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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 7, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Articles The Process of LLP Annual Compliance Demonetization Cash Deposits – Source cannot be considered as unexplained u/s 69 even when deposit is in Violation of RBI guidelines Recovery of Canteen and Transport expense for employees under statutory/Contractual obligation is Not a supply and ITC is recoverable. RECENT DEVELOPMENTS IN GST Extended period of limitation cannot be invoked on a legitimate buyer Tips to Get Single Status Certificate in Any Country GST refund application is valid even for the period prior to issuance of refund policy for unregistered persons News Union Finance Minister Smt. Nirmala Sitharaman chairs meeting to review performance of Public Sector Banks RBI invites comments on draft circular on Arrangements with Card Networks for issue of Debit, Credit and Prepaid Cards Notifications SEZ G.S.R. 481(E) - dated 4-7-2023 - SEZ Special Economic Zones (Third Amendment) Rules, 2023 - Procedure of import or export or procurement from or supply to Domestic Tariff Area of ship by a Unit in International Financial Services Centre Circulars / Instructions / Orders Customs Instruction No. 20/2023 - dated 5-7-2023 Notification of Authorised Officers under Section 25 read with Section 47 (5) of Food Safety Standards (FSS) Act, 2006 and Regulation 13 (1) of FSS (Import) Regulation, 2017 Instruction No. 21/2023 - dated 5-7-2023 Amendment in import policy condition of Cigarette lighters Covered under CTH 9613 of Chapter 96 of Schedule-I (Import Policy) of ITC (HS) 2022 Highlights / Catch Notes GST Requirement of registration in Assam, if applicant registered in West Bengal, buys goods at Guwahati - though clause (f) of sub-section (2) of section 97 enables the applicant to make the instant application seeking an advance ruling whether the applicant is required to be registered, this authority is not empowered to pronounce any ruling in cases where the question is found to be in respect of registration required to be obtained in a State other than the State of West Bengal. - Application rejected - AAR Visit to Get Source Multiple GST registration from the same premises - Option for separate registration may be availed by a registered person provided such registered person has multiple places of business. Therefore, in cases where a registered person carries on separate type of businesses from same place of business within a State, he cannot opt to obtain separate registration within the said State as per proviso to sub-section (2) of section 25 of the GST Act read with rules made there under. - AAR Visit to Get Source Exemption from GST - Fair Price Shop - Supply of goods or services to ration card holder on behalf of the Government - the consideration against which the applicant supplies S.K. Oil to the ration card holders comprises inter alia of ‘Dealer’s Commission’ - the applicant is making supply to the ration card holders and not to the State Government - Benefit of exemption from GST not available - AAR Visit to Get Source Income Tax Revision u/s 263 by CIT - Profit on sale of agricultural land - As observed by the Pr. CIT, and, rightly so, as the A.O had failed to verify the maintainability of the assessee’s claim that the transaction of sale of land at Village: Baroda to NRDA was exempt from tax and in absence of any supporting material had summarily accepted his claim, therefore, it was clearly a case where the order on the said aspect had been passed without making any enquiry or verification which should have been made. - AT Visit to Get Source Revision u/s 263 - Lack of enquiry - faceless assessment - in a faceless regime, normally there cannot be a case of prejudice of lack of enquiry for the reason that there is application of mind by multiple officers of Department and not by a single officer and thus at the end of our discussion, we are of the view that the assessee firm had furnished the requisite information and the NFAC has completed the assessment after considering all the facts, therefore, the order passed by the AO cannot be termed as erroneous. - AT Visit to Get Source Non granting of TDS credit - assessment in hands of HUF v/s Karta [individual] - In the present case the KARTA of HUF has not claimed the TDS in the individual’s returns. The A.O. cannot deny the credit of TDS in the assessee’s name when the corresponding capital gain on the said transaction was taxed in the assessee HUF’s name and cannot take benefit of the mistake crept in, in the sale deed. - AT Visit to Get Source Addition of deemed dividend u/s 2(22)(e) - business transactions - Received advance from Sister Concern in which assesssee has substantial interest - This was a pure business deal. Since, the project did not mature, therefore, the agreement was cancelled by an exit agreement dated 29.01.2010 and the entire amount was refunded by the assessee - No additions - AT Visit to Get Source Addition of payments made through credit card - payment was made by Company and recorded by Company in its books of account - when the assessee was consistently claiming that he is not able to explain the difference in absence of full details of Information Report, either the departmental authorities should have provided full information to assessee to enable him to delve into the difference or else they should have accepted the assessee’s simpliciter explanation that difference could not be reconciled in absence of full information. - AT Visit to Get Source Speculative or non speculative business - treatment of “high sea sale” - when the goods are not taken by the delivery the entire issue is treated as speculative transaction. But in assessee’s case the entire transaction is going through by proper delivery of the goods during purchase and the documents are provided for evidence of delivery of goods related to high sea sale. We find that the observation of the ld. - Loss from activity of High Sea sale allowed to be adjusted interest income (as business income) - AT Visit to Get Source Assessment of income in the hands of the assessee - fraudulent filing of returns of income by the Chartered Accountant - The finding by the Board of Discipline of ICAI is to the effect that the said CA, with the connivance of the partners of the assessee, prepared fake documents to support the ITR which was uploaded without the knowledge of the assessee. It prima facie creates any doubt as to whether there is any income in the hands of the assessee for this year or not? - Since the criminal case is pending against the alleged perpetrators of the fraud, AO directed to take a view in view of the outcome of the criminal case - AT Visit to Get Source Exemption u/s 54B - LTCG was invested in the purchase of another agricultural land in the name of his wife - The term “assessee” is qualified by the expression “purchased any other land for being used for agricultural purposes”, which necessarily means that the new asset has to be in the name of the assessee himself; that therefore, purchase of agricultural land by the assessee in the name of his son or grandson etc. does not qualify for exemption u/s 54B. - AT Visit to Get Source Addition u/s. 68 - cash received by assessee (co-operative society) from its members during the demonetisation period in Specified Bank Notes - Not every deposit during the demonetisation period would fall under category of unaccounted cash. The burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. - Matter restored back to AO for fresh consideration - AT Visit to Get Source Ex-parte order by CIT (Appeals) - Section 250(6) enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex-parte order. - CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non-compliance without addressing the issue on merit. - AT Visit to Get Source Income accrued in India - Non-Resident - taxability of interest on Income Tax Refund - Contrary decisions of different High courts - As in case of ACIT Vs. Clough Engineering Ltd. [2011 (5) TMI 562 - ITAT, DELHI] a view favourable to the assessee has been taken. However, in case of B.J. Services Co. Middle East Ltd. [2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT] the Hon’ble HC, while examining pari materia provision contained in Article 12(6) of India-UK Treaty has held that interest on income tax refund is taxable as business profits under Article 7 of the treaty. In our humble opinion, the decision of the Hon’ble Uttarakhand High Court will carry greater precedentiary value. - AT Visit to Get Source Customs Levy of penalty u/s 112(a) of the Customs Act, 1962 - Personal penalty for abetment in evasion of duty of customs - In the context of Section 112(a) of the Customs Act, by definition, the expression ‘abet’ means instigating, conspiring, intentionally aiding the acts of commission or omission that render the goods liable for confiscation - It is apparent that the knowledge of a wrongful act of omission or commission, which rendered the goods liable for confiscation under Section 111 of the Customs Act, is a necessary element for the offence of abetting the doing of such an act. - HC Visit to Get Source Valuation of imported goods - Bulk Liquid Cargo - Methyl Iso Butyl Ketone - excess of 1.66% in the quantity unloaded as compared to the Invoice and Bill of Lading quantity - For Bulk Cargo at the relevant time, not the weight but value paid was the criteria of duty and the transaction value or invoice price and not the quantity, in any case, was to be the basis of assessment. - AT Visit to Get Source IBC Overriding effect of IBC on all proceedings after initiation of Section 7 Application - SEBI can auction the property of the Corporate Debtor or not - - Law is well settled that when moratorium comes into operation, no other proceedings for recovery against the Corporate Debtor can be continued. - AT Visit to Get Source Power of Tribunal to review the judgment versus Power to re-call - Larger Bench (5 Members) decision - The judgments of the Hon’ble Supreme Court clearly lays down that there is a distinction between review and recall. The power to review is not conferred upon this Tribunal but power to recall its judgment is inherent in this Tribunal since inherent power of the Tribunal are preserved - AT Visit to Get Source Initiation of CIRP u/s 7 of IBC - NCLT admitted the application - basic requisites of Debt and Default, that are required to be examined and proven - It is to be remembered that the Corporate Debtor, cannot seek an umbrage, under the Inter Creditor Agreement, with a view to avoid, evade, circumvent and supplant its obligation(s), in terms of the ‘Loan Facility Agreement’. - the Corporate Debtor has not furnished any material evidence to suggest that, it will be in a position to repay the amounts, owed to the Lenders. - Appeal dismissed - AT Visit to Get Source Service Tax Classification of service - mining service or not - activity of transportation of limestone and reject undertaken by the appellant - The activity of excavation of boulders would also not be a service simpliciter, as it includes further processes involved to make the boulders fit for client usage. Thus, the same would be classifiable under ‘business auxiliary service’ and not under ‘mining service’. - AT Visit to Get Source Business auxiliary service (BAS) - Transaction in the nature of commission or not - export of garments - Mere use of the word ‘commission’ in the clause dealing with terms of payment would not mean that ‘commission’ was paid by the seller. There is no third person who can be said to be acting an agent and the goods were undoubtedly sold on a principal to principal basis - Demand was rightly dropped - AT Visit to Get Source Extended period of limitation - Various factors have not been examined by the Commissioner in the impugned order and a conclusion has merely been drawn that because there was suppression of facts by the appellant, the suppression was with an intent to evade payment of service tax - impugned order holding that the extended period of limitation has been correctly invoked, therefore, cannot be sustained and is set aside - AT Visit to Get Source Levy of penalty upon the Director of appellant’s company and upon Head of Finance and Accounts of the appellants’ company and upon the company itself - The SCN is held time-barred. Findings of adjudicating authority are held unreasonable. Hence, the orders under challenge confirming demand with interest against company and imposing penalty on company, its director and its financial head are hereby set aside - AT Visit to Get Source Central Excise Demand of Differential Duty - Inclusion of value of deemed export in the value of DTA clearance of goods - wrongful determination of assessable value of finished goods - Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances. - SC Visit to Get Source Priority of recovery of tax / duty of excise dues - Attachment of property - Seeking removal of lien/charge/encumbrance/mutation entry of Central Excise Department - the Full Bench has clearly held that if the security interest of the secured creditor is registered with CERSAI, then the secured creditor would get priority over the dues of the Government. - HC Visit to Get Source Exemption to goods supplied to projects funded by the U.N. or other international organizations - As per the Circular, the exemption is applicable to goods which form part of the project on permanent basis and not to goods which are used for execution of the project and after completion of the project remain with the contractors, for further deployment in other projects. This interpretation has not been envisaged in the Explanation2 - the department has interpreted the Explanation 2 wrongly. - AT Visit to Get Source VAT Scope of clarification issued by the Revenue Department - To be retrospective or prospective - Applicability of Exemption Entry - Confusion between the two entries of classification / exemption - The clarification was issued in exercise of power conferred by the statute - What the clarification provided by the Commissioner does is to clear the meaning of the two entries which was already implicit but had given rise to a confusion. A clarification of this nature, therefore, is bound to be retrospective - SC Visit to Get Source Case Laws: GST 2023 (7) TMI 251 Cancellation of GST registration of petitioner - forging of invoice and bill without any transaction of coal - failure on the part of petitioner to produce books of accounts as such a proceeding under section 74(1) of JGST Act 2017 has been started - HELD THAT:- There is no doubt that the GST is complete Code in itself. Section 132 of the JGST Act, 2017 speaks that any person who commits any of the offence prescribed from Sub-section 1(a) to 1(l), shall be liable to be punished - Section 134 of the said Act, 2017 speaks that no court shall take cognizance of any offence punishable under this Act except with the previous sanction of the Commissioner. The dispute in the case in hand of forging of invoice and bill without any transaction of coal and the Court finds that if such a dispute is there, it has been set at rest by reasoned judgment of the Hon'ble Supreme Court in JAYANT AND ORS. VERSUS THE STATE OF MADHYA PRADESH AND ORS. [ 2020 (12) TMI 1237 - SUPREME COURT ] wherein at paragraph 21, directions have been issued by the Hon'ble Supreme Court. In view of the directions issued by the Hon'ble Supreme Court and considering that identical was the situation there, the Court finds that directions under paragraphs 21.4 and 21.5 of the said judgment, are sufficient to dispose of this petition - petition dismissed. 2023 (7) TMI 250 Maintainability of appeal - period of limitation to file that appeal has expired - violation of principles of natural justice - HELD THAT:- Neither on the general rule of natural justice applicable to these proceedings nor in the context of section 75(4) of the Act, the course adopted by the adjudicating authority, was permissible - rules of natural justice have been flouted, absolutely. Once date had been fixed and communicated to the petitioner both for the purpose of filing written reply and for the purpose of oral hearing, no adjudication order may have been passed before that date arrived. Rule of fairness must prevail to ensure that the needs and requirement of justice are met. To ensure due compliance, writ Court may always and in the present facts, does feel compelled to interfere. Matter is remitted to the adjudicating authority to pass fresh order strictly in accordance with law, necessarily involving adequate opportunity of hearing being granted to the petitioner, both for the purpose of filing written reply as also of personal hearing - Petition allowed by way of remand. 2023 (7) TMI 249 Maintainability of appeal - non-constitution of Second Appellate Tribunal - contravention to sub-sections (1) (4) of Section 107 of the GST Act - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to verification of deposit being made as stated by the learned counsel for the Petitioner, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off. 2023 (7) TMI 248 Valuation of supply of services - composite supply - rate of tax - providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System - components to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018- Central Tax (Rate). Whether the instant supply shall qualify as an exempt supply vide entry no. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No. 2/2018- Central Tax (Rate) dated 25.01.2018) or the same shall be taxable @ 5% as clarified in para 3.2 of the Circular No. 153/09/2021-GST dated 17.06.2021 issued by the CBIC? HELD THAT:- The activities undertaken by them for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT:- The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance Control) Order, 2013 - the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- The contract entered into with the State Government stipulates that the applicant will retain 1kg refraction and 4kgs bran for conversion of 100 kgs of wheat. As per the contract these bran and refraction are retained by the applicant and it is sold in the open market at the prevailing market rates which is generally around Rs 20/- per kg for bran and Re 1/- per kg for refraction. This rate was also confirmed in the memo issued by State Government of West Bengal, Department of Food and Supplies vide memo no. 569(3) - FS/Sectt/Food/4P02/2016/2021 dated 18.02.2022 - in the instant case, value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration - the value of goods involved in the instant supply stands at Rs.60/- against total value of supply of Rs. 260.48, thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply. The instant supply of services by way of milling of food grains into flour (atta) to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the supply satisfies all the conditions specified in the said entry. 2023 (7) TMI 247 Scope of Advance Ruling authority - Requirement of registration in Assam, if applicant registered in West Bengal, buys goods at Guwahati - Determination of address to be mentioned in the invoice issued by the supplier of the applicant and tax to be charged thereon - applicant can supply goods from Assam to West Bengal or not, and tax to be charged in that event - Procedure to generate e-way bill. Requirement of registration in Assam, if applicant registered in West Bengal, buys goods at Guwahati - HELD THAT:- Sub-section (1) of section 96 speaks that the Government shall, by notification, constitute an Authority to be known as the West Bengal Authority for Advance Ruling. The said sub-section also makes provision to notify any Authority located in another State to act as the Authority for the State. In exercise of the aforesaid power conferred by sub-section (1) of section 96, the West Bengal Authority for Advance Ruling has been constituted vide Notification No. 1157-F.T dated the 30th day of June, 2017. Further, sub-section (2) of section 1 of the West Bengal Goods and Services Tax Act, 2017 speaks that the Act extends to the whole of the State of West Bengal - though clause (f) of sub-section (2) of section 97 enables the applicant to make the instant application seeking an advance ruling whether the applicant is required to be registered, this authority is not empowered to pronounce any ruling in cases where the question is found to be in respect of registration required to be obtained in a State other than the State of West Bengal. The subject matter of other questions are found not to be covered under any of the clauses of sub-section (2) of section 97 of the GST Act. 2023 (7) TMI 246 Valuation of supply of services - composite supply - rate of tax - providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System - components to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018- Central Tax (Rate). Whether the instant supply shall qualify as an exempt supply vide entry no. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No. 2/2018- Central Tax (Rate) dated 25.01.2018) or the same shall be taxable @ 5% as clarified in para 3.2 of the Circular No. 153/09/2021-GST dated 17.06.2021 issued by the CBIC? HELD THAT:- The activities undertaken by them for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT:- The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance Control) Order, 2013 - the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- It is found from the agreement made between the applicant and the State Government that the applicant has been selected for empanelment for crushing of wheat into whole meal atta and fortify it by pre-mixing micro-nutrients and to pack it in 1Kg poly pouch/packet and to deliver the same to the nominated M.R. Distributors - such activities undertaken by the applicant for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. The State Government agrees to pay the applicant a total amount of Rs. 179.48 for crushing of 100 kgs of wheat which includes fortification cost of Rs. 10/- and packing charges of Rs. 50/- Thus, in the instant case, the applicant receives Rs. 10/- and Rs. 50/- i.e., Rs. 60/- in total against fortification cost and packing charges respectively for crushing of 100 kgs of wheat which involves supply of goods. We have to determine whether such value exceeds 25% of the total value of supply or not? - in the instant case, value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration. Thus the total non-cash consideration for by-products and gunny bags allowed to flower millers is Rs. 124 only for each 100 kg wheat . So, in the instant case, the amount of Rs. 124 may be considered as equivalent to the consideration not in money for the purpose of determination of value of supply under clause (b) of rule 27 of the GST Rules and such amount is admittedly known to the applicant at the time of supply - the total value of supply to be Rs. 260.48 out of which Rs. 136.48 is the cash consideration and Rs. 124 is the non-cash consideration - the value of goods involved in the instant supply stands at Rs. 60/- against total value of supply of Rs. 260.48, thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply. 2023 (7) TMI 245 Valuation of supply of services provided by the applicant Company to the State Government - Composite supply or not - providing services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System - rate of tax applicable on the value of supply - components to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018- Central Tax (Rate). Whether the instant supply shall qualify as an exempt supply vide entry no. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No. 2/2018- Central Tax (Rate) dated 25.01.2018) or the same shall be taxable @ 5% as clarified in para 3.2 of the Circular No. 153/09/2021-GST dated 17.06.2021 issued by the CBIC? HELD THAT:- The activities undertaken by them for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply. Whether this composite supply is made in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution? - HELD THAT:- The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance Control) Order, 2013 - the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- In the instant case, value of supply shall be the consideration in money and shall also include all the components towards non-cash consideration - the total value of supply to be Rs. 260.48 out of which Rs. 136.48 is the cash consideration and Rs. 124 is the non-cash consideration, as it has been explained in the aforesaid memo.The value of goods involved in the instant supply stands at Rs. 60/- against total value of supply of Rs. 260.48, thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply. The instant supply of services by way of milling of food grains into flour (atta) to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the supply satisfies all the conditions specified in the said entry. 2023 (7) TMI 244 Multiple GST registration from the same premises - Requirement to take separate registration for each type of business i.e. manufacturing/reselling/providing services carried on from same place of business - separate registration for each type of business i.e. manufacturing/reselling/providing services carried on from same place of business - separate registration for each state for carrying on said business in such state - separate registration for the each state, where execution of contract /job would required to be carried, in case applicant being registered under the WBGST Act, 2017 receives the work/job order from contractees situated within/outside West Bengal and inputs (both goods and services) are procured within West Bengal or state where contract would be executed. Whether this authority can decide requirement of registration of the applicant in a State other than the State of West Bengal? - HELD THAT:- Sub-section (2) of section 1 of the West Bengal Goods and Services Tax Act, 2017 which speaks that the Act extends to the whole of the State of West Bengal. Though clause (f) of sub-section (2) of section 97 enables the applicant to make the instant application seeking an advance ruling whether the applicant is required to be registered, this authority is not empowered to pronounce any ruling in cases where the question is found to be in respect of registration required to be obtained in a State other than the State of West Bengal. As a result, no ruling can be pronounced in respect of questions raised by the applicant regarding requirement of separate registration for each state for carrying on said business in such state and requirement of separate registration for the each state, where execution of contract /job would required to be carried, in case applicant being registered under the WBGST Act, 2017 receives the work/job order from contractees situated within/outside West Bengal and inputs (both goods and services) are procured within West Bengal or state where contract would be executed. Requirement for separate registration in West Bengal as the applicant is already registered under the GST Act- HELD THAT:- A person having separate business verticals had the option to obtain separate registration for each such vertical in a State or Union territory till 31.01.2019 - rule 11 of the CGST / WBGST Rules, 2017 has also undergone an amendment with effect from 01.02.2019 wherein the manner for Separate registration for multiple business verticals within a State or a Union territory has been substituted by Separate registration for multiple places of business within a State or a Union territory . Further, a new rule 41A has also been inserted w.e.f. 01.02.2019 prescribing the manner for transfer of credit on obtaining separate registration for multiple places of business within a State or Union territory. It therefore appears that the GST Act and rules made there under provided an option for separate registration within a State for multiple business verticals till 31.01.2019 and thereafter option for separate registration as well as transfer of unutilized input tax credit has been provided to a person having multiple places of business within the State - option for separate registration may be availed by a registered person provided such registered person has multiple places of business. Therefore, in cases where a registered person carries on separate type of businesses from same place of business within a State, he cannot opt to obtain separate registration within the said State as per proviso to sub-section (2) of section 25 of the GST Act read with rules made there under. Thus, as per proviso to sub-section (2) of section 25 of the GST Act, separate registration in a State may be granted to a person who has multiple places of business in that State. 2023 (7) TMI 243 Exemption from GST - Fair Price Shop - Supply of goods or services to ration card holder on behalf of the Government - applicant is supplying services to the State Government or not - applicant receives consideration in the form of commission or margin or not. Applicability of Nil rate of tax under entry 11A of the Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (as amended). Fair price shop or not - HELD THAT:- Fair Price Shop is licensed by the Government for distribution of essential commodities to the ration card holders. During the personal hearing, the applicant had presented the license, issued to it by the West Bengal State Government, for a dealer issued under the West Bengal Kerosene Control Order, 1968 which has been renewed from time to time. This license authorizes the applicant to carry out business as a dealer of kerosene from his shop, and make purchases of kerosene from a licensed dealer subject to any limits imposed by law - the applicant is a Fair price shop for the purpose of entry 11A of the Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (as amended). Consideration in the form of commission or margin - HELD THAT:- The applicant receives consideration from the ration card holders against sale of S.K. Oil at the price mentioned in the price schedule - In the table mentioned in this price schedule, the entries 10-14 mention the difference between the purchase price and sale price wherefrom it appears that the sale price i.e., the consideration against which the applicant supplies S.K. Oil to the ration card holders comprises inter alia of Dealer s Commission . Supply of services to the State Government - HELD THAT:- The recipient would be a person who is liable to pay consideration for the supply of goods or services. In this case, the person liable to pay the consideration is the ration card holder, and is thus the recipient of the supply. The supply is of S.K. Oil and the recipients are the ration card holders. Consequently, this supply is in the nature of supply of goods to the ration card holders. In the instant case, there is no supply made by the applicant to the Government and that the ration card holders are the recipient of the supply. The applicant has made various submissions arguing that they are making supply of services to the State Government by way of working as an agent of the Government for distributing S.K. Oil to the ration card holders identified by the Government - the applicant is making supply to the ration card holders and not to the State Government. Thus the entry 11A of the Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (as amended) is not applicable in this case. Further, the supply to the ration card holders is of goods namely, kerosene oil, i.e., S.K. Oil, for which the consideration is paid by these recipients. Income Tax 2023 (7) TMI 242 Rate of depreciation on UPS - HELD THAT:- There is nothing on record to suggest that the UPS equipment, in this case, was used for purposes other than running a computer. UPS equipment, as the acronym goes, is a piece of equipment which ensures that there is an uninterrupted power supply, to prevent loss of data in the event of a power outage. If anything is crucial to the working of a computer, it is UPS equipment, which ensures that important data that is being handled or dealt with by the user is not lost on account of sudden power failure. We do not intend to suggest that any and every piece of equipment which, generally, acts as a UPS contraption, say for an industrial unit, and in this context also supports a computer system would fall in this category and thus be amenable to depreciation at the rate of 60%, as against the rate provided in the residuary entry which is 15%.Thus,we are not inclined to entertain a question of law concerning this aspect of the matter. Treatment of subsidy received from the Government of Goa - Revenue or capital receipt - HELD THAT:- Subsidy received by the respondent/assessee was an incentive given to establish an industrial unit in a backward area and, thus, generate employment for local inhabitants, we cannot but agree with the Tribunal and CIT(A) that the subsidy, indeed, was a capital receipt. Similarly, insofar as the other limb of the issue is concerned, we agree with the Tribunal that the measure for calculating the subsidy, which was 25% of the fixed capital cost, cannot determine the purpose for which the subsidy was given, and, thus, as directed by CIT(A), adjusted proportionately against the cost of the assets. Since the subsidy in this case was not intended as a payment to meet, directly or indirectly, a part of the cost of the assets, no adjustment could have been ordered, as was directed by CIT(A). The Tribunal, on this score, in our view, reached the correct conclusion. 2023 (7) TMI 241 Penalty u/s 271AAB - Undisclosed income under the disclosure petition made during search and seizure proceedings as taken to books - undisclosed stock - HELD THAT:- Tribunal took note of the statement recorded from the Director before the Investigating Officer and all other documents forming part of the assessment file and held that no material has been brought on record by the AO to show that the during the course of search the authorized officer of the department had conducted physical inspection of the stock because of which excess quantities of raw leather was deducted and consequence to which additions were made towards undisclosed stock. Further the Tribunal found that the AO himself assessed the said sum of Rs. 6,04,95,912/- on the ground of under-valuation of stock and not as value of undisclosed stock . Tribunal held that the difference in stocks had been identified by internal team of the assessee itself much prior to the commencement of the search. Tribunal also noted the decision of its coordinate bench in the assessee s group company M/s. New Horizon Private Limited [ 2019 (9) TMI 859 - ITAT KOLKATA ] wherein the facts were identical had affirmed the order passed by the CIT(A) which attained finality and held that no penalty could be levied under Section 271 AAB of the Act. After taking note of the auditor s report as well as stock inspection report, the tribunal found that such inspection report was prepared at the instance of the management as a matter of internal control and the same was drawn up much prior to the date of search. Tribunal has made elaborate examination of the factual position and granted relief to the assessee correctly. Defective notice u/s 274 - On a perusal of the notice, we find that none of the particulars which are required to be mentioned in the notice have been disclosed. In fact, the relevant columns have been left blank. The question would be whether penalty proceedings could have been initiated pursuant to such a notice and was the notice in accordance with law. As decided in Food Corporation of India Limited Versus State of Punjab and Others [ 2000 (12) TMI 911 - SUPREME COURT ] vague and unreasoned notice will not provide reasonable opportunity to the noticee to file objection meeting the reasons/grounds on which action is proposed. Since the notice did not state the reasons of the grounds, the notice was held to be vague. Decided in favour of the assessee 2023 (7) TMI 240 TDS u/s 194I or 194C - Payment for contract of Charter Hire - assessee is engaged in the business of owning and operating vessels for which they, inter alia, enter into contracts of transport service in the form of charterparties, to wit, contract of carriage of goods - HELD THAT:- We are informed Respondents have granted a certificate for lower deduction of tax at source under Section 194-C of the Act to one of the members of Petitioner No.1 in 2016-17. If that is so, it is clearly contrary to the claim of Respondents that charter hire income is in the nature of rent which is covered under Section 194-I of the Act and not under section 194-C of the Act. Period of limitation for proceedings u/s 201(1) - The period of limitation for proceedings under Section 201(1) of the Act is provided under Section 201(3) of the Act wherein a period of seven years has been prescribed. The said time period has expired and no further proceedings should be commenced or lie. Respondents be directed to clarify that in the abovementioned circumstances, no further proceedings shall be taken out by them against Petitioner no. 1 or its members or their charter party clients for any alleged failure in deducting tax at source for the period being Financial Years 2006-07, 2007-08, 2008-09 and 2009-10. 2023 (7) TMI 239 Initiation of proceedings u/s 147 - Notice issued after expiry of four years - reason to believe - review v/s reopening - failure to truly and fully disclose material facts or not? - HELD THAT:- Reasons for initiation of proceedings u/s 147 of the Act annexed to the Petition that are evidently premised on the statement It is seen from the case records , nothing to indicate failure to disclose any material fact. Upon examining the order u/s 143(3) r.w.s 263 as find that the AO has considered all submissions and documents and accepted the Loss to be carried forward. Also with regard to section 72A(2) of the Act, he held that the losses on the amalgamated assessee company are carried forward and on amalgamation get fresh life for further 8 years from the date of amalgamation. Thus it is not a case of inadvertence or oversight or a lacuna but clearly a change of opinion. No new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly an exercise to review the original assessment order based on a change of opinion which is impermissible as held in CIT v Kelvinator of India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT ] - Decided in favour of assessee. 2023 (7) TMI 238 Revision u/s 263 by CIT - profit on sale of agricultural land - allegation of Non independent application of mind and solely on the basis of Revenue Audit Objection - HELD THAT:- Information/objection gathered by the Pr. CIT from the audit party vide its memo/letter squarely falls within the scope and ken of the term records as used in Section 263 of the Act. CIT in order to fortify his aforesaid conviction had categorically observed that the claim of the assessee that the land under consideration was not a capital asset was not supported by any documentary evidence, viz. (i) that no certificate from the land records authority certifying that the agricultural land sold by the assessee was situated beyond the specified distance from the municipal limits as mentioned in Section 2(14)(iii) of the Act was available on record ; (ii) that there were no documents available on record which would corroborate that the lands in question were used for agricultural purposes for two years immediately preceding the date of transfer as was a pre-condition per clause (ii) of Section 10(37) of the Act; and (iii) the lands were acquired not for any agriculture purposes as the same were acquired by NRDA. We are unable to concur with the Ld. AR that the Pr. CIT had merely acted upon the suggestion of the audit party and had failed to independently apply his mind while assuming jurisdiction u/s. 263 of the Act. As observed by the Pr. CIT, and, rightly so, as the A.O had failed to verify the maintainability of the assessee s claim that the transaction of sale of land at Village: Baroda to NRDA was exempt from tax and in absence of any supporting material had summarily accepted his claim, therefore, it was clearly a case where the order on the said aspect had been passed without making any enquiry or verification which should have been made. No reason to dislodge the well-reasoned order of the Pr. CIT, who by specifically referring to Explanation 2 to Section 263 of the Act had held the order passed by the A.O u/s. 143(3) as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act, uphold the same. Decided against assessee. 2023 (7) TMI 237 Revision u/s 263 - Lack of enquiry - assessment in the faceless manner - As per CIT rental income of the assessee from aforesaid concems was required to be taxed under the head Income from House Property but the AO failed to do so - HELD THAT:- Law, contained in section 263, does not allow CIT to impose his view over the judicious view adopted by AO unless the view adopted by AO is established to be not at all sustainable in law. AO, in the present case, on appreciation of facts, found that assessee firm was receiving the rent from letting out the properties along with other amenities and, accordingly, using his judicial wisdom, taxed the income under the head business and profession. The view of AO was also supported by the CBDT Circular wherein also the principle laid down was that letting out buildings along with other amenities will fall in income from business. AO was duty bound to follow the directions of CBDT more so when specifically brought to his notice by the assessee during the assessment proceedings. AO, after adequate enquiry, has taken a judicious view. Revision u/s 263 is not permissible merely because PCIT may entertain a different view on the issue. Case of the assessee was selected for scrutiny for specific purpose for verification of refund claim and income from house property and, therefore, there cannot be any presumption of lack of enquiry more particularly when the detailed questionnaire was issued by the AO during the assessment proceedings and in this regard the assessee had also furnished all the details alongwith decision of Chennai Properties Investments Ltd. [ 2015 (5) TMI 46 - SUPREME COURT ] Therefore, it cannot be presumed that there was lack of enquiry on the part of the AO. Assessment in the present case of the assessee firm for the year under consideration was carried out in the faceless manner by NFAC. It is a fact that any faceless assessment is carried out through a teamwork of assessment unit, technical unit, review unit, verification unit etc. Since different units are headed by Principal Commissioner of Income Tax, therefore, in a faceless regime, normally there cannot be a case of prejudice of lack of enquiry for the reason that there is application of mind by multiple officers of Department and not by a single officer and thus at the end of our discussion, we are of the view that the assessee firm had furnished the requisite information and the NFAC has completed the assessment after considering all the facts, therefore, the order passed by the AO cannot be termed as erroneous. Assessment order passed by the AO was after full enquiry and, therefore, the case does not fall within the clause (a) and (b) of Explanation 2 to Section 263. Hence, PCIT has erred in assuming jurisdiction u/s 263 of the Act and the order passed by him stands quashed. Decided in favour of assessee. 2023 (7) TMI 236 Capital gain - STCG or LTCG - assessee has sold crusher plant (Rohit Stone Product) at Kali Pahari ( Black Mountain) Mahoba along with land and office situated therein - ownership right over the said land granted under lease to mine - HELD THAT:- The assessee has not filed even before us, the details of land transferred. It is also pertinent to mention that claim is made that the assessee declared capital gain during the assessment year 2015-16, which was accepted by department in scrutiny assessment u/s 143(3) read with Section 143(2) for assessment year 2015-16 by the AO. On perusal of the assessment order for assessment year 2015-16 passed by AO, it transpires that the case of the assessee was selected for framing limited scrutiny assessment for ay: 2015-16 owing to large cash deposits in the bank, and thus, it was not the case selected for framing complete scrutiny, or limited scrutiny to verify capital gain declared by the assessee. The assessee has sold crusher plant (Rohit Stone Product) at Kali Pahari ( Black Mountain) Mahoba along with land and office situated therein, as it emerges from the sale agreement dated 01.04.2013. The details of land transferred in not furnished by the assessee. The stone crushed is mined.There is no ownership right over the said land granted under lease to mine(unless contrary is brought on record by the assessee through cogent evidences), nor is the lessee entitled to transfer the same without permission of Government. Rule 37 of Mining Concession Rule, 1960 is relevant. The consequences for breach are also stipulated in the law. DR has contended that it was not a case of slump sale, as complete assets and liabilities of Rohit Stone Product, were not transferred. The complete details are not on record as the assessee has not furnished the same and also the authorities below have not comprehensively looked into the issue . Thus, it is considered fit and proper, in the interest of justice, to restore the matter back to the file of the AO for fresh determination(denovo assessment) of the issue on merits in accordance with law. The assessee is directed to produce all details before the AO, in set aside proceedings for denovo assessment by the AO. In case, the assessee do not cooperate before the AO during set aside proceedings for framing denovo assessment, the AO shall be free to decide the issue on merits in accordance with law. The AO also has ample powers under the 1961 Act to collect information directly from authorities as well other persons considered deemed fit. The AO is directed to give fair hearing to the assessee in accordance with principles of natural justice. Thus, the appeal of the assessee on this issue is allowed for statistical purposes Addition of gift - We find merits in the contentions of the assessee that all the documents which were filed by the assessee, needed to be verified and considered by authorities below. Thus, it is also considered fit and proper, in the interest of justice, to restore the matter back to the file of the AO for fresh determination(denovo assessment) of the issue on merits in accordance with law. The assessee is directed to produce all details before the AO in his defense, in set aside proceedings for denovo assessment by the AO. Unexplained cash deposits in bank - HELD THAT:- Issue needs proper verification by authorities below for which cogent evidences to be brought on record by the assessee, that both the income, firstly Rs. 50 lacs which is accepted by Hon ble Income Tax Settlement Commission, as well secondly income of Rs. 50 lacs as income from commission from stone grit, both have suffered taxation and was offered to tax by the assessee, and no income has escaped assessment while Revenue has got its due taxes . The complete facts are not on record, and balled statements are made by the assessee before the authorities below, while assessee is required to file cogent evidences to demonstrate that no income has escaped assessment and all dues taxes stood paid to Revenue. The authorities below are also required to verify comprehensively that both the income aggregating to Rs. 100 lacs have suffered taxation and no income escapes taxation - restore the matter back to the file of the AO for fresh determination. 2023 (7) TMI 235 Revision u/s 263 by CIT - assessee had received excess amounts in cash in respect of sale of certain plots over and above the officially recorded price - HELD THAT:- From the fact, it emerges that certain additions of on-money have been made in the hands of the assessee on protective basis. However, it was noted by revisionary authority that the figures of on-money, on substantive basis was much higher and a portion of the same was omitted to be considered by AO while framing the assessment order. It is a clear case where error has incurred which is prejudicial to the interest of the revenue. Therefore, no fault could be found in the revision of the order. However, as noted from the impugned order, the addition has to be made on protective basis only. Assessee appeal dismissed. 2023 (7) TMI 234 Addition relating to Advertisement Marketing Expenses - whether allowable business expenditure u/s 37? - assessee failed to substantiate that the impugned amounts were incurred wholly and exclusively for the purpose of business of assessee and not for personal purpose or non business purpose - HELD THAT:- CIT(A) categorically noted that the assessee did not furnish any detail or even in the name of Indian clients to whom the gifts, parties, lunches etc. were given. He further noted that the information given by the assessee was vague and proves nothing and purchases of branded apparels and luxury items have been made for giving gifts to customer without identifying the person huge amounts has been incurred on providing gifts and hospitality to foreign customers without identifying the guests which make it clear that these are expenses of personal nature only and as the items purchased were not the items which can be given to an organisation or customer and the same were purchased as per personal choice and consumption. These facts factual finding have not been negatived by assessee. Addition of 25% of credit card expenses by CIT(A) - CIT(A) concluded that the perusal of the credit card statement shows that most of the expenses were purely personal in nature, being items like apparels, electronic items shoes, sun glasses etc. We are unable to find any fault in the conclusion derived by the CIT(A) in this regard as the ld. counsel of assessee could not substantiate that the expenses incurred by the assessee through credit card was for the purpose of business of assessee and there was no element of personal purpose or non business purpose. Therefore disallowance being 25% of total claim is quite correct and justified. CIT(A) confirmed disallowance holding that it was incurred for personal purpose and not for business purposes as the assessee did not furnish the guest list and not even furnish the photographs or any other evidences substantiating that the said expenditure was incurred on get together party at factory premises on 31.12.2013 with a view to promote business of assessee. Even before us there is no evidence before us substantiating the claim of assessee therefore the disallowance made by the ld. CIT(A) does not require any interference. Genuineness of expenditure - Assessee maintaining a guest house at the ARALIAS Gurgaon and the expenses incurred at the club of said guest house used by the guest of appellant company staying in the guest house - It is a well settled principal of tax jurisprudence that the person that who makes a claim is also under obligation to substantiate the same failing which the tax authorities are validly entitled to make disallowances or additions as the case may be. In the present case the assessee has submitted has reiterated the submission which were made before the ld. CIT(A) has also submitted voluminous paper book but has failed to controvert or demolish observations and comments of the ld. CIT(A) enhancing the addition. Therefore we are unable to see any valid reason to interfere with the findings arrived by the ld. CIT(A) and hence we uphold the same. Assessee appeal dismissed. 2023 (7) TMI 233 Deemed income liable for capital gain tax - difference in sale consideration as per sale-deed and circle rate determined by the Stamp Valuation Authority - HELD THAT:- Before AO it was stated that the property was gifted but not sold. However, the AO did not accept this explanation on the basis that Smt. Arvind Kaur had received sale consideration at Rs. 4,00,000/- i.e. Rs. 1,00,00/- in cash and Rs. 3,00,000/- by cheque. This fact is not controverted by the assessee by placing any material before us. CIT(Appeals) has rightly concluded that property once gifted cannot be sold or bequeathed. The assessee has failed to bring any evidence to controvert the finding of the lower authorities. Decided against assessee. 2023 (7) TMI 232 Amortization of variable license fee - Deduction u/s 35AAB or u/s. 37(1) - CIT(A) allowed the same as revenue expenditure - HELD THAT:- Hon ble jurisdictional High Court, while deciding the appeals for the assessment years 2003-04, 2004-05, 2006-07 and 2007-08, has upheld assessee s claim of deduction as revenue expenditure. While, deciding the assessee s appeal for the assessment year 2009-10, the Tribunal [ 2016 (11) TMI 1739 - ITAT DELHI] has allowed assessee s claim of deduction following the decision of the Hon ble High Court. No infirmity in the decision of learned first appellate authority. Ground raised is dismissed. Nature of expenditure - subscriber verification penalty paid to the Department of Telecommunication - violation of KYC norms - AO treating the payment as penal in character, hence, not allowable u/s. 37 - HELD THAT:- From the facts on record, it does not transpire that the violation of KYC norms entails any criminal liability or prosecution. As per the license agreement, for violation of any terms of the agreement including KYC norms, the assessee is to be visited with penalty of various amounts. As discussed, such penalty is imposed as a deterrent measure and not for any offense or due to prohibition of law. It is further necessary to observe, the penalty arises because of breach of certain terms and conditions of the license agreement, hence, in regular course of business. Pertinently, in case of Mangal Keshav Securities Ltd. [ 2015 (11) TMI 111 - ITAT MUMBAI] while dealing with more or less identical issue of penalty levied by Stock Exchange for violation of KYC norms, has held that payment made towards penalty for violation of KYC norms would not fall within the ambit of Explanation 1 to section 37(1) of the Act. Thus exceptions provided under Explanation 1 to section 37(1) of the Act will not get attracted. Thus, we do not find any infirmity in the decision of learned Commissioner (Appeals) in deleting the disallowance. Decided against revenue. TDS u/s 194H - Disallowance u/s. 40(a)(ia) - assessee has provided discounts to pre-paid card distributors - HELD THAT:- While dealing with identical issue in assessee s own case for earlier assessment years, various Benches of the Tribunal have held that the provisions of section 194H are not attracted to the discounts given to distributors. Hence, section 40(a)(ia) would not be applicable. As in the latest order passed for the assessment year 2009-10 the Tribunal in order [ 2016 (11) TMI 1739 - ITAT DELHI] has deleted similar disallowance - provisions of section 194H are not applicable to the discounts given to the distributors - disallowance u/s. 40(a)(ia) deleted.- Decided in favour of assessee. 2023 (7) TMI 231 Non granting of TDS credit - assessment in hands of HUF v/s Karta [individual] - CIT(A) directing the assessee to follow the procedure prescribed u/s. 37BA(2) for the purpose of getting TDS credit - sale of property belonging to HUF but TDS deduction reflected in 26AS of the KARTA of HUF as the buyer deducted tax in his name for the reason that he was the registered owner of the properties - assessee contended that the A.O. has accepted the return of income filed by the assessee but had denied TDS credit in the computation sheet where the TDS is reflected in the individual name - HELD THAT:- As decided in Bhavani Shah (HUF) [ 2017 (7) TMI 819 - GUJARAT HIGH COURT] that under special circumstances TDS credit can be given to the assessee HUF upon filing affidavit by the individual that the income does not belong to him and that he has not claimed credit of TDS In the present case the KARTA of HUF has not claimed the TDS in the individual s returns. The A.O. cannot deny the credit of TDS in the assessee s name when the corresponding capital gain on the said transaction was taxed in the assessee HUF s name and cannot take benefit of the mistake crept in, in the sale deed. It is also pertinent to point out that the provision of section 199(3) mandates that credit may be given to person other than those mentioned in sub-section (1) (2), which allows deviation in giving credit in suitable cases. A.O. is directed to allow the TDS credit in the hands of the assessee HUF after verifying that the same was not claimed in the hands of the individual. Assessee appeal allowed. 2023 (7) TMI 230 Assessment u/s 153A - Addition of deemed dividend u/s 2(22)(e) - CIT(A) in this case has deleted the addition so made by the Assessing Officer observing that the aforesaid advances received by the assessee from the two concerns were purely business transactions - HELD THAT:- As noted that M/s Safari Retreats Pvt. Ltd. had given the loan in the regular course of business, where the lending of money was the substantial part of the business of the company. The assessee had duly paid interest @12% per annum on the loan amount which was reasonably high commercial rate of interest. - as in the case of advances from Forum Ventures Pvt. Ltd , the said advances were received pursuant to an agreement entered into with the said concern of the assessee for purchasing 40,000 sq.ft. in the form of six flats for a real estate project. This was a pure business deal. Since, the project did not mature, therefore, the agreement was cancelled by an exit agreement dated 29.01.2010 and the entire amount was refunded by the assessee to the said Forum Venture Pvt. Ltd. CIT(A) therefore held that both the transactions with the aforesaid concerns were business and commercial arrangements duly supported not only by agreements but also by the conduct of the parties involved. CIT(A) has further observed that it was not the case of the Ao that the said amounts were given gratuitously to the assessee only by virtue of its company beneficial shareholder. This addition was not based on any incriminating material found during the search action and that in the absence of incriminating material found during the search action, no addition could have been made by the Assessing Officer in an assessment carried u/s 153A of the Act. The above issue is squarely covered by the recent decision of the Hon ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. reported in [ 2023 (4) TMI 1056 - SUPREME COURT] No reason to interfere with the above findings of the ld. CIT(A), the same are accordingly upheld. Addition u/s 14A r.w.r. 8D - proportionate disallowance of expenditure relating to earning of tax exempt income - HELD THAT:- Since this was a case of reassessment proceedings u/s 153A pursuant to the search action u/s 132 of the Act, therefore, the addition if any could have been based on the basis of incriminating material found during the search action. CIT(A) observed that the aforesaid addition u/s 14A was not based on any incriminating material found during the search action, therefore deleted the impugned addition correctly. Disallowance of statutory deduction claimed by the assessee u/s 24(i) - CIT(A) deleted the addition - HELD THAT:- CIT(A) correctly deleted the aforesaid disallowance made by the Assessing Officer observing that the assessee himself had suo moto added back the aforesaid administrative expenditure relating to building maintenance etc. and that no double deduction was claimed and also held that even this addition was not based on any incriminating material found during the search action and that in the absence of incriminating material found during the search action, no addition could have been made by the Assessing Officer in an assessment carried u/s 153A. 2023 (7) TMI 229 Accommodation entries received from paper companies - taxation in hands of ultimate beneficiary - maintainability of protective additions - HELD THAT:- CIT(A) in the case of present assessee had observed that M/s. Surya Processed Food Pvt. Ltd. is ultimate beneficiary and while confirming the substantial additions in hands of M/s. Surya Processed Food Pvt. Ltd. had deleted the protective additions in the hands of present assessee, the same require reconsideration on merits, in the light of orders [ 2019 (5) TMI 687 - ITAT DELHI] of the Tribunal wherein substantial additions in the hands of M/s. Surya Processed Food Pvt. Ltd. have also been deleted since the income has already been taxed in the hands of M/s Surya Food and Agro Limited. Ground raised by Revenue is sustained for statistical purposes and the issue is restored to the files of Ld. CIT(A) with direction to decide the issues afresh - Revenue appeal allowed for statistical purposes. 2023 (7) TMI 228 Addition of payments made through credit card - second round of appeal - addition in hands of company or individual - HELD THAT:- We find sufficient weightage in the submission of Ld. AR that a total payment was made by Company and recorded by Company in its books of account which is very much evident from copy of Ledger A/c supplied by Company as detailed in foregoing paragraph. The expenditure really belonged to Company and any disallowance, even if to be made on account of personal or non-business nature, could only be made in the hands of Company and not in the hands of assessee. Remaining portion of disallowance is concerned, we find that the assessee has been consistently claiming that in absence of full details of Information Report, he was not able to explain the difference. We find that the Information is reported by third party agencies to Income-tax Department and the possibility of wrong reporting cannot be denied - when the assessee was consistently claiming that he is not able to explain the difference in absence of full details of Information Report, either the departmental authorities should have provided full information to assessee to enable him to delve into the difference or else they should have accepted the assessee s simpliciter explanation that difference could not be reconciled in absence of full information. Since the authorities have not taken any pains to provide full information to assessee, the only judicious way to settle the controversy is to accept assessee s explanation - no justification in saddling the assessee with any disallowance. Decided in favour of assessee. 2023 (7) TMI 227 Addition of cash deposit during demonetization period u/s. 69 r.w.s. 115BBE - HELD THAT:- To bring any amount u/s. 69 the nature and source of investment, needs to be examined. In case the assessee explains the nature and source of investment, then the question of making addition towards unexplained investment u/s. 69 of the Act does not arise. In this case, the source of deposits has not been disputed and has been created out of ordinary business sales which has been credited into books of accounts and profits has also been duly included in the return of income filed in relevant assessment year. Therefore, we are of the considered view that, additions cannot be made u/s. 69 and taxed u/s. 115BBE towards cash deposits made to bank account. As on perusal of details and records, we find that the assessee has filed all details to explain source for cash deposits and on the basis of details filed by the assessee, AO never disputed fact that source for cash deposit is not out of ordinary business receipts, which has been accounted in the books of accounts of the assessee and further, there is no deviation in cash deposits during demonetization period when compared to earlier period in same financial year and in earlier financial year. AO erred in making additions towards cash deposits during demonetization period u/s. 69 - Decided in favour of assessee. 2023 (7) TMI 226 Speculative or non speculative business - treatment of high sea sale which is considered by revenue as speculative transaction as there is no end delivery - Adjustment of loss from activity of High Sea Sale with the interest income - HELD THAT:- The issue is only confined related to speculative transaction is delivery of the goods. When the delivery of the goods is executed, there is no treatment of the speculative transaction. The assessee placed a written submission and mentioned the details document that the said goods are duly taken delivery by the assessee during the purchase from sellers. There is no such any paper transaction or the transfer of the goods before taken the delivery. AR submitted the chart with documentary evidence which is depicting that the edible oil purchased from Singapore / Malasysia. Thus when the goods are not taken by the delivery the entire issue is treated as speculative transaction. But in assessee s case the entire transaction is going through by proper delivery of the goods during purchase and the documents are provided for evidence of delivery of goods related to high sea sale. We find that the observation of the ld. CIT(A) is not accepted and liable to be dismissed. Interest earned on FDRs - Interest which was treated as business income by the assessee and adjusted in the profit and loss account - We respectfully relied on the order of Shahi Export House [ 2010 (8) TMI 785 - DELHI HIGH COURT] Where the interest was taken as expenses, Not as an income from other sources. The investment in fixed deposit of the assessee were duly utilized for formation of letter of credit in relation to the foreign transaction. In the export and import, the investments are utilised in short term investment and there is no such any fix time of investment related to generation of the interest out of the said investment. We also relied on the order of the ITAT, Amritsar Bench [ 2023 (3) TMI 601 - ITAT AMRITSAR] - Accordingly, the order passed by the ld. CIT(A) is not required for any intervention related interest issue. Accordingly, ground taken for the issue of interest by the revenue is dismissed. 2023 (7) TMI 225 Assessment of income in the hands of the assessee - fraudulent filing of returns of income by the Chartered Accountant - uploading the ITR basing on fake and fabricated documents without assessee consent - According to the assessee, there was a fraud played by his partners with the connivance of Chartered Accountant in furnishing the return of income and other documents by making use of PAN of the assessee and also the same Chartered Accountant appropriated the refund that was issued by the department. HELD THAT:- Assessee furnished the order in Criminal Petition on the file of the Hon'ble High Court of Judicature at Hyderabad wherein Mr. Abbineni Srinivasulu Goud and others were accused/petitions sought anticipatory bail which clearly reads that they have admitted therein that they happen to be the partners of the assessee herein in the liquor business. There is no denial of the fact that Chartered Accountant, who uploaded the ITRs of the assessee for the assessment year 2014-15. The finding by the Board of Discipline of ICAI is to the effect that the said Chartered Accountant, with the connivance of the partners of the assessee, prepared fake documents to support the ITR which was uploaded without the knowledge of the assessee. It prima facie creates any doubt as to whether there is any income in the hands of the assessee for this year or not? ICAI is a professional body competent to deal with the complaints against the Chartered Accountants, and the proceedings of the Disciplinary Board thereof carry their own credibility and cannot be simply brushed aside. Due regard has to be given to the findings of such professional Body. The said findings lends any amount of support to the contention of the assessee. Thus as criminal case is pending against the alleged perpetrators of the fraud and the findings of the criminal court would clinch the issue with this aspect. Fraud vitiates everything. It would not be in the interest of justice to direct the assessee to pay the taxes resulted on the fraud played against him and then, to collect the same from the perpetrators of the fraud. Set aside the issue to the file of the learned Assessing Officer to take a view basing on the outcome of the criminal case - Appeal of the assessee is treated as allowed for statistical purposes. 2023 (7) TMI 224 Revision u/s 263 by CIT - VAT liability was not considered for disallowance u/s 43B - HELD THAT:- The powers u/s 263 can be exercised if the order sought to be revised is erroneous inasmuch as prejudicial to the interests of the Revenue. Hence twin conditions are required to be satisfied one being that order should be erroneous and second, such order should be prejudicial to the interests of the Revenue. The basis of exercising the power by the learned Pr. CIT is that the AO failed to verify the correctness of the disallowance made in the tax audit report. During the course of hearing the learned counsel for the assessee has pointed that the learned Pr. CIT failed to consider the fact that no disallowance could be made in the case of VAT as the amount was duly deposited before the due date of filing of the return of income. EPF contribution - as pointed out that the assessee itself had made disallowance, hence no prejudice was caused to the Revenue. DR could not rebut the submissions of the assessee regarding VAT, paid in the government account before the due date of filing of the return of income u/s 139(1) of the Act and also the disallowance made by the assessee itself in respect of EPF. It was not a fit case for exercising powers u/s 263 as the learned Pr. CIT did not verify the correct facts from the records before embarking upon the issuance of notice u/s 263 of the Act and initiating the proceedings. We, therefore, set aside the impugned order and restore the original assessment order passed by the AO. Decided in favour of assessee. 2023 (7) TMI 223 Exemption u/s 54B - LTCG was invested in the purchase of another agricultural land in the name of his wife - Benefit of exemption denied on the ground that investment was not made in the own name of the assessee - HELD THAT:- In Kamal Kant Kamboj [ 2017 (8) TMI 285 - PUNJAB AND HARYANA HIGH COURT] relying on its earlier decisions of Dinesh Verma [ 2015 (7) TMI 486 - PUNJAB HARYANA HIGH COURT] and Jai Narain [ 2007 (8) TMI 295 - PUNJAB AND HARYANA HIGH COURT] has held that as held in Jai Narain s case, Section 54B of the Income Tax Act nowhere suggests that the legislature intended to advance the benefit of the said Section to an assessee who purchases agricultural land in the name of a third person; that the term assessee is qualified by the expression purchased any other land for being used for agricultural purposes , which necessarily means that the new asset has to be in the name of the assessee himself; that therefore, purchase of agricultural land by the assessee in the name of his son or grandson etc. does not qualify for exemption u/s 54B. Assessee would not be entitled to the benefit conferred by the provisions of Section 54B - Decided against assessee. 2023 (7) TMI 222 Addition u/s. 68 - cash received by assessee (co-operative society) from its members during the demonetisation period in Specified Bank Notes - As per AO assessee ought not to have accepted SBN s which were no longer a legal tender - Assessee submitted by the AR that except for a few depositors who expired during covid period KYC of the rest of the depositors have been furnished in the said paper book - whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money? HELD THAT:- The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. The assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. The burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Grounds raised by the assessee stands allowed for statistical purposes. 2023 (7) TMI 221 Disallowance of expenditure incurred on packing penalty - ex-parte order by CIT(A) - plea of the assessee that the penalty paid in the instant case are in the nature of damages paid for breach of contract and therefore, fully deductible u/s 37 of the Act and Explanation-1 is not attracted - HELD THAT:- It is true that damages paid for breach of contract are treated to be normal incidence of business unlike the penalty paid on violation of statutory provisions. Similar issue has been examined in CIT vs. Catholic Syrian Bank Ltd., , [ 2002 (11) TMI 17 - KERALA HIGH COURT] , Jammu Auto Industries [ 2008 (1) TMI 62 - PUNJAB HARYANA HIGH COURT] and plethora of other judgments. Thus, the issue raised by the assessee appears to be meritorious on first principles.In the same vein, we note that the assessee has failed to attend before the CIT(A) and the CIT(A) has passed order ex-parte without expressing any opinion on merits. We straightaway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex-parte order. CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non-compliance without addressing the issue on merit. Thus, in view of Section 250(6) of the Act, the issue requires to be restored back to the file of the CIT(A) for adjudication in accordance with law - Appeal of the assessee is allowed for statistical purposes. 2023 (7) TMI 220 Income accrued in India - taxability of receipts from services rendered by head office in Germany - receipts attributable to the PE - benefit of treaty - HELD THAT:- Income derived by a resident of a Contracting State from certain specified activities including technical services provided in the other Contracting State through a PE situated in that State shall not be attributable to that PE. The receipts are not taxable as FTS under Article 12 and have to be treated, either as business profit under Article 7 or independent personal services under Article 14. Once the receipts fall under Article 7 of the treaty, the protocol comes into play. That being the case in terms of protocol 1(b) of the tax treaty, the receipts even though connected to the PE cannot be made taxable in India. However, protocol 1(b) of the tax treaty specifically refers to income from planning, project, construction or research activities and technical services. Income derived from aforesaid activities will be protected under protocol 1(b) of the treaty, hence, not taxable in India. Whereas, the rest of the income will be taxable under Article 7 of the tax treaty. Accordingly, the Assessing Officer is directed to examine the nature of income and not to tax the income of the nature specified in protocol 1(b) of the tax treaty. Disallowance of office and administrative cost - assessee has not furnished any evidence to establish that the expenses were incurred by the head office exclusively for the PE - HELD THAT:- Though, in principle, we agree that the expenditure incurred by the head office directly connected to the PE has to be allowed without imposing the restrictions of section 44C of the Act, however, burden is entirely on the assessee to establish on record through authentic evidence that such expenditure was actually incurred by head office for the PE. In the present case, the assessee has failed to do so. Article 7(3) of the tax treaty speaks of allowance of expenditure subject to the limitation prescribed in domestic law. No reason to interfere with the decision of learned DRP on the issue. Ground raised is dismissed. Taxation of interest on income tax refund - applying the rate of 40% by treating it at par with profits of business, as against the assessee s claim of tax rates of 10% under Article 11(2) of India Germany DTAA - On going through the Article 11(5) of the treaty, we agree with the decision of Commissioner (Appeals) as the said Article specifically carves out an exception by providing that in case the debt claim in respect of which interest is paid is effectively connected with the Permanent Establishment, the provisions of Article 7 or Article 14 would apply. As in case of ACIT Vs. Clough Engineering Ltd. [ 2011 (5) TMI 562 - ITAT, DELHI] a view favourable to the assessee has been taken. However, in case of B.J. Services Co. Middle East Ltd. [ 2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT] the Hon ble Uttarakhand High Court, while examining pari materia provision contained in Article 12(6) of India-UK Treaty has held that interest on income tax refund is taxable as business profits under Article 7 of the treaty. In our humble opinion, the decision of the Hon ble Uttarakhand High Court will carry greater precedentiary value. This ground is dismissed. Customs 2023 (7) TMI 219 Jurisdiction under Section 130E of the Customs Act, 1962 - HELD THAT:- It is not found that the issues raised come within the four corners of Section 130E of the Customs Act, 1962. There are no reason to entertain these appeals in our jurisdiction under Section 130E of the Customs Act, 1962 - appeal dismissed. 2023 (7) TMI 218 Levy of penalty u/s 112(a) of the Customs Act, 1962 - G-Card hold of customs broker - Personal penalty for abetment in evasion of duty of customs - illegal import of prohibited goods - gas cylinders and salaam mishri - mis-declaration of goods - appellant had knowledge of the import of prohibited goods or not - HELD THAT:- Indisputably, persons who have committed the acts of omission or commission in relation to goods that rendered them liable for confiscation, are liable to pay the penalty as stipulated under Section 112(a) of the Customs Act, without any requirement to establish their mal intent. However, the same principle would not apply to persons who are alleged to have abetted such acts of omission or commission. This is because, abetment, necessarily requires, at the minimum, knowledge of the offending Act. The use of the expression abet in Section 112(a) of the Customs Act, makes it implicit that the person charged, who is alleged to have abetted the acts of omission or commission, has knowledge and is aware of the said acts. A plain meaning of the word abet means instigation, aid, encouragement of an offence - It necessarily involves the knowledge that the act being abetted is wrong. In the context of Section 112(a) of the Customs Act, by definition, the expression abet means instigating, conspiring, intentionally aiding the acts of commission or omission that render the goods liable for confiscation - It is apparent that the knowledge of a wrongful act of omission or commission, which rendered the goods liable for confiscation under Section 111 of the Customs Act, is a necessary element for the offence of abetting the doing of such an act. In M/S AMRITLAKSHMI MACHINES WORK, MR. N.K. BRAMCHARI, MANAGING PARTNER, M/S. AMRITLAKSHMI MACHINE WORKS VERSUS COMMISSIONER OF CUSTOMS (IMPORT) [ 2016 (2) TMI 57 - BOMBAY HIGH COURT ] a Full Bench of the Bombay High Court had considered the aforesaid issue and held that the word abetment is required to be assigned the same meaning as under Section 3(1) of the General Clauses Act, 1897. The penalty imposed on the appellant under Section 112(a) of the Customs Act is set aside - Appeal allowed. 2023 (7) TMI 217 Valuation of imported goods - Methyl Iso Butyl Ketone - excess of 1.66% in the quantity unloaded as compared to the Invoice and Bill of Lading quantity - HELD THAT:- The Lower Authorities have relied upon the public notice F. No. S/20-022/2010, which does not indicate the basis on which percentage has been fixed in such general terms for all commodities. The decisions have been correctly relied upon by the Learned Advocate in M/S. WELSPUN CORP. LIMITED VERSUS COMMISSIONER OF CUSTOMS, MUNDRA [ 2018 (12) TMI 173 - CESTAT AHMEDABAD] and are applicable in the present case. The tolerance limit of upto 3 or even 5 % has been approved in the above decisions and therefore percentage of 1.66 is within the limit of indicated tolerance limit of case law. Again the public notice does not bring out commodity wise tolerance limits citing any technical literature for the same and therefore the same cannot be preferred over the criteria indicated by the CBEC in circulars cited above. It, therefore, follows that for Bulk Cargo at the relevant time, not the weight but value paid was the criteria of duty and the transaction value or invoice price and not the quantity, in any case, was to be the basis of assessment. Demand do not sustain - Appeal allowed. Corporate Laws 2023 (7) TMI 216 Maintainability of suit - Rejection of plaint on the ground that the dispute raised in the plaint cannot be decided by a Civil Court - appellant contended that the disputes in the plaint, falls within the exclusive jurisdiction of the National Company Law Tribunal (NCLT) - Section 9 of the Code of Civil Procedure and Section 430 of the Companies Act. HELD THAT:- It is clear from the averments made in the plaint that it is not a proceeding for refusal of registration or rectification of register under Section 58 or 59 of the 2013 Act. Section 58 contemplates a situation where a private company limited by share refuses whether in pursuance of any power of the Company under its article or otherwise to register the transfer of or the transmission by operational law of the right to any security or interest within a period of 30 days from the date on which the instrument of transfer or the intimation of such transmission was delivered to the company if there is a refusal the transferee may appeal to the tribunal under Section 58(5) of the Companies Act, 2013 where, however, the name of a person is erroneously entered in the register in place of a rightful owner and such error appears to be apparent a proceeding under Section 59 would be permissible. In ADESH KAUR VERSUS EICHER MOTORS LIMITED AND ORS. [ 2018 (8) TMI 836 - SUPREME COURT] the jurisdiction of the tribunal in a proceeding under Section 59 was not interfered with as the Hon ble Supreme Court observed that it was an open and shut case of fraud in which the appellant has been victim, and respondent no. 2 the perpetrator . As a corollary if it appears that the disputed questions of the facts are complicated and cannot be conveniently decided in a summary procedure the jurisdiction of the Civil Court is not ousted. Although it cannot be disputed that the NCLT may have jurisdiction to decide the title of any person who is a party to the application urging that his name has been wrongly omitted from the register or should have been entered in the register in a proceeding under Section 59 of the present Act or Section 155 read with Section 111 of the Companies Act, 1956, however, the issue in the suit is not one of rectification. NCLT thus, would have jurisdiction to decide a rectification proceeding where facts are self evident and does not call for any serious enquiry or adjudication of fraud. It would depend on the facts of a case. However, the present proceeding is not for rectification although eventually it may lead to the same in the event the suit is decreed - the appellant has not filed any written statement and the time had expired in the meantime the appellant shall be permitted to file written statement within three weeks from date, in default, the suit may proceed ex parte against the appellant. Appeal dismissed. Insolvency & Bankruptcy 2023 (7) TMI 215 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - investment in equity of the Corporate Debtor as per informal understanding between the parties - Financial Creditors or not. Whether money contributed by the Respondent No. 1 along with her nominees was in nature of financial debt or investment by way of equity in the Corporate Debtor? HELD THAT:- From the perusal of the record especially part IV of the application filed by the Respondent No. 1 before the Adjudicating Authority , it is seen that Rs. 4,41,25,000/- was disbursed to the Corporate Debtor from time to time starting from 05.12.2012 to 03.12.2018 and total amount claimed to be in default as on 30.06.2021 was Rs. 7,57,56,215/-, which included the interest from 01.04.2016 @ 12% p.a. We also note that the Respondent No. 1 is a shareholder of the Corporate Debtor holding 24.63% of equity capital. Admittedly by the Appellant and evidently from the records made available before us, the Corporate Debtor paid interest @ 9% to the Respondent No. 1 for the Financial Year 2016-17 and for the Financial Year 2017-18 the Corporate Debtor paid interest @ 12% to the Respondent No. 1 and a statement of confirmation of account was also issued accordingly by the Corporate Debtor to the Respondent No. 1 . It is evident that on failure to receive due money on time, the Respondent No. 1 wrote a letter on 19.09.2020 to the Corporate Debtor calling upon to return the outstanding principal amount along with interest and the same was replied by the Corporate Debtor on 27.10.2020 denying the liability and stating that payment was made towards share premium. This Appellate Tribunal observe that the Code no where prescribes that there should be a written agreement between the parties to prove the loan and its disbursement to be treated as financial debts. It is also observed that if there are acknowledgments by the Corporate Debtor and where the statements of accounts of the Corporate Debtor are in position to proof disbursement of loan and payment of interest, the absence of formal written agreement would not bar the Financial Creditor (the Respondent No. 1 herein) from initiating the CIRP. There have been clear acknowledgments which have been issued by the Corporate Debtor for the money received from the Respondent No. 1 which also mentioned the quantum of interest payment to be made by the Corporate Debtor to the Respondent No. 1. Similarly, we also take into account the fact that TDS was deducted regarding interest paid and the name of the Appellant as deductor and the name of the Respondent No. 1 as deductee is clearly evident. This does not give any scope for benefits of the Appellant - there was clear financial debt in form of loan given by the Respondent No. 1 to the Corporate Debtor and this could not have been treated in any way as equity infusion/ share premium in Corporate Debtor. Appeal dismissed. 2023 (7) TMI 214 Maintainability of application under Section 60(5)(c) of IBC - Liquidation estate - Khagaria Respondent No. 1, a step down subsidiary of the Corporate Debtor - whether its asset can form part of the liquidation estate of the Corporate Debtor in terms of Explanation (d) to sub-section 4 of Section 36 of the Code or not? - HELD THAT:- Section 60(5) began with non-obstante clause. Sub-Section 5(c) which is relied provides any question or priorities or any question of law of facts, arising out of or in relation to the Insolvency Resolution or Liquidation Proceedings of the Corporate Debtor the key words under Section 60(5)(c) are ARISING OUT OF OR IN RELATION TO THE INSOLVENCY RESOLUTION OR LIQUIDATION PROCEEDINGs OF THE CORPORATE DEBTOR. What is the meaning of expression arising out of or in relation to has to be examined to find out as to whether Application I.A. No. 2691 of 2022 is maintainable or not. The Hon ble Supreme Court had occasion to consider Section 60(5)(c) in GUJARAT URJA VIKAS NIGAM LIMITED VERSUS MR. AMIT GUPTA AND ORS. [ 2021 (3) TMI 340 - SUPREME COURT ]. In the above case, power purchase agreement was entered between the Corporate Debtor and GUVNL. GUVNL issued notices alleging that event of default has occurred, Corporate Debtor was called upon to remedy his default failing which the power purchase agreement was to be terminated. The Corporate Debtor filed an Application under Section 60(5) with regard to notice issued by GUVNL where an Interim Order was passed on 31st May, 2019 restraining the Appellant from terminating PPA till the next date of hearing. The Adjudicating Authority allowed the Application setting aside the notice issued by the GUVNL. Appeal was dismissed by the Appellate Tribunal against which the GUVNL filed an Appeal - The Hon ble Supreme Court noticed earlier judgments of the Supreme Court where expression arising out of or related to were explained. It was noted that word arising out of and relating to have been given expansive interpretation by the Supreme Court. Hon ble Supreme Court however observed that it is necessary to bear in mind the context in which the phrases have been used - It was held by Hon ble Supreme Court that NCLT has jurisdiction to adjudicate dispute which arises only from or which relates to the Insolvency of the Corporate Debtor. Thus, the Adjudicating Authority did not commit any error in holding that Application is maintainable under Section 60(5)(c) of the Code - appeal dismissed. 2023 (7) TMI 213 Approval of Resolution Plan - allegation is that Resolution plan is discriminative in the distribution of the proposed amount to the Operational Creditor vis- -vis Financial Creditor - appellant submits that the Resolution Plan approved by the Adjudicating Authority is not in consonance with the provision of I B Code, 2016 - Whether Appellants can claim discrimination in payment qua the financial creditors in these Appeals? HELD THAT:- Financial Creditor and Operational Creditor are at different ladder in Section 53 of the Code. Financial Creditor under Section 53(i)(b) are entitled to receive payment equal to those workmen dues. The Operational Creditor can not claim payment equal to the Financial Creditor which is law well settled - reference made to Judgement of the Hon ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] where the Hon ble Supreme Court has laid down that equality in the payment under the Resolution Plan has to be under some class of creditors. The principle of equality is applicable only in same class of creditors. This Tribunal in a case arising out of similar facts in DAMODAR VALLEY CORPORATION VERSUS DIMENSION STEEL AND ALLOYS PRIVATE LIMITED, BIJOY MURMURIA, RESOLUTION PROFESSIONAL OF THE CORPORATE DEBTOR, C/O SUMEDHA MANAGEMENT SOLUTION PRIVATE LIMITED, C.P. ISPAT PRIVATE LIMITED [ 2022 (5) TMI 1365 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] where Electricity Dues were unpaid by the Corporate Debtor, Resolution Plan was approved where operational creditors of the Damodar Valley Corporation were provided less than 1% - This tribunal had noticed about the meagre payment to Operational Creditor in most of the Resolution Plan. Tribunal has made observations in the said judgment drawing attention to the fact of the legislative scheme and to consider as to whether any changes are required or not and held that In the present case, the Operational Creditors have been given only miniscule of their admitted claim to the extent of only 0.19%. As the law stand today, no exception can be taken to such Plans, which provide payment to Operational Creditor in accordance with Section 30(2)(b) of the Code. However, the time has come when it should be examined by the Government and the Board to find out as to whether there are any grounds for considering change in the legislative scheme towards the payment to the Operational Creditors, which also consist of Government dues and other statutory dues. We make it clear that our observation is only to facilitate the Government and other competent Authority to consider this issue and take decision, so as to the objective of equitable and fair distribution can be fulfilled with clear parameters to guide the all concerned to arrive at the fair and equitable distribution. Regulation 17(vi) also does not in any manner affect the distribution as contemplated by Section 53 of the Code. The approval of the Resolution Plan cannot be faulted on the grounds as contended by the Learned Counsel for the Appellant in these Appeals - appeal dismissed. 2023 (7) TMI 212 Validity of Resolution Plan - allowing the implementation of Resolution Plan without considering the Appellant s case for settlement under Section 12A of I B Code - HELD THAT:- Regulation 40C was inserted in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2020, in view of lockdown. According to the said provision, the period of lockdown was not to be counted for the purpose of timelines, for any activity that could not be completed due to such lockdown. The central government issued notification declaring total lockdown period to be extended. The Respondent No.1, on the instructions of Committee of creditors filed an application dated 28.05.2020 under Section 12(2) of the code vide which resolution professional sought an extension of 90 days for the CIRP process and further sought the exclusion of lockdown period as per Regulation 40 C. The Adjudicating Authority granted extension of 90 days beyond 180 days of CIRP and further granted exemption of lockdown period w.e.f. 25.03.2020. The order dated 03.06.2020, although did not specify the number of days that stood exempted, but granted exemption in terms of Section 40-C. Whether the Resolution Applicant was barred under Section 29A of the Code or not? - HELD THAT:- It is the case of the Appellant is that Mr. Rahoul Subberwal was Managing Director of three companies which were liquidated in UK and being undischarged insolvent was not eligible and adversely effected eligibility of the M/s Sirius Foods Pvt. Ltd./ Respondent No. 2 as Mr. Subberwal is a shareholder of Respondent No. 2. In this connection, it is noted that the term undischarged insolvent has not been defined in the Code. Moreover, such orders for declaring are required to be issued by the Court. We also take note of the detailed averments of the Respondents that Mr. Subberwal has not been disqualified under Section 6 or Section 7 of the UK Company Directors Disqualification Act, 1986 and he continuous to serve as director in other UK based company in M/s Spice Trail Ltd. and he would not have been allowed to continue in this company, had he remained ineligible as per UK Laws. Non consideration of the settlement offer made by him to the CoC - the Resolution offer of the M/s Sirius Foods Pvt. Ltd. / Respondent No. 2 / Resolution Applicant is lower than the liquidation value as well as the settlement offer amount of the Appellant or not - HELD THAT:- The total Resolution Plan amounts to Rs. 27.27 Crores which is much more than both the liquidation value of Rs. 17.88 Crores and the settlement offer of the Appellant is Rs. 19.63 Crores. The averments of the Respondents is agreed upon that the Code do not stipulate that the Resolution Plans size is required to be more than the liquidation value which was also supported by the Hon ble Supreme Court of India in the matter of Maharashtra Seamless [ 2020 (1) TMI 903 - SUPREME COURT ] - there are no error in the Impugned Order on this aspect. There are no error in the challenged both Impugned Orders. The Appeal being devoid of any merit is dismissed. 2023 (7) TMI 211 E-auction of the sole property of the corporate debtor - correct procedure was followed in the E-auction or not - whether auction was conducted in haste without giving adequate opportunity to all to participate? - principles of natural justice - HELD THAT:- It is observed that the Liquidator issued a notice for sale of assets on 02.04.2022 and date of E-auction was mentioned in the said notice was 08.04.2022 from 2 pm to 4 pm. In the said notice, 4th and 7th April, 2022 were stipulated as last dates for submission of KYC and EMD respectively. The notice also erroneously stated last date and time for submission of EoI by interested bidder as 15.04.2022 (5pm) with last date and time for payment of EMD as 16.04.2022 (5pm). These clear conflicting dates are sufficient to cause confusion and therefore can not be treated as mere typographical error as claimed by the Liquidator. Apparently no time frame was given for any inspection of the premise by the prospective bidder, which is not very rightful thing to do on behalf of the Liquidator - It is also observed that the corrigendum for rectification of error in the notice for sale of assets was given in newspapers and IBBI website which was after the E-auction was completed, rendering these to be futile and at best paper exercise on post facto basis. There are no error in the Impugned Order dated 02.03.2023, wherein the E-auction was set aside and it was held that the Liquidator must bear all expenses incurred for the auction - appeal dismissed. 2023 (7) TMI 210 Overriding effect of IBC on all proceedings after initiation of Section 7 Application - SEBI can auction the property of the Corporate Debtor or not - HELD THAT:- Section 7 Application has been filed by Respondent Nos 3 to 102 who are investors in the Corporate Debtor who have not been refunded their money in spite of Order dated 29.02.2016 passed by SEBI. The sequence of events as noted above indicates that Appellant-SEBI after the Order dated 29.02.2016, has issued a recovery certificate and has attached the properties of the Corporate Debtor, its directors, its associate Companies and has also conducted auction of 15 properties by which amount of Rs. 104 Crores have been received. It is well settled that proceedings by Financial Creditors under Section 7 can be initiated despite pendency of any other proceedings relating to the Corporate Debtor. Right given to a Financial Creditor under IBC can be invoked by Financial Creditor despite any proceeding pending with regard to Corporate Debtor in any other forum. The present is a case where Creditors of the Corporate Debtor have initiated Section 7 Application since the amount invested by them was not being refunded by the Corporate Debtor in spite of order passed by the SEBI Dated 29.02.2016. The Hon ble Supreme Court in Indian Overseas Bank Vs. RCM Infrastructure Limited [ 2022 (5) TMI 926 - SUPREME COURT ] have categorically held that after moratorium under Section 14(1)(c) comes into operation, no proceeding to recover against the Corporate Debtor can be continued. Law is well settled that when moratorium comes into operation, no other proceedings for recovery against the Corporate Debtor can be continued. The Resolution Professional has also appeared before the High Court in the Writ Petition where Interim Order was passed on 09.01.2019 before the initiation of proceedings under Section 7 - there are no doubt that RP shall obtain necessary clarification and modification from the High Court to proceed further in the CIRP Process before finalisation of CIRP Process. There are no grounds have been made out in this Appeal to interfere with the Impugned Order passed by the Adjudicating Authority admitting Section 7 Application. Present is a case where debt and default has been admitted and does not even a case of the Appellant that there is no debt and default at the instance of the corporate debtor. Appellant itself has initiated proceeding against the Corporate Debtor for recovery. Resolution Professional has also appeared in Writ Petition where appropriate clarification/modification has been sought for. There are no error in the order of the Adjudicating Authority warranting any interference in this Appeal, there is no merit in the Appeal, the Appeal is dismissed. 2023 (7) TMI 209 Power of Tribunal to review the judgment versus Power to re-call its order - Larger Bench (5 Members) decision - power to entertain an application for recall of judgment on sufficient grounds - perusal of decision in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited Anr. [ 2021 (10) TMI 1039 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] and Rajendra Mulchand Varma Ors Vs K.L.J Resources Ltd Anr. [ 2022 (10) TMI 383 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] which can be read to mean that there is no power vested in this Tribunal to recall a judgment or not - this Tribunal cannot recall its judgment in exercise of its inherent jurisdiction or not. HELD THAT:- It is to be noticed that Rule 11 is akin to Section 151 of the Code of Civil Procedure. The Court as well as Tribunals exercise juridical power of the State while performing adjudicatory functions. The Hon ble Supreme court has held in Harinagar Sugar Mills Ltd. vs. Shyam Sunder Jhunjhunwala Ors. [ 1961 (4) TMI 23 - SUPREME COURT ] that procedures of Court and Tribunal may differ but the functions are not essentially different. The inherent power of the Courts and that of the Tribunals are the powers which are not conferred to it but those powers are inherent in the Courts and Tribunals by strength of duty to do justice to parties before it - Inherent power by a Court or Tribunal can be exercised to do justice between the parties, which exercise, however, in no manner should contravene any express provision of the statute. The first judgment which has been relied by learned counsel for the Applicant is judgment of Hon ble Supreme Court in A. R. Antulay vs. R.S. Nayak Another [ 1988 (4) TMI 432 - SUPREME COURT ]. In the above case, before the Hon ble Supreme Court question arose as to whether the Hon ble Supreme Court in exercise of its powers can set aside a direction given by earlier judgment - Hon ble Supreme Court in the above judgment has clearly held that where a party has had no notice and decree is made against him, he can approach the court for setting-aside the decision. The judgments of the Hon ble Supreme Court clearly lays down that there is a distinction between review and recall. The power to review is not conferred upon this Tribunal but power to recall its judgment is inherent in this Tribunal since inherent power of the Tribunal are preserved, powers which are inherent in the Tribunal as has been declared by Rule 11 of the NCLAT Rules, 2016. Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. Power of recall of a judgment can be exercised by this Tribunal when any procedural error is committed in delivering the earlier judgment; for example; necessary party has not been served or necessary party was not before the Tribunal when judgment was delivered adverse to a party. There may be other grounds for recall of a judgment. Now two three-member bench judgments of this Tribunal which have been noted and referred to in the order are perused, which are Agarwal Coal Corporation Private Limited vs. Sun Paper Mill Limited Anr. and Rajendra Mulchand Varma Ors vs. K.L.J Resources Ltd Anr. Agarwal Coal Corporation Private Limited was a case where an I.A. was filed in decided Company Appeal seeking to place on record fraudulent acts of the Respondent and prayed for exercise of inherent power in allowing the application. Appellate Tribunal in the above case vide its judgment dated 16.10.2019, refused to interfere in the order of the Adjudicating Authority while dismissing the Appeal. A three-member bench had occasion to consider the ambit of review and power of recall. This Tribunal held that power of review is not inherent power, with which there can be no quarrel. Tribunal has observed that order passed by Adjudicating Authority or Appellate Tribunal cannot be either reviewed or recalled. From reasons given in the judgment, it is clear that against the order of the Tribunal dismissing the appeal on 16.10.2019 an appeal was filed under Section 62 of the I B Code before the Hon ble Supreme Court, which appeal was dismissed as not pressed. Three-member bench held that the judgment of this Tribunal dated 16.10.2019 has become final between the parties - the reason for rejecting the application are contained in Para 29 and 30, however, observations in Para 27 were made in wide terms that Adjudicating Authority and Appellate Tribunal has no power to review or recall. The above judgment of This Tribunal holding that there is no power to recall a judgment cannot be held to be laying down a correct law. Power to recall a judgment is an inherent power which is in the Tribunal as has been so declared by Rule 11. The Tribunal has inherent power to recall its judgment on appropriate grounds, the three-member bench judgment in Agarwal Coal Corporation Private Limited and K.L.J Resources Ltd. Anr. observing that the Tribunal does not have power to recall cannot be approved. The three-member bench judgments of this Tribunal insofar as observation that this Tribunal has no power to review, no exception can be taken to that part of the judgment. This Tribunal is not vested with any power to review the judgment, however, in exercise of its inherent jurisdiction this Tribunal can entertain an application for recall of judgment on sufficient grounds - The judgment of this Tribunal in Agarwal Coal Corporation Private Limited vs Sun Paper Mill Limited Anr. and Rajendra Mulchand Varma Ors vs K.L.J Resources Ltd Anr. observing that this Tribunal cannot recall its judgment does not lay down the correct law. Let this order be placed before the appropriate bench for consideration. 2023 (7) TMI 208 Initiation of CIRP u/s 7 of IBC - NCLT admitted the application - basic requisites of Debt and Default, that are required to be examined and proven, prior to the admission of Petition, seeking to initiate Insolvency Process, was not established - Non-application of mind by Adjudicating Authority - HELD THAT:- In the instant case, there is no dispute, in regard to the sanction of Loans, amounting to Rs.355.40 Crores, by the 1st Respondent / Bank, to and in favor of the Corporate Debtor, beginning from the Year 2010. Furthermore, more than Rs.3,000 Crores, were advanced by the 12 Financial Institutions, together with the 1st Respondent / Bank, amounting to over and above Rs.3,000 Crores, in part financing the costs for setting up of 540 MW Coal Fired Thermal Power Plant, in Taran Tarn, Punjab, and for ease of convenience, the Lenders, has referred to supra or termed as Senior Lenders. Admittedly, a Loan Recall Notice, dated 17.12.2019, was issued by the 1st Respondent / Bank / Petitioner / Financial Creditor, because of the Default, committed by the Corporate Debtor, in making payments, as per Master Amendment Agreement dated 21.07.2017. In reality, the Corporate Debtor / GVK Power (Goindwal Sahib) Ltd., had availed the Credit Facilities, but, failed and neglected to operate the same, in accordance with the agreed Terms and Conditions. The Account, was classified, as Non Performing Asset, from 29.11.2017. It is pointed out that from the Information Utility i.e., National E-governance Services Limited, a record of Default, was produced, before the Adjudicating Authority, on behalf of the 1st Respondent / Bank / Financial Creditor - Be it noted that, the Inter Creditor Agreement, was executed by some Consortium Lenders of the Corporate Debtor (including the 1st Respondent / Bank / Financial Creditor), pursuant to the Reserve Bank of India s Directions 2019. In reality, the Inter Creditor Agreement, dated 06.07.2019, was executed to afford a scaffold, for a possible Resolution. No wonder, there is no Fetter in Law, much less in the Reserve Bank of India s Directions 2019, for the Lenders, to resort to the Summary I B Code Proceedings. The Right of the 1st Respondent / Bank, especially, under the I B Code, 2016, cannot be taken away or overridden, by any Reserve Bank of India s Rule, etc. It is to be remembered that the Corporate Debtor, cannot seek an umbrage, under the Inter Creditor Agreement, with a view to avoid, evade, circumvent and supplant its obligation(s), in terms of the Loan Facility Agreement . Continuing further, the I B Code, 2016 (vide Section 238 of the I B Code, 2016), will have an overriding effect, in regard to anything inconsistent therewith contained in any other Law, for the time being in force. In the present case, the Corporate Debtor has not furnished any material evidence to suggest that, it will be in a position to repay the amounts, owed to the Lenders. It cannot be forgotten that no endeavour was made to accomplish a Resolution Plan, although many deliberations and meetings, had taken place. Besides these, the Corporate Debtor, inspite of request made by the Lenders, had not opted to Improve and Revise, the One Time Proposal, which is an unfavourable circumstance, as opined by this Tribunal. Keeping in mind of the fact that the Defaults, had taken place in the year 2017, the huge Public Monies, are entangled, and the main Company Petition, was preferred, before the Adjudicating Authority / Tribunal, on 20.12.2019, with a view to prevent, diminishing Value of the Assets of the Corporate Debtor, to protect the Creditors interests, and considering the totality of the integral facts and circumstances of the case on hand, in a conspectus manner, comes to a resultant conclusion that the view, arrived at by the Adjudicating Authority / Tribunal, by exercising its Judicial Discretion, ofcourse, in admitting the Section 7 Application, does not suffer from any Material Irregularity, or Patent Illegality, in the eye of Law. Accordingly, the Appeal fails - Appeal dismissed. Service Tax 2023 (7) TMI 207 Refund of Service Tax - rejection of refund claim on the ground that the said business auxiliary service was not specified under N/N. 17/2009-ST dated 7.7.2009 - reverse charge mechanism - HELD THAT:- The issue relating to the time limit set by Notification No. 41/2007 has been examined by this Bench in the case of M/S. CORE MINERALS VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI (VICE-VERSA) [ 2023 (2) TMI 945 - CESTAT CHENNAI] ) wherein it has been held that the time limit prescribed under the substantive legislation, namely, Section 11B, is applicable - the said view is agreed upon because section 11B of the Act is a substantive provision of the statute while a notification is only part of a subordinate legislation and cannot override the parent statute. When the time limit of one year has to be calculated? - HELD THAT:- The said issue was also examined by a coordinate Bench of this Tribunal in BALKRISHNA TEXTILES PVT LTD VERSUS C.C.E. -AHMEDABAD-I [ 2022 (6) TMI 613 - CESTAT AHMEDABAD] wherein it was held that the relevant date of computing six months under Notification 41/2007-ST is to be taken on the date when service tax is paid and not from the first day of the month following the quarter in which the export is made. Thus, the time limit should be construed accordingly. Claim of refund by the appellant as per Notification No. 17/2009 dated 7.7.2009, wherein duty was paid by mistake instead of availing duty exemption and are now seeking refund - HELD THAT:- The duty has been paid under mistake of law because they followed the pattern of the earlier exemption Notification No. 41/2007 dated 6.10.2007, but when they realized their mistake, they have claimed a refund of duties paid. The refund of the same paid under a mistake, cannot be denied to them, when the claim is filed within time as per section 11B. The Hon ble Supreme Court in its judgement in SHARE MEDICAL CARE VERSUS UNION OF INDIA [ 2007 (2) TMI 2 - SUPREME COURT] held that it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage - This being so, the appellants are eligible for the duty paid mistakenly when they were eligible for exemption under Notification 17/2009-ST dated 07/07/2009. Since it is found that the appellant is eligible for exemption under notification No. 17/2009-ST dated 07.07.2009, the issue of failure of the appellants to comply with the various conditions stipulated under the Notification No. 5/2006-CE (NT) dated 14.3.2006, issued under Rule 5 of CENVAT Credit Rules, 2004 does not survive - the refund claim to have been filed within time and is liable to be sanctioned as per law - appeal allowed. 2023 (7) TMI 206 Waiver of interest and penalty - Leviability of Service Tax on Renting of Immovable Property Services - constitutional validity of amendment giving retrospective effect from 01/06/2007 - HELD THAT:- This is a case where a retrospective amendment was made to the definition of Renting of Immovable Property Service in order to clarify the legislative intent and also bring in certainty in tax liability. The amendment clarified that the activity of renting of immovable property per se would also constitute a taxable service under the relevant clause. It was given retrospective effect from 01.06.2007. It is found that no provision of time has been made in the present amendment for payment of retrospectively assessed duty. Hence, the interest would be in the nature of a quasi-punishment and is not payable by the appellant. This is based on the well settled principle of constitutional law that sovereign legislative bodies can make laws with retrospective operation however no ex post facto penalty is permissible. In the light of the same no penalty is also payable by the appellant. Hence the appellant is liable for waiver of interest and penalty. The Hon ble Tribunal s judgment in M/S COAL MINES PROVIDENT FUND ORGANISATION VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RANCHI [ 2020 (2) TMI 1493 - CESTAT KOLKATA] cited by Revenue is not on an issue related to demands based on retrospective amendment to a legislation and is distinguished, moreover it will have to give way to a judgement of the Apex Court on the matter. The interest and penalties confirmed in the impugned order set aside - appeal disposed off. 2023 (7) TMI 205 Exemption for services provided by sub-contractor to contractors appointed by a Developer or Unit in the SEZ Act - HELD THAT:- In the present matter SEZ units appointed main contractors for carrying out work and main contractor appointed to Appellant as sub-contractor for carrying out works of SEZ units. Further in term of Notification No. 9/2009-ST dated 03.03.2009 service tax exemption is available to services received by the Developer of units of SEZ with approval from the approval committee. In the instant case appellant does not have any approval form the competent authority to provide the services to Developer or SEZ units. In terms of said Notification No. 9/2009 ST, as service provider who provides services to SEZ units or developers of SEZ, has to pay Service tax on services so provided on which service receiver i.e. SEZ units or developer of SEZ may claim refund - Even though the sub-contractor provided the service as sub-contractor to the main contractor but it is not under dispute that the service was provided in the SEZ which prima-facie show that services were provided by the appellant as sub-contractor which was ultimately received by the SEZ developer or unit in SEZ. It is also the contention of the Revenue that the services provided by sub-contractor are not approved. In this regard it is found that it is not the service provider specific if the services are approved in relation to the main contractor, there should not be any need of separate approval of list of services with the sub-contractor. The appeal is allowed by way of remand to the Adjudicating Authority to pass a fresh order. 2023 (7) TMI 204 CENVAT Credit - Tripartite Agreement is made for the dealer to provide space, infrastructure, manpower etc., to enable the Appellant to seek insurance business for the Insurance company - whether for such services provided by the dealers, TBSS would be eligible for cenvat credit or not ? - HELD THAT:- There is no dispute that the Appellant, the car dealer and the insurance company have entered into Tripartite Agreement at the very first stage. These Agreements have been entered into much before the investigation/enquiries were initiated. Therefore, there is nothing to indicate that the veracity of such documents is liable to be questioned. This Agreement clarifies role of the car dealer and the acceptance letter from their side shows the details of activities being undertaken by them. Subsequent to 01.07.2012, the Invoices raised by any service provider need not specify as to under what category of service they are providing the services. In respect of the service recipient also so long as the service falls within the definition of input service in terms of Rule 2(l) of CCR 2004, they would be eligible to take the cenvat credit. The only condition being that the input service should not be under the exclusion list. There is also no allegation that the Show Cause Notice to the effect that the services rendered under these invoices are not falling within the definition of Rule 2(l) of the CCR 2004. The entire case has been built on the ground that absolutely no service was rendered by the car dealers. For coming to this conclusion, the Department has relied upon only two Recorded statements of the dealers out of more than 100 dealers of the Appellant. Even these two officials have given a different version when they were cross examined. In such a case no evidentiary value can be placed on the Recorded Statements of these officials. Further there is no allegation coming up in the Show Cause Notice that TBSS have not recorded the transactions with car dealers in their books of accounts. Reliance placed in the case of M/S. MODULAR AUTO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [ 2018 (8) TMI 1691 - MADRAS HIGH COURT] where it was held that Therefore, unless and until the assessment made on BIL was revised, which obviously could have been done, at this juncture, on account of the expiry of the period of limitation, the interpretation given by the Commissioner (Appeals) as well as the Tribunal with regard to the nature of invoice raised on the assesses is unsustainable. In the case of M/S. CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI [ 2021 (3) TMI 24 - CESTAT CHENNAI] it was held that unless and until the assessment made by the dealer is revised, the credit at the recipient s end cannot be denied. From the above decisions, it is seen that on identical issue various coordinate Benches of this Tribunals have held that the assesses therein are eligible to take the cenvat credit - the Appellant is eligible to take the cenvat credit on the invoices raised by various car dealers, distributors for the services provided by them - appeal allowed. 2023 (7) TMI 203 Refund of unutilized input service credit under Rule 5 of the CENVAT Credit Rules, 2004 - non-registered premises - HELD THAT:- The issue sought to be raised in the present appeal by the Revenue is no more res integra by virtue of the ruling of the very jurisdictional High Court of Madras - reliance can be placed in THE COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI VERSUS M/S. PAY PAL INDIA PVT. LTD. [ 2020 (7) TMI 321 - MADRAS HIGH COURT] where it was held that refund claimed by the Assessee on Cenvat Credit cannot be disallowed merely because the premises in question was not registered with the Revenue Department. The impugned order does not suffer from any legal infirmity - Appeal filed by Revenue is dismissed. 2023 (7) TMI 202 Levy of Service tax - Business auxiliary services - Appellant approach the print media like various daily newspapers and get these advertisements published, material to be published in the print media is given by clients - HELD THAT:- From the documentary evidence, it is seen that for getting the advertisement published, the Appellant gets an invoice from the print media wherein they are giving discount of 10%-15%. After the advertisement is published, the Appellant is raising the invoice on Government of Andhra Pradesh and other clients wherein he is charging the full amount. The difference between the invoice raised by the Appellant on their clients and invoice raised on the Appellant by the print media is the margin which is available to the Appellant - In this case, it is seen that it is a kind of trading activity in services. The Appellant first books the space by getting certain discount and sells the same at a higher rate to their clients. Therefore, the discount being received by him from the print media is nothing but a profit margin and not any commission received from the print media. In the case of GREY WORLDWIDE (I) PVT LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [ 2014 (9) TMI 180 - CESTAT MUMBAI] it is held it can be seen that the Tribunal has been consistently taking the stand that incentives received by an advertising agency from the media without any contractual obligation to render any service cannot be levied to Service Tax under the category of BAS. The amount of incentive received by the Advertising Agency from the print media has been under litigation and the Tribunals have been consistently holding that such incentives or discounts cannot be termed as Business Auxiliary Service. On going through the case law relied upon by the Revenue, MALAR PUBLICATIONS LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2018 (1) TMI 1058 - CESTAT CHENNAI] ), it is seen that the facts are different. There the Appellants were canvassing advertisements for the publications like Daily Thanthi, Rani Weekly etc., and were getting fixed retainership fee for their work. Therefore, the decision arrived at by the Tribunal in the case of Malar Publications Ltd is distinguishable and cannot be applied to the facts of the present case. The confirmed demand on the ground that the Appellant was providing Business Auxiliary Services to the print media cannot legally sustai - Appeal allowed. 2023 (7) TMI 201 Classification of service - mining service or not - activity of transportation of limestone and reject undertaken by the appellant - period involved is from July 2013 to December 2014 - HELD THAT:- The contracts in question entered by the appellant with the mine owners are not composite in nature as the same provide for separates activities to be undertaken by the appellant at separate rates. A perusal of the contracts leaves no manner of doubt that the appellant had undertaken the activity of mining and transportation separately, for which separate charges were paid to the appellant by separate invoices. Thus, when the contracts categorise the activity of mining and transportation as two separate activates having no nexus with each other, then these two activities have to be treated as two separate services. Reference can be made to the judgment of the Supreme Court in THE STATE OF MADRAS VERSUS GANNON DUNKERLEY CO. (MADRAS) LTD. [ 1958 (4) TMI 42 - SUPREME COURT] ] wherein this Supreme Court emphasised the nature of an indivisible works contract and held that there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agreement to sell from the agreement to do work and render service and to impose a tax thereon cannot be questioned. It is clear from the aforesaid observation of the Supreme Court that in a case when two separate activities are undertaken even though the same may be provided under a single contract, they would have to be treated as two separate activities and taxed accordingly. In M/S. PRAHLAD RAI COMPANY VERSUS CCE, JAIPUR [ 2017 (12) TMI 1380 - CESTAT NEW DELHI] the dispute was whether the activity of mobilizing of equipment, removing of top vegetation, over burden, drilling, blasting, excavating boulders, sorting and sizing of boulders, crushing and further transportation would be classifiable as site formation services or mining services . The Tribunal held that where there is excavation or raising of ore, the same would not be classifiable under site formation service. The activity of excavation of boulders would also not be a service simpliciter, as it includes further processes involved to make the boulders fit for client usage. Thus, the same would be classifiable under business auxiliary service and not under mining service . The impugned order dated 01.02.2017 passed by the Commissioner, therefore, cannot be sustained and is set aside - The appeal is, accordingly, allowed. 2023 (7) TMI 200 Levy of Service Tax - business auxiliary service (BAS) - whether the amount paid by the respondents to overseas companies situated in Dubai and shown as commission in the shipping documents in relation to export of readymade garments by the respondents is liable to be taxed under business auxiliary service (BAS), as defined under section 65(19) of the Finance Act, 1994? - reverse charge mechanism. HELD THAT:- A conjoint reading of all the clauses of the agreement leaves no manner of doubt that it is the overseas expenses incurred by the buyer that have to be deducted from the payment to be made by the buyer to the seller and this is limited to 12.5% of the invoice value. Wrong use of the word commission in the contract, particularly when the said amount has also been referred to as expenses in the same contract will not mean that commission has been paid by the seller. It is apparent from a conjoint reading of the various clauses of the aforesaid contract dated 15.04.2007 executed between Super Almas Trading and M/s. Sidh Designers Pvt. Ltd. that M/s. Sidh Designers, as seller, had agreed to sell the goods to Super Almas Trading, which has been described as the buyer, after deduction of expenses incurred by the buyer. Mere use of the word commission in the clause dealing with terms of payment would not mean that commission was paid by the seller. There is no third person who can be said to be acting an agent and the goods were undoubtedly sold on a principal to principal basis. What was actually deducted from the payment to be made by the buyer was the expenses incurred by the overseas buyer and not commission. The Commissioner, therefore, committed no error in concluding that commission was not paid by the foreign entity to the respondents. What was necessary was an examination of the terms of the contract and it was immaterial whether the contract was placed by the respondents during the course of investigation or in the reply filed to the show cause notices, for nothing turns on this, unless it was established by the department that the contract did not exist at all. The Commissioner was justified in dropping the demand proposed in the show cause notices - Appeal dismissed. 2023 (7) TMI 199 Extended period of limitation - wilful suppression of facts or not - whether the Commissioner was justified in holding that the extended period of limitation contemplated under section 73(1) of the Finance Act was correctly invoked in the facts and circumstances of the case? - HELD THAT:- It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful since wilful precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be wilful and with an intent to evade payment of service tax - The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It would also be useful to refer to a decision of the Tribunal in M/S. SHIV-VANI OIL GAS EXPLORATION SERVICES LTD. VERSUS CST, NEW DELHI [ 2016 (10) TMI 878 - CESTAT NEW DELHI] , wherein the Tribunal after making reference to the decision of the Supreme Court in COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1994 (9) TMI 86 - SUPREME COURT] , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. Various factors have not been examined by the Commissioner in the impugned order and a conclusion has merely been drawn that because there was suppression of facts by the appellant, the suppression was with an intent to evade payment of service tax - impugned order holding that the extended period of limitation has been correctly invoked, therefore, cannot be sustained and is set aside - appeal allowed. 2023 (7) TMI 198 CENVAT Credit - rule 14 of the 2004 Credit Rules read with section 11A of the Central Excise Act, 1944 - levy of penalty under section 15(3) of the 2004 Credit Rules - contravention of rule 6(3A) of the 2004 Credit Rules - levy of service tax on excess baggage charges recovered from passengers - invocation of provisions of section 73(1) of the Finance Act for suppression of facts. Extended period of limitation - HELD THAT:- In the present case, the show cause notice was issued on 21.10.2014. In regard to the demand of CENVAT credit taken in excess of rule 6(3A) of the 2004 Credit Rules, the period of dispute is from July 2010 to March 2011. In regard to the demand of service tax short paid on excess baggage charges, the period of dispute is from April 2009 to March 2012. In the present case, the entire demand is for the extended period of limitation - in the absence of any challenge to this finding, the extended period of limitation could not have been invoked. When the entire demand proposed in the show cause notice is for the extended period of limitation, the demand proposed in the show cause notice has to be set aside, irrespective of the challenge by the department to the issues on merit. The audit of the statutory records of the respondent was conducted from 02.05.2012 to 08.05.2012. The same issues and demand were suggested in the audit report. The respondent had also been filing ST-3 returns. However, the show cause notice was only issued on 21.10.2014, i.e. after more than two years of the facts coming to the knowledge of the department. The department could have issued the show cause notice within the normal period of limitation. The extended period of limitation could, therefore, not have been invoked by the department. The appeal filed by the department deserves to be dismissed and is dismissed. 2023 (7) TMI 197 Levy of penalty upon the Director of appellant s company and upon Head of Finance and Accounts of the appellants company and upon the company itself - Works Contract Service - contravention of the provisions of Section 67 of the Finance Act, 1994 and also contrary to Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- It has been submitted on behalf of the appellants that company was regularly audited without any objections as taken in impugned SCN. It has nowhere been denied by the department. There is no denial about regular filing of regular ST-3 returns. In light of these admissions, based on the subsequent audit, the objection which could be raised during previous audit, SCN cannot be issued that too after invoking extended period of limitation. Shri Anil Mohan Pokhriyal, admittedly, is not the Director of the company, he was a senior employee acting on the mandate of the directors. Otherwise also except his own statement, there is no incriminating evidence against him to prove that he had willfully suppressed the facts with an intention to evade the payment. He being the employee, question of him being the beneficiary of alleged evasion does not at all arises. Once there is absence of motive, in the light of criminal jurisprudence, mens rea cannot be attributed. The adjudicating authority has been unreasonable while imposing penalty on Shri Anil Mohan Pokhriyal. Similarly there appears no evidence of any positive act on part of Retd. Col. Swarn Kumar Makin and even of the company that there was any intentional mala fide suppression. Except that there is uncorroborated statement of auditor Shri Satnam Singh, same cannot be looked into especially when the penalty on the said auditor of appellant company was done away. Penalties upon Shri Anil Mohan Pokhriyal and Retd. Col. Swarn Kumar Makin and on the company are held as liable to be set aside. The order under challenge is held as liable to be set aside on this score only. Works contracts pertaining to Industrial or Commercial Construction Services - HELD THAT:- The relevant service i.e. Commercial or Industrial Construction too was in existence till 30.06.12 and the party was classifying it as such in their ST-3 returns. Abatement is also held to have been rightly availed. Also that the SCN had proposed a demand running into crores but the original adjudicating authority after appreciating and accepting the contentions of the appellant has held that options of Rule 2A of Service Tax (Determination of Value) Rules, 2006 lies with the assesse and department cannot force the assessee to calculate in accordance of one of the said option. Based on these findings that major portion of demand of interest even on mobilization advance has also been dropped. Despite these findings still some demand under challenge with interest and penalty has been confirmed - In the light of the fact that department raised the demand based on compelling appellant for one option calculate despite that other available options were to be adopted as per choice of assessee and that never earlier any such objection was raised, the demand confirmed along with interest penalties against M/s. Makin Developers Pvt. Ltd. is liable to be set aside. The SCN is held time-barred. Findings of adjudicating authority are held unreasonable. Hence, the orders under challenge confirming demand with interest against company and imposing penalty on company, its director and its financial head are hereby set aside - Appeal allowed. Central Excise 2023 (7) TMI 196 Demand of Differential Duty - wrongful determination of assessable value of finished goods by not including therein the monetary value of the duty benefits, obtained from its customers as a result of the transfer of the advance licenses - invocation of Extended period of limitation invoking proviso to Section 11A (1) of the Central Excise Act, 1944 - HELD THAT:- Section 11A of the Central Excise Act, 1944, which deals with the issue of limitation for issuing show cause notices for recovery of duties which have been short paid or short levied, is the governing law in the present case. In the case of Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay [ 1995 (3) TMI 100 - SUPREME COURT] , this Court, while dealing with a similar fact circumstance wherein the extended period of limitation under the abovementioned proviso had been invoked, held that since the expression suppression of facts is used in the company of terms such as fraud, collusion and willful misstatement, it cannot therefore refer to an act of mere omission, and must be interpreted as referring to a deliberate act of non-disclosure aimed at evading duty, that is to say, an element of intentional action must be present. The format of the ER-1/RT-12 return is seen, which the assessee was required to file on a monthly basis for intimating to the department the value of clearances effected and the amounts of duties paid thereon - there are no separate column or requirement in these forms for declaring the value and other details of clearances effected to the deemed export buyers i.e. holders of advance licenses. Note 4 under Form ER-1 does require separate details to be mentioned for exports under bond - In the absence of any specific column or note similar to note 4, requiring separate disclosure of the value of deemed export clearances, there are no merit in the findings of the adjudicating authority that there was suppression of facts as a consequence of assessee's failure to separately disclose the value of deemed export clearances. An accusation of non-disclosure can only be made if there is in the first instance a requirement to disclose. The finding of the Tribunal agreed upon, that during the period in dispute it was holding a bonafide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a malafide belief particularly when such a belief was emanating from the view taken by a division bench of Tribunal - Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances. The Show Cause Notice in this case was issued on 29.12.2005 and sought to invoke the extended period of limitation by making similar allegations as in Civil Appeal No. 6033 of 2009. The order impugned in this appeal, however is an order dated 4.4.2010 of the Gujarat High Court by which the Court had dismissed an appeal filed by the revenue against an order of CESTAT, by holding that no question of law could be stated to arise from the order of CESTAT. The conclusions with regard to Civil Appeal 6033 of 2009 apply equally to this appeal. In the result both the appeals filed by the Revenue are dismissed on the ground that the demands are time barred. 2023 (7) TMI 195 Works contract with customers for installation and erection of lifts parts/components cleared from appellant s factory to sites of customers for AMC and for modernization since contract is indivisible, sale value of parts/components is not available - HELD THAT:- We do not think that the legacy issue requires detailed elucidation. Further, for the sake of consistency and certainty, we think that the appeals should be dismissed. Appeal dismissed. 2023 (7) TMI 194 Marketability/saleability/dutiability - manufacture of petroleum products and organic chemicals - Low Sulphur Heavy Stock (LSHS) - Long Residues (LR) - Refinery gases (RG) - captive consumption - eligibility for exemption under notification 67/95 - It was held by CESTAT that Revenue having failed to establish marketability of the impugned goods in the present ten show cause notice which have been adjudicated as per the impugned order cannot succeed on the leviability of duty of excise on the impugned goods. Since the appeal of revenue cannot succeed on this ground, the other issues and ground of admissibility of exemption under Notification No 67/95-CE etc. need not be considered. HELD THAT:- There are no ground to interfere with the impugned judgment - appeal dismissed. 2023 (7) TMI 193 Priority of recovery of tax / duty of excise dues - Attachment of property - Seeking removal of lien/charge/encumbrance/mutation entry of Central Excise Department from the records of Respondent No. 4 and 5 in respect of the immovable property - refusal to register the Sale Certificate because of the lien/charge/encumbrance/mutation entry of Respondent No. 1 and 2 recorded in the records of Respondent No. 4 and 5 in respect of the Secured Asset - HELD THAT:- The issue raised in the present Petition is squarely covered by the decision of the Full Bench of this Court in the case of Jalgaon Janta Sahakari Bank Ltd. and Anr. Vs Joint Commissioner of Sales Tax Nodal 9, Mumbai and Anr. [ 2022 (9) TMI 163 - BOMBAY HIGH COURT] . In this decision, the Full Bench has clearly held that if the security interest of the secured creditor is registered with CERSAI, then the secured creditor would get priority over the dues of the Government. Since the Full Bench decision of this Court in the case of Jalgaon Janta Sahakari Bank Ltd. and Anr. has rested the controversy of priority of the secured creditor viz-a-viz the dues of the Central Government or State Government or local authority under Section 26-E of the SARFAESI Act, 2002, the lien/charges/encumbrance/mutation entry, if any, registered with Respondent No.5 by Respondent Nos. 1 2 cannot be allowed to stand and Respondent No. 4 would have to be directed to record/register the Sale Certificate/Sale Deed under the provisions of the Registration Act, 1908 as free from any encumbrances of the Respondent No. 1 and 2. Petition allowed. 2023 (7) TMI 192 Exemption to goods supplied to projects funded by the U.N. or other international organizations under N/N. 108/95 dated 28.08.1995 - denial on the ground that the supplied goods were not in the nature of being consumed in the core activity of the project on permanent basis - also alleged that contractors purchased the goods in their own name, from their own funds - denial on the basis of clarification given by the Circular dated 12.06.2008 - HELD THAT:- Notification 108/95 grants exemption to all goods required for execution of the projects financed by international organizations like World Bank, Asian Development Bank etc. To claim the exemption, the manufacturer has to obtain a certificate from the head of the Project Implementing Authority, countersigned by an officer not below the rank of Joint Secretary to the Government of India or Principal Secretary or Secretary to the state Government, to the effect that the goods are required for execution of the project, which has been approved by the Government of India. The Appellant has got the certificates and hence they fulfilled the condition stipulated in the Notification 108/95 dated 28.08.95, to avail the exemption. The Appellant stated that after introduction of Explanation 2 to the Notification, CBEC issued clarification vide Circular dated 12.06.2008, which has added words to the Notification which were not there. As per the Circular, the exemption is applicable to goods which form part of the project on permanent basis and not to goods which are used for execution of the project and after completion of the project remain with the contractors, for further deployment in other projects. This interpretation has not been envisaged in the Explanation2 - the department has interpreted the Explanation 2 wrongly. The Explanation 2 would only mean that the goods brought into the project should not be withdrawn by the contractor during the course of execution of the project. After the project is completed the contractor is well within his right to withdraw the capital goods and machinery used in execution of the project, since it does not form part of the structure of the project. This view has been taken by the Tribunal in the case of M/S. SCHWING STETTER (I) PVT. LTD. VERSUS CCE AND ST, LTU, CHENNAI [ 2018 (1) TMI 764 - CESTAT CHENNAI ] where it was held that The department cannot later turn around to deny exemption by interpreting Explanation 2 to the effect that the exemption is not available if the goods are withdrawn from project site . The Appellant are eligible for the benefit of the Notification 108/95 dated 28.08.95, for the chassis cleared to the projects funded by international organizations, as they have fulfilled the conditions stipulated in the Notification. Accordingly, the impugned order is liable to be set aside - Appeal allowed. CST, VAT & Sales Tax 2023 (7) TMI 191 Scope of clarification issued by the Revenue Department - To be retrospective or prospective - Applicability of Exemption Entry No. 8 on maize starch - overriding effect of Taxation Entry No. 61 - recovery of taxes retrospectively is a mere change of opinion or not - HELD THAT:- The Exemption Notification was erroneously held by the High Court not to have statutory backing. Recital thereof shows the source of power. Exercise of power was in terms of Section 17 of the Act, which appears to be the repository of the State Government s power to exempt payment of tax. However, nothing really turns on it in view of the several Amendment Acts by which the Schedules were amended from time to time - Indeed, the Act was amended further with effect from 27th March, 2002 by Act No.18 of 2002, i.e., the Tamil Nadu General Sales Tax (Fourth Amendment) Act, 2002, but the same being a post-millennium event is admittedly beyond the period under consideration, i.e., 1998-99; hence, we need not be too concerned with the latter amendment. It would appear from the conspectus of the statutory provisions as delineated above that there were two entries in the field at or about the period of the relevant assessment year, i.e., sago and starch of any kind in Schedule I, referred by us as Taxation Entry No.61, and products of millets (rice, flour, brokens and brans of cholam, cumbu, ragi, thinai, varagu, samai, kudiraivali, milo and maize) in Schedule III which we are referring to as Exemption Entry No.8. Law is well settled that if in any statutory rule or statutory notification two expressions are used - one in general words and the other in special terms - under the rules of interpretation, it has to be understood that the special terms were not meant to be included in the general expression; alternatively, it can be said that where a statute contains both a general provision as well as a specific provision, the latter must prevail - it is thus emerged that Taxation Entry No.61 is relatable to starch of any kind whereas Exemption Entry No.8 relates to products of millet . The clarification vide Circular dated 8th October, 1998 was issued in exercise of power conferred by the statute (i.e., Section 28-A of the Act). Whenever a clarification pursuant to an application made by a registered dealer as to the applicable rate of tax is issued under sub-section (1), or the Commissioner on his own clarifies any point concerning the rate of tax under the Act, or the procedure relating to assessment and collection of tax as provided for under the Act is issued under sub-section (2), the object is to make the rate of tax explicit what is otherwise implicit - What the clarification provided by the Commissioner does is to clear the meaning of the two entries which was already implicit but had given rise to a confusion. A clarification of this nature, therefore, is bound to be retrospective. The impugned judgment is upheld albeit for reasons not assigned by the High Court. Finding no merit in the appeals, the same is dismissed.
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