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TMI Tax Updates - e-Newsletter
August 14, 2024
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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State GST officer suspended for issuing refund to fake exporter challenged. Lack of evidence and proper verification cited. Suspension quashed.
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Court allowed fresh chance to petitioner due to discrepancies in turnover. Responding to notices could have changed the outcome.
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Petitioner challenged GST Assessment Orders, lacked info, charges may be taxable. Court quashed orders, remitted for fresh assessment.
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Goods transferred from FTWZ to DTA or within FTWZ, subject to CGST Act. Ruling confirms bonded warehouse status. Addressing IGST levy & input tax credit reversal. FTWZ as SEZ warehouse.
Income Tax
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Tax officer fined Rs.25,000 & faces jail for disobeying court order.
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AO corrected mistake under sec 154 due to audit objections. Tribunal upheld assessee's appeal. Revenue's appeal dismissed.
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High Court ruled reopening proceedings invalid as AO lacked fresh material. AO's reason for reopening didn't show failure to disclose. Assessment order addressed issue already. Notice u/s 148 quashed.
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Court ruled converting blocks to slabs is "manufacture" under tax law. Impact on tax liabilities crucial. Upheld High Court decision.
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The case involves fake purchases in bullion sector. Key issue is Gross Profit rate. Tribunal directs 0.15% GP rate for disputed purchases.
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Company in liquidation faced income tax reassessment. NCLT appointed liquidator. IBC overrides. ITAT appeals dismissed.
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TP adjustment excludes incomparable companies due to related party transactions. Cost allocation change disallowed. 25% depreciation on intangible assets allowed.
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Assessee disputed TDS liability on provisions in books. Appellate authority ruled in favor citing precedent.
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AO added stock based on search & statements from GM/Director. Discrepancies due to search activities. AO misinterpreted finished goods accounting. ITAT allowed assessee's appeal.
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Assessee denied exemption, challenges denial due to missing registration docs. ITAT rules existing registration protects exemption claim.
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Tax case: Unexplained cash credit from alleged bogus loans. Assessee proved loan genuineness with evidence. ITAT upholds decision.
Customs
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Tribunal cuts fine & penalty for importing old clothes. Confiscation upheld but fine & penalty reduced to 10% & 5%. CESTAT
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Dispute over imported goods as 'Capital Goods' for customs exemption resolved in favor of importer.
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Penalty overturned for arranging lorries in illegal export case. Lack of proof of knowledge crucial.
FEMA
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Property seized under SAFEMA isn't automatically linked to TADA cases. Declaratory suits in Bombay HC won't affect SAFEMA proceedings. No need to prove income-property link for SAFEMA notice validity.
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Court allows using documents from other legal proceedings as evidence in FERA case. Proceeds independently. The Director found guilty.
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Business trip with $50,000 in Cheques without permission led to FEMA violation. Appellant not liable, but Finance Manager aware. Penalties reduced.
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Company directors' liability under FEMA depends on their role, not just title. Lack of evidence led to dismissal.
Benami Property
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Appellant's properties attached in benami case. Tribunal confirms some but sets aside others due to inadequate consideration.
Indian Laws
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Court ruled exchange rate on deposit date applies for converting foreign arbitral award to INR. Interest ceases on deposit.
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Court rules interest on money award at 3x RBI rates with monthly compounding. Debtor must pay in 4 weeks. Compliance due Aug 6, 2024.
IBC
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Payment dispute case: Invoices overdue? Time-barred claims rejected. Preexisting dispute on 11th invoice. Appeal dismissed.
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Appellate Tribunal: Bank Guarantee can be invoked in moratorium. Assets of surety separate from Corporate Debtor. Appeal allowed.
PMLA
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Challenge to property attachment in case. Adjudicator equates property value to proceeds. Definition clarified in related case. Appellant's failure to disclose source led to dismissal.
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Seizure order challenged under PMLA 2002 not valid if investigation not done within 365 days. Court allows appeal, sets aside order.
Service Tax
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Appellant wins refund claim for non-commercial project, no service tax liability.
Central Excise
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Dispute over CENVAT credit for construction services resolved! Tribunal broadens rules, allowing credit for plant security.
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Appellant wins cenvat credit case on Bills of Entry! Tribunal rules in favor citing Customs Act.
TMI Short Notes
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (8) TMI 703
Challenge to suspension order of State GST officer - petitioner has issued refund to a fake exporter without properly verifying the relevant details - challenge to order of suspension mainly on the ground that there are no strong prima facie materials against the petitioner and that there was a clear non-application of mind on the part of the respondents in justifying the suspension on the ground that the petitioner did not check / verify the E-way bills, which was not a requirement under the circular dated 23.03.2020. HELD THAT:- It must be borne in mind that the threshold while dealing with a suspension order passed against an authority exercising a Quasi-Judicial power or a Judicial power, must be slightly at a higher level than the test applied for the authorities who are performing administrative functions. The act of passing orders on the application filed for refund of the Input Tax, is clearly a Quasi-Judicial function. The relevant provision contemplates that the refund claim must be proceeded within a period of seven (7) days from the date of filing of he application for refund. If it is not complied with, it will attract interest and in which case it will also amount to a misconduct for violation of the provisions of the GST Act. Therefore, the authority has to balance the interest of the exchequer and at the same time must process the refund claim within the time stipulated by the Act. As a Quasi-Judicial authority, if the petitioner has fulfilled all the requirements that are provided under the relevant Act and the circular, that by itself is sufficient compliance before passing the order of refund of the tax. If for any reasons, it ultimately turns out to be a fake export by a fraudster, the order passed by the petitioner by itself cannot result in the suspension of the petitioner. In other words, when the petitioner was exercising his Quasi-Judicial function, unless there was a strong prima facie material against the petitioner involving moral turpitude, grave misconduct, etc., suspension must be the last resort. This Court finds that there were no strong prima facie materials against the petitioner to prima facie come to a conclusion that the petitioner was involved in an act of moral turpitude or grave misconduct. This Court is inclined to interfere with the order of suspension passed by the 2nd respondent - the impugned suspension order issued by the 2nd respondent is hereby quashed - Petition allowed.
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2024 (8) TMI 702
Grant of bail - fabrication of registration certificates and claiming inadmissible input tax credit to evade payment of GST - Section 132 (1) (i) of the Central and State GST Act, 2017 - HELD THAT:- In the instant case, as the petitioner has been under judicial custody for the last 61 days, the investigation is not complete and the final report has not been laid, it is convincing that the petitioner is entitled to be released on statutory bail, since it is his indefeasible right under Sec.167(2) of the Code. The application is allowed, by directing the petitioner to be released on bail on him executing a bond for Rs. 1,00,000/- (Rupees One lakh only) with two solvent sureties each for the like sum, to the satisfaction of the court having jurisdiction, which shall be subject to the fulfilment of conditions imposed - bail application allowed.
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2024 (8) TMI 701
Cancellation of registration of petitioner - order of cancellation does not contain any reasons and there is no mention as to whether the objections of the petitioner had been considered at all - HELD THAT:- The undisputed fact, that can be seen from the record placed before this Court, is that a reason was set out in the show cause notice for initiating the process of cancellation of registration. The petitioner filed his objections to the said proposal. The 1st respondent, without referring to any of those objections and without assigning any reasons in the order, had directed cancellation of registration of the petitioner. Such an order, without assigning reasons and without considering the objections of the petitioner, is a clear violation of the principles of natural justice and requires to be set aside. The impugned order of the 1st respondent is set aside - the writ petition is disposed off.
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2024 (8) TMI 700
Challenge to present petition - unreasoned order - violation of principles of natural justice - inadmissible input tax credit in respect of motor vehicle services and airlines travel - HELD THAT:- This Court is inundated with writ petitions challenging such unreasoned orders, which have been issued on the last few days of the extended period of limitation for passing such orders - It is apparent that such orders are not informed by reason and fail to consider the responses submitted by the tax payers. It appears that these orders have been passed only to somehow raise a demand prior to the expiry of the limitation period and perhaps being fully conscious that said orders would not sustain. List on 29.08.2024.
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2024 (8) TMI 699
Challenge to assessment order - difference in the turnover in GSTR 7 and GSTR 3B 0 petitioner has failed to respond to the notices - HELD THAT:- It is noticed that the dispute arises on account of difference in the turnover in GSTR 7 and GSTR 3B. Perhaps, if the petitioner had responded to the notices that preceded the impugned order, the petitioner may have succeeded. The petitioner deserves a fresh chance to explain the case although no fault can be attributed to the first respondent for passing the impugned order, as there was no reply. Considering the same, the impugned order is set aside and the case is remitted back to the first respondent to pass a fresh order on merits subject to the petitioner depositing 10% of the disputed tax to the credit of the Government from his Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (8) TMI 698
Extension of time limit for issuance of the order u/s 73(9) of WBGST/CGST Act, 2017 for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized - HELD THAT:- Taking into consideration the fact that a prima facie case has been made out by the petitioner, and the fact that a coordinate Bench of this Court by an order dated 13th February, 2024 in an identical matter in the case of OSL Exclusive Pvt. Ltd. v. Union of India Ors., [ 2024 (3) TMI 1338 - CALCUTTA HIGH COURT] had been pleased to pass a limited interim order, it is proposed to stay the impugned demand made in the order dated 15th April, 2024 as appearing at annexure P-3 to the writ petition till the end of November, 2024 or until further order whichever is earlier. Liberty to mention after expiry of the period for exchange of affidavits.
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2024 (8) TMI 697
Delayed availing of Input Tax Credit contrary to Section 16(4) of the respective GST Enactments - HELD THAT:- This is fit case for interference as the Parliament has itself taken stock of the situation by addressing the issue in Clause 114 of the Finance (No.2) Bill, 2024 with the rider in Clause 146 of the Finance (No.2) Bill, 2024. The impugned Order-in-Appeal No.MAD-CGST-JTC-APP-173-21, dated 25.01.2021 passed by the third respondent confirming the Order-in-Original No.VNR-GST-0000- AC-000-01-2020, dated 09.11.2020 passed by the second respondent, is set aside and the case is remitted back to the second respondent to pass a fresh order, after taking stock of the amendments into the respective GST Enactments, based on the proposals in Finance (No.2) Bill, 2024. This Writ Petition stands disposed of.
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2024 (8) TMI 696
Challenge to Assessment Orders for multiple Assessment Years - case of the petitioner is that the SCN that preceded the impugned order, did not mention any of the ingredients for invoking larger period of limitation under Section 74 of the respective GST enactments, 2017 - HELD THAT:- There are shortcomings on the part of the petitioner for not giving proper informations to the department in a readable form. This is evident from the notice issued to the petitioner for the respective periods in Form GST DRC 01. The petitioner compounded the case by not participating in the personal hearing and instead, gave certain informations through google drive link which was inaccessible or not readable and has thus suffered the impugned Assessment Orders. The amount that are collected by the petitioner from the passengers through its General Sales Agents (GSAs) are taxable only in the hand of the Airport Authority of India. If any other separate charges were collected by the petitioner for acting as pure agent of Airport Authority of India, such service may be liable to tax in the hands of the petitioner under the provisions of the respective GST Acts and as per the Notifications issued by the Central Government under Section 9 of the respective GST Enactments. This would require a detailed consideration by the respondent. If the petitioner has availed input tax credit on the service tax collected from the passengers towards Passenger Services Fee (PSF) and User Development Fee (UDF), the petitioner would be liable to reverse the same. This aspect also needs to be re-examined by the respondent. Considering the fact that there is no clarity either at the Show Cause Notice or in the respective impugned Assessment Orders, this Court is inclined to quash the respective impugned Assessment Orders and remit the case back to the respondent to pass fresh orders on merits - The petitioner is directed to co-operate with the respondent by filing reply to the Show Cause Notices, Addendum and Corrigendum that may be issued. The petitioner shall furnish the documents to the respondent. These Writ Petitions are disposed of.
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2024 (8) TMI 695
Transfer of title of goods stored in FTWZ Unit by the Applicant to its customers in Domestic Tariff Area (DTA) or multiple transfers within the FTWZ followed by a subsequent removal from FTWZ Unit - Bonded warehouse transaction covered under para 8 (a) of Schedule III of the CGST Act or the TNGST Act and the rules made there under - levy of IGST on goods stored in FTWZ unit and supplied to its customers in DTA unit, in addition to the customs duty payable by the customer in DTA on removal of goods from the FTWZ unit in accordance with Section 30 of Special Economic Zone - reversal of input tax credit of common inputs/input services/Capital goods is required at the hands of the Applicant in terms of recent amended Section 17 (3) of the CGST Act. Whether the transfer of title of goods stored in FTWZ Unit by the Applicant to its customers in Domestic Tariff Area (DTA) or multiple transfers within the FTWZ followed by a subsequent removal from FTWZ Unit would result in bonded warehouse transaction covered under para 8 (a) of Schedule III of the CGST Act or the TNGST Act and the rules made there under? - HELD THAT:- As per the nature of services being provided to the applicant by M/s. Kerry Indev Logistics Private Limited, which is a unit of FTWZ, it is clear that the basic activity of a FTWZ unit is warehousing of the goods belonging to its client. Further, the definition of FTWZ as per Section 2(n) of the Special Economic Zones Act, 2005, carries the phrase wherein mainly trading and warehousing and other activities related thereto are carried on , confirms the fact that warehousing is one of the most important activity undertaken by an unit in FTWZ. Further, in such cases where the goods are imported and warehoused by the LSP (M/s. Kerry Indev Logistics), on behalf of the client (the applicant), it is observed that the LSP normally files a Bill of Entry for warehousing , in which the details of both the SEZ entity (LSP) and the Indian client would be mentioned. Special Economic Zones are deemed to be considered as ports, airports, inland container depots, land stations, outside the Customs territory of India, under Section 7 of the Customs Act, 1962, which deals with the appointment of ports, airports, etc. Hence, it is a deemed territory outside the Customs territory of India. The Free Trade Warehousing Zone (FTWZ) is part of SEZ scheme and it is a Customs bonded, warehouse. Warehousing of goods that are imported without payment of appropriate Customs duties are carried out in these zones. SEZ is a specifically delineated duty free enclave which is deemed to be a foreign territory for the purposes of trade operations and duties and tariffs. Normally, the applicant imports goods and stores them in FTWZ till he finds a local customer who will purchase the goods and such purchaser clears the goods under the provisions of the Customs Act. In the instant case, the goods imported by KILPL belonging to the applicant are reported to have been deposited and warehoused in FTWZ unit for further modes of transfer. As far as the activities relating to transfer of title of goods by the applicant to customers in DTA , and multiple transfers within the FTWZ are concerned, both these activities get squarely covered under para 8 (a) of Schedule-Ill of the CGST Act, 2017. In respect of the activity relating to followed by a subsequent removal from FTWZ unit, it is observed that the same relates to the customer in whose name the title of goods has been transferred, as it is connected through the phrase followed by a to the other two main queries referred above. Thus, the transfer of title of goods stored in FTWZ Unit by the applicant to its customers in Domestic Tariff Area (DTA) or multiple transfer within the FTWZ, gets covered under para 8 (a) of Schedule-III of the CGST Act, 2017. Whether Integrated Goods and Service Tax(IGST) is payable by the applicant on the goods stored in FTWZ unit and supplied to its customers in DTA unit in addition to the Customs Duty payable by the customer in DTA on removal of goods from FTWZ unit in accordance with Section 30 of Special Economic Zone (SEZ) Ad, 2005 read with the Customs laws? - HELD THAT:- This query need not be answered, as the answer to first query is answered in the affirmative. Irrespective of whether supply of goods lying in FTWZ unit to DTA customers is covered under Schedule-Ill of the CGST Act or not whether any reversal of input tax credit of common inputs/Capital goods is required at the hand of the applicant in terms of recent amended Section 17 (3) of the CGST Act? - HELD THAT:- Prior to amendment of Section 17 of CGST Act, 2017, carried out under the Finance Act, 2023 (8 of 2023), the explanation to Section 17 (3) of the CGST Act, 2017, did not include the activities listed in Schedule-Ill as exempt supply . Hence, all the activities listed in Schedule-Ill were excluded for the purpose of apportionment of credit. With the amendment to Explanation of Section 17 (3) of the CGST Act, 2017, apart from paragraph 5 of Schedule-Ill to the Act, clause (a) to paragraph 8 of the said schedule have been mentioned as an exception to Section 17 (3) of the Act. Accordingly, proportionate reversal of ITC of common inputs/capital goods/services availed, if any, is required to be made by the applicant in terms of the amended Section 17 (3) of the CGST Act, 2017, and the rules made thereunder.
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Income Tax
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2024 (8) TMI 694
Disobedience of the order by the Deputy Commissioner of Income Tax (DCIT) - Jurisdictional error in assessing the applicant at Lucknow instead of New Delhi Contempt application has been filed alleging willful and deliberate disobedience of the judgment and order passed by a Division Bench of this Court [ 2015 (3) TMI 1229 - ALLAHABAD HIGH COURT ] , whereby notice issued to the petitioner-applicant was quashed on the ground of jurisdictional error and the opposite party was to delete all the outstanding amount from the web portal showing the dues to be paid - judgment had quashed the notice and subsequent proceedings due to jurisdictional errors, directing the deletion of any outstanding amounts from the web portal. Despite this, the opposite party did not comply, leading to the present contempt proceedings. Show cause notice was issued to the opposite party - Mr. Harish Gidwani, DCIT, Range-2, Lucknow that why he should not be tried and punished u/s 12 of the Contempt of Courts Act, 1971 for willful and deliberate disobedience of the order HELD THAT:- This Court is of the view that the opposite party is guilty of contempt of the order passed by the writ Court and the opposite party does not have the jurisdiction or authority to interpret the order passed by the Court by putting words which are not contained in the judgment and order appears to be willful and deliberate. It is not in dispute that notice issued to the applicant for the assessment year 2012-13 dated 3.11.2014 was quashed on the ground of jurisdictional as well as consequential orders were also directed to be set aside. Meaning thereby, the Assessing Officer has to take care that the entry existing on the web portal was to be deleted immediately after passing of the judgment and order dated 31.03.2015 but deliberately and intentionally the outstanding of notice of assessment year 2011-12 became operation on the web portal till seven years and seven months which ruined the reputation of the applicant and this act of the Income Tax Authority was in deliberate and willful disobedience of the judgment and order dated 31.03.2015. Here, in the present case, as per own admission of previous learned counsel for the opposite party, the outstanding amount was deleted from the web portal after seven months, although it is actually seven years and seven months which amounts deliberate and willful disobedience of the judgment and order dated 31.03.201 for which the opposite party is liable to be punished with imprisonment as well as fine. The Hon ble Supreme Court as well as this Court, on several occasions while considering the willful disobedience of the order, repeatedly held that willful and deliberate contempt must be punished both by the imprisonment and fine as it is absolutely imperative to uphold the dignity and majesty of a court of law. In view of the above, the ratio of judgments relied upon by learned counsel for the opposite party is not applicable to the present facts and circumstances of the case as in all the decisions a definite finding has been recorded that in case the commission of contempt is willful and deliberate, the contemnor must be punished to uphold the dignity and majesty of a court of law. Civil contempt is punishable with imprisonment as well as fine. In a given case, the court may also penalise the party in contempt by order him to pay the costs of the application and a fine can also be imposed upon the contemnor. Thus, this Court finds the charges framed vide order [ 2023 (11) TMI 240 - ALLAHABAD HIGH COURT ] to be proved against the opposite party. This Court is also of the opinion that the action of the opposite party is not only contemptuous but is also malicious. He took care with the money of the applicant in spite of clear direction of this Court and there is no justifiable reason for the said action. If the action of Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow (now retired) is considered in the background by the allegations made against him, it was his purposeful act to harass the applicant in spite of order of the writ Court. Unnecessarily mens rea is not required to be proved in a case of contempt but in the present case the violation is willful, deliberate and coupled with intention and motive to harass the applicant. For the reasons given above, this Court finds the opposite party- Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow (now retired) to be guilty u/s 12 of the Contempt of Courts Act, 1971. On these facts, fine only would not meet the ends of justice because Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow (now retired) was a senior officer, who was the custodian of assessing of the applicant and had committed a grossly reprehensible act and in case he is not punished, it would send down a wrong signal to other officials of Income Tax Department that even such unbusiness like conduct invites only a warning or fine, as Courts are flooded with matters, where orders are passed. Accordingly, a fine of Rs. 25,000/- along with simple imprisonment for a period of one week is awarded to the contemnor-Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow (now retired). In case of default, he would suffer one day s further simple imprisonment. The contemnor-opposite party (Mr. Harish Gidwani, Deputy Commissioner of Income Tax, Range-2, Lucknow (now retired)) will surrender before the Senior Registrar of this Court 3.30p.m. on 9.8.2024 who will send him jail to serve out the sentence. The Senior Registrar of this Court is directed to submit a report by 12.8.2024 to this Court in regard to compliance of the order.
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2024 (8) TMI 693
Rectification of mistake u/s 154 - AO, receipt of the audit objections, issued a notice u/s 154 and passed order by adding waiver of principal amount and revised the book profit was calculated - Tribunal, dismissed the appeal of the Revenue based on the tax effect - HELD THAT:- It is not in dispute that the audit objection was raised in respect of the assessment framed u/s 143 (3) read with Section 147 of the Act and not against the order giving effect to the CIT (A) s order and the order passed by the AO on 23rd August, 2012. The order u/s 154 of the Act is, therefore, quashed and set aside by the CIT (A) on the very ground. CIT (A) allowing the appeal filed by the assessee, the revenue preferred [ 2021 (4) TMI 1383 - ITAT AHMEDABAD] - CIT (A) has quashed and set aside the audit objection, admittedly pertaining to the assessment order, which has merged into the order of CIT (A). Therefore, CIT (A) has rightly quashed the order u/s 154 passed by the AO on the ground that there cannot be any mistake apparent on the record in order giving effect dated 23rd August, 2012. In such circumstances, the Tribunal has rightly dismissed the Miscellaneous Application of the petitioner holding that the appeal preferred by the revenue against the appellate order before the Tribunal was not in lieu of the audit objection being accepted by the department. Therefore, the case would not fall in the exceptions as provided in clause 10(c) of the CBDT Circular No. 3/2018 requiring withdrawal of the appeal of the petitioner where the tax effect fall below the threshold limit.
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2024 (8) TMI 692
Validity of reopening proceedings - reasons to believe - excess depreciation claimed - HELD THAT:- As on perusal of the reasons recorded that the AO has formed a reason to believe only on the basis of material available on record in absence of any fresh tangible material having live nexus with the reasons recorded. As also not in dispute that there is no failure on part of the assessee to disclose fully and truly all material facts relevant for assessment in absence of any allegation or even remote reference to that effect made in the reasons recorded. On perusal of the assessment order u/s 143 (3) AO in the regular course of assessment has considered the issue of depreciation and has chosen to make addition only on the point of depreciation claimed on depreciation on the project development phase which clearly shows that the AO after considering the claim of entire depreciation has made addition only on excess depreciation claimed by the assessee on the above issue. The impugned notice u/s 148 is therefore, not tenable and is accordingly quashed and set aside - Decided in favour of assessee.
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2024 (8) TMI 691
Deduction u/s 80IA - scope of expressions manufacture and production - AO rejected the claim on the ground that activity of the appellant cannot be categorized as manufacturing or production - HELD THAT:- The substantial question of law arising in the present appeal is no longer res-integra and has been decided in Arihant Tiles Marbles P. Limited 2009 (12) TMI 1 - SUPREME COURT] blocks converted into polished slabs and tiles after undergoing the process indicated above certainly results in emergence of a new and distinct commodity. The original block does not remain the marble block, it becomes a slab or tile. In the circumstances, not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence and, therefore, on the facts of these cases, we are of the view that the High Court was right in coming to the conclusion that the activity undertaken by the respondents-assessees did constitute manufacture or production in terms of section 80-IA of the Income-tax Act, 1961. Activity will not amount to manufacture or production under Section 80-IA will have disastrous consequences, particularly in view of the fact that the assessees in all the cases would plead that they were not liable to pay excise duty, sales tax etc. because the activity did not constitute manufacture. The activity undertaken by each of the respondents constitutes manufacture or production and, therefore, they would be entitled to the benefit of section 80-IA - Appeal of assessee allowed.
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2024 (8) TMI 690
Addition u/s. 14A r.w.r.8D - AO has not recorded his dissatisfaction over the workings made by the assessee, having regard to the accounts of the assessee - HELD THAT:- Since the own funds available with the assessee exceeds the value of investments, no disallowance out of interest expenses u/r 8D(2)(ii) is called for. In respect of expenditure disallowance to be made u/r 8D(2)(iii) of I T Rules, we direct the AO to consider only those investments, which have yielded exempt income for the purpose of computing average value of investments and accordingly recompute the disallowance under Rule 8D(2)(iii). Addition of disallowance computed u/s. 14A for computing book profits u/s. 115JB - As held in the case of ACIT vs. Vireet Investment (P.) Ltd.[ 2017 (6) TMI 1124 - ITAT DELHI] that the addition to be made under clause (f) of explanation (1) to section 115JB(2) of the Act is required to be made without resorting to computation contemplated u/s.14A r.w. Rule 8D of the Rules. Accordingly, we set aside the order passed by the tax authorities on this issue and restore the same to the file of the AO with a direction to compute the addition to be made under clause (f) of explanation (1) to section 115JB(2) of the Act on the basis of annual accounts of the assessee without having regard to the disallowance made u/s 14A of the Act.
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2024 (8) TMI 689
Bogus purchases u/s 69C - assessee is dealing in bullion - estimation of GP rate - assessee has categorically pleaded that even at its peak, the gross profit rate in case of the bullion cannot be more than 0.15% - HELD THAT:- The assessee has already shown GP rate of 0.13% on its sales which seems quite reasonable. The assessee has also demonstrated that if the purchases are held to be bogus and the corresponding expenses are reduced from the sales, the GP percentage, under such circumstances, would come to 26% of the sales, which is not possible in the business or trading of precious metals like gold and silver, wherein, the daily prices are regulated by market and by no regulator stretch of imagination it is possible to inflate the purchases. The addition of entire purchases of bullion by the assessee is not sustainable as per law. Even it is assumed that the assessee had made purchases from some other vendors, even then as pleaded by the assessee and not rebutted by the lower authorities, the maximum profit margin can be @ 0.15%. As submitted that under any circumstances at the most, the profit margin cannot be assessed more than 0.15% of the disputed purchases. Thus, is directed that in respect of disputed purchases AO will take GP rate @ 0.15% on the corresponding sales instead of @ 0.13% shown by the assessee. Appeal of the assessee is treated as partly allowed.
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2024 (8) TMI 688
Validity of reassessment/ income tax proceedings against company insolvent/dissolved - scope of parallel proceeding when company in liquidation - HELD THAT:- It is seen that in this case, once it is a matter of record that the proceedings are before the Hon'ble NCLT, then it merely needs to be considered whether the present proceedings can continue or need to abate considering the express provisions of Section 178(6) of the Act, which expressly provides for the IBC having an overriding effect, when a Company is in liquidation. We observe that the liquidation proceedings have commenced as per the order of Hon'ble NCLT, Kolkata in the assessee s case and an official liquidator has been appointed. It is a settled legal principle that from the time of appointment of official liquidator, the assessee company becomes defunct and the official liquidator steps into the shoes of the assessee. A reading of this provision makes it clear that once it is not possible to legally initiate any suit or other legal proceeding against the corporate debtor then the present proceedings before the ITAT are also affected and cannot proceed parallel to the proceedings under the IBC, 2016. From a plain reading of the provisions of Section 178(6) of the IBC, 2016, the IBC, 2016 has an overriding effect and therefore, the present proceedings cannot be sustained and the appeals need to be dismissed. We hereby dismiss all the appeals filed by the Revenue, with the liberty granted to the appellant/official liquidator to recall the present order when the occasion so warrants.
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2024 (8) TMI 687
Reopening of assessment u/s 147 - disallowance u/s 80P(2)(d) - interest and dividend received from Ahmedabad District Co-op. Bank and Gujarat State Cooperative Bank Limited when interest earned from investment made in any bank, not being co-operative society is not deductible u/s 80P(2)(d) - HELD THAT:- The original assessment has also dealt with this issue as the return of income was filed by the assessee on 29.11.2014 which was incorrectly mentioned in the reassessment proceedings that the assessee has not filed the return of income. The notices issued alongwith questionnaire categorically mentioned information called upon the assessee relating to dividend from Co-op Society and interest from Co-op Society for which the assessee has given the detailed reply alongwith its submissions. CIT(A) merely by deciding the case on merit cannot ignore legal aspect and state that it is infructuous. The reopening is on very same issue and, therefore, it is second opinion. Thus, application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 is allowed. Since the assessment itself becomes bad in law, the issues contested by the Revenue in the present appeal does not require any comment. Appeal of revenue dismissed. Deduction u/s 80P(2)(d) - As decision of Hon ble Gujarat High Court in the case of Surat District Co-op. Milk Producers Union vs. ACIT [ 2023 (9) TMI 1525 - GUJARAT HIGH COURT] CIT(A) has categorically mentioned that the Ahmedabad District Co-op. Bank Limited and the Gujarat State Co-operative Bank Limited are Co-operative Societies registered under Gujarat Co-operative Societies Act, 1961 and, therefore, the word Co-operative Society mentioned in Section 80P(20)(d) of the Act includes these Co-operative Societies also and, therefore, the interest earned and dividend income from these Co-operative Societies/Banks should be taken into account while granting deduction u/s 80P(2)(d). Decided in favour of assessee.
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2024 (8) TMI 686
Penalty u/s 271(1)(c) - rejecting the claim for set off of brought forward business loss against the income - allegation of defective notice u/s 274 - HELD THAT:- There was no failure to disclose material facts, as the cancellation of the banking license by the RBI was disclosed in the original return. The banking business was under liquidation, the cooperative status was intact, and the bank continued to earn interest on deposits placed out of funds realised form the borrowers and claimed the set-off of brought forward losses. We also note that the quantum appeal before the Tribunal against the order of the CIT(A) was dismissed for non-prosecution and the assessee had no opportunity to argue on the merits. Penalty is based on a technical disallowance of set-off claims, not on concealment or inaccurate particulars of income. We also note that the AO failed to specify whether the penalty was for concealment or inaccurate particulars in the notice issued u/s 274 r.w.s. 271(1)(c) of the Act. It is held in many judicial precedents that the penalty notice must clearly specify whether it is for concealment of income or furnishing inaccurate particulars. A vague notice vitiates the penalty proceedings. Decided in favour of assessee.
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2024 (8) TMI 685
TP Adjustment - comparable selection - exclusion of two comparable companies, viz. Inductis India Pvt. Ltd and Mentor Graphics India Pvt. Ltd for Related Party Transaction - HELD THAT:- As we note that both the above comparables for Related Party Transaction - as noted from Annual Report of Inductis India Pvt. Ltd., for financial years 2017-18, 2018- 19 out of the revenue of the Company 99% of the revenue is generated from inter co transaction. Annual Report of Mentor Graphics India Pvt. Ltd., for financial years 2017-18, 2018-19 out of the revenue of the Company 100% of the revenue is generated from inter co transaction. The above is excessive related party transaction rendering these two entities, un-comparable. Accordingly, we hold that these two comparables may be removed and other comparables be taken into account for computation of arm s length price. AO jurisdiction over the international transaction of expenditure incurred towards support services - DRP disallowing the expenditure incurred towards support services - as argued impugned transaction has been accepted by the TPO over the years, including the year under consideration, and hence, the same should not have been disturbed - disallowing the support services cost paid by the Appellant to the associated enterprise -changing the cost allocation methodology from headcount ratio to salary expense ratio, thereby partly disallowing support services cost - HELD THAT:- The issue is squarely covered in favour of the assessee by the decision of the ITAT, Delhi Coordinate Bench in assessee s own case[ 2024 (7) TMI 26 - ITAT DELHI] cost allocation key on the basis of headcount should not be disturbed for the year under consideration. Even the findings of the survey team were very much available before the ld TPO. We find that the cost allocation on the basis of headcount has been affirmed to be an appropriate allocation key as relying on case of CIT Vs. EHPT India Private Limited. [ 2011 (12) TMI 49 - DELHI HIGH COURT] Depreciation allowance towards the intangible assets (being customer contracts as well as assembled workforce) - additional ground raised - HELD THAT:- As decided in assessee s own case[ 2024 (7) TMI 26 - ITAT DELHI] held that the cost of intangible assets to be capital expenditure and accordingly granted depreciation at the rate of 25%. Thus we direct the AO to grant depreciation consequent to the order of the tribunal in AY 2010-11 and allow the additional ground raised by the assessee.
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2024 (8) TMI 684
Liability u/s. 201(1) - TDS on the provisions made in the books of accounts - as submitted by the assessee that the provisions were created as per accrual basis of accounting and were therefore reversed in the subsequent assessment year and TDS compliance was done on such expenses when the actual invoices were booked in the next year. HELD THAT:- We find considerable cogency in the contention of assessee that after appreciating the contention of the Assessee and relying on the case of IBM India (P) Ltd. [ 2015 (6) TMI 323 - ITAT BANGALORE] CIT(A) passed the appellate orders for AY 2014-15 to AY 2017-18 by holding that once the assessee has deducted TDS in subsequent year, the demand u/s. 201(1) cannot be raised and further interest u/s. 201(1A) only can be charged upto the date of deduction and where party is not known, or where transactions have been reversed / cancelled, TDS provisions are not applicable. Hence, CIT(A) has rightly granted the relief to the assessee in as much as the question of TDS payment was concerned and directed the AO to verify the facts and calculate interest upto the date of deduction, which does not need any interference - Appeals filed by the Revenue are dismissed.
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2024 (8) TMI 683
Scope of rectification u/s 154 - disallowance of PF/ESI contributions - whether PF ESI contributions made by employees is an allowable deduction or not ? - submission of the Ld. Counsel that before passing rectification order u/s 154 CPC-Bangluru did not issue any prior notice/intimation granting an opportunity of being heard to the assessee as mandated under sub-section (3) of section 154 HELD THAT:- As several opportunities were granted to the Ld. DR to place on record any evidence of issue or prior notice to the assessee before passing 154 order proposing the disallowance u/s 36(1)(va) of the Act - DR could not place any evidence on record to suggest that any prior intimation/notice was given to the assessee proposing to make disallowance u/s 36(1)(va) of the Act before passing rectification order u/s 154 of the Act. We observe that in the case of ACIT Vs. Humboldt Wedag Pvt. Ltd. [ 2018 (6) TMI 1829 - ITAT DELHI] held that it is obligatory under the statute to issue notice by the tax authorities and give a reasonable opportunity of being heard to the assessee and this is clearly set out under 154 of the Act. If this procedure of issuing notice and giving reasonable opportunity of being heard is not followed any further exercise will be nonest and the order itself becomes void ab initio. Thus we hold that the 154 order passed by the CPC was without issuing any prior notice/intimation granting an opportunity of being heard to the assessee and therefore is in violation of the mandate as provided in sub-section (3) of section 154 of the Act. Thus, the rectification order of CPC is bad in law. Diversified views on issue - As observed that as on the date of passing the order u/s 154 there were divergent views on the issue of disallowance u/s 36(1)(va) of the Act which were paid before due date u/s 139(1) of the Act. As on the date of passing rectification order the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. [ 2009 (12) TMI 38 - DELHI HIGH COURT] was in favour of the assessee, wherein the Hon ble High Court held that the contributions to PF/ESI paid before the due date u/s 139(1) of the Act are allowable as deduction. Therefore, the issue of disallowance u/s 36(1)(va) of the Act stands decided in favour of the assessee as on the date of passing of the rectification order u/s 154 - thus adjustment made by CPC disallowing PF/ESI contributions by way of rectification u/s 154 of the Act cannot be said to be a mistake apparent on record as contemplated u/s 154 - Assessee appeal allowed.
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2024 (8) TMI 682
Addition on account of excess stock found during search - AO determined the excess stock after comparing it with the books stock - addition made by AO has also relied on the statement of General Manager of the company and Director of the company - HELD THAT:- Both the teams convey to the factory Accounts Department which tallies the quantity and quality with the suppliers bills. Various details in the bill such as GST number, name, computation, etc. are checked and verified. Finally, the bill is couriered or hand-delivered to Noida Head Office from Sikandrabad unit where all details are checked again and further it is checked by the Purchase Department and tallied with the order placed by the assessee. In case of any discrepancy, the bill approval and subsequent entry in the books is held up till the issue is resolved or the material is rejected. This entire process takes time, ranging from a couple of days up to a week depending on the case to case basis. Based on this process of updating the stock register, the material unloaded upto 24.03.2021 could not be entered into the books of account at Noida office because of the search seizure activities being carried on during that period. The assessee filed the quantitative details of the stock updating the stock upto 24.03.2021, since the stock taking exercise was done on 24.03.2021 and not on 22.02.2021 i.e. the date of the stock summary ledger used by the search team for making comparison and drawing adverse inference. The search party took the stock by the description on the cartoons such as Dog, Panther and Zebra whereas the same contents can be a part of stock of Aluminium wire, rod and sheets mentioned in the raw material. Similarly, the production of the material during the two days of search has not been entered in the books but has been valued by the search party. The inventory has been prepared not based on the material but based on the description of the finished product. Further, Shri Subhash Singh in his statement has confirmed the fact that stock was being maintained at the Head Office at C-58, Sector 4, Noida, not at the plant level. Shri Subhash Singh was confronted with the accounts stock ledger at Sikandrabad and was asked to identify and quantify the material. He pointed out all the material as per the accounts stock ledger provided to him by the search team. This is also one of the reasons why the plant General Manager was not able to give a satisfactory reply on the stock. Similarly, it is difficult to distinguish between aluminium scrap 86%, aluminium scrap (low grade) and aluminium scrap. Shri Subhash Singh was not involved in day to day stock taking, manufacturing and technical aspects of the plant. Also in the statement he has slated that he mainly looks after plant administration, government liaisoning and compliances. Similarly, Sh. Akshat Jain, the Director stated in the statement that he needs to check the difference for reconciliation. AO has made the addition solely on the basis of statement recorded of Sh. Akshat Jain and Sh. Subhash Singh. Similarly, the inventorisation of the scrap has been done on estimate basis. The goods received during the period of search have not been entered in books and also the final product which has been manufacture and ready for sale was also not entered in the books. There was a difference to the tune of raw material received as well as the finished goods ready for dispatch which has been available at the premises but not entered in the books of accounts. These finished goods pointed out by the AO represent the production which has been done by the unit and which were ready for subsequent sales as on 24.03.2021. These were not unaccounted stock but the finished goods produced out of the raw material which were duly accounted for. Accordingly, these finished goods and the raw material received were not part of the stock inventory as per books of accounts. At the time of issue for sale, the entry is passed in the stock account whereby the raw material is reduced as consumed and corresponding entry of finished goods produced is recorded with the simultaneous issue of finished goods against the sale invoice. This is the normal accounting practice of stock in any manufacturing unit. AO has straightaway picked up the total quantity of finished goods as on 24.03.2021 and added the same as unaccounted stock ignoring the fact of corresponding raw material being available in the books of accounts. AO has not disputed the details and reconciliation submitted by the assessee including the quantity analysis in this regard. The addition made by the AO and sustained by the CIT(A) are due to the misinterpretation of the accounting system of finished goods and solely based on the statements recorded without any corroborative evidence of unaccounted sales. It is important to point out that nothing incriminating regarding any purchase or sales outside the books of accounts was found. Hence, the addition made on account of excess stock cannot be sustained. Appeal of the assessee is allowed.
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2024 (8) TMI 681
Denial of exemption u/s 11 by the CPC u/s 143(1) - non furnishing of fresh registration u/s 12AB - assessee having obtained the provisional registration u/s 12AB - whether non uploading of Form 10B within the date prescribed under the Act would become fatal to the claim of exemption u/s 11? - HELD THAT:- We find that the assessee was already enjoying the registration u/s 12AA of the Act vide order dated 08.01.2001, though in the instant case the assessee had indeed applied for fresh registration u/s 12AB of the Act in the prescribed form within the time allowed by the statute. That is why the said application has been duly considered by CIT by granting provisional registration in Form 10AC dated 05.04.2022 valid for 5 assessment years commencing from AY 2022-23 to 2026-27. As per the law, fresh registration could be granted only from the year in which application was preferred by the assessee. The said application made by the assessee for seeking fresh registration u/s 12AB of the Act is well within time allowed by CBDT. Hence the original registration obtained u/s 12AA dated 08.01.2001 would protect the assessee up to AY 2021-22 for claim of exemption u/s 11 of the Act as long as other conditions prescribed in section 11 to 13 of the Act have been fulfilled by the assessee. From AYs 2022-23 to 2026-27, the assessee would be eligible for exemption u/s 11 of the At given the fresh registration obtained u/s 12AB of the Act. Hence, for AY 2021-22 the assessee would be duly entitled for claim of exemption u/s 11 - The grounds raised by the assessee are allowed.
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2024 (8) TMI 680
Addition u/s 68 - unexplained cash credit - bogus unsecured loan - AO added the peak credit - no satisfaction on genuineness, creditworthiness of the lenders - interest disallowed u/s 69C - HELD THAT:- We find that the assessee has provided substantial evidence to establish the identity, genuineness, and creditworthiness of the loan creditors. AO's conclusions were largely based on assumptions and the principle of preponderance of human probability, without substantial evidence contradicting the assessee's claims. Assessee complied with statutory requirements, including the provision of confirmations, ID proofs, bank statements, and tax return details of the loan creditors. The repayment of loans in subsequent years further supports the genuineness of the transactions. The case of Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] is appropriate, wherein the Hon ble Court held that no addition should be made, if the repayment of loans is accepted by the department in subsequent years. CIT(A) has rightly noted that the AO s remand report did not provide substantial adverse comments on the identity and genuineness of the transactions. AO's reliance on the principle of human probability without concrete evidence does not warrant the additions made under sections 68 and 69C of the Act. Based on the above findings, and following the judicial precedents relied upon, we conclude that the appeal of the Revenue lacks merit and the CIT(A) s order deleting the additions under sections 68 and 69C of the Act is upheld. Revenue s grounds of appeal are, therefore, dismissed.
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Benami Property
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2024 (8) TMI 679
Benami property transaction - appellant Directorate attached 29 immovable properties - beneficial owner - provisional attachment orders - property purchased in the name of Kapuri Devi were excluded on the ground that both her sons and husband were working so the property could be purchased in her name - description of each property has been given by the appellant which otherwise has been left by the Adjudicating Authority for confirmation in case of Somendra Dhariwal HELD THAT:- The finding recorded by the Adjudicating Authority is without reference to the facts of the case referred earlier while referring the arguments of the appellant. The Adjudicating Authority shifted the burden on I.O. to show that the beneficial owner has provided the consideration of the properties though the detailed facts in that regard were submitted and has been narrated in this order also, thus, a perverse finding has been recorded going against the record and the material referred earlier. The finding has been recorded even going against the definition of benami transaction given under section 2(9)(A) despite satisfaction of both the limbs of the definition. It was a case where the property was transferred or held by a person of which consideration was provided or paid by another person. It is the case where wife and sons were not having sufficient means to acquire properties of the value given by the appellant and also that acquisition of property was for immediate or future benefit of the persons who provided consideration i.e. the father. It was found that the appellant Shobharam Dhariwal while in service could earn an amount of Rs. 63,95,140/- towards salary and if no part of it has been spent on the livelihood, he could not have acquired the property in name of his wife and son worth of Rs. 4 crore, 58 lacs and odd. The property was acquired for a value of a sum more than the earning. It was out of the illicit income of Shobharam Dhariwal while in service of the agriculture department. The unaccounted amount was used to acquire the property in the name of wife and sons for his own benefit and therefore it becomes a case of benami transaction‟ but the Adjudicating Authority has recorded superficial finding to deny confirmation to the attachment even for the properties at item no. 20 to 28 in Table A,properties at Sr. No. 15 to 19 in Table B, properties at Sr. No. 5 and 6 in Table C and movable properties in Table C (I). It has erroneously shifted the burden to prove the allegation on the appellant though it remains successful to prove it by bringing all the facts and relevant material on record and has been referred by us in the earlier paras of the order. The reference of Income Tax Returns (ITRs) and the source of one‟s earning apart from the description of the property acquired by the respondents has been given in those paras where Shri Shobharam used illegitimate earning for acquisition of property and in fact if the order of the Adjudicating Authority is allowed to stand, it would advance the cause of corruption in the hands of employees and would be fatal to the system. The Authority has considered the case even after taking into consideration of the income of two sons and the wife of one son to find out the benami transaction. In view of the above, we allow the appeal by causing interference in the order in following terms: 1. The attachment of property from item no. 1 to 19 and 29 in Table- A, properties at Sr. no. 1 to 14 given in Table-B and properties at Sr. no. 1 to 4 given in table C would remain subject to final outcome of the review petition pending before the Apex Court. The appellant Directorate would be at liberty to seek review of this order in reference to those immovable properties apart from 5 movable properties in Table-A (1) and 3 movable properties in Table- B (1) after the judgement of the Apex Court on the Review Petition. 2. So far as immovable properties at item 20 to 28 in Table-A, properties at Sr. No. 15 to 19 given at Table-B, properties at Sr. No. 5 and 6 given in Table-C and movable properties at Sr. No. 1 to 3 given in Table-C (1) are concerned, the impugned order is set aside with confirmation of the attachment for the detailed reasons given above. It would be for immovable property as well other than 5 movable properties in Table-A (1) and 3 movable properties in Table-B(1) left by Adjudicating Authority.
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Customs
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2024 (8) TMI 678
Maintainability of review petition - error apparent on the face of record or not - Condonation of delay in issuance of notices - HELD THAT:- There is no error apparent on the face of the record or any merit in the Review Petition, warranting reconsideration of the order impugned. The Review Petition is accordingly, dismissed.
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2024 (8) TMI 677
Challenge to SCN issued u/s 18(2) of the Customs Act, 1962 and the adjudication order in original - order records that no reply was received from the importer in response to the SCN - violation of principles of natural justice - HELD THAT:- Admittedly, in this case it is noticed that the petitioner had imported sports goods for a project which was awarded by the Central Government to NBCC and NBCC had subcontracted the job to the petitioner. The petitioner claims that the petitioner is entitled to an exemption and the goods imported by the petitioner is covered by Notification No.146/94-Customs Serial no.1, dated 13th July, 1994. Records reveal that the petitioner was given an opportunity of personal hearing by the Adjudicating Officer and after hearing the petitioner, a final order had been passed. Although a personal hearing was given but non-consideration of such response by recording in the order that no reply was received appears to be a mechanical approach, apart from being violation of principles of natural justice. Although, there is an Appellate Authority, however, as the order-in-original stands vitiated and the order cannot be sustained. The same is, accordingly, set aside and is remanded back to the Adjudicating authority for re-hearing. Petition disposed off by way of remand.
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2024 (8) TMI 676
Benefit of exemption of Additional Duty of Customs (SAD) leviable under Section 3(5) of Customs Act, 1962 - April 2011 to March 2013 - benefit of N/N. 20/2006-Cus. dated 01.03.2006 (Sl. No. 50) and N/N. 21/2012 dated 17.03.2012 (Sl. No. 12). Extending the benefit of Notification to the goods that were omitted - HELD THAT:- The question of extending the benefit of Notification to the goods that were omitted does not arise. Therefore, the appellant s claim that the amendment to the First Schedule has no implication on the exemption Notification is absolutely of no legal basis in as much as the exemption Notification read with the amendment made to the First Schedule makes them ineligible for the benefit of the above Notification. There is no dispute that the Bills of Entry filed by the appellant was for clearance of textile materials classifiable under Chapter Headings 5407, 5516 and 5903 which specifically stand omitted by the above amendment. Hence, the Commissioner (Appeals) had rightly denied the benefit of the Notification. As rightly submitted by the Revenue, in view of the numerous decisions of the Hon ble Supreme Court, any exemption Notification has to be strictly interpreted. Therefore, the appellant is not eligible for the benefit of the Notification during the disputed period. Whether there was any misstatement or misdeclaration of facts so as to invoke extended period of limitation? - HELD THAT:- The period of dispute is April 2011 to March 2013 wherein the appellant had filed Ex-bond Bills of Entry during the relevant period clearly showing the description of goods, the Chapter Heading and had paid BCD along with CVD and claimed the benefit of Notification No.20/2006-Cus. dated 01.03.2006 or Notification No. 21/2012 dated 17.03.2012 on SAD as the case may be. These Ex-Bond Bills of Entry placed on record have been clearly endorsed by the offices of the Customs as proof of assessment and allowed the goods to be cleared. Since, the description, specific chapter heading and respective duties liable to be paid are clearly mentioned and assessed to duty by the officers, the question of reopening the assessments for the extended period does not arise. There are no material facts that have been mis-declared or misrepresented except to state that in self-assessment, the appellant should have been vigilant and claimed only those benefits that were available to them. There is nothing on record to prove that there was wilful default on the part of the appellant and hence, the demand cannot be sustained beyond the normal period. Accordingly, confiscation under Section 111(m) of Customs Act, 1962 and penalty imposed under Section 114A of the Customs Act, 1962, are set aside. The appeal is allowed by way of remand only for the purpose of re-quantification of demand along with the interest for the normal period.
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2024 (8) TMI 675
Reduction in the quantum of redemption fine and penalty - import of old and used worn clothing, completely fumigated restricted item - enhancement of value - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI ], wherein this Tribunal has observed ' However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%.' It is held that the redemption fine and penalty imposed on the respondent to the tune of 10% 5% respectively on the assessed value is sufficient - the redemption fine and penalty confirmed by the ld.Commissioner (Appeals) are sufficient to meet the end of justice. There are no infirmity in the impugned order and the same is upheld - appeal of Revenue dismissed.
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2024 (8) TMI 674
Import of Spares/Parts or Capital Goods? - eligibility for the benefit of the N/N. 104/2009-Customs dated 14-09-2009, as amended by N/N. 42/2012-Customs dated 22-06-2012 - allegation of the Revenue is that the imports are neither related to 'Capital goods imported earlier' nor are 'Capital goods' themselves and hence cannot be imported under SHIS license by claiming the benefit of exemption given by the said Notification ibid. HELD THAT:- It is observed that the goods imported by the Respondent are not merely spares/parts as alleged in the Notice. They are 'Capital Goods' as defined in the policy. Further, the restriction of 10% is only with respect to import of components, spares/parts of capital goods imported earlier. Thus, import of capital goods (including accessories thereof) which have not been imported earlier, can be imported by utilizing SHIS without any restriction. The import of Parts/Spares/Components in the form of Roller Sets , Spacers , Spares for Cold rolling Mills Blades for slitting Machines falling under Customs Tariff Item Nos. 84559000 82089090 respectively come under the ambit of definition of Capital Goods , which are to be used in the setting up Cold Roll Forming Mill Lines for manufacture of 'Engineering goods'. It is observed that in respect of all the 10 BEs, the respondent has imported capital goods or their accessories along with their spares/parts and therefore the benefit of the exemption is clearly available to the goods imported. The Chartered Engineer's certificate submitted by the Respondent clearly establish that the goods imported are integral parts/components of the capital goods which are essential to make the plant operational. It is observed that the Respondent has placed their reliance on the decision in the case of COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. JSW STEEL LTD. [ 2015 (10) TMI 2392 - CESTAT CHENNAI ], wherein it was held that Capital goods definition given under the notification is identical to the definition given in the FTP and covers 'plant, machinery, equipment or accessories required for manufacture, production either directly or indirectly which includes components/spares required for replacement, modernization, technological upgradation and expansion etc. The Respondent has placed their reliance on the decision in the case of COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. JSW STEEL LTD. [ 2015 (10) TMI 2392 - CESTAT CHENNAI ], wherein it was held that Capital goods definition given under the notification is identical to the definition given in the FTP and covers 'plant, machinery, equipment or accessories required for manufacture, production either directly or indirectly which includes components/spares required for replacement, modernization, technological upgradation and expansion etc. It is observed that the case law cited supra has direct application in the instant case. Similar to the facts of the decision, in this case also there was a single Contract between the supplier and the Respondent for the import of the entire equipment of plant and machinery for their Stainless Steel Slitting Line and Cold Rolled Forming Mill Lines for production of Railway Wagon and other related parts in their factory under a single quoted price. When the Respondent was to import as per the contract, the whole plant and machinery for Stainless Steel Slitting Line Cold Rolled Forming Mill Lines, the entire goods cannot be imported in one lot under a single Bill of Entry. Further, the Chartered Engineer's Certificate dated 18.04.2015, categorically certified that entire Capital Goods imported under SHIS Scheme have been installed and the department has also accepted the same as a fulfilment towards licence obligation. Thus, the Respondents have imported 'Capital Goods' which are eligible for the benefit of the Notification No. 104/2009-Customs dated 14-09-2009, as amended and the benefit of the notification has been rightly allowed by the ld. adjudicating authority. There are no infirmity in the impugned order passed by the ld. adjudicating authority dropping the demands raised in the Notice - appeal filed by Revenue dismissed.
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2024 (8) TMI 673
Levy of penalty u/s 114(1) of the Customs Act, 1962 - it is alleged that the Appellant had assisted the exporter to arrange lorry for export of the goods and thereby abetted illegal export of goods - absence of admissible evidence - HELD THAT:- On bare perusal of the SCN and impugned order, it is admitted that the Appellant had arranged 15 lorries for transportation of goods. But there is no evidence adduced by the investigating agency to allege that the Appellant had knowledge regarding the presence of Muriate of Potash in the above containers at the time of arranging transport. While considering the very same issue, this Tribunal in M/s Vikram Logistics and Maritime Service Pvt. Ltd. Versus Commissioner of Customs, Mysore [ 2013 (11) TMI 1400 - CESTAT BANGALORE ], set aside the penalty on the ground that It is that the appellant or his agent or driver of the vehicle or person in-charge of conveyance did not have knowledge of nature of the goods being transported. Moreover it is not the case of the department that the Appellant who had arranged the vehicles had knowledge regarding presence of offending goods for transportation . In the present case also, in the absence of any admissible evidence, penalty imposed on Appellant is not sustainable. Appeal allowed.
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Corporate Laws
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2024 (8) TMI 672
Maintainability of petition - Invocation of extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, 1950 - oppression and mismanagement in the affairs of the company - HELD THAT:- On perusal of the record, a strong inference is invited that although respondent No.2 is an NBFC, its present management has lot to answer with regard to the manner in which it is conducting its affairs. Though Respondent (Mr. Raj Shekhar Rao, Sr. Adv.) has forcefully argued that several notices issued by respondent No.2 have been dutifully replied and they are engaging with them in right earnest, however, it is prima facie evident that respondent No.1/RBI is allowing themselves to be taken for a ride inasmuch as repeated notices sent by respondent No.1 are being circumvented in the sense that relevant documents are not being submitted and corrective steps have not been taken by respondent No.2. Issue notice. Respondent No.1 is directed to file an updated Status Report as to the outcome of the proceedings conducted so far and the specify action(s), if any, proposed to be taken to streamline the running of the affairs of respondent No.2. As requested by learned Counsel for respondent No.1, two weeks time is granted to file an updated Status Report.
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Insolvency & Bankruptcy
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2024 (8) TMI 671
Application for intervention/impleadment and objections - exercise of power under Article 142 of the Constitution of India - HELD THAT:- Application for intervention/impleadment and objections to the consent terms have been filed by M/s. A.M. Patel Infrastructure Pvt. Ltd. It is accepted at the Bar that M/s. A.M. Patel Infrastructure Pvt. Ltd. claims to be an operational creditor, but its claim has not been accepted by the liquidator, which is pending adjudication. An application under Section 66 of the IBC has been filed for avoidance of transaction, which has not yet been adjudicated. The company, namely, Virtue Infra and Entertainment Private Limited will stand revived - The proceedings pending before the National Company Law Tribunal will be treated as disposed of. Appeal disposed off.
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2024 (8) TMI 670
Seeking Section 9 application - whether payment in respect of the ten invoices raised by the Operational Creditor were time barred? - whether there was any substance in the contention of the Corporate Debtor that there was a preexisting dispute surrounding the debt claimed by the Operational Creditor? Time limitation - HELD THAT:- It is the case of the Corporate Debtor that even taking into account the date of the 10th invoice which was 02.02.2017, the claim against it stood barred on 01.02.2020 which pre-dated the filing of Section 9 application which happened to be 04.03.2020. Hence all the 10 invoices, except the 11th invoice no. 77, stood time barred. It is well acknowledged that the period of limitation for an application under Section 9 of IBC is undisputedly three years as prescribed by the Limitation Act. Since the date of default is the starting point for counting of limitation and such date of default having been specifically shown as 25.07.2016 in Part IV by the Appellant in respect of these 10 invoices, the limitation period of filing of Section 9 application clearly expired on 24.07.2019 while the Section 9 application was filed on 04.03.2020 - the Adjudicating Authority did not commit any error in holding that the first ten invoices relied upon by the Appellant as the basis for their Section 9 application were all time-barred claims on which the incidence of debt and default could not be predicated. Pre-existing dispute - HELD THAT:- Despite having received the payment, it is clear that the Appellant has tried to misrepresent the total outstanding amount as Rs. 75.38 lakhs as due and payable under the 11th invoice no. 77 dated 31.01.2019 in Part-IV of the Section 9 application. Even on seeing the reply of the Corporate Debtor to the Section 8 Demand Notice, it is noticed that the amounts claimed by the Appellant have been disputed by the Respondent - the Adjudicating Authority rightly applied the ratio of Innoventive judgement supra in deciding whether the amount under 11th invoice had become due and payable or not and basis that appreciated the existence of a pre-existing dispute in respect of the said invoice and factorising the same rejected the Section 9 application. Given the conspectus of facts in the present case, it is clear that the first ten invoices were clearly time-barred and the 11th invoice no. 77 stood disputed even before the issue of demand notice - the Adjudicating Authority did not commit any error in rejecting the Section 9 application. There are no good grounds to interfere with the impugned order - appeal dismissed.
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2024 (8) TMI 669
Invocation of Performance Bank Guarantee - Jurisdiction of order restraining the Appellant from encashing the Performance Bank Guarantee - applicability of moratorium u/s 14 of IBC - HELD THAT:- The basis of Judgment of the Adjudicating Authority is that Performance Bank Guarantee is not unconditional and sufficient ground has not made out by the Appellant to prove the fault on the part of Corporate Debtor, hence the Guarantee could not be invoked. The issue as to invocation of Performance Bank Guarantee during the period of Moratorium is now well settled. Reference made to the Judgment of the Hon ble Supreme Court in the matter of STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT ], where Hon ble Supreme Court has noticed the amendment made in Section 14(3) and has also noted the Report of the Insolvency Law Committee dated 26.03.2018 in consequence of which amendments were made in Section 14(3). The Committee in its Report has opined that Assets of the surety are separate from those of the Corporate Debtor and proceeding against the Corporate Debtor may not be seriously impacted by the actions against Assets of third parties like sureties. Thus, it is well settled that Section 14 in no manner impact the right of the Appellant to invoke the Bank Guarantee during pendency of the Moratorium and in the present case, it was during currency of the Moratorium 30.10.2019, the Guarantee was invoked. The observation made by the Adjudicating Authority that reading of Clauses of Performance Bank Guarantee does not give the impression of it being unconditional. There is no dispute between the parties that Mechanical Completion Certificate, the date for Mechanical Completion as per the Contract was 23.08.2018 and Certificate was issued as specifying the date of Mechanical Completion as 31.01.2019 - When the Contractor does not complete the Contract within the period specified, it cannot be said that Contractor has complied the terms and conditions of the Contract. In the letter invoking the Bank Guarantee, it was clearly stated by the Appellant that Contractor has not perform his obligation in accordance with the Contract was advised of such failure and did not cure the failure within the time period allowed for in the Contract. When it is an admitted fact that Contractor did not complete the Contract as per the Mechanical Completion Certificate it is not open to hold that there is no default on the part of the Contractor. The Adjudicating Authority committed an error in allowing the Application filed by the RP of the Corporate Debtor for restraining the Appellant, the State Bank of India and other Bank who has given counter Guarantee to invoke the Bank Guarantee. Order passed by the Adjudicating Authority, thus is unsustainable. Appeal allowed.
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2024 (8) TMI 668
Dissolution of Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 r.w Regulation 45 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- On perusal of the application and documents annexed with it, it is found that the applicant has not annexed Final report and Sale certificate with the application therefore this Adjudicating Authority listed this matter for clarification on 04.06.2024. In compliance of order dated 04.06.2024, applicant filed clarification affidavit. It is observed that the liquidator has obtained a report from the Auditor by way of Independent Auditor s Report wherein the draw down of receipts and payments are mentioned. By way of email he has forwarded to a list of recipients for information and has in its report stated that the same has been forwarded for information. However, neither the email states that in view of the report he proposes to dissolve the entity and file before this authority this application, nor has he convened a meeting of the SCC to propose a dissolution under Sec 54 of IBC 2016. This application cannot be considered and needs to be reverted back with the directions to the liquidator to convene a meeting of SCC and place his proposal and submit a fresh application based on the advice of SCC - Application rejected.
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FEMA
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2024 (8) TMI 667
Appellants discharged from the predicate offence - orders to retain incriminating documents/digital evidences/material/Indian currency recovered/seized vide Panchnamas from the office premises of the appellants - HELD THAT:- We have considered the rival submissions and find that pursuant to the order of the learned Magistrate in reference to predicate offence and subsequent order passed by Special Court to discharge the appellants even from the offence of money laundering under the Act of 2002, the order of provisional attachment and its confirmation cannot survive. Our view is supported by the judgment of the Apex Court in the case of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] In the light of the aforesaid, the impugned orders are set aside and the appeals are allowed.
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2024 (8) TMI 666
Property forfeited under SAFEMA - Properties were also subject matter of TADA proceedings - HELD THAT:- The perusal of Section 8 reveals it to be distinct than the provision of SAFEMA and thereby the judgment of the Apex Court Amina Ahmed Dossa [ 2001 (1) TMI 1028 - SUPREME COURT] in reference to different statute cannot be applied. It is more so when even the facts giving rise to the case are different. If the Appellant and his relatives have filed declaratory suits before the Bombay High Court, it would have no bearing on the present proceedings but can be under TADA. Therefore, the first issue raised by the Appellant to challenge the impugned order is not made out. The forfeiture of property under TADA is to be dealt with as per the provision of TADA and would have no effect on the action taken as per the provision of SAFEMA. Validity of Notice under Section 6 of SAFEMA - obligation to first establish nexus between the income of the Detenue and the property in question - HELD THAT:- As per plain reading of Section 6 of the Act we do not find that the Competent Authority should have issued Show Cause Notice after showing link or nexus with the income of Detenue and property sought to be forfeited. If the argument is accepted, we would be virtually rewriting the provision, which is not permissible. The second issue raised by the Appellant is accordingly rejected. Violation of Principles of Natural Justice - principles of nature justice have not been followed because proceeding remain pending before many officers but decided by one posted on the date of hearing - HELD THAT:- In the instant case the final hearing was made by the Competent Authority on 23rd May, 2005 said to be for few minutes without any proof has resulted in pronouncement of order. It was by the same Authority. The written arguments itself show that the Appellant remain present on the date of hearing though said to be only of 10 to 15 minutes. It is however a fact that the order has been passed by the same Authority. Thus, arguments in reference to the principle of natural justice is not made out and therefore rejected summarily. Property in question - The property forfeited is a building known as Aqdas Mahal, Motlibai Street, Agripada, Mumbai-400001. The property has been acquired by natural guardian of the appellant by Indenture dated 28.09.1992 for the total consideration of Rs. 6,50,000/-. The entire transaction has occurred in a structured manner wherein consideration for the property was paid from the money advanced by way of loans to children. In absence of any loan agreement or documents to support the contentions of the Appellant, it remain unsubstantiated. Appellant has otherwise failed to refer to any material produce before the Competent Authority to disclose source for acquisition of property thus arguments in reference to the property cannot be accepted. Appeal dismissed.
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2024 (8) TMI 665
Validity of document received from Income Tax Department as evidence for the proceedings under FERA - determine the nature of the two receipts from abroad as to whether the receipts are in contravention of the provisions of FERA - HELD THAT:- In view of the statutory provision for allowing the use of the documents recovered during the proceedings under any other law, the objection against the use of the documents in the present case since these were recovered during the proceedings under the Income Tax Act, cannot be accepted. In this regard, the Hon ble Supreme Court in the case of KTMS Mohd. Anr. v/s Union of India [ 1992 (4) TMI 6 - SUPREME COURT ] held that the statements recorded under FERA could not be used for the proceedings under the Income Tax Act and not the other way round as is provided u/s 72 of FERA. The focus of the Hon ble Supreme Court in the case supra was on the necessity to examine the statements so as to determine whether it was tendered voluntarily or not. In the present case, the Respondent Directorate has undertaken investigations under FERA, after the initial reference from the Income Tax Department. Also decided in Standard Chartered Bank Ors. [ 2006 (2) TMI 272 - SUPREME COURT ] the two proceedings are independent of each other and the finding on the adjudication is not conclusive on the prosecution under the Act. Thus, we are unable to persuade ourselves that the outcome of the prosecution proceedings should have a binding effect in the present proceedings. Contravention of Section 9(1)(c) of FERA - Nature of the transfer of amount US $ 5 Lakhs from Shri J L Kothari to the Appellant Company - The nationality of Shri J. L. Kothari as US citizen has not been challenged by the Appellants. We also fail to appreciate that how issuance of shares, if any, by M/s Neptune Estate Pvt. Ltd. can fulfill and substitute the obligation of the Appellant Company to issue shares against the receipt of funds from Shri J L Kothari. While the aforementioned Form 2 claims to have issued shares on 27.06.1996 by M/s Neptune Estate Pvt. Ltd. of which Shri Vikram Singh was a Director yet in his statement recorded subsequently on 18.02.1997 there is not even a whisper about the claimed issuance of shares. Therefore, we cannot agree with the contention that the said remittance of US $ 5 Lakhs was an investment into the Appellant Company. The receipt of US $ 5 Lakhs into the accounts of the Appellant Company for a few days could only have been a temporary loan and that too from a US citizen, resident in Bangkok. The Appellant Company transferred the funds to another company within a short period on the instructions of the person who remitted the funds from abroad. Such transfer jeopardized the MoU dated 05.12.1995, yet it was made which corroborates the absolute control on the funds by its remitter. It is therefore implied that the remitted funds could have only been in the nature of temporary loan to the Appellant Company by a foreign citizen resident abroad, without any general or special exemption of the RBI. The company to which the funds were moved was wherein Shri Vikram Singh was a Director. Thus, the Appellant Company became a temporary parking place for the remitted funds. An arrangement which was willingly entered into and therefore indulged in accepting and acknowledging a debt. We therefore find that the Appellant Company has indulged in the contravention of Section 9(1)(c) of FERA, for an amount of US $ 5 lakhs. Shri R C Jain was the Director of the Appellant Company at the relevant time and was responsible for the conduct of its affairs as is obvious from his signature on the said MoU. From the statement of Shri Vikram Singh recorded u/s 40 of FERA, it is obvious that Shri Vikram Singh was the person who knew Shri J L Kothari since 1993. He was also aware of remittance of US $ 5 lakh and of US $ 1 lakh received by the Appellant Company. In view of remittance of funds to the Appellant Company and thereafter to M/s Neptune Estate Pvt. Ltd., his role in the transactions cannot be denied. Therefore, the contraventions of Section 9(1)(c) read with Section 68(1) of FERA against the two individual Appellants stand proved. Contravention of Section 8(1) of FERA by Shri Vikram Singh - Shri Vikram Singh has also been charged for the contravention of Section 8(1) as US $ 1 lakh was said to have been remitted by Shri Rakesh Saxena of M/s Real Fact Enterprises, Hong Kong. During the course of overseas enquiries, the Counsel General of India, Hong Kong informed that at the given address of M/s Real Fact Enterprises at 901-903, K.Centre, 88, Queens Road, Central Hong Kong, no such company was functioning and the premises was occupied by M/s Yuen Chow Group of Companies and there was no person by name Shri Rakesh Saxena in the said company/ premises. In view of the aforementioned findings, the Ld. Adjudicating Authority has inferred that the remittance was arranged by Shri Vikram Singh himself. While dropping the charge of Section 9(1)(c) of FERA against the Appellant Company for the said remittance of US $ 1 lakh, the Ld. Adjudicating Authority has held the charge of contravention of Section 8(1) of FERA proved against the individual Appellant, Shri Vikram Singh. We have not found anything contrary produced by the Appellant to refute the findings made in the overseas enquiry. Hence, we hold contravention of Section 8(1) by the individual Appellant Shri Vikram Singh. The Ld. Adjudicating Authority has also confiscated US $ 1 lakh under Section 63 of FERA since the amount remained unexplained and tainted.
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2024 (8) TMI 664
Offence u/s 5 of FEMA - foreign exchange totaling US$ 50,000/- in Travelers Cheques [TCs] found for the so called business travel to Sri Lanka without the necessary permissions - HELD THAT: Admittedly, the proposal for seven days business promotion trip to Sri Lanka by appellant Faiyaz Shamim was planned at the instance of Dinesh C. Rawat. Mr. Faiyaz Shamim was working as Export Executive and Sanjay Mukherjee was working as Finance Manager in M/s Dinmay Exim Avenue Pvt Ltd. It is also an admitted fact that appellant Faiyaz Shamim was not instrumental in applying for foreign exchange, as the said work was managed by Miss Roshni Rawat and Shri Dinesh Chandra Rawat Directors of the company, who issued the application for US $ 25,000 each on company s pad in favour of Mr. Faiyaz Shamim to two different authorized money changers namely M/s VKC Credit Forex Pvt Ltd. and M/s RR Sen Bros. Pvt Ltd. Shri D. C. Rawat and his daughter Miss Roshni Rawat jointly signed the cheque no. 345852 345853 dated 13. 09. 2003 in the favour of said two authorized money changers respectively. Even if it is presumed that Shri Faiyaz Shamim was not aware of this fact that foreign exchange is being procured by his company, without obtaining prior permission of RBI, even then, he is not entitled to any benefit, as he was not carrying any permission of RBI at the time of his travelling to Sri Lanka when he was intercepted by Custom Authorities at the Airport. He may be ignorant of the factual position, but ignorance of law is no excuse, since he was not carrying any permission of RBI for carrying additional US $ 25,000. It was the duty on the part of appellant Faiyaz Shamim to verify this fact before obtaining the additional US $ of 25,000 and to request for RBI permission before carrying the same. Miss Roshni Rawat and Shri Dinesh Chandra Rawat have already admitted their fault for committing this technical violation by not obtaining the prior permission of RBI. Case of appellant Sanjay Mukherjee, who was working as Finance Manger in the said company - Being Finance Manager, it cannot be presumed that he was not aware about the drawl of additional US $ 25,000 from another FFMC namely M/s RR Sen Bros (P) Ltd. It is apparent that he intentionally not associated himself for drawing the additional US $ 25,000, as he was conscious of the fact for contravention of the provisions of FEMA without permission of RBI to hand over the same to Faiyaz Shamim. Even otherwise, being Finance Manager of M/s Dinmay Exim Avenue Pvt Ltd. , he is vicariously liable for the contravention as above. Therefore, both the appeals are liable to be dismissed being devoid of any merits. However, seeing the fact that the penalty of Rs. 10,00,000/- imposed upon the Manging Director, Dinesh C. Rawat is reduced to Rs. 2,00,000/-, the penalty imposed upon the present appellants also needs to be reduced, seeing their minor role and being the employees in the said company. Accordingly, in the interest of justice, the penalty of Rs. 1,00,000/- imposed upon the present appellants is reduced to Rs. 50,000/-. The present appeals are hereby partly allowed, and thereby, the impugned review orders dated 08. 03. 2018; Order dated 13. 01. 2017 passed in Appeal by Ld. Special Director (Appeals); are hereby modified to the extent that both the appellants are liable to pay penalty of Rs. 50,000/- each. Perusal of record reveals that both the appellants have already pre-deposited the penalty of Rs. 50,000/- each before admission of this appeal at the time of allowing their applications for waive of pre-deposit of application.
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2024 (8) TMI 663
Offence under FEMA - Involvement of the Respondents in the conduct of the business of the company - liability of director in a company for contravention of provisions - HELD THAT:- We observe that the liability u/s 42(1) depends on the role one plays in the affairs of the company, and not on mere designation. It cannot be that all Directors irrespective of their role and responsibilities shall be deemed to be guilty of the contravention. From the record, it is obvious that Shri S.R. Subba was the main person in-charge of the affairs of the company and was responsible to the company for the conduct of its business. Moreover, Shri S.R. Subba has clearly stated before the Enforcement Directorate, that he was looking after the affairs of the company including its day-to-day activities during the relevant period and the respondents were not actively involved in the affairs of the company. Shri S.R. Subba vide his letter dated 09.10.2006 addressed to the Ld. Adjudicatory Authority, reiterated that he was looking after the affairs of the Company including its day to day activities during the relevant period. The other noticees were not actively involved in the affairs of the company. Also obvious from the record that Shri M.K. Subba, the retired Director, was directly involved in the opening and maintenance of the accounts in the foreign banks, and fully responsible for the conduct of the Company. Respondents were Directors they were not actively involved in the policy and decision making activities of the Company. The respondents were neither in-charge of the affairs of the company nor responsible for its conduct. There are no statements recorded by the Enforcement Directorate with respect to the Respondents as to their role in the company. Revisionists have failed to produce any evidence, which shows as to how and in what manner the Respondents were responsible for the conduct of the business of the Company. In the Revision Petition as well as in the pleadings nothing has been put forth as to lead us to draw conclusions otherwise. Thus, no merit in the Revision Petition and do not interfere with the impugned order.
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PMLA
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2024 (8) TMI 662
Money Laundering - Confirmation of attachment of the properties said to be the proceeds of crime - challenge to the order of Adjudicating Authority has been made mainly on the ground that the properties attached by the respondent are not the proceeds of crime thus could not have been attached - HELD THAT:- It is found that not only the role of the appellant was taken into consideration by the Adjudicating Authority but finding has also been recorded that out of the properties attached, few are for the equivalent value. The perusal of the judgment in the case of Prakash Industries [ 2022 (7) TMI 877 - DELHI HIGH COURT] would not only make the things clear but gives proper interpretation to the definition of proceeds of crime. It has three limbs and out of which second limb is for the property of equivalent in value to the proceeds out of the crime. If the proceeds are not available in the hands of the appellant, either it is vanish or syphoned off then the property of the equivalent value can be attached and for that reason the words value thereof does not specify acquisition of the property prior or subsequent to the commission of crime. There are no merit in the appeal in reference to the issues raised in the present case - The appellant has failed to disclose the source of acquisition of the property even in the appeal. The vague statements of fact regarding acquisition of property has been made by the appellant without giving detail description of the sources by which it was acquired. The Adjudicating Authority has given reference to the Income Tax Return submitted by the appellant Shamshad where income was shown between 4 to 5 lakhs only and therefore, it is found that the Adjudicating Authority has meticulously considered each aspect of the matter however appeal has been pressed only on few grounds and has been dealt with by us finding no merit in any of the ground, the appeal would fail. Appeal dismissed.
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2024 (8) TMI 661
Challenge to seizure order passed u/s 8(3) of PMLA 2002 - investigation required to be completed within 365 days as per Section 8(3)(a) of the Act has not yet been completed - HELD THAT:- The respondents fairly admitted that the investigation pursuant to the FIR No. RC 221/2020 dated 11.03.2020 and the ECIR registered thereupon has not been completed. If the pendency of the proceedings relating to offence is construed or taken even prior to completion of investigation resulting in prosecution complaint then there was no necessity to even provide the period of investigation for the purpose of continuance of the order of attachment. In fact, proceedings before the Court starts from the stage of submission of prosecution complaint or charge-sheet and thereupon cognizance of the offence is taken and therefore only two limbs of the provision has significance and are not overlapping to each other and accordingly if the investigation is not completed within 365 days then the attachment or seizure would lapse. The impugned seizure so as the order of the Adjudicating Authority cannot continue, rather the seizure stands lapsed after the period given under Section 8(3) of the Act of 2002 and is set aside - the impugned order set aside - appeal allowed.
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Service Tax
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2024 (8) TMI 660
Refund of service tax paid by the appellant under the category works contract services in respect of a composite contract involving the construction/laying down of drinking water supply pipeline awarded by Kerala Water Authority (KWA) - Applicability of Section 11B of the Central Excise Act, 1944 covering the periods 01 June 2007 to 30 September 2010 and 01 January 2011 to 31 October 2011 respectively - principles of unjust enrichment. Whether the activity undertaken by the appellants for construction of distribution system of water supply for KWA is a taxable service under Work Contract Service in terms of Section 65(105)(zzzza) of the Finance Act, 1994, or not? - HELD THAT:- The Larger Bench of this Tribunal in the case of Lanco Infratech Limited [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB) ] held that the construction of canals/pipelines/conduits to support irrigation, water supply or for sewerage disposal, when provided to Government/Government undertakings would be for non-commercial, non-industrial purposes, even when executed under turnkey/EPC contractual mode and would fall within the ambit of clause (b), Explanation (ii) of Section 65(105)(zzzza); and would consequently not be exigible to Service Tax, in view of the exclusion enacted in clause (b). Thus, the appellant is not liable to pay service tax for the activity undertaken by them for laying down the pipelines for Government/Government Undertakings for supply of water from KWA in Thiruvananthapuram City. In view of the this , we find that the appellant is not liable to pay service tax - there is no liability of the appellant to pay service tax in this case - issue is answered in favour of the appellant. Whether the refund claims filed by the appellant of service tax paid, which was not payable by the appellant is hit by the provisions of Section 11B of the Central Excise Act, 1944, or not? - HELD THAT:- The Hon ble High Court in the case of MDP Infra (India) Private Limited [ 2019 (2) TMI 208 - MADHYA PRADESH HIGH COURT ] has examined the issue although the appellant was not liable to pay service tax, which was paid under mistake of law in terms of the Finance Bill, 2016. The appellant is required to file refund claim within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President - Admittedly, in the said case, the refund claim was filed beyond the time limit maintained under the Finance Bill, 2016, which is not the case in hand. Therefore, the decision of the case MDP Infra (India) Private Limited is not applicable to the facts and circumstances of this case. Thus, the refund claims filed by the appellant, are not hit by the provisions of Section 11B of the Central Excise Act, 1944 as the service tax has been paid by the appellant under mistake of law. Therefore, the issue is also answered in favour of the appellant. Whether the refund claims filed by the appellant are hit by bar of unjust enrichment or not? - HELD THAT:- From the letter dated 31.10.2011 issued by Tokyo Engineering Consultants Co.,Ltd., who are the consultant for KWA, it is clearly stated that as the service rendered by them is not a taxable service, therefore, the service recipient refused to pay service tax to the appellant, in that circumstances, it is held that the appellant has borne the service tax by themselves and have passed the bar of unjust enrichment. Accordingly, it is held that the refund claim filed by the appellant are not hit by the bar of unjust enrichment. The appellants are entitled for refund claim - the adjudicating authority is directed to sanction the refund claim to the appellants within one months from the date of receipt of this order - appeal disposed off.
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2024 (8) TMI 659
CENVAT Credit - non-maintenance of separate records - common services used for providing taxable as well as exempt goods - Contravention of Rules 6(3) of the CENVAT Credit Rules, 2004 - HELD THAT:- The appellant is engaged in the activity of providing taxable services and also engaged in the manufacture of exempted goods. For providing outward taxable services, the appellant is availing CENVAT Credit on input services which were exclusively used for the taxable services and maintained separate accounts thereof. For inputs used in the manufacturing of exempted goods, the appellant is maintaining separate accounts and not availing any CENVAT Credit on the said inputs. There were certain common services which were availed by the appellant for providing taxable services as well as manufacturing exempted goods. Services namely, security services, bank charges, AMC for fax machines/intercom systems, etc., are covered under Rule 6(5) of the CENVAT Credit Rules, 2004, on which the appellant is entitled to avail CENVAT Credit at 100%, although they were providing taxable output services and manufacturing exempted goods. Therefore, on the said services, no reversal is required by the appellant. The appellant had utilized CENVAT Credit within 20% of payment of Service Tax during the financial years 2006-07 and 2007-08, in terms of Rule 6(3)(c) of the CENVAT Credit Rules, 2004. Therefore, the said CENVAT Credit cannot be denied to the appellant. The proceedings against the appellant by way of the impugned Show Cause Notice are not sustainable - the impugned order is set aside - appeal allowed.
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2024 (8) TMI 658
Non-payment of service tax - Construction of Residential Complex Service - Works Contract Service - time limitation. Whether the appellant is liable to pay service tax under the Construction of Residential Complex Services and Works Contract Service for the period from June 2007 to May 2008? - HELD THAT:- In the decision of M/s Krishna Homes [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] the Tribunal had considered the Board Circular and held that the demand of service tax against a promoter, developer, builder cannot sustain for the period prior to 01.07.2010. In the assessee's own case for the period subsequent to the disputed period the demand has been set aside following the decision in the case of M/s. Krishna homes [ 2014 (3) TMI 694 - CESTAT AHMEDABAD] observing that the assessee has provided services as a promoter/developer/builder - the demand of service tax cannot sustain. The impugned order is set aside to the extend of confirming the demand of service tax and interest. The appeal filed by the assessee is allowed
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Central Excise
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2024 (8) TMI 657
Liability of appellant to pay Excise Duty - Appellant does not even have any manufacturing facility to manufacture these products - Department has come to a conclusion that the Appellant is the manufacturer because they have claimed to be so when they have received the contract from various Electricity Boards - time limitation - HELD THAT:- From the Show Cause Notice and order-in-original, it is not found that any investigation was taken up by the Department to check up as to whether the Appellant has the facility to manufacture such electrical items in their factory. Admittedly, the Electricity Boards were treating the the Appellant as the manufacturer and receiving the goods. Therefore, the manufacture had to be taking place in some place other than the premises of the Appellant. In this case, it is more or less certain that the manufacturing has taken place at the job worker's premises only. In such a case, in terms of section 2(f) of Central Excise Act, 1944, when the manufacture takes place at the premises of the job worker and then he steps into the shoes of the manufacturer. Here, the Show Cause Notice has not been issued to such job worker/manufacturer, but has been issued to the Appellant who has only got the job work of manufacturing done through third parties. The same issue had come up in the case of Combat Engineering [ 2023 (5) TMI 78 - CESTAT KOLKATA ] and this Bench has held ' it would be evident that in the present case, the job workers of the assessee company were independent contractors/manufacturers and hence, the assessee company and/or its directors cannot be saddled with any liability of payment of excise duty and/or consequential penalty with respect to the goods so manufactured by the said job workers.' The facts in the present case are similar/identical. Therefore, the ratio laid down in the above case law is squarely applicable to the facts of the present case. Accordingly, there are merits in the arguments of the Appellant - the impugned order is set aside - appeal allowed.
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2024 (8) TMI 656
CENVAT Credit - input service - services used for construction of housing units in the colony for staff - nexus with the manufacturing activity or for transport or storage of the final product, or not - time limitation - suppression os facts or not. HELD THAT:- The fact of remote location of the unit with difficult accessibility and lack of dwellings is undisputed. The Cenvat credit is availed for construction of barracks and hostel for the CISF personnel, that provide 24X7 security cover to the plant, while residential quarters were meant for the employees that were crucial to the smooth operation of the appellant s works and plant. It is evident from the language, that the expressions made use of in Rule 2(l) call for being considered in an unrestricted and uninhibited sense and thereby give the expression an exhaustive and a wider meaning so as to expand language and the arch of the expression used giving it the widest amplitude. The Hon ble apex Court in the case of GOOD YEAR INDIA LIMITED VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1997 (9) TMI 100 - SUPREME COURT] , had held that the expression such as would indicate the description to be illustrative and not exhaustive. Further, in the case of ADITYA BIRLA NUVO LTD. VERSUS CCE, BHAVNAGAR [ 2009 (1) TMI 117 - CESTAT AHMEDABAD] , it has been held by the Tribunal that the words and includes provides for giving the definition of input services a wide interpretation, and bring into ambit those services which may not be considered as directly or indirectly relatable to manufacture. The intention being to provide the benefit of credit of service tax paid on such services. The rules specifically provide for allowing Cenvat credit of any service used by manufacturer, whether directly or indirectly in or in relation to the manufacturer of final products, and clearance of the final product up to the place of removal. In the facts and circumstances of the factory running 24X7, it is imperative for the assessee to provide and maintain the facility of residential colony adjacent to the factory, being located at a remote location - the construction services used in construction of barracks and hostel for the jawans and residential complex for the employees not only goes in to offer efficiency of the system and production of finished goods but also ensures and guarantees the unhindered production of the same. These services are certainly made use of in relation to manufacture of goods. Time Limitation - suppression of facts - HELD THAT:- In any case the appellant were filing the returns regularly along with which they had also enclosed, copies of input, credit, registers, capital goods, registers, input service registers, clearly indicating the credit availed on a monthly basis as demonstrated by them during the course of hearing. Thus they cannot be charged for suppression as they had laid open their complete account details to the authorities - the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, RAIPUR VERSUS RAJARAM MAIZE PRODUCTS [ 2010 (7) TMI 339 - CESTAT, NEW DELHI] in a case where the issue involved is subject to different or alternative interpretations, had held that adoption of any particular interpretation cannot be held as a device adopted by the manufacturer/service provider to suppress the information with intention to evade payment of duty. Thus no suppression clause can be invoked in view of the fact that the appellant had disclosed all particulars required to be disclosed under law. The order of the lower authority is set aside - Appeal allowed.
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2024 (8) TMI 655
Recovery of excess refund of excise duty - non-utilization of entire CENVAT Credit availed on inputs during the month of November 2002 which was subsequently utilized in December 2002 - N/N. 32/99-C.E. dated 08.07.1999 - HELD THAT:- The issue involved in the present case has already been settled by this Tribunal in the case of COMMISSIONER OF C. EX., JAMMU VERSUS NEW INDIA WIRE CABLES [ 2008 (7) TMI 213 - CESTAT NEW DELHI ] wherein an assessee working under a similar area-based exemption Notification had availed CENVAT Credit in one month but carried forward and utilized the same in subsequent month / months. The Department disputed the same and sought to recover the excess refund sanctioned to the assessee in the initial month where the CENVAT Credit was not fully utilized. The Tribunal, New Delhi in the said decision has allowed the contention of the assessee that once the very same amount of CENVAT Credit is utilized in the subsequent period, there is no loss to the revenue. It was also held that the confirmed demand in such a scenario will defeat the purpose of the Notification. Thus, there was no provision during the impugned period that the CENVAT Credit is to be utilized in the same month and the said provision has been made effective vide the Finance Bill, 2003 by way of Section 153 of the Act, in these circumstances, the CENVAT Credit unutilized in the month of November, 2002 cannot be debarred to the appellant. There are no merit in the impugned order and accordingly, the same is set aside, holding that no excess refund has been allowed to the appellant. Consequently, the recovery proceedings against the appellant are not sustainable - appeal allowed.
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2024 (8) TMI 654
Wrongful availment of cenvat credit on Bills of Entry for which duty was paid by them under protest - Department was of the view that appellant is not eligible to avail credit as the Bill of Entry is only provisionally assessed and is yet to be finalized - extended period of limitation - suppression of facts or not. Eligibility to avail credit when the duty is paid during provisional assessment under protest - HELD THAT:- The Customs Act, 1962 for payment of duty under protest as well as for provisional assessment. Rule 9 (1) of CCR 2004 specifically does not bar the availment of credit even if duty is paid during provisional assessment. There is no mention in the provision restricting the availment of credit when duty is paid under protest. The Tribunal in the case of Monarch Catalyst Pvt. Ltd. [ 2011 (11) TMI 185 - CESTAT, MUMBAI] held that the credit is eligible even if the assessment is provisional. Thus, there are no grounds for disallowing credit. The appellant is eligible to avail credit. The issue on merits is found in favour of the appellant. Time limitation - suppression of facts or not - HELD THAT:- There is no allegation that the appellant has suppressed facts with intent to evade payment of duty. The words used in the show cause notice is that the appellant has wrongly taken the cenvat credit on the basis of challans for which duty was paid under protest. The fact of paying duty under protest was well within the knowledge of the Department in 2016 itself. The credit has been availed on 30.09.2016. However, the show cause notice has been issued much later only on 30.07.2019 invoking the extended period - the Department has failed to establish grounds for invoking the extended period. The issue of limitation is answered in favour of the appellant. The impugned order is set aside - Appeal allowed.
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Indian Laws
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2024 (8) TMI 653
Enforcement of an arbitral award expressed in foreign currency - what is the correct and appropriate date to determine the foreign exchange rate for converting the award amount expressed in foreign currency to Indian rupees? - what would be the date of such conversion, when the award debtor deposits some amount before the court during the pendency of proceedings challenging the award? HELD THAT:- In the present case, it is important to note the terms on which the two deposits of Rs. 7.5 crores and Rs. 50 lakhs were made. From the order of the High Court dated 15.10.2010, it is clear that such order for deposit of Rs. 7.5 crores and for furnishing a bank guarantee of an Indian bank for the release of the deposit was made in accordance with the consent of the parties. The facts in this case are similar to Renusagar [ 1993 (10) TMI 232 - SUPREME COURT ] for an analogy to be drawn. Here as well, the deposit was made during the pendency of the proceedings under the objections petition. It was permitted to be withdrawn against a bank guarantee of an Indian bank. Here the respondent was entirely unable to withdraw the amount, while the issue there was that it was only unable to convert the amount to US dollars. However, in both cases, the respondent failed to move the Court for necessary orders to be able to receive and utilise the amount. In this case, there is the added fact that the respondent consented to the deposit and the condition requiring security. In light of these similarities, it is appropriate to adopt the Court s approach in Renusagar. The deposit of Rs. 7.5 crores stands converted as on the date of deposit (22.10.2010), when the rate of exchange as submitted by the appellants is 1 euro = Rs. 59.17. The submission that the respondent was unable to furnish a bank guarantee of an Indian bank, also rejected. This argument is only to serve its own interest to be able to benefit from a higher exchange rate but does not address the principle that operates while enforcing a sum expressed in foreign currency. A similar logic underscores the statutory provisions in Order 21, Rule 1 and Order 24 of the Code of Civil Procedure, 190852 to determine whether interest will continue to operate on an amount deposited before a court - A constitution bench of this Court in Gurpreet Singh v. Union of India [ 2006 (10) TMI 493 - SUPREME COURT] extensively discussed the rules governing interest calculation when the defendant/ judgment-debtor deposits some part of the amount. Order 24 governs deposits at the pre-decretal stage and Order 21, Rule 1 at the post-decretal stage.54 The essence of these provisions is that on any amount deposited into the court, interest shall cease to run from the date when the depositor serves a notice to the plaintiff/decree-holder. Similarly, when payment is tendered to the decree-holder outside the court, interest ceases on such amount even if the payment is refused. Order 21, Rule 1 embodies a rule of prudence that once the amount is tendered to the decree-holder by the judgmentdebtor, whether in the form of a court deposit or other forms of payment such as demand draft or cheque, the judgment-debtor cannot be made liable to then pay interest on such amount. It is clear that the exchange rate on 22.10.2010 would apply to that extent and non-withdrawal by the respondent of Rs. 7.5 crores was in its own discretion and inaction. However, since the order of 03.06.2011 permits withdrawal of Rs. 50 lakhs on the completion of the proceedings, that would be the appropriate date for determining the exchange rate. Here, the revision proceedings were complete on 01.07.2014. Hence, it would be appropriate to apply the exchange rate as on this date to convert the deposit of Rs. 50 lakhs. The statutory scheme of the Act makes a foreign arbitral award enforceable when the objections against it are finally decided. Therefore, as per the Act and the principle in Forasol (supra), the relevant date for determining the conversion rate of foreign award expressed in foreign currency is the date when the award becomes enforceable - When the award debtor deposits an amount before the court during the pendency of objections and the award holder is permitted to withdraw the same, even if against the requirement of security, this deposited amount must be converted as on the date of the deposit - After the conversion of the deposited amount, the same must be adjusted against the remaining amount of principal and interest pending under the arbitral award. This remaining amount must be converted on the date when the arbitral award becomes enforceable, i.e., when the objections against it are finally decided. Appeal allowed in part.
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2024 (8) TMI 652
Enforcement of a money-award rendered in favour of the petitioner - Calculation of rate of interest on the money award - to be calculated on the basis of the bank rate fixed by the Reserve Bank of India (RBI) as on the appointed date or be calculated on the basis of the fluctuating rates at different points of time as notified by the RBI from the appointed date till the date of payment - Section 16 of the MSME Act - HELD THAT:- Upon a comprehensive assessment of the provisions of Section 16, the inevitable conclusion is that the interest envisaged therein is to be paid at the rate of three times the RBI notified rates, the incidence of which would be at each monthly rest, meaning thereby that the rates would be fluctuating along with the RBI-notified rates at variable points of time, to be taken at each monthly interval which is the point of incidence of such rates. Accordingly, the version of the award-debtor is accepted. The rate of interest has to be calculated from the appointed date till the date of repayment, calculated on the basis of compound interest with monthly rests, the rate of interest being taken at each point of incidence at each monthly rest, in terms of the RBI rates prevalent at that point of time, multiplied by three. Hence, the award-debtor is to pay interest to the award-holder at the variable rates of interest as notified by the RBI from time to time, multiplied by three, throughout the period, calculated at each monthly interval at the then prevailing rates. The mode of calculation having thus been determined, the award-debtor is directed to make the full payment of interest as per the calculations in the light of the observations above to the award-holder within four (04) weeks from date. For such purpose, along with such payment of the entire interest component over and above the principal awarded amount, deducting the amounts already paid/deposited in terms of court orders, the award-debtor shall also file in court a copy of the detailed calculations for arriving at the amount paid to the award-holder. The award holder will be at liberty to withdraw (if deposited), alternatively utilize (if paid directly) the amount already deposited/paid by the award debtor. The matter shall next be listed under the heading For Orders on August 6, 2024 when the award-debtors shall file an affidavit of compliance, showing payment of such entire amount of interest along with the principal to the award-holder, annexing to the said affidavit a break-up of the detailed calculations of interest till the date of payment.
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