TMI Tax Updates - e-Newsletter
July 5, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise Indian Laws

Articles

1. GST @ SEVEN YEARS IN INDIA

   By: Dr. Sanjiv Agarwal

2. INITIATION OF INSOLVENCY RESOLUTION PROCESS AGAINST A CO-BORROWER UNDER SECTION 95(1) OF IBC CODE

   By: DR.MARIAPPAN GOVINDARAJAN

3. Income Tax Compliance Due dates-July 2024

   By: Ishita Ramani

4. GST is not applicable on services of design engineering and contraction of water tanks by the Government Authority

   By: Bimal jain

5. Rule 28(2) ultra-vires the Act but who cares!

   By: Madhusudan Mishra

News

1. Enhancements to Address-Related Fields in GST Registration Functionalities

2. Compliance of the Petroleum and Explosives Industry must be balanced with public safety: Union Commerce and Industry Minister Shri Piyush Goyal

3. General public is alerted on fake and fraudulent e-mails bearing names, signatures, stamps and logos of Delhi Police Cyber Crime and Economic Offence, Central Economic Intelligence Bureau (CEIB), Intelligence Bureau and Cyber Cell, Delhi

4. Repayment of ‘8.40% GS 2024’

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/95 - dated 4-7-2024

Modification to Enhanced Supervision of Stock Brokers and Depository Participants

2. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/96 - dated 4-7-2024

Measures to instil confidence in securities market – Brokers’ Institutional mechanism for prevention and detection of fraud or market abuse

FEMA

3. 12 - dated 3-7-2024

Online submission of Form A2: Removal of limits on amount of remittance

4. 13 - dated 3-7-2024

Release of foreign exchange for Miscellaneous Remittances

Companies Law

5. 04/2024 - dated 4-7-2024

Filing of Forms [BEN-2, MGT-6] due to migration from V2 Version to V3 Version in MCA 21 Portal from 4th July, 2024 to 14th July, 2024

Central Excise

6. 1086/01/2024 - dated 3-7-2024

Revised Monetary Limits for Adjudication of Show Cause Notices in Central Excise for commodities classified under Chapter 24 of Schedule IV of Central Excise Act, 1944

Highlights / Catch Notes

GST

• Petition dismissed for delay. Approach Appellate Commissioner after depositing 25% disputed tax (10% mandatory + 15% for delay). Deposit within 30 days.

  Case-Laws - HC : Petition dismissed due to time limitation. Petitioners granted liberty to approach Appellate Commissioner u/s 107 of GST Act, subject to depositing 25% of disputed tax, with 10% being mandatory requirement u/s 107 and additional 15% for approaching court after expiry of limitation period. Petitioners directed to deposit 25% of disputed tax from Electronic Cash Register within 30 days from receipt of order. Petition disposed of.
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• Order quashed for denying oral hearing before adverse assessment. Mandatory hearing in heavy liability cases. Fresh notice to petitioner in 2 weeks.

  Case-Laws - HC : Order set aside for violation of principles of natural justice by denying petitioner opportunity of oral hearing before passing adverse assessment order raising excess demand. Assessing Authority mandated to afford such opportunity irrespective of petitioner's choice. In assessment orders creating heavy civil liability, granting minimal hearing opportunity essential. Matter remitted to issue fresh notice to petitioner within two weeks for hearing before passing fresh order.
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• Tax notice missed online, court allows fresh hearing on depositing 10% tax. Order quashed, case remanded for new decision.

  Case-Laws - HC : The court found the petition maintainable despite the time limitation, as the petitioner failed to notice the show cause notice (SCN) posted on the GST common portal. Partial relief was granted by quashing the impugned order and remitting the case back to the respondent for fresh orders, subject to the petitioner depositing 10% of the disputed tax from its Electronic Cash Register. The quashed order shall be treated as an addendum to the preceding show cause notice.
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• Mismatch in tax credits claimed by petitioner. Court granted partial relief by cancelling tax demand, subject to Rs. 10,000 deposit. Fresh hearing ordered.

  Case-Laws - HC : Discrepancies between input tax credit availed by petitioner in GSTR 3B and auto-populated GSTR 2A. Court granted partial relief by setting aside impugned order confirming IGST demand and interest, subject to petitioner depositing Rs. 10,000. Petitioner to file reply to show cause notice with deposit within 30 days. Impugned order quashed, treated as addendum to show cause notice. Respondent to pass fresh order on merits expeditiously, preferably within two months after hearing petitioner. Petition allowed.
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• Tax appeal allowed after deposit. Authority to decide swiftly within 3 months.

  Case-Laws - HC : Petition maintainable, time limitation condoned. Petitioner allowed to file statutory appeal before Appellate Deputy Commissioner (GST), Trichy, upon depositing additional 25% of disputed tax. Appellate authority directed to entertain appeal and dispose it on merits expeditiously within three months of filing, in accordance with law.
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• Tax demand overlapped for same years. But lack of response to notices requires fresh orders after proper consideration.

  Case-Laws - HC : Overlapping demand confirmed u/s 63 and Section 74 of TNGST Act for same assessment years cannot be challenged. However, petitioner's failure to reply to show cause notices preceding impugned orders necessitates remand for fresh orders on merits in accordance with law by respondents after detailed consideration. Petitions disposed off through remand.
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• Applicant granted bail for false tax claims from fake firms! Multiple firms, no real business. High Court cites ARNESH KUMAR case.

  Case-Laws - HC : The applicant sought regular bail for allegedly illegally claiming Input Tax Credit (ITC) through fake firms without conducting any business or supply of goods, contravening provisions of the CGST Act. Statements recorded u/s 136 of the CGST Act were considered relevant. Evidence showed the applicant operated multiple firms on a single PAN, claiming ITC without actual business operations. Citing the ARNESH KUMAR case, the High Court noted that the applicant's detention was unjustified as investigations were completed and the maximum punishment was five years. The bail application was granted, subject to specified conditions.
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• High Court Quashes GST Cancellation, Orders Rehearing with 10% Deposit Due to Premature Action.

  Case-Laws - HC : The petitioner's GST registration was cancelled due to failure to file returns and non-compliance with show cause notices. High Court found a contradiction as the registration was cancelled before the return period. The matter is remitted for fresh orders, and petitioner must deposit 10% disputed tax for a rehearing. Impugned orders quashed, treated as part of show cause notices. Petition disposed by High Court.
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• Court Allows Late GST Appeal Filing Due to Lack of Online Notice; Orders New Hearing u/s 107.

  Case-Laws - HC : The appeal filed by the petitioner u/s 107 of the West Bengal/Central Goods and Services Tax Act, 2017 was rejected. The petitioner argued lack of opportunity to respond to Show Cause Notice (SCN) online. The court found the delay in filing the appeal justified due to lack of knowledge of the order and allowed condonation beyond the prescribed period. The appellate authority's decision was deemed flawed and set aside based on precedent allowing for condonation of delay. The matter was not remanded on the issue of delay, and the appellate authority was directed to hear and decide the appeal within eight weeks.
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• Interest on Delayed Tax Payment Under CGST Act Not Applicable from Cash Ledger Deposit Date to Return Filing.

  Case-Laws - HC : The High Court addressed the demand for interest u/s 50 of the Central Goods and Services Tax Act, 2017. It clarified that interest on delayed tax payment is not applicable from the date of deposit in the electronic cash ledger until the filing of the return. The Court emphasized that interest is compensatory and can only be imposed from the due date of tax payment until the actual deposit in the electronic cash ledger. Referring to relevant legal precedents, the Court highlighted that once the amount is credited to the government account, the tax liability is discharged, and no interest is payable if a sufficient balance remains in the electronic cash ledger. The Court concluded that the petitioner cannot be held liable for interest from the deposit date to the return filing date. The petition was allowed in favor of the petitioner.
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• Court rules denial of oral hearing violates natural justice. Even if not requested, authority must provide it before adverse decision.

  Case-Laws - HC : The High Court found a violation of the principles of natural justice due to the Assessing Authority's denial of an oral hearing opportunity. The court held that even if the petitioner did not request a personal hearing, the Authority must still provide it before making an adverse decision, especially in cases with significant civil liability. Upholding the principle of natural justice, the Court emphasized the necessity of a genuine opportunity for hearing before rejecting explanations and imposing demands. The case was remitted to the Assistant Commissioner to issue a fresh notice to the petitioner within two weeks for a proper hearing.
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• Court said pay 20% of tax, not interest! Follow statutes for fair rulings. Appeal allowed.

  Case-Laws - HC : The High Court reviewed a challenge to an interim order requiring appellants to deposit 20% of the remaining unpaid interest within a specified timeframe. The court held that the statute governing appeals to the tribunal does not mandate payment of 20% of disputed interest, but rather 20% of the remaining tax amount in dispute. The court emphasized that statutory provisions should guide judicial discretion, leading to the conclusion that the condition imposed by the lower court was improper. As a result, the appeal was allowed.
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Income Tax

• Court rules no tax on software royalties to foreign resident, citing DTAA. No copyright rights = no tax deduction.

  Case-Laws - HC : The High Court considered the taxability of royalty receipts for obtaining computer software paid to a foreign resident. Citing relevant legal precedents, the Court held that under the DTAA provisions, there was no obligation to deduct tax at source as the distribution agreements did not confer any right or interest in copyright to distributors/end users. Section 9(1)(vi) of the Income Tax Act, along with Explanations 2 and 4 on royalty, were deemed inapplicable as they were not beneficial to the assessee. The decision favored the assessee, following a similar ruling in a previous case.
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• Court Rules No TDS Required on Non-Resident Payments Pre-2010; Temple, School Expenses Deemed Revenue in Nature.

  Case-Laws - HC : The High Court addressed the issue of Tax Deducted at Source u/s 195 and addition u/s 40(a)(ia) for payments made to non-residents. The court examined the scope of Explanation to Section 9(1)(vii) and the retrospective amendment by the Finance Act, 2010. It was held that the retrospective nature of the amendment did not require the Assessee to deduct tax at source. Reference was made to a previous decision accepted by the Department. The court also considered the impossibility of applying certain tax provisions retrospectively. Regarding expenditure on temple repairs and school construction, the court upheld the Tribunal's decision that such expenses were revenue in nature, not requiring deduction of tax at source. The court found no error in the Tribunal's decision and ruled in favor of the assessee.
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• High Court decision: Trust denied exemption due to filing error. Trust eligible for exemption. Reconsideration ordered within 3 months.

  Case-Laws - HC : The High Court address the rejection of revision petition u/s 264 due to an inadvertent error in filing Form ITR-VII, resulting in denial of exemption to a trust approved u/s 10(23C) of the Income-tax Act. The court found that the Trust was entitled to exemption as there was no indication otherwise. The respondent's rejection based on filing errors without considering the exemption claim requires reconsideration. The court set aside the order and remanded the matter for reconsideration, directing the respondent to issue a fresh order within three months considering the court's observations.
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• The Tribunal decided the property purchase right transfer as long-term gain. Deduction claim u/s 54F allowed.

  Case-Laws - AT : The Appellate Tribunal considered whether the transfer of the right to acquire property should be categorized as a long-term or short-term capital gain. The Tribunal found that the right accrued to the assessee upon issuance of the allotment letter, granting the right to purchase the flat. The holding period was determined to commence from the date of the allotment letter, resulting in the gain being classified as long-term. Additionally, the Tribunal allowed the deduction claim u/s 54F, emphasizing the authority of appellate bodies to entertain such claims. The matter was remitted to the Assessing Officer for verification in accordance with the law.
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• Employees' foreign travel reimbursement is taxable. TDS liable to be deducted. Similar case precedent cited.

  Case-Laws - AT : The ITAT held that non-deduction of TDS on LTC reimbursement for foreign travel by the assessee's employees is not permissible. While travel within India is exempt from tax, foreign travel reimbursement is taxable. The tribunal referred to a similar case where the assessee was required to deduct tax on LTC payments to employees. The decision was made against the assessee based on legal precedents.
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• Tribunal Overturns Penalty for Income Misclassification; Upholds Taxpayer's Right to Challenge Disallowances.

  Case-Laws - AT : The Appellate Tribunal addressed the issue of penalty u/s 271(1)(c) concerning the correct classification of income. The Assessing Officer treated the income as 'income from house property' instead of 'business income', disallowing deductions. The Tribunal noted that in a previous assessment year, the same income was accepted as 'business income'. The AO's imposition of penalty for furnishing inaccurate particulars was deemed unjustified, citing legal precedents. The Tribunal emphasized that a mere unsustainable claim does not warrant penalty unless there is deliberate misinformation. The Tribunal ruled in favor of the assessee, highlighting that the recovery from the tenant exceeded the agreed rent. Not appealing disallowances does not automatically attract penalty, as penalty proceedings are separate. The assessee has the right to contest and prove no concealment of income, thereby negating penalty u/s 271(1)(c).
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• ITAT ruled no speculative transactions as actual delivery to buyer. Interest disallowance rejected for business purposes. Precedent followed.

  Case-Laws - AT : The ITAT held that the assessee's transactions did not fall within the provisions of speculative transactions u/s 43(5) as the ultimate settlement was through actual delivery to the buyer. Disallowance of interest u/s 36(1)(iii) was rejected as the advance to parties was for business purposes, not necessarily bearing interest, and supported by audited balance sheet reflecting availability of interest-free funds. The decision aligned with the precedent set by the Supreme Court in Reliance Industries Ltd, leading to deletion of the addition u/s 36(1)(iii) in favor of the assessee.
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• Society wins tax appeal! Tribunal says society exempt from sec.13 rules. CBDT Circular supports decision. Assessing Officer's disallowance void.

  Case-Laws - AT : The case pertains to denial of exemption u/s 11 due to alleged violation of provisions of section 13(1)(c). The Appellate Tribunal held that as the society is notified u/s 10(23C)(iv) and registered u/s 12A(a) of the Act, the conditions u/s 13 do not apply, as per CBDT Circular No. 557, dated 19.03.1990. Therefore, the Assessing Officer cannot disallow u/s 11. The Tribunal found no infirmity in the CIT(A)'s order allowing the appeal, leading to the dismissal of the Revenue's appeal.
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• Appellate Tribunal Quashes Assessment Order; Incorrect Facts Used for Reopening Case u/s 148A.

  Case-Laws - AT : The ITAT, an Appellate Tribunal, reviewed the validity of an assessment order challenged due to reasons recorded without proper application of mind u/s 148A. The AO based reasons on information from the AIR uploaded by a reporting entity about deposits in a J&K bank account not belonging to the assessee. The ITAT held that the CIT(A) erred in affirming the addition without recognizing the incorrect assumption that the account belonged to the assessee, despite a bank certificate confirming otherwise. The ITAT deemed the reasons recorded as legally flawed, emphasizing that reopening cannot be based on incorrect facts derived from AIR information. Consequently, the ITAT allowed the appeal, concluding that the assessment made on such grounds should be quashed.
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• Investment Income from Cooperative Banks Not Deductible u/s 80P(2)(d), Tribunal Directs Further Assessment.

  Case-Laws - AT : The Appellate Tribunal held that income earned from investments in cooperative banks, which are not cooperative societies, is not eligible for deduction u/s 80P(2)(d) of the Act. The argument that cooperative banks are also cooperative societies was deemed baseless. The Tribunal directed the Assessing Officer to examine if investments with cooperative banks were made due to statutory compulsions and, if so, to consider granting deduction u/s 80P(2)(a)(i) of the Act. If not eligible under 80P(2)(a)(i), the AO should assess eligibility u/s 80P(2)(d) in light of a recent Supreme Court judgment. If neither section applies, the AO should consider a deduction u/s 57 for the cost of funds. The Tribunal relied on the Karnataka High Court judgment for granting deduction for the cost of funds and ordered consideration of the assessee's claim in ground 4.1.
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Customs

• High Court case on denial of cross-examination for supari classification. Importance of cross-examination emphasized. Petitioner can appeal within 10 days.

  Case-Laws - HC : The High Court addressed a case involving a violation of natural justice principles due to the rejection of the petitioner's request for cross-examination in a matter concerning the classification of unflavoured and APL supari in relevant bills of entry. The court noted that the denial of cross-examination lacked a valid reason and referred to a Supreme Court ruling emphasizing the importance of cross-examination when witness statements are foundational to the order. The High Court allowed the petitioner to file a statutory appeal within ten days to be heard on merits without limitation issues, as the order in question was subject to appeal.
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• Tribunal boosts value of imported goods due to undervaluation alert, citing lack of consideration for key documents.

  Case-Laws - AT : The Appellate Tribunal (CESTAT) considered a case involving undervaluation of imported engineering goods, specifically 9000 Nos. spares of water filters-75 GPD water pumps. The declared value was rejected, and the value was enhanced based on a DRI alert regarding undervaluation by overseas suppliers. The Tribunal found that the lower authorities did not consider vital documents obtained under RTI, including a CD detailing price workings and contemporary import data. This lack of consideration violated principles of natural justice. The case was remanded to the Adjudicating Authority for reevaluation based on the additional documents obtained, leading to the appeal being allowed through remand.
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• In a customs case, penalties & confiscation found unjustified due to procedural errors. Commissioner exceeded authority.

  Case-Laws - AT : The case involved a challenge to the imposition of penalties and confiscation of goods under the Customs Act, 1962. The Appellate Tribunal found that the penalties imposed were not justified as the procedural irregularities did not warrant such severe actions. The Tribunal highlighted that the confiscation of goods was not warranted as the goods were not removed from the customs area without permission. The Commissioner of Customs was deemed to have exceeded authority in imposing penalties and failed to properly assess the breaches. The Tribunal set aside the penalties and confiscation, allowing the appeal.
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• Dispute over customs duty refund denied by tribunal. Appeal assessments before refund claim. All assessments appealable.

  Case-Laws - AT : The case involved a dispute over the appealability of assessments and the refund of excess customs duty payment. The appellate tribunal held that the refund claim was rejected as it was not part of the final reassessment order. The appellant should have challenged the final reassessment order to modify the amount. Refund proceedings cannot alter assessments unless modified. All assessments, including self-assessments, are appealable. The appellant's claim for refund was rightly rejected, citing the principle of unjust enrichment. The appeal was dismissed as there were no merits.
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• Appellate Tribunal Remands Case: Procedural Errors in Show Cause Notice for Goods from Zanzibar via UAE.

  Case-Laws - AT : The case involved a dispute regarding differential duty on goods with a Certificate of Origin from Zanzibar, warehoused during transit in the UAE. The Appellate Tribunal found that the importer failed to provide evidence of direct dispatch from Zanzibar. The Tribunal noted that Indian customs control should not be applied to goods in the UAE and highlighted procedural errors in the show cause notice. The failure to identify the person chargeable to duty or interest was deemed crucial, leading to the decision to set aside the order and remand the case for a fresh decision. The appeal was allowed by way of remand.
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• Importer appeal dismissed by CESTAT due to value below Rs. 50 lakhs limit set by CBIC.

  Case-Laws - AT : The case involves an appeal before the CESTAT challenging an assessment that led to an enhancement of value accepted by the importer. The CBIC's circular dated 02.11.2023 sets a monetary limit of Rs. 50 lakhs below which no appeal can be filed before the CESTAT. The duty amount in this appeal falls below this threshold. Citing a Bombay High Court decision, the appeal is deemed not maintainable as per the CBIC's instructions. Therefore, the appeal has been dismissed.
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FEMA

• All cross-border remittances now require Form A2, regardless of value. Earlier exemption up to $25K withdrawn. ensure compliance.

  Circulars : Authorised Dealers must obtain Form A2 for all cross-border remittances, irrespective of transaction value. Previous circulars allowing remittances up to USD 25,000 without Form A2 stand withdrawn. Dealers / Banks to ensure compliance with FEMA provisions while allowing remittances. Circular issued under FEMA Sections 10(4) and 11(1).
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• Authorized Dealers Can Facilitate Unlimited Remittances with Form A2, Complying with FEMA 1999 Sections 10(4) and 11(1).

  Circulars : Authorised Dealers (AD Category-I banks and AD Category-II entities) can facilitate remittances based on online/physical submission of Form A2 without any limit on amount, subject to conditions u/s 10(5) of FEMA 1999. ADs to frame guidelines with Board approval within statutory framework. Reporting in FETERS to continue. KYC norms to be complied with. Issued u/ss 10(4) and 11(1) of FEMA 1999.
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• High Court Quashes FERA Complaint Due to Lack of Proper Authorization u/s 61(2)(ii), Citing Abuse of Process.

  Case-Laws - HC : The High Court reviewed a case involving proceedings under FERA against a juristic person. The petitioner contended that the complaint was invalid as it was not filed by the authorized personnel as required by Section 61 (2) (ii) of FERA, 1973. The court found that the complaint lacked proper authorization and relied on a statement that did not support the allegations. Referring to a legal precedent, the court determined that the petitioner should be exonerated from criminal prosecution due to the lack of merit in the case. Consequently, the court deemed the continuation of the complaint case as an abuse of the court process and quashed it.
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Corporate Law

• In a liquidation case, claims should be decided until provisional liquidator's appointment. Bank of Baroda's dual claims were valid.

  Case-Laws - HC : The High Court addressed the issue of the relevant date for adjudicating claims in a liquidation scenario. The Court held that claims should be adjudicated up to the date of the provisional liquidator's appointment, not the final winding-up date. The Bank of Baroda had dual claims, one as a secured creditor and one as a Debenture Trustee. The applicant's claim settlement assertions were found factually incorrect as the Bank was entitled to recover a specific amount. Orders upholding these claims were not challenged and finalized. The Court dismissed the application, finding no errors warranting review.
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State GST

• GST Updates: Vehicle Leasing, Electricity Charges, Barley Processing, Mineral Trusts, and Landscaping Services Explained.

  Circulars : Clarifications provided on applicability of GST: 1) Leasing of motor vehicles without operators not included in 'same line of business' for passenger transport services, attracting higher GST rate. 2) Electricity charges reimbursed by lessees/occupants to real estate companies/malls taxable as part of composite supply of renting/maintenance services, except when charged on pure agent basis. 3) Job work for processing barley into malted barley attracts 5% GST as food product, irrespective of end-use. 4) District Mineral Foundation Trusts set up by state governments are governmental authorities eligible for GST exemptions. 5) Horticulture/landscaping services provided to CPWD for public parks/areas exempt from GST under specified notification.
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• Strict SOP for GST registration cancellation of fraudulent taxpayers. Curbing fake invoices, wrongful ITC claims. Evidence-based scrutiny, reasoned orders.

  Circulars : The circular provides a Standard Operating Procedure (SOP) for cancellation of GST registration of non-genuine taxpayers and creation of a repository of such entities. It outlines the background, legal provisions, procedure for cancellation initiated by the officer or on application, collection of evidence during investigation/inspection, preparation of evidence folders, sharing with authorities, and maintaining a repository by the Business Intelligence Unit (BIU). The aim is to curb the menace of fake invoices, wrongful ITC availment, and identify generators and users through risk parameters. It emphasizes thorough scrutiny, collection of evidence, recording statements, and reasoned orders for cancellation to safeguard government revenue.
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• Services by directors in personal capacity exempt from RCM. Official services attract RCM. Cinema food taxed at 5% GST if unbundled.

  Circulars : Clarifications issued on applicability of GST Reverse Charge Mechanism (RCM) for services provided by directors to companies and taxability of food/beverages supplied in cinema halls. Services by directors in personal capacity like renting immovable property are not subject to RCM. Only services rendered in director's official capacity attract RCM. Supply of food/beverages in cinema halls qualifies as restaurant service taxable at 5% GST, except when bundled with cinema exhibition as composite supply, where the bundled rate applies. Difficulties in implementation to be brought to notice of Pr. Commissioner, Trade and Tax.
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• KGST Act: Recipient can avail ITC on RCM supplies from unregistered suppliers in FY when invoice issued, subject to conditions.

  Circulars : The circular clarifies the time limit u/s 16(4) of the KGST Act, 2017, for availing input tax credit (ITC) by the recipient on tax paid under reverse charge mechanism (RCM) for supplies received from unregistered persons. It states that where the recipient is liable to pay tax on RCM supplies from unregistered suppliers and issue an invoice u/s 31(3)(f), the relevant financial year for calculating the time limit u/s 16(4) for ITC availment will be the financial year in which the invoice is issued by the recipient. The recipient must pay tax on such supplies, along with interest for delayed payment, and comply with other conditions u/ss 16 and 17 to avail ITC. Delayed issuance of invoices may also attract penal action u/s 122.
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• Rule 28(1) KGST: Imported Services from Foreign Affiliates Can Be Valued as Nil Without Invoice if Fully Creditable.

  Circulars : Clarifies that in cases of import of services by a registered person in India from a related person located outside India, where the recipient is eligible for full input tax credit, the value declared in the invoice by the recipient shall be deemed as open market value as per the second proviso to Rule 28(1) of KGST Rules. Further, if no invoice is issued by the recipient for services provided by the foreign affiliate, the value may be deemed as Nil and treated as open market value under the same provision. Directs trade notices to publicize the circular and address implementation difficulties.
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• New Procedure for Manufacturers: Substitute Machine Details, Certify Energy Ratings, Report Sale Price Without MRP.

  Circulars : Circular clarifies issues related to special procedure for manufacturers of specified commodities. Unavailable machine details can be substituted with year of purchase or assigned numeric number. Electricity consumption rating can be certified by Chartered Engineer if unavailable. For goods without MRP, sale price to be reported. Practicing Chartered Engineers from Institute of Engineers India eligible for certification. Procedure not applicable to SEZs, manual packing processes. For multiple machines, details of final packing machine required. In job work, procedure applicable to all involved, including unregistered job workers through principal manufacturer.
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Indian Laws

• High Court determines compensation for motor accident: Rs. 30,88,592 + 7% interest. Insurance Company to pay in 8 weeks.

  Case-Laws - HC : The High Court addressed the determination of compensation following a motor vehicular accident. The Court considered the deceased's annual income based on previous three years of Income Tax Returns, adjusting it to Rs. 1,76,496. Additionally, an amount of Rs. 60,000 from heavy goods vehicles was added. The Court rejected the Insurance Company's plea of policy violation due to lack of evidence. The total compensation, after adjustments, was fixed at Rs. 30,88,592 along with 7% interest. The Court directed the Insurance Company to deposit the sum within eight weeks for disbursement to the claimants, modifying the previous award.
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• High Court resolved dishonored cheque case through Mediation Center settlement. Respondent withdrew complaints, emphasizing upholding settlements.

  Case-Laws - HC : The High Court addressed a case involving dishonored cheques under the Negotiable Instruments Act. The parties settled disputes through a Mediation Center, supported by a settlement agreement and payment of a specified amount. Respondent agreed to withdraw complaints and make a statement voluntarily. The Court emphasized upholding settlements to avoid discouraging future agreements and payments. It utilized its power u/s 482 of the CrPC to prevent abuse of court processes. The Court quashed the criminal complaints, acknowledging the petitioner's payment and the complainant's dishonest conduct, ultimately allowing the petition.
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• High Court rules on arbitration award challenge, upholding deductions for service charges, production charges, and service tax.

  Case-Laws - HC : The High Court addressed various issues in a challenge to a final arbitration award u/s 34 of the Arbitration and Conciliation Act, 1996. The dispute involved deductions for welcome drinks, service charges, service tax, GST, interest, and costs. The court upheld the arbitrator's decision on deductions made by the petitioner and service charges. It found the petitioner liable for production charges and service tax due to the absence of a contract. The court also confirmed the payment of GST as settled in the interim award. Interest at 9% per annum was awarded from the initiation of arbitration. The court upheld the arbitrator's discretion in awarding costs, ultimately dismissing the petition for lack of grounds u/s 34 of the Act.
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• High Court clarifies: Individuals in charge of company can be held liable in cheque dishonor cases. Legal responsibility upheld u/ss 138 and 141 of NI Act.

  Case-Laws - HC : The High Court addressed the issue of criminal liability in a cheque dishonor case involving a company. The complainant failed to specify the authorized signatory or the person in charge of daily affairs. Referring to a Supreme Court ruling, it was established that individuals responsible for a company's affairs can be summoned and penalized u/s 138 with Section 141 of NI Act. The complainant asserted that the accused were fully responsible for the company's operations, shifting the burden to the accused to prove any restrictions on their powers. The court found no flaws in summoning the accused, dismissing the petition.
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IBC

• NCLAT addressed contempt petition on RP fees. Adjudicating Authority can set fees under CIRP Regulations. Financial Creditor to pay fees and expenses.

  Case-Laws - AT : The NCLAT, an Appellate Tribunal, addressed a contempt petition regarding the determination of the Resolution Professional's (RP's) fees and expenses. The Appellate Tribunal held that the Adjudicating Authority has jurisdiction to determine the fees and expenses under Regulation 33(2) of CIRP Regulations 2016. The Adjudicating Authority complied with the Tribunal's direction to determine the fees. The Financial Creditor was directed to pay Rs. 7,30,000/- as RP's fee and Rs. 2,41,512/- as CIRP expenses, with a specific payment timeline. An uncalled-for direction was set aside, and the appeal was disposed of, emphasizing the Financial Creditor's liability to pay the determined amounts.
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• Resolution Plan Approval Upheld; Tribunal Dismisses Valuation Irregularities, SEBI Ban Claims as Unsubstantiated.

  Case-Laws - AT : The National Company Law Appellate Tribunal (NCLAT) considered the approval of a resolution plan by the Successful Resolution Applicant (SRA), focusing on valuation processes and compliance with Section 29-A(f) of the Insolvency and Bankruptcy Code. The appellant's claims of irregularities in valuation and alleged ban by SEBI on SRA's promoters were deemed unsubstantiated. The Tribunal emphasized that the Committee of Creditors' (CoC) decision to approve the plan, supported by 100% voting share, is a commercial decision not subject to judicial interference unless noncompliance with Section 30(2) of IBC is proven. The Adjudicating Authority's approval of the plan and rejection of the appellant's objections were upheld, leading to the dismissal of the appeal.
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• Court Excludes 18-Month Period from Resolution Plan Timeline Due to Litigation, Overturns Liquidation Order.

  Case-Laws - AT : The NCLAT addressed the exclusion of an eighteen-month time period for resolution plan implementation and the extension of this period due to ongoing litigation. The Adjudicating Authority considered liquidation due to a perceived logjam and potential harm to the Financial Creditor. The Adjudicating Authority's conclusion was influenced by ongoing litigation hindering plan implementation. The court highlighted that discussions in the plan were about plan implementation, not liquidation. Section 33 of the IBC outlines grounds for liquidation, but as the resolution plan was in place and no breaches were shown, liquidation was deemed inappropriate. The stay by a higher court affecting plan implementation justified time exclusion. The order for liquidation was set aside, and time for plan implementation was extended from a specified date.
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• NCLAT clarified that certain allottees must meet new criteria for filing insolvency under IBC. Allottees like appellants must adhere to rules. Appeal denied.

  Case-Laws - AT : The NCLAT addressed the maintainability of a section 7 application under the IBC, focusing on the threshold set by Amendment Act 1 of 2020. It was held that allottees, including those in the Assured Returns Class of Creditors, are covered under the definition of 'allottees'. The appellants, being part of this class, had to meet the threshold criteria introduced by the amendment, which they failed to do. The Adjudicating Authority correctly determined that the appellants, as allottees, must adhere to the second proviso of Section 7(1) of IBC. The appeal was dismissed as the appellants were deemed to still fall within the ambit of 'allottees' and were required to meet the threshold for filing a section 7 application.
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• Appellate Tribunal Rules Interest Claims Cannot Meet Insolvency Threshold; Dismisses Application for CIRP Initiation.

  Case-Laws - AT : The NCLAT, an Appellate Tribunal, addressed the issue of maintainability of a section 9 application due to non-fulfillment of the prescribed threshold of Rs.1 crore and the existence of a disputed interest claim. The Corporate Debtor disputed the interest claim, leading to the conclusion that the interest amount could not be clubbed with the principal amount as per Section 4 of the IBC. The Adjudicating Authority correctly dismissed the application based on previous tribunal judgments. The appellant cited a judgment regarding interest on delayed payments but failed to establish that the interest claim was undisputed. As the claim for interest was contested, CIRP initiation was deemed inappropriate. The Adjudicating Authority's rejection of the Section 9 application was upheld, and the appeal was dismissed.
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• Appellant's Failure to Implement Resolution Plan Leads to Liquidation Under Insolvency and Bankruptcy Code.

  Case-Laws - AT : The case involves the Appellant's failure to implement a Resolution Plan approved by the Adjudicating Authority, leading to the question of whether the Appellant's inability to infuse share capital due to the company's inactive status absolves them from their obligations. The NCLAT held that the Appellant's offer to deposit the remaining amount into an Escrow Account does not excuse their failure to adhere to the Resolution Plan timelines. The Adjudicating Authority's refusal to grant waivers and the SRA's mindset of conditional plan implementation were considered. As the Resolution Plan was not implemented, liquidation was deemed necessary under the I&B Code. The Appellant's argument regarding fund infusion hindrance was rejected, leading to the dismissal of the appeal.
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PMLA

• High Court denied bail in a money laundering case involving leasing Waqf properties. Accused misled about surgery, evidence pointed to criminal conspiracy.

  Case-Laws - HC : The High Court considered a bail application in a money laundering case involving illegal gratification for leasing Waqf properties. It assessed the evidentiary value of statements u/s 50 of PMLA for bail purposes. The evidence indicated a criminal conspiracy involving the accused in investing proceeds of crime in immovable properties. The Court found that the accused misled about the necessity of bail for a surgery, casting doubt on their credibility. The Court concluded that the evidence warranted the application of Section 45 of PMLA, denying bail to the applicants. The bail application was dismissed.
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SEBI

• Master Circular consolidates debt securities issuance & listing norms. Supersedes previous circulars. Compliance mandatory for recognized entities.

  Circulars : Master Circular consolidates provisions for issue and listing of non-convertible securities, securitized debt instruments, security receipts, municipal debt securities, and commercial paper. Supersedes previous circulars, with actions taken under rescinded circulars deemed valid. Mandates recognized entities to disseminate, comply, implement systems, amend bylaws, and create awareness. Issued under SEBI Act, NCS Regulations, ILDM Regulations, and SDI Regulations. Effective immediately.
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• SEBI Updates Rules: Issuers Can Offer Debt Securities at Rs. 10,000 Face Value via Private Placement for Retail Boost.

  Circulars : SEBI has modified provisions allowing issuers to issue debt securities and non-convertible redeemable preference shares on private placement basis at a face value of Rs. 10,000, subject to conditions like appointing a merchant banker, offering interest/dividend bearing securities without structured obligations, and permitting specified credit enhancements verified by credit rating agencies. Existing clauses mandating Rs. 1 lakh face value for privately placed listed debt securities and Rs. 1 crore for certain other listed securities have been deleted. Trading lot shall always be equal to face value. The circular aims to encourage retail participation and enhance liquidity in the corporate bond market.
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Service Tax

• The court ruled non-payment of tax for construction services. Services to educational premises exempt, but not for appellant. Penalties upheld.

  Case-Laws - AT : The case involved non-payment of service tax for construction services. The Tribunal held that construction for educational premises was exempt, but the appellant's services didn't qualify. Exemption was rejected for services to a trust unless for charitable causes. Lack of evidence led to demand confirmation for toll plaza construction. Challenges to tax computation, time limit extension, and penalties were dismissed. Penalties were justified for contraventions, including failure to register and pay tax on time. Interest and late filing fees were upheld. The appeal was dismissed.
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Central Excise

• Revised Monetary Limits Set for Tobacco Excise Cases: Superintendents Up to 20L, Dy/Asst Commissioners 20L-2Cr, Addl/Joint Over 2Cr.

  Circulars : Revised monetary limits for adjudication of show cause notices in Central Excise for commodities classified under Chapter 24 of Schedule IV (tobacco and tobacco products). For central excise duty/CENVAT credit cases: Superintendent - up to Rs. 20 lakh, Deputy/Assistant Commissioner - above Rs. 20 lakh up to Rs. 2 crore, Additional/Joint Commissioner - above Rs. 2 crore without limit. Applicable to pending notices from 01.07.2017 onwards. For evasion of central excise duty/CENVAT credit and GST, separate notices issued but adjudicated by same authority under CGST Act. DGGI notices assigned to CGST adjudicating authority. For Audit Commissionerate notices involving multiple Commissionerates, proposal for common adjudicating authority sent to Board. Corrigendum for pre-Circular unadjudicated notices. Trade notice publication and difficulty reporting mechanism specified.
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Case Laws:

• GST

• 2024 (7) TMI 262
  Confirmation of demand proposed in the notice in Form GST DRC 01, dated 09.01.2023 - petitioner has failed to file the reply in time - petitioner seeking one opportunity to explain the case - principles of natural justice - HELD THAT:- The petitioner can be given one opportunity to explain the case on merits subject to the petitioner depositing 25% of the disputed tax from the Electronic Cash Register, within a period of 30 days from the date of receipt of a copy of this order. The impugned order which stands quashed in this order shall be treated as Addendum to the show cause notice issued to the petitioner. Subject to the petitioner complying with the above requirements along with reply within a period of 30 days, the respondent shall proceed to pass fresh orders on merits and in accordance with law after hearing the petitioner. It is expected that fresh orders shall be passed within a period of three months from today. The writ petition is disposed off.

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• 2024 (7) TMI 261
  Maintainability of petition - time limitation - HELD THAT:- Although the learned counsel for the petitioners would make submissions on the questions of law at this stage, the submissions of the petitioners on the questions of law cannot be entertained, save that the petitioners can be given liberty to work out their remedy before the Appellate Commissioner namely, the Deputy Appellate Commissioner under Section 107 of the GST Act subject to the petitioners depositing 25% of the disputed tax [10% being the mandatory requirement under Section 107 of the GST Act and 15% for approaching this Court for the remedy long after the limitation has expired]. In fine, the respective petitioners shall deposit 25% of the disputed tax from the Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order. Petition disposed off.

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• 2024 (7) TMI 260
  Challenge to assessment order - documents placed on record by the petitioner were not duly taken into consideration - violation of principles of natural justice - HELD THAT:- The petitioner has placed on record the relevant GSTR 3B, GSTR 1 and GSTR 9C returns. On examining the same cumulatively, it appears prima facie that there could have been an inadvertent error. Neither the draft proposal nor the show cause notice referred to the requirement for the sales list and outward supply invoices. In these circumstances, the interest of justice warrants that another opportunity be provided to the petitioner on this issue. As regards the issue relating to RCM, the petitioner stated that the excess RCM availed of was reversed in August 2018. This aspect is required to be examined by the assessing officer. The impugned order dated 27.04.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand as regards the RCM issue. Such remittance shall be made within fifteen days from the date of receipt of a copy of this order - petition disposed off.

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• 2024 (7) TMI 259
  Violation of principles of natural justice - ex-parte order - impugned order passed without fixing any date and without issuing any further notice for another date of hearing - HELD THAT:- In the present case notice for filing of reply was issued on 18.8.2022 for the date 18.09.2022. No separate / other date was fixed for hearing. Yet, without passing any order on the date fixed, the impugned order has been passed on 4.11.2022 without fixing any date and without issuing any further notice for another date of hearing. The present order has remained wholly ex-parte order that may not be sustained - impugned order dated 4.11.2022 passed by the respondent is hereby set-aside - Petition allowed.

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• 2024 (7) TMI 258
  Challenge to order whereby demand in excess has been raised against the present petitioner - petitioner was completely denied opportunity of oral hearing before the Assessing Authority - violation of principles of natural justice - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified No in the column meant to mark the assessee s choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms - The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created. The impugned order dated 26.12.2023 is set aside - The matter is remitted to respondent no.2/Assistant Commissioner, State Tax, Sector - 2, Pratapgarh, Prayagraj to issue a fresh notice to the petitioner within a period of two weeks from today - Petition disposed off by way of remand.

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• 2024 (7) TMI 257
  Cancellation of the GST registration of petitioner - petitioner was unaware of proceedings culminating in the impugned assessment order under Section 62 until distraint proceedings were initiated - HELD THAT:- On examining the impugned assessment order, it is evident that the assessment was made on best judgment basis because the petitioner failed to respond to the notice in Form GSTR 3A. In the affidavit in support of this writ petition, he asserts that his registration was cancelled and that he was unable to carry on business due to financial stringency. In the above facts and circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 03.03.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - petition disposed off.

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• 2024 (7) TMI 256
  Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - petitioner was unaware of proceedings culminating in the impugned assessment order - communications were uploaded on the GST portal and not communicated to the petitioner through any other mode - HELD THAT:- On perusal of the show cause notice, it appears that the tax proposal relates to a mismatch between the petitioner s GSTR 3B return and the GSTR 1 return as also between the petitioner s GSTR 3B return and the auto-populated GSTR 2A. Such proposal was confirmed without the petitioner being heard. The petitioner asserts that it was unable to participate in proceedings on account of not being aware of the same. In these circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 30.12.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - petition disposed off.

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• 2024 (7) TMI 255
  Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - petitioner was unaware of proceedings culminating in the impugned assessment - communications were uploaded on the GST portal and not communicated to the petitioner through any other mode - HELD THAT:- On examining the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not submit documents or reply to the show cause notice. In view of the assertion that the petitioner could not participate in proceedings on account of not being aware of the same, the interest of justice warrants reconsideration subject to putting the petitioner on terms. The impugned order dated 06.07.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - Petition disposed off.

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• 2024 (7) TMI 254
  Maintainability of petition - time limitation - petitioner failed to notice that the SCN, which were posted in the GST common portal - HELD THAT:- This Court is of the view that the petitioner may be given partial relief by quashing the impugned order and remitting the case back to the respondent to pass fresh orders subject to the petitioner depositing 10% of disputed tax to the credit of the respondent from its Electronic Cash Register - The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. Petition allowed.

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• 2024 (7) TMI 253
  Recovery of ITC availed - Discrepancies between the credit availed by the petitioner in its Return in GSTR 3B and the auto populated Return in GSTR 2A - HELD THAT:- Considering the fact that the petitioner has admitted the liability on the CGST and SGST and paid the amount together with the interest on 20.12.2023, this Court is inclined to grant partial relief to the petitioner by setting aside the impugned order which confirmed the demand on IGST and the interest payable thereon, subject to the petitioner depositing Rs. 10,000/- to the credit of the second respondent from its Electronic Cash Register. The petitioner shall also file a reply to the notice that preceded the impugned order, along with the said deposit within 30 days from the date of receipt of a copy of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order - It is expected that the second respondent shall pass a fresh orders on merits and in accordance with law as expeditiously as possible preferably within a period of two months thereafter. Needless to state, before passing the order, the petitioner shall be heard. Petition allowed.

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• 2024 (7) TMI 252
  Seeking grant of Regular bail - illegally claimed ITC - fake firms - no busiess conducted - HELD THAT:- In the present case, it is alleged that the applicant, by using a single PAN and without conducting any business and supply of any goods from the registered premises, illegally claimed refund of the accumulated ITC on account of trade/supply of goods and contravened provisions of the CGST Act. The office of the non-applicant recorded statements of the applicant and various witnesses. The non-applicant relied upon statements of witnesses including the applicant and submitted that the arrest of the applicant is justified. Section 136 of the CGST Act deals with relevancy of statement under certain circumstances. As per the said Section, a statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant. For the purpose of proving an offence, As per the said Section, a statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant. From the material collected on record, reasons recorded are that during search, some documents were found showing that the applicant is running several firms on one PAN and without supplying any goods and though the said firms are not in existence, claimed ITC on account of trade/supply of goods. In the case of ARNESH KUMAR VERSUS STATE OF BIHAR ANR [ 2014 (7) TMI 1143 - SUPREME COURT ], the Honourable Apex Court while laying down some guidelines clarified that directions issued would not only be applicable to cases under 498-A of the Indian Penal Code or Section 4 of the Dowry Prohibition Act but also would cover cases where offence is punishable with imprisonment for a terms which may be less than seven years or which may extend to seven years whether with or without fine. In the present case, the necessary investigation is already carried out and chargesheet is already filed. The maximum punishment provided is five years. Further detention of the applicant in jail is not required. As such, the application deserves to be allowed - applicant shall be released on bail, subject to fulfilment of conditions imposed - bail application allowed.

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• 2024 (7) TMI 251
  Challenge to demand proposed in the Show Cause Notice that preceded the impugned order has been confirmed - HELD THAT:- It is clear that the impugned order has been passed mechanically and warrants interference under Article 226 of the Constitution of India. Considering the same, the impugned order is quashed - The impugned order which stands quashed in this order shall be treated as addendum to the Show Cause Notice. Since the reply of the petitioner is very brief, the petitioner is given liberty to file reply afresh within a period of 30 days from the date of receipt of a copy of this order. The respondent shall pass fresh orders after duly considering the reply to be filed by the petitioner as also the Written Statement of the petitioner which has been mentioned in its reply in Form GST DRC-06 dated 28.10.2023. It is expected that the first respondent will pass orders on merits, within a period of 60 days from the date of receipt of a copy of this order - Since the petitioner s bank account has been freezed, the respondents are directed to lift the freezing of the bank account of the petitioner as the impugned order stands quashed in this order. Petition disposed off.

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• 2024 (7) TMI 250
  Maintaiability of petition - time limitation - petitioner could not file statutory appeal before the Appellate Deputy Commissioner (GST), Trichy, in terms of Section 107 of the respective GST enactments - HELD THAT:- The Court is inclined to exercise the discretion partly in favour of the petitioner by granting relief to file statutory appeal before the Appellate Deputy Commissioner (GST), Trichy. For the aforesaid purpose, Appellate Deputy Commissioner (GST), Trichy is suo motu impleaded as second respondent in these Writ Petitions. The petitioner shall file an appeal within a period of 30 days from the date of receipt of a copy of this order together with the deposit of another 25% of the disputed tax over and above the amount that is said to have been recovered from the petitioner. Subject to above, the second respondent shall entertain the petitioner s appeals and dispose of on merits and in accordance with law as expeditiously as possible preferably within a period of three months of filing of appeal. Petition disposed off.

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• 2024 (7) TMI 249
  Cancellation of petitioner s GST registration - petitioner had not filed any Return for a period in dispute - petitioner has neither replied to the show cause notices nor participated in the personal hearings - HELD THAT:- This Court is of the view that the petitioner has made out the case for interference with the impugned orders as there is a contradiction. Since the petitioner s registration was cancelled on 08.01.2019, the question of the petitioner filing the Return in GST DRC 3B cannot be countenanced. It appears that since the petitioner has neither also replied to the show cause notices nor participated in the personal hearings. This Court is, therefore, of the view that the matter deserves to be remitted back to the respondent to pass fresh orders on merits - Considering the fact that the petitioner may have had outward supply of goods during the period in dispute, as a condition for hearing the case afresh, the petitioner shall deposit 10% of the disputed tax under the respective Writ Petitions in cash or through Electronic Cash Register, if the same is accessible. The impugned orders, which stand quashed shall be treated as addendum to the respective show cause notices that preceded the impugned orders - Petition disposed off.

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• 2024 (7) TMI 248
  Rejection of appeal filed by the petitioner under Section 107 of the West Bengal/Central Goods and Services Tax Act, 2017 - petitioner contends that the petitioner did not get opportunity to respond to SCN since, the same was not available for viewing on the view notices tab - HELD THAT:- A detailed explanation as to why the appeal had been filed out of time had been provided. The aforesaid aspect, unfortunately, had not been appropriately considered by the appellate authority who had proceeded to mechanically observe, inasmuch as, the petitioner had filed the appeal after a gap of six months and twelve days, there was no reasonable cause for the delay. The fact that the petitioner was prevented from filing the appeal within the time prescribed had not been considered. Lack of knowledge, as regards passing of the aforesaid order, had not been considered by the appellate authority. The order impugned thus, appears to be perverse. It has already been held by the Hon ble Division Bench of this Court in the case of S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] that the appellate authority is competent to hear an appeal by condoning the delay beyond one month from the prescribed period as provided in Section 107 (4) of the said Act. Having regard to the aforesaid, the order dated 27th February, 2024, passed by the appellate authority, cannot be sustained and the same is accordingly set aside. Thus, no useful purpose will be served by remanding the matter to the appellate authority to reconsider the application for condonation of delay - Since, the explanation provided by the petitioner appears to be sufficient, by condoning the delay, the appellate authority is directed to hear out and dispose of the appeal on merit after giving the petitioner an opportunity of hearing, preferably within a period of eight weeks from the date of communication of this order. The petition is disposed off.

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• 2024 (7) TMI 247
  Violation of principles of natural justice - non-consideration of petitioner s reply - impugned order states that the petitioner has not responded to the notice in DRC 01 dated 04.12.2023 - HELD THAT:- A reading of the impugned order indicates that though the petitioner has replied to the show cause notice in DRC 01 dated 04.12.2023 in SCN No. 04/2023-GST/SUPDT, which was received on 27.02.2024, same has not been considered by the respondent while passing the impugned order dated 15.03.2024. The impugned order is set aside and the case is remitted back to the respondent to pass fresh orders on merits within 30 days from the date of receipt of a copy of this order. The petitioner shall file a fresh copy of the reply within 15 days from the date of receipt of a copy of this order and participate in the aforesaid proceedings positively - petition disposed off by way of remand.

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• 2024 (7) TMI 246
  Violation of principles of natural justice - documents filed by the petitioner were not taken into consideration while confirming the tax proposals - awarded to the petitioner by the Coimbatore Municipal Corporation - pure service contracts - exempt supply or not - HELD THAT:- As regards exempted supply, the petitioner has placed on record a document indicating that the work was awarded to the petitioner by the Coimbatore Municipal Corporation. In addition, the petitioner has also placed on record communications from the Coimbatore Municipal Corporation awarding service contracts to the petitioner. Also annexed are certificates from the Assistant Executive Engineer, Coimbatore Municipal Corporation with regard to specific items of work, including amounts paid in respect thereof. Prima facie, these documents indicate that these were pure service contracts. However, this is required to be established by the petitioner by submitting all relevant documents. Since the demand with regard to defect constitutes a substantial portion of the overall demand, the matter requires re-consideration by putting the petitioner on terms. The impugned order dated 30.03.2024 is set aside on condition that the petitioner remits a sum of Rs. 3,00,000/- towards the disputed tax demand within three weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2024 (7) TMI 245
  Condonation of delay of 10 days in filing appeal - sufficient reasons for delay or not - HELD THAT:- From the annexures to Form GST APL-01 filed by the petitioner, it would appear that the petitioner had categorically stated in paragraph 17 thereof, not only the period of delay but the reasons for delay. From the above, it would appear that there is delay of 10 days in preferring the appeal. The petitioner had also explained the delay. Independent of the above, a further letter was also filed with the Assistant Commissioner of State Tax explaining the delay. The aforesaid explanation given by the petitioner has not been considered by the appellate authority. The appellate authority ought to have, in the given facts taken note of the explanation given by the petitioner praying for condonation of delay. The appellate authority having not considered the same and having mechanically rejected the said prayer, the order dated cannot be sustained and the same is accordingly set aside. Admittedly, the petitioner had made pre-deposit as required for maintaining the appeal under Section 107 of the said Act. Taking into consideration the aforesaid and the explanation given by the petitioner, the petitioner has been able to sufficiently explain the delay in filing the above appeal. The appeal is restored to its original file by condoning the delay.

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• 2024 (7) TMI 244
  Overlapping of demand - demand was confirmed under Section 63 of the TNGST Act, 2017 earlier and the same demand has been confirmed again in the subsequent orders passed for the assessment years 2018-19 and 2019-20 under Section 74 of the TNGST Act, 2017 - HELD THAT:- The challenge to the impugned orders, on the ground that there is overlapping between demand confirmed earlier under Section 63 of TNGST Act, 2017 for the same assessment years, cannot be countenanced. On this ground, these Writ Petitions are liable to be dismissed. The petitioner has not replied to the respective show cause notices that preceded the impugned order - Since the matter would require detailed consideration, the impugned orders are quashed and the cases are remitted back to the respective respondents to pass fresh orders on merits and in accordance with law - petition disposed off by way of remand.

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• 2024 (7) TMI 243
  Violation of principles of natural justice - petitioner was not provided a reasonable opportunity to contest the tax demand on merits - inadvertent error was made while filing the annual return by choosing Column 6[D] instead of Column 6[B], resulting into tax error - HELD THAT:- The petitioner s reply dated 11.01.2023 indicates that the GSTR 3B returns for assessment period 2017-18 along with a comparison statement between the GSTR 2A and the GSTR 3B returns were annexed. The assessing officer does not appear to have taken note of these documents while confirming the tax proposal. However, as contended by learned Additional Government Pleader, the petitioner has also failed to subsequently participate in proceedings or file the reconciliation statement in GSTR 9C. In these circumstances, while reconsideration is necessary, it is also necessary to put the petitioner on terms. The impugned order dated 28.12.2023 is set aside on condition that the petitioner remits 5% of the disputed tax demand as agreed to within two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (7) TMI 241
  Violation of principles of natural justice - non application of mind - difference between the turnover reflected in Form 26 AS and the turnover reflected in the petitioner s GST returns - HELD THAT:- It is evident that tax liability was imposed on the petitioner on the difference between the turnover reflected in Form 26 AS and the turnover reflected in the petitioner s GST returns. Learned counsel for the petitioner explained this difference by pointing out that the period running from 01.04.2017 to 30.06.2017 does not fall within the GST period. Since the impugned order was issued without hearing the petitioner on this aspect, reconsideration is necessary by putting the petitioner on terms with regard to the default in responding to the show cause notice or participate in proceedings. The impugned order dated 28.12.2023 is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (7) TMI 240
  Violation of principles of natural justice - assessment order assailed on the ground that the petitioner discharged the tax liability in full - HELD THAT:- The petitioner has placed on record the GSTR 3B return for the month of February 2022 -23. The return discloses the payment of CGST of Rs. 3,07,825.5/- and SGST of a like amount. On perusal of the impugned order, the amount specified as payable by the petitioner tallies with the amount indicated in the GSTR 3B returns. On instructions, however, respondents submits that these amounts were not received. This is a matter to be verified by the assessing officer. Nonetheless, a case is made out for reconsideration on this basis, subject to putting the petitioner on terms. The impugned order dated 26.04.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.

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• 2024 (7) TMI 239
  Demand for short payment of interest under Section 50 of the under Central Goods and Services Tax Act, 2017 - period after deposit of tax by the petitioners in the electronic cash ledger - whether the petitioner is liable to pay interest on the amount of tax from the date of deposit made in electronic cash ledger till the date of filing of the return? - HELD THAT:- Section 50 of CGST Act provides for interest on delayed payment of tax. Proviso to Section 50(1) refers to interest on tax payable in respect of supplies made during a tax period and declaring the return for the said period furnished after the due date in accordance with the provisions of Section 39 shall be payable on the portion of the tax which is paid by debit in electric cash ledger. It appears that the respondents have literally interpreted the words interest shall be payable on that portion of the tax which is paid by debit in the electronic cash ledger . The debit in electronic cash ledger is on the date of filing of the return and therefore, interest is calculated till date of filing of return ignoring the fact that the assessee might have deposited the amount in electronic cash ledger prior to the date of filing of return and return may be filed belatedly for various reasons. Debiting of electronic cash ledger is only adjustment of the amount of deposit made in the electronic cash ledger. Therefore, on plain reading of the provisions of Section 50(1) which applies for calculating levy of interest on delayed payment of tax cannot be literally interpreted to the effect that interest is payable on the amount which is already deposited and utilised for the payment and thereafter adjusted for payment of tax is contrary to the fundamental principle for charging interest which is compensatory in nature. The interest can be levied only from the due date of payment of tax till the deposit of such tax in the electronic cash ledger on demand of interest even for subsequent period from the date of deposit in electronic cash ledger till date of filing of return is therefore not tenable. The Hon ble Supreme Court in case of COMMISSIONER OF INCOME TAX II VERSUS M/S MODIPON LTD., PAHARPUR COOLING TOWERS LTD. [ 2017 (11) TMI 1429 - SUPREME COURT] has held that the amount deposited in personal ledger account PLA under the excise provisions of the Central Excise Act is nothing but payment of tax and therefore, it was held to be an admissible deduction under Section 43B of the Income Tax Act, 1961. Thus, when the assessee petitioner deposited the amount which is credited into electronic cash ledger after actual deposit in the Government Treasury, there is no loss to the Government Revenue merely because such deposit gets adjusted against the actual liability at the later date at the time of filing of return. The Hon ble Madras High Court in case of M/S. EICHER MOTORS LIMITED, REPRESENTED BY ITS GROUP MANAGER, FINANCE, MR. R. HARI PRASAD VERSUS THE SUPERINTENDENT OF GST AND CENTRAL EXCISE, RANGE II, TIRUVOTTIYUR DIVISION, THE ASSISTANT COMMISSIONER OF CENTRAL TAX CENTRAL EXCISE, CHENNAI [ 2024 (1) TMI 1111 - MADRAS HIGH COURT] has taken into consideration the entire scheme of the GST Act and thereafter arrived at a conclusion that no interest is leviable under Section 50 of the Act if sufficient balance is available in the electronic cash ledger. As per the Scheme of the Government, it is only for the purpose of accounting that the debit in electronic cash ledger will be made at the time of filing of the return otherwise the amounts get credited to the account of the Government immediately upon the deposit - Therefore, once the amount deposited by the petitioner is credited to the account of the Government, the tax liability of such registered person stands discharged on the said date subject to setting off by debit in electronic cash ledger for accounting purpose at the time of filing of return to set off liability against such deposit of the amount which was credited to the account of the Government and therefore, the petitioner cannot be made liable to pay the interest from the date of deposit in the account of the electronic cash ledger till the date of filing of the return. Petition allowed.

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• 2024 (7) TMI 238
  Coercive recovery made by the respondents-authorities during the course of search - petitioners were compelled to deposit the amount along with an undertaking that they are depositing such amount as a voluntary deposit are pending for consideration. HELD THAT:- Issue Rule returnable on 1st July, 2024 - By way of ad-interim relief, no coercive recovery shall be made by the respondents-authorities.

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• 2024 (7) TMI 237
  Levy of penalty u/s 129 of Uttar Pradesh Goods and Services Tax Act, (UPGST Act)2017 - Part B had not been issued in support of the E-Way Bill of the goods being transported - evasion of tax - HELD THAT:- The coordinate bench in M/S. RAWAL WASIA YARN DYING PVT. LTD. VERSUS COMMISSIONER COMMERCIAL TAX AND ANOTHER [ 2024 (1) TMI 1245 - ALLAHABAD HIGH COURT] has held that where the invoice contains the details of vehicle, the error committed in uploading Part B is merely technical in nature and it does not disclose any intention of evading tax. The ratio of law laid down by the coordinate bench of this court in M/s Rawal Wasia Yarn Dying Pvt. Ltd. applies to the present case also. The orders dated 03.02.2024 passed by the respondent no. 3, and the order dated 04.05.2024 passed by the Additional Commissioner, Grade-2 (Appeal)-II, State Tax, Ayodhya, are hereby quashed - Petition allowed.

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• 2024 (7) TMI 236
  Violation of principles of natural justice - complete denial of opportunity of oral hearing before the Assessing Authority - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified No in the column meant to mark the assessee s choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms - The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created. The matter is remitted to the respondent no.2/Assistant Commissioner, State Tax, Sector - 1, Pratapgarh, Prayagraj to issue a fresh notice to the petitioner within a period of two weeks from today - petition disposed off by way of remand.

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• 2024 (7) TMI 235
  Validity of adjudication notice issued under Section 74 of the CGST Act, 2017 - allegations of fraud - scope of judicial review. HELD THAT:- The parties may never be required to contest the factual disputes, within the limited scope of judicial review. Insofar as no inherent lack of jurisdiction shown to exist, interference claimed at this stage, is declined. The proceedings disposed off.

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• 2024 (7) TMI 234
  Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax proposal - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal arose out of a scrutiny of the GSTR-2A and upon noticing issuance of credit notes by Proficient Technologies. The petitioner has placed on record the GSTR-3B returns for the relevant month to establish that the petitioner did not avail of ITC in respect of purchases from Proficient Technologies. In these circumstances, reconsideration is necessary by putting the petitioner on terms. The impugned order dated 01.11.2023 is set aside and the matter is remanded to the respondent for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order - Petition disposed off by way of remand.

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• 2024 (7) TMI 233
  Violation of principles of natural justice - reasonable opportunity was not provided to contest the tax demand on merits - petitioner is willing to remit 10% of the disputed tax demand as a condition for remand - HELD THAT:- On perusal of the impugned order, it is evident that an audit was conducted and that an audit report dated 22.09.2023 was issued. It is also clear that an intimation and show cause notice preceded the impugned order. In these circumstances, the petitioner cannot be absolved of responsibility as a registered person to monitor the GST portal. At the same time, it is noticeable that the tax proposal was confirmed because the petitioner did not annex supporting documents. Therefore, albeit by putting the petitioner on terms, the interest of justice demands that the petitioner be provided an opportunity. The impugned order dated 29.12.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of three weeks from the date of receipt of a copy of this order.

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• 2024 (7) TMI 232
  Challenge to interim order by which the appellants were directed to deposit 20% of the disputed remaining unpaid interest within a time frame - HELD THAT:- In the case on hand the provision for filing an appeal before the tribunal does not contemplate payment of 20% of the disputed interest and it is specific in stating that no appeal shall be filed under sub-section (1) of Section 112 unless the appellant has paid a sum equal to 20% of the remaining amount of tax in dispute - the legislative intent as amplified in Section 112(8)(b) of the Act clearly restricts the pre-deposit amount to 20% of the remaining amount of tax in dispute and does not speak of interest. The discretion to be exercised by the court should be in terms of the statute and, therefore, the said condition imposed by the learned Single Bench calls for interference. Appeal allowed.

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• 2024 (7) TMI 231
  Seeking grant of anticipatory bail - apprehension of arrest - alleged involvement in the offences u/s 294/ 406/ 420/ 465/ 468/ 469/ 506/ 120-B IPC - petitioner submits that the present Petitioner is a Charted Accountant by profession and all the transactions were through the Bank account of the Company and was deposited by him through online payment of Tax, GST for the Company - HELD THAT:- Keeping in view the allegations appearing in the FIR, the circumstances appearing, the seriousness and gravity of the offences while this Court is not inclined to grant anticipatory bail, it is directed that in the event the Petitioner surrenders and moves for bail in connection with Chandrasekharpur PS Case No. 584 of 2023 corresponding to CT Case No. 1419 of 2023 pending before the learned JMFC, Cog-II, Bhubaneswar within a period of three weeks hence, the Petitioner shall be released on bail on such terms and conditions as would be deemed just and proper by the said court subject to deposit of Rs.20,000/- in the manner to be directed by the court concerned. Application disposed off.

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• 2024 (7) TMI 230
  Challenge to GST audit proceedings - impugned order assailed on the ground that the audit was not conducted in accordance with subsection (4) of Section 65 of applicable GST enactments - HELD THAT:- It is unclear from the documents on record as to when all the documents called for in GST ADT-01 were provided by the petitioner. As regards the contention relating to non filing of ITC-02, the petitioner s contention is that no ITC was availed of by the consumer division and that there was no transfer thereof as a consequence. It is just and necessary to provide another opportunity to the petitioner to place all relevant documents on record in this connection to effectively contest the tax demand. However, it also necessary to protect revenue interest while remanding the matter for reconsideration. The impugned order dated 22.12.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - the writ petition is disposed off.

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• 2024 (7) TMI 229
  Challenge to N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 issued by the first respondent and the N/N. II(2)/CTR-532 (d-4)/2017 dated 29.06.2017 - Jurisdiction of GST Council - challenge on the ground that rate fixation is a function assigned to the GST Council under the Central Goods and Services Tax Act, 2017 and that the GST Council meetings did not recommend the inclusion of residuary entry 453. HELD THAT:- List the matter on 04.04.2024.

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• Income Tax

• 2024 (7) TMI 242
  Condonation of delay filling against Revision order u/s 263 - appeal filled with a delay of 348 days - reasons for delay explained as company did not receive proper legal advice at the earliest point of time - addition made on the issue of ESOP reimbursement - HELD THAT:- Impugned order was passed on 29/03/2022 and on the very same day, the assessee sought advice of the consultants in respect of the action to be taken about the 263 order. Advice was received on 07/04/2022. On a perusal of the mail dated 07/04/2022, we find that the consultant clearly advised that the assessee may file an appeal before the ITAT against the order passed by learned PCIT under section 263 of the Act to quash the same and thereby no revision proceedings will be initiated by the learned Assessing Officer in case the order is quashed. The consultant further said that the assessee may accept the order under section 263 of the Act and comply with the revision proceedings initiated by the learned Assessing Officer by responding to all the notices issued in future and the assessee has an option to submit detailed facts before the learned Assessing Officer for his verification and may object for any addition to be made on the issue of ESOP reimbursement. It is, therefore, clear that the advice rendered by the consultant on 29/03/2022 is by no means an ambiguous one or misguiding one, but on the other hand, it made the options clear to the assessee. First option is to challenge the order under section 263 and to avoid the revision proceedings before the learned Assessing Officer and the second option is to accept the order under section 263 and to proceed with the revision proceedings before the AO. Assessee had chosen the first option to proceed with the revision proceedings before the learned Assessing Officer by furnishing the requisite information. There is nothing on record to show that it is not a conscious decision taken by the assessee. It is only on realising that there is very limited option to challenge the consequential proceedings before the AO the assessee obtained the advice to challenge the order under section 263 of the Act. Even after obtaining the second advice, the assessee did not promptly proceed with the challenge of the 263 order, before the learned Assessing Officer concludes the consequential proceedings. The assessee adopted wait and see method to have the best of both the worlds. Thus, we do not find it proper to condone the delay and the reason stated by the assessee does not constitute sufficient cause for such purpose - Decided against assessee.

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• 2024 (7) TMI 228
  Stay of demand pending statutory appeals - Challenging orders u/s 201/201(1A) - re-assessment proceedings u/s 148 - HELD THAT:- The petitioner is directed to remit a sum of Rs. 15 crore within two weeks from the date of receipt of a copy of this order towards the tax demand under the impugned orders u/s 201/201(1A). Subject to the remittance of the said amount, the orders u/s 201/201(1A) shall be stayed until disposal of statutory appeals to be filed by the petitioner. Such statutory appeals shall be presented by the petitioner within ten days from the date of receipt of a copy of this order and the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation. The rectification petitions filed by the petitioner on 05.06.2024 and 20.06.2024 are directed to be disposed of within three months from the date of receipt of a copy of this order. The petitioner is directed to take necessary steps to upload the application and supporting documents on the portal within one week from the date of remittance of the sum of Rs. 15 crore. The respondents are directed to provide access to the portal and enable the uploading thereof. Proceedings for reassessment pursuant to the notice under Section 148 shall be kept in abeyance until disposal of the statutory appeals to be filed by the petitioner.

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• 2024 (7) TMI 227
  Taxability of Income In India or not - Royalty receipts - payments made by the assessee to a foreign resident, for obtaining computer software - HELD THAT:- Similar issue of law which had arisen before this Court in the case of Reliance Industries Ltd. [ 2024 (6) TMI 1069 - BOMBAY HIGH COURT] wherein this Court, considering the position in law as laid down in Engineering Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] and other decisions, dismissed the revenue s appeals inter alia observing that the question of law would stand squarely covered by such decision of the Supreme Court as onsidering the provisions of DTAA, there was no obligation on the persons mentioned in Section 195 (1) of the Act to deduct tax at source as the distribution agreements, in the facts of the case did not create any interest or right in such distributors/end users, which amounted to the use or right to use any copyright. It was held that the provisions of Section 9 (1) (vi) of the Act along with Explanation 2 and 4 thereof which dealt with royalty, not being more beneficial to the assessee, had no application in the facts of the case. Decided against revenue.

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• 2024 (7) TMI 226
  Addition u/s 68 - Share application money was received from bogus shell companies - initial onus to establish proof of identity of the creditors,capacity of creditors to advance money and genuineness of transaction - As argued original beneficiary was identified as Rashi Steels, appellant /assessee should not be subjected to the tax liability - HELD THAT:- The submission of the appellant that since the original beneficiary was held to be Rashi Steel, the present appellant cannot be assessed for the said tax liability do not impress us. If the notices were issued to Eagle Commotrade Pvt. Ltd. and M/s Krishnakali Distributors Pvt Ltd, they were found to be fake/non-existent, the appellant company could not fall back to say that Rashi Steels was the original beneficiary as has been held that the practice of conversion of unaccounted money through the cloak of share capital/premium must be subjected to careful scrutiny. The initial enquiry which came to fore revealed that on close scrutiny the investment which was made by the said two companies their proof of identity of creditors and the capacity of creditors to advance money and genuineness of transaction fell apart when the company was found to be non-existent. It is the first barrier, therefore, the onus of Section 68 of the Act, 1961 is to be discharged by the assessee and having failed to do so. Accordingly, no question of law appears to be arises for consideration.

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• 2024 (7) TMI 225
  TDS u/s 195 - Addition u/s 40(a)(ia) - payments aggregating to the non-residents towards the charges for sampling and analysis of cargo at the destination port as well as for professional and consultancy fees - Scope of Explanation to Section 9(1)(vii) and the retrospective amendment by the Finance Act, 2010 - HELD THAT:- Having carefully perused the order of the Tribunal and upon considering the materials on record, we do not find favour with the submission of learned counsel for the Revenue that since the amendment made by the Finance Act, 2010, was retrospective, the payments made by the Respondent Assessee were taxable in the hands of the recipients and consequently, the Respondent Assessee was obliged to deduct tax at source from the payments made . It is not disputed that the decision of the coordinate Bench of the Tribunal in Ajit Ramakant Phatarpekar [ 2015 (4) TMI 261 - ITAT PANAJI] has been accepted by the Department, which held that an Assessee could not be expected to deduct tax at source from payments that became taxable owing to retrospective amendment. The order of this Court in PCIT vs Ajit Phatarpekar [ 2020 (11) TMI 70 - BOMBAY HIGH COURT] is an indicator that the order passed by the Tribunal in the case of Ajit Phatarpekar (supra) has been accepted by the Department. It is significant to note that the Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] has dealt with two latin maxims, lex non cogit ad impossibilia, i.e. the law does not demand the impossible and impotentia excusat legem, i.e. when there is a disability that makes it impossible to obey the law, the alleged disobedience of law is excused. It is thus clear that the person mentioned in section 195 of the Income Tax Act cannot be expected to do the impossible, namely, to apply the expanded definition of royalty inserted by explanation 4 to section 9 (1) (vi) of the Income Tax Act, for the assessment years in question, at a time when such explanation was not actually and factually in the statute. Nature of expenditure - expenditure on temple repairs and construction of school revenue or capital expenditure - Before the Tribunal, Assessee submitted that the expenditure incurred was out of business exigencies in order to create and maintain good/cordial relations with the villagers residing around the mining and business activity area of the Assessee, that no capital asset came to be acquired. - HELD THAT:- Tribunal in the facts of the present case, according to us, did not commit any error in holding that the quantum of expenses incurred is a wholly irrelevant consideration for the purpose of determining whether the expenses incurred are of capital or revenue in nature. The decision of the CIT (A) as regards the allowance of the expenditure incurred on the purchase of ambulances has been accepted by the Revenue and has not been agitated further. The expenditure incurred on the purchase of ambulances was allowed. However, the expenditure incurred on renovation and construction of temples/schools was disallowed. In the facts of the present case, we are inclined to agree with the Tribunal that it is not open for the Revenue to take a divergent stand with respect to the expenditure incurred on renovation and construction of temples/schools when it has allowed the expenditure on purchase of ambulances only based on the reason that the expenditure on schools/temples was huge. Factually, the Respondent Assessee has incurred expenses on the renovation and construction of schools/temples situated in the villages surrounding the mining area. The expenses were incurred out of business exigencies, the details of which are set out earlier. The Tribunal, therefore, committed no error in holding that the expenditure was the allowable business expenditure of a revenue nature having found no capital asset had been acquired by the Respondent Assessee by incurring the expenditure. Appeal Decided in favour of assessee.

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• 2024 (7) TMI 224
  Rejection of revision petition u/s 264 - Merely on account of an inadvertent error while filing Form ITR-VII, the petitioner had been denied the benefit of exemption to trust - HELD THAT:- The Trust was granted approval u/s10(23C) of the Income-tax Act in the year 2013. The impugned order does not contain any indication that the Trust is not entitled to exemption. Indeed, the first respondent has examined the returns of income of the petitioner for assessment years 2017-18 and 2019-20. Those returns of income would clearly indicate whether the assessee claimed exemption during those years. After examining those returns of income, the only observation of the first respondent is that the petitioner made errors while filing returns in respect of those years also. As correctly submitted by learned counsel for the petitioner, wide powers are conferred u/s 264 provided the party concerned has not filed an appeal against the relevant order. Without examining the petitioner s request on merits, the first respondent has rejected the application on the ground of delay. Therefore, the matter requires reconsideration. The impugned order is set aside and the matter is remanded to the first respondent for reconsideration. The first respondent is directed to reconsider the matter by taking into account the observations set out in this order and issue a fresh order within three months from the date of receipt of a copy of this order.

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• 2024 (7) TMI 223
  Digital evidence as relied upon without complying with the Digital Evidence Investigation Manual issued by the Central Board of Direct Taxes - HELD THAT:-While the petitioner asserts that the respondent did not adhere to the Digital Evidence Investigation Manual or to Section 65B of the Indian Evidence Act, the petitioner is unable to point out any specific instances of the respondent having breached the manual or Section 65B. It also does not appear that such objections were raised in course of the assessment proceedings. In these circumstances, this does not appear to be an appropriate case for the exercise of discretionary jurisdiction under Article 226. Put differently, in order to test the contentions of learned counsel for the petitioner, reappraisal of evidence may be necessary and the appropriate forum for such reappraisal is the appellate authority. For reasons aforesaid, is disposed of by permitting the petitioner to carry a statutory appeal. If such statutory appeal is presented within ten days from the date of receipt of a copy of this order, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation.

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• 2024 (7) TMI 222
  Deduction u/s. 80P(2)(d)/80P(2)(a)(i) - deduction of interest income earned out of deposits made with Cooperative banks/Nationalised banks - HELD THAT:- Allowability of exemption under the provisions of section 80P(2)(a)(i) in respect of interest income earned by a cooperative society from the cooperative banks/scheduled banks, there is a cleavage of judicial opinion amongst several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [ 2018 (12) TMI 1926 - ITAT PUNE ] taken view in favour of the assessee following the judgment of Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT ] Thus we are of the considered opinion that the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, we direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) even though not eligible for deduction u/s. 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.

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• 2024 (7) TMI 221
  Denial of claim of exemption u/s. 11 - assessee failed to e-file the Audit Report in form 10B one month prior to the due date of filing the return u/s. 139(1) - CIT(A) admitting alternate claim of assessee u/s. 10(23C)(iiiad) of the Act without providing opportunity of hearing to the AO - HELD THAT:- In our considered opinion, the CIT(A) erred in admitting the alternate claim of the assessee u/s 10(23C)(iiiad) of the Act without providing an opportunity of hearing to the Assessing Officer. The Ld.CIT(A) erred in not allowing the ground regarding the alleged delay in filing Form 10B, which was uploaded, but not downloaded due to technical issues. The Ld.CIT(A) erred in not appreciating that the filing of Form 10B is not mandatory but a procedural requirement, and thus, the exemption claimed under sections 11/12 of the Act should be allowed. As in Ramji Mandir Religious and Charitable Trust [ 2023 (12) TMI 1295 - ITAT AHMEDABAD] case held that procedural requirements like filing Form 10B should not override the substantive claim of exemption, when the assessee has substantially complied with the requirements. It has been held by various Courts that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before due-date prescribed u/s 139(1) of the Act cannot be so fatal so as to deny they very claim of exemption u/s. 11(2). We find that the delay in filing Form 10B was due to technical issues and was beyond the control of the assessee. The procedural requirement should not deny the substantive claim of exemption u/s 11 - Decided in favour of assessee.

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• 2024 (7) TMI 220
  Denial of registration u/s 12A(1)(ac)(ii) and u/s 80G(5) - as alleged not carrying out any charitable activity as per section 2(15) - THAT:- It is crystal clear that the applications dated 28.03.2023 in Form No. 10AB seeking registration u/s. 12A(1)(ac(ii) u/s 80G(5) were filed. The documents submitted by appellant showed that no charitable activity was initiated. As per income and expenditure account no expense has been incurred on any charitable activity as detailed in section 2(15). So application was rejected on 26.09.2023. However, letter dated 21.09.2023 at page 51 of paper book show purchased of land. Letter dated 17.7.2023 at page 68 to 70 mentions the trust has given financial assistance/donation to improve the healthcare education and services and to uplift the standard of living at Tribals. As per ratio of judgment in Ananda Social Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] it is well settled that a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. In view of above material facts and well settled principle of law passing of impugned order has led to miscarriage of justice which is required to be remedied. Accordingly impugned order is not just, fair and legal. Appeals of the assessee are allowed.

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• 2024 (7) TMI 219
  Not granting approval u/s 80G(5) - assessee has not filed application for seeking permanent approval within 6 months of commencement of its activities - also cancelling the provisional approval dated 08/03/2023 which was granted under clause (iv) of the first proviso to section 80G(5) - As considering the hardship of the stake holder, the same was extended till September 2022. HELD THAT:- The ground for rejection are curable in nature and same in fact was cured by the circular No. 7/2024 dated 25th April, 2024 issued by the CBDT. The CBDT, considering the factual aspect of the matter, allowed the trust to apply again if they fail to apply within the timeline prescribed up to 30.06.2024. Since there is no other adverse observation in the order under challenge and considering the CBDT circular we deem it fit to set aside the matter before the file of the ld. CIT(E) to settle the dispute raised hereinabove. Appeal of the assessee is allowed for statistical purpose.

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• 2024 (7) TMI 218
  Delay in filling appeal before ITAT - delay is 1170 days - cause for delay is stated to be Covid-19 pandemic and roads and highways were closed down by the farmers - cause for non-appearance before the lower authorities is stated to be non-receipt of statutory notices and also stated that the person who used to look after the accounts, failed to file Income Tax Return and did not apprise the assessee about the developments - HELD THAT:- The law is well-settled that if the litigant is prevented by sufficient cause for not approaching the Court within the time as prescribed under law, the Tribunal/Court would be justified in condoning the delay. Looking to the explanation offered by the assessee, we are of the considered view that there was reasonable cause that prevented the assessee in filing the present appeal. Undisputedly, in recent part country has witnessed unprecedented events of Covid-19 and thereafter, farmer s agitation. Taking a liberal approach as mandated by Hon ble Supreme Court in catena of judgement, we hereby condone the delay and admit the appeal for deciding it on merit. Assessment order passed ex-parte to the assessee - No opportunity provided by lower authorities - Addition of undisclosed cash u/s 68 - HELD THAT:- AO did not make any inquiry and made additions in a mechanical manner. It is well-settled that section 144 of the Act casts an obligation on the Assessing Authority for making necessary inquiry qua the nature of transaction before proceedings for making disallowances/additions. CIT(A) sustained the findings of AO, treating the Income Tax Return of the assessee as invalid without assigning any reason. Therefore, we hereby, set aside the impugned order and restore the assessment to the AO for making assessment afresh after providing adequate opportunity of being heard. Ground raised by the assessee are accordingly, allowed for statistical purposes.

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• 2024 (7) TMI 217
  Adjustment provided u/s 143 (1) - denial of Deduction u/s 80P - interest income received from Co- operative Banks - whether interest income received by a Co-operative Society from Co-operative Bank is allowable u/s 80P(2)(d)? - HELD THAT:- The disallowance of deduction under chapter VI A can only be made u/s 143(1)(a) (v) of the act only on account of non-furnishing of return of income within the due date of filing of the return. This is not the reason. It is not the case that deduction u/s 80P(2)(d) is a deduction provided by any monitoring limit or percentage ratio or fraction. Thus, claim of deduction under section 80P(2)(d) is also not classified as incorrect claim. Thus, the adjustment of disallowance of deduction under that section is not permissible adjustment provided under section 143 (1) of the act. Therefore the intimation passed under section 143 (1) is not sustainable. Deduction u/s 80P - On the merits of the case, provisions of section 2 (19) define a co-operative society as under:- co-operative society 97 means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies Thus, for the definition of the cooperative society whether covers the cooperative banks are not one has to look at the respective cooperative societies act is applicable. Thus it is apparent that cooperative banks are also a co-operative society. Only difference is that those cooperative societies are doing the business of banking as per the banking companies act 1949. Therefore, merely because these cooperative societies cooperative bank they do not lose their status as a co-operative society. According to the provisions of section 80P(2)(d) of the income tax act (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income. Thus, the assessee s investment of earning interest income from such cooperative banks which are also cooperative societies whole of such income is deductible under this section.It is not in dispute that assessee is not a cooperative bank and therefore provisions of section 80 P (4) of the act does not apply to it. Thus the assessee is eligible for deduction u/s 80P(2)(d) of the act on its income received from all the above cooperative banks. Hence assessee is eligible for that deduction on fixed deposit interest and savings bank interest. Assessee is not eligible for deduction of bank interest from bank of Baroda. Appeal of the assessee is partly allowed.

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• 2024 (7) TMI 216
  Long term capital gain or short term capital gain - transfer of the right to acquire property - computing the holding period - AO noted that assessee has sold the right to property conferred on the assessee by the allotment letter and not the property - HELD THAT:- It is an undisputed fact that letter of allotment was issued by the builder to the assessee on 15.02.2010 by which a right to own the flat as identified by the assessee and builder in the project to be undertaken for construction had accrued on the assessee. The right which accrued to the assessee is the booking right, i.e., the right to purchase the flat and obtain the title. Whether booking right to the flat accrues to the assessee on the date of allotment of the flat by way of issuing the letter by the builder or on the date of execution and registration of the agreement to sell, i.e., the buyer s agreement ? - In our considered view, only that agreement which intends to convey these rights accruing to parties can be considered as the source of accrual of rights to the assessee. By virtue of the letter of allotment, some right to own a property is given by the builder to the assessee. A right in personam had been created in favour of the assessee in whose favour the letter of allotment had been issued and who has paid 20% of the total agreed consideration as advance - all other payments on various milestones identified in the said letter have been duly met by the assessee on subsequent dates, duly acknowledged by the builder. Undoubtedly, such contractual right arising out of the letter of allotment can be surrendered or neutralised by the parties through subsequent contract or conduct but such is not a case in hand before us. In the present case before us, assessee has been issued a letter of allotment by the builder setting out the terms and conditions for the construction of the flat to be undertaken by the builder and various milestones listed for making payment by the assessee. There are other restrictive covenants for both the parties as stated in the letter of allotment which would result into adverse consequences, if not met. We are also conscious of the proposition that transfer of the property is effective on registration of conveyance deed in view of section 54 of Transfer of Property Act. The absolute legal ownership of an immovable property takes place in terms of various provisions of Transfer of Property Act which needs to be read with provisions of section 2(47) of the Act for the purpose of computing tax liability arising on account of sale or purchase of immovable properties under the Act. However, the issue before us is different. The issue of transfer of ownership is not the issue to be decided here for computing the holding period. Thus we find that holding period should be computed from the date issue of allotment letter. Once this is considered, the holding period becomes more than 36 months and consequently the right to own the property transferred by the assessee would be a long-term capital asset in the hands of the assessee and the gain on transfer of the same would be taxable in the hands of the assessee as long-term capital gain. Ground no. 1 taken by the assessee is allowed. Denial of claim of deduction u/s. 54F - failure by the assessee to file revised return of income for claiming the said deduction - HELD THAT:- As assessee has placed reliance on the decisions of Goetze (India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] and Pruthvi Brokers [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] according to which nothing impinges on the powers of appellate authorities to entertain a claim made by the assessee before the appellate authorities. Considering these judicial precedents, we find it proper to accept the claim of deduction made by the assessee u/s. 54F Accordingly, for the limited purpose of verification, we remit this matter on claim of deduction u/s. 54F to the file of ld. Jurisdictional Assessing Officer (JAO), who shall allow the claim, if the verification is found to be in accordance with the provisions of the Act. Accordingly, we set aside ground No. 2 taken by the assessee in this respect and allow it for the statistical purposes.

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• 2024 (7) TMI 215
  TDS u/s 192 - non deduction of TDS on the LTC reimbursement towards foreign travel by the employees of assessee - HELD THAT:- If employees of the assessee travel within India and receive any value for any travel concession or assistance along with his family, is exempt from tax. Therefore there is no requirement of TDS on such value/assistance received from employer. However, in this case, we observe that employees of assessee have travelled outside India which is not exempt income in the hands of the assessee s employees. Therefore this value or assistance should be considered for TDS u/s. 192 of the Act. Similar issue has been decided by the coordinate Bench of the Tribunal in State Bank of India, Personal Banking Branch, New Delhi Ors [ 2024 (2) TMI 1397 - ITAT DELHI] relying on [ 2022 (11) TMI 426 - SUPREME COURT] held in holding that the assessee is liable to deduct tax at source on the payments made to its employees towards LTC bills - Decided against assessee.

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• 2024 (7) TMI 214
  Penalty u/s 271(1)(c) - deterimnation of correct head of income - AO has treated the income earned by assessee from subject property as income from house property and not as business income and for that reason made the impugned disallowances of deductions - AR submitted that the assessee has disclosed complete and accurate particulars of the claims of depreciation and interest expenses and it is not a case of AO that the assessee has supplied any incorrect or erroneous or false detail in the return or during assessment-proceedings - HELD THAT:- AR has claimed that the AO in preceding AY 2015- 16 has accepted the very same activity/income of assessee as Income from business . In current AY 2016-17 only, the AO has treated the same activity/income as Income from House Property in assessment-order and disallowed the deductions of depreciation and interest. But since the assessee has not filed any appeal against assessment-order, we do not have that issue before us and we do not wish to make any further comment on either side. However, we find that the AO has also imposed penalty u/s 271(1)(c) qua the disallowances of depreciation and interest expenses by treating it as a case of furnishing inaccurate particulars . This approach of AO is, in our considered view, not a justified approach according to the settled decisions of various judicial forums as narrated earlier. The Hon ble Supreme Court has categorically held in Reliance Petro Products (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] that unless the assessee has supplied any incorrect or erroneous or false information to department, this would not be a case of inviting the penalty u/s 271(1)(c). It is further held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars. Same view has been taken by ITAT, Indore in Turning Point Estate Pvt. Ltd. [ 2023 (4) TMI 1339 - ITAT INDORE] Similarly, ITAT Indore in Krishi Upaj Mandi Samiti [ 2009 (11) TMI 1033 - ITAT INDORE] and Indersons Leather Pvt. Ltd. [ 2009 (8) TMI 730 - PUNJAB AND HARYANA HIGH COURT ] have categorically held that in a case where the assessee declared rental income as business income but the AO assessed as Income from House Property , there is neither concealment of income nor furnishing of inaccurate particulars of income and penalty u/s 271(1)(c) is not attracted. Thus, it is very clear that in the present case of assessee where the AO has merely rejected a claim of deductions of depreciation and interest made by assessee on the premise of change in taxability head but without finding any incorrect or erroneous or false information having been supplied by assessee, no penalty can be imposed. Hence, the present case is not fit for imposition of penalty. Assessee has not received any rent from tenant - As we notice that the assessee has made a recovery of Rs. 1.67 crore during current year from tenant. Although the assessee has not received any money in the nomenclature of rent yet the recovery of Rs. 1.67 crore from tenant is a much higher compensation than the rent of Rs. 1,20,000/- agreed in lease-agreement. Assessee has not filed any appeal to contest the disallowances made in assessment-order and therefore the assessee cannot raise objection against imposition of penalty qua those disallowances. This concern, in our view, is meritless because assessment-proceeding and penalty-proceedings are two distinct and separate proceeding. Any addition/disallowance made in assessment-proceedings and even if not contested by assessee for any reason, does not attract penalty automatically. The assessee is within his right to claim and prove on facts and with the support of decided judicial rulings, that there is no concealment of income or furnishing of inaccurate particulars of income and therefore the penalty u/s 271(1)(c) is not attracted. Decided in favour of assessee.

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• 2024 (7) TMI 213
  Rejection of registration u/s 12AB r.w.s. 12A(1)(ac)(i) - assessee trust is a section 8 company - assessee received donations which has not been routed through I E account - as argued CIT(Exemption) without considering the fact that the assessee trust is a section 8 company registered under the Companies Act, 2013 with a charitable object of providing medical relief to the geriatric population and registered u/s 7(2), rejected the claim of registration without affording proper opportunity to the assessee. HELD THAT:- It is an admitted fact that the assessee has filed an application dt 24.04.2023 and the CIT(Exemption) issued first notice to the assessee through ITBA portal on 26.07.2023. After the assessee furnished the details, he issued a show cause notice to the assessee on 06.10.2023, to which the assessee furnished a detailed reply on 11.10.2023. However, we find the CIT(Exemption) without calling for any clarification from the side of the assessee, passed the order on 27.10.2023. Claim of assessee trust that it is a section 8 company registered under the Companies Act, 2013 with charitable object of providing medical relief to the geriatric population and registration u/s 7(2) of the Companies Act, 2013 was not at all considered by the CIT(Exemption) before rejecting the claim of registration u/s 12AA of the Act. We find from the various details furnished by the assessee that the excess of income over expenditure for the year ending 31.03.2022 was Rs. 160,562/- and 31.03.2021 was Rs. 1,79,157/-. Therefore, we fail to understand as to how the CIT(Exemption) has contended that the assessee trust is making substantial surplus when such surplus appears to be nominal. Thus, we deem it proper to restore the issue to the file of Ld. CIT(Exemption) with a direction to grant one more opportunity to the assessee to substantiate its case by filing the requisite details. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2024 (7) TMI 212
  Speculative transaction u/s 43(5) - contention of the revenue is that assessee has not taken physical delivery of edible oil at the port of destination (i.e at the port of delivery in India), it falls within the provisions of speculative transaction u/s 43(5) - HELD THAT:- Respectfully following the judgments of Hoosen Kasam Dada (India ) Ltd [ 1962 (9) TMI 70 - CALCUTTA HIGH COURT and Sripal Satyapal vs ITO [ 2007 (1) TMI 627 - RAJASTHAN HIGH COURT] and on the views expressed in the case of Lakshminarayan Trading Company [ 1995 (3) TMI 20 - ANDHRA PRADESH HIGH COURT] and the judgment of the coordinate bench [ 2023 (3) TMI 601 - ITAT AMRITSAR] in the assessee own case, we hold that the ultimate settlement of the transactions entered into by the assessee has been settled by the actual delivery of the goods to the ultimate buyer and thus the transactions of sale and purchase in the instant case does not fall within the provisions of section 43(5) of the Act 61 and are not speculative transactions - Decided against revenue. Disallowance of interest u/s 36(1)(iii) - no interest is charged by the assessee on such advance made to 3 parties - HELD THAT:- Dealing with G H Crop Protection Private Limited are fully business dealing and the amount has been paid by way of advance for procuring of materials and since the said materials were not supplied due to unavoidable circumstances the funds has been refunded by the said party. Moreover, name of the party G H Crop Protection Private Limited is appearing in the schedule of loans taken/ accepted and repayments made during the year. This is just to establish that there is regular business dealing with the said party and the amounts advanced or taken, does not necessarily bear interest at all times. This transaction has been out of business exigency. DR has not disputed or controverted the arguments of the assessee on the aspect of availability of interest free funds, as shown to have been reflected in the audited balance sheet. We are of the opinion that there is neither any reason nor any material to disbelieve the figures contained in the audited balance sheet, more so, the availability of unsecured loans (free of interest) duly reflected in the balance sheet under the head unsecured long term borrowings on 31st March 2015, which is sufficient to meet the advance of Rs. 19 lakhs and 14 lakhs, respectively, given to Homeland Enclave Limited, and J P Singh and Co, and respectfully following the decision of Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] we delete the addition sustained by the CIT(A) u/s 36(1)(iii) of the Act 61. Decided in favour of assessee.

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• 2024 (7) TMI 211
  TP Adjustment - comparable Selection under EDS Segment - HELD THAT:- Acropetal Technologies Ltd. be excluded from comparable matrix on the ground that financials of this entity are based on fraud committed as per clear-cut finding of SEBI adjudicator. Vama Industries (Segment) - software development and EDS services are two distinct segments and the margins in these two segments could not be held to be comparable with each other. Therefore, we direct Ld. TPO to exclude the same in final comparable matrix. Comparable selection under IT Segment - Larsen and Toubro Infotech Ltd. be excluded as segment turnover of this entity is more than 36 times as that of the assessee. Thirdware Solutions Ltd. entity was into acquisition / purchase of hardware and software including software as a service. This entity was also engaged in software development, implementation and support services. Therefore, it earned income from products and services. On the other hand, the assessee was solely into software services. Comparable selection under ITeS Segment - Infosys BPO Ltd. be rejected on the ground that turnover of this entity was quite high i.e., approx. Rs. 1356 crores. There was wide gap between the size and turnover of the company Hartron Communications Ltd. to be excluded on the ground that this entity had diversified operations which could not be compared with ITeS segment. Further, during this year, there were extraordinary operations and therefore, it could not be taken as comparable entity. Disallowance of notional loss - a ssessee claimed deduction which represent foreign currency loss - AO held the same to be notional loss and observed that the same would accrue only at the time of repayment of loan, therefore, the deduction was denied - HELD THAT:- We find that Ld. DRP has rendered a finding that the loans have been utilized towards fixed assets and therefore, the loss is capital in nature. From the facts, it is not clear as to how the loan has been utilized by the assessee. In our opinion, if the loan is utilized towards purchase of fixed assts, it would be in the nature of capital expenditure. However, if it has been utilized for day-to-day business operations, the same would be revenue in nature. Apparently, the assessee is following consistent method of accounting to claim the same. It is also not clear as to what treatment has been given by the assessee to claimed profit / loss in the year of liquidation. All these facts would have material bearing on determination of issue. Therefore, we restore this matter back to the file of Ld. AO for fresh adjudication by bringing on record correct factual matrix. Disallowance of Provision for Obsolescence - assessee claimed loss under this head in the computation of income without claiming the same in Profit Loss Account - The same represent provision for obsolete inventory - AO disallowed the same which was confirmed by Ld. DRP - HELD THAT:- We are of the considered opinion that mere provision of old stock could not be allowed to the assessee by way of deduction in the computation of income. The assessee would be following a definite accounting policy to value the book stocks and the profit or loss arising therefrom would accrue only at the time of sale thereof. Therefore, this claim has rightly been denied by lower authorities. Nature of expenditure - Disallowance of Repair and Maintenance Expenditure - HELD THAT:- We find that the aforesaid expenditure has enabled the assessee to add more work space which would mean that there is enlargement of profit-making apparatus for the assessee. The mere fact that the same was carried out on a leased space would not materially affect this fact. The assessee has added more floors to the existing office space which is nothing but capital in nature. The expenditure would bring enduring benefit to the assessee in future. Therefore, the directions of Ld. DRP could not be faulted with. Disallowance of Stamp Duty Charges - stamp duty towards registration of rental agreement for office premises - DRP held that the expense was towards acquisition of lease and therefore, it was capital in nature. Accordingly, the same was disallowed - HELD THAT:- We find that the liability to pay stamp duty has crystallized only during this year. The lease agreement may be for more than on year, however, the expenditure is mere a revenue expenditure and unless the assessee chooses to treat the same as deferred revenue expenditure, full deduction thereof shall be allowable to the assessee in the year of incurrence i.e., in this year. We direct Ld. AO to allow this deduction. Disallowance of Depreciation on Printes etc. - assessee claimed higher depreciation on printers @60% as applicable to computers - AO allowed depreciation of 25% and made disallowance - HELD THAT:- It is apparent that the printers and scanners are being used along with computers and do not carry separate existence as such. Therefore, we direct Ld. AO to allow higher depreciation on the same. Disallowance of Depreciation on Softwares - assessee claimed higher depreciation on software @60% as applicable to computers - AO proposed allowance of 25% - DRP held that the same could not be allowed for want of TDS - HELD THAT:- We find that this issue is covered in assessee s favor by the decision of Age Management Services ( 2019 (7) TMI 1153 - MADRAS HIGH COURT ) wherein it has been held that where software license acquired by assessee was in nature of software application, the assessee would be eligible to claim depreciation at 60%. Respectfully following the same, we allow this claim of the assessee. TDS u/s 192 - Disallowance u/s 40(a)(i) on Secondment Payment to Employees - assessee made payments to its AE on account of Salary expenses of seconded employees and the amounts were stated to be in the nature of reimbursements - DRP proposed to treat the same as Fees for Technical Services - HELD THAT:- Upon perusal of agreement, it emerges that the assessee has availed services of employees of its group entities. The same was to facilitate business operations of the assessee. These seconded employees have worked under the control and supervision of the assessee which is evident from the fact that the assessee, as an employer, has deducted due TDS u/s 192. Therefore, these payments have already suffered TDS. The assessee has merely reimbursed actual salary to its AE. The same were merely in the nature of reimbursements only and do not include any element of income. The risk and reward of the work performed by the deputed employees was with assessee. Therefore, Ld. DRP, in our opinion, is not correct to treat the same as Fees for Technical Services which would require separate TDS. Accordingly, impugned disallowance as made u/s 40(a)(i) stand deleted.

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• 2024 (7) TMI 210
  Denial of exemption u/s 11 - violation of provisions of section 13(1)(c) - two parties, who had contributed to the assessee trust exceeding fifty thousand rupees and guest house of the assessee trust was let out to the interested parties at an inadequate rent - society is Notified u/s. 10(23C)(iv) of the Act from the assessment year 1977-78 - HELD THAT:- It is an admitted fact that society has been registered u/s. 10(23C)(iv) of the Act along with the registration u/s.12A(a) of the Act. Assessee is a charitable society and hence the conditions prescribed u/s. 13 of the Act are not applicable to it as per the CBDT circular No.557, dated 19.03.1990, once the society is notified u/s. 10(23C) of the Act. Similarly, the Assessing Officer cannot make any disallowance u/s.11, as the society is an organization having notified u/s. 10(23C)(iv) of the Act. Considering the entire facts and circumstances of the case, we are of the view that, there is no infirmity in the order of CIT(A) in allowing the appeal of the assessee and therefore, there is no need for us to interfere and hence, we are inclined to dismiss the appeal of the Revenue.

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• 2024 (7) TMI 209
  Validity of the assessment order - recording of reasons without application of mind u/s 148A - reasons recorded by the AO based on the AIR information uploaded by the reporting entity u/s 285BA regarding deposits in J K bank account which does not belong to assessee - HELD THAT:- CIT(A) failed to acknowledge the fact that the reopening was made on wrong assumption of facts, by not appreciating the information regarding deposit in J K bank account does not pertain to the appellant. In our view, the CIT(A) has committed a factual and legal error in affirming the addition disregarding the certificate issued by the bank, which explicitly states that the appellant does not have any account with in J k Bank, Lassipora by way of wrongly mentioned the fact that the account belongs to the assessee. Thus, the said findings of the CIT (Appeals) is factually incorrect in the light of the bank certificates being filed as an additional evidence before the CIT(A) by the assessee. Reasons recorded are bad in law as the reopening has been made based on incorrect facts. It is a settled law that the reopening cannot be made based on wrong assumption of facts following AIR information and accordingly, the assessment made on the basis of wrong assumption of facts is liable to be quashed. Appeal filed by the assessee is allowed.

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• 2024 (7) TMI 208
  Bogus LTCG - addition u/s 68 as unexplained cash credit - addition based on the premise of alleged price rigging in the PMC Fin Corp script - HELD THAT:- It is noted that the assesses has established its claim before the lower authorities, based upon the documents namely bank details, the purchase/sell documents, the details of the D-Mat Account etc. and that the appellant held the shares for a period of more than one year and sold them through recognized stock exchange and paid STT. Meaning thereby that the assesse has complied all the conditions of section 10(38) of Income Tax Act, 1961 to claim, long term capital gain, earned by the appellant was exempt as per provisions of section 10(38) of the Income Tax Act, 1961 and same has been duly declared in the income tax return of the assessee. Addition made by the AO and upheld by the CIT(A) was solely based on the premise of alleged price rigging in the PMC Fin Corp script. However, this allegation is negated by the Securities Appellate Tribunal Mumbai, in its order by explicitly dismissed these allegations. The tribunal s ruling stated that there is no supporting material on record to substantiate the accusation of the company s involvement in price inflation. Moreover, the order emphasized that purchasing shares from the stock exchange platform is not unlawful, and continuous buying of shares at increased prices does not contravene any provisions of SEBI laws, particularly the PFUTP Regulations. (APB, Pgs. 76-88). Hon ble SUPREME COURT OF INDIA in the case of Principal Commissioner of Income-tax vs. Renu Aggarwal [ 2023 (7) TMI 288 - SC ORDER] dismissed the SLP filed by revenue filed against the Hon ble high court as held there was lack of adverse comments from stock exchange and officials of company involved in these transactions and no material relating to assessee was found in investigation wing report, additions made by Assessing Officer had rightly been deleted. Recently, the Hon ble Apex Court in the case of PCIT v. Dipansu Mohapatra [ 2024 (3) TMI 217 - SC ORDER] dismissed against order of High Court that where assessee provided all details of purchase and sales of shares to AO along with contract notes for purchase and sale, demat account and bank statement and, furthermore no incriminating materials were found during survey conducted in premises of assessee, AO could not deny claim under section 10(38) merely by relying on statements of accommodation entry providers which were recorded much before date of survey. We hold that there was no reason to add capital gains as unexplained cash credit u/s 68. Decided in favour of assessee.

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• 2024 (7) TMI 207
  Deduction u/s 8-P - Income by way of interest earned by it on the deposits or investments made by it during the concerned years with a Co-operative Banks which are not co- operative societies - HELD THAT:- The ratio laid down by the Hon ble Karnataka High Court in the case of Totalgars Cooperative Sales Society[ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] is that in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society [ 2010 (2) TMI 3 - SUPREME COURT] in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in cooperative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act. The argument that co-operative Banks are also co-operative societies is again without any basis in the light of the law explained in the case of Totagar co-opeartive sales society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] - The reliance placed by Assessee on the earlier decisions of Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] that the decision in Totgars Cooperative Sale Society [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] stands explained by the later decision in the case of Totagar co-opeartive sales society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] Thus, we hold that CIT(A) is not justified in granting deduction under section 80P(2)(d) of the Act for the Assessment Years 2017-18, 2018-19 and 2020-21. Deduction u/s 80P(2)(d) concerning interest income from cooperative banks - claim of deduction u/s 57 in respect of the cost of funds for earning such interest income which is assessed as income under the head Income from Other Sources - HELD THAT:- AO is directed to examine whether investment with Co-operative Bank is out of statutory compulsions to maintain the SLR, and if so, to grant deduction under section 80P(2)(a)(i) of the Act. In the event it is found that assessee is not entitled to get the benefit under section 80P(2)(a)(i) of the Act, the AO shall also examine whether it is entitled to deduction under section 80P(2)(d) of the Act in light of the recent judgment of Kerala State Co-operative Agricultural Rural Development ( 2023 (9) TMI 761 - SUPREME COURT ). If the assessee is not entitled to benefit of deduction either under section 80P(2)(a)(i) or under section 80P(2)(d) of the Act, the AO shall consider the claim of deduction under section 57 of the Act in respect of the cost of funds for earning such interest income which is assessed as income under the head Income from Other Sources . For the direction to grant deduction for the cost of funds, we rely on the judgment of the jurisdictional High Court in the case of Totgar s Cooperative Sales Society Ltd., [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] Further, the AO shall also consider the claim of the assessee raised in its CO in ground 4.1 (supra). It is ordered accordingly.

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• Customs

• 2024 (7) TMI 206
  Violation of principles of natural justice - petitioner s request for cross-examination rejected - rejection of declared classification in the relevant bills of entry - unflavoured supari (betel nut product) - APL supari (boiled betel nut product) - HELD THAT:- It is recorded that the petitioner made a request for cross-examination of the auditors, assessing officers, officers who approved the assessment, the examining staff and the chemical examiner, who tested the samples before assessment. It is further recorded that no cogent reason was adduced for cross-examination. It is clear from paragraph 6 of the judgment of the Supreme Court in ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT] that interference with denial of cross-examination, in that case, was on account of the fact that the statements of the witnesses, whom the assessee requested to cross-examine, was the basis of the impugned order. Learned counsel for the petitioner is unable to point out as to how the statements of the witnesses sought to be cross-examined form the foundation of the present order. The order impugned in this writ petition can be appealed against. The present writ petition was filed in the last week of April 2024. If the period of pendency of this writ petition is excluded, the petitioner should be permitted to prosecute a statutory appeal. The petition is disposed of by permitting the petitioner to file a statutory appeal. If such appeal is filed within ten days from the date of receipt of a copy of this order, the Tribunal is directed to receive and dispose of such appeal on merits without going into the question of limitation.

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• 2024 (7) TMI 205
  Seeking provisional release of imported second hand digital multifunction printing and copying machines - HELD THAT:- A batch of writ petitions pertaining to the same goods were disposed in M/S. SIMPLE MACHINES VERSUS THE COMMISSIONER OF CUSTOMS (CHENNAI II) IMPORT, THE ADDITIONAL COMMISSIONER OF CUSTOMS (CONCOR ICD) , THE DEPUTY COMMISSIONER OF CUSTOMS (CONCOR ICD) [ 2023 (12) TMI 198 - MADRAS HIGH COURT] , where in similar circumstances, it was held that This Court is inclined to allow these writ petitions to the extent of releasing the goods provisionally. Application disposed off in the same manner, placing reliance on the above case.

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• 2024 (7) TMI 204
  Undervaluation of imported engineering goods - 9000 Nos. spares of water filters-75 GPD water pumps - misdeclaration of goods - rejection of declared value - enhancement of value based on DRI alert on undervaluation of imported goods by overseas suppliers - enhancement on the basis of assumptions and presumptions - lower authorities not given any heed to the said vital documents - violation of principles of natural justice - HELD THAT:- The entire case of under valuation was initiated on the basis of alert notice issued by DRI. The said notice was issued on the doubt that the similar goods were being imported by various importers across the country by resorting to the under valuation of the goods. However, merely on the basis of alert notice the value cannot be enhanced. Though the Department has adduced certain evidence such as marketing enquiry, correspondence with foreign supplier etc. However, the appellant by making application obtained various documents. The documents obtained under RTI are vital documents. However, the appellant was not put to notice with these documents in the show cause notice. The appellant have obtained these documents after the adjudication order was passed. It is also observed that the appellant have given Compact Disk (CD) giving the details of working of price between the domestic and imported goods. The appellant have also provided the contemporary import data but both the lower authorities have not given any heed to the said vital documents. Therefore, the orders passed by both the lower authorities are in violation of principles of natural justice. Matter remanded to the Adjudicating Authority for examining and reconsidering over all case on the basis of various additional documents which were obtained under RTI by the appellant - appeal allowed by way of remand.

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• 2024 (7) TMI 203
  Levy of simultaneous penalty under a residual empowerment vested in adjudicatory authority by Customs Act, 1962 - breach of obligations as licensee of warehouse under Customs Act, 1962, by recourse to regulation 12 of the Warehouse (Custody and Handling of Goods) Regulations, 2016 - suspension of warehouse license - confiscation of the goods under section 111 of the Customs Act, 1962 - consequent imposition of fine under section 125 of Customs Act, 1962 - imposition of penalties under section 117 of Customs Act, 1962. HELD THAT:- It was ascertained during the enquiry proceedings that the appellant had sought inclusion of tank no. 103 to the private warehouse licence in December 2021 and that permission was accorded on 18th February 2022. It is also on record that the goods imported vide bill of entry 7434419/10.02.2022 had been pumped in the said tank on 15th February 2022. There is no doubt that the procedure does not contemplate retrospective applicability of such inclusion but in matters of storage, and especially of liquid bulk, which, for want of discharge on arrival, would imply retention of the vessel with mounting of related charges, required the breach to be viewed in proper perspective as malafide has not been set out in the impugned order - there are doubts about the applicability of this provision inasmuch as goods not having been deposited in a warehouse could not be alleged to have been removed contrary to permission and, further, it is not as if the goods were moved out of customs area and supervisory control of the customs authorities pending clearance for home consumption. As confiscation was not warranted, the imposition of penalty under section 112 in relation to the impugned goods is patently not correct in law. The confiscation had been ordered under section 111(h) of Customs Act, 1962 which is liable to be invoked only when goods are unloaded or attempted to be unloaded in contravention of provisions under section 33 and section 34 of Customs Act, 1962. It would appear that Commissioner of Customs has failed to take cognizance of chapter VI of Customs Act, 1962 which placed responsibility for unloading of the cargo on the master of vessel as set out in section 31 of Customs Act, 1962 and, thereafter, for discharge only in places specified under section 8(a) of Customs Act, 1962. The powers entrusted on Principal Commissioner of Customs/ Commissioner of Customs under section 8 of Customs Act, 1962 is intended to earmark places for loading and unloading and to set limits of designated customs area which has been defined as a customs station and an area in which imported goods or exported goods are ordinarily kept before clearance by the customs authorities ; from the impugned order we are unable to discover if the Commissioner of Customs had ascertained if the said bonded tanks were within such customs area. While the storage of third party goods in a private warehouse may be irregular, there is certainly no bar on the storage of goods belonging to any person, even to licensee of private warehouse licence, in a public warehouse. The Commissioner of Customs appears to have ignored this fundamental premise in considering the said storage to be irregular. There is no justification whatsoever for invoking section 111(h) as well as imposition of penalty thereof under section 112 of Customs Act, 1962. Accordingly, detrimentation of fine and penalties are set aside. The Commissioner of Customs has exceeded his authority in imposing penalty under section 117 for the several breaches noticed during the course of inspection. Furthermore, insofar as the maximum permissible assessable value alleged to have been breached, it should not have escaped notices of Commissioner of Customs that the said condition does not define value and, if at all required, should have been estimated in accordance with section 2(41) of Customs Act, 1962. In the absence of such exercise, the validity of the finding of having exceeded the maximum permissible assessable value is without factual basis and, therefore, incorrect. The impugned order was passed in excess of authority and the imposition of penalty lacks authority of law for which reason the impugned orders are set aside to allow the appeals. - Appeal allowed.

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• 2024 (7) TMI 202
  Appealability of assessments - Refund of excess payment of customs duty - rejection on the ground that the claims were finalised by the Superintendent, Vadiner, who is not the proper officer - failure to produce the document evidencing that they have not passed on the incidence of duty to its buyers - HELD THAT:- The peculiar facts of the present case are that on remand by the Commissioner (Appeals) on 31.03.2011, final re-assessment order dated 02.04.2013 was passed by the Assistant Commissioner. The amount paid in excess by the appellant was finally re-assessed and, therefore, the refund was allowed in consonance to the amount so assessed by the Adjudicating Authority. The refund sanctioning authority could not have gone beyond the assessment order and hence, there was no error in the order dated 16.09.2013 rejecting the refund of Rs.77,36,325/- as it was not part of the final re-assessment order. If the appellant had any grievance against the final re-assessment order, the proper remedy would have been to have challenged the same and get the final reassessed amount modified, however, as observed in Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT ], the assessee would be liable to file an application under Section 27 of the Act and the provisions of the limitation period and the principle of unjust enrichment would be applicable. The appellant is, therefore, not entitle to the refund as claimed and the same have been rightly rejected by the Authorities below. Thus, all assessments, including self assessments are appealable and, therefore, unless the same is modified, no refund could be sanctioned so as to alter the assessment on the principle that refund proceedings are in the nature of execution proceedings and it is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. There are no merit in this appeal - appeal dismissed.

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• 2024 (7) TMI 201
  Demand of Differential duty - Certificate of Origin of the goods - warehousing during transit in the UAE - Denial of benefit of N/N. 12/2012-Cus dated 17th March 2012 - inability of the importer either to furnish documentation evincing direct dispatch from Zanzibar or, in terms of the said rules, deemed direct dispatch from Zanzibar - identity of the person chargeable to duty or interest lacking - HELD THAT:- From the facts and circumstances of documentation flow, as well as physical movement of the impugned goods, it is observed that it is the conclusion of the goods having, for a time, been out of customs control that is at the core of the dispute. There are no evidence on record that the procedures of customs control in the United Arab Emirates, and in particular at Jebel Ali, had been ascertained for determination that the warehousing during transit was in contravention of prescription in the impugned Rules. It would also appears to us that customs control of India has been sought to be emplaced over the flow of goods in the United Arab Emirates to arrive at the conclusion. This is not appropriate exercise of adjudicatory responsibility as well as treaty obligation. The appellant have also raised certain technical issues such as show cause notice having referred to the individual appellant herein for recovery of differential duty as well as for imposition of penalty under section 114A of Customs Act, 1962 which is contrary to the provisions of section 28 of Customs Act, 1962 intended to place person chargeable with duty or interest on notice and that the time-frame stipulated in section 28(9) of Customs Act, 1962 have not been complied with. The lower authorities have justified the apparent breach of section 28(9) of Customs Act, 1962 by drawing attention to the change of adjudicating authority as adequate explanation. It must be noted here that it was consequent upon parliamentary deliberation that the said expression came to be incorporated in section 28 of Customs Act, 1962, making it incumbent upon the adjudicating authority to identify the said person. Likewise, section 114A of Customs Act, 1962 renders it obligatory on the part of the person liable to duty or interest which is a consequence of finding on the applicability of section 28 of Customs Act, 1962 to comply with the adjudication order. That this is lacking in the impugned order and, though pointed out by the appellants herein to the first appellate authority, remained unanswered places a question mark on the legality of the impugned order - As the identity of the person chargeable to duty or interest is crucial to the fastening of duty liability and interest as well as penalty, the impugned order is in error. It would be appropriate to set aside the impugned order and remand the matter back to the original authority for fresh decision - Appeal allowed by way of remand.

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• 2024 (7) TMI 200
  Maintainability of appeal - monetary limit involved in the appeal - Challenge to assessment - enhancement of value as per acceptance/admission by the importer/assessee /respondent - HELD THAT:- For reduction of litigation, the CBIC has issued circulars/instructions from time to time instructing the department not to file the appeal and in some cases, if it has already filed, not to press the appeal before higher authorities i.e. the CESTAT, the High Courts and the Supreme Court as the case may be, where the duty amount involved is below the minimum threshold limits respectively prescribed in such circulars. In the present cases, we are concerned with the CBIC s latest circular dated 02.11.2023, wherein it has been specifically prescribed that no appeal shall be filed before the CESTAT below the monetary limit of Rs. 50 lakhs and if already filed, will have to be withdrawn - the present appeal falls within the instructions as prescribed in the circular dated 02.11.2023. It is pertinent to mention here that the amount of duty involved in the appeal is below of the threshold limit prescribed in circular dated 02.11.2023 issued by the CBIC wherein it is provided that if the duty amount involved is less than Rs. 50 lakhs, then no appeal shall be filed before the CESTAT, and if already filed, the same will be withdrawn by the department. Reference made to the decision of the Bombay High Court in the case of COMMISSIONER OF CUSTOMS, CENTRAL EXCISE, SERVICE TAX, NASHIK II COMMISSIONERATE, VERSUS M/S. SUVARNA SANJIVANI SUGARCANE [ 2017 (6) TMI 858 - BOMBAY HIGH COURT ] wherein the Hon ble High Court has observed There is no issue that the appeals filed by the department in the year 2 012 having monitory limits of below 15/20 lakhs. The above provisions and instructions/circulars therefore covers the case of disposal of these appeals on the same ground. The learned Counsel appearing for the respondents has no objection for such disposal. The present appeal filed by the department is not maintainable in view of the instructions dated 02.11.2023 issued by the Board - Appeal dismissed.

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• Corporate Laws

• 2024 (7) TMI 199
  Relevant date for adjudication of claims - Whether the claims of the applicant are to be adjudicated up to the date of the appointment of the provisional liquidator i.e., 25.02.2002 or up to the date of final winding up of the company (in liquidation) i.e., 09.08.2012? - HELD THAT:- A bare perusal of the order dated 28.09.2012 passed by this Court would substantiate the dual claims of the Bank of Baroda, which had submitted its claim for Rs. 7,56,02,275/- as secured creditor and claim for Rs. 8,34,4,285/- as Debenture Trustee. Insofar as the plea by the applicant is concerned, that a sum of Rs. 7,56,02,275/- was paid towards full and final settlement of its claim and that it was paid another sum of Rs. 6.50 crores towards its claim upto the date of final winding up i.e. 09.08.2012, the said aspect appears to be factually incorrect as the applicant overlooks that the DRT-II, New Delhi in O.A. No. 54/2002 passed an order thereby making the Bank of Baroda entitled to recover a sum of Rs. 7,57,77,191/- plus interest towards loan defaults, which order was also upheld by the DRAT vide order dated 28.05.2015. It was in respect of the aforesaid claim of Bank of Baroda being in the nature of a secured creditor, that a sum of Rs. 6.50 crores was paid towards full and final settlement of its claim. The order dated 31.01.2019 has not been assailed by the applicant and the same has attained finality. It goes without saying that a sum of Rs. 7,56,02,575/- has further been paid to Bank of Baroda in respect of the claims in the capacity of being a Debenture Trustee, which has been assessed up to the date of provisional winding up of the company vide order dated 25.02.2002. There is no error apparent on the face of the record to seek review of the order dated 03.02.2023 passed by this Court - this Court finds no merit in the present application - application dismissed.

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• Insolvency & Bankruptcy

• 2024 (7) TMI 198
  Admission of Section 95 application filed by the Financial Creditor - Personal Guarantor of the Corporate Debtor - date of default - time limitation - it was held by NCLAT that There are no error in the order passed by the Adjudicating Authority admitting Section 95 application. There is no merit in the appeal . HELD THAT:- It is not required to interfere with the impugned judgment and order passed by the National Company Law Appellate Tribunal, New Delhi. The appeal is, accordingly, dismissed.

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• 2024 (7) TMI 197
  Contempt petition - Determination of Resolution Professional (RP s) fees and expenses - jurisdiction of the Adjudicating Authority to determine the fees and expenses - Regulation 33(2) of CIRP Regulations 2016 - HELD THAT:- The submission of the Appellant that the Adjudicating Authority has no jurisdiction to proceed for computation of fee and expenses, not agreed upon. When the Appellate Tribunal vide its order dated 11.12.2019 has specifically directed in paragraph 19 that Financial Creditor is liable to pay the CIRP cost and fees which was to be reported to the Adjudicating Authority and which was to be determined, the Adjudicating Authority has ample jurisdiction to proceed to examine the entitlement of the fee and expenses. The direction of the Appellate Tribunal has been substantially complied by the Adjudicating Authority by determining the fee and expenses. The order passed by this Appellate Tribunal on 11.12.2019 is final and binding between the parties and the Financial Creditor cannot escape from liability to pay fee and expenses. Adjudicating Authority has determined the fee of Rs. 1,00,000/- per month totalling Rs. 7,30,000/- which we are of the view that need to be paid by the Financial Creditor. CIRP expenses has also been approved for Rs. 2,41,512/- which finds approval - However, the direction issued in paragraph 15.3 is uncalled for and is set aside. The Appellant is liable to pay the amount of Rs. 7,30,000/- plus Rs. 2,41,512/- minus any amount if already paid which payment shall be made to the RP within four weeks from today by a Bank Draft or by R.T.G.S payment - Appeal disposed off.

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• 2024 (7) TMI 196
  Approval of the resolution plan of Successful Resolution Applicant (SRA) - incorrect valuation exercise - valuation contemplated under the relevant CIRP Regulations were duly followed or not by the RP - applicability of Section 29-A(f) of the IBC - HELD THAT:- Admittedly therefore, the Appellant was provided copy of the resolution plan as well as minutes of the CoC meeting and even allowed to attend the CoC meetings. Hence, the allegations raised by the Appellant of the RP not inviting the Appellant to attend the CoC meetings and not being provided with the resolution plan is frivolous and self-contradictory and therefore deserves scant regard. It is clear therefore that the Appellant has unjustifiably claimed that there has been statutory violations and irregularities in the valuation process conducted by the RP. There are no reasons to disagree with the Adjudicating Authority that the alleged imposition of ban by SEBI on the promoters of the SRA does not hold good because the Securities Appellate Tribunal had set aside the orders of the SEBI - the SRA was eligible to submit the resolution plan for the Corporate Debtor. Thus, even on this count the Appellant has hopelessly failed to validate their contention of alleged irregularity. When the CoC has approved the Resolution Plan by 100% voting share after considering its feasibility and viability, such decision of CoC is a commercial decision. There can be no fetters on the commercial wisdom of the CoC. It is settled law that commercial wisdom of CoC in approving the Resolution Plan is not to be interfered in the exercise of jurisdiction of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers - The Adjudicating Authority can reject the resolution plan only when there is noncompliance of Section 30(2) of IBC. There are no adequate grounds shown or material placed on record by the Appellant as to how the plan does not conform to Section 30(2) of IBC. The Adjudicating Authority did not err in approving the resolution plan of the SRA - the Adjudicating Authority did not commit any error in rejecting the interlocutory application of the Appellant objecting to the approval by the CoC of the resolution plan of the SRA - Appeal dismissed.

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• 2024 (7) TMI 195
  Liquidation of Corporate Debtor - exclusion of time period of eighteen months for implementation of the resolution plan - extension of time for implementation of the resolution plan - scope of relevant clauses of the Basic Assumptions contained in the resolution plan - HELD THAT:- The Adjudicating Authority has been persuaded to believe that there has been a logjam in the whole resolution process due to the ongoing litigation which was jeopardising the interest of the Financial Creditor and hence in their considered view, liquidation order can be passed in these circumstances - The Adjudicating Authority while passing the impugned order has been clearly persuaded to conclude that implementation of the plan of the SRA was contingent upon the outcome of the litigation proceedings and/or vacation of stay order, and to avoid further jeopardy to the interests of the Financial Creditor arising out of the stalemate in the whole resolution process, liquidation was very much an exercisable option. In the present facts of the case, the ad interim stay of the orders of the Hon ble Delhi High Court by the Hon ble Apex Court undisputedly continues to subsist. For this reason alone, indisputably the assets of the Corporate Debtor have not been effectively made over the SRA. That being the case, there is no doubt that the interim orders of the Hon ble Supreme Court have led to a complete embargo and stalled the ongoing resolution proceedings. Clause 8 of the Basic Assumptions provides for discussion between the Appellant and RP and Respondent No. 2 regarding further course of action in case the plan is not implemented within 18 months. The discussion regarding the further course of action contemplated by the plan could only be interpreted to mean discussion regarding implementation of the plan and not liquidation of the Corporate Debtor. Merely, because extending the 18 months period would allegedly go against the commercial interests of the Financial Creditor is not a convincing and persuasive ground for the Respondent No. 2 to unilaterally press for liquidation without any deliberations and discussions with the other stakeholders. On seeing the statutory construct of the IBC, it is Section 33 of the IBC which outlines the grounds for liquidation of a Corporate Debtor. In terms of Section 33(1)(a) of IBC, where the Adjudicating Authority, before the expiry of the CIRP period or maximum period permitted for completion of the CIRP under Section 12 of the IBC, does not receive a resolution plan under Section 30(6) of the IBC, initiation of liquidation can be allowed by Adjudicating Authority. This is not applicable in the present case since a resolution plan is already in place - Admittedly, in the present factual matrix, there is no such non-compliance or default or failure attributable on the part of the SRA in the plan implementation for the Corporate Debtor to be subjected to liquidation. There is nothing on record which have been placed by the Respondents to show any breaches on the part of the SRA in implementing the plan. Hence, Section 33(1)(b) of IBC is also not attracted. In the present case, the implementation is yet to commence in view of the fetters placed by the ad interim stay orders of the Hon ble Supreme Court for which no fault can be pinned on the SRA. Thus, when none of the pre-requisite conditions required to be fulfilled before undertaking liquidation process are met, in such circumstances, the Financial Creditor cannot use the forum of the Adjudicating Authority to force liquidation of the Corporate Debtor - It is also settled law that when a higher court grants a stay which stalls the implementation of the resolution plan, the said period can well be excluded from the time period given for implementation of the resolution plan. The impugned order allowing liquidation of the Corporate Debtor set aside - the Adjudicating Authority directed to allow exclusion of time from 13.12.2021 sought for implementation of the resolution plan - appeal allowed.

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• 2024 (7) TMI 194
  Maintainability of section 7 application - applicability of threshold introduced by Amendment Act 1 of 2020 of the IBC - requirement of application to be filed jointly by not less than 100 allottees under the same real estate project or not less than 10% of the total number of allottees, whichever is less - HELD THAT:- The Adjudicating Authority has correctly held that even a commercial space or unit allotted to Assured Returns Class of Creditors is also covered in the ambit of an allottee . After taking notice of the judgement of this Tribunal in Nikhil Mehta [ 2017 (8) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], the Adjudicating Authority has also correctly noted that this judgement has nowhere observed that assured returns class of creditors in a particular project do not come under the definition of allottees . The Adjudicating Authority has further held that in the facts of the present case, as per affidavit of the Corporate Debtor, the total number of allotted units in the Floreal Tower is 504 and 366 allottees therein fall under the Assured Returns Class of Creditors. Since the present Appellants happen to be part of the Assured Returns Class of Creditors, they continue to belong to the substratum of allottees and therefore continue to be governed by the threshold limit prescribed under second proviso to Section 7(1) of IBC. Since the present application was filed before the IBC Amendment Act 1 of 2020 had come into effect, consequently upon the amendment, as financial creditors who are allottees under a real estate project, the Appellants were required to meet the threshold criteria of not being less than 100 such creditors in the same class or not being less than 10% of the total number of creditors in the same class, whichever is less, to qualify to file Section 7 application against the Corporate Debtor. This parameter has clearly not been complied with thereby making the Section 7 application non-maintainable. The Appellants cannot be said to go out of the definition of allottees merely because they are part of MAR plan or that they should be treated in a different category wherein they are not required to comply with second proviso to Section 7(1). The Adjudicating Authority has correctly held that the Appellants continue to hold the status of allottees and having filed Section 7 Application, they are mandatorily required to comply with second proviso to Section 7(1) of IBC. There is no merit in the Appeal - The Appeal is dismissed.

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• 2024 (7) TMI 193
  Maintainability of section 9 application - non-fulfilment of the prescribed threshold limit of Rs.1 crore - dispute of interest exists or not - clubbing of liability - HELD THAT:- The Corporate Debtor having refuted the claim of the Operational Creditor and also denied any liability towards interest payment, the claim regarding interest was clearly disputed. In the given facts and circumstances, we have no hesitation in holding that the Adjudicating Authority had correctly held that the amount of interest having been disputed, the said interest amount cannot be clubbed with the principal amount, thereby threshold criteria laid down under Section 4 of the IBC is not met. The Adjudicating Authority while dismissing the Section 9 application has relied on two judgments of this Tribunal for not clubbing the interest amount on account of delayed payments with the principal amount. Learned Counsel for the Appellant has relied on the judgment of this Tribunal in Prasat Agarwal Vs Parasrampuria and Ors. [ 2022 (7) TMI 835 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH] wherein it held that when interest of delayed payment is stipulated in the invoice, it will entitle the Operational Creditor for right to payment of interest amount along with outstanding principal amount. While there can be no dispute that when an amount of interest is agreed or statutory, the same shall be clearly part of the debt as long as the claim of interest is not disputed. In the present case, however, when the Corporate Debtor in its reply to Section 8 Demand Notice and reply to Section 9 application has clearly and categorically contested the levy of any interest amount and also denied to pay any such interest, this is not a case of payment of any mutually agreed interest. Hence, Prasat Agarwal judgment does not come to the aid of the Appellant as the distinguishing in that case was that the Corporate Debtor had not disputed the levy of interest unlike in the present case where the interest has been both disputed and denied. The claim for interest being a disputed fact can only be adjudicated by a court of competent jurisdiction. Initiation of CIRP is certainly not an answer in the facts and circumstances of the case. The claim of interest being disputed, no error has been committed by the Adjudicating Authority in rejecting the application under Section 9. The Adjudicating Authority has rightly rejected the Section 9 application of the Appellant. There is no merit in the Appeal - Appeal dismissed.

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• 2024 (7) TMI 192
  Liquidation of Corporate Debtor - whether the Appellant has failed to implement the Resolution Plan approved by the Adjudicating Authority on 25.03.2024 and whether the company being not active, the Appellant could not infuse the share capital for payments to the creditors as per the Resolution Plan? HELD THAT:- The Appellant after having failed to make infusion of any amount as per the Resolution Plan and make payment as per timelines has offered to deposit entire remaining amount of Rs.29.34 Crores into an Escrow Account, which deposit is also made subject of fulfilment of condition as noted. The sequence of events indicate that the Successful Resolution Applicant has clearly failed to implement the Resolution Plan and the ground that fund cannot be infused since status of company was not made active is not sufficient to absolve the liability of the Appellant to implement the plan. It is also relevant to notice that the Resolution Applicant before the Adjudicating Authority at the time of approval of the plan has prayed for waivers which prayer was not granted by the Adjudicating Authority by order dated 25.03.2021. When the Adjudicating Authority expressly refused to grant any reliefs and concessions, as prayed, the plan was to be implemented by the Successful Resolution Applicant and Appellant cannot be heard to say that unless the Registrar of Companies change the status of the Corporate Debtor into active implementation of plan cannot proceed further. It is also relevant to notice that when no waiver was granted to the Successful Resolution Applicant and there was no challenge to the order of the Adjudicating Authority approving the Resolution Plan, the order dated 25.03.2021 has become final and plan as approved by the Adjudicating Authority along with refusal to grant any waiver and relief was liability of the SRA to implement and it was binding on the SRA. The Adjudicating Authority in the impugned order has considered all the aspects of the matter. The Adjudicating Authority rightly observed that the applications filed by the Corporate Debtor clearly indicates the mindset of the SRA that the plan is conditional and it shall be implemented only after the status of the Corporate Debtor is updated on MCA Portal. When the Resolution Plan has not been implemented by the SRA, there was no option left with the Adjudicating Authority except for direction for liquidation. The Adjudicating Authority has rightly passed the order for liquidation under Section 33 Sub-section (3) read with Section 33(1)(b) of the I B Code. After directing for liquidation, the Adjudicating Authority has also not committed any error in dismissing different applications filed by the Appellant. Present is a case where the Appellant s case is that he having not been able to infuse the fund by share capital, the implementation of plan cannot begin, which submission has been noted and rejected - appellant is not entitled to any relief - appeal dismissed.

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• FEMA

• 2024 (7) TMI 191
  Proceedings of FERA against juristic person - proceedings pending before the Metropolitan Magistrate under Sections 56 and 68 of FERA challenged - show cause memorandum is a replica or verbatim/representation of the allegations in the complaint filed in the criminal proceeding which is under challenge - revisional application was initially preferred on the grounds that M/s. ITC Ltd being a juristic person cannot be subjected to any punishment for imprisonment and so cannot be proceeded with under Section 4 of Foreign Exchange Regulation Act, 1973 - criminal complaint against the petitioner according to the complainant/opposite party is based on the statement of Shri N. Lakshminarayan HELD THAT:- In the present case adjudicating authority decided the issue relating to the Show Cause on merits, including the statement and the materials placed before the adjudicating authority. The exception enumerated in paragraph 38 (vi) of Radheshyam Kejriwal [ 2011 (2) TMI 154 - SUPREME COURT] is not application to the facts of the present case, rather the case of the petitioner falls within the ambit of paragraph 38(vii) of Radheshyam Kejriwal (supra) case which states as follows: 38. (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. It is of the opinion that further continuance of the complaint case being Case No. C-2482/2002 pending before the learned Metropolitan Magistrate, 9th Court, Calcutta would be an abuse of the process of the Court and as such the same is hereby quashed.

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• PMLA

• 2024 (7) TMI 190
  Challenge to order passed by the High Court of Delhi in Bail Application - HELD THAT:- Having regard to the fact that the period of 6-8 months fixed by this Court by Order dated 30.10.2023 having not come to an end, it would suffice to dispose of these petitions with liberty to the petitioner to revive his prayer afresh after filing of the final complaint/Charge-sheet as assured by learned Solicitor General. Needless to state that in the event of such an application being filed, the same would be considered on its own merits. These petitions stand disposed of.

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• 2024 (7) TMI 189
  Seeking grant of Regular Bail - money laundering - proceeds of crime out of illegal gratification in lieu of giving favours to the bidders by leasing out the Waqf properties to them - predicate offence - twin conditions of Section 45 (1) of PMLA satisfied or not - HELD THAT:- While the conclusive evidentiary value of the statements under Section 50 PMLA will be determined at the end of the trial, the Courts can rely on the statements under Section 50 of PMLA and other material collected by the prosecution to determine if a prima facie case is made out for the purpose of granting bail - At this stage, the only evidence available includes the statements recorded under Section 50 of PMLA and other corroborating material, such as electronic evidence, money transactions, or documentary evidence. This evidence is crucial for the Court to assess a person s involvement in an offence under PMLA. Therefore, this Court finds that the argument that statements under Section 50 of PMLA cannot be considered at the stage of bail is without merit. The material evidence gathered during the course of the investigation by the Directorate of Enforcement reveals that Amanatullah Khan had hatched a criminal conspiracy along with his close associates i.e., the present applicants/accuseds and others and pursuant to the same, he had invested his ill-gotten money i.e. proceeds of crime, in the immovable properties through his associates namely Zeeshan Haider, Daud Nasir and others. As alleged, Amanatullah Khan had purchased immovable properties in the name of benamidars i.e. the present applicants Zeeshan Haider and Daud Nasir, by concealing and suppressing their actual value which is very nominal in comparison to their actual sale value and actively concealed amounts that were paid in cash to the seller, which are the proceeds of crime acquired by Amanatullah Khan out of his corrupt and illegal activities relating to the offences scheduled under PMLA. This Court further upon careful consideration of the submissions and documents presented by Sh. Zoheb Hossain learned Special Counsel for the Directorate of Enforcement, notes that the interim bail granted to applicant Daud Nasir on 10.05.2024, was primarily for the purpose of taking care of his wife during her scheduled surgery on 17.05.2024 at Fortis Hospital, Shalimar Bagh, New Delhi. It has been argued that this surgery was not conducted as scheduled. This Court has gone through the email dated 28.05.2024 sent by Fortis Hospital to the Directorate of Enforcement which reveals that the applicant s wife neither submitted the prescribed medical reports to the doctors nor went to the hospital for admission or surgery on the scheduled date - This Court is of the opinion that the applicant/accused Daud Nasir has misled the Court by misrepresenting the need for interim bail, which was granted based on the necessity of a major surgery at Fortis Hospital. Thus, the conduct of the applicant Daud Nasir is doubtful and this Court is of the opinion if the applicant Daud Nasir if released on bail, may misuse the liberty and may attempt to tamper with evidence or influence witnesses. The material brought before this Court at this stage is sufficient to attract bar under Section 45 of PMLA on both the applicants. Considering the aforesaid facts and circumstances, this Court does not find it a fit case for grant of regular bail to the present applicants i.e., Zeeshan Haider and Daud Nasir. Application dismissed.

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• Service Tax

• 2024 (7) TMI 188
  Determination of tax liability of the petitioner in terms of the show cause cum demand notice - time limitation - benefit of Mega Exemption Notification dated 20th June, 2012 - HELD THAT:- It is noticed that the show-cause had been issued by invoking the extended period as provided for in the first proviso to Section 73 (1) of the said Act. It appears from the aforesaid show cause that on the basis of the information received by the Department from the Central Board of Direct Taxes for the financial year 2015-16 and 2016-17 that the assessee was requested to submit certain documents, inter alia, including profit and loss account, income tax return, Form 26AS, output service bills, explanation and clarification for the mismatches in reporting different value of services provided to different tax authorities for the financial year 2015-16, 2016-17 and 2017-18. It is not in dispute that the payment had been disbursed in favour of the petitioner by the PWD as would corroborate from the documents appearing at pages 42 and 43 of the writ petition dated 1st September, 2016. The aforesaid ought to have been considered by the authorised officer. To the extent of the non-consideration of the aforesaid by glossing over the payment certificate and refusing to accept the payment certificates issued by the Government since, the work orders were not disclosed in original, such finding returned by the authorised officer is perverse. It would be prudent to send back the petitioner before the respondents for reconsideration of the matter afresh, inasmuch as the respondents on instruction has not denied that in appropriate cases benefit of Mega Exemption Notification dated 20th June, 2012 can be granted. The petitioner is remanded back to the adjudicating authority, who shall dispose of the aforesaid show cause notice by affording an opportunity of personal hearing to the petitioner and/or her representative within a period of eight weeks from the date of communication of this order subject to payment of Rs. 5,00,000/- with the respondents. Petition disposed off by way of remand.

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• 2024 (7) TMI 187
  Invocation of larger period of limitation under Proviso to Section 73 of the Finance Act, 1994 - suppression of material fact by comparing the gross receipts declared in the income tax returns filed under Section 139 of the Income Tax Act and ST-3 returns filed under the provisions of the Finance Act, 1994 read with Services Tax Rules, 1994 - HELD THAT:- Even if the petitioner may have a case on merits, it is best left to be decided by the Appellate Authority under the hierarchy prescribed under the Finance Act, 1994. The submissions made by the petitioner also indicate that there could be finer aspects of law, which may have to be settled in a case like the petitioner and therefore, it is best left to be decided by the authorities including the High Court in exercise of its appellate jurisdiction against the orders of the Tribunal, in case, the petitioner fails before the respondent as also before the Appellate Commissioner as also before the CESTAT. This Writ Petition is disposed of by giving liberty to the petitioner to file a statutory appeal before the Appellate Commissioner within a period of 30 days from the date of receipt of a copy of this order.

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• 2024 (7) TMI 186
  Levy of service tax under Reverse Charge Mechanism - Goods Transport Agency (GTA) - manufacture of marble slab and tiles for which they obtain marble blocks from various mines and also engage individual transporters and truck owners for transportation of marble blocks - HELD THAT:- During the post negative era w.e.f. 01.07.2012 Individual Transporters are not taxable under the provisions of Section 66D(p)(i). The present show cause notice covers the period from April, 2015 to March, 2016 and hence, the appellants are not liable to pay service tax. The impugned order is set aside - appeal allowed.

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• 2024 (7) TMI 185
  Non-payment of service tax - services of construction of Girls College for M/s Amar Nath Trust etc. - construction of buildings in relation to education premises are exempted vide Sl No 9 of the N/N. 25/2012-ST dated 20.06.2012 or not - Demand made in respect of the services provided to M/s Madhucon Projects in relation to construction of toll Plaza at Jaipur Highway - Computation of the service tax payable in respect of the services provided by the appellant to M/s Ginni Filament - time limitation - Cum tax benefit - interest - penalty - Late filing fees. Demand made in respect of services of construction of Girls College for M/s Amar Nath Trust etc. - HELD THAT:- The services provided by the appellant are under the category of work contract services and are not in nature of the services specified under the said entry. There are no merits in the submissions made by the appellant in this regard. Appellant has claimed exemption under Sl No 13 of the said notification before the original authority which has been rejected only in specific cases and appellant has not challenged the rejection at the time of argument of the appeal. The demand made in respect of the services provided by the appellant to the said trust have been held to be exempted where the services were for charitable causes in terms of the said notification under that entry. There are no merits in the submissions made by the appellant in this respect. Demand made in respect of the services provided to M/s Madhucon Projects in relation to construction of toll Plaza at Jaipur Highway - HELD THAT:- It is evident that the demand has been confirmed for the reasn that appellant were unable to substantiate their claim that they were providing the services to M/s Madhucon Project for construction of Toll Plaza by way of a proper certificate. Impugned order records the reason for rejection of the said certificate. The said certificate which was produced have not be produced before us in this appeal. Instead a copy of work order dated 18.10.2010 given by M/s Madhucon Projects Limited to appellant has been produced. This work order is in respect of Construction of Toll Booth at Bharatpur Jaipu Highway including all finishing size 1.5 X 3.00 m . This work order do not specify any thing in respect of road construction contract between NHAI and M/s Madhucon Projects - In absence of any evidence to the contrary there are no substance in the challenge made by the appellant to the findings recorded in the impugned order. Computation of the service tax payable in respect of the services provided by the appellant to M/s Ginni Filament - HELD THAT:- There are no merits in the appellant challenge to the computation of the tax liability. Time limitation - HELD THAT:- Impugned order clearly records the reason for invoking the extended period, and there are no challenge in the appeal or during the course of arguments here. Penalties - HELD THAT:- The penalties imposed upon the appellant under Section 78 of the Finance Act, 1994 are justified in view of the observation made by the Hon ble Supreme Court in case of Rajasthan Spinning and Weaving Mills Ltd [ 2009 (5) TMI 15 - SUPREME COURT] - Penalties imposed under Section 77 (1) (a), 77 (1) (b) and 77 (2) are also justified for the reasons of contraventions of the Act and Rules made thereunder. Appellant has contravened the provisions by not taking registration, not filling the returns and not paying the tax by the due date. The penalties in such case need to be upheld. Interest - HELD THAT:- As the demand for tax is upheld, the demand of interest under Section 75 is also consequential and upheld. Late filing fees - HELD THAT:- As the appellant has not filed the returns by the due date, late filing fees levied in terms of Rule 7C of the Service Tax Rules, 1994 is also upheld. There are no merits in the appeal - appeal dismissed.

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• Central Excise

• 2024 (7) TMI 184
  Reversal of CENVAT Credit - credit availed on the inputs and capital goods such as explosives, detonators, lubricants, components, etc. provided to the contractors for mine development work/ore production in terms of Rule 3(5) of the Cenvat Credit Rules, 2004 - extended period of limitation - interest - penalty. CENVAT Credit - HELD THAT:- The appellant is right in submitting that the issue in the present case is squarely covered by the earlier decision in their own case C.C.E. S.T. UDAIPUR VERSUS M/S. HINDUSTAN ZINC LTD. [ 2017 (5) TMI 514 - CESTAT NEW DELHI] , covering the subsequent period, where it was held that As such there is no removal of inputs or capital goods and there is no question of any reversal under rule 3(5) of the Cenvat Credit Rules 2004. Therefore, credit cannot be denied in this case . On merits, following the earlier decisions of the Tribunal in Hindustan Zinc, there is no sale and no removal of inputs and capital goods when the assessee supplied the same to the contractor, which was used for mine development activity and, therefore, the provisions of Rule 3(5) are not applicable. In the circumstances, the appellant was not required to reverse the credit availed in respect of the impugned items. Merely providing the inputs and capital goods to the contractor for use within the captive mines for mine development works of the appellant does not amount to removal and thereby, do not attract the provisions of Rule 3(5) of CCR. Extended period of limitation - interest - penalty - HELD THAT:- Since the issue has been decided on merits in favour of the appellant, the question of extended period of limitation, levy of interest and penalty does not survive. The impugned order deserves to be set aside - Appeal allowed.

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• 2024 (7) TMI 183
  Sale of branded goods or not - gold bars and gold/silver coins - no logo, trademark or brand name affixed on the above said items - liability to pay duty in terms of N/N. 01/2011-CE. dated 01.03.2011 - HELD THAT:- On going through the entry 89, it is found that articles in relation to gold shall mean anything (other than ornaments), in a finished form, made of, or manufactured from or containing, gold and includes any gold coin and broken pieces of an article of gold but does not include primary gold, that is to say, gold in any unfinished or semi-finished form including ingots, bars, blocks slabs, billets, shots, pellets, rods, sheets, foils and wires. Admittedly, the main demand in the present case against the appellant is for sale of gold bar, which is specifically excluded as per the Explanation given in the said Entry. Therefore, the gold bars, which is primary gold, sold by the appellant, are not excisable goods and consequently, no duty is payable by the appellant. Gold coins and silver coins - HELD THAT:- There is no logo, trademark or brand name affixed/embossed on these articles - On going through the pictures it is found that there is no mark indicating brand name on the gold / silver coins and therefore, it cannot be considered that these are branded goods. In these circumstances, on these gold / silver coins, the appellant is not liable to pay duty in terms of Sl. No. 89 of Notification No. 01/2011-C.E. dated 01.03.2011. The decision relied upon by the Ld. Authorized Representative for the Revenue in the case of Australian Foods India (P) Ltd. [ 2013 (1) TMI 330 - SUPREME COURT] is not applicable to the facts of this case as, in this case, there is a specific Circular issued by the respondent vide Circular F. No. 354/38/2011-TRU dated 02.03.2012 which clarified that It is clarified that the excise duty leviable on precious metal jewellery, manufactured or sold under a brand name, is attracted only on such jewellery on which the trade/brand name or any such mark or symbol or even a number which is cross referred with such trade/brand name ((not being a house mark used by jewellers for identification of jewellery at the time of exchange/resale) is indelibly marked or embossed. If such brand name is not affixed or embossed on the jewellery or article itself but appears on the packing such as the jewellery box or pouch or even on the warranty card or certificate of quality, such goods will not be treated as branded jewellery and thus will not be liable to excise duty. Thus, no duty is payable by the appellant. Consequently, no penalty can be imposed on the appellants. The impugned order set aside - appeal allowed.

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• 2024 (7) TMI 182
  Clandestine operation of Form, Fill Seal (FFS) for packing machine in contravention of the provisions of the Chewing Tobacco and Manufactured Tobacco Packing Machines Rules, 2010 in an unregistered premise, without obtaining registration - failure to prove the date of installation of machine - demand of duty alongwith penalties on both the appellants. Whether the date of installation of the machine is on the basis of evidence placed or it is to be presumed that the same has to be taken up from the 1st April, 2012 in the absence of any material evidence? HELD THAT:- The fact of sale of machine by M/s Hindustan Machines has been verified. During investigation, it was found that M/s Hindustan Machines have sold the machine on 16.03.2012. The Revenue has alleged that this is a afterthought. It is found that the investigation was done on 29.03.2012 and the invoices has been produced on 02.04.2012, which is within 2 or 3 days, but no evidence has been produced by the Revenue that the said invoice is not genuine as on the said invoices, the supplier of the machine has paid the VAT. In that circumstances, the premise goes benefit of doubt in favour of the appellant that they had been able to produce the invoices of the machine on 16.03.2012, which might have been installed within a week time and the claim of the appellant is that they have started production on 22.03.2012. In this case, the appellant has been able to prove with a documentary evidence and the packing machine has been supplied on 16.03.2012 from Bhillai. As the appellant is located in Kalahandi, therefore, production of machine starts w.e.f. 22.03.2012. The appellant is liable to duty in terms of Rule 18 (2) of the Chewing Tobacco and Unmanufactured Tobacco, Packing Machine (Capacity Determination and Calculation of Duty) Rules, 2010 w.e.f. 22.03.2012 along with interest and the appellant is liable to be penalized in their activity as they failed to intimate the Department in advance - The remaining demand is not sustainable against the appellant. Appeal disposed off.

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• 2024 (7) TMI 181
  Levy of penalty under Rule 209 and Rule 26 of the Central Excise Rules, 1944 and 2002 - Scope of SCN - impugned order assailed on the ground that the provisions of erstwhile Rule 209 ibid and Rule 26 ibid shall not be invoked inasmuch as no proposals were made in the showcause notice for confiscation of the goods, which were not available in the factory. HELD THAT:- Rule 209A ibid and Rule 26 ibid were similarly worded, concerning imposition of personal penalty. Since, the period of dispute involved in these appeals is from February, 2000 to September, 2003, both the provisions are attracted herein for consideration of the issue as to whether, the Department s action for imposition of penalty under Rule 209 and 26 ibid was proper or otherwise. It transpires that question of imposition of personal penalty would arise only in the eventuality, when the person concerned on whom the penalty is sought to be imposed, was having the knowledge that the offending goods were liable for confiscation. On reading of the show-cause notice as well as the impugned order, it is found that the authorities below nowhere had mentioned that the appellants had a pre- knowledge that the goods which were not received in the factory were liable for confiscation. Since the show-cause notice in this case, had not proposed for confiscation of the goods and the said aspect has not been dealt with in the adjudication order, the imposition of penalty under Rule 26 ibid on the appellants cannot stand judicial scrutiny. There are no merits in the impugned order, insofar as it has imposed penalty on the appellants under Rule 209/26 of the Rules, 1944/2002 - impugned order is set aside - appeal allowed.

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• Indian Laws

• 2024 (7) TMI 180
  Dishonour of Cheque - continuation of proceedings under the Negotiable Instruments Act, 1881 - disutes of parties settled before the Mediation Centre - HELD THAT:- The Mediation Report dated 16.05.2016 categorically indicates that Respondent No. 2 has amicably settled the two matters, that is, the complaints which were filed by Respondent No. 2 under Section 138 of the NI Act. Respondent No. 2 also agreed to withdraw the complaints and to make necessary statement before the learned Trial Court. The proceedings further record that the statement is made on his own free will and without any force, pressure or coercion. Prior to the recording of the statement by the learned Mediator, the parties had entered into a settlement agreement dated 01.04.2016. The agreement is duly signed by Respondent No. 2 as well as the other parties. The terms of the settlement mention that the parties have settled their disputes, which includes the two complaints which are the subject matter of the present proceedings under Section 138 of the NI Act. In terms of the said settlement, Respondent No. 2 had agreed that on payment of a sum of Rs.30,00,000/- against the entire outstanding amount, the claims towards Respondent No. 2 would be settled. Once it is an admitted position that an agreement was signed by the parties and the payment in terms of the settlement has already been paid by the petitioner, Respondent No. 2 cannot be allowed to wriggle away by taking such arguments - It is not denied by Respondent No. 2 that he was present before the learned Mediator and his statement was recorded of his own free will and without any force, pressure or coercion. If the settlements are discarded and rejected on such grounds, the parties would be wary of entering into any settlement agreement and make payments thereof. It is apparent that Respondent No. 2 after having pocketed the amount received pursuant to the settlement, is trying to reagitate the dispute. Such tendency ought not to be encouraged. The High Court, while exercising power under Section 482 of the CrPC, can definitely look into the record and pass such orders that may be necessary to prevent the abuse of the process of the Court or otherwise to secure the ends of justice. It is apparent that the petitioner, despite having paid the amount has been made to suffer and litigate for the last more than eight years due to dishonest attitude of the complainant. The Criminal Complaints are quashed - petition allowed.

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• 2024 (7) TMI 179
  Challenge to final award - Section 34 of the Arbitration and Conciliation Act, 1996 - disputes between the parties - deductions made on account of welcome drink - Service Charges - Service tax - GST - Interest - Costs. Inclusion/Exclusion of Wet Tissues - HELD THAT:- The learned Arbitrator has noted the admission of the petitioner s witness in his cross-examination that: a) Rs. 37,47,824 was deducted by the petitioner towards the amounts paid to the respondent (Rs. 7.23 per unit for tetra pack and Rs. 1.35 per unit towards wet tissue); and b) welcome drinks and wet tissues were supplied by the respondent w.e.f. 05.03.2017. Based on this, the learned Arbirator has awarded a sum of Rs. 37,47,824/- (for deductions made by IRCTC towards supplies made by them from 19.12.2016 to 04.03.2017) and Rs. 41,81,583/- (for production charges of welcome drink, including tetra pack, from 05.03.2017 to 18.06.2017). Hence, the learned Arbitrator has correctly awarded the amount to the respondent and find no infirmity with his reasoning. Service Charges - HELD THAT:- There are no infirmity with the findings of the learned Arbitrator. Since there was no contract between the parties for providing the welcome drink (including the wet tissues) to the passengers for the initial period of 6 months as held in the Interim Award (and upheld by the Hon ble Supreme Court), the learned Arbitrator s view that the petitioner was liable to pay production charges, service charges as well as service tax on the same is the correct view. No perversity can be attributed to the conclusion drawn by the learned Arbitrator in holding that in the letters, the respondent had explicitly mentioned that it would be claiming charges for the welcome drink (and wet tissues) in due time, and the same was not objected to by the petitioner in as much as it continued with the contract and kept extending. The service charges claimed by the respondent (under or about 17%) are much less than the charges stipulated in the contract, which ranged from 20-30%, which is duly noted by the learned Arbitrator - the findings of the learned Arbitrator are neither unreasonable nor perverse in this regard and take into account the agreement between the parties as well as their conduct. Service tax - HELD THAT:- There was no specific issue framed (or subsequently dropped) on the inclusion of service tax as far as the welcome drink was concerned. Since the dues on welcome drink were yet to be decided at the passing of the Interim Award, it is not unreasonable of the learned Arbitrator to hold that service tax was also payable by the petitioner on the welcome drink since there was no contract between the parties regarding the said services for the initial period of 6 months, and post that, the petitioner had impliedly agreed to being charged for the said services. Merely because a few issues were dropped regarding service tax on specific items/services, the learned Arbitrator is not unreasonable in holding that no general issue on payment of service tax has been dropped by the respondent. Hence, the finding of the learned Arbitrator does not warrant interference by this Court. GST - HELD THAT:- It was settled in the Interim Award itself that GST was payable to the respondent over and above the production charges, and the same has attained finality. The petitioner cannot now urge an argument before this Court that production charges, since were inclusive of taxes (VAT), were to be bifurcated before payment of GST. Further, RW-1 has categorically stated in its cross- examination that GST on production charges and extra meal charges have been claimed by the respondent and correctly reflected in Annexure-1 of the affidavit dated 02.01.2021 .The petitioner s argument that GST on production charges were never claimed is thus untenable, as the learned Arbitrator has duly recorded a finding to the contrary. There are no grounds to interfere with the findings of the learned Arbitrator to this extent. Interest - HELD THAT:- Referencing to Section 31 (7) of the Act, as well as Section 2(b) of the Interest Act, 1978, it held that since the maximum rate of interest being paid by banks is about 7% per annum, the respondent is entitled to 9% per annum interest on the award amount from 01.11.2018, when the arbitration was initiated, till the date of payment appeared to be reasonable. There are no infirmity with the findings of the learned Arbitrator. Costs - HELD THAT:- Imposition of costs is a discretionary power vested with the arbitral tribunal. The learned Arbitrator held that in the present matter, the respondent tried to settle the matter, however, since negotiations failed, hearings had to be conducted - The costs granted by the learned Arbitrator are reasonable and granted after due consideration of different factors and in consonance with Section 31A of the Act, as discussed in the Final Award. There are no infirmity with the findings of the learned Arbitrator. The same is sound and credible. The petitioner has failed to make out any ground for interference with the award under Section 34 of the Act - petition dismissed.

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• 2024 (7) TMI 178
  Dishonour of Cheque - criminal liability if company - issuance of summons to accused - complainant failed to mention the name of the authorized signatory of the Company and the person, who was looking after the daily affairs of the Company - HELD THAT:- The Hon ble Supreme Court dealt with the liability of the Company and its Directors in PAWAN KUMAR GOEL VERSUS STATE OF U.P. ANOTHER [ 2022 (11) TMI 855 - SUPREME COURT] and held that a person, who is in charge of and responsible to the Company for its affairs can be summoned and punished under Section 138 read with Section 141 of NI Act. In the present case, the complainant had specifically stated in para No.2 of the complaint that accused No.4 to 8 are its Managing Directors and Directors of accused No.1 to 3 and are fully responsible for all assets, liabilities and daily business affairs of accused No.1 to 3 - It was laid down in N. RANGACHARI VERSUS BHARAT SANCHAR NIGAM LTD [ 2007 (4) TMI 621 - SUPREME COURT] that once it is established that a Director is in charge and responsible for the affairs of the Company, the burden shifts upon the accused to show that there was some restriction on his power. A person dealing with the Company is entitled to presume that he is the Director and in charge for the affairs of the Company and the burden shifts upon the person to prove any restriction. In the present case, the necessary averments that the accused were in charge and responsible for the affairs of the Company have been made and the burden will shift to the accused to show any restriction on their power. There is no infirmity in the order summoning the accused and the same cannot be quashed. Hence, the present petition fails and the same is dismissed - Petition dismissed.

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• 2024 (7) TMI 177
  Determination of the compensation on death of the deceased in a motor vehicular accident - determination of the monthly income/annual income of the deceased - as argued Tribunal instead of taking average of previous three years of Income Tax Return (ITR) considered four years as it was available on record and hence, a wrong approach was adopted - HELD THAT:- It is not in dispute that in normal course, preceding three years ITRs are considered while assessing the annual income but in the instant case, one more assessment year of 2011-2012 was included. Adopting the normal course for the previous three consecutive financial years before the death, the Court is of the view that the annual income with such tax deduction should be accepted at Rs. 1,76,496/-. The Court is inclined to accept the plea of Mr. Mohanty, learned counsel for the claimants and fix the annual income of the deceased at Rs. 1,76,496/- allowing the tax deductions for the years 2012-13, 2013-14 and 2014-15. With respect to the income towards the heavy goods vehicles, an amount of Rs. 60,000/- has been added to the annual income - When a presumptive income is assessed at, for the purpose of tax as per Section 44-AE of the Income Tax Act, it may not be incorrect to demand a sum of Rs. 7,500/- a month in respect of the hypothecated goods vehicles, the said amount being the presumptive monthly income previous year whereupon tax was payable but the irony is that both the vehicles were purchased barely few months before the death of the deceased. As regards the periodical increment at the rate of 10% vis- -vis general damages in every three years, there is no quarrel over the legal position as held by the Apex Court in Pranay Sethi (supra), however, it shall be in respect of an amount of Rs. 70,000/- instead of Rs. 1,20,000/- which has been allowed by the learned Tribunal on the heads of consortium @ Rs. 40,000/- for each for the claimants. As regards the plea of Insurance Company that there was violation of policy conditions , as pleaded that the tanker was involved in transporting hazardous substance, which was not in terms of the DL of the driver, who had no such authorization to ply the alleged vehicle. In fact, there has been no specific evidence brought on record from the side of the Insurance Company challenging the DL of the driver of the offending tanker to claim that any such policy condition is violated -absence of any such endorsement in the DL, without any specific evidence on record, the plea as to violation of policy condition is not to be accepted. In any case, Exts. D and E proved such claim to be incorrect. Hence, it is held that the contention of Mr. Dasmohapatra with such a plea is liable to be rejected. But, as already held, the plea that the amount on conventional heads for an amount of Rs. 1,20,000/- should be Rs. 70,000/- is acceptable and to which, the Court is in complete agreement. The annual income of the deceased is to be reassessed at Rs. 1,76,496/- taking into account average income of previous three years, such as, 2012-13, 2013-14 and 2014-15. Over and above, the said amount, assuming the income from the heavy goods vehicles of the deceased, the Court is inclined to add an amount of Rs. 22,500/- only (not counting for the entire year) since the hypothecated TATA ACE and JCB had been purchased shortly before the accident. No evidence is on record either to ascertain, if both the vehicles are still with the claimants or in the meantime, disposed of after the death of the deceased. Anyways, the income with an additional sum of Rs. 22,500/- becomes Rs. 1,99,996/-. Since the deceased died living behind the dependants, deduction towards personal and living expenses should be 1/3rd and hence, loss of dependency is calculated at Rs. 1,33,330/- and with a multiplier of 16 (as the deceased was aged about 31 years) applicable in view of the decision of Smt. Sarla Verma and others Vrs. Delhi Transport Corporation and Another [ 2009 (4) TMI 1030 - SUPREME COURT ] the amount is arrived at Rs. 21,33,280/-. Besides the above, the claimants are also entitled to 40% on the said sum towards loss of future prospects as the deceased was below 40 years at the time of death, hence, the amount becomes Rs. 29,86,592/-. With the addition of Rs. 77,000/- on general damages inclusive of periodical increment every three years and other additional expenses allowed by learned Tribunal on the heads of transportation of dead body for Rs. 5,000/-, funeral and obsequies expenses at the rate of Rs. 20,000/-, the amount of compensation is reached at Rs. 30,88,592/- (instead of Rs. 33,58,657/-) which is payable along with interest @ 7% per annum usually being the lending rate. Hence, the Court is not in favour of enhancing the interest to 9% per annum so claimed by the appellants.The Court is also not in favour of any penal interest @ 9% per annum allowed by the learned Tribunal as the same is unwarranted. As a logical sequitur, the impugned award passed in M.A.C Case is hereby modified to the extent as aforesaid with a direction to the Insurance Company to deposit a sum of Rs. 30,88,592/- along with interest at the rate of 7% per annum from the date of claim application filed till its realization within eight weeks from today, whereafter, it shall immediately be disbursed in favour of the claimants.

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