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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 21, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Non-filing of the returns does not empower the GST Authorities to cancel the registration retrospectively Situations in which ITC can be recovered from purchaser – Calcutta HC Ruling A Comparative Study on Impact of GST on Real Estate Sector Higher penalty cannot be imposed u/s 129(1)(b) of the CGST Act if owner of goods comes forward to pay penalty Marine Vessel parts attracts GST@ 5% News Operationalisation of the Board for Advance Rulings Notifications GST - States 26/2023-State Tax - dated 10-8-2023 - Himachal Pradesh SGST Amendment in Notification No. 08/2023-State Tax, dated the 10th April, 2023 25/2023-State Tax - dated 10-8-2023 - Himachal Pradesh SGST Amendment in Notification No. 07/2023-State Tax, dated the 10th April, 2023 S.R.O. No. 882/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O.(P) No.115/2017/TAXES dated 25th September, 2017 S.R.O. No. 881/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O.(P) No.60/2023/TAXES dated 6th May, 2023 S.R.O. No. 879/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O.(P) No.58/2023/TAXES dated 6th May, 2023 S.R O. No. 880/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O. (P) No.59/2023/TAXES dated 6th May, 2023 CT-8-0003-2023-Sec-1-V-(CT) (31) - dated 31-7-2023 - Madhya Pradesh SGST Amendment in Notification No. CT-8-0003-2023-Sec-I-V(CT) (10), dated 21st April, 2023 Income Tax 65/2023 - dated 18-8-2023 - IT Computation of Perquisite - Value of residential accommodation provided by the employer to employee Highlights / Catch Notes GST Cancellation of GST registration of petitioner - Considering the settled principles of law as also the mandate of the provisions of Section 29(2) of the CGST Act, 2017, it is opined that the impugned orders passed by both the authorities are in breach of principles of natural justice - the impugned orders, therefore, cannot be sustained and would be required to be set aside. - HC Visit to Get Source Cancellation of GST registration of petitioner - appeal rejected on the ground that the request for revocation was not filed within the statutory limitation of 90 (30+60) days - no useful purpose would be served by keeping the petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods and services. - GST registration restored - HC Visit to Get Source Income Tax MAT computation - Book profit u/s 115JB - once the accounts of the company have been scrutinized and certified by statutory auditors and approved by the Company in general meeting and the Registrar of Company is also satisfied that the accounts of the Company are maintained in accordance with the requirement of the Companies Act, the Assessing Officer cannot embark upon a fresh enquiry in regard to the entries made in the books of account of the company. - HC Visit to Get Source Disallowance of provision of warranty - The provision made by the assessee was ascertained based on the actual expenses incurred on settlement of warranty schemes in earlier years and was based on the scientific exercise of making provision for warranty clause for each and every vehicle sold on a regular basis year on year. - Claim cannot be disallowed - AT Visit to Get Source Characterization of receipts - exemption u/s 10(10D) - Amount received on redemption/maturity of unit linked insurance scheme - it can be construed the receipt fell under the head “capital gains” but not under “income from other sources”. We therefore, direct the AO to allow indexation and tax the amount under the head “capital gains”. - AT Visit to Get Source TDS on account of ESOP - Disallowance u/s 40 (a) (ia) can be made only when the tax is deductible at source. TDS u/s 192 made at the time of payment and not at the time of accrual. - AT Visit to Get Source Penalty u/s 271(1)(c) - assessee in response to the notice u/s 148 has offered capital gain and paid taxes thereon - Going by the language of section 148, that any such return filed under this section, replace his original return of income, for such purpose, such returned filled is treated as return filed u/s 139. - No penalty - AT Visit to Get Source Taxability of income - Characterization of receipts - software sub-licence fee - the income in dispute, since can be classified under other Articles of the tax treaty, they cannot be brought under the residuary provision contained under Article 23 of the tax treaty. The income cannot be treated as other income under Article 23(3) of the tax treaty. The only provision under which it could have been taxed is as business income under Article 7. - Thus in absence of a PE in India, it cannot be taxed under that provision as well - AT Visit to Get Source Cash credit u/s 68 - assessee is a partner has declared income under IDS 2016 but the declaration failed as the taxes due on income declared was not paid by the firm - the income belonging to the firm whether disclosed or undisclosed can be taxed only in the hands of the firm and not in the hands of the partner. - AT Visit to Get Source Addition u/s 153A - Undisclosed investment - Addition on the basis of DVO report - The relief granted was based on the foundation of comparative figures of investment by the assessee and the estimate by the DVO where a margin of 30% has been considered on higher side, 25% on account of difference in CPWD and PWD rates and 5% for self- supervision. - Appeal of the revenue dismissed - AT Visit to Get Source Customs Issuing summons to Daughter for the alleged offence committed by the Father - It is difficult for this Court to conclude that the petitioner had any knowledge of the alleged offences committed by her father which can be attributable to her. Taking a holistic note of all the aforesaid facts as they stand, as per this Court, the Complaint did/ does not disclose the commission of any offence by the petitioner. Thus, there was no sufficient reason for the learned Chief Metropolitan Magistrate to issue summons to her. - HC Visit to Get Source Lapsed SCN - Period of Limitation - The intention of the legislation, thus, is apparent that the show cause notices which were issued prior to the Finance Act coming into force the Finance Act, 2014 were required to be governed by unamended Act of Section 28(9) of the Customs Act. - the Department for almost a period of 17 months slept over the matter despite the specific mandate of even the unamended Section 28(9) of the Customs Act that the duty shall be levied within a period of 12 months from the date of issuance of the notice. - SCN has lapsed and cannot be adjudicated - HC Visit to Get Source Release of gold jewelry seized - A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods imported without authorization upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. - HC Visit to Get Source Valuation of imported goods - on the basis of wrong documents submitted by the overseas entity, the appellant had filed the Bills of Entry, the lenient approach can be adopted in reducing the quantum of redemption fine and penalty imposed on the appellant. Therefore, the impugned order is modified to, the extent of reducing the redemption fine to Rs. 04 lakhs and penalty to Rs. 01 lakh respectively. - AT Visit to Get Source IBC Rejection of application of the Liquidator - recoveries of customs duties - invocation of the Bank Guarantee(BG) allowed, during the moratorium period in force under section 14 of IBC. - the customs authorities are not recovering any amount on the basis of assessed customs/import duty, but the issue in the appeal is about invocation of the BG and FDRs. - Appeal of the liquidator dismissed. - AT Visit to Get Source Service Tax SVS, 2019 - gross suppression of documents by the petitioner - The petitioner is required to be non-suited on the ground of suppression of facts and documents, irrespective of whatever reliefs the petitioner has prayed in the present petition. The law in this regard is well settled. A litigant cannot be expected to approach the Court by suppressing materials and more particularly such material which is prejudicial to the petitioner. - HC Visit to Get Source Extended period of limitation - having all the facts were disclosed to the department, nothing prevented department from issue of show cause notice within normal period of one year. Therefore, the demand raised in the show cause notice is clearly time-barred. - AT Visit to Get Source Wrongful availment of CENVAT Credit - input services - broadcasting agencies - the agreements entered with the broadcasting agencies were not on behalf of WWIL, but on its own behalf by the appellant. Further, perusal of the invoices issued by the broadcasting agencies to the appellant on which the appellant has paid the service tax gives him a right to claim the cenvat credit on input services. - Credit allowed - AT Visit to Get Source Central Excise Violation of principles of natural justice - relied upon documents not given by Department in order to facilitate the appellant to file reply to the SCN - allegation of clandestine removal - Matter remanded back with directions to supply RuDs - AT Visit to Get Source VAT Initiation of Reassessment proceedings - Proceeding on the dictate of the Audit Party - The law is no more res integra that a quasi-judicial authority cannot abdicate its jurisdiction on the dictate of an external authority and proceed to pass order on such external dictate - HC Visit to Get Source Case Laws: GST 2023 (8) TMI 890 Rejection of appeal of Petitioner under Section 107 of the Central Goods and Service Act - cancellation of GST registration of petitioner - violation of principles of natural justice - HELD THAT:- There is much substance in the contention as urged on behalf of the Petitioner. Insofar as the breach of the principles of natural justice, it is noted from the show cause notice that no documents were furnished to the Petitioner in support of the sole ground which are given here. The Petitioner had sought for an adjournment that he was not available in the town, by his email dated 14th April 2022 and that the proceedings be kept for hearing on 16th May 2022. However, the Superintendent proceeded to cancel the registration by an order dated 4th May 2022 that too by erroneously recording that the Petitioner was heard and the documents and reply submitted by him was examined, when neither the Petitioner was heard nor any documents were filed by the Petitioner. It is found that inherent defect/illegality in the impugned order was brought to the attention of the Appellate Authority in the Petitioner s appeal filed by raising the specific ground - However, in the impugned order dated 23rd January 2023, the Appellate Authority has proceeded to overlook such ground and in fact has proceeded on a fresh material, namely, the range officer s report in regard to the short paid tax and other materials in regard to the cancellation of registration of the suppliers of the Petitioner s, as set out in the impugned order. Considering the settled principles of law as also the mandate of the provisions of Section 29(2) of the CGST Act, 2017, it is opined that the impugned orders passed by both the authorities are in breach of principles of natural justice - the impugned orders, therefore, cannot be sustained and would be required to be set aside. The impugned Order-In-Original cancelling the Petitioner s GST Registration is quashed and set aside and also the orders passed by the Appellate Authority dated 23rd January 2023 are quashed and set aside - petition allowed. 2023 (8) TMI 889 Cancellation of GST registration of petitioner - appeal rejected on the ground that the request for revocation was not filed within the statutory limitation of 90 (30+60) days - HELD THAT:- Reliance placed upon the decision of the Principal Bench of this Court in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , wherein, it was held that no useful purpose would be served by keeping the petitioners out of the Goods and Services Tax regime, as such assessee would still continue to do business and supply goods and services. Since the issue involved in this writ petition is similar, the writ petition is allowed in terms of the guidelines provided in the order in Tvl.Suguna Cutpiece vs. Appellate Deputy Commissioner (ST) (GST) and others. 2023 (8) TMI 840 Constitutional Validity of Rule 42(3) of the CGST Rules 2017 inserted notification No. 16 of 2019-Central Tax dated 29th March, 2019 - Section 73 of the WBGST Act - HELD THAT:- Since the constitutional validity of both the central and State Rules have been challenged in the matter petitioner shall serve a copy of the writ petition upon the learned Advocate General and the Additional Solicitor General within a week from date. Any final order passed on the impugned show-cause notices shall abide by the result of the writ petition. Liberty is granted to the petitioner to implead the Commissioner of CGST, Kolkata (North), and a copy of the writ petition shall be served upon him - List this matter for final hearing in the monthly list of September, 2023. Income Tax 2023 (8) TMI 888 Conversion of limited Scrutiny into Complete scrutiny - Expansion of scope of Scrutiny - whether AO which had initially issued notice u/s 143(2) for a Limited Scrutiny of the return filed by the assessee on three aspects, could have expanded the scope prior to obtaining approval for a Complete Scrutiny by the appropriate authority? - Whether Tribunal erred not considering the fact that the case was converted from Limited Scrutiny to Complete Scrutiny on approval of the Pr. CIT in writing and only thereafter the Assessment Order was passed ? - HELD THAT:- As the scheme of assessment as provided u/s 143 is a complete code by itself and the circumstances under which the power under sub-section (2) of Section 143 could be invoked has been clearly spelt out and on a reading of sub-section (3) of Section 143, it is evidently clear that on the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the AO may require on specified points, and after taking into account all relevant material which he has gathered, the AO shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. Therefore, the question of part of the provision being procedural is an incorrect interpretation of the scheme provided u/s 143 - As noted above, the CIT(A) has examined the merits of the matter and after taking note of the facts granted relief to the assessee to the extent indicated therein. Revenue has not made out any case for interference of the order passed by the Tribunal. 2023 (8) TMI 887 Payment of shipping charges - Correctness of the order passed by CIT(A) - Commissioner granted partial relief in favour of the assessee in respect of certain disallowances concerning the non-resident shipping lines - HELD THAT:- On a perusal of the order passed by the CIT(A), we find that there is sufficient discussion as to why the CIT(A) was convinced that relief should be granted to the assessee in respect of the Hanjin Shipping Co. Ltd. and Maersk Line India Pvt. Ltd. Payment of shipping charges was admittedly paid to Hanjin Shipping Co. Ltd., which is an agent of non resident shipping company and the copy of the order u/s 197 by the DDIT (International Taxation) 3(1), Mumbai, certifying that provisions of 195 and 194C of the Act are not applicable in respect of the payments made to Hanjin Shipping Co. Ltd. or their agent Hanjin Shipping India Pvt. Ltd. Thus, the finding in our view, takes note of the relevant order passed by the DDIT (International Taxation). This finding is duly supported by a note mentioned in the invoice raised by Hanjin Shipping Co. Ltd. wherein it has been clearly stated that there is an order under Section 197 of the Act and a request was made not to deduct any tax on the said invoice. Therefore, we find that so far as the payment of shipping charges to Hanjin Shipping India Pvt. Ltd. was rightly construed by the CIT(A) and also that no tax need to be deducted at source. With regard to Maersk Line India Pvt. Ltd., the CIT(A) noted that similar payment for shipping charges found to have been made to the shipping company during the previous year ending 31.03.2012. Thus we are of the view that CIT(A) rightly granted relief to the assessee in respect of the payment of shipping charges to those two companies namely Hanjin Shipping Co. Ltd. and Maersk Line India Pvt. Ltd.. Tribunal was right in so far as the payments made by the assessee to MSC Agencies Pvt. Ltd., Samudera Shipping Line Pvt. Ltd. and Overseas Container Line Ltd. There is no specific discussion by the CIT(A) while granting relief to the assessee. Therefore, to that extent we agree that the findings rendered by the learned Tribunal that the issue has to be reconsidered by the assessing officer afresh only in respect of those three companies as mentioned above. Appeal is partly allowed. 2023 (8) TMI 886 Reopening of assessment u/s 147 - reason to believe that Petitioner s income chargeable to tax has escaped assessment based on an alleged SEBI Investigation report, in which, Syncom Formulations Limited has been found to be involved in bogus LTCG and loss to beneficiaries - According to Petitioner, this order has been passed without jurisdiction because no separate order disposing Petitioner s objections has been passed - HELD THAT:- Petitioner is a family member of the promoter group of Syncom Formulations Limited and there has never been any investigation by SEBI against Syncom Formulation Limited. Petitioner, therefore, is justified in seeking a copy of the report on which reliance has been placed while arriving at the conclusion that there are reasons to believe that income of Petitioner has escaped assessment. Therefore, we hereby quash and set aside the Assessment Order and remand the matter back to Jurisdictional Assessing Officer (JAO), who shall, within two weeks of this order being uploaded, make available to Petitioner a copy of the report of SEBI relied upon in the reasons to believe for re-opening. If the report contains information regarding other entities which are not concerned with Petitioner, the JAO may redact those portions. 2023 (8) TMI 885 Stay of demand - directions to deposit of amounts lesser than twenty percent of the disputed demand - HELD THAT:- There shall be a direction to the respondents to maintain status quo as far as pre-deposit of the amount pursuant to the Assessment Order dated 19.03.2022 or in terms of the rectification order passed on 17.01.2023 for a period of two months from today. The Appellate Commissioner / fourth respondent before whom appeal of the petitioner is pending shall endevour to dispose of the above appeal, within a period of two months from the date of receipt of copy of this order. The petitioner is directed to cooperate with the Appellate Commissioner namely the fourth respondent. In case, for any reason the appeal is not disposed of by the fourth respondent, the respondents may call upon the petitioner to pay amount in terms of taking note of the decision of the Hon'ble Supreme Court in the case of PCIT vs. LG Electronics India (P.) Ltd [ 2018 (7) TMI 1905 - SC ORDER] has held that tax authorities are authorised to grant waiver of deposit of amounts lesser than twenty percent of the disputed demand in the facts and circumstances of each case Writ Petition is disposed of with the above observations. 2023 (8) TMI 884 Loss arising on demerger - MAT computation - AO initiating fresh enquiry in regard to the entries made in the books of account of the company - AO took a stand that such loss ought to be adjusted against reserves of respondent and cannot be debited to the profit and loss account - AO also observed that the accounting treatment was not in accordance with the provisions of the Companies Act - HELD THAT:- The admitted position is that as per explanation to section 115JB(2) of the Act, only adjustment as permitted to the book profit are those as provided in the explanation thereto. We have to observe that the treatment given by respondent in its accounts have been approved by the Company Court while approving the scheme of demerger. Moreover, the statutory auditors have accepted the book treatment in respect of loss that arise on account of demerger. It is well settled that as per Explanation 1 below section 115JB(2) of the act, only adjustment as permitted to the book profit are those as provided in the said explanation. The purpose of section 115JB of the Act is to provide an alternative method of computation of tax by accepting the book profits as shown by Respondent, after certain adjustments as specified in Explanation 1 of section 115JB(2) and levying tax thereon as alternative to the tax computed under the other provisions of the Act. Apex Court in the case of Apollo Tyres Ltd.[ 2002 (5) TMI 5 - SUPREME COURT] has held that the only power the AO has is the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. AO has a limited power of making increase and reduction as provided for in the explanation to section 115JB. AO does not have jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the explanation. Section 115JA was changed to 115JB pursuant to Finance Act, 2000, w.e.f., 1st April, 2001. We also find that the conditions given in explanation 1 in section 115JB is the same as explanation 1 in section 115JA, barring few minor differences. But the undisputable position is once the accounts of the company have been scrutinized and certified by statutory auditors and approved by the Company in general meeting and the Registrar of Company is also satisfied that the accounts of the Company are maintained in accordance with the requirement of the Companies Act, the Assessing Officer cannot embark upon a fresh enquiry in regard to the entries made in the books of account of the company . This is exactly what the ITAT has also held in the impugned order. 2023 (8) TMI 883 Disallowance of provision of warranty - whether provision was contingent in nature and same was not based on actual basis? - assessee submitted that the provision was created after making extensive working on a scientific basis and the same is backed by historical trends essential to determine the warranty provisions to be made and the actual expenses incurred against such sales subsequently - HElD THAT:- As it is evident that the provision made by the assessee was ascertained based on the actual expenses incurred on settlement of warranty schemes in earlier years and was based on the scientific exercise of making provision for warranty clause for each and every vehicle sold on a regular basis year on year. We find that the issue is squarely covered in favour of the assessee by the decision of Rotork Controls India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] Therefore, no infirmity in the impugned order allowing the claim of provision for warranty expenses. Accordingly, grounds raised by the Revenue are dismissed. 2023 (8) TMI 882 Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As in the present case, the assessee has not earned any dividend income, therefore, disallowance of expenditure u/s 14A read with Rule 8D is not sustainable. We further find that vide amendment by the Finance Act, 2022, the non-obstante clause and explanation were inserted in section 14A of the Act to the effect that the section shall apply even if no exempt income has accrued or arisen or has been received during the year. We find that while dealing with the issue of whether the aforesaid amendment by the Finance Act, 2022 is prospective or retrospective in operation, M/s Era infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] held that the amendment by Finance Act, 2022 in section 14A is prospective and will apply in relation to the AY 2022 23 and subsequent assessment years. Thus, even in view of the aforesaid amendment also, the disallowance u/s 14A r.w.r. 8D is not permissible in the present case. Disallowance computed u/s 14A read with Rule 8D is directed to be deleted - Decided in favour of assessee. 2023 (8) TMI 881 Reopening of assessment u/s 147 - assessee is one of the beneficiaries of the accommodation entries receipt by entity - plea of the AR that the reassessment proceedings have been initiated entirely based on the satisfaction borrowed from the Investigation Wing and no independent inquiry was conducted by the assessee to come to the aforesaid conclusion - HELD THAT:- As on the basis of information received from the investigation wing, reassessment proceedings in the case of the assessee were initiated. As also well settled that sufficiency or correctness of the material is not a thing to be considered at the stage of recording the reasons. As a result, we find no infirmity in the reassessment proceedings initiated by the AO u/s 147 of the Act. Accordingly, ground no. 1 in assessee s appeal, raised as an additional ground, is dismissed. Addition u/s 68 - As evident from the record, the Revenue has doubted the existence of this entity and has claimed that this entity to be only a paper entity that works to issue accommodation entries. The aforesaid documents prove to the contrary as not only details of the loan by Bhoomidevi Credit Corporation Ltd. to the assessee is recorded in the financial statements of the aforesaid entity, similar details are corroborated from the ledger account of Bhoomidevi Credit Corporation Ltd. in assessee s books. Since the assessee has proved the existence of Bhoomidevi Credit Corporation Ltd., we find no merits in the findings of AO which were upheld by the learned CIT(A). Accordingly, the addition made by the AO and upheld by the learned CIT(A) is deleted and grounds raised by the assessee on merits are allowed. 2023 (8) TMI 880 Assessment u/s 153C - denial of deduction of interest income u/s 80IC and Addition towards share application money as unexplained cash credit - HELD THAT:- We find that the original assessment for AY 2010-11 was completed in the hands of the assessee u/s 143(3) of the Act on 12/06/2012. It is not in dispute that the date of handing over of seized documents by the AO of Raghuveer Singh Yadav (Section 153A assessee) to the AO of the assessee herein (Section 153C) was on 11/02/2014. Hence, the date of search in the hands of the assessee would have to be reckoned as 11/02/2014. Accordingly, as on 11/02/2014, there was no pending assessment proceeding for AY 2010-11 for the assessee. Hence, assessment year 2010-11 becomes an unabated/concluded assessment in the hands of the assessee as on 11/02/2014. There is absolutely no incriminating material found during the course of search regarding the denial of deduction u/s 80IC of the Act for interest income and share capital received. Hence, in the absence of any incriminating material relatable to AY 2010-11 qua the additions made in the hands of the assessee, in respect of concluded assessment, the earlier assessment so framed cannot be disturbed by the Ld. AO. This issue is no longer res-integra in view of the recent decision of the Hon ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd[ 2023 (4) TMI 1056 - SUPREME COURT] Also no assessment at all could be made u/s 153C of the Act for AY 2010-11, since, the seized documents representing the seized cash did not pertain to AY 2010-11. See Singhad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT ] - Thus assessment framed in the hands of the assessee u/s 153C for AY 2010-11 is hereby quashed. Decided in favour of assessee. 2023 (8) TMI 879 Characterization of receipts - exemption u/s 10(10D) - Amount received on redemption/maturity of unit linked insurance scheme - to be taxed under the head income from other sources or capital gain as claimed by the assessee - HELD THAT:- Lower authorities have mis-directed themselves by not considering the distinction between the ordinary life insurance scheme and ULIP. In the assessee s case, it is unit linked insurance scheme and is related to the units of mutual fund allotted to the assessee in respect of the money paid by him. CIT(A) ought to have considered the issue from that perspective since the transactions are akin to mutual fund therefore, deserves same treatment. Merely, because life is insured by the transaction would not alter basic character of transaction. CBDT has issued a circular regarding exemption u/s 10(10D) which provides exemption qua the life insurance schemes. It is pertinent to note that a new provision has been inserted w.e.f. 01.04.2021 by Finance Act, 2021 i.e. Section 45(1B) [objective of inserting of this provision is stated to subject the matured/redeemed amount to tax which otherwise was exempt u/s 10(10D)] Hence, it can be construed the receipt fell under the head capital gains but not under income from other sources . We therefore, direct the AO to allow indexation and tax the amount under the head capital gains . The grounds raised by the assessee are allowed. 2023 (8) TMI 878 Disallowance u/s. 14A r.w.r.8D - Scope of amendment in Section 14A - expenditure incurred on earning exempt income - HELD THAT:- As in the present case before us which pertains to A.Y.2013-14, are of the opinion that change in provision of Section 14A will have no retrospective binding effect. Contention of the Ld. AR that now when the assessee company had not received any exempt income during the year under consideration, therefore, no disallowance u/s. 14A of the Act was called for in its hand is acceptable, since the aforesaid contention of the Ld. AR is duly supported by the judgment of Chettinad Logistics Pvt. Ltd. [ 2018 (7) TMI 567 - SC ORDER] and in the case of Pr. CIT Vs. Oil Industries Dev. Board [ 2019 (3) TMI 1571 - SC ORDER] . Thus disallowance u/s 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted. In view of the above precedents, which are squarely applicable to the facts of the instant case, we limit the disallowance to the extent of exempt income. 2023 (8) TMI 877 TDS on account of ESOP - DR submitted that the agreement for distributor with an agent and not on principal to principal basis - whether taxes required to be deducted on several payments made by the assessee or provisions of expenditure? - HELD THAT:- ESOP is considered as perquisite and taxes deducted at source by the employer assessee. Deduction is allowed to the assessee on the basis of provisions of the income tax Act. Disallowance u/s 40 (a) (ia) can be made only when the tax is deductible at source. TDS u/s 192 made at the time of payment and not at the time of accrual. Year end provisions - It is not the case that assessee is making a provision without any basis. Such a provision is a violation of accounting standards, accounting policy of the company and against provisions of the companies Act! As per accounting standard 29 the provision cannot be made unless the payee is identified. Therefore the various judicial precedents relied upon by the learned authorised representative does not apply to the facts of the case. However it is also the fact that the assessee has subsequently deducted tax at source on such payment and therefore the assessee is only liable to the extent of interest under section 201(1A) of the act. Accordingly on this issue we confirm the order of the learned assessing officer only to that extent of charging of the interest as the taxes already deducted on such payment and paid albeit late. TDS u/s 194H on Discount given held as commission expenditure - Assessee has also produced before us the details of several sales promotion schemes based on which discounts are offered to the various Distributors. The distributorship agreement clearly states that company shall supply the products on the basis of the order placed by the distributor from time to time and as soon as the products are delivered to the distributor the responsibility of the assessee ceases. As per clause number 4 of the distributorship agreement it is clear that risk and reward of the goods passes on to the distributor from the assessee as soon as the goods are delivered to the distributor. Therefore it is an agreement having a relationship of principal to principal and not principal to agent . Thus assessee is not required to deduct any tax at source under the provisions of section 194H of the act on the discount given to the Distributors of the assessee. 2023 (8) TMI 876 Penalty u/s 271(1)(c) - assessee in response to the notice u/s 148 has offered capital gain and paid taxes thereon - HELD THAT:- We are conscious of the facts that assessment in the present case in completed u/s 147. Going by the language of section 148, that any such return filed under this section, replace his original return of income, for such purpose, such returned filled is treated as return filed u/s 139. We find that the ratio case of Kirit Dahyabhai Patel [ 2015 (1) TMI 201 - GUJARAT HIGH COURT] and is squarely applicable on the facts of the present case. Hence, we direct the Assessing Officer to delete the penalty levied u/s 271(1)(c) . As the assessee in the return of income in response to the notice u/s 148 has offered capital gain and paid tax, thus grounds of appeals raised by the assessee are allowed. 2023 (8) TMI 875 Taxability of income - Characterization of receipts - taxability of receipts towards software sub-licence fee - income from other sources u/s 56 of the Act and Article 23(3) of India USA Double Taxation Avoidance Agreement (DTAA) OR business income - HELD THAT:- The facts of the present appeal, admittedly, the item of income sought to be taxed is the receipts from sublicensing of software licences. Therefore, ordinarily, the income can be characterized as royalty under section 9(1)(vi) of the Act and Article 12 of the DTAA. In case, it is not taxable as royalty income, it can be treated as business income under Article 7 of the tax treaty. Thus, to our understanding, the residuary provision under Article 23 can come into play when an item of income is not expressly dealt with in other articles preceding article 23 of the tax treaty. Characterization of an item of income under a particular Article is different from taxability of that income under the said Article. A particular item of income can fall either under Article 7 or Article 12. However, their taxability under these articles is subject to fulfillment of conditions enumerated therein. The residuary provisions of Article 23 will not apply to items of income, which can be classified under other provisions of the tax treaty, but their taxability is subject to fulfillment of conditions mentioned therein. To our understanding, the receipts in dispute could have been characterized either as royalty income falling under Article 12 or business income under Article 7 of the tax treaty. However, in view of the ratio laid down in judicial precedents, the income is not taxable as royalty. Alternatively, it could have been taxed as business income under Article 7 of the tax treaty. However, in absence of a PE, it cannot be taxed in India. Thus, in our view, the income in dispute, since can be classified under other Articles of the tax treaty, they cannot be brought under the residuary provision contained under Article 23 of the tax treaty. The income cannot be treated as other income under Article 23(3) of the tax treaty. The only provision under which it could have been taxed is as business income under Article 7. Thus in absence of a PE in India, it cannot be taxed under that provision as well. Therefore, we direct the Assessing Officer to delete the addition. Decided in favour of assessee. 2023 (8) TMI 874 Cash credit u/s 68 - assessee is a partner has declared income under IDS 2016 but the declaration failed as the taxes due on income declared was not paid by the firm - AO held that the income from partnership firm can be claimed as exempt only when the firm has paid tax on such income - CIT(A) upheld the addition for the reason that the genuineness as well as source of this credit entry stands unproved by the assessee - HELD THAT:- We notice that the CBDT has issued a circular No.8/2014 dated 31/03/2014 where it is clarified that income of the firm is to be taxed in the hands of the firm only and the same can under no circumstances be taxed in the hands of the partners even if the income of the firm is declared as NIL on account of deductions and exemptions. AR during course of hearing submitted that the addition towards the income declared under IDS 2016 is made in the hands of M/s Monarch and Qureshi Builders and the firm is in appeal before the CIT(A) against the impugned addition. Therefore we see merit in the submission of the ld AR that the revenue on the one hand taking a stand that the income belongs to the partnership firm and on the other hand taxing the same income again in the hands of the assessee resulting in double taxation. From the perusal of the CBDT circular and considering the ratio of the decision in the case of KT.Joseph [ 2009 (8) TMI 122 - ITAT COCHIN ] it is clear that the income belonging to the firm whether disclosed or undisclosed can be taxed only in the hands of the firm and not in the hands of the partner . Accordingly we are of the considered view that the income cannot be taxed as income of the assessee u/s 68 of the Act and the addition thus made stands deleted on merits also. Decided in favour of assessee. 2023 (8) TMI 873 Disallowance u/s 14A - assessee submitted that there has not been any exempt income during the year - HELD THAT:- Since assessee has not earned any exempt income in the year under consideration. Therefore, the addition made u/s 14A of the Act is directed to be deleted. Disallowance of staff welfare expenses - assessee failed to prove the expenses incurred for business purposes - Grievance of the Revenue is that Ld.CIT(A) deleted part of the addition and gave substantial relief to the assessee - HELD THAT:- CIT(A) has considered the material on record that goes to prove that part of the expenditure that has been disallowance by the AO was infact incurred for the purposes of business of the assessee company. This finding on facts is not contradicted by the Revenue by placing any adverse material on record. Therefore, we do not see any reason to interfere in the findings of Ld.CIT(A). Moreover, the disallowance has been made purely on estimation basis - AO has not given any basis as to why only 20% of such expenditure is disallowed.Thus there has to be some basis for rejection of claim by the AO. The AO should have pointed out as to why out of total expenditure, 20% is not incurred for business purpose. In the absence of specific finding, action of AO for disallowance of expenditure would not be justified. Disallowance of service fee u/s 37 (1) - HELD THAT:- CIT(A) has followed the decision of the Tribunal rendered in assessee s own case [ 2016 (4) TMI 1447 - ITAT DELHI] deleting addition. TDS u/s 195 - Non-deduction of TDS u/s 40(a)(i) - HELD THAT:- From the above findings of Ld.CIT(A), it is clear that the issue related to deduction of tax has been examined in earlier years wherein held appellant is not the PE of Mitsui Co. Ltd (Japan), hence no question of attribution of any profit of Mitsui Co. Ltd (Japan) to the appellant company. Accordingly, there is no question of deduction of tax on the same. In view of the binding precedent, we do not see any merit in the grounds of appeal. Disallowance of staff welfare expenses - HELD THAT:- From the finding of Ld.CIT(A), it is clear that he did not advert to other expenses. He merely affirmed the action of AO without pointing out as to how the remaining expenses are not for business purpose. It is well settled that the AO should not resort to adhoc disallowance. If the expenditure is not incurred for business purpose, there has to be a specific finding in this regard unless expenditure for personal use and business purpose are mixed and cannot be segregated. In the case in hand, this is not the case, we therefore, direct the AO to delete the impugned addition. The ground raised by the assessee is allowed. 2023 (8) TMI 872 Disallowance u/s 14A - Scope of amendment brought out in the Finance Act, 2022 to the provisions under section 14A - HELD THAT:- On perusal of the Memorandum of the Finance Bill, 2022 reveals that it explicitly stipulates that the amendment made to section 14A will take effect from 1 st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. Similar issue was subject matter in appeal before the Tribunal and in the case of Maxivision Eye Hospital Pvt. Ltd. [ 2022 (7) TMI 1450 - ITAT CHENNAI] The explanation inserted in the provisions of section 14A by the Finance Act, 2022 is prospective and not retrospective and since the assessee has not earned any exempt income, the addition made towards disallowance u/s 14A of the Act is deleted in view of the decision in the case of CIT v. Chettinad Logistics (P) Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] as well as the decision of Chettinad Logistics (P) Ltd. [ 2018 (7) TMI 567 - SC ORDER] . This ground of appeal is allowed. Nature of expenses - ROC fees - revenue or capital expenditure - HELD THAT:- Due to increase in share capital, the assessee has incurred expenses on account of ROC fees and the AO has treated the same as capital in nature and disallowed the claim of the assessee, which was confirmed by the ld. CIT(A). When the AO has treated the expenses as capital in nature, depreciation should have been allowed, which was not done in this case. Accordingly, we set aside the order of the ld. CIT(A) on this issue and remit the matter back to the file of the AO to examine and decide the issue afresh in accordance with law by affording an opportunity of being heard to the assessee. Disallowance of difference in TDS deductions - assessee has explained that the difference may be TDS difference has not been accepted and accordingly the difference amount was disallowed and added to the income of the assessee - HELD THAT:- As before CIT(A) confirmed the addition by observing that since the assessee could not admit total receipts, thereby resulting in short reflection of gross receipts in the books of accounts for taxation. Before the Bench, assessee could not offer any convincing explanation towards short reflection of gross receipts. Accordingly, the ground raised by the assessee is dismissed. 2023 (8) TMI 871 Addition u/s 68 - unexplained share premium and share capital - whether documentary evidence for establishing identity, creditworthiness of the investors and the genuineness of the transaction proved? - HELD THAT:- Assessee had provided all the details to discharge the onus to prove the identity, creditworthiness and genuineness of the investors, the onus will shift to Income Tax Authorities to disprove the documents furnished by the assessee. It is found from the record that the A.O. or the CIT(A) has not made any further investigation on the claim made by the assessee or the document produced by the assessee. Thus, the addition cannot be sustained merely based on the inferences without gathering tangible evidence. It is well settled law that once the assessee discharges its onus to prove the creditworthiness of the investor companies and the genuineness of the transaction, the onus will shift on the Department to refute the assertion made by the Assessee. Assessee had fulfilled the ingredients of Section 68 of the Act by proving the initial burden cast upon the Assessee, once the assessee proves/fulfils the ingredients of Section 68 the burden shifts on the revenue. In the present case, the Lower Authorities have not brought anything on record to prove otherwise or to disprove the claim of the assessee and in such circumstances; the authorities are precluded from making any other addition on this count in the absence of contrary materials. As before fastening any liability upon the Assessee, the A.O is required to show by bringing on record tangible material that the amounts received as share capital/loans from the investors/lenders actually emanated from the coffers of the Assessee or represented the undisclosed income of the Assessee. Therefore we find merit in the Ground No. 1 is of the Assessee. Enhancement of income u/s 251 - Addition under the head from other sources by applying Section 56(2)(viib) on protective basis by rejecting the valuation report furnished under Rule 11UA (2) (b) of the Income Tax Rules i.e. Discounted Cash Flow Method (DCF Method) - assessee submitted that the CIT(A) has committed an error in not accepting the valuation report of Chartered Accountant who valued the shares as per Clause B of Rule 11UA (2) of the IT Rules - HELD THAT:- There is no dispute that legally the assessee had option to choose the valuation of the shares as per Rule 11UA of the IT Rules. When the statute provides for particular procedure, authorities have to follow the same and cannot interpret or permitted to act in contravention of the statute. The said legal principal is based on the legal maxim Expression Unis Est Exclusion Alterius . Thus, we hold that the CIT(A) have committed an error in rejected the valuation done by the assessee from prescribed expert as per the prescribed method, which ultimately resulted in enhancement of income of the Assessee u/s 251(1) of the Act. Accordingly, we allow Ground Nos. 2 of the Assessee and delete the enhancement made by the CIT(A). 2023 (8) TMI 870 Denial of depreciation - Capital work in progress held as accommodation entry - AO has mainly held the party as non-verifiable in view of the reason that notice u/s 133(6) issued remained unserved and the assessee also failed to produce the said parties for verification of the claims of work carried out by it - HELD THAT:- The additional evidence filed by the assessee is crucial and goes to the root of the matter. The learned Counsel has submitted that the party is alive on the address provided on the website of the Ministry of corporate affairs, therefore, it is imperative to verify from the records of the said party whether any work was actually carried out. Therefore, we feel it appropriate to restore this issue back to the file of the ld CIT(A) for deciding on the merit of the addition. If required, he may call for a remand report from the assessing officer on the said additional evidence. The ld CIT(A) or the AO in remand proceeding are it liberty to carry out the inquiries as deemed fit for verification of the work done by the said party. The ground No. 2 of appeal of the assessee is accordingly allowed for statistical purposes. Validity of assessment u/s 153C - Assessee submitted that on the basis of information received from Shri Pravin Aggarwal, reassessment could have been initiated only u/s 153C of the Act and not u/s 148 - HELD THAT:- The Hon ble supreme court in the case of ITO vs Vikram Sujitkumar Bhatia [ 2023 (4) TMI 296 - SUPREME COURT] held the amendment brought to section 153C of the Act by way of finance Act, 2015 as retrospective. Since, the information received from search at the Shri Pravin Aggarwal was based on his statement and other material, which were pertaining to Shri Pravin Aggarwal only and therefore, proceedings u/s 153C of the Act could not have been initiated/invoked in the hands of the assessee on said material. The challenge of the Ld. Counsel of the assessee for invalidating the present proceedings u/s 153C on this reason is accordingly rejected. In our opinion on such information from Pravin Aggarwal only valid recourse was to issue notice u/s 148 of the Act. The decisions relied upon by the learned counsel are distinguishable as same are on the facts of the specific case where any asset belonging to an assessee or material pertaining to an assessee is found during the search of the third party. In absence of providing copy of the approval for reassessment granted by the appropriate authority u/s 151 of the Act, notice u/s 148 of the Act is invalid, and thus assessment was no longer abated and hence no addition could have been made otherwise than the aid of the incriminating material - In our opinion, the matter cannot be deferred for an indefinite period before us. This issue of challenge of validity of notice u/s 148 of the Act has been raised for the first time before us and not raised before the lower authorities. We note that in view of the additional evidence furnished by the assessee on the issue of the merit, we have restored the matter back to the file of the ld. CIT(A), therefore in the interest of the substantial justice, we feel it appropriate to restore this issue, which is a matter of determination of fact, to the file of the Ld. CIT(A) for adjudication. He may call for a report from the assessing officer and verify copy of the approval granted under section 151 of the Act. If such an approval is found to be in existence, then he shall provide a copy of the same to the assessee. If no such approval for issue of notice under section 148 of the Act is found, then Ld. CIT(A) may decide validity of the assessment proceedings under section 153C of the Act in accordance with law. 2023 (8) TMI 869 TP Adjustment - HELD THAT:- As submitted that all the grounds of appeal is withdrawn for the reason that the resolution has been arrived at between Indian and US Competent Authorities in respect of the Transfer Pricing issues raised by the assessee before the Tribunal - Accordingly, the appeal is dismissed as withdrawn. CIT(Appeals) holding certain expenses to be part of operating cost of the assessee for the purpose of TP adjustment - Since the MAP resolution entered into with competent authorities covers the TP adjustment as reproduced above, the appeal of the revenue has become infructuous and accordingly dismissed. Thus both the appeals by the assessee and the revenue are dismissed. 2023 (8) TMI 868 Interest paid u/s 201(1A) claimed as deduction while computing the profits and gains - HELD THAT:- The Bangalore Bench of the Tribunal in assessee s own case [ 2022 (8) TMI 349 - ITAT BANGALORE] had categorically held after relying various judicial pronouncements that interest u/s 201(1A) of the I.T. Act cannot be claimed as a deduction. We hold that interest paid by the assessee u/s 201(1A) cannot be allowed as a deduction while computing the profits and gains of the assessee. A.O. had made an addition by stating that the said amount is the interest paid u/s 201(1A) claimed as deduction u/s 37 - According to the AR, the disallowance can be limited to the TDS - In this context, the learned AR had submitted that the assessee has filed a rectification application before the A.O. and the same is pending - The above contention of the learned AR needs to be examined by the A.O. For the limited purpose of examining the figures for disallowance, the issue is restored to the files of the A.O. The A.O. is directed to examine the correct figure of interest paid u/s 201(1A) of the I.T. Act that is claimed as a deduction. Appeal filed by the assessee is partly allowed for statistical purposes. 2023 (8) TMI 867 Net profit ratio of unaccounted income - suppression of receipts - incomes accepted during the course of survey - Addition of entire unaccounted gross receipts without allowing deduction towards expenses in this regard - HELD THAT:- As in the assessee s own case for the AY 2016-17 [ 2022 (9) TMI 865 - ITAT VISAKHAPATNAM] wherein under identical circumstances, the Tribunal held that the profit ratio of unaccounted income of the assessee shall be computed @ 18% , which is as accepted by the assessee during the survey proceedings. Thus we hereby direct the Ld. AO to compute the net profit ratio of unaccounted income of the assessee at the rate of 18%. Appeal of the assessee is allowed. 2023 (8) TMI 866 Addition u/s 153A - Undisclosed investment - additions made by AO were based on an incriminating material duly scanned in the assessment order - CIT(A) deleted the addition - HELD THAT:- We are of the considered opinion that Ld CIT(A) has examined and issued in light of the factual matrix of the case and legality of the applicability of the provisions of section 153A for reopening of the assessment for unabated years or years for which assessments are already competed or for the years for which assessment in regular course is already barred by limitation, cannot be done unless some incriminating material qua each of the AY s which were sought to be reopened is unearthed during the operations of search and seizure conducted at the premises of the assessee. Since, in the present case such condition for invoking the provisions of section 153A for AY 2012-13 to 2015-16 could not be substantiated by the revenue, assumption of jurisdiction for these years was not justified. No reason to disturb the finding of the Ld CIT(A) on this ground. Whether rejection of books of account is mandatory or not for making a reference to DVO u/s 142A? - This has been discussed, deliberated and decided by the Ld CIT(A) without leaving room for any ambiguity, we therefor of the view that, ratio of law emanated by the order of ITAT Jabalpur in the case of Price Rai [ 2021 (7) TMI 1421 - ITAT JABALPUR] could not be applied in the present case, so the contentions of the revenue to restore the matter back to AO for fresh adjudication is not acceptable on this ground. Addition on the basis of DVO report - revenue contention that the Ld AO has validly invoked the provisions of section 142A of the act and therefore the additions made based on the report of the DVO by the Ld AO reduced by the Ld CIT(A) was an error and same needs to be corrected by setting aside the order of Ld CIT(A) and restoring back the order of the Ld AO - HELD THAT:- CIT(A) has decided the issues with a finding that the there were discrepancies in the report of DVO with respect to rates adopted by the DVO on a higher side and therefore a well thought relief of 30% on the valuation given by the DVO was granted to the assessee. The relief granted was based on the foundation of comparative figures of investment by the assessee and the estimate by the DVO where a margin of 30% has been considered on higher side, 25% on account of difference in CPWD and PWD rates and 5% for self- supervision. The decision of the Ld CIT(A) was duly guided by various judicial pronouncements by High Courts and coordinate benches of the ITAT, thus, in our considered opinion the same is on right footing. We therefore do not see any convincing reason to interfere with the findings of the CIT(A). Consequently, the appeals of the revenue dismissed. Customs 2023 (8) TMI 865 Issuing summons to Daughter for the alleged offence committed by the Father - Maintainability of petition - remedy of revision being available - jurisdiction of this Court in terms of Section 482 Cr.P.C. - smuggling of arms and ammunitions from Slovenia to India - father of the petitioner utilized the petitioner s Arms and Ammunition License [License] issued by the Delhi Police and the Renowned Shooter Certificate issued by the National Rifle Association of India [NRAI] for importing weapons using bogus Invoices and by suppressing the true value and description of the weapons, and without the recommendation of NRAI. HELD THAT:- It is the general practice in most, if not all, Indian families that a student studying in School/ College/ University and that too when it happens to be in another State/Country, it is the family, primarily the parents, who play the augment role to support and fill in for them. It is a matter of common knowledge that most of such students are dependent upon their parents. This is more so when the parents are also involved in the same activity, like in the present circumstances, where the father of the petitioner is himself a shooter. Considering the state of affairs involved, this Court is of the view that like any other student, the petitioner would have been busy in her studies and like any other sportsperson, she would also have been busy with her shooting practices and therefore her father filled in for making all arrangements qua procuring arms and ammunitions for her shooting practices/ competitions. This Court is of the view that the case against the petitioner is based on assumption and presumption, which is neither sufficient for registration of a complaint against her nor for issuance of the impugned summoning order. The overall facts hereinabove lead to the conclusion that the petitioner is being wrongly prosecuted for the alleged offences committed by her father, only on the pretext that her father was in possession of her License at the time of seizure and had allegedly utilized the same for procuring arms, without any specific allegation(s) against her. It is difficult for this Court to conclude that the petitioner had any knowledge of the alleged offences committed by her father which can be attributable to her. Taking a holistic note of all the aforesaid facts as they stand, as per this Court, the Complaint did/ does not disclose the commission of any offence by the petitioner. Thus, there was no sufficient reason for the learned Chief Metropolitan Magistrate to issue summons to her. In view thereof, no prima-facie case is made out against the petitioner under Section(s) 132, 135(1)(a) and 135(1)(b) of the Act as the allegations against the petitioner do not disclose the essential ingredients of the offence she is charged with/ accused of and no presumption that the petitioner had knowledge of the alleged offences committed by her father can be drawn. Further, in the opinion of this Court, the learned Chief Metropolitan Magistrate was wrong in proceeding to issue summons vide the impugned order merely on the existence of preponderance of probability. Hence, Section 138A of the Act is not applicable to the facts of the present case. Petition allowed. 2023 (8) TMI 864 Lapsed SCN - Period of Limitation - whether the adjudication of the impugned SCN issued on 14.02.2018 is now barred by limitation and has lapsed in view of Section 28(9) of the Customs Act? HELD THAT:- From a bare perusal of amended Sub-sections (9) and (9A) of Section 28 of the Customs Act, it is evident that the proper officer is bound to pass an order within six months or one year from the date of notice as the case may be, in cases of duties not paid or short-levied or short-paid or erroneously refunded. The said period can be extended for a further period of six months or one year in the cases specified in clause (a) and (b) of Section 9, respectively, by an officer, senior in rank to the proper officer having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest within the prescribed period - With effect from 29.03.2018, it is mandatory for the proper officer to adjudicate the Show Cause Notices that are issued after the amendment to Section 28(9) of the Customs Act within a period of six months or one year of the date of issuance as the case maybe. The same can be extended for a further period of one year by an officer senior in rank to the proper officer, after considering the circumstances under which the proper officer was prevented from passing an order within the prescribed period. The intention of the legislation, thus, is apparent that the show cause notices which were issued prior to the Finance Act coming into force the Finance Act, 2014 were required to be governed by unamended Act of Section 28(9) of the Customs Act. Whether in terms of erstwhile Section 28(9) of the Customs Act, the impugned SCN dated 14.02.2018 has lapsed having not been adjudicated within the period of 12 months? - HELD THAT:- The unamended Section 28(9) of the Customs Act, specifically provides that the proper officer shall determine the amount of duty within six months or within one year, as the case may be, from the date of notice. It only provides certain degree of inbuilt flexibility by incorporating the words where it is possible to do so - It is apparent from the documents and the timelines reflects by them that no sincere efforts have been made by the Department for adjudicating the impugned SCN. Despite being aware of the provisions of the Customs Act, admittedly, no steps were taken by the Department from 29.04.2019 that is the date, the Adjudicating Officer sent a letter to DRI seeking certain clarifications of the documents, and 15.10.2020 when they issued another letter granting personal hearing to the petitioners. It is, thus, admitted that the Department for almost a period of 17 months slept over the matter despite the specific mandate of even the unamended Section 28(9) of the Customs Act that the duty shall be levied within a period of 12 months from the date of issuance of the notice. It is the case of the Revenue that the amended provision of Section 28 of the Customs Act is not applicable in the present case for the reason that the impugned SCN was issued prior to the Finance Act, 2018, coming into force. Therefore, the benefit of extension of limitation as provided under Section 28(9A) of the Customs Act would be applicable only in those cases where the show cause notices have been issued after the enactment of the Finance Act, 2018 since even as per the Revenue the notice issued prior to coming into effect of Finance Act, 2018 would be governed by the unamended provisions. There is no material to show that it was not possible for the proper Officer to determine the amount of duty within the prescribed period. The mention of the words, where it is not possible to do so , in our opinion, does not enable the Department to defer the determination of the notices for an indeterminate period of time. The legislature in its wisdom has provided a specific period for the authority to discharge its functions. The indifference of the concerned officer to complete the adjudication within the time period as mandated, cannot be condoned to the detriment of the assessee. Such indifference is not only detrimental to the interest of the taxpayer but also to the exchequer. In the absence of any ground that it was not possible for the officer to determine the amount of duty within the prescribed period, the impugned SCN has lapsed and cannot be adjudicated - Petition allowed. 2023 (8) TMI 863 Direction to respondents to return the seized 03 numbers of crude gold chain 24 Karat purity totally weighing 348 grams to the petitioner - prohibited item or restricted item - Section 110-A of the Customs Act, 1962 - HELD THAT:- Once the gold is seized by the proper officers under Section 110 of the Customs Act, 1962, the petitioner is entitled to release of the gold, which are detained pending adjudication proceedings, in terms of Section 110-A of the Customs Act, 1962. As per Section 110-A of the Customs Act, 1962, any goods, documents or things seized or bank account provisionally attached, pending the order of the adjudicating authority, may be released to the owner or the bank account holder on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. Thereafter, even in the case of option to pay fine in lieu of confiscation, Section 125 of the Customs Act, 1962 will come into play. In the present case, the gold chains, which have been seized from the petitioner, is not a prohibited item. Hence, the Adjudication Officer ultimately, shall give an option to redeem the confiscated gold jewels. In the present case, the petitioner is ready and willing to give a bank guarantee for 50% of the duty involved. It is seen that the respondents have treated the gold as prohibited items. But the Hon'ble Apex Court in the case of COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [ 2019 (1) TMI 1324 - SUPREME COURT] distinguished the prohibited item from restricted item. It was held that Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The MFDs were not prohibited but restricted items for import. A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods imported without authorization upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. Further, the Delhi High Court in VAIBHAV SAMPAT MORE, RAVIKIRAN BALASO GAIKWAD, SADDAM RAMJAN PATEL, DILEEP LAXMAN PATIL, PAWAN KUMAR MOHAN GAIKWAD, AVADHUT ARUN VIBHUTE, SACHIN APPASO HASBE, ABHIJEET NAND KUMAR BABAR, YOGESH HANMANT RUPNAR, VERSUS NATIONAL INVESTIGATION AGENCY THROUGH ITS CHIEF INVESTIGATION OFFICER [ 2022 (6) TMI 220 - DELHI HIGH COURT] held that import of gold is not prohibited, but restricted subject to prescribed quantity on payment of duty. Thus, import of gold is not prohibited, but restricted subject to prescribed quantity on payment of duty. Section 125 of the Customs Act, 1962, gives rights to the owner or from whom the goods have been seized to redeem such goods on payment of fine. Further, the Courts consistently held that goods can be handed over on executing 50% of the Bank guarantee on the duty amount. In view of the same, the impugned order is quashed and the petitioner is directed to pay 50% customs duty and also execute 50% of the Bank guarantee in lieu of customs duty. And on such payment / execution of the Bank guarantee, the respondents are directed to hand over the gold chains to the petitioner within two weeks from thereon. This Writ Petition is disposed of. 2023 (8) TMI 862 Valuation of imported goods - mixed items of Hair Accessories, Imitation Jewellery accessories etc. - excess weight in the imported consignment as against the declared weight in the Bills of Entry - wrong declaration made about the composition of the imported goods as MS (Mild Steel) - rejection of declared value - redetermination of transaction value - HELD THAT:- The overseas supplier M/s Landmark EXIM (HK) Co., Hong Kong vide letter dated 10.02.2012 has confirmed that due to oversight they had shipped more quantity of the subject goods to the appellant. On perusal of the case records, it is found that the appellant had no intention in wrong filing of the Bills of Entry and based on the available records, they had complied with the requirement of filing Bills of Entry for the imported consignment. However, since the provisions regarding particulars required for assessment has not been declared correctly as found out in the examination conducted by the Department, they have not complied with the Customs law in proper perspective and thus, Section 111 ibid is attracted for confiscation of goods and for imposition of redemption fine. Therefore, the order passed by the lower authority that the appellant is exposed to the penal consequences provided in the statute, is agreed upon. Considering the peculiar facts of the case that on the basis of wrong documents submitted by the overseas entity, the appellant had filed the Bills of Entry, the lenient approach can be adopted in reducing the quantum of redemption fine and penalty imposed on the appellant. Therefore, the impugned order is modified to, the extent of reducing the redemption fine to Rs. 04 lakhs and penalty to Rs. 01 lakh respectively. Appeal allowed in part. Insolvency & Bankruptcy 2023 (8) TMI 861 Extension of CIRP period - approval of the Resolution Plan - Appellant challenging the orders contends that there is no justification for allowing the exclusion ex-post facto and 24.04.2022 was last date for period of CIRP - HELD THAT:- Coming to order dated 29.03.2023 by which the Adjudicating Authority has extended the period of CIRP from 24.04.2022 to 26.05.2022 i.e. 32 days, it is suffice to mention that on 24.04.2022 in the 17th CoC meeting of CoC plans were already discussed and were to be voted upon and application has to be filed before the Adjudicating Authority for approval. 26.05.2022 is that date when the application was filed by the Resolution Professional for approval of the Resolution Plan. 24.04.2022 being last date for CIRP, on which date plans were already discussed, exclusion of 32 days lapsed between 17th CoC meeting and filing of application by Resolution Professional has rightly been allowed by the Adjudicating Authority. The Adjudicating Authority has rightly noticed that the CIRP in the present case commenced during the COVID period and Adjudicating Authority also noticed that the application for approval of the plan is pending consideration before the Adjudicating Authority which may result in resolution of the Corporate Debtor, case has been made out for exclusion of the period from 24.04.2022 to 26.05.2022 - there are no error in the order passed by the Adjudicating Authority granting exclusion of period from 24.04.2022 to 26.05.2022. There is no infirmity in the order dated 29.03.2022 which may warrant interference by this Appellate Tribunal. Approval of the Resolution Plan - principal submission advanced by the Appellant is that the Resolution Applicant is not eligible to submit the Resolution Plan - HELD THAT:- The Committee of Creditors in its commercial wisdom has approved the Resolution Plan submitted by KGK Realty (India) Private Limited with vote share of 76.35% - there are no reason to interfere with the decision of Adjudicating Authority approving the Resolution Plan. No grounds have been made out to interfere with the impugned order. Both the Appeals are dismissed. 2023 (8) TMI 860 Rejection of application of the Liquidator - recoveries of customs duties - invocation of the Bank Guarantee(BG) allowed, during the moratorium period in force under section 14 of IBC. Whether the BGs and FDRs (Fixed Deposit Receipts) that were deposited by the corporate debtor in view of various materials received at the port and released by the customs from Nhava Sheva Port and the Customs Private Bonded Warehouse at Wardha, should be returned to the corporate debtor/liquidator? HELD THAT:- In the present case, invocation of BG is not about recovery of any claim by the customs authorities, but is about revocation of surety provided by the corporate debtor to the customs authorities in the form of FDRs and BG. In this connection, the judgment of the Hon ble Supreme court in the matter of STATE BANK OF INDIA VERSUS V. RAMAKRISHNAN AND ANR. [ 2018 (8) TMI 837 - SUPREME COURT] is noted, wherein Hon ble Supreme Court has noticed the observations in the report dated 26.03.2018 of the Insolvency Law Committee appointed by the Ministry of Corporate Affairs, holding that to clear the confusion regarding treatment of assets of guarantors of the corporate debtor vis-a-vis the moratorium on the assets of the corporate debtor, it has been recommended to clarify by way of an explanation that all assets of such guarantors to the corporate debtor shall be outside scope of moratorium imposed under the Code Appellant placed reliance upon the judgment of Hon ble Supreme Court in the matter of SUNDARESH BHATT, LIQUIDATOR OF ABG SHIPYARD VERSUS CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2022 (8) TMI 1161 - SUPREME COURT] . A perusal of this judgment shows that the customs authorities can assess/reassess customs/import duty, but are not allowed to recover such amounts, which should be claimed as part of the resolution process under IBC by the debtor. This judgment is distinguished on the basis that in the present case, the customs authorities are not recovering any amount on the basis of assessed customs/import duty, but the issue in the appeal is about invocation of the BG and FDRs. Therefore, in the light of the judgment of Hon ble Supreme Court in the matter of State Bank of India vs. V. Ramakrishnan Anr. and of this Tribunal in the matter of BHARAT ALUMINIUM CO. LTD VERSUS M/S J.P. ENGINEERS PVT LTD., ANDHRA BANK (NOW MERGED WITH UNION BANK) [ 2021 (2) TMI 1151 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , it is clear that section 14(3)(b) allows for invocation of BGs. The appeal is devoid of merit and does not deserve to be admitted at the initial stage itself. 2023 (8) TMI 859 CIRP - NCLT admitted the application - Violation of principles of natural justice - whether there was any denial of justice and fair opportunity of hearing suffered by either of the parties before the Adjudicating Authority and whether the impugned order suffers from any infirmity on the count of natural justice or on merits? HELD THAT:- The debt and default above the threshold limit having been established, there is sufficient reason for admission of the main petition and admitting the Corporate Debtor into the rigours of CIRP - it is added that procrastinated pronouncement of order has given fodder to the Appellant in making the absurd claims of having not been heard. At this point, we cannot restrain ourselves from observing that such unreasonable and unexplained delays in delivering verdicts are not desirable. Be that as it may, the hyper-technical and opportunistic pleas raised by the Appellant to stymie the admission of CIRP of the Corporate Debtor cannot be countenanced either. There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal. The appeal is dismissed. PMLA 2023 (8) TMI 858 Freezing of Bank Accounts of petitioner - Illegal smuggling of human hair - HELD THAT:- The initial order of freezing of the 5(4+1) Bank Accounts of the respondents/writ petitioners which was purportedly undertaken by the authorities of ED under Sub- Section (1A) of Section 17 of the Act of 2002. The authorities seizing/freezing of the record is required to file an application requesting for retention of the record of property or the order of freezing served under Sub- Section (1A) of Section 17 of the Act of 2002 to the adjudicating authority within a period of 30 days from the date of such seizure and freezing. The adjudicating authority, in turn, is empowered by virtue of Section 20(1) of the Act of 2002 to direct continuation of the freezing of the Bank Account or retention of the seized property within a period of 180 days from the date on which such property was seized or frozen, as the case may be. There is no dispute amongst the parties that the list of Bank Accounts enclosed with the Original Application (O.A.) filed by the ED to the adjudicating authority, did not contain, the numbers of the 5 (4+1) disputed Bank Accounts of the writ petitioners. The ED, of course, tried to demonstrate before the learned Single Judge that an order of freezing these 5(4+1) Bank Accounts had also been passed on 10.02.2022, which fact was disputed by the writ petitioners. The learned Single Judge was perfectly justified in directing de-freezing of 5(4+1) Bank Accounts, because the continued embargo on the operation thereof by the Banks concerned on purported instruction of the ED clearly amounts to violation of the fundamental rights of the Account holders, i.e. respondents/writ petitioners as enshrined under Article 19(1)(g) of the Constitution of India. The availability of statutory remedy cannot act to the detriment of a litigant when the writ jurisdiction of the Court is invoked in the matter wherein there is clear transgression of the fundamental rights of a citizen. Appeal dismissed. Service Tax 2023 (8) TMI 857 Works Contract Service - benefit of Notification No.1/2006-ST dated 01.03.2006 denied - it was held by CESTAT that the appellant is entitled for the benefit of Notification No.01/2006-ST dated 01.03.2006. HELD THAT:- This Court is not inclined to interfere with the impugned order of the High Court. The appeals are dismissed. 2023 (8) TMI 856 Issuance of discharge certificates - seeking direction to respondents to not initiate any coercive action seeking recovery of alleged interest dues against the petitioner during the pendency of the present petition - adherence to the provisions of SVS, 2019 - gross suppression of documents by the petitioner - HELD THAT:- The petitioner is required to be non-suited on the ground of suppression of facts and documents, irrespective of whatever reliefs the petitioner has prayed in the present petition. The law in this regard is well settled. A litigant cannot be expected to approach the Court by suppressing materials and more particularly such material which is prejudicial to the petitioner. There are no manner of doubt that the petition cannot be entertained and it would be required to be dismissed - petition dismissed. 2023 (8) TMI 855 Settlement of dispute under the Sabka Vishwas (Legacy Disputes Resolution) Scheme, 2019 - rejection of petitioner's declaration in Form SVLDRS-1 and SVLDRS-3 - payment enabled through internet facility - technical glitches - HELD THAT:- The respondents have enabled the payment of the amount through internet facility. Therefore, the denial of the benefits under the Sabka Vishwas (Legacy Disputes Resolution) Scheme, 2019, to the petitioner on account of technical glitches cannot be the basis, particularly, when the petitioner had sufficient bank balance - It cannot be said that the petitioner was guilty of any delay in making payments. The amount that was credited has been re-credited back into the petitioner's account on account of technical problem either at the Banks or at the server maintained by the respondent Department for crediting the amount. Therefore, there is no justification in the stand of the respondents Department. Consequently, this Writ Petition has to be allowed and is according allowed. 2023 (8) TMI 854 Levy of Service tax - business auxiliary service - tax on the gross amount received by the appellant for manufacture and supply of the drugs - drugs manufactured by the appellant are exempted from payment of central excise duty - HELD THAT:- From the facts stated in the show cause notice it is not under dispute that the activity of manufacturing of drugs on behalf of the principle is an excisable activity in terms of Section 2 (f) of Central Excise Act, 1944. The demand was confirmed on the very same activity under the category of Business Auxiliary Service and sub head production of goods on behalf of the clients . It can be seen that in clause (v) of the definition of Business Auxiliary Service, though the production of goods on behalf of the client is a taxable service, however, any activity that amounts to manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944 is out of the ambit of the definition of Business Auxiliary Service. The Revenue has completely misunderstood the definition of business auxiliary service particularly with regard to the service of production of goods on behalf of the client. From the definition it is absolutely clear that all such production activities which are other than the activity of manufacture in terms of Section 2 (f) of Central Excise Act, 1944 are alone shall be taxable activity under the head of production of goods on behalf of the client under Business Auxiliary Service. Therefore, in the present case the activity admittedly amounts to manufacture of excisable goods i.e., drugs which is clearly covered under Section 2 (f) of Central Excise Act, 1944 cannot be classified as taxable service under business auxiliary service. The Revenue while demanding the service tax also taken the support from the exemption Notification No. 08/2005-ST contending that since the appellant s manufacturing activity is exempted from excise duty, the exemption Notification No. 08/2005- ST is also not available - here the activity does not fall under the definition of business auxiliary service since the same is excisable manufacturing activity in terms of Section 2 (f) of Central Excise Act, 1944 the Notification 08/2005 ST is absolutely irrelevant in the present case. It is noteworthy that the said notification is only relevant when the service is taxable under Finance Act, 1994 which is not the case here as per discussion. The demand of service tax is not sustainable. Accordingly, the impugned order is set aside. Appeal is allowed. 2023 (8) TMI 853 Wrongful payment of Service Tax - Business Auxiliary Services - Transportation of goods by Rail Services - demand has been confirmed by the Ld. Commissioner only on the ground of Rule 5 of the Service tax Determination of Value Rules, 2006 - benefit of N/N. 1/ 2006 ST - Extended period of limitation - HELD THAT:- The issue involved in this case is regarding the demand of service tax for the period April 2008 to March 2011 on the ground that the appellant has availed in-eligible benefit of notification No. 1/2006-ST dated 01.03.2006 by discharging the service tax liability by availing Cenvat Credit and paid service tax after availing abatement of 70% of the gross amount - it is found from the records and copy of ST-3 produced, that appellant had been filing the ST-3 returns regularly to the Jurisdictional Range officers. It is on record that the appellant shown all the details in ST-3 returns. It becomes clear from the ST-3 return that the fact that appellant were discharging Service tax on Transport of Goods in container by Rail service and availing Cenvat credit and utilized the Cenvat credit was in the knowledge of the Revenue. However show cause notice to the Appellant was issued on 26.02.2013. Inasmuch as the entire information was in the knowledge of the Revenue, the longer period of limitation is not available - the show cause notice should have been issued within the normal period of one year as prescribed under Section 73(1), whereas the show cause notice for the period April 2008 to March 2009 was issued on 26.02.2013 i.e. after prescribed limit of one year. As per the fact, there is no suppression of fact on the part of the appellant. It is admitted fact that the appellant have taken service tax registration and are filing the periodical returns regularly. The appellant have maintained proper books of accounts in the normal course of business. It is pertinent to note that the entire case of the department on merit is that since appellant have availed Cenvat Credit, they violated the condition of abatement notification No. 01/2006-ST - availment of Cenvat Credit and payment of Service Tax on the abated value were declared in the ST-3 return. Hence, having all the facts were disclosed to the department, nothing prevented department from issue of show cause notice within normal period of one year. Therefore, the demand raised in the show cause notice is clearly time-barred. The impugned order is set aside - appeal allowed. 2023 (8) TMI 852 Levy of Service Tax - Customs House Agents (CHA) Services - non-verification of ledger accounts and journal entries for the entire periods - It was alleged that this pattern of invoicing was adopted to suppress the actual service charges collected and to pay less service tax - extended period of limitation - HELD THAT:- The Adjudicating authority ought to have verified the records for the entire period of 2006-07 and 2007-08 before concluding that service tax has been paid on examination and miscellaneous charges under the head of agency charges. Dropping the demand of service tax without actual verification of financial records is not legal and proper. However as regard the said dispute, it is found that CA certified documents are submitted by the assessee before the Ld. Commissioner - the order of the learned Commissioner dropping demand sustains. Ld. Commissioner has confirmed the Service tax demand on the ground that, the appellant in addition to the payment of service tax on agency charges was also required to pay service tax on charges for the CHA functions related to the entry or departure of conveyance or the import or exports of goods as well as service tax on the difference between the amount received from the client as reimbursable expenses and the amount spent/incurred - the view taken by the Adjudicating authority that the charges/ expenses recovered by the appellant from their clients towards, Amendment of Bills of Entry, cancellation of document charges, choking of containers, communication charges, conveyance, Craft paper charges, DEEC Charges, Delivery order charges, DEPB Charges, DFRC Charges, EOU Charges, EPCG Charges, Examination charges, Lashing charges, fumigation charges, Opening Repacking/ strap ping charges, Palletisation charges, Repacking charges, release advice charges, sundries charges, loading charges etc. as part of CHA service. There is no dispute on the facts that on agency charges which are related to CHA services appellant are paying service tax. The Hon ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] held Rule 5 of Service Tax (Determination of Value) Rules, 2006 as ultra vires to Section 67 therefore, considering this settled legal position, the reimbursable expenses incurred by the CHA which is other than the CHA Agency charges cannot be taxable hence, the demand of Service Tax on this count is clearly not sustainable. Ld. Commissioner held that service provider has provided sufficient details of Cenvat Credit availed by them along with their ST-3 returns. Therefore the charges of suppressing the facts cannot sustain. When commissioner himself has held that the charge of suppression of the fact not sustain against the appellant, confirmation of demand of Cenvat credit beyond a normal period of one year by the Ld. Commissioner in the present matter legally not correct - since the Cenvat documents have not been verified by the revenue, nor the longer period of limitation has been invoked specifically in the show cause notice, the proceedings flowing from such a defective show cause notice, are neither legal nor proper. Consequently, the Cenvat credit demand is set aside. Extended period of limitation - HELD THAT:- The appellant being CHA had been paying the Service Tax on the CHA charges in terms of a Board Circular read with the judgment of Hon ble Supreme Court in the case of Intercontinental Consultants. At the relevant time the issue was not free from doubt. Therefore, lot of litigations were in pipeline, on the same issue and finally it was decided by the Hon ble Supreme Court and the Board also issued a Circular specifically for the CHA service that over and above the CHA service charges on reimbursement no service tax was payable - On this undisputed fact, the appellant have rightly entertained the bonafide belief that the over and above the CHA service charges, the reimbursement expenses are not taxable. Hence there is absolutely no suppression of fact on the part of the appellant, therefore the demand for the extended period is not sustainable also on the ground of limitation. Since the issue was admittedly involved interpretation of valuation provision under Section 67 that whether reimbursement expenses are includible in the gross value of Service charge of CHA, there is no suppression of fact. Hence, the demand for the extended period is not sustainable on the ground of time bar also. Appeal of Revenue dismissed. 2023 (8) TMI 851 Invocation of extended period of 5 years as per the first Proviso to Subsection(1) of Section 73 of Finance Act, 1994 - period involved in the present case is 01.11.2007 to 31.03.2011 and the show cause notice was issued after one year i.e. 07.06.2012 - Non-payment of service tax - service provided in the capacity of Sub-contractor. HELD THAT:- It is found that the issue was not free from doubt and the matter was referred to the Larger Bench and due to conflicting judgments the larger bench has finally decided that in case of service provided by sub-contractor even though the main contractor have paid the service tax on total value the sub-contractor is liable to pay service tax.Since there was serious doubt about the taxability of the sub-contractor and also due to conflicting judgment, which subsequently resolved by the larger bench in the case of M/s Melange developers Pvt. Ltd [ 2019 (6) TMI 518 - CESTAT NEW DELHI] , the bonafide belief of the appellant that they are not liability to pay service tax cannot be doubted, questioned.In such situation the extended period which can be invoked only on the ingredient such as suppuration of fact, mis-statement, fraud, collusion with intent to evade payment of Service Tax, cannot be invoked. This Tribunal has consistently taken a view that on the issue of taxability on sub-contractor the extended period cannot be invoked this has been considered in M/s. Synergy Engineers Group Pvt. Ltd. Delhi [ 2023 (2) TMI 478 - CESTAT NEW DELHI] . Thus, it is consistently held that in the case of Service Tax liability on the sub-contractor demand for the extended period cannot be sustained in the light of the larger bench judgment in the case of M/s Melange developers Pvt. Ltd - the entire demand being issued for extended period i.e. beyond one year from the date of show cause notice shall not sustain on limitation alone. The impugned order set aside - appeal allowed. 2023 (8) TMI 850 Time limitation - Levy of Service Tax - Rent a Cab operator Service - hiring of Buses to Maharashtra State Road Transport Corporation (MSRTC) - penalties - HELD THAT:- There is no dispute that the issue involved interpretation of law regarding taxability of the service of hiring of buses. On this issue various cases have been decided and though finally it was held that the hiring of the buses also falls under rent a cab service but considering the bonafide of the assessee the demand is set aside on the ground of time barred. This has been considered in the case of COMMISSIONER OF SERVICE TAX VERSUS VIJAY TRAVELS [ 2015 (1) TMI 809 - GUJARAT HIGH COURT] wherein the Hon ble Gujarat High Court while dealing with the demand for the longer period upheld the order of the Tribunal to the extent the demand was set aside on time bar. Even though the demand on merit was sustainable, but demand for the extended period was set aside. Considering this legal position is the present case since entire demand is beyond normal period the same is not sustainable - the penalties are also not sustainable. The impugned order is set aside and appeal is allowed. 2023 (8) TMI 849 Wrongful availment of CENVAT Credit - input services - broadcasting agencies - extended period of limitation - whether the demand is time barred for the period 10.09.2004 to 30.09.2008 as the show cause notice for the same was issued on 09.04.2010? - levy of interest and penalties - HELD THAT:- The appellant has entered into an agreement dated 01.04.2005 with Wire and Wireless India Ltd. (WWIL) to manage and run the cable television network on behalf of WWIL within the jurisdiction of Rohtak and for such services the appellant would be receiving 90% of the revenue generated by WWIL as consideration on which the appellant has discharged the Service tax under the category of BAS. Further, it is also a fact that for carrying out the obligations under the Agreement, the Appellant also enters into agreements with various broadcasting agencies for receiving the broadcasting signals for retransmitting the same to subscriber cable operator of WWIL. The broadcasters have issued the invoices in the name of the Appellant with applicable service tax which was duly paid by the Appellant. These broadcastings services were received by the Appellant as an input service for providing the taxable output service of managing the system network of WWIL - it is also found that the Ld. Commissioner has not properly gone through the agreements between the appellant and the WWIL and the broadcasting agencies and has wrongly come to the conclusion that the WWIL was the service provider of cable network and they were entitled to avail cenvat credit on the invoices issued by broadcasting agencies and not the appellant. The Ld. Commissioner has not considered the material on fact that there is no agreement between WWIL and the broadcastings agencies and the agreement between the appellant and various broadcasting agencies makes no reference of the agreement between WWIL and the appellant. Therefore, the agreements entered with the broadcasting agencies were not on behalf of WWIL, but on its own behalf by the appellant. Further, perusal of the invoices issued by the broadcasting agencies to the appellant on which the appellant has paid the service tax gives him a right to claim the cenvat credit on input services. Extended period of limitation - HELD THAT:- The substantial demand is time barred because the show cause notice was issued on 09.04.2010 for the period from 10.09.2004 to 30.09.2008 by invoking the extended period of limitation in the absence of any malafide and suppression of facts on the part of the appellant. The appellant has been filing the ST-returns with full disclosure of the cenvat credit amount availed on the services and the department was already aware of the fact about the availment of cenvat credit of tax paid on broadcasting services. Hence, the extended period in such cases cannot be invoked as held in the case of Bharat Hotels Limited [ 2018 (2) TMI 23 - DELHI HIGH COURT ]. The impugned order denying the cenvat credit is not sustainable in law - Appeal allowed. 2023 (8) TMI 848 Contravention of the condition imposed under the Notification No. 01/2006 - CENVAT Credit availed - demand along with interest and penalty denying the benefit of notification - HELD THAT:- Admittedly the fact of Cenvat Credit and utilization of the same has been recorded by the Appellant in their ST-3 Returns. Only on the basis of scrutiny of these Returns, the Department has issued the Show Cause Notice. Therefore, this proves that the Appellant has not suppressed any fact but has declared the details of Cenvat Credit taken and their utilization in the ST 3 Returns. Therefore, their explanation that this was an inadvertent error on their part, is to be accepted. It is also seen that after the OIO was passed, they have reversed the entire Cenvat Credit. In the present case, the Appellant has reversed the entire Cenvat Credit taken. Therefore, the confirmed demand of Rs.22,13,962/- along with interest is required to be set aside. However, as pointed out by the Learned AR, it is seen that the Appellant has only reversed the Cenvat Credit without paying the relevant interest - the Appellant is required to pay the interest for the period when the Cevat Credit was taken till the time they have reversed the Cenvat Credit, as per the applicable rate of interest at that particular point of time. Since the Appellant has contravened the conditions imposed under in the Notification, they cannot be absolved from penalty and they are also required to pay the penalty - thus they are required to pay penalty of Rs.1.25 lakhs. Appeal allowed in part. Central Excise 2023 (8) TMI 847 Calculation of interest on refund sanctioned - relevant dates - refund of pre-deposit made while filing the appeal before the tribunal is due from 3 months of passing of remand order by the Tribunal or after 3 months of passing order in de novo adjudication? - HELD THAT:- The pre-deposit for which the appellant has sought for the refund was paid specifically for entertaining the assessee s appeal by this tribunal, once the appeal was disposed of by way either setting aside the demand or by way of remand to the adjudicating authority, the demand of duty does not exist for the time being, therefore the amount of pre-deposit became refundable to the assessee. on the order of the tribunal the contention of the department in this case is that the refund is matured from the date of de novo adjudication order has no relevance for the reason that de novo adjudication is nothing to do with the pre-deposit made under Section 35F before this Tribunal. From the circular No. 802/35/2004-CX dated 8 December, 2004, it was categorically clarified and reiterates their earlier circular that in case of refund of Pre-deposit the dead line for refunding, this pre-deposit is 3 months from the date of Tribunal s order, accordingly if the refund is not granted within 3 months from the date of Tribunal s order thereafter the department is bound to pay the interest to the claimant - As regard the revenue s contention that the appellant have not filed the proper refund claim - it is found that in various judgments it has been settled that as regard refund of pre-deposit, there is no requirement for filing a refund claim. The department must give the refund suo moto on the basis of Tribunal s order therefore merely because the appellant have not filed the proper refund claim within 3 months of the Tribunal order, department cannot be absolved from the liability of interest on the refund of pre-deposit. This issue has been considered in VOLTAS LIMITED VERSUS UNION OF INDIA [ 1998 (11) TMI 137 - HIGH COURT OF DELHI] where it was held that once the order of adjudication was set aside, the Tribunal could not have ordered the amount of pre-deposit to be retained awaiting the order of adjudication. There is no provision in the law requiring certain amount to be retained as a pre-deposit pending finalisation of the adjudication proceedings. As the amount is being withheld without any authority of law, it is liable to be refunded. Thus there is absolutely no doubt that appellant are entitled for the interest from the 3 months of the order of the tribunal till the refund was granted - appeal allowed. 2023 (8) TMI 846 Violation of principles of natural justice - relied upon documents not given by Department in order to facilitate the appellant to file reply to the SCN - allegation of clandestine removal - HELD THAT:- It can be seen from the acknowledgement that the appellant has received only documents listed in Annexure-A. The details of the invoices / bills on which the quantification of the duty is done is contained in Annexure-B. The Department ought to have given the copies of such invoices or bills which have been seized and used to derive the quantum of duty. It is also pointed out by the learned counsel that during the relevant period there was circular issued by the Board which explained that certain fabrications done at the customer site and embedded to the earth are not excisable goods and therefore not exigible to duty. The appellant has produced the copies of letters dt. 30.03.2011, 24.06.2011 and 23.12.2013. The appellant has not been supplied with necessary documents. In such circumstances, the matter requires to be remanded to the adjudicating authority who is directed to furnish the relied upon document to the appellant and also give an opportunity of hearing to the appellant with sufficient chance for adducing any further evidence. Appeal is allowed by way of remand to the adjudicating authority. CST, VAT & Sales Tax 2023 (8) TMI 845 Maintainability of petition - availability of efficacious and alternative remedy of appeal - Validity of assessment order - barred by time limitation or not - principles of natural justice. Time Limitation - HELD THAT:- Admittedly, the basis for issuing show cause notice and passing of impugned Assessment Order was the inspection dated 21.05.2013 of V E Department and its report to the 1st respondent. In such an event, the 1st respondent owes a responsibility to furnish the copy of the said report at least after receiving the request letter dated 08.07.2015 of the petitioner, a copy of which is filed along with material papers. Thus the petitioner was deprived of a valuable opportunity to submit her objections against the said report and impugned Assessment Order - The net result is that though the Assessment Order pertaining to the tax period 2013-14 is within the period of limitation, however, the same is liable to be set aside for non-furnishing of the report of the V E Department forwarded to the 1st respondent and also non-consideration of subsequent report issued by the V E Department as claimed by the petitioner and not giving an opportunity of hearing to the petitioner in this regard. In this case, the principles of natural justice were violated and further a major part of assessed period is barred by limitation and thereby, the 1st respondent had no jurisdiction to pass assessment order to that extent. In such an event, this Court can entertain writ petition. The Assessment Order dated 11.01.2019 so far as it relates to the period 2008-09 to 2012-13 (upto November, 2012) is barred by limitation and hence set aside to that extent, however, the said order relating to the tax period 2013-14 is held to be within the period of limitation - Petition allowed in part. 2023 (8) TMI 844 Determination of appellant's turnover under Section 3-B of the TNGST Act 1959 - levy of penalty under Section 16(2) of the Act - revision of assessment on the basis of third party records - assessment confirmed on the basis of information collected from the place of business of a third party that too when those information reveal only the commission received by the said third party, for the invoices allegedly raised in the name of the appellant - burden to prove - violation of principles of natural justice. HELD THAT:- Admittedly, the assessments of the appellant have been revised based upon certain records said to have been seized by the Enforcement Wing from the Photo Marketing Service in Chennai which is said to have revealed that the assessee had purchased the goods vide six invoices from one Jindal Photo Films, New Delhi. Therefore, it is clear that the assessments have been revised based upon third party documents and not based upon any inspection conducted in the premises of the assessee. The authorities have failed to furnish a copy of the said third party document to the assessee, especially when the assessee has taken a stand that their names and registration number have been misused by some one to evade tax. No opportunity has been provided to the assessee to cross examine the said third party. Therefore, it is clear that the entire revision of assessment has been made based on documents which have been screened from the purview of the assessee. On the other hand, the burden has been fixed upon the assessee to prove the negative that he did not have any transaction with those third party entities. The orders of the authorities are clearly in violation of the principles of natural justice and they are liable to be set aside and accordingly, set aside - All the substantial questions of law are answered in favour of the appellant - Appeal allowed. 2023 (8) TMI 843 Initiation of Reassessment proceedings - time barred or not - Levy of penalty u/s 10 A of the CST Act - deliberate intent or not - Mis-utilization of Form 'C' for purchase of goods at concessional rate - assessee was carrying out manufacturing activity on job work basis and the goods manufactured by it was not sold by it but was sold by Tata Motors Limited. Whether Section 42(3) is in itself the substantive provision provided under the JVAT Act for initiation of re-assessment proceeding or it merely enumerates additional circumstances/grounds under which re-assessment proceeding can be initiated under the substantive provision of re-assessment contained under Section 40 of the JVAT Act? - HELD THAT:- The Hon ble Supreme Court, in the case of Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT] , has clearly laid down that the phrase levy and collection indicates that all the steps in making a man liable to pay a tax and exaction of tax from him must be in accordance with law. All steps must be taken according to statutory provisions and no one can be subjected to levy and collection of tax without authority of law. It is a settled law that completion of assessment of an assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act. Pior to insertion of Section 42(3), the Assessing Authority, could have treated audit objection as an information and could have initiated re-assessment proceeding. However, Section 42(3) provides that when information is received by way of observation/objection from the Comptroller and Auditor General of India, the Assessing Authority has to proceed to re-assess the dealer. Thus, what is dispensed with under Section 42(3) is recording of reasons to believe by the Assessing Authority for initiation of re-assessment proceeding. Further, in the Judgment rendered by Hon ble Apex Court, in the case of Larsen and Toubro [ 2017 (3) TMI 1064 - SUPREME COURT] , Hon ble Apex Court, after examining almost all earlier Judgments, although held that an audit objection would be well within the parameters of being construed as information, but at the same time, it has been held that merely because audit objection has been raised, the same would not authorize the Assessing Authority to proceed with re-assessment and the Assessing Authority has to record his satisfaction on the audit objection. In the said Judgment, Hon ble Supreme Court noticed that the Assessing Authority was not agreeing with the audit observation, but, despite the same, proceeded to issue Notice on the ground of direction issued by Audit Party and not on its personal satisfaction and it was clearly held by Hon ble Apex Court that same was not permissible under law; and the very initiation of re-assessment proceeding was declared as without jurisdiction. The law is no more res integra that a quasi-judicial authority cannot abdicate its jurisdiction on the dictate of an external authority and proceed to pass order on such external dictate - In the present case, it has been argued by learned Advocate General, Section 42(3) mandates the assessing authority to initiate re-assessment proceeding on the dictate of the Audit Party which, on the face of discussions, would amount to abdication of jurisdiction of the assessing authority being a quasi-judicial body to external dictates, which would be contrary to the ratio laid down by the Judgment of Hon ble Apex Court in the case of Indian Eastern Newspaper Society, New Dehi [ 1979 (8) TMI 1 - SUPREME COURT] and in the case of Larsen and Toubro. Whether Section 42(3) is an independent provision conferring power of re-assessment or is merely as additional ground conferred under the Act upon the assessing authority for carrying out re-assessment proceedings? - HELD THAT:- Since it is already declared that Section 42(3) is to be read with Section 40(4) of JVAT Act and limitation period for carrying out re-assessment proceeding is five years, we are not deliberating further over the said issue - However, it would be apt to also refer to the Judgment rendered by Hon ble Supreme Court in the case of State of Punjab Ors. Vs. Bhatinda District Cooperative Milk Producers Union Ltd. [ 2007 (10) TMI 300 - SUPREME COURT] wherein Hon ble Apex Court, while examining the provisions contained under the Punjab General Sales Tax Act conferring power of suo-motu revision upon the Commissioner, held that although said Section prescribed no period of limitation but the same would not mean that suo-motu power can be exercised at any time. The Hon ble, in the said Judgment, held that if no period of limitation is prescribed, statutory authority must exercise jurisdiction within reasonable time and the reasonable period would depend upon the nature of the statute, liabilities and other relevant factors. In the said Judgment, Hon ble Supreme Court, while examining the scheme of Punjab General Sales Tax Act, held that revisional power should ordinarily be exercised within a period of three years and, in any event, the same should not exceed the period of five years. Said finding was given by the Hon ble Apex Court by considering various provisions of the Punjab Act which contains provision of limitation varying from three years to five years from the end of the tax period. Similarly, under the scheme of JVAT Act also, provisions of limitation for carrying out assessment, audit assessment, scrutiny assessment, re-assessment proceedings, etc. have been prescribed to be three years to five years. It is for the said reason also, in our opinion, while incorporating provision of Section 42(3), the Legislature, in its wisdom, had not sought to extend the period of limitation by inserting non-obstante clause. Whether imposition of penalty under Section 10A of the CST Act against the Petitioner-assessee for alleged violation of provisions of Section 10(b) of the CST Act is sustainable in the eye of law? - HELD THAT:- The Assessing Authority failed to discharge its burden to prove the existence of circumstances constituting the said offence under Section 10(b). It may also be noted here that Show Cause Notice, pursuant to audit objection, was issued for alleged violation of Section 10(d) of the Act, but orders were passed for alleged violation of Section 10(b) of the Act. The first Revisional Authority i.e. Additional Commissioner of Commercial Taxes also held that the audit objection is not valid in view of the Judgment of East India Mfg. Company Ltd. [ 1981 (7) TMI 205 - SUPREME COURT] , but still upheld the order of the Assessing Authority imposing penalty, which compelled the Petitioner to move before the second Revisional Authority i.e. Commercial Taxes Tribunal. The Commercial Taxes Tribunal, interestingly, upheld levy of penalty on a completely new ground by recording, inter alia, that in the original Registration Certificate of the Petitioner, although Petitioner was entitled to purchase goods at concessional rate for re-sale, but the word Wahi / Do was missing in the Registration Certificate and Petitioner was not entitled to purchase goods for manufacturing and processing of the goods for sale. This finding rendered by Commercial Taxes Tribunal is clearly travelling beyond the impugned orders and has been raised for the first time before the Tribunal. The imposition of penalty against the Petitioner under Section 10A of the Act is not sustainable in the eye of law, and, the assesse was under the bona fide belief that its Registration Certificate entitled it to purchase goods at concessional rate for manufacturing and processing of goods for sale and the said bona fide belief of the assesse is fortified by the stand taken by the Revenue itself, wherein at no stage it was disputed that assesse was not entitled to purchase goods at concessional rate for manufacturing and processing activity. The assesse-Petitioner, therefore, cannot be said to have falsely represented knowingly and willfully with guilty mind and, thus, we are of the opinion that the order of penalty levied against the assesse is not sustainable. Application allowed. Indian Laws 2023 (8) TMI 842 Dishonour of Cheque - delay of 34 days in filing the revision petition - sufficient cause for delay or not - presumption under Section 138 of the NI Act - HELD THAT:- As far as the question of limitation is concerned, it is settled law that rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time. In Apangshu Mohan Lodh Ors. Vs. State of Tripura Ors., [ 2003 (10) TMI 641 - SUPREME COURT] , the Apex Court held that the power of condonation of delay is discretionary and is to be liberally construed. No doubt, delay is fatal to the case of any party but as far as possible the matter should be heard and decided on merits. In the instant case, there is a delay of 34 days, which should be condoned in order to decide the present case on merits - Secondly, it has been held by the learned Sessions Court that the defences raised by the petitioner that the respondent had never advanced any friendly loan and he did not have any financial capacity to lend any such huge amount of loan and that advancing of friendly loan is not accounted in the business of account and income tax returns are such defences which can only be decided once the parties lead their respective evidence before the trial court. In the instant case, the issuance of cheque is not denied by the petitioner and there is a presumption under Section 138 of the NI Act that the Court shall presume that the holder of a cheque received the cheque of the nature referred into Section 138 of the NI Act, for the discharge, in whole or in part or any debt or other liability. As far as the question of limitation is concerned, that part of the impugned order is set aside and delay in filing the revision petition is condoned. With these observations, the present petition is dismissed. 2023 (8) TMI 841 Dishonour of Cheque - acquittal of the accused 1 and 2 for the offence punishable under section 138 of the N.I Act - HELD THAT:- The scope of interference in an appeal against Acquittal has been gone into by the Hon'ble Supreme Court in JASWANT SINGH VERSUS STATE OF HARYANA [ 2000 (4) TMI 825 - SUPREME COURT ] wherein it was observed While sitting in Judgment over an acquittal, the appellate Court is first required to seek an answer to the question whether the findings of the trial court are palpably wrong, manifestly erroneous or demonstrably unsustainable. If the appellate Court answers the above question in the negative, the order of Acquittal is not to be disturbed. In light of well-settled legal principles, the burden lies on the accused to prove the non-existence of consideration by bringing on record such facts and circumstances, which would lead the Court to believe the non-existence of the consideration. If the accused discharges the onus of proof showing that the existence of consideration was improbable or doubtful and the execution of the promissory note, the onus would be shifted to the complainant. Then he will be obliged to prove the existence of the consideration. The available evidence clearly indicates that the accused had no compelling need to borrow the specified amount, considering that they possessed Rs. 7,00,000/- in their bank account at the time of the Exs. P1 and P2 promissory note transactions. The complainant has not provided a satisfactory explanation or demonstrated the source of her income that would enable her to lend such a substantial sum to the accused. The accused have presented substantial evidence before the Court, and based on this, the complainant's assertion that they issued a cheque on 03.02.2013 is proven to be inaccurate. The evidence adduced supports the view that the accused's version is more likely and credible in this context - It is a cardinal principle of criminal jurisprudence that in an acquittal appeal, if another view is possible, then also the appellate Court cannot substitute its view by reversing the Acquittal into conviction unless the findings of the trial Court are perverse, contrary to the material on record, palpably wrong, manifestly erroneous or demonstrably unsustainable. In the instant case, the appellant has yet to be able to point out how the findings recorded by the learned Additional Sessions Judge are perverse, contrary to material on record, palpably wrong, manifestly erroneous or demonstrably unsustainable. The trial Court's conclusion was found to be erroneous, and the appellate Court s Judgment aligns with the settled legal position. The point is accordingly answered in favour of the accused and against the complainant.
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