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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 23, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Articles How to registered a foreign LLC in Wyoming? LEVY OF GST ON ONLINE GAMING – JOURNEY FROM GST COUNCIL TO ENACTMENT GLOBAL MINIMUM TAX SERIES – PART 15 Need for GloBE Pillar 2 Impact Assessment DATA PROTECTION BOARD OF INDIA Battery charging service provided by public charging station attracts 18% GST Appellant Authority cannot reject appeal merely on the ground that order copy was not furnished physically News 14th Joint Group of Customs Meeting Between India and Bangladesh India participates in 20th ASEAN-India Economic Ministers’ Meeting in Semarang, Indonesia Auction for Sale (re-issue) of (i) ‘7.06% GS 2028’, (ii) ‘7.18% GS 2033’, and (iii) ‘7.30% GS 2053’ Notifications GST - States S.O. 236 - dated 18-8-2023 - Bihar SGST Amendment in Notification No. S.O. 133, dated the 17th May, 2023 10/2023-State Tax (Rate) - dated 10-8-2023 - Himachal Pradesh SGST Amendment in Notification No. 26/2018-State Tax (Rate), dated the 31st December, 2018 09/2023-State Tax (Rate) - dated 10-8-2023 - Himachal Pradesh SGST Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017 08/2023-State Tax (Rate) - dated 10-8-2023 - Himachal Pradesh SGST Amendment in Notification No. 13/2017-State Tax (Rate), dated the 30th June, 2017 06/2023-State Tax (Rate) - dated 10-8-2023 - Himachal Pradesh SGST Amendment in Notification No. 11/2017-State Tax (Rate), dated the 30th June, 2017 S.R.O. No. 878/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O. (P) No.57/2023/TAXES dated 6th May, 2023 S.R.O. No. 877/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O. (P) No.24/2018/TAXES dated 9th March, 2018 S.R.O. No. 876/2023 - dated 17-8-2023 - Kerala SGST Amendment in Notification G.O. (P) No.135/2018/TAXES dated 18th August, 2018 CT/8/0008/2023-Sec-1-05(CT) (33) - dated 18-8-2023 - Madhya Pradesh SGST Seeks to notify special procedure to be followed by a registered person pursuant to the directions of the Hon’ble Supreme Court in the case of Union of India v/s Filco Trade Centre Pvt. Ltd., SLP(C) No.32709-32710/2018 with regard to filing an appeal against the order passed by the proper officer under section 73 or 74 of MPGST Act, 2017 F.12 (11)FD/Tax/2023- 33 - dated 16-8-2023 - Rajasthan SGST Seeks to waive the requirement of mandatory registration under section 24(ix) of RGST Act for person supplying goods through ECOs, subject to certain conditions F.12 (11)FD/Tax/2023- 31 - dated 16-8-2023 - Rajasthan SGST Seeks to notify special procedure to be followed by a registered person engaged in manufacturing of certain goods Circulars / Instructions / Orders SEBI SEBI/HO/DDHS/POD2/P/CIR/2023/121 - dated 12-7-2023 Master Circular for ESG Rating Providers (“ERPs”) Highlights / Catch Notes GST Refund of ITC denied - intermediary services - Export of services or not - There is no allegation that the petitioner has rendered any service to an individual. Plainly, the Adjudicating Authority has misunderstood the nature of services covered u/s 13(3)(b) the IGST Act. These are essentially in the nature of personal services which require the physical presence of the service recipient.- the services are advisory services relating to investments in India. - Refund allowed - HC Visit to Get Source Cancellation of GST registration of petitioner - There is no dispute that the premises where the petitioner claims to have been carrying on his business prior to shifting to new address in July, 2021, was demolished by the Northern Railway Authorities. Although, it is alleged in the counter affidavit that it was demolished many years ago, there is no material on record to establish the same. - GST registration restored - HC Visit to Get Source Validity of investigation proceedings - The disclosed principal place of business of the petitioner is the same as that of some other connected entities, which have been investigated by DGGI, Chennai. Clearly, no advantage can be drawn by the petitioner on that account - petitioner has a separate tax registration. - There are no reason to interdict DGGI, Jaipur from conducting the investigation in respect of the petitioner company - HC Visit to Get Source Levy of penalty u/s 122 - Initially demand of GST towards wrongful availing ITC paid without interest - Later interest u/s 50 was also paid - there is no proceeding of scrutiny or appeal pending and there cannot be any revision of the input tax credit since the allegation of excess claim has been admitted and differential amount paid by the assessee. The penalty levied was proper and a civil liability - HC Visit to Get Source Genuineness of availment of ITC in respect of Inward Supply - The impression that taxes were paid by the purchaser of supplier in lieu of works done and invoices raised by the supplier but whether the entire payments were made in lieu of the invoices in respect of which petitioner is making a claim for rightful availment of ITC by filing GSTR-I and GSTR-3B returns for the said tax period, is something which needs verification at the end of the GST authorities. - Matter restored back - HC Visit to Get Source Exemption from CGST & UPGST - training services to commercial pilots - the Aircraft Act and the Aircraft rules did not approve the Appellant as an institute for conduct of examination that yields to or results into a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating Examination conducted by the DGCA. - Benefit of exemption not available - AAAR Visit to Get Source Income Tax Reopening of assessment u/s 147 - genuineness of transactions of purchase of gold bars - transactions with person who is engaged in providing accommodative entries - There is nothing to say why Petitioner’s explanation cannot be accepted. We are also surprised that to issue such an order the PCIT even gave sanction which also reflects total non-application of mind by the PCIT. - matter restored back with directions - HC Visit to Get Source Reopening of assessment - Source of cash deposit - determination of total amount of consideration out of the sale of agriculture land - It is a case of cash deposit. Therefore, the burden was on the assessee to prove that the consideration for sale was much more amount and not what was recited in the sale deed. - Appeal of the assessee dismissed - HC Visit to Get Source Penalty u/s. 271(1)(c) - A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the defaults for which he was being proceeded against, therefore, the penalty under Sec. 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. - AT Visit to Get Source Rectification u/s 154 - Addition u/s. 69 - Power of AO u/s 116 - Nothing is discernible therefrom, which jeopardizes the power of the A.O. in rectifying mistakes apparent from the record after seeking any instruction/guidance from a superior authority. As the contention of the Ld. AR is devoid and bereft of any force of law; therefore, the same is dismissed. - AT Visit to Get Source Income taxable in India - Fixed place PE in India - project office in India - none of the conditions of fixed place PE stand satisfied - the attribution of profit qua the receipts from offshore supplies to the alleged fixed place PE in the form of BTIL is unsustainable as, in our view, BTIL cannot be construed as PE of the assessee in India. - AT Visit to Get Source Disallowance of Interest Expenses related to Interest free Advance/loan given to its subsidiary company - The loan advanced to subsidiary company is financed from Interest Free Funds accumulated by the company, as noted above. Such loan was advanced out of commercial expediency to expand the business of the subsidiary company. - Additions deleted - AT Visit to Get Source Validity of Revision u/s 263 - Even on cursor perusal of the reply filed by the assessee would show that the assessee has offered the incomes in the line with the order passed by the Regulatory Authority. - In regard to the issue of subsidy also, the assessee has categorically mentioned that it has been following AS-12 and that net of the subsidy has been offered to tax. - Revision order set aside - AT Visit to Get Source Customs Exemption to the Petitioner from payment of Cost Recovery Charges - The CRB order No. 5/2021(Exemption) dated 25th April 2021 would be effective from 1st April 2020 and not from 19th April 2021 and, therefore, the Respondents are directed to modify the exemption order granting exemption from payment of Costs Recovery Charges from 1st April 2020 making the Petitioner eligible for exemption from said date that is 1st April, 2020 - HC Visit to Get Source Confiscation - redemption fine - penalty - illegal export by resorting to gross mis-declaration about the ‘Fe’ content - It is seen that the Test Report itself was generated with a delay of 105 to 138 days, and even after the Test was completed in 2010, the Appellant was never provided the copies of the Test Report till they were annexed to the Show Cause Notice issued in 2018. In such a case, there was scope for the Appellant to approach any other authority to get the consignment retested or to question the Test Report given by the CRCL. - Confiscation, redemption fine and penalty set aside - AT Visit to Get Source Valuation of imported goods - import of industrial robot for the purpose of international exhibition of machine tools - if any value has to be rejected, the Proper Officer has to produce necessary documents or evidence to reject the value. - Demand set aside - AT Visit to Get Source Corporate Law Recovery of dues against customs duty - Preferential right of secured creditors over hypothecated movable property - The provision of Section 142A of the Customs Act, insofar as it protects the rights of overriding preferential creditors governed and covered by Section 529A of the Companies Act, is clarificatory and declaratory in nature, and does not lay down a new dictum or confer any new right as far as the present case is concerned. - SC Visit to Get Source Service Tax Erection and installation service - The activity performed by the appellant amounts to manufacture or not - fabrication of building material and erection of factory shed - The activity is liable to service tax - AT Visit to Get Source Central Excise Process amounting to manufacture - activity of refilling Oxygen and Argon gases from bulk packages into retail cylinders and selling them to industrial consumers - the department has failed to establish that the activities undertaken by the appellant amount to 'manufacture'. The appellant succeeds on merits of the case - AT Visit to Get Source VAT Refund of Pre-deposit alongwith interest - Adjustment of pre-deposit with pending demand - A pre-deposit would become refundable the moment an Appellate Authority comes to hold in favour of the assessee and demands come to be annulled. This principally since pre-deposit is not tax or duty and the refund of which alone is regulated by Section 30(1) of the Act - Refund of pre-deposit allowed - HC Visit to Get Source Case Laws: GST 2023 (8) TMI 981 Maintainability of petition - delay in approaching the appellate authority - petitioner also submitted that the demand for tax has been met - HELD THAT:- The Special Leave Petition is dismissed. 2023 (8) TMI 980 Refund of ITC denied - intermediary services - Export of services or not - services rendered by the petitioner to I Squared Asia Advisors Pte. Ltd., a company having its principal place of the business in Singapore - place of supply of service - whether in the context of services rendered by the petitioner to I Squared under the Agreement, the petitioner is an Intermediary and its services are covered under Sub-section (8)(b) of Section 13 and / or under Sub-section (4) of Section 13 and / or under Sub-section (3)(b) of Section 13 of the IGST Act? HELD THAT:- It is not easy to discern the import of the aforesaid reasoning of the Adjudicating Authority. However, it does appear that the Adjudicating Authority had proceeded on the basis that since the service recipient had invested amounts on the basis of advisory services rendered by the petitioner, the services provided by the petitioner were to customers of I Squared and therefore the petitioner was an Intermediary . Plainly, the said reasoning is fundamentally flawed. Merely because I Squared may have, on the basis of advisory services given by the petitioner, made the investments in entities in India, cannot be construed to mean that the petitioner had rendered the advisory services as an Intermediary . The Appellate Authority had accepted that the services provided by the petitioner included identifying potential opportunities for investments in India, analyzing investment returns and related risks, preparing reports etc. However, the Adjudicating Authority concluded that the petitioner was performing these activities in India in his liaison capacity and the person acting in liaison capacity, has to act as a go-between his principal and his principal s customers which are opportunities for investments in the instant case'' - Concededly, the said view is unsustainable. It is, thus implicit in the concept of an Intermediary that there are three parties, namely, the supplier of principal service; the recipient of the principal service and an intermediary facilitating or arranging the said supply. Where a party renders advisory or consultancy services on its own account and does not merely arrange it from another supplier or facilitate such supply, there are only two entities, namely, service provider and the service recipient. In such a case, rendering of consultancy services cannot be considered as Intermediary Services or services as an Intermediary . The reasons recorded in the impugned order dated 21.09.2021 rejecting the petitioner s claim for refund for the Financial Year 2019-20 are cryptic. The Adjudicating Authority had noted the scope of services as specified under Clause 3 of the Agreement. The order also indicates that the Adjudicating Authority had made further enquiries by visiting the website, www.cubehighways.com. The Adjudicating Authority observed that the group of companies, which included the petitioner, was engaged in construction of highways, toll operations etc. in India and held that the petitioner renders services in relation to those projects in India. The Adjudicating Authority, thus, concluded that Sub-section (3)(b), Sub-section (4) and Sub-section (7)(b) of Section 13 of the IGST Act were attracted - Concededly, the petitioner has not rendered any services in more than one state or union territory as envisaged in Sub-section (7) of Section 13 of the IGST Act. Sub-section (3)(b) of Section 13 of the IGST Act is equally inapplicable. First of all, it relates to services which are supplied to an individual and which require physical presence of the recipient (or a person acting on his behalf) with the supplier of the services. There is no allegation that the petitioner has rendered any service to an individual. Plainly, the Adjudicating Authority has misunderstood the nature of services covered under Sub-section (3)(b) of Section 13 of the IGST Act. These are essentially in the nature of personal services which require the physical presence of the service recipient. It also cannot be accepted that the services rendered by the petitioner can be covered under Sub-section (4) of Section 13 of the IGST Act. As is apparent from the plain language of Sub-section (4) of Section 13 of the IGST Act, the supply of services contemplated under the said Clause are those that are supplied directly in relation to an immovable property. Such services include services supplied by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite - The petitioner had also provided invoices which indicated that it was charging market services and advisory fee . It cannot be accepted that the present petitions are required to be remanded to the Adjudicating Authority for consideration afresh. There is no material which would even remotely suggest that the services rendered by the petitioner are not as claimed, that is, advisory services relating to investments in India. The impugned orders are set aside. The Adjudicating Authority is directed to process the petitioner s claim for refund as expeditiously as possible and preferably with in a period of eight weeks from today - petition allowed. 2023 (8) TMI 979 Cancellation of GST registration of petitioner with retrospective effect from 01.07.2017 - Assessee filed the application for cancellation of registration but failed to submit the reply to the Show Cause notice issued - petitioner was not available at the principal place of business - HELD THAT:- It is important to note that the show cause notice dated 16.02.2021 calling upon the petitioner to show cause why his GST Registration not be cancelled, did not indicate that the concerned officer had proposed to cancel the same with retrospective effect. The show cause notice also does not indicate that any inquiries were made, which revealed that the petitioner had never existed at his declared place of business. The order dated 02.11.2021 cancelling the petitioner s registration also contains no reason whatsoever. It merely records that no reply was submitted to the show cause notice. It is an unreasoned order and completely disregards that the petitioner had filed an application dated 20.11.2020 for cancellation of his GST Registration and disclosed that he had stopped carrying on business. Thus, the question of the petitioner being available at the principal place of business did not arise. It follows that this could not have been the ground for cancellation of the petitioner s GST Registration with retrospective effect. It is considered apposite to allow the present petition and direct that the cancellation of the petitioner s GST Registration shall be effective from 20.11.2020 - petition allowed. 2023 (8) TMI 978 Cancellation of GST registration of petitioner - Proof of existence of premises for which registration obtained - Non compliance of any specified provisions in the GST Act or the Rules made thereunder - HELD THAT:- The impugned order dated 13.10.2022 neither refers to the reply filed by the petitioner nor considers the explanation provided by the petitioner. There is no dispute that the premises where the petitioner claims to have been carrying on his business prior to shifting to new address in July, 2021, was demolished by the Northern Railway Authorities. Although, it is alleged in the counter affidavit that it was demolished many years ago, there is no material on record to establish the same. It is the petitioner s case that the premises had been demolished some time in the year 2021 compelling it to shift to a new place. Neither the impugned show cause notice nor the show-cause notice dated 23.09.2022 can be sustained. Consequently, the orders passed pursuant thereto are liable to be set aside - the impugned show cause notice set aside - petition allowed. 2023 (8) TMI 977 Withdrawal of negative block of the electronic credit ledger of the Petitioner as visible from the extract of credit ledger - Section 25 read with Section 67(2) and Article 19(1)(g) of the Constitution of India - HELD THAT:- In the present case, the Delhi State Authority administratively concerned with the petitioner, has clarified that it has not carried out any investigation but had issued orders regarding blocking of the account at the instance of DGGI, Chennai - DGGI, Chennai, has also stated that it has not carried out any investigation in respect of the petitioner company. The disclosed principal place of business of the petitioner is the same as that of some other connected entities, which have been investigated by DGGI, Chennai. Clearly, no advantage can be drawn by the petitioner on that account - petitioner has a separate tax registration. If any of the authorities has found it necessary to investigate the petitioner based on certain information, the said investigation cannot be stopped or interdicted on account of investigation conducted with respect of any other entity. There are no reason to interdict DGGI, Jaipur from conducting the investigation in respect of the petitioner company - petition disposed off. 2023 (8) TMI 976 Attachment of petitioner's bank account - One year has passed from the date of passing of the said attachment order - HELD THAT:- Since the order dated 05.08.2022 which was the last provisional order passed by the Commissionerate at Belapur is no longer operative, the present petition has been rendered academic. It is deemed apposite to dispose of the present petition by directing the concerned bank (respondent no. 3) to not interdict the operation of the petitioner s bank account on account of any of the orders of provisional attachment that are included in the tabular statement given - petition disposed off. 2023 (8) TMI 975 Seeking grant of bail - reason to believe or any satisfaction to justify the arrest has been provided or not - HELD THAT:- It is a settled law that while granting bail, the court has to keep in mind the nature of accusation, the nature of the evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, the circumstances which are peculiar to the accused, his role and involvement in the offence, his involvement in other cases and reasonable apprehension of the witnesses being tampered with. Taking into account the totality of facts and keeping in mind, the ratio of the Apex Court's judgment in the case ofSTATE OF RAJASTHAN, JAIPUR VERSUS BALCHAND @ BALIAY [ 1977 (9) TMI 126 - SUPREME COURT] , GUDIKANTI NARASIMHULU AND ORS. VERSUS PUBLIC PROSECUTOR, HIGH COURT OF ANDHRA PRADESH [ 1977 (12) TMI 143 - SUPREME COURT] , RAM GOVIND UPADHYAY VERSUS SUDARSHAN SINGH AND ORS. [ 2002 (3) TMI 945 - SUPREME COURT] , PRASANTA KUMAR SARKAR VERSUS ASHIS CHATTERJEE AND ORS. [ 2010 (10) TMI 1199 - SUPREME COURT] and MAHIPAL VERSUS RAJESH KUMAR @ POLIA ANR. [ 2019 (12) TMI 1461 - SUPREME COURT] , the larger interest of the public/State and other circumstances, but without expressing any opinion on the merits, it is opined that it is a fit case for grant of bail. Hence, the present bail application is allowed. 2023 (8) TMI 974 Levy of penalty u/s 122 - Initially demand of GST towards wrongful availing ITC paid without interest - Later interest u/s 50 was also paid - excess claim of input tax credit, which stood paid subsequent to a notice issued under the BGST Act - applicability of the decision in the case of PRICE WATERHOUSE COOPERS (P.) LTD. VERSUS COMMISSIONER OF INCOME-TAX, KOLKATA - I [ 2012 (9) TMI 775 - SUPREME COURT] - HELD THAT:- In the said decision, the Hon ble Supreme Court at the outset observed that the imposition of penalty in that case was not justified on the facts of the case. Therein, a provision for payment of gratuity was claimed as deduction, in the statement filed along with the return; which also contained a further statement that the same is not allowable. The Assessing Officer saddled the assessee with penalty at 300% of the tax sought to be evaded by furnishing inaccurate particulars. The Hon ble Supreme Court directed the assessee to file an affidavit and based on the explanation offered found the mistake committed to be silly mistake which also stood acknowledged by the Tribunal as well as by the High Court. On the particular facts, the Hon ble Supreme Court set aside the penalty imposed on the assessee under the Income Tax Act. In the present case, it is seen that the assessee has defaulted tax payment, based on an excessive claim of input tax credit, later deposited the input tax credit without interest due under Section 50; which attracted the penalty under Section 122 - it is already found that there can be no coercion found insofar as the deposit is concerned. The assessee, hence, has admitted the discrepancy with respect to excess claim of input tax credit and paid the amounts due on which interest was also due under Section 50 of the BGST Act. The non-payment of tax due and the failure to pay interest attracted the penalty imposed. The reliance on the Circular bearing F. No. CBIC-20001/2/2022- GST, in the facts of the present case is also not sustainable. The Circular was issued only to get over the difficulties in the nascent stage of the goods and services tax regime. There was a specific method provided by which input tax credit claims could have been sustained even if some discrepancies in the various returns filed were noticed. A procedure was stipulated under paragraph 4 by which the discrepancies could be rectified and the claim permitted by the Assessing Officer. The said procedure does not apply to the petitioner-assessee since he has admitted the allegation of excess claim and remitted the amounts due by way of tax. The petitioner - assessee has also not approached the Assessing Officer with the necessary evidence to substantiate the input tax credit; as provided in the Circular. In the present case, there is no proceeding of scrutiny or appeal pending and there cannot be any revision of the input tax credit since the allegation of excess claim has been admitted and differential amount paid by the assessee. The penalty levied was proper and a civil liability, attracted on the failure to pay the tax due, on a wrong claim of input tax credit. There are absolutely no reason to entertain the writ petition, the same is dismissed. 2023 (8) TMI 973 Short payment of compensation Cess - Cut Tobacco or Manufactured Tobacco - Demand confirmed without subjecting the product to testing - violation of principles of natural justice - HELD THAT:- Although the Tribunal has not been constituted till date, nevertheless, this issue can be decided by the Appellate Commissioner by calling for a report of the expert regarding the nature of the product. This Court cannot decide questions of fact which are vital for final determination of the issue involved under Article 226 of the Constitution of India. Therefore, this Writ Petition is liable to be dismissed. Since, the petitioner has filed this Writ Petition within the limitation prescribed for filing an appeal under Section 107 of the CGST Act, 2017, Court is inclined to dispose of this Writ Petition by giving opportunity to the petitioner to file a statutory appeal before the Appellate Authority under Section 107 of the CGST Act, 2017 within a period of 30 days from the date of receipt of a copy of this order. If such appeal is filed by the petitioner within the time stipulated herein, the Appellate Authority shall consider the appeal and dispose of the same on merits on its turn and in accordance with law as expeditiously as possible, preferably within a period of six months from the date of receipt of the appeal - Petition disposed off. 2023 (8) TMI 972 Attachment of Bank Accounts of petitioner - Time limitation - HELD THAT:- The provisions of section 83 indicates that orders of attachment are self-limiting. They are to remain in force for one year. The writ petition is closed as nothing further survives for adjudication. 2023 (8) TMI 971 Time Limitation - appeal rejected on the ground that it is beyond the period of limitation - HELD THAT:- It is seen from the records that the order passed by the first respondent cannot be questioned as the appeal has been filed belatedly - At the same time, it is evident that the Assessment order was hosted in the website on 05.07.2022 but the petitioner was unaware of the same. The petitioner was issued with reminder notice on 09.11.2022 and on 19.01.2023 asking the petitioner to file a reply to the Show Cause Notice bearing Ref.No.210911200007261 dated 18.02.2022 - the Court is inclined to condone the delay in filing the appeal by the directing the first respondent to dispose of the appeal of the petitioner on merits and in accordance with law within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off. 2023 (8) TMI 970 Cancellation of GST registration of petitioner - wrongful availment of ITC in respect of Inward Supply - Demand u/s 73 - HELD THAT:- The gist of the stand of the respective parties creates an impression that taxes were paid by the purchaser petitioner to respondent no.6 in lieu of works done and invoices raised by respondent no.6 but whether the entire payments were made in lieu of the invoices in respect of which petitioner is making a claim for rightful availment of ITC by filing GSTR-I and GSTR-3B returns for the said tax period, is something which needs verification at the end of the respondent authorities. In order to facilitate the exercise since the petitioner and the respondent no.6 are separately assessed under Bokaro Circle and Garhwa Circle respectively, it would be proper that exercise of verification and reconciliation of the statements of the petitioner and the respondent no.6 be carried out by Additional Commissioner (Headquarters), Ranchi. Let the Additional Commissioner (Headquarters), Ranchi be impleaded as respondent no. 7 in the writ petition during course of the day by learned counsel for the petitioner in red ink. Learned counsel for the respondent State accepts notice on behalf of the newly added respondent. To carry out the exercise therefore, let the petitioner, respondent no.6 and the State Tax Officer, Bokaro and Garhwa or their authorized officers appear before the Additional Commissioner (Headquarters), Ranchi on 5th April 2023. Petitioner and respondents shall appear with all the relevant records, invoices, returns and books of accounts for the relevant tax period so that the verification exercise and reconciliation of their statements / returns can be carried out effectively. The Additional Commissioner (Headquarters), Ranchi shall submit a report on affidavit on the next date. Let the matter appear on 12th April 2023. 2023 (8) TMI 969 Exemption from CGST UPGST - educational services - supply of education and training services to commercial pilots in accordance with the training curriculum approved by the DGCA for obtaining the extension of ATRs on their existing license - services provided by the Appellant is part of a curriculum for obtaining qualification recognized by any law for the time being in force or not - to be covered under SI.No. 66(a) of the Notification No. 12/2017 dated 30.06.2017 or not - HELD THAT:- The Appellant imparts training to the trainees and thus provides ATR extension services. On completion of the said training the Appellant issues course completion certificate, which is a pre-requisite document for preferring application before the DGCA, who conducts the examination through an approved examiner and on passing of the said exam the DGCA records the said ATR extension in the CPL of the pilots concerned. Thus the training conducted by the appellant does not result into any qualification and it is not recognized by the law. The Appellant placed reliance on the service tax case of Indian Institute of Aircraft Engineering Vs. Union of India [ 2013 (5) TMI 592 - DELHI HIGH COURT ] and in the said case the petitioner was an Aircraft Maintenance Engineering Training School, approved by the DGCA, for providing Aircraft Maintenance Engineering (AME) training and also to conduct examination as per the course approved by the DGCA. These facts are different from the facts of the instant case in as much that the Appellant is not empowered to conduct the examination but impart training and issues completion certificate, which serves the purpose of a document required for filing the application with the DGCA so as to attend the examination. Thus the said case law is not applicable to the facts and circumstances of the case in hand. The Appellant also referred the Circular No. 117/36/2019-GST dated 11.10.2019 wherein a clarification on applicability of GST exemption to the DG Shipping approved maritime courses conducted by Maritime Training Institutes of India to the effect that the Maritime Training Institutes and their training courses are approved by the Director General of Shipping and are recognized under the provisions of the Merchant Shipping Act, 1958 read with the Merchant Shipping (standards of training, certification and watch-keeping for seafarers) Rules, 2014 and thus the said institutes are educational institutions. It is observed that the said institutes are empowered to impart training and certification of the said training in terms of Merchant Shipping Act, 1958 read with relevant rules, whereas in the instant case the Aircraft Act and the Aircraft rules did not approve the Appellant as an institute for conduct of examination that yields to or results into a qualification, but only to issue course completion certificate which is useful only as one of the enclosure to file the application for the Type Rating Examination conducted by the DGCA. Further, there is no circular applicable to the said Type Rating training, being given by the Appellant and thus the Circular dated 11.10.2019 relevant to Shipping courses is not relevant in the instant case. Thus, the Authority for Advance Ruling have rightly held that the impugned services of the Appellant are not covered under entry number 66(a) of the Notification 12/2017-Central Tax (Rate) dated 28-06-2017, as amended and hence do not qualify for exemption from GST. Income Tax 2023 (8) TMI 968 Validity of reopening of assessment - denial of reasonable opportunity of being heard due to non-supply of documentary evidence/material in support of the notice u/s. 148A(b) - HELD THAT:- As this issue is already been adjudicated and decided by this Court in a recent decision in M/s Amrit Homes Private Ltd. [ 2023 (8) TMI 683 - MADHYA PRADESH HIGH COURT] as held object behind insertion of Section 148A by the Legislature w.e.f. 01.04.2021 inter alia is to prevent rampant and casual issuance of notice u/s. 148 by the Revenue;to save unnecessary harassment to the assessee of being subjected to re-opening a case under Section 148 and to save the Revenue of the time and energy which may be vested pursuing frivolous and fruitless proceedings u/s 148. No live and proximate link between information received by Assessing Officer and formation of belief that income chargeable to tax has escaped assessment - As seen from the notice issued u/s. 148A(b) (Annexure P/2) dated 03.03.2023 that the same is accompanied by Annexure containing details of facts, figures and reasons, which are said to be the foundation of the AO forming opinion that income chargeable to tax escaped assessment qua the assessment year 2019-20. On the aforesaid detail of information furnished to the petitioner along with the said notice u/s. 148A(b), it appears that the same is sufficient and adequate to afford reasonable opportunity to petitioner to prepare and submit an effective response. Thus, it does not appear that the notice u/s. 148A(b) is wanting in material in particular. 2023 (8) TMI 967 Deduction u/s 35 - claim denied as this was not part of the Return of Income [ ROI ] - stand of the assessee is, thus, that the document which is appended to the affidavit-in-reply is the copy of the original ROI ? - whether Annexure-II/Annexure-A, which is appended to the PCIT s affidavit, was the ROI said to have been filed by the respondent/assessee? - HELD THAT:- A careful perusal of Annexure-II which is appended to the appeal, and Annexure-A which is appended on the affidavit of the PCIT dated 21.10.2018, shows that the documents are titled Computation of Income and Tax Thereon (ITR-6) .Clearly, this is not the ROI filed by the petitioner. As noticed both by the Tribunal and CIT(A), this a computation of income concerning the respondent/assessee which was carried out by the Central Processing Centre (CPC), Bangaluru. The weight of the evidence is also in favour of the respondent/assessee, which is also evident from, what is noted by the AO in paragraph 1 and 2 of the assessment order dated 25.02.2013. Thus, having regard to the record, and the affidavit of the PCIT dated 31.10.2018, we are of the opinion, as noted above, that the weight of the evidence which was placed before the CIT(A) and the Tribunal is clearly in favour of the respondent/assessee. We find no reason to interfere with the impugned order. TDS u/s 195 - commission paid to a non-resident foreign agent - whether accrued or deemed to have accrued in India? - HELD THAT:- As no material was brought on record by the appellant/revenue, which could have established that the commission paid to a non-resident foreign agent had accrued or deemed to have accrued in India.Therefore, since no income chargeable to tax arose in the hands of the non-resident, as per the provisions of the Act, there was no obligation to deduct tax at source u/s 195 of the Act. Given this position, in our view, the Tribunal rightly sustained the deletion of disallowance u/s 40(a)(i). Disallowance u/s 37 - Assessee has not discharged its initial onus - HELD THAT:- Tribunal sustained the deletion of disallowance as it was made by the AO solely based on the information available in the Annual Information Return [AIR]. According to the Tribunal, since there was a mismatch between the books of accounts of the assessee and the information available in AIR, the AO should have conducted an enquiry before deleting the expenditure claimed by the assessee.We find nothing wrong in the approach adopted by the Tribunal. Higher rate of depreciation on electrical fittings by holding the same as the plant - HELD THAT:- Tribunal, in our opinion for good reason, has concluded that electric fittings were amenable to higher rate of depreciation, as they were part of plant and machinery, and not furniture and fixtures. This view was backed by a decision of the coordinate bench of this court BSES Rajdhani Powers Ltd [ 2010 (8) TMI 58 - DELHI HIGH COURT] . 2023 (8) TMI 966 Reopening of assessment u/s 147 - genuineness of transactions of purchase of gold bars - transactions with person who is engaged in providing accommodative entries - HELD THAT:- Petitioner stated that Petitioner had purchased gold bar from S.K. Jewels and made payment for the same via account payee cheque. Copies of the purchase ledger/stock register for gold bars, ledger copy of S K Jewels, ledger confirmation, purchase bills and extract of bank statements with highlighted payments were also provided. It is also mentioned in the reply that Petitioner has accounted the bill into its books of accounts for which GST tax invoice has been submitted and the bill has been uploaded on GST portal which can be verified and Petitioner has taken credit for the same. Despite this the impugned order dated 19th April 2023 u/s 148A(d) of the Act came to be passed which defies sensibility. We are unable to fathom how just because Petitioner has accepted that it had transactions with S. K. Jewels, there could be no dispute that the amount paid to S.K. Jewels would be for taking accommodation entries. There is nothing to say why Petitioner s explanation cannot be accepted. We are also surprised that to issue such an order the PCIT even gave sanction which also reflects total non-application of mind by the PCIT. It gives an impression that PCIT has simply signed even without bothering to read and understand what the matter is about. We hereby quash and set aside the order passed under Section 148A(d) - matter restored back with directions. 2023 (8) TMI 965 Recovery of demand as outstanding against a company - HELD THAT:- Petitioner, says that against the assessment order qua which recovery is sought to be made vis- -vis the petitioner, an appeal has been lodged before the appellate authority as far back as in 2013, which has not been adjudicated up until now. A response has been filed with respect to the aforementioned show-cause notice. Petitioner, however, says that, inadvertently, the reply, which is dated 11.05.2023, has not been placed on record. We have, however, been shown a hard copy of the reply dated 11.05.2023. Given this position, at this stage, we are not inclined to interdict the proceedings. The concerned officer is, however, directed to adjudicate the show-cause notice - In case the decision rendered by the concerned officer is adverse to the interests of the petitioner, the same shall not be given effect to, for a period of four weeks from the date of the said order being served on the petitioner. 2023 (8) TMI 964 Reopening of assessment - source of cash deposit - determination of total amount of consideration out of the sale of agriculture land - HELD THAT:- Tribunal has taken into consideration the recital contained in the registered sale deed which clearly shows that the sale consideration was Rs. 6.75 lacs. The aspect relating to valuation of the property for the purposes of stamp duty was also taken into consideration but the Assessing Authority, Appellate Authority and ITAT all recorded concurrent finding placing reliance mainly on the sale deed and recital contained therein. Moreover, it is not the case of the appellant-assessee that the entire sale consideration was transferred in the account of the assessee through cheque issued by the purchasers. It is a case of cash deposit. Therefore, the burden was on the assessee to prove that the consideration for sale was Rs. 20,80,000/- and not what was recited in the sale deed. We find that all the authorities have appreciated the oral and documentary evidence and recorded their findings of fact on the issue as to what actually was the sale consideration in the matter of transaction of sale of agricultural land. Even though the submission of learned counsel for the appellant would be that there was no proper appreciation of evidence, it is essentially a case of appreciation of evidence and not of substantial question of law. As the appeal does not involve any substantial question of law, we are not inclined to re-appreciate and interfere with the concurrent finding of facts. 2023 (8) TMI 963 Rejection of books of accounts - NP determination - HELD THAT:- Considering nature of business involved in the assessee s case namely business of repairing and servicing of diesel generators, we deem it fit to adopt the net profit ratio of 9.52% as determined in the previous Assessment Year 2013-14 to be adopted for the present Assessment Year 2014-15. Thus AO is directed to adopt 9.52% as the net profit for the Assessment Year 2014-15. Thus the Grounds raised by the Assessee is hereby allowed. 2023 (8) TMI 962 Penalty u/s. 271(1)(c) - failure to point out specific default in both the Show Cause notices issued u/s 274 r.w.s 271 - HELD THAT:- As failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty u/s 271(1)(c) was sought to be imposed on him by clearly and explicitly pointing out the specific defaults in the SCN(s) for which he was called upon to explain that as to why penalty u/s. 271(1)(c) of the Act may not be imposed upon him, had, thus, left the assessee guessing of the default for which he was being proceeded against, and had divested him of an opportunity to put forth an explanation before the A.O that no such penalty was called for in his case A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the defaults for which he was being proceeded against, therefore, the penalty under Sec. 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. Decided in favour of assessee. 2023 (8) TMI 961 Penalty u/s. 271B - AO observed that the assessee had, without reasonable cause, failed to get his accounts audited and furnished a tax audit report within the stipulated period as required u/s 44AB - HELD THAT:- Because the gross turnover/sales of the assessee on which he had disclosed presumptive profit u/s. 44AD of the Act, i.e., @8.02% was substantially less than the threshold limit of two crore rupees as envisaged in the 3rd proviso to Section 44AB therefore, we concur with the claim of the Ld. AR that no obligation was cast upon him to get his accounts audited as per the mandate of the aforesaid statutory provision. We, thus, in terms of our observations above, are unable to persuade ourselves to subscribe to the penalty imposed by the A.O. u/s. 271B - Decided in favour of assessee. 2023 (8) TMI 960 Penalty u/s 271B - assessee has not got its books audited u/s 44AB as its business turnover exceeded the limit prescribed - HELD THAT:- In the case of Dr. K. Satish Shetty [ 2009 (2) TMI 207 - KARNATAKA HIGH COURT] held that since section 44AB as such does not show or contemplate that all businesses are to be consolidated together for working out aggregate of turnover and, on facts, it was clear that assessee had acted in a bona fide belief and had no dishonest intention in not obtaining audit report for all three businesses carried on by him, Tribunal was justified in deleting penalty imposed on assessee. In the case of Nanak Singh Guliani [ 2001 (9) TMI 23 - MADHYA PRADESH HIGH COURT] the assessee, who was engaged in business of contractor ship, sub-contracted work of substantial amount. The gross receipts attributable to him personally became less than Rs. 40 lakhs. The High Court held that the assessee being under bona fide belief that amount obtained by subcontractor was not to be accounted towards his income, was a reasonable cause for not getting accounts audited under section 44AB. In the case of Staywell Hotels (P.) Ltd. [ 2005 (3) TMI 47 - MADHYA PRADESH HIGH COURT] held that where delay in filing audit report in Form No. 3CD, was not due to any deliberate intention on part of assessee, nor could its conduct be regarded as contumacious or with a view to evade payment of tax, no case for penalty u/s 271B was made out. Thus we are of the considered view that this is a fit case when penalty under Section 271B of the Act is liable to set-aside. Decided in favour of assessee. 2023 (8) TMI 959 Rectification u/s 154 - Addition u/s. 69 - AO observed that though the tax on the assessed income was to be computed as per the special tax rate of 30% as contemplated u/s. 115BBE the same inadvertently remained omitted to be done and was calculated as per the standard rates - HELD THAT:- If the assessee's quantum appeal is decided in his favor at any stage, then the order passed by the A.O u/s. 154 of the Act as upheld by the CIT(Appeals) would fall to the ground and be rendered redundant. On the other hand, if the quantum appeal is decided against the assessee, then the order passed by the CIT(Appeals) confirming the A.O s order u/s. 154 of the Act would hold the ground. To sum up, we are unable to comprehend as to on what basis the disposing of the assessee s appeal against the order passed u/s. 154 of the Act by the CIT(Appeals) would prejudice the interest of the assessee. Thus, in terms of our observation above, finding no infirmity in disposing of the assessee s appeal against the order passed u/s. 154 by the CIT(Appeals), we uphold his order. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of our observations above. Apropos, the contention of the Ld. AR that the A.O. had grossly erred in issuing notice u/s. 154 of the Act after seeking approval of the Addl. CIT, Range-Korba, we find no substance in the same. On a specific query by the Bench about restriction placed upon an A.O. in seeking instruction/guidelines from the Addl. CIT either at the initiation stage or while passing an order u/s 154 of the Act, the Ld. AR failed to come forth with any reply. On a perusal of Section 154 of the Act, it transpires that the same therein contemplates that the income tax authority referred to in Section 116 may, to rectify any mistake apparent from the record, inter alia, amend any order passed by it under the provision of the Act. Nothing is discernible therefrom, which jeopardizes the power of the A.O. in rectifying mistakes apparent from the record after seeking any instruction/guidance from a superior authority. As the contention of the Ld. AR is devoid and bereft of any force of law; therefore, the same is dismissed. Thus, the Ground of appeal No.2 raised by the assessee is dismissed in terms of our observations above. 2023 (8) TMI 958 Maintainability of an appeal against the order passed u/ sec. 139(9) before the CIT(A) u/ sec. 246A - HELD THAT:- We find that sec. 246A is a self-exhaustive provision providing remedy of an appeal against the orders passed by lower authority(ies) in various clauses from (a) to (r) followed by Explanation(s) and statutory proviso(s); as the case may be. Learned counsel could not pin-point any appeal provision therein against sec. 139(9) order. That being the case, we are of the considered opinion that only stricter interpretation in such an instance has to be adopted in light of landmark decision in Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. Ors. [ 2018 (7) TMI 1826 - SUPREME COURT] The assessee s arguments based on sec. 246(1)(a)(i) are found to be devoid of any merit as the above quoted statutory expression (supra) comes into play only when the concerned taxpayer denies his liability to be assessed under this Act which is not the case before us once we are dealing with an issue of validity of a return only. We observe in these peculiar facts that sec. 246A envisages an appellate remedy before the CIT(A) not based on various consequences faced by an assessee or by way of necessary implications but as per various orders passed by the field authorities under the specified statutory provisions only. So far as the assessee s reliance on learned coordinate bench foregoing decision (supra) is concerned, we hold the same to be per inquirium only since not adopting stricter interpretation in above terms. Case law CIT vs. B.R. Constructions [ 1992 (6) TMI 13 - ANDHRA PRADESH HIGH COURT] holds that a judicial decision ceases to be a binding precedent in such a factual backdrop. We accordingly uphold the CIT(A)'s action rejecting the assessee s lower appeal against sec. 139(9) order as not maintainable u/ sec. 246A - Assessee appeal dismissed. 2023 (8) TMI 957 Income taxable in India - Fixed place PE in India - project office in India - Addition u/Article 5 of India - Germany Double Taxation Avoidance Agreement (DTAA) - assessee is a non-resident corporate entity incorporated under the laws of Germany and a tax resident of Germany - whether the profits earned on offshore supply of 8 number of train sets to DMRC can be attributed to the alleged PE of the assessee India? - HELD THAT:- Essentially the contract is a divisible Contract. On a careful perusal of observations of learned DRP, it is observed that learned DRP has misconstrued the terms of the agreement between the DMRC and the Consortium partners as well as the terms of the Consortium Agreement. DRP has erroneously assumed that the activities under Cost Centre D are also performed by the assessee. Whereas, factually and in terms of the contract, such activities falling under Cost Centre D were not only performed by BTIL but the profits from such activities have been offered to tax by BTIL. Therefore, in our view, the receipts from offshore supply of rolling stock cannot be taxable in India as the transfer of title over the goods has taken place outside India. Whether BTIL constitutes a fixed place PE of the assessee in India? - As analyzing the facts and materials on record in the touchstone of the ratio laid down in the judicial precedents cited before us, we are of the view that none of the conditions of fixed place PE as enshrined under Article 5(1) of India Germany tax treaty stand satisfied to construe BTIL as the PE of the assessee in India. Thus, in view of our aforesaid conclusion, we hold that the attribution of profit qua the receipts from offshore supplies to the alleged fixed place PE in the form of BTIL is unsustainable as, in our view, BTIL cannot be construed as PE of the assessee in India. 2023 (8) TMI 956 Disallowance of Interest Expenses related to Interest free Advance/loan given to its subsidiary company - HELD THAT:- We note that only parent company can help the wholly owned subsidiary company. The profit and loss of the wholly owned subsidiary company is the profit and loss of the parent company. We note that loan at a concessional rate of interest were given to sister concern for commercial expediency. The loan advanced to subsidiary company is financed from Interest Free Funds accumulated by the company, as noted above. Such loan was advanced out of commercial expediency to expand the business of the subsidiary company. For that reliance can be place on the decision of SA builder Ltd. [ 2006 (12) TMI 82 - SUPREME COURT ] Who can help the wholly owned subsidiary in needy hours? This is the parent company, who can help the wholly owned subsidiary in needy hours to save the business. Based on these facts, we note that addition made by the assessing officer needs to be deleted. We note that the entire loan to subsidiary, is brought forward from preceding years and is financed from Interest Free Funds after considering Application of Funds for Fixed Assets and Working Capital. Thus, no part of Loan to subsidiary is attributable to Interest Free loans which were taken for specific purposes. The Assessee Company had advanced loan to its wholly owned subsidiary Company, M/s Synergy Films Pvt Ltd, as a 100% stake Holder Company is required to provide quasi capital and margin for working capital as mandated by the Banker of the subsidiary Company who has sanctioned the bank facilities with the stipulation that Company to maintain the level of Unsecured loans from Holding Company at the projected level and same is sub- ordinated to the bank dues till the currency of the facilities. Appeal of assessee allowed. 2023 (8) TMI 955 Rejection of books of accounts - Assessee failed to give valid explanation for fall in GP ratio from 24.40% last year to 2.21% this year and the explanation of the Assessee that nature of business has changed is found misleading because same business of meat sales is continued in local and foreign markets - HELD THAT:- Though we are in agreement with the contention of the ld. AR that the AO has not pointed out any ambiguity in the reply of seven parties out of 29 parties, however, it is an undisputed fact that maximum parties to whom notices have been issued u/s. 133(6) of the Act were not served as the notices sent were returned back with the remarks left or no such person etc. AO rightly drew the presumption against the Assessee s claim. Consequently, on the aforesaid reasons, the Assessing Officer rejected the books of accounts of the Assessee and the ld. Commissioner has also rightly affirmed the rejection of books of account, invoking the provisions of section 145(3) - Hence, we are inclined not to interfere in the decision of the Ld. Commissioner in confirming the rejection of books of account by invoking the provisions of section 145(3) of the Act. GP estimation - Though AO considered the aforesaid two cases, but found the same not comparable to the case of the Assessee, however, while determining the GP rate considered the GP of the said two comparable cases and the fact that the sales are verified and not found questionable. Therefore, considering the peculiar facts and circumstances in totality, we deem it appropriate to apply the GP ratio by considering the average of GP ratio declared by the Assessee @ 2% in the F.Y. 2012-13 and 1.03% and 3.99% respectively declared by M/s. Al-Nasir Agro and Mr. Salahuddin Prop. of MDA Exports, whose GP ratio have also been taken into consideration by the AO in determining the GP Ratio and consequently result would come to 2.34% (2%+1.03%+3.99%=7.02/3). Hence the AO is directed to recompute the GP rate accordingly. 2023 (8) TMI 954 Validity of Revision u/s 263 - TDS on payment made to Power Grid Corporation of India Ltd (PGCIL) - excess claim of regulatory asset - non recognition of income arising out of subsidy - HELD THAT:- The absence of any enquiry made by the Pr. CIT in respect of the replies filed by the assessee clearly shows the non-application of mind by the Pr. CIT. Even if one is to consider the facts of the addition, the Co-ordinate Bench of this Tribunal in assessee s own case has already held that the assessee is not liable to deduct TDS on the wheeling charges paid to PGCIL. This has been directed in assessee' case for the assessment year 2009-10. The revenue has been conscious in not appealing against the said order. However in order dated 28.3.2011, the Pr. CIT has ignored the reply on this issue in the order u/s. 263. In regard to the issue of regulatory asset, it was very much before the Pr. CIT and in the replies filed by the assessee that OERC has directed to recover the specified amounts in six years and that amounts have been recovered and offered to tax and in short it is excess income that has been offered to tax and same could not have been treated as erroneous and prejudicial to the interest of the revenue under any circumstances. The order of OERC is also dated 18.3.2011 and this order was available before the Pr. CIT before passing order u/s. 263. In regard to deferred tax liability also, the assessee has collected the amounts on the basis of the order of OERC. This was also before the Pr. CIT. Even on cursor perusal of the reply filed by the assessee would show that the assessee has offered the incomes in the line with the order passed by the Regulatory Authority. In regard to the issue of subsidy also, the assessee has categorically mentioned that it has been following AS-12 and that net of the subsidy has been offered to tax. Thus, clearly this is a case of no enquiry by the Pr. CIT. A perusal of the order of Orissa State Police Housing Welfare Corporation Ltd.,[ 2022 (4) TMI 1395 - ORISSA HIGH COURT] shows thatas categorically held that the purpose of such an enquiry would be to arrive at a subjective view. Even if such enquiry is not mandatory, there has to be some basis on which the CIT can form such a view. The basis for forming a view that the assessment order is passed is erroneous and prejudicial to the interest of the revenue is admittedly not coming out of the order of the Pr. CIT. The order of the Pr. CIT is admittedly non speaking one in respect of replies filed by the assessee before him. Even if we are to consider the decision of Malbar Industrial Co Ltd [ 2000 (2) TMI 10 - SUPREME COURT] the said order used the words the Commissioner has to be satisfied with twin conditions . This satisfaction must be discernible from the order of the Pr. CIT. The order of the Pr. CIT should a speaking one for the reasons to be discernible. Here, it is noticed that it is not so. The order passed u/s. 263 is unsustainable and consequently, same stands quashed. 2023 (8) TMI 931 Reopening of assessment u/s 147 - notice issued against deceased assessee - HELD THAT:- The issue that proceedings against dead persons are void ab intio is an issue which is settled by several decisions of this Court as in the case of Krishnaawtar Kabra of Jagannath Rampal Kabra [ 2022 (5) TMI 744 - GUJARAT HIGH COURT] and in the case of Chandreshbhai Jayantibhai Patel v. Income Tax Officer [ 2019 (1) TMI 353 - GUJARAT HIGH COURT] - Under the circumstances, the provisions of Section 292B and 292BB of the Act shall not apply in the facts of the case on hand as issuing notice to deceased assessee is not a curable defect - Decided against revenue. Customs 2023 (8) TMI 953 Waiver of Interest component - necessary duty was paid - HELD THAT:- There are no reason to interfere with the impugned judgment and order passed by the High Court in the peculiar facts and circumstances of the present case. The civil appeal is dismissed accordingly. 2023 (8) TMI 952 Exemption to the Petitioner from payment of Cost Recovery Charges w.e.f. 19th April 2021, although, the application for exemption was made in April 2020 - HELD THAT:- The Respondents have not alleged that the Petitioner is not eligible for grant of exemption as per Circular No. 13/2009. Para 5.5 of Circular No. 13/2009 deals with eligibility for grant of exemption, namely the CFS is in existence for a consecutive period of two financial years and parameters such as total number of import or export containers handled, customs declaration fled for import or export, etc. are satisfied. The Respondents have not averred that any of the conditions specified in para 5.5 of Circular No. 13/2009 is not complied by the Petitioner. The delay in payment of Cost Recovery Charges also does not form as a precondition for non-eligibility of exemption from 1st April 2020 and in any case delay in payment would not amount to non-payment of dues. It is also worth noting that the Respondents have not shown us any document which states that if there is a delay in clearing dues the exemption would not be granted for the period of delay and, therefore, the contention of the Respondent on this account does not survive. Even otherwise, admittedly all the dues were cleared before Circular No. 2/2021 was issued and even application was made much before the said circular and, therefore, even on this account Respondents contention fails on this account. It is also to be noted that when application was made in January 2020, there was no outstanding dues since the Petitioner had paid all the dues upto December 2019, which is not disputed by the Respondents. The undertaking given on 24th December 2019 by the Petitioner that they will pay all dues was on the premises that they will get exemption from January 2020 when first time application was made and when in fact as stated above there was no outstanding or demand notice. The issue arose before the Gujarat High Court in case of Adani Ports and Special Economic Zone Limited Anr. Vs. Union of India Ors. [ 2017 (12) TMI 676 - GUJARAT HIGH COURT] as to whether the Revenue was justified in granting exemption from 15th December 2015 and not from the date of the application made by the Petitioners. The Gujarat High Court after analysing the scheme came to the conclusion that the exemption ought to have been granted from the date of the application and not from the date when the Chief Commissioner decided to grant exemption. The fact of the present petition being similar to that before the Gujarat High Court, the analysis done would require to come to a conclusion that the Respondents were not justified in granting exemption w.e.f. 19th April 2021 when the application was made in April 2020. The CRB order No. 5/2021(Exemption) dated 25th April 2021 would be effective from 1st April 2020 and not from 19th April 2021 and, therefore, the Respondents are directed to modify the exemption order granting exemption from payment of Costs Recovery Charges from 1st April 2020 making the Petitioner eligible for exemption from said date that is 1st April, 2020 - Petition allowed. 2023 (8) TMI 951 Levy of penalties - clandestine clearance of high value electronic goods - smuggling gold jewellery - intent to abet the offence or not - HELD THAT:- The statement recorded from Sri Naveen Kumar under Section 108 of the Customs Act, 1962 has revealed that Sri Kannan used to inform the airway bill details of the arriving consignment over phone or in person. Sri NaveenKumar was responsible for the customs clearance. Sri NaveenKumar used to download the import manifest of M/s.UPS authorized courier from the server and then would remove the particular airwaybills from the manifest. He would then take the altered manifest to the courier terminal for submission before the custodian. Apart from the goods covered by the two airway bills seized by D.R.I as per the statement, Sri Naveen Kumar has cleared earlier goods covered by 85 airway bills for Kannan. It is also admitted by Sri Naveen Kumar that he followed the same modus operandi for clearing the above airway bills. Thus, it can be seen that Sri Naveen Kumar and Sri Kannan were fully involved and acted together in the illegal activity of importing the undeclared goods. The narration of facts itself bring out the mens rea and overt act of Sri Naveen Kumar, and Sri I.C. Kannan. The goods which have crossed the barrier of the country without declaration and without payment of duty are liable for confiscation under Section 111 (d) of the Customs Act, 1962. Thereby the act of the appellants attracts imposition of penalty under section 112 (a) of the Customs Act, 1962. However, it is found that penalty of Rs.10 lakhs imposed under Section 112 (a) of the Act is on the higher side and requires to be reduced. The penalty imposed under Section 112 (a) on each of the appellant is reduced to Rs.5,00,000/-. Further, in the present case, the whereabouts of the consignee were not traceable. On investigations, it was revealed that there is no such person in the given address. These are nothing but paper transactions. The imports were made only for the benefit of appellants and their allies. A person who causes to be made, signed or used any declaration or document is also liable under Section 114AA. Sri I.C. Kannan had caused Sri Naveen Kumar to make the false documents. It is Sri I.C. Kannan who had informed Sri Naveen Kumar the details of airway bills so as to manipulate the import manifest. So both appellants are guilty and liable for penalty liable under Section 114AA. On appreciation of facts, it is found that penalty of Rs.25 lakhs under Section 114AA is on the higher side and requires to be reduced. The penalty imposed under this section is reduced to Rs.10,00,000/- (Rupees Ten lakhs only) on each of the appellants. Appeal allowed in part. 2023 (8) TMI 950 Mis-declaration of value to gain undue excess benefit of DEPB Licence - HELD THAT:- Admittedly, the Department has obtained the details from SGS India towards inspection carried out by them for the consignments. The value shown in the invoices available with SGS is lesser than the total value of the invoices and export documents raised by the Appellant on the overseas importer. Prima facie, it is seen that the values are different between the Invoices available with the SGS and the export invoices raised by the Appellant. But on their own, they do not prove whether the exports were done at a much higher value or were overvalued. The Appellant has provided details of BRC towards the realization of export proceeds. These BRCs which are filed by the Appellant before the Adjudicating Authority and Tribunal show that in respect of each and every export Invoice and Bill of Exports, the Appellant has been able to get the full realization from the overseas importer, in foreign currency and the same has been converted into Indian rupees by the receiving bank in India. The very fact that the overseas importer has accepted the value cited by the Appellant in the invoices and has honored the payment and has made the full payment, would show that he does not treat that the value of the imported consignment as inflated or overvalued. The data towards the purchase rate of such fabric in India has been provided by the Appellant to be at Rs. 85 to 95 per Meter in India. The Department has not made any effort to verify as to what was the purchase price in India for such fabric. The Department contends that the sale value was inflated by about 330%. For this, they should have checked what is the price of such fabric in India. If the figures of Rs.85 to 95 per meter as given by the Appellant towards the purchase is taken, the same would have the value of about USD 2 at that point of time. When the sale price of USD 2 or 2.10 is considered, there are no over valuation. As per the present calculation of the Department, the sale price should be less than 10 Cents if 330% over valuation is to be considered. In this case, apart from relying on the Invoices found with SGS, no other corroborative evidence in whatever form has been brought in by Department to fortify their allegation. The Department has not undertaken any other investigation towards the purchase cost given by the Appellant. The realized price and the purchase price cited by the Appellant more or less match giving no scope to over-value the consignment, much less over-value it by 330%. The Adjudicating Authority has also not considered the details of BRC submitted by the Appellant to the effect that they have fully realized the value of the export invoices from the overseas importer - The case law of Vishal Exports Overseas Ltd. [ 2007 (2) TMI 4 - SUPREME COURT ] is squarely applicable to the facts of the present case, where it was held that the FOB price is supported amply by the BRCs with which no fault is found. Once that is clear, there will be no question to hold that the FOB is inflated. Appeal allowed. 2023 (8) TMI 949 Levy of Customs Duty - liability of Appellant/Assessee to pay customs duty on the FOB value on export of iron ore fines considering the same as cum-duty value or otherwise - HELD THAT:- The issue is no longer res integra as has been decided in catena of rulings against the Appellant/Assessee and in favour of Revenue - reliance can be placed in SESA GOA LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2020 (3) TMI 772 - CESTAT HYDERABAD] where it was held that The present case is of exports. In case of exports, the cost of freight and transit insurance are not part of the transaction value at the Port of export i.e. the Indian Port where the goods are exported. It includes only the Free on Board (FOB) value. This is the value for the purpose of Section 14 and export duty must be calculated on this FOB value. Thus, following the precedent decision of this Tribunal, appeal dismissed. 2023 (8) TMI 948 Valuation of imported goods - old and used garments, completely fumigated - restricted item or not - enhancement of value - classification of imported goods - classifiable under Tariff Item No.63090000 of the First Schedule of the Act or not - HELD THAT:- The department has not categorically mentioned what should be the Classification sought by them or what is the value proposed. In the impugned order, the Adjudicating Authority has classified some goods under Tariff Item 63090000 and the bales of quit found in the consignments have been classified under Tariff Item 94049019 of the First Schedule to the Customs Tariff Act, 1975 - It is observed that there is no valid reason given in the grounds of appeal for any revised classification. Accordingly, the classification arrived at by the Adjudicating Authority is proper and doesn't require any modification. Valuation of the goods imported - HELD THAT:- The goods were used and worn garments. The declared value was enhanced to US$ 0.60 per kg under Rule 9 of the Customs Valuation Rules, 2007 and the department has not produced any additional evidence for further enhancement. Accordingly, the redetermined value doesn't require any modification or further enhancement. Redemption fine and penalty imposed - HELD THAT:- This valuation issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI ], wherein this Tribunal has observed the various issues and submissions made and the failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. It is observed that while deciding the quantum of the redemption fine and personal penalty, the Adjudicating Authority has taken into account the detention charges, the demurrage charges and the damage already incurred on the impugned goods. The Adjudicating Authority has also considered the Final Order dated 19.09.2014 of the CESTAT, EZB, Kolkata in the case of M/s S.S. Impex, wherein redemption fine of 19.5% and penalty @ 7.8% were imposed, under similar circumstances - the redemption fine and penalty imposed on the respondent to the tune of 20% 8% respectively on the assessed value is sufficient. Therefore, the redemption fine and penalty imposed by the Ld. Commissioner are sufficient to meet the end of justice. Penalties - HELD THAT:- The Adjudicating Authority has imposed Rs.3,00,000/- Penalty under Section 112(a) and 112(b) of the Customs Act, 1962 - It is found that there is no ground available in this case to impose penalty under Section 114A of the Customs Act, 1962. There are no infirmity in the impugned order and the same is upheld - the appeal filed by the Revenue is dismissed. 2023 (8) TMI 947 Confiscation - redemption fine - penalty - illegal export by resorting to gross mis-declaration about the Fe content - Department issued the Show Cause Notice on the ground that in all the seven cases, the Fe content was more than 64% whereas the Appellant was claiming that in all these cases, the Fe content was between 63 to 63.97, hence less than Fe content of 64% - HELD THAT:- The Fe content on Dry Weight basis, arrived at by the chemical examiner, vis-a-vis the Dry Weight Fe arrived at by the Private laboratories, engaged by the Appellant, have to be considered for this purpose. Therefore, the contention of the Appellant that only the Wet Weight Fe is required to be considered for this purpose cannot be accepted. It is an admitted fact that when the iron ore is received at the port, it is in wet condition with moisture and other impurities. Therefore, the Fe content of Wet Iron Ore is to be taken to arrive at the Fe content of the Dry metric ton as per the formula. On its own, the Wet Metric Ton Fe by itself cannot be considered in this case as the issue pertains to Fe content on DMT basis. From the test reports relied upon by the Department, which have been issued by the chemical examiner, it is seen that they have simply removed the moisture content. They have only taken into consideration the moisture content and arrived at the Fe content of the Dry Metric Tons. From the Test Reports of CRCL, it is seen that they have not considered the content of any other impurities which may be in the iron ore while arriving at the at the Fe content of the dry metric tons. For the samples drawn by the appellant and given to the Private Laboratories, they have taken up the Test and then given the test results within a period of 6 to 9 days. In the case of Test Reports given by the Chemical Examiner, it is seen that the Tests have conducted with a delay of 3 to 4 months - Department, even after receiving all the documentary evidence, including the Test Report of Private Labs, BRC, etc. from the Appellant, in June 2013, failed to complete the finalization of the assessment of the Shipping Bills. It is seen that the Appellant has been regularly taking up with the Department and higher officials, including the Ministry in 2013, 2014, 2015, and 2016 to complete the assessment process but nothing was done by the Department till they issued the Show Cause Notice in August 2018. The Appellant has taken the Fe content of DMT given by the Private Laboratories and has raised the bill based on such DMT values on the overseas importer. Since initially the Appellant has taken the stand that Fe Content on DMT basis is 63 in respect of all the consignments, this resulted in higher payment by the overseas importer. On such receipt of excess amount/ additional amount from the overseas importer, the Appellant has paid the differential export duty. There is no dispute on this issue. This fortifies the Appellant's argument that the overseas importer has accepted the DMT Fe content as given by the private laboratories and made the payment. It is seen that the Test Report itself was generated with a delay of 105 to 138 days, and even after the Test was completed in 2010, the Appellant was never provided the copies of the Test Report till they were annexed to the Show Cause Notice issued in 2018. In such a case, there was scope for the Appellant to approach any other authority to get the consignment retested or to question the Test Report given by the CRCL. Appeal allowed. 2023 (8) TMI 946 Valuation of imported goods - import of industrial robot for the purpose of international exhibition of machine tools - rejection of negotiated value on the ground that the appellant had not furnished any justifiable reason for reduction of the value from the value declared in the ATA Carnet for arriving at the negotiated transaction value as claimed by them - HELD THAT:- The goods imported are under ATA Carnet are allowed duty-free in terms of Notification No. 157/1990-Cus. dated 28.3.1990. As seen from the ATA Carnet documents, it is clearly shown that the goods are meant for exhibition at IMTEX 2009 India and the value shown therein is EUR 55900 was meant for the purpose of bringing the goods into India for the exhibition and these goods as per the ATA Carnet Regulations are to be exported within six months. During the relevant time, the sale of such goods was permitted on payment of Customs duty with prior approval from Government of India. The question here arises is whether the price adopted by the Customs which is commercial value as per the ATA Carnet form meant for exhibition can be taken as the transaction value. As per Section 14 of the Customs Act, 1962, the price actually paid or payable for the goods when sold for delivery at the time and place of importation is to be considered. Hence, if any value has to be rejected, the Proper Officer has to produce necessary documents or evidence to reject the value. In the instant case, the Invoice dated 23.06.2009 issued by M/s. Saielo to M/s. Ace Designers Ltd is on record to show that the item has been purchased for EUR 30000. There is also a purchase order No. 4500000176 dated 12.06.2009 on record, which also shows the value as EUR 30000. In the case of CCE vs. Galaxy Entertainment (I) Pvt Ltd: [ 2007 (5) TMI 53 - SUPREME COURT] , the Hon ble Supreme Court held that when there was a negotiated price and this negotiated price had to be accepted as the value of the imported item, if the customs do not find any cogent reasons for rejecting the same. The impugned order is set aside and the appeal is allowed. 2023 (8) TMI 930 Review of decision in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT ] - Benefit of exemption - Import of Camera - Extended period of limitation - Jurisdiction of DRI to issue Show Cause Notice (SCN) - Proper Officer - Validity of proceeding initiated for Recovery of duty not paid - HELD THAT:- As the principal issue is subjudice before the Supreme Court as noted in IDEA CELLULLAR LTD., INGRAM MICRO INDIA PVT. LTD. GE T AND D INDIA LTD., S. KUSHALCHAND AND COMPANY, GLOBAL EXIM, JINESH T. VIKAM, CHANDRESH G. PATEL, VIJAY G. PATEL VERSUS THE UNION OF INDIA, ADDITIONAL DIRECTOR GENERAL, ADDITIONAL DIRECTOR, DIRECTORATE OF REVENUE INTELLIGENCE MUMBAI ZONAL UNIT AND ORS. [ 2023 (6) TMI 1302 - BOMBAY HIGH COURT] , it is opined that this petition also needs to be admitted. Hence, Rule. Respondent waives service. As and by way of ad-interim relief, the impugned order is stayed, however, liberty to the respondents to make an application for vacating the said order in the event the respondents are of the opinion that the same ought not to be continued and/or after the decision of the Supreme Court in the pending Review/Writ Petition in the case of Canon India Pvt. Ltd. Application disposed off. Corporate Laws 2023 (8) TMI 945 Right of customs authorities (first right) to sell the imported goods under the Customs Act, 1962 and adjust the sale proceeds towards payment of customs duty - Preferential right of secured creditors over hypothecated movable property - winding up order passed - resolution of conflict between the Companies Act and the Customs Act - HELD THAT:- The goods were not released on non-payment of customs duty etc. and, thereupon, show cause notices dated 17th February 2000 and 10th April 2000 were issued and two adjudication orders dated 15th September 2000 and 10th October 2000 were passed. In a similar factual matrix, a three judges bench of this Court in Commissioner of Customs, Calcutta and Another v. Biecco Lawrie Ltd. [ 2008 (2) TMI 646 - SUPREME COURT] had examined the provisions of Section 15 of the Customs Act, as they then existed, and have opined that clause (b) to Section 15(1) of the Customs Act will cease to apply when the requirements under Section 68 of the Customs Act stand fulfilled and the imported goods are cleared for home consumption. In the context of the present case, we must hold that the debt had become due in terms of the two adjudication orders dated 15th September 2000 and 10th October 2000 and payable immediately. Thus, the customs duty became due and payable prior to twelve months next to the relevant date ; the relevant date' being the date of winding up of the Company on 1st December 2003. The amount due and payable in terms of the two adjudication orders dated 15th September 2000 and 10th October 2000 would, therefore, not fall in the category of preferential payments under clause (a) to Section 530(1) of the Companies Act. The provisions of the land revenue enactment applicable in the present case have not been relied upon by the respondents, in which event, a legal issue relating to conflict of laws would have arisen and required an answer. The provisions in the Customs Act do not, in any manner, negate or override the statutory preference in terms of Section 529A of the Companies Act, which treats the secured creditors and the workmen s dues As defined and payable in terms of Section 529(3)(b) of the Companies Act as overriding preferential creditors; and the government dues limited to debts due and payable in the twelve months next before the relevant date, which are to be treated as preferential payments under Section 530 of the Companies Act, but are ranked below overriding preferential payments and have to be paid after the payment has been made in terms of Section 529 and 529A of the Companies Act. Therefore, the prior secured creditors are entitled to enforce their charge, notwithstanding the government dues payable under the Customs Act. The provision of Section 142A of the Customs Act, insofar as it protects the rights of overriding preferential creditors governed and covered by Section 529A of the Companies Act, is clarificatory and declaratory in nature, and does not lay down a new dictum or confer any new right as far as the present case is concerned. However, the enactment of section 142A of the Customs Act does confer or create a first charge on the dues payable under the Customs Act, notwithstanding provisions under any Central Act, but not in cases covered under Section 529A of the Companies Act, RDDBFI Act, SARFAESI Act and the IBC. Section 142A of the Customs Act, post its enactment, would dilute the impact of Section 530 of the Companies Act, which had restricted preferential treatment to government taxes due and payable limited to twelve months prior to the relevant date , without preferential right for taxes that had become due and payable in the earlier period. On interpretation of Section 178 of the Income Tax Act, it was held that the provision is made applicable for any tax which is then or is likely to become payable , and specifically relates to cases where the company is in liquidation. Consequently, the amount specified and covered by Section 178 of the Income Tax Act is protected in view of the nonobstante clause in sub-section (6) to Section 178 and this amount has to be set aside. In terms of Section 178 of the Income Tax Act, the amount set aside will not form a part of the pool of dues to be distributed among ordinary or unsecured creditors or, for that matter, as indicated over the overriding or preferential creditors under Sections 529A and 530 of the Companies Act. The sale proceeds deposited in this Court and converted into fixed deposit receipts, along with the interest accrued thereon, will be paid to the Official Liquidator to be distributed in accordance with the provisions of Sections 529A and 530 of the Companies Act - Appeal allowed. Insolvency & Bankruptcy 2023 (8) TMI 944 Transfer of proceeding and jurisdiction for such transfer - Proceedings after commencement of IBC - company court can Suo Motu transfer a proceeding relating to winding up to NCLT or can such transfer only be made pursuant to an application by one of the parties? - Section 434(1)(c) last proviso of the Companies Act, 2013 read with Rules 5 and 6 of companies (Transfer of Pending Proceedings) Rules, 2016. HELD THAT:- As would appear from the substituted Section 434(1)(c), the original sub-section has undergone several changes between 7th December, 2016 and 17th August, 2018. The first proviso to Section 434 (1)(c) after the substitution in 2016 clarified transfer of pending proceeding by the phrase only such proceeding relating to winding up the companies as may be prescribed by the Central Government. The stage at which such pending proceeding relating to the winding up of companies needs to be transferred has been prescribed and laid down by the Companies (Transfer of Pending Proceeding) Rules, 2016. The said rule was notified on 29th June, 2017. The fifth proviso to Section 434(1)(c) introduced by Act 26 of 2018 with effect from 6th June, 2018 was primarily to tide over the difficulties and the conflict that are likely to arise by reason of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. By reason of IBC there could be a possibility of initiation of proceeding under Sections 7 and 8 of IBC in relation to a company against whom a winding up petition is pending. The reading of the provisions of IBC with the Companies Act, 2013 undoubtedly would show that the provision of IBC would have primacy in case of conflict over the Companies Act, 2013 as the ultimate object of IBC is to resuscitate the corporate debtors who are in the red. This approach is also in some cases necessary to transfer the winding up proceeding to NCLT to prevent parallel proceeding. In Action Ispat and Power Pvt. Ltd. [ 2020 (12) TMI 535 - SUPREME COURT ] a winding up application was filed under Section 433(e) and (f), 434 and 439 of the Companies Act against the Company seeking winding up in which it was also alleged that for the goods supply Action Ispat had failed to pay a sum of Rs.4.55 crores. The Company Judge in Delhi High Court passed an order on 27th August, 2018 admitting the winding up petition and appointed the official liquidator attached to the Supreme Court as the liquidator of the Company with further direction to take over all the assets, books of accounts and records of the Company forthwith. An application was then filed before the Company Judge by SBI being a secured creditor of Action Ispat seeking transfer of the winding up petition to the NCLT in view of the fact that the SBI had filed an application under Section 7 of the IBC Code 2016 which was pending before NCLT. The issue before the Supreme Court was whether the discretion exercised by the Company Court in transferring the winding up proceeding to NCLT was liable to be set aside. In Action Ispat and Power Pvt. Ltd. the Hon ble Supreme Court observed that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The IBC Code was held to be a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors - The Hon ble Supreme Court noticed that after the introduction of the transfer rules 2016 only those proceedings which are at the stage of pre service of notice of the winding up petition stand compulsorily transferred to NCLT. The Hon ble Supreme Court noticed that by reason of Rules 5 and 6 of the transfer rules which would result in parallel proceedings to continue before the Company Court and pre admission proceeding would be compulsorily transferred to NCLT. It was thus clarified that so long as no actual sale of the immovable or movable properties have taken place, nothing irreversible is done which would warrant a Company Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings. It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the Company Court must proceed with the winding up, instead of transferring the proceedings to the NCLT to now be decided in accordance with the provisions of the Code. The aforesaid judgment thus, clearly spell out that unless the court is convinced that the company is to suffer an inevitable corporate death the first choice would to be to make an all out attempt to revive the company and this procedure has been elaborately laid down in IBC. The Companies Act, 2013 is not suited for such situation. This is clearly reflected from the amended and substituted Section 434 of the Companies Act, 2013 read with Sections 7 and 8 of the IBC and the objects and reasons of both the statutes. There is no conflict between the two provisions. The Court has discretion to transfer the proceeding depending upon the stage of the proceeding. If it appears to the Company Court that the die is cast and the corporate death of the company is inevitable there is no requirement to transfer such proceeding. The said discretion is not always dependent upon any formal application being made but it is always desirable that the views of the petitioning creditor, secured creditors and the official liquidator are ascertained. Re: M/s. Total Plastic Solutions Pvt. Ltd. (In Liquidation) - HELD THAT:- Applying the aforesaid principles we find that the direction of the Company Court to transfer CA No. 8 of 2022, CP No. 419 of 2013 (M/s. Total Plastic Solutions Pvt. Ltd.(In Liquidation) was not proper as the report of the official liquidator in paragraph 9 has clearly stated that the corporate death of the company is inevitable. In view thereof the order dated 12th December, 2022 is set aside. The winding up of the company is required to be completed by the Company Court - Application allowed. Re: M/s. Abhijeet Projects Limited (In Liquidation) - HELD THAT:- The views of the secured creditors have not been accurately stated. One of the secured creditors, IDBI has clearly expressed its intention to continue with the proceeding in this Court as would be evident from the email dated August 1, 2023. In the said email the secured creditor has stated that the company petition shall not be sent to NCLT. The secured creditors unlike Action Ispat and Power Pvt. Ltd. did not file any application under Section 7 and 8 of IBC. In the event such applications were filed the company court could have been justified in transferring the proceeding to the Tribunal following Action Ispat and Power Pvt. Ltd. on a satisfaction being recorded that the corporate death of the company is not inevitable and NCLT would be the preferred choice - On such facts discretion could not have been exercised in favour of transferring the proceeding to NCLT. The creditors were not heard. Under such circumstances the order impugned is set aside. The Company Court shall proceed with the winding up of the company. APO 12 of 2023 with I.A. No. ACO 1 of 203 are allowed. Re: M/s. Corporate Ispat Alloys Limited (In Liquidation) - HELD THAT:- In the report the Official Liquidator in paragraph 8 has clearly stated that five financial institutions are of the view that the transfer of proceeding to NCLT as directed by the Hon ble Judge taking company matters may be implemented. In other words they consented to the proceeding being transferred to NCLT. Although the Act contemplates filing of an application for transfer of proceedings pending immediately before the commencement of the Insolvency and Bankruptcy Amendment Ordinance, 2018 in the present case having regard to the views expressed by the secured creditors insistent of any application for transfer would be a mere formality - Under such circumstances the order passed by the learned Single Judge in M/s. Corporate Ispat Alloys Limited is upheld. The department is directed to transfer the record of CP/419/2013 to the National Company Law Tribunal, Calcutta, forthwith. Service Tax 2023 (8) TMI 943 Condonation of delay in filing appeal - it was held by High Court that no illegality is committed by the appellate authority in not condoning the huge delay of approximately ten years - HELD THAT:- There are no merit in the Special Leave Petition. SLP dismissed. 2023 (8) TMI 942 Constitutional validity of Section 66A of the Finance Act, 1994 - HELD THAT:- The validity of Section 66A of the said Act was challenged earlier before Division Bench of the High Court of Delhi and by its judgment rendered in Orient Crafts Ltd. v. Union of India and Another [ 2006 (9) TMI 2 - DELHI HIGH COURT ], the High Court dismissed the writ petition. The said judgment in Orient Crafts Ltd. was relied on by the High Court while disposing of the writ petition filed by the appellant herein. There are no reason to take a different view from that of the decision taken by the High Court in the case of Orient Crafts Ltd., the appeal is, accordingly, dismissed. 2023 (8) TMI 941 Demand of differential service tax with interest and penalties - amount collected as Ocean Freight charges by the appellant from their customers is more than the ocean freight charges paid to the shipping companies - Classification of services - activity of transporting of goods as Freight Forwarders or providing Business Support Service - HELD THAT:- The appellant has subsequently provided a copy of the complete OIO. Annexures to the SCN were not provided. Copies of Agreements between the appellant and their customers and between them and the shipping lines / airlines have not been provided. The appellants have however clarified that they have not submitted the same as no such agreements existed. They have also filed a set of few invoices during the hearing after Revenue had pointed out the lack of the same to substantiate their assertions. However, while examining these invoices during the hearing, they were found to contain both types of invoices - None of the invoices showed bulk booking of space with the shipping lines / airlines by the appellant which was then farmed out to needy customers. Considering that these were sanitised invoices chosen by the appellant and not randomly chosen invoices by Revenue, the invoices presented during the hearing did not reveal a clear or pre-dominant pattern of advance booking of cargo space. The appellant whose activity has failed to establish his credential as a Freight Forwarder is found to satisfy the classification of Business Support Service. The appellant s averment during the hearing was that what they receive towards freight charges from the service recipients is a reimbursement of freight charges with a slight markup and subjecting it to tax would amount to double taxation - HELD THAT:- The judgement of the Hon ble High Court of Delhi in the case of Intercontinental Consultants [ 2012 (12) TMI 150 - DELHI HIGH COURT ], has now been affirmed by the Apex Court in Union of India v. M/s. Intercontinental Consultants [ 2018 (3) TMI 357 - SUPREME COURT ], which settles the matter on reimbursements - it is found that the Hon ble High Court of Delhi, had declared Rule 5(1) of the Service Tax Valuation Rules as ultra vires of the erstwhile Section 66 and Section 67 of the Finance Act, 1994. The Apex Court while affirming the judgement of the Delhi High Court as per the statute then in force held that service tax is collected with reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, which is to be ascertained for the purpose of calculating the service tax payable thereupon. Any other amount which is calculated not for providing such taxable service cannot be a part of that valuation as that amount is not calculated for providing such taxable service . Section 67 of the Finance Act 1994 was amended with effect from 14/05/2015 making reimbursable expenditure or cost as a part of valuation of taxable services for charging service tax. The period covered by the impugned order covers the period from 2010 to 2017 i.e. before and after the amendment to the section. It is found that the issue is of importance and merits being examined afresh by the Original Authority based on facts, documentary evidence and the law as laid out by the Apex Court. To claim exclusion of any part of the consideration from the assessable value, prior to the amendment of section 67 ibid, the terms of agreement or understanding between parties should prima facie indicate that there was an obligation upon the service receiver to incur such expenditure which was incurred by the service provider and was later reimbursed by the service receiver to service provider. The appellant needs to be given an opportunity to provide data to demonstrate that reimbursement are in line with law and of actuals, supported by sufficient evidence. Extended period of limitation - HELD THAT:- The treatment of the issue of time bar has been very cryptic in the OIO. There is nothing to show that there was suppression of fact or contravention of any of the provisions of the chapter or of the rules made thereunder with intent to evade payment of service tax - the impugned order passed by the learned Commissioner (Appeals) is also not very helpful in this matter and merely states that the appellant did not declare said taxable value and assessed the service tax correctly, hence extended period under proviso to section 73(1) of the act was rightly invoked. The lack of discussion and finding that there was suppression of fact or contravention of any of the provisions of the chapter or of the rules made thereunder with intent to evade payment of service tax, is fatal and hence we find that the evocation of the extended period has not been correctly done. In the circumstances the demand is to be restricted to the normal period only as the ingredients to evoke proviso to section 73(1) was not demonstrated to be present as per both the orders mentioned. Penalties imposed, which are consequential to evoking of the extended period, are also set aside. The issue regarding the value of the taxable service for the normal period is remanded and shall be redetermined along with duty and interest by the Original Authority - Appeal disposed off. 2023 (8) TMI 940 Erection and installation service - Works Contract Service - Process amounting to manufacture or not - value of materials to be excluded from the value for computation of duty or not - since the service tax is not shown separately in the invoice the consideration received should be treated as inclusive of duty - penalty. The activity performed by the appellant amounts to manufacture or not - fabrication of building material and erection of factory shed - HELD THAT:- The activity of skill and labour provided by the appellant is a service covered by the definition of erection, commissioning of structures as per section I05(39a)(i). The appellant has also not referred to any judgment where activities of a similar nature were held to be the manufacture of a factory shed. In fact, the appellant s plea was that their activities are of repair which is far removed from their claim of manufacture of goods. The value of materials should be excluded from the value for computation of duty, or not - HELD THAT:- A larger bench of the Tribunal in Bhayana Builders (P) Limited vs CST, Delhi [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] , had taken up the reference of a similar matter relating to free supplies of goods received during construction activities for consideration, holding that The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994. The judgment was affirmed by the Supreme Court. Although a reference to the judgment and its applicability have not been canvassed here, it is felt that deciding the matter raised without examining the judgement would not help in developing good law, especially when judicial discipline requires us to follow the ratio of the Larger Bench. Thus it is held that the value of goods and materials supplied free of cost by M/s Bannari Amman Sugars Ltd are to be excluded from the value of the taxable service for computation of duty. Since the service tax is not shown separately in the invoice the consideration received should be treated as inclusive of duty - HELD THAT:- A similar matter pertaining to Central Excise duty was examined by the Apex Court in the case of Commissioner of Central Excise, Delhi vs. Maruti Udyog Ltd [ 2002 (2) TMI 101 - SUPREME COURT] and Collector vs. Shri Chakra Tyres Ltd. [ 2002 (2) TMI 1312 - SC ORDER] it was held that the total consideration received by the manufacturer be treated as cum-duty. The said consideration has to be apportioned between the assessable value and the excise duty leviable - Review petition filed against the said order also came to be dismissed MARUTI UDYOG [ 2004 (12) TMI 669 - SC ORDER] . Whether the issue is purely interpretative in nature and is not a fit case for imposition of penalty? - HELD THAT:- The appellant has not cited any judgment or circular during the relevant time which would show that there was a difference of opinion in the taxability of the service and help reach a conclusion that the issues involved were purely interpretative in nature, hence we are not able to accept their plea - the appellant had failed to pay the service tax and also have failed to report provision of service in their periodical returns. Hence the fact that these activities were suppressed from the department with intention to evade payment of tax has substance - the imposition of penalty or issue of Show Cause Notice invoking the extended period of time limit upheld. The matter is remanded back to the lower authority to determine the value of the taxable service afresh allowing cum-tax benefit and by not including the value of goods and materials supplied free of cost by M/s. Bannari Amman Sugars Ltd. Penalty may thereafter be imposed suitably as per law. The impugned order is partially set aside. Central Excise 2023 (8) TMI 939 Violation of principles of natural justice - impugned order passed without taking into consideration the request made by the appellant to the D.C. for extension of LOP/Green Card - HELD THAT:- The issue of Show Cause Notice dated 04.10.2019 to the appellant appears premature and issued before the appellants request to the D.C. had been finalised. However, it is also noticed that the LOP/Green card was valid only up to 6.10.2014 and the department had issued the SCN after five years since its expiry giving sufficient time for the D,C. s office in coming to a decision in the matter - It is found that the Show Cause Notice does not contain any allegations of a blameworthy act by the appellant except his license was not renewed by the D.C. A person who sets out to do business is at times caught in circumstances beyond his control. It is for the department s concerned to ensure that such bonafide assessee are facilitated and not subjected to needless quasi-judicial proceedings which involve a penalty. To have a setback in business is not a punishable offence. Each situation has to be examined on its merit and hardship should not be caused to a compliant assessee just because a provision in law enables the discretionary imposition of penalties. The SCN has been issued invoking the B-17 bond executed by the appellant. Hence, although the action of the Commissioner (Appeals) in setting aside the penalty was right, he should also have asked the adjudicating authority to examine the duty liability in terms of the exit order given by the D.C. This is in line with Board s Circular No. 12/2008 dated 24.7.2008 issued from F. No. DGEP/FTP/13/2008-EOU G J and Circular No. 21/95 dated 10.3.1995 (F. No. 307/29/91-FTT) wherein it was stated that demand of duty can be confirmed only after a definite conclusion regarding the non-fulfilment of export obligation is arrived at by the Development Commissioner. Delays in receiving final permission must be taken up by the jurisdiction Customs / Central Excise authorities with the Development Commissioner / Director STP so that the matter is not delayed. The appellant has showed his willingness to pay the duty as per the normal process of debonding at the time of exit from EOU scheme. Matter remanded back to the learned Adjudicating Authority to decide afresh the issues relating to the demand for duty and interest only, after considering any written request from the appellant and hearing him in the matter, based on the in-principle exit order given by the D.C. and further developments in the matter if any - appeal disposed off. 2023 (8) TMI 938 Relevant date of payment of interest - delayed sanction of refund of amount deposited towards duty and interest - HELD THAT:- Both the parties agreed that the Order-in-Appeal dated 27/06/2019 passed by the Commissioner (Appeals) was not appealed against, when no appeal by revenue, this order has become final even if the said order was erroneous or that view was possible in the matter. It is settled law that the Assistant Commissioner was bound by the order of the higher Appellate Authority and if he had taken any view contrary to the above said order, the said order would have passed in contempt of the order of the Commissioner (Appeals) which is contrary to the principle of judicial discipline as enunciated by the Hon ble Supreme Court in Union of India Vs M/s Kamlakshi Finance Corporation Ltd. [ 1991 (9) TMI 72 - SUPREME COURT] - there are no error in the order of the Original Authority granting refund as directed by the order of the Commissioner (Appeals) which has acquired finality. He has taken all the necessary precautions before granting the refund, by making necessary enquiries with the review branch of Commissionerate and getting the refund pre-audited. It is a settled law that once an order has not been challenged before appropriate authority it cannot be reopened and challenged in collateral proceedings subsequently by the same authority. There are no merits in the impugned order and the same is set aside - appeal allowed. 2023 (8) TMI 937 Valuation - non-inclusion of transportation charges in the value of final products - wrong availment of Cenvat Credit - inputs removed as such in terms of Rule 3(5) of CENVAT Credit Rules, 2004 - suppression of facts or not - extended period of limitation - HELD THAT:- The issue is no longer res integra inasmuch as the same stands settled in favour of the Appellant by this Tribunal in the case of M/S. ADITYA BIRLA CHEMICALS (INDIA) LIMITED (EARLIER KNOWN AS M/S. BIHAR CAUSTIC CHEMICALS LIMITED) VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, RANCHI [ 2021 (1) TMI 709 - CESTAT KOLKATA] where it was held that the contention of the Department to include the freight amount in the assessable value does not meet the test of law and hence not legally sustainable. Thus, the transportation charges are not includable in the assessable value. Accordingly, the demand of central excise duty of Rs.15,22,175/- confirmed in the impugned order on the ground of non-inclusion of transportation charges is not sustainable. Denial of Cenvat credit of Rs.56,84,435/- taken by the Appellant on the CPC received from UHCL, on the ground that it was not an input, we observe that the department has not questioned the duty payment by UHCL on the CPC - HELD THAT:- In the present case, the Appellant has paid much more central excise duty than the CENVAT Credit availed by them on the CPC received from UHCL. Therefore, CENVAT credit availed cannot be denied on the ground that they were not inputs. Even if they were considered as inputs , Rule 3(5) of CENVAT Credit Rules, 2004 provides that when inputs on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs. In the present case, the Appellant has paid much more central excise duty than the CENVAT Credit availed by them on CPC received from UHCL which would be clear from the statement annexed to the compilation. In that event, the Appellant cannot be asked to reverse the CENVAT Credit once again - The credit availed by the Appellant cannot be denied on the ground that it has been entered as finished goods in their RG-1 and hence it is not an input. The demands confirmed in the impugned order are liable to be set aside - Since the demand itself is not sustainable, the question of charging interest or imposing penalty does not arise - Appeal allowed. 2023 (8) TMI 936 Process amounting to manufacture - activity of refilling Oxygen and Argon gases from bulk packages into retail cylinders and selling them to industrial consumers - Time limitation - HELD THAT:- From the definition of 'manufacture' it can be seen that as per 2(f)(ii) the definition includes certain 'deemed manufacture' as envisaged in Sections and Chapter Notes of CETA, 1985. Chapter Note 9 to Chapter 28 (which has been already reproduced) thus gives situations when certain activities in relation to goods falling under Chapter 28 are deemed to be manufacture of goods so as to attract the levy of Central Excise duty. In the appellant's own case, the issue came up for consideration in GOYAL M.G. GASES PVT. LTD. VERSUS COMMISSIONER OF C. EX. S.T., CHANDIGARH [ 2016 (1) TMI 1055 - CESTAT NEW DELHI] , where the Tribunal after considering the application of Chapter Note 9 to Chapter 28 held that the activity does not amount to 'manufacture'. After appreciating the facts and following the decisions, it is opined that the department has failed to establish that the activities undertaken by the appellant amount to 'manufacture'. The appellant succeeds on merits of the case. Time Limitation - HELD THAT:- The SCN has been issued invoking extended period. There were decisions in favour of the appellant and their request to surrender the registration of manufacture was also accepted by the department. Further the issue is purely interpretational in nature. No positive act of suppression has been established against the appellant - there are no grounds for invoking the extended period. The issue on limitation is also answered in favour of appellant. The impugned order is set aside. The appeal is allowed. CST, VAT & Sales Tax 2023 (8) TMI 935 Rejection of refund application - Assessment order set aside - HELD THAT:- By the order impugned before the High Court, the authority rejected the application for refund. The respondent filed a writ petition challenging such rejection before the High Court of Punjab and Haryana. The Division Bench of the High Court examined the matter and having considered the order rejecting the refund came to the conclusion that there are no reasons accompanying the decision taken and following the decision in the case of SADHU OVERSEAS VERSUS STATE OF HARYANA AND ANOTHER [ 2007 (9) TMI 575 - PUNJAB AND HARYANA HIGH COURT] as well as RATTI WOOLLEN MILLS VERSUS STATE OF PUNJAB AND OTHERS [ 2007 (2) TMI 587 - PUNJAB AND HARYANA HIGH COURT] , the High Court allowed the writ petition(s) and directed the refund to be made. Further, the High Court directed that the interest shall be calculated at a statutory rate of 12 per cent for the first month of delay and at the rate of 18 per cent per annum in respect of delay caused for the subsequent months. The interest payable confined to 12 per cent per annum for the entire period - application disposed off. 2023 (8) TMI 934 Maintainability of petition assailing the assessment - availability of alternate remedy of appeal - Validity of assessment orders - Levy and recovery of Local Body Tax (LBT) - bringing the goods, subject matter of assessment within the municipal limits for use, consumption and sale or not - vires of sub-section 152D of the MMC Act - HELD THAT:- The municipal taxation in regard to the levy and recovery of the LBT is part of a well defined statutory scheme, which is a Code by itself. The question would be whether the petitioner has made out any exceptional case so as to be made an exception from deviating the statutory scheme and discipline as may be legitimately required in entertaining the present petition. Considering the case as averred by the petitioner in the petition, it is opined that at this stage of the proceedings, the vires of sub-section 152D of the MMC Act not examined, as challenged by the petitioner - this is because what was questioned by the petitioner are primarily the assessment orders. It would quite justified in taking such view considering the clear averments as made in the memo of petition in paragraph 5(f) when the petitioner takes a position contrary to the well settled principles of law, i.e. when the petitioner contends that the provision of not allowing filing of a statutory appeal without deposit of the disputed tax is arbitrary, harsh and irrational (when the validity of the said provision of pre-deposit has already been upheld]. Also when the petitioner clearly avers in the petition that it is difficult for the petitioner to pay the entire amount of disputed tax to maintain the appeal, and for such reason this petition is filed. The Division Bench of this Court in case KHARGHAR CO-OP. HOUSING SOCIETIES FEDERATION LTD. AND ORS. VERSUS MUNICIPAL COMMISSIONER, PANVEL MUNICIPAL CORPORATION AND ORS. [ 2023 (4) TMI 1241 - BOMBAY HIGH COURT] when in the context of payment of municipal taxes the Division Bench referring to the provisions of Section 406 and considering the several decisions of the Supreme Court in Shivram Poddar Vs. Income Tax Officer, Central Circle II, Calcutta and Anr. [ 1963 (12) TMI 6 - SUPREME COURT ]; Income-Tax Officer Lucknow Vs. M/s S.B. Singar Singh Sons Anr. [ 1976 (8) TMI 5 - SUPREME COURT ]; Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. Ors. [ 1984 (11) TMI 63 - SUPREME COURT ]; M/s. Godrej Sara Lee Ltd. Vs. The Excise and Taxation Officer-cum-Assessing Authority Ors. [ 2023 (2) TMI 64 - SUPREME COURT ] has held that the petition under Article 226 of the Constitution assailing the assessment and demand order ought not to be entertained and the proper remedy would be to challenge the assessment order by taking recourse to the statutory remedy of an appeal - Such decision is squarely applicable in the facts of the present case, as contention of the petitioner is similar to one considered by the Division Bench in Kharghar Co-op. Housing Societies case. Petitioner has not brought the goods, subject matter of assessment within the municipal limits for use, consumption and sale and has purchased goods locally - HELD THAT:- In so far as the contention of the petitioner on merits are concerned namely that the petitioner has not brought the goods, subject matter of assessment within the municipal limits for use, consumption and sale and has purchased goods locally and therefore such goods are not liable for the levy of the LBT, is a factual contention, which can be effectively examined on the basis of the documents and which can be certainly examined in the proceedings of a statutory appeal. The petitioner has not made out any case for interference in these petitions so as to pursuade the Court to make an exception to entertain the petitions, notwithstanding the statutory remedy of an appeal available to the petitioner as provided under the provisions of Section 406 of the MMC Act - merely for the reasons that the vires of a statutory provision namely Section 152D of the MMC Act being assailed by the petitioner, would not mean that de hors a strong foundation and a cause of action for assailing such provision being made out, the Court nonetheless would be under an obligation to examine the vires of the said provision and entertain the petitions. The petitioner is permitted to avail the remedy of an appeal under Section 406 of the MMC Act to assail the impugned assessment orders. Let such appeal be filed within four weeks from today - If such appeals are filed, the same be adjudicated by the appellate authority on its merits without an objection as to limitation as the petitioner was bonafide pursuing the present proceedings. All contentions of the parties on the merits of the proceedings if any instituted before the appellate authority are expressly kept open. Petition disposed off. 2023 (8) TMI 933 Validity of assessment orders - demand under Section 19(2)(v) of the TNVAT Act - Invisible loss - Deficit stock - HELD THAT:- It was incumbent on the part of the assessee as also the revenue to have to applied for a modification of the aforesaid order. It however went unnoticed. The revenue was under the assumption that the amount stood confirmed as far as deficit stock issue was concerned while the petitioner has assumed the issue all the issues were answered as the impugned orders were set aside and case was remitted back. The Department also did not choose to issue further prerevision notice on deficit stock which culminated in the subsequent orders. The issue relating to the stock deficit has not been addressed after the order was set aside by this Court on 18.09.2017 in W.P.Nos.16000 to 16004 of 2017 on account of the confusion that prevailed. Be that as it may, the issue has been alive in these proceedings, all through though the other two issue have been settled in favour of the petitioner and have been dropped. As far as deficit stock is concerned, it has be construed that the issue is still alive. Neither the Department can be deprived of the revenue if the amount was payable by the petitioner nor the petitioner deprived of a chance to defend itself. The case is remitted back to the respondent to pass a fresh order as far as deficit stock is concerned - Petition disposed off. 2023 (8) TMI 932 Refund of Pre-deposit alongwith interest - Adjustment of pre-deposit with pending demand - pre-deposit made for the purposes of pursuing an appeal under the Act can be treated as duty or not? - HELD THAT:- MRF LIMITED VERSUS COMMISSIONER OF TRADE AND TAXES [ 2015 (5) TMI 462 - DELHI HIGH COURT] has unequivocally held that a deposit made in terms of a provision connected with the preferment of an appeal cannot be treated to be tax or duty. In fact that is the position which has been consistently held by various courts as would be evident from the discussion which follows. It thus remains undisputed that a pre-deposit cannot partake the character of a tax or duty. This since, it would clearly be connected only with the right of the assessee to pursue an appeal. As is manifest from a clear reading of sub-section (1) of section 30, the said provision relates to a claim made by a person for refund of an amount of tax paid by him. The express language as employed in Section 30(1) itself takes the case of refund of pre-deposit out from the rigors of the procedural formalities which are contemplated therein. We further note that as in the present case, claims for refund which may arise as a consequence of an order passed by the Appellate Authority or a Court would be governed by Section 30(4) of the Act - The same position would also appear to flow from a reading of Rule 29 and which contemplates Form ST- 21 and Form ST-22 being moved by an assessee when claiming refund. Rule 29 (2) speaks of an application for refund of any tax or penalty imposed under Section 30(1) or reimbursement of tax under Section 30(8). Neither sub-section (1) nor sub-section (8) of Section 30 deal with the subject of refund of pre-deposit. Thus, a pre-deposit would become refundable the moment an Appellate Authority comes to hold in favour of the assessee and demands come to be annulled. This principally since pre-deposit is not tax or duty and the refund of which alone is regulated by Section 30(1) of the Act - the decision of the Bombay High Court in SUVIDHE LTD. VERSUS UNION OF INDIA [ 1996 (2) TMI 136 - BOMBAY HIGH COURT] was assailed before the Supreme Court. While dismissing the appeal of the Union, the Supreme Court in Union of India Vs. Suvidhe Limited. [ 1996 (8) TMI 521 - SC ORDER] held as A deposit under Section 35-F is not a payment of duty but only a pre-deposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief. There are no justification to accord a judicial imprimatur to such an interpretation since it would go against the very grain of a pre-deposit - Whether the respondents would be entitled to adjust a pre-deposit against an outstanding demand in case the assessee were to lose in the appeal is a question which, in any case, does not arise in the present proceedings. The respondent is hereby directed to refund a sum of Rs.50,76,485/- along with interest in terms of Section 30(4) with effect from 04 December 2017 till the date of actual payment - Petition allowed.
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