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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 23, 2024 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST High Court dismissed challenge to 100% penalty order u/s 74 GST law. Limited scope under Art 226. No relief. Raise grievances via appellate remedy. Visit to Get Source Tax liability of legal rep under CGST Act questioned. Court quashed order, remitted case for fresh hearing allowing petitioner to defend. Visit to Get Source Notices/endorsements issued to non-existent entity quashed. Respondents free to pursue proceedings against appropriate entity as per law. Visit to Get Source EOU entitled to IGST refund u/r 89 on exports, not u/r 96. Procedural lapses can't deny legitimate export incentives. Order set aside. Visit to Get Source Navaratan Oil, Gold Turmeric Cream classified as drugs; Boroplus Cream as drug, not cosmetic; Sonachandi Chavanprash not a drug Visit to Get Source Tax demand quashed due to lack of natural justice. Petitioner to remit 10% tax within 2 weeks for reconsideration. Visit to Get Source Refund application dismissed. Option to pay or contest seizure. Chose payment, skipping adjudication. Delayed 7 years after release. Visit to Get Source ITC denied on commodities & cancelled dealers' supplies. Petitioner showed invoices, bills & returns. Order lacked findings, wrongly demanded lorry receipts. HC remanded, allowed fresh reply. Visit to Get Source Delay in filing appeal rejected, mismatch in GSTR returns. HC directs appellate authority to consider appeal on merits if re-presented within 10 days. Visit to Get Source Income Tax Tribunal dismissed appeal ex-parte; HC found no fault of assessee, remanded appeal back for fresh hearing on merits. Visit to Get Source Assessee's real estate income estimated at 8% turnover. 40% receipts allowed as agricultural income due to lack of documentation. Appeal partly allowed. Visit to Get Source Monetary limit not breached for 2006-07 to 2010-11, appeals dismissed. For 2011-12 & 2012-13, exemption u/s 12AA allowed. Visit to Get Source Reopening invalid: Unverified info, retracted statement, no independent inquiry. AO failed to verify evidence. Mere suspicion, no legal basis. Visit to Get Source Income duly accounted, corroborated by audits & returns. No unexplained investments/expenses. Rent, contractor payments substantiated. CIT(A) & ITAT upheld assessee's stand. Visit to Get Source Disallowances u/s 40(a)(ia) partly upheld. Arm's length pricing adjustments directed. Education cess disallowed. Stock exchange charges allowed. Visit to Get Source Reopening beyond 4 yrs invalid due to lack of evidence of non-disclosure. Deemed dividend u/s 2(22)(e) not required to be declared. Visit to Get Source Deduction u/s 57 against income u/s 56 disputed. Expenses apportionment challenged. Remanded to verify assessee's formula consistency. If consistent, no addition. Visit to Get Source Charitable entity granted exemption u/ss 11 & 12 for conducting exhibitions sans commercial intent. Accumulation sans Form 10 condoned. Prior period expenditure allowed. Visit to Get Source Interest/dividend income from co-op banks deductible u/s 80P(2)(d) for co-op societies. Allow deduction for interest earned from co-op banks. Visit to Get Source Customs Govt imposes 17.57% countervailing duty on radial tyres above 16" for buses/trucks from China for 5 yrs to protect domestic industry. Visit to Get Source Duty credit extended to SEZ units exporting under RoDTEP Scheme. Shipping bill/export bill required from 1st July 2024. Visit to Get Source Bail granted despite recovery of diamonds & foreign currencies due to non-communication of grounds in known language, violating Art. 22(5). (5) Visit to Get Source Iron ore export duty paid excess, Fe content <62% on WMT basis. Refund ordered as per precedents. Impugned orders set aside. Visit to Get Source Helicopter import exempted from customs duty under condition 104 if used for non-scheduled air transport services. Visit to Get Source Refund claim not barred by limitation if paid under protest. Sec 27 recognizes protest payment, not vacation. Excludes penalty/fine refunds. Visit to Get Source Indian Laws Concession agreement is a lease, stamp duty payable on lessee's amount spent, not entire project cost. Amendment valid. Visit to Get Source Broker sought bail in fake Demat accounts case. Court: No direct role proven, granted bail after 5 months custody on conditions. Visit to Get Source IBC Dismissal of salary arrears claim for 103 employees. No double payment. RP not liable for CoC-approved payments during CIRP. Visit to Get Source PMLA Reporting entities must obtain KYC Identifier, retrieve & update KYC records from Central Registry for client due diligence. Visit to Get Source SEBI SEBI amends AIF Regulations, adds new chapter for migrated venture capital funds with eligibility criteria, investment norms & restrictions. Visit to Get Source Master Circular regulates ESG Rating Providers. Specifies requirements, obligations. Board responsible for compliance. Visit to Get Source SEBI allows ESG Rating Providers to rate products/issuers in IFSC under IFSCA guidelines. Aims to protect investors & promote market. Visit to Get Source SEBI allows CRAs to rate under IFSCA norms. IFSCA to oversee CRAs' IFSC ops, complaints & enforcement. Effective immediately. Visit to Get Source Service Tax Drilling bore wells for agriculturists claimed exemption under negative list. Court upheld revenue's jurisdiction to issue show cause notice invoking extended period after inquiry. Visit to Get Source Central Excise Reversal of Cenvat credit for exempted goods with interest allowed; Revenue can't demand 10% of exempted value if opted for reversal. Visit to Get Source Excess duty refund denied due to unjust enrichment. Appellants failed to prove non-passing of excess duty to customers. Visit to Get Source VAT Tribunal order quashed for violating natural justice. Delay grounds ignored. Rehearing ordered on lack of order communication. Visit to Get Source Articles MEETINGS OF CREDITORS AND CONTRIBUTORIES (WINDING UP BY TRIBUNAL – VI) Fresh Opportunity of hearing be granted when guidelines prescribed in Circular relating to discrepancies in Form GSTR-3B and Form GSTR-2A for claiming of ITC has not been complied with Notifications GST - States 32/2023-State Tax - dated 18-7-2024 - Delhi SGST Exempt the registered person whose aggregate turnover in FY 2023-24 is upto Rs. two crores, from filing annual return for the said financial year 04/2024 - State Tax (Rate) - dated 15-7-2024 - Gujarat SGST Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017 03/2024 - State Tax (Rate) - dated 15-7-2024 - Gujarat SGST Amendment in Notification No. 2/2017-State Tax (Rate) dated the 30th June, 2017 02/2024 - State Tax (Rate) - dated 15-7-2024 - Gujarat SGST Amendment in Notification No. 1/2017-State Tax (Rate) dated the 30th June, 2017 19/GST-2 - dated 19-7-2024 - Haryana SGST Notification under first proviso to section 44 to exempt the registered person whose aggregate turnover in the financial year 2023-24 is up to two crore rupees, from filing annual return for the said financial year under the HGST Act, 2017 F.12(1)FD/Tax/2024-89 - dated 19-7-2024 - Rajasthan SGST Seeks to amend the Notification No. F.12(56)FD/Tax/2017-Pt-II-117 dated 20.09.2018 regarding reduction of rate of TCS Income Tax 88/2024 - dated 18-7-2024 - IT Amendment in Notification No. 02/2023 dated 25th January, 2023 - Extension of exemption u/s 10(23FE) - the pension fund, namely, the California Public Employees Retirement System 87/2024 - dated 18-7-2024 - IT Amendment in Notification No. 128/2022 dated 28th December, 2022 - Extension of exemption u/s 10(23FE) - the pension fund, namely, 1000242244 Ontario Inc. 86/2024 - dated 18-7-2024 - IT Amendment in Notification No. 125/2022 dated 16th November, 2022 - Extension of exemption u/s 10(23FE) - the sovereign wealth fund, namely, Public Investment Fund 77/2024 - dated 18-7-2024 - IT Amendment in Notification No. 130 /2021 dated 2nd November, 2021 - Extension of exemption u/s 10(23FE) - the pension fund, namely, the School Employees Retirement System of Ohio 76/2024 - dated 18-7-2024 - IT Amendment in Notification No. 114/2021 dated 20th September, 2021 - Extension of exemption u/s 10(23FE) - the pension fund, namely, the BCI IRR India Holdings Inc. 75/2024 - dated 18-7-2024 - IT Amendment in Notification No. 112/2021 dated 16th September, 2021 - Extension of exemption u/s 10(23FE) - the pension fund, namely, the 2726522 Ontario Limited 74/2024 - dated 18-7-2024 - IT Amendment in Notification No. 111/2021 dated 16th September, 2021 - Extension of exemption u/s 10(23FE) - the pension fund, namely, 2452991 Ontario Limited Money Laundering G.S.R. 419 (E) - dated 19-7-2024 - PMLA Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2024 - Rule 9 - Client Due Diligence SEBI SEBI/LAD-NRO/GN/2024/194 - dated 11-7-2024 - SEBI Securities and Exchange Board of India (Alternative Investment Funds) (Third Amendment) Regulations, 2024 SEZ S.O. 2869 (E) - dated 15-7-2024 - SEZ Central Government de-notifies an area of 1.78 hectares, thereby making resultant area as 9.09 hectares at Sadaramangala/Pattandur Agrahara, International Tech Park, Whitefield Road, Bangalore, Karnataka News Refund of tax paid on Inward supply of goods by Canteen Store Department (FORM GST RFD 10A) Webinar on “Budgetary Schemes for 2024–25 : Strengthening Justice delivery - Strengthening India” to be organised on coming Wednesday (24th July 2024) INDIA’S REAL GDP PROJECTED TO GROW BETWEEN 6.5–7 PER CENT IN 2024-25 ECONOMIC SURVEY CONSERVATIVELY PROJECTS A REAL GDP GROWTH OF 6.5–7 PER CENT IN FY25 PREFACE OF ECONOMIC SURVEY 2023-24 CALLS FOR STEERING THE COUNTRY THROUGH MULTIPLE COMPACTS AND CONSENSUS WITH GOVERNMENTS, PRIVATE SECTOR AND ACADMIA SUSTAINING AND ACCELERATING INDIA'S PROGRESS IN THE FACE OF EVOLVING CHALLENGES REQUIRES DEDICATED INVESTMENT IN STATE MACHINERY TO REINVENT AND REINVIGORATE ITSELF - ECONOMIC SURVEY 2023-24 INFRASTRUCTURE EXPANSION IN INDIA WITNESSES SIGNIFICANT GROWTH IN RECENT YEARS: ECONOMIC SURVEY 2023-24 INDIAN ECONOMY NEEDS TO GENERATE NEARLY 78.5 LAKH JOBS ANNUALLY IN THE NON-FARM SECTOR UNTIL 2030 TO CATER TO THE RISING WORKFORCE INDIAN LABOUR MARKET WITNESSES IMPROVEMENT IN LAST SIX YEARS WITH THE UNEMPLOYMENT RATE DECLINING TO 3.2 PER CENT IN 2022-23 STELLAR PERFORMACE OF INDIA’s BANKING AND FINANCIAL SECTOR AMIDST GLOBAL HEADWINDS INDIA’S EXTERNAL SECTOR SHOWS RESILIENCE AMIDST GEOPOLITICAL HEADWINDS GOVERNMENT'S PRUDENT MONETARY & TRADE POLICY SUPPORTED BY STRONG OUTPUT GROWTH REDUCES RETAIL INFLATION TO A FOUR-YEAR LOW OF 5.4% IN FY24 INDIAN AGRICULTURE SECTOR IS A SUCCESS STORY: ECONOMIC SURVEY 2023-24 GROSS CAPITAL FORMATION (GCF) OF AGRICULTURE SECTOR GROWS AT THE RATE OF 19.04 PER CENT IN 2022-23: ECONOMIC SURVEY AGRICULTURE SECTOR HAS REGISTERED AN AVERAGE ANNUAL GROWTH RATE OF 4.18 PER CENT OVER THE LAST FIVE YEARS : ECONOMIC SURVEY ALLIED SECTORS OF INDIAN AGRICULTURE HAV EMERGED AS PROMISING SOURCES FOR IMPROVING FARM INCOMES: ECONOMIC SURVEY 9.5 PERCENT GROWTH IN INDUSTRIAL SECTOR GOVERNMENT SOCIAL SECTOR SPENDING SHOWS RISING TREND SINCE 2016, STATES ECONOMIC SURVEY 2023-24 EXPENDITURE ON SOCIAL SERVICES INCREASED FROM 6.7 % OF GDP IN 2017-18 TO 7.8 % of GDP IN 2023-24 HEALTH SECTOR VITAL FOR RESILIENT ECONOMY, STATES ECONOMIC SURVEY 2024 HEALTHCARE BECOMES MORE AFFORDABLE AND ACCESSIBLE OVER THE PAST FEW YEARS ECONOMIC SURVEY 2024 ADDRESSES MENTAL HEALTH AT THE ECONOMIC LEVEL FOR THE FIRST TIME EVER 218.8 PER CENT INCREASE IN THE BUDGET FOR WELFARE AND EMPOWERMENT OF WOMEN FROM FY14 TO FY25 FEMALE LABOUR FORCE PARTICIPATION RATE (LFPR) ROSE TO 37 PER CENT IN 2022-2023 FROM 23.3 PER CENT IN 2017-2018 NEP 2020 PREPARES YOUTH TO TAKE ON CHALLENGES AND OPPORTUNITIES EMERGING FROM A KNOWLEDGE-DRIVEN ECONOMY OF 21ST CENTURY TOTAL ENROLMENT IN HIGHER EDUCATION INCREASES TO NEARLY 4.33 CRORE IN FY22 FROM 3.42 CRORE IN FY15, AN INCREASE OF 26.5 % SINCE FY15 NEW SKILLING INITIATIVES AND REVAMPING THE EXISTING ONES SHOULD CONTINUE TO BE OF HIGH PRIORITY TO THE GOVERNMENT–ECONOMIC SURVEY 2023-24 SHARE OF MSMEs IN MANUFACTURING OUTPUT STANDS AT 35.4 PER CENT. DEREGULATION OF MSME SECTOR CRUCIAL: ECONOMIC SURVEY 2023-24 NUMBER OF PATENTS GRANTED CROSS 1 LAKH IN FY 23-24 SERVICES SECTOR CONTINUES TO CONTRIBUTE SIGNIFICANTLY TO INDIA'S GROWTH, ACCOUNTS FOR ABOUT 55 PER CENT OF TOTAL SIZE OF THE ECONOMY IN FY24 INDIA’S SERVICES LANDSCAPE WITNESSES RAPID TECHNOLOGY DRIVEN TRANSFORMATION IN DOMESTIC SERVICES DELIVERY AND DIVERSIFICATION OF EXPORTS 2.63 CRORE HOUSES CONSTRUCTED FOR POOR IN LAST NINE YEARS IN RURAL AREAS ADOPTING BUILDING INFORMATION MODELLING (BIM) TO REDUCE PROJECT DELAYS, CONSTRUCTION COSTS AND SYSTEMIC INEFFICIENCIES: ECONOMIC SURVEY 2023-24 INDIA’S POWER GRID EMERGES AS ONE OF THE LARGEST UNIFIED ELECTRICITY GRIDS IN WORLD: ECONOMIC SURVEY 2023-24 DESPITE BEING ONE OF THE FASTEST-GROWING ECONOMIES IN THE WORLD, INDIA’S ANNUAL PER CAPITA CARBON EMISSION IS ONLY ABOUT ONE-THIRD OF THE GLOBAL AVERAGE INDIA NEEDS TO LOOK AT CLIMATE CHANGE FROM THE ‘LOCAL LENS’, INSTEAD OF ‘ONE SIZE FITS ALL’ PRESCRIPTIONS FROM THE WEST Current Issues in the Indian Banking and Financial Sector (Inaugural Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - July 19, 2024 - at the Financial Express Modern BFSI Summit, Mumbai) Case Laws: GST 2024 (7) TMI 1110 Challenge to assessment order - levy of 100% penalty - HELD THAT:- The impugned orders are passed under Section 74 of the respective GST enactments, do not call for any interference in the hands of this Court, under Article 226 of the Constitution of India. The scope of interference is limited with wide powers. There are no extenuating reasons in this case for extending olive branch to the petitioner. Suffice to state that the petitioner can be given an opportunity to went out his grievances before the Appellate Authority under the hierarchy prescribed under the respective GST enactments. Petition dismissed. 2024 (7) TMI 1109 Liability of tax of a legal representative - Section 93 of the CGST Act, 2017 - petitioner would submit that the petitioner has not taken over the business of the petitioner s father (Late) Mr.Sathianesan and therefore, the impugned order is liable to be quashed - HELD THAT:- It is noticed that as a legal representative, the petitioner may be liable to be taxed in terms of Section 93 of the CGST Act, 2017. A similar writ petition was also filed by this petitioner in W.P(MD)No.11646 of 2024 for the assessment year 2017-18 and an order came to be passed on 05.06.2024 - the said petition was disposed off holding that ' Having considered the submissions of the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondent, the Court is of the view that this is a fit case for quashing the impugned order and remitting back the case to the respondent to pass fresh orders on merits and in accordance with law as admittedly the demand pertains to July 2017 to March 2018 and the impugned order has been passed after the death of the petitioner s father. Since the petitioner may be liable to be taxed as legal representative/heir of his father in terms of under Section 93 of the respective GST enactments, the Court is of the view that the petitioner should be given a proper opportunity to defend the tax liability.' There are no reason to take a different view - petition allowed. 2024 (7) TMI 1108 Challenge to notices/endorsement in Form GST DRC-01 - issuance of notices to a non-existent entity - HELD THAT:- Admittedly, as the notices/endorsement at Annexure-'A' are issued to a non-existent entity, the proceedings sought to be initiated by virtue of show cause notices/endorsement at Annexure-'A' in all the petitions are set aside. It is needless to state that the respondents are at liberty to pursue the proceedings against the appropriate entity regarding the subject matter of notices at Annexure-'A' as is permissible in law, as the petitions are disposed off on the premise that no proceedings could have been initiated against a non-existent Company. The petitions are disposed off. 2024 (7) TMI 1107 100% EOU - Refund claim - requirement to be filed under Rule 89 of the CGST Rules, 2017 or under Rule 96 of the CGST Rules, 2017. The case of the petitioner is that the petitioner is a 100% Export Oriented Unit [EOU] and had exported goods out of country and that by mistake, the petitioner had wrongly claimed refund under Rule 96 of the CGST Rules, 2017 on the IGST paid by the petitioner on capital goods and inputs utilized for export of goods instead of Rule 89 of the CGST Rules, 2017. HELD THAT:- The petitioner is admittedly a 100% Export Oriented Unit [EOU] and has wrongly availed the benefit of refund under Rule 96 of CGST Rules, 2017 seeking to grant refund of input tax credit availed and utilized in discharging IGST on the exported goods. It is however subjected to rider or limitation under Rule 96(10) of the CGST Rules, 2017. The petitioner is perhaps entitled to exemption under Rule 89 of the CGST Rules, 2017, as the petitioner has received inputs under CBEC N/N. 48/2017-Central Tax, dated 18.10.2017 and under N/N. 78/2017-Cus (Tariff) dated 13.10.2017 amending N/N. 52/2003-Cus (Tariff) dated 31.03.2003 - the procedural irregularity committed by the petitioner should not come in the legitimate way of grant of export incentives as admittedly exports were made and the refund claims were itself based on the shipping bills. The Court has repeatedly held that procedural irregularity should come in the legitimate way of grant of export incentives - reliance placed on the decision of the Hon'ble Supreme Court in COMMISSIONER OF SALES TAX, U.P. VERSUS AURIAYA CHAMBER OF COMMERCE, ALLAHABAD [ 1986 (4) TMI 363 - SUPREME COURT ], wherein, it has been held that the rules or procedures are hand-maids of justice not its mistress. The impugned order is set aside and the case is remitted back to the fifth respondent to pass fresh order by examining the exports made by the petitioner for grant of refund under Rule 89 of the CGST Rules, 2017 in terms of Section 16(3) of the IGST Act, 2017 - Petition disposed off by way of remand. 2024 (7) TMI 1106 Classification of goods - cosmetics or drugs? - Navaratan Oil - Gold Turmeric Ayurvedic Cream - Nirog Dant Power Lal - Boroplus Antiseptic Cream - Boroplus Prickly Heat Powder - Sonachandi Chavanprash - whether the aforementioned products would fall under Entry 36 or Entry 37 of the CGST Act and TGST Act? Himani Sonachandi Chavanprash - HELD THAT:- A plain reading of the definition of drugs would clearly indicate that it is a product which can be internally and externally used. Hence, Himani Sonachandi Chavanprash is one product which is only edible and is not a product which can be used externally - In view of the aforesaid factual aspect of the case and the specific finding of fact given by the STAT, no strong case has been made out by the learned Standing Counsel for the respondent/Department to interdict the finding so far as the product Himani Sonachandi Chavanprash is concerned. The challenge to the said finding thus stands answered in the negative affirming the finding given by the STAT. Himani Boroplus Antiseptic Cream - HELD THAT:- The said cream under no circumstances can be brought or treated as a cosmetic. It can only be used for the medicinal value that it has and it cannot be used as an ordinary facial or a body cream except for the purpose for which it has been manufactured and sold. It also is not a product which is otherwise capable of being used as a cosmetic or a toiletry product. Neither can it be brought within the purview of medicated goods as the medicated goods are those which are used otherwise than as medicines with its added incidental medicinal properties, for example medicated shampoo, soap, hand wash etc. etc. - the finding given by the STAT is a well-reasoned finding which does not warrant interference as no substantial material could be brought on record either before the authorities concerned or before this Court so as to disprove the findings given by the STAT. Himani Boroplus Prickly Heat Powder - HELD THAT:- This product, unlike Nycil Prickly Heat Powder has predominant medicinal elements which has a soothing and protective effect on the skin, which can be attributed to its cosmetic nature. It only contains medicinal ingredients such as Zinc Oxide, Boric Acid and Salicylic Acid, which gives it therapeutic and prophylactic properties, making it more than just a cosmetic product - Himani Boroplus Prickly Heat Powder has been rightly classified under Entry 37 in Schedule 1st of the APGST Act. This classification acknowledges the product's medicinal properties and its role in health and healing. Conversely, the product should not be classified under Entry 36 as 'Cosmetics or Toilet Preparations' in the same schedule of the Act. This is because such a classification would downplay the product's medicinal attributes and potentially misrepresent its purpose and use to the public. Himani Navaratan Oil - HELD THAT:- Medicated goods are those where incidental medicinal properties are incorporated in small quantity and the product needs to be otherwise sold for the very same purpose for which it was otherwise manufactured and sold. Thus the finding of the STAT so far as Navaratan Oil being a cosmetic and not a Drug is liable to be set aside and it is ordered accordingly. Himani Gold Turmeric Ayurvedic Cream - HELD THAT:- What is necessary to be appreciated at this juncture is that, from the rapper in which the cream is sold, very emphatically highlights it as an ayurvedic medicine. The rapper also clearly indicates that the cream is highly effective for cracked skins, pimples, boils and numerous other skin blemishes. Nowhere did they in the rapper claim it to be a cosmetic product or a product which could enhance the complexion or fairness. The licensing authority having granted license for the said product as an ayurvedic drug, the manufacture, sale and distribution of the product as a drug and not a cosmetic is established and it is being marketed only as a drug and not as a cosmetic. Application disposed off. 2024 (7) TMI 1105 Violation of principles of natural justice - it is asserted that the petitioner was unable to contest the tax demand on merits because the consultant engaged by the petitioner had not informed the petitioner about these proceedings - HELD THAT:- On examining the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice. It also appears that the proposal relates to a comparison between the inward supply, as gleaned from the GSTR 2A, and the outward supply. The petitioner has placed on record evidence that he opted for composition levy and filed quarterly returns in Form GSTR 4. In these circumstances, the interest of justice warrants re-consideration, albeit by putting the petitioner on terms. The impugned order dated 22.12.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within a period of two weeks from the date of receipt of a copy of this order - petition disposed off. 2024 (7) TMI 1104 Maintainability of appeal - Appeal against order under CGST/SGST Act - adjudication on the refund application - HELD THAT:- At the time of seizure of the goods by the authorities under the CGST/SGST Act, there was an option for the appellant to either pay the amounts demanded and avoid an adjudication or to contest the seizure and insist on an adjudication order. For reasons best known to him, he chose to make the payment and consequently, Ext. P5 order was passed releasing the goods to him by making it clear that in view of the payment the authorities were not proceeding against him for determination of any tax and penalty. If the appellant had a case that the payment was a mistake, he should have preferred an application for a refund of the tax/penalty paid by him and sought for an adjudication on the refund application. The appellant is solely to blame. At this stage of the proceedings, where this appeal is filed more than 7 years after the release of the goods to the appellant, there are no reason to take a view different from that of the learned Single Judge, who in our view rightly dismissed the Writ Petition. The Writ Appeal fails and is accordingly dismissed. 2024 (7) TMI 1102 Violation of principles of natural justice - petitioner's reply was not taken into consideration - mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A as regards Input Tax Credit - HELD THAT:- On examining the impugned order in comparison to the petitioner's reply, it is noticeable that the petitioner's assertion that the ITC available in GSTR 2A exceeds that availed of in GSTR 3B was not considered. Similarly, with regard to the turnover mismatch between the petitioner's GSTR 1 return and the e-way bill portal, the petitioner's reply to the effect that the tax liability was discharged was not taken into consideration. Consequently, the matter requires re-consideration. The impugned order dated 30.01.2024 is set aside and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, the first respondent is directed to issue a fresh order within three months from the date of receipt of a copy of this order - petition disposed off. 2024 (7) TMI 1101 Challenge to assessment order - time limitation - mismatch between the GSTR 2A and GSTR 3B - HELD THAT:- Although the petitioner has made several submissions touching upon the merits of the case, it is not required to give any observations on the same. Suffice to state that the petitioner can be given one opportunity to explain the case subject to the petitioner depositing 25% of the disputed tax with the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order. The petitioner shall also file a reply within the aforesaid period. The Writ Petition stands allowed. 2024 (7) TMI 1100 Challenge to assessment order - petitioner has not replied to any of the notices that were issued to the petitioner that preceded the impugned orders - HELD THAT:- Although the learned Additional Government Pleader appearing for the respondent submits that these writ petitions are without merits, in view of the decision of the Hon'ble Supreme Court in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT] and the appellate remedy as far as the assessment orders for the assessment years 2017-18 to 2019-20 are concerned, is time barred, in view of the decision of the Hon'ble Supreme Court in SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] , to balance the interest of the parties, the impugned orders can be set aside subject to the petitioner depositing 25% of the disputed tax from the Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order for the respective assessment years. The impugned order, which stands quashed, shall be treated as an addendum to the show cause notices issued to the petitioner. It is expected that the respondent shall pass a fresh order on merits and in accordance with law within a period of 2 months thereafter - the petition is allowed. 2024 (7) TMI 1099 Cancellation of GST registration - petitioner could not file returns in time on account of ill-health and COVID 19 pandemic - HELD THAT:- The petitioner is directed to file returns for the period prior to the cancellation of registration, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - It is made clear that such payment of tax, interest, fine / fee and etc. shall not be allowed to be made or adjusted from and out of any Input Tax Credit (ITC) which may be lying unutilized or unclaimed in the hands of the petitioner. Petition disposed off. 2024 (7) TMI 1098 Input Tax Credit - ineligible commodities as per sub-section (5) of Section 17 of applicable GST statutes - ITC for supplies from cancelled dealers, who had not remitted tax dues - HELD THAT:- As regards the first issue, the petitioner stated that materials classified under HSN Code 7204 were procured and that such materials do not fall within the scope of Section 17(5) since they were used in furtherance of business. The petitioner enclosed relevant invoices and e-way bills. With regard to the second issue, the petitioner pointed out that a supplier, whose registration certificate was cancelled cannot generate e-way bills. The petitioner enclosed relevant invoices, e-way bills and the supplier's returns as proof of payment of tax by such supplier. In the impugned order, there are no findings in respect of the first issue. As regards the second issue, the tax proposal was confirmed on the ground that the petitioner did not establish movement of goods by producing lorry receipts, weighment slips and payments made to the supplier. None of these documents were called for in the show cause notice which proceeded on a completely different basis. Therefore, the impugned order cannot be sustained. The impugned order dated 28.04.2024 is set aside and the matter is remanded for re-consideration. The petitioner is permitted to submit an additional reply by enclosing all relevant documents with regard to movement of goods. Such additional reply shall be submitted within fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand. 2024 (7) TMI 1097 Condonation of delay in filing appeal - it is submitted that appellate authority rejected the appeal because such appeal was presented 29 days beyond the condonable period - mismatch between the petitioner's GSTR 1 and GSTR 3B returns - HELD THAT:- On perusal of the impugned appellate order, it is clear that the appeal was rejected because it was presented 29 days beyond the condonable period under Section 107 of the applicable GST statutes. In the appeal, the petitioner stated that he was unable to file the appeal in time because the order was uploaded on the portal and he came to know about the order only on 08.03.2024. The period of delay is only 29 days beyond the condonable period. When the above facts and circumstances are considered cumulatively, it is just and appropriate that the appellate authority be directed to consider and dispose of such appeal on merits. The matter is remanded to the appellate authority. Subject to the condition that the petitioner re-presents the appeal within ten days from the date of receipt of a copy of this order, the appellate authority is directed to receive and dispose of such appeal on merits without going into the question of limitation - Petition disposed off by way of remand. 2024 (7) TMI 1096 Declining to grant any interim order - GST tribunal has yet to be constituted - requirement of 20% mandatory pre-deposit - HELD THAT:- It may be true that under the statute the aggrieved person who approaches the tribunal would be entitled to make a prayer for stay subject to payment of 20% of the disputed tax - In the instant case, it appears to be not in dispute that more than 20% has been recovered, nonetheless the writ petition has been filed before this court and that has been entertained on the ground that the tribunal is not functional. In the facts and circumstances of this case, the appellants could not have taken such a stand more particularly because the 2nd appellant, Uttam Kumar Bagaria is one of the partners of the partnership firm/ Eastern Traders. The court considered the facts and circumstances and declined to exercise any discretion in granting an interim order - no grounds have been made to interfere with the said order passed by the learned Single Bench - Appeal dismissed. Income Tax 2024 (7) TMI 1103 Disallowance of Deduction claimed u/s. 80P - interest income received by the appellant from entities enjoying the status of a co-operative society as per law - HELD THAT:- The issue is settled by the principle of law laid down by the Hon'ble Supreme Court in the case of M/S. Annasaheb Patil MathadiKamgarSahakariPathpedi Limited [ 2023 (5) TMI 372 - SC ORDER ] as held Assessee cannot be termed as Banks/Cooperative Banks and that being a credit Society, they are entitled to exemption under section 80(P) (2) of the Income Tax Act. Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise on merits also and taking into consideration the CBDT Circular and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be co-operative Bank/Bank and therefore, section 80(P) (4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under section 80(P) (2) . Decision of the Ld. CIT(A) in denying the deduction to the assessee is perverse to the facts on record and against the spirit of law, in view of the provisions of sub section 4 of section 80(P) - Assessee appeal allowed. 2024 (7) TMI 1095 Validity of Reopening of assessment u/s 147 - reasons to believe Notice issued beyond four years - there was unclaimed TDS - HELD THAT:- As explained that the petitioner had not considered TDS credit corresponding to interest income which was transferred to Salasar Agropanel Pvt. Ltd. The petitioner also placed on record acknowledgment of return of income filed by the said company with computation of income and ledger of interest income on security deposit. From the perusal of the reasons, it is apparent that the AO on the same material has arrived at a reason to believe that the income has escaped assessment though the petitioner has explained the same during the regular assessment proceedings and there is no failure on part of the petitioner to fully and truly disclose all material facts during the assessment for the year under consideration. It is a mere change of opinion on part of the AO and the impugned notice is without jurisdiction and also hit by the Proviso to Section 147 of the Act. Decided in favour of assessee. 2024 (7) TMI 1094 Tribunal dismissed assessee's appeal ex-parte - Addition u/s 68 - bogus LTCG - addition to the share capital on the ground that failure of discharge the onus - HELD THAT:- It is not the assessee who remained negligent towards his statutory rights of appeal. But, unfortunately, the Chartered Accountant, who was engaged to contest and to make effective representation before the Tribunal, has failed to perform his professional duty diligently. In our view, therefore, neither any fault nor any negligence can be attributed to the assessee, who has been saddled with liability of tax. Considering the same, only on humanitarian ground, we propose to show our interference for the limited purpose of remanding the present appeal back to the Tribunal for fresh decision on merits, after giving reasonable opportunity of hearing to the appellant assessee. 2024 (7) TMI 1093 Estimation of income on turnover - AO estimated the same at 15% and according to the assessee it is only at 5% - HELD THAT:- There is no evidence to support the claim of the assessee at 5%. Taking a pragmatic view on this matter, the ends of justice would be met if the same is estimated at 8% of the turnover. Therefore, direct the AO to estimate the income of the assessee on real estate business at 8%. Agricultural income - disallowance of agri income as documents produced by the assessee do not bear his name and the show the name of some other persons - HELD THAT:- Assessee does not dispute this fact, but on the other hand states that due to the fear of litigation at the instance of the tenants, the landlords are slow in excluding the documents in favour of the tenants and also that the agricultural marketing committees are also not issuing the receipts on the name of the tenants. Though, we cannot brush aside this contention of the assessee, it is difficult that the entire amount of ₹ 5.85 Lacs is derived by the assessee without any document. The disallowance of the total receipt does not seem to be correct and at the same time, having regard to the smallest of amount deem it not proper to send it back for any further verification. Thus, direct the AO to take 40% of the receipt as agricultural income of the assessee. Rest of the addition is upheld. Assessee appeal partly allowed. 2024 (7) TMI 1092 Validity of order passed u/s 154 - benefit of Foreign Tax Credit u/s 90/90A of the Income Tax Act read with Article 24 of India-Australia DTAA in respect of taxes paid by the Australian branch denied - HELD THAT:- On examining the company tax return and the activity statements, it appears prima facie that the petitioner has remitted taxes through the Australian branch. It is clear that Foreign Tax Credit in respect thereof was claimed by the petitioner by filing Form 67 with relevant annexures. On examining the intimation u/s 143(1) and the impugned rectification order, Foreign Tax Credit was computed by the assessing officer and such computation tallies with the Foreign Tax Credit claim of the assessee. In spite of accepting the computation of the tax payer, the tax credit relief was denied. It is not possible to discern the reasons for such denial, but these facts and circumstances undoubtedly warrant reconsideration. The impugned rectification order is set aside and the matter is remanded for reconsideration in so far as the Foreign Tax Credit claim is concerned. If there are any dues after taking into consideration such Foreign Tax Credit claim and interest liability arising therefrom, the petitioner shall discharge the same. 2024 (7) TMI 1091 Transfer / Centralization order u/s 127 - cases of the assessees are centralized to the board of Deputy Commissioner of Income Tax [ DCIT ], Central Circle, Karnal, Haryana - link between the assessee and the searched party - As decided by HC [ 2024 (5) TMI 456 - DELHI HIGH COURT] Revenue before passing the impugned order has provided the opportunity of hearing to the assessee [Mark Gulati] and considered the assessee s [Mark Gulati] objections, thus, the order would reflect that the Revenue had duly applied its mind and powers under Section 127 was invoked on the grounds of administrative convenience and meaningful assessment. Powers of Section 127 of the Act can be invoked for public interest and administrative convenience. Furthermore, the ground of coordinated investigation is a good ground of transfer as upheld by various decisions quoted above. Thus we are hereby not inclined to interfere with the orders passed under Section 127 of the Act. HELD THAT:- We do not find any good ground and reason to interfere with the impugned judgment(s) and, hence, the present special leave petitions are dismissed. Pending application(s), if any, shall stand disposed of. 2024 (7) TMI 1090 Monetary limit to file appeal before High Court - Denial of exemption to the Trust - HELD THAT:- We have to see whether the monetary limit in any of these appeals is breached through the filing of these appeals. We find in this context that the tax effect in the appeals pertaining to assessment years 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11 are well below the monetary limit of Rs. 1 crore specified in the circulars referred above. Without any further discussion therefore, we deem it appropriate to dismiss the said I.T appeals as not maintainable in view of the Circulars referred above that are binding on the department in view of the judgment in S.R.M.B Diary Farming (P) Ltd. [ 2017 (11) TMI 1494 - SUPREME COURT] . For AY 2011-12 and 2012-13 No doubt, the said appeals involve a tax effect exceeding Rs. 1 crore - Additions to be made to the income of the Trust and since the more fundamental issue as regards the availability of exemption to the assessee Trust, consequent to its registration u/s 12AA of the Act has already been sustained - Since the issue of registration u/s 12AA of the Act, and the availability of exemption to the assessee-Trust, has already been answered in their favour by the order of the Tribunal [ 2017 (1) TMI 1671 - ITAT COCHIN ] supra, we are of the view that the aforesaid questions of law raised by the revenue in the appeals have to be answered against the revenue and in favour of the assessee 2024 (7) TMI 1089 Reopening of assessment - credible information received from the Investigation Wing - Addition u/s 68 - assessee is one of the beneficiaries ploughing back its own unaccounted money in the form of share capital and premium - as argued addition was made solely on the basis of the statement of Shri Rajesh Bhutoria, which has been retracted subsequently just two days before passing the assessment order - HELD THAT:- AO has not made any independent enquiry of the detailed and voluminous evidences adduced by the assessee. Even the statement so relied upon does not specifically implicate the assessee and it is apparent that the same has been taken in connection with the investigation of one Baazar Group of Companies. Further, the reasons for re opening his full of infirmities and mismatch in the amount and in the name of investors. We are surprised to note that the statement was available with the Department right from November 2014, but till the date of re opening, no enquiry whatsoever to carry out the authenticity of the report of the Investigation Wing as applicable to the present case. CIT(A) has correctly concluded that the entire re assessment has been done out of mere suspicion and is not backed by independent reason to believe by the AO. The statement of Shri Rajesh Bhutoria, cannot be held to be a gospel truth specifically when the same has been retracted before the Metropolitan Magistrate. Even in the remand report, AO has not done any verification to contradict the humongous evidences adduced by the assessee and to challenge its authenticity. Accordingly, the entire addition made by the AO is based on mere surmises and conjectures and has no legal legs to stand upon. Accordingly, we find no merit in the grounds of appeal raised by the Revenue. The re opening was initiated on the basis of barrowed satisfaction and the Assessing Officer could not bring out the live nexus of information leading to re assessment. There are lots of infirmities in the reasons recorded. Certain persons are named. But it is not clear as to how they are connected with the company. The Bank Statement of Adhik Multitrade Pvt. Ltd. was examined. But significantly, the name of such company does not appear in list of four companies mentioned. The reasons only speak of the conclusions and do not bring out independent application of mind. In fact, Aadita Construction Pvt. Ltd., has subscribed shares for ₹ 37 lakh and not ₹ 22 lakh as per reasons. There is no company named Adshaj Multitrade Pvt. Ltd. in the list of shareholders. These glaring observations of the facts are a clear pointer to the fact that basis of re opening is fragile. CIT(A) has correctly decided which needs no interference at our end. Thus, we uphold the order passed by the learned CIT(A) by dismissing the grounds raised by the Revenue. 2024 (7) TMI 1088 Unexplained cash deposits - excess deposits in bank by invoking provisions of Section 69A r.w. Section 115BBE - AO made additions under the head cash deposits alleging a variance between receipts reported by the assessee in its books of accounts and audited P L account and the total receipts as noticed in the bank statements furnished by the assessee - CIT(A) deleted addition - HELD THAT:- The adoption of mercantile system of accounting policy mandatory for assessee-company as per Section 145(1) has been properly disclosed in the audited financial accounts. As per mercantile method, the receipt towards coaching fee will be regarded as chargeable income only upon its accrual i.e legal right to receive such money. Mere receipt of money/ fee would not result in its taxability unless the service against such fee received has been rendered. The conclusion to dislodge perfunctory addition appears to be based on nuanced analysis of facts by the CIT(A) and resonate with the accounting principles and corroboration of facts on record. The CIT(A) has thus rightly removed the absurdity committed by the AO and correctly accepted the audited turnover as declared by the assessee. As following the mercantile method of accounting, the assessee has also recognized the income received in the earlier year but accrued in this year as the taxable income of this year. Likewise, coaching fee received in this year but services rendered in the next year has been proportionately carried forward for taxation in next year since a component of fee received did not accrue in this year. Such amount of fee was carried forward and recognized in the subsequent year as per the rudimentary principles of accounting. Noticeably, the accounts have been subjected to statutory audit without any qualifications. Furthermore, the sales/turnover recorded by the assessee in the books is found to be in conformity with the service tax return. The addition made by the AO on the other hand is plaughed with wild and creative accounting giving rise to absurd results. We can effortlessly see complete absence of any semblance in the action of the AO. The process of reasoning adopted by the CIT(A) to reverse such addition is based on objective scrutiny of facts and is thus fully endorsed. The utterly incomprehensible addition conjured up by the AO on manifestly wrong premises by including non-revenue entries without any opportunity to the Assessee can not be countenanced in any manner. Hence, we decline to interfere with the order of the CIT(A). Additions u/s 69A on account alleged unaccounted investment in property - AO has made additions towards undisclosed investment in undisclosed property on the basis of some inaccurate information gathered in SFT-12 in form 26AS - CIT(A) deleted addition- HELD THAT:- With reference to alleged investment in property, the assessee has taken a clear stand that it has not made any purchase or investment in immovable property. Rather, the assessee has taken the property at lease/rent for which copy of lease/rent agreement was produced before the AO as well as before the CIT(A). An affidavit to the effect that assessee did not purchase any property during the year under consideration was also placed before the lower authorities. The copy of ledger account of security deposit with the landlord in relation to the impugned property, rent paid to landlord in relation to property vindicates the stand of the assessee. The AO, on the other hand, has not brought any concrete evidence to support bald allegation. The onus placed on the AO was thus not discharged. CIT(A), in our considered view, has analyzed the facts in right perspective which is self explanatory. On the face of tell tale facts, we endorse the action of the CIT(A) and decline to interfere. Additions on account of unexpired fee - AO alleging that the unexpired fee, in the nature of income, has been shown on the liability side of the balance-sheet - HELD THAT:- The pro rata basis for calculating an unexpired fee is apparently consistent with the recognized accounting policy. The CIT(A) has rightly appreciated the facts in proper prospective. The CIT(A) has examined the issue threadbare and the basis of calculation of unexpired fee has also been correctly appreciated by the CIT(A) as tabulated in its appellate order. The action of the AO is contrary to the recognized accounting method employed by the assessee. The additions made by the AO does stand to reasons and suffers from obvious flaw. The action of the CIT(A) is in consonance with the factual matrix and accounting policy. Thus, no interference with the view taken by the CIT(A) is called for. Additions on account of rent charges on the ground that rent agreements of some property have not been provided - AO doubted the genuineness and correctness of rent charges and disallowed 10% of the total rent amount on estimated basis - CIT(A) deleted addition - HELD THAT:- The rent agreements were uploaded in respect of halls booked on the website of the Income Tax together with PAN of the landlords. A comprehensive detail of rent paid along with TDS, nature of payment, name of the party, PAN, amount paid/credited, property number and address of the land and landlord was also submitted. The relevant facts were also concurrently produced before the CIT(A) as recorded by the CIT(A). Before us as well, the documentary evidences have been adverted the course of hearing. In the backdrop of facts noted above, the estimated disallowance of 10% of rent payment is wholly incomprehensible and uncalled for. The CIT(A), in our considered view, has rightly appraised the facts in perspective. The findings of the CIT(A) is self speaking and does not require further elaboration. We thus see no reason to interfere with the findings of the CIT(A). Additions on account of payment to contractors - AO alleging that assessee has provided a chart of 46 contractors including the nature of payments, name of the party, PAN, total amount paid/ credited and TDS deducted but no details of address of the contractors, confirmation, copy of agreements, etc. were furnished - CIT(A) found that the expenses have been incurred wholly and exclusively for the purposes of business and thus cancelled the disallowance - HELD THAT:- The facts placed before the lower authorities were adverted and reiterated before us as well. On appraisal of facts placed on record holistically, we find that conclusion drawn by the CIT(A) is complimented by the relevant facts. In the light of comprehensive documentations, payment through banking channel, deduction of TDS on such payments etc. we see no reason to depart from the findings of the CIT(A). We thus decline to interfere with the conclusion drawn by the CIT(A). Revenue appeal dismissed. 2024 (7) TMI 1087 Penalty levied u/s 271(1)(c) - non specification of clear charge - whether the assessee has concealed its particulars of income; or furnished inaccurate particulars of such income? - HELD THAT:- The penalty order does not mention the specific charge of default committed by the assessee i.e. whether the assessee has concealed its particulars of income; or furnished inaccurate particulars of such income. We hold that from the impugned penalty order it is not clear under which limb of section 271(1)(c) penalty was levied. There being no specific charge for levy of penalty, the penalty order is therefore, contrary to law laid downin the case of M/s Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] Accordingly, impugned penalty order passed u/s 271(1)(c) of the Act is quashed. Appeal of the Revenue is dismissed. 2024 (7) TMI 1086 Disallowance u/s 14A - assessee argued no expenditure has been incurred for earning the aforesaid tax free income - HELD THAT:- As per the judgment Godrej Boyce Mfg Co Ltd [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] the provisions of Rule 8D of the IT Rules are not applicable to Assessment Year 2005-06. Hon ble Bombay High Court had held that for prior years (to which provision contained in Rule 8D of the IT Rules did not apply), it is duty of the Assessing Officer to determine the quantum of disallowance on a reasonable basis.In view of the same, disallowance under Section 14A of the Act made by the authorities below is restricted to 2% of the exempt income. In terms of the aforesaid, Ground No. 1(a) to 1(e) raised by the Assessee are partly-allowed. TDS u/s 194C - Disallowance made u/s 40(a)(ia) on account of failure to withhold tax payments - Payment made to M/s Team Lease for providing secretarial and clerical staff on contractual basis - HELD THAT:- We find merit in the contention advanced in behalf of the Revenue. In absence of a valid/proper Nil tax withholding certificate (containing the name of the Assessee) having been issued under Section 197(1) of the Act for the relevant previous year, the Assessee was under obligation to deduct tax at source from payments made to Team Lease as per provisions of Section 194C of the Act. We decline to interfere with the order passed by the CIT(A) confirming disallowance made u/s 40(a)(ia) - Decided against assesee. TDS u/s 195 - disallowance made u/s 40(a)(i)/(ia) - failure to withhold tax from the payments of Global Overhead Charges to Deutsche Securities Inc., New York, USA - HELD THAT:- DTAA between India and Germany did not contain the make available clause in the definition of Fees for Technical Services as contained in Article 12(4) of the said DTAA. Therefore, disallowance was reported/made under Section 40(a)(i) in the Tax Audit Report and the computation of total income. Thus, the aforesaid payments of global overhead charges stood on a different footing as compared to the payments for global overhead charges to Deutsche Securities Inc. New York, USA, a tax resident of USA entitled to claim benefit of Article 12(4)(b) of the DTAA containing make available clause. We hold that the global overhead charges were not liable to tax in India as Fee for Included Services in terms of the provisions contained in Article 12(4)(b) of the DTAA; the Assessee was not under obligation to deduct tax from the same; and therefore, the provisions of Section 40(a)(i) were incorrectly invoked in respect of the same. Therefore, disallowance made under Section 40(a)(i) of the Act is deleted and Ground No.3 rasied by the Assessee is allowed. TP Additions - brokerage rates charged by the Assessee to AEs in respect of CH Trades - HELD THAT:- We direct the TPO/AO to grant suitable Volume and Marketing Cost Adjustment after verifying the computation thereof placed on record by the Assessee. In terms of the aforesaid the TPO/Assessing Officer is directed to recomputed the ALP and determine the quantum of transfer pricing adjustment, if any. Deduction for education cess - HELD THAT:- We note that the claim for deduction for education cess raised has been raised for the first time before the Tribunal. In view of retrospective amendment in Section 40(a)(ii) of the Act and the judgment of Joint Commissioner of Income Tax Vs. Chambal Fertilisers Chemicals Ltd. [ 2022 (12) TMI 1098 - SC ORDER] deduction for education cess cannot be allowed. TDS u/s 195 - deduction on expenditure incurred on VSAT/Lease Line Charges - CIT(A) deleted the both the above disallowances holding that the Assessee was not under obligation to deduct tax from the payments towards VSAT/Leased Line Charges and Transaction Charges paid to stock exchanges since the same were not in the nature of fee for technical services as defined in Explanation 2 to Section 9(1)(vii) - HELD THAT:- As regards VSAT/Leased line charges are concerned, the same are recovered by the stock exchanges from members for providing connectivity by way of VSAT/Leased Lines. In our view, as per the above judgment of Kotak Securities Limited [ 2016 (3) TMI 1026 - SUPREME COURT] the VSAT/Leased Line Charges would also be regarded as payment for a facility provided by the stock exchanges and not fee for technical services . In view of the above, we do not find any infirmity in the conclusion drawn by the CIT(A) that VSAT/Leased Line Charges and Transaction Charges are not in the nature of fee for technical services. Accordingly, we decline to interfere with the order passed by the CIT(A) deleting the disallowance under Section 40(a)(ia) of the Act in respect of VSAT/Lease Line Charges and Transaction Charges. Claim of benefit of variation/reduction of 5 percent in terms of the provisions contained in proviso(s) to Section 92C(2) - HELD THAT:- Special Bench of the Tribunal in the case of M/s IHG IT Services (India) Private Limited [ 2013 (5) TMI 309 - ITAT DELHI] after taking into consideration the retrospective amendment to the second proviso to Section 92C(2) of the Act by the Finance Act, 2012, held that the benefit of tolerance margin of 5% would be available only if the variation is within the said tolerance margin. Once the variation exceeded the tolerance margin of 5%, then there would be no benefit even up to tolerance margin of 5%. Then, the ALP as worked out under Section 92C(1) would have to be taken as ALP without any benefit of tolerance margin. Accordingly, we overturn the decision of the CIT(A) and direct the TPO/Assessing Officer to re-compute the transfer pricing addition, if any, after taking into consideration the aforesaid judgment of the Special Bench. 2024 (7) TMI 1085 Validity of reopening of assessment after expiry of four years -deemed dividend u/s 2(22)(e) - as argued no specific satisfaction was recorded by the AO that there was a failure on the part of the assessee to disclose fully and truly all material facts - HELD THAT:-To reopen the case beyond 4 years, must be first established that there was a failure on the part of the assessee to disclose fully and truly all material facts and such failure has not been established either by the AO or by the CIT(A). As regarding the issue of deemed dividend on which the second reopening was done, there can be failure on the part of the assessee only when there is requirement as per law to disclose the deemed dividend in the return of income or in the tax audit report and which has not been complied. It is found that there was no requirement to declare any deemed dividend u/s 2(22)(e) in the ITR or in the Tax Audit Report for this year. These requirements were introduced in the ITR Form and in the Tax Audit Report much later. Under the circumstances, the assessee cannot be charged with any failure to disclose fully or truly all material facts. As explained by the assessee that account with the company was in the nature of current account and as per finding recorded by the Ld. CIT(A), there were 35 transactions during the year. CIT(A) had taken the closing balance only as deemed dividend and the ground taken by the Revenue that the deemed dividend was restricted is not found correct. As per direction of the Ld. CIT(A), only the closing credit balance was required to be verified with reference to accumulated profit of the company. We are of the considered opinion that there was no failure on the part of the assessee to disclose fully and truly all the material facts and, therefore, the jurisdiction of the AO u/s 147 of the Act was not correctly assumed. The fact of any failure on the part of the assessee was neither brought out by the AO nor was evident from the record, which was essential for reopening the case beyond 4 years. Therefore, the reopening done by the AO was incorrect and not in accordance with the 1st Proviso to Section 147 - Decided in favour of assessee. 2024 (7) TMI 1084 Deduction claimed u/s 57 against income returned u/s 56 - manner in which expenses of the assessee were to be apportioned to the earning of income u/s 56 - Revenue authorities rejecting assesses apportionment and allocating expenses on a different basis which is being disputed before us - HELD THAT:- The purpose of calculating the correctness of expenses apportioned by the assessee to the earning of interest income returned to tax under the head income from other sources , the issue is restored back to the AO, and the AO is directed to verify as to whether the formula adopted by the assessee for apportioning interest expenses to the earning of interest income returned to tax u/s 56 of the Act is the same as that adopted in AY 2014-15 and accepted by the AO in assessment of that year. If found to be so, no addition is made to the income of the assessee. In sum and substance the AO is directed to apportion expenses for claim u/s 57 of the Act in the manner done in A.Y 2014-15. With the above direction the issue is restored back to the AO. The appeal filed by the assessee is accordingly allowed for statistical purposes. 2024 (7) TMI 1083 Benefit of exemption u/s 11 12 - charitable entity u/s 2(15) - denial of exemption on act of conducting exhibitions being in the nature of trade and commerce - as per AO assessee's activities were commercial in nature, thus not eligible for exemption - HELD THAT:- As decided in A.Y. 2012-13 to 2014-15 [ 2023 (1) TMI 1346 - ITAT MUMBAI ] there being no mark up on consideration charged from the exporter, therefore in the broad principles laid down by the Hon'ble Supreme Court, the activity is beyond the purview of either trade, commerce and business or activity of rendering services in relation to trade, commerce or business. Further the ITAT has held that assessee is not hit by the proviso to section 2(15) of the Act as far as activity of conducting or participating in exhibitions within India or overseas. A.O is directed to grant benefit of section 11 and 12 as per provisions of law. Alternative disallowance u/s 11(2) of the Act holding that specific detail of objects for which the surplus was accumulated is not specified in the form no. 10 filed by the assessee - CIT(A) held that assessee trust has accumulated the surplus for the purpose specified in the trust deed. In this regard, CIT(A) has also discussed Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [ 2018 (10) TMI 995 - GUJARAT HIGH COURT ] wherein it is held that lack of declaration in the form no. 10 regarding specific purpose for which funds were be accumulated by the assessee trust would not be fatal to the exemption claimed u/s 11(2). Further the Hon ble Supreme Court has dismissed the SLP filed against the aforesaid decision of the Hon ble High Court [ 2019 (4) TMI 843 - SC ORDER ] We have also perused the copy of Board Resolution dated 18.08.2015 filed at the appellate proceedings as per which the surplus is accumulated for the specified purposes in accordance with the provision of Sec. 11 sub-section (2) of the Act. Claim of prior period of expenditure - CIT(A) held that assessee is entitled to the benefit of Sec.11 and all the expenditure were incurred by the assessee towards the object of trust. AO has not brought any contrary material to demonstrate that assessee has not incurred the expenditure for the object of the trust, therefore, we don t find any reason to interfere in the decision of CIT(A), accordingly, this ground of appeal of the revenue is dismissed. 2024 (7) TMI 1082 Deduction u/s 80P - deduction of income earned as interest/dividend from co-operative bank - HELD THAT:- The provisions of section 80P(2)(d) of the Act reflects that if any income by way of interest or dividend derived by the Co-operative Society from its investment with any other Co-operative Society, then the whole of such income shall be deducted in computing the total income of the Assessee. Meaning thereby income if any by way of interest or dividend earned from investment with any other Co- operative Society, then such amount of interest or dividend earned shall be deductible in computing the total income of the Assessee. The Hon‟ble Co-ordinate Benches of the Tribunal in various cases including in Belgaum Coal and Coke Consumer Co-operative Association Ltd. [ 2022 (4) TMI 395 - ITAT PANAJI] dealt with identical issue as to whether the interest/dividend income earned from Co-operative Bank is allowable as deduction under section 80P(2)(d) of the Act or not and ultimately allowed the deduction claimed as interest/dividend income earned from Co-operative Bank u/s 80P(2)(d) of the Act . The income if any earned by way of interest or dividend from the investments made with any other Co- operative Bank as well, is allowable as deduction u/s 80P(2)(d) of the Act. Accordingly the AO is directed to allow deduction qua interest earned from Co-operative Banks only but subject to verification. Assessee appeal allowed. Customs 2024 (7) TMI 1081 Seeking grant of bail under Section 439 of Cr.P.C. - recovery of diamonds and the foreign currencies - HELD THAT:- The Hon'ble Apex Court referred to its earlier decision in Lallubhai Jogibhai Patel v/s Union of India Ors [ 1980 (12) TMI 182 - SUPREME COURT] to re-iterate the position of law that the grounds of detention must be communicated to the detenue in writing, in the language which could be understood by him. It is specifically held that, if the grounds are verbally explained, it infringes the constitutional mandate of Article 22 (5) of the Constitution of India. Therefore, the contention of the learned counsel for the respondent that the order in Prabir Purkayashta [ 2024 (5) TMI 1104 - SUPREME COURT] was delivered only on 15.05.2024 and therefore, non-compliance of the same while apprehending the accused on 19.05.2024 may not vitiate the arrest and detention of the petitioner, cannot be accepted. The requirement of communicating the grounds of arrest and detention to the accused in writing, in the language known to him is the requirement of law and there cannot be any compromise in the same. Even though there are prima facie materials against the petitioner in support of the case of the respondent, since there is non-compliance of the mandate of law while apprehending and detaining the petitioner, it is opined that the petitioner is entitled to be enlarged on bail subject to conditions, which will take care of the interest of the prosecution. The petitioner is ordered to be enlarged on bail subject to fulfiment of conditions imposed - petition allowed. 2024 (7) TMI 1080 Refund of excess custom duty paid - the Fe content on DMT basis was below 62% and custom duty should be calculated at the rate of Rs. 50/- PMT instead of Rs. 300/- PMT - HELD THAT:- The appellant got a contract dated 01.10.2007 to export 15,000 MT of Iron Ore fines to China. Accordingly, they filed two shipping bills for the export of 15,000 MT of iron ore. The load port analysis report showed the Fe content as 63.22% on DMT basis. Accordingly, both the shipping bills dated 26.11.2007 filed by the appellant for export of 15,000 MT of iron ore were assessed provisionally and the appellant paid export duty at the rate of Rs. 300/- per MT along with applicable cess as per the Customs Tariff Act. It is observed that after the decision of the Hon ble Supreme Court in the case of UNION OF INDIA VERSUS GANGADHAR NARSINGDAS AGGARWAL [ 1995 (8) TMI 73 - SUPREME COURT] , the Board issued Customs Circular No. 04/2012-Cus dated 17.02.2012, wherein it was directed to complete all pending assessments considering Fe content on Wet Metric Ton (WMT) basis. We also observe that Notification No.62/2007-Customs dated 03.05.2007 was issued, wherein it has been notified that Fe content below 62% will attract customs duty at the rate of Rs. 50 PMT. The issue is no more res integra in the view of the decisions of the Tribunal, Kolkata in the case of M/S BAGADIYA BROTHERS PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA AND COMMISSIONER OF CUSTOMS (PREVENTIVE) , BHUBANESWAR [ 2023 (9) TMI 827 - CESTAT KOLKATA] pronounced on 15 September 2023 wherein on a similar issue, this Tribunal has held that 'Fe' content is to be determined on WMT basis and duty has to be charged on such basis. A perusal of the Certificate indicates that the percentage of 'Fe' content in the iron ore exported is 58.61%, which is less than 62%. As per Notification No.62/2007-Customs dated 03.05.2007, when the Fe content is below 62%, the customs duty payable on the iron ore exported is at the rate of Rs. 50/- per MT. Accordingly, the appellant is liable to pay customs duty @ Rs.50/- per MT for the iron ore exported vide the above said two shipping bills. As the appellant has already paid customs duty @ Rs.300/- per MT, the appellant is eligible for refund of excess customs duty paid at the time of export. The impugned order as well as the Finalisation order dated 10.02.2017 is set aside - matter remanded back to the adjudicating authority to finalise the provisional assessment. Upon finalisation, the appellant is eligible for the refund of the excess duty paid at the time of export - appeal disposed off by way of remand. 2024 (7) TMI 1079 Exemption entry 347B of the N/N. 21/2002-Customs dated 01.03.2002, as amended by notification No.61/2007-Customs dated 03.05.2007 - import of helicopters by the appellants - confiscation - penalty u/s 112 ibid - HELD THAT:- This a contractual arrangement between the appellants and the company for providing the facility of helicopter services to them by making available the specified aircraft(s) owned by them and for which they had obtained Non-Scheduled Air Transport Services (Passenger) permit. Further, the undertaking given by the company is for use of aircraft for a minimum of 40 hours per month is a kind of assurance of business given to the appellants as a favourable/regular customer. In respect of the agreement dated 19.09.2006, it transpires that this is another agreement of similar nature wherein the services of hiring helicopter was provided to one another company. In terms of the notification No. 21/2002-Customs dated 01.03.2002 as amended by notification No. 61/2007-Customs dated 03.05.2007, it is provided that import of goods falling under chapter heading 8802 (except 8802 60 00) are exempt from basic customs duty subject to fulfillment of the condition No. 104. Helicopters being classifiable under Customs Tariff Item 8802 1100, 8802 1200 are covered under the above exemption entry and hence the goods under dispute in this case are eligible for exemption by the main entry under Serial No. 347B of the notification dated 03.05.2007 - on the basis of the above factual matrix of the import goods fulfilling all the conditions and covered by the exemption entry, by description and coverage of the customs tariff sub-heading, the import of helicopter by the appellants would be covered by the exemption entry under Serial No. 347B of the notification dated 03.05.2007. It is therefore to be understood that CAR 2010 can be taken as a basis to comprehend the CAR 1999 and CAR 2000. In terms of the definition of nonscheduled air transport service under CAR, this is other than the scheduled air transport service. Thus, this definition provides a meaning that the requirement of publishing a timetable; providing a pattern of regular frequency of flight services in a systematic manner; and the such services being kept open for public, is not required to be followed for non-scheduled air transport service. In view of such a definition provided under CAR/Aircraft Rules, 1937, we come to the conclusion that the findings arrived at in the impugned order for denying the exemption benefit under Serial No. 347B of the notification dated 03.05.2007, only on the basis of explanation under condition No.104 is not legally sustainable. The order of the Tribunal the case of COMMR. OF CUS. (IMPORT) , ACC, MUMBAI VERSUS AIRMID AVIATION PVT. LTD. [ 2020 (3) TMI 922 - CESTAT MUMBAI] , had dealt the genesis of the issue, distinction between definitions provided under the Aircraft Rules and explanation and the interpretation of statutes and exemption notification in detail. Upon such examination the Tribunal has held that exemption is eligible to non-scheduled (passenger) service operator as the peripheral circumstances such as absence of published tariff, non-issue of tickets and carriage of employees of companies, not to be construed as intention for own user by harmoniously interpreting the exemption notification and Aircraft Rules and CAR. The import of Bell Helicopter (Model No.412-EP, Sr. No.36643 registered as VT-HGK) by the appellants vide B/E No.397583 dated 26.12.2007 is eligible for grant of exemption from the whole of the import duties of customs under Serial No. 347B of the Notification No.21/2002-Customs dated 01.03.2002 as amended by Notification No. 61/2007-Customs dated 03.05.2007 - there are no merits in the impugned order, in so far as it has confirmed the demand of customs duty and confiscated the imported goods offering the same on redemption fine and imposed penalties on the appellants. Therefore, by setting aside the impugned order dated 16.03.2009 - appeal allowed. 2024 (7) TMI 1078 Refund claim - rejection of refund on the ground that they have been filed beyond the prescribed period of limitation as per Section 27 of the Customs Act, 1962 - HELD THAT:- The period of limitation of one year does not apply when the amount claimed as refund have been paid under protest. Section only recognizes the fact of payment of amounts under protest. It does not recognize the vacation or such a protest once it is established that the amount claimed as refund were paid under protest. There are no reason why such a condition can be imported within the statute which has been not provided. In case of TRIVENI ENGG. INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., ALLAHABAD [ 2012 (6) TMI 757 - CESTAT NEW DELHI] following has been held that ' Bagasse is not a dutiable item and not a manufacture item, as held by the Hon ble Supreme Court, there was no question of any reversal of duty under the provision of Rule 6 (3) of CCR, 2004. Under such facts and circumstances, I hold that the amount reversed by the appellant under Rule 6 (3) of CCR was in the nature of revenue deposit. Further, it is an admitted fact that such amount was reversibly deposited under protest.' There are no merits in the submissions made to the fact that the provisions of Section 27 could not apply to the case of refund of penalty and fines. The period of limitation shall not apply in the present case and refunds claim have to be adjudicated accordingly, treating that these amounts of redemption fine and penalties were paid under protest as per the direction of the department, for effecting the clearance of the goods though the order imposing the fine and penalty was challenged in appeal. Thus though it is held that the refund claim has to be processed under the provisions of Section 27 of the Customs Act, 1962, as this is a case of consequential refund of penalty and redemption fine, the same cannot be held to be barred by the limitation as provided in the said section. There are no merits in the impugned order - appeal allowed. Insolvency & Bankruptcy 2024 (7) TMI 1077 Dismissal of application - requirement of payment to 103 employees towards arrears of salary - examination of settlement with 103 employees - double paymnet were done to employees or not - HELD THAT:- The prayers made by the Appellant were not liable to be allowed. Whatever prayers have been made has been clearly categorically explained in the reply affidavit of Respondent filed in this Appeal, as well as before the Adjudicating Authority. There is no occasion for holding RP personally liable for any payment made to 103 employees. It is pleaded by the RP that the payments, which have been made, were made with the approval of the CoC. Any payment after CIRP having been made by the RP with the approval of CoC, no personal liability can be fastened on the RP. The prayers made by the Appellant in the Application, could not have been allowed and in view of the affidavit filed by the RP, the apprehension that Appellants 103 employees shall receive double payment has also been clarified and those 103 employees shall not be entitled to be made any payment as per the Resolution Plan towards their unpaid salary. Whereas, 103 employees shall also be entitled for payment of gratuity and provident fund. There is no ground has been made out to interfere with the order passed by the Adjudicating Authority - appeal dismissed. Service Tax 2024 (7) TMI 1076 Invocation of extended period of limitation - It is the contention of learned counsel for the petitioner that petitioner is engaged in carrying out drilling of bore wells in agricultural lands pertaining to agriculturists, which falls under the exemption under negative list entry under section 66 (D) (3) of the Finance Act of 1994 - HELD THAT:- This Court is of the opinion that to invoke the proviso to Section 73 (1) of the erstwhile Finance Act of 1994, the necessary mandatory requirements are contemplated in the Act of 1994, which is ingrained in the proviso to section 73 (1) of the Act. The same has been stated in the show cause notice with regard to the petitioner being liable to pay the service tax and why penalties should not be imposed except for narrating in detail with regard to the requirements as contemplated under proviso to Section 73 (1) of the Act of 1994. It is not the case of the petitioner that he was not provided an opportunity to reply and so also it is not his case that he was not given a personal hearing or opportunity of hearing. The petitioner was asked to provide details with regard to why he has not registered under the service tax and not paid the service tax. It is apparently clear that once the show cause notice is issued under the proviso to Section 73 (1) of the erstwhile Finance Act, invoking the extended period of limitation beyond the 30 months and once an inquiry is conducted, opportunity is given to file reply when adjudication is held the grounds whatever urged by the petitioner herein would have to be challenged by way of an appeal provided under the Act of 1994, rather than challenging the jurisdiction of the revenue for issuance of the show cause notice - It cannot be said that the revenue does not have the jurisdiction to issue show cause notice under Section 73 (1) of the Act as it is not specified in detail with regard to the requirement under proviso to Section 73 (1) of the Act. As subsequently in the course of the show cause notice and the hearing, the opportunity was provided to the petitioner to substantiate the same by answering the requirement of not registering himself under the service tax registration and payment of service tax. It is apparently clear that the invocation of the writ jurisdiction under Article 226 of the Constitution of India whether could be entertained when there is an alternative efficacious remedy of appeal available under this statute. It is not in dispute, but in the present case, Section 85 of the Act, 1994 provides for appeal against any orders passed by the authorities. If at all the petitioner is aggrieved by the order of the authorities, he would have to approach the appellate authority rather than invoking the writ jurisdiction. There are no good ground made or cogent reasons of the revenue having not provided sufficient cause and reasons to invoke the proviso to section 73 (1) of the Act, 1994, for the extended period of limitation - petition is dismissed. 2024 (7) TMI 1075 Non-payment of service tax - consideration received from Nalco, USA - service rendered during the period 2007-08 to 2011-12 - Extended period of limitation - HELD THAT:- For the services being rendered for the clients of USA Company in India since the service is taking place within India, the Appellant is required to pay Service Tax, which they are doing and the Department is not disputing the same. In respect of the services rendered for the clients of USA Company in foreign countries, this would amount to export of services in terms of Rule 3 of the Export of Services Rules, 2005. Rule 3 (2)(b) specifies that when the services are rendered abroad, the consideration should be received in convertible foreign currency. Admittedly, there is no dispute that the Appellant is receiving the consideration in convertible foreign exchange. Only objection of the Revenue is to the effect that such foreign exchange is being received form USA Company and not directly from the clients. There are no specific bar or condition at Rule No. 3(2)(b) that the convertible foreign exchange should be received only from the clients and not through any other person. Therefore, the Revenue's contention that the amount is not being received in convertible foreign exchange, not agreed upon. Since the Appellant has fulfilled all the requirements under Export of Service Rule, 2005, we hold that on merits the confirmed demand is required to be set aside. In respect of reimbursements given to Nalco Company USA, there are the costs initially incurred by them and the same is being reimbursed by the appellant. There is no allegation that such amounts are being paid by the appellant as consideration towards any service provided by Nalco Company USA. Therefore, the confirmed demand on this count is legally not sustainable, the same is set aside. Extended period of limitation - HELD THAT:- There are considerable force in the Appellant's submission that the Department has not brought in any concrete evidence towards suppression. Admittedly, the Appellant is registered with the Service Tax Department and is making the normal Service Tax payments, filing the ST-3 Returns etc. which shows that they have been providing all the details to the Department on a timely basis. Towards their transactions within India, they are discharging the Service Tax liability. In respect of the services rendered abroad, their holding bonafide belief is found to be proper. In such a case, suppression clause cannot be sustained against the Appellant. Therefore, the confirmed demand towards extended period set aside on account of time bar also. The Appeal is thus allowed both on merits as well as on account of limitation (in respect of the extended period). 2024 (7) TMI 1074 Levy of service tax - renting of immovable property - buildings (at Corbett Ramnagar Naukuchiyatal) which were renting - eligibility for abatement of 40% in terms of N/N. 26/2012 - supply of Tangible Goods service - letting out plant/machinery and fixtures to M/s.Mahindra Holidays Resorts India Ltd. - extended period of limitation - penalty u/s 77 and 78 of FA. Renting of immovable property - HELD THAT:- For the period upto June, 2012, relying on the provisions of Section 65(105)(zzzz) and the Exclusionary Clause (d), which provided that, building used solely for residential purposes and buildings used for the purpose of accommodation including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities shall not be included in the category of immovable property for the purpose of business or commerce. The issue is no longer res integra as the same is considered on the earlier occasion also by this Tribunal in the case of AMBIENCE CONSTRUCTIONS INDIA LTD. VERSUS THE COMMISSIONER OF SERVICE TAX HYDERABAD [ 2012 (11) TMI 653 - CESTAT BANGALORE] and also in the case of M/S JAI MAHAL HOTELS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (7) TMI 540 - CESTAT NEW DELHI] , where the Tribunal held 'On a true and fair construction of provisions of the exclusionary clause under Explanation 1 to Section 65(105)(zzzz); and in particular sub-clause (d) thereof, we are compelled to the conclusion that renting of buildings used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel, is covered by the exclusionary clause and does not amount to an immovable property , falling within the ambit of the taxable service in issue.' The case of the appellant is that since renting of hotels is not covered in the Negative List but had become taxable, therefore, they have paid the service tax on the letting out of the hotel building w.e.f. 1.7.2012. Notification No.26/2012 dated 20.06.2012 exempted the taxable services of the description specified in Column (2) of the Table therein, from so much of the service tax as in excess of the service tax calculated on a value, which is equivalent to the percentage specified in the corresponding entry at Serial No.6 of this Notification i.e., renting of hotels, inns, guesthouse, clubs, camp sites or other commercial places meant for residential or lodging purposes to the extent of 60%. Thus under the specific entry in the notification, the appellant is eligible for abatement to the extent of 40% and was liable to pay service tax on 60% of the value. Since the appellant have paid the service tax on 60% of the value of the rental amount received on letting out the said hotel, they are not liable for any further payments towards service tax and therefore, the demand for the balance amount stands dropped. Supply of tangible goods service - letting out of the Plant Machinery to MHRIL - HELD THAT:- A perusal of Section 65(105)(zzzzj) and Section 66E(f) shows that the requirement to fall under such services remains the same, which involves supply of tangible goods without transferring the right of possession and effective control of such goods. Further, the definition also shows that service tax under SOTG is applicable when the goods are provided for use without transfer of right to possession and effective control whereas in the present case, complete control and possession of goods have been given to MHRIL and hence, they are excluded from the levy of service tax. Thus, for the period from 01.07.2012, the appellants have admittedly deposited the service tax, subject to the abatement in terms of the N/N. 26/2012 dated 20.06.2012 and, therefore, they are liable for service tax only to the extent of 60% of the value of the lease rent of the hotel - the appellants are not liable to pay service tax under the category of SOTG on the goods as they are part of the premises and are immovable. We are supported by the earlier decision of this Tribunal dated 13.09.2019 in the case of the appellant. Levy of penalty - HELD THAT:- The issue was in the nature of interpretation and the transactions are duly recorded in the books of accounts, which are maintained in the ordinary course of business and, hence, no ground for levy of penalty is made out. The impugned order is hereby set aside and the appeal is accordingly allowed. 2024 (7) TMI 1067 Liability to pay service tax - construction of educational institutions - Works Contract Service for the period 01.10.2008 to 30.06.2012 - The department is of the view that the appellant has to pay service tax for construction service provided to construct educational institutions - extended period of limitation. HELD THAT:- The Department vide Circular No.80/10/2004-ST dt. 17.09.2004 has clarified that the constructions which are for the use of organizations or institutions being established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for the purpose of profit are not taxable being noncommercial in nature - When the circular issued by the Board specifically clarified that construction services provided for construction of educational institutions are exempted from levy of service tax, there are no reason to hold that these constructions are commercial in nature. The department itself has taken the view that the circular dt. 17.09.2004 is still in force and that the construction provided for educational institutions are exempted from levy of service tax. Needless to say, that the Board circulars are binding on the department. The Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT] had occasion to consider the issue of refund of service tax paid by an assessee on construction services provided for construction of educational institutions. The Hon ble High Court upheld the order passed by the Tribunal that construction of educational institutions is exempt from levy of service tax. In the case of GUJARAT ADANI INSTITUTE OF MEDICAL SCIENCES VERSUS C.C.E. S.T. -RAJKOT [ 2023 (6) TMI 1000 - CESTAT AHMEDABAD] , the Tribunal considered the very same issue as to whether the demand of service tax raised on construction of educational institutions is sustainable or not, and it was held that ' When the property in question is not used by Appellant for commercial purpose then it cannot be liable for payment of service tax as is apparent from Circular dated 17-09-2004. It is apparent that C.B.E. C. circular considered the use of the said property as non-commercial in nature. In these circumstances service tax on construction of said building / property cannot be levied.' In the case of M/S KMV PROJECTS LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, AND SERVICE TAX HYDERABAD [ 2019 (3) TMI 1439 - CESTAT HYDERABAD] , the issue considered by the Tribunal was whether construction of guest house for temples at Srisailam, Kanipakam and also educational institutions would be subject to levy of service tax, where it was held that ' these buildings constructed by the appellant and the services rendered under works contract services are not taxable pre or post 1-7-2012.' Thus, the demand of service tax under WCS for the disputed period for construction of educational institutions cannot sustain. The issue on merits is answered in favour of the appellant and against the Revenue. Time Limitation - HELD THAT:- There is no positive act of suppression established by the department against the appellant. The issue is also interpretational in nature as there have been several litigations. The Board has also come forward to clarify the nature of construction services when provided to educational institutions. In such circumstances, there are no grounds for invoking the extended period and the demand is time-barred. The issue of limitation is answered in favour of the appellant and against the Revenue. The impugned order is set aside - appeal allowed. Central Excise 2024 (7) TMI 1073 Levy of short production duty - ratio of 93% finished goods viz-a-viz inputs consumed - setting aside the OIO without considering material facts - violation of principles of natural justice - HELD THAT:- The undisputed facts are that apart from the variation in production percentage as compared to the norms fixed by the SAIL , there was no other material available with the Department of the alleged excess production being cleared without payment of duty. The variation as per the Department was of only 2%. Further that the Plant and Machinery used by the respondent was not of the latest technology as that of the SAIL. The findings of Tribunal have not been challenged or disputed in the present appeal. During the course of arguments, no factual distinction between the facts of the present case and of M/S H.R. STEELS PVT. LTD. VERSUS CCE ST, ALWAR. [ 2018 (12) TMI 1950 - CESTAT NEW DELHI] has been made out. The addition was made only on the sole ground of 2% variation in production output of the respondent as compared to SAIL. No question of law much less substantial question of law is involved - appeal dismissed. 2024 (7) TMI 1072 Interpretation of statute - Rule 6 (3) (b) of Cenvat Credit Rules, 2004 - Demand equal to 10%, if the assessee reversed/paid proportionate Cenvat credit in respect of common input service used in the manufacture of exempted goods - whether the Tribunal properly acted as the appellate authority under Section 35C of the Central Excise Act, 1944, because the Hon'ble Tribunal does not explicitly address/verify whether the conditions stipulated under Rule 6 (3) (b) of Cenvat Credit Rules, 2004 have been complied with by the assesse - HELD THAT:- In view of the findings of facts arrived at by the CESTAT, it is not in dispute that the respondent has reversed the Cenvat Credit proportionate to the credit on input service used for exempted goods along with interest. The credit though availed at the time of receipt of input service but after reversal thereof along with the interest, the respondent never availed the credit. As per option given by Rule 6 (3) of the Rules which has come into effect from 01.04.2008, the appellant could not have insisted upon the payment of 10% amount of the value of the exempted goods when the petitioner has opted for the reversal of the Cenvat Credit on the input goods and services used for the exempted goods along with the interest. Merely because the respondent has reversed such credit in the year 2010, the appellant-Revenue cannot insist upon payment of 10% amount of the value of the exempted goods coupled with the facts that the respondent has paid interest at the rate of 24% per annum on the amount of reversal of the Cenvat Credit on 01.10.2010 which is not in dispute. Thus, no question of law much less any substantial question of law arises from the impugned order of the CESTAT - appeal dismissed. 2024 (7) TMI 1071 Refund of excess duty paid on account of issue of credit notes to dealers and stockists after the clearance of the goods - rejection on the ground that incidence of duty has been passed on and the appellants have not given any evidence to the effect that the incidence has not been passed on to the ultimate customers - principles of unjust enrichment under Section 11B read with provisions of Section 12B of Central Excise Act - HELD THAT:- This issue as to whether in the given set of facts, it was not possible to identify the persons who ultimately borne out the amount of excise duty collected in excess and therefore such excess amount will remain in the fund which will be utilised for the benefit of the customers as provided under Section 12D of the Central Excise Act, 1944 needs to be examined. The appellants have not been able to establish that they had not passed on the excess excise duty to their ultimate customer. Merely because they were selling on MRP basis, it would not absolve them from the fact that they had not passed on the original duty charged by the appellant to the ultimate customer and therefore even if they are entitled for refund on merit, they would still not be entitled for refund on the grounds of unjust enrichment under Section 11B. It is found that the judgment by Larger Bench of Hon ble Supreme Court in the case of Commissioner of Central Excise, Madras Vs Addison and Co. Ltd., the Addison and Company case law [ 2016 (8) TMI 1071 - SUPREME COURT] is squarely applicable to the facts of the case in as much as while the appellant is entitled for refund on merits but clearly they are not entitled for refund on the grounds of unjust enrichment as they have not been able to clear the bar of unjust enrichment. In so far as applicability of Section 12B is concerned, Commissioner (Appeals) has relied on various judgments including Grasim Industries Vs CCE, Bhopal [ 2003 (2) TMI 89 - CEGAT, NEW DELHI] , Sangam Processors (Bhilwara) Ltd., Vs Collector of Central Excise, Jaipur [ 1993 (2) TMI 211 - CEGAT, NEW DELHI] , Grasim Industries Ltd., Vs CCE, Bhopal [ 2011 (8) TMI 689 - SUPREME COURT] . He has placed reliance on Sangam Processors Ltd., [ 1994 (1) TMI 275 - SC ORDER] judgment passed by Three Member Bench of Hon ble Supreme Court to come to the conclusion that in the given fact of the case principle of doctrine of unjust enrichment would be applicable. It is found that though the appellants have also relied on various case laws, all these case laws have been dealt with adequately by the Commissioner (Appeals) who has given reasons for relying on certain judgments for coming to the conclusion that in the facts of the case, the principle of unjust enrichment would be applicable. Since the appellants have failed to prove that they had not passed on the excess excise duty to their ultimate customer, they would be hit by the provision of Section 12B. Therefore, while the refund is eligible on merits, the same cannot be disbursed to the appellant and is required to be dealt with in accordance with the provisions under Section 12D. Therefore, part of the observations of the Commissioner (Appeals) as regards non-entitlement of the refund on merit is not sustainable. However, his order is sustainable as regards applicability of unjust enrichment in the facts of the case. Appeal disposed off. CST, VAT & Sales Tax 2024 (7) TMI 1070 Rejection of application of recall of the order - assessment year 2009-2010 - application has been made after a period of 7 years without considering the reasons stated by the petitioner for filing the delay application for rectification - non-application of mind - violation of principles of natural justice - HELD THAT:- In the present case, it is abundantly clear that none of the grounds raise even considered by the Tribunal and therefore the impugned order suffers for non-application of mind and accordingly arbitrary. This aspect of the matter has already been decided by coordinate Bench of this Court in the case of M/s Ram Sewak Coal Depot [ 2003 (2) TMI 457 - ALLAHABAD HIGH COURT ], where it was held that ' it is held that the Trade Tax Tribunal has jurisdiction to set aside an ex parte order and re-hear the matter. There being no express provision to that effect does not inhibit the Tribunal in any manner to recall the said judgment.' In the present case also the petitioner has also taken the ground that he was never communicated the order passed by the Tribunal and therefore he was never aware about the order dated 16.03.2017 and it is only on the initiation of the recovery proceedings he came to know about the said order and accordingly he moved an application for rectification which is accordingly rejected by impugned order dated 30.03.2024. The impugned orders suffer from non-application of mind inasmuch as the ground taken by the petitioner have not been considered and dealt with accordingly the impugned order dated 30.03.2024 is set aside. The matter is remitted to the Commercial Trade Tax Tribunal to decide the application of the petitioner afresh in accordance with law - revision allowed by way of remand. Indian Laws 2024 (7) TMI 1069 Lease or not - transaction where the right to collect tolls is given in lieu of the amount spent by the Concessionaire in the construction of roads, bridges etc. under the Build, Operate Transfer (BOT) Scheme - Section 105 of the Transfer of Property Act, 1882 - Section 2(16) of the Indian Stamp Act, 1899 - validity of the amendment made in proviso (c) to Clause (C) of Article 33 of Schedule 1(A) as amended by the Indian Stamp (M.P.) Act, 2002 - Doctrine of legitimate expectation - Doctrine of promissory estoppel. HELD THAT:- There are no hesitation in holding that the judgment of the High Court impugned in these appeals does not require any interference. There are no infirmity, much less any perversity warranting any interference by this Court. The High Court has dealt with all aspects of the matter considering not only the stipulations in the Concession Agreement but has also dealt with in detail with the respective arguments advanced by the petitioners before the High Court (the appellants herein) at the same time referring to the statutory provisions, the constitutional provisions as also the case-laws relied upon by the counsel for the parties. However, there is one aspect of the matter which requires clarification which we shall deal with at the end of this judgment. The doctrine of legitimate expectation has been discussed and elucidated upon in several judgment by this Court. The doctrine provides a framework for judicial review of executive actions, policy changes, and legislative decisions. In UOI. VERSUS HINDUSTAN DEVELOPMENT CORPN. [ 1993 (4) TMI 306 - SUPREME COURT ], this Court emphasized that legitimate expectation primarily grants an applicant the right to a fair hearing before a decision that negates a promise or withdraws an undertaking from which an expectation of certain outcome or treatment arises. It does not, however, create an absolute right to the expected outcome. The protection of legitimate expectation is subject to overriding public interest, which means that even if an individual s expectation is reasonable and based on a past practice or representation by the executive or legislature, it can be denied if justified by a significant public necessity. Doctrine of legitimate expectation - HELD THAT:- The doctrine of legitimate expectation serves only as a procedural safeguard ensuring fairness in administrative decisions and policy changes. It grants the expectant party the right to a fair hearing and an explanation but does not guarantee the realization of the expected benefit. The government s authority to revise policies in public interest remains paramount, with the judiciary intervening only in cases of arbitrariness, unreasonableness, or lack of public interest. This balanced approach ensures that while individuals can expect consistent treatment based on past practices or promises, the government retains the flexibility to respond to evolving needs and priorities. Doctrine of promissory estoppel - HELD THAT:- On the doctrine of promissory estoppel, since it is an equitable doctrine, it only comes into play when equity requires a party be estopped from withdrawing its promise. It has been well settled by this Court in several judgments that the principle of promissory estoppel cannot be invoked against the exercise of legislative power. Promissory estoppel or legitimate expectation can be dealt with on the same status of the executive decision when the prior as well as the subsequent decisions are both taken by the same or similarly placed authorities. Where the executive takes a decision based upon which a party acts and, later on, the executive withdraws that decision to the detriment of the party acting upon the earlier decision, it can be said to be estopped from withdrawing its promise or depriving the party from its legitimate expectation of what had been promised. Whether the Concession Agreement is a lease or a bond or a license? - HELD THAT:- The definition of lease as given under the IS Act clearly covers any instrument by which tolls of any description are let and also under Section 105 of the TP Act, all the ingredients of a lease are fulfilled. In the present case, the same reasoning and findings as given by the High Court in great detail after considering the various clauses of the Concession Agreement is not repeated - the finding of the High Court upheld to be clearly justified and based upon a clear understanding of the terms of the concession agreement. There are no perversity at all in the reasoning given by the High Court to uphold the Concession Agreement to be a lease. Once, the stamp duty is payable on the amount spent by the lessee, the demand raised on the whole amount would be unjustified, as such, to the above extent, the demand needs to be set aside with a further direction to the Revenue Officer/Collector (Stamps) of the district concerned to re-calculate the same as observed above and, accordingly, raise the demand. In case, the appellants have deposited the demand raised on the entire project cost then the amount lying in excess with the State would be refunded to them. The appeals stand partly allowed. 2024 (7) TMI 1068 Seeking grant of bail - unknown persons had siphoned off huge amount of money by creating fake Demat accounts of shareholders whose shares were lying dormant - active role of applicant or not - HELD THAT:- Being a stock broker and in the business of shares, merely because the applicant was in touch with accused No.1 and he forwarded certain whatsapp messages concerning details of shares that could be said to be dormant, in itself cannot be the basis of claiming that the applicant had a major role to play in duping the shareholders (victims). Although it is stated in the charge-sheet that the applicant had an active role to play in opening of fake accounts of such victim shareholders, there does not appear to be any material to support such an assertion. It is brought to the notice of this Court that one of the employees of accused No.1 i.e. Mahadev Gavde, in his statement recorded under Section 164 of the Cr.P.C. has described in detail as to the manner in which the accused No.1 used to open such fake accounts of the victim shareholders. There is no role ascribed to the applicant in the said statement. This Court is of the opinion that the applicant had been able to make out a case to contend that there is scant material to directly link the applicant with the incident in question, leading to registration of the FIR. There is presently no material on record to show that the applicant in any manner could be said to be a beneficiary of the alleged activities that led to registration of the FIR. The applicant has already spent more than 5 Months behind bars and in this situation, this Court is inclined to allow the present application. The applicant shall be released on bail for offences under Sections 420, 465, 467, 468 and 471 read with 120(B) of the Indian Penal Code (IPC), on furnishing PR bond of ₹ 1,00,000/- and one or two sureties in the like amount to the satisfaction of the Trial Court and subject to fulfilment of further conditions imposed - bail application allowed.
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TMI Tax Updates - e-Newsletter July 23, 2024

Highlights / Catch Notes

GST

High Court dismissed challenge to 100% penalty order u/s 74 GST law. Limited scope under Art 226. No relief. Raise grievances via appellate remedy.

Tax liability of legal rep under CGST Act questioned. Court quashed order, remitted case for fresh hearing allowing petitioner to defend.

Notices/endorsements issued to non-existent entity quashed. Respondents free to pursue proceedings against appropriate entity as per law.

EOU entitled to IGST refund u/r 89 on exports, not u/r 96. Procedural lapses can't deny legitimate export incentives. Order set aside.

Navaratan Oil, Gold Turmeric Cream classified as drugs; Boroplus Cream as drug, not cosmetic; Sonachandi Chavanprash not a drug

Tax demand quashed due to lack of natural justice. Petitioner to remit 10% tax within 2 weeks for reconsideration.

Refund application dismissed. Option to pay or contest seizure. Chose payment, skipping adjudication. Delayed 7 years after release.

ITC denied on commodities & cancelled dealers' supplies. Petitioner showed invoices, bills & returns. Order lacked findings, wrongly demanded lorry receipts. HC remanded, allowed fresh reply.

Delay in filing appeal rejected, mismatch in GSTR returns. HC directs appellate authority to consider appeal on merits if re-presented within 10 days.

Income Tax

Tribunal dismissed appeal ex-parte; HC found no fault of assessee, remanded appeal back for fresh hearing on merits.

Assessee's real estate income estimated at 8% turnover. 40% receipts allowed as agricultural income due to lack of documentation. Appeal partly allowed.

Monetary limit not breached for 2006-07 to 2010-11, appeals dismissed. For 2011-12 & 2012-13, exemption u/s 12AA allowed.

Reopening invalid: Unverified info, retracted statement, no independent inquiry. AO failed to verify evidence. Mere suspicion, no legal basis.

Income duly accounted, corroborated by audits & returns. No unexplained investments/expenses. Rent, contractor payments substantiated. CIT(A) & ITAT upheld assessee's stand.

Disallowances u/s 40(a)(ia) partly upheld. Arm's length pricing adjustments directed. Education cess disallowed. Stock exchange charges allowed.

Reopening beyond 4 yrs invalid due to lack of evidence of non-disclosure. Deemed dividend u/s 2(22)(e) not required to be declared.

Deduction u/s 57 against income u/s 56 disputed. Expenses apportionment challenged. Remanded to verify assessee's formula consistency. If consistent, no addition.

Charitable entity granted exemption u/ss 11 & 12 for conducting exhibitions sans commercial intent. Accumulation sans Form 10 condoned. Prior period expenditure allowed.

Interest/dividend income from co-op banks deductible u/s 80P(2)(d) for co-op societies. Allow deduction for interest earned from co-op banks.

Customs

Govt imposes 17.57% countervailing duty on radial tyres above 16" for buses/trucks from China for 5 yrs to protect domestic industry.

Duty credit extended to SEZ units exporting under RoDTEP Scheme. Shipping bill/export bill required from 1st July 2024.

Bail granted despite recovery of diamonds & foreign currencies due to non-communication of grounds in known language, violating Art. 22(5). (5)

Iron ore export duty paid excess, Fe content <62% on WMT basis. Refund ordered as per precedents. Impugned orders set aside.

Helicopter import exempted from customs duty under condition 104 if used for non-scheduled air transport services.

Refund claim not barred by limitation if paid under protest. Sec 27 recognizes protest payment, not vacation. Excludes penalty/fine refunds.

Indian Laws

Concession agreement is a lease, stamp duty payable on lessee's amount spent, not entire project cost. Amendment valid.

Broker sought bail in fake Demat accounts case. Court: No direct role proven, granted bail after 5 months custody on conditions.

IBC

Dismissal of salary arrears claim for 103 employees. No double payment. RP not liable for CoC-approved payments during CIRP.

PMLA

Reporting entities must obtain KYC Identifier, retrieve & update KYC records from Central Registry for client due diligence.

SEBI

SEBI amends AIF Regulations, adds new chapter for migrated venture capital funds with eligibility criteria, investment norms & restrictions.

Master Circular regulates ESG Rating Providers. Specifies requirements, obligations. Board responsible for compliance.

SEBI allows ESG Rating Providers to rate products/issuers in IFSC under IFSCA guidelines. Aims to protect investors & promote market.

SEBI allows CRAs to rate under IFSCA norms. IFSCA to oversee CRAs' IFSC ops, complaints & enforcement. Effective immediately.

Service Tax

Drilling bore wells for agriculturists claimed exemption under negative list. Court upheld revenue's jurisdiction to issue show cause notice invoking extended period after inquiry.

Central Excise

Reversal of Cenvat credit for exempted goods with interest allowed; Revenue can't demand 10% of exempted value if opted for reversal.

Excess duty refund denied due to unjust enrichment. Appellants failed to prove non-passing of excess duty to customers.

VAT

Tribunal order quashed for violating natural justice. Delay grounds ignored. Rehearing ordered on lack of order communication.

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TMI Tax Updates - e-Newsletter
July 23, 2024