Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 13, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Seized cash returned to owner due to lack of evidence about illegal source.
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Cancellation order due to unsubstantiated fraud allegations violated natural justice; revocation rejection set aside for fair hearing.
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Petitioner claims coerced tax deposit, disputes Input Tax Credit denial. Respondent denies coercion, calls deposit voluntary.
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Taxpayer wins remand on tax arrears dispute due to eligibility for input tax credit after legislative changes.
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Tax assessment order quashed for violation of natural justice; case remanded with conditions.
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Tax assessment order quashed for lack of due process; matter remanded for fresh hearing.
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Tax officer issued demand notice for GST payment, court upholds his authority.
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Notice for testing fly ash bricks upheld; Raise objections & reply to show cause.
Income Tax
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Chartered Accountant's spouse illness delays filing tax returns; condonation granted.
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No penalty for estimated expense disallowance, rules ITAT.
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Income tax deduction for co-operative societies: Eligibility criteria and treatment of interest/dividend income.
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Guest house maintenance expenses allowed as business deduction for company.
Customs
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Customs broker's license revocation invalid due to lack of mandatory offense report.
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Customs duty deposit refunded with interest post favorable adjudication.
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Plastic body, heating element classified as complete kettle - overturned lower ruling favoring importer's "parts" classification.
FEMA
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Foreign exchange violation: Company's penalty halved, individual's reduced after RBI clearance omission.
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Bank and individuals fined for illegally transferring non-convertible funds abroad without RBI approval.
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Illegal forex transfer foiled at airport, accused couldn't justify retraction.
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Seizure of assets equivalent to property held abroad for forex violation.
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Delayed export obligations result in penalties for technical FEMA contraventions.
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Seized foreign currencies: Credibility doubts on source explanation.
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Alleged fraud via inflated invoices for export benefits; cross-examination denied as case based on documents.
Corporate Law
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Transfer of shares dispute: Supreme Court overturns tribunals' rulings for inadequate evidence scrutiny.
IBC
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Absence of tripartite contract, invoice evidence dooms IBC claim against third party.
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Tax dues not treated as secured debt; Priority over workmen's dues and secured creditors.
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Appellant's challenge to resolution plan approval dismissed for failure to conduct due diligence on corporate debtor's assets.
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Tribunal overturns rejection of defective insolvency petition, mandates notice to rectify defects before dismissal.
Indian Laws
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Procedural lapses undermine drug convictions: Time gap, lack of continuity invalidate search; non-compliance with recording requirements.
PMLA
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Anticipatory bail granted, cooperating in probe, no flight risk - LOC quashed.
Service Tax
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Clearing agents' reimbursed transport costs not taxable as pure agents.
Central Excise
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Erroneous excise duty refund recovery debated - Unicorn vs SRD dilemma.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (9) TMI 605
Seeking release of seized cash - cash was found at the office premises of the petitioner and since no satisfactory answer or evidence was furnished by him regarding the source of the aforesaid cash, the same was resumed by the officer - HELD THAT:- This Court is informed that the cash seized has been kept in a fixed deposit account by the respondents. The respondents are directed to forthwith remit the aforesaid amount to the petitioner s bank account along with the accrued interest. Petition disposed off.
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2024 (9) TMI 604
Cancellation of GST registration - SCN has not stated any reason for cancellation - violation of principles of natural justice - HELD THAT:- The SCN did not mention any intelligible reason. It merely set out the provision that would enable the proper officer to cancel a taxpayer s registration on the ground of violation by the provisions of the CGST Act/DGST Act or the Central Goods and Services Tax Rules, 2017/ Delhi Goods and Services Tax Rules, 2017 leading to wrongful availment or utilization of input tax credit or refund of tax. The SCN is bereft of any particulars, which would provide any clue to the taxpayer as to the reasons for cancellation of the petitioner s GST registration. The SCN also did not specify any venue, date or time for the petitioner to appear for the personal hearing. It is also material to note that although, the SCN did not propose any action for retrospectively cancelling the petitioner s GST registration, the impugned cancellation order cancelled the petitioner s GST registration from the date when it was granted, that is, with effect from 15.10.2018. It is apparent that the impugned cancellation order is void as it was passed in violation of the principles of natural justice. First, the petitioner was not provided any intelligible reasons for proposing to cancel its GST registration and also was not afforded an opportunity of being personally heard. Additionally, there was no proposed action for cancelling the petitioner s GST registration with retrospective effect. The impugned cancellation order is also not informed by any reason as it does not set out any reason for cancelling the petitioner s GST registration. The impugned cancellation order and the SCN are set aside. The respondents are directed to forthwith restore the petitioner s GST registration. The petitioner shall file his GST returns, which are due within thirty days and also pay the tax along with interest and penalty, if any. Petition allowed.
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2024 (9) TMI 603
Seeking revocation of the cancellation order - petitioner neither responded to the SCN nor appeared before the concerned proper officer on the appointed date and time - HELD THAT:- It is seen that the impugned SCN, whereby the petitioner was called upon to show cause why its GST registration not be cancelled, did not set out any intelligible reasons. It merely reproduced the provisions of Section 29(2)(e) of the Central Goods and Services Tax Act, 2017. The said provision enables the proper officer to cancel the taxpayer s GST registration if it is obtained by means of fraud, wilful misstatement or suppression of facts. The impugned SCN did not indicate any alleged fraud or mention any statement, which is alleged to be a wilful misstatement. It also did not set out any facts, which are alleged to have been suppressed by the petitioner. There are merit in the petitioner s contention that the impugned cancellation order was passed in violation of the principles of natural justice. The learned counsel for the petitioner has confined the present petition to seeking an opportunity to respond to the said allegations. Thus, notwithstanding that the impugned cancellation order is liable to be set aside on falling foul of the principles of natural justice, it is not considered apposite to set aside that order - the order dated 01.05.2024 whereby the petitioner s application for revocation of the impugned cancellation order was rejected, is set aside. Petition disposed off.
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2024 (9) TMI 602
Refund of amount deposited under coercion and protest - availment of inadmissible Input Tax Credit (ITC) - HELD THAT:- It is the petitioner s case that the amount was deposited under coercion and it had no outstanding tax liability that was required to be discharged. This is disputed by the respondent and it is stated that the amount was deposited voluntarily. It is material to note that the deposits of tax were not made during the course of any raid or while the petitioner or any of his employees were in custody of the respondent. According to the petitioner, he was coerced to deposit the tax demanded under the threat that the registration would be cancelled. Clearly, the petitioner could have availed remedies at the material time in respect of such alleged threats. It is not considered necessary to conduct any enquiry whether the amount as deposited by the petitioner was under coercion or voluntarily. However, it is considered apposite to observe that in the event the petitioner claims that it has deposited the tax in excess of his liability, the petitioner is not remediless and can seek refund in accordance with law. Petition disposed off.
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2024 (9) TMI 601
Recovery of arrears of tax - Assessment Years 2017-2018 and 2018-2019 - non-filing of returns - petitioner had earlier suffered Assessment Orders under Section 62 of the Tamil Nadu Goods and Services Tax Act, 2017, which was wrongly mentioned as Section 63 of the Tamil Nadu Goods and Services Tax Act, 2017 on 20.09.2019 - grant of benefit of Input Tax Credit as per recent amendments - HELD THAT:- The Finance Bill was presented on 23.07.2024 before the Parliament. The Finance Bill was also passed into Act as a result of which, the proposals in Clause 114 of the Finance Bill has been passed as Section 114 of the Finance Act, 2024 - As a consequence of the above amendment, Sections 16(5) and 16(6) of the Central Goods and Services Tax (CGST) Act have been incorporated. Similar amendments are expected by the Tamil Nadu State Legislature to insert Sections 16(5) and 16(6) of the Tamil Nadu Goods and Services Tax Act, 2017. As per the decision of the Hon'ble Supreme Court in FORMICA INDIA DIVISION VERSUS COLLECTOR OF CENTRAL EXCISE [ 1995 (3) TMI 98 - SUPREME COURT] , once the tax is demanded, the benefit of Input Tax Credit has to be granted. The Impugned Recovery Notices can be set aside and the case be remitted back to the respondents to pass a fresh order - Petition allowed by way of remand.
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2024 (9) TMI 600
Challenge to assessment order passed by the second respondent for the Assessment Year 2017- 2018 - case of the petitioner is that the impugned Assessment Order has been in gross violation of principle of natural justice and also suffers from want of jurisdiction - HELD THAT:- This Court is inclined to partly come to the rescue to the petitioner by quashing the impugned Assessment Order and by remitting the case back to the respondents to pass a fresh order with the following conditions: i. The petitioner shall deposit 10% of the disputed tax of Rs. 31,56,386/-, within a period of six weeks from the date of receipt of a copy of this order. ii. The petitioner shall file a detail reply to the impugned Assessment Order, which stands quashed, within a period of thirty days from today. The impugned Assessment Order which stands quashed shall be treated as addendum to the Show Cause Notice dated 11.02.2021 issued to the petitioner, which preceded the impugned Assessment Order. Petition disposed off.
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2024 (9) TMI 599
Order u/s 73 of the Central Goods Services Tax Act, 2017 / Delhi Goods Services Tax Act, 2017 - jurisdiction for initiation of the special audit - HELD THAT:- There are merit in the contention that the same was unreasoned as it neither refers to any of the contentious issues nor deals with the reply submitted by the petitioner. It merely states that the reply submitted by the petitioner is unsatisfactory. The impugned order is stayed till the next date of hearing. List on 15.10.2024.
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2024 (9) TMI 598
Rejection of part refund on the ground that export proceeds were not realized despite lapse of nine months - respondent submits that due verification has been done and the contention of the petitioner has been found to be correct and the entire proceeds of the export invoices has been received and in INR have matched - HELD THAT:- The Order-in-Original dated 10.06.2022 to the limited extent that it rejected the part refund of the petitioner is set aside. The Order-in-Appeal dated 16.03.2023 is also set aside. Consequently, matter is remitted to the limited extent that it had earlier rejected the part refund application for being reconsidered in accordance with law. Petition disposed off.
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2024 (9) TMI 597
Challenge to assessment orders - impugned orders have preceded SCN u/s 74 of the respective GST enactment dated 02.01.2023 and 30.12.2022 respectively - HELD THAT:- Having considered the fact that the petitioner has not replied to the respective Show Cause Notices issued under Section 74 of the respective GST enactments, considering the predicament of the petitioner that the petitioner was ailing from Kidney problem and considering the fact that the petitioner has paid a sum of Rs.5,76,810/-, the Court is inclined to come to the rescue of the petitioner by quashing the impugned orders and remitting the cases back to the respondent to pass fresh orders on merits and in accordance with law. The impugned orders, which stand quashed, shall be treated as addendum to the respective show cause notices that preceded the respective impugned orders. The petitioner is directed to file consolidated reply within a period of 30 days from the date of receipt of a copy of this order. Petition disposed off.
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2024 (9) TMI 596
Maintainability of petition - petition filed under Article 226 of the Constitution of India seeking multifarious reliefs - non-constitution of the Tribunal - HELD THAT:- The petitioner essentially is desirous of availing statutory remedy of appeal against the impugned orders before the Appellate Tribunal u/s 112 of the Bihar Goods and Services Tax Act - However, due to non-constitution of the Tribunal, the petitioner is deprived of his 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. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves - Petition is disposed off.
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2024 (9) TMI 595
Challenge to orders passed by the authority on the ground that without taking into consideration the overlapping period, the demand has been raised - HELD THAT:- This Court finds that the factual position is not in dispute, as on the basis of the intelligence report, for the financial year 2017-18 and 2018-19, assessment was made by the authority under Annexure-1 dated 09.11.2023. But for the period from October, 2017 to March, 2018, the Adjudicating Authority passed the order on 04.12.2023 under Annexure-5. As it revealed from the order dated 04.12.2023, the Adjudicating Authority before passing the order has given thrice opportunity to the petitioner but the petitioner did not participate in the proceeding. As it appears from the record that the petitioner has intimated the period for which the Adjudicating Authority decided the matter and, as such, the same is the subject matter in the order dated 09.11.2023 passed by the authority on the basis of the intelligence report under Annexure-1. Merely because the petitioner made request letter to the authority to consider the same, that cannot be said that the petitioner had appeared and taken steps in the matter. Had the petitioner participated in the proceeding, it would have informed the authority with regard to the fact of overlapping of the amount and, as such, the authority could have considered the same. Furthermore, it is also not correct to say that the order passed by the authority under Annexure-1 involves the period, which has been taken in the order passed under Annexure-5. But fact remains, if the demand has been raised for a particular period by the authority under Annexure-1, the same have been taken into consideration while passing the order in Annexure-5. This Court is of the considered view that the order dated 04.12.2023 passed by the Adjudicating Authority under Annexure-5 cannot be sustained in the eye of law and the same is liable to be quashed and is hereby quashed. The matter is remitted back to the Adjudicating Authority for its rehearing and passing appropriate order in accordance with law by giving opportunity of hearing to the parties. Petition disposed off.
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2024 (9) TMI 594
Compentency of Officer to issue SCN - petitioner s contention is that the adjudication can be done only by the Assistant Commissioner and not an Additional Director of G.S.T. Intelligence - HELD THAT:- There is no reason to find incompetence on the Officer, who has issued the impugned communication especially since the circular specifically permits show-cause notices to be issued by the Central Tax Officers of Audit Commissionerates and Directorate General of G.S.T. In fact, what is impugned is not even a show-cause notice, it is just an intimation to pay up the amounts indicated therein failing which the only consequence is the issuance of a show-cause notice under Section 74(1) for which also the Additional Director is competent. There are absolutely no reason to interfere with the impugned communication - petition dismissed.
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2024 (9) TMI 593
Cancellation of GST registration of the petitioner - petitioner submits that a reply to the Show Cause Notice was sent by Speed Post, however, till date the SCN has not been adjudicated - HELD THAT:- Issue notice. Notice is accepted by learned counsel appearing for respondent, who states that within a period of four weeks, the Show Cause Notice shall be duly adjudicated and appropriate order passed. The petition is disposed of, directing the proper officer to dispose of the Show Cause Notice within a period four weeks after giving opportunity of personal hearing to the petitioner.
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2024 (9) TMI 592
Seeking to quash the notice issued by opposite party no.4 under Section 74 of OGST Act - testing of fly ash bricks - HELD THAT:- This Court is of the considered view that since the components of fly ash bricks are under challenge, this Court is not inclined to interfere with the same at the stage of notice of show cause issued to the petitioner under Section 74 of the OGST Act. In any case, if the petitioner raises objection with regard to demand raised by the authority in the notice of show case and makes a comprehensive reply to the notice of show cause for verification of fly ash bricks and utilization of percentage of raw materials, it is open to the opposite party-authority to take necessary steps in accordance with law and, as such, this Court has not expressed any opinion on the merits of the case. The writ petition stands disposed of.
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2024 (9) TMI 591
Dismissal of petition - failure to avail of the opportunities before the original authority - no grounds made out for interference under Article 226 of the Constitution of India - violation of principles of natural justice - HELD THAT:- The appellant can be permitted to avail the statutory remedy taking into consideration the fact that the writ petition was filed challenging Ext.P5 order within the condonable period for filing an appeal - this writ appeal is disposed off by directing that if the appellant were to file an appeal against Ext.P5 order on or before 15.05.2024, the period from 15.03.2024 till 15.05.2024 shall be excluded for the purpose of determining the period with in which such appeal had to be filed. Appeal disposed off.
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2024 (9) TMI 590
Jurisdiction declined on the ground that the appellant has an appellate remedy under Section 107 of the CGST / SGST Acts - grievance of the appellant is that the appellant is unable to upload an appeal though the appellant is still within time to file an appeal against Ext.P4 order in terms of the provisions contained in Section 107 of the CGST / SGST Acts - HELD THAT:- This writ appeal stands disposed of without interfering with the judgment of the learned Single Judge, but however clarifying that if the appellant were to prefer a statutory appeal against Ext.P4 order within the statutory period of limitation, the same shall be taken on file and disposed of without undue delay. Appeal disposed off.
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2024 (9) TMI 589
Maintainability of petition - availability of statutory remedy of appeal - non-constitution of Tribunal - HELD THAT:- The petitioner essentially is desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act - However, due to non-constitution of the Tribunal, the petitioner is deprived of his 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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2024 (9) TMI 588
Permission to withdraw the petition as there are some inadvertent errors and seeks leave to file again - HELD THAT:- The matter stands dismissed on withdrawal with liberty, as prayed for.
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Income Tax
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2024 (9) TMI 587
Delay in filling SLP - Claim of exemption u/s 10(38) - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers - As decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] claim for benefit of Section 10(38) and denial of an opportunity to cross examine the entry providers, turned on facts - ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. HELD THAT:- There is a delay of 449 days in filing the special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any. Pending application(s) stand disposed of. The aforesaid order is passed following the order passed by this Court in Special Leave Petition [ 2024 (2) TMI 1202 - SC ORDER] . Anupama Mohapatra).
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2024 (9) TMI 586
Validity of assessment u/s 153C - Statutory imperatives of incriminating material - as decided by HC power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence - Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments. Impugned action under Section 153C of the Act, pertaining to AYs 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2020-21 are hereby quashed and set aside. However, and insofar as AY 2019-20 is concerned, the same is left untouched. All rights and contentions of respective parties are kept open to be addressed in the ongoing assessment proceedings for AY 2019-20. HELD THAT:- We are not inclined to interfere with the impugned judgment and, hence, the special leave petition is dismissed. Pending application(s), if any, shall stand disposed of.
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2024 (9) TMI 585
Condonation of delay in filing the return of income rejected - as argued income-tax returns were handled by a Chartered Accountant, who could not take timely steps on account of ill health of his spouse and returns of the petitioners could not be filed within the stipulated time - HELD THAT:- It needs no elaboration that in matters of maintaining accounts and filing of returns, the assessees are most likely to depend on the professional services of their Chartered Accountants. Once a Chartered Accountant is engaged and there is a genuine dependence on his services, such as in the present case, whose personal difficulties had caused a delay in filing of the petitioners returns, was certainly a cause beyond the control of the petitioners / assessees. In these circumstances, the assessee, being at no fault, should have been the primary consideration of the PCIT The reasons can be manifold like illness either of himself or his family members, as a result of which he was unable to timely discharge his professional obligation. There could also be a likelihood that for such reasons, of impossibility of any services being provided/performed for his clients when tested on acceptable materials. Such human factors necessarily require a due consideration when it comes to compliances of the time limits even under the Income Tax Act. The situation in hand is akin to what a Court would consider in legal proceedings before it, in condoning delay in filing of proceedings. In dealing with such situations, the Courts would not discard an empathetic /humane view of the matter in condoning the delay in filing legal proceedings, when law confers powers to condone the delay in the litigant pursuing Court proceedings. This of course on testing the bona fides of such plea as may be urged. In our opinion, such principles which are quite paramount and jurisprudentially accepted are certainly applicable, when the assessee seeks condonation of delay in filing income tax returns, so as to remove the prejudice being caused to him, so as to regularise his returns. In fact, in this situation, to not permit an assessee to file his returns, is quite counter productive to the very object and purpose, the tax laws intend to achieve. In this view of the matter, we have no manner of doubt that the delay which is sufficiently explained in the present case would be required to be condoned. Resultantly, the impugned order is quashed and set aside. The respondents are directed to permit the petitioners to file returns with penalty, fees and interest, if any, within a period of two weeks from today.
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2024 (9) TMI 584
Penalty u/s 271(1)(c) - adhoc disallowance of 20% of the expenses - HELD THAT:- We find the Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Products (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that mere making of a claim which is not sustainable in law by itself, will not attract penalty under the section when the assessee has furnished all the particulars of income, which are not found to be inaccurate. It is up to the authorities to accept the claim of the assessee or not, but that cannot call for imposition of penalty. There are umpteen number of decisions in which it has been held that no concealment penalty can be imposed for disallowance of expenses on estimate basis. Such decisions include CIT vs. Ajaib Singh and Co. [ 2001 (8) TMI 79 - PUNJAB AND HARYANA HIGH COURT] , Naranbhai Veerabhai and Co. [ 1992 (10) TMI 46 - GUJARAT HIGH COURT] and Addl. CIT vs. Delhi Cloth and General Mills Co. Ltd. [ 1984 (1) TMI 10 - DELHI HIGH COURT] Since the major amount has already been deleted by the CIT(A) / NFAC and the only addition is an estimated lump sum addition debited in the Profit and Loss Account, therefore, we are of the considered opinion that penalty u/s 271(1)(c) of the Act is not leviable in the instant case. We, therefore, set aside the order of the Ld CIT(A)/NFAC and direct the AO to delete the penalty levied u/s 271(1)(c) - Appeal filed by the assessee is allowed.
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2024 (9) TMI 583
Validity of the notice u/s 148 against a deceased person - Responsibility of legal heir for assessment proceedings - HELD THAT:- A perusal of the aforesaid provisions of section 159 would reveal that as per the provisions of section 159(2)(b) of the Act, any proceeding which could have been taken against the deceased, if he had survived, may be taken against the legal representative and further that as per sub section 159(3) the legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. As per the aforesaid provisions, the AO having come to know that the assessee Sri Arjun Dass Agarwal has died, was supposed to substitute the name of the legal heir who would have been liable in his own name as an assessee for tax liability of Sri Arjun Dass Agarwal, however, to be recovered only out of estate left by the deceased assessee. No such exercise has been done by the AO in this case. The assessment order framed by the AO is bad in law on two counts. The notice u/s 148 of the Act has been issued in the name of dead person and further the legal heir of the deceased assessee has not been impleaded and no notice u/s 148 of the Act has been issued in the name of any legal heir of the deceased assessee.The assessment has not been framed in the name of any specific person, rather, simply legal heir of late Arjun Dass Agarwal has been mentioned, without pointing out as to against whom the same is specifically enforceable - Appeal of the assessee stands allowed.
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2024 (9) TMI 582
Denial of deduction u/s 80P2(a)(i) - assessee society has invested its idle funds which are immediately not required for lending to its members in Co-op Banks and Scheduled Banks and earned interest out of such investment - AO held that society cannot be termed as a mutual concern and the principles of mutuality cannot be applied. The transactions with associate/nominal members result in certain income/advantages, which are used by the society or rather applied to the benefit of the regular members HELD THAT:- The Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. Ors. [ 2021 (1) TMI 488 - SUPREME COURT] had held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the Act. The Hon ble Apex Court after considering the judicial pronouncements on the subject, had stated that the term member has not been defined under the Income-tax Act. Also section 80P(4) of the I.T. Act is to be read as a proviso. It was stated by the Hon ble Apex Court that section 80P(4) of the Act now specifically excludes only co-operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. The Hon ble Apex Court had enunciated various principles in regard to deduction u/s 80P of the Act. On identical factual situation, the Bangalore Bench of the Tribunal in the case of M/s. Ravindra Multipurpose Cooperative Society Ltd [ 2021 (9) TMI 342 - ITAT BANGALORE] had remanded the issue to the files of the A.O. for de novo consideration. The Tribunal directed the A.O. to follow the dictum laid down by the Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT Anr. (supra). Thus, we restore the issue of claim of deduction u/s 80P(2)(a)(i) of the Act to the file of the A.O. for de novo consideration. Claim of deduction u/s 80P(2)(d) - We direct the AO to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns interest / dividend income out of investments with co-operative society, as observed by Hon ble Supreme Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [ 2023 (9) TMI 761 - SUPREME COURT] the same is entitled to deduction u/s 80P(2)(d) of the I.T. Act. Addition u/s 57 - We make it clear that if the interest earned by assessee from the banks is considered under the head Income from other sources , relief to be granted to the assessee u/s 57 in accordance with law. Accordingly, the issue is restored to the file of ld. AO for de-novo consideration with the above observations. Appeal of the assessee is partly allowed for statistical purposes.
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2024 (9) TMI 581
Denial of relief claimed u/s. 90/90A - foreign tax credit (FTC) denied - non grant of credit of TDS as that there was a delay in filing of Form No.67 for claiming relief as per the DTAA between the Government of India and USA - mandatory V/S directory requirement - as argued since assessee had paid taxes on the said income in USA, the assessee cannot be taxed twice on the said amount and credit of taxes paid/withheld in the overseas jurisdiction i.e USA should be granted to the assessee - HELD THAT:- We are of the considered view, that the assessee has duly filed form No.67 giving particulars of taxes withheld by the US based employer, albeit with a minor delay but the same was duly filed by the assessee before the return of income of assessee was processed by the CPC u/s. 143(1) of the Act on 24.12.2021. The contents/details furnished by the assessee in form No.67 have not been disputed/challenged by the Department at any stage of proceedings. In case of Manoj Kaushikprasad Jingar [ 2023 (8) TMI 382 - ITAT AHMEDABAD] ITAT held that late filing of form no.67 cannot deny entitlement to the assessee to tax benefit when the salary earned is from Tanzania and there is a tax treaty between India and Tanzania. The assessee cannot be taxed twice on the same income and therefore the Ld.CIT(A), cannot deny the claim of the assessee. In the case of Sanjeev Agarwal [ 2023 (5) TMI 1287 - ITAT JAIPUR] ITAT held that Foreign Tax Credit could not be denied for delay in filing Form No. 67 as filing of Form No. 67 is not mandatory but a directory requirement. In the case of 42 Hertz Software India (P.) Ltd. [ 2022 (3) TMI 834 - ITAT BANGALORE] ITAT held that where for claiming foreign tax credit (FTC), assessee failed to furnish Form67 on or before due date of furnishing return of income prescribed under section 139(1) but submitted same subsequently during assessment proceedings, assessee was entitled to claim Foreign Tax Credit for taxes paid. Decided in favour of assessee.
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2024 (9) TMI 580
Disallowance of Mumbai Guest House Maintenance Charges - expenses incurred by the company are not for business purpose - guest house was occupied by relatives of ex-chairman of the company - HELD THAT:- We find that legal ownership of the guest house was with the assessee company during the assessment year, and the assessee company has incurred expenditure towards maintenance of guest house, during the assessment year under consideration which is for the purpose of the business, hence, it should be allowed. It is also a settled principle that ordinarily it is for the assessee to decide whether any expenditure should be incurred in the course of his business. The Hon ble Apex Court in the case of Sasoon J. David and Co. (P) Ltd. [ 1979 (5) TMI 3 - SUPREME COURT] held that expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction for the same. Therefore, we find that both the expenditure incurred in both the assessment years are for business purpose, and hence it should be allowed to the assessee company. We direct the AO to allow the expenditure on maintenance of guest house. Hence, additions made are directed to be deleted. Decided in favour of assessee.
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2024 (9) TMI 579
Rectification u/s 154 - Period of limitation - HELD THAT:- The assessment order was passed on 18/02/2016, the last date of passing order under section 154 of the Act was 31/03/2020. Hence, the order passed on 26/03/2021, is beyond limitation and cannot be sustained. On 29/10/2019, the order giving effect to section 250 of the Act was passed and that particular order was never sought to be rectified in contradistinction to the submissions made by the learned D.R. Hence, the issue raised by the Revenue in Grounds no.1, 2 and 3, has no merit and it is accordingly dismissed.
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2024 (9) TMI 578
Revision u/s 263 - addition u/s 68 - AO has not made any verification or inquiry in respect of gift received by the assessee - HELD THAT:- As per notice u/s 142(1) AO has made enquiry related to the large increase in the capital for which the assessee has replied the same thereby stating that the details of NRE Account of assessee s sister as well as the receipt of the money from his sister including the Bank Statement of the assessee s sister. Source was explained of receipt and, therefore, the full enquiry was conducted on the said issue related to Gift from assessee s sister to the assessee. AO at the time of assessment proceedings u/s 143(3) of the Act, has conducted thorough enquiry and in fact has made disallowance where it was necessary to do so. Therefore, merely on the basis of taking different view by the PCIT that also which is outside the scope of Section 68 of the Act (source of source) if it has been explained already by the assessee, then invocation of Section 263 of the Act in the present assessee s case is not justifiable. In fact, Hon ble Apex Court in case of Shreeji Prints (P.) Limited [ 2021 (9) TMI 108 - SUPREME COURT] has categorically mentioned that when enquiries conducted by the AO are in detail and the AO has taken plausible view the same cannot be considered erroneous and prejudicial to the interest of Revenue and invocation of Section 263 of the Act is not justifiable. Appeal of the assessee is allowed.
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2024 (9) TMI 577
Deduction u/s. 80P(2)(d) - interest received from investment in the said co-operative bank - HELD THAT:- We note that ITAT Mumbai Bench in assessee s own case in Blue Rose Co-operative Society Limited [ 2024 (7) TMI 1082 - ITAT MUMBAI ] has considered the identical issue and held that the interest earned by way of interest or dividend from investments made with any other co-operative bank is allowable as deduction u/s. 80P(2)(d) in assessee s own case for the A.Y. 2020-21. Nothing has been brought to our notice that the investee co-operative bank which is also a co-operative society is in possession of License from RBI to do banking business and did function at par with other commercial bank. The assessee is thus entitled for the benefit u/s 80P(2)(d) of the Act. The aforesaid point is accordingly determined in favor of the assessee and against the revenue. The impugned order passed by learned CIT(A), thus cannot be sustained. Hence, the appeal is liable to be allowed.
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2024 (9) TMI 576
Deduction u/s 80P(2)(d) - interest received from co-operative banks - adjustment u/s 143(1) - HELD THAT:- As decided in assessee own case [ 2024 (6) TMI 1395 - ITAT MUMBAI] wherein held admittedly assessee is a Co-operative Housing Society registered under Maharashtra Society act 1960 and as per the said act of the Co-operative Housing Societies have to get their accounts audited ones there is requirement to furnish and audit before from Charted Accountant, and therefore the due date was 31/10/2012 and 31/10/2014 for the A.Y 2012-23 and 2014 15 respectively and thus assessee had filed the return of income within the due date of under section 139(1). Thus even under amended provision no prima facie adjustment have been made no prima facie adjustment on account of deduction u/s. 80P could have been made. In the early provision of adjustment u/s. 143(1)(a) no such disallowance could have been made. Accordingly, we hold that disallowance made by the CPC u/s. 143(1)(a) on the claim of deduction u/s. 80P is beyond the scope of adjustment u/s. 143(1) - Decided in favour of assessee. Delay in filing of the return - Section 80AC specifies the under which section deduction would not be allowed unless the return was furnished on or before the due date specified u/s 139(1). The disallowance of deduction claimed u/s 80P(2)(d) is not mentioned therein As before 01.04.2018 the disallowance of deduction u/s 80IA, 80IAB, 80IB, 80IC, 80ID, 80IE only could be made in case of belated filing of returns. Therefore, deduction u/s 80P(2)(d) is not hit by the provisions of 80AC.
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2024 (9) TMI 542
Addition based on survey recorded in survey u/s 131 - HELD THAT:- We agree with the ld. CIT(A) in the respective grounds that the AO used the statement to corroborate said material found during the survey but, at the same time, the assessee had successfully explained the contents of the said impounded document/s in responding to the additions made by the AO and thus, were rightly deleted as by the ld.CIT(A). Hence, no blind reliance could be placed on the statement of the assessee alleging admission. The law is well settled that no addition can be made solely based on the statement. Even the CBDT directed the subordinate authorities not to press the assessee to make surrenders. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz [ 2019 (9) TMI 357 - KERALA HIGH COURT] Thus, we find no infirmity in the order of the ld.CIT(A) on this aspect. It is necessary to clarify that we have confirmed the deletions of additions by the CIT(A) on merits independent of these legal aspects. Thus, following the findings recorded in the order A.Y. 16-17 as aforesaid, prayer of the assessee is decided in its favour whereas part of the ground no. 1 6 taken by the Revenue are decided against the Revenue. Addition made by the AO stated to be based on the impounded annexure and the statement of the Assessee record during the survey - There is no dispute with regards to the source of payment of total purchase consideration including all expenses at Rs. 64.18 lacs out of which Rs. 29.58 lacs paid through cheque and Rs. 33.60 was paid in cash. Further, Rs. 1 lac was paid towards stamp charges details are available at APB 85, which is a copy of the ledger account in the books of M/s Quick Advertising Company. AO never held the assessee to be the benamidar of Smt Nisha Jain. These facts and findings could not be rebutted by the D/R. Further heavy reliance is placed on the statement of the assessee recorded during the survey u/s 133A is completely misplaced. In the case of Naresh Jain [ 2024 (9) TMI 505 - ITAT JAIPUR] for A.Y. 2016-17, we have already dealt with this issue in detail of our order dated 05-08-2024 (Reproduced hereinabove) holding that survey statement alone, cannot be relied upon as such statement has no binding evidentiary value. We also agree with the ld. CIT(A) that the AO used the statement to corroborate said material found during the survey however, at the same time, the assessee had explained the contents of the said impounded agreement. AO ignored that the impounded agreement was of April, 2016, whereas the registered sell deed was entered in May 2016, whereas survey took place long thereafter on 02.02.2017. In view of all this direct and cogent evidences, surrounding circumstances, no blind reliance could be placed on the statement of the assessee. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz [ 2019 (9) TMI 357 - KERALA HIGH COURT] Thus, we find no infirmity in the order of the CIT(A). Therefore, the ground No. 2 of the Revenue is dismissed. Purchase of the agricultural land at Manadana, Kota - On a careful consideration of the rival contentions, the material available on record and in the light of the judicial pronouncements, we find no force in the ground of the Revenue. It is noticed that the impounded papers are bearing the dates of 2008 and other years, but do not show any date falling in the F.Y 16- 17(A.Y. 2017-18). Even the payment of Rs. 6,90,000/- was made by the assessee on different dates through cheques between the period from October, 2008 to March, 2009 as per the ledger account in the books of M/s Quick Advertising Company, copies placed at ABP Pg. 111. In the views of these facts which remained unrebutted, we find no infirmity in the order of ld. CIT(A) who rightly deleted the addition in this year. Hence, ground No. 3 of appeal is dismissed. Addition based on impounded documents and the statement of the assessee (Q/A 23) recorded during survey u/s 133A - HELD THAT:- We find no force in the ground of the Revenue in as much as undisputedly, the amount of construction expenditure was already booked by the wife of the assessee, Smt. Nisha Jain in the regularly maintained books of accounts of her proprietary M/s Quick Advertising Company, Kota to the extent of Rs. 27,97,131/- and the balance of Rs. 7,02,869/- has already been offered by the assessee with the clam of telescoping. The said books of accounts containing the relevant ledger account, etc. were produced before the authorities below. However, the ld. AO could not find any fault therein, nor he rejected the books of accounts. We have also seen the impounded documents relied upon by the AO however, we find that no blind reliance could be placed on the statement of the assessee, alleging admission because in the same very statement, he clearly stated that he was not in a position to tell the exact amount of expenditures recorded in the accounts. Further, we find that the ld. CIT(A), recorded categorical findings of fact after verification of the record, and obtained a remand report from the AO, wherein nothing substantial adverse was found and he rightly deleted the addition to the extent of Rs. 27,97,131/- and the balance addition of Rs. 7,02,869/- has been upheld. Therefore, the ground No. 4 of the Revenue is dismissed. Addition of marriage expenditure - Mere rough-jottings, and in the shape of mere estimations, and does not inspire any confidence and has lost relevance in the light of the fact that the related marriage expenses had already been recorded in the accounts. No blind reliance could be placed on the statement of the assessee, alleging admission by the assessee because in the same very statement, he clearly stated that he was not in a position to tell the exact amount of expenditures recorded in the accounts. Further, we find that the ld. CIT(A), recorded categorical findings of fact after verification of the record, and obtained a remand report from the AO, wherein nothing substantial adverse was found and thus, he rightly deleted the addition. Therefore, this ground No. 5 of the Revenue is dismissed. Benefit of telescoping of the additional income against the undisclosed outgoings - There is nothing on record to show that the additional income so offered in these years stood utilised elsewhere and was not available for the undisclosed investment/outgoings made by the assessee in this year (to the extent they were confirmed by the CIT(A)) - DR was also not in a position to controvert these fact findings. The issue of telescoping is no more res integra and rather a well settled principle because in the case of Anantharam Veerasingaiah Co [ 1980 (4) TMI 2 - SUPREME COURT] has in principle agreed that the undisclosed income in one year will constitute a fund which can be drawn by the assessee later on and can be utilised for acquiring goods or in making investments, etc. and therefore, separate additions on both the counts cannot be made. The Hon ble jurisdictional High Court in the case of CIT v. Thyaramal Balachand [ 1986 (4) TMI 14 - RAJASTHAN HIGH COURT] has also held so, following the aforesaid apex court judgement. Therefore, in principle, we are in full agreement with the findings recorded by the ld. CIT(A) in giving benefit of telescoping of the additional income against the undisclosed outgoings, to the extent sustained by him. Hence, we don t find any merit in ground No. 7 Telescoping effect to set off against sustained additions - In the case of R. K. Mehta [ 2012 (9) TMI 1158 - ITAT RAJKOT] Tribunal held that there is no statutory condition for availing telescopic benefit that the assessee should raise the issue of telescopic before AO or CIT(A). Issue can be raised or allowed for the first time at stage of the Tribunal provided Tribunal is satisfied that assessee is entitled to the benefit of telescopic. It is noticed that there was an uncovered balance of Rs. 2,59,618/-, as aforesaid, which is telescoped against the carried forward cash available of Rs. 46,64,712/- from A.Y. 2016-17 hence, there remains nothing uncovered and therefore, the addition sustained by the CIT(A) of Rs. 2,59,618/- is hereby deleted. The assessee thus get relief of Rs. 2,59,618/-. Hence this ground of the Revenue is dismissed whereas the prayer of the assessee as aforesaid, is hereby allowed.
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Customs
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2024 (9) TMI 575
Refund claim - time limitation - unjust enrichment - Condonation of delay in filing SLP - HELD THAT:- There is a delay of 175 days in filing this Special Leave Petition. It is also found that the Department ought not to have challenged the order of the High Court in the instant case. Hence, the Special Leave Petition is dismissed both on the ground of delay as well as on merits.
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2024 (9) TMI 574
Condonation of delay of 238 days in filing the Special Leave Petition - sufficient cause for delay or not - HELD THAT:- There is no satisfactory explanation for condoning the delay of 238 days in filing the Special Leave Petition. The Special Leave Petition is accordingly dismissed on the ground of delay.
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2024 (9) TMI 573
Revocation of Customs Broker Licence - forefeiture of security deposit with penalty - improper activities allegedly found to have been carried out by the said M/s. Akshay Exports - erasure of earlier Show Cause Notices issued under the Customs Act, 1962, deemed as Offense Report , renders the proceedings under Custom Brokers Licensing Regulations, 2018 non-est and in excess of power vested in licensing authority or not - no offense report when the notice under Regulation No. 17 of Custom Brokers Licensing Regulations, 2018 - separate offence report not served to the CB - issue has already been dealt with in another order of the CESTAT even though it was for another SCN - cryptic order without examining the facts of the case. HELD THAT:- The CESTAT has allowed the appeal on the basis that the two show cause notices that were issued by which the process of revocation was initiated has been based on the original two show cause notices dated 13th March 2009 and 11th March 2010 both of which have been quashed and set aside. Moreover, Regulation 17 of the said Regulations provides for receipt of offence report by the Licencing Authority i.e., Appellant. The Tribunal held that even though the timelines prescribed under the Regulations may not have been complied with still, and rightly so, the essential pre-requisite for commencement of proceedings as required under the Regulation 17 is the receipt of offence report by the Licencing Authority. There has been, admittedly, no offence report received. Infact, Appellant has not even considered Respondent s submission that the proceedings could not have been initiated in the absence of offence report envisaged under the Regulations. In the Circular, it is mentioned that the Investigating Authority shall furnish its report to the Commissioner of Customs who had issued the CHA Licence within 30 days of the detection of an offence. The Court in Necko Freight Forwarders Ltd. [ 2018 (1) TMI 1185 - DELHI HIGH COURT ] has held that the offence report as used in Regulation 20 (2) of the Customs House Agents Licencing Regulations, 2004 was understood as a report regarding detection of an offence. The Tribunal is agreed upon that the offence report is the foundation for initiation of proceedings by the Licencing Authority. Since admittedly there is no offence report, we cannot find any fault in the impugned order. Appeal dismissed.
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2024 (9) TMI 572
Refund of amount deposited the course of investigation, consequent to the closure of proceedings initiated under the Customs Act, 1962 - HELD THAT:- Undisputedly, the amounts in question were deposited in the course of investigation and pending adjudication. The adjudicatory process has ultimately ended in favour of the assessee. In view of the above, there are no legal justification in the respondents continuing to retain the amounts which were deposited under protest by the writ petitioners and during the course of investigation. The respondents are directed to refund the amounts of INR 1,50,00,000/- forthwith. The aforesaid refund shall be accompanied with statutory interest as payable under the Act till the date of actual disbursement - petition allowed.
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2024 (9) TMI 571
Classification of imported goods - electric kettle or parts of electric kettle - to be classified under Customs Tariff Item CTI 8516 90 00 as parts of electric kettle or under CTI 8516 71 00 as complete kettle? - Interpretation of Rule 2(a) of the General Rules of Interpretation of Import Tariff (GIR) - HELD THAT:- As per GIR 2(a) goods in CKD or SKD condition deserve to be classified as finished articles. Similarly, unfinished or incomplete articles also deserve to be classified as complete or finished articles. If they are imported as parts which, if assembled, will not make the complete article but only make an incomplete article but such incomplete article will have the essential characteristics of the complete article such parts should also be classified as complete articles. It is undisputed that the plastic body, heating element, lid are imported through the Bill of Entry. The essential characteristics of an electric kettle is to heat the water using electricity to turn off heating as soon as the water attaining the required temperature. Heating element and thermostat and the body in the water is to be heated are all imported. The sensor provides an element of automation. In this case, insofar as the temperature is concerned, the controller thermostat itself functions as the sensor. Therefore, the sensor which the respondent procures domestically only adds some additional functionality. Similarly, the screw, plugs, wire etc., are minor parts without which also the kettle will have the essential characteristics of complete kettle although it will be incomplete. The Commissioner (Appeals) also recorded that the electric kettle will be incomplete without these parts without which it cannot be put in the market as an electric kettle. He, has lost sight of the fact that kettle incomplete also should be classified as complete kettle as per GIR 2(a). He misunderstood this rule and felt that unless all parts are imported together, an incomplete article or parts which constitute an incomplete article but which has the essential features of an complete article cannot be classified as a complete article which is contrary to GIR 2(a). There are no hesitation in holding that in the facts of this case that the Commissioner (Appeals) erred in setting aside the order in original passed by the Deputy Commissioner. The impugned order is set aside and the classification by Deputy Commissioner in his OIO is restored and the appeal filed by the revenue is allowed.
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2024 (9) TMI 543
Valuation of imported goods - Motor Controller and different types of Electric Tricycle Spare Parts - enhancement of value - rejection of declared value - change in classification of the item imported. Valuation of imported goods - enhancement of value - HELD THAT:- The NIDB data, which the Revenue has relied upon for enhancing the value, is showing the assessed value and not the declared value. In these circumstances, the value declared in the NIDB data is not acceptable in the absence of NIDB data with regard to the declared value. Therefore, the enhancement made by the ld. adjudicating authority is contrary to law and we find that the Ld. Commissioner (Appeals) has rightly struck down the enhancement in price. Rejection of declared value - HELD THAT:- It is observed that the assessing officer has rejected the transaction values without any valid basis/reasons and without following the due procedure as laid down under Section 14 and Valuation Rules, especially when there is nothing on record to suggest that the transaction values declared by the appellant were not the price actually paid for the goods when sold for export to India. There is also nothing on record to suggest that the buyer and seller of the goods were related or price was not the sole consideration for sale - the Ld. Commissioner (Appeals) has given categorical findings to reject the enhancement of value by the assessing officer and there are no reason to interfere with the same - the impugned order passed by the Commissioner (Appeals) upheld, accepting the transaction value declared by the Respondent in the respective Bills of Entry. Classification of the goods imported - HELD THAT:- The Respondent has classified the goods under the Tariff Heading 8503 0090. Customs Tariff Heading 8503 covers parts suitable for use solely or principally with the machines of heading 8501 or 8502 and Custom Tariff Item 8503 0090 covers parts of electric motor (other than DC motor) . The electric motor is classified under the chapter heading 8501.In the Assessment Order, the Ld. Adjudicating authority has observed that the 'Controller' is used for starting and stopping the motor, selecting forward or reverse rotation, selecting and regulating the speed etc. - all these functions are connected to motor and the 'controller' is principally used with the motor to perform these functions. Thus, the 'controller' imported by the Respondent is rightly classifiable under the chapter 8503 - it is also found that the controllers are not covered under the CTH 8708 as per the explanatory notes to Section XVII. It is also pertinent to note that the Notes to CTH 8503 covers the parts to be used with motor and as such merits the classification of the goods under CTH 8503. Thus, the goods imported by the Respondent are rightly classifiable under Chapter heading 8503 0090 as claimed by them in the respective Bills of Entry. The correct classification of the goods in question is CTH 8503 0090 - the Ld. Commissioner (Appeals) has rightly held the classification of the impugned goods under CTH 8503 0090 - there are no infirmity in the impugned orders and the same are upheld. The appeals filed by the Revenue are dismissed.
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Corporate Laws
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2024 (9) TMI 570
Valid transfer of shares or not - Seeking rectification of the Register of Members of M/s. Lexus Technologies Pvt. Ltd., Vijayawada, Andhra Pradesh, respondent No.1, by entering their names therein under Sections 59 and 88 of the Act of 2013 - seeking to initiate action against Mantena Narasa Raju, Appa Rao Mukkamala and Suresh Anne, respondent Nos. 2,3 and 4, for oppression and mismanagement, apart from criminal proceedings under Sections 447 and 448 of the Act of 2013 for committing fraud. HELD THAT:- In the present case, proper verification of the assertions made by the parties was a sine qua non. The Acting President of the NCLT, by failing to carry out the said exercise, failed to discharge the mandate of law. Exercise of power under Section 59 of the Act of 2013 is to be undertaken in right earnest by examining the material, evidence, and the facts on record. This has not been done. Rather, a narrow view was taken without calling upon respondent No. 2 to prove the veracity of the contrary story put forth by him, despite receiving monies from the appellants. The facts, material, and evidence had to be examined in the context of the underlying facts, which would have included the receipt of monies, the signatures on the transfer deeds, etc. Needless to state, questions of fact must be decided on the principle of preponderance of probabilities, giving due weight to the specific facts, as found, so as to draw the conclusion that a reasonable person, acquainted with the relevant field, would draw on the basis of the same facts. Neither the Acting President of the NCLT nor the NCLAT examined, with any seriousness, the issues raised before them to come to a cogent conclusion as to whether the disputes raised by the respondents were mere moonshine. In Ammonia Supplies Corporation (P) Ltd. [ 1998 (9) TMI 427 - SUPREME COURT ], this Court held to that effect in the context of Section 155 of the Companies Act, 1956. Thereafter, in Aadesh Kaur (supra) also, this Court affirmed that if, on facts, an open-and-shut case of fraud is made out in favour of the person seeking rectification, the National Company Law Tribunal would be entitled to exercise such power under Section 59 of the Act of 2013. Therefore, verification of this aspect was essential but the NCLT failed to discharge this mandate. Another crucial fact that needs to be noted is that the interim order passed on 27.06.2019 by the Member (Judicial) of the NCLT had indicated, in clear terms, the issues that arose for consideration and the inquiry required to determine the same. However, ignoring the said interim order, the Acting President of the NCLT chose to summarily dismiss the petition, without considering the material already placed on record and without further evidence being adduced. The documents that were referred to and attached to the Company Petition and the appellants rejoinder were glossed over or were completely ignored - Neither the NCLT nor the NCLAT chose to labour over the actual issues for consideration by looking at the documentary evidence already placed on record or by calling for further evidence in that regard. The judgment in Company Petition and the judgment in Company Appeal are set aside - Appeal allowed.
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Insolvency & Bankruptcy
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2024 (9) TMI 569
Rejection of Section 9 application filed by the Operational Creditor-Appellant seeking initiation of Corporate Insolvency Resolution Process - whether the Appellant is an Operational Creditor of the Respondent and whether the claim of the Appellant is an operational debt qua the Respondent? - Time limitation. HELD THAT:- The Appellant has not placed on record any documentary evidence or agreement between the Appellant, Respondent and Empathy stipulating the terms and conditions of the guarantee of payment allegedly undertaken by the Respondent on behalf of Empathy for the goods supplied to it by the Appellant. It has, however, been canvassed by the Appellant that there is no need for any signed instrument to substantiate a contract of guarantee and that the existence of such a contract can be conclusively established from other correspondences/documents exchanged between the parties in this context. The Adjudicating Authority was not off the mark in observing that the Appellant has failed to produce any documentary evidence/tripartite agreement stipulating the terms and conditions of the guarantee of payment undertaken by the Respondent on behalf of the third party for the goods supplied to it by the Appellant. In the absence of any privity of contract between the parties, the Appellant cannot be treated as the Operational Creditor of the Respondent. It is a well settled legal proposition that the operative requirement of operational debt is that the claim must bear some nexus with a provision of goods or services, without specifying who is to be supplier or receiver. In the present case, the absence of any contractual agreement between the Appellant and the Respondent, defining their business relationship is an admitted fact - in the facts of the present case, it is undisputed that goods were not supplied by the Appellant but supplied by some third parties. It is however the claim of the Appellant that they had supplied the goods through the third parties who were their local distributors. the submission made by the Appellant that the suppliers were their local distributors since there is no agreement or documents placed on record to show that the goods were to be supplied by the Appellant through local distributors and that any such arrangement had been agreed to by Empathy or the Respondent is not impressive. The assertion of Appellant is therefore at best a fanciful proposition bereft of any substance. Since the invoices were raised by third parties and not by the Appellant, basis these invoices, the Appellant cannot justifiably claim any amount as purportedly due to them from the Respondent. When there is no co-relation between the goods supplied by the third parties to Empathy and the claim raised by the Appellant in respect of such goods on the Respondent, the Appellant/Operational Creditor had clearly failed to fulfil the requirements of Rule 5(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to establish their operational claims. The operative and primary requirements of Section 5(21) not having been met, we are therefore not convinced by the contention of the Appellant of their claim arising out of supply of goods as operational debt. In the absence of operational debt, no liability could be fastened on the Respondent to pay for these goods - thus the precondition for initiation of Section 9 IBC proceedings was non-existent in the facts of the present case. It is, therefore, clear that in the reply to the Section 8 Demand Notice, the Respondent has not only denied their liability to pay the claims raised by the Appellant but also raised question marks on the privity of contract between them. Time Limitation - HELD THAT:- In the present case, the date of default shown in Part IV of Form 5 was 28.08.2015. However, the Section 9 application was filed on 11.02.2019 which was clearly beyond the three years limitation period and hence clearly time barred. The Section 9 application was not filed for the purpose of insolvency resolution but for recovery of money owed to them by Empathy from the Respondent. Such behaviour on the part of the Appellant amounts to misuse of the provisions of the IBC and is strongly deprecated. The Adjudicating Authority has rightly rejected the application of the Appellant filed under Section 9 of IBC - the impugned order does not warrant any interference. There is no merit in the Appeal - Appeal dismissed.
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2024 (9) TMI 568
Condonation of delay in filing the appeal under Section 61 of the Insolvency and Bankruptcy Code - relevant dates for calculation of limitation period - HELD THAT:- Undisputedly, the Appellant has made the prayer for condonation of delay of 50 days in filing the appeal, meaning thereby, if the limitation period is counted from the date of passing of the order i.e. 11.03.2024 and it is to be counted from the next day i.e. 12.03.2024 then it would come to 80 days till it is filed on 31.05.2024. Thus, besides statutory period of 30 days, the Appellant has consumed another 50 days for filing the appeal though there is a window of only 15 days for considering the appeal by condoning the delay on sufficient cause assigned by the Appellant. In no case, the delay can be condoned beyond the period of 15 days i.e. 30 + 15 = 45 days whereas in this case it is 30+50=80 days, therefore, in view of the decision of the Hon ble Supreme Court in the case of National Spot Exchange Limited [ 2021 (9) TMI 1156 - SUPREME COURT ], this court has no jurisdiction to condone the delay. As regards the case of the Appellant that it had no knowledge of the order having been passed, the appellant itself was an intervenor in that case pending before the Tribunal, therefore, the Appellant had knowledge of the matter which was pending and cannot be allowed to show ignorance. Even otherwise, after the impugned order was passed on 11.03.2024, notice was published on 13.03.2024 in the newspaper and in this regard, the Appellant had the deemed knowledge in view of the decision of the Hon ble Supreme court in the case of M/s PRS Infrastructure Ltd. [ 2023 (9) TMI 516 - SUPREME COURT ]. Thus, there is hardly any merit in the present application for considering the application for condonation of delay as it is totally barred by time and beyond the period of 45 days. Application dismissed.
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2024 (9) TMI 567
Admission of Section 7 Application filed by the Financial Creditors - debt and default or not - constituition of CoC - inclusion of related parties in the CoC - HELD THAT:- The debt and default on the part of the Corporate Debtor is not even questioned, which is an admitted fact. Hence, apart from challenging the order of admission, it is not required to enter into issues sought to be raised by the Appellant that both the Intervenors are related party and their claims have wrongly been admitted. The issue regarding they being related party and their claims have wrongly been included, are issues, which need to be raised by the Appellant before the Adjudicating Authority by filing appropriate application under Section 60, sub-section (5) of the IBC. The ends of justice will be served in giving liberty to the Appellant to file an appropriate application before the Adjudicating Authority, questioning the admission of claim of M/s Certa Infrastructure Pvt. Ltd. and M/s Proplarity Infratech Pvt. Ltd., including the challenge to their inclusion in the CoC, which issues need to be decided by Adjudicating Authority after hearing the parties. The Appellant is given liberty to file an appropriate application under Section 60, sub-section (5) of the IBC, challenging the inclusion of M/s Certa Infrastructure Pvt. Ltd. and M/s Proplarity Infratech Pvt. Ltd. in the CoC and admission of their claims, which application may be filed within a week from today - For a period of two weeks, the IRP shall not convene the meeting of the CoC. The IRP shall be entitled to convene the meeting of the CoC after two weeks from today, subject to any order or directions passed by Adjudicating Authority in the application to be filed by the Appellant. Appeal disposed off.
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2024 (9) TMI 566
Dismissal of application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - refund of the entire amount of advance alongwith interest - cancellation of amount which was disbursed as loan - whether appellant has given money as loan or not - HELD THAT:- The Appellant has not advanced the money as loan rather the money has been given to the Respondent for the purpose of clearing their title over the land in question which was to be shared by both of them in the ratio of 30% / 70%. It is pertinent to mention that the Appellant has not filed any financial statement on record in order to show that the money which has been given as per term sheet has been shown as a loan advanced to the Respondent. There are no reason to interfere with the well-considered findings of the Tribunal whereby the application filed by the Appellant has been rejected - there are no merit in the present appeal - appeal dismissed.
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2024 (9) TMI 565
Approval of Resolution plan - grievance is that the Appellant was treated as an unsecured creditor, the claim of the appellant was termed as unsecured debt and was not considered as secured debt under Section 30 of the Code - HELD THAT:- The entire case of the Appellant is based upon the decision in the case of Rainbow Papers [ 2022 (9) TMI 317 - SUPREME COURT ] in which, while interpreting Section 48 of the GVAT Act, the Hon ble Supreme Court has held that the State Tax Office, in the said case, was secured creditor. In the case of Commissioner of Income Tax Vs. KTC Tyres (India) Ltd. [ 2005 (9) TMI 665 - SUPREME COURT ], the argument raised was that the capital gain tax which was payable by the company must be treated as liquidation expenses and therefore, must be paid first even before the dues of the workmen and secured creditors are discharged. This contention was totally rejected by the Hon ble Supreme Court in the aforesaid case KTC Tyres holding that reading sections 529A and 530 together, there is no escape from the conclusion that the liability towards workmen s dues and debts due to secured creditors as provided under clause (b) of Section 529A(1) has to be paid in priority to all other debts including tax dues to the revenue. In the case of Zicom Saas Pvt. Ltd. [ 2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], the Department of State Tax of Maharashtra filed the claim before the RP of an amount of Rs. 43,72,97,479/- out of which Resolution Professional accepted the claim of Rs. 36,68,12,729/-and in the plan they were allotted only 1% of the admitted claim. In this case also reliance has been placed upon in the case of Rainbow Papers alleging that the claim of the State Tax Maharashtra has to be treated as secured charge in terms of Section 37 of the MVAT Act, however, while interpreting Section 48 of the GVAT Act vis a vis Section 37 of the MVAT Act, this Court has found that Section 37 was made subject to any provision regarding creation of first charge in any central act, the provisions of Section 48 of the GVAT Act and Section 37 of the MPVAT Act were not pari materia and therefore, it was held that 9. When we compare the provisions of Section 48 of the provision of Gujarat Values Added Tax which was relied in Rainbow Papers Limited and the Provisions of Section 37 which is sought to be relied on in the present Appeal, distinction between the provisions is clear. Although it has also been held by the Hon ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Limited [ 2023 (7) TMI 831 - SUPREME COURT ] that the decision in the case of Rainbow Papers is a decision of the Court in the facts of the said case but without going into this aspect of the matter, it is opined that argument of the Appellant would not cut any ice that Section 48 of the GVAT Act and Section 33 of the MPVAT Act are pari materia, therefore, the ratio laid down by the Hon ble Supreme Court in the case of Rainbow Papers has to be applied rather the provisions of Section 37 of the MVAT Act and Section 33 of the MPVAT Act appears to be pari materia about which a decision has been taken by this court in the case of Zicom Saas [ 2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] that both the provisions are not pari materia with Section 48 of the GVAT Act, therefore, no benefit can be given to the Appellant on the basis of the decision of the Rainbow Papers. There are no merit in the present appeal and hence, the same is hereby dismissed.
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2024 (9) TMI 564
Approval of Resolution Plan - Applicant submits that RP has not issued clarification with regard to certain commercial spaces in the Corporate Debtor s asset - It is submitted that the Applicant/ Appellant was not informed about the 4th to 9th floor also belong to the Corporate Debtor - HELD THAT:- The entire submission of the learned Counsel for the Applicant advanced, relates to, not divulging about the inclusion of certain floors with commercial spaces in the Corporate Debtor s assets. It is to be noted that neither in the Appeal, nor in the Application, the Applicant/ Appellant has brought on record the Information Memorandum. The Information Memorandum and virtual room was shared with the Appellant by the RP, he being a Resolution Applicant. Entire Westin Hotel belong to the Corporate Debtor. With regard to 4th to 9th Floor, it was clearly mentioned in the Information Memorandum that SHPL have assigned it to Savyambhut Marketing Pvt. Ltd. Whatever stated in the Information Memorandum, the conclusion on such assignment was the matter for consideration of the SRA, who had to submit the Resolution Plan. The Resolution Plan for the Corporate Debtor was invited on as is where is basis and information was provided to all Resolution Applicants. Learned Counsel for the RP is right in his submission that it was for the Applicant/Appellant to seek any clarification, which it may require regarding the commercial space in the course of its due diligence of the Corporate Debtor. All Resolution Applicants were required to make their own due diligence and submit the Resolution Plan. The submission, which has been raised by the learned Counsel for the Applicant/Appellant that RP failed to divulge about the inclusion of certain floor with commercial spaces is incorrect on the submissions, which have been advanced by the Appellant itself before this Tribunal. There is no substance in the submission advanced by the Applicant in the present Application praying for setting aside the order of the Adjudicating Authority and to remand the Plan back to the CoC for fresh consideration. There is no merit in the Application - Application dismissed.
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2024 (9) TMI 563
Rejection of Section 9 Application filed by the Appellant as defective - rejection of application as defective without giving an opportunity of hearing - violation of principles of natural justice - HELD THAT:- The various issues raised by the learned Senior Counsel for the Respondent Shri Amit Sibal need not be gone into at this stage, when the Adjudicating Authority has not adverted to any of the above issues and has rejected the Application as defective. When the Adjudicating Authority has proceeded to dismiss the Application as defective, it was obligatory as per Proviso to Section 9, sub-section (ii) to give a notice to the Applicant to rectify the defect in the Application within seven days from the date of receipt of such notice. The Adjudicating Authority having not issued a notice under Proviso, the order impugned is unsustainable on this ground alone. The judgment of this Tribunal relied by the learned Counsel for the Appellant in TEK TRAVELS PRIVATE LIMITED VERSUS ALTIUS TRAVELS PRIVATE LIMITED [ 2021 (4) TMI 813 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI ] fully support the submissions of learned Counsel for the Appellant, where this Tribunal has held that before rejection of an Application on the ground of defect, the Adjudicating Authority ought to have provided an opportunity to rectify the defects within seven days. The order dated 02.01.2024 is set aside - Section 9 Application filed by the Appellant before the Adjudicating Authority is revived - appeal disposed off.
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FEMA
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2024 (9) TMI 562
Order passed by the Special Director imposing the penalty - contravention of Section 6(3)(a) of FEMA - HELD THAT:- As explained that the omissions to give particulars of the step-down WOSs were shown to be unintentional and occasioned only for the reason that the Company had disclosed its business plans to the entities named above and it was to prevent the Company from the local laws applicable in different countries where the entities were situated. It thus became clear that though the appellant company was having letter of clearance from the RBI dated 22.11.2001, certain omissions were found but it cannot be said that the appellants were not vigilant to seek clearance/approval before making investments. As also a fact that on 20.07.2005, the RBI accorded its approval on the Company s application for closure of the WOS and advised the Company to surrender its holding license, if issued, and to produce evidence of repatriation towards realization of equity investment. Therefore, some justification in reference to the facts of this case and the act of the appellant has been given though contested by the respondent. The facts aforesaid are relevant only for the purpose of considering the quantum of penalty otherwise the contravention of Section 6(3)(a) of the Act of 1999 and Regulations 5,6 and 13 of the Regulations, 2000 has not been contested Taking into consideration the overall facts which include the initial permission of RBI, we find penalty amount to be disproportionate and accordingly the penalty of M/s Tips Industries is reduced from Rs.70 lakhs to Rs.35 lakhs and for Shri Kumar S. Taurani, it is reduced from Rs.28 lakhs to Rs.8 lakhs. The reduction of the penalty is even looking to the amount involved and the reason of contravention. Accordingly, it would not be taken as an order on the proportionality groundbut the reduction of the amount is in the peculiar facts and circumstances of the case. We cause interference in the impugned order only in regard to the imposition of penalty which seems to be disproportionate and, therefore, the penalty of Rs.70 lakhs is reduced to Rs.35 lakhs on the appellant company while the penalty of Rs.28 lakhs is reduced to Rs.8 lakhs on the individual and with the aforesaid the impugned order is modified. As clarified that the appellant had approached Bombay High Court where certain issues were framed for adjudication. However, appellant did not press the appeal in reference to those issues, rather volunteered for adjudication of the appeal only in reference to the amount of penalty. Hence, he has not pressed for an order in reference to the judgment of Bombay High Court. It is on his agreement and when he did not press the appeal to answer the issues framed by the Bombay High Court that we have disposed of the appeal. The learned counsel was otherwise fair enough to state that legal issues framed by Bombay High Court are not made out on the facts of the case and accordingly we proceeded to dispose of the appeal in reference to the rival arguments. Thus, with the reduction of the penalty amount, appeal is disposed of.
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2024 (9) TMI 561
Penalty imposed under the Foreign Exchange Management - non-convertible amount was transferred out of India not on one occasion but on many occasions - Negligence vs. connivance of appellants - HELD THAT:- Appellants had acted in contravention of the provisions of the act of 1973 to make non-convertible amount to be convertible without prior permission of the RBI. Subsequently, if the amount was brought back, the contravention of the provisions of the Act of 1973 cannot be ignored. It may be due to inadvertence. The officers of the bank transferred the non-convertible amount to make it convertible. If we go deep into the issue and refer the facts, even connivance of the officers would come on record but in view of the order of the Delhi High Court, we are considering the issue whether there was negligence on the part of the appellant. We find that the appellants were negligent in making non-convertible amount to be convertible. It cannot occur due to inadvertent error because the non-convertible amount was transferred out of India not on one occasion but on many occasions. Thus, negligence on the part of the appellants gets well proved on the facts of the case. Appellants submitted that there is no loss of foreign currency as it was brought back to India. It has already been clarified that contravention of the provisions of the Act of 1973 would not get nullified if the currency was subsequently brought back to India. In fact, if the negligence of the appellants is ignored, then it would be nothing but to endorse their action in contravention of the provisions of the Act of 1973. If such arrangements are permitted and ignored, it may have serious consequence. Only for the reason that the money was alleged to have been brought back, no penalty could have been imposed, we do not find aforesaid ground to be tenable. Whether respondent/Adjudicating Authority is justified in imposing the penalty of Rs.65 lakhs on the appellant bank and Rs. 10 lakhs each on its officers - We have gone through the record and also the judgment of the Delhi High Court [ 2010 (1) TMI 1313 - DELHI HIGH COURT] The Delhi High Court has restricted the case in reference to allegation of negligence and not for any other issue. Adjudicating Authority ought to have decided the Show Cause Notice in reference to the aforesaid. We find that the learned Adjudicating Authority has taken into consideration each aspect of the matter raised before it and thereupon passed a detailed speaking order. In doing so, it did not become judge of its own cause, rather order was passed based on material and otherwise the appellants themselves have admitted their error in transferring of non-convertible funds making it convertible. The Adjudicating Authority has meticulously considered each aspect of the matter and finding contravention of the provisions of the Act of 1973, appropriate penalty was imposed but has been questioned. As emphatically argued that without there being any representation of ED, the Adjudicating Authority has passed the order. We find no substance in the argument aforesaid. As per the procedure for passing Adjudication Order, the entire material issent to the Adjudicating Authority who cause a Show Cause Notice to invite reply of the person contravened the provisions of the Act of 1973. After receipt of the reply and the material, the Adjudicating pass an appropriate order. In the instant case, the procedure aforesaid was adopted thus we do not find that the Adjudicating Authority became judge of its own cause. Penalty could have been imposed after taking note of the judgment of the High Court. However, in the instant case, a penalty disproportionate to the default and the contravention has been imposed. It is a fact that non-convertible currency was made convertible in violation of the Act of 1973 but for the aforesaid contravention, the penalty is disproportionate. The Delhi High Court has taken it to be a case of negligence thus the penalty should have been restricted to the allegation of negligence. We are not in agreement with the argument raised by the appellants that there was no contravention of the provisions of the Act of 1973, we find the penalty to be on the higher side. When the non-convertible amount was brought back, the fact aforesaid could not have been ignored by the Adjudicating Authority though bringing the currency back to India does not absolve the appellant for contravention of the provisions of the Act of 1973. Thus, while we find contravention of the provisions of the Act of 1973, the penalty imposed for different contravention is disproportionate. We find reasons to cause interference in the quantum of penalty which is reduced from Rs.65 lakhs to Rs.30 lakhs on the appellant bank and Rs.10 lakhs to Rs.3 lakhs on the individual appellant. The amount of pre-deposit has been satisfied by depositing 50% of the amount by appellant Standard Chartered Bank and 30% each by its officers/other appellants. Therefore, the appellants have already satisfied the equivalent amount or even deposited higher amount pursuant to the order for pre-deposit. Since the amount has been satisfied by the appellants, no other amount would be recoverable, rather if any amount received by the respondent is in excess to the penalty imposed by this Tribunal, it would be refundable.
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2024 (9) TMI 560
Violation of Section 8(1) and and (9) (1)(a) of FERA - officers of the Directorate of Revenue Intelligence, Hyderabad seized foreign exchange of various denominations equivalent to Rs.54,20,854 at Hyderabad Airport on 11.12.1999 from Bala Ravi Kishore - reliance on statement recorded u/s 108 of the Customs Act - validity of reliance on the statement though retracted by the appellant - HELD THAT:- The facts on record shows that there was no retraction of the statement and otherwise in absence of reason and without justifying the delay mere retraction cannot be accepted. The Apex Court in the case of Bharat v. State of UP [ 1970 (3) TMI 183 - SUPREME COURT (LB) ] has ruled on the retraction of the statement as an afterthought. We are unable to accept the argument of the learned counsel for the appellant that retraction has been relied though no document has been produced to prove it and otherwise there was material available to prove the case which was mainly the currency recovered though from Shri Bala Ravi Kishore but he was carrying it at the instance of the appellant. We are unable to accept that merely for the reason currency was not recovered from the appellant, a case would not be made out. The facts available on record are sufficient to prove the contravention. It is not only that the currency recovered was meant for its delivery to a person out of India but there was no permission to carry the currency. Director of Enforcement has thus rightly concluded about the contravention of the provisions to impose penalty on the appellant. The appellant has made a reference of Section 49(3) of the Act of 1999 to submit that the adjudication was not initiated within the sunset period of two years. It is only on the ground that notices were not served before the expiry of the period of two years while the notice was issued prior to the period of two years. Thus, we are unable to accept the argument that the proceedings were initiated after the sunset period of two years, rather issuance of Show Cause Notice itself shows initiation of the proceedings and that too within the sunset period. Accordingly, we are unable to accept the aforesaid argument also. Appellant lastly made a reference of the acquittal of the appellant in the prosecution under the Customs Act with an argument that once the appellant is acquitted in the prosecution, the penalty should not sustain. The argument aforesaid has been made in ignorance of the fact that the appellant was exonerated by the Metropolitan Sessions Judge, Hyderabad on the ground that the sanction for the offence under Section 135(1)(b)(ii) of the Customs Act was not taken and, therefore, the prosecution therein failed. It is, however, after recording the finding that the appellant and others attempted and abetted the smuggling of foreign currency - The appeal therein by the respondent was dismissed. The perusal of the order would reveal two issues framed by the court and answered accordingly. Metropolitan Sessions Judge concluded that the conviction could not be made in absence of sanction for conviction under Section 135(1). It is otherwise to be clarified that mere acquittal in the prosecution case would not have bearing unless the issue is decided on merits. In the instant case, the acquittal in the prosecution case is on technical ground thus it will not have bearing on the present case. Appeal dismissed.
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2024 (9) TMI 559
Proceedings under the FEMA, 1999 - black money in foreign bank, i.e., HSBC Zurich, Switzerland - use of information received under the India-France Double Taxation Avoidance Agreement - main argument that S. 37A of FEMA, 1999 is inapplicable, it is submitted by the appellant that even assuming S. 37A to be applicable, the section only authorizes seizure of assets, and not confiscation of the same - HELD THAT:- An appeal having been filed before us under the aforesaid Section 37A(5), we propose to dispose of the same on the basis of the material before us. Furthermore, we do not find anything in the language of the statute which states categorically that the Appellate Tribunal must necessarily pass its order on the basis of outdated facts, which would remain frozen in time as they were at the time when the Ld. Competent Authority passed its order. Being the order of a judicial authority, in the appellant's own case, and underlying facts in that case being substantially the same as in the present case, we deem it appropriate in the interest of justice to take the discharge order passed by the Ld. ACMM in the prosecution case filed by the Income Tax Department on record. Entire proceedings under FEMA, 1999 were initiated on the basis of the prosecution case launched by the I-T Department and the appellant stands discharged in the aforesaid case - To invoke the provisions of Section 37A, therefore, there is no requirement of proof just below reasonable doubt . In fact, there is no requirement even to have the reason to believe that any foreign exchange, foreign security, or any immovable property, situated outside India, is held in contravention of section 4 but merely the reason to believe that it is suspected to have been so held. From the above, it is evident that a very low threshold has been set by the legislature under Section 37A. It appears that the threshold for initiating action under section 37A has been kept low deliberately since the section provides for multiple avenues of redress to the affected person, including adjudication, appeal to the Appellate Tribunal, and also an opening to have the seizure set aside at any stage of the proceedings by disclosing the fact of such foreign exchange or foreign security or immovable property, bringing it back into in India and, thereafter, making an application to the Competent Authority or the Adjudicating Authority. We do not agree with the appellant that the action taken under section 37A in the present case no longer has any legs to stand because the appellant stands discharged in the prosecution case filed by the I-T Department. Information shared under the India-France DTAA could not have been shared with any other authority or court other than authorities dealing with Income Tax proceedings - We find merit in the contention put forward by the respondent that as per the plain language of Section 37A, the Respondent Directorate could invoke the said provision upon receipt of any information or otherwise and it is not relevant as to where the department gained knowledge of such contravention. He further pointed out that Article 28 of the said DTAA provides that any information received by any contracting state shall be treated as secret in the same manner as information obtained under the domestic laws of the contracting state and further provides that the information may be disclosed in public court proceedings or in judicial decisions. In any case, this Appellate Tribunal is not the appropriate forum to look into issue of violation of DTAA, if any. In view of the facts stated above, we do not find any merit in the aforesaid contention of the appellant. Even assuming that the provisions of Section 37A are applicable, the said section only authorises seizure of the assets but not confiscation of the same - We find that under section 37A the Authorized Officer has been empowered to 'seize' value equivalent in India to the foreign exchange/foreign security/immovable property outside India. The word seize is not defined under the Act, being a commonly used of word of general parlance. The common meaning of the word is to take possession of something, especially property. Needless to say, possession of financial instruments which are held in a dematerialized form can only be taken by transfer of the same to the demat account of the Respondent Directorate. The learned counsel for the respondent has pointed out that this is all that has been done in the present case. The Directorate has merely seized the bonds and the same have not been confiscated. Confiscation will happen only after the adjudication proceedings are concluded. Having considered the facts before us and the clarification provided on behalf of the respondents, we find no merit in the argument of the appellant regarding confiscation of the property. Section 37A of FEMA, 1999 was introduced by way of an amendment in the year 2015, it came into effect from 09.09.2015 - On the issue of 'continuing offence', the contention of the appellant essentially is that in the first instance there is no offence/contravention whatsoever in this case. At no stage of the proceedings did the appellant make any admission of continuing to hold any account abroad and the Directorate also does not have any evidence to support that conclusion. The Directorate had relied solely on the Income Tax prosecution case in which the appellant now stands discharged based on the categorical finding that there was no evidence even to charge him. In support of his contention, the learned counsel for the appellant relied heavily upon the language of the letter dated 30.08.2011 addressed to the Director General of Investigation of the Income Tax Department written on behalf of the appellant and the other members of his family by their Authorised Representative, Shri Abhay K. Aggarwal. The appellant's reliance upon the decision of Ganpati Dealcom Pvt. Ltd. [ 2022 (8) TMI 1047 - SUPREME COURT ] would not assist him. It may also be pointed out that this Appellate Tribunal in the case of Prism Scan Express Pvt. Ltd. [ 2024 (1) TMI 203 - APPELLATE TRIBUNAL FOR SAFEMA AT NEW DELHI ] had held that a property which was transferred' prior to 2016, could still constitute benami property if it continued to be 'held' after the Amendment Act of 2016 came into force, since definition of 'benami transaction' under Section 2 (9) (A) of the amended Act covers not only property transferred to but also property held by a person the consideration for which has been provided by another person. In such cases, the question of retrospectivity would not arise as action was initiated on the ground that the property was 'held' in contravention of the amended Act after it came into force. Similar is the situation with respect to application of S. 37A in the present case. Accordingly, we do not find any grounds to interfere with the impugned order at this stage of the proceedings under Section 37A. We do not find merit in the appeal or the application for restitution of the seized property and accordingly, dismiss the appeal with all pending applications.
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2024 (9) TMI 558
Offence under FEMA - enhancement of penalty - information was received that out of the 21 foreign remittances, the export obligations were not completed within the prescribed period of financial year - HELD THAT:- On reading of Section 13 (1) FEMA it is obvious that the maximum amount of penalty which can be imposed under the Section is three times the amount of contravention involved. From the language of the section, it is clear that the section has not prescribed either a fixed amount of penalty or minimum amount of penalty. It therefore, follows that the amount of the penalty which is to be imposed by the Adjudicating Authority is a matter of discretion which, of course, is necessarily required to be exercised judiciously after taking into account the facts of the case and the evidence placed before him. As per the admitted fact, export proceeds are already realized by the respondent, though with delay of two years eight months and three years two months, from the date of exports. The fact that export proceeds are already realized, we agree with the view of Ld. Adjudicating Authority that this case pertains to only technical contravention, on account of delay in realizing the export proceeds. The said contravention of delay in realizing the export proceeds does not amount to quantifiable contravention equivalent to the proceeds of exports in any manner, asthere was no intention on the part of the respondents to indulge in contravention of the substantive provisions, as remittances against exportsare already realised. As decided in Hindustan Steel Ltd. vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] reading of the Adjudication Order reflects judiciousness on the part of the Adjudicating Authority, in not having imposed penalty which is commensurate with the amount of foreign remittance against exports, particularly so when the contraventions were technical in nature as the substantive provisions of the Regulations have been complied with, even though with some delay. The Adjudicating Authority has imposed separate penalty of Rs. Two Lakh each on both the Noticee(s) on account of delay for the compliances/remittances against exports. Where the contraventions are not of substantive provisions, the penalties of Rs. Two Lakh each on both the Noticee(s), imposed by the Adjudicating Authority meet the ends of justice. As reasons relied upon by the Adjudicating Authority for the imposition of the penalties, we observe that the order of the Adjudicating Authority cannot be interfered with.
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2024 (9) TMI 557
Unauthorised transactions in foreign exchange - search was conducted at the business and residential premises of the appellant which yielded foreign currencies pertaining to various countries, including US $, Singapore $, Euro, Hong Kong $ and Australia $, in addition to a large amount of Indian currency - prima facie corroborate the information on the basis of the Directorate had initiated action against the appellant - HELD THAT:- Joint Director has pointed out a number of discrepancies in the so-called agreements to sell and fabrication of said agreements is not ruled out. We find that very cogent issues have been raised therein for which no explanations are forthcoming from the appellant's side. Further, there is nothing to show that the transactions for the sale of land as claimed by the appellant materialized as balance payments were not received till date and no sale deeds were executed in favour of vendees. It cannot be believed that any vendee will give huge part- payment in cash. The said vendees have not filed their claims in any court or before ED. It is also not explained whether the so-called advances were refunded to the intending buyers after the sale transactions failed to fructify. Even the very contention that four different and almost identical transactions were entered into within a span of 10 days for sale four immovable properties owned by the members of his family are not credible to say the least especially as the appellant had failed to advance any such explanation in his earlier statement wherein very specific claims had been made. Thus, we are in full agreement with the Ld. Joint Director that explanations provided subsequently to justify the Indian currency seized as well as the documents produced to substantiate the explanations are the result of an afterthought and suffer from deep contradictions. Even otherwise, it is unlikely that any family will agree to sell most of its properties, without agreeing to purchase alternate better properties. Similarly, as regards the foreign currencies found, as already stated, the appellant had initially claimed that he had made six trips abroad to various countries, namely, Sri Lanka, Thailand, Hong Kong, Dubai, Singapore Australia. For undertaking the said trips, he used to purchase foreign exchange from different money changers and also the local market. He claimed that the foreign currencies seized were unspent balances of the foreign currencies which he had purchased in this manner. He undertook to furnish the details of his visits and purchases of foreign exchange made along with copies of his passport as evidence of his foreign trips and stated that he was not aware that after return from trips abroad he ought to have surrendered the unspent balance of foreign exchange to an authorized dealer within 180 days from the date of his return to India. There were also several discrepancies in the documents produced by him in support of claim that the foreign currencies were leftover balances of foreign currencies purchased by him in connection with his visits abroad. These have also been discussed in detail of the order Ld. Joint Director and are not being repeated here for the sake of brevity. When it was pointed out to him that there was no co-relation between the documents produced and the amounts of various currencies seized from his premises, he put forward a new claim that during his trips abroad, he visited many casinos and played various games and won prize money in various currencies including S $ 15,100, HK $ 12,100, US $ 600, Euro 500, Aus $ 1000 and UAE Dh 3350 and brought back various amounts of such foreign currencies to India. No proof was adduced for the claims made. Even if the claims were correct, it would mean that he failed to surrender the same to an authorised person within 180 days from the date of his return to India in contravention of the provisions of Section 8 of FEMA, 1999 read with Regulation No. 6A of the Foreign Exchange Management (Realisation, Repatriation Surrender of Foreign Exchange) Regulations 2000. Furthermore, the Appellant failed to explain the source of US $ 6200 seized at his premises. It is pointed out by the Ld. Joint Director that as per Rule 3 of Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulation, 2015 a person can only hold US $ 2000 foreign currency notes and hence the Appellant was in violation of the provisions of this rule and possession of the said money was not justified by the Appellant. 32. Having considered the entire gamut of facts commencing with the initial information received, the findings from the search operation, the initial explanations put forward and the explanations advanced subsequently, the findings recorded in the impugned order upon appraisal of the evidence by the authority below, we are of the view that the arguments and contentions put forward on behalf of the appellant, are self- serving and lack credibility and the appellant has totally failed to explain the seizure of Indian and foreign currency from the premises by way of any cogent and reliable evidence and that the findings of the Authority below are well supported by the material on record. Accordingly, we hereby confirm the penalties levied by the Ld. Adjudicating Authority vide order dated 30.09.2013, impugned before us.
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2024 (9) TMI 556
Offence under FEMA - bogus purported exports (of sub-standard goods) to Russia with inflated invoices for the purpose of obtaining export benefits under DEPB and Duty Drawback Schemes - Reliance on statement of the witnesses recorded during investigation u/s 37 - Denial of Cross-Examination of Witnesses HELD THAT:- In the present case, the Adjudicating Authority has not summoned any person to examine him on oath as per clause (a) of Section 28 (2) of FEMA, 1999. Even no evidence is led by respondent ED before the Adjudicating Authority by way of receiving evidence by way of affidavits as per clause (c) of Section 28 (2) FEMA, 1999. Respondent ED is relying upon the statement of persons recorded u/s 37 of FEMA, 1999 which are duly corroborated with documentary evidence collected from various sources during the investigation of this case. The cross examination of any person will be material, if the whole case is based on the oral statement of different persons recorded u/s 37 of FEMA, without any corroborative documentary evidence, or when any witnesses summoned and examined before the Adjudicating Authority on oath. Tribunals and Adjudicating Authorities are quasi-judicial bodies, which mostly adopts summary procedure for conducting the proceedings and the same cannot be equated with regular Courts. Moreover, the tribunals are not bound by the procedure laid down in Civil Procedure Code, 1908. In the present case apart from the statement of the witnesses recorded during investigation u/s 37 of FEMA, there is huge documentary evidence, which corroborates the same, as pointed out by respondent in the preceding para. As per the allegation against the appellant Suresh Saluja @ Pappy Saluja, he made the bogus purported exports (of sub-standard goods) to Russia with inflated invoices for the purpose of obtaining export benefits under DEPB and Duty Drawback Schemes - Said consignments never reached Russia, as per investigation conducted by DRI, however, appellant procured the remittances through unauthorised channels. As also revealed during investigation that appellant Suresh Saluja instigated number of persons for floating bogus firms/concerns in order to show the purchase of material to complete the paper transactions without actual purchase. The bank accounts of said bogus firms/concerns were also opened at the instance of Suresh Saluja, but he retained the blank signed cheques of the said accounts to withdraw the bogus payments made to said firms/concerns. Even otherwise, summoning Kabul Singh, Balwant Singh Maan, and Dr. Naginder Khera for purpose of cross examination is not going to demolish the investigation conducted by respondent ED, being based on documentary evidence and the other material evidence. Appellant wants to cross-examine the witnesses, without filing his reply to the grounds of Show Cause Notice, which is also against the canons of court proceedings, as without going through the defnce taken by appellant, Ld. Adjudicating Authority can not appreciate whether the summoning of the said persons for cross-examination is really required during the Adjudication Proceedings in the interest of justice or the request for the same is made with a malafide intention to delay the proceedings and/or without any basis in view of documentary evidence on record. It is apparent that the said application was moved by the appellant Suresh Saluja to delay the adjudication proceedings pending before the Adjudicating Authority, as he has not disclosed his defence till date and wants to play a blind game with the investigation agency/ED. As pertinent to mention here that appellant Suresh Saluja without filing his reply to explain his defence to the show cause notice, challenged the Show Cause Notice, at premature stage before the Hon'ble High Court of Punjab and Haryana, Chandigarh by way of CWP-1371 of 2017, and thereafter filed the appeal before this Appellate Tribunal. This points towards the direction that appellant is trying his best to stall the adjudication proceedings, as he is conscious of the fact that huge penalty is going to be imposed by the Adjudicating Authority on the basis of evidence on record, as and when any final order is passed, in absence any cogent defence in his favor. The present appeal is hereby dismissed, being devoid of any merits, and thereby, adjudicating authority is hereby directed to conclude the adjudication proceedings as per law, if there is no stay by Hon'ble Punjab Haryana High Court. Appellant is at liberty to file reply on merits to the grounds of SCN. It is made clear that nothing expressed herein will affect the right of any party in the Adjudication proceedings. Further, Ld. Adjudicating Authority will be at liberty to examine and cross-examine any witness on oath, if so required, in the interest of justice.
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PMLA
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2024 (9) TMI 555
Money Laundering - Seeking to withdraw/recall of Look-Out-Circular (LOC) - scheduled offences - violation of the provisions of the Bilateral Agreement executed between the Director, Town and Country Planning, Haryana (DTCP) - HELD THAT:- The circumstances in which the Look Out Notice can be opened has been explained in the decision of this Court in Sumer Singh Salkan [ 2010 (8) TMI 1083 - DELHI HIGH COURT ]. It was observed that Recourse to LOC can be taken by investigating agency in cognizable offences under IPC or other penal Laws, where the accused was deliberately evading arrest or not appearing in the trial court despite NBWs and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest . In the present case, none of the circumstances are made out. Though it has been insisted that the LOC was issued to secure presence of the Petitioner and that he is at flight risk and would evade trial, however, it is evident that the Petitioner has been duly cooperating with the Investigating Agency by furnishing the requisite documents and by responding to queries raised by the Respondent No. 1/ED. It is also recorded in Order dated 05.09.2022 passed by the Apex Court that he has appeared more than 14 times before the ED. Notably, the Apex Court has already granted Anticipatory Bail to the petitioner vide Order dated 05.09.2022, with the directions that no coercive action, including arrest, shall be taken against the petitioner. The Anticipatory Bail order also obliges the petitioner to join the investigation as and when called upon by the investigating agency. Given these facts, that petitioner has joined investigations, is not evading the process of law and there is no likelihood of the petitioner leaving the country to evade trial; none of the grounds for continuing the LOC continue to exist. The Lookout Circular (LOC) issued against the Petitioner is hereby quashed. Petition allowed.
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Service Tax
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2024 (9) TMI 554
Levy of service tax - material consumed during retreading of tyres - value of the services rendered was below the threshold limit in terms of N/N. 6/2005 dated 1.3.2005. Whether Service Tax is leviable on the total amount charged for retreading of tyres including the value of material have been used and sold in the execution of Contract or only on service portion? - HELD THAT:- The learned Commissioner observed that that the identical issue has already been decided by the Apex Court in the case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2017 (1) TMI 1110 - SUPREME COURT] where it was held that ' the appellant is liable for service tax on service portion only which is below threshold limit of SSI exemption.' Service tax on the service portion, which is below the threshold limit of SSI exemption - HELD THAT:- The learned Commissioner seriously erred in observing that the appellant is liable to service tax on the service portion, which is below the threshold limit of SSI exemption. Once the finding is that the value of the service portion is below the threshold limit, they are entitled to exemption from service tax. The appellant is entitled to avail the benefit of the prescribed limit in terms of N/N.06/2005-ST dated 1.3.2005, whereby the taxable services not exceeding Rs.Four Lakhs were exempted in any financial year. The threshold exemption limit was enhanced to Rs.Eight Lakhs w.e.f. 01.04.2007 and Rs.Ten Lakhs w.e.f. 01.04.2008, which is applicable to the period in question - the appellant is entitled to exemption from the whole of the service tax leviable thereon under Section 66 of the Finance Act. There is an error in the impugned order when despite the findings being in favour of the appellant/assesee, the appeal filed by the Revenue was allowed. The appellant is liable to service tax on service portion only, which is below the threshold limit needs to be set aside - Appeal allowed.
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2024 (9) TMI 553
Recovery of short paid service tax with interest and equal penalty - Demand of service tax where the payment of 50% of tax is by the appellant and the remaining 50% is made by the service recipient - HELD THAT:- The issue whether the demand of service tax is sustainable when the payment of 50% of tax by the appellant and the remaining 50% by the service recipient, is no longer res-integra and has been decided by the Karnataka High Court in M/S. ZYETA INTERIORS PVT. LTD. SHRI. AMIT PRAKASH, DIRECTOR OF M/S. ZYETA INTERIORS PVT. LTD, VERSUS THE VICE CHAIRMAN SETTLEMENT COMMISSION, CHENNAI, THE PRINCIPAL COMMISIONER OF GST AND CENTRAL EXCISE, BANGALORE [ 2021 (10) TMI 233 - KARNATAKA HIGH COURT] where it was held that 'once the tax liability is discharged regardless of the persons who discharge, the Assessee cannot be asked to pay the tax again.' Following the decision of the Karnataka High Court, the Principal Bench in M/S. AADARSH SRI SAI MANPOWER SOLUTION (P) LTD., SHRI MADAN SINGH RAWAT, DIRECTOR AND SHRI TRILOK SINGH RAWAT, DIRECTOR VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE SERVICE TAX, DEHRADUN, UTTRAKHAND [ 2023 (7) TMI 917 - CESTAT NEW DELHI] also observed that when the entire tax due has been deposited in the account of the Central Government though not entirely by the appellant as the service provider but also by the service recipients, it will not be possible to sustain the demand. Since the appellant has paid the 50% of the tax due and remaining 50% has been paid by the service recipient with regard to the impugned taxable service, the duty liability stands discharged as 100% tax is deposited in the government exchequer. There is no loss to the Revenue for which they can claim that the duty has been short paid. The issue has been decided on merits in favour of the appellant and hence it is not necessary to go into the question of invocation of the extended period of limitation or the levy of interest and penalty. The impugned order, is unsustainable and deserves to be set aside. The appeal is, accordingly allowed.
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2024 (9) TMI 552
Leviability of VAT/CST - appellant company charges handling charges @0.6% to 1% from their dealers/customers, which is part of sales consideration - inclusion in the assessable value or not - invocation of extended period of limitation. Inclusion in the assessable value or not - HELD THAT:- The present controversy has been decided by the Ahmedabad Bench of this Tribunal in the case of M/S GUJARAT BOROSIL LTD VERSUS COMMISSIONER OF C. EX. S. TAX, SURAT-II [ 2017 (7) TMI 1034 - CESTAT AHMEDABAD] , where the issue involved was whether the amount equal to 7% of the value of the goods, collected as insurance charges under the head cost of transportation from the dealers/buyers is includible in the assessable value and chargeable to duty. The Tribunal had categorically noted that the issue of charging duty on the said insurance charges by adding to the assessable value is settled by this Tribunal as similar proceedings initiated has been decided in M/S GUJARAT BOROSIL LTD VERSUS COMMISSIONER OF C. EX. S. TAX, SURAT-II [ 2017 (7) TMI 1034 - CESTAT AHMEDABAD] - The Tribunal arrived at the conclusion that the amount equal to 7% of the value of the goods collected as insurance charges under the head cost of transportation from the dealers/buyers is not the excess amount of insurance charges collected and retained by the appellant but the amount has been collected as compensation for breakages during the course of transit by issuing credit notes. Thus, the payment made by the assessee to its customers for breakages and losses neither tantamounts to insurance nor cost of transportation and is includible in the assessable value. Invocation of the extended period of limitation - HELD THAT:- The Tribunal observed that once the facts are within the knowledge of the Department, being always in dispute, hence the allegation that they have suppressed the facts from the knowledge of the Department is not acceptable in view of the principle of law laid down by the Apex Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] and P B PHARMACEUTICALS (P) LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 2003 (2) TMI 68 - SUPREME COURT] . Similarly, the imposition of penalty was held to be un-warranted and un-justified as the issue related to the interpretation of Valuation Provisions and the duty was confirmed only for the normal period. The question of invocation of extended period of limitation and imposition of penalty, etc. is also not sustainable. The impugned order is set aside - appeal allowed.
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2024 (9) TMI 551
Non-payment of Service tax - Recovery of certain expenditures from their service recipient and the amount collected by the appellant from their service recipient have not been included under the taxable value for the purpose of payment of Service Tax - invocation of extended period of limitation - HELD THAT:- The appellant have recovered certain reimbursement expenditure which have been made by them for transport of goods on behalf of their principals namely M/s. Adani Willmar Limited. It is also matter of record that the charges with regard to the C and F agent service received by the appellant have already been declared by them in their ST-3 returns and on the same due amount of the Service Tax had already been paid. It was held by learned Commissioner (Appeals) while rejecting the appeal of the appellants that ' The appellant has received extra amount than the amount from their clients towards providing of various services and hence cannot be termed as pure agent as per Rule 5 of the Service Tax (Determination of Value) Rules, 2006 and hence all such value are required to be included in the value for the purpose of charging service Tax on the said services and hence is required to discharge the Service Tax liability accordingly'. The logic adopted by the learned Commissioner (Appeal) in his above mentioned findings is legally not sustainable as Hon'ble Delhi High Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. in its order dated 30.04.2012 [ 2012 (12) TMI 150 - DELHI HIGH COURT] have held that Rule 5 (1) of the Service Tax Valuation Rules is contrary to the provision of Section 67 of the Finance Act, 1994 and thus has been declared Rule 5(1) as ultra virus. The transportation charges reimbursed to the appellant by their principals are on actual basis of the amount incurred by them on transportation of goods on behalf of their principals as pure agent and same are not includable in the taxable value of services for the appellant. The impugned Order-In-Appeal is without any merit and is set aside - appeal allowed.
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Central Excise
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2024 (9) TMI 550
Recovery of erroneous Refund claim - Interpretation and applicability of Section 11A of the Central Excise Act, 1944 - whether the subsequent judgment of the Hon ble Supreme Court rendered in M/s Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT] overruling the judgment of M/s SRD Nutrients [ 2017 (11) TMI 655 - SUPREME COURT ] will be applicable in the facts of the instant case? - HELD THAT:- A plain reading of section 11A of the Central Excise Act, 1944 reveals that it makes a distinction between the cases of duties of excise not having been levied, paid, short-paid or short-levied, erroneously refunded, for reasons of fraud, collusion or any mis-statement or suppression of facts or contravention of any provisions of the Act or Rules made with the intent to evade payment of duty and in cases where none of these elements are present, under sub-section (1) of section 11A of the Act of 1944, where any such duty of excise has not been levied or short-levied or erroneously refunded for any reason other than the reasons of fraud or collusion, etc., the Central Excise Officer would, within two years from the relevant date, serve a notice on the person chargeable to the duty calling upon him to show cause why the amount specified in the notice along with interest not be recovered. The learned Tribunal proceeded to observe to the effect that the Excise Officer had no other choice but to follow the decision of the Hon ble Supreme Court in M/s SRD Nutrients. Any other action on his part would have been wholly illegal. His order of refund thus was in consonance with the law declared by the Hon ble Supreme Court at the time when he was passing the order. The learned Tribunal proceeded further to observe that in its view any subsequent change in the legal position would not permit him to invoke the powers of section 11A of the Act of 1944. As is well settled, all legal proceedings on the date when are being decided by any Court, would be governed by the law laid down by the Hon ble Supreme Court which prevails on such date. This statutory appeal is a classic example of an instance where precious and valuable time of the Court is lost because of the appellant choosing not to follow the law laid down by the Hon ble Supreme Court which governs the field. The ratio of the decision rendered by the Hon ble Supreme Court in the case of Commissioner of CGST and Central Excise (J and K) vs. M/s Saraswati Agro Chemicals Pvt. Ltd. [ 2023 (7) TMI 542 - SC ORDER] is squarely applicable in the facts of the instant case. Even then, this statutory appeal was filed by the Commissioner of Central Goods and Services Tax and Central Excise, Siliguri Commissionerate on 20th May, 2024. On that date (i.e. on 20th May, 2024), the judgment of the Hon ble Supreme Court dated 04th July, 2023, was squarely governing the field - this is a fit case for imposition of cost upon the appellant. As such, this Court imposes a cost of Rs. 20,000/- upon the appellant which shall be deposited with the Sikkim State Legal Services Authority within a fortnight from date. It is refrained from imposing cost upon the appellant.
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2024 (9) TMI 549
Clandestine manufacture and clearance of the finished goods - entire case is made on the basis of alleged receipt of clandestinely removed Billets by M/s Twenty First Century Wire Rods Ltd. - reliance placed upon the statement of accountant of the TFCWRL - violation of principles of natural justice - HELD THAT:- There is no evidence of clandestine manufacture of appellant s final product. The revenue couldn t bring a single evidence of finished goods allegedly manufactured received by any buyer. There is not a single evidence of receipt of sale proceed against alleged clandestine manufacture and clearance of final product. No evidence of transport of any single consignment of alleged clandestinely removed goods was adduced. Third party's evidence is not sufficient to establish the clandestine removal of appellant s goods particularly when the said third party's statement was not examined under Section 9D of Central Excise Act, 1944. By reading the Section 9D, it is clear that it is not the optional but mandatory to conduct the cross examination of the witnesses. Since in the present case no cross examination was allowed, the statements cannot be relied upon which is the root of the evidence and in the absence of root tree cannot stand. This issue of cross examination has been time and again considered repeatedly by various forums. In the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT] Hon ble Supreme Court held that ' if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice.' Thus, it is a settled law that in absence of cross examination the statements cannot be relied upon as evidence as the same lose its evidentiary value. The revenue could not establish it s case of clandestine removal. Hence the demand will not sustain - the impugned order is set aside - appeal allowed.
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2024 (9) TMI 548
Levy of personal penalty on each of the appellant u/r 26 of the Central Excise Rules, 2002 - HELD THAT:- This Tribunal in the cases of SHRI S. BHARATH REDDY, MANAGING DIRECTOR, M/S. BRITISH NUTRITIONS PRIVATE LIMITED SHRI V.S. REDDY, EXECUTIVE DIRECTOR, M/S. BRITISH NUTRITIONS PRIVATE LIMITED, VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2024 (6) TMI 1394 - CESTAT BANGALORE] , SHRI RAGHAVENDRA, PLANT MANAGER M/S. L.G. BALAKRISHNA BROS. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MYSORE [ 2024 (5) TMI 1335 - CESTAT BANGALORE] and M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2023 (12) TMI 304 - CESTAT CHANDIGARH] held that once the main appeal is settled under SVLDRS, 2019, the appeals filed by the co-noticees challenging the personal penalty arising out of the same Order-in-Original cannot be sustained. The appeals filed by the appellants deserve to be allowed and the same are allowed.
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CST, VAT & Sales Tax
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2024 (9) TMI 547
Challenge to seizure order - direction of High Court that 50% of the disputed tax should be deposited within three weeks from the date of the order - HELD THAT:- This appeal has been pending since 2011, the consequence of which is that further proceedings pursuant to the show cause notice for violation of Section 52 of the Uttar Pradesh Value Added Tax Act, 2008 have not been taken up. In view of the above, the respondent- State Department are directed to initiate the proceedings, if any and pass a final order within a period of three months from today. In view of the fact that the goods were released pursuant to the order passed by this Court, the bank guarantee need not be renewed after three months. Appeal disposed off.
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2024 (9) TMI 546
Requirement to issue SCN for imposition of penalty - requirement to provide opportunity of showing cause in writing against the imposition of a penalty - violation of principles of natural justice - HELD THAT:- As per Section 72 (2) of the Karnataka Value Added Act, 2003, before a decision is taken for imposition of any penalty, show-cause notice has to be issued to the assessee and after being given an opportunity of showing cause in writing against the imposition of a penalty, the decision to impose or not to impose the penalty must be taken. No doubt, the quantum of penalty is prescribed under the said provision but the fact that the opportunity to show-cause in writing has been prescribed clearly indicates that the imposition of penalty is not automatic. It is by way of exercise of discretion given the facts and circumstances of the case, we thus find that in Section 45 (5) and (6) of the Gujarat Sales Tax Act, 1969, there is no such provision for giving an opportunity to the assessee to show-cause against the imposition of the penalty; therein the imposition of penalty is automatic. The suo moto revision undertaken under Section 64 of the Karnataka Value Added Tax Act, 2003, was wholly unnecessary. The High Court was therefore justified in setting aside the order of the Joint Commissioner of Commercial Taxes dated 31.03.2017 and restoring the order passed by the First Appellate Authority dated 27.11.2012. SLP dismissed.
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2024 (9) TMI 545
Scope of the word sale under Section 2(g) of the Central Tax Act, 1956, amended vide Act 20 of 2002 with effect from 11.05.2002 - taxability of work contracts undertaken outside the jurisdiction of Tamil Nadu - HELD THAT:- Insofar as the applicability of Section 2(g) of the Central Sales Tax Act, 1956, w.e.f. 11.05.2002, if had the works done by the petitioner are work contracts undertaken prior to the said cutoff date, the same could easily be treated as non-taxable works undertaken by the dealer concerned. As per the case in hand, admittedly, the works were undertaken in the Assessment Year 1999-2000, that is well before the cutoff date of 11.05.2002. In view of the contract documents, which have been placed, there are no doubt over the works that have been undertaken by the petitioner to state that they are work contracts. If those are work contracts undertaken by the petitioner, that too prior to 11.05.2002, the said work contracts cannot be brought under the purview of the tax net under the Central Sales Tax Act, 1956. The order impugned, passed by the Tribunal insofar as allowing the appeal filed before the Tribunal by the State as well as the dismissal of the COP filed by the petitioner, is to be reversed or set aside - this Tax Case Revision is allowed in favour of the petitioner and against the respondent Revenue.
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Indian Laws
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2024 (9) TMI 544
Res gestae - Relevancy of facts forming part of same transaction - Conviction u/s 29 read with 20(b)(ii)(c) and 25 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - aiding the business of drug trafficking - carrying narcotic substances in an auto-rickshaw - HELD THAT:- This Court has laid down the test for acts forming part of same transaction in Gentela Vijyvardhan Rao and Anr. v. State of Andhra Pradesh [ 1996 (8) TMI 571 - SUPREME COURT ], wherein it has been held that it is based on spontaneity and immediacy of such statement or fact in relation to the fact in issue. Provided that if there was an interval which ought to have been sufficient for purpose of fabrication then the said statement having been recorded, with however slight delay there may be, is not part of res gestae. In the present factual matrix, having perused the material it appears that the attempt towards raiding/searching the residence of Accused No. 4 was not explicitly in pursuance of detaining the said accused but the testimonies of the members of the raiding party showcase the idea of search of the house to be an afterthought with an admitted time gap of 40-45 minutes between having raided the auto-rickshaw which was alleged to be abandoned by the driver and Accused No. 4 and subsequent search of the house of Accused No. 4, wherein Accused No. 1 was present - Moreover, it appears from the record that even the idea to search the house was for the purpose of recovery of more contraband and not to apprehend the said absconded accused at the first instance. Thence, it can be safely concluded that the search conducted at the residence of the Accused No. 4 is not a continuance of action of the raiding party towards the search of the auto-rickshaw based on the secret information received by Mrs. Chaube. Accordingly, it does not appropriately fulfil the requirements of the test laid down in Gentela Vijyvardhan Rao. Compliance of Section 42 of the NDPS Act, 1985 - HELD THAT:- From the perusal of provision of Section 42(1) of the NDPS Act, 1985, it is evident that the provision obligates an officer empowered by virtue of Section 41(2) of the NDPS Act, 1985 to record the information received from any person regarding an alleged offence under Chapter IV of the NDPS Act, 1985 or record the grounds of his belief as per the Proviso to Section 42(1) of the NDPS Act, 1985 in case an empowered officer proceeds on his personal knowledge. While the same is to be conveyed to the immediate official superior prior to the said search or raid, in case of any inability to do so, the Section 42(2) of the NDPS Act provides that a copy of the same shall be sent to the concerned immediate official superior along with grounds of his belief as per the proviso hereto. In DHARAMVEER PRASAD @ DHARMBIR PRASAD VERSUS STATE OF BIHAR ANR. [ 2018 (9) TMI 2147 - SUPREME COURT (LB)] , there was non-examination of the independent witness without any explanation provided by the prosecution and even the panchnama or the seizure memo were not prepared on the spot but after having had reached police station only. Since the vehicle was apprehended and contraband was seized in non-compliance of the Section 42 of the NDPS Act, 1985 - conviction and sentence of the appellant therein was set aside. It is pertinent to note that the empowered Gazetted Officer must have reason to believe that an offence has been committed under Chapter IV of the NDPS Act, 1985, which necessitated the arrest or search. As per Section 41(2) of the NDPS Act, 1985, such reason to believe must arise from either personal knowledge of the said Gazetted Officer or information given by any person to him. Additionally, such knowledge or information is required to be reduced into writing by virtue of expression and taken in writing used therein. While the facts and evidences are appreciated in the instant case, the testimonies of the PW-01 and the members of the raiding party do not present such a compliance of the information of rights to the Accused No. 1 herein. While a claim is made to this effect, nothing has come up from the perusal of the panchnama or the deposition of the PW-01 to this effect. Accordingly, the authorities have further failed to protect the inherent rights granted to the Accused No. 1 by virtue of the statutory safeguards. Section 67 is at an antecedent stage to the investigation, which occurs after the empowered officer under Section 42 of the NDPS Act, 1985 has the reason to believe upon information gathered in an enquiry made in that behalf that an offence under NDPS Act, 1985 has been committed and is thus not even in the nature of a confessional statement. Hence, question of its being admissible in trial as a confessional statement against the accused does not arise. These appeals are allowed by setting aside the impugned judgment of the High Court as well as that of the Trial Court. The appellants are acquitted of the charges framed against them by giving benefit of doubt.
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