Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 2, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Central Excise
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19/2024 - dated
31-7-2024
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CE
Seeks to amend No. 19/2022-Central Excise, dated the 19th July, 2022 to reduce the Special Additional Excise Duty on production of Petroleum Crude.
Customs
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41/2024 - dated
31-7-2024
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Cus
Seeks to amend notification No. 50/2017- Customs, dated 30.06.2017, in order to prescribe conditional BCD rate of 10% on Laboratory Chemicals [excluding undenatured ethyl alcohol of any alcoholic strength], falling under HS 9802 00 00, for specified use.
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53/2024 - dated
31-7-2024
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
DGFT
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22/2024-25 - dated
1-8-2024
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FTP
Inclusion of Kandla and Vishakhapatnam Sea ports for Export of Essential Commodities to Maldives during FY 2024-25
GST
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S.O. 3048(E) - dated
31-7-2024
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CGST
Constitution of Principal and States benches of GSTAT.
GST - States
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(04/2024) FD 02 CSL 2024 - dated
15-7-2024
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Karnataka SGST
Amendment in Notification No. (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(03/2024) FD 02 CSL 2024 - dated
15-7-2024
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Karnataka SGST
Amendment in Notification No. (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(02/2024) FD 02 CSL 2024 - dated
15-7-2024
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Karnataka SGST
Amendment in Notification No. (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Ministry of Finance establishes GST Appellate Tribunal with Principal Bench in Delhi, 36 State Benches across India from Sep 1, 2023.
Pursuant to sections 109(1), (3) and (4) of the Central Goods and Services Tax Act, 2017, the Ministry of Finance constituted the Goods and Services Tax Appellate Tribunal (GSTAT) with effect from September 1, 2023. The Principal Bench was established in New Delhi, and 36 State Benches were constituted across various locations. The notification outlined the number of Benches, their locations, and associated Sitting or Circuit Benches for each State/Union Territory. Certain Benches were designated as Circuit Benches, to be operationalized based on the volume of appeals filed. Each Bench would comprise one Judicial Member and one Technical Member.
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Petition maintainable despite pending appeal on different cause. Claimed ITC refund for exports Sep'19-Jan'20. Approach appellate authority.
Maintainability of petition challenged on different cause of action. Petitioner claimed refund/Input Tax Credit for purchase of goods utilized in manufacturing and export of garments from September 2019 to January 2020. Though Special Appeal pending before Court on writ petition, cause of action different. Writ petition disposed, directing petitioner to approach appellate authority against impugned orders.
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Summoning order & NBW quashed for tax liability on services to edu. institutions (Apr'14-Jun'17) u/ss 89, 83 Finance Act'44, Sec 174 CGST Act'17, Sec 9 r/w 9(AA) Excise Act'44. Bail allowed.
Quashing sought of summoning order and non-bailable warrant against applicant u/ss 89, 83 of Finance Act, 1944, Section 174 of CGST Act, 2017 and Section 9 r/w Section 9(AA) of Central Excise Act, 1944 regarding tax liability on services provided by applicant to educational institutions between April 2014 and June 2017. Application disposed of, subject to conditions, without commenting on merits, considering facts and circumstances. Bail application allowed.
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Minor discrepancy in PIN code on Tax Invoices & E-Way Bill not a major violation. Penalty for technical breach unjustified.
Levy of penalty u/s 129(5) of GST Act for discrepancy between PIN code of petitioner in Tax Invoices and E-Way Bill. Court held minor discrepancy in PIN code in GST Registration and Tax Invoices as minor violation of GST enactments. Difference in address in E-Way Bill and Tax Invoices due to Head Office and actual dispatch place. Petitioner earlier obtained VAT registration for dispatch place. Tax Invoices raised from same address. Imposition of penalty for technical breach or minor address variance in Tax Invoices and E-Way Bill unjustified u/s 129(5). GST enactments aim to avoid unjust tax burden on assessee regularly paying tax and complying with law. Impugned order quashed. Respondent directed to refund amount paid or allow credit adjustment towards future tax liability.
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Excess stock found, proceedings initiated u/ss 73 & 74 of UPGST Act applicable, not Section 130. Previous ruling overturned. Order set aside.
Excess stock found during survey on 24.08.2018, proceedings initiated. Court held that if excess stock found, proceedings u/ss 73 & 74 of UPGST Act applicable, not Section 130 read with Rule 122. In previous case, Court ruled even if excess stock found, proceedings u/s 130 of UPGST Act cannot be initiated. Impugned order set aside, petition allowed.
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Impugned orders set aside, cases remitted for re-examination as per CBIC Circular. Petitioner not liable if no invoice raised.
Impugned orders set aside, cases remitted to re-examine issue in light of CBIC Circular No.221/15/2024-GST dated 26.06.2024. Petitioner prima facie not liable to pay tax if no invoice raised on NHAI. Tax liability arises when petitioner raises invoice for payment or receives annuities. Mere sub-contracting and advance completion of work for receiving annuity payments over 15 years does not disentitle petitioner from availing input tax credit or infer tax liability on entire contract value without invoicing or payment receipt. Re-examination ordered in light of observations and circular.
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Violation of natural justice - Inadequate notice, lack of physical verification, non-disclosure of visit attempt. Procedure flawed but dismissal justified due to petitioners' non-cooperation.
Violation of principles of natural justice - Show cause notice did not disclose reasons for cancellation of petitioner's GST registration. Mere disclosure of reasons does not satisfy Rule 25 of GST Rules regarding physical verification of business premises. Respondents did not notify petitioners about attempt to identify petitioner's place of business. Postal endorsement alone cannot establish non-existence of company. Procedure adopted by respondents may not strictly follow rules but cannot be deemed illegal, especially when petitioners are unwilling for further inspection, raising presumption of withholding information. Petitioners not entitled to relief under Article 226, petition dismissed.
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Consultancy for water schemes under Jal Jeevan Mission exempt if supplied before 01.01.2022 to MJP, a 'Governmental Authority'.
Consultancy services provided to Maharashtra Jeevan Pradhikaran (MJP) for water supply schemes under Jal Jeevan Mission, a Government of India initiative, are exempt from GST if time of supply is before 01.01.2022. MJP, established by Maharashtra State Legislature, qualifies as 'Governmental Authority' for exemption purposes before 01.01.2022. Funds received through PFMS indicate services supplied to Central and State Governments, not MJP. After 01.01.2022, services to MJP for constitutional functions of State and Central Governments are taxable.
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Supply of ad space in print media for municipal corps' ads on recruitment of medical staff exempted from GST as pure service. /2017
Exemption from tax for supply of selling space for advertisement in print media qualifies as pure service under Entry 3 of Exemption Notification. Supply does not constitute composite supply of goods and services under Entry 3A. Pune and Pimpri Municipal Corporations are local authorities u/s 2(69) of GST Act for Entries 3 and 3A. Content of advertisement for recruitment of medical officers and professors has connection to functions entrusted to panchayats under Article 243G and municipalities under Article 243W of Constitution. Supply of service of selling space for such advertisements relates to functions entrusted under Articles 243G and 243W, covering wide range of activities provided to local authorities. Being pure services to municipal corporations, the supply is exempted under Entry 3 of Notification 12/2017-Central Tax (Rate).
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Services before 18.07.2022, invoiced later for price escalation, attract 18% GST despite earlier 12% rate under works contract. : , , , ,
Services supplied before 18.07.2022, invoices proposed for price escalation. Rate of GST 18% applicable as per Section 14(a)(i) of CGST Act, 2017 on invoices issued after 18.07.2022 for price escalation against works contract services executed prior to 18.07.2022, despite services originally taxable at 12% under Notification 24/2017-CT(Rate) dated 21.09.2017.
Income Tax
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Property details provided, accounts submitted, payment made in 2010, purchase deed given to AO. Tribunal: Assessment Order not prejudicial.
Observing that property details were provided to the Assessing Officer, properties reflected in accounts submitted during assessment proceedings, substantial payment made in 2010, and cash component part of purchase deed submitted to AO, the Tribunal held that Assessment Order was not erroneous prejudicial to Revenue interest. Consequently, Order u/s 263 set aside, allowing assessee's appeal.
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Tribunal's plenary powers prevail over return revisions. AO must consider additional grounds afresh. CBDT circular overruled.
Revised return enhancing declared income necessitated by settlement with respondents in earlier years. AO refused to accept declarations and proceed per settlement. AO's view that granting relief would result in income falling below threshold declared in Return of Income. Supreme Court's judgment in Wipro Finance case laid to rest doubts regarding Tribunal's power to entertain fresh claims and accord relief, irrespective of assessee's position in return. Ordinarily, assessee bound by return, but Tribunal's plenary powers u/s 254 cannot be denied or subjected to return revision. CBDT circular cannot disregard Tribunal's direction to AO to examine issue afresh. Writ petitions allowed, final assessment orders quashed insofar as negating consideration of additional grounds. AO to consider additional grounds and pass fresh orders. Consequential demand and penalty notices also quashed.
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Merger effective 01.04.2012, transferee liable for transferor's taxes. Assessing non-existent transferor post-merger incorrect. Orders quashed.
As per the Scheme of Amalgamation, the effective merger date of the petitioner company with another company was 01.04.2012. Post-merger, the petitioner ceased to exist, and its tax liability merged with the transferee company. The transferee was obligated to include the transferor's tax liability. Issuing assessment orders against the non-existent transferor post-merger was incorrect. The impugned assessment orders were quashed, and the writ petitions were allowed by the HC.
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Faceless info u/s 135A can't lead to arbitrary 148 notice. Safeguards needed to prevent defective info. AO must consider assessee's version before issuing 148 notice.
Merely deriving information through faceless scheme u/s 135A cannot create arbitrary consequences. Safeguards are needed to prevent defective information leading to Section 148 notice. Not all information u/s 135A is sacrosanct or defect-free. Once defect is pointed out, AO must consider assessee's version before issuing Section 148 notice. AO failed to verify correctness of electronic information with assessee's explanation before issuing impugned Section 148 notice. AO needs to apply mind, verify materials, and form opinion before dispensing with Section 148A procedure for Section 148 notice based on Section 135A information. Impugned Section 148 notice quashed for non-application of mind and being arbitrary.
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Assessee's AMP expense disallowed. TP adjustments in Trading & Networking upheld with directions for working capital, non-operational items. Royalty adjustment deleted; TNMM adoption appropriate. Expatriate salaries allowed.
Transfer pricing adjustment made to alleged international transaction of AMP expenditure incurred by assessee disallowed due to lack of evidence that assessee agreed to incur such expenditure on behalf of parent company or that advertising and marketing budget was determined by parent entity. TP adjustments to arm's length price of international transactions in Trading segment under TNMM by altering set of comparable companies upheld as deselection of functionally dissimilar companies justified. Similarly, TP adjustments in Networking segment upheld. TPO directed to grant working capital adjustment and correctly compute profit margins of comparables by excluding non-operational items while determining arm's length price in Trading, Networking and Manufacturing segments. TPO also directed to determine proportionate adjustment appropriately by considering transactions with AEs and excluding unrelated party transactions. Adjustment to royalty paid to parent for licensed know-how deleted as TPO's selection of comparable transactions under CUP lacked meaningful comparability and was arbitrary. Adoption of TNMM held appropriate as relevant CUP data unavailable. Disallowance of salary paid to expatriate employees on secondment from Korea deleted as they worked under sole control of assessee and no evidence of furthering parent company's objectives.
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Assessment framed without valid notice from jurisdictional AO. ITO's notice non-est in law. No transfer order. Assessment order passed without valid notice u/s 143(2).
Assessment framed without issuing mandatory notice u/s 143(2) by jurisdictional officer. Assessee filed return with Range-1(1), notice u/s 143(2) issued by ITO, Ward-3(1), lacking jurisdiction as per Notification vesting jurisdiction with ITO, Ward-1(1). ITO, Ward-3(1)'s notice u/s 143(2) non-est in law. No transfer order u/s 127 from ITO, Ward-3(1) to ITO, Ward-1(1). ITO, Ward-1(1) passed assessment order without valid notice u/s 143(2). Assessment framed without valid notice from jurisdictional AO. Assessee's appeal allowed.
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Reopening assessment invalid-AO didn't record non-disclosure; 2nd reopening on share premium-based on impermissible change of opinion.
Reopening of assessment u/s 147 was invalid as Assessing Officer (AO) failed to record that assessee did not disclose fully and truly all material facts necessary for assessment. For second round of reassessment on share premium received, reopening was based on change of opinion, which is impermissible. Investigation wing's report alone is insufficient as survey statements lack evidentiary value. Failure to disclose survey details in first reopening does not constitute failure u/s 147. Decided in assessee's favor.
Customs
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Revised tariff values for edible oils, brass scrap, areca nut, gold & silver announced. Effective Aug 1, 2024.
Notification amends tariff values for edible oils, brass scrap, areca nut, gold, and silver. Tables provide revised tariff values for crude palm oil, RBD palm oil, others-palm oil, crude palmolein, RBD palmolein, others-palmolein, crude soya bean oil, brass scrap, gold in various forms, silver in various forms, and areca nuts. Notification effective August 1, 2024, under Customs Act, 1962.
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Lab chemicals (excl. undenatured ethyl alcohol) under HS 9802 attract 10% customs duty if used for lab/R&D & not sold. Misuse attracts full duty.
Notification amends notification No. 50/2017-Customs to prescribe conditional 10% basic customs duty rate on laboratory chemicals (excluding undenatured ethyl alcohol) under HS 9802 00 00 for specified laboratory or research and development use. Importer must submit undertaking not to sell or trade imported goods, failing which duty becomes payable on quantity misused.
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Importer challenged confiscation, fine & penalty for alleged mis-declaration of value when show cause was for prohibited goods import.
Respondent issued show cause notice alleging import of prohibited goods. Petitioner replied and attended personal hearing. Impugned order did not discuss hazardous waste issue, implying acceptance of petitioner's explanation as per precedent. However, order rejected declared value, ordered confiscation for re-export, imposed redemption fine and penalty for mis-declaration of assessable value. Since show cause notice pertained to import of prohibited goods, not mis-declaration of value, impugned order set aside under Article 226. Petition disposed.
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Centre can amend trade policy retrospectively for public interest; exports allowed on prior LCs.
The Central Government is empowered to formulate and amend the Foreign Trade Policy. The impugned Notification prohibiting export of Non-Basmati White Rice, except in certain cases, cannot be held contrary to the Foreign Trade Policy. The policy change can be given retrospective effect in public interest, overriding individual losses, as held in Shrijee Sales Corporation and Unicorn Industries cases. The petitioners' claim of vested rights due to prior Letters of Credit is rejected, as they were at the procurement stage, not shipment stage. The conditions in the Notification enabling exports for fulfilled contractual obligations are not arbitrary or violative of Article 14. The doctrine of legitimate expectation cannot be upheld per the Supreme Court's decision in Sivanandan CT case, as legitimate expectation is not a legal right and yields to public interest. No prior notice is required. The Notification will have prospective effect for the petitioners, allowing exports of Non-Basmati White Rice against Letters of Credit issued before 20.07.2023, fulfilling contractual obligations with foreign buyers.
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Customs authorities' waiver certificate binds CFS & shipping lines. Demurrage/detention charges payable only if importer delays clearance.
The statutory regulations have an overruling effect on the contract between parties. The demurrage/detention charges are payable only when goods are not cleared voluntarily or due to customs authorities' action/inaction. The waiver certificate issued by customs authorities is statutorily binding on CFS and shipping lines/agents. The writ petitions against CFS, CFA, and shipping lines/agents are maintainable as they are obliged to perform duties per the Customs Act and regulations. CFS need not be heard before granting waiver certificates. The 90-day clearance period under regulations is enforceable only if no detention by authorities. If goods are cleared in favor of importer, no charges can be demanded. The authorities are liable for delays beyond 60 days. Importers who succeeded are entitled to refund, and interest claims can be considered. Non-compliance with waiver certificates by CFS and carriers may lead to appropriate action per due process.
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Customs Tribunal: Import of new vehicles in CKD condition allowed through non-designated ports. 'Motor vehicles' excludes CKD units.
Customs Tribunal held that restrictions on import of new vehicles through designated ports under Foreign Trade Policy do not apply to vehicles imported in completely knocked down (CKD) condition. Expression 'motor vehicles' in relevant policy condition includes only completely built units, not CKD condition vehicles. Rule 126 of Central Motor Vehicle Rules requires prototype testing and approval, which is not possible for unassembled CKD vehicles. Relying on Delhi High Court judgment, Tribunal observed that term 'motor vehicle' in policy conditions can only apply to complete vehicles, not CKD or incomplete vehicles. Importing motorcycles in CKD condition through non-designated ICD did not violate any prohibition, hence no confiscation, redemption fine or penalty was imposable. Impugned order set aside, appeal allowed.
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Appellant's wrong 'Country-of-Origin' certificate led to duty, interest & reduced penalty. Notification benefit claim rejected. Penalty upheld for firm, set aside for proprietor.
Appellant produced wrong 'Country-of-Origin' certificate to claim notification benefit, amounting to mis-declaration and suppression of facts. Duty along with interest and reduced penalty u/s 114A paid. Claim for notification benefit at appellate stage rejected as certificates to be produced at clearance time. Levy of penalty u/s 114A and 114AA upheld, as both independent, but penalty under 114AA on proprietor set aside, as proprietor and firm being one entity, cannot be penalized twice for same offence. Impugned order modified, appeal partially allowed.
DGFT
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Kandla & Vishakhapatnam ports added for exporting essential commodities to Maldives in 2024-25 under restricted category.
Kandla and Vishakhapatnam sea ports included for export of essential commodities under prohibited/restricted category to Maldives during fiscal year 2024-25, in addition to ports listed in earlier notification, in exercise of powers under Foreign Trade (Development & Regulation) Act, 1992 and Foreign Trade Policy 2023, as amended.
Corporate Law
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Court dismisses shell firm's plea, finds fund diversion of Rs. 78.45 cr by mastermind; unregistered deeds & lack of authority cited.
The Court dismissed the applications filed by the applicant company, SMS Textiles Limited, observing that it is a shell company of the company in liquidation and its mastermind Mr. K.C. Palanisamy. The Court found that there has been diversion of funds from the company in liquidation to the tune of Rs. 78.45 crores, at the behest of Mr. K.C. Palanisamy. The applicant failed to place on record the certified or attested copy of the registered sale deed dated 14.03.2005, by which it claimed to have purchased the property in question. The License Deed whereby the property was allegedly leased to the respondent company was not a registered document. The authority of Mr. Piyush Kumar, who filed the application as Authorized Representative, was not explained, and no Board resolution was placed on record. The sale deed was executed after the appointment of the Provisional Liquidator, raising doubts about the applicant's claims. The Court found sufficient grounds to infer that the applicant company is a shell company and has not come to the Court with clean hands, and therefore, the reliefs claimed cannot be granted.
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Oppression plea by heirs rejected. Deceased accepted share transfer consideration, didn't challenge it for years despite SC ruling.
Oppression and mismanagement case - Transfer of 2500 shares by deceased challenged by appellant claiming legal heirs entitled to shares or fair price. Held: Appellant's contention rejected as initial transfer challenged only by Respondent No.4 on ground of share entitlement, deceased never alleged any right on shares after receiving consideration and executing letter dated 23.06.2015. Despite Supreme Court decision in 2018, deceased took no action for share transfer till 2021 death. Appellants/legal heirs acted six months after death, misinterpreting order in TP No.106/2016. Share transfer by deceased never an issue before Company Law Board or NCLT, deceased never challenged it. Appellants lack locus standi to file petition u/ss 241-242 as non-members/shareholders. Appeal dismissed.
Bill
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TDS rates reduced for 194D, 194DA, 194G, 194H, 194-IB, 194M, 194-O from 0.1-2% from 1.4.2025/1.10.2024. 194F omitted for MF/UTI repurchase from 1.10.2024. No change for salary, VDAs, lottery, race horses, property transfers, NR payments, contracts.
Rationalisation of Tax Deducted at Source rates is proposed. TDS rates to be reduced for sections 194D, 194DA, 194G, 194H, 194-IB, 194M, and 194-O, ranging from 0.1% to 2%, effective from 1.4.2025 or 1.10.2024. Section 194F relating to repurchase of units by Mutual Funds/UTI is proposed to be omitted from 1.10.2024. No change for TDS on salary, virtual digital assets, lottery winnings, race horses, immovable property transfers, non-resident payments, and contract payments.
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Tax Deducted at Source (TDS) on insurance commission for non-corporates reduced from 5% to 2% from Apr 1, 2025.
Section 194D mandates deduction of tax at source (TDS) on insurance commission payments to residents. Currently, the TDS rate is 5% for non-corporate entities. It is proposed to reduce this TDS rate from 5% to 2% for non-corporate recipients, effective April 1, 2025. This amendment aims to rationalize and simplify taxation of capital gains.
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Lower TDS rate of 2% on life insurance payouts from Oct 1, 2024 to simplify taxation of capital gains.
Section 194DA mandates tax deduction at source (TDS) at 5% on payments made under life insurance policies, excluding exempt amounts. The proposed amendment reduces the TDS rate from 5% to 2%, effective October 1, 2024, rationalizing and simplifying taxation of capital gains from life insurance policies.
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Lower 5% TDS on lottery commission/prizes to 2% from Oct 1, 2024 for income over Rs. 15,000.
Section 194G mandates tax deduction at source (TDS) at 5% on commission, remuneration, or prize income exceeding INR 15,000 paid to persons involved in lottery ticket stocking, distribution, purchase, or sale. It is proposed to reduce the TDS rate under this section from 5% to 2%, effective October 1, 2024.
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Income tax deduction on commission/brokerage slashed from 5% to 2% from Oct 1, 2024. Simplified capital gains taxation.
Section 194H income tax deduction on commission or brokerage payments reduced from 5% to 2%. Amendment effective October 1, 2024. Rationalisation and simplification of capital gains taxation.
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Rent >Rs 50K/month? 5% TDS u/s 194-IB. From Oct '24, 2% TDS rate simplifies capital gains tax.
Individual or HUF responsible for paying rent exceeding Rs. 50,000 per month to resident required to deduct 5% TDS u/s 194-IB. Proposed amendment reduces TDS rate to 2% effective October 1, 2024, rationalizing and simplifying taxation of capital gains.
Indian Laws
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Bar Councils can only charge enrolment fee u/s 24(1)(f) Advocates Act 1961 for admission. Other fees construed as enrolment fee.
Bar Councils can only charge enrolment fee prescribed u/s 24(1)(f) of Advocates Act 1961 at time of admission on State rolls. Other miscellaneous fees like application form, processing, postal, police verification, ID card, administrative, photograph fees etc. charged at enrolment are construed as part of enrolment fee and cannot cumulatively exceed prescribed fee. Bar Councils directed to ensure compliance, not defeat provision through different nomenclatures. No refund of excess fees collected before this judgment, which has prospective effect. Writ petition and transfer cases disposed of.
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Complainants to get full refund + 12% interest p.a. from deposit date till refund for delayed project handover. Force majeure rejected. Appeal partly allowed.
Direction to refund entire sum deposited by complainants with interest at 12% per annum from date of respective deposit till refund for delay in completion of project and handing over possession of flats - force majeure clause not applicable as held in DLF HOME DEVELOPERS case - appeal allowed in part modifying interest rate from 9% to 12% per annum as per agreement clause.
IBC
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Plaintiff claims defendants can't defend suit. Court says limitation issue needs examination. First defendant defaulted on Rs. 70L payment.
Plaintiff contended defendants have no real prospect of successfully defending suit claim. Court held limitation issue raised by defendants requires further examination and cannot be decided in Interlocutory Application as plea cannot be held moonshine. First defendant defaulted on Rs.70,00,000 payment to plaintiff under Memorandum of Compromise. Cheque issued by first defendant got dishonoured. Plaintiff contends no necessity to withdraw suit per Memorandum since right to restore suit on breach. Defendants 2 to 4, being directors of first defendant company, not parties to contracts including construction contract and Memorandum of Compromise. Their liability can be adjudicated only after trial. First defendant made out probable case for defending suit on ground of limitation as amendment applications filed beyond three years from Memorandum date. Court directed first defendant to deposit Rs.70,00,000 within two weeks, failing which summary judgment for the amount in plaintiff's favour. Application against defendants 2 to 4 dismissed as suit claim against them to be adjudicated after trial.
PMLA
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Bail denied for alleged hawala operator linked to online betting app. Court finds prima facie money laundering evidence.
The court rejected the bail application u/s 45 of the PMLA, finding reasonable grounds to believe the applicant was involved in money laundering related to proceeds from the Mahadev Book App's online betting operations. The applicant admitted to being a hawala operator, receiving havala money from associates linked to the App's promoters. His jewellery shop hosted a party with the App's promoters. The court held there was prima facie evidence of the applicant's involvement in laundering proceeds of crime u/s 3 of the PMLA, and denying bail considering the risk of committing further offences.
SEBI
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University Funds & Endowments exempted from extra disclosures if: <25% Indian equity, >Rs. 10K cr global AUM, non-profit status.
Amendment exempts University Funds and University related Endowments registered or eligible as Category I FPIs from additional disclosure requirements subject to conditions: Indian equity AUM below 25% of global AUM, global AUM exceeding INR 10,000 crore, filing tax return evidencing non-profit status. Eligible jurisdictions specified by SEBI in consultation with Custodians/DDPs Forum. Exemption aims to protect investors, promote securities market development under SEBI Act and FPI Regulations.
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SEBI amends delisting norms: promoter group defined, trade curbs, certifications, 90% shareholding threshold, relaxations for small firms.
Securities and Exchange Board of India (SEBI) amended Delisting of Equity Shares Regulations. Key changes: Promoter group defined; restrictions on promoters/entities selling shares 6 months pre-delisting approval; promoter certification on compliance, delisting in shareholders' interest; merchant banker due diligence, certification on promoter trades; delisting allowed if 90% shareholding reached, 25% public participation; provisions on offer price, timelines; SEBI powers to grant relaxations; simplified delisting norms for small companies; transitional provisions.
Service Tax
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Franchise service ad charges reimbursed by franchisees can't be included in gross value as per CESTAT ruling. Revenue's case unconstitutional.
The CESTAT held that the advertisement charges collected by the appellant as reimbursement expense cannot be included in the gross value of franchise service. The revenue's case was based on Rule 5(1) and 5(2) of the Service Tax (Determination of Value) Rules, 2006, which were held unconstitutional and ultra vires the Finance Act, 1994. The advertisement expenses were ultimately borne by the franchisees as part of their business expenses and cannot be included in the gross value of franchise service. Consequently, the impugned order allowing the revenue's appeal was set aside, and the appeal was allowed.
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Sec 125(1) disqualifies if duty not quantified by 30.06.2019 & enquiry/investigation held. Firm's rep statement recorded on 06.07.2007 is "enquiry". But duty quantified as per HC order, so rejection quashed.
Section 125(1) of SVLDR Scheme disqualifies persons subjected to enquiry/investigation where duty involved was not quantified by 30.06.2019. Section 121(m) defines "enquiry/investigation" to include recording statements. Firm's representative's statement recorded on 06.07.2007 falls within this definition. However, twin conditions of enquiry/investigation and non-quantification before 30.06.2019 not satisfied as duty quantification formula prescribed by HC order. Hence, rejection of firm and partners' applications under SVLDR Scheme not justified, quashed and set aside. Petition allowed.
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Commission, incentives not taxable pre-2015. Reimbursements for warranty/service not taxable. No suppression, so no penalty.
Demand for service tax on commission received on vehicle sales, sales promotion, and incentives under 'Business Auxiliary Services' set aside as show cause notice failed to specify sub-section of Section 65(19). Demand for service tax on reimbursements for free service and warranty under 'Authorized Service Station Service' set aside based on Supreme Court ruling that reimbursable expenditure was not taxable prior to amendment of Section 67 in 2015. Extended period of limitation and penalty not imposable as no suppression of facts with intention to evade tax established. Impugned order set aside, appeal allowed.
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Service tax short paid by excluding free goods' value. Consideration = agreed amount, not value of free supplies.
Valuation - Service tax short paid by not including gross amount charged for services rendered. Gross amount charged defined in Section 67 does not expand meaning to include value of free supply goods. Value of taxable services cannot depend on value of goods supplied free. Consideration is amount recovered/recoverable as per agreed terms between parties. Amount approved by service recipient as per contract is consideration for computing tax liability. Short payment due to non-inclusion of Tax Deducted at Source (TDS) not sustainable as TDS grossed up and tax paid except when refunded due to losses. Denial of Cenvat credit for lack of documents not tenable as invoices contained requisite particulars. Liability under reverse charge mechanism for legal consultancy and rent-a-cab services to be appropriated. Extended period of limitation not invokable for mere verbal allegations without dishonest/fraudulent intent.
Central Excise
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Govt slashes Special Addl Excise Duty on Crude Oil to Rs. 4600/tonne from existing rate. Effective 1st Aug '24.
Notification amends previous notification No. 19/2022-Central Excise to reduce Special Additional Excise Duty on production of Petroleum Crude from existing rate to Rs. 4600 per tonne. Amendment made in exercise of powers u/s 5A of Central Excise Act, 1944 read with Section 147 of Finance Act, 2002. Comes into force on 1st August, 2024.
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Invoices sans supply,CENVAT misuse.Partner confessed fraud.Pre-emptive reversal,no retraction.Burden on manufacturer.Order upheld.
CENVAT Credit - invoices issued without actual supply of materials - retraction of statements - burden of proof - personal penalty on partner of appellant firm. Mastermind partner admitted purchasing prime material, selling locally on cash basis, passing CENVAT Credit to manufacturers by misdescribing goods as "scrap". Other partner admitted taking CENVAT Credit on "scrap" described as "prime finished goods" in invoices. Appellant voluntarily debited CENVAT Credit before partner's statement, not retracting statement. Burden of proof regarding admissibility of CENVAT Credit lies with manufacturer as per Rules. No infirmity in impugned order, appeal dismissed.
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Imported goods destroyed by fire at 100% EOU; duty element uninsured but no negligence. As per rules, duty can't be demanded if goods lost.
The appellant, a 100% Export Oriented Unit (EOU), imported goods and stored them in a licensed warehouse u/s 58 of the Customs Act, 1962. These goods were destroyed in a fire accident at the factory premises. Although the goods were insured for their value, the duty element was not covered. The insurance company settled the claim after determining the fire was caused by unavoidable circumstances. The department also recorded the destroyed goods. Despite the duty element not being insured, there was no negligence on the appellant's part. As per Section 23 of the Customs Act, 1962, read with Rule 21 of the Central Excise Rules, 2002, and Notification No. 22/2023-CE dated 31.03.2003, when goods are lost, the question of demanding duty does not arise. The Appellate Tribunal, in a similar case, held that if the Assistant/Deputy Commissioner of Customs is satisfied that the imported goods have been lost, duty cannot be demanded. Since the fire occurred due to unforeseen reasons, the demand for duty is set aside, and the appeal is allowed.
VAT
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Non-paid sales tax dues don't create 1st charge over property. Secured creditors precede. Auction buyers get valid titles despite delays.
Non-paid dues of Sales Tax department do not constitute a first charge over property. The first charge belongs to Secured Creditors or the State/Central Government (Crown's debt). Bonafide purchasers who acquired properties through auctions following loan defaults by predecessors hold valid titles. The charge of a Secured Creditor precedes an Unsecured Creditor's (Crown's debt) charge. State authorities cannot reject mutation applications by auction purchasers. Delay is irrelevant as purchasers have invested substantial amounts and acquired valid titles through Sale Certificates. Authorities are directed to mutate purchasers' names in revenue records by quashing State's attachment/charge, as Banks held the first charge. Petitions allowed.
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Haryana GST Act allows best judgment assessment with single notice within 5 yrs, sans intimation of basis or personal hearing.
Section 28A of the Haryana General Sales Tax Act, 1973 dispenses with the requirement of a second notice and opportunity of personal hearing before proceeding with best judgment assessment. However, the Assessing Authority is bound to issue the initial notice for best judgment assessment within the period of five years as prescribed u/s 28(4) of the Act. The Assessing Authority is not required to intimate the basis for arriving at the best judgment assessment or take any other step, except issuing the initial notice within the five-year period. The legislature's use of the word "for" in Section 28A clarifies that the five-year limitation applies to the issuance of the initial notice for best judgment assessment, without the need for additional steps.
Case Laws:
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GST
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2024 (8) TMI 78
Maintainability of the petition - appeal on different cause of action - Refund/Input Tax Credit for purchase of goods from suppliers which was utilized further in manufacturing and export of garments for the period September 2019 to January 2020 - HELD THAT:- In the instant case, the petitioner has claimed a refund of Rs. 1,86,40,537/- as ITC for purchases made by for different period. It is convincing that even though, a Special Appeal is pending before this Court in a case relating to the writ petition, but the cause of action in the said Special Appeal is different. The writ petition is disposed of with the direction to the petitioner to approach the appellate authority against the orders impugned.
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2024 (8) TMI 77
Order passed u/s 73 of the U.P. GST Act, 2017 - the petitioner informed respondent- adjudicating authority the need to issue appropriate notice and to grant the petitioner time to seek permission of the IRP to contest the adjudication proceedings - HELD THAT:- No further notice was issued or date was fixed in the adjudication proceedings. The impugned order came to be passed within a fortnight therefrom. Also it is not in dispute that subsequently vide order dated 15.04.2024 passed by the National Company Law Appellate Tribunal, Chennai, the order dated 03.04.2024 passed by the NCLT appointing the IRP has been set aside. As to the current status of the petitioner the petitioner is out of insolvency proceedings. Thus, no useful purpose would be served in keeping this petition pending or calling for a counter affidavit at this stage. Clearly once the petitioner was undergoing resolution before the Interim Resolution Professional and the fact of IRP appointment was communicated to the adjudicating authority, it may not have passed the impugned order during pendency of that CIRP - the writ petition is disposed of.
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2024 (8) TMI 76
Maintainability of petition - availability of remedy of appeal under Section 107 of the Act - Challenge to order u/s 74 of the U.P. G.S.T. Act, 2017 - ex-parte order - violation of principles of natural justice - HELD THAT:- In the present case as well the notice for filing of reply was issued on 08.09.2023 for the date 08.10.2023. No separate / other date was fixed for hearing. Yet, without passing any order on the date fixed, the impugned order has been passed on 18.10.2023 without fixing any date and without issuing any further notice for another date of hearing. The present order has remained wholly ex-parte order that may not be sustained in view of the earlier order passed in Mahaveer Trading Company versus Deputy Commissioner State Tax and Another. The impugned order dated 18.10.2023 passed by the respondent No.2- Joint Commissioner, Corporate Circle Commercial Tax/ State Tax Zone-Etawah, Range- Mainpuri, Firozabad is, hereby, set-aside - the writ petition is allowed.
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2024 (8) TMI 75
Order challenged on the ground that tax liability was imposed on a factually erroneous basis in assessment orders for assessment periods 2018-2019 and 2019-2020 - HELD THAT:- The petitioner has placed on record the GSTR 3B return. Such return specifies a sum of Rs. 77,69,979/- in the column pertaining to cess in table 4. The impugned order, on the contrary, specifies that Rs. 1,89,09,103/- was reported as inward cess in the GSTR 3B return. On such basis, the respondent arrived at the conclusion that there was short payment of cess on outward supplies to the extent of Rs. 31,05,088/-. Since the conclusion appears prima facie to be based on an erroneous factual assumption, the matter requires reconsideration. The impugned orders dated 28.02.2024 are set aside and the matters are remanded for reconsideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue fresh orders within a period of three months from the date of receipt of a copy of this order. Petition disposed off.
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2024 (8) TMI 74
Seeking quashing of the summoning order and order issuing non-bailable warrant against the applicant - Sections 89, 83 of Finance Act, 1944, Section 174 of CGST Act, 2017 and Section 9 r/w Section 9(AA) of Central Excise Act, 1944 - tax liability on the services provided by the applicant herein between April, 2014 and June, 2017 to the educational institutions - HELD THAT:- Having considered the facts and circumstances of the case in all its ramification and without commenting upon the merits of the case, the instant application is disposed of, subject to fulfilment of conditions imposed. Bail application allowed.
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2024 (8) TMI 73
Violation of principles of natural justice - reasonable opportunity was not provided to the petitioner to contest the tax demand on merits - entitlement to transitional Input Tax Credit - HELD THAT:- On examining the petitioner's reply, it appears that the petitioner enclosed TRAN-1. However, while asserting that the petitioner has relevant VAT and CST invoices, no other documents were enclosed. To that extent, the petitioner cannot be absolved of responsibility for the confirmation of the tax proposal. However, both in the above mentioned reply and in the affidavit, the petitioner asserts that all relevant documents are available and were filed when TRAN-1 was originally filed. These facts and circumstances justify the provision of another opportunity to the petitioner, albeit by putting the petitioner on terms. The impugned order dated 29.12.2023 is set aside subject to the condition that the petitioner remits 15% of the disputed tax demand as agreed to within fifteen days from the date of receipt of a copy of this order. Within the said period, the petitioner is permitted to submit an additional reply by enclosing all relevant documents - petition disposed off.
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2024 (8) TMI 72
Levy of penalty u/s 129(5) of GST Act - discrepancy between the PIN code of the petitioner in the Tax Invoices and in the E-Way Bill - HELD THAT:- Having considered the documents filed by the petitioner and having considered the Circular Circular No.64/38/2018-GST dated 14.09.2018 issued by the Central Board of Indirect Taxes and Customs, the content, the Court is of the view that the petitioner cannot be mulcted with unjust penalty due to a minor discrepancy in the PIN code in the GST Registration and the Tax Invoices is to be construed as a minor violation of the provisions of respective GST enactments. It is noticed that the difference in the address given in the E-Way Bill and the address in the Tax Invoices are only on account of the difference in the Head Office and the actual place from which the delivery was made. The petitioner had earlier obtained registration under VAT Act, for the place from where the despatch was made. The Tax Invoices, that has been raised by the petitioner, is from the same address at earlier obtained registration from VAT Authority. The imposition of penalty for technical venial breach of the provisions or the minor discrepancy in the variance in the address in the Tax Invoices and the E-Way Bill would not justify the penalty under Section 129(5) of the respective GST enactments. Although the petitioner has come long after the impugned order was passed, the Court is of the view that the philosophy under the respective GST enactments is not to levy unjust tax and burden on assessee, who is otherwise regular in paying tax and complies with the law. The impugned order passed by the respondent is quashed. In view of this order, the respondent is directed to either refund the amount paid by the petitioner or allow the petitioner to take credit in their Electronic Cash Register or Electronic Cash for adjustment towards future tax liablity of the petitioner - Petition disposed off.
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2024 (8) TMI 71
Validity of assessment order - excess stock - confiscation of goods on the basis of eye measurement - HELD THAT:- It is not in dispute that the survey was made on 24.08.2018 in which alleged excess stock was found then the proceedings were initiated - This Court on various occasions has held that if the excess stock was found then the proceedings under Sections 73 74 of the UPGST Act will come into play and not proceedings under Section 130 read with Rule 122 of the Act. This Court in M/s Shree Om Steels Vs. Additional Commissioner Grade-2 and Another [ 2024 (7) TMI 1205 - ALLAHABAD HIGH COURT] held that even if excess stock is found, the proceedings under section 130 of the UPGST Act cannot be initiated. The impugned order cannot sustain in the eyes of law and the same is hereby set aside - Petition allowed.
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2024 (8) TMI 70
Proportion of taxablity - providing services to the National Highways Department of India and that the considerations are received in two parcels - contention of the Department is that since the work has been substantially completed, the petitioner was liable to pay tax on the entire value of the work - CBIC Circular No.221/15/2024-GST dated 26.06.2024 - HELD THAT:- The impugned orders are to be set aside and the cases are remitted back to the respondent to re-examine the issue in the light of the clarification issued by the Central Board of Indirect Taxes and Customs vide Circular No.221/15/2024-GST, dated 26.06.2024, pursuant to the recommendation of the GST Council in its 53rd Meeting held on 22.06.2024. Prima facie , the petitioner is not liable to pay tax if no invoice is raised by the petitioner on the NHAI. As and when the petitioner either raises invoice for payment of the amount in 30 Annuities qua balance 60% or receives amounts in Annuities, the petitioner would be liable to pay tax. Merely because, the petitioner has sub-contracted the work and completed the work in advance for receiving the payments in the form of Annuity over a period of 15 years would not either disentitle the petitioner to avail input tax credit on the tax charged by the sub-contractor on the petitioner or to draw an inference that the petitioner was indeed liable to pay tax on the entire value of the contract with NHAI, even though the petitioner has neither raised any invoice nor received the payment. The impugned orders are set aside and the cases are remitted back to the respondent to re-examine the issue in the light of the above observations and in the light of Circular No.221/15/2024-GST, dated 26.06.2024. Petition disposed off by way of remand.
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2024 (8) TMI 69
Levy of GST on transaction of assignment of long term leasehold right - HELD THAT:- Issue Notice, returnable on 01st August, 2024. By way of ad-interim relief, no further proceedings shall be continued pursuant to the impugned show-cause notice.
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2024 (8) TMI 68
Violation of principles of natural justice - No opportunity of personal hearing provided as per Section 75(4) of GST Act, 2017 - time limitation - appeal could not be filed in time - HELD THAT:- In the peculiar facts of this case, as the petitioner s Chartered Accountant, met with an accident, during the period of limitation for preferring an appeal, we deem it appropriate to permit the petitioner to file an appeal before the appellate authority within fifteen days from today. If the appeal is preferred within the aforesaid time, the appellate authority shall consider and decide it on merits and shall not throw it over board on the ground of delay. The Writ Petition is accordingly disposed of.
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2024 (8) TMI 67
Cancellation of the petitioner's registration under the Central Goods and Services Tax Act, 2017 - SCN does not disclose reasons as to why the petitioner no. 1 s registration under the said Act is liable to be cancelled - Violation of prinicples of natural justice - HELD THAT:- It cannot be said that the petitioner no. 1 was not disclosed the reasons as to why the show cause had been issued. However mere disclosure of reasons, does not satisfy the requirement of the provisions contained in Rule 25 of the Central Goods and Services Tax Rules, 2017. A perusal of the aforesaid Rule would demonstrate the mode and manner in which the physical verification of the business premises in certain cases are required to be carried out. Admittedly, in this case, the petitioners were not notified of the attempt made by the respondents to identify the petitioner no. 1 s place of business. Although, Mr. Banerjee, by placing reliance on the endorsement made by the postal authorities on a letter dated 17th January, 2024 attempts to establish that the petitioner no. 1 is not in existence, such a procedure to establish the existence or non-existence of a company is unknown in law. Although, the procedure adopted by the respondents to cancel the petitioner no. 1 s registration under the said Act may not be strictly as per the procedure laid down, however, the same cannot be said to be per se illegal or without any basis, especially when the petitioners are not interested to have the factual determination as regards the existence of the petitioner no. 1 s business premises made by the respondents, tested out by a further inspection. The above raises a presumption that the petitioners are withholding information and have not approached this Court with clean hands. The petitioners are not entitled to any relief under Article 226 of the Constitution of India - petition dismissed.
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2024 (8) TMI 66
Seeking a direction to the first respondent to accept the appeal by treating the date of filing of the appeal as 18.06.2021 - rejection of refund of IGST on ocean freight - HELD THAT:- In PKV Agencies, this Court followed the judgment of the Orissa High Court in M/S. ATLAS PVC PIPES LIMITED VERSUS STATE OF ODISHA OTHERS [ 2022 (7) TMI 130 - ORISSA HIGH COURT ]. In effect, the Court concluded that the non- production of the hard copy of the impugned order is only a technical defect and that the appeal is required to be processed provided the appeal was filed within time. In the case at hand, the refund rejection order was issued on 19.03.2021 and the appeal was lodged on 18.06.2021. As such, the appeal was filed within time limit prescribed by statute. In those circumstances, the ratio of PKV Agencies is applicable. This writ petition is disposed of by directing the first respondent to process the appeal by not rejecting the same on the ground that the physical copy of the impugned order was filed on 02.02.2024. If the appeal is otherwise in order, the first respondent is directed to number the appeal within one month from the date of receipt of a copy of this order.
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2024 (8) TMI 65
Appeal dismissed on the ground that the pre-deposit had been made in the Electronic Credit Ledger and not Electronic Cash Ledger as required under Section 107 of the GST Act - HELD THAT:- Perusal of the material on record would indicate that the petitioner had incorrectly deposited 10% in the Electronic Credit Ledger instead of the Electronic Cash Ledger as required in law as a result of which the Appellate Authority dismissed the appeal on the ground that the petitioner had not deposited 10% in the Electronic Credit Ledger. However, having regard to the subsequent event that has transpired wherein the said amount of 10% has been recovered by the respondent from the petitioner, it is deemed just and appropriate to set aside the impugned order and restore the appeal preferred by the petitioner to the file of the respondent No.1 - Appellate Authority for consideration on merits in accordance with law. The respondents are directed to unblock and lift the seizure of the Bank Current Account of the petitioner bearing account No.50200018448492 of HDFC Bank - Petition disposed off.
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2024 (8) TMI 64
Rejection of claim of the petitioner for Input Tax Credit - period from July 2017 to March 2018 - Challenge to assessment order - HELD THAT:- Ext.P1 assessment order to the extent it denies Input Tax Credit of Rs.5,10,808.68/- owing to the alleged mismatch between GSTR 2A and GSTR 3B of the supplier will stand set aside. Since Ext.P1 covers other issues also, it is made clear that Ext.P1 is interfered with only to the extent that it denies Input Tax Credit and all other issues as determined by Ext.P1 will continue to operate. Therefore, this writ petition will stand disposed of directing that if the petitioner files an application for rectification of Ext.P1 order to the extent that it denies Input Tax Credit for the sum of Rs.5,10,808.68/- along with documents in support of the claim for Input Tax Credit, the same shall be considered by the respondent and orders shall be passed on the application, in accordance with the law, after affording an opportunity of hearing to the petitioner. Petition disposed off.
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2024 (8) TMI 63
Governmental Authority or not - serial number 3 of notification Number 12/2017-Central Tax (Rate) dated 28/06/2017 - Rate of tax - work allotted by Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed invoiced before 01.01.2022 - work allotted by Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India which is performed invoiced after 01.01.2022 but which is allotted before 01.01.2022 - work allotted by Maharashtra Jeevan Pradhikaran (MJP) as a part of Jal Jeevan Mission which is a mission of Government of India allotted, performed invoiced after 01.01.2022 - service receiver within the meaning of Sec. 2 (93) of CGST/MGST Act in respect of amounts received as grants by MJP which are paid to the applicant on services provided before 01.01.2022 and after 01.01.2022 - appointment of MJP as an agency to implement water supply schemes - delegation of sovereign function enumerated in Sch. XI XII within the framework of Constitution of India so as to hold that MJP has performed the function entrusted under Article 243G 243W of the Constitution of India. Whether Services provided to MJP for the Constitutional function of State Central Governments, for which these Governments are liable to pay the consideration of contract, and as payment is made through PFMS, supplies are in fact made to the Central State Government? - HELD THAT:- The Jal Jeevan Mission is implemented through SWSM, which is Society and has authority to undertake work, as per guidelines of the Jal Jeevan Mission. Authority and responsibility to Open Bank account. Both the Governments will transfer funds as grants in this account. Money is not directly going to be paid to the vendors/ contractors of SWSM, directly by respective Governments. Use of PFMS is binding. Hence it can not be said that the respective Governments are liable to pay to the vendors/contractors making supply to SWSM or MJP, as the case may be. Payment received through PFMS, proves that both the Central Governments have paid to applicant for the services supplied by them, hence are services provided to the Governments and not MJP. Whether the MJP is Governmental Authority - HELD THAT:- As the MJP is set up by an Act of Legislature of Maharashtra State, it is Governmental Authority , for the purpose of exemption entry at Sr No 3, before the omission of the words from the entry by Notification No. 16/2021-Central Tax (Rate) dated 18-11-2021 (W.e.f. 01 January 2022). Supply of services where Time of supply is on or before 31-12-2021. After Considering all the aforesaid facts, provisions of Law, issues and decision therein, we have no hesitation in holding the Technical Consultancy for Project Development and Management support services , provided by the applicant to the MJP for its Water supply schemes where time of supply is on or before 31-12-2021, are covered by the exemption entry at Sr No. 3 of the exemption notification No 12/2017-Central Tax (Rate), dated 28th June 2017.
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2024 (8) TMI 62
Exemption from tax - supply of selling space for advertisement in print media - pure service for the purpose of Entry at Sr. No.3 of the Exemption Notification - composite supply of goods and services in which the value of supply of goods constitute not more than 25%, for the purpose of Entry at Sr. No.3Aof the Exemption Notification - Pune Municipal Corporation and Pimpri Municipal corporation are local authorities for the purpose of entry at Sr no. 3 and 3 A of notification 12/2017 or not - content of advertisement has some connection either direct, indirect, remote etc. to the function entrusted to the panchayat or not - supply of service of selling space for advertisement for recruitment of doctors for the posts of 'Medical Officers' and 'Professors' required for hospital and medical college, having attached Hospital, run by the respective corporation can be said to be in relation to the function entrusted to the Panchayat under Article 243G 243W of the Constitution. Whether supply of selling space for advertisement in print media is pure service as referred in the said Entry No 3 of the Exemption Notification? - HELD THAT:- In supply of space for advertisement in print media, only the rights to publish advertisement are available to the recipient in specified publication, in which such advertisement is published. For printing of newspaper or printed material, Ink and papers are used and the property in such ink and papers get transferred in form of newspaper or print media, to customers who purchase or receive such of newspaper or print media. No property in goods in form of newspaper or print media, is transferred to the recipient of service of supply of selling space in print media. The recipient of such supply get only space in the newspaper, where content of its advertisement is printed. Therefore, it is decided that the supply of selling space in print media is supply of pure service as envisaged in Entry No. 3 of the Exemption Notification. Whether supply of selling space for advertisement in print media is composite supply of goods and services in which the value of supply of goods constitute not more than 25% %, for the purpose of Entry at Sr. No.3Aof the Exemption Notification? - HELD THAT:- Decision on this issue become redundant as the services are held to be pure services as discussed decided in above issue. Whether Pune Municipal Corporation and Pimpri Municipal corporation are local authorities for the purpose of entry at Sr no. 3 and 3 A referred above of the Exemption Notification? - HELD THAT:- This issue is decided by Maharashtra Authority for Advance Ruling in M/s. City and Industrial Development Corporation of Maharashtra Limited [ 2019 (6) TMI 1009 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] holding that 'we also are of the opinion that the NMMC and PMC are Municipal Corporations which satisfy the definition of a 'Local Authority' as defined in Section 2 (69) of the GST Act.' - the earlier decision of Maharashtra ARA in CIDCO's case agreed upon. Whether the content of advertisement has some connection to the function entrusted to a panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution? - HELD THAT:- From the recruitment Rules framed by PMC and similar Rules framed by PCMC, Publication of Advertisement for Recruitment of Medical Officers etc. is mandatory to be published in the Newspaper or Notice Board of the Corporation. Therefore, we are of the opinion that Activity of placing Advertisement for recruitment of Medical Officers and Professors from Medical Profession is mandatory on the Corporation and the content of advertisement has some connection, whether direct, indirect or remote, to the function entrusted to a panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution. Whether supply of service of selling space for advertisement for recrement of doctors required for hospital and medical colleges run by the respective corporation can be said to be in relation to the function entrusted to the Panchayat under Article 243G 243W of the Constitution? - HELD THAT:- The words any activity in relation to any function used in entry at Sr. no 3 are very broad and shall not be confused with the words directly in relation to , which are used for direct and proximate relationship - Hon'ble Supreme court-Constitution Bench in case of State Of Karnataka vs Azad Coach Builders Pvt. Ltd. Anr [ 2010 (9) TMI 879 - SUPREME COURT] held that ' The expression in relation to1 are words of comprehensiveness, which might both have a direct significance as well as an indirect significance, depending on the context in which it is used and they are not words of restrictive content and ought not be so construed.' Context of word in exemption notification-Entry at Sr No 3 - HELD THAT:- The exemption under the entries at Serial No. 12(e) and 25(a) of notification 25/2012-Service Tax dated 20-6-2012, will cover a wide range of activities/services provided to a government, a local authority or governmental authority and will include the activity of construction of tube wells. As the content of advertisement is in relation to the function of Education, including primary and secondary schools and Health and sanitation, including hospital, Primary health centres and dispensaries; it is decided that being pure services provided to the Municipal Corporations are covered by Entry No. 3 of the Notification 12/2017-Central Tax (Rate) Dated 28th June 2017, and exempted from tax.
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2024 (8) TMI 61
Determination of applicable rate of GST - supplementary invoice proposed to be issued, by the applicant for price escalation against the works contract services executed prior to 18.07.2022 - taxable @12% under N/N. 24/2017-Central Tax (Rate) dated 21.09.2017 (as amended from time to time) or 18% in view of the amendment to the said N/N. 3/2022-CT (Rate) dated 13.07.2022 read with Section 14 of CGST SGST Acts, 2017. HELD THAT:- In the present case, services have been supplied before 18.07.2022 (before the change in rate of tax vide Notification No. 03/2022-CT (Rate) dated 13.07.2022 w.e.f. 18.07.2022) and no payment against price escalation has been made. Further, invoices are proposed to be issued. So, rate of tax can be decided in view of the provisions of Section 14(a) (i) of the CGST Act, 2017 which is 18%.
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Income Tax
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2024 (8) TMI 60
Stay of demand - pre-deposit requirement - as decided by HC [ 2017 (6) TMI 1237 - KERALA HIGH COURT] Ld' Single Judge was perfectly justified in requiring the appellant to remit 15% of the disputed demand. Therefore, we do not find any merit in this appeal - HELD THAT:- As stated at the Bar that these Special Leave Petitions arise out of an interim order passed by the High Court in appeals. That these appeals have itself been disposed of. In the circumstances, appropriate orders may be made in these petitions. Noting the above, these Special Leave Petitions are disposed of as infructuous.
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2024 (8) TMI 59
Validity of assessment order based on Section 144B(6)(viii) - Denial of personal hearing by National Faceless Appeal Centre - As decided by HC [ 2024 (4) TMI 1158 - DELHI HIGH COURT] opportunity of personal hearing was sought in case an adverse inference was to be drawn by the respondents. In light of the qualified and hedged prayer that was made before the Assessing Officer, we find that the challenge as raised in the instant writ petition is clearly misconceived. HELD THAT:- We dispose of this Special Leave Petition by noting the fact that the High Court itself has in paragraph 5 of the impugned order stated that the impugned order was without prejudice to the rights and contentions of the writ petitioner and that it was open for him to address his case on all points in the statutory remedy that is to be availed. Therefore, the petitioner is at liberty to take all contentions that is available to him, in the statutory appeal to be filed if so advised, having regard to the fact that by the time the impugned order was passed, the assessment order had already been made.
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2024 (8) TMI 58
Delay filling SLP - Gross delay of 265 days in preferring this Special Leave Petition - as decided by HC Tribunal was right in cancelling the order made u/s 263 directing the AO to exclude interest u/s 244A granted to it on excess refund claimed through a revised return - HELD THAT:- As perused the application seeking condonation of delay. We are totally dis-satisfied with the manner in which the said application has been drafted inasmuch as it gives an impression that a cyclostlyed and sterotyped form of application has been made use of to insert certain dates so as to adjust to the date of filing of the special leave petition(s). The explanation offered for the said delay is also not satisfactory nor is it sufficient in law to condone the same. Application seeking condonation is dismissed. Consequently, the Special Leave Petition is also dismissed on the ground of delay.
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2024 (8) TMI 57
Delay in filling SLP - Denial of exemption u/s 11 - Assessee has not carried on any charitable activities during the relevant period and, as such, violated Section 11(2) and 11(5) - High court dismissed the Revenue's appeal, affirming the Tribunal's decision that the trust's activities were charitable and that there were no violations of Sections 11 and 13 - HELD THAT:- There is a gross delay of 496 days in filing this special leave petition. We are not satisfied with the explanation offered in order to seek condonation of delay. In the circumstances, the application seeking condonation of delay in filing special leave petition is dismissed. Consequently, the special leave petition also stands dismissed. Pending application(s), if any, shall also stand disposed of.
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2024 (8) TMI 56
Validity of reassessment notice u/s 148A - Denial of natural justice reasonable opportunity of hearing not provided - HELD THAT:- As there is no dispute regarding explanation given u/s 148 regarding information that can be relied upon by the AO to reopen assessment of escaped income. Revenue Audit Objections can be considered as a valid ground for opening assessment that has concluded. This Court is of the considered opinion that the reply of the petitioner had specifically asked for documents to be supplied including complete case proceedings and for personal hearing, which was not given. The Assessing Officer has acted in undue haste. The orders u/s 148A(d) and u/s 148 are set aside. The respondents shall provide all relevant documents that have been asked for by the petitioner in his representation by making payment of necessary fees to the department, within a period of one week from today. The petitioner shall submit his reply within one week, thereafter. A personal hearing shall be given by the AO, and an order u/s 148(d) be passed after considering the submissions made by the petitioner in his reply as also his personal hearing within three weeks, thereafter.
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2024 (8) TMI 55
Revised return submitted enhancing the declared income - revisions on the basis of a sum being attributable to activities of its Liaison office in India and in respect of actual sales made to the Delhi Metro Rail Corporation according to the writ petitioners, were necessitated in light of the settlement which had been arrived at with the respondents in earlier years - AO while framing an order of assessment on 31 December 2008 refused to accept the aforesaid declarations and thus chose not to proceed in accordance with the settlement which had been alluded to. According to the view expressed by the AO in the order impugned before us, the grant of relief as claimed by the petitioner would clearly result in the income chargeable to tax falling below the threshold as declared in its Return of Income. HELD THAT:- Any doubt which could have possibly been harboured in this respect in any case stands laid to rest bearing in mind the recent judgment rendered by the Supreme Court in Wipro Finance Ltd. [ 2022 (4) TMI 694 - SUPREME COURT] As would be evident from a reading of paragraph 10 of the report, an identical objection appears to have been raised on behalf of the Revenue with it being contended that since the assessee had taken a particular position with respect to an item of expenditure in the return, not only was the Tribunal disentitled in law to entertain a fresh claim, the same in any case could not have been taken into consideration for the purposes of according relief to the assessee. While ordinarily an assessee may be bound by the Return of Income as furnished, in case the Tribunal were to admit a question and proceed to accord relief, the same cannot be denied or be made subject to a Return of Income being revised. The insistence of the respondents on a revision of the return being a precondition clearly fails to take into consideration the plenary powers which stand conferred upon the Tribunal by virtue of Section 254 of the Act. In light of our conclusions on the principal question which stood posited, we observe that the challenge to the Circular of the CBDT does not really merit further consideration. All that need be observed is that once the Tribunal had called upon the AO to examine the issue afresh, the said direction could not have been disregarded by reference to a Circular issue by the CBDT. We accordingly allow the writ petitions and quash the final assessment orders dated 30 November 2021 insofar as they negate consideration of the additional grounds which had been urged by the writ petitioners. The AO shall consequently consider the same and pass fresh orders in accordance with law. We, in light of the above, also quash the consequential demand and penalty notices also dated 30 November 2021.
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2024 (8) TMI 54
Assessment against non-existent company - merger of petitioner company with another company - HELD THAT:- The effective date of the merger under the Scheme of Amalgamation is 01.04.2012. Thus, w.e.f. 01.04.2012, the said SPB Papers Limited ceased to exist. The tax lability of the said transferor company SPB Papers Limited would have stood merged with the transferee company M/s.Seshasayee Paper and Boards Limited. Thus, it is incumbent on the part of the transferee company to have included the tax liability of the transferor company SPB Papers Limited in view of the merger with effect from 01.04.2012. If this was not done, it is for the Income Department to proceed against the transferee company and not against the transferor company which stood merged w.e.f. 01.04.2012. Therefore, the impugned Assessment Orders are liable to be quashed and are accordingly quashed. Writ Petitions are allowed
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2024 (8) TMI 53
Reopening of assessment u/s 147 - information derived under the faceless scheme notified u/s 135A namely from the mechanism of faceless collection of information - HELD THAT:- We thus find substance in the contentions as urged on behalf of the Petitioner that merely because a faceless collection of information is provided u/s 148A of the Act, and the entire information is electronically generated on the electronic portal being required to be answered by the assessee, as in the present case, the operation of such electronic regime cannot create arbitrary consequences. To prevent such situation, the department needs to have a mechanism of having some safeguards. To presume that the scheme of Section 148 r.w.s.148A and Section 135A of the Act in all cases would operate on defect-free information cannot be accepted, even when information u/s 135A of the Act is available and the electronic mechanism requiring it to be processed further, for any action to be taken u/s 148 of the Act. It is difficult to accept that in every case any information which is derived from Section 135A of the Act would be sacrosanct and/or would be free of defects. Hence, once a defect is pointed out on such information as available on the portal, it would be certainly the duty of the AO to examine whether the version of the assessee in pointing out that the information is not correct, would require due consideration for any further action to be taken to issue notice u/s 148 of the Act. We find that in the present case, the assessee in fact had pointed out in her remarks that what has been disclosed by the assessee in the return of income was the correct income derived by the Petitioner in regard to the interest earned by the petitioner on deposits with the Canara Bank. Thus, such remarks or explanation as offered by the assessee necessarily was required to be considered, before the AO could proceed to obtain approval from the Commissioner of Income-tax and for the purpose of issuance of impugned notice u/s 148 of the Act. It is only after the Petitioner knocked the doors of the Court in the present proceedings, the AO has come across such information which indicates that what has been disclosed by the Petitioner in her return of income was the correct figure of income derived by the Petitioner as interest income received from the Canara Bank. Thus, in the present case, in our opinion, an exercise for verification of the correctness of the electronic information with the other information furnished by the assessee, was required to be undertaken by the AO before issuance of notice under Section 148 and not after the Petitioner was put to an ordeal of facing a notice and on being required to approach this Court, to seek redressal of her grievances and protection of her rights guaranteed under Article 14 read with Article 300A of the Constitution of India. We find merit in the Petitioner s case that such actions could have been avoided by the AO if an application of mind to this effect was to be shown on the earlier occasion. We would, therefore, certainly accept the Petitioner s contention that the impugned notice issued u/s 148 is arbitrary and vitiated by non-application of mind and consequently it being required to be quashed and set aside. AO needs to bear in mind that when the AO intends to resort to an action u/s 148 of the Act on the basis of information, which is derived u/s 135A of the Act, that is in the electronic form, unless the AO has verified such other relevant materials gathered either form the assessee or otherwise available, he ought not to proceed to issue a notice u/s 148 of the Act, without undertaking an exercise of appropriate verification of such materials so as to form an opinion, that it would be permissible in a given case to dispense with the procedure under Section 148A to be followed, for issuance of a notice u/s 148 of the Act. The impugned notice issued u/s 148 of the Act is quashed and set aside. Assessee appeal allowed.
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2024 (8) TMI 52
Validity of reopening of assessment - impugned order states that the petitioner has not submitted any explanation - HELD THAT:- The said reply has been sent by the petitioner electronically on 22.03.2024. However, the impugned order states that the petitioner has not submitted any explanation. It appears that the petitioner had responded to the notice u/s 148A (b), dated 13.03.2024 to the 2nd respondent and thus, the reply, dated 22.03.2024 sent electronically was not communicated to the 1st respondent. Therefore, this is a fit case for interfering with the impugned order, dated 30.03.2024 passed under Section 148A (d) of the Income Tax Act, 1961 and the impugned notice, dated 30.03.2024 under Section 148 of the Income Tax Act, 1961. Under these circumstances, the impugned order and the notice, dated 30.03.2024 are quashed and the case is remitted back to the file of the 1st respondent to pass a fresh orders on merits and in accordance with law. This writ petition is disposed of by giving liberty to the petitioner to file additional reply, if any, within a period of two (2) weeks from the date of receipt of copy of this order. The impugned order, dated 30.03.2024 passed u/s 148A (d) of the Income Tax Act, 1961 shall be treated addendum to show cause notice, dated 13.03.2024 issued under Section 148A (d) of the Income Tax, 1961
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2024 (8) TMI 51
Depreciation claim of assessee-trust - Double deduction or not? - HELD THAT:- The issue in the present proceedings as it relates to assessment year 2011-12, the law stands settled in the authoritative pronouncement of the Supreme Court in the case of Rajasthan Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT ] In such case the proceeding had arisen from the decision of this Court wherein the following question of law was formulated by this Court in Rajashtani Gujarati Charitable Foundation [ 2013 (1) TMI 820 - BOMBAY HIGH COURT ] wherein held the Income Tax Appellate Tribunal is justified in holding that the depreciation in respect of cost of the assets allowed to the assessee as expenditure is allowable and does nor gives rise to double deduction. This Court answered the question of law considering the prior decision of this Court in the case of CIT v. Institute of Banking [ 2003 (7) TMI 52 - BOMBAY HIGH COURT ] against the Revenue. Once assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well. Assessee appeal allowed.
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2024 (8) TMI 50
Reopening of assessment u/s 147 - time for completing the assessment under Section 153 - as submitted petitioner may be given one opportunity to explain the position before the first respondent - respondent submit that the Writ Petition is liable to be dismissed, as the petitioner has an alternate remedy before the Appellate Commissioner u/s 246(A) HELD THAT:- Petitioner can be granted a partial relief by setting aside the impugned order explaining the position as to the limitation. In case, the petitioner succeeds on limitation, the demand that has been proposed may be dropped. On the other hand, in case, the Officer has come to a conclusion during the hearing that no case is made out for dropping the assessment on account of limitation, the petitioner shall be ready to make submissions on merits. The first respondent shall pass suitable order on merits as expeditiously as possible, preferably, within a period of six months from the date of receipt of a copy of this order. Needless to state, the petitioner is at liberty to file additional written submissions. The petitioner shall also be heard before passing final orders. The petitioner shall also co-operate with the first respondent.
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2024 (8) TMI 49
Validity of reopening of assessment - notice after the expiry of four years - long term capital loss on sale of flat jointly owned by petitioner and spouse - HELD THAT:- Since the notice u/s 148 of the Act was issued after the expiry of four years of the assessment year and the assessment under Section 143(3) of the Act having been completed, as per the proviso to Section 147 of the Act, only if there was a failure on the part of Assessee to disclose truly and fully material facts, the assessment could be reopened. AO has taken a stand that by virtue of the Taxation and Other Loss (Relaxation of Certain Provisions) Ordinance, 2020 and the notifications issued thereunder, the proviso to Section 147 of the Act will not be applicable. It is an incorrect stand because the AO in the notice issued u/s 148 states that it has been issued after obtaining the necessary satisfaction of the Commissioner of Income Tax, ( CIT ) Pune. If it was within four years, he would not have taken the approval of the CIT and he would have taken the approval only of the Joint Commissioner of Income Tax. Moreover, in this case the issue regarding the capital loss on the sale of the said flat was subject of assessment proceedings. It is evident from the assessment order itself. Therefore, it is a clear case of change of opinion and that cannot be the basis for reopening an assessment. Decided in favour of assessee.
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2024 (8) TMI 48
Delay filling ROI - Rejection of applications u/s 119(2)(b) seeking condonation of delay - applications for condonation of delay were rejected entirely on the basis that such returns of income could have been filed through the e-filing portal - HELD THAT:- Section 119(2)(b) of the Income Tax Act enables the Central Board of Direct Taxes to condone delay in cases of genuine hardship. The said provision has been interpreted in several judgments, including of this Court, and it has been held that the provision should receive a liberal construction. The primary consideration in such applications is whether genuine hardship would be caused to the applicant. In this case, the applicant is an individual assessee. He resides in the United States of America. The two relevant assessment years were years when normal life was affected worldwide by the Covid-19 pandemic. The petitioner has placed on record a complaint filed by him with the Alameda County Sheriff's Office with regard to a theft from his car in which several items, including his passport, were lost. In the applications filed before the Commissioner of Income Tax, he has referred to his parents and in-laws being affected by the Covid-19 pandemic and the death of his father-in-law in the year 2021. Upon taking into account all the aforesaid facts and circumstances, in my view, these are appropriate cases to condone the delay in filing the returns of income. Therefore, the orders impugned herein are quashed and it is directed that the returns of income filing by the petitioner for assessment years 2020-2021 and 2021-2022 be processed in accordance with law.
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2024 (8) TMI 47
Offence punishable u/s 276B r/w Sec.278AA - accused are running an education institution at Coimbatore and are liable to deduct tax at source in respect of expenditure covered by the provisions of Chapter XVIIB of the Income Tax Act, 1961 - significant failure on the part of accused to pay the tax deducted at source to the Government account within the time limit as required under law - respondent raised objections stating that the delay is caused in paying the tax amount - HELD THAT:- Admittedly, the fact reveals that there is a delay on the part of petitioners and they have subsequently remitted the tax amount and delay is not caused wantonly, but only due to the concerned staff left the concern on maternity leave, the delay was caused. Furthermore, it was subsequently rectified and thereafter, they have deducted the tax amount properly and remitted the same without any delay. So, on seeing the conduct of petitioners, the proceedings initiated against them is liable to be quashed. Accordingly, these Criminal Original Petitions are allowed and the proceedings initiated on the file of Judicial Magistrate No.III, Coimbatore is quashed.
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2024 (8) TMI 46
Validity of reopening of assessment u/s 147 - Opportunity of hearing not granted to the petitioner before passing the impugned order - HELD THAT:- Respondent fairly stated that the petitioner was not provided an opportunity of hearing and the matter may be remanded back to the respondent-AO so as to enable the petitioner to file a reply to the notice u/s 148B because keeping this matter pending in this Hon ble Court would delay the re-assessment proceedings, if required to be re-opened after considering the reply of the petitioner and giving opportunity of hearing to the petitioner. Considering the above submissions, the impugned notice issued under Section 148 of the Act and the order passed u/s 148A(d) are hereby quashed and set aside remanding the matter back to the respondent-AO so as to grant an opportunity of hearing to the petitioner to file a reply as provided u/s 148A(b) of the Act. The respondent is directed to give an opportunity of hearing to petitioner in compliance of the above provisions of the Act. The petition is accordingly disposed of.
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2024 (8) TMI 45
Addition of specified bank notes u/s. 69A - AO treated the entire cash deposits during the demonetisation period as unexplained investment u/s. 69A and section 115BBE - HELD THAT:- We note that the cash deposits during demonetisation is only Rs. 3,25,000 and the CIT(A) has allowed Rs. 75,000 and only issue is for balance of Rs. 2,50,000 is before us. We are of the view no purpose will be served if the issue is remitted to AO since the assessee has not maintained any books of accounts, therefore we proceed to adjudicate the issue on merits. We note from the monthly sales submitted before the CIT(A) that business has been carried out by the assessee only for 10 months. From the purchase and sales for the month of September, October and November 2016 is not extraordinary in trends. Therefore keeping cash of Rs. 3,25,000 is meagre and assessee has also submitted that cash deposited is related with the turnover from 9.11.2016 to 16.11.2016 for 8 days and remaining cash was before 8.11.2016. If we consider the average sales per day for 26 days in a month, turnover comes to Rs. 32,780. Accordingly turnover for 8 days is Rs. 2,62,240 which is more than the disallowed amount of Rs. 2,50,000. Since the assessee has not maintained books of account therefore on the basis of calculating arithmetical figure and considering the nature of business and turnover of the assessee and very less amount of cash deposits, we allow this ground. Invoking of section 44AD - estimation of income at 8% of turnover - HELD THAT:- We do not find any infirmity in the order of CIT(Appeals) and the assessee is unable to prove that it is exempt towards eligible business and eligible assessee is defined u/s 44AD and assessee has also not maintained any books of account. He has not complied other provisions for showing lower profit. We hold that the order of the CIT(Appeals) on this point for estimating profit @ 8% is justified. Appeal by the assessee is partly allowed.
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2024 (8) TMI 44
Addition of cash deposits in the bank - contention of the assessee is that the assessee received back Rs. 20 lakhs paid as advance for purchase of plot in cash - HELD THAT:- The assessee had issued receipt against cash received from Madhur Infra Developers Pvt. Ltd. - The cash deposits in the bank account is the amount received by assessee from Madhur Infra Developers P. Ltd. The proximity of receipt of cash by the assessee from Madhur Infra Developers P. Ltd. and cash deposits of Rs. 20 lakhs reflected in the bank account on 01.10.2024 fairly indicate the possibility of deposit of cash received by the assessee from Madhur Infra Developers P. Ltd. Thus, deposit of cash in the bank account stands explained by the assessee. A specific query was made to assessee as to whether the documents on which reliance has been placed before the Tribunal were furnished to the AO and CIT(A), he made statement at Bar that all these documents were furnished to the authorities below and a certificate to this effect has also been given by him after the Index of paper book. In light of the facts of case and the documents on record ground no. 1 2 of the appeal are allowed. Long Term capital Gain (LTCG) - contention of the assessee is that the assessee has offered long term capital gain to tax in AY 2019-20 i.e. the year of receipt of total consideration - HELD THAT:- AO has computed long term capital gains in the impugned assessment year on the presumption that the entire consideration has been received by the assessee , as the Sale Deed was executed registered in the relevant period and accordingly worked long term capital gain on sale of land at Rs. 45,79,404/- - CIT(A) noted the fact that Rs. 35 lakhs was not received by the assessee, the CIT(A) directed the AO to recalculate capital gain on the sales consideration to the extent actually received i.e. Rs. 20,33,320/- only. After examining peculiar facts of case, we are of considered view that the computation of LTCG in the impugned AY is not in accordance with the provisions of the Act. As assessee has pointed that the assessee has discharged his tax liability on Long Term Capital Gains in the year of receipt of entire sale consideration i.e. AY 2019-20. We deem it appropriate to restore this issue to the AO for limited purpose to verify whether the assessee has offered long term capital gains to tax in the year of receipt of entire consideration, if it is so no addition in the impugned assessment year on this account is warranted.
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2024 (8) TMI 43
TP adjustment made to the international transaction of AMP Expenditure incurred by the assessee - HELD THAT:- In the instant case, where the assessee does not accept the existence of any such transaction, the onus is on the TPO to bring evidence and material on record to rebut the assessee s position. From the facts on record, it is manifest that the Revenue s position is not backed by any evidence that the assessee had agreed either explicitly or implicitly to incur any AMP expenditure on behalf of the parent company. There is no material that would show that the assessee s advertising and marketing budget was finalised or determined at the behest of the parent entity. TP adjustments to the arm s length price of the alleged international transaction of AMP expenditure of the appellant is bad in law and liable to be deleted. Arm s length price of the international transactions in the Trading segment under TNMM by altering the set of comparable companies - comparable selection - HELD THAT:- Deselection of companies functionally dissimilar with that of assessee. TP adjustments made to the arm s length price of the international transactions of the Networking segment - comparable selection - HELD THAT:- Deselection of companies functionally dissimilar with that of assessee. Trading, Networking and Manufacturing segments - determination of arm s length price of the international transactions of these segments - appellant has contended that the TPO has erred in not granting working capital adjustment - HELD THAT:- TPO has inadvertently failed to do so. Ld. CIT(DR) does not contest the same and submits that this matter can be remanded to the file of the TPO for computation. In view of the same, we direct the TPO to grant working capital adjustment while computing the mean/median margin of the comparables in accordance with the binding direction of the DRP. Similarly, as regards incorrect computation of profit margins of the comparables, Ld. CIT(DR) does not oppose the issue in principle and submits that the TPO may be directed to carry out a factual verification of the income and costs that are sought to be included or excluded. We order accordingly. All items of income and expenditure which have a nexus with the business operations of the appellant are to be considered whereas any financing or non-recurring/non-operational item is to be excluded. Trading, Networking and Manufacturing segments adjustment - as contended that the manner of computation of proportionate adjustment is erroneous - HELD THAT:- We direct the TPO to determine the proportionate adjustment, if any, in an appropriate manner which considers the transactions with the AEs and excludes the unrelated party transactions after taking into account the computations submitted by the assessee. Adjustment/disallowance made in respect of royalty paid by the assessee to its parent for the know-how licensed for manufacturing of various products - selection of MAM - TPO has concluded that the rate of royalty is higher than the arm s length rate and has made adjustment in this regard which has been contested in this appeal - HELD THAT:- We find considerable merit in the contention of the assessee that the comparable transactions chosen under CUP are devoid of any meaningful comparability. Of all the methods prescribed, CUP is the most rigorous as it compares prices at transactional level. It requires highest level of similarity in terms of subject matter of agreements and transactions in respect of products/services, salient contractual terms, tenure and several other economically relevant characteristics. We find that the TPO s selection of comparable transactions is vitiated as wholly incomparable technologies, products and contracts have been picked up in an arbitrary manner. Such an approach is inimical to the accuracy demanded under CUP. These transactions are ex-facie disparate and do not have even a modicum of similarity at transactional level. We have no hesitation in holding that the approach adopted by the TPO is unsustainable and should be deleted. The adjustment made to the royalty transaction is therefore, held to be invalid and unsustainable in law. Since we have held that on merits this adjustment is sustainable, we need not get into the issue of jurisdiction and other ancillary aspects raised by the assessee. These are academic in view of our aforesaid conclusion. As regards the issue of adoption of TNMM versus CUP, it is fair to conclude that if relevant data of comparable transactions (in terms of material aspects like nature of goods and services, geographical markets, contract terms etc) is not available CUP should be eschewed and TNMM can be an appropriate method to determine the arm s length. In the instant case, we have held that the data chosen by the TPO for CUP is wholly inappropriate. Secondly, the TPO has already accepted TNMM for the Manufacturing segment as a whole. There are numerous international transactions in this segment - all these transactions like royalty, purchase of raw materials etc. have been aggregated under TNMM and benchmarked against independent third party comparables. In these circumstances, cherry-picking of one particular transaction like royalty and subjecting the same to a separate benchmarking and adjustment under CUP results in an impermissible double adjustment - once under TNMM and another CUP. This is contrary to the provisions which mandate adoption of only one method as the most appropriate method. A licensing arrangement where technical know-how is used for manufacturing is an inextricable part of the entire segment and we do not find any infirmity in bundling the same with the other transactions of this segment. At the end of the day, if the segment is generating arm s length level of operating profits which is equivalent or more than profit margin of the comparables, there can be no cause for the Revenue to carry out an exercise of the present kind. Disallowance of salary paid to expatriate employees on secondment made u/s 37 - AO has held that the employees on secondment from Korea are primarily working for the Korean parent and therefore, their salaries being paid by the appellant are not allowable as deductible expenses - HELD THAT:- The secondees from Samsung Korea are taken on the payroll of the appellant by way of local employment contracts and during the period of secondment they work under the sole control of the appellant. Their salary is borne solely by the appellant and the Korean parent is not liable for any of their actions and omissions. Their functions are wholly towards the business of the appellant and though they may be required to interact closely and regularly with the personnel of the parent entity, their functions and responsibilities are solely towards the appellant. He has cited numerous decisions to support the view that secondees were the employees of the assessee and no permanent establishment can be created for such activities. Ld. CIT(DR), while accepting, that the prior year s Tribunal order on this issue squarely covers the issue, submits that res-judicata does not apply to income tax proceedings and every year needs to be seen separately. He would submit that the seconded employees are furthering the objectives of the Korean company and are in effect the employees of the Korean company. We do not find any merit in his contention. The AO has not brought any evidence on record to show that the seconded employees were furthering the business objectives of the foreign parent. He has merely relied on the assessment order passed in the Korean company s case where it was held by the AO of the Korean company that it had a permanent establishment in India on account of the functions of the secondees. The entire approach is based on surmises and conjectures. Coordinate Bench in the case of the Korean company has already deleted the additions and negated the existence of permanent establishment. Based on these orders, in A.Yr. 2014-15, another Coordinate Bench has deleted the disallowance of salary made on this account.
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2024 (8) TMI 42
Condonation of delay in filing the appeal dismissed by CIT(A) - delay of 380 days - as submitted person who was looking after accounting work of the appellant was filed giving detailed reasons as to how the email intimating the penalty order was not noticed inadvertently due to huge number of emails being received by her on behalf of the appellant - HELD THAT:- CIT(A) has adopted a hyper-technical approach while considering the grounds of condonation of delay in the case of the appellant. The right of appeal to the Ld. CIT(A) u/s. 248 is a statutory right granted to the appellant/assessee. The statutory right cannot be denied to an assessee unless there is inordinate delay or gross negligence on the part of the assessee. It is settled law that the rules and procedure is handmade of justice and the adjudicating authorities should not deny a statutory right of appeal on technical grounds. The appellant has very fairly admitted before the Ld. CIT(A) that there is delay of 380 days in filing the appeal. The appellant has very genuinely given the reasons for condonation of delay before the Ld. CIT(A) and has even filed the affidavit of the concerned employee who was responsible for receiving emails on behalf of the appellant. As evident from the affidavit of accounting person/Mrs. Pooja Ashanand Mishra that she inadvertently failed to notice the email containing the order dated 28.02.2022 sent on the email of the appellant. She has given the detail reasons for the said missing of the notices of the email. We have no reason to disbelieve the affidavit so submitted. Nothing contrary has been brought on record by the respondents which may contradict and falsify affidavit of employee of the appellant in support of seeking condonation of delay. Thus the impugned order of the Ld. CIT(A) is not sustainable in the eyes of law and accordingly set aside with the directions to restore the case of the appellant on the file of Ld. CIT(A).
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2024 (8) TMI 41
Bogus purchases - as stated assessee has purchased goods from allegedly bogus suppliers but has enough evidences to show the genuineness of the purchases - HELD THAT:- When the parties are mentioned into the bogus hawala racket of Maharashtra sales tax authorities and informed to the assessing officer by the director-general of investigation, Mumbai, we find that the genuineness of the purchases cannot be accepted. However even if the genuineness of the purchases cannot be accepted, then the natural course would be to make an addition to the extent of the profit involved in such bogus purchases which is less than the net profit shown from genuine purchases. This is so because the intention of the bogus purchases would be to reduce the profits of the assessee. By this mechanism the profits of the assessee are taxed from tainted purchases to the extent of profit on by the assessee from one tainted purchases. This is also the mandate of the decision of Mohammad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] Thus, we direct AO to tax amount of profit out of the above bogus purchases. The assessee is directed to furnish such information within 90 days from the date of this order to the learned assessing officer, the learned AO after examination, may confirm the addition to the extent of difference in the gross profit as held by the honourable Bombay High Court. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] Appeal of the assessee is partly allowed.
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2024 (8) TMI 40
Assessment framed without issuing a mandatory notice u/s. 143(2) by jurisdictional officer - assessee had filed the return of income with Range-1(1), Jamshedpur, and the notice under section 143(2) was issued by ITO, Ward-3(1), Jamshedpur - HELD THAT:- Jurisdiction over the assessee vested with the ITO, Ward-1(1), Jamshedpur vide Notification dated 15.11.2014 issued by the CIT, Jamshedpur whereas the impugned notice u/s 143(2) was issued by ITO, Ward-3(1), Jamshedpur on 31.08.2015. Therefore, the ITO, Ward-3(1), Jamshedpur lacked jurisdiction to issue u/s 143(2) which is non-est in the eyes of law. This is a glaring example of an inherent lack of jurisdiction of the AO in issuing notice u/s 143(2) which means that no valid notice was ever issued by the ITO, Ward- 1(1), Jamshedpur, having valid jurisdiction over the assessee. There was no order of transfer u/s 127 for transferring the case from ITO, Ward-3(1), Jamshedpur to ITO, Ward- 1(1), Jamshedpur as coming out from the order sheet. In the present case, the ITO, Ward- 1(1), Jamshedpur passed the assessment order dated 02.12. 2016 without any transfer order u/s 127 and is therefore invalid. Thus the assessment was framed without issuing any valid notice u/s 143(2) from the jurisdictional AO. Appeal of the assessee is allowed.
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2024 (8) TMI 39
Revision u/s 263 - stamp valuation bench mark taken by the PCIT - HELD THAT:- We observe that the details regarding the property were made available to the Assessing Officer during the course of assessment proceedings, all the aforesaid properties were duly reflected in the books of accounts maintained by the assessee and the same were submitted before the AO during the assessment proceedings for his kind consideration, the PCIT has also not taken into consideration the fact that substantial payment in respect of the above properties were made in the year 2010 and, therefore, it was not analyzed whether the Jantri Value of Financial Year 2014-15 should be taken for the purpose of invoking Section 263 of the Act and further so far as cash component in respect of above property is concerned, evidently it is forming part of the purchase deed itself which was submitted before the AO during the course of assessment proceedings. We are of the considered view that the Assessment Order is not erroneous in so far as prejudicial to the interest of the Revenue. Accordingly, Order passed under Section 263 of the Act is liable to be set aside. Appeal of the assessee is allowed.
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2024 (8) TMI 38
Validity of reopening of assessment u/s 147 - addition u/s 68 - notice after expiry of four years - eligibility of reasons to believe - reopening of the assessment for the second time - HELD THAT:- Since the assessee had filed return of income, the conditions relating to failure on the part of the assessee to make a return u/s 139 or in response to a notice issued u/s 142(1) or 148 of the Act will not apply to the facts of the present case. The remaining condition is that, it is necessary for the AO to demonstrate that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. We notice that, in the reasons recorded by the AO for reopening of assessment, he did not mention that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. It has been held by the Honourable High Courts that non-mentioning of the failure of the assessee in the reasons recorded for reopening would make the reopening invalid. In case, viz., Titanor Components Ltd. [ 2011 (6) TMI 138 - BOMBAY HIGH COURT] held that the AO cannot proceed with reassessment u/s 147 of the Act unless he records in the reasons that there was failure on the part of the assessee to disclose fully and truly all material facts. Since the assessing officer has not recorded in the reasons that there was failure on the part of the assessee to disclose fully and truly all material facts, the impugned reopening is bad in law and accordingly the impugned assessment order is liable to be quashed. Second round of reassessment proceedings - share premium received by the assessee company - The first reopening was completed by the AO by passing assessment order on 17-03-2015, wherein the AO accepted the receipt of share capital along with share premium and did not make any addition. Thereafter, on the basis of information from investigation wing and survey report, the AO again reopened the assessment in order to assess share capital/share premium. In view of the fact that the share capital/share premium received by the assessee was examined and accepted twice by the AO, the second reopening is on account of change in opinion only, which is not permitted. It is well settled proposition of law that the statement taken during the course of survey operations conducted u/s 133A of the Act does not have evidentiary value. It was stated that the assessee did not make any surrender in the return of income filed in response to the notice issued u/s 148 of the Act, meaning thereby, the assessee did not accept the version of the investigation wing of the department. Since share capital/share premium are capital receipts, the AO should have in his possession some tangible material to show that the said receipts constituted income in the hands of the assessee. The AO did not have any tangible material except the report of the investigation wing, which was only allegation of the investigation wing. In the absence of any new tangible material, the impugned reopening of assessment is bad in law. We notice that the Ld CIT(A) has expressed the view that the failure of the assessee to disclose the details of survey operations in the first round of reopening of assessment results in the failure contemplated in the first proviso to sec. 147 of the Act. In our view, the above said interpretation of the Ld CIT(A) is not correct. The failure should occur during the original assessment proceedings completed u/s 143(3) of the Act, which is not the case here. The Ld CIT(A) also referred to the surrender made in the survey statement and this issue was addressed by us in the earlier paragraph. In view of the foregoing discussions, we hold that the impugned reopening of assessment is bad in law - Decided in favour of assessee.
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2024 (8) TMI 37
Adjustment u/s 92C as the section 92BA (i) been omitted by Finance Act 2017, w.e.f. 01.04.2017 - determination of the arm s length price of the Specified Domestic Transaction under clause (i) of section 92BA - meaning of the words repeal omission - HELD THAT:- Once the Section 92BA(i) was omitted w.e.f 01/04/2017, it means it never existed on statute. We have already quoted the decision of Hon ble Bombay High Court on the rule of precedence. In these facts and circumstances, as per the rule of precedence, we have to follow the decision of Hon ble Karnataka High Court in the case of Texport Overseas P Ltd. [ 2019 (12) TMI 1312 - KARNATAKA HIGH COURT ] In this case the reference to TPO was made on 18/09/2017, i.e. after the section 92BA(i) was omitted, also the TP Order was passed on 30/10/2018 i.e. after the section 92BA(i) was omitted, respectfully following the Hon ble Karnataka High Court s decision (supra) we hold that the Transfer Pricing Order dated 30/10/2018 for A.Y.2015-16 is unsustainable in law. Accordingly, the AO/TPO is directed to delete the adjustment made. Accordingly, the Ground Number 1 of the Assessee is allowed. Impugned transaction may be set aside to the AO for de-novo consideration under section 40A(2)(b) - As observed that the AO has no where invoked the section 40A(2)(b) of the Act for the impugned payments in the Assessment Order. Rather it is observed that the DRP has held we are of the view that without prejudice this transaction is also covered under Section 40A(2)(b), the payments made to the related parties to be disallowed. However, in the Assessment Order u/s 143(3) r.w.s 144C(13) dated 15/10/2019, the AO has not mentioned anything about the without prejudice disallowance u/s.40A(2)(b) of the Act. Once the AO has not invoked the relevant provisions of the Act in the assessment order the CIT(DR) cannot improve the Assessment Order at this stage. As relying on Mahindra Mahindra [ 2009 (4) TMI 207 - ITAT BOMBAY-H ] once AO has not invoked section 40A(2)(b) of the Act in the assessment order, ld.DR cannot raise the issue at this stage. Therefore, the contention raised by Ld.DR is rejected.
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Customs
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2024 (8) TMI 36
Jurisdiction - power to adjudicate SCN - Seeking direction to expeditiously adjudicate SCN u/s 124 of the Customs Act, 1962 - it was held by High Court that 'There are no peculiar facts and circumstances in the case of the petitioner to hold that an officer below the rank of Commissioner of Customs is denuded of the power or authority to adjudicate the Show Cause Notice' - HELD THAT:- The petitioner states that now notice of hearing has been issued by the Additional Commissioner. Nothing survives in the petition - SLP disposed off.
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2024 (8) TMI 35
Rectification of mistake - error apparent on the face of record or not - 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 34
Legality of the import - Import of hazardous waste or e-waste? - used haemodialysis machines - case of Revenue was that the import of Used Critical Care Medical Equipment has been prohibited under the policy condition and the provisions laid down for the import of Old and Used Medical Equipment under Rule 12 (6) and Basel No. B-1110 of Schedule VI of the said Rules - no discussion or finding on the issue of hazardous waste in the impugned order. HELD THAT:- Once the show cause notice is issued making certain allegations and petitioner is called upon to show cause as to why action should not be taken and petitioner has replied to it and attended the personal hearing, not giving a finding on that issue after recording copiously the submissions of petitioner would mean that respondent no. 3 was satisfied with the explanation given by petitioner. Support for this view taken from a judgment of this Court in Aroni Commercials Limited Vs. The Deputy Commissioner of Income Tax-2 (1) [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] , where the Court, while dealing with the provisions of Section 148 of the Income Tax Act, 1961, held that once a query is raised during the assessment proceedings and assessee has replied to it, it follows that the query was subject matter of consideration of Assessing Officer while completing the assessment and same is deemed to have been accepted. The Court also held that it is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the each and every query raised - Therefore, since there is no discussion or finding on the issue of hazardous waste in the impugned order, respondent no. 3 should be taken as having accepted petitioner s explanation. In the impugned order, respondent no. 3 has strangely gone ahead and rejected the assessable value as Rs. 50,14,653/- and redetermined the value of the said goods as Rs.56,79,450/-. Based on this finding, he has also ordered confiscation of the said goods under Section 111 (d) of the Customs Act and given an option to petitioner to redeem the said goods on payment of redemption fine of Rs.3,00,000/- under Section 125 of the Act for the purpose of re-export only. Penalty of Rs. 1,00,000/- also was imposed upon petitioner under Section 112 (a) (i) of the Act - petitioner has been called upon to show cause as to why the goods should not be confiscated or why penalty should not be imposed. But considering the entire show cause notice, the proposed confiscation and penalty was due to allegation that petitioner had imported the prohibited goods and not for mis-declaration of the assessable value. This is a fit case to exercise jurisdiction under Article 226 of the Constitution of India and it is also a fit case to set aside the impugned order dated 21st April 2021. Petition disposed off.
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2024 (8) TMI 33
Smuggling of Golden Bars - seeking grant of bail - prohibited goods or not - Section 135 Customs Duty Act, 1962 - HELD THAT:- Keeping in view the fact that in the matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial, the gold seized is in the possession of the Department, the offence appears to be compoundable by virtue of Section 137(3) of the Customs Act and there is nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial, no criminal antecedent to the credit of the applicant, his willingness and readiness to deposit the adequate customs duty over the said gold, the applicant is in jail since 7.1.2024, without commenting upon the merits of the case, it is opined that the applicant has made out a case for bail. Let the applicant - Arvind Chandrakant Kadam involved in case crime no. NIL of 2024 under Section 135 Customs Duty Act, 1962, Police Station D.R.I., District Varanasi be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to fulfilment of conditions imposed - the bail application of the accused-applicant is allowed.
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2024 (8) TMI 32
Export of the Non-Basmati India White Rice - Compliance with export commitments - Issuance of N/N. 20 of 2023 dated 20.07.2023 and the clarification in Trade Notice No.23/2023 dated 18.08.2023 - effect of Foreign Trade Policy decision, retrospective or prospective? - violation of Fundamental Rights or not - violation of principles of natural justice or Doctrine of Legitimate Expectation. Whether the impugned Notification is in conformity with the Foreign Trade Policy and if not, the same is liable to be set aside? - HELD THAT:- A conjoint reading of the statutory provisions, the Notifications and the Foreign Trade Policy would go to show that the Central Government is empowered to formulate and announce the Foreign Trade Policy and amend the existing policy and the same is not in dispute - In the present case, as is evident from the impugned Notification, the existing policy with regard to export of Non-Basmati White Rice is changed in public interest and the export of the same is prohibited by carving out certain exceptions. Therefore, the impugned Notification cannot be held to be contrary to the Foreign Trade Policy. Whether the policy can be given retrospective effect and allowed to take away the vested rights? - HELD THAT:- In Shrijee Sales Corporation case [ 1996 (12) TMI 61 - SUPREME COURT ], the Hon ble Supreme Court of India was dealing with an Appeal filed against the judgment of the High Court of Delhi challenging the Notification granting exemption to imports of Polyvinyl resins (PVC) falling within Chapter 39 of the First Schedule to the Customs Tariff Act, 1975. In the light of the provisions of the Customs Tariff Act under Section 25, the Hon ble Supreme Court of India inter alia, held ' The imposition and exemption of customs duty are the chief vehicles of the Government to protect a domestic market and to steady the level of prices. The tariffs are its chosen instruments to shield domestic production from foreign competition.' In Unicorn Industries case [ 2019 (9) TMI 791 - SUPREME COURT ], the Hon ble Apex Court was dealing with exemption from payment of Excise Duty on the manufacture of pan masala and at para 37 held that ' The State could not be compelled to continue the exemption, though it was satisfied that it was not in the public interest to do so. The larger public interest would outweigh an individual loss, if any.' In the present case, the petitioners claim that Letters of Credit were issued in their favour by the foreign buyers prior to the issuance of the impugned Notification and the same is not in dispute. It is also their case that pursuant to the agreement / contracts entered with the foreign buyers they have procured the Non-Basmati White Rice and therefore vested rights accrued to them in terms of the Foreign Trade Policy 2023, which provides import / export on or after the date of the regulation / restriction will be allowed for importer / exporter, who has a commitment through an irrevocable Commercial Letter of Credit before the date of imposition of such restriction / regulation. Clause 1.05 of the Foreign Trade Policy which was in force prior to 20.07.2023 provides that wherever Government brings out a policy change of a particular item, the change will be applicable prospectively (from the date of Notification) unless otherwise provided for - the Foreign Trade (Development and Regulation) Act-1992 does not confer any right to the authorities or enable them to issue any Notification which has the effect of imposing prohibition with retrospective effect or take away the vested rights accrued to the petitioners by virtue of the Foreign Trade Policy, 2023 prior to the issuance of the impugned Notification. Whether the policy decision can be set aside, if the same is found arbitrary or violative of Fundamental Rights? - HELD THAT:- The conditions imposed in the impugned Notification are clearly distinctive and enables the exporters who have already made arrangements for shipment of Non-Basmati White Rice in fulfillment of their contractual obligations. In the present set of cases, the petitioners are still at the stage of procurement of the Non-Basmati White Rice and they cannot be equated with those of exporters who made all arrangements for shipment. Therefore, the contention that the action of the respondents is arbitrary and hit by Article 14 of the Constitution of India cannot be accepted. Whether the policy decision can be interfered with, if the same is violative of principles of natural justice or Doctrine of Legitimate Expectation? - HELD THAT:- In the present case the petitioners / exporters had acted upon the existing Foreign Trade Policy-2023, entered into agreement / contracts with foreign buyers, pursuant to which the Letters of Credit were issued in their favour and therefore justified in raising the contention based on doctrine of legitimate expectation. However, in the light of the Constitutional Bench decision of the Hon ble Supreme Court in SIVANANDAN CT AND OTHERS VERSUS HIGH COURT OF KERALA AND OTHERS [ 2023 (7) TMI 1438 - SUPREME COURT] the contentions with reference to Doctrine of Legitimate Expectation cannot be upheld - In the light of the expression of the Hon ble Supreme Court that the legitimate expectation is not a legal right and that shall yield to the public interest, the question is answered against the petitioners and no prior notice need be issued. The Writ Petitions are disposed of holding that the impugned Notification shall have prospective effect only, in so far as the Writ petitioners herein are concerned, and the same shall not impede the petitioners exports of Non-Basmati White Rice in fulfillment of their contractual obligations with the foreign buyers, provided the Letters of Credit are issued in their favour prior to 20.07.2023 - Petition disposed off.
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2024 (8) TMI 31
Applicability, enforceability and the binding nature of the Regulations, which contemplate waiver of demurrage/detention charges - Whether the importers are liable to pay detention/demurrage charges to the CFS and the shipping lines/steamer agents when the goods have been detained by the Customs Department for verification, and after the verification, it was found that the imported goods were in order? - Whether the waiver certificate for the detention/demurrage charges granted by the Customs Department is statutorily binding on the CFS and shipping lines/steamer agents? - Maintainability of the writ petitions, question raised by the CFS/Steamer Agents/Shipping Line - Whether the statutory regulations would have an overruling effect on the contract between the parties? Legal Framework - HELD THAT:- The demurrage/detention charges are payable only when the goods are not cleared either voluntarily by the importer or because of action or inaction of the Customs authorities in completion of the adjudication proceedings or in taking a decision on provisional release. It would be apropos to mention here that the question of payment of demurrage/detention charges arises only if the goods are not cleared within the free period. An objection has been raised by the CCSP stating that they are only rental/storage charges and not demurrage/detention charges. This objection will not hold water as such narrow approach cannot be given to the words demurrage /detention charges as they are charges payable by the owner/Importer of the goods for not having cleared the goods within the agreed free time. Though the word detention has not been defined under the Act, it is held that it is to be treated as synonymous with the seizure of the goods which takes place when the same is directed not to be cleared. It would be relevant to refer to Sections 158 and 170 of the Contract Act which deal with repayment by bailor and bailees particular lien, wherein the word remuneration is used. The word remuneration would refer to the charges payable by the importer/owner of the goods to the CCSP, by whatsoever nomenclature agreed by them. When it is not in dispute that the charges become payable only after a particular period and upon default in clearance, the nomenclature used in the agreement as rent or penal or storage charges is nothing but the demurrage or detention charges as stated in the both the regulations. In fact, regulation 6 (1) (l) also uses the word rent , implying that no charges during the period of detention can be charged. Will the contract between the parties prevail over statutory regulations? - HELD THAT:- The words subject to any other law for the time being in force would have to be read as a reference to the provisions of the Customs Act with regard to result of the final adjudication proceedings. Though any contract entered into would be governed by the provisions of the Contract Act to decide the inter se rights between the parties, it is still subject to law of the land, which in this case is the Customs Act, 1962 and the Regulations framed thereunder. The saving clause in Section 1 of the Contract Act clearly states that nothing contained in the Act shall affect the provisions of any Statute, Act or Regulations. This cannot be disputed. Further, as per Section 23 of the Contract Act, the consideration or object is unlawful if it is forbidden by law or if permitted would defeat the provisions of any law. In the present cases, when the goods are presented, detained and ultimately cleared after having found that there is no fault on the part of the importer, and subsequently a waiver certificate is issued, then, the contract between the parties cannot be implemented - the power to issue Regulations is traceable to Section 141(2) which provides that the conditions for receipt, storage, delivery, despatch or otherwise of imported goods or goods meant for export handled in a customs area and the responsibilities of persons engaged in the aforesaid activities shall be as prescribed. Therefore, the contention that the Regulations are contrary to the Act cannot be countenanced. Maintainability of the writ petitions against CCSP's, CFA, Shipping Lines/Steamer Agents - HELD THAT:- The terms of the contract are subject to the Regulations which have statutory force and that the importers who are found not to be guilty of any violation are entitled to waiver, if a certificate is issued by the authorities. That apart, it is held that the CCSP are obliged to perform their duties in accordance with the provisions of the Customs Act and the Regulations, namely the HCCA Regulations, and SCMT Regulations. The Regulations not only insist on obtaining appropriate approval under Section 8 of the Act but also require declarations and documents to be executed by the CCSP failing which they can neither operate in the customs area nor handle imported goods. While acting in accordance with the directions given by the Customs authorities, they are performing their statutory obligation. Therefore, what is also to be considered in the present case is the circumstances and the object for which the Regulations have been brought into force. The findings of the learned Judge in the orders dated 22.06.2021 01.07.2021 that the rights of the parties should be determined by the civil court, cannot be agreed upon. The writ petitions ought not to have been rejected on that ground and as the directions sought are only to enforce a statutory right, a writ of mandamus is entertainable. CCSP's right to be heard - whether the CCSPs ought to have been heard before the waiver certificates were granted? - HELD THAT:- The detention of the goods is a statutory act for verification of the correctness of the particulars furnished. The resultant actions of confiscation or assessment of duty or levy of penalty are also statutory acts in which the role of the CCSP is limited to the extent of holding the goods. More importantly, the Regulations do not contemplate any provision for the CCSP to be heard when a waiver is issued and only contemplates for opportunities before penal action is taken against them for non-compliance. It is not to be forgotten that the authorities in the adjudication process perform quasi-judicial function and therefore, the detention order for waiver cannot be said to be purely administrative, more so in the light of our findings that it cannot be in a blanket manner issued just because the goods were detained. As the facts are not in dispute and as the legal issues have already been decided against the CCSP, the grant of opportunity is only an useless formality and therefore, the contention is unsustainable. Period of waiver - HELD THAT:- The time of 90 days provided under Regulation 6 (1) (m) for clearance of the goods under 2009 Regulations is enforceable only if there is no detention by the authorities and when there is a detention of goods for verification, the timelines would not apply. This postulates the question that if the goods are not verified and an order is not passed within 60 days of detention, can the liability be fastened on the importer or the Customs Authority? The answer again is similar. If the goods are cleared with the adjudication ending in favour of the importer, there cannot be any demand and if the detention is found to be in order and such an order is passed after the time prescribed for waiver under the Regulations, the liability would fall on the authorities for the period after 60 days and on the importer until 60 days. Similarly, if the authorities delay the issuance of any order for re-export or clearance, the liability would fall on the authorities. At this juncture, it would be appropriate to recall the circumstances and object of the HCCA Regulations. An importer who has ultimately succeeded in the adjudication proceedings is entitled for refund. However, insofar as the claim for interest in concerned, it is open to the parties to approach the authority concerned, who shall consider the same in accordance with law. Noncompliance of the waiver certificates by the CCSPs and the authorised carriers - HELD THAT:- The provisions of the Customs Act, the 2009 HCCA Regulations and the 2018 SCMT Regulations, contain various provisions for cancellation of licence, suspension and imposition of penalty. When the waiver certificate is issued, it is the obligation on the part of the CCSP to honour the same and waive the charges. Further, the Act and the provisions do not carry any provision for payment of interest. Therefore, the only deterrent for non-compliance can be initiation of appropriate action against the CCSPs. Therefore, in cases, where the certificates are issued after conclusion of the adjudication proceedings in favour of the importer/exporter and if not complied, appropriate action may be initiated by the department by following the due process of law. Application disposed off.
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2024 (8) TMI 30
Applicability of restrictions under the Policy Condition 2(II) (d) of Chapter 87 of the ITC (HS) Classification under the Foreign Trade Policy [FTP], which permits import of new vehicles only through some designated ports, airports and ICDs - applicability of port restrictions to new vehicles imported in completely knocked down [CKD] condition - whether the expression motor vehicles in 2(II) (d) above also includes vehicles imported in CKD condition or it includes only completely built units? - HELD THAT:- Rule 126 of Central Motor Vehicle Rules (CMVR), 1989 requires the prototype to be tested by testing agencies and approved. It goes without saying that when the motor vehicle is imported in CKD condition, it will not be possible to test it nor will it be possible to grant type approval to a vehicle which has not even been assembled. Therefore, this can only be meant for motor vehicles which have been fully installed. Reliance placed on M/S. RAMA KRISHNA SALES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (2) TMI 149 - DELHI HIGH COURT] in which Delhi High Court dealt with a case where some parts of E-rickshaw were imported by the petitioner and those parts together deserved to be classified under the Customs Tariff as e-rickshaw. The question was whether the petitioner was also required to meet the policy condition for import of new vehicle of the import policy, where it was held that 'There is merit in the petitioner s contention that it cannot obtain a type approval under Rule 126 of the Motor Vehicles Rules, since it is not importing a motor vehicle but only certain parts thereof. The petitioner has imported these parts for selling the same to manufacturers. The manufacturers in turn are required to obtain a type approval under Rule 126 of the said Rules for manufacture of the E-Rickshaw.' From the above, it is obvious that the term motor vehicle used in various clauses of Policy Note II to Chapter 87 can only apply to complete vehicles and cannot apply to vehicles in CKD condition or to incomplete vehicles. In importing motor cycles in CKD condition through ICD, Garhi Harasu, the appellant had not violated any prohibition and the imported goods were therefore, not liable to confiscation under section 111(d). Consequently, no redemption fine or penalty was imposable on the appellant. The impugned order is set aside - Appeal allowed.
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2024 (8) TMI 29
Benefit of N/N. 53/2011-Cus. dated 1.7.2011 - clearance of Merbau Sawn Timber Blocks - Country-of-Origin Certificate produced by the appellant was not in the prescribed format - mis-declaration and suppression of facts - levy of penalty under Section 114A and Section 114AA of the Customs Act, 1962. HELD THAT:- It is an admitted fact by the appellant that they had produced a wrong certificate of Country of Origin to claim the benefit of the said Notification. And this came to the notice of the Department only when detailed investigations were undertaken by the department. In view of the above having accepted mis-declaration and paid the entire amount of duty along with interest and the reduced penalty, the appellant cannot now claim that there was no mis-declaration. Therefore, the duty amount along with interest and reduced penalty already paid stands confirmed. On appeal before the Commissioner (Appeals), the appellant claimed the benefit of Notification No.46/2011-Cus. dated 01.06.2011 read with Notification No.189/2009-Cus (N.T.) dated 31/12/2009. The Commissioner in the impugned order has clearly stated that the benefit of the above Notification was not part of the show-cause notice and hence, it is an afterthought. The Commissioner (Appeals) also states that the same cannot be extended as the said certificates were to be produced at the time of clearance and the said certificates are to be issued by the exporting country. Therefore, the question of extending the benefit of a new Notification which was not claimed at the time of filing the Bill of Entry cannot be extended as the same cannot be verified as the goods have already been cleared. Levy of penalty under Section 114A and Section 114AA of the Customs Act, 1962, on the ground that both are independent of each other and having admittedly produced a wrong Country of Origin certificates - HELD THAT:- The proprietor and the firm being one and the same, penalty cannot be imposed twice, one on the firm under Section 114A and another on the Proprietor under Section 114AA. Moreover, the offence committed in this case is production of wrong Country of Origin Certificate and therefore, based on the same offence, there cannot be two penalties on the same appellant. The appellant having already discharged the duty liability along with interest and penalty under Section 114A, there are no reason to impose penalty under Section 114AA. Accordingly, the penalty of Rs.45,00,000/- imposed on the appellant (Proprietor of M/s. Royal Timbers) cannot be sustained. The impugned order is upheld except for the imposition of the penalty under Section 114AA of the Customs Act, 1962 - the impugned order is modified and the appeal is disposed of.
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Corporate Laws
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2024 (8) TMI 28
Execution of decree passed in favour - Permission to Applicant to Execute the Decree against Respondent, M/s Apollo Tubes and Steel Industries Ltd currently under charge of the Official Liquidator - whether the petitioner can be allowed to execute the decree passed in his favour by the Madras High Court? - HELD THAT:- The perusal of Section 446 of the Companies Act, 1956 makes it crystal clear that in order to continue a suit against a company whose winding up proceedings are ongoing, the party seeking such continuance of suit should seek leave from the Court for the same - it is evident that the permission is required to be taken for the continuation of the suit and the provision is silent on the aspect of whether such permission is required for execution of the decree as well or not. In BANSIDHAR SHANKARLAL VERSUS MOHD. IBRAHIM [ 1970 (9) TMI 62 - SUPREME COURT ], the Hon ble Supreme Court dealt with the objection raised with regard to obtaining of leave for execution - the judgment settles the position of law and therefore, it can be said that once the leave is granted to proceed with the suit, there is no need for the parties to file another application to seek execution of the decree awarded in their favor. It is no doubt that the execution proceedings are considered as continuation of the suit itself and the party in whose favour a decree has been granted can only reap the benefits of the same after execution of the said decree. On the aspect of whether the decree holder had obtained leave of the Court for continuance of the suit, it is evident that the Court did not comment on the same therefore, leading to the inference that the same was not obtained by the decree holder - it is also apparent that the decree was obtained from a foreign Court and therefore, the leave was sought to be taken at the time of its execution in India - Since the decree holder had filed for the leave of the Court for the first time, it is apparent that the Court had adjudicated the issue on the basis of the same. The present application is allowed and the petitioner/applicant is granted leave to execute the decree passed by the Madras High Court vide order dated 24th November, 2023.
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2024 (8) TMI 27
Seeking directions against the Official Liquidator to handover vacant possession of the property - Seeking direction to the Official Liquidator to make payment of compensation of Rs. 5 lacs per month since the date of possession of the property in question - shell company - diversion of funds by the Ex-Management as also the fraud played upon the Canara Bank, being the secured creditor of the company (in liquidation). HELD THAT:- It is manifest that there has been diversion of funds from the company (in liquidation) to the tune Rs. 78.45 crores, at the behest of the mastermind Mr. K.C. Palanisamy. Evidently, the lease/license deed dated 02.06.1999, entered into between DAIL and M/s. Jasai Exports Pvt. Ltd. was registered. A perusal of the record also shows that the applicant has not placed on the record the certified or attested copy of the registered sale deed dated 14.03.2005, by way of which it is stated to have purchased the property in question from the original owner. The copy of the License Deed whereby the property in question is alleged to have been leased out to the respondent company (in liquidation) dated 02.06.1999 reserving payment of license fee of Rs. 80,000/- for use and occupation of the premises with provision for increase etc. has not been placed by the applicant on the record and the same has been placed on the record by the respondent/Canara Bank. Evidently, it is not a registered document either. Although, learned counsel for the applicant vehemently urged that an application has already been moved for revival of the company on 01.04.2024, the said fact was not disclosed while moving the present application. The authority of Mr. Piyush Kumar, who has filed the application as Authorized Representative of the Board has not been explained. No resolution of the Board of Directors has been placed on the record. Apparently, the sale deed dated 14.03.2005 has been executed after appointment of Provisional Liquidator by this Court vide order dated 26.10.2024. The decision in the case of RAVINDRA ISHWARDAS SETHNA VERSUS OFFICIAL LIQUIDATOR, HIGH COURT, BOMBAY [ 1983 (8) TMI 187 - SUPREME COURT ] cited by the learned Senior Counsel for the applicant to the effect that the Official Liquidator does not require the premises in question for beneficial winding up of the company (in liquidation) does not cut any ice. This Court finds that there are sufficient grounds to raise an inference that the applicant company is a shell company of the company (in liquidation) and its mastermind Mr. K.C. Palanisamy. It is manifest that the applicant company has not come to the Court with clean hands, and therefore, the reliefs claimed cannot be granted. The present applications moved by the applicant company, namely SMS Textiles Limited, are hereby dismissed.
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2024 (8) TMI 26
Oppression and Mismangement - Transfer of 2500 shares by deceased - grievance of the appellant is now since the transfer of shares was held to be illegal hence the legal heirs of deceased should get those shares and/or a fair price - HELD THAT:- The contention of appellant cannot be accepted, since initial transfer was challenged only by Respondent No.4 and that too on the ground he should also get a slice of it. The deceased admittedly never alleged/claimed any right on such shares after he had received the entire consideration and after he had executed letter dated 23.06.2015. It is important to mention despite the Hon ble Supreme Court decision in 2018 the deceased never took any action for transfer of shares in his favour by 2021 i.e. till he was alive. The appellants/legal heirs of the deceased came into action six months after of his death and are now trying to misinterpret the order passed in TP No.106/2016 to their benefit. The transfer of shares by deceased was never an issue pending before Company Law Board or Ld. NCLT and neither the deceased challenged such transfer. It was purely a dispute between other directors and deceased himself opted out of that frame. Hence this appeal has no merit. Even otherwise we find the appellants have no locus to file petition under Section 241-242 under the Companies Act as they are not the member/shareholders of the Company. The appeal thus has no force. Accordingly it is dismissed.
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Securities / SEBI
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2024 (8) TMI 25
Defalcation of the proceeds from the preferential issue - allegation of mis-utilization of the proceeds - inordinate delay in the issuance of the show cause notice - as decided by SAT [ 2023 (7) TMI 1440 - THE SECURITIES APPELLATE TRIBUNAL, MUMBAI] issuance of the preferential issue was known to the stock exchange as well as to SEBI and, therefore, there is no justification for issuance of show cause notice at this belated stage. No penalty could be imposed for the alleged deviation. We also find that there is no charge of defalcation of the proceeds from the preferential issue. HELD THAT:- We do not find any good ground and reason to interfere with the impugned judgment and hence, the present appeals are dismissed. The question(s) of law is left open. Pending application(s), if any, shall stand disposed of.
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Insolvency & Bankruptcy
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2024 (8) TMI 24
Seeking enforcement of an arbitral award - deduction of amount awarded to the respondent against the counter claims - deduction of TDS on the amount payable to the decree holder under the arbitral award. Deduction of amount ₹ 2,62,93,252/- awarded to the respondent against the counter claims preferred by it before the Arbitral Tribunal from the amount of ₹ 5,51,95,198/- awarded to the petitioner, as the respondent is in liquidation following initiation of proceedings under the IBC 2016 - HELD THAT:- The Arbitral Tribunal has itself, in the impugned award, set off the amount of ₹ 2,62,93,252/- against the amount of ₹ 5,51,95,198/- and has arrived at a difference of ₹ 2,89,01,946/-. What is sought to contend is essentially that the adjustment of the awarded amount to the respondent against the counter claims preferred by it, from the amount awarded to the petitioner, is impermissible. That, however, would require the petitioner to challenge the award, which has not been done till date - This submission is, therefore, rejected. Case that the respondent could not have deducted TDS from the amount of ₹ 2,89,01,946/- - HELD THAT:- Plainly read, as the petitioner was working as a contractor for the respondent, and the money payable to the petitioner under the arbitral award were in the petitioner s capacity as such contractor, the deduction of TDS by the respondent from the petitioner would appear to be in sync with Section 194C (1) of the Income Tax Act, 1961. The respondent could not have deducted TDS from the amount of ₹ 9,15,93,846/- payable to the petitioner - It is informed that TDS already stands paid by the petitioner to the Income Tax Authorities as well as the Competent Authority under the Building and Other Construction Workers Welfare Cess Act, 1996. Petition disposed off.
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2024 (8) TMI 23
Attachment of property, pending the liquidation proceedings - seeking interim order permitting the sale to take place as part of the liquidation process, after lifting the attachment order issued by the Enforcement Directorate - HELD THAT:- Reliance is placed on the judgments of the High Court of New Delhi in Rajiv Chakraborty Resolution Professional of EIEL v. Directorate of Enforcement [ 2022 (11) TMI 600 - DELHI HIGH COURT ] and that of the High Court of Gujarat in AM MINING INDIA PRIVATE LIMITED VERSUS UNION OF INDIA [ 2023 (8) TMI 1489 - GUJARAT HIGH COURT] to submit that the where the insolvency proceedings had been started even before the attachment is ordered by the Enforcement Directorate, the proceedings before the NCLT will have to prevail over the proceedings of the Enforcement Directorate. The Court had interpreted the non obstante clause in the two enactments. The interest of the parties can be safe guarded pending this litigation by permitting the sale to go on and ensuring that the proceeds of the sale shall be liable for attachment by the Enforcement Directorate. In the above circumstances, there will be an interim direction to lift the attachment effected by the Enforcement Directorate on the properties which are subject matter of the liquidation to facilitate the Liquidator to sell the properties.
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2024 (8) TMI 22
Seeking for summary judgment against the defendants in terms of the suit prayers - plaintiff contends that the defendants have no real prospect of successfully defending the suit claim - Time limitation - HELD THAT:- The Hon'ble Supreme Court in the case of Life Insurance Corporation vs. Sanjeev Builders Private Limited [ 2017 (10) TMI 1650 - SUPREME COURT ] has also framed general guidelines for Courts while adjudicating amendment applications filed under Order VI Rule 17 of C.P.C. wherein it has been held that if a time barred claim is sought to be introduced, in which case, the fact that the claim would be time barred becomes a relevant factor for consideration. Though in the instant case, amendment applications have already been allowed permitting the plaintiff to amend the suit claim and the said order also has not been challenged, this Court is of the considered view that just because the amendment applications are allowed, the plea of limitation taken by the defendants cannot be totally ignored and therefore, the limitation issue can be decided only after trial. The issue of limitation raised by the defendants requires further examination and cannot be decided in this Interlocutory Application as the plea of limitation taken by the defendants cannot be held to be moonshine - the defendants have contended that the plaintiff has flouted the Memorandum of Compromise dated 14.09.2019 by not withdrawing the suit as undertaken by them under the Memorandum of Compromise. Admittedly, it has been established through the plaintiff's through her documentary evidence that the first defendant defaulted in the payment of Rs.70,00,000/- payable to the plaintiff under the Memorandum of Compromise dated 14.09.2019. The cheque issued by the first defendant to the plaintiff for the said amount has also got returned dishonoured for insufficiency of funds. The plaintiff therefore contends that there is no necessity to withdraw the suit as per the Memorandum of Compromise since under the Memorandum of Compromise, the plaintiff is having the right to restore the suit on account of the breach of the Memorandum of Compromise committed by the first defendant. The defendants 2 to 4 though being the directors of the first defendant company, in their individual capacity are not parties to any of the contracts entered into with the plaintiff, which includes the construction contract and the Memorandum of Compromise, which are the basis of this summary judgment application. Through this summary judgment application, the defendants 2 to 4 cannot be made liable. Infact this Court, while dismissing the application filed by the defendants 2 and 3 under Order I Rule 10 of C.P.C. to remove from the array of party defendants, has held that only after trial, the liability of the defendants 2 and 3 can be adjudicated upon. Insofar as the limitation plea is concerned, the first defendant has made out a probable case for defending the suit on the ground that the suit is barred by limitation since the amendment applications seeking amendment of the claim was filed beyond the period of three years from the date of the Memorandum of Compromise. Without expressing any opinion on the merits of the respective contentions, this application is disposed of as against the first defendant by directing the first defendant to deposit to the credit of the suit a sum of Rs.70,00,000/- within a period of two weeks from the date of receipt of a copy of this order, failing which there shall be a summary judgment for a sum of Rs.70,00,000/- in favour of the plaintiff against the first defendant. This application filed against the defendants 2 to 4 is dismissed as the suit claim against the defendants 2 to 4 can be adjudicated only after trial - application dismissed.
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PMLA
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2024 (8) TMI 21
Second bail application for grant of regular bail - online betting in Live Ludo, Football, Casino games and marks through Mahadav Book - applicability of Section 45 of the PMLA - HELD THAT:- As per provisions of Section 45 of the PMLA, apart from providing Public Prosecutor, opportunity to oppose bail application, filed by the applicant, two conditions are required to be fulfilled i.e. firstly, the court is satisfied that there are reasonable grounds for believing that applicant is not guilty of such offence and secondly, he is not likely to commit any offence while on bail. In the case of Sanjay Jain Vs. Enforcement Directorate [ 2024 (3) TMI 598 - DELHI HIGH COURT ], the Delhi High Court vide order dated 7-3-2024 considering various observations of Hon ble Supreme Court made in the case of Vijay Madanlal Choudhary Vs. Union of India [ 2022 (7) TMI 1316 - SUPREME COURT ] has held that ' A finding is also required to be recorded as to the possibility of the bail applicant committing a crime after grant of bail. This aspect has to be considered having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence.' In the instant case, as per case of Enforcement Directorate itself, applicant has not played any role in the predicate offence of online betting, but applicant himself has admitted in his statement recorded under Section 50 of the PMLA, 2002 that, he and his brother Anil Dammani work as Havala operator. Promoter of Mahadev Book App namely Sourabh Chandrakar frequently purchased gift items from his jewellery shop namely Abhushan Jewelers since 2019 till 2021 - Applicant has also admitted that, he knows Rahul Wakte (associate of ASI Chandra Bhushan Verma), who had come many times in their shop for Havala transaction worth Rs. 3-4 crorers. These facts have also been supported by chandra Bhushan Verma in his statement under Section 50 of the PMLA, 2002. The evidence available on the complaint shows that, the applicant is not only involved in Hawala transactions, rather, he is also aware about the persons to/from whom he delivered/received the amount of Hawala. Since, the party was organized by promoters of Mahadev Book App and other connected persons, therefore, contentions raised by learned counsel for the applicant that, he was not aware about the fact that said amount of Hawala transaction was proceed of crime of Mahadev Book App, does not appear to be correct - Transaction of amount through Hawala made by the applicant also comes in purview of proceeds of crime, as has been defined in Section 2 (1) (u) of PMLA, 2002. Since applicant is engaged in the business of jewellery, but, his connection in Hawala transaction, that too, in respect of money pertaining to Mahadev Book App, shows his involvement in such economic offence. The applicant used to receive Havala money in his shop namely Abhushan Jewelers and persons who brought money of Havala and persons who collected the same, are found to be associates of money transaction of proceeds of crime of Mahadev Book App. Even promoters of Mahadev Book App namely Ravi Uppal and Sourabh Chandrakar had organized a party in the farm house of applicant and his brother, in which, Ravi Uppal, Sourabh Chandrakar, applicant and his brother, Ashish Rathore, Deepan Josef and he himself were present - Considering such significant role of applicant in ensuing money laundering case of proceeds of crime of Mahadev Book App, it is found that, there is sufficient evidence collected by the respondent-Enforcement Directorate to prima facie come to the conclusion that the applicant was involved in the offence of money laundering as defined in Section 3 of the PMLA. Having regard to the provisions of Section 45 of the PMLA, bail cannot be granted to applicant - instant bail application is rejected.
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Service Tax
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2024 (8) TMI 20
Rejection of the applications made under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) - rejection on the ground that Petitioner No.1-Firm has not paid the redemption fine of Rs.25 lakhs - HELD THAT:- The disqualification prescribed under Section 125 (1) (e), is not applicable to the facts of the Petitioners case therein. The Respondents are directed to accept 9 applications made by Petitioners and intimate within a period of four weeks from the date of uploading the present judgment, the amount, if any, required to be paid by Petitioner for availing the benefit of the Scheme. Petitioner would make the payment within a period of four weeks from the date of such intimation and inform the same to Respondents. Respondents would issue a final certificate in Form SVLDRS-4 within a period of four weeks from the date of such intimation of Petitioners having made the payment. Declaration made by two partners for settlement of penalty levied of Rs.1,75,000/- each and Rs.17 lakh each vide show cause notices dated 8th August 2007 and 21st February 2008 have been rejected on the ground that the declaration made by Petitioner No.1-Firm has been rejected - Since the Respondents are directed to accept the applications made by Firm for the reasons recorded above, the basis of rejection in the case of partners does not survive and, therefore, Respondents are directed to accept 4 applications made by partners. Petition disposed off.
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2024 (8) TMI 19
Valuation for the purpose of gross value of franchise service - inclusion of cost of advertisement charges which is collected by the appellant as reimbursement expense in the gross value of the franchise fees - HELD THAT:- The show cause notice is based on the provision of Rule 5 (1) of Service Tax (Determination of Value) Rules, 2006 - the revenue sought to include the advertisement expense in the gross value of franchise service. Further, the adjudicating authority considering the Rule 5 of valuation Rules held that the advertisement expenses has to be borne by the franchisees on their own but as per the arrangement, the appellant are making payment of advertisement charges to the advertisement agencies and taking reimbursement from the service recipient, therefore, advertisement charges is not a part and parcel of the value of franchise service. It is found that right from show cause notice upto the Commissioner (Appeals) order, the entire case of the Revenue is based on Rule 5 (1) 5(2) of Service Tax (Determination of Value) Rules, 2006, it is found that this Rule 5 (1) has been held unconstitutional as the same ultra vires the provision of section 66 and 67of the Finance Act, 1994, therefore, on this change of legal position the entire action of the revenue is vitiated. Consequently, the order of the Commissioner (Appeals) is also not sustainable on this ground alone. In the present case, the advertisement is in the business interest of the franchisee but the arrangement of advertisement is such that the advertisement agencies are providing advertisement for the franchisee and the payment therefore is made by the appellant and the same is collecting as reimbursement from the franchisee - The advertising expenses is ultimately borne by the franchisee because the same is part of their business expenses, the same cannot be included in the gross value of franchise service. The impugned order allowing the revenue s appeal is not sustainable in law and in the fact. Hence, the same is set aside - Appeal allowed.
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2024 (8) TMI 18
Non-payment of appropriate service tax - amount received as 'commission' on vehicle sale, sales promotion and incentive under the category of 'Business Auxiliary Services' - SCN do not specify the sub-section of Section 65(19) - non-payment of service tax on the amount of reimbursements received by them towards free service and warranty, under the category of 'Authorized Service Station Service' - extended period of limitation. Demand confirmed under the category of 'Business Auxiliary Service' - HELD THAT:- It is observed that neither the Show Cause Notice nor the Order-in-Original has mentioned the specified sub-section of section 65(19) under which the service tax has been demanded. It is a settled position of law that when the Show Cause Notice does not specify under which clause of the definition of business auxiliary service the activity of the service provider falls, then demand is not sustainable. This view has been held by the Tribunal Hyderabad in the case of SYNIVERSE MOBILE SOLUTIONS PVT LTD., (EARLIER TRANSCIBERNET INDIA PVT LTD.) VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD IV [ 2023 (6) TMI 463 - CESTAT HYDERABAD ], wherein it has been observed The impugned order, therefore, can be set aside only on this ground as the show cause notice does not mention which service out of the seven services specified in Section 65(19) of the Act was undertaken by the Appellant - by relying on the decision cited, it is held that in the absence of a specific sub-section of Section 65(19) of the Finance Act, 1994 under which the service tax has been demanded, the demand of service tax under the category of 'Business Auxiliary Service' is not sustainable and accordingly, the same is set aside. Demand of service tax confirmed under the category of 'Authorized Service Station' - HELD THAT:- Since TML covers the expenses for after-sale services, which are already included in the assessable value for excise duty, no service tax is payable on the reimbursements received by the Appellant from TML. With regard to the reimbursement of labour, we agree with the submission of the that the same has become taxable only with effect from 01.07.2012. The appellant submitted that with effect from 01.07.2012, service tax has been discharged by them on the reimbursement of labour. The issue is no longer res integra since the Hon ble Supreme Court has already decided this issue by stating that that until May 14, 2015, reimbursable expenditure or cost in consideration for services were not included prior to the amendment of Section 67 of the Finance Act, 2015. Therefore, in the absence of such charging section, no service tax can be charged on the reimbursements received by the appellant - Hon ble Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT ] where it was held that ' value of free supplies of diesel and explosives would not warrant inclusion while arriving at the gross amount charged on its service tax is to be paid.' - the demand confirmed under the head of Authorised Service Station Service is not sustainable and is set aside. Confirmation of the demand by invoking extended period of limitation - HELD THAT:- It is observed that the performance of after sale services by the dealer is a standard practice. The Appellant has not undertaken any surreptitious mode of operations to receive the commission or reimbursements. Thus, there is no suppression of facts with intention to evade the tax established in this case. Accordingly, the extended period of limitation cannot be invoked in this case. For the same reason, no penalty is imposable on the Appellant. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 17
Affirming levy of service tax on the Ocean Freight , as proposed in the show cause notice, contrary to the decision of the Gujarat High Court in the case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] - HELD THAT:- Considering the decision in Sal Steel Ltd.it is found that the law has been categorically settled. Taking the view that as per the scheme of the Finance Act and the Service Tax Rules, there is no power conferred upon the Central Government for charging and collecting the tax on extra territorial events for the services rendered and consumed beyond the taxable territory i.e. beyond India, the Court held that since the Act is not applicable to the territories other than India, therefore, the Executives cannot have any power to make rules for territories beyond India - the High Court laid down that the person receiving the services of sea transportation in CIF Contracts is the seller/supplier of the goods located in a foreign territory and the Indian importers are not the persons receiving sea transportation services for the simple reason that they receive the goods contracted by them and they have no privity of contract with the shipping line nor does the Indian importer make any payment of ocean freight to the service provider. Therefore, the Court was of the view that the impugned provisions making the importer liable to pay service tax, is ultra vires the statutory provisions of the Act as it amounts to recovering the service tax from a third person. The decision of the Gujarat High Court in Sal Steels Ltd. was rendered on 06.09.2019 and the show cause notice in the present case was issued on 08.09.2020, which is subsequent to the judgement of the High Court of Gujarat and so were the orders passed by the lower authority, i.e. Order-in-Original on 25.02.2022 and Order-in-Appeal on 26.04.2023. Perusing the show cause notice and these orders, it is found that the appellant had categorically relied on the decision of the Gujarat High Court in Sal Steel Ltd., however, the Asstt. Commissioner issuing the show cause notice and the authorities below failed to appreciate or follow the said decision, which was binding on them. In fact, the contention of the appellant on the basis of the decision of the High Court of Gujarat that they have not paid the Ocean Freight to the shipping company as they are neither the service provider nor the service receiver was rejected by the Asstt. Commissioner issuing show cause notice on the ground that it did not seem tenable in the light of the Rule 2(1)(d)(EEC) of Service Tax Rules, 1994. The authorities below have acted in complete disregard of the principle of judicial propriety. The impugned order deserves to be set aside and the appeal is allowed.
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2024 (8) TMI 16
Classification of service - Insurance Auxiliary Service or not - irregular availment of CENVAT Credit, on the basis of documents which are not prescribed document under Rule 9(1) of Cenvat Credit Rules, 2004 - time limitation. Classification of service - HELD THAT:- From the SCN it is observed that the Department has not brought in any evidence or allegation to the effect that the Appellant has obtained any licence from the IRDA authorities to act as intermediary or agent for the Insurance companies. It is also noticed that the company is purchasing Insurance policy by paying certain amount and selling the same to the individual members at a particular rate. For such an activity, the Appellant may be keeping some margin for themselves for providing some other allied services to the members - There is nothing to indicate from the show cause notice that the Appellant has received any commission from the insurance company as an intermediary or as an agent. In case of insurance auxiliary service , the person acting as an intermediary or an agent receives commission from the insurance company since they act as an intermediary between the insurance company and the clients of the insurance company. In this case for the insurance company, the Appellant himself is the client. The individual members of the club are not the clients of the insurance company. The sale value minus purchase value of the policy would be the profit for the club - the Appellant has not provided any service under the category of insurance auxiliary service and set aside the confirmed demand of Rs.62,06,774/-. I rregular availment of CENVAT Credit, on the basis of documents which are not prescribed document under Rule 9(1) of Cenvat Credit Rules, 2004 - HELD THAT:- The Appellant is paying the Service Tax on the membership fee collected from the members. The insurance companies which are providing the insurance service, are charging the Service Tax. There is a direct nexus between the input services i.e. insurance service provided by the insurance companies and the output service provided by the Appellant in the form of club or association service. Hence, this meets the requirement of input service in terms of Section 2(l) of the Cenvat Credit Rules, 2004 - there are no reason to doubt the authenticity of the transactions and the Service Tax payment made by the insurance companies. The appellant has enclosed all the copies of the invoices issued by the insurance companies. Therefore, it is held that the Appellant has correctly taken the Cenvat Credit and set aside the confirmed demand of Rs.4,10,25,659/-. Time Limitation - HELD THAT:- Being a public limited company, they are also filing their Income Tax Returns and maintaining proper records in the form of Profit and Loss account, Balance Sheet etc. The Department has failed to bring any evidence to the effect that the Appellants have suppressed any facts in order to evade payment of Service Tax. Therefore, the invocation of extended period in this case is legally not sustainable. The Appeal stands allowed both on merits as well as on limitation.
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2024 (8) TMI 15
Classification of services - Management, Maintenance or Repair Services or not - exclusive use of their plant with all manpower along with common infrastructure facilities - period from April-2015 to June-2017 - HELD THAT:- The issue decided in the case of GUJARAT INSECTICIDES LTD VERSUS C.C. E-BHARUCH [ 2024 (1) TMI 774 - CESTAT AHMEDABAD ] where it was held that 'under the arrangement between the appellant and M/s. Gharda Chemicals Ltd. there is no provision of service of management, maintenance or repair service, whereas, the activity of the appellant is of production of excisable goods.' It is clear that on the similar facts, the matter stands covered in favour of the appellant in their own matters, both prior to Negative List Period as well as Post Negative List Period. The agreement re-entered in 2015 in also not substantively different from earlier agreements covered by aforesaid orders. Accordingly, the matter being no longer res Integra and having been decided in favour of party and the concerned services not having been found to be the management, maintenance or repair services but production of excisable goods, the demand in view of the stated decisions is not sustainable. Appeal allowed.
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2024 (8) TMI 14
Valuation - Short payment of service tax - correct Invoice Value for the services provided not shown in ST-3 returns nor in balance sheet - Short payment of service tax due to not including the amount of tax deducted (TDS) - Denial of Cenvat credit availed without documents - Liability of appellant to pay service tax under reverse charge mechanism for receiving legal consultancy and rent a cab services - Extended period of limitation. Service tax has been short paid as has not been paid on gross amount charged despite that it was payable on accrual basis w.e.f. 01.04.2011 - HELD THAT:- The definition of gross amount charged given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term gross amount charged to enable the Department to ignore the contract value or the amount actually charged by the service provider to the service recipient for the service rendered. The fact that it is an inclusive definition and may not be exhaustive also does not lead to the conclusion that the contract value can be ignored and the value of free supply goods can be added over and above the contract value to arrive at the value of taxable services. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. Thus, on first principle itself, a value which is not part of the contract between the service provider and the service recipient has no relevance in the determination of the value of taxable services provided by the service provider. An amount recovered or recoverable as per the agreed terms between two persons will only form 'consideration' for a service. Any amount proposed to be charged by one person but is not agreed to be paid by the other person in lieu of services, will not be part of 'consideration'. It is apparent that the value considered by the appellant for computation, on which appellant has discharged his tax liability, is the value paid by NHAI, the recipient of service, after altering the amount demanded by the appellant to the extent it approved the same as per terms of the contract between service provider and service recipient/NHAI. Thus, the amount which has been approved by NHAI out of the proposed amount of the invoices raised by the appellant is actually the amount of contract paid by NHAI to appellant towards consideration for receiving Consultant Engineer Service from the appellant - It is an admitted fact that the amount paid by NHAI also includes grossed up amount, amount withheld and the amounts of remunerations but only those which were duly supported by the respective document and were approved by NHAI. Hence, department reliance upon Rule 7 of valuation rules and upon the amendment w.e.f. 01.04.2011 is redundant. The department failed to acknowledge as to how something can be recognized as income in balance sheet, which was never supposed to be treated as receivable from NHAI. The demand of service tax on the amount which was never received for the period April 2009 to March 2011 is bad in law and is, therefore, liable to be set aside. The findings of the adjudicating authority below that the method adopted by the appellant for calculation of taxable service is not consistent for the provision of Section 67 of Finance Act, 1994 are not at all sustainable - The appellant has rightly treated the amount approved by NHAI as the amount of consideration for computing tax liability. The allegation of short payment of tax on this account is therefore not sustainable. Short payment of service tax due to not including the amount of tax deducted (TDS) - HELD THAT:- It stands clear from the documents on record that the appellant has discharged service tax on the taxable value including the TDS when the said amount of TDS was retained by the appellant, however, the taxable value did not include the amount of TDS when the said amount was to be refunded back by the appellant to the NHAI due to the reason of suffering losses in the said financial year. Also as per the agreement between the service provider and the service recipient the amount of consideration was tax exclusive. This issue is otherwise no more res-integra - Decision in the case of ITD Cem Joint Venture versus Commissioner of Central Excise by CESTAT, Chandigarh [ 2024 (2) TMI 15 - CESTAT CHANDIGARH ] followed where it was held that ' The appellants have thus grossed up the TDS and complied with the statutory obligation. The situation would be different if the TDS is deducted from the actual consideration and is not borne by the Indian counterpart. When the foreign counterpart does not agree to forego the TDS portion from the consideration agreed, then it becomes legally incumbent upon the appellant to gross up the value as under Section 195A. Thus, the amount of TDS was not supposed to be included in the gross value received by the appellant for providing Consultant Engineer Service to NHAI otherwise also tax on TDS also has been paid except when the amount was refunded to NHAI owing to losses - the allegations and the confirmation thereof that the tax paid by appellant is short for not including the amount of TDS are, therefore, not sustainable. Denial of Cenvat credit alleging it to have been availed without documents - HELD THAT:- The adjudicating authority has relied upon Rule 9 (6) and Rule 9 (9) of Cenvat Credit Rules, 2004, while holding that the Cenvat Credit has been availed based on improper invoice, however, the authority has failed to appreciate proviso to Rule 9 (2) of same Cenvat Credit Rules, 2004. According to the said proviso no specific document is required till all the particulars as mentioned in the Rule 9(1) of CCR, 2004 are available in the document submitted by the assessee. The invoices submitted by the appellant contain entire relevant information. Hence, substantial benefit of availment cannot be denied based on procedural lapse. The findings of denying availment of Cenvat credit to the appellant held to be liable to be set aside - Cenvat credit has been denied also for the reasons that the documents were not provided by the appellant. But it is on record that invoices and ledges of Cenvat credit were supplied to department on 25.01.2017 and were even provided during audit. The show cause notice could not have so mathematical details had the documents would not been provided. Liability of appellant to pay service tax under reverse charge mechanism for receiving legal consultancy and rent a cab services - HELD THAT:- The appellant has not contested their liability for the said services, however, as per the Notification 30/2012 the liability on the abated value @ 40% of the taxable value stands already discharged. Hence, this amount can be demanded or recovered again, however, has to be appropriated as appellant s liability under RCM to pay service tax for receiving legal consultancy and Rent-a-cab services. Invocation of extended period of limitation - HELD THAT:- The mere verbal allegations about suppression of facts are not sufficient to invoke the extended period of limitation. The Hon ble Supreme Court in the case of Padmini Products versus Commissioner of Central Excise, Bangalore [ 1989 (8) TMI 80 - SUPREME COURT ] has held that extended period of limitation will not be attracted when the appellant has not acted with dishonest or fraudulent intent. With respect to invocation of amount of TDS since there is a scope of entertaining a doubt about the view to be taken the extended period of limitation cannot be invoked. Appeal disposed off.
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2024 (8) TMI 13
Exemption from payment of service tax - specified service in terms of N/N. 09/2009-ST dated 03.03.2009 read with N/N. 17/2011-ST dated 01.03.2011 or not - signage income received while renting out space for the signages to the units in the SEZ area - HELD THAT:- If a developer has to enjoy the exemptions available under section 26 of the SEZ Act, its operations should be authorised by the Board under Section 4 and it should meet the manner, terms and conditions laid down under the SEZ Rules. Similarly, if a unit located in the SEZ has to enjoy the exemptions available under Section 26; its operations must be authorised by the Development Commissioner under Section 9 and it should meet the manner, terms and conditions prescribed under the SEZ Rules. For exemption from the service tax, the concerned SEZ Rules are Rules 22 and 31. While the SEZ Act itself provides for exemption from service tax (as well as Central Excise duty and Customs duty), exemption notifications were also issued by the Government under the respective laws with some conditions. The exemption notifications in dispute in this case are service tax exemption notifications ST-40/2012 dated 20.06.2013 and ST12/2013 dated 01.07.2013. This Tribunal also in the case of M/S. DLF ASSETS PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF GOODS SERVICE TAX, DELHI NORTH [ 2023 (7) TMI 881 - CESTAT NEW DELHI] , has considered the issue as to whether the services rendered by the appellant to units in SEZ would be exempted from payment of service tax in view of the provisions of the SEZ, Act and the notification to this effect.The Tribunal in this decision has held ' The prescribed manner as mentioned in Section 26(2), has been provided under Rule 31 of the SEZ Rules, whereby it is stated that exemption from payment of service tax shall be to any service provider for the authorized operations in a Special Economic Zone.' The notification has imposed a condition which is contrary to the overall exemption provided in the statute itself by virtue of Section 26 read with Rule 31. The exemption notification cannot override the statue - Otherwise also, the provisions of SEZ Act have the overriding effect in terms of Section 51 of the Act as already mentioned above. By virtue of Section 51 of the SEZ Act, the provisions of the SEZ Act and the SEZ Rules are mandated to have overriding effect over the provisions contained in any other Act. Therefore, all the activities relating to SEZ shall be guided by the provisions contained in the SEZ Act and the SEZ Rules. The present show cause notice raised demand holding that the activities of the appellant are classifiable under sale of space or time for advertisement service as defined under Section 65 (105) (zzzm) of the Act and not under Renting of immovable property service as defined under 65 (105) (zzzz), and exemption is not available on sale of space or time for advertisement services as same is not covered under the list of approved/authorized services - the present show cause notice was issued for period 2014-15 i.e. for the negative list regime where classification based levy ceased to exist. Thus, demand was proposed, confirmed and upheld by involing/examining obsolete provisions and even without refering to Section 65B (44) of the Act - In the present case, It is not the advertisement broadcast by radio or television, hence the exemption from payment of service tax for the impugned activity of appellant is otherwise available w.e.f. 01.07.2012. The findings of the adjudicating authority below are held contrary to the position of statute (SEZ Act and Rules). The adjudicating authority has failed to observe the judicial discipline by ignoring the previous decisions in appellant s own case - the department itself has dropped the demand on same demand which has not been considered in the present case - the impugned order is set aside - appeal allowed.
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2024 (7) TMI 1516
Rejection of the application made by firm and its partners in Form-1 under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) for settlement of dispute arising under indirect tax - seeking waiver of penalty and redemption fine under SVLDR Scheme since the basic duty was already covered and benefit availed under the SVLDR Scheme - HELD THAT:- Section 125 (1) of SVLDR Scheme provides that all persons shall be eligible to make a declaration under the Scheme except the persons who are mentioned in clauses (a) to (f). Clause (e) disqualifies person who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before 30th June 2019. Section 121 (m) of SVLDR Scheme defines enquiry or investigation to include the actions specified therein and sub-clause (iv) refers to recording of statement . In the instant case, as noted above the statement of the representative of Petitioner No.1-Firm was recorded on 6th July 2007 and, therefore, same would fall within the phrase enquiry or investigation as defined in Section 121 of the SVLDR Scheme - the disqulaification specified in Section 125 (1) (e) of SVLDR Scheme is not applicable to the facts of the Petitioner s case inasmuch as, the twin conditions, viz., subjected to an enquiry or investigation and non-quantification of duty before 30th June 2019 is not satisfied since the formula for quantification was prescribed in the High Court order. Therefore, the basis of rejection by Respondents of the aforesaid 14 SVLDR Scheme application is not justified and same is quashed and set aside. The rejection by Respondents of the applications made by firm was not justified. Since basis of rejection of the applications made by the firm has been quashed and set aside, the consequential benefit would flow to the 8 partners who have made 16 applications. The rejections by Respondents of 16 applications made by partners is quashed and set aside - petition allowed.
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Central Excise
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2024 (8) TMI 12
Determination of interest on delayed refund in terms of Section 11BB of the Central Excise Act, 1944 - HELD THAT:- The learned Division Bench of this Court had directed payment of interest on the delayed refund to the respondent assessee therein within a period of two months from the date of the said order. However, it was observed that the assessee would have to furnish an undertaking that in case the revenue succeeds in the said SLP, the interest amount paid under the order so passed i.e. the order dated 22.03.2023 shall be reimbursed to the Department. This Court, therefore, disposes of the instant writ petition by interfering with the impugned order dated 25.05.2024 - This Court directs the respondent authorities and, more particularly, the Assistant Commissioner, Central GST Division Dibrugarh to verify the amount of interest on the delayed refund of the dues of the petitioners and thereupon release the said amount within two months from the date of submission of the certified copy of this order. Petition disposed off.
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2024 (8) TMI 11
Interpretation of statute - expression capital goods cleared as such includes capital goods cleared as such after being used in terms of Rule 3(4) of the Cenvat Credit Rules, 2002 or not - Whether a two member bench of the Tribunal could have adopted an interpretation of the phrase as such which is different from the interpretation given by a Larger Bench of the Tribunal in the case of MODERNOVA PLASTYLES PVT. LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2008 (10) TMI 51 - CESTAT, MUMBAI] ? HELD THAT:- The appellant has paid duty on the depreciated value of the capital goods. Thus, the duty has been discharged on depreciated value, therefore, the reversal of credit will be confined to the extent of use of capital goods i.e. value of the capital goods will be depreciated based on its use over the period of use. Keeping in view the above ruling of the High Court, as the removal cannot be treated as removed as such , therefore, the duty has to be discharged on the depreciated value. Accordingly, the view taken by the Customs, Excise Service Tax Appellate Tribunal in its order dated 07.07.2011 would go contrary to the law as held in COMMISSIONER CENTRAL EXCISE COMMISSIONERATE VERSUS M/S RAGHAV ALLOYS LTD. [ 2010 (4) TMI 294 - PUNJAB HARYANA HIGH COURT] . Appeal allowed.
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2024 (8) TMI 10
Entitlement to Excise Duty exemption - Marketability of the product Low Sulphur Heavy Stock (LSHS) - Department took the view that the electricity generated by the usage of LSHS, is not only used in relation to manufacture of final product but also such electricity is being used for the day to day requirement of running their township, refinery hospital, etc. - Time limitation. HELD THAT:- On going through the Test Report given by the Quality Control Department of IOC, it is seen that they have compared the test results of the product vis- -vis BIS standards. In many cases, the parameters are not matching. In particular, the flash point of the LSHS is given as 50oC to 64oC the minimum requirement is 76oC. Similarly the water content found is 1.5% to 5% whereas the maximum permissible limit is 1% only. When such critical parameters are not met, the product cannot be marketed/sold by the Appellant to any third party. In respect of the petroleum products unless the BIS specifications are met, it would be illegal to sell such products. Therefore, the Test Report on the face of it, clarifies that the product is not marketable. The very same issue was before the Banglore Tribunal in the case of MANGALORE REFINERY PETROCHEM. LTD. VERSUS C. CE CUS., BANGALORE [ 2006 (4) TMI 361 - CESTAT, BANGALORE] , wherein the Tribunal has held ' we are of the view that the impugned product, as such is not marketable even though it is loosely termed as LSHS. Since the impugned product is not marketable, the same is not excisable. If the impugned product is not excisable, there is no merit in the demand of duties.' As on date, this decision of the Banglore Tribunal has not been stayed or overturned. Therefore, the issue has reached finality. Time Limitation - HELD THAT:- All the records of the LSHS manufactured and utilized for generation of electricity which is used within the factory and used in the township etc. are very much recorded. The Department did not take any timely action on raising the demand in respect of the LSHS used for the electricity which was consumed at their township refinery, hospital etc. Therefore, the entire demand for the period January 2007 to March 2007 is time barred. Hence the confirmed demand is set aside even on account of limitation to this extent. The appeal is allowed fully on merits and partly allowed on limitation.
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2024 (8) TMI 9
Valuation - inclusion of cost of free supply materials in the assessable value in terms of Rule 10 (A) (iii) of Central Excise Valuation Rules 2000, read with Rule 6 of the said Rules - time limitation - penalty - revenue neutrality. Whether the demand of duty raised invoking Rule 10A (iii) read with Rule 6 of Central Excise Valuation Rules, 2000 alleging that the value of goods supplied free of cost by the principal manufacturer has to be included to arrive at the assessable value (transaction value) is legal and proper? - HELD THAT:- The provisions of Rule 10A can be applied when excisable goods are produced or manufactured by a job worker on behalf of a person and cleared to the buyer of the principal and/or cleared to a depot or a consignment agent. The intention of the Legislature was to capture the tax on the goods, on the value of the said goods when cleared to the ultimate consumers. In the case in hand, it is found that provisions of Rule 10A (i) and (ii) does not apply as recorded correctly by the first appellate authority. Provisions of Rule 10A (iii) gets attracted as 10A(i) or (ii) does not apply. The said provision (iii) very clearly mandate that in a case not covered under clause (i) or (ii), the provisions of foregoing rules, wherever applicable shall mutatis and mutandis apply for determination of value of the excisable goods. The provisions under Rule 10 A of Central Excise Valuation (Determination of Price of excisable goods), Rules 2000 has to be applied. In the present case, the Cenvated raw materials have been supplied free of cost to the appellant by the principal manufacturer. However, while clearing the wiring harness, the appellant has not included the value of these free materials in the assessable value - The cost of the intermediate product has been included for arriving at the assessable value by the principal manufacturer who has availed the credit on the free inputs supplied. The principal manufacturer would be eligible to avail credit of duty paid on intermediate product (wiring harness) by the appellant. The whole situation is revenue neutral. Time Limitation - Penalty - HELD THAT:- There is no positive act of suppression established against the appellant except for the allegation that the value of free materials was not included for payment of central excise duty. These free materials have been received by the appellant from the principal manufacturer on job work challans. These being the facts, the invocation of extended period cannot sustain. For this reason, the demand raised invoking the extended period requires to be set aside - For the same reasons, the penalty imposed in respect of both show cause notices are set aside. The appellant is liable to pay duty along with interest for the normal period only. Appeal allowed in part.
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2024 (8) TMI 8
CENVAT Credit - issuance of invoices without supply the material - retraction of statements - burden of proof - personal penalty on the partner of the appellant firm - HELD THAT:- On perusal of the material on record, and also the statements of the persons recorded during the investigation, it appears that Sh. Varinder Kumar, who is the partner of M/s Blue Star Exports, is the mastermind of issuing invoices without supply the material. Further, it is found that Sh. Varinder Kumar of M/s Blue Star Exports has admitted in his statement that they purchased prime material and sell the same in the local market on cash basis and pass the Cenvat Credit of the same to the manufacturer by changing the description of the goods and the price so as to show as scrap . It is found Sh. Kuldip Singh, the partner of the appellant in his statement dated 07.09.2017 has clearly admitted that they have taken the Cenvat Credit on cuttings which are basically scarp whereas the manufacturer s invoices show the description of the goods as prime finished goods . Regarding the taking of Cenvat Credit whether the same is correct or not, he stated that he cannot say anything. The appellant had voluntarily debited the Cenvat Credit availed on the strength of invoices issued by M/s Blue Star Exports on 14.12.2016 i.e. before the date of statement of Sh. Kuldip Singh, partner of the appellant, recorded on 07.09.2017 and he has not retracted his statement till date which clearly shows that he has accepted his lapse - as for Rule 4 of the Cenvat Credit Rules, 2004 read with Rule 9(5) of the Cenvat Credit Rules, 2004, the burden of proof regarding the admissibility of the Cenvat Credit shall lie upon the manufacturer or provider of output service before taking such credit. There is no infirmity in the impugned order passed by the learned Commissioner (Appeals), accordingly the same is upheld by dismissing the appeal of the appellant - appeal dismissed.
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2024 (8) TMI 7
Interest of delayed refund - relevant date for calculation of such interest - rate of interest - HELD THAT:- The dispute in the present appeal is no more res integra and is squarely covered by the decision of the Tribunal in the case of M/S. MARSHALL FOUNDRY ENGG. PVT. LTD., M/S. MARSHALL AUTO CAST PVT. LTD., M/S. MARSHALL FOUNDRY WORKS PVT. LTD., M/S. MARSHALL CASTING LIMITED AND M/S. MARSHAL ATUT INDUSTRIES LIMITED VERSUS COMMISSIONER OF CGST, FARIDABAD [ 2019 (11) TMI 1269 - CESTAT CHANDIGARH ] where it was held that ' appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization.' As the issue has already been examined by the Tribunal and consistent view has been taken all along. Therefore, the Appellant is entitled to claim of interest on the delayed refund from the date of deposit till the date of its realization. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
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2024 (8) TMI 6
100% EOU - remission of duty under Section 23 of the Customs Act 1962 read with Rule 21 of the Central Excise Rules, 2002 and in terms of N/N. 22/2023-CE dated 31.03.2003 - HELD THAT:- The undisputed facts are that the goods that were imported by the appellant who is an 100% EOU and stored in the warehouse licenced under Section 58 of the Customs Act, 1962 were destroyed in a fire accident. It is an admitted fact the goods were insured only for the value of the goods and not for the duty foregone at the time of import. It is also a fact that due to unforeseen circumstances, the fire accident occurred at the factory premises and the insurance company after thorough investigation, having satisfied that the fire was caused due to unavoidable circumstance, settled the claim of insurance. The department also had drawn Mahazar and taken stock of the goods that were destroyed in the fire. The fact that the goods were not insured for duty element does not prove that there was any negligence on the part of the appellant. The issue stands settled in as much as in similar set of facts in appellant s own case of M/S AMERICAN POWER CONVERSION (INDIA) PVT. LTD. (now known as M/s. Schenider Electric IT Business India Pvt. Ltd.) VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, BANGALORE. [ 2023 (10) TMI 1422 - CESTAT BANGALORE] has held 'as per the above provisions when the Assistant/Deputy Commissioner of Customs is satisfied that the imported goods have been lost, the question of demanding duty on these goods does not arise.' In the present case since the fire occurred due to unforeseen reasons and the goods were destroyed in the fire, the question of demanding duty does not arise. In the result, the impugned order is set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (8) TMI 5
Imposition of tax and penalty in respect of the belated filing of returns and the consequential reversal of Input Tax Credit (ITC) - HELD THAT:- On examining the impugned order, it is evident that the petitioner's contention was accepted with regard to the wrong claim of ITC after noticing that the dealer had rectified the error. The respondent noticed that the returns for the month of March 2017 were filed belatedly on 02.08.2017. The order also records that the copy of the return was available on the web portal. The petitioner does not assert that the return was not filed on 02.08.2017 and that it was filed earlier. The turnover and other particulars were taken from the petitioner's returns while recording conclusions on this issue. Since the conclusion was based on a reasonable appraisal of the material, no interference is warranted as regards the tax component. Penalty - HELD THAT:- The petitioner relied on the judgment of the Division Bench of this Court in M/S. SHREE LAXMI JEWELLERY LTD. VERSUS THE STATE OF TAMIL NADU, REP. BY THE JOINT COMMISSIONER (CT) , CHENNAI [ 2019 (3) TMI 297 - MADRAS HIGH COURT ] for the proposition that sub-section (4) of Section 27 of the TNVAT Act should not be invoked merely on account of belated filing of return. In spite of placing this judgment before the respondent, there is no mention of such judgment or any consideration of such principle in the impugned order. To that extent, interference with the order is called for. The petition is disposed of without any order as to costs by partly setting aside order dated 18.03.2024 only in so far as the imposition of penalty is concerned and remanding that aspect for reconsideration.
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2024 (8) TMI 4
Time limitation for issuance of notice for best judgment assessment - Necessity under the provisions of Section 28A of the Haryana General Sales Tax Act, 1973, to issue the notice for best judgement assessment u/s 28 (4) of Customs Act, 1962, within the period of five years - HELD THAT:- Section 28 prescribes procedure of assessment to be framed by Assessing Authority. As per 1973 Act, every dealer has to file quarterly returns which are followed by annual return. If the Assessing Officer finds that returns furnished in respect of any period are not correct and complete, he shall serve on such dealer a notice in the prescribed manner either to attend in person or to produce or cause to be produced any evidence which such dealer may rely in support of such returns. He after considering the evidence, as the dealer may produce, assess the amount of tax due from the dealer. Sub-section (4) of Section 28 provides that if a dealer, having furnished returns in respect of a period, fails to comply with the terms of notice issued under sub-section (2), the Assessing Authority shall, within five years after the expiry of such period, proceed to assess to the best of his judgment, the amount of tax due from the dealer. It is apt to notice here that Section 28 (4) of 1973 Act provides that Assessing Authority shall, within five years after the expiry of such period proceed to assess to the best of his judgment. The Supreme Court in Indian Aluminium Cables Limited [ 1976 (9) TMI 144 - SUPREME COURT] interpreting Section 11 (4) of 1948 Act which was para materia with Section 28 (4) of 1973 Act has held that Assessing Authority shall take effective steps after serving notice under sub-section (2) in case of best judgment assessment. The Court further clarified that effective steps include notice to dealer intimating him that he is proceeding to assess to the best of his judgment and opportunity of personal hearing. From the conjoint reading of Section 28A of 1973 Act and judgment of Supreme Court in Indian Aluminium Cables Limited, it is evident that Section 28A of 1973 Act, whereby requirement of second notice prior to proceeding with best judgment assessment and grant of opportunity of personal hearing has been dispensed with, was inserted to overcome judgment of Supreme Court. The Assessing Authority before proceeding to frame best judgment assessment is not required to intimate the basis for arriving at best of judgment assessment or to take any other step for proceeding to assess. The Assessing Authority after issuing first notice may proceed to assess the best of judgment without second notice, without taking any other step, without intimating basis for arriving at best of judgment assessment, however, Assessing Authority is bound to proceed within the period of five years which has been specified under Section 28 (4) of 1973 Act - The legislature has used word for which makes it clear that for proceeding to assess to the best of judgment within five years, it shall not be necessary to intimate the basis for arriving at best of judgment or to take any other step. Thus, Section 28A of 1973 Act has not obliterated requirement to proceed for best of judgment assessment within five years period as specified in Section 28 (4) of 1973 Act - The Assessing Authority is bound to issue notice within five years period prescribed under Section 28 (4) of 1973 Act for best judgment assessment. The reference is answered in above terms and matter is remitted back to Tribunal to pass appropriate orders.
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2024 (8) TMI 3
Recovery of non-paid dues of Sales Tax departmentFirst charge over the property in question - Secured Creditor or the State / Central Government (Crowns debt) - HELD THAT:- What is undisputed fact in each of the petitions is that all the petitioners herein are bonafide purchasers of various properties which were put to auction upon default in repayment of loan committed by their predecessors in title. Therefore, under the proceedings under the SARFAESI Act, the properties were put to auction pursuant to a charge which was created in favour of the respective Bank and the petitioners having been the successful bidder, had paid the bid amount and purchased the property as successful bidder. The charge of the Secured Creditor will precede over the charge of an Unsecured Creditor (Crowns Date). In the instant case, the submission of learned AGP Mr. Trivedi that the State and its authorities have rightly rejected the application for mutation of entry of the petitioners in respect of the property in question cannot be accepted. Further, as far as the submission of delay is concerned, the same also cannot be accepted for the reason that the petitioners are the bonafide purchasers of the property in question by way of auction or from successful auction purchaser and they have invested huge amount in the property, they have acquired the title of the property by way of Sale Certificate, they are the holder of the title in respect of property in question as on today. The respondent authorities are directed to mutate the names of each of the petitioners in the revenue record by quashing and setting aside any attachment / charge over the property in question by the State or its authorities as there was a first charge of the respondent Bank in each of the petitions - Petition allowed.
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Indian Laws
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2024 (8) TMI 2
Challenge to the validity of the enrolment fees charged by State Bar Councils - grievance is that the fees charged by the SBCs at the time of admission of persons on State rolls are more than the enrolment fee prescribed under Section 24(1)(f) of the Advocates Act 1961 - payment of other miscellaneous fees can be made a pre-condition for enrolment or not. HELD THAT:- The SBCs and the BCI depend entirely on the amount collected from candidates at the time of enrolment for performing their functions under the Advocates Act, including payment of salaries to their staff. According to the legislative scheme of the Advocates Act, the Bar Councils must only charge the amount stipulated under Section 24(1)(f) as an enrolment fee. Instead of devising ways and means to charge fees from enrolled advocates for rendering services, the SBCs and the BCI have been forcing young law graduates to cough up exorbitant amounts of money as a pre-condition for enrolment. Once the advocates are enrolled on the State rolls, the Bar Councils can charge fees for the services provided to the advocates in accordance with the provisions of the Advocates Act. It is for the SBCs and the BCI to devise an appropriate method of charging fees that is fair and just not only for the law graduates intending to enroll, but also for the advocates already enrolled on the State rolls. There are several reasonable ways by which the SBCs and BCI can and already do collect funds at later stages of an advocate s career. Payment of Other Miscellaneous Fees as a Pre-condition for Enrolment - HELD THAT:- It is clarified that the only charges permissible at the stage of enrolment are those stipulated under Section 24(1)(f) of the Advocates Act. All other miscellaneous fees, including but not limited to, application form fees, processing fees, postal charges, police verification charges, ID card charges, administrative fees, photograph fees etc. charged from the candidates at the time of admission are to be construed as part of the enrollment fee. The fees charged under these or any similar heads cannot cumulatively exceed the enrolment fee prescribed in Section 24(1)(f). The SBCs and the BCI are directed to ensure that the fees charged at the time of enrollment comply with Section 24(1)(f) and the provision is not defeated either directly or indirectly under the garb of different nomenclatures. The SBCs cannot charge an enrolment fee or miscellaneous fees above the amount prescribed in Section 24(1)(f). No case is made out for this Court to exercise its power under Article 142 to implement the BCI Draft Enrolment Rules in their current form. Prospective effect of this judgement - HELD THAT:- The result of this decision would have entitled advocates who have paid the excess enrolment fee to a refund from the SBCs The SBCs have been levying the enrolment fees for a considerable duration and utilizing the collected amounts to carry out their day-to-day functioning. Therefore, it is declared that this judgment will have prospective effect. Resultantly, the SBCs are not required to refund the excess enrolment fees collected before the date of this judgment. The writ petition, transferred cases and transfer petitions are disposed of.
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2024 (8) TMI 1
Direction by National Consumer Disputes Redressal Commission (NCDRC) to refund the entire sum deposited by the complainants-appellants with interest at the rate of 9% per annum from the date of respective deposit till the date of refund - delay in completion of the project and in handing over possession of flats - force majeure clause - HELD THAT:- Insofar as the contention of the respondent - Developer that since there was a delay in sanctioning the layout plans, it was covered under force majeure clause is concerned, this Court, in the case of DLF HOME DEVELOPERS LTD. AND ORS. VERSUS CAPITAL GREENS FLAT BUYERS ASSOCIATION AND ORS. [ 2020 (12) TMI 1400 - SUPREME COURT] has held to the contrary. Therefore, the contention in that regard is without substance. The learned Commission has rightly directed the respondent-Developer to refund the entire amount deposited by the complainantsappellants. However, it is found that, insofar as award of interest at the rate of 9% per annum is concerned, the learned Commission was not justified in the facts of the case to award a lesser interest than even the one agreed upon in the Agreement. Undisputedly, the facts of the case show that the project was delayed inordinately. The complainantsappellants were made to suffer for long, for no fault of them. In spite of making the entire payment, they were deprived of the possession within the stipulated time. The learned Commission, at least, ought to have awarded interest at the rate of 12% per annum in view of clause 7(b) of the Agreement. The direction made by the learned Commission for refund of the entire amount deposited by the complainants-appellants is upheld. However, the direction with regard to interest is modified to the extent that it shall be paid at the rate of 12% per annum from the date of respective deposit till the date of refund - Appeal allowed in part.
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