TMI Tax Updates - e-Newsletter
July 26, 2023

Case Laws in this Newsletter:

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

Articles

1. Process to Register a Delaware LLC for Non-US Resident

   By: Ishita Ramani

2. GLOBAL MINIMUM TAX SERIES – PART 11 - Pillar Two Safe Harbours

   By: Amit Jalan

3. To make easy business and profession for self-employed people extend ITR filing date from 31.07.2023

   By: DEVKUMAR KOTHARI

4. The CBIC Officers entrusted with larger Roles – More Flying squads to check warehouse, vehicles, restaurants, etc to support Election Commission

   By: Vivek Jalan

5. ONCE APPLICATION FOR REFUND IS MADE IT HAS TO BE PROCESSED BY THE PROPER OFFICER

   By: DR.MARIAPPAN GOVINDARAJAN

6. GST Implications on Various Travel-Related Services by Agent GST Implications on Various Travel-Related Services by Agent.

   By: Estartup India

7. Directed to refund the payment deposited during search proceedings being without authority of law

   By: Bimal jain

News

1. White Label ATMs (WLAs) to drive ATM penetration in India with a greater focus on Tier III to VI centres

2. Withdrawal of ₹2000 denomination currency notes by RBI

3. Relief to 137 MSMEs provided under “Vivad Se Vishwas I - Relief to MSMEs” scheme

4. 1,19,224 claims paid under Pradhan Mantri Suraksha Bima Yojana (PMSBY) scheme

5. Remarks of Shri M. Rajeshwar Rao, Deputy Governor Panel Discussion on Climate Implications for Central Banking (Organised by the IMF and Center for Social and Economic Forum on Wednesday, July 19, 2023 at New Delhi)

6. Union Finance Minister Smt.Nirmala Sitharaman presides over the 164th Income Tax Day celebrations at New Delhi

Notifications

GST - States

1. 694/XI-2-23-9(47)-17-T.C. 217-U.P.Act-1-2017-Order (276)-2023 - dated 13-6-2023 - Uttar Pradesh SGST

Amendment in Notification No. 428/XI-2-9(47)-17-U.P. Act-1-2017-Order (106)- 2020, dated April 30th , 2020

SEBI

2. SEBI/LAD-NRO/GN/2023/140 - dated 24-7-2023 - SEBI

Securities and Exchange Board of India (Stock Brokers) (Second Amendment) Regulations, 2023

3. SEBI/LAD-NRO/GN/2023/139 - dated 24-7-2023 - SEBI

Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Second Amendment) Regulations, 2023

Circulars / Instructions / Orders

GST - States

1. Trade Circular 13 T of 2023 - dated 21-7-2023

Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021

2. Trade Circular 14 T of 2023 - dated 21-7-2023

Clarification on TCS liability under Sec 52 of the CGST Act, 2017 in case of multiple E-commerce Operators in one transaction

3. Trade Circular 15 T of 2023 - dated 21-7-2023

Clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period

4. Trade Circular 16 T of 2023 - dated 21-7-2023

Clarification on taxability of shares held in a subsidiary company by the holding company

FEMA

5. Press Note No. 1 (2023 Series) - dated 21-7-2023

STREAMLINING THE PROCEDURE FOR GRANT OF INDUSTRIAL LICENSES

Highlights / Catch Notes

GST

• Court Rules No Penalty for Delayed Transitional Credit Under GST Due to Government Portal Glitches.

  Case-Laws - HC : Levy of Interest and penalty - the transitional credit which was taken has been sanctioned - The difficulty arose only on account of technical glitches in the web portal maintained by the Central Government at the time of implementation of GST. The petitioner cannot be penalized as the credit itself was allowed - HC
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Income Tax

• High Court Upholds ITAT Decision: No Penalty for Bona Fide Error u/s 271(1)(c) on Excess Depreciation Claim.

  Case-Laws - HC : Penalty u/s. 271(1)(c) - furnishing of inaccurate particulars of income - the addition made in the impugned case on account of excess depreciation claimed having been surrendered by the assessee itself without any prior detection of the Revenue and the excess claim having been demonstrated to have been made for the bonafide reasons - ITAT has rightly deleted the penalty - HC
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• Solar Plant Depreciation Claim Approved: Factory-Linked Rooftop Installation Qualifies for Higher Rate, Overruling DRP Rejection.

  Case-Laws - AT : Eligibility to claim depreciation at higher rate - DRP rejected the claim on the premise that the Solar Power Plant is installed at the roof top of office building for captive use for office - Contention of the assessee that office building is part of factory premise and the electricity is used for factory only is acceptable - AT
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• Penalty Deleted for Non-Compliance Due to Unreceived Notices: Section 272A(1)(d) Case Lacks Evidence from Assessing Officer.

  Case-Laws - AT : Penalty u/s 272A(1)(d) - non-compliance of the statutory notices - It is the contention of the assessee that AO through National Faceless Assessment Centre had issued notice dated 14.03.2018 and 23.08.2019 but the same were not received by the assessee. AO has not assigned any reason for not accepting the contention of the assessee. - Levy of penalty deleted - AT
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• Depreciation Claim Upheld: Section 32 Allows Depreciation on Entire Asset Block, Including Closed Units, Despite BIFR Directions.

  Case-Laws - AT : Disallowance of depreciation u/s 32 - Plants not in operation - The BIFR directions do not override the provisions of Act. As long as the ownership of the assets continue to be with the assessee company - Assets of closed units could not be segregated for purpose of allowing depreciation and depreciation has to be allowed on entire block of assets. - AT
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• Assessee's Default u/s 206C: NFAC Order Set Aside Over Late Form 27C, Rule 37C Interpretation Challenged.

  Case-Laws - AT : Default u/s. 206C - assessee has not collected TCS on sale of scraps - late filing of Form 27C - the A.O. failed to verify the Form 27C though the assessee submitted belatedly and the Ld. A.O. declined to accept the same in view of Rule 37C of the I.T. Rules. Further there is no issue qua genuineness of these Forms. - order passed by the NFAC set aside - AT
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• Hospital Pharmacy Income Eligible for Section 80IB(11C) Deduction: Understanding "Derived From" vs. "Attributable To" in Tax Benefits.

  Case-Laws - AT : Deduction u/s 80IB(11C) - business of running hospitals - nature of income - “derived from” vs “attributable to” - the assessee is eligible to claim deduction u/s. 80IB(11C) of the Act in respect of inhouse pharmacy maintained by the assessee within the premises of hospital. - AT
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• Court Rules Unsupported Documents Insufficient for Proving Undisclosed Income u/ss 69A, 69C of Income Tax Act.

  Case-Laws - AT : Unexplained money and unexplained expenses not recorded in the books of accounts u/s 69A/69C - Documents found during the search raise doubts but the same cannot be used as evidence until and unless it is supported by the corroborative material and after carrying out independent enquiries - Regarding the SMS, it does not establish that the assessee has carried out cash transactions with Venus group - revenue failed to prove the onus cast on it - AT
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• Taxpayer Faces Higher Tax Rate for 2016-17 u/s 115BBE After Revising Income in Survey.

  Case-Laws - AT : Revision u/s 263 - applicability of higher rate of tax is u/s 115BBE - incomes have been admitted by assessee during the course of survey and also offered as such in the return of income - Higher rate of tax prescribed in section 115BBE is applicable to the whole previous year 2016-17 relevant to assessment-year 2017-18 - AT
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• Depreciation Claims Beyond Six Years Not Allowed; No Legal Provision for Income Modification After This Period.

  Case-Laws - AT : Claim of depreciation beyond six years for the first time - There is no provision under law to make assessment of an assessee beyond six years. Therefore, claim made by the assessee beyond six years cannot be admitted, because, there is no provision under the law to modify the income of the assessee by the AO. - AT
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Customs

• Confiscation of Imported Goods for Misdeclaration of Quantity and Value u/ss 111(l) and 111(m); Penalties Imposed.

  Case-Laws - AT : Confiscation - redemption fine - penalty - Misdeclaration of quantity and value of imported goods - the goods were found to be in excess of the entry made i.e. the bill of entry and, therefore, they were liable to confiscation under section 111(l). The imported goods also did not correspond in value and, therefore, were also liable for confiscation under section 111(m). - AT
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• CHA License Revocation Overturned: Commissioner Exceeded 90-Day Limit After Inquiry Report Submission, Violating Prescribed Timeline.

  Case-Laws - AT : Revocation of the appellant's CHA Licence - the Commissioner passed the order after more than one year from the date of submission of the Inquiry Report, which is clearly beyond the prescribed period of 90 days - order of revocation and forfeiture set aside - AT
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• Customs Broker's License Suspension Overturned; Misdemeanor Involving Unusual Goods Deemed Insufficient for Actionable Concern.

  Case-Laws - AT : Suspension of Customs Broker License - single alleged misdemeanour - The goods are not a normal item of import requiring close familiarity on the part of the importer. The claim of the appellant to unblemished record of half a century as a professional ‘customs broker’ has not been disputed. - The apprehension of similar modus operandi that exercised the mind of the licencing authority is, thus, needless. - suspension order set aside - AT
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IBC

• SARFAESI Proceedings Against Guarantor Allowed Despite Moratorium on Corporate Debtor, Says Court on IBC Sections 14 & 31.

  Case-Laws - HC : CIRP - Recovery of dues from the Guarantor, while moratorium was decelerated against the corporate debtor - S. 14 and S.31 of the IBC does not bar initiation and continuation of the SARFAESI proceedings against the Guarantor. As such, the bank has not violated the moratorium as ordered by the NCLT, in initiating SARFAESI Proceedings against Petitioner / Guarantor. - HC
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• Respondents Deemed Fraudulent for Submitting False Accounts, Violating Section 66(1) of Insolvency and Bankruptcy Code 2016.

  Case-Laws - AT : CIRP - Fraudulent Transactions or transaction in the normal course of business - It is seen that the intent to defraud the creditors”, under Section 66(1) of the I & B Code, 2016 is further established by the fact that the ‘Respondent Nos. 2 & 3’ had provided different books of accounts in different proceedings before the ‘Adjudicating Authority’ with a clear intent to fraudulently deprive the creditors of the ‘Corporate Debtor’ from the admitted amounts - AT
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PMLA

• Appellate Tribunal can condone any delay in filing an appeal, no limitation on delay length.

  Case-Laws - HC : Condonation of delay in filing appeal - There is no cap as regards condonation. By saying no cap, it is meant that the Appellate Tribunal is not stifled when it comes to condonation of delay and any length of delay can be condoned. However, in the case on hand, adverting to the case file, learned counsel submitted that the impugned order has been received by the writ petitioners only on 06.02.2023 and captioned writ petitions have been filed in this Court on 20.03.2023. - HC
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Service Tax

• Supreme Court Affirms Video Production Services as Export, Classifies Editing and Coloring Under Service Tax Rules.

  Case-Laws - SC : Export of services - Palace of performance services on Goods - Video Production Agency service or not - the services such as editing, cutting, coloring etc. is only after recording is done of any programme, event or function on a magnetic tape or any other media or device - Having regard to the expressed words “services relating thereto” and the circular dated 09.07.2001, paragraph ‘2’, it is found that the Tribunal has rightly interpreted the said sections. - SC
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• Appellant Awarded 12% Annual Interest on Export Rebate Refund; Ensures Correct Interest Recovery on Previous Claim.

  Case-Laws - AT : Interest on refund of retention of rebate claim - Earlier recovery of interest made from the Rebate claim on exports - The appellant is entitled to interest @ 12% P.A. - AT
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• Extended Limitation Period Invalid Without Evidence of Intent to Evade Service Tax, Self-Assessment Insufficient.

  Case-Laws - AT : Invocation of extended period of limitation - The Principal Commissioner, therefore, fell in error in observing that the extended period of limitation could be invoked even if there was no intent to evade payment of service tax - Further, the extended period of limitation cannot be invoked merely because the parties have to self assess. - AT
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Central Excise

• Refund Claim Denied: Credit Notes Insufficient to Prove No Unjust Enrichment u/s 12B of Central Excise Act, 1944.

  Case-Laws - AT : Refund of duty paid under protest - Principles of unjust enrichment - merely issuing credit notes subsequent to the clearance of goods, the assessee cannot be said to have passed the bar of unjust enrichment envisaged under Section 12B of the Central Excise Act, 1944. - AT
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• CENVAT Credit Dispute: Supplier's Duty Payment on Exempted Goods Lacks Show Cause Notice u/s 11D, Supports Respondent's Claim.

  Case-Laws - AT : CENVAT Credit - capital goods - Payment of duty on exempted goods by the supplier - if the department is of the view that the supplier was not supposed to pay the duty in such case, the jurisdiction Officer at supplier end should have issued a Show Cause Notice for recovery of such amount under Section 11D of Central Excise Act, 1944, which was not done by the department. This further reinforce the claim of the respondent about their Cenvat credit. - AT
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VAT

• Delhi VAT Refunds Can't Be Withheld for Unrecoverable Dues; Objections Filed Against 2018 Demand Prevent Adjustment.

  Case-Laws - HC : Adjustment of pending dues from the amount of refund due to a tax payer - DVAT - The demand for the same was raised on 04.09.2018. However, the said amount is not recoverable as the petitioner had filed its objections against the said demands on 02.11.2018. It is impermissible to withhold refund towards demands which are not recoverable - HC
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Case Laws:

• GST

• 2023 (7) TMI 1008
  Summon to remain present for the purpose of interrogation in connection with an inquiry against one M/s. Iyer Enterprise Mundra Kutch - requirement to interrogate the respondents in regard to the alleged evasion of Goods and Service Tax Liability/Contravention of the Provision of the Finance Act 1994 and CGST Act 2017 - Section 83 of the Finance Act, 1994 and Section 70 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- It is well-settled position of law that power to arrest a person by an empowered authority under the GST Act and could be termed as statutory in character and ordinarily the writ court should not interfere with exercise of such power - this is so because such power of arrest can be exercised only in those cases where the Commissioner or his delegatee has reasons to believe that the person has committed any offence specified in Clause (a) or Clause (b) or Clause(c) or Clause (d) of sub-Section (1) of Section 132 which is punishable under clause (i) or (ii) or sub-section (1) or sub5 Section (2) of the said Section. This Court in UNION OF INDIA VERSUS PADAM NARAIN AGGARWAL ETC. [ 2008 (10) TMI 1 - SUPREME COURT] made it very clear that ordinarily the Court should not impose any condition before effecting arrest. If any conditions are imposed before effecting arrest for instance giving prior intimation to the person concerned etc., the statutory provisions would be rendered ineffective, nugatory and meaningless. The position of law is that if any person is summoned under Section 69 of the CGST Act, 2017 for the purpose of recording of his statement, the provisions of Section 438 of Criminal Procedure Code, 1908 cannot be invoked - as no First Information Report gets registered before the power of arrest under Section 69(1) of the CGST Act, 2017 is invoked and in such circumstances, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure for anticipatory bail. The only way a person summoned can seek protection against the pre-trial arrest is to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India. Undoubtedly, this is exactly what the respondents did in the present case. What the respondents sought by filing two criminal applications under Article 226 of the Constitution before the High Court was the direction to the appellant herein not to arrest them in exercise of the power conferred by Section 69(1) of the GST Act, 2017. This, in essence, is key to prayer for anticipatory bail. However, at the stage of summons, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure. One more opportunity provided to both the respondents to appear before the authorities for the purpose of recording of their statements. If the respondents fail to appear, then it shall be open for the authority concerned to proceed further in accordance with law - appeal allowed.

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• 2023 (7) TMI 1007
  Refund of Input Tax Credit (ITC) relating to input services - export of education services - Zero Rated Supplies in terms of Section 16 of the Integrated Goods Services Tax Act, 2017 - non-issuance of notice - periods April, 2018 to August, 2018 and October, 2018 to March, 2019. HELD THAT:- There is a fundamental error in the manner in which the petitioner s refund applications have been processed - Admittedly, the concerned authority had not issued any notice as required under Rule 92(3) of the Central Goods and Services Rules, 2017 (CGST Rules), setting out the reasons for rejection of the refund. The petitioner, thus, had no opportunity to satisfy the concerned authorities as to its claim for refund to the extent it has been rejected. It is considered apposite to set aside the impugned order as well as the refund rejection orders to the extent, the same reject the refund claims made by the petitioner - the petition is disposed of.

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• 2023 (7) TMI 1006
  Cancellation of registration of petitioner - Order passed solely on the directions of another authority without considering the petitioner s reply - HELD THAT:- Undisputedly, in terms of Section 107(4) of the CGST Act, the Appellate Authority had the discretion to condone the delay in filing the appeal, not exceeding one month. In the present case, it is apparent that the petitioner was interacting with the Department for resolution of the matter regarding cancellation of the GST Registration and, the petitioner had sufficiently explained the delay of fourteen days. Considering the wide ramifications of cancellation of GST Registration, the Appellate Authority ought to have condoned the delay. The order dated 28.10.2022 cancelling the GST registration had been passed solely on the directions issued by another authority. The only reason for cancellation of the GST Registration as disclosed in the Order-in-Original is that, the DC(AE), CGST, North Delhi had, by a letter dated 30.09.2022, directed cancellation of the registration of the taxpayer from the date of her GST Registration. It is material to note that the Order-in-Original dated 28.10.2022 also contained a tabular statement, which indicated that no tax was found payable. It is trite law that an authority that is vested with the power to take a decision is required to independently exercise the power and cannot do so on mere directions of another authority, without independently satisfying itself of the said decision - In the present case, it is apparent that the impugned Order-in-Original dated 28.10.2022 has been passed solely on the directions of another authority, without considering the petitioner s reply to the Show Cause Notice dated 06.10.2022. Plainly, the impugned Order-in-Original dated 28.10.2022 cannot be sustained. The cancellation of the GST Registration of a taxpayer has wide implications for the taxpayer and has the propensity of bringing the taxpayer s business to a standstill. It could never be the intention of the legislature to exclude persons from carrying on legitimate business. Thus, the measure of cancellation of GST must be exercised with circumspection and only in cases, where it is necessary. The impugned order set aside - petition disposed off.

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• 2023 (7) TMI 1005
  Demand of twice the value of goods alongwith taxes - goods to be not traceable to a registered dealer - ownership of goods of determined - HELD THAT:- Prima facie it is shown to the Court that while the goods were in transit it accompanied the tax invoice and e-way bill which indicated the goods to be owned by the petitioner - The petitioner has otherwise raised a claim before the authorities regarding the ownership of goods in question. The order passed by the authorities, however, in no manner reflects application of mind on the question as to whether the petitioner is the owner of the goods in question or not. In the facts of the case, such consideration on the question as to who is the owner of the goods is clearly lacking. The department, therefore, would not be justified in proceeding to hold the goods not to belong to a registered dealer without dealing with the question of ownership of such goods in transit. A Division Bench of this Court in [ 2023 (6) TMI 360 - ALLAHABAD HIGH COURT ] after referring to previous judgments of this Court has observed that the question with regard to ownership of the goods be determined before levying penalty etc. The third respondent is directed to examine the petitioner s claim of ownership of goods, in accordance with the applicable circular and the provisions in law, and thereafter proceed afresh to determine the issue after affording opportunity of hearing to the petitioner - Petition allowed.

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• 2023 (7) TMI 1004
  Irregular availment of transitional credit - current management was a taxpayer, or not, during the period of procurement of inputs or capital goods as availed in the TRAN-1 - obligation of past, on a new management - dues prior to the date when resolution plan was approved - HELD THAT:- After going through the relevant portion of the impugned order it can be safely held that the adjudicating authority was correct in holding that as the Apex Court in the case of Ghanshyam Mishra and Sons Private Ltd. [ 2021 (4) TMI 613 - SUPREME COURT ] was of the view that the current management was not a taxpayer for the period prior to 04.06.2018. i.e., the date of change of management and therefore the liability of the earlier management should not be shifted to the current management. Likewise, the credit available to the earlier management will also not be available to the current management as the current management was not a taxpayer during the period of procurement of inputs or capital goods as availed in the TRAN-1 filed on 30.11.2022. Nevertheless, at the last portion of the order it misdirected itself in holding that the whole amount taken as transitional credit is liable to be recovered along with applicable interest and penalties. This part of the order is certainly against the ratio of the judgments passed by the Hon ble Apex Court in the case of Ghanshyam Mishra and Sons Private Ltd. as such, the same requires interference. The petitioner can also not take credit of the ITC of the earlier period i.e., prior to 17.04.2018 (Annexure-1); the date on which the National Company Law Tribunal has approved the resolution plan of the Petitioner. Hence, the petitioner is not entitled to claim of Rs. 92,13,412/- which has been claimed by the Petitioner as Transitional credit by filing new TRAN-1 in light of the Order passed by Hon ble Supreme Court in the case of Union of India Vrs. Filco Trade Centre Put. Ltd. [ 2022 (7) TMI 1232 - SC ORDER ]. Application allowed in part.

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• 2023 (7) TMI 1003
  Levy of Penalty - passing on Input Tax Credit to various recipients through GSTR-1 without actual supply of goods - opportunity of hearing not provided - principles of natural justice - HELD THAT:- Although, the petitioner has been issued with notices which has not replied, the impugned order has been passed directly without affording an opportunity of personal hearing to the petitioner pursuant to the Show Cause Notice in Form GST DRC-01 dated 13.02.2023. It is clear that there is a violation of principles of natural justice. The impugned order dated 16.03.2023 passed by the first respondent is set aside and the case is remitted back to the respondents for passing de novo order - Petition allowed by way of remand.

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• 2023 (7) TMI 1002
  Levy of Interest and penalty - the credit which was taken has been sanctioned - petitioner had also filed returns to transition the same credit - HELD THAT:- Though the petitioner has an alternate remedy before the Appellate Commissioner, there is no disputing facts that the petitioner is entitled to Rs. 11,06,396/- on the eve of implementation of GST with effect from 01.07.2017. By the Sanction Order (Tran-1 Credit) dated 20.02.2023, the Superintendent of GST and Central Excise, Range-IIIB, Puducherry has confirmed that the petitioner is entitled to the aforesaid transitional credit - Therefore, merely because the petitioner had filed subsequent return and had given up the same would not mean that the petitioner can be subjected to pay interest and penalty. The difficulty arose only on account of technical glitches in the web portal maintained by the Central Government at the time of implementation of GST. The petitioner cannot be penalized as the credit itself was allowed after the implementation of GST by Sanction Order (Tran- 1 Credit) dated 20.02.2023. There are sufficient grounds to interfere with the impugned order. The impugned order seeking to impose interest and penalty on the petitioner is unsustainable. Therefore, the impugned order is liable to be quashed - petition allowed.

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• Income Tax

• 2023 (7) TMI 1009
  Addition u/s 69A - unexplained cash deposits during the demonetization period - HELD THAT:- We agree with assessee that only source of income is from sale of crackers, and it can be concluded that the cash deposits in the assessee s bank account arise only out of cash sale. No material against the assessee is brought on record by the AO for the cash deposits. When the purchases and closing stock was not disputed by the Revenue, it is imperative to admit that the difference ought to be the sales made by the assessee. The assessee in its written submissions accepted the additional profit. Relying on the decision of Sridevi Ravi [ 2020 (12) TMI 665 - ITAT CHENNAI ] we find that the assessee has therefore explained the cash deposits and hence no addition can be made U/s. 69A r.w.s. 115BBE - Decided in favour of assessee.

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• 2023 (7) TMI 1001
  Income taxable in India - Addition of recharacterization of receipts from sale of software licenses to Indian customers/distributors as royalty - Whether taxing the same receipts in hands of Respondent would result in double taxation? - HELD THAT:- As we opine that the judgment of three judge Bench of this Court in Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Anr. [ 2021 (3) TMI 138 - SUPREME COURT] is holding the field and therefore, the said judgment would have to be followed in the instant case also. In view of the above, the Special Leave Petitions stand dismissed.

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• 2023 (7) TMI 1000
  Deduction u/s 10A Computation - inclusion of provisions written back towards link charges and annual day expenses, Foreign Exchange Fluctuation Gain and Foreign Currency Expenditure and Communication Charges - Set off of brought forward losses - HC decided issues in favour of assessee - HELD THAT:- This Court is not inclined to interfere with the impugned judgment and order of the High Court. Further, there is an inordinate delay of 373 days in filing the instant petition. Accordingly, the special leave petition is dismissed on the ground of delay as well as on merits.

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• 2023 (7) TMI 999
  Penalty u/s 271(1)(c) - Enhancement of disallowance u/s 43B by assessee - course-correction was carried out with the submission of a revised tax audit report - ITAT set aside penalty levy - HELD THAT:- Tribunal correctly noted that there is no dispute about the fact that a specific query with regard to the issue concerning disallowance under Section 43B of the Act was raised by the AO for the first time via notice dated 21.11.2016 issued under Section 142(1) of the Act. Therefore, as correctly argued by assessee it was not, as is noted by the AO, that the disallowance under Section 43B of the Act was not correctly recorded in the tax audit report and the respondent/assessee made a course-correction only thereafter. What is not in dispute is that, at the relevant time, there were judgments of GUJARAT CYPROMET LTD. [ 2006 (8) TMI 664 - GUJARAT HIGH COURT] which took the view that favoured the respondent/assessee - it cannot be said that the enhancement of disallowance under Section 43B of the Act carried out by the respondent/assessee was not voluntarily. Decided in favour of assessee.

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• 2023 (7) TMI 998
  Double taxation - claim tax credit on dividend income received from its Thai subsidiary - interpretation of Article 23 of the Indo-Thai DTAA - HELD THAT:- We agree with the Tribunal, that the respondent/assessee was entitled to claim tax credit on dividend income received from its Thai subsidiary, in respect of Thai Tax Payable , which it would have to pay, but for the exemption accorded to it under the provisions of Section 34 of the Investment Promotion Act. If the exemption available u/s 34 of the Investment Promotion Act had not kicked in, the dividend income would have suffered tax at the rate of 10% under Section 70 of the Thai Revenue Code. The appellant/revenue s appeals are based on the proposition that tax credit as claimed, could not be extended to the respondent/assessee, because it had not paid tax in Thailand, i.e., that benefit under Article 23 of the Indo-Thai DTAA could only be extended in a situation where the tax had actually been paid. In view of the rationale provided by us hereinabove, this argument is completely misconceived. The concept of tax sparing is embedded in several DTAAs which have been executed by India, such as with France, Jordan and Oman, apart from Thailand. Insofar as the Indo-Thailand DTAA is concerned, credit for tax sparing works for residents of Thailand, as well as India. This is a mechanism which is engrafted in DTAAs to incentivize investment for economic development. Interdiction of such provisions would, in our view, be detrimental to the larger public interest. Thus, for the foregoing reasons, we are disinclined to interfere with the impugned order passed by the Tribunal. No substantial question of law arises for our consideration.

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• 2023 (7) TMI 997
  TP adjustment to the manufacturing income - assessee had benchmarked its transactions using two segments namely manufacturing and indenting but during the TP proceedings, it separated the losses from solar test, arbitrarily to present better margins under manufacturing segment - HELD THAT:- As held in Apollo Tyres Ltd [ 2002 (5) TMI 5 - SUPREME COURT] A.O. has to accept the authenticity of the accounts. It is not a case of the A.O. that the accounts of assessee have not been scrutinized or certified by statutory auditors or approved by the company in general meeting or has not been filed before the ROC. In fact, Appellant stated that the company should also accept these accounts as much as the A.O. has accepted the accounts of assessee. The Directors note in the Annual Accounts specifically refers to solar trial test and how the activity undertaken did not take off and how having regard to the principles of accounting standard of impairment of assets (AS 28) assessee has made the provisions in respect of such impairment. The auditors have accepted it. The accounts have been approved by the company in general meeting and has also been filed by the Registrar of Companies. Therefore, the ITAT was correct in not interfering with the order of the DRP with regard to computation of PLI. The DRP has correctly held that the ST activity was an extraordinary item and was not part of the regular business of assessee and there was impairment of asset. Set off of brought forward unabsorbed depreciation i.e. for the period prior to amendment in sub section (2) of Section 32 of the Act w.e.f. 1/4/2002 - HELD THAT:- The issue would be covered by the order in the case of Petrofills Co-operative Ltd. [ 2021 (3) TMI 1092 - SC ORDER] which upheld the order passed by Hindustan Unilever Ltd [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] has taken the same view that depreciation should be allowed to be carried forward.

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• 2023 (7) TMI 996
  Penalty u/s. 271(1)(c) - furnishing of inaccurate particulars of income in the return of income filed - excess depreciation claimed having been surrendered by the assessee - HELD THAT: - In the present case, the revenue has failed to establish that there was a concealment of particulars of the income of the assessee. The revenue has also failed to establish that the assessee had furnished inaccurate particulars of its income. ITAT has observed that the addition made in the impugned case on account of excess depreciation claimed having been surrendered by the assessee itself without any prior detection of the Revenue and the excess claim having been demonstrated to have been made for the bonafide reasons and hence, the learned ITAT has held that the case is not for the levy of penalty. It is further observed by the learned ITAT that the assessee itself to align its books of accounts with MCA notification disclosed all particulars relating to the excess claim. In view of the totality of the facts and decisions rendered in the case of M/s. Bell Ceramics Limited [ 2021 (7) TMI 747 - GUJARAT HIGH COURT] we are of the considered opinion that in the present case, no substantial question of law arises for consideration.

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• 2023 (7) TMI 995
  Eligibility to claim depreciation at higher rate - two Solar Power Plants installed at two manufacturing units/factories at Bikaner and Manesar - DRP rejected the claim on the premise that the Solar Power Plant is installed at the roof top of office building for captive use for office - Contention of the assessee that office building is part of factory premise and the electricity is used for factory only - HELD THAT:- The Solar Power Plant in question is of 160 Mega Watt capacity and even in the wildest of imagination, it cannot be presumed that this is installed for meeting the need of office only. We therefore, are of the considered view that authority below ought to have verified the fact by making field inquiry. Considering the fact that Solar Power Plant is of very high capacity and it is stated at bar that the office building is part of factory and electricity so generated is used for factory only. The issue is restored to the file of AO for verification.This ground of assessee s appeal is allowed for statistical purposes.

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• 2023 (7) TMI 994
  Addition u/s 68 - assessee could not prove the identity and creditworthiness of creditors as well as the genuineness of transactions in respect of deposits in its various bank accounts - CIT(A) deleted the addition - HELD THAT:- CIT(A) ought to have verified the persons/firm/Companies from whom the alleged amount has been credited along with the details of the PAN numbers and also should have verified the details of the persons to whom the said amount has been paid later on. CIT(A) should have also verified the fact as to whether the amount has been paid to the very same person from whom the said amount got credited to the Assessee or to some other persons for any consideration to arriving a conclusion that, the assessee is an entry provider and the said amount is the part of accommodation entry . In the absence of the details of the persons regarding credits and the payments made by the assessee, we are not in a position to uphold the order of the CIT (A). Order of the CIT(A) is reversed and the issue in dispute is restored to the file of the A.O. with a direction to the assessee to furnish the details of the deposits and withdrawals to the A.O. and details of the persons/firm/company so as to decide the issue afresh. Appeal of the Revenue are partly allowed for statistical purpose.

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• 2023 (7) TMI 993
  Rectification u/s 154 - Disallowance of interest expenses u/s 36(1)(iii) - AO giving a single opportunity of being heard to the assessee - HELD THAT:- As per section 154 of the Act, the AO is empowered to amend any order passed by it under the provision of Act. With a view to rectifying any mistake apparent from record but where such amendment has effect of enhancing assessment, shall not be made unless the assessment authority concerned, has given notice to the assessee of its intention so to do and allow the assessee a reasonable opportunity of being heard. From the records available, it is seen that the assessee was not provided reasonable opportunity of being heard by the AO. Assessee has relied upon the judgement of Hero Cycle Pvt.Ltd. [ 1997 (8) TMI 6 - SUPREME COURT] Shri Harinder Singh vs ITO Others [ 2011 (12) TMI 223 - ITAT CHANDIGARH] Considering the totality of the facts, invocation of provision of section 154 is not justified under the facts of the present case since the addition made by the AO has resulted into enhancing of assessed income without giving adequate opportunity to the assessee, deserves to be quashed. Therefore, impugned addition is hereby, deleted.

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• 2023 (7) TMI 992
  Penalty u/s 272A(1)(d) - non-compliance of the statutory notices - HELD THAT:- It is seen from the record that in response to the penalty notice the assessee had filed certain explanation before the Assessing Authority. However, the Assessing Authority did not consider the same. Penalty u/s 271A(1)(d) is not automatic. If the assessee could show the reasonable cause for non-compliance, in that event the AO should not levy the penalty. It is the contention of the assessee that AO through National Faceless Assessment Centre had issued notice dated 14.03.2018 and 23.08.2019 but the same were not received by the assessee. AO has not assigned any reason for not accepting the contention of the assessee. Therefore, it is not a fit case for levy of penalty. Decided in favour of assessee.

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• 2023 (7) TMI 991
  Revision u/s 263 - Disallowance u/s. 40A(3) for payments below Rs. 20,000/- and further the payments had been made towards purchase of cement which did not attract any liability to deduct tax at source - HELD THAT:- Section 40A(3) of the Act, as it stood prior to amendment by the Finance Act, 2017, which came into effect from 01.04.2018, specifies that where the assessee had incurred any expenditure in respect of which a payment or aggregate of payments made to a person in a day otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds Rs. 20,000/-, no deduction shall be allowed in respect of such expenditure. From the assessment order, it is very clear that in the present case no payment in cash exceeding Rs. 20,000/- had been made. Therefore, the Assessing Officer has wrongly invoked the provisions of Section 40A(3) of the Act and accordingly, the same cannot be sustained. We set aside the order of the NFAC and direct the Assessing Officer to delete the addition. Decided in favour of assessee

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• 2023 (7) TMI 990
  Revision u/s 263 by CIT - exemption u/s 54F - HELD THAT:- We find that in the consequential assessment-order framed de novo, the AO has accepted assessee s submissions and again allowed exemption u/s 54F although he has reduced the quantum of exemption so as to set right some calculation-mistake as pointed by Ld. AR. But the fact remains that the AO has accepted the exemption u/s 54F and allowed the same. Faced with this situation, we do not find any grievance subsisting to the assessee from revision-order when the AO has allowed exemption u/s 54F even while carrying out the direction given by PCIT. When it so, the present appeal filed by the assessee becomes infructuous liable to be dismissed.

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• 2023 (7) TMI 989
  Higher rate of depreciation on dumpers - @30% or @15% - HELD THAT:- As relying on HC own case [ 2018 (5) TMI 1172 - GUJARAT HIGH COURT] we have no hesitation in allowing the benefit of higher rate of depreciation @ 30% on Dumper, Tipper etc. to the assessee Thus the grounds raised by the Revenue is devoid of merits.

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• 2023 (7) TMI 988
  Assessment u/s 153A - incriminating material found at the time of search or not? - HELD THAT:- Disallowances made by the AO are devoid of any incriminating material found at the time of search, CIT(A) respectfully following the binding decision in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] quashed the assessment order. As in the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] has upheld the decision of the Hon ble Delhi High Court, therefore, there remain no grievance for the revenue now. We do not find any error or infirmity in the findings of the CIT(A) qua ground No.2, therefore, the captioned appeals by the revenue are dismissed.

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• 2023 (7) TMI 987
  Rectification u/s 154 - Charging late fee u/s 234-E - TDS returns belatedly for the various quarters in the Financial Year 2013-14 and 2014-15 - Rectification application as no demand u/s 234E could have been issued prior to 01/06/2015 - HELD THAT:- A combined reading of provisions of Section 154 and the Section 116 of the Act, which specifically includes the Assessee s jurisdictional A.O. for the sake of Section 154 which provides for rectification of mistake. Thus, in our opinion, the Jurisdictional A.O. is having the jurisdiction to entertain the application filed by the Assessee u/s 154. Assessee had filed single rectification application before the A.O. as against several intimations, we direct the Assessee to file separate rectification applications against each intimation and further we direct the A.O. to dispose off the applications on merit, without raising the issue of jurisdiction.Appeal filed by the assessee is partly allowed for statistical purpose.

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• 2023 (7) TMI 986
  Disallowance of depreciation u/s 32 - Plants not in operation - HELD THAT:- Units are non-operating since 1996 and prior to 2003-04 all the assessment were done without any additions on account of disallowance then the principles of consistency required Revenue to have allowed the depreciation on the assets for being part to the block of assets. The BIFR directions do not override the provisions of Act. As long as the ownership of the assets continue to be with the assessee company, as for the purpose of Section 32 the claim of assessee company fulfils the following essentials. 1st the assets are capital in nature. 2nd assets are still owned by the assessee company. 3rd the depreciation was claimed on the assets forming part of the non-operating plants in the block of assets. 4th WDV at the beginning of the year was available and the assets were used for the purpose of business or profession since they were three other working units and the company as a whole were still working. It is a settled provision of law that use for a purpose of business when applied to block of assets would mean use of block of asset and not any specific building or machinery. Assets of closed units could not be segregated for purpose of allowing depreciation and depreciation has to be allowed on entire block of assets. See Bharat Aluminium company Ltd. [ 2009 (10) TMI 505 - DELHI HIGH COURT ] The Mumbai Bench in the case of Swati Synthetics Ltd. [ 2009 (12) TMI 667 - ITAT MUMBAI ] has held that as the year under consideration is not the first year of the assets. The assets of closed units still remained exist / part of the block of the assets and accordingly allowed depreciation. Thus appeals of assessee are allowed and AO is directed to allow the depreciation as claimed by the assessee on the block of assets for the relevant assessment years.

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• 2023 (7) TMI 985
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - non striking irrelevant matter/portion in notice - HELD THAT:- As in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s. 271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision squarely applies to the facts of the Assessee s case as the notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Decided in favour of assessee.

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• 2023 (7) TMI 984
  Default u/s. 206C - assessee has not collected TCS on sale of scraps - late filing of Form 27C - HELD THAT:- It is an admitted fact that the assessee filed Form 27C namely declaration as prescribed in Section 206C(1A) of the Act to be filed by a buyer before delivery of the goods namely scraps in this case, without collection of tax. The Assessing Officer has not accepted the late filing of the declaration, as the same is again Rule 37C of the Income Tax Rules and thereby charged tax at 1% and also levied interest u/s. 206C of the Act. However sub-section (1A) of section 206C does not provide for any time limit within which, such declaration is to be filed by the buyer. However time limit is prescribed in Rule 37C of the I.T. Rules. Hon ble Gujarat High Court in the case of CIT (TDS) Vs. Siyaram Metal Udyog Pvt. Ltd. [ 2016 (7) TMI 68 - GUJARAT HIGH COURT] held that when there was no dispute about the declaration being filed in prescribed Form 27C and there was no dispute about the genuineness of such declaration, mere minor delay in filing the said declaration would not defeat the very claim made by the assessee and thereby dismissed the Revenue appeal. Thus we hereby set aside the orders passed by the Lower Authorities for the reason, the A.O. failed to verify the Form 27C though the assessee submitted belatedly and the Ld. A.O. declined to accept the same in view of Rule 37C of the I.T. Rules. Further there is no issue qua genuineness of these Forms. Appeal filed by the Assessee is allowed for statistical purpose.

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• 2023 (7) TMI 983
  Impairment loss - Loss claimed on disposal of fixed assets - said loss was calculated as prescribed in Accounting Standard AS-10 issued by the ICAI and accounting policy being consistently adopted by the assessee company - contention of the Revenue that the same is not allowable as per the provisions of section 41(2) - HELD THAT:- Since the assessee itself has accepted that the claim of impairment loss on disposal of fixed assets which was calculated and accounted for according to the guidelines prescribed under the Companies Act, which are not binding while calculating the taxable income of the assessee under the provisions of the Income Tax Act, therefore, the observations of CIT(A), which are not factually correct that the entire block of asset has exhausted, is an erroneous finding not in concurrence with the actual facts of the case, wherein as per computation of total Income by the assessee the block is showing as in existence, is liable to be quashed. Consequently, the addition made by the AO stands confirmed. Since we are approving the findings of learned AO regarding disallowing the claim of the assessee for impairment loss, in the interest of justice, the entitlement of depreciation which should have been allowed to the assessee according to the provisions of section 32 of the Income Tax Act, is hereby directed to be allowed. Appeal of the Revenue is partly allowed for statistical purposes.

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• 2023 (7) TMI 982
  Income deemed to accrue or arise in India - profit attributable to the India PE - As argued transaction was effected offshore and the Project Office merely acted for custom clearance - HELD THAT:- Though custom clearance of offshore equipment supply was the responsibility of Hitachi Ltd. Indian Project Office, however, all activities in relation to the same are carried out by M/s Mitsui Co. Ltd. and goods are only passed through the Project Offices for the purpose of customs duty compliance in India including payment of customs duty and IGST, which in turn was charged back to Hitachi Ltd. Japan by the Project Office. The activities relating to customs clearance are covered under the scope of work for Onshore portion of the contract. Hence, as per the terms of contract with DFCCIL, the offshore goods supplied from Japan were handed over to M/s Mitsui Co. Ltd. in Japan for transportation and delivery at site. Thus, no activity in respect of offshore portion of the contract is attributable to the PEs of assessee in India. Role of the Project Officer - What was the role of the Project Office for the transaction in question and what is the basis for attributing the profit at 35% to the PE. Moreover, before AO it was stated by the assessee company that the goods were passed through the Project Offices purely for the purpose of customs duty compliances. The lower authorities have not adverted anything on this aspect. As on account of loss no profit could be attributed - As following the binding judgment of CIT (International Taxation) Vs. Nokia Solutions and Net Works OY [ 2022 (12) TMI 700 - DELHI HIGH COURT] we are of the considered view that the authorities below were not justified in attributing the profit to the assessee when there was loss. We, therefore, direct the Assessing Officer to delete the impugned addition - Decided in favour of assessee.

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• 2023 (7) TMI 981
  Deduction u/s 80IB(11C) - addition relating to trading in medicines and surgical equipments - CIT-A deleted the addition - As per DR the words used in section 80IB(11C) are derived from and not attributable to - HELD THAT:- Since pharmacy is an integral part of running of hospitals, looking to that instant facts, the Assessing Officer has correctly disallowed the deduction in respect of income earned from trading in medicines. In response, the counsel for the assessee placed reliance on the observations by ld. CIT(A) in the appellate order. The counsel for the assessee submitted that the assessee is a multi-specialist hospital having over 100 beds. In such cases, running of inhouse pharmacy is essential for running of hospitals since substantial medicines are required on day to day basis in treating the patients. A hospital of such large operations cannot run unless and until there is inhouse pharmacy to cater to the needs of inhouse patients No infirmity in the observations made by the CIT(A), while allowing the appeal of the assessee on this issue. As respectfully following the observations in the case of Eureka Medical Pvt. Ltd. [ 2018 (8) TMI 267 - ITAT NAGPUR] we are of the considered view that the assessee is eligible to claim deduction u/s. 80IB(11C) of the Act in respect of inhouse pharmacy maintained by the assessee within the premises of hospital. We are in agreement with the documents taken by the counsel for the assessee that in case of multi-speciality hospital having over 100 beds, it is not feasible to efficiently run the hospital, without having an inhouse pharmacy to cater to the needs of inhouse patients. Disallowance u/s. 14A - CIT(A) allowed the appeal of the assessee on the ground that during the year under consideration, the assessee had not earned exempt income during the year under consideration - HELD THAT:- We are of the considered view that there is no infirmity in the order of CIT(A) as during the year under consideration no exempt income was earned by the assessee. In a recent ruling passed in the case of Era Infrastructure India Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] it has been held that the amendment brought in by the Finance Act, 2022, to section 14A by inserting a non-obstante clause and Explanation will take effect from 01-04-2022 and cannot be presumed to have retrospective effect. Therefore, for assessment year 2013-14, no disallowance could be made u/s. 14A if no exempt income was earned by the assessee. In the case of Asian Grantio India Ltd [ 2019 (10) TMI 1193 - ITAT AHMEDABAD] the Ahmedabad ITAT held that Disallowance of expenses under section 14A read with rule 8D of 1962 Rules cannot be made in absence of exempt income. Decided in favour of revenue. Proportionate disallowance - assessee had advanced interest free loans to its group companies - HELD THAT:- Looking into the facts of the case, in the interest of justice, the issue is being restored to the file of AO to ascertain whether the aforesaid amount of interest free loan given by the assessee to its group companies is out of own funds or out of interest bearing funds. In the result, the issue is being restored to the file of the Assessing Officer with the above directions.

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• 2023 (7) TMI 980
  Validity of reopening of assessment u/s 147 - non obtaining valid approval from the competent authority as per mandatory requirement u/s 151 - HELD THAT:- PCIT has given his approval u/s 151 of the Act in Column 13 of page 15 wherein, he has given a detailed basis based on the exercise undertaken by him, before granting approval u/s 151 - We are unable to see any discrepancy therein, which could show nonapplication of mind by the PCIT at the time of granting approval u/s 151. Non application of mind by the AO, at the time of initiation of reassessment proceedings - The text and words used by the AO in the reasons recorded for reopening of the assessment clearly shows that the AO proceeded to initiate assessment proceedings u/s 147 of the Act and to issue notice u/s 148 of the Act without having any valid satisfaction and assuming valid jurisdiction, only on the basis of borrowed satisfaction based on report of investigation wing only and there was no independent application of mind by the AO to the information and documents received from the Investigation Wing which could form a valid basis and reason to believe that income has escaped assessment. As decided in Meenashi Overseas [ 2017 (5) TMI 1428 - DELHI HIGH COURT] and PCIT Vs. RMG Polyvinyl [ 2017 (7) TMI 371 - DELHI HIGH COURT] where the reasons recorded by the AO failed to demonstrate link between the tangible material and the formation of reasons to believe that the income has escaped assessment, then, indeed it amounts to borrowed satisfaction and the conclusion of the AO based on reproduction of conclusion drawn in the investigation report cannot be held as valid basis and reason to believe after application of mind. AO did not assume valid jurisdiction for initiation of reassessment proceedings u/s 147 - Decided in favour of assessee.

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• 2023 (7) TMI 979
  Validity of Assessment u/s 153A - as argued no notice u/s 153A could be issued for the AY 2017- 18 - period of 6 years provided for the purpose of assessment in pursuant to the requisition u/s 132A - HELD THAT:- Admittedly, in pursuant to the requisition u/s 132A on 05.12.2016, notice u/s 153A of the Income Tax Act, 1961 were issued to the assessee for the six assessment years immediately preceding to the assessment year under consideration i.e. AY 2017-18. In response thereto, assessee has filed the return of income for the assessment year 2011-12 to 2016-17. It is undisputed fact on record that a notice u/s 153A of the Income Tax Act, 1961 was issued to the appellant for assessment year 2017-18 on 13.11.2017, asking him to file the return (APB, Pg.1). Since, the assessment year 2017-18 was out of the period of 6 years provided for the purpose of assessment in pursuant to the requisition u/s 132A dated 05.12.2016 and hence, notice issued u/s 153A on 12.11.2018 to the appellant assessee to file the return of income for the assessment year 2017-18 is invalid notice - Decided in favour of assessee.

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• 2023 (7) TMI 978
  Rectification u/s 254 - non consideration of the argument made and non adjudication of the specific grounds raised - Bench while passing the order summarized the argument addressed by the Ld. A.R. for the assessee in para 8 and para 13 of the order but in the operative part the Bench proceeded to rely on the order of this Tribunal in assessee s own case for the assessment year 2003-04 and gave a similar direction to the respondent - HELD THAT:- As perused para 8 of the impugned order wherein contention of the assessee has been duly recorded and thereafter in para 10 of the argument addressed by the assessee has been dealt with, however we could not trace out if any mistake apparent on record is there. There may be wrong findings given by the Tribunal but these findings do not amount to mistake apparent on record to be interfered with u/s 254 - Each and every fact and argument addressed by the assessee has been brought on record, discussed with and decided as per wisdom of the Bench. Even during the course of argument before the Bench in the present miscellaneous application the Ld. A.R. for the assessee has failed to point out as to why the order passed by the Tribunal in its own case in A.Y. 2003-04 should not be followed by the Bench while passing the order (supra) which is in accordance with settled principle of law that in the identical facts consistency must be maintained. Not adjudicating the ground No.2 raised by the assessee as CIT(A) erred in not appreciating the fact when amount received is in dispute same cannot be brought to tax - Argument addressed on ground No.2 has been duly recorded in para 8 of the order (supra) and findings have been returned in para 10 11 of the order (supra). It appears that under the garb of present miscellaneous application assessee sought review of the order (supra) passed by the Bench which is not permissible under law. So without entering into the merits of the findings returned by the co-ordinate Bench of the Tribunal in order (supra) we fail to notice any mistake apparent on record so as to attract the provisions contained u/s 254(2) read with rule 24 of the ITAT Rules. MA moved by the applicant assessee is hereby dismissed.

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• 2023 (7) TMI 977
  Capital loss/capital gain computation - period of holding of the shares in the hands of the assessee -benefit of indexation cost - HELD THAT:- Once the revenue has admitted that the assessee was the beneficial owner of the shares then the period of holding to our understanding must be taken from the year in which the shares were held by the registered owners. Admittedly, the assessee has made necessary compliance under the Companies Act by furnishing the necessary declarations in the form MGT-4, MGT-5 and MGT-6 which were duly accepted by the competent authority i.e. Registrar of companies. Authorities below cannot interpret such declarations according to their understanding without pointing out any fault therein. It is equally important to note that the two registered shareholders have admitted in the statements to having received money from the Amarpali group for making the investment. Assessee has also paid the taxes on the investment made by him in the name of registered shareholders out of his undisclosed income and therefore it will be inappropriate to allege that the transaction shown by the assessee represents the use of colorable device. Revenue while calculating the capital gain in the hands of the assessee has adopted the cost of acquisition shown in the name of the registered shareholders for the investment made in the shares in the years 2008-09 and 2009-10. Thus, period of holding while calculating the income under the head capital gain exceeds 36 months and therefore the assessee must be given the benefit of indexation cost. Hence, the ground of appeal of the assessee is hereby allowed. Unexplained money and unexplained expenses not recorded in the books of accounts u/s 69A/69C - HELD THAT:- No addition based on the documents found from the premises of the 3rd party can be made in the hands of the assessee in the given facts and circumstances. Likewise, such documents were not in the handwriting of the assessee, nor the signature of the assessee was bearing on such papers. These documents found during the search raise doubts but the same cannot be used as evidence until and unless it is supported by the corroborative material and after carrying out independent enquiries. Even the statements recorded in the case of Venus group do not suggest the assessee was involved in such cash transactions. Moreover, the statements of the Venus group were not supplied to the assessee for the rebuttal and therefore the same cannot be used against the assessee and that too without providing the opportunity of cross-examination. Regarding the SMS between the assessee and Shri Ashok Vaswani, it does not establish that the assessee has carried out cash transactions with Venus group. The SMS was relating to transactions of the other companies which were duly recorded in the books of accounts. Therefore, the SMS cannot be a basis to draw any inference against the assessee. Under the provisions of section 69A/69C of the Act, the primary onus lies upon the revenue. In other words, it is the onus of the revenue to prove based on the documentary evidence that the assessee was the owner of the unaccounted money. But we note that the entire addition lacked supporting evidence. The Hon ble High Court of Bombay in the case of CIT Vs. BG Shirke Construction Technology (P) Ltd. [ 2018 (8) TMI 1207 - BOMBAY HIGH COURT] has held that the primary onus under the 69C lies upon the revenue - Decided against revenue.

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• 2023 (7) TMI 976
  Undisclosed income (seized from the assessee) - No source of cash explained as seized - HELD THAT:- In the appeal before the ld. CIT(A), addition was confirmed observing that the aforesaid amount was released in favour of assessee and the same was deposited by the assessee in his bank account. But as argued that the ld. CIT(A) has not appreciated that the fact that the said some is repaid back by RTGS. It is not disputed by the revenue before us that pursuant to the seizure of this cash, case of Shri Ram Karan Kulhari and case of Shri Babulal Jat for an amouns respectively added. The bench also noted that the amount seized from the party are paid to the owner of the money so seized and since the fact that the said some has already been taxed in the hands of Shri Baulal Jat and Shri Ram Karan Kulhari we see no reason to confirm the said addition and therefore, the addition made by the ld. AO is vacated in the hands of the assessee.Decided in favour of assessee.

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• 2023 (7) TMI 975
  TP Adjustment - As argued AO has made TP adjustment in spite of the fact the TPO has passed an order u/s. 92CA r.w.s. 254 of the Act clearly stating the transfer pricing adjustment to be NIL - HELD THAT:- We accept this contention of the ld. AR and direct the AO to pass consequential order to the TPO s order dated 18.1.2023 considering the TP adjustment at Nil. The ground of the assessee on this issue is allowed. Disallowance u/s. 14A - HELD THAT:- We are of the opinion that though the AO in the computation of total income has noted the relief allowed by the ITAT, yet he has retained the addition of Rs. 1,37,500. Since the addition u/s. 14A has been deleted by the Tribunal vide order cited supra, we direct the AO to pass consequential order. Deduction u/s. 80G - HELD THAT:- AO has not dealt on the aspects, prima facie, considered the contributions as not voluntary but a legal obligation and has accepted the genuineness of the contributions. We are of the opinion, that the matter has to be considered for examination and verification of facts subject to the assessee satisfying the requirements of claim u/s. 80G of the Act. Accordingly, we restore the entire disputed issues to the file of A.O. for fresh examination and verification. TDS u/s 195 - Disallowance u/s. 40(a)(ia) - secondment of employees - HELD THAT:- Respectfully following the views expressed in Abbey Business Services India (P.) Ltd. s case [ 2020 (12) TMI 570 - KARNATAKA HIGH COURT] , Cholamandalam MS General Insurance Co. Ltd. s case [ 2009 (1) TMI 19 - AUTHORITY FOR ADVANCE RULINGS] , Mark Spencer Reliance India (P.) Ltd. [ 2013 (11) TMI 317 - ITAT MUMBAI] , Faurecia Automotive Holding [ 2019 (7) TMI 402 - ITAT PUNE] , we are of the view that the reimbursement made by the assessee in India to overseas entity, towards the seconded employees cannot be regarded as Fee For technical Services Since the Tribunal on an earlier occasion for the AYs 2011-12 to 2014-15 2015-16 to 2018-19 has held that there is no violation of provision of section 195, assessee cannot be held to be an assessee in default u/s. 201(1) of the Act, there is no question of disallowance of any expenditure u/s. 40(a)(ia) of the Act.

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• 2023 (7) TMI 974
  Validity of assessment order passes pursuant to the DRP directions u/s 144C - Period of limitation - HELD THAT:- It is clear from the copy of the order sheet that the A.O. received the documents on 30.12.2021. As per section 144C(13) of the Act, the order should have been passed on or before 31.01.2022, whereas the A.O. has passed final assessment order on 02.02.2022, which is beyond the time limit. Hence, the order passed by the A.O. is barred by limitation as per section 144C(13). Therefore, we find substance on the submission of the learned AR and the final assessment order passed is nonest in the eyes of law. Decided in favour of assessee.

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• 2023 (7) TMI 973
  Revision u/s 263 - applicability of higher rate of tax is u/s 115BBE - incomes have been admitted by assessee during the course of survey and also offered as such in the return of income - income relatable to the excess-stock and excess-cash - HELD THAT:- We are in agreement with DR that the Ld. AO has simply stated that the assessee has incorporated the excess-cash and excess-stock in the ITR. The function of assessing authority is not only of adjudicator but also of investigator. In the present case, it is quite apparent from assessment-order that the Ld. AO has not made requisite enquiry to ascertain the nature and tax implications of the impugned incomes, he has simply shut the point by saying that the assessee has incorporated incomes in ITR. Therefore, the decisions relied upon by Ld. AR do not support the assessee s stand. As the higher rate of tax prescribed in section 115BBE is applicable to the whole previous year 2016-17 relevant to assessment-year 2017-18 and there is no merit in the contention raised by assessee. We are of the view that the Ld. PCIT has rightly termed the assessment-order as erroneous-cum-prejudicial to the interest of revenue and therefore the revision- order passed by PCIT is a valid order in terms of section 263. Decided against assessee.

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• 2023 (7) TMI 972
  Admissibility of depreciation claim not made in the return of income - assessment of trust - assessee has made a claim before the AO by filing a revised statement of total income - HELD THAT:- We find that in Rajasthan Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] has considered the issue of depreciation on fixed assets, when the assessee has claimed expenditure incurred for acquisition of capital asset as application of income for charitable purpose u/s. 11(1)(a) and held that even though, expenditure incurred for acquisition of capital asset, has been claimed as application of income, yet depreciation, would be allowed on assets so purchased while computing income from property held under Trust. There is no dispute, even though, the assessee has not claimed depreciation on fixed assets while filing return of income, but when the assessee has made a claim by filing a revised statement of total income before completion of assessment, the AO is bound to accept the claim of the assessee and allow necessary depreciation as per law. AO is erred in not allowing depreciation claimed by the assessee for the AY 2010-11 In a situation where the assessee is not claimed depreciation on fixed assets for any reason, but the AO while computing income of an assessee, should allow depreciation allowable as per law. Arguments of the AO that any fresh claim can be made only by filing a revised return, we find that although, the law restricts the AO to admit any fresh claim without any revised return, but there is no prohibition for the appellate authorities to admit fresh claim made by assessee to decide the issue and this principle is supported by the decision of Goetze (India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] . Therefore, we are not in agreement with the reasoning given by the AO to deny depreciation claimed for earlier assessment years. Claim of depreciation beyond six years for the first time - HELD THAT:- There is no provision under law to make assessment of an assessee beyond six years. Therefore, claim made by the assessee beyond six years cannot be admitted, because, there is no provision under the law to modify the income of the assessee by the AO. Therefore, we are in agreement with the reasons given by the AO that the assessee cannot make a claim beyond six years. However, the claim made by the assessee with regard to assessment years which are come within the period of six assessment years, then, the AO can verify the claim of the assessee in light of provisions of Sec.32(1) of the Act, and allow depreciation on fixed assets as per law. Therefore, we are of the considered view that the issue needs to go back to the file of the AO for further examination of facts with regard to depreciation on fixed assets.

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• 2023 (7) TMI 971
  Disallowance of depreciation on intangible assets - Highway Project on BOT basis - HELD THAT:- The Tribunal in GWALIOR BYPASS PROJECT LTD. [ 2022 (7) TMI 1440 - ITAT DELHI] held that the assessee is entitled for depreciation as admissible on intangible assets as relying on M/s. Progressive Constructions Ltd. [ 2017 (3) TMI 1167 - ITAT HYDERABAD] held that the expenditure incurred by the assessee for construction of road under BOT contract by the Government of India has given rise to an intangible asset as defined under Explanation 3(b) r/w section 32(1)(ii) of the Act. Hence, assessee is eligible to claim depreciation on such asset at the specified rate. - Decided in favour of assessee.

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• Customs

• 2023 (7) TMI 970
  Violation of principles of natural justice - Opportunity of hearing granted or not - recording only the arguments/submissions of the Department without looking into the case/defense of the Appellant already available on record - conspiracy of the import consignments by resorting to smuggling of goods of high value through the import consignments set to contain goods of low value - HELD THAT:- The finding of the Tribunal in the impugned order that the Appellant is the importer of the goods and the payments have been made from his bank account is contrary to the finding of the Tribunal in its order dated 25th October 2010, while disposing of the stay application, inasmuch as, in the said order, the Tribunal has observed that most of the Appellants did not file any bill of entry and two bills of entry were filed in the name of J.N. Export International. The contradictory finding is not borne out from any material, but appears to be based only on the submissions made by the revenue before the Tribunal in the absence of the Appellant. It is in the interest of justice that the impugned order dated 16th November 2017, insofar as the present Appellant is concerned requires to be set aside and a fresh adjudication ordered - Appeal disposed off.

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• 2023 (7) TMI 969
  Entitlement to avail benefit of Anti-Dumping Duty Notification No. 48/2014-ADD dated 11.12.2014 - whether Anti Dumping Duty is leviable on all imported goods ranging from actual thickness of 3.7 mm (4 +/- 0.3) to 12.8 (12 +/- .8)? - HELD THAT:- It clearly appears that not only in the case of Mudit Glassworks Place, but also in respondent s own case in respect of similar imports, the demand of anti-dumping duty was dropped. The tribunal has considered the contentions of the appellant as also of the respondents and referring to such two decisions, has come to a conclusion that the respondents appeal in such circumstances was required to be allowed. The tribunal has observed that the nominal thickness has not been defined in BIS and moreover, when actual thickness is available, in that event, it would not be appropriate to extend the tolerance so as to raise a demand of anti-dumping duty under the notification in question - there is nothing objectionable in the findings as recorded by the tribunal. It is also not in dispute that the earlier similar imports of the respondent were duly verified and were allowed to be cleared by the customs authorities. There cannot be two different standards for similar imports in regard to applicability of the said notification. Thus, no substantial question of law would arise - there is no merit in the appeal - appeal dismissed.

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• 2023 (7) TMI 968
  Levy of Anti Dumping Duty (ADD) on second hand goods - used and second hand injunction moulding machine imported / originated from China - value based on a new product originated from China - HELD THAT:- It is not disputed that the goods imported are used and second hand goods. The Chartered Engineer who examined the goods apprised the value which has been accepted by the department. The value has been filed on the basis of estimation of the new product. Merely because the value is based on a new product originated from China, it cannot be said that the second hand goods is subject to levy of ADD. The ADD is levied to protect domestic industry. The findings in respect of an investigation for levy of ADD are in regard to manufacture / price of new machinery. It cannot be said that the manufacturers of new machine will suffer material injury due to import of second hand and used machine. The Tribunal in a similar issue in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. TRINITY EXPORTERS [ 2019 (2) TMI 1370 - CESTAT CHENNAI ] observed that It is also pertinent to note that the impugned machinery in question had been manufactured in 2007 and it was first exported to South Africa from where it has made its circuitous journey back to this country. The Anti-Dumping Duty Notification which came about in 2009, cannot be back-pedalled to be imposed on goods which have been manufactured and exported in 2007 from a particular country. Thus, there are no grounds to interfere with the impugned order. The same is sustained. The appeal is dismissed being devoid of merits.

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• 2023 (7) TMI 967
  Misdeclaration of quantity of imported goods - rejection of transaction value - re-determination of value on the basis of values of contemporaneous imports of goods - difference between the first check and second check of the goods - Confiscation - redemption fine - penalty - HELD THAT:- It is undisputed that the appellant filed a bill of entry declared certain goods and on examination, 42% more goods were found by the customs authorities. Learned counsel for the appellant emphasized that the excess quantity was found during first check examination - It is found that the law does not distinguish between the first check and the second check. What is important if the appellant made the correct declaration in the bill of entry or not. The bill of entry was filed on 20.09.2017 by the appellant. It does not matter whether the apprising group, thereafter, decides to assess the goods first based on the documents and then gets them examined or gets the goods examined first. In both cases, the mis-declaration in the bill of entry is already complete. It also needs to be pointed out that the SIIB officers also received specific intelligence about this mis-declaration and place an alert in the customs EDI system. On examination, the mis-declaration was proved. The difference in quantity is substantial as 42% more goods were imported then what were declared. When excess quantity of goods were found, it was logical for the officer assessing the bill of entry to reject the transaction value because, the transaction value reflected in the invoices and other documents was for declared quantity and not for the quantity actually imported. Once the declared assessable value is rejected under Rule 12 of the valuation rules, valuation should be proceeded under Rules 4 through 9. In this case, rule 5 of the Valuation Rules was applied and the assessable value was enhanced from Rs. 40,62,307/- to Rs. 43,42,301/-. Consequently, the duty liability increased by Rs. 2,79,994/- and the re-determined value has been accepted by the importer in its letter dated 06.10.2017. Therefore, there are no infirmity whatever in re-assessing duty on the imported goods. In this case, the goods were found to be in excess of the entry made i.e. the bill of entry and, therefore, they were liable to confiscation under section 111(l). The imported goods also did not correspond in value and, therefore, were also liable for confiscation under section 111(m). Redemption Fine - HELD THAT:- Having confiscated the goods worth Rs. 43,42,301/- the Additional Commissioner allowed the redemption on a fine of Rs. 4,50,000/- which is about 10% of the value of the goods. Section 125 of the Act places the restriction that the amount of fine cannot exceed the market value of the goods. In the factual matrix of this case, it is found that the redemption fine imposed is just and fair. Penalty - HELD THAT:- The adjudicating authority has correctly held that the appellant had knowingly mis-declared the value of the quantity of the goods in the bill of entry and impose penalty under section 114 AA. The Commissioner (Appeals) has, in the impugned order correct by upheld this penalty. The impugned order is correct and proper and calls for no interference - Appeal dismissed.

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• 2023 (7) TMI 966
  Revocation of the appellant s CHA Licence - forfeiture of Bank Guarantee - failure to fulfil the obligations cast upon them under Regulation 13 of the CHALR, while importing goods duty-free under Advance Authorization Scheme - HELD THAT:- From the documents placed on record, it appears that the personal hearing was provided on 31.08.2012, which means that as on the date of hearing, no order was made by the Commissioner. Even if the period of ninety days is to be calculated from 26.04.2012, then the Commissioner should have passed the order revoking the licence at least before the end of August 2012. But however, the impugned order is dated 11.06.2013, which is clearly very much beyond the prescribed period of 90 days. Reliance placed on the decision of the Hon ble High Court of Judicature at Madras in the case of M/S. SABIN LOGISTICS PVT. LTD., MR. S. LOGANATHAN VERSUS COMMISSIONER OF CUSTOMS, SHRI FELIX RAJ [ 2019 (4) TMI 1713 - MADRAS HIGH COURT ] wherein it has been clearly held that where a provision / regulation spells out a specific period of limitation, such period is mandatory and any exclusion therefrom should also be provided specifically and thus, the Hon ble Court set aside the impugned order therein where the Customs Broker Licence was revoked by the Commissioner. The impugned order of revocation as well forfeiture of security deposit is clearly unsustainable in the eye of law and hence, the same is set aside - Appeal allowed.

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• 2023 (7) TMI 965
  Classification of imported goods - External Hard Disc Drives - removable or exchangeable Disc Drives - to be classified under CTH 84717020 and 85471730 respectively, or not - N/N. 12/2012-CE dated 01.03.2012 at Sl. No. 255 - HELD THAT:- The Tribunal in the case of COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS SUPERTRON ELECTRONICS P. LTD. [ 2017 (1) TMI 1529 - CESTAT NEW DELHI ] had considered the very same issue held that external hard disc drive is classifiable under CTH 84717020 and is eligible for concessional rate CV duty as per the Notification. The said decision of the Tribunal was affirmed by the Hon ble Apex Court in COMMISSIONER OF CUSTOMS, NEW DELHI VERSUS M/S SUPERTRON ELECTRONICS PVT. LTD. [ 2017 (10) TMI 1281 - SC ORDER ] - the impugned order does not call for any interference - Appeal of Revenue dismissed.

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• 2023 (7) TMI 964
  Rejection of request for amendment of shipping bills - rejection on the ground that the goods were not examined at the time of export - HELD THAT:- It is brought out from the facts that the appellant had inadvertently mentioned the code for free shipping bills instead of code for DFIA shipping bill. It is seen from the records that the appellant had mentioned in the shipping bills that these are filed under DFIA License scheme. However, while selecting the code, they had inadvertently mentioned the code for free shipping bills . It is not disputed that the goods have been exported. So also, the documents existing at the time of export are produced. In such circumstances, the department cannot deny the request for conversion of shipping bills holding that the goods were not examined as being filed as free shipping bills. Section 149 of the Customs Act does not stipulate such condition. The second ground for rejection is that it is beyond 3 months as stipulated in Board circular. Section 149 of Customs Act does not stipulate any time. The grounds have been considered by the Tribunal in the case of N.C. John Sons Pvt. Ltd. [ 2019 (11) TMI 259 - CESTAT BANGALORE] and the Tribunal had held that the amendment of shipping bill has to be allowed. The Tribunal in the case of Autotech Industries (India) Pvt. Ltd. [ 2021 (11) TMI 518 - CESTAT CHENNAI] as well as M/S. CARBOLINE INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2022 (2) TMI 745 - CESTAT CHENNAI] considered the very same issue and held that the request for amendment cannot be rejected. The request for conversion of shipping bills cannot be denied. The impugned order is set aside. Appeals are allowed.

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• 2023 (7) TMI 963
  Suspension of Customs Broker License - single alleged misdemeanour - violation of regulation 16 of Customs Broker Licencing Regulations, 2018 - HELD THAT:- The suspension has been ordered for a single alleged misdemeanour of August/September 2021 and that, too, in clearance of an article that is permissible for import subject to necessary licences. The goods are not a normal item of import requiring close familiarity on the part of the importer. The claim of the appellant to unblemished record of half a century as a professional customs broker has not been disputed. The apprehension of similar modus operandi that exercised the mind of the licencing authority is, thus, needless. Several months have elapsed since the alleged incident before suspension was resorted to by the licencing authority. Regulation 16 of Customs Broker Licencing Regulations, 2018 may be invoked only when immediate action is warranted and such circumstances did not obviously exist. The suspension is set aside - appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (7) TMI 962
  Seeking issuance of writ of prohibition, preventing the respondent from approaching the concerned NCLT under the provisions of the IBC - Seeking quashing of demand notice, invoking the personal guarantees of the petitioner for the purported total outstanding debt. HELD THAT:- A writ of prohibition can be issued, when a petitioner has made out a case for want of jurisdiction. However, in cases where jurisdictional challenges can be agitated before an alternate forum, circumspection must be observed before a writ of prohibition can be granted. Indeed, the authorities do not treat the existence of an alternate remedy as a bar to grant the writ of prohibition. In the landmark case of WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT ] as well, the Hon ble Supreme Court declared that in cases where proceedings are wholly without jurisdiction, an alternate remedy does not bar relief. Despite the existence of an alternate remedy not being a bar to grant the writ of prohibition, it is a valid consideration that needs to be given its due weightage while entertaining a petition praying for a writ of prohibition. Undeniably, the principle of Nooh [ 1957 (9) TMI 42 - SUPREME COURT] , has application in the instant case, not merely because the petitioner prays for the impugned demand notice to be quashed, but also because the writs of certiorari and prohibition are complementary in nature, having a common ground of lack of jurisdiction . Thus, the existence of an alternate remedy does not act as a bar to entertain a petition praying for a writ of prohibition. In cases where an alternate remedy is available to the petitioner, there is a higher threshold that needs to be met, it being of a total and absolute lack of jurisdiction, in order for a writ court to grant relief. The existence of a statutorily prescribed alternate remedy, where a specialized forum is competent to decide upon its own jurisdiction, the burden upon a petitioner is further compounded. In such a scenario, the petitioner needs to convince the court, not merely that the proceedings or actions being taken are wholly without jurisdiction but also why the alternate forum must be deprived of an opportunity to decide upon its own jurisdiction. The petitioner contends that the respondent must be prevented from approaching the concerned NCLT under Section 95 of the IBC, and the impugned demand notice must be quashed as there is no debt the petitioner owes to the respondent. Firstly, that the assignment, by splitting the debt, adversely affects the rights of the surety. An assignment of this kind, when analysed through this lens, may possibly undermine a variety of different benefits that a surety is entitled to under the Indian Contract Act, 1872 (ICA). For instance, in the present case, the right of subrogation, may be seen to have become illusory. If at all in the present case, the assignor is allowed to enforce the guarantee, and the guarantor subsequently pays the entire debt, the guarantor could not, then, meaningfully make a claim for subrogation, as the principal debtor still owes the debt to the assignee - Importantly, however, it may be seen that a guarantor may waive these beneficial rights that he is so entitled to under the ICA. The general principle of the law allowing beneficial provisions to be waived off by the consent of the beneficiary is equally applicable in the context of the surety s rights under the ICA. The surety may waive his rights either through express and specific terms in the contract of guarantee itself, or through a subsequent agreement between the guarantor and the creditor to that effect - thus, the concerned NCLT must carefully scrutinize the deed of guarantee, if at all required. There are broadly three submissions of the respondent that are relevant to the issue, firstly, while relying upon the decision of Lalit Kumar Jain [ 2021 (5) TMI 743 - SUPREME COURT] , that the discharge or release of the principal debtor does not absolve the surety/guarantor of his liability; secondly, that the respondent is only seeking to recover the part of the debt that was left unrecovered after the CIRP of FACOR was concluded; and thirdly, that since the personal guarantees were specifically excluded from the Resolution Plan and the said Assignment Agreement, the terms of the Resolution Plan cannot be altered. It is clear that the specific issue considered by the Hon ble Supreme Court in the case of Lalit Kumar Jain was whether the approval of a resolution, which leads to a discharge or release of a corporate debtor can, in and itself, lead to a discharge of the personal guarantor - In the instant case, the petitioner s claim is not based on the mere passing of the Resolution Plan of FACOR, but rather is concerned with the effect that the terms of the Resolution Plan have in law. It is their case, that the Resolution Plan is valid in law, its terms need to be adhered to, however, the effect of the terms of the Resolution Plan is that the respondent cannot enforce the guarantee given to it by the petitioner - This court is, therefore, of the opinion that the pronouncement of Lalit Kumar Jain shall have no application in the facts of the present case. The second submission of the respondent that the respondent is only seeking to recover the part of the debt that was left unrecovered after the CIRP of FACOR was concluded now deserves attention - Indeed, it is the case that the respondent intends to recover what was left unrecovered after the CIRP of FACOR concluded, however, after the underlying debt was assigned. The assignee is entitled to recover the unrecovered amount as well. The third argument, and the most vehemently argued submission of the respondent must now be considered by this court. It is their contention that since the personal guarantees were specifically excluded from the Resolution Plan and the said Assignment Agreement, the respondent can proceed to enforce the guarantee given by the petitioner to the creditor. The terms of the Resolution Plan cannot be altered after they have attained finality. This court is of the opinion, that in the present case, no right of the petitioner under Article 14 of the Constitution of India has been violated. It is, therefore not warranted to delve into, what the true import of specific clauses of contracts is - it can be concluded that a reservation of rights clause is incompatible with an absolute release of a principal debtor. Whether the petitioner has established that the impugned demand notice was wholly without jurisdiction and the respondent must therefore be prevented from approaching the concerned NCLT under the provisions of the IBC? - HELD THAT:- In a petition praying for a writ of prohibition, where a petitioner is to demonstrate the absence of jurisdiction, this court does not consider it fit, to develop, if at all this is a case for that to take place, an area of private contractual law, and then to use that development in order to establish a want of jurisdiction on the part of the respondent - It is not the case that the reliefs prayed for cannot be granted by the concerned NCLT. The petitioner s claim of the guarantor getting a right to be heard at a belated stage, is not sufficient to entertain the present petition. The legislature, in its wisdom, thought it fit to give the right of hearing at belated stage. Indeed, if in the present case the petition is entertained, it would subvert the procedure laid down under the IBC. The respondent in turn would be denied the opportunity to present their case before the concerned NCLT. This court is, therefore, of the opinion that the present writ petition deserves to be dismissed - Petition dismissed.

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• 2023 (7) TMI 961
  CIRP - Recovery of dues from the Guarantor, while moratorium was decelerated against the corporate debtor - Legal Steps taken by the Respondent Bank under the provision of the SARFAESI Act - Plaintiff is an MSME within the meaning of the MSMED Act of 2006 or not - applicability of notification S.O. 1432(E) dated 29.5.2015 - no opportunity of restructuring of the Principal Borrower Company and to its directors/ guarantors, provided by the Respondent No. 1 Bank. Petitioner submitted that the Borrower being an MSME should be taken care of by the Government and Special Mention Accounts and rectification, restructuring and if both the options do not work, then recovery option as last option should be used. HELD THAT:- Supreme Court in the matter of AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [ 2018 (2) TMI 25 - SUPREME COURT ] held that if statutory remedies under the DRT Act and the SARFAESI Act is available, High Court should not exercise its jurisdiction under Article 226 for passing orders. In the case of PHOENIX ARC PRIVATE LIMITED VERSUS VISHWA BHARATI VIDYA MANDIR ORS. [ 2022 (1) TMI 503 - SUPREME COURT ] it was held that High Court should not entertain Petition when a remedy under SARFAESI Act is available. Petitioner has already availed the benefits of Section 17, by preferring an exhaustive application by way of Securitisation Application No. 92 of 2022 before the D.R.T. On 8 May 2023, liberty was granted to the parties to file Written submissions, and matter was closed for orders. By Order dated 11.09.2019, the NCLT has declared a moratorium against the action being taken against the Borrower, including the SARFAESI proceedings. However, the Secured Asset is owned by the Petitioner/Guarantor. Therefore, as such, the Respondent No. 3 /Bank can proceed against the Mortgaged Property of Personal Guarantor as per S. 13(11) of the SARFAESI - The issue is already covered by the judgment of the Supreme Court in STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT ] which holds that S. 14 and S.31 of the IBC does not bar initiation and continuation of the SARFAESI proceedings against the Guarantor. As such, the bank has not violated the moratorium as ordered by the NCLT, in initiating SARFAESI Proceedings against Petitioner / Guarantor. The present proceedings cannot be entertained - This, more particularly, for the reason that the adjudication on such prayer and that too at the behest of the petitioner, is wholly academic - Petition dismissed.

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• 2023 (7) TMI 960
  Seeking Condonation of Delay of 13 days in filing the present Appeal - Sufficient reasons for delay present or not - time limitation for the purpose of filing an appeal - HELD THAT:- In the present case, the Impugned Order was passed on 12.05.2023. The period of 30 days had expired on 11.06.2023 whereas the Appeal alongwith the Application for Condonation of Delay was filed on 26.06.2023. The reason given by the Appellant is that the Appellant was Ex- Parte before the Learned Tribunal in IA/846(CHE)/2020 in which the Impugned Order has been passed about which it came to know only on 27.05.2023. But no evidence is brought on record even prima facie to prove that the Appellant acquired the knowledge only on 27.05.2023. It is to be borne in mind that the legislature has provided only a period of 30 days for the purpose of filing of an Appeal in order to ensure expeditious disposal of the Litigation arising out of the Code and has further provided a window of only 15 days to the Appellate Tribunal to consider an Application for Condonation of Delay that too on being satisfied that there was a sufficient cause with the Appellant/Applicant for not approaching the Court by way of an Appeal in time (within the period of 30 days as prescribed). There are no substance in the present Application as it does not inspire confidence for the purpose of constituting a sufficient cause to satisfaction. Hence, the Application is hereby dismissed.

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• 2023 (7) TMI 959
  Rejection of Section 7 Application - rejection on the ground that ledger and the bank statement do not tally - discrepancies between the Bank Statement and the Ledger Account, exists or not - existence of debt and default or not - HELD THAT:- Section 7 Application was filed by the Financial Creditor with the case that loan was given to the Corporate Debtor for an amount of Rs. 9.41 crores out of which Rs. 5.12 Crores was paid in the year 2013-14 and the amount of Rs. 4.29 was pending. In the Part-IV of the Section 7 Application, the said amount was claimed on the basis of which the CIRP was sought to be initiated. The observation of the Adjudicating Authority that amount of Rs. 4.10 lac was received from Harvansh and not from the Corporate Debtor is not a correct observation. The Bank Statement has been placed on record by the Corporate Debtor which indicate that on 24th August, 2015 by transfer Rs. 4.10 Lac was received by the Financial Creditor and on the same day the said amount of Rs. 4.10 Lac was transferred to one Mr. Harvansh. The two entries are separate entries in the Bank Statement and tallies with the Ledger Account which indicate that Rs. 4.10 Lac was credited in the Account of the Financial Creditor. Thus the basis of the order of the Adjudicating Authority rejecting Section 7 Application is unfounded. Debt and Default being admitted, the Adjudicating Authority ought to have admitted Section 7 Application in view of the law laid down in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ]. The order passed by the Adjudicating Authority is not sustainable in law and is hereby set aside - appeal allowed.

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• 2023 (7) TMI 958
  CIRP - Fraudulent Transactions or transaction in the normal course of business with the Corporate Debtor - appellant submits that they have availed financial assistance to overcome their financial distress and therefore transactions should have been treated as normal commercial transaction - existence of malafide intention or wilful misconduct or not - Section 66 of the I B Code, 2016 - HELD THAT:- As per Section 66, the Adjudicating Authority can pass suitable orders, if it is found that any person has carried on the business of the Corporate Debtor with intent to defraud its creditors and such persons can be directed to make contributions to the assets of the Corporate Debtor . It can also be inferred that the fraud can, interalia, consist of such debts which debtor has no intention of paying or does not expect to be able to pay or such fraud may also happen by way of false representation and without intention to pay back. The expression any person includes a knowing party to the carrying out fraudulent transactions. Section 66 of the I B Code, 2016, therefore, clearly provides that if it is found that any business of the Corporate Debtor has been carried on with an intent to defraud the creditors of the Corporate Debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the Resolution Professional pass an order to make liable to such contribution to the assets of the Corporate Debtor as may deemed fit. This Appellate Tribunal notes that the business of the Corporate Debtor was related to trading in Bullion i.e. import/ export/ dealing in local markets by way of sale/purchase of gold and the Corporate Debtor was not at all connected with business of financial services or lending money - this Appellate Tribunal finds it quite unusual on the part of the Corporate Debtor to lend such huge amount of Rs. 41.03 crores and similarly unusual on point of the Appellant to have benefitted of this largesse without any explainable rhyme or reason. From the averments made during the hearing as well as records available, it transpires that the Appellant made two different and contradictory submissions regarding nature of its relationship with the Corporate Debtor and nature of the transaction based on which the Appellant received such huge amount of Rs. 41.03. crores from the Corporate Debtor . It is noted that initially the Appellant explained this transaction as Long Term Borrowing (Loan) and not credit from trading activities before the Adjudicating Authority in Para 6(b) of the Reply filed by the Appellant . The Appellant has now taken the stand in rejoinder before this Appellate Tribunal that money pertains to regular business transactions which is evident from Para 5 of the Rejoinder - Such contradictory statements also do not auger well and raises doubts in the mind of the Appellate Tribunal regarding the real nature of the transaction along with true relationship between the Appellant and the Corporate Debtor . It cannot be the case of the Appellant s that the Appellant is not a party to the subject fraudulent and wrongful trading, despite being the sole beneficiary of the same and beyond any acceptable logical conclusion. It is seen that the intent to defraud the creditors , under Section 66(1) of the I B Code, 2016 is further established by the fact that the Respondent Nos. 2 3 had provided different books of accounts in different proceedings before the Adjudicating Authority with a clear intent to fraudulently deprive the creditors of the Corporate Debtor from the admitted amounts - This Appellate Tribunal observed that the Appellant is a principal beneficiary of fraudulent and wrongful trading and therefore the Adjudicating Authority has rightly held this transaction as fraudulent under Section 66 of the I B Code, 2016. Thus, this Appellate Tribunal comes to definitive conclusion that there is no error in the impugned order dated 29.01.2021 - appeal dismissed.

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• PMLA

• 2023 (7) TMI 957
  Seeking grant of bail - Money Laundering - aiding in fraudulent increase of inventory/stock in the account books of M/s Shakti Bhog Foods Limited [SBFL] which helped in increasing the borrowings - twin requirements of section 45 of PMLA complied with or not - reliaibility of statements u/s 50 of PMLA - HELD THAT:- In order to grant bail, this Court, in view of the twin conditions has to record a finding that there are reasonable grounds for believing that the applicant/accused is not guilty of the offence of money laundering. It is a settled proposition that reasonable grounds is something more than prima facie . Although the email dt. 22.11.2013 does not bear the signatures of the Applicant and that the invoices are signed by Vijay Kumar Malhotra, CFO, the statements of witnesses as well as co-accused persons, recorded under Section 50 of PMLA, point out to the Applicant s active participation in procuring fake invoices from shell companies. It also reveals that the Applicant assisted in transferring proceeds of crime to shell companies without any genuine business transactions - The Applicant cannot feign ignorance to these transactions as these transactions relate to purchase of material for SBFL and the Applicant admittedly was VP (Purchases). Apart from fake invoices, fake transport invoices for these LCs were arranged under the applicant and others. Investigations revealed that total payment of Rs 342.05 crores (Rs. 111.26 crores in the form of L/C and Rs. 229.79 crores in the form of direct payments made from bank accounts) were made to 05 vendors of SBFL. On verification of (TAN and PAN) numbers of these vendors and their transporters, 02 of these vendors were found having invalid TAN and PAN of the non-existent transporters - the emails show the involvement of the applicant in the running of the affairs and business dealings of SBFL as he was either the originator or primary recipient. In view of such clear emails, at this stage a finding cannot be given that there are reasonable grounds for believing that the accused/applicant is not guilty of offence of money laundering. The emails categorially lead one to infer that the applicant was directly involved in process/activity connected to the proceeds of crime. As per the statements given by AH Ansari, Sandeep Mishra, Vijay Kumar Malhotra, Ewin Ahuja, the Applicant was not merely an employee of the company who was bound by the decisions taken by Sh. Kewal Krishna Kumar. The defence of the Applicant that the applicant had no such knowledge of any illegal transactions by Sh. Kewal Krishna Kumar and his family members does not seem probable - The statements prima facie also lend credence to the fact that the applicant was not merely the paper director but was a director who was actively involved in the working of the SBFL. In Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT] , the Hon ble Supreme Court has also held The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are reasonable grounds for believing which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt. The fact that the applicant is a 12th passed individual does not mean that he was not mentally adept to commit the alleged offense. The court at this stage is not required to delve deep into the evidence collected by the investigating agency or to make any findings about its authenticity or relevance to the applicant. It is also not required to make a finding of guilt, conduct a mini-trial, or meticulously examine the evidence. It only needs to be determined whether the applicant has successfully made out a case for me to state that there are reasonable grounds for believing that applicant is not guilty of the offence of money laundering - that there is sufficient incriminating evidence about the involvement of the accused/applicant in the offence of money laundering. It is not only the statements u/s 50 PMLA which show the involvement of the applicant but other material such as emails as well as documents containing the signatures of the applicant which are also indicative of involvement of the applicant in the offence of money laundering. The statements have not been retracted. The applicant is not guilty of the offence of money laundering - the application for bail of Mr. Tarun Kumar is dismissed.

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• 2023 (7) TMI 956
  Condonation of delay in filing appeal before tribunal - availability of alternative remedy of appeal - Provisional attachment of multiple immovable properties - HELD THAT:- There is no disputation or disagreement that the writ petitioners have an alternate remedy by way of an appeal to Hon ble Appellate Tribunal, PMLA, New Delhi under Section 26 of PMLA. As regards alternate remedy, law is well settled that alternate remedy is not a bar for exercise of writ jurisdiction and that alternate remedy qua writ jurisdiction is a self imposed restraint. In other words, alternate remedy rule is not a absolute rule and it is a rule of discretion. Be that as it may, as regards the alternate remedy rule which is not a absolute rule and a rule of discretion, Hon ble Supreme Court in a long line of authorities has repeatedly held that in fiscal law, the rigor of application of alternate remedy rule is very high. In the present case, the writ petitioners have raised several points on merits in their campaign against the impugned common order made by the first respondent but as this Court is not entertaining captioned WPs by applying the alternate remedy rule, it is deemed appropriate to not to embark upon the exercise of examining the same - It should be recorded that learned counsel for petitioners submitted that he is conscious of the alternate remedy rule and therefore, predicated his admission board campaign on the aforementioned 180 days point for consideration and in this view of the matter also, it is deemed appropriate to not to discuss the merits of the writ petitioners campaign against the impugned common order. There is no cap as regards condonation. By saying no cap, it is meant that the Appellate Tribunal is not stifled when it comes to condonation of delay and any length of delay can be condoned. However, in the case on hand, adverting to the case file, learned counsel submitted that the impugned order has been received by the writ petitioners only on 06.02.2023 and captioned writ petitions have been filed in this Court on 20.03.2023. The captioned writ petitions are disposed of as closed albeit preserving all the rights and contentions of the writ petitioners to approach the Appellate Tribunal under Section 26 of PMLA - Appeal disposed off.

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• Service Tax

• 2023 (7) TMI 955
  Export of services - Palace of performance services on Goods - Video Production Agency service or not - scope of Video Production Agency and Video-Tape Production - HELD THAT:- On a conjoint reading of the definitions of the Video Production Agency and Video-Tape Production , it is found that the services such as editing, cutting, coloring etc. is only after recording is done of any programme, event or function on a magnetic tape or any other media or device. This is clear from the use of the words services relating thereto and such a Video-Tape Production when done by any professional videographer or any commercial concern engaged in the business of rendering such services is a Video Production Agency . Having regard to the expressed words services relating thereto and the circular dated 09.07.2001, paragraph 2 , it is found that the Tribunal has rightly interpreted the said sections. Appeal dismissed.

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• 2023 (7) TMI 954
  Valuation - pure agency services or not - Octroi Charges - amount received after 14.05.2015 towards electricity charges from the assessable value of the service provider - exclusion of the electricity charges from the assessable value for the period prior to 14.05.2015 - It was held by CESTAT that there are no merit in the appeals filed by Revenue as well as that filed by SLP and therefore, both are rejected. HELD THAT:- There are no good ground to interfere in the matter - appeal dismissed.

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• 2023 (7) TMI 953
  Classification of services - survey and exploration of minerals service or not - contracts for drilling work by ONGC and Reliance Industries Ltd. - applicability of Circular No. 80/10/2004-ST dated 17 September 2004 - HELD THAT:- The members of the petitioners are required to be permitted to urge all their contentions before the Departmental Authorities in the event the occasion so arises - It is opined that so far no show cause notices are issued to the members of the petitioner except as recorded in the case of M/s. Transocean Offshore International Ventures Ltd., a copy of which is annexed at Exhibit H. Thus, neither any proceedings are initiated nor any proceedings in regard to the other members are pending before the department. The circular as challenged in the petition, was issued almost 19 years back. The department has also not taken any action and the members of petitioner since 2007 are paying service tax under the category of mining services . In a petition which is filed by the association, it may not be appropriate to examine the validity of the impugned circular. The same is already subject matter of contention in the show cause notice issued to one of the petitioner s member M/s. Transocean Offshore International Ventures Ltd., and it would be for such member of the petitioner, who would be entitled to raise all contentions in regard to the circular by raising all permissible contentions in law and on facts. If such contentions are raised, certainly they fall for consideration of the Designated Officer who would, if at all, is to adjudicate the show cause notice. Petition disposed off.

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• 2023 (7) TMI 952
  Violation of principles of natural justice - contentions were not dealt properly - Levy of Service Tax - Authorised Service Station Services - Banking and Other Financial Services - penalty under Section 76 of the Finance Act, 1994 - HELD THAT:- It is satisfying that certainly in respect of the aspects which are noted by the Tribunal, a remand to the Commissioner was necessary. However, it is found that accompanied with the relook on the factual issues, the issues of law as being canvassed by the Appellant which are on the nature of warranty contract and position of law in that regard as also the issue of jurisdiction were required to be considered by the Tribunal and findings recorded thereon. However, there are no findings recorded on such issues by the Tribunal. The Commissioner in the peculiar facts needs to consider these issues in respect of nature of warranty contract in the light of the decision of the Supreme Court in case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ], as also the issue of jurisdiction be addressed by him in deciding the proceedings on record. The present appeals disposed off by maintaining the order of the Tribunal in remanding the proceedings to the Commissioner.

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• 2023 (7) TMI 951
  Extended period of limitation - Non-payment of Service Tax - value of the tower supplied free by various clients was not included in the assessable value - benefit of N/N.19/2003-ST dated 21.08.2003 and N/N.1/2006-ST dated 01.03.2006 - HELD THAT:- The Adjudicating Authority though finds that the exemption contained in Notification No.19/2003-ST dated 21.07.2003 and Notification No.1/2006-ST dated 01.03.2006 is not applicable to the respondents as the service receiver has not supplied any plant, machinery or equipment - However, learned Adjudicating Authority holds that the issue is time barred. There is considerable force in the argument of the Adjudicating Authority. Moreover, the submissions of learned Counsel for the respondents based on the Manual for Scrutiny of Service Tax Returns make it clear that it was incumbent upon the Department to scrutinise the records of the respondent and to raise any queries, in case they are not satisfied with the Returns, In the instant case, it is seen that no queries of any sort have been raised or no mistakes were pointed out by the Department on the basis of the scrutiny of the Returns of the respondent. Under the circumstances, it is not open to the Department to allege that there has been wilful suppression of material facts on the part of the respondent. Tribunal has gone into the very same issue, in respect of the respondent s office in Delhi, in respect of show-cause notice issued on similar lines, and vide in case [ 2016 (3) TMI 783 - CESTAT NEW DELHI] have upheld the order of the Adjudicating Authority who dropped the proceedings, holding that no service tax is leviable on the works contract during the period prior to 1.6.2007 and remand the case for de novo adjudication only in respect of such contracts which were pure sweat contract, if any. The issue is loaded in favour of the respondents both on limitation and merits. In the instant case, the issue of merit is not under consideration. Extended period of Limitation - HELD THAT:- Learned Adjudicating Authority has correctly found that there is no suppression and hence, the provisions of Section 73 of Finance Act, 1994 are not attracted to invoke extended period - the impugned order is legally correct and tenable and that the Revenue s appeal is not maintainable and is liable to be dismissed. Appeal of Revenue dismissed.

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• 2023 (7) TMI 950
  Interest on refund of retention of rebate claim - Earlier recovery of interest made from the Rebate claim on exports - entitlement for interest for the intervening period - HELD THAT:- The said issue has come up before this Tribunal in several cases. In the case of Riba Textile Ltd [ 2020 (2) TMI 602 - CESTAT CHANDIGARH] where this Tribunal observed the appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum. The said order has been affirmed by Hon ble Punjab Haryana High Court [ 2022 (3) TMI 693 - PUNJAB HARYANA HIGH COURT] , therefore it is held that the appellant is entitled to claim interest i.e. from the date of sanctioning of the rebate claim i.e. 4.02.2016 and 12.03.2016 for Rs. 36,98,880/- and Rs. 6,97,904/- respectively till the date of sanctioning of their rebate claim i.e. 31.03.2021 and 10.06.2021 respectively. It is pertinent to mentioning that the appellant is entitled to interest @ 12% P.A. as held by this Tribunal in the case of Parle Agro Pvt Ltd [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] . Appeal disposed off.

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• 2023 (7) TMI 949
  Invocation of extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act - intent to evade or not - Levy of service tax - service of transport of passengers by air or not - excess baggage charges collected by the appellant from the passengers. HELD THAT:- Case of Jet Airways - The two learned Members constituting the Division Bench in Jet Airways had not agreed on the invocation of the extended period of limitation nor did they agree on the issue of the classification of the services rendered by the appellant - The learned Member (Judicial) held that the services rendered by the appellant would fall under transport of passengers by air and the extended period of limitation could not have been invoked - The learned Member (Technical), however, held that the services rendered by the appellant would fall under transport of goods by air and the extended period of limitation was correctly invoked. Difference of opinion was referred to Third Member in KINGFISHER AIRLINES LTD, JET AIRWAYS LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2015 (11) TMI 54 - CESTAT MUMBAI (LB)] , to whom the matter was referred, agreed with views expressed by the learned Member (Judicial) on all the three issues - it was held by Third Member and thus majority view was that i). the excess baggage charges collected by the appellant Airlines is integral part of the service provided for transport of passengers by Air ii). the issue is one of interpretation of the taxing statute and as such being debatable, there is no element of any fraud or suppression. Accordingly, the extended period of limitation is held not invocable and iii) So far the imposition of penalties are concerned, in the facts and circumstances, there being no deliberate defiance of the provisions of law or non-compliance with the provisions of Service Tax, none of the penalties are held to be attracted. The Division Bench of the Tribunal in M/S THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LTD. VERSUS CST, NEW DELHI [ 2018 (4) TMI 837 - CESTAT NEW DELHI] followed the decision rendered by the Tribunal in Jet Airways and observed Upon analysis of the scope of the taxable service vis- -vis. the excess baggage charges collected by the assessee, the Tribunal in the case of Jet Airways Ltd. has held that collection of such charges is an integral part of the main service and cannot be separately taxed under any other heads of service. Thus, in view of the aforesaid decisions, it has to be held that the collection of amount by the appellant towards excess baggage charges would be leviable to service tax under the category of transport of passengers by air and not under transportation of cargo by air. Extended period of limitation - HELD THAT:- There is substance in the contention advanced by the learned counsel for the appellant that mere suppression of fact is not enough as it has also to be conclusively established that suppression was wilful with an intent to evade payment of service tax - It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful since wilful precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The Principal Commissioner, therefore, fell in error in observing that the extended period of limitation could be invoked even if there was no intent to evade payment of service tax - The Principal Commissioner also fell in error in holding that the extended period of limitation could be invoked in the present case because under the self-assessment procedure parties are required to process on their own tax dues on the services provided but since the appellant had failed to discharge this burden, the appellant had willfully and deliberately suppressed facts so as to avoid payment of service tax. This issue was examined by a Division Bench of the Tribunal in M/S HLS ASIA LTD. VERSUS COMMISSIONER, SERVICE TAX COMMISSIONERATE, NEW DELHI [ 2023 (3) TMI 379 - CESTAT NEW DELHI] and it was held that the extended period of limitation cannot be invoked merely because the parties have to self assess. This apart, the learned Member (Judicial) in Jet Airways had observed that since the issue of classification of the service on the basis of various judicial pronouncement was debatable, the extended period of limitation could not have been invoked. Though the learned Member (Technical) did not agree with this view, but the learned Third Member (Judicial) to whom the matter was referred agreed with the views expressed by the learned Member (Judicial) on this issue. Thus, it has to be held that the Principal Commissioner was not justified in holding that the extended period of limitation had been correctly invoked in the present case. It can be thus concluded that:- 1. the services provided by the appellant in connection with the collection of excess baggage charges would fall under the category of transport of passengers by air. 2. the extended period of limitation could not have been invoked; and the benefit of Notification No. 26/2010 dated 22.06.2010 as also the benefit of the Notification No. 4/2011 that amended the notification dated 22.06.2010 would be available to the appellant. 3. The matter has, therefore, to be remitted to the Principal Commissioner to determine the service tax that would be payable by the appellant.

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• Central Excise

• 2023 (7) TMI 948
  Time Limitation - demand for the period February 1991 to July 1995 (out of total period of February 1991 to January 1996) is barred by limitation or not - HELD THAT:- There is no disputes between the parties that the Show Cause Notice was issued on 12th February 1996, demanding duty along with interest and penalty for the period from February, 1991 to July, 1995. The judgment of the Supreme Court referred by the learned counsel for the Appellant in M/S SANJAY INDL CORPN AND ANOTHER VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (3) TMI 592 - SUPREME COURT] the facts pertained to raising a duty of business of cutting larger steal plates. So also, the trader had challenged the imposition of penalty, and amongst other grounds the issue of limitation was taken up. It was held that demand beyond normal period of 6 months was not sustainable. In the present proceedings, the Show Cause Notice was issued on 12th February, 1996, for a period from February, 1991 to July, 1995, which is admittedly issued beyond a period of 6 months. At the relevant time the unamended Section 11A(1) mentioned a period of 6 months within which a notice could be served. Therefore, the Show Cause Notice can be sustained only if the department is able to show that there is suppression on the part of the Appellant. However, no material is available on record that the appellant indulged in suppression so as to attract any of the requirements as contended in the proviso to Section 11A of the Central Excise Act to apply the extended period of limitation. The question of law needs to be answered in favour of the Appellant, and against the respondent - Appeal allowed.

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• 2023 (7) TMI 947
  CENVAT Credit - Inputs - Titanium Coated Cathodes - Department was of the view that the coated cathodes having been used only as part of an equipment is not eligible for credit as inputs - manufacture of Caustic Soda Lye and Liquid Chlorine - HELD THAT:- The Tribunal in the case of COLLECTOR OF C. EX. VERSUS METTUR CHEMICALS INDUSTRIALS [ 1990 (12) TMI 243 - CEGAT, MADRAS] held that cathodes used in the electrolytic process being incidentally consumed in the manufacture of caustic soda is an input as defined under erstwhile Rule 57A of Central Excise Rules, 1944 and eligible for modvat credit. The revision application filed by the department against this decision of the Tribunal was dismissed by the Tribunal vide Final Order No.170/1995 and the order has been accepted by the Department. In the case of COLLECTOR OF CENTRAL EXCISE, INDORE VERSUS GWALIOR RAYON SILK MFG. (WVG.) CO. LTD. [ 1988 (2) TMI 210 - CEGAT, NEW DELHI ] it was categorically held that electrodes takes part in the manufacturing process and though no doubt that electrodes did not enter the stream of manufacture as raw materials, they are eligible for credit. There are no grounds to deviate from the view taken by the Commissioner (Appeals) - appeal of Revenue dismissed.

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• 2023 (7) TMI 946
  Principles of unjust enrichment - incidence of duty has been passed on to the dealers or not - Refund of duty paid under protest - classification of water filters - HELD THAT:- The appellant has collected excise duty by issuing invoice to their dealers and thereafter has issued credit notes as mark of returning the excise duty. However, it has to be borne in mind that the dealers have already passed on the said duty element to the consumers while selling the water filters to the consumers. There is no evidence that the appellant has returned the excise duty to the ultimate consumers. The Hon ble Supreme Court in the case of M/S. ADISON AND CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2017 (5) TMI 50 - SC ORDER] / [ 2016 (8) TMI 1071 - SUPREME COURT] had occasion to consider the very same point and held that by merely issuing credit notes subsequent to the clearance of goods, the assessee cannot be said to have passed the bar of unjust enrichment envisaged under Section 12B of the Central Excise Act, 1944. Thus, the order passed by the authorities below is legal and proper and does not require any interference - the impugned order is sustained - appeal dismissed.

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• 2023 (7) TMI 945
  Reversal of CENVAT Credit - supplies made to SEZ - Liability of demand of an amount equal to 10% value of cement supplied to SEZ developers - Retrospective effect of amendment made in Rule 6(6)(i) of Cenvat Credit Rules, 2004 vide Notification No. 50/2008-CE(NT) dated 31.12.2008 or not - HELD THAT:- From the amendment in Rule 6(6)(i) of Cenvat Credit Rules, 2004, it can be seen that amendment is by way of substitution in Rule 6 (6)(i) of Cenvat Credit Rules, 2004. It is settled law that any amendment brought by way of substitution is treated as if the said amendment was existing even prior to the date of amendment and accordingly the benefit of said amendment can be extended for the past period retrospectively. Moreover, in the present case, the supplies made to SEZ is always considered as export therefore, against the export demand equal to 10% value of goods supplied to SEZ is otherwise not sustainable. The issue is no longer res-integra as the same has been decided in favour of the assessee - Appeal of Revenue dismissed.

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• 2023 (7) TMI 944
  Recovery of CENVAT Credit - cenvated inputs in process, which were lost in fire - material in process/work in progress destroyed in fire - recovery of excess cash refund under N/N. 56/2002-CE dated 14.11.2002 - levy of penalty u/r 15 of the Cenvat Credit Rules, 2004 read with Rule 27 of the Central Excise Rules, 2002. Reversal of cenvat credit on input lost in fire - HELD THAT:- As such there is no dispute and the appellant himself has reversed the cenvat credit which is admitted by the department itself. Therefore, there is no dispute with regard to this issue. CENVAT credit on material in process/work in progress destroyed in fire - whether in the facts and circumstances of this case, Rule 3(5B) and 3(5C) are applicable or not? - HELD THAT:- The original authority as well as the appellate authority both have invoked Rule 3(5B) and 3(5C) to confirm the demand. This issue has been considered by various benches of the Tribunal, in this regard, it is pertinent to refer the decision in the case of M/S. CIPY POLYURETHANES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR [ 2021 (12) TMI 238 - CESTAT MUMBAI] wherein the division bench of this Tribunal after considering various decisions of the Tribunal on this issue has held it is quite evident that Rule 3 (5B) is applicable only in the situation were the inputs or capital goods have become obsolete and written off. It is not applicable in the situations where the inputs and semi finished goods are destroyed in fire accident. Demand of excess refund of Rs. 4,34,573/- - HELD THAT:- The show cause notice in this regard is totally vague and does not mention as to when, by whom and vide which order-in-original refund has been granted and in which month. Further, the appellant has categorically stated that no such refund was taken for the month of February 2008 as alleged by the department. Hence, there is no question of excess refund which is to be paid to the department. This issue is also decided against the department. The impugned order is not sustainable in law - Appeal allowed.

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• 2023 (7) TMI 943
  CENVAT Credit - capital goods - Engraved Ms Copper Plated Rollers - denial on the ground that the Capital Goods received by the appellant is exempted at the suppliers end - HELD THAT:- There is no dispute on the fact that the supplier are registered with Central Excise, they have duly discharged the payment of Excise duty, they have issued invoices and filed their returns to their Jurisdiction Central Excise Officer. The Jurisdictional Central Excise officer of supplier has not whisper a word about alleged wrong assessment of duty. The department had jolly well accepted the Act of the supplier that is payment of Excise Duty. The self-assessment of payment of excise duty has attained finality as no objection was raised by the department against the supplier. Therefore, rightly or wrongly, if the assessment at the supplier s end has been accepted and no objection was raised, the same cannot be disputed at the recipient of goods for availment of Cenvat credit by the recipient - Since, the payment of duty has been assessed and the same was not challenged the duty was paid by the supplier is in terms of Section 3 of Central Excise Act, 1944 and this duty is clearly, legally available as Cenvat credit to the recipient. Moreover, if the department is of the view that the supplier was not supposed to pay the duty in such case, the jurisdiction Officer at supplier end should have issued a Show Cause Notice for recovery of such amount under Section 11D of Central Excise Act, 1944, which was not done by the department. This further reinforce the claim of the respondent about their Cenvat credit. This issue has been considered time and again in various judgments - reliance can be placed in the case of COMMISSIONER OF CENTRAL EX. CUS., SURAT-III VERSUS CREATIVE ENTERPRISES [ 2008 (7) TMI 311 - GUJARAT HIGH COURT] where it was held that The Tribunal is justified in holding that if the activity of the respondent-assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture. - The judgment of Hon ble Gujarat High Court has been affirmed by the Hon ble Supreme Court, in COMMISSIONER OF CENTRAL EXCISE CUSTOMS VERSUS MDS SWITCHGEAR LTD. [ 2008 (8) TMI 37 - SUPREME COURT] . The Learned Commissioner (Appeals) has rightly allowed the Cenvat credit on capital goods to the respondent. Hence, the order of the Learned Commissioner is absolutely legal and correct, which does not require any interference - Appeal of Revenue dismissed.

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• CST, VAT & Sales Tax

• 2023 (7) TMI 942
  Levy of tax - chemicals used as consumables in the process of job work of dyeing of fabric - tax is levied irrespective of the fact whether property in goods had been transferred or not - HELD THAT:- Matters remanded to the Assessing Officer to consider the case of the assessees as well as of the Appellants herein and to pass fresh orders in terms of the directions issued by the High Court in M/S A.P. PROCESSORS, PLOT NO. 103, SECTOR-24, FARIDABAD THROUGH ITS PARTNER SH. ARVIND JAIN VERSUS STATE OF HARYANA THROUGH PRINCIPAL SECRETARY TO GOVERNMENT OF HARYANA, EXCISE AND TAXATION DEPARTMENT, CIVIL SECRETARIAT, CHANDIGARH [ 2018 (5) TMI 1797 - PUNJAB AND HARYANA HIGH COURT ] where it was held that In the present case, it would be essential to determine the value of consumables transferred in the goods on which tax is leviable. While determining the actual loss of chemicals, dyes and colours where the fabric or textile undergoes various processes depends upon factual aspect which can be considered only by the Assessing Officer where parties can produce evidence in respect of their respective claims/contentions. There are no reason to interfere with the impugned orders - appeal dismissed.

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• 2023 (7) TMI 941
  Requirement of adjusting the pending dues from the amount of refund due to a tax payer - date when the amount of refund is payable for the purposes of Section 42 of the DVAT Act - HELD THAT:- The language of Section 38(2) of the DVAT Act indicates the scheme of application of an amount refundable to a person towards the outstanding dues. It requires the Commissioner to apply the excess amount due to a taxpayer towards recovery of any other amount due under the DVAT Act or under the CST Act. Clearly, if there is a crystalized demand, which is due and payable by any taxpayer, the Commissioner is required to first apply the amount refundable for satisfaction of that liability. If any amount remains after the discharge of such dues, the same is required to be refunded within the stipulated period - It is apparent that the use of the words any other amount due in Section 38(2) of the DVAT Act refers to the amount due and outstanding at the material time, which is other than that covered under the assessment or quantification resulting in the claim for the refund either made separately or as reflected in the return furnished by the taxpayer. The taxpayer s remedies and claim in respect of any amount correctly applied in terms of Section 38(2) of the DVAT Act that is against other amounts due outside the rubric of the return furnished or its claim for the refund would follow a different trajectory. If the refund claimed by the taxpayer in his return is not paid on account of the assessment and reassessment framed under Sections 32 or 33 of the DVAT Act for the same tax period and the petitioner is successful in upsetting the same either pursuant to the objections filed under Section 74 of the DVAT Act, or in an appeal filed before the Appellate Authority under Section 76 of the DVAT Act, the self-assessment (return furnished) would stand confirmed and the assessee s claim would be required to be processed. This is so because, if the petitioner prevails in its objections under Section 74 of the DVAT Act, or appeals under Section 76 of the DVAT Act, that would amount to vindicating its stand that the assessments framed are erroneous and the refund claimed under the return should have rightly been paid within the time as stipulated under Section 38(3)(a) of the DVAT Act. Even in cases where the assessments are reviewed under Section 74B of the DVAT Act and as a consequence, the refund as reflected in the return is required to be made, the refund would be traceable to the return furnished by the taxpayer. The doctrine of Harmonious Construction requires that provisions of a statute not be read in isolation but in conformity with the scheme of the statute so as to avoid any conflict with the other provisions. This interpretation of Sub-rule (2) and Subrule (4) of Rule 34 of the DVAT Rules is consistent with the said doctrine. Entitlement to Interest on delayed refunds - relevant time for calculation of interest - Interest on the refund is required to be reckoned with reference to the date of filing its revised return, or not - HELD THAT:- In terms of Section 42(1) of the DVAT Act, a person is entitled to interest from the date that the refund was due to be paid or the date when the amount was over paid by the person, whichever is later - In the present case, undisputedly, the date on which the refund was due was later. According to the Revenue, the return furnished by a taxpayer, would stand superseded by the subsequent assessments under Sections 32 or 33 of the DVAT Act and, if no refund is due in terms of such assessments, the refund would be payable only after the taxpayer has succeeded in its challenge for setting aside or modifying the assessments framed under Sections 32 and 33 of the DVAT Act. It is contended that if the taxpayer secures the orders for setting aside or modifying the said assessments, the refund would be payable as a consequence of such orders - This aforesaid contention is unmerited. Once the taxpayer has succeeded in upsetting the assessments framed under Sections 32 or 33 of the DVAT Act, which results in vindicating its claim for refund either in part or as a whole, as claimed by furnishing a return, interest under Section 42(1)(a) of the DVAT Act would be payable from such date as the refund was due to be paid to the taxpayer. The expression, the date that refund was due to be paid must be construed as the date when such a refund ought to have been paid to the taxpayer. If the taxpayer succeeds in vindicating its stand that its claim for the refund was correct and that the subsequent assessments framed by the concerned authorities for the same tax period were erroneous or unjustified; it would follow that the taxpayer should have been refunded the amount claimed and that interest would be payable from the said date. In the present case, the petitioner had filed its revised return for the fourth quarter of the Financial Year 2013-14 on 31.03.2015. However, prior to that (on 15.05.2014 and 07.06.2014) default assessments under Section 32 and 33 of the DVAT Act were framed for various tax periods falling within the Financial Year 2012-13. The said default assessments were framed on 15.05.2014 and 07.06.2014. The petitioner had not filed any objections to the said assessments at the material time. In terms of Section 35 of the DVAT Act, the demands that were assessed in respect of the tax periods in the Financial Year 2012-13 were payable and outstanding. However, the refund due to the petitioner was not applied towards the dues pertaining to the amounts due against demands raised in respect of the tax periods in the Financial Year 2012-13, at the material time. Thus, the same were required to be disbursed. Insofar as the demands for assessments for the Financial Year 2013-14 are concerned, the assessments under Sections 32 and 33 of the DVAT Act were framed subsequent to the last date of processing the petitioner s claim for refund and the refund could not have been withheld at the material time. There is no dispute that the petitioner s refund was required to be paid within a period of two months from the date of filing the revised return. The respondent had clearly failed to act in accordance with Section 38 of the DVAT Act as it had not processed the petitioner s claim within the stipulated period of two months - withholding of the amount due to the petitioner was in breach of Section 38 of the DVAT Act. Thus, interest would be payable to the petitioner on the said amount from 01.06.2015, as claimed. Whilst the Department has processed the petitioner s claim for the refund of Rs.44,14,979/-. The Department has withheld a sum of Rs.10,43,918/- [Rs.6,50,434/- as tax and interest and Rs.3,93,484/- on account of penalty] for the tax period covered under the Financial Year 2013- 14. The demand for the same was raised on 04.09.2018. However, the said amount is not recoverable as the petitioner had filed its objections against the said demands on 02.11.2018. It is impermissible to withhold refund towards demands which are not recoverable - it is considered apposite to direct the concerned authority to refund the remaining withheld amount of amount Rs.10,43,918/- along with interest with effect from 01.06.2015 and recompute the interest for the amount of Rs.44,14,979/- as refunded in terms of the order dated 01.02.2023 and refund the interest due after adjusting the amount of Rs.7,983/- already disbursed. Petition allowed.

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• 2023 (7) TMI 940
  Violation of Natural Justice - no personal hearing afforded to the Petitioner before passing the impugned assessment order - Validity of G.O.Ms.No.47/27.03.2012 with effect from 01.04.2012 - amendment made to Entries 1 and 2 of Second Schedule to the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The Petitioner was not granted any opportunity to put forth their submission on merits. It was submitted that under similar circumstances, this Court was pleased to direct the Assessing Officer to revoke the assessment after granting an opportunity to the Petitioner to put forth their submission on merits. The impugned assessment order, dated 03.06.2022 passed by the Respondent are hereby quashed and the matters are remanded back to the Respondent for fresh consideration - Petition allowed by way of remand.

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