TMI Tax Updates - e-Newsletter
July 20, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax

Highlights / Catch Notes

GST

• Goods detained on mere suspicion of tax evasion despite proper docs. Court: Authorities failed to prove intent (mens ria). Orders quashed.

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• HC allows small biz to upload ITC certificate by condoning 2-day delay due to COVID-19 u/r 40(1)(b) after approval of composition scheme withdrawal.

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• Plea to quash show-cause notice citing Rule 142 violation dismissed. Notices detailed tax liabilities, no breach of natural justice.

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• Provisional attachment orders valid if objection not filed u/r 159(5). Petitioner avoided service, didn't apply for release. Revenue interest protection permissible.

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• Petitioner failed to pass on GST rate cut benefits to viewers by not reducing ticket prices until 11.03.2019, violating Section 171.

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• Cancellation of GST registration doesn't absolve tax liability. Audit authorized for registered persons, including those during audit period. Fraudulent ITC claims & cancellation don't warrant relief.

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• Order cancelling registration quashed for lack of reasons. Matter remanded to provide reasons within 2 weeks. Appellate order set aside.

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Income Tax

• Registration granted. Fresh application rejected, withdrawal allowed. Previous registration valid 2022-23 to 2026-27. Order inconsequential.

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• Retrospective cancellation of registration u/s 12A invalid. CIT(E) failed to justify reasons. Provisions don't permit retrospective action.

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• Short-term capital loss from selling shares valid. Intervening transactions can't be ignored. Buying loss-making firm's shares for turnaround legit.

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• Obsolete inventory write-off per audited accounts & accounting norms allowed as deductible expense. Consistent with legal principles.

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• AO rejected valuer's report; ITAT: refer to DVO if unsatisfied. Old property, cost unascertainable, adopt fair market value per Sec 48.

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• Tribunal upheld genuineness of loan transaction backed by documents; authorities erred in rejecting evidence without verification.

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• Offshore design & engineering inextricably linked to equipment supply, not taxable as FTS. Supervisory services taxable as business profits/FTS under tax treaty.

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• Tribunal upholds assessee's contentions, deletes additions by AO on unexplained cash, bank statements, time deposits & u/s 68.

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• Personal expenses disallowed. Lack of evidence for exclusive professional use. Exempt income expense disallowance upheld. Appeal dismissed.

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Customs

• Petition against customs seizure, SCN, lookout circular dismissed. SCN valid u/s 28(4). Commissioner is "Proper Officer". Delay grounds rejected.

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• Customs Broker License: Revocation set aside; deposit forfeiture & Rs.50k penalty upheld for concealment of Red Sander logs under CITES; verification lapse.

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• Goods classified under CTH 09011149 or 09019010 remanded to obtain amended procurement certificate instead of confiscation. Opportunity for re-testing samples.

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• Misdeclared imports confiscated. Declared value accepted. Excess goods' value upheld. Redemption fine & penalty reduced.

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Corporate Law

• Forms IEPF-3 & IEPF-4, IEPF-7 & IEPF-1 merged. Online fee payment for IEPF via MCA21. Simplified filings.

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IBC

• Creditor failed to prove debt & default against Corporate Debtor. Section 9 application rejected as debt fell in COVID-19 prohibited period.

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Service Tax

• Online services like SEO, web design & app dev aren't OIDAR. They're biz support/software dev, not info retrieval. Place of provision outside India = export.

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• Leasing DG Sets is deemed sale, not supply of service. Excluded from service tax purview. Order set aside, appeal allowed.

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• Refund claim rejected; services not exempt under Notification 25/2012-ST or Section 66D. Invoices showed business auxiliary services to SOLCIL, taxable.

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Central Excise

• Clandestine removal denied CENVAT credit. Duty, interest & penalty assessed for FY 2007-12. Differential duty demand reduced. Imported showers duty demand set aside.

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VAT

• Belated Input Tax Credit claim allowed, following precedent. Right to claim ITC indefeasible, no time limit prescribed.

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Articles

• ADVISORY COMMITTEE (WINDING UP BY THE TRIBUNAL – V)
• RECENT DEVELOPMENTS IN GST
• Assessee entitled to personal hearing opportunity after passing of Order when amount of tax payable has been appropriated

Notifications

• Income Tax

• 82/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 97/2022 dated 17th August, 2022 - Extension of exemption u/s 10(23FE) - The pension fund, namely, CPPIB India Private Holdings Inc.in respect of the eligible investment made by it in India.

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• 79/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 86/2022 dated 21st July, 2022 - Extension of exemption u/s 10(23FE) - the pension fund, namely, CPPIB Credit Investments VI Inc.

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• 70/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 65/2021 dated 13th May, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the Government Employees Superannuation Board

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• 68/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 63/2021 dated 13th May, 2021 - Extension of exemption u/s 10(23FE) - the sovereign wealth fund, namely, the Ministry of Economy and Finance (of the Republic of Korea)

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• 65/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 54/2021 dated 5th May, 2021 - Extension of Exemption u/s 10(23FE) - The sovereign wealth fund, namely, the Stretford End Investment Pte. Ltd.

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• 64/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 53/2021 dated the 5th May, 2021 - Extension of Exemption u/s 10 (23FE) - the sovereign wealth fund, namely, the Dagenham Investment Pte. Ltd.

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• 63/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 52/2021 dated 5th May, 2021 - Extension of Exemption u/s 10(23FE) - the sovereign wealth fund, namely, the Anahera Investment Pte. Ltd.

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• 62/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 51/2021 dated 5th May, 2021 - Extension of Exemption u/s 10(23FE) - the sovereign wealth fund, namely, the Bricklayers Investment Pte. Ltd.

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• 61/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 46/2021 dated 4th May, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the CDPQ Fixed Income XI Inc

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• 60/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 45/2021 dated 4th May, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the Ivanhoe Logistics India Inc

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• 59/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 44/2021 dated 4th May, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the CDPQ Infrastructures Asia III Inc

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• 58/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 43/2021 dated 4th May, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the Caisse de depot et placement du Quebec

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• 57/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 35/202 dated the 22nd April, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the Canada Pension Plan Investment Board Private Holdings (4) Inc

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• 56/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 34/2021 dated 22nd April, 2021 - Extension of Exemption u/s 10(23FE) - the pension fund, namely, the Canada Pension Plan Investment Board

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• 55/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 33/2021 dated 19th April, 2021 - Extension of Exemption u/s 10(23FE) - the sovereign wealth fund, namely, the Norfund, Government of Norway

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• 54/2024 - dated 18-7-2024 - IT
  Amendment in Notification No. 89/2020 dated the 2nd November, 2020 - Extension of Exemption U/s 10(23FE) - the sovereign wealth fund namely, the MIC Redwood 1 RSC Limited, Abu Dhabi, United Arab Emirates

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/102 - dated 19-7-2024
  Enabling Credit Rating Agencies (CRAs) to undertake rating activities under IFSCA
• SEBI - SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/103 - dated 19-7-2024
  Enabling ESG Rating Providers (ERPs) to undertake ESG rating activities under IFSCA
• SEBI - SEBI/HO/DDHS/POD3/P/CIR/2024/45 - dated 16-5-2024
  Master Circular for ESG Rating Providers (“ERPs”)
• Companies Law - 07/2024 - dated 17-7-2024
  Merger of Forms IEPF-3 With IEPF-4 and IEPF-7 with IEPF-1 along with change in payment process thereof in MCA Version 3

News

• GeM’s e-Learning Training Courses now available in 12 Official Languages

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• CCI approves acquisition of up to 56% shareholding of Ismartu India Private Limited by Dixon Technologies (India) Limited

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• CCI approves acquisition of ordinary shares of Berhyanda and Berhyanda MidCo by Platinum Poppy

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• CCI approves indirect controlling acquisition of Arjas Steel Private Limited and Arjas Modern Steel Private Limited by Sandur Manganese & Iron Ores Limited and BAG Holdings Private Limited

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Case Laws:

• GST

• 2024 (7) TMI 1037
  Detention of goods - inference drawn that the goods is likely to be unloaded at distt. Hapur without having proper documents - goods detained only on the basis of surmises and conjunctures that the goods were not on its normal route and driver of the goods was having mobile number of one dealer of distt. Hapur - HELD THAT:- It is not in dispute that the goods were coming from Distt. Muzaffarnagar and same was intercepted during transit. As per the document accompanying with the goods in question, no discrepancy was found. Further the goods in question were going up to Distt. Ghaziabad and same was intercepted at distt. Hapur under the pretext that it was not on its normal route as well as the driver of the truck was having mobile number of a dealer of Distt. Hapur, therefore, inference has been drawn that the goods in question will be unloaded at distt. Hapur without having any proper document. The respondent authorities have not recorded any finding with regard to intention to avoid the payment of tax, in other words the mens ria is absent. Once there is no finding with regard to mens ria to avoid the payment of tax, the impugned order cannot be sustained in the eyes of law on this ground also. The impugned orders dated 30.7.2020 and 10/11.12.2019 are hereby quashed - Petition allowed.

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• 2024 (7) TMI 1036
  Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the total demand on merits - petitioner asserts that he was unaware of proceedings culminating in the impugned order because the show cause notice and other communications were uploaded on the GST portal in the View Additional Notices and Orders tab and not communicated to the petitioner through any other mode - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not file any written objection or attend the personal hearing. By taking into account the assertion that such non participation was on account of not being aware of proceedings, the matter requires reconsideration. It should also be noticed that the petitioner discharged the entire tax and interest demand. The impugned order dated 17.10.2023 is set aside subject to verification of the payment made by the petitioner under Form DRC-03 on 30.10.2023. The petitioner is permitted to submit a reply to the show cause notice within 15 days from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (7) TMI 1035
  Detention of goods u/s 129 (1) of the APGST/CGST IGST Acts, 2017 - physical verification of the goods show that the value set out in the invoices is far lesser than the fair market value and there is huge difference between the maximum retail price printed on the said goods against the value shown in the invoices - HELD THAT:- Without going into the question of whether the endorsement has been made after proper appreciation of the material before the 1st respondent, it would be appropriate to dispose of this Writ Petition, keeping in view the objections raised by the petitioner before this Court. The 1st respondent shall pass necessary orders on the show-cause notices issued under Sections 129 130 of the APGST/CGST IGST Acts, 2017, within a period of one (1) week from today after hearing the petitioner on these notices again - The order of the 1st respondent shall be passed before the reference to the undated endorsement which is impugned in the present Writ Petition. It is further clarified that any decision taken by the 1st respondent shall be uninfluenced by any of the observations in the said endorsement. Petition disposed off.

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• 2024 (7) TMI 1034
  Direction upon the respondents to allow the petitioner to upload the input tax credit certificate in the web portal of the respondent authorities by condoning the delays in the petitioner s attempt to upload such certificate - HELD THAT:- The petitioner who is small businessman was dependent on his chartered accountant for filing his return. It was the Covid-19 period. The petitioner had duly made an application for withdrawal from composition scheme. Such application of the petitioner was submitted on 12th November, 2021 and the same was approved by the authorities. Although, the petitioner was required to make a declaration electronically on the common portal in Form GST ITC-01 within 30 days from the date of approval, it appears that there was a delay of 2 days. The fact that the petitioner was prevented from submitting his return within the time specified is not called in question by the authorities/ by the Joint Commissioner. In fact, the Joint Commissioner has accepted the explanation given by the petitioner. Although, a defence is being sought to be set up by the respondents that there is no provision for condonation of delay, the respondents cannot be permitted to raise such defence having not challenged the order dated 9th March, 2022. In any event, the aforesaid defence set up by the respondents is misconceived as would appear from Rule 40 (1) (b) of the said Rules. Since, from the order dated 1st April, 2022 it would be apparent that the Joint Commissioner State Tax had accepted the explanation given by the petitioner and had found that the delay was condonable in the fact of the case, however, having not been identified any provision in the Act or Rules, he did not allow the application, in the peculiar circumstances, this is a fit case for directing to the respondent authorities to condone delay and permit the petitioner to file Form GST ITC-01. The writ petition stands disposed of.

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• 2024 (7) TMI 1033
  Seeking quashing of SCN and subsequent tcorrigendum - non-compliance with mandatory requirements of Rule 1A of Rule 142 of the Goods and Services Tax Rules, 2017 - HELD THAT:- A keenest perusal of the SCN and subsequent thereto corrigendum, thus candidly unfolds that all the detailings of the tax liabilities as contemplated under the 'GST Rules of 2017', become ad nauseum detailed therein, besides they are detailed with utmost clarity, thereby the petitioner-assessee became fully enlightened with the facts, which he is required to be contesting. Resultantly thereby there would be the fullest opportunity to the assessee-petitioner to ably contest the facts relating to its purportedly omitting to liquidate its tax liabilities to the department. In sequel, thereby there is no breach to the principles of natural justice. As but a natural corollary thereto the exception, whereby on proof thereof, the assessee-petitioner, even without availing the alternative remedy of his appealing against the impugned Annexures, could redress his grievances, through his instituting a writ petition before this Court, rather are not satisfied at all. This Court at this stage, finds no merit in the writ petition, and, with the above observations, the same is dismissed. However, liberty reserved to the petitioner to avail the alternative remedy of filing a statutory appeal against the impugned Annexures, before the Appellate Authority concerned - Petition dismissed.

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• 2024 (7) TMI 1032
  Cancellation of registration of petitioner - non-service of notice - non-furnishing of the report of the Additional Commissioner of Commercial Taxes (Enforcement), Bangalore, Karnataka - violation of principles of natural justice - HELD THAT:- A perusal of the objections raised by the petitioner would show that the said objections are extracts of various Judgments and a statement that all necessary documents are available with the petitioner. In such circumstances, the observations of the assessing officer made above are sufficient response to the objections raised by the petitioner. Similarly, the absence of the petitioner at the address available with the assessing office cannot amount to non-service of notice on the petitioner. On the question of non-furnishing of the report of the Additional Commissioner of Commercial Taxes (Enforcement), Bangalore, Karnataka, the Judgment of Division Bench of the Common Andhra Pradesh High Court in the case of Sri Nallana Sambasiva Rao Vs. State of Andhra Pradesh [ 2015 (2) TMI 1377 - TELANGANA HIGH COURT] followed, which had held that an assessment based on material and reports submitted by Regional Vigilance and Enforcement Authority can be upheld only when such reports are supplied to the assessee along with the notice of the assessment before any assessment order is passed. As the said report has not been furnished, the subsequent assessment order which levied tax penalty and interest would have to be set aside. This Writ Petition is allowed setting aside the impugned order of assessment passed by the 1st respondent and remanding the matter back to the 1st respondent to take up the assessment proceedings after furnishing the copy of the report of the Additional Commissioner of Commercial Taxes (Enforcement), Bangalore, Karnataka and after giving a opportunity of personal hearing to the petitioner. Petition allowed by way of remand.

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• 2024 (7) TMI 1031
  Maintainability of appeal - appeal rejected on the ground that the same was barred by limitation - HELD THAT:- Admittedly, in this case the petitioner had filed an appeal challenging the order passed under Section 73 (9) of the said Act. Simultaneously, with the filing of the appeal, the petitioner had also made pre-deposit of Rs. 63,278/- as is required for maintaining the appeal. As such there is no lack of bona fide on the part of the petitioner in preferring the appeal. It appears that the petitioner had also made a prayer for condonation of delay, inter alia, claiming that by reasons of lack of proper knowledge of the GST portal there had been delay in filing the appeal. There appears to be a delay of 66 days in filing the appeal. Taking into consideration that the petitioner is a small businessman and there is no lack of bona fide on the part of the petitioner and one does not stand to gain by filing a belated appeal, in the instant case, the appellate authority ought to have appropriately considered the application for condonation of delay filed by the petitioner. The appellate authority, however, appears to have rejected the appeal on the ground of limitation by, inter alia, holding that the delay can only be condoned provided the same is filed within the period of one month of the time prescribed - taking note of the explanation give by the petitioner while setting aside the order dated 30th April 2024, the delay in preferring the appeal is condoned. The appellate authority is directed to hear out and dispose of the appeal, on merit, upon giving an opportunity of hearing to the petitioner, within a period of 8 weeks from the date of communication of this order - petition disposed off.

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• 2024 (7) TMI 1030
  Seeking direction upon the respondents to allow the petitioner to file an appeal under Section 107 of the West Bengal GST/CGST Act, 2017 - HELD THAT:- Taking into consideration the materials on record, in the event the petitioner makes payment with the concerned respondents the entirety of the amount of tax, interest, fine, fee and penalty payable under Section 107 (6) (a) of the said Act, in respect of determination made for the tax period for which the petitioner is not interested to prefer the appeal and pays a sum equal to 10 per cent of the remaining amount of the tax in dispute arising from the said order in respect of the tax period which forms subject matter of appeal, there cannot be any difficulty on the part of the respondents to admit the said appeal and hear out the same on merits. If the appeal is filed within a period of three weeks from date, upon compliance of the conditions as indicated above, the Appellate Authority in such case would be obliged to consider and dispose of the said appeal on merits within a period of eight weeks from the date of filing of such appeal upon giving opportunity of hearing to the petitioner. Petition disposed off.

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• 2024 (7) TMI 1029
  Cancellation of registration of the petitioner - failure to file returns for a continuous period of six months - HELD THAT:- Having regard to the case made out by the petitioner that the petitioner was prevented by sufficient cause from firstly responding to the show cause and secondly from filing of an application for revocation of the order of cancellation of registration, an opportunity should be granted to the petitioner, who is only a small businessman, to continue with his business and profession, especially when it is not the case of the respondents that the petitioner had been adapting dubious process to evade tax. Having regard to the aforesaid and taking note of the direction issued by the Hon ble Division Bench of this Court in the case of SUBHANKAR GOLDER VERSUS ASSISTANT COMMISSIONER OF STATE TAX, SERAMPORE CHARGE ORS. [ 2024 (5) TMI 1262 - CALCUTTA HIGH COURT] , it is proposed to set aside the order dated 19th January, 2023, cancelling the registration of the petitioner under the said Act, subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty, if not already paid. The writ petition is disposed of without any order as to costs.

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• 2024 (7) TMI 1028
  Condonation of delay in filing appeal - sufficient reasons for delay or not - non-service with the copies of the orders - lack of efficient staff making difficult for the petitioner to access the portal on regular basis - HELD THAT:- Admittedly, in this case, it is noticed that the petitioner had preferred an appeal though the same was delayed. Simultaneously, with the filing of the appeal, the petitioner had also made pre-deposit of Rs. 43,224/- as is required for maintaining the appeal under the provisions of the said Act. The aforesaid would demonstrate that there is no lack of bona fide on the part of the petitioner in preferring the appeal. Although the explanation given by the petitioner does not appear to be proper, however, for the ends of justice and taking into consideration that the petitioner had already made pre-deposit and has honest intentions, the delay in filing the appeal should be condoned. The delay in preferring the appeal under Section 107 of the said Act is condoned and the appeal be restored to its original file - Petition disposed off.

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• 2024 (7) TMI 1027
  Condonation of delay of 17 days in filing appeal - authority's competence to condone the delay - sufficient cause for delay or not - HELD THAT:- From the application for condonation of delay filed by petitioner before the appellate authority, it would transpire that there was a delay of 17 days in filing the said appeal and the same was due to the medical reasons. From the documents disclosed by the petitioner it appears that the petitioner s advocate, by reasons of his father s illness, could not prepare the appeal in time. It is submitted that the petitioner s advocate s father ultimately, succumbed to the illness and expired on 17th February, 2024. The aforesaid had occasioned the delay in preferring the appeal. Although, the petitioner had taken all steps to have the appeal filed within the time prescribed, unfortunately, by reasons of the circumstances which are beyond the control of the petitioner, the delay had occasioned. The appellate authority had glossed over the aforesaid explanation given by the petitioner and had purported to reject the appeal, inter alia, on the ground that the appellate authority is only competent to condone the delay provided the same is filed within the period of one month beyond the time prescribed. The petitioner, having sufficiently explained the delay, the appellate authority ought to have appropriately considered the same. There appears to be a jurisdictional error on the part of the appellate authority in failing to consider the petitioner s application for condonation of delay. Petition disposed off.

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• 2024 (7) TMI 1026
  Seeking to quash the order of adjudication under Section 73 (9) read with Section 6 and 50 of the Karnataka Goods and Services Tax Act, 2017 - non-issuance of ASMT-10 dated 05.01.2022 for the tax period of 2018-19 through email or registered post - violation of principles of natural justice - HELD THAT:- This Court is conscious of the fact that when a person is charged with any show cause notice, a reasonable opportunity of being heard is required to be given. Nevertheless, the present case, the appeal remedy being available, the petitioner shall make use of the same. The authorities shall provide a reasonable opportunity of hearing, either physically or through virtual mode (video conference) and after hearing the petitioner, by granting sufficient opportunity, pass suitable orders. Petition is disposed of - Liberty is reserved to the petitioner to approach the appellate authority as contemplated under the CGST Act of 2017 and file appropriate appeal.

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• 2024 (7) TMI 1025
  Challenge to provisional orders of attachment - continuation of attachment beyond the period of one year - HELD THAT:- Admittedly, in this case, the provisional orders of attachment had been issued under Section 83 of the said Act. It may be noted, that once, a provisional order of attachment has been issued under Section 83 of the said Act, the statute itself considering the drastic nature of the order confers a right on the person whose property is attached to file an objection under Rule 159 (5) of the said Rules - Once, an objection is filed, it is for the Commissioner to consider whether or not such order of attachment is required to be continued or not. Admittedly, in this case, no such objection has been filed. Although, a lot of stress has been laid by the petitioner to, inter alia, contend that the orders of attachment cannot be continued for more than a year, in this case, it is found that fresh provisional orders of attachment has been issued. The respondents have prima facie been able to explain the circumstances under which such provisional orders of attachment had been necessitated, inasmuch as, the notices under Section 74 of the said Act, could not be served on the petitioner. At this stage it cannot be ruled out that the petitioner was avoiding service of notice. Although, the order of provisional attachment appears to be drastic, there is no embargo on exercise of power. The present case does not suggest that the petitioner has in anyway been harassed or any of the rights of the petitioner, as enshrined in the constitutional provisions has been infringed, especially when the petitioner did not apply for release of the property, by filing an objection in terms of the Rule 159 (5) of the said Rules. Prima facie there appears to be sufficient material for the respondents to pass fresh provisional orders of attachment to protect the interest of revenue. Even after the fresh orders of attachment dated 9th February, 2024 under Section 83 of the said Act had been passed, no steps had been taken by the petitioner to object to the continuance of such orders in the manner provided for in the statute. At this stage when the inquiry to determine liability under Section 74 of the said Act is in progress, and having regard to facts noted above it cannot be said that there was no material for formation of opinion for issuing order of provisional attachment. Since the petitioner did not approach the respondents by way of an application in terms of Rule 159 (5) of the said Rules, and there appears to be no explanation by the petitioner for not approaching the respondents, the petitioner, at this stage, is not entitled to invoke the extraordinary writ jurisdiction of this Court. Petition dismissed.

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• 2024 (7) TMI 1024
  Failure to pass the benefits of reduction in the rate of G.S.T. w.e.f. 01.01.2019 to the beneficiaries, i.e., the viewers of the cinema who had viewed the cinema from the petitioner s-theatre - default or not - HELD THAT:- Some of the admitted factual matrix is that, up till 31.12.2018, the G.S.T. was being collected at cinema theatres at the rate of 28% 18% in two categories, i.e., tickets sold above Rs. 100/- and tickets sold below Rs. 100/-. From 01.01.2019, the aforesaid rate of tax got reduced to 18% for tickets more than Rs. 100/- and 12% for tickets below Rs. 100/-. The petitioner reduced the prices of tickets only w.e.f. 11.03.2019 for two months and ten days, i.e., w.e.f. 01.01.2019 till 10.03.2019. The price at which the tickets were sold was the same that were being sold as on 31.12.2019. There is no dispute so far as the petitioner having paid the G.S.T. at the rate fixed by the respondent-Department even on the price at which the tickets were sold. As a consequence, the Government has also got G.S.T. from the petitioner at the higher rate on which the tickets were sold which has thus added up the revenue to some extent. A plain reading of the provision of section 171 of CGST Act, clearly indicates that the said provision has been introduced to ensure that the supplier of goods and services should not make profit from the reduction of the tax rate under the G.S.T. law. Rather the intention of the Government is that the moment the rate of tax under the G.S.T. is reduced, the benefit should immediately be passed on to the end-user by way of reduction in the prices commensurate with the reduction in the rate of tax. There are no illegality committed by the respondent-Authority which has passed the impugned order in Case No. 22/2020, dated 07.10.2020 - there are no merit in the writ petition and the same deserves to be and is accordingly dismissed.

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• 2024 (7) TMI 1023
  Challenge to audit notice - main thrust of the argument of counsel for the petitioner is that Authorities can undertake audit of a registered person only - cancellation of GST registration of petitioner - HELD THAT:- Section 29 (3) of the CGST Act pertains to cancellation of registration. Section 29 (3) of the CGST Act clearly mandates that the cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation. Thus Sub-Section (3) of Section 29 of the CGST Act makes it adequately clear that even after cancellation, if any tax liability subsists, the registered person is required to pay the tax. Section 65 (1) of the CGST Act also authorizes the Authority to undertake audit of any registered person for such period. Admittedly, the petitioner was a registered person for the period for which the assessment order has been passed and notice dated 06.03.2020 to initiate audit has been issued. It is also pertinent to note that after audit, show cause notice was issued under Section 73 of the CGST Act and a detailed reply was filed by the petitioner and only thereafter, an assessment order has been passed against the petitioner. There are no error in the proceedings initiated by respondents as registered person under Section 65 of the CGST Act would include those who were registered for the period for which audit was undertaken. The petitioner, who has fraudulently availed the ITC and has thereafter, applied for cancellation of registration, is not entitled for any relief from the Court. Petition dismissed with a cost of Rs. 25,000/-.

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• 2024 (7) TMI 1022
  Cancellation of registration of petitioner - returns could not be filed from January, 2018 onwards as petitioner has not hired any consultant - no reasons assigned for cancellation - violation of principles of natural justice - HELD THAT:- It appears that the order impugned cancelling the registration of the petitioner dated 11.3.2020 is itself passed without assigning any reasons whatsoever in nature. The said order cannot be said to be as per well settled law with regard to the reasons. As the Appellate Authority has dismissed the appeals of the petitioner, the respondent authorities will not be able to exercise the revisional power under section 108 of the GST Act. Therefore, the impugned order passed by the Appellate Authority as well as the order of cancellation of registration are required to be quashed and set aside. Accordingly, the matter is remanded back to the Assessing Officer at the show cause notice stage. The Assessing Officer shall provide detailed reason for cancellation of registration of the petitioner, if not supplied earlier within a period of two weeks from today i.e. on or before 18.03.2024 - petition alowed by way of remand.

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• Income Tax

• 2024 (7) TMI 1021
  Exemption u/s 11 - Deemed registration u/s 12AA - whether non-deciding the application for registration u/s 12AA (2) within a period of six months, there shall be deemed registration or no? HELD THAT:- Petitioner having already granted a registration under Section 12A (1) (ac) (ii) read with Section 12AB (1) (a) of the Act on 04 April, 2022 for a period of five years i.e. from assessment year 2022-23 to 2026-27, there was no need for the petitioner to make a fresh application on 30 September, 2022 under which the impugned order has been passed. It obviously appears to be a mistake on the part of the petitioner as it was quite illogical, that once the petitioner was possessing registration for five years, and before such registration would come to an end, there could be no need for the petitioner in the very year i.e. on 30 September, 2022 to make a fresh application for any registration. Further considering the purport of the relevant provisions, we also find that the primary reason as set out in the impugned order, to reject the application of the petitioner, is itself not supported by the provision. Even assuming that the application of the petitioner was a valid independent application, and the reason as furnished in the impugned order that as the earlier provisional registration was not submitted by the petitioner, the petitioner would not be entitled for issuance of a registration, was not a valid and justifiable reason to reject the application. We may not be required to delve on the illegality of the order dated 31 March, 2023, for the reason that Mr. Naniwadekar, on instructions, submits that his client would intend to withdraw the application dated 30 September, 2022 on which the impugned order dated 31 March, 2023 has been passed. In the peculiar facts of the case, we are inclined to accept such request as made by Mr. Naniwadekar. This would obviously render the impugned order inconsequential. We also accept the contention as made on behalf of the petitioner that the order dated 04 April, 2022 would continue to operate to the benefit of the petitioner as there is nothing on record to show that such order is not legal, valid and non-subsisting as on date. Order - The application dated 30 September, 2022 filed by the petitioner for registration under Section 12A (1) (ac) (i) of the Act is permitted to be withdrawn. As a consequence thereof, the impugned order dated 31 March, 2023 is rendered inconsequential. ii. It is noted that the registration dated 04 April, 2022 as granted to the petitioner under the provisions in question as on date is legal and valid from assessment year 2022-23 to 2026-27.

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• 2024 (7) TMI 1020
  Denial of re-registration u/s. 12A - cancellation of registration retrospectively w.e.f 1.4.2014 insofar as the provisions of section 12AA/12AB - assessee has been misusing the funds received under the guise of donation which was evident from the investigation report - as argued show cause notice for cancellation of registration had been issued by CIT (E) on 6.10.2022 but the cancellation of registration was done w.e.f. 1.4.2014 relevant to assessment year 2015-16, thus provisions of section 12AB does not provide for retrospective cancellation of registration u/s. 12A HELD THAT:- A perusal of the order cancelling the registration shows that the ld CIT(E) has not given any reason for rejecting various explanation given by the assessee to various show cause notices issued. All that the ld CIT(E) says that the replies are in relation to observations made by the Assessing officer and has nothing to do with the reasons given for giving show cause notice for cancellation of registration. A perusal of the order of ld CIT(E) clearly shows that the reasons given for the show cause notice are the reasons which are considered by the Assessing Officer in the assessment order for the assessment years 2013-14 2014-15. The assessee has also given reply to various issues in the show cause notice. In any case, the show cause notice for cancellation of registration having been issued on 6.10.2022, ld CIT (E) could not have cancelled registration retrospectively w.e.f 1.4.2014 insofar as the provisions of section 12AA/12AB does not provide for the cancellation of registration with retrospective effect. on perusal of provisions of section 12AB(4) of the Act shows that the said provision has been substituted by the Finance Act, 2022 w.e.f. 1.4.2022. Before 1.4.2022, the registration could have been cancelled u/s. 12AB(5). However, the provisions of section 12AA and Section 12AB came into effect from 1.4.2015. Before that registration was done under section 12A of the Act. One needs to understand that the provisions of section 12A of the Act was amended to 12AA and then 12AB because registration scheme for Trust was to corollary to claim file and smile i.e. to file the registration as admittedly charitable institution. Subsequently, the provisions of exemption was brought in and opportunity was given to CIT(E) to deny the exemption, still the power for cancellation the registration was granted. However, the power to cancel the registration with retrospective effect is not provided in the Statute - Assessee appeal allowed.

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• 2024 (7) TMI 1019
  Unexplained cash credit u/s 68 - non rejection of books of accounts - HELD THAT:- As when books of account were rejected, no addition can be made u/s 68 of the IT Act, 1961. As submitted that the lenders are all agriculturists and then there is no locus standi to advance for purchase of sand - It is a common fact that agriculture is a seasonal activity and farmers with marginal land holding find it difficult to sustain. So to augment their income level, there is no bar to try alternative avenues for generation of income. Even big corporates diversify and venture into new business ventures. So the hollow argument is rejected being devoid of any merit. In fact, these persons had unequivocally confirmed in the course of statement recorded u/s 131 that they have advanced for purchase of sand. We find that all the 17 persons have appeared u/s 131 before the I.T.O. Ward-1, Amravati and have clearly confirmed that they have advanced to the appellant for the purchase of sand in cash. They have clearly mentioned that they have sufficient agricultural income from where the advance was given for purchase of sand. Such advances were subsequently repaid by banking transactions or adjusted with sale of sand. The unimpeachable testimony of these persons cannot be lightly brushed aside. The ratio decidendi is squarely applicable to the case in hand that when advances are later booked as income, no addition u/s 68 is possible. Decided in favour of assessee.

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• 2024 (7) TMI 1018
  Rectification u/s 154 - disallowance of prior period expenses - HELD THAT:- We find that identical issue on similar facts and circumstances, in Atul Shirodkar Associates [ 2022 (7) TMI 1525 - ITAT MUMBAI] , has decided the issue in favour of the assessee wherein held that for initiating proceedings u/s 154 of the Act, the mistake apparent from record must be an obvious and patent mistake and not something which can be established by long drawn process of reasoning on points on which there may conceivably be two opinions. As is evident from the facts available on record, the issue of prior period expenses, inter alia, on which rectification u/s 154 of the Act was done by the AO in the present case is open to divergent views and the same requires long drawn process of examination, therefore, we are of the view that rectification order passed u/s 154 on this issue clearly falls beyond the ambit of expression mistake apparent from the record - Decided in favour of assessee.

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• 2024 (7) TMI 1017
  Disallowance of deduction of traded goods written off on account of obsolete, damaged, expired stock - case of the assessee that the amount of obsolete inventory written off has been debited to the Profit and Loss Account which has been audited by the auditor, thus, the aforesaid written off of obsolete inventory has been audited and the quantum of written off also forms part of the Audited Financial Statements in accordance with the disclosure, requirements of Accounting Standard HELD THAT:- AO while making the disallowance observed that once having a taken the stock at NRB, the assessee is not permitted to again reduced the value of provision for obsolete or damaged stock otherwise this will result in double benefit , the coordinate Bench of the Tribunal in the case of M/s BG Exploration and Production India Ltd. [ 2018 (7) TMI 1954 - ITAT DELHI] held that when the taxpayer has prepared obsolete inventory in accordance with the system of accounting regularly followed by it in compliance to section 211(3C) of the Companies (Accounting Standards) Rules, 2006 as amended and other relevant provisions of the Companies Act, 1956 and has duly got prepared audited report of an independent auditor on the basis of physical verification and in view of the maintenance of inventory, the disallowance made by the AO/DRP is not sustainable in the eyes of law. ITAT Bench at Jaipur in the case of Gillette India Ltd. [ 2015 (12) TMI 1800 - ITAT JAIPUR] held that the assessee had given details about the inventory written off along with ledger codes whereby the identified items of inventory are written off in the books of account, and accordingly deduction for written off of obsolete inventory should be allowed to the assessee.

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• 2024 (7) TMI 1016
  Computation of capital gain - LTCG - FMV determination - property is an old one, was received as a gift by the assessee from his mother - AO refused to accept the registered valuer s report for the cost of acquisition and he has relied upon section 55A to emphasize that in case the AO was not in agreement with the valuation made by the registered valuer, he ought to have referred the property for valuation by the departmental valuer - HELD THAT:- AO should have referred the property to the DVO if he was not satisfied with the registered valuer s report. The property is an old one, was received as a gift by the assessee from his mother and, therefore, the value was unascertainable and the cost of acquisition was required to be taken as the fair market value as per clause (3) of Explanation to section 48. Since the assessee had filed a valuation report and if the Ld. AO was of the opinion that the value so claimed is at variance with its Fair Market Value, as per clause (a) of Section 55A, the Ld. AO should have referred the valuation of capital asset to the Valuation Officer instead of outrightly rejecting the valuation reports and without pointing out any error in the rate or the area adopted for the valuation. Thus, the order of the Ld. CIT(A) is set aside and the AO is directed to adopt the FMV of the properties as per the rates adopted by the registered valuer and which reports were filed during the course of the assessment proceeding as he did not form any opinion that the value so claimed was at variance with the FMV but outrightly rejected the report of the registered valuer which he was not legally authorised to do as the valuer is a technical expert in respect of valuation and unless there was any error or discrepancies in the reports the valuation as shown by him ought to have been adopted. Assessee appeal allowed.

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• 2024 (7) TMI 1015
  Unexplained income u/s 68 - share application money Receipts - assessee has not produced any investor for examination before him - HELD THAT:- No fresh share application money was received by the assessee during the year under consideration. The old loans were rounded off by way of share allotment to the respective creditors. Since no fresh amount either in cash or otherwise has been received by the assessee during the year and only the old loans were converted into the share allotment, therefore, the observation of AO that the assessee has introduced the unexplained money as share application money, is not correct. Additions made by the AO are not justified in this case and accordingly the same are ordered to the deleted. Appeal of the assessee stands allowed.

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• 2024 (7) TMI 1014
  Validity of reassessment proceedings - Unexplained cash credit u/s 68 - unsecured loan received from the loan creditor - Loans treated as bogus on the basis of the statement given by one Mukesh Banka - HELD THAT:- As prima facie the appellant has submitted copies of all those documents including the bank statement of the alleged loan provided/accommodation entry provider in support of transaction related to alleged loan claimed by the appellant. But he discarded the same by mere assumption and surmises thereby saying that these documents are mere masks to hide the real nature of the transaction. It is surprising to note that what was the basis of ld. CIT(A) to discard those documents without verification and genuineness of the documents and he doubted the same. We further notice that the ld. CIT(A) has rejected the above documents by saying that finding of the AO was based on strong surrounding circumstances and preponderance of the probability and human conduct. It is important to mention here that above findings cannot be basis of rejection of a document which was filed by the assessee. The documents clearly go to show that the transaction made being a genuine one and we do not find any transaction made by and with any Mukesh Banka. It is also a fact that all transactions made through banking channels. Loan taken was duly repaid by account payee cheque. No transaction was entered with Sh. Mukesh Banka and Banka Group. Genuine loan was taken from M/s. Fast Speed Realcon Pvt. Ltd. and loan confirmation of M/s. Fast Speed Realcon Pvt. Ltd. has also been enclosed in the balance sheet, profit and loss account filed by the assessee. Keeping in view the above facts, the answers come in favour of the assessee that the assessee could be able to disclose the amount and the finding of the AO and the ld. CIT(A) that the assessee could not be able to disclose the source of income of Rs. 15 Lakh is hereby set aside. Validity of reopening of assessment - We find that before issuance of notice u/s 148 of the Act there must be a belief in the mind of the AO that the assessee has escaped assessment of income and there must be some basis for forming such a belief. Mere suspicion cannot be a ground for issuance of notice. In the present case as we have discussed above that there is nothing in the record brought by the AO to establish any connection of the assessee with Mukesh Banka, there is no transaction made by and with Mukesh Banka as the statement of bank account details reveals. Keeping in view the above facts also the case of the assessee is succeeded that issuance of notice is also bad in law. Accordingly, the grounds raised by the assessee are allowed. Assessee appeal allowed.

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• 2024 (7) TMI 1013
  Income deemed to accrue or arise in India - taxability of amount received towards offshore supply of design and engineering - Fees for Technical Services (FTS), both u/s 9(1)(vii) of IT Act as well as Article 12 of India Austria DTAA - assessee is a non-resident corporate entity engaged in the business of supplying plants and services for hydropower, pulp and paper, metals and other specialized industries - HELD THAT:- As terms of contract would make it clear that the design and engineering services inextricably linked with the manufacturing and supply of equipments. It is not the case of the department that the offshore supply of design and engineering would have enabled the contractee to manufacture the plant and equipment through any other party independent of the assessee. Thus, it has to be held that offshore supply of design and engineering, being closely linked to the offshore supply of plant and equipment, it cannot be segregated from the offshore supply of plant and machinery, as the basic nature and character of both the transactions are identical. Therefore, when offshore supply of plant and equipment is not taxable, offshore supply of design and engineering cannot be made taxable. As we analyze with the fact involved in case of SMS Concast AG [ 2023 (7) TMI 164 - ITAT DELHI ] it would be clear that assessee s case stands on a better footing as the contracts under which the assessee has received the payment are composite contracts. Therefore, the ratio laid down in case of SMS Concast AG (supra) squarely applies to assessee s case. Identical view has been expressed by the Coordinate Bench in case of DSD Noell GMBH (supra). Therefore, respectfully following the decisions of the Coordinate Bench, as noted above, we hold that the amount in dispute is not taxable in India. Taxability of amount received towards onshore supervisory services as FTS by applying the rate of 10% on gross basis - HELD THAT:- It is a fact that the departmental authorities have treated the amount received from onshore services as FTS. Article 12(4) of the treaty deals with FTS and paragraph 2 of Article 12 provides that both royalty and FTS shall be taxed on gross basis by applying the rate of 10%. However, paragraph 5 of Article 12 carves out an exception by providing that in a case where royalty and FTS are connected with PE in the source country, then the provisions of Article 7 or Article 14 would apply. In other words, even though, the receipts are in the nature of FTS, however, if it is connected to the PE, it has to be treated as business profit under Article 7. Therefore, in our view, the departmental authorities fell into error in taxing the receipts from onshore supervisory services as FTS under Article 12(4) of the treaty on gross basis. We hold that the receipts from onshore services, being attached to the supervisory PE in India, have to be taxed on net basis under Article 7 of the treaty. As per Article 7(5) of the treaty, the business profits of the PE has to be determined by the same method year by year, unless there is good and sufficient reasons to depart from the said method. Before us assessee as submitted that the assessee has followed project completion method year by year and the department has also accepted it in all other assessment years. In fact, it is his submission that in assessment year 2014-15, the entire receipts from onshore supervisory services has been offered by the assessee and the AO has assessed it. Keeping submission of the assessee, we direct the AO to factually verify, whether the receipts in dispute were offered to tax by the assessee in assessment year 2014-15 and, in case, it is found to be so, no further addition can be made in the impugned assessment year. Ground is allowed for statistical purposes. Taxability of certain other supervisory fee in India - We find that the contracts, under which the assessee carried out onshore supervisory activities, are composite contracts involving both supply of plant and equipment, drawings and design, provision of supervisory services, erection, commissioning etc. Therefore, the services provided by the assessee, being technical in nature, receipts have to be treated as FTS under Article 12(4) of India Austria DTAA. That being the fact on record, the supervisory fee received by the assessee is taxable in India in terms of Article 12(4) of tax treaty, irrespective of the fact whether the assessee had a PE in India or not. As relying on SMS Concast AG [ 2023 (7) TMI 164 - ITAT DELHI ] the amount received clearly falls within the definition of FTS, both under the domestic law as well as under the treaty provision. Once the receipts fall within the definition of FTS under Article 12(4) of the DTAA as well as the domestic law, it becomes immaterial whether the assessee has a PE in India or not. Therefore, in our view, the amount in dispute having qualified as FTS, has rightly been brought to tax at the hands of the assessee. Decided against assessee. Taxability of reimbursement of expenses from Indian group companies as FTS - assessee had entered into a cost contribution contract with other group entities for group information and business services - HELD THAT:- Cost incurred by the assessee for providing such services are allocated by way of specific allocation key to all the group companies, including the Indian entities. The cost incurred for providing such services was invoiced to all the entities including Indian entities and the assessee received the reimbursement of cost without any market up. The issue arising before us is, whether such cost reimbursement would be taxable as FTS. In our view, what the assessee has done is, shared the expenditure incurred for running the business with all its group entities. The cost has been recovered without any markup. Therefore, there is no profit element embedded in the payments received. That being the case, the receipts cannot be treated as FTS and brought to tax in India.

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• 2024 (7) TMI 1012
  Unexplained cash credit - RTGS transfer from the assessee s bank account in IDBI bank to standard chartered bank - HELD THAT:- As transpired that there was no deposit of cash in its bank account namely Standard Chartered Bank as alleged by the revenue but there was FD made by the assessee out of the loan obtained from the bank as discussed above. Such amounts of FD cannot be treated as unexplained cash deposit as alleged by the revenue based on the AIR information. Accordingly, the same cannot be made subject to the addition. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Addition based on the bank statements has submitted that there was no cash deposit in the bank account dated 12 March 2012. The contention of the assessee has nowhere been proved wrong by the revenue by bringing contrary material. The onus lies upon the revenue to bring necessary corroborative material suggesting that there was a deposit in the bank account of the assessee. As such, merely based on the AIR information, there cannot be any addition to the total income of the assessee until and unless some corroborative materials are brought on record. But the revenue failed to do so. Accordingly, no addition is warranted to the total income of the assessee based on the AIR information. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. Addition on account of time deposits as unexplained - AO held that the assessee was required to explain the source of the time deposit even assuming such deposits were required to be made for issuance of LOC/Bank Guarantee but failed to do so - HELD THAT:- The present case, the assessee has made time deposits/ renewed time deposits and fixed deposits in its bank account out of the bank account disclosed in the books of accounts. The assessee in the year under consideration has shown operating receipts which is commensurate to the amounts of FDs made by the assessee. CIT-A rightly deleted the addition made by the AO after giving detailed reasoning explained somewhere in the preceding paragraph. DR at the time of hearing, has not brought anything contrary to the finding of the learned CIT-A. Accordingly, we do not find any reason to disturb the findings given by the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. Regarding the renewal of time deposits, we note that the word renewal itself suggests that FDs, were made by the assessee on the earlier occasion which have been matured and renewed as fixed deposits in the year under consideration. The revenue has not doubted on the original source of renewal of these time deposits. In our considered view, the renewal of time deposits cannot be questioned until and unless the original value of the FD is in doubt. The revenue has nowhere doubted the original total value of the FD, therefore in our considered view the matured value of such FD renewed in the year under consideration cannot be questioned. On this reasoning alone, the finding of the learned CIT-A is not sustainable. Renewal of FDs - The books of accounts of the assessee were duly audited and the same are not rejected by the revenue. Thus, what transpired is this that all the entries reflecting in the bank statement were duly disclosed in the audited financial statements. Furthermore, the operating income shown by the assessee for the year under consideration is sufficient to justify the source of such these FDs/ Time Deposits. Accordingly, in our considered view, the finding of the learned CITA is not sustainable. There is a double addition by the revenue with respect to certain FDs which were renewed in the year under consideration. For instance, certain FDs were made by the assessee for the 1st time in the year in dispute and the same was added by the AO to the total income of the assessee. On the maturity of such these FDs/ renewals of such FD s, the revenue has made further addition which leads to the double addition. Such double addition is not desirable under the provisions of law until and unless the provision of law warrants so. Accordingly, we are of the view that, the renewal of the FDs cannot be made subject to the addition. Addition on account of investments in the land property - We find that the cheque numbers as mentioned in sale deed duly debited in the bank of the assessee as on 22 and 23 February 2012 against the name of vendor parties. At the time of hearing, the learned DR could not controvert the facts stated above. Thus, there cannot be drawn any adverse inference against the assessee merely for the clearance of the cheques later. Hence, we set aside the finding of the ld. CITA and direct the AO to delete the addition made by him. Unexplained cash credit u/s 68 - The identity of parties/share applicant/vender/promotors has been duly established by the assessee on strength of the above document. Credit worthiness was also not in doubt as these parties were regularly filing returns of income and showing substantial income. The onus regarding the genuineness of transaction was also discharged by the assessee by furnishing the board resolution, minutes of extraordinary general meeting, ROC filing. Furthermore, the above parties have duly accounted for the transactions in their books on which offered capital gain. It is also pertinent to highlight that the transaction of land for which consideration was paid by allotting share at huge premium was between assessee company and its promotors/owner. If we lift the corporate veil, ultimately, they were still the owners of the land transferred to the assessee. Thus, in given facts and circumstances, the genuineness of the transaction was also duly established. Decided in favour of assessee.

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• 2024 (7) TMI 1011
  Allowable business expenditure- Foreign Travel Expenses - lower authorities restricting the foreign travel allowances to 50% - HELD THAT:- We are not able to draw an inference that the expenditure incurred by the assessee has co-relation with the professional activities of the assessee, for example, the assessee had claimed towards the foreign currency purchased for US Travel for 4500 USD. The said amount spent by the assessee was merely for converting Indian currency into foreign currency. However, what is required to be demonstrated by the assessee before was for what purposes, the US Dollars were spent by the assessee in U.S. but nothing was brought on record to show for what purposes the amount was spent. Similarly, the assessee had claimed another foreign currency of Rs. 1,49,578/- towards purchase of foreign currency for USA Travel Trip. However, against the nature of foreign travel, it was mentioned that the amount was spent towards fitness program but no evidence was produced by the assessee to show that amount spent towards fitness program. However, what was required to be produced by the assessee was that he had joined in fitness program of any club or at any fitness coach and had paid the said amount for that purposes. Since no evidence was brought on record by the assessee to substantiate his claim, therefore, lower authorities have rightly restricted the claim of the assessee to an extent of 50% thus making the addition. Physical Fitness Expenses - Though the physical fitness was a part and parcel of assessee s profession but it cannot be held to be incurred wholly and exclusively for the profession of the assessee. Even the assessee has not filed any evidence to show that he underwent any weight loss program to fulfill his professional commitment. Hence, we do not find any reason to interfere with the finding of ld.CIT(A) on this issue. Thus, this ground of the assessee dismissed. 20% of other expenses considered as personal expenses - No fault can be found in the reasoning of Assessing Officer / ld.CIT(A) as nature of expenses claimed by assessee comes under mixed basket of profession and personal expenses and it is not possible to segregate preciously professional with personal expenses. Hence, we do not find any reason to interfere with the decision of learned lower authorities. Thus, this ground is dismissed. Security Charges - Disallowing / upholding of 10% of security charges stating that there is personal element - As assessee has not filed any evidence to prove that these expenses are wholly and exclusively incurred for his profession. Hence, we confirm the action of AO in disallowing 10% security charges. Thus, this ground of the assessee is dismissed. 50% Swimming Pool Charges - contentions of the assessee are that he assessee has constructed swimming pool exclusively for his use on the land belonging to his sister to whom he was paying rent @ Rs.60,000/- p.m and that being a film star, he cannot use public swimming pool - If assessee constructed the pool on the land belonging to his sister itself, then obviously, there will be a probability of using the facility by his family members also. Hence, we cannot deny the involvement of personal element in this aspect. In view of the above, we do not find any reason for disagreeing with the findings of the ld.CIT(A) on this issue. Thus, this ground of the assessee is dismissed. Disallowance u/s 14A - As mentioned disallowing amount u/s 14A of the Act is fair and reasonable to cover up any expenses as such with regard to exempt income and granted part relief to the assessee. We do not find any reason for disagreeing with the findings of the ld.CIT(A) on this issue. Hence, we dismiss this ground also. Appeal of the assessee is dismissed.

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• 2024 (7) TMI 1010
  Exemption u/s 11 - treating capital receipt instead of corpus donation - assessee was not registered u/s 12A - HELD THAT:- Similar situation arose in the case of Hosanna Ministries [ 2020 (3) TMI 496 - ITAT VISAKHAPATNAM ] corpus specific voluntary contribution being in nature of capital receipt, are outside scope o income under section 2(24)(iia) and, thus same cannot be brought to tax even in case of trust not registered u/s. 12A / 12AA. Also see Serum Institute of India Research Foundation [ 2018 (2) TMI 103 - ITAT PUNE ] Decided in favour of assessee.

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• 2024 (7) TMI 992
  Short term capital loss - AO has not brought any evidence/ material on record to establish that the sale transaction is not genuine - AO has primarily swayed by the fact that within a short span of time, shares costing Rs. 4.10 crores were disposed at Rs. 42 lakh only - whether the short term capital loss claimed to have been carried forward for the assessment year 2010-11 can be disallowed by the AO holding the same to be bogus and sham? - HELD THAT:- As decided in KASHYAP SWEETNERS (P.) LTD. [ 2004 (5) TMI 250 - ITAT INDORE] notwithstanding a series of legal steps taken by an assessee, the intended legal result has not been achieved, the court might be justified in overlooking the intermediate steps, but it is not permissible for the court to treat the intervening legal step as non-est based upon some hypothetical assessment of the real motive of the assessee. An act which is otherwise valid in law cannot be treated as non-est merely on the basis of some under lying motive supposedly resulting in some economic detriment or prejudice to the national interests. Assessee tried to turn the share seller company into good performance company. The directors experience and understanding of the market also tried to be exploited. But the attempt did not gain the desired result. There is nothing illegal or illogical. The purchase of shares cannot be taken as devoid of any business acumens. The purchase of shares of loss making company and becoming the Board member of the company cannot be termed as mere attempt to purchase loss. Considering the facts and circumstances of the case, we are of the view that the addition made by AO and sustained by the CIT(A) is unjustified and deserves to be deleted. Special provision considers fair market value as full value of consideration for transfer of unquoted shares has been brought into effect from assessment year 2018-19 u/s 50CA. This section specifically provides that where consideration for transfer of unquoted shares is less than fair market value of such share determined in accordance with the prescribed manner, the fair market value shall be deemed to be the full value of consideration for the purpose of concluded income under the head capital gain . This amendment will apply from assessment year 2018-19 and subsequent assessment years. It is clear in that assessment year 2010-11 under reference that no addition can be made by resorting to Section 50CA. As u/s 48 of the I.T. Act, 1961, to calculate capital gain , costs of acquisition has to be deducted from full value of consideration. Full value of consideration means the actual consideration received and there was no provision to tinker with such full value of consideration in the impugned year. Accordingly, disallowance has no legal legs to stand upon. We direct the A.O. to delete the same. Accordingly, the appeal of the assessee is allowed.

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• Customs

• 2024 (7) TMI 1009
  Challenge to seizure memorandum, SCN and look out notice issued in respect of the managing partner of the partnership firm - mis-declaration of imported goods - HELD THAT:- On examining the show cause notice, such show cause notice was issued under sub-section 4 of Section 28 r/w Section 124 and Section 110AA of the Customs Act. It also appears that such show cause notice sets out reasons for invoking sub-section 4, including suppression of facts and wilful misstatement. Sub-section 34 of Section 2 of the Customs Act defines Proper Officer widely as meaning an officer of customs who is assigned specific functions under the Customs Act. The petitioner is unable to establish that the Commissioner of Customs does not qualify as a proper officer for purposes of initiating proceedings under sub-section 4 of Section 28 of the Customs Act. The show cause notice was issued on 30.10.2023, which prima facie appears to be within the 5 year period of limitation under sub-section 4 of Section 28. As regards the lookout notice, such look out notice should be challenged in accordance with law by a person to whom such look out notice was issued. This writ petition has been filed by the partnership firm and not by the individual to whom the lookout notice was issued. The seizure memorandum was issued on 03.11.2021 and the challenge thereto is liable to be rejected on the ground of laches. For all these reasons, the Writ Petition is not sustainable. Petition dismissed.

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• 2024 (7) TMI 1008
  Time barred SCN - Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty under Regulation 14 of the CBLR, 2018 - concealment of Red Sander wooden logs which were prohibited under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, 1975 (CITES) - violation of sub-regulations (d), (e) and (n) of Regulation 10 of CBLR, 2018 - HELD THAT:- The Commissioner in the impugned order has stated that the offence report dated 23.03.2022 was received on 01.09.2022 and the notice was issued on 13.09.2022, therefore, the notice was not beyond the stipulated time as per the CBLR, 2018. However, the appellant claimed that when the license was suspended on 25.03.2022 based on the offense report, the Commissioner cannot claim that it was received only on 13.09.2022, hence, the notice is time barred. On perusal of the Know Your Customer (KYC) form, we find that the name of the authorised decision maker is shown as Shri Shaan Basha and the signature of the authorised signatory is by Shri Shaan Basha himself on behalf of Zain Trading and it is also on record that the Managing Partner Shri Benny Francis admitted to the fact that they had not verified the identity of the exporter or functioning of the exporter at the declared address nor they contacted the exporter - The Commissioner in the impugned order has also noted that the appellant had been punished number of times for violation of the CBLR Regulations and specifically found that he had filed Bills of Entry for export of Red Sander Logs knowing well it is a prohibited item. There are no reason to disagree with the Commissioner s order in revoking the license. However, taking into consideration the fact that the appellant has 23 employees working all over the branches, the revocation of the license has affected the employees of their source of livelihood; the license has been revoked on 15.12.2022 and thus for almost 18 months the livelihood of these employees has suffered - Considering these facts and the fact that the appellant cannot be disabled permanently so as to deprive him and his employees their source of livelihood; in the interest of justice, the revocation is set aside; however, forfeiture of entire amount of security deposit and imposition of penalty of Rs.50,000/- under Regulation 14 read with Regulation 18(1) of CBLR 18 is upheld. Appeal allowed in part.

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• 2024 (7) TMI 1007
  100% EOU - Classification of imported goods - Indonesia Robusta Coffee Beans 30/70 - to be classified under Customs Tariff Heading 09011149 or under CTH 09019010? - HELD THAT:- The very same issue came up before this Tribunal in Artistic Stone (P) Ltd. Versus Commissioner of Customs, Kandla [ 2006 (8) TMI 451 - CESTAT, NEW DELHI ] and it is held that it is for the concerned authority under Special Economic Zone to consider the request of the EOU to import raw materials suitable for manufacture of export products and to ensure fulfilment of export obligations as per the norms issued from time to time and accordingly, remanded the matter to allow the appellant to produce amended procurement certificate from the concerned authorities under Rule 5(1)(a) of the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. This Tribunal has earlier considered the issue and when there is an allegation of change of description and HSN code, the matter was remanded to adjudication authority with a direction to the importer to produce amended procurement certificate from the concerned authority. Considering the provisions, if there is change of description from declaration made by the importer, an opportunity should have been extended to the importer to accordingly obtain the amended procurement certificate from competent authority rather than ordering confiscation of the goods. The impugned order is set aside and the case is remanded to the Commissioner for de-novo adjudication. In case the Appellant is not satisfied with the test report relied by the Adjudication Authority, respondent is directed to extend an opportunity to re-test the samples through another accredited agency - appeal disposed off by way of remand.

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• 2024 (7) TMI 1006
  Valuation of imported goods - undervaluation and mis-declaration - mis-declaration regarding description and quantity of the goods - HELD THAT:- It is an admitted fact that there is misdeclaration made by the Appellant regarding description and quantity of goods. Thus, goods found in excess are liable for confiscation for such misdeclaration. However, misdeclaration of description and value of declared goods and misdeclaration of the excess quantity of goods has to be considered, separately. As submitted by the learned counsel during hearing, by relying on the letter purported to have been written by the Appellant during investigation, whether it is forcefully obtained from the appellant or otherwise cannot be a basis for valuation. There is no proper investigation conducted by the investigating officer to find out the actual transaction value by following proper method of valuation including value of contemporaneous import. In the absence of any admissible evidence regarding contemporaneous import, there is no reason or justification to reject the value declared for the goods, which are declared in the Bill of Entry. In support of the method adopted, adjudicating authority held that the invoice dated 17.11.2011 presented does not represent the consignment as it cannot be co-related to these goods. As regards the valuation of 140 cartons found in excess during examination related to co-axial cooper cables, the Appellant has not declared the same item at the time of filing the Bill of Entry and also not furnished any admissible evidence regarding the value. Though they have produced a letter from overseas supplier, stating that we have already confirmed the value of copper carton RG6 steel cables to US dollar 3.58*(100m) as per our Performa invoice No. 909/11 dated 24.10.2011 , no such Performa invoice was produced during investigation or while submitting reply to the show cause notice. Facts being so, in the absence of any evidence regarding actual transaction value relating to the 140 cartons, the value of Rs.3,56,510/- as determined by the Adjudicating authority as the assessable value, upheld. The impugned order is modified to the extent of upholding the value declared by the Appellant for the 560 cartons of RG6 co-axial steel cables as assessable value, upholding assessable value of excess 140 cartons of co-axial copper cables as Rs.3,56,510/- as assessed by the adjudication authority and the redemption fine is reduced to Rs.35,000/- and penalty reduced to Rs.20,000/-. Appeal allowed in part.

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• Insolvency & Bankruptcy

• 2024 (7) TMI 1005
  Validity of SCN - petitioner No. 1 has been addressed as an Ex Independent Director - certain acts of financial irregularities have been committed by the petitioner on different dates during the period from November, 2014 to 31st March 2017 - HELD THAT:- The decision in the case of Shantanu Prakash [ 2024 (5) TMI 1323 - DELHI HIGH COURT ], heavily relied upon by the learned counsel for the respondent, was one wherein this Court reiterated the decision in the case of Rajesh Agarwal [ 2023 (3) TMI 1205 - SUPREME COURT ] and the petitioner, who was also an Ex-Director and a guarantor of the company, had availed various credit facilities from consortium of banks, of which the respondent banks were also members and it was found that there was not only a violation of the principles of nature justice inasmuch as relevant documents were not supplied to the petitioner, but also that the petitioner was not given any opportunity before classifying his accounts as fraud - this Court passed directions against the respondents to allow the petitioner and/or authorized representative to inspect the records of the company besides the records which are available and in possession of the IRP and once that bridge was passed, the petitioner was called upon to make representation and to be afforded an opportunity of hearing before passing appropriate directions. It is apparent that despite a clean chit given by the forensic auditor and the fact that the CIRP proceedings had been initiated from 20.04.2018, coupled with the fact that the petitioner No. 1 is described as Ex. Independent Director, a prima-facie ground is made that the impugned SCN is vulnerable in law. Further, the copies of the documents which have been relied upon, have not been supplied. The respondent is also duty bound to supply the report of the forensic audit conducted against it so as to consider what changes in the circumstances, if any, were brought out and in what manner if at all, the report was found to be not correct or unreliable. This Court finds that this is a fit case for issuance of notice and the same is apparently accepted by learned counsel for the respondent. Let a reply be filed within four weeks from today. Respondent is further directed to place on record the complete report of the forensic audit conducted by Grant Thornton LLP. Re-notify on 20.08.2024 - the operation of impugned SCN dated 19.06.2024 shall remain in abeyance.

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• 2024 (7) TMI 1004
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Applicability of Section 10A of the Insolvency and Bankruptcy Code (IBC) - whether any operational debt qua the Corporate Debtor has been proven to have become due and payable and if there has been a default in the payment thereof and whether there is any pre-existing dispute between the parties? - HELD THAT:- The Adjudicating Authority had applied its mind while considering the contention of the Appellant that the Respondent s claim of payments having been made by them was false. However, this contention of the Appellant was not found sustainable by the Adjudicating Authority and held to be a mere sweeping statement by the Appellant for reasons of being unsubstantiated with supporting documents. It is also notice that the Adjudicating Authority has noticed contradiction in the pleadings made by the Operational Creditor with regard to outstanding payments and the ledger account of the Corporate Debtor maintained by the Operational Creditor in their books of account which reflect that payments have been made by the Corporate Debtor. In the absence of any credible proof put forth by the Operational Creditor to controvert the contention of the Corporate Debtor that the entire debt has been cleared and that there was no default, we have no reason to disagree with the above findings of the Adjudicating Authority that the allegations of debt and default raised by the Appellant is facile and lacks substance. The aim and objective of Section 10A was to protect a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing - The Adjudicating Authority has opined that even though the invoice was issued one day prior to the commencement of prohibited period under Section 10A, it cannot escape the clutches of Section 10A since the date of issue of invoice cannot become the date of default since nothing has been placed on record by the Operational Creditor to show that the invoice had been delivered to the Corporate Debtor on the same date. Mere insertion of any date in the Section 8 demand notice or in the Section 9 application does not make that date of default valid and binding especially when there is no agreement between the two parties as to what shall constitute an event of default. In the absence of any agreement available on record, the alleged date of default cannot be whimsically and arbitrarily decided by the Operational Creditor. The Operational Creditor needs to be put to strict proof to establish the date of default. Neither in their pleadings nor in the course of oral arguments, any evidence has been placed on record by the Appellant to show how the default qua the third invoice did not arise during the Section 10A prohibited period. The debt and default above the threshold limit has not been established by the Appellant qua the Respondent - the Section 9 application has been filed with malicious intent to settle score between members of the family and not for the resolution of insolvency - the decision of the Adjudicating Authority rejecting the Section 9 application and imposing penalty of Rs. one lakh only upon the Appellant is affirmed - appeal dismissed.

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• PMLA

• 2024 (7) TMI 1003
  Rejection of bail - Money Laundering - whether there are reasonable grounds for pleading before and impressing this court that the petitioner is not guilty of such offence, and he is not likely to commit any offence while on bail? - it was held by High Court that 'The petitioner is hereby granted bail subject to the terms and conditions of furnishing personal bond to the tune of rupees ten lacs to the satisfaction of the Superintendent of Jail concerned and surety bond of two sureties of like amount to the satisfaction of Registrar Judicial, Srinagar of this court' - HELD THAT:- It is not required to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed.

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• Service Tax

• 2024 (7) TMI 1002
  Classification of services - Online Information and Data base Access or Retrieval services or not - Place of Provision of Services - whether services provided by the Appellant during the period 01.04.2015 to 30.11.2016 were classifiable under category of OIDAR? - HELD THAT:- In the present case, it is found that Search Engine Optimization service was provided by the Appellant, which is a process whereby client s website visibility in search engines like, Google, Microsoft Bing etc. is increased. The process optimize search engine results of the client s website. After processing of the website, it is uploaded to client s server. Website visibility is commonly measured by the placement or ranking of the site on search engine results pages. The above process of search engine optimization is not providing any information and database for retrieval but it is a technological change in website of the client to rank it higher for prospective customers of the client who desires to know about the product or service of the client. Job of the Appellant is limited only to process of website of the client. It is not covered under OIDAR service as in the said process no information is provided for database access or retrieval. It is an improvement process of the website of the client to keep it on higher ranking. The Appellant does not have any relationship with any viewer, i.e., the person who retrieves or accesses data. The Appellant simple setting up campaign on the Google site hired by its client who uses them for further purposes. OIDAR services are those services which can be accessed by anyone all over the globe. In the instant case, the Appellant provides service only to specific person who in turn uses the same for viewers of world. The nature of service is more akin to Business Support Service. Hence, services in question are not under OIDAR category. The Appellant is also engaged in development of Mobile apps and web design development activities for its clients. Mobile application development is the process of making software for smart phones, tablets and digital assistants. The software can be preinstalled on the device, downloaded from a mobile app store or accessed through a mobile web browser. It is not an information and database for retrieval but it is software development activities for further operation. Hence the same cannot be classified under OIDAR. Once the classification of said services is not covered under OIDAR services, the place of provision in respect of service being rendered by the Appellant is outside India in respect of which export has been claimed. The place of provision Rule 9(b) of the POPS Rules, 2002 would not be applicable in the present case. The impugned order is set aside - appeal allowed.

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• 2024 (7) TMI 1001
  Cenvat Credit of Service Tax - input service - credit for rendering output service, paid for the insurance service provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC) to them for insuring the deposits of the public with them by considering it as an input service - HELD THAT:- Larger Bench of the Tribunal has been constituted in the matter of M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [ 2020 (6) TMI 278 - CESTAT BANGALORE - LB] to resolve whether the banks can avail Cenvat Credit of Service Tax paid by the banks for the service provided by the Deposit Insurance and Credit Guarantee Corporation. The Larger Bench of the Tribunal examined at length the provisions of the Finance Act, Cenvat Credit Rules, the Deposit Insurance Act and the Regulations and it also considered the decision of the Hon'ble High Court of Karnataka in the matter of THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX CUSTOMS, BANGALORE (ADJUDICATION) , THE COMMISSIONER OF SERVICE TAX VERSUS M/S. PNB METLIFE INDIA INSURANCE CO. LTD. [ 2015 (5) TMI 68 - KARNATAKA HIGH COURT] . After examining, the Larger Bench of the Tribunal in South Indian Bank observed that the service rendered by the Deposit Insurance and Credit Guarantee Corporation to the banks would fall in the main part of the definition in input service , which is any service used by a provider of output service for providing an output service and so once this falls in the main definition of input service it would not be necessary to examine whether the service would be covered by the inclusive part of the definition. Appellant are eligible to avail Cenvat Credit of the Service Tax paid by them to the Deposit Insurance and Credit Guarantee Corporation for insurance service provided by the said Corporation - the impugned orders are set aside - appeal allowed.

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• 2024 (7) TMI 1000
  Exemption from service tax - services by way of motor vehicle parking facility to general public - applicability of Sl No 24 of N/N. 25/2012-ST dated 01.07.2012 - HELD THAT:- The agreement between the appellant and its contractor is in nature of license to provide parking facilities to general public on behalf of the Appellant i.e. Railway at the specified locations. Contractor is not extended any tenancy rights over the land and hence the said agreement cannot be said to be lease agreement for the land to be used for providing the parking facilities. The leasing of land for providing parking facilities is as such excluded from the Sl No 24 of the N/N. 25/2012-ST. From perusal of the affidavit filed by some Senior officer, it is quite evident that across the North Central Zone, the service tax was not collected by the railway authorities in respect of similar facilities provided any where. It also appears that no demand were also made, in any other jursidiction by the concerned revenue authorities, thereby extending the benefit of exemption under N/N. 25/2012-ST in respect of same services. There are no merits in the impugned order - appeal allowed.

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• 2024 (7) TMI 999
  Taxability - renting of DG Sets - supply of tangible goods for use service - period from 01.07.2012 onwards - HELD THAT:- In the appellant s own case [ 2023 (9) TMI 868 - CESTAT AHMEDABAD ] for the period before 01.07.2012, this Tribunal has passed the order holding that leasing of DG Set does not amount to service under tangible goods for use. It is clear that in the appellant s own case, their activity does not fall under the supply of tangible goods for use, particularly for the reason that transaction is in the nature of deemed sale under article 366 (29A) of Constitution of India. Though the period involved is post 01.07.2012, and the definition of individual service was done away however even considering the statutory provisions post 01.07.2012, the deemed sale under article 366 (29A), continues to be excluded from the purview of service tax. Therefore, though the above decision is for the period 01.07.2012 but on the point that activity is deemed sale, is clearly applicable even in the present case also. Their activity of leasing of DG Sets in the present case is not liable to service tax - the impugned order is set-aside - appeal allowed.

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• 2024 (7) TMI 998
  Refund claim - refund claim was rejected by the adjudicating authority holding that the impugned service cannot be deemed to have been covered by the negative list in section 66D of Finance Act 1994 nor exempted by the said notification in this case - HELD THAT:- All the documents reproduced except MOU are referred in the show cause notice. MOU has been produced by the appellant along with their appeal filed and have been relied by them for claiming that the burden of tax has not been passed on to the service recipient at time of hearing. From the documents, it is quite evident that appellant had been providing services only to SOLCIL for which they raised invoices on them and received payment from them. They were providing the services as business associate of SOLCIL and were paying the service tax after obtaining registration under the category of business auxiliary service. Neither the entry at Sl. No 9 in the Notification No 25/2012-ST nor the Circular No 172/7/2013, provides for any exemption or clarifies in respect of the Business Auxiliary Services Provided by the appellant to their service recipient i.e. SOLCIL. Both the service provider and service recipient are located in taxable territory and thus the service tax has been correctly levied on the services provided by the appellant to SOLCIL. Appellant has not provided any services in nature of auxiliary education services to any educational institution either in India or outside, for claiming the benefit of exemption under Notification No 25/2012-ST (S No 9). Both the authorities have concluded that the exemption claimed by the appellant is not admissible to them. Appellant has not come with clarity to specify the reason for claiming the exemption and refund even in the appeal filed. As observed earlier service tax is transaction based levy and should be determined only after examining the terms of agreement between the service provider and service recipient - Appellant having failed to clarify in respect of exact nature of transaction before the authorities below, there are no perversity or illegality in rejection of the refund claim filed. The impugned order upheld rejecting the refund claim filed by the appellant.

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• 2024 (7) TMI 997
  Service tax on ocean freight - Constitutional validity of N/N. 15/2017-ST and 16/2017-ST making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting explanation-V to reverse charge N/N. 30/2012-ST - Service tax on sea transportation service in CIF contracts - HELD THAT:- The issue is no longer res-integra and has been decided by the Hon ble Gujarat High Court in case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] . In fact the matter was decided by the First Appellate authority following the said decision. This position has been admitted by the revenue in the appeal filed. This appeal ahs been filed mainly for the reason that revenue contemplates to challenge the order of Hon ble Gujarat High Court before Hon ble Supreme Court. The SLP filed by revenue bearing Diary No 27023 of 2020 against the order of Hon ble High Court is still pending admission. In absence of any admission or stay from Hon ble Supreme Court there is no appropriate reason for not following the judicial precedent available in form of the order Hon ble Gujarat High Court. Instructions issued by the CBIC to its officer cannot be a reason for not following the well settled principles of judicial discipline and precedence - In any case the impugned order which relies on the said order of Hon ble Gujarat High Court can be faulted for this reason. There are no merits in the appeal filed by the Revenue - appeal filed by Revenue is dismissed.

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• 2024 (7) TMI 996
  Failure to pay appropriate service tax - Commercial or Industrial Construction Service (CICS) - works of composite nature - period prior to 1.7.2012 - construction of a commercial complex or not - HELD THAT:- As per the quantification of service tax, the appellant has been given 67% abatement. This would show that the contracts are composite in nature involving supply of materials as well as rendition of services. The demand under such composite contracts can only be made under the category of WCS. The Tribunal in the case of Real Value Promoters Pvt. Ltd. [ 2018 (9) TMI 1149 - CESTAT CHENNAI] had considered the issue as to whether the demand made under CICS / RCS / CCS can sustain for the period prior to 1.7.2012 for composite contracts. The said decision was followed by the Tribunal in the case of Jain Housing Construction Ltd. [ 2023 (2) TMI 1044 - CESTAT CHENNAI] whereby the Tribunal set aside the demand following the decision in the case of Real Value Promoters Pvt. Ltd. The demand cannot sustain. In the result, the impugned order is set aside - Appeal allowed.

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• Central Excise

• 2024 (7) TMI 995
  Denial of CENVAT Credit - supplies made against International Competitive Bidding - goods manufactured in Maneja - Sub-Rule (6) of the Rule 6 of CCR, 2004 - HELD THAT:- It is clear from exception from Rule 6 of CCR, 2004 that where the goods are obtained for a contract which is obtained under International Competitive Bidding, and where the imports of such goods are totally exempted from basic and Additional Customs Duty, the Cenvat Credit availed also need not be reversed in terms of Rule 6(6) of the Cenvat Credit Rules, 2004. The adjudicating authority has raised doubts about the use of all the goods supplied by the Maneja plant to the Savli plant being in the nature of the goods supplied in connection with the contract with DMRC. From the perusal of the appeal memorandum and synopsis submitted by the appellant, it is seen that this ground has not been contested. No specific evidence has been produced to establish that all the goods supplied by the appellant to their plant at Savli related solely to supplies with respect to DMRC contract. The questions have not been answered in the appeal memorandum or in the synopsis, it is required to remand the matter back to the original adjudicating authority to give an opportunity to appellant to clarify this aspect. The appellant are liberty to submit all the evidences in support of the claim that the all goods supplied by them were indeed in the nature of supplies made for the fulfilment of the contract obtained from DMRC under International Competitive Bidding from their other factory. If such evidence is produced, the benefit of Rule 6 (6) of the CCR will be extended to the appellant. Appeal allowed by way of remand for fresh adjudication.

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• 2024 (7) TMI 994
  Clandestine Removal - trading of goods and/or clearance of inputs as such or not - denial of CENVAT Credit - Liability to pay the duty, Interest, and penalty in connection with clearance of goods for the period from FY 2007-08 to 2011-12 - time limitation. Demand of differential duty demand of Rs. 40,70,142/- - Appellant has contended that while transporting goods to depot, Appellant had paid Octroi and Municipal Cess and also given discount to the various buyers while selling of the goods from depot - HELD THAT:- It is settled law that in terms of statutory provisions and decision, show that deductions claimed from assessable value must be actual and not artificial - there are force in appellant s submission that amount of discounts from price passed on to its customers and Octroi/ Cess paid by it to NMMC is required to be deducted from assessable value of goods. Various decisions relied upon by the Appellant on this aspect supports their submissions. Consequently, considering Octroi and Municipal Cess paid by Appellant and the discount given to the various buyers by Appellant, the net amount of duty difference payable Rs. 3,81,322/- is also accepted by Appellant in their written submissions as against confirmation of duty demand of Rs. 40,70,142/- by the Commissioner under the impugned order - the Appellant is liable to pay the differential duty of Rs. 3,81,322/- along with interest and penalty and Appellant would also be eligible for reduced penalty @ 25 % of the duty demand, subject to the condition that Appellant pay the differential duty Rs. 3,81,322/- with interest and reduced penalty @ 25 % of duty is also paid within 30 days of communication of this Order. This differential duty of Rs. 3,81,322/- with interest and reduced penalty @ 25 % payable may also be deducted from the amounts deposited during the proceedings which is appropriated by O-I-O. Duty demand of Rs. 43,19,238/- confirmed on clearance of showers holding that the same were cleared as such after import and the process carried out thereon after import does not amount to manufacture - HELD THAT:- The definition of manufacture under Central Excise Act, 1944 is very wide and includes any process incidental or ancillary to the completion of a manufactured product. The process carried out by the Appellant on subject goods was incidental and ancillary for making the product marketable in India. Thus, it would amount to manufacture and hence demand of duty Rs. 43,19,238/- is not sustainable - In the case of Shital Industries vs CCE, Ahmedabad-II [ 2024 (6) TMI 1261 - CESTAT AHMEDABAD] , this Tribunal has held that the Rule 16 of Central Excise Rules 2002 unambiguously provide that if an assessee even does not carry out manufacturing activity but carried out any activity whether the same is amount to manufacture or not manufacture, assessee can avail Cenvat credit on the duty paid goods received in the factory. And after any process, if it is cleared from the factory, in case of activity amount to manufacture it is cleared on payment of duty on the transaction value and if the activity does not amount to manufacture then the same is cleared on payment of duty equivalent to the Cenvat credit. Thus, the transactions of appellant are covered by the provision of Rule 16 of Central Excise Rules, 2002 - the demand of duty Rs. 43,19,238/- is not sustainable. As the final product shower head was cleared on payment of duty and such duty amount was also recovered by the Appellant as per the law and therefore, the payment of duty on goods can not be considered as deposited in terms of Section 11D of Central Excise Act 1944. Cenvat Credit demand of Rs. 27,61,517/- in respect of Cenvat credit taken for Additional Duty of Customs (CVD) paid on import of such parts of shower head as per law - HELD THAT:- It is observed that it is not open for Revenue to demand duty of Rs. 43,19,238/- for clearance of final product on one hand and demand of Rs. 27,61,517/- under Rule 14 of the Cenvat Credit Rules 2004 for Cenvat Credit contained in those very goods, on the other hand. It is also settled law that demand of duty on final product and also on inputs contained therein is impermissible. Duty demand of Rs. 3,12,373/- on alleged Clandestine Clearance of Goods - HELD THAT:- The demand is based on confessional statements which have not been taken on record since the provisions of section 9D of Central Excise Act 1944 not followed in this matter. There are force in the submissions of Appellant on this ground. It is also found that demand on the basis of certain private records viz. dispatch Register recovered during search are not supported by any other corroborative clinching evidence not sustainable - since there is no evidence to support clandestine clearance of goods without payment of duty, confirmation of demand of duty amounting to Rs. 3,12,373/- also is not sustainable as we set aside the same. Penalty imposed under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- Since major/substantial demand of duty with interest penalty is set aside, separate penalty imposed under Rule 26 of Central Excise Rules, 2002 on the co-Appellants Shri Shri Hemantkumar N. Shah, Director and Shri Kalpesh M. Sapa, Ex-Dy. Manager is not warranted and deserves to be set aside, and is set aside. The differential duty of Rs. 3,81,322/- with interest and penalty are upheld. Remaining duty demands with interest and Penalty are set aside - Appeals are partially allowed.

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• CST, VAT & Sales Tax

• 2024 (7) TMI 993
  Disallowance of belated claim of Input Tax Credit - disallowance on the ground that, such belated claims for the Input Tax Credit could not be entertained - applicability of Section 10 (3) of the KVAT Act - State Appellate Tribunal allowed the claim - HELD THAT:- In the present case, taking note of the law laid down by the Division Bench in the BHARAT EARTH MOVERS LIMITED VERSUS THE STATE OF KARNATAKA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES BANGALORE [ 2023 (1) TMI 341 - KARNATAKA HIGH COURT] clearly holding that the right to claim Input Tax Credit is a indefeasible right and no time limit is prescribed under Section 10 (3) of the KVAT Act for availing Input Tax Credit, no exception could be taken for entertaining belated claims. There are no question of law arising that requires admission of the revision petition - revision disposed off.

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