TMI Tax Updates - e-Newsletter
August 25, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Form MGT 14: Types of Resolutions

   By: Ishita Ramani

2. Global Minimum Tax : 16 – Permanent Establishments under GloBE

   By: Amit Jalan

3. Minor mismatch due to adoption of standard method, not a mis-declaration

   By: Bimal jain

4. REINSTATEMENT WITH BACK WAGES UNDER INDUSTRIAL DISPUTES ACT, 1947

   By: DR.MARIAPPAN GOVINDARAJAN

5. Transportation charges up to buyer's premise, if included in agreed price, count towards assessable value

   By: Bimal jain

News

1. “Building Blocks for a Sustainable Future: Some Reflections” (Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India - Delivered at the 29th Lalit Doshi Memorial Lecture on August 23, 2023 at the Y. B. Chavan Centre, Mumbai)

2. Union Commerce and Industry Minister Shri Piyush Goyal addresses the opening session of G20 Trade and Investment Ministerial Meeting, Jaipur

3. 54th Network Planning Group Meeting under PM GatiShakti recommends four infrastructure projects

Notifications

GST - States

1. S.O. 233 - dated 18-8-2023 - Bihar SGST

Amendment in Notification No. S.O. 130, dated the 17th May, 2023

2. S.O. 232 - dated 18-8-2023 - Bihar SGST

Amendment in Notification No. S.O. 4, dated the 02nd January, 2018

3. S.O. 231 - dated 18-8-2023 - Bihar SGST

Amendment in Notification S.O. No. 173, dated the 21st September, 2017

4. 24/2023-State Tax - dated 10-8-2023 - Himachal Pradesh SGST

Amendment in Notification No. 06/2023-State Tax, dated the 10th April, 2023

5. 23/2023-State Tax - dated 10-8-2023 - Himachal Pradesh SGST

Amendment in Notification No. 03/2023-State Tax, dated the 10th April, 2023

6. 22/2023-State Tax - dated 10-8-2023 - Himachal Pradesh SGST

Amendment in Notification No. 73/2017-State Tax, dated the 16th January, 2018

7. 07/2023-State Tax (Rate) - dated 10-8-2023 - Himachal Pradesh SGST

Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017

8. 29/2023-State Tax - dated 22-8-2023 - Maharashtra 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.

9. 28/2023-State Tax - dated 22-8-2023 - Maharashtra SGST

Seeks to notify the provisions of sections 2 to 23 of the Finance Act, 2023 (Mah.XXXII of 2023)

Income Tax

10. 67/2023 - dated 23-8-2023 - IT

Exemption from specified income U/s 10(46) – Notifies 'Punjab Building and Other Construction Welfare Board' a body constituted by the State Government of Punjab

11. 66/2023 - dated 23-8-2023 - IT

Exemption from specified income U/s 10(46) – Notifies ‘District Mineral Foundation Trust’

SEBI

12. SEBI/LAD-NRO/GN/2023/149 - dated 23-8-2023 - SEBI

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2023.

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 23/2023 - dated 31-7-2023

Empanelment of Chartered Engineers for valuation of Second Hand Machinery/Goods in the Office of the Commissioner of Customs, Chennai-II(Import) Commissionerate, Chennai-Calling for applications - reg.

Highlights / Catch Notes

GST

• Respondent Can't Begin Audit Abruptly After Inaction, But Can Start Assessment u/ss 73 & 74.

  Case-Laws - HC : Jurisdiction to conduct audit - When a Section provides for periodical audit, the respondent having failed to conduct audit for all these years, suddenly cannot wake up and conduct an audit. However, this will not preclude the respondent from initiating assessment proceedings for the said concern under Sections 73 and 74. - HC
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• Court Grants Relief for SCN Violation: Petitioner to Receive New Notice with Proper Hearing Opportunity.

  Case-Laws - HC : Violation of principles of natural justice - opportunity of hearing not given to petitioner before issuance of SCN - Relief granted subject to conditions - Revenue directed to issue fresh SCN after complying with the prescribed procedure - HC
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Income Tax

• Taxpayer Files Refund Claim for 2009-10; No Time Limit u/s 245, Offsetting Allowed for Outstanding Dues.

  Case-Laws - HC : Refund claim - Period of limitation - For the FY 2009- 10 being filed now - The entire problem could be resolved if the department avails of the provision under Section 245 of the Income Tax Act. Having found that there is no limitation for making a claim of refund; even now the assessee could make an application and when the refund is processed there can be a set off made of the amounts remaining due from the assessee for the various assessment years, from the amounts directed to be refunded. - HC
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• High Court Confirms Assessee Not Responsible for Filing Form 3CL u/r 6(7A); DSIR Holds Responsibility.

  Case-Laws - HC : Deduction u/s 35(2AB) - Under Rule 6(7A), the Department of Scientific and Industrial Research is required to submit its report to the Income Tax Authorities in Form 3CL. There is no requirement of the assessee to file the said form, but Form No. 3CL is required to be submitted by the Department of Scientific and Industrial Research to the Income Tax Authorities. Therefore, the allegation of failure to file the said form cannot be attributed to petitioner. - Claim of the assessee allowed - HC
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• Reopening Assessment u/s 147 Unjustified: AO's Change of Opinion and Lack of Due Diligence Not Grounds for Action.

  Case-Laws - HC : Reopening of assessment u/s 147 - Change of opinion - The reopening of the assessment is nothing but a mere change of opinion on the part of AO. If the AO could not discover even with due diligence, the petitioner cannot be blamed for that. If the AO did not examine the issue of allowability of the deduction during the course of regular assessment, the revenue has no jurisdiction to reopen the assessment. - HC
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• ITAT Rules: No Evidence of Tax Evasion or Suppression; Deletion of Additions Based on Presumptions Ordered.

  Case-Laws - HC : Suppression of sales of iron ore - Tribunal found that in absence of any charge of evasion of royalty/tax, it cannot be presumed that there is any suppression of quantity of production from the mine or the purchase made by appellant from M/s Jai Minerals. The Tribunal also found that the findings leading to addition by the Assessing Officer are based on presumption rather than proof. - Order of ITAT deleting the additions sustained - HC
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• Income Declared in Survey Should Be Assessed as Business Income, Not Unexplained Income or Income from Other Sources.

  Case-Laws - AT : Nature of income surrendered during survey - Taxable ‘Head of income’ - excess income declared during the course of survey proceedings cannot be treated as unexplained income of the assessee-appellant since credited to P & L A/c and cannot be assessed as income from other sources, but, under income from business. - AT
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• Assessee's Surrendered Income Covers Building Costs, AO's Adjustment Deemed Unjustified by Tribunal Decision.

  Case-Laws - AT : Additions towards building expenses and other unaccounted income - Addition made by the AO on account of addition in the value of building cannot be held to be justified as the assessee in clear terms has surrendered the additional professional income covering the expenditure incurred on building - AT
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• Taxpayer's Voluntary Surrender of Professional Income Should Be Taxed as Professional Income, Not Unexplained Sources u/s 69.

  Case-Laws - AT : Income surrendered in survey action - undisclosed professional income - In fact, no such income has been found during the survey action. However, the assessee to keep his promise, has offered for taxation the surrendered additional professional income - Action of the AO in assessing the aforesaid surrendered income as income from unexplained sources u/s 69 cannot be held to be justified - To be taxed as professional income - AT
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• Customs Authorities Exclude Royalty from Invoice Value; Royalty-Related Tax Adjustment Removed Due to Lack of Evidence.

  Case-Laws - AT : TP Adjustment - upward adjustment - import of goods - Royalty - The Special Valuation Branch of the Customs Authorities has given a categorical finding that royalty is not included in the invoice value of the goods imported by the assessee - while arriving at a conclusion, ld. TPO has no where recorded and referred to any material which could demonstrate that royalty payment by the assessee is embedded in the process of the imported goods. - Additions deleted - AT
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• Revenue's Challenge on Inflated Coal Costs Dismissed as Tariff Price Already Covers Costs, Reflects in Taxable Profits.

  Case-Laws - AT : Disallowance of inflated coal expenses - the case of the Revenue is that assessee might have inflated cost of the coal, however, once the cost of the coal is part of tariff price determination by the regulatory authority and once the electricity is sold on the same tariff which has been credited to the profit and loss account and offered to tax, then there is no question of separately taxing the alleged inflated cost of coal. - AT
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Customs

• High Court Upholds CESTAT's Decision for Provisional Release of Goods u/s 110A of the Customs Act 1962.

  Case-Laws - HC : Provisional release of the goods under Section 110A of the Act of 1962 - goods declined to be released on the ground that the said goods did not contain starch or other additives and did not fall under CTH2106 - CESTAT allowed the provisional release - contradictory nature of test reports received from CRCL, Mumbai and Anacon Laboratory - No substantial question of law arises - HC
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• Customs Broker License Revocation: Brokers Not Liable for Errors in Government-Issued Documents; Responsibility Lies with Issuers.

  Case-Laws - AT : Revocation of Customs Broker License - The Customs Broker is neither omniscient nor omnipotent. The Customs broker is not concerned with to ensure that the documents issued by the various organisations were issued correctly. If they were issued wrongly, the fault lies with the authorities issuing such certificate, and registrations, and not with the Custom Broker. It is not for the Custom Broker to needlessly doubt the government issued IDs and registration numbers. The broker cannot be faulted for believing in them. - AT
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• Cement Import Duty Demand Unjustified Without Challenging Original Bill of Entry Assessment for Undervaluation from Bangladesh.

  Case-Laws - AT : Undervaluation of imported goods - cement imported from Bangladesh - demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable. - AT
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• Court Dismisses Unauthenticated Evidence in Opal Glassware Valuation Case; Insufficient Proof to Reject Transaction Value.

  Case-Laws - AT : Valuation of imported goods - Opal glassware - evidence of contemporaneous import dismissed on the ground that the document purportedly showing the value of contemporaneous import being unauthenticated & unsigned - There has not been sufficient evidence with the Department to reject the transaction value - AT
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IBC

• Settlement Reached: CIRP to Close Without CoC or Section 12A Application; Adjudicating Authority Acts u/r 11.

  Case-Laws - AT : Seeking closing of CIRP process - Applicant enters into settlement with the Corporate Debtor - At time when the CoC was not constituted, there can be no impediment in power of Adjudicating Authority to exercise jurisdiction under Rule 11 to close the CIRP even if no application as per the procedure under Section 12A r/w Regulation 30A has been filed. - AT
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PMLA

• Single-Member Bench Permitted in Money Laundering Cases Under PMLA Section 6, Aligns with Statute's Intent.

  Case-Laws - HC : Money Laundering - quorum non judis - By a reading of Section 6 of the PMLA Act without adding or substituting words into the statute, it is clear that the adjudicating authority which comprises of a single member bench is entitled to adjudicate the matter and any other interpretation would tantamount to distorting the language adopted in the statute which is impermissible. - HC
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Service Tax

• High Court Quashes Service Tax Notices Due to 10-Year Delay Unexplained by Respondents.

  Case-Laws - HC : Inordinate delay of almost 10 years in adjudication of the case - The delay in completion of the adjudication proceedings for a period of almost 10 years cannot be attributed to the Petitioner and further in the absence of the delay having been explained by the Respondents, the impugned notices ought to be quashed - HC
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• Court Rejects Claim of Discontinued Air Conditioning in Restaurant-Bar; Valid License Confirms Continued Operation with Facility.

  Case-Laws - AT : Classification of services - Restaurant-cum- Bar Service - air conditioning facility is provided therein - The licence is currently valid which means that the appellant is still running the Restaurant-cum-Bar and as per the Restaurant Bar Licence policy - there are no perversity in the appreciation of the material on record and therefore, the plea taken by the appellant that they have dispensed with the air conditioning facility is not correct and needs to be rejected. - AT
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Central Excise

• Mould Charges Must Be Included in Assessable Value for Taxation, Rules Central Excise Law.

  Case-Laws - AT : Valuation - amount collected by the appellant from customers as mould charges (recovered separately) - additional consideration or not - The mould charges recovered from the buyers need to be included in the assessable value - AT
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• Court Rules Against Excise Duty on Top Gas; Department Fails to Prove Manufacturing Process.

  Case-Laws - AT : Excisability - marketability - Process amounting to manufacture or not - top gas that emerged from the Reduction Shaft had been subjected to a refining process for removal impurities. - it is a settled law that the burden is on the department to establish that a product is a manufactured product, before seeking to levy duty of excise on the same. The said burden has not been discharged, in the facts of the present case. - Demand set aside - AT
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VAT

• Tribunal Cannot Refer Khair Wood Classification to High Court u/s 33(1) of HPGST Act, 1968.

  Case-Laws - HC : Classification of goods - Khair - The issue as to whether Khair wood falls within the definition of timber or converted timber, has already been decided by Hon’ble Division Bench of this Court - When the issue is covered by the above decisions, learned Tribunal has no authority or jurisdiction to make a Reference under Section 33(1) of the HPGST Act, 1968 to this Court in the manner as has been done. - HC
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Case Laws:

• GST

• 2023 (8) TMI 1092
  Maintainability of appeal - appeal dismissed on the ground of limitation - HELD THAT:- From the perusal of sections 107 (1) and 169 of the UP GST Act, it is evidently clear that the appeal against an order can be preferred within a period of three months from the date of communication. Section 169 (1)(a) of the UPGST Act provides that any decision, order, summons, notice or other communication shall be served by any one of the following methods, namely, by giving or tendering it directly or by a messenger including a courier to the addressee or the taxable person or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person. Therefore, it is evident that the order communicated on an Advocate will be deemed service upon the petitioner. It is admitted that the order was passed on 28.03.2018 and the said order was duly communicated to the Advocate of the petitioner, namely, Shri Anil Jain. Once an order has been communicated on 28.03.2018, the limitation for filing an appeal within a period of three months ends in the last week of June, 2018. On perusal of section 5 application of the petitioner filed in support of the appeal, not a single word has been whispered as to how and in what method the petitioner came to know about the said order on 26.06.2019 and as to why the application was moved on 26.06.2019 by another counsel, when the order dated 28.03.2018 was already communicated to the petitioner s Advocate, namely, Shri Anil Jain. Once the Advocate, namely, Shri Anil Jain, was representing the petitioner before the respondent Assistant Commissioner, State Tax, Mobile Squad, on which the order dated 28.03.2018 was served on the same day, i.e., on 28.03.2018, was not disputed at any stage and the only ground taken was that Shri Anil Jain, Advocate has not informed the petitioner about the order dated 28.03.2018. In view of these facts not being in dispute, the impugned order cannot be interfered with. Petition dismissed.

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• 2023 (8) TMI 1091
  Demand in excess to Rs. 26 Lacs has been raised against the present petitioner - notice in the proceedings was issued to the petitioner on 12.07.2022 seeking his reply within 15 days - grant of opportunity of hearing - HELD THAT:- The view taken by the coordinate bench in Bharat Mint Allied Chemicals (supra), agreed upon - Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified No in the column meant to mark the assessee s choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. Here, we note, the impugned order itself has been passed on 21.03.2023, while reply to the show-cause-notice had been entertained on 30.12.2022. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the Respondent No.2/Assistant Commissioner, State Tax, Sector-1, Karvi, to issue a fresh notice to the petitioner within a period of two weeks from today - petition allowed.

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• 2023 (8) TMI 1090
  Availing statutory remedy of appeal - Section 112 of the Bihar Goods and Services Tax Act - stay on recovery - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of its statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act - Petition disposed off.

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• 2023 (8) TMI 1089
  Jurisdiction to conduct audit - the petitioner s registration is cancelled, now he is an unregistered concern - Failure to pay collected tax - closure of business - respondents submitted that the grounds raised in the Writ Petition cannot be accepted, since it is a recently closed unit and the respondent is having every right to conduct audit - HELD THAT:- Section 65 of CGST Act, states that the Commissioner or any other officer authorized through a general or specific order to conduct audit for any registered person. When the section specifically states any registered person , then it ought to be construed as existence concern and the unregistered person is exempted from the purview of the said section 65. But the contention of the respondent is that the audit is being conducted for a period from 2017-2018, 2021-2022. Therefore, the respondent claims that for the said period, the petitioner was a registered firm and for the said period, the respondent is empowered to conduct audit. On perusing Section 65, it is stated that the audit can be conducted to the said registered persons for such period , for such frequency and in such manner . When a Section provides for periodical audit, the respondent having failed to conduct audit for all these years, suddenly cannot wake up and conduct an audit. However, this will not preclude the respondent from initiating assessment proceedings for the said concern under Sections 73 and 74. Therefore, the said impugned order is liable to be quashed. Hence, the impugned order is quashed with liberty to the respondent to initiate assessment proceedings under Sections 73 and 74 of the Act. Petition allowed.

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• 2023 (8) TMI 1088
  Violation of principles of natural justice - opportunity of hearing not given to petitioner before issuance of SCN - Availment and utilization of Input Tax Credit during subsequent period - HELD THAT:- Considering the fact the impugned order has been passed without giving the petitioner an opportunity of hearing although the petitioner filed reply within the stipulated time, the impugned order is set aside and the case is remitted back to the respondent. However, the petitioner shall debit a sum of Rs. 50,000/- as a security within a period of 15 days from the date of receipt of a copy of this order. Subject to such compliance, the respondent shall issue a fresh notice of hearing and dispose the case afresh within a period of 30 days thereafter - The amount to be paid by the petitioner pursuant to this order shall be treated as a deposit , to be adjusted or appropriated or refunded subject to the final outcome of the fresh proceeding. Petition disposed off.

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• Income Tax

• 2023 (8) TMI 1094
  Penalty u/s 271D - limitation period for the penalty levied - Penalty levied which is after 8 years from the end of the assessment year under consideration - Absence of the assessment order or proceedings in the case of assessee - HELD THAT:- The limitation for passing the order imposing penalty under chapter- XXI has been provided by considering all possible situation where the assessment order or other order is subject matter of appeal of the order is revised under section 263 or assessment order or other orders are subject matter of appeal before the Hon ble High Court or Hon ble Supreme Court. Thus, it is clear that section 275, pre supposes the existence of assessment proceedings/revision proceedings or appeal proceedings arising from the assessment order or revision order and the limitation is provided as per outcome of these proceedings. In absence of assessment in the case of the assessee the initiation of penalty is not valid and further when the satisfaction for initiation of the penalty on the part of the AO is absent in the case of the assessee then the penalty levied u/s 271D is not valid. Hon ble Supreme Court in Jain Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] has affirmed the view of the Hon ble High Court that in absence of satisfaction recorded regarding the penalty proceedings u/s 271E of the Act the order of levy of penalty is not valid. As decided in Vijayaben G. Zalavadia [ 2022 (5) TMI 1572 - ITAT AHMEDABAD] held impugned penalty under Section 271E is not permissible in the absence of regular assessment framed against the assessee by the Revenue. Hence, the same is not found to be sustainable. Therefore, it is pre-requisite condition that the initiation of penalty 271D/271E of the Act, there must be assessment proceedings or proceeding arising from assessment order are pending in the case of the assessee. Accordingly we hold that the penalty levied u/s 271D of the Act without any assessment proceedings in the case of the assessee is not valid and liable to be quashed - Decided in favour of assessee.

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• 2023 (8) TMI 1087
  Disallowance of Interest payable to Alimenta on the amount awarded - Confirmed liability or contingent liability - As decided by HC [ 2017 (4) TMI 974 - DELHI HIGH COURT] with the Award having been made rule of the Court by a learned Single Judge of this Court, the mere fact that the said judgment and decree was stayed by a DB would not relieve NAFED of its obligation to pay interest in terms thereof to Alimenta. Such liability commenced in the previous year in which the said judgment and decree was passed by the learned Single Judge - HELD THAT:- Having heard learned Senior counsel for the petitioners at a considerable length and after carefully perusing the material available on record, we do not find any ground to interfere with the impugned Order passed by the High Court of Delhi at New Delhi.

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• 2023 (8) TMI 1086
  Penalty u/s 271D / 271E - non-compliance of the provisions of Section 269-SS and 269-T - competent authority to levy the penalty - HELD THAT:- As petitioner submitted that what is impugned in this Special Leave Petition is the order of the High Court passed in a writ petition, filed by the petitioner. However, the petitioner has been successful before the CIT (Appeals) and as against the said order, no further appeal has been filed by the Revenue. Therefore, the Special Leave Petition may be disposed of leaving the question of law, if any, open. Learned senior counsel appearing or the Revenue does not object to this submission. In view of the aforesaid submission made by the learned counsel for the petitioner, which is accepted, the Special Leave Petition is disposed of, keeping open the question of law, if any, which arises in this matter.

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• 2023 (8) TMI 1085
  Reopening of assessment u/s 147 - Validity of notice u/s 148 - as argued notice was based only on change of opinion and there was no escapement of income - Assessment of trust - assessee had earmarked funds under the head Fund Pending Utilization and had not included in receipts - HELD THAT:- In Kelivinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT ] it was held that there can be re-opening of assessment under Section 148 of the Act only if the Assessing Officer has reason to believe that any income chargeable to tax had escaped assessment for any assessment year - Thus on account of a mere change of opinion, re-assessment proceedings cannot be initiated by assessing office. This has been reiterated in ICICI Securities Primary Dealership Limited [ 2012 (8) TMI 754 - SC ORDER ] and Techspan India Private Limited -[ 2018 (4) TMI 1376 - SUPREME COURT ] So we do not find any merit of ground for the assessment years 2004-05 and 2005-06. Revision u/s 263 - as per CIT AO had fail to apply the correct provisions of Section 12(1) - HELD THAT:- The findings of fact recorded by the CIT(Appeals) had been confirmed by the Tribunal in all these appeals holding that these findings had not been assailed by the Revenue through any evidence or material on record; and therefore it is established that the assessee utilized the fund for the purpose of achieving its objective, and that the utilization was more than the prescribed limit, consequent upon which there was no reason to make additions against the assessee. After considering the facts and circumstances and the contentions of the Revenue, we are satisfied that no question of law much less substantial question of law arises for consideration in these appeals and we hold that the findings recorded by the Tribunal cannot, in the facts and circumstances, be said to be perverse.

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• 2023 (8) TMI 1084
  Reopening of assessment u/s 147 - mandation of approval obtained u/s 151 - HELD THAT:- The mandatory sanction required u/s 151 issuing notice u/s 148 of the Act by A.O. is absent for a reason as in the approval copy u/s 151 made available to petitioner states Reasons to Believe - As per Annexure. But in the annexure it is only blank page. Therefore, there is no denial of the fact that the annexure did not contain any reasons. On this ground alone in our view the impugned notice and the order on objections have to be quashed and set aside. Reasons for re-opening is not there on the Website/Income Tax Portal. There is no reference to these reasons for re-opening in the affidavit in reply. Moreover, the Form for recording the reasons and obtaining approval indicates that the approval was given on 30th March 2021. It would only mean that either the Form was filled up on 30th March 2021 or earlier. But in the approval which is available on the Website/Income Tax Portal, an extract/copy whereof is annexed at Exhibit V to the petition shows approval is dated 31st March 2021 and date of proposal is also shown as 31st March 2021. We are not inclined to accept the submissions that there was proper reasons recorded based on which approval was obtained u/s 151 and that there was application of mind by the Additional Commissioner of Income Tax while according the approval. Decided in favour of assessee.

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• 2023 (8) TMI 1083
  Refund claim - Whether the amendments made to the Income Tax Act, 1961 and the circular issued regulating the period in which a Refund Application is to be filed would result in the frustration of the claim of refund made by the assessee? - HELD THAT:- Section 200A speaks of processing of statements of tax deducted at source. If, as submitted by the Revenue, Section 200A is not applicable to the relevant year, there is nothing preventing the Assessing Officer from processing the statement filed under Section 200 and allowing the refund; on a request made by the assessee. The very procedure for processing of statement of tax deducted at source and an intimation along with a refund, without even a claim from the assessee is brought in under Section 200A. In that circumstance, the amounts capable of being refunded could also be adjusted as against the demand raised, which is far lesser. As sub-rule (3A) of Rule 31A - admittedly, the same was brought in only on 19.02.2013 along with Form 26B. The assessee even now is ready to file an application under Form 26B; however, the department asserts that such an application cannot be filed without first satisfying the demand made under Annexure-7 series. The assessee on the other hand submits that when far more amounts are due from the department to the assessee, the department could enable filing of Form 26B so that the refund can be processed and the demands set off along with any interest payable to the department from the refunded amounts. The only rider would be in so far as the department also being made liable to pay the interest due on the refund. Annexure-B is a circular issued by the Board which as has been declared in the cited decisions is not binding on this Court or even the assessee. There can be no prescription of a limitation period in the circular, which is not available in the statute or the rules framed thereunder. The entire problem could be resolved if the department avails of the provision under Section 245 of the Income Tax Act. Having found that there is no limitation for making a claim of refund; even now the assessee could make an application and when the refund is processed there can be a set off made of the amounts remaining due from the assessee for the various assessment years, from the amounts directed to be refunded. On the above reasoning, we direct the department to either enable filing of Form 26B or in the alternative permit the assessee to make a claim for refund in the physical mode which shall be considered on the basis of the statement made under Section 200 regarding the tax deducted at source. The refund being processed and permitted, the department should set off the amounts due as evident from the demand raised for the various assessment years from 2007-08 to 2021-22 as per Annexure-7 series.

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• 2023 (8) TMI 1082
  Appeal on substantive addition as pending adjudication before ITAT - as contended additions made on protective basis which were the subject matter of the appeal before the Tribunal could have been kept pending instead of being closed. HELD THAT:- According to us, that was one alternative. The other alternative was, which is what the Tribunal has done, to dispose of the appeal with a caveat that in the event of any deletion in the hands of Mr P.K. Jindal wherein substantial additions were made, the appellant/revenue will have liberty to take further steps against the respondent/assessee in accordance with law. According to us, this would mean that if the appellant/revenue were to fail in the matter concerning substantive additions, it would have leave to reopen the appeal pending before the Tribunal.The above-captioned appeals are, thus, closed.

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• 2023 (8) TMI 1081
  Disallowance of expenses u/s 40A(3) - Failure to provide any basis for working out the difference between the contents of two financial datas in the parallel books maintained by ABCL Ltd. and the Assessee himself - ITAT deleted te addition - HELD THAT:- Tribunal also found that data available on record was only in respect of liability but not as regards assets or expenditure. Tribunal thus found that in view of above AO wrongly held the difference to be invested in fixed assets and undisclosed expenditure, without any supportive material on record. Tribunal therefore drew inference that Assessee had incurred certain liability which though recorded in the parallel Books of Accounts of the Assessee was not recorded in the regular Audited Books of Account. The Tribunal in this background found that the case of the Assessee was of suppression of liability in the Audited Books of Account vis-a-vis the parallel set of Books of Account and; therefore, it was rightly concluded by the Tribunal that under the law undisclosed investment or undisclosed expenditure can be subject matter of addition either u/s 69 or 69A or 69B or 69C of the IT Act but in the present case the issue is not in regard to undisclosed investment or expenditure but undisclosed liability. Accordingly, the Tribunal held that the findings of the AO in this regard are based purely on assumption and; therefore, the addition made by the Assessing Officer was held unjustified. Decided against revenue.

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• 2023 (8) TMI 1080
  Rectification of mistake - scope and ambit of power of the Appellate Tribunal vested u/s 254(2) to rectify palpable mistake - Dismisal of appeal on low tax effect - HELD THAT:- Only palpable errors which do not require detailed inquiry are amenable to power of rectification. Rectification is a power which is comparatively restrictive than the power of review. In the instant case, the stand of Revenue was accepted by the Tribunal by holding that appeal was wrongly dismissed u/s 268A(1) r.w.s. 268A(4) of IT Act, after holding that palpable error had crept in, inasmuch as Tribunal failing to see that appeals filed could not have been dismissed by Tribunal merely on the ground that financial implication involved is below 50 lacs especially when subject matter fell within the exception Clause 10(c) of CBDT Instruction No.03/2018 dated 11.07.2018 r/w Instruction No.17/2019 dated 08.08.2019, that the audit objection has been accepted. The fact, that Tribunal missed seeing this obvious and palpable mistake was certainly a cause giving rise to rectification and; therefore, this Court has no hesitation to hold that the power of rectification exercised by Tribunal u/s 254(2) of the IT Act was well within the bounds of law. Whether the documentary proof regarding acceptance of audit objection was on record of the Tribunal or not? - If not, then it s effect ? - This Court called the record of the Tribunal and perused the same. In both these records in original, this Court did not find any audit objection or its acceptance on record. Tribunal is a judicial body and; therefore, need to adhere to all the principles of natural justice which are codified in the Income Tax Act before deciding a case. In the instant case, it is not clear from the record as to whether the relevant documents being produced by the Revenue contains the foundational documents to support the ground that the case fell within the exception Clause 10(c) of CBDT Instruction No.03/2018, dated 11.07.2018 r/w Instruction No.17/2019 dated 08.08.2019. In view of above, this Court has no manner of doubt that the first question as regards jurisdictional purviews of power of rectification is concerned, the same is decided against the Assessee but the other substantial questions of law as aforesaid are decided in favour of the Assessee.

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• 2023 (8) TMI 1079
  Reopening of assessment u/s 147 - Notice beyond period of four years - reasons to believe or suspect -HELD THAT:- It is settled law that where the assessment is sought to be reopened after the expiry of a period of four years from the end of the relevant year, the proviso to Section 147 of the Act stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary. Provision for doubtful debts - If we consider the reasons for reopening we would first of all observe that the Assessing Officer records Since the provision is made on account of bad and doubtful debts which is not an ascertained liability as per section 115JB the same need to be added which the assessee has failed to do so. This indicates non application of mind by the Assessing Officer while recording the reasons and also by the approving authority which granted approval under Section 151 of the Act. Further, in ITR Form 6 filed under Section 139(1) of the Act in clause 40 of Part A - P L account sum was disclosed as provision for doubtful debts and in Schedule relating to MAT, petitioner disclosed the working of book profit - Petitioner in Note No. 24 to the accounts disclosed the provision for bad and doubtful debts. Provision for bad and doubtful debts is in Note No. 14 Trade Receivables of the Audited Accounts as a reduction from trade receivables and also in Note No. 24 Other Expenses . Audited accounts were filed during the course of assessment proceedings - respondent no. 1 records that the details called for have been filed and discussed with petitioner and the book profit is calculated by respondent and is brought to tax under Section 115JB of the Act. Based on these facts, there is no failure to disclose any material facts necessary for the assessment so as to invoke provision of Section 147 of the Act after a period of four years from the end of the relevant assessment year. The details have been filed in the course of the assessment proceedings and respondent no. 1, after examining the details, has computed the income under regular provisions of the Act and profit u/s 115JB. Deduction u/s 35(2AB) - There is no failure to disclose any facts necessary for the assessment, but on the contrary the claim of deduction u/s 35 was examined by raising a specific query and after going through the details filed in the course of the assessment proceedings, the same was allowed in the assessment order. The impugned proceedings would amount to review of the earlier order without any fresh tangible material on record and, therefore, the impugned proceedings are wholly without jurisdiction, illegal and bad in law. Under Rule 6(7A), the Department of Scientific and Industrial Research is required to submit its report to the Income Tax Authorities in Form 3CL. There is no requirement of the assessee to file the said form, but Form No. 3CL is required to be submitted by the Department of Scientific and Industrial Research to the Income Tax Authorities. Therefore, the allegation of failure to file the said form cannot be attributed to petitioner. Loss on sale of asset - Such amount has been disclosed in Note No. 24 of the P L account. The said amount is also disclosed in ITR-6 form at Item 38 of Part A. Respondent no. 1 had called for details of depreciation claimed on the assets vide letter dated 1st December 2015. Respondent no. 1, after perusing the details filed, made an assessment under Section 143(3) of the Act computing the assessed income under the regular provisions of the Income Tax and book profit under Section 115JB of the Act. There is no failure to disclose material facts necessary for the assessment but on the contrary the assessment has been made after calling for the details. Therefore, the impugned proceedings would amount to review of the earlier order without there being any fresh tangible material on record. Decided in favour of assessee.

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• 2023 (8) TMI 1078
  Stay of Disputed demand - AO in adjusting the refund due to the petitioner/assessee for AY 2022-23, against the disputed demands for AYs 2011-12, 2012-13, and 2014-15 - HELD THAT:- Under the Office Memorandum ( OM ) dated 29.02.2016, as amended by OM dated 31.07.2017, AO should have, ordinarily, in terms of para 4A adjusted not more than 20% of the disputed demand, considering the fact that an appeal concerning the disputed demand was, admittedly, pending before the CIT(A). Higher amount can only be retained, only if, as per the aforementioned OMs, the assessee s case falls in the situation captured in para 4B (a). No material has been furnished by the respondent/revenue which would suggest that the petitioner/assessee s case would fall within 4(B)(a). Given this position, the writ petition is disposed of with the direction to the respondents/revenue to release the amount, along with applicable interest, which is in excess of 20% of the disputed demand, concerning the aforementioned AYs. We may also note (something we have recorded in our order dated 14.07.2023), according to the petitioner/assessee, the excess amount which is available with the respondents/revenue. Respondents/revenue will make their own calculation and ascertain whether the amount indicated by the petitioner/assessee is the excess amount. Thus, the excess amount beyond 20%, along with applicable interest, will be released to the petitioner within four (4) weeks of the receipt of a copy of the judgement.

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• 2023 (8) TMI 1077
  Reopening of assessment u/s 147 - Reopening beyond period of four years - Change of opinion - as observed that on scrutiny of profit and loss account, balance sheet, computation of income, it was found that the assessee had claimed and allowed deduction u/s 80- IA - HELD THAT:- The petitioner had truly and fully disclosed all the material facts which were called upon by the revenue at the relevant time. The reopening of the assessment is nothing but a mere change of opinion on the part of AO. If the AO could not discover even with due diligence, the petitioner cannot be blamed for that. If the AO did not examine the issue of allowability of the deduction during the course of regular assessment, the revenue has no jurisdiction to reopen the assessment. Decided in favour of assessee.

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• 2023 (8) TMI 1076
  Penalty order u/s 270A - Non affording mandatory hearing in terms of the legal requirements under Section 274(1) - assessment order passed u/s 143(3) r.w.s. 153C - HELD THAT:- It is pointed out that for the purpose of initiating proceedings, there must be recovery of incriminatory material without which recourse cannot be had to Section 153C of the Act and that the only option available under such circumstance would be to proceed for reassessment under Sections 147 to 148 of the Act. Admittedly, there has been violation of principles of natural justice. Accordingly, case is made out for remanding the matter for fresh consideration while directing the Authority to embark upon reconsideration including the contentions raised regarding Section 153C of the Act with reference to the law laid down by the Apex Court in the case of Abhisar Buildwell [ 2023 (5) TMI 587 - SUPREME COURT ] The penalty order and the assessment order are set aside. The Authority to reconsider the matter in light of the discussion made above.

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• 2023 (8) TMI 1075
  Suppression of sales of iron ore - different sale figures found during seizure in an incriminating evidence as per law which has led the AO to calculate suppression of sales to 20% - ITAT deleted the addition - HELD THAT:- A bare perusal of the contents reveals Tribunal found that in absence of any charge of evasion of royalty/tax, it cannot be presumed that there is any suppression of quantity of production from the mine or the purchase made by appellant from M/s Jai Minerals. The Tribunal also found that the findings leading to addition by the Assessing Officer are based on presumption rather than proof. Moreso, other findings rendered in the aforesaid paragraphs of the impugned order reveal that they are based on factual disputes and, therefore, neither give rise to any substantial proposed question of law as proposed by the Revenue or otherwise. In the absence of any substantial question of law arising from the findings of Tribunal which are purely factual in nature, this Court declines admission to this appeal.

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• 2023 (8) TMI 1074
  Reopening of assessment u/s 147 - unexplained deposits during demonetization - HELD THAT:- As attempt of the petitioner to contrive the jurisdiction of this Court under Article 226 of the Constitution of India on the ground of violation of principles of natural justice cannot be countenanced. The petitioner has given his explanation which was found in adequate. Therefore, AO has passed the impugned order u/s 147 r/w 144B. A reading of the impugned order indicates that the petitioner has deposited a sum in the wake of demonetization. Therefore, the petitioner was called upon to give his explanation. The petitioner has however not properly explained the facts surrounding deposit of the aforesaid sum - Hence, the impugned order was passed by the respondent. Therefore, there is no merits to challenge the impugned order in the writ petition. As such this writ petition cannot be entertained, as the petitioner has an alternate remedy before the Appellate Commissioner. This writ petition is dismissed with liberty to the petitioner to file statutory appeal against the impugned order before the Appellate Commissioner within a period of 30 days from the date of receipt of a copy of this order.

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• 2023 (8) TMI 1073
  Faceless assessment - contention of the petitioner is that the information sought for by the 1st respondent was very bald and vague - according to the petitioner effective opportunity was not granted to the petitioner - HELD THAT:- It is seen that the petitioner is the Primary Agricultural Credit Society (PACS) and the society is formed for lending loans to the members who are farmers and the income is only from interest through lending business. The petitioner has submitted the details of its transaction in the annexures submitted along with the reply. On receipt of the reply the respondent has directed the petitioner to the submit the name and address along with PAN numbers of the members. The contention of the petitioner is that there are 3000 members and it is voluminous documents and hence the petitioner was is seeking personal hearing to produce the register manually. The respondent submitted since it is faceless assessment the request of the petitioner cannot be entertained. The petitioner further submitted since the society is lending money to farmers, the farmers may not have PAN numbers. The petitioner society may provide the PAN numbers where ever it is available and indicate where ever it is not available. This Court is of the considered opinion that the petitioner ought to be granted one more opportunity to produce the register and to produce the other particulars sought for by the respondent. Therefore, impugned order is set aside. The petitioner is directed to reply to the notice, dated 16.11.2022, within a period of two weeks from the date of receipt of a copy of this order. Thereafter, the respondents shall fix the date of personal hearing as per law.

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• 2023 (8) TMI 1072
  Gain on sale of Joint owned property - correct year of assessment - HELD THAT:- Firstly there seems to be no fault of assessee when the assessee has done everything on 22.03.2011. The documents on record clearly establish that the consideration had been received and possession had also been given by/on 22.03.2011. Secondly, we are consciously aware of the decision of Hamada Ammal Vs. Avadiappa Pathar [ 1990 (11) TMI 414 - SUPREME COURT] wherein held that vendee gets rights which will be related back on registration from the date of the execution of the sale deed and such rights are protected under Order XXXVIII Rule 10 CPC read together with Section 47 of the Registration Act. The sale-deed even if finally registered on 19.05.2011 would relate back to 22.03.2011 (i.e. date of execution). Being so, we agree to the contention of Ld. AR that the sale of land had taken place on 22.03.2011 in the financial year 2010-11 and the capital gain was taxable in AY 2011-12. The necessary outcome of this is such that the AO has wrongly assessed the capital gain in AY 2012-13 under consideration. Faced with this situation, we are inclined to delete the addition made by AO in AY 2012-13. The assessee succeeds in this claim.

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• 2023 (8) TMI 1071
  Revision u/s 263 - assessee had borrowed funds for construction of its hotel building and acquiring other fixed assets - As per CIT since the amount was borrowed in foreign currency for acquisition of certain capital assets, AO wrongly granted deduction in respect of such foreign exchange loss - HELD THAT:- The assessee is engaged in the business of running hotels at Pune and Nagpur. Certain amount of loan was taken in foreign currency for capital purposes. Loss on foreign exchange fluctuation in respect of such loan was claimed as deduction. The same could not have been allowed as deduction in terms of the judgment of Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] AO, without conducting any enquiry on this issue, finalized the assessment u/s. 143(3) and eventually allowed the deduction. In view of the fact that such foreign exchange fluctuation loss is not deductible as it pertains to loans taken for capital purposes, the AO by allowing deduction for this sum, passed an erroneous order which was prejudicial to the interest of the Revenue. In our considered opinion, no exception can be taken to the view canvassed by the ld. Pr.CIT in this regard. Decided against assessee.

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• 2023 (8) TMI 1070
  Computation of Interest u/s 244A - Interest to be allowed up to which date? - HELD THAT:- When the refund is issued to the assessee, the interest u/s 244A is required to be computed up to the date on which the refund order is received by the assessee. This is the mandate of case of PFIZER LIMITED [ 1991 (3) TMI 121 - BOMBAY HIGH COURT] . Therefore, this issue is squarely covered in favour of the assessee.

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• 2023 (8) TMI 1069
  Head of income under which the income declared during the course of survey proceedings to be assessed - Quantum of deduction allowable u/sec. 40(b) - remuneration paid to the partners - As per AO excess income declared should be assessed under the head Income from other sources which does not qualify for book profits as defined under the provisions of Sec. 40(b) for the purpose of computing the quantum of allowable remuneration to the partners - HELD THAT:- AO failed to note that once the income is credited to the P L A/c, the presumption is that income is derived from business only and there is no evidence on record by the Assessing Officer to show that the assessee-appellant firm had derived this excess income under the head other than the business carried on by the assessee-appellant. Further once the income is credited to P L A/c, it cannot be said that the source of the excess income is unexplained. The decisions relied on of Kim Pharma Pvt. Ltd. [ 2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT] and SVS Oils Mills [ 2019 (5) TMI 1392 - MADRAS HIGH COURT] have no application to the facts of the present case, inasmuch as, those cases are relates to where no explanation as to the source of the excess stock was found and not shown in the P L A/c. Whereas in the present case the excess income was credited to the P L A/c and, therefore, it cannot be said that excess income is derived from income from other sources. We derive strength from the ratio of decision of Bajargan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] is squarely applicable to the facts of the present case and, therefore, excess income declared during the course of survey proceedings cannot be treated as unexplained income of the assessee-appellant since credited to P L A/c and cannot be assessed as income from other sources, but, under income from business. Appeal of assessee allowed.

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• 2023 (8) TMI 1068
  Levy the penalty u/sec. 271C - non deduction of TDS on harvesting charges - HELD THAT:- Harvesting charges forms part of the purchase price of sugar cane payable to the farmer by the assessee-company and it is well settled law that there is no obligation to deduct tax at source on the purchase of goods. In view of the above settled legal position, we cannot doubt the plea of the assessee-respondent that it had entertained a bonafide belief that no tax is required to be deducted on harvesting charges. CIT(A) has rightly deleted the penalty as it entertained a bonafide belief that no tax is required to be deducted at source on harvesting charges. Appeal filed by the Revenue stand dismissed.

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• 2023 (8) TMI 1067
  Cessation of liabilities u/s 41(1) - CIT(A) applying the provision of section 28(iv) thereby, modifying the assessment order - HELD THAT:- As far the question of cessation of liability in respect of Green Press Pvt. Ltd. is concerned, the assessee has placed reliance on various case laws by the more particularly judgement of Jain Exports (P.) Ltd. [ 2013 (5) TMI 690 - DELHI HIGH COURT ] and Batliboi Environmental Engineering Ltd. [ 2022 (6) TMI 903 - BOMBAY HIGH COURT ] as concluded that merely because the liability is barred by limitation, it does not cease to be a debt. This view is also taken by this court in the case of CIT v. Indian Rayon and Industries Ltd. [ 2010 (3) TMI 299 - BOMBAY HIGH COURT ] Therefore, the submission made by the appellant that because the liability is barred by the period of limitation the same would be treated as income and added under section 41(1) of the Act cannot be accepted as no other decision contrary to the above is shown to us. Thus, the second question of law does not survive for consideration. Thus AO erred in making addition treating the cessation of liability and CIT(A) erred in applying the provision of section 28(iv) of the Act, thereby, modifying the assessment order. The grounds so raised by the assessee deserve to be allowed.

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• 2023 (8) TMI 1066
  Penalty order u/s 271E - repayment of loan in cash - Contravention of the provisions of section 269SS - HELD THAT:- Arun Kumar Gandhi (HUF) had purchased an agricultural land on 30.04.2010 situated at Pratapgarh, Rajasthan. Copy of the registered sale deed was filed by the assessee during the proceedings. The land was purchased in rural area. There was public holiday on 28th March. Banks were over worked being end of financial year. Therefore, in our opinion, there was reasonable cause for cash payment to HUF. In the case of assessee also HUF on the same day i.e. on 30.04.2010 had purchased agricultural land. Therefore, respectfully following case of MANOJ LALWANI. [ 2002 (3) TMI 6 - RAJASTHAN HIGH COURT] , since there was reasonable cause, we direct the AO to delete the penalty. Accordingly, the appeal of the assessee is allowed.

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• 2023 (8) TMI 1065
  Addition on account of unsecured loan - Addition of unsecured loans, merely on the basis of the statement of Rajendra Jain[entry provider] - CIT(A) upheld the addition of unsecured loan as well as disallowance of interest expense by holding that to prove the genuineness of unsecured loan it is the duty of assessee as mandated u/s 68 to prove the identity, creditworthiness and genuineness of such transactions - HELD THAT:- We find that in response to the show cause notice, the assessee furnished loan confirmation, PAN, bank statement along with ITR of lenders. We further find that assessing officer in order to verify the genuineness of such loan transactions issued notice u/s 133(6), such notice was duly served upon both the lenders. Both the lenders filed their respective reply. AO recorded that complete details as desired by him was not furnished. AO by referring the modus operandi alleged entry provider treated the loan transaction as accommodation entry and also disallowed the interest expenses. We find that before Ld. CIT(A) the assessee made similar submissions as argued before us. CIT(A) neither verified the repayment of loan nor sought any remand report from Assessing Officer. Such evidence is self-sufficient to prove the facts that the loan amount alongwith interest was repaid. We find that assessee placed on record copy of their bank statements, reflecting the repayment of loans on 22.03.2016. We find that in the case of Ayachi Chandershekhar Narsangi [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] held that when the department has accepted repayment of loan in subsequent year and no addition was to be made on account of loan. We find that such plea of repayment of loan was not raised for the first time before Tribunal, rather categorically contended before ld CIT(A) as well. We find that repayment of loan was made much before passing of assessment order. The assessing officer passed assessment order on 26.12.2016, however, the loan with current year interest was repaid on 22.03.2016. No evidence was brought on record if receipt of loan was circulated transaction. Decided in favour of assessee.

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• 2023 (8) TMI 1064
  Additions u/s 69C - bogus purchases - information received by AO from the sales-tax department - HELD THAT:- As in the present case, corresponding sales made by the assessee out of the disputed purchases have not been doubted by the Revenue. Thus, in the absence of purchases, the assessee could not have affected corresponding sales. Therefore, respectfully following the judicial precedent in the assessee s own case [ 2017 (4) TMI 1622 - ITAT MUMBAI] we direct the AO to restrict the addition to 2.5% of the bogus purchases. Accordingly, grounds raised in the assessee s appeal are partly allowed.

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• 2023 (8) TMI 1063
  Exemption u/s 11 - Resgistration u/s 12AB cancelled with retrospective effect - Assessement of trust - PCIT (central) jurisdiction to cancel the registration - assessee trust as provided freebies to doctors which are in violation of the Indian Medical Council (Professional Conduct Ethics) Regulations, 2002 - HELD THAT:- We notice that as per serial no.12 of the CBDT notification Nos 52 53, the jurisdiction for all cases in Greater Mumbai and Navi Mumbai, claiming exemption under sections 11 and 12 lies with the Commissioner of Income-tax (Exemption) Mumbai. Therefore we see merit in the submissions of the ld AR that the PCIT (Central) does not have jurisdiction to cancel the registration under section 12AB. As decided in Pacific Academy of Higher Education Research [ 2023 (1) TMI 1283 - ITAT JODHPUR] CIT(Exemption) who is having the jurisdiction to handle cases claiming exemption under section 11 and 12 cannot transfer or hand over or give his work or power or duties. In case, if it is necessary to do so then there has to be proper proceedings in writing. In assessee s case the facts are identical where the assessment is centralized and there was no proceeding or communication to the assessee that the CIT(Exemptions) has transferred his power to PCIT. Therefore respectfully following the ratio laid down in the above decision by the Jothpur Bench of the Tribunal and considering the facts of the present case we hold that the PCIT does not have the jurisdiction to cancel the registration u/s 12 AB. Thus the cancellation of registration retrospectively from AY 2016-17 under section 12AB(4) by the PCIT is not valid. Decided in favour of assessee.

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• 2023 (8) TMI 1062
  Income surrendered in survey action - undisclosed professional income - building expenses and other unaccounted income - CIT(A) treating the Surrendered Business Income under the head Building as Deemed Income u/s 69 - AO invoked the provisions of Section 115BBE and taxe the said income @ 60% - AO also separately added an amount on account of addition in the value of building - CIT(A) confirmed the addition so made by the AO - HELD THAT:- As surrender has been made just on estimation basis that the assessee might have received from professional receipts which might not have been accounted for. Central Board of Direct Taxes has also issued instructions that the Income Tax Authorities at the time of survey/search action should not harp upon taking surrender/confession statements, rather they should collect the evidences relevant to unaccounted/unexplained income and that the additions should not be based merely on by obtaining surrender statements. Surrender statement has been obtained and there is no evidence nor any allegation of the Survey Party that the assessee had income from any other source. In fact, no such income has been found during the survey action. However, the assessee to keep his promise, has offered for taxation the surrendered additional professional income of Rs. 30 lacs. Action of the AO in assessing the aforesaid surrendered income as income from unexplained sources u/s 69 cannot be held to be justified. Therefore, the said surrendered income has been rightly offered by the assessee his business/professional income. The invocation of Section 115BBE is also held not applicable in this case. Separate addition on account of addition in the value of building - Addition made by the AO on account of addition in the value of building cannot also be held to be justified as the assessee in clear terms has surrendered the additional professional income covering the expenditure incurred on building also - Decided in favour of assessee.

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• 2023 (8) TMI 1061
  TP Adjustment - upward adjustment made for AMP expenses - HELD THAT:- Considering the facts of the present case and the applicable law as well as the recent decision of Coordinate bench in assessee s own case for the preceding two years [ 2020 (6) TMI 474 - ITAT KOLKATA ], we are in agreement that AMP is not an International Transaction and thus, delete the ALP adjustment made - Accordingly, grounds taken by the assessee in this respect are allowed. ALP adjustment on account of payment of royalty - AO/TPO observed that many of the brands on which royalty for know-how and brand were paid are very old for which no patent exists and Assessee was show caused as to why not royalty paid for know-how on the brands be considered as junk and only the royalty on brand be allowed on the basis of comparable agreement - whether royalty is embedded in the import price paid by the assessee to its AEs, on the goods imported by it? - HELD THAT:- We find force in the submissions made by the Ld. Counsel vis- -vis application of principle of consistency as well as jurisdiction of the Ld. TPO to test the commercial expediency of an international transaction while applying the benefit test for which we place our reliance on the decision of the Coordinate Bench in assessee s own case for the preceding two years (supra). Also we observe that payment of royalty on the import of goods by the assessee from its AEs is governed by the licence agreement which is effective since the year 2005. We note that there is no legal bar on the commercial terms arrange by the assessee in respect of payment of royalty of the net sales - Also, Customs Authorities have duly examined the issue in respect of royalty if embedded within the import price in respect of goods imported by the assessee from its related parties i.e. AEs. The Special Valuation Branch of the Customs Authorities has given a categorical finding that royalty is not included in the invoice value of the goods imported by the assessee - while arriving at a conclusion, ld. TPO has no where recorded and referred to any material which could demonstrate that royalty payment by the assessee is embedded in the process of the imported goods. To our understanding, it is merely a presumption which cannot be upheld after looking into the facts of the case and corroborative material placed on record - thus we delete the upward adjustment in respect of payment of royalty. Upward adjustment for R D services - TPO rejected certain comparables selected by the assessee owing to difference in functions, assets, risk (FAR analysis) - HELD THAT:- As we find it proper to remit the matter back to the file of Ld. TPO to undertake comparability test based on correct functionality of the comparables by considering the material on record and arrive at the benchmarking in accordance with the provisions of law. Assessee is at liberty to furnish any further details in this respect to justify its benchmarking of ALP of the transaction. Adjustment made towards IT support services - KPO or BPO services - Comparable selection - HELD THAT:- Counsel candidly submitted that after capturing the correct functional profile of the comparables based on material furnished by the assessee, the matter may be remitted back to the file of Ld. TPO to undertake a fresh comparability test to arrive at correct bench-marking. Considering the submissions made, facts of the case and material placed on record, we find it proper to remit this issue also to the file of Ld. TPO to undertake afresh comparability test by capturing the correct functionality as the assessee has described the IT support services which it has provided to its AEs. Upward adjustment on export of raw material and finished goods - TPO noted that margin in export of raw material and finished goods in the case of comparables selected is high for which assessee was issued a show cause notice and also proposed to consider internal Transaction Net Margin Method (TNMM) to determine the arms length price (ALP) - HELD THAT:- As on perusal of the charts furnished with the updated computation of margin by highlighting the functional profile of each of the comparables, we find it appropriate to remit this issue to the file of Ld. TPO to revisit the comparables by taking into consideration the material placed on record. Assessee is at liberty to furnish any further details in this respect to justify its benchmarking of the transaction to arrive at ALP. Upward adjustment for import purchases of finished goods from the AEs - TPO found functional difference in the comparables and recomputed the gross profit margin of 37.06% to arrive at the ALP of imported goods - As contended that the comparables considered by the Ld. TPO have functional differences and, therefore, the entire bench- marking exercise has to be revisited - HELD THAT:- As we find it proper to remit the matter back to the file of Ld. TPO to revisit the benchmarking exercise by taking into account the functional profile of the comparables and that of the assessee to arrive at justifiable ALP. Assessee is at liberty to furnish any further details to substantiate its claim. Adjustment made for mark-up of recovery and expenses - TPO observed that assessee has recovered expenses from its AEs which are in the nature of services provided in helping the AEs in the legal affairs and arranging for the trained manpower. He thus, treated this as support service and bench-mark by using the comparable companies to arrive at Profit Level Indicator (PLI) of 18.17% - assessee submitted that there is no adjudication by the Ld. TPO or Ld. DRP as to what services were rendered. According to him, expenses in question were in respect of system upgrade of the assessee for which costs were reimbursed to the assessee by the AEs - HELD THAT:- We remit this issue back to the file of Ld. TPO to adjudicate upon this issue by taking into consideration the evidence placed on record by the assessee. Upward adjustment towards allocation of expenses - Counsel submitted that there is no income element in the said transactions which are on cost to cost basis reimbursements and TPO has limited jurisdiction to determine the ALP of an international transaction and questioning the commercial expediency is not in his domain - HELD THAT:- As we find it proper to remit this issue back to the file of Ld. TPO to adjudicate upon the same by taking into account the details and evidence placed on record by the assessee.

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• 2023 (8) TMI 1060
  Deduction u/s 80P - claim denied on intimation u/ 143(1) - assessee has not filed the return of income within the due date specified u/s 139(1) for the A.Y. 2019-20 in question - HELD THAT:- The identical issue has come up before case of Kishorepur Paschimanchal SKUS Limited . [ 2023 (5) TMI 1243 - ITAT KOLKATA] wherein after taking note of provisions of Section 80AC of the Act and provision of Section 143(1) and subsequent amendment thereto, it was concluded that such adjustments under Chapter VI-A was not permissible u/s 143(1) of the Act in response of assessment years prior to A.Y. 2021-22. In the light of observations towards impermissibility to make adjustments towards deduction claimed under Section 80P of the Act prior to the amendment carried out in Section 143(1)(a)(v) of the Act effective prospectively from 01.04.2021 i.e. A.Y. 2021-22, we are of the view that CPC, Bengaluru has committed prima facie error in making adjustments to the returned income on account of deduction claimed u/s 80P of the Act while drawing intimation u/s 143(1) - We, thus, find merit in the plea of the assessee seeking rectification of the apparent error. Consequently, we set aside the order of the CIT(A) and direct the designated authority/CPC, Bengaluru to restore the deduction claimed under Section 80P of the Act made by the assessee - Appeal of assessee allowed.

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• 2023 (8) TMI 1059
  Reopening of assessment u/s 147 - disallowance u/s. 14A r.w.r. 8D - HELD THAT:- In the present case, if you go by reasons recorded for re-opening of assessment, the assessment has been reopened to assess income chargeable to tax had been escaped assessment on account of computation of disallowance u/s. 14A r.w.r. 8D and said issue was subject matter of appeal before the CIT(A). The issue of disallowance u/s. 14A r.w.r. 8D of I.T. Rules, 1962 was travelled up to Tribunal and [ 2021 (3) TMI 1429 - ITAT CHENNAI] has remanded the issue back to the file of the Assessing Officer for denovo consideration of disallowance u/s. 14A r.w.r. 8D, thus it is very clear that the issue on which the assessment has been re-opened was subject matter of appeal and thus, in our considered view as per 3rd proviso to section 147 re-opening of assessment and consequent assessment order passed by the Assessing Officer is bad in law and liable to be quashed. Decided in favour of assessee.

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• 2023 (8) TMI 1058
  Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - HELD THAT:- As decided in the case of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT ] that in case assessee has surplus fund then it is presumed that investment has been made out of surplus funds and no disallowance u/s 14A can be made on interest expenditure - thus no disallowance on account of interest can be made when assessee has surplus funds. In so far as the ld. CIT(A) s direction that to re-compute disallowance considering only those investments including investment in subsidies which have earned tax free income during the year, is based on precedents of earlier years of the Tribunal for the A.Y. 2017-18 and 2018-19 supra. Decided against revenue. Nature of expenses - Expenditure on replacement of meters - AO held that expenditure incurred in replacement of meters is a capital expenditure and allowed depreciation thereon as against assessee s claim as revenue expenditure - HELD THAT:- The expenditure on replacement of meters is for facilitating the assessee s business operations and enables maintenance and conduct of the assessee s business more effectively or more profitably. The replacement of meter does not increase the assessee s generation or distribution capacity. Further, replacing old meters by new meters has resulted only in getting better readings of the current consumption and does not in any way enhance the capital assets or the quantity of power supply. Accordingly, the assessee has correctly claimed the expenditure incurred on replacement of meters as revenue expenditure - See Bombay High Court in assessee s own case [ 2014 (6) TMI 574 - BOMBAY HIGH COURT ] Allocation of head office expenses for computing profit eligible for deduction u/s. 80IA for distribution unit - AO has apportioned the head office expenses to all the units and the eligible profits were re-computed - HELD THAT:- Now this issue is settled in the case of the assessee on the same point by the decision of the Tribunal as well as the Hon ble Bombay High court in earlier years that profit of eligible undertaking has to be worked out as if such undertaking was only source of income during the previous year and deduction u/s. 80IA is allowable in respect of profits and gains derived from such business. Therefore, head office expenses cannot be deducted from the profits and the gains which had derived from eligible business because it has been found as a finding of fact that these expenses do not have direct and immediate connection with the eligible unit. Accordingly, ground raised by the Revenue is dismissed. Deduction u/s. 80IA restricted to business income instead of total income - HELD THAT:- The Hon ble Supreme Court [ 2021 (4) TMI 1237 - SUPREME COURT ] has decided the issue in favour of the assessee wherein claim that deduction u/s. 80IA ought to be allowed upto gross total income has been accepted. Thus, in view of the above, we allow the assessee s claim of deduction u/s. 80IA that it ought to be allowed up to gross total income which has been accepted. Consequently, the ground is dismissed. MAT - computation of book profits u/s. 115JB and disallowance u/s.14A - HELD THAT:- As no disallowance u/s. 14A is required to be made for computing book profits u/s. 115JB. See Vireet Investments P. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] Disallowance of inflated coal expenses - disallowance on adhoc and estimated basis at 12% - HELD THAT:- As all the observations and the finding given by the ld. AO as incorporated these are all based on DRI report which as of now has not been approved by the higher appellate forums and as informed by the assessee, the same are still at the stage of show-cause notice and no final order has been passed. Thus, all the observations of AO has no relevance at all. As observed above, the case of the Revenue is that assessee might have inflated cost of the coal, however, once the cost of the coal is part of tariff price determination by the regulatory authority and once the electricity is sold on the same tariff which has been credited to the profit and loss account and offered to tax, then there is no question of separately taxing the alleged inflated cost of coal. Therefore, no disallowance at all is warranted. Accordingly, the entire addition is deleted and consequently, the Revenue s appeal is dismissed and assessee s appeal is allowed.

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• Customs

• 2023 (8) TMI 1057
  Provisional release of the goods under Section 110A of the Act of 1962 - goods declined to be released on the ground that the said goods did not contain starch or other additives and did not fall under CTH2106 - CESTAT allowed the provisional release - contradictory nature of test reports received from CRCL, Mumbai and Anacon Laboratory - HELD THAT:- The report dated 16-11-2022 received from CRCL, Mumbai indicated presence of some insect infestation in all the samples. On this basis, the Superintendent of Customs on 30-11-2022 proceeded to observe that there was a mismatch between the test memo submitted and the test report obtained. Anacon Laboratory in its report dated 16-11-2022 found the samples fit for human consumption as per FSSAI specifications. It is clear that despite receiving the test reports for the queries that were made to CRCL, Mumbai and Anacon Laboratory, the Superintendent by his communication dated 30-11-2022 further sought a test to be undertaken by CRCL, Mumbai as to whether the sample was fit for human consumption or not. When this test was not sought at an earlier point of time vide communication dated 14-11-2022 and the report of Anacon Laboratory, a FSSAI accredited Laboratory being clear that the sample was fit for human consumption, there does not appear to be any basis for the Superintendent on 30-11-2022 to again make a request for confirming whether the sample was fit for human consumption or not. In this regard, if Regulation 9 of the Regulation of 2017 is perused, it becomes clear that two parts of the food sample are required to be first taken. The Authorised Officer is required to forward one part of the sealed and labelled article to the Food Analyst at a notified Laboratory under the Regulation of 2011. If the sample is found to be safe, the remaining sample is required to be returned to the importer. If the sample is found to be unsafe, on the request received from the food importer, the second sample can be forwarded to the Referral Laboratory for analysis. It thus indicates that only if the sample sent to the Food Analyst is found to be unsafe that such second sample be referred to the Referral Laboratory. The communication dated 30-11-2022 issued by the Superintendent therefore does not appear to be in consonance with Regulation 9 of the Regulation of 2017. The appellant has relied upon Notification dated 9-10-2019 issued by FSSAI which refers to notifying various Customs officials as Authorised Officers under Section 25 read with Section 47(5) of the Act of 2006 for food import clearance. In accordance therewith, Instruction No. 1 of 2020 issued by the dated 12-2-2020 require the Custom Official notified as Authorised Officer to ensure that the FSSAI accredited Laboratories are being utilized for analysis of samples of imported food items. The communication dated 14-12-2020 issued by the Superintendent thus indicates that the reports submitted by CRCL, Mumbai and Anacon Laboratory, Nagpur were not contradictory in nature considering the tests directed to be carried out. The decision in DINESHCHANDRA JAMNADAS GANDHI VERSUS STATE OF GUJARAT [ 1989 (1) TMI 222 - SUPREME COURT] refers to challenge to the order of conviction under the provisions of the Food Adulteration Act, 1954 and holds that offence of food adulteration is a socio-economic offence. It is not found that the appeal gives rise to any substantial question of law for consideration. The order passed by the CESTAT on 10-5-2023 does not call for any interference. The Customs Appeal is dismissed.

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• 2023 (8) TMI 1056
  Revocation of Customs Broker License - appellants contend that the offence committed by the various exporters was extraneous to their (the appellant) functions as a Customs Brokers - violation of Regulation 10(n) of CBLR or not - HELD THAT:- The Ld. Adjudicating Authority arrived at a finding that there is no reason to disagree with the Inquiry Report received on 28.12. 2021 and therefore ordered, the revocation of the Customs Brokers License. Regulation 10(n) merely requires the Customs Broker to verify the correctness of Importer Exporter Code, (IEC) number, Goods and Service Tax Identification number at the declared address by using reliable independent authentic documents, data or information. Obviously, this responsibility does not extend to physically going to verify the premises of each of the exporters to ensure that they are functioning at the premises. When a Government Officer issues the certificate bearing registration number with an address, it is not for the Customs Broker to sit in judgement over such a certificate. The Customs Broker cannot be faulted for trusting the certificates issued by the various government bodies/department. It is a different matter, if the documents are not authentic and are forged by the Customs Broker or the Customs Broker had reason to believe that the said documents were not truthful and their veracity was in doubt. The Customs Broker is only a processing agent of documents with respect to a document submitted to him. The Customs Broker is neither omniscient nor omnipotent. The Customs broker is not concerned with to ensure that the documents issued by the various organisations were issued correctly. If they were issued wrongly, the fault lies with the authorities issuing such certificate, and registrations, and not with the Custom Broker. It is not for the Custom Broker to needlessly doubt the government issued IDs and registration numbers. The broker cannot be faulted for believing in them. The Customer Broker in terms of regulation 10(n) of the CBLR, is obligated to verify the correctness of the IEC number, GSTIN, identity of his client and functioning of his client at the declared address by using reliable independent authentic documents, data or information. It merely cannot be pleaded that the IEC code which is issued by the DGFT, the GST number, the PAN which is issued by the Department of Revenue, CBIC CBDT respectively, have all been done with collusion and for enabling the exports. The fault for any wrong doing revenue loss thus does not befall upon the Customs Broker. Thus, in terms of Regulation 10(n), any of the three methods viz. document, data or information can be employed by the Customs Broker to establish the identity of their client. It is not necessary that the Customs Broker are required to collect information or launch an investigation. So long as there are documents which are independent, reliable and authentic to establish the identity of the client, this obligation is fulfilled. Documents such as GSTIN, IEC and PAN card are all such documents as prescribed. The responsibility of the Customs Broker as held by judicial bodies does not require then to maintain vigil and continuous surveillance on the client to ensure that they continue to operate from the address as given in the various KYC documents and in case of change as such get the documents amended - none of the documents entertained by the Customs Broker obtained for KYC, have been indicated to be fictitious and not genuine, it is found that the Customer Broker has not violated Regulation 10(n) of CBLR with regard to the said fifteen exporters. Thus, Customs Broker has not failed in discharging his responsibilities under Regulation 10(n) of CBLR, 2018 Under the circumstances, the Customs Broker cannot be held responsible for the exporters found to not exist during subsequent verification undertaken, by the officers or there has been unrealized IGST, availed of by the untraceable exporters. The Ld. Commissioner s Order cannot be sustained and is required to be set aside - Appeal allowed.

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• 2023 (8) TMI 1055
  Undervaluation of imported goods - cement imported from Bangladesh - it was alleged by Revenue that the declared MRP of the cement imported by the Appellant was much less as compared to the MRP declared on the cement imported from the same manufacturer through other ports - original assessment of the Bills of entry not challenged - HELD THAT:- It is observed that different lots of the impugned goods were imported by different importers through different land ports though the goods were manufactured by the same manufacturer in Bangladesh. The Appellant stated that the MRP printed on the goods imported through other ports can be different as the Place of importation itself was different and hence difference in MRP is quite natural - It is observed that MRP on the same item is decided in consideration of a number of factors besides landing cost and duty element. In the instant case the goods were imported through different ports. That itself is a valid reason for the difference in price. There is no evidence to suggest that the goods so imported through different ports under different MRP were being sold at same price. Hence, the price difference cannot be attributed to suppression of the value by the Appellant. Accordingly, the demand is not sustainable. The self-assessment of the Bills of Entry by the importer was not challenged by the department. The Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] , has held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. It is observed that the ratio of the above said decision is squarely applicable in this case - The impugned order passed demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable. Hence, the demand is not sustainable on this count also.

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• 2023 (8) TMI 1054
  Valuation of imported goods - mis-declaration with regard to value of the goods - Suppression of facts or not - confiscation - redemption fine - penalty - HELD THAT:- In case, where the duty has been non-levied or short-levied, owing to the reason of collusion or any willful mis-statement or suppression of facts, it has been mandated in Section 114A ibid that the person who is liable to pay the duty, as determined under subsection (8) of Section 28 ibid, shall also be liable to pay a penalty equal to the duty so determined. However, the first proviso appended to Section 114A ibid, considers for payment of 25% of determined amount of duty, in the eventuality where such duty is paid within 30 days from the date of communication of the order. In the present case, payment of the disputed duty amount along with interest is not in question inasmuch as such amount was paid by the appellants during the course of investigation, and the same has also been appropriated in the adjudication order. Further, it is not the case of Revenue that the appellant M/s Zuari Structural Works Engineers had not paid 25% of penalty within the period of 30 days from the date of communication of the adjudication order. In this context, the Learned Advocate appearing for the appellants has stated that the reduced penalty amount was deposited on 18.01.2013 - the impugned order, to the extent it has upheld confirmation of the penalty amount equal to the adjudged amount of duty and interest on the appellant M/s Zuari Structural Works Engineers cannot be sustained and accordingly, is liable to set aside. Hence, the impugned order upholding confirmation of equal amount of penalty is set aside and the appeal to such extent is allowed in favour of the appellant. Imposition of penalty under Section 114A ibid on Shri Gurudas Kamat, partner of the appellant M/s Zuari Structural Work Engineers - HELD THAT:- nsofar as imposition of penalty under Section 114A ibid is concerned, the said provision can only be invoked in the case of the importer, engaged in importation of goods into India. Since, the appellant Shri Gurudas Kamat is not an importer of the subject goods in the present case and that the said statutory provision has already been invoked for short-levy or non-levy of duty on the importer, we are also of the view that penal provisions contained in Section 114A ibid cannot be invoked for imposition of penalty on the appellant herein. Therefore, on this ground, the appeal filed by Shri Gurudas Kamat is allowed by setting aside the impugned order to this extent. Confiscation - redemption fine - penalty - HELD THAT:- The appellant herein is a high sea s purchaser of the goods and filed the Bill of Entry for clearance of the goods from the customs custody. Since,all the related documents were submitted at the time of assessment of the goods in question, it cannot be said that the provisions of Section 111(m) ibid have been contravened, inasmuch as there is no mis-declaration of value and also acknowledging the fact that appellant should not be held responsible for mis-declaration of goods and confiscation of the goods, the original authority had rightly imposed penalty on M/s. Mallesh Co. by invoking the provisions of Section 112(a) ibid. Since, the Department has recognized M/s. Mallesh Co.,as High Sea seller and a distinct person in the transaction between the overseas seller and the appellant herein, the appellant being the high sea s purchaser cannot be penalized for confiscation of the goods under Section 111(m) ibid. Therefore, the impugned order imposing redemption fine of Rs. 3,03,000/- on the appellant is set aside and the appeal is allowed in favour of the appellant. Appeal disposed off.

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• 2023 (8) TMI 1053
  Valuation of imported goods - Opal glassware - evidence of contemporaneous import dismissed on the ground that the document purportedly showing the value of contemporaneous import being unauthenticated unsigned - HELD THAT:- While remanding the matter this Tribunal has not directed the Adjudication Authority to consider any specific ground but directed to reconsider the issue afresh. In such situation there is no infirmity in reopening the entire issue. However, the Adjudication Authority ought to have considered the findings given by this Tribunal regarding the sustainability of the finding regarding statement recorded from the Managing partner. Moreover in spite of furnishing details like port of import, Bill of Entry number, date, country of origin, imported items etc. for the relevant period and even after specific directions to consider the evidence produced by the appellant regarding contemporaneous import by this Tribunal, no efforts were made by the Adjudication Authority to call for the records available in the data bank regarding said imports to verify the facts after sharing such information with appellant before de-novo adjudication. As regard the findings related to overseas remittance, the Adjudication Authority has stated that the importer did not produce statement covering the entire period of import. The Hon ble Supreme Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2000 (11) TMI 139 - SUPREME COURT] held that the transaction value cannot be rejected unless the imports attract any of the exceptions noted in Rule 3(2) of Customs Valuation Rules, 2007. Revenue has not been able to establish that imported goods attracts exception noted in Rule 3(2) of Valuation Rules. Regarding trade discounts claimed by the appellant, this Tribunal in M/S. OZURT SYSTEMS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2015 (11) TMI 1090 - CESTAT BANGALORE] considered the claimed discount at the range of 87% to 97% from the supplier s price list and following the judgment of Hon ble Supreme Court in MIRAH EXPORTS PVT. LTD. VERSUS COLLECTOR OF CUSTOMS [ 1998 (2) TMI 124 - SUPREME COURT] and in METAL BOX INDIA LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MADRAS [ 1995 (1) TMI 380 - SUPREME COURT] held that, it is not unusual for foreign supplier to give a higher discount when imports are in much larger quantity and in such cases, it cannot be said that there has been undervaluation in the invoice. There has not been sufficient evidence with the Department to reject the transaction value - the appeals are allowed, penalty imposed on appellants are set aside with consequential relief if any.

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• Insolvency & Bankruptcy

• 2023 (8) TMI 1052
  Seeking closing of CIRP process - HELD THAT:- From the facts which have been recorded in the Settlement Agreement, it is clear that the Corporate Debtor has defaulted in making payment to the Operational Creditor since 2015 and the Settlement Agreement dated 27.09.2021 was also breached since payment as per the Settlement Agreement was not discharged by the Corporate Debtor. The Settlement Agreement, thus, clearly contemplates that in event of default, the Operational Creditor shall continue with the existing pending proceedings. The default having been committed by the Corporate Debtor, it is not open for the Corporate Debtor to insist that the Operational Creditor should not continue the proceedings. From the Settlement Agreement it is also clear that on account of breach the entitlement of Operational Creditor was Rs.92.70 Crores minus Rs.25 Lakhs with interest @12%. At time when the CoC was not constituted, there can be no impediment in power of Adjudicating Authority to exercise jurisdiction under Rule 11 to close the CIRP even if no application as per the procedure under Section 12A r/w Regulation 30A has been filed. The Adjudicating Authority itself has recorded finding that application filed by the Applicant was maintainable, which finding is recorded in Para 10 of the order. Thus, the mere fact that there are claims of other creditors against the Corporate Debtor are not impediment for closing the CIRP filed by an Applicant either under Section 7 or Section 9, if the Applicant enters into settlement with the Corporate Debtor and the debt is liquidated but present is a case where offer given by the Appellant in its application under I.A. No. 1571 of 2023 came after breach of the Settlement Agreement at the stage when Appeal against the admission order was dismissed by this Tribunal and the said order was upheld by the Hon ble Supreme Court - CIRP against the Corporate Debtor need not be closed and be allowed to complete its due course in accordance with law. Appeal dismissed.

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• PMLA

• 2023 (8) TMI 1051
  Money Laundering - quorum non judis - adjudicating authority presently functioning with only one member - attachment/retention/freezing of property or record during the pendency of the proceedings relating to the schedule (predicate) offence - HELD THAT:- The functions of the adjudicating authority are civil in nature to the extent that it does not decide on the criminality of the offences nor does it have power to levy penalties or impose punishment. Thus, the decision in PAREENA SWARUP VERSUS UNION OF INDIA [ 2008 (9) TMI 558 - SUPREME COURT] would go to support the stand taken by the Enforcement Directorate before this Court - The decision in MADRAS BAR ASSOCIATION VERSUS UNION OF INDIA ANR. [ 2020 (12) TMI 3 - SUPREME COURT] pertain to the constitutionality of various provisions concerning the selection, appointment, tenure, conditions of service and ancillary matters relating to various tribunals which act in aid of the judicial branch. While considering such an issue, namely appointment to tribunals which are in aid of the judicial branch namely tribunals constituted under Section 323A and 323B of the Constitution, the court made pointed observations as to the constitution of Search and Selection Committees to such tribunals, and held that the judicial dominance in the composition of the Search and Selection Committees is required to ensure independence of tribunals. Therefore, decision in Madras Bar Association would be inapplicable to the facts and circumstances of the case on hand. Absence of two members in the adjudicating authority whether a single member has become quorum non judis and cannot take up the cases for adjudication - HELD THAT:- Section 6 of the PMLA Act deals with adjudicating authorities, composition, powers etc. Sub Section (1) of Section 6 states that the Central Government shall by notification appoint and adjudicating authority to exercise jurisdiction, powers and authority conferred by or under the Act. Sub Section (2) states that the adjudicating authority shall consists of a Chairperson and two other members. The proviso states that one member each shall be a person having experienced in the field of law, administration and finance or accountancy - A plain reading of the provision makes it clear that the Central Government is empowered to appoint an adjudicating authority by issue of notification in the Gazette to exercise the jurisdiction, powers and authority conferred by or under the Act and in accordance with the said provision the Central Government has issued a notification on 01.07.2005 and have appointed the adjudicating authority to exercise jurisdiction, powers and authority conferred by or under the Act. Thus, for all purposes an adjudicating authority has been put in place and the manner in which the business of the adjudicating authority has to be carried out is stipulated in Sub-Section (5) of Section 6 and in terms of Clause (b) of Sub Section (5) of Section 6, a single member bench of the adjudicating authority is competent to adjudicate any matter under the provisions of the Act. Any other interpretation as suggested by the appellant, if acceded to would make the provisions of the Act unworkable, apart from such interpretation not being in line and in tenor with the provisions of Section 6. Therefore, the contention raised by the appellant has to necessarily fail. The Hon ble Division Bench of the High Court of Delhi in J. SEKAR, S. RAMACHANDRAN, K. RETHINAM, SRS MINING, T. VINAYAK RAVI REDDY, SURENDRA KUMAR JAIN AND ORS., M/S. SWASTIK CEMENT PRODUCTS PVT. LTD. ORS., DHAWAN CREATIVE PRINTS PVT. LTD. AND ANR., APARAJITA KUMARI ANR., PRATIBHA SINGH ANR. VERSUS UNION OF INDIA JOINT DIRECTOR, ENFORCEMENT DIRECTORATE ANR. [ 2018 (1) TMI 535 - DELHI HIGH COURT] held that under Section 6(5)(b) of the PMLA Act, a bench may be constituted by the Chairperson of the adjudicating authority with one or two members as the Chairperson may deem fit. It was held that it is possible to have a single member bench. The word bench therefore does not connote plurality; that could, even under Section 6(5)(b) of the PMLA Act be a single member bench . Further it was held that when Section 6(6) of the PMLA Act states that a Chairperson can transfer a member from one bench to another, it has to be noted in the above context of their also being a single member bench. By a reading of Section 6 of the PMLA Act without adding or substituting words into the statute, it is clear that the adjudicating authority which comprises of a single member bench is entitled to adjudicate the matter and any other interpretation would tantamount to distorting the language adopted in the statute which is impermissible. The appellant has not made out any case for interference with the order passed by the learned single bench. Accordingly, the appeal fails and it is dismissed.

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• Service Tax

• 2023 (8) TMI 1050
  Inordinate delay of almost 10 years in adjudication of the case - respondents contended that the petition be dismissed because the Petitioner has not attended the hearing and the revenue should be permitted to proceed with the show cause notices - HELD THAT:- The Respondents have not explained the delay as to why after issuing notices in 2010/2011, they could not complete the adjudication proceedings for a period of almost 10 years. The Respondents have not furnished any proof of the notice of personal hearing, alleged to have been, granted in the year 2015 and 2017 except making an averment in the affidavit-in-reply nor pursuant to RTI application proof of service of these notices were furnished to the Petitioner. The Respondents were not prevented to complete the adjudication proceedings ex-parte if the Petitioner, as alleged by the Respondents, did not attend the so-called personal hearing granted in 2015 and 2017. There is no explanation provided by the Respondents explaining delay in adjudication. The delay in completion of the adjudication proceedings for a period of almost 10 years cannot be attributed to the Petitioner and further in the absence of the delay having been explained by the Respondents, the impugned notices ought to be quashed - it cannot be expected that oblivious to the above position in law as also the mandate of Section 73(4B) of the CGST Act, the adjudicating officer would nonetheless proceed to adjudicate the show-cause notice. Petition allowed.

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• 2023 (8) TMI 1049
  Classification of services - Restaurant-cum- Bar Service - air conditioning facility is provided therein or not - Suppression of facts - extended period of limitation - HELD THAT:- It is found from the records that subsequent to the inclusion of the services provided by the Restaurant having facility of air conditioning in the service tax net, letter dated 7.9.2012 was issued by the department calling upon the appellant to provide details of Registration Certificate, Bar licence., STR/ Income Tax Returns, bill books and bank account details for the financial year 2011-2012. The appellant in terms of summons dated 19.12.2012 appeared on 28.12.2012 and in his statement recorded under section 14 of the Act, stated that on 8.7.2010 when he obtained Bar licence he was having air conditioning facility in his Restaurant-cum-Bar but air conditioner was removed and instead air cooling facility through air cooler was provided by the end of year 2010 till 31.12. 2012 - it appears that the statement made by the appellant on 28.12.2012 was a mere cover up so as to avoid any service tax liability and there is no substantive proof in support thereof. On the contrary, it is on record that in the initial application made by the appellant on 23.6.2010 for availing the liquor licence the restaurant had air conditioning facility. There is nothing to rebut this documentary evidence and therefore the case of the appellant is not acceptable. The licence is currently valid which means that the appellant is still running the Restaurant-cum-Bar and as per the Restaurant Bar Licence policy and law of State Excise Department the appellant needs to comply with the conditions linked with the grant of licence as well as for the renewal of the licence and one of which is that air conditioning facility is provided therein - there are no perversity in the appreciation of the material on record and therefore, the plea taken by the appellant that they have dispensed with the air conditioning facility is not correct and needs to be rejected. Suppression of facts - extended period of limitation - HELD THAT:- The extended period of limitation is clearly applicable as the appellant suppressed the correct fact with regard to the facility of AC being available at the restaurant and mis-represented and misguided the department with the sole intent to evade payment of duty. The intention to evade duty is writ large in the conduct of the appellant and it cannot be said to be a case of bonafide belief of non liability of service tax or a case of ignorance of service tax liability. For the said reasons, penalty under section 77(1)(a), 77(2) and 78 of the Finance Act,1994 are also confirmed. Unless and until, the appellant is able to produce any cogent and substantive evidence in support of his statement that he does not have the AC facility in the restaurant, he is not eligible to claim the benefit of the exemption notification. The burden lies on the appellant to prove his case that he falls under the exemption Notification as there is no AC facility in his restaurant, which he has failed to do. There are no infirmity in the impugned order which is hereby affirmed and the demand of service tax for the period from 01.05.2011 to 31.03.2015 alongwith penalty under Section 77(1)(a), 77(2) and 78 of the Finance Act, 1944 is upheld. Accordingly, the appeal is dismissed.

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• 2023 (8) TMI 1048
  Valuation of services - Manpower Recruitment or Supply Agency service - inclusion of consideration for salary, EPF and ESI as gross value of taxable services in terms of Section 67 of Finance act 1994 - time limitation - HELD THAT:- It is not the case of the Department that the appellant is separately recovering the charges towards wages, EPF, ESI etc. and that the same are not reimbursable deductions - it is found that though the agreement is on the basis of perkilometer per-person provided by the appellants to M/s PRTC, it is the PRTC who have also indicated the wages, PF etc. to be paid by the appellants. Notwithstanding the fact that the contract or the offer letter issued by PRTC does not indicate the wages etc. separately, the circular issued by them indicates the same. It is not the claim of the Department that such wages, PF etc. are not paid by the appellants or not paid in full by the appellants. Therefore, it is opined that they are in the nature of the reimbursable expenses and cannot be termed to be expenditure incurred by the appellants in the course of provision of the service. Moreover, going by the latest decision of the Tribunal in the case of M.P. Security Force [ 2019 (8) TMI 211 - CESTAT NEW DELHI] , it is found that wages, EPF, ESI etc. cannot be included for the purpose of arriving at the value of taxable service for the purpose of Service Tax Valuation Rules. Extended period of limitation - HELD THAT:- vide a catena of judgments including that of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] , it was held that mere non-obtaining of registration; non-filing of returns and nonpayment of service tax does not constitute a suppression with intent to evade service tax in order that extended period is liable to be invoked; there should be a positive act on the part of the assessee to show that there is such suppression or mis-statement etc. with intent to evade service tax. In the instant case, the Department has not adduced any evidence to this effect other than bare averment that extended period is invokable - Therefore, in view of the judgments, it is opined that in the facts of the impugned case, extended period cannot be invoked and the appellants succeed on limitation also. The appellants contended that they are not a Commercial Concern during the period 01.04.2006 to 30.04.2006 - HELD THAT:- This issue pertains to only a small period and as the appellants succeed both on merits and limitation, any discussion on this count is redundant. Appeal allowed.

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• 2023 (8) TMI 1047
  Demand of service tax - amount received post sale deed date - It appeared to Revenue that the cost of construction completed up to the date of introduction of tax w.e.f. 16.06.2005, receipts covered by the same deed (sale amount), and hence, the question of allowing further deduction on account of construction work done before the date of introduction of tax, does not arise. HELD THAT:- The taxability no longer exists in view of the clarification by the Board vide aforementioned Circular No. 151/2/2012-ST dated 10.02.2012, for the construction of residential complex prior to 01.07.2010. Appeal allowed.

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• 2023 (8) TMI 1046
  CENVAT Credit - input services or not - services used in the residential colony of the assessee-appellant - nexus with output service or not - period of dispute involved in this case is from April, 2009 to March, 2011 - HELD THAT:- The definition of input service under the un-amended provisions of Rule 2(l) of the CENVAT Credit Rules, 2004 (effective up to 31.03.2011) is relevant for consideration of the present dispute - On reading of the statutory provisions, it reveals that in the inclusive part of the definition, the phrase activities relating to business is specifically finding place for the purpose of consideration of the services as input service for grant of the benefit of CENVAT Credit to the manufacturer/service provider - It is found that the cost of the disputed services together with the service tax paid thereon towards maintenance and repair of the residential colony situated adjacent to the factory premises had been considered by the appellant for calculation of the cost of production of manufacture of final products and on clearance of the same, they had discharged appropriate duty liability, which has also not been disputed by the Department. The appellant had, in fact, incurred the expenses towards maintenance of the residential colony situated adjacent to factory and such cost has also formed an element of the cost, while preparing the periodic statement of the cost of production, on which appropriate Central Excise duty liability has been discharged. Thus, denial of CENVAT benefit by the authorities below cannot be sustained It is also found that in the appellant s own case for the earlier period, this Bench in MANIKGARH CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2017 (9) TMI 776 - CESTAT MUMBAI] has allowed the CENVAT benefit to the appellant on the identical set of facts. There are no merits in the impugned order, insofar as it has upheld denial of the CENVAT benefit to the appellant - the appeal is allowed in favour of the appellant.

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• 2023 (8) TMI 1045
  Levy of service tax - manpower supply services or not - taking on loan employees of other company, secondment - receiving invoices from its group company, namely M/s. BJ Services Co., Huston, Texas (Texas company) for salaries and other benefits and the amounts stated in the said invoices were paid by the appellant in foreign currency - reverse charge mechanism - extended period of limitation. HELD THAT:- Both the sides agree that the ruling by Hon ble Supreme Court in the case of C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] is squarely applicable in the facts of the present case. It was held in the case that It is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued). It is also observed that the original authority did not have advantage of the ruling by Hon ble Supreme Court while deciding the issue and passing the impugned order-in-original. The data in the appeal paper book does not throw light on the quantum of service tax that would be recoverable in case the present appeal succeeds in setting aside the demand for extended period of limitation. Thus, matter remanded to the original authority with a direction to follow and apply the ruling passed by Hon ble Supreme Court in the cited case of Northern Operating Systems Pvt. Ltd. in its letter and spirit and redetermine service tax liability of the appellant, the interest payable by the appellant and penalties to be imposed. For the said purpose, the impugned order-in-original set aside. Appeal disposed off.

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• Central Excise

• 2023 (8) TMI 1044
  Valuation - amount collected by the appellant from customers as mould charges (recovered separately) - additional consideration or not - should form part of the transaction value, as per Section 4 of Central Excise Act, 1944 or not - HELD THAT:- From the legal provision of Section 4 of Central Excise Act, 1944 read with Rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000, it can be seen that the value of tools, dies, moulds, drawings etc. used in production of excisable goods need to form the part of assessable value. In this case, there is no denying the fact that appellant has been collecting mould charges from the buyers of his product and therefore we hold that the amount of mould charges collected by the appellant forms an additional consideration flowing through the appellant and therefore the same need to be included in the assessable value of excisable goods. As per the provision of Central Excise law, the excisable goods first need to be assessed as per provisions of the Section 4 of Central Excise Act, 1944 read with Rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000. It is irrelevant whether the goods have been cleared for domestic use for the export purpose. The legally provided scheme of assessment of the goods needs to be followed while clearing the goods even if they are meant for export. The mould charges recovered from the buyers need to be included in the assessable value and therefore, there are no legal lacunae in the impugned order-in-original and thus, there is no merit in the appeals - appeal dismissed.

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• 2023 (8) TMI 1043
  Excisability - marketability - Process amounting to manufacture or not - top gas that emerged from the Reduction Shaft had been subjected to a refining process for removal impurities. Whether mere marketability of a product is enough for levy of central excise duty in view of what is contained in the Explanation to the definition of excisable goods in section 2(d) of the Excise Act w.e.f. 10.05.2008 or is it necessary that manufacture must necessarily also take place? HELD THAT:- This issue was examined by the Bombay High Court in HINDALCO INDUSTRIES LIMITED VERSUS THE UNION OF INDIA, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [ 2014 (12) TMI 657 - BOMBAY HIGH COURT] . The decision rendered by a Larger Bench of the Tribunal in HINDALCO INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR, MUMBAI III NAGPUR [ 2014 (11) TMI 385 - CESTAT MUMBAI (LB)] was assailed in a Writ Petition before the Bombay High Court. The issue that had arisen before the Larger Bench of the Tribunal was whether aluminium dross and skimmings or similar non-ferrous metal dross and skimmings, which arise in the process of manufacture of aluminium/non-ferrous metal products can be considered as manufactured goods and hence, excisable for the period post 10.05.2008 in view of the Explanation added to section 2(d) of the Excise Act. The Larger Bench of the Tribunal held when dross and skimmings are specifically mentioned in the tariff, it would not be unreasonable to assume that such products are manufactured goods even though they arise in the course of manufacture of other products. Inasmuch as the goods which are capable of being bought and sold are deemed to be marketable, in view of explanation to Section 2(d), the twin tests of manufacture and marketability are clearly satisfied in the case of dross and skimmings. As per the settled position in law manufacture takes place when a new commodity with a distinct name, character or use emerges from a process or series of processes. In the present case, this test of manufacture is satisfied in respect of dross and skimmings. Therefore, the will of the Legislature has to be given effect to by adopting a harmonious interpretation. In this view of the matter, it appears to us that w.e.f. 10-5-2008, aluminium dross and skimmings are liable to excise duty. The Bombay High Court, in view of the decisions of the Supreme Court in UNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [ 2003 (10) TMI 47 - SUPREME COURT] , COLLECTOR OF CENTRAL EXCISE, PATNA VERSUS TATA IRON STEEL CO. LTD. [ 2004 (2) TMI 68 - SUPREME COURT] and M/S. GRASIM INDUSTRIES LTD. VERSUS UNION OF INDIA [ 2011 (10) TMI 2 - SUPREME COURT] held that when the Supreme Court had held that the conditions contemplated under section 2(d) and section 2(f) of the Excise Act have to be satisfied conjunctively in order to entail imposition of excise duty under section 3 of the Excise Act, the Tribunal committed an error in holding otherwise. The inevitable conclusion that follows from the aforesaid decisions is that even after the addition of Explanation in the definition of excisable goods w.e.f. 16.05.2008 in section 2(f) of the Excise Act, it has necessarily to be seen whether the goods satisfy the requirement of manufacture , for only then excise duty can be levied. In PHILLIPS CARBON BLACK LTD. VERSUS COMMISSIONER OF C. EX., BOLPUR [ 1998 (2) TMI 336 - CEGAT, CALCUTTA] , the Tribunal observed that merely because off gas which emerged in the course of manufacture of carbon black was burnt because of environmental laws and in the process heat that was generated was used for the rotaters in the manufacturing operation, it cannot be said that manufacture had taken place. In the present case, to appreciate the issue, it would be useful to understand the process undertaken by the appellant for the manufacture of Hot Rolled Coils, Sheets, Plates and Direct Reduced Iron. It has been described earlier in detail, but briefly stated it transpires that the appellant had used Corex Technology for the two functional modules. These modules operated on the technology offered by VAI, Austria. It consists of two reactors, namely, Reduction Shaft and Melter Gasifier - contention of the appellant is that the top gas which emerges either from the Melter Gasifier or the Reduction Shaft is refuse, but it has necessarily to undergo the requirement of scrubbing of the particulate matter and other impurities before being released in the atmosphere because of the directions issued by the Ministry of Environment and Forests and this process of removal of impurities would not amount to manufacture. According to the appellant, it was only to meet this requirement that it had to work on the top gas. Whether the scrubbing of the particulate matter and removal of impurities in the top gas would amount to manufacture of export gas? - HELD THAT:- The top gas that emerges is refuse and can be said to be similar to dross and skimmings, which are scum and are not manufactured goods. The appellant manufactures Direct Reduced Iron and the top gas emerges as a result of process of manufacture of Direct Reduced Iron. Top gas is not a new and different article with a distinctive character or use and merely because top gas may fetch a price after the removal of the impurities would not mean that it has been manufactured. It not possible to accept the distinction sought to be drawn by the learned special counsel for the department as the top gas is admittedly not manufactured and arises only as a technological accident. The top gas emerging out of the process of manufacture of Direct Reduced Iron is, in fact, in the nature of dross and skimmings which are scum that are produced in the course of manufacture of aluminium. It would, therefore, be reasonable to apply the same principles that have been enumerated in the decisions of the Supreme Court in UNION OF INDIA VERSUS HINDALCO INDUSTRIES LIMITED [ 2019 (3) TMI 1933 - SC ORDER] , UNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [ 2003 (10) TMI 47 - SUPREME COURT] , UNION OF INDIA VERSUS DELHI CLOTH AND GENERAL MILLS CO. LTD. [ 1962 (10) TMI 1 - SUPREME COURT] and SOUTH BIHAR SUGAR MILLS LTD. VERSUS UNION OF INDIA [ 1968 (2) TMI 36 - SUPREME COURT] to determine whether manufacture had taken place. We need to remind ourselves, at this stage, about the observations made by the Bombay High Court and the Supreme Court in Indian Aluminium Co. Indian Aluminium Co. The Bombay High Court noted that dross and skimmings are merely the scum thrown out in the process of manufacture of aluminium sheets and, therefore, it cannot be said that transformation has taken place resulting in a new and different article with a distinctive name, character or use. The Supreme Court also observed the dross and skimmings are merely refuse given out in the course of manufacture in the process of removing impurities from the raw material. A conclusion can, therefore, safely be drawn that top gas was not manufactured, and indeed the Commissioner has also not recorded a finding that top gas had been manufactured. Whether removal of impurities from the top gas would result in the manufacture of export gas? - HELD THAT:- The Commissioner has emphasized that since the export gas becomes marketable it would indicate existence of manufacture. As noticed above, the Commissioner was first required to examine whether manufacture had actually taken place and a conclusion could not have been drawn that because it was marketable it would mean that manufacture had taken place. The Commissioner also heavily relied on the fact that the export gas was nothing but Carbon Monoxide , which conclusion is evidently incorrect since the export gas had only 47.02% of Carbon Monoxide. The Commissioner also proceeded to observe that manufacture had taken place since Carbon Monoxide falls under Tariff Item 2811 29 40 of the Excise Tariff and the Tribunal had earlier held in JSW STEELS LTD. VERSUS COMMISSIONER OF C. EX., BELGAUM [ 2010 (2) TMI 527 - CESTAT, BANGALORE] that this would amount to marketability . This view, as discussed above, is incorrect. Even otherwise, it is a settled law that the burden is on the department to establish that a product is a manufactured product, before seeking to levy duty of excise on the same. The said burden has not been discharged, in the facts of the present case. Thus, the process undertaken on the top gas for removal of impurities to satisfy not only the conditions set out in the letter granting permission to the appellant for continuation and expansion of its manufacturing facilities but also to ensure compliance of the process design of the Technology supplier would not result in manufacture of the export gas. The Commissioner was, therefore, not justified in confirming the demand. Appeal allowed.

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• 2023 (8) TMI 1042
  Refund of excess amount paid under the Provisions of section 11D(2) of CE Act - Burden of duty - time limitation - principles of unjust enrichment - HELD THAT:- On a plain reading of Section 11D(1), sub-Section (1) provides that the person who has collected tax, upon finalization of assessment, if it is found to have been collected in excess, such excess tax has to be deposited with the Central Government. Under the admitted facts, HSL has deposited the amount collected from ONGC with the Central Government. Sub-Section (2) to Section 11D provides that upon adjustment of the tax pursuant to finalization of assessment, if any surplus is left, then either such surplus shall be credited to the Fund (Consumer Welfare Fund) or, as the case may be, refunded to the person who has borne incidence of such amount, in accordance with the provisions of Section 11B - admittedly, there is no dispute on the fact that the Respondent Assesee has borne the incidence of the amount of Rs 97,67,087/-. Principles of unjust enrichment - HELD THAT:- As informed by the Counsel for the Respondent, that the pursuant to directions in the Order-in-Appeal for remand on the ground of unjust enrichment, the Adjudicating Authority cannot have adjudicated and cannot reject the refund holding that the Respondent Assessee does not satisfy that they have not passed on the burden of duty against which order, the Respondent Assessee has gone in appeal before the Commissioner(Appeals). There are no error in the impugned Order-in-Appeal of the Commissioner (Appeals) and the same is accordingly upheld - appeal dismissed.

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• 2023 (8) TMI 1041
  100% EOU - non-fulfilment of export obligation - Failure to achieve the minimum NFEP under 6.5 of Chapter 6 of Foreign Trade Policy, 2004-2009, 6.10.1 of Hand Book Procedure Volume I of Foreign Trade Policy 2004-09 - wrong availment of exemption in contravention of provisions of N/N.1/95-CE dated 04.01.1995, N/N.22/03-CE dated 31.03.2003 as amended by N/N.53-97-Cus dated 03.06.1997 and N/N.52/2003-Cus dated 31.03.2003 as amended read with Para 6.5 of the Foreign Trade Policy 2004-2009. HELD THAT:- Without considering the proceedings taken by the Development Commissioner and the payment of duty by the respondent, the Deputy Commissioner of Central Excise Customs, opted for existing from EOU Scheme to EPCG Scheme in terms of the Foreign Trade Policy, 2004-09 on 07.02.2007 and after payment of duty, no dues certificate was issued. The show-cause notice was issued and the adjudicating authority has gone into this case and development taken before the Development Commissioner as well as the payment of duty by the respondent at the time of opting out from EOU Scheme to EPCG Scheme and the adjudicating authority dropped the proceedings against the respondent. The fact is further noted that after adjudication, the respondent has fulfilled their export obligation and obtained for EODC on 09.03.2018. Thus, no proceedings are sustainable against the respondent - appeal filed by Revenue dismissed.

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• CST, VAT & Sales Tax

• 2023 (8) TMI 1093
  Classification of goods - Khair - falls under the definition of Timber as defined under section 2(II) (Explanation 3) of the HP GST Act, 1968 or not - Khair wood, which is a raw material for katha manufacturing companies/ dealers, can be classified as converted timber or not as per notification dated 07-02-1992 - entitlement to claim sale @1% of Khair wood against RM-1, as per Notification No.EXNF( 9)2/99 (ii) dated 23-07-1999 or not. HELD THAT:- The issue as to whether Khair wood falls within the definition of timber or converted timber, has already been decided by Hon ble Division Bench of this Court in KARTAR SINGH VERSUS STATE OF HP. AND OTHERS (AND OTHER CASES) [ 2008 (12) TMI 696 - HIMACHAL PRADESH HIGH COURT ] following the judgment of Hon ble High Court of Punjab Haryana in PANWAR TIMBERS VERSUS STATE OF PUNJAB [ 2006 (9) TMI 508 - PUNJAB AND HARYANA HIGH COURT ]. When the issue is covered by the above decisions, learned Tribunal has no authority or jurisdiction to make a Reference under Section 33(1) of the HPGST Act, 1968 to this Court in the manner as has been done. Therefore, the reference is rejected. The matter is to be re-considered by the learned Tribunal in light of the above decisions and an appropriate order be passed in the case of assessee in question.

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• Indian Laws

• 2023 (8) TMI 1040
  Violation of principles of natural justice - Impounding of petitioner s passport - wrong information given by agent at the time of renewal application - case of petitioner is that the impounding was done without notice to the petitioner - HELD THAT:- The petitioner was employed as labourer in foreign countries. He was working in Singapore and later in Middle East. The action taken by the respondent cannot be faulted. If false particulars and false documents are given, the Passport Authority has no option but to impound the passport - The petitioner has no where challenged the basic premises on which the impugned action is resting. Therefore, the question of granting declaration as sought for does not arise. At the same time, this Court cannot lose sight of the human angle. It is a fact that the citizens take the services of middle men and agents to transact with the authorities. In this case, the agent employed by the petitioner had indulged in fraud. In order to quicken the process of obtaining passport, he has given false particulars. During verification, the same came to light - However, for almost nine years, the petitioner has been without any passport. Obviously his life and career has been affected. Even if the petitioner had committed a mistake, he cannot be condemned for ever. The biblical concept of eternal damnation goes ill with the reformatory trend in modern jurisprudence. The petitioner is permitted to submit a fresh application before the respondent - petition allowed.

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