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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 5, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Impact of GST on the online gaming industry post the decisions taken in the 51st GST Council Meeting. GLOBAL MINIMUM TAX SERIES – PART 13 GloBE Rules for Minority Owned Entities A brief Note on E-Invoicing compliance REJECTION OF ITC REFUND CLAIM BY ADJUDICATING AUTHORITY AND APPELLATE AUTHORITY ON DIFFERENT GROUNDS No bar for prosecution under IPC merely because the provision of GST law prescribes punishment News DPIIT holds review meeting on adoption of PM GatiShakti by social sector Ministries in project planning and implementation Union Minister for Commerce and Industry Sh. Piyush Goyal emphasizes upon need for enhanced collaboration and trust-building between India and Latin American & Caribbean region Notifications Customs 07/2023 - dated 3-8-2023 - ADD ADD on Dispersion Unshifted Single Mode Optical Fiber (SMOF) originating in or exported from China PR, Indonesia and Korea RP and imported into India. 58/2023 - dated 3-8-2023 - Cus (NT) Deferred Payment of Import Duty (Amendment) Rules, 2023 DGFT 25/2023 - dated 3-8-2023 - FTP Amendment in Export Policy of Red Sanders wood exclusively sourced from cultivation origin obtained from private land (including Pattaland) and Confiscated source GST - States FD 20 CSL 2023 - dated 31-7-2023 - Karnataka SGST CORRIGENDUM - Notification (11/2021) No. FD 16 CSL 2021, dated: 4th June 2021, Notification (04/2022) No. FD 07 CSL 2022, dated: 3rd June 2022, Notification (07/2022) No. FD 07 CSL 2022, dated: 12th July 2022 and Notification (01/2023) No. FD 20 CSL 2023, dated: 6th April 2023 (12/2023) FD 20 CSL 2023 - dated 31-7-2023 - Karnataka SGST Seeks to amend Notification (05/2023) No. FD 20 CSL 2023, dated the 6th April, 2023 (11/2023) FD 20 CSL 2023 - dated 31-7-2023 - Karnataka SGST Seeks to amend Notification (04/2023) No. FD 20 CSL 2023, dated the 6th April, 2023 (10/2023) FD 20 CSL 2023 - dated 31-7-2023 - Karnataka SGST Seeks to amend Notification (03/2023) No. FD 20 CSL 2023, dated the 6th April, 2023 (09/2023) FD 20 CSL 2023 - dated 31-7-2023 - Karnataka SGST Seeks to extend time limit for application for revocation of cancellation of registration. (08/2023) FD 20 CSL 2023 - dated 31-7-2023 - Karnataka SGST Seeks to amend Notification (24/2017) No. FD 47 CSL 2017, dated the 29th December, 2017 Circulars / Instructions / Orders SEBI SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/135 - dated 4-8-2023 Corrigendum cum Amendment to Circular dated July 31, 2023 on Online Resolution of Disputes in the Indian Securities Market DGFT 24/2023 - dated 4-8-2023 Amendment in Para 4.73 (15) of Handbook of Procedures, 2023 25/2023 - dated 4-8-2023 Amendments in conditions of the Standard Input Output Norms (SION) at E-136 for export of Wheat Flour Highlights / Catch Notes GST Power / Jurisdiction to attach bank accounts - No order u/s 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue - In the present case, Superintendent (Anti- Evasion) has, by a letter addressed to the bank seeking information, also directed freezing the petitioner’s bank account. The impugned communication is without authority of law. - HC Visit to Get Source Condonation of delay of 40 days in filing appeal - Considering the fact that the petitioner is a small-time trader, who wishes to challenge the order passed on 27.02.2023 by the respondent. The Court is therefore inclined to allow this writ petition by directing the respondent to number the appeal subject to the petitioner depositing a sum of Rs.50,000/- over and above, the amount already deposited by the petitioner towards pre-deposit. - HC Visit to Get Source Principles of natural justice - petitioner was given fifteen days time to respond and also to come for a personal hearing - There is no merits in the present writ petition - HC Visit to Get Source Income Tax Revision u/s 263 - Deduction u/s 80I - what the learned tribunal ought to have noted is that whether the assessing officer/PCIT can revisit the claim which was accepted for the assessment year 2012-2013 while completing the assessment for the year 2013-2014 being the second year of substantial expansion. This aspect of the matter has not been dealt with by the tribunal. - In the absence of such consideration, revision order passed u/s 263 set aside - HC Visit to Get Source Validity of reopening of assessment u/s 147 - opportunity of being heard by assessee by issuing the show cause notice u/s 148A(b) need to be given - The minimum seven days required to be made as a mandatory requirement and failure to comply with would render a notice itself invalid. Therefore, on this ground alone, the notice requires to be quashed and set aside. - HC Visit to Get Source Exemption u/s 10(23C)(via) - Solely for philanthropic purposes and not for the purpose of profit - There is nothing wrong if the bonus is paid to the members of the staff, as the staff and other members as well as medical practitioners are not expected to work with the assessee on a charitable basis if a decent hospital is to be maintained and good facilities are to be provided for the patients. It is not the case of the Revenue that the surplus which is generated was diverted to any non-charitable activity. - AT Visit to Get Source Revision u/s 263 - allowability of sales promotion incentive which was admittedly not subjected to TDS under section 194H - We fail to understand how the AO has allowed the impugned expenditure without examining / verifying the agreement entered into between the assessee (the payer) and its dealers (the payees). - Revision proceedings sustained - AT Visit to Get Source Penalty u/s 271B - late filing of Tax Audit Report in Form 3CA - The record shows the same to have been obtained on 26.2.2018. The question of explaining the delay by the assessee would arise only where it is furnished with a delay. - No explanation, much less proving the reasonable cause for the delay, which in fact is a continuing one. - Levy of penalty confirmed - AT Visit to Get Source Exemption u/s 11 - Charitable Purpose - Plastic Waste Management - Expenditure of multi-layered plastic collection and disposal charges for members are the only major expenses - CIT (E) is wrong in observing the objects of the Assessee society to be merely ostensible charitable objects. All the objects of the Assessee society, taken either individually, or collectively, are directed towards the Assessee’s charitable object of preservation of the environment. - Benefit of exemption to be allowed - AT Visit to Get Source Addition of amounts recoverable from members - development rights in property - The expenditure towards the entire redevelopment should be borne by the assessee including for those flats to be allotted to the members because that is the consideration paid to the members for transferring the rights in the flats. - No merit in the contention of the revenue that the cost of construction should be borne by the members - CIT(A) rightly deleted the additions - AT Visit to Get Source TP Adjustment - corporate guarantee given by the assessee company to its AEs - the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs - AT Visit to Get Source Customs Allegations of corruption against a Customs Appraiser - The standard of proof, the objectives of the two proceedings are different. Thus the above contention of the Petitioner is liable to be rejected. The departmental proceedings initiated under CBLR need not be kept in abeyance until the disposal of the criminal proceedings. - HC Visit to Get Source Absolute confiscation of seized gold - There was no reasonable belief with the DRI officers at the time of detaining/seizing the gold from appellant, the onus was upon the department to prove that the gold in the hands of the appellant was the foreign smuggled gold. Apparently and admittedly, there was no foreign marking. No doubt, in case the gold is acknowledged to be melted, there remains no possibility of any marking on the melted piece of gold. However, it is still for the department to prove that the gold with the appellant is from the illicit source - AT Visit to Get Source Parallel proceedings - Levy of penalty u/s 112(b) of Customs Act, 1962 on the appellant who was a co-noticee in show cause notice - adjudication order was already passed by Commissioner of Customs, JNCH, Navi Mumbai - the present impugned order is ab-initio void and illegal - AT Visit to Get Source IBC Approval of the Resolution Plan challenged - challenged on the ground that as per the Resolution Plan, only 0.13% has been earmarked towards Government dues, and the Financial Creditor is getting 44.5% of the Claim amounts and the other Operational Creditors are getting 0.51% of their Claim amounts, which is stated to be unfair. - Revenue appeal dismissed - AT Visit to Get Source Initiation of CIRP - NCLT rejected the application - It is settled law that what has to be seen is whether a dispute raised is spurious or genuine. Keeping in view the documentary evidence on record, this Tribunal is satisfied that the dispute raised is a spurious one specifically having regard to the admission of liability - NCLT directed to admit the application - AT Visit to Get Source CIRP Proceedings against the Personal Guarantors - the ‘Adjudicating Authority’ / ‘Tribunal’, has ‘jurisdiction’, to ‘entertain’/’initiate’, the ‘Insolvency Proceedings’ of the ‘Personal Guarantors’, even when ‘no Corporate Insolvency Resolution Process’ proceedings, is ‘pending’, against the ‘Corporate Debtor’, and in any event, the ‘Corporate Insolvency Resolution Process’ proceedings, is pending, and continued to be pending, against the ‘Corporate Debtor’. - AT Visit to Get Source SEBI Violation of Regulation 11(1) of the SAST Regulations - Non issue of open offer as warrants were converted into shares - the appellants who acquired the warrants on 12th January, 1994 were not “acquirer” within the meaning of Regulation 2(1)(b) of the SAST Regulations and that there is no acquisition by them under the SAST Regulations and, consequently, the provision of the SAST Regulations cannot be applied to the warrants allotted to them on 12th January, 1994 - AT Visit to Get Source Order directing SEBI to appoint another Whole Time Member (WTM) - Settlement of dispute - Delegation of Statutory and Financial Powers - SEBI directed to appoint another WTM and if no WTM is available, then any authorised officer higher in grade or rank or position to the WTM would hear and decide the matter - AT Visit to Get Source Delay in the initiation of the proceedings by SEBI - Even though there is no period of limitation prescribed in the Act and the Regulations for issuance of a show cause notice and for completion of the adjudication proceedings, nonetheless, the authorities are required to exercise its powers within a reasonable period. - No penalty - AT Visit to Get Source Service Tax SSI Exemption - use of brand name of another person - Commission Agent Service - it can be seen that Commission Agent service provided by the appellant cannot be treated as branded service. Accordingly, the exemption Notification No. 6/2005-ST cannot be denied - AT Visit to Get Source Wrong classification of services availed by the appellant - demand of service tax under reverse charge mechanism (RCM) - payments made to foreign vendors for repair works aircraft outside India - it is not in dispute that the services were provided outside India. Service tax, therefore, could not have been demanded from the appellant under the RCM - AT Visit to Get Source Central Excise Reversal of Cenvat credit lying unutilized in respect of ADE(T&TA) in terms of transitional provision of Rule 11(3)(ii) of the Cenvat Credit Rules, 2004 - Rule 11(3) of Cenvat Credit Rules, 2004 though provides for reversal of unutilized Cenvat credit but the same cannot be applied retrospectively in the absence of specific provision under the statute. - AT Visit to Get Source Method of valuation - It is observed that the adjudicating authority has wrongly interpreted the Board Circular. As per the Circular, when there is independent sale along with sale to ‘related persons’, Rule 9 is not applicable and recourse will have to be taken to the residuary Rule 11. - AT Visit to Get Source VAT Classification of commodities - rate of tax - Clohex - Clohex Plus - A product used mainly in curing or treating ailments or diseases and containing curative ingredients, even in small quantities, is to be branded as a medicament. The dominant use to which the product is being used certainly has a bearing. - HC Visit to Get Source Case Laws: GST 2023 (8) TMI 239 Power / Jurisdiction to attach bank accounts - Superintendent (Anti- Evasion) - Calling upon the bank to furnish certain documents pertaining to the petitioner - Provisional attachment - HELD THAT:- It is well settled that the orders of provisional attachment of bank accounts or other assets of a tax payer has a serious adverse effect on the business of the tax payer. In M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT ], the Supreme Court made observations to the effect that such drastic powers must be exercised only where it is necessary. Considering that the wide adverse ramifications such orders have, this Court, has in a number of decisions, held that the power under Section 83 of the CGST Act can be exercised only subject to the conditions, as specified therein, being fully satisfied. No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue - In the present case, respondent no. 2 has, by a letter addressed to the bank seeking information, also directed freezing the petitioner s bank account. The impugned communication is without authority of law. It has been issued in complete disregard of the provisions of the CGST Act and the adverse effect of such orders. The impugned communication set aside to the extent that it seeks to place a debit freeze on the petitioner s account. The respondents are required to act in accordance with the statutory provisions - petition disposed off. 2023 (8) TMI 238 Cancellation of registration of petitioner - allegation is that the registration has been obtained by means of fraud, wilfull misstatement or suppression of facts - HELD THAT:- This court in the case of SARVODAY IMPEX VERSUS UNION OF INDIA [ 2023 (6) TMI 632 - GUJARAT HIGH COURT ] in an identical matter relying on a decision of the coordinate bench of this court in the case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT ] where it was held that According to the learned AGP, it is in such circumstances that the show cause notices and impugned orders without any details are being forwarded to the dealers. This hardly can be a valid explanation for the purpose of issuing such vague show cause notices and vague final orders cancelling the registration. Since the present petition is squarely covered by the aforesaid order, the impugned notice being cryptic and without reasons deserves to be quashed and set aside - Petition allowed. 2023 (8) TMI 237 Condonation of delay of 40 days in filing appeal - petitioner also seeks a direction to the respondent to accept the physical copy of the appeal - HELD THAT:- The petitioner appears to be a small-time trader, who has committed defaults in filing the returns and thereafter, has suffered the Assessment Order on 27.02.2023 - The appeal that was filed by the petitioner on 03.07.2023 was beyond the condonable period of thirty days, after the expiry of the first 90 days on 26.06.2023. The Officers acting under the provisions of the GST Acts cannot entertain the appeal beyond the period of limitation and therefore, they have rightly rejected the same. Considering the fact that the petitioner is a small-time trader, who wishes to challenge the order passed on 27.02.2023 by the respondent. The Court is therefore inclined to allow this writ petition by directing the respondent to number the appeal subject to the petitioner depositing a sum of Rs.50,000/- over and above, the amount already deposited by the petitioner towards pre-deposit. On such payment of the aforesaid amount, the delay of 40 days in filing the appeal shall stand condoned - Petition allowed. 2023 (8) TMI 236 Principles of natural justice - petitioner was given fifteen days time to respond and also to come for a personal hearing - HELD THAT:- The petitioner has not asked for any personal hearing. In fact the petitioner has made a submission on merits, though without furnishing any details. The challenge to the impugned order stating that the petitioner was not given an opportunity of hearing therefore cannot be countenanced as the petitioner has given a reply but has failed to appear before the respondent in response to notice in DRC-01 issued under Rule 100 of the Tamil Nadu Goods and Services Taxes Rules, 2017 on 26.03.2021. There is no merits in the present writ petition - this writ petition is liable to be dismissed. 2023 (8) TMI 235 Profiteering - projects other than the project SKA Green Arch being constructed by the Respondent under single GST Registration - whether the Respondent was liable to pass on the benefit of ITC in respect of all the other Projects/Blocks to the buyers, or not, as per the provisions of Section 171 (1) of the CGST Act, 2017? - HELD THAT:- The Respondent is executing a single project namely SKA Green Arch under GSTIN 09AAGCP220N1ZW. The above project is being executed by the Respondent in two Phases i.e. in the first phase, there are two towers namely, Aster and Orchid and in the second phase, there are two towers namely, Tulip and Zinnia. For both the phases under the SKA Green Arch project, the Respondent has taken a single RERA Registration No. i.e. UPRERAPRJ3377 registered with Uttar Pradesh Real Estate Regulatory Authority (UP RERA). The NAA vide its Order No. 72/2022 dated 13.09.2022 has already determined profiteered amount of Rs. 4,75,87,468/- in respect of the above two phases of the project SKA Green Arch . It is also observed by the Commission that the Respondent is not executing any other project other than the project SKA Green Arch under the same GSTIN 09AAGCP220N1ZW and the same has been verified by the DGAP by visiting the website of UP RERA. From the website of UP RERA, it has been observed that the Respondent has obtained single registration of two phases of the project SKA Green Arch and no other project than the above project is being executed by him under the above GSTIN - The Deputy Commissioner of State Tax, U.P. vide his letter dated 01.03.2023 had informed that the Respondent had not executed any project other than the project SKA Green Arch . Thus, the instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the Respondent is not executing any project other than the project SKA Green Arch which has already been investigated and profiteered amount has also been determined - the proceedings initiated against the Respondent under Rule 133 (5) of the CGST Rules, 2017 are hereby dropped. 2023 (8) TMI 234 Profiteering - projects other than the project VISHVVANATH SARATHYA being constructed by the Respondent under single GST Registration - whether the Respondent was liable to pass on the benefit of ITC in respect of all the other Projects/Blocks to the buyers, or not, as per the provisions of Section 171(1) of the CGST Act, 2017? Vishwanath Sopan - HELD THAT:- In respect of this project, the Respondent has submitted building use permission dated 24.01.2017 issued by the Ahmedabad Urban Development Authority. Keeping in view the above submissions, the Commission finds that since the Respondent has received the BU permission on 24.01.2017 in pre-GST regime, the Anti-profiteering provisions under Section 171 of CGST Act, 2017 are not applicable to the said Project. Vishwanath Samam - HELD THAT:- The Commission has observed that the said project commenced in 2019 after implementation of GST. As per the RERA Website of Gujarat, date of commencement of the Vishwanath Samam project was 05.04.2019 and as per Respondent's record first booking for the project was done on 20.07.2019. Since, no unit was sold in pre-GST era which can be compared with the post-GST base price to determine whether there is any profiteering and there is no availability of CENVAT credit to compare with ITC which is available to him in post-GST era, therefore, the Anti-profiteering provisions under Section 171 of CGST Act, 2017 are not applicable to the project. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 (5) of the CGST Rules, 2017 are hereby dropped. 2023 (8) TMI 233 Scope of Section 171 of the CGST Act, 2017 - Profiteering - projects other than the project Panchshil Tower being constructed by the Respondent - reduction in rate of tax on any supply of goods or services or the benefit of ITC passed on to the recipient by way of commensurate reduction in prices or not. Yoovilla Phase-I project - HELD THAT:- In respect of Yoovilla Phase-I project, the Respondent has submitted OC dated 01.07.2016 issued by the Pune Metropolitan Region Development Authority for building no. Villas of V-2 type, Ground floor and First floor for 6 no. of Villas and building no. Villas V-3 type, Ground floor and First floor for 39 no. of Villas, constructed in Phase-I and the said project was completed on 01.07.2016 in pre-GST period. Keeping in view the above submissions, the Commission finds that since the Respondent has received the OC on 01.07.2016 in pre-GST regime, Anti-profiteering provisions under Section 171 of CGST Act, 2017 are not applicable to the said Project. Project T-Villa'' - HELD THAT:- The Commission has observed that the said project has been registered under RERA Reg. No. P52100010632 which is valid for a period commencing from 31.08.2017 and ending with 30.09.2023 unless renewed by MRERA. The same has been verified by the DGAP by visiting the website of MRERA. As per RERA Registration the Respondent has constructed four apartments in the said project and all the four apartments are unsold. Therefore, the Anti-profiteering provisions under Section 171 of CGST Act, 2017 are not applicable to the project. Project SOHO - HELD THAT:- The Commission has found that the said project has been registered under RERA Reg. No. P52100017890 which is valid for a period commencing from 24.09.2018 and ending with 30.12.2026 unless renewed by MRERA. The same has been verified by the DGAP by visiting the website of MRERA. It is also observed that there is no unit sold in pre-GST era which can be compared with the post GST base price to determine whether there is any profiteering. There is also no availability of CENVAT to compare it with ITC which is available to him in post GST era. Therefore, Anti-profiteering provisions under Section 171 of CGST Act, 2017 are not applicable to the project. Project V2 Villa P-I - HELD THAT:- The Commission has observed that the said project has been registered under RERA Reg. No. P52100034062 which is valid for a period commencing from 24.03.2022 and ending with 31.12.2027 unless renewed by MRERA. The same has been verified by the DGAP by visiting the website of MRERA. It is also observed that the said project was launched on 24.03.2022 and as per the Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019, any project which was commenced after 01.04.2019 will be mandatorily required to follow the new GST rate of 5% (without ITC). Thus, the Respondent is not eligible to avail input tax credit w.e.f. 01.04.2019. Therefore, Anti-profiteering provisions under Section 171 of CGST Act, 2017 are not applicable to the project. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017. Accordingly, the proceedings initiated against the Respondent under Rule 133 (5) of the CGST Rules, 2017 are hereby dropped. Income Tax 2023 (8) TMI 232 Rejection of books of accounts u/s 145 - on-money receipts - application of Accounting standards - As decided by HC [ 2017 (5) TMI 1505 - RAJASTHAN HIGH COURT] merely because of non-maintenance of a detailed qualitative and quantitative register alone, the same could not be a valid reason to reach a finding that books of account do not present true and complete picture of accounts and financial transactions - Addition of on-money transactions in the appellant's case by the authorities below is found without any basis and found perverse on facts. It, therefore, could not be a reason for rejecting the books of account maintained by the assessee in regular course of business - Also as Completed contract method followed by the appellant, therefore, could not be faulted with by the revenue and the assumptions made by the Assessing Officer that by not following AS-9 7 the same tantamount to not following prescribed AS1 under section 145(2) of the Act are found misplaced, unnecessary and uncalled HELD THAT:- This Court is of the opinion that the impugned order does not call for interference. The special leave petition is accordingly dismissed. All pending applications are disposed of. 2023 (8) TMI 231 Depreciation on oil wells - @10% OR 80% - HC held ITAT did not erred in law and on facts in allowing the depreciation on oil wells treating the same as Plant and Machinery - HELD THAT:- SLP dismissed. 2023 (8) TMI 230 Entitlement of department to collect interest u/s 234D - whether the statutory provisions entitle the Department to limit the interest from the date of claim of deduction, the allowance of which lead to refund? - As per HC AO made out the case of delay in refund for any period attributable to the assessee disentitling for interest. So much so, the officer has no escape from granting interest to the assessee in terms of s. 244A(1)(a) - Also belated claim of provision for bad debt u/s 36(1)(vii)(a) by the assessee will not justify denial of interest otherwise eligible u/s 244A(l)(a) from 1st April, 1999 to 10th Jan., 2001 - HELD THAT:- The Appeals stand dismissed as withdrawn. 2023 (8) TMI 229 Revision u/s 263 - Deduction u/s 80I in respect of its Unit IV being the 7th year of such claim and 2nd year from the date when the assessee made substantial expansion - claim denied on the ground that Form 10CCB was not filed, the relevant assessment year being the 7th year of assessment, only 30% deduction should be allowed instead of 100% deduction and therefore AO has allowed excess deduction - HELD THAT:- As per assessee AO will have no power to revisit the genuineness of the claim for the substantial expansion which was already settled in the first year of substantial expansion namely A.Y. 2012-2013. Though such detailed contention was raised by the assessee, we find that the tribunal has not dealt with the same. Tribunal has not noted the crucial and important facts that the assessment year under consideration is the second year of substantial expansion and for the first year of substantial expansion namely for the assessment year 2012-2013, the claim made by the assessee for deduction at 100% was accepted by the assessing officer after conducting a detailed enquiry and examining all the documents which were produced by the assessee. Thus, what the learned tribunal ought to have noted is that whether the assessing officer/PCIT can revisit the claim which was accepted for the assessment year 2012-2013 while completing the assessment for the year 2013-2014 being the second year of substantial expansion. This aspect of the matter has not been dealt with by the tribunal. As long as the benefit granted under Section 80IC for the first year of substantial expansion remains unaltered, the assessing officer would have no jurisdiction to revisit the same issue in the subsequent assessment years. The assessee had filed the copy of Form 10CCB before the PCIT in response to the show cause notice issued under Section 263 of the Act. The tribunal ought to have seen that the PCIT did not advert to any of the documents produced by the assessee and proceeded to hold against the assessee on a totally different ground than on the ground on which the show cause notice under Section 263 of the Act was issued. Interestingly the PCIT accepts that the assessee would be entitled to 30% deduction even in the absence of Form 10 CCB. Therefore, it was a fit case where the tribunal should have interfered with the order passed by the PCIT on the several grounds by taking note of all the facts which were placed by the assessee before the PCIT and also the facts which were placed by the assessee before the assessing officer during the course of the assessment proceedings for the assessment year 2012-2013. Assessee appeal allowed. 2023 (8) TMI 228 Validity of reopening of assessment u/s 147 - opportunity of being heard by assessee by issuing the show cause notice u/s 148A(b) need to be given - HELD THAT:- As the result of an enquiry/ information available suggests that income chargeable to tax has escaped assessment, AO shall provide an opportunity of being heard by assessee by issuing the show cause notice u/s 148A(b) and the notice shall provide between seven to thirty days time for the assessee to submit their reply. A template of the show cause notice is also annexed to the guidelines. Therefore, in view of the guidelines, we would also read that the minimum seven days required to be made as a mandatory requirement and failure to comply with would render a notice itself invalid. Therefore, on this ground alone, the notice requires to be quashed and set aside. Perhaps, being aware of this position, Respondent No. 1 has chosen not to deal with these objections raised by Petitioner in the reply to the show cause notice. Also a provision that the order u/s 148A(d) shall be sent to assessee along with the approval of the specified authority for such order u/s 148A(d) - In the case at hand, the approval that has been sent is of some other assessee and not Petitioner. This also indicates non-application of mind by Respondent No. 1. On this ground also, the order dated 31st March 2023 impugned in the Petition is required to be quashed and set aside. Assessing Officer will specify the quantum of income/assets/ expenditure/ entry which has escaped assessment. This not stated in the order under Clause D of Section 148 of the Act. On this ground also, the said order dated 31st March 2023 is required to be quashed and set aside. There is a factually incorrect statement made in the order that the affidavit of Petitioner s brother that was submitted was not notarized when it was factually a notarized affidavit. In the impugned order, it is stated that the HDFC statement/document do not substantiate the credit worthiness and genuineness of the lender of the gift, i.e., brother of Petitioner. Mr. Gandhi states that if only Petitioner was called upon to submit, Petitioner would have submitted evidence towards credit worthiness of the brother because in the show cause notice issued, Petitioner was only directed to call upon to disclose the source from which he got money to pay for the flat. In our view, therefore, on this ground also, the impugned order dated 31st March 2023 is required to be quashed and set aside. Decided in favour of assessee. 2023 (8) TMI 227 Exemption u/s 11 - scope of amended Section 2(15) - AO found that assessee is charging fees from customers and has obtained Intellectual Property Rights (IPR) from Belgium and transferring through license agreement use of such IPR and un-specie - HELD THAT:- ITAT allowed the benefit of exemption on ground that, GS1 India is in fact, involved in advancement of general public utility, its services are for the benefit of trade and business, from which they receive significantly high receipts. In view of the Judgement of the Apex Court in the matter of Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] , the impugned order passed by the Tribunal is set aside. 2023 (8) TMI 226 Demand u/s 201(1)/201(1A) - demand notice issued u/s 156 - petitioner ought to have deducted tax at source u/s 194I - HELD THAT:- As revenue, cannot but accept that the impugned order cannot be sustained, having regard to the judgment rendered in DLF Homes Panchkula Pvt. Ltd [ 2023 (4) TMI 399 - DELHI HIGH COURT] . Having regard to the aforesaid, the impugned order and the demand notice are quashed. 2023 (8) TMI 225 Assessment u/s 153A - unexplained cash credit addition - addition made towards capital introduced in Dragon Movies - incriminating material found as a result of search or not? - HELD THAT:- It is a well-established principle of law by the decision of Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] that no addition can be made in absence of incriminating material found as a result of search, if the assessment is unabated/concluded as on the date of search. A similar view has been taken in the case of PCIT v. Meeta Gutgutia [ 2017 (5) TMI 1224 - DELHI HIGH COURT] as clearly held that in absence of any incriminating material, no addition can be made in the assessment framed u/s. 153A/153C. In the present case, there is no dispute with regard to the fact that additions made by the AO towards cash credit being capital introduced in Dragon Movies is not based on any incriminating material found as a result of search. Therefore, additions made by the AO towards unexplained cash credit is unsustainable under law. Addition deleted - Decided in favour of assessee. 2023 (8) TMI 224 Addition on account of waiver of liability treating the same as cessation of liability u/s 41 (1) - assessee contended that the waiver of loan basically constituted capital receipts and that the waiver was by the holding company of the shareholder, hence section 41(1) is inapplicable irrespective of the manner of utilization of loan - HELD THAT:- The impugned quarrel has now been well settled by the Hon ble Supreme Court in the case of Mahindra and Mahindra [ 2018 (5) TMI 358 - SUPREME COURT] held Section 41 (1) does not apply since waiver of loan does not amount to cessation of trading liability. It is a matter of record that the Respondent has not claimed any deduction under Section 36 (1) (iii) of the IT Act qua the payment of interest in any previous year. Thus we direct the AO to delete the impugned addition. The appeal of the assessee is accordingly allowed. 2023 (8) TMI 223 Registration u/s 10(23C)(via) - satisfaction of the condition of existing solely for philanthropic purposes and not for the purpose of profit - application for continuation of registration rejected holding that the assessee does not satisfy the conditions of existing solely for philanthropic purposes and not for the purposes of profit, as surplus year after year are generated out of the systematic activity of profit-making and therefore the assessee is running the hospital for the purpose of profit. HELD THAT:- As already decided in own case [ 2018 (3) TMI 795 - BOMBAY HIGH COURT] merely because a hospital or institution is getting a profit, that by itself will not attract disqualification and it will attract disqualification only if the hospital or institution exists for the purpose of gaining profit - also held that if the object of the assessee is to set up a decent hospital for providing medical facilities and medical help at a reasonable charge and for providing medical facilities to the needy and poor free of charge or at subsidised rates, it is necessary for the assessee to engage trained staff and medical practitioners, for which the professionals or other persons, who rendered services, have to be paid honorarium. There is nothing wrong if the bonus is paid to the members of the staff, as the staff and other members as well as medical practitioners are not expected to work with the assessee on a charitable basis if a decent hospital is to be maintained and good facilities are to be provided for the patients. It is not the case of the Revenue that the surplus which is generated was diverted to any non-charitable activity. The Hon ble High Court, however, found that there are certain aspects which require further examination and accordingly remitted the matter for fresh consideration of the application for registration filed by the assessee under section 10(23C)(via). Thus CIT(E) did not analyse all the submissions made by the assessee in light of the various aspects highlighted by the Hon ble High Court. It is pertinent to note that the matter was restored for the consideration of assessee s application for registration u/s 10(23C)(via) and the Hon ble High Court directed the assessee to furnish the information/details regarding the aspects as highlighted in judgment. However, the learned CIT(E) without examining all these aspects, as directed by the Hon ble High Court, has reiterated its findings regarding the non-earmarking of any beds for indigent and weaker sections, which as noted above was held to be not a correct test by the Hon ble High Court. The impugned order passed by the learned CIT(E) is set aside and the sole ground raised by the assessee is allowed for statistical purposes. 2023 (8) TMI 222 Rectification u/s 154 - withholding tax on year end provisions - shortfall in TDS on year end provisions reported in Form 3CD of the assessee for FY 2012-13 - HELD THAT:- As we are of the view that action of the Ld. AO to resort to the provisions of section 154 cannot be faulted. We also observe that no finding on merits of the case has been recorded by the Ld. CIT(A). We, therefore hold that in the interest of justice and fair play the issue needs to be restored to the file of the Ld. AO with a direction to him to decide the issue under consideration afresh in accordance with law after allowing reasonable opportunity to the assessee to explain its case. We order accordingly. 2023 (8) TMI 221 Revision u/s 263 - allowability of sales promotion incentive which was admittedly not subjected to TDS under section 194H - HELD THAT:- To determine whether the sales incentive which is paid by the assessee to its dealers is in the nature of discount or commission , necessarily the agreement between the assessee and its dealers has to be examined. On an query from the Bench during the course of hearing, the learned AR candidly admitted that the agreement between the assessee and its dealers for making the payments of sales incentive was never placed before the AO during the course of assessment proceedings. Mere furnishing of sales ledger, credit note, etc., by itself would not be a determining factor whether the sales incentive would be in the nature of commission or discount . We fail to understand how the AO has allowed the impugned expenditure without examining / verifying the agreement entered into between the assessee (the payer) and its dealers (the payees). Therefore, Assessment Order has been passed without verification, which should have been made, and the PCIT was well within the jurisdiction to have invoked the revisionary powers u/s 263. Appeal filed by the assessee is dismissed. 2023 (8) TMI 220 Addition of cash deposits in bank account u/s 69A - HELD THAT:- Assessee has filed copy of bank statement of the bank account on the basis of which the impugned addition has been made. From the bank account statement it is transpired that the assessee had deposited in cash and there were withdrawals out of the cash deposits. There were substantial withdrawals and deposits, the lower authorities have not given set off of the cash withdrawals made by the assessee at different intervals, find that there were cash withdrawals as well before making deposits. Therefore, it can be assumed that the deposits were also from the withdrawals made by the assessee on earlier occasions. Hence, it would be fair and reasonable to restrict the addition made by the authorities below to the extent of 20%. Decided partly in favour of assessee. 2023 (8) TMI 219 Penalty u/s 271B - late filing of Tax Audit Report in Form 3CA, i.e., from the Tax Auditor - whats the reasonable cause of delay? - HELD THAT:- There is nothing on record to exhibit the date on which the TAR was obtained by the assessee-bank, filed by it along with the return of income even as the law requires it to be obtained and furnished by the date specified u/s. 139(1) for furnishing the return of income, i.e., latest by 31.10.2019 (for that year), much less explain the delay in furnishing the same. No clear reply in this regard was also furnished by assessee during the hearing, who would rather admit to the statutory audit report from the Registrar of Societies, which is also to be filed by the date specified u/s. 44AB, to have been not furnished at all. The record shows the same to have been obtained on 26.2.2018. The question of explaining the delay by the assessee would arise only where it is furnished with a delay. In the instant case, it, though equally required to be furnished u/s. 44AB along with the TAR, has admittedly not been furnished even after being obtained. No reason for the same has been advanced, much less reasonable cause for the default proved, as the law, per s. 273B, requires for excluding penalty. Further, this is apart from the unexplained delay in obtaining and furnishing the TAR, filed only on 29/3/2018. No explanation, much less proving the reasonable cause for the delay, which in fact is a continuing one. We therefore find no reason to interfere with the impugned order - Decided against assessee. 2023 (8) TMI 218 Estimation of income - addition on protective bases - bogus share transactions and sale purchases - HELD THAT:- Since the entire business of providing accommodation entries was run by Mr. Praveen Kumar Jain and the profit/income by way of commission on the turnover through the conduit companies was also enjoyed by him, the income earned on turnover through these concerns, including the assessee, was included as income in the individual case of Mr. Praveen Kumar Jain. However, the Assessing Officer also assessed this income in the hands of the assessee on a protective basis. As we find that the coordinate bench of the Tribunal vide its order [ 2023 (1) TMI 1276 - ITAT MUMBAI] for the assessment years 2008-09 to 2014-15 upheld the addition made on substantive basis in the hands of Mr. Praveen Kumar Jain. Thus as the substantive addition has already been upheld by the coordinate bench in the case of Praveen Kumar Jain (supra), therefore the similar addition made on a protective basis in the hands of the assessee becomes unsustainable and therefore is directed to be deleted in all the assessment years under consideration before us - Decided in favour of assessee. 2023 (8) TMI 217 Addition u/s 68 - undisclosed cash deposit - HELD THAT:- As in the present case, the cash so received by the assessee is backed by sales carried out by the assessee as recorded in the books of accounts. Therefore, the source of cash is duly explained. The provisions of Sec.68 could be invoked only in cases when there was unexplained cash credit in the books of accounts maintained by the assessee. Assessee has duly identified the debtors from whom the cash was received and the same could not be disputed by lower authorities. The PAN of respective debtors as well as quantum of cash realized from each of them has duly been detailed by the assessee before AO during assessment proceedings. No defect has been pointed out in the books of accounts. In such a case, the credit could not be held to be unexplained cash credit and the impugned additions are not sustainable in law. Thus in Rahul Cold Storage [ 2022 (12) TMI 437 - ITAT RAIPUR ] wherein it has similarly been held that when the deposits were sourced out of business receipts duly recorded in the books of accounts, no such addition could be made u/s 68. Decided in favour of assessee. 2023 (8) TMI 216 Exemption u/s 11 - Assessment of trust - Plastic Waste Management [Preservation of the environment as a Charitable Purpose or not?] - Rejecting the Assessee s application in Form No. 10A filed electronically seeking registration u/s 12A - charitable activity u/s 2(15) - HELD THAT:- The Punjab Pollution Control Board is a creature of Legislation in the form of the Plastic Waste Management Rules, 2016, particularly Rule 12 and Schedule II, containing the Guidelines with regard to the plastic waste management under the Extended Producer s Responsibility for Plastic Packaging and duties and functions of the State Pollution Control Boards. There is nothing wrong in the factum of all the powers having been vested with the Punjab Pollution Control Board. Rather, this is in furtherance of the requirement of the Plastic Waste Management Rules, 2016. The Bye-laws of the Assessee society are entirely in keeping with its Memorandum of Association which, in turn, is well within the four corners of the Plastic Waste Management Rules, 2016. The aims and objects of the Assessee society are not restrictive in nature. Rather, as per requirement of the Plastic Waste Management Rules, they are centered towards the implementation of the preservation of the environment purpose of plastic waste management under the aegis of the Punjab Pollution Control Board. It is out of sheer ignorance of the law that the ld. CIT(E) has held that the Assessee society, as per its bye-laws, is meant to be run as a one man show and not as a public charity. Apropos the finding of the ld. CIT(E) that none of the activities of the Assessee society is covered by any limb of charitable purpose , as envisaged by section 2(15) of the I.T. Act, we find that not only one, but all the objectives of the Assessee society are directly covered by the limb of preservation of the environment as a Charitable Purpose under the provisions of section 2(15) of the I.T. Act. Expenditure of multi-layered plastic collection and disposal charges for members are the only major expenses incurred by the Assessee society. Considering its sole object of plastic waste management, obviously, there cannot be any other major expenditure attributable to the objects of the Assessee society. The factum of this major expenditure does not take away from the prevailing fact that the objects of the Assessee society are charitable objects and its activities are with regard to the Members of the society only, strictly as per the requirements of the scheme of plastic waste management under the Plastic Waste Management Rules, 2016, as amended from time to time. CIT (E) is again wrong in observing the objects of the Assessee society to be merely ostensible charitable objects. All the objects of the Assessee society, taken either individually, or collectively, are directed towards the Assessee s charitable object of preservation of the environment. CIT(E) has also erred in holding that the activity of the Assessee society does not enure for the public at large. It cannot be over stressed that the object of plastic waste management under the Plastic Waste Management Rules, 2016 is nothing other than an activity substantially and wholly enuring for one and all, so that the basic purpose of preservation of the environment is fulfilled so far as regards the pollution caused by plastic. National Green Tribunal as well as the Hon'ble Supreme Court, besides the High Courts of the country are repeatedly laying down law favouring plastic waste management as a measure for the preservation of the environment, enuring for the public at large. ORDER: The objects of the Assessee society are charitable and the activities of the Assessee society are genuine, as provided u/s 12AA - finding that the order under appeal rejecting the Assessee s application filed in Form No. 10A for registration, is erroneous and not sustainable in the eye of law, we hereby set aside and reverse the said order passed by the CIT(E), Chandigarh - Decided in favour of assessee. 2023 (8) TMI 215 Addition of amounts recoverable from members - cost of construction towards the redevelopment of the area of FSI acquired from the members and Marwah family - Assessee acquired development rights in property - main reasons for the revenue in the first round of appellate proceedings to disallow the expenses is that the cost of construction which is to be borne by the members should have been received by the assessee and that without showing the receipts the assessee is not entitled to claim the cost of construction towards development of the property as a deduction - HELD THAT:- It is important to understand the way income and expenditure is earned / incurred in a redevelopment project. In assessee s case here the income to the assessee is arising out of two sources i.e. one consideration received from the additional space allotted to the existing members and second from the sale of 6 flats which the assessee got as part of the redevelopment. The expenditure towards the entire redevelopment should be borne by the assessee including for those flats to be allotted to the members because that is the consideration paid to the members for transferring the rights in the flats. Therefore we are unable to agree with the contention that the cost of construction should be borne by the members. Revenue to the assessee is from sale of additional space to existing members and from the sale of the additional flats assessee received from the development project. Real test for allowing the cost of construction is whether the assessee has accounted for both these revenues in the profit and loss account - From the perusal of materials submitted before us and also from the findings given by the CIT(A) after verification of details, it is clear that the assessee has accounted the revenue from the redevelopment project on completion of contract method and has claimed the expenses accordingly. No infirmity in the findings given by the CIT(A) while allowing the claim of the assessee. Assessee has correctly claimed the cost of construction towards the redevelopment of the area of FSI acquired from the members and Marwah family. No reason to interfere with the decision of the CIT(A) - Decided against revenue. 2023 (8) TMI 214 Penalty u/s. 271(1)(c) - estimation of gross profit rate @12.5% on the alleged bogus purchases - HELD THAT:- Once the source of the purchases are from the books, payments have been made through banking channels along with the copy of delivery challans and here in particular case, assessee also produced stock register and also quantities the details of purchases, corresponding sales, therefore it cannot be held that the purchases were non genuine or any kind of penalty for furnishing of inaccurate particular sales can be levied on estimated GP rate of 12.5%. Nothing has been proved beyond doubt as alleged by the Ld. CIT(A), that assessee was indulged in availing accommodation entry of bogus purchases. Addition has been made on some estimate of profit element embedded in such purchases and therefore, on such adhoc estimate of GP rate, penalty u/s. 271(1)(c) is not warranted, especially when assessee has produced all the details and documentary evidences of purchases and corresponding sales and there is no tinkering with the trading result and overall gross profit have been accepted - Decided in favour of assessee. 2023 (8) TMI 213 Disallowance u/s 36(1)(va) - employees contribution to PF and ESI and TDS deposited beyond the due dates - Intimation passed u/s 143(1) - As during the pendency of the appellate proceedings, the CPC Bangalore passed u/s 154 has deleted the addition so made by the CPC - HELD THAT:- There is no further grievance and cause of action which is left with the assessee to agitate before the ld CIT(A) and the appeal before the ld CIT(A) therefore becomes infructuous and there is thus no basis left for the confirmation of addition by the ld. CIT(A) NFAC. In any case, the assessee has also brought out the factual inaccuracy which has crept in the order of ld. CIT(A), NFAC wherein the statutory dues have been held to be relatable to the employee s share of contribution whereas the disallowances which have been made by the CPC vide intimation u/s 143(1) pertains to the statutory dues pertaining to the employer s share of contribution towards ESI PF and TDS payable which is covered under the provisions of section 43B and therefore, CIT(A) NFAC has wrongly invoked the provisions of section 36(1)(va) while confirming the same - order so passed by the ld CIT(A) is therefore set-aside. Decided in favour of assessee. 2023 (8) TMI 212 Reopening of assessment u/s 147 - accommodation entry transactions - CIT(A) deleted addition - HELD THAT:- CIT(A) has duly examined the issue with regard to reopening of the case u/s 147 of the Act. Shri Roop Kishore Madan was not found to be entry operator from the sources of Shri R. K. Madan with regard to the amounts given to M/s. Gulab Buildtech on 03.02.2012 have been duly proved. The total amount given was Rs. 8.68 crore as against the amount alleged by the Revenue of Rs. 5.65 crores. The source of the entire amount have been duly examined by the ld CIT(A). Similarly, the loan transaction in M/s. G. B. P L. and BBPL with Sh. R. K. Madan which has been presumed to be an accommodation entry has been proved contra. Hence, the ld CIT(A) held that there was no reason to believe but it was only the suspicion which led to reopening of the case. We find no flaw in the order of the ld CIT(A), either on facts of the case or on judicial pronouncements applicable to the instant case in the background of the said facts. Hence, we decline to interfere with the well reasoned and logical order of the ld CIT(A). Decided against revenue. 2023 (8) TMI 211 TP Adjustment - Calculation of segmental profit - assessee has been earning 15% profit on the services rendered to the overseas AE under the EDS and BSS segment, which is as per the Agreement entered with the AEs - HELD THAT:-As on going through the schedule No.19 other expenses , we notice that there is sub-contracting expenses of Rs. 54.,23 crores, which are included under the head other expenses and employee benefit expenses is at schedule No.18, which is Rs. 363.17 crores. These are the identifiable expenses and as per the agreement and TP study, assessee is engaged in the sub- contract works also, therefore, these sub-contracting expenses should be apportioned between/among the relevant segments/departments. The assessee has himself accepted that Rs. 55.36 crores are towards employee cost for the business support service segments to which the ld. TPO has rightly distributed. We direct the ld. TPO for the apportionment of rest amount of expenses under the heads other expenses excluding the sub-contracting expenses Rs. 135.61(189.84-54.23) crores should be divided as per the turnover of the segments of the assessee and the assessee is also agree for the apportionment on the basis of turnover. As under schedule No. 19 Other expenses we did not find separate employee benefit expenses, each head of expenses have been characterized and debited with the amount incurred by the assessee and the assessee has also not provided detail of employee cost of Rs. 55.36 crores, in view of this it cannot be said that the employee cost of Rs. 55.36 Crores of expenses are included under the head of Other Expenses in schedule 19. Thus we are sending back the file to the ld. TPO for fresh apportionment/distribution of the expenses among the segments of the assessee and re-calculate the margins. Accordingly, this ground of appeal is allowed for statistical purposes. Comparable selection - HELD THAT:- TPO is directed to exclude the company Tech Mahindra Business Services Ltd., Infosys Business Services Ltd. and SPI Technologies India Pvt. Ltd. from the final set of comparables. In the result, the ground raised by the assessee on this issue is allowed. Working Capital Adjustment - HELD THAT:- As we noted that the working capital adjustment is to be given and it is a mandatory requirement to allow adjustment if the assessee is able to provide the reasonable/accurate data of the comparable companies - we direct the assessee for providing necessary data for substantiating its claim before the AO/TPO. Accordingly, this ground of appeal is allowed for statistical purposes. Treatment to trade receivables as an international transaction - TPO adopted notional interest rate of 14% being SBI PLR rate - method of computation of such rate to the Appellant - HELD THAT:- TPO has observed in this regard in his order that the Assessee was asked to furnish details of trade receivable and details of realization which were submitted. The TPO to determine the interest attributable to delayed realization of trade receivables by applying 6 months LIBOR plus 400 basis points with a mark-up of 100 basis points (which works out to 5.975%). The interest were calculated only for the accrued during the year. After direction of the ld. DRP the adjustment has been come down because as per direction the SBI short term deposit rate was applied. Considering the rival submissions and decisions of the co-ordinate benches of the Tribunal the interest on receivables have been upheld that it is an international transactions and separate bench markings are required to be done for interest on delayed receivables. In view of this we direct to the AO/TPO for calculating afresh after applying 6 months LIBOR plus 300 basis points with a mark-up of 100 basis points and decide the issue as per law. The assessee is directed to provide the necessary documents. This ground of appeal is allowed for statistical purpose. 2023 (8) TMI 210 TP Adjustment - disallowance of 5% marked up in relation to purchase of certain fixed assets (i.e. Smoke Meter and Heating Channel) and a non consideration of evidence in respect of the same - HELD THAT:- It is the specific case of the assessee is that the CIT(A) has relied on the remand report of the TPO without appreciating that TPO in relation to smoke meter and heating channel looked only at A.E and third party invoice A.O for Financial Year 2010-11 and over looked the A.E and third party invoice for impugned Financial Year 2011-12 and did not refer to Invoice No. 3011101638 dated 03/11/2021 wherein the aforesaid asset were sold by AVL List GmPG to third party customer. Therefore, in our considered opinion, if the matter is remanded to the file of A.O to consider the A.E and third party invoice for the Financial Year 2011-12, Invoice and other details submitted by the assessee and decide the said issue afresh, the substantial justice would be rendered. Accordingly, we allow the Grounds of Appeal for statistical purpose with a direction to the A.O. for de-novo consideration for the issue by considering all the invoices and details submitted by the assessee in the right perspective and pass order in accordance with law. Appeal of the assessee is allowed for statistical purpose. 2023 (8) TMI 209 TP Adjustment - corporate guarantee given by the assessee company to its AEs - international transaction or not? - HED THAT:- We have also gone through the decision of this Tribunal in the assessee s own case for the AY 2014-15 [ 2023 (2) TMI 1174 - ITAT VISAKHAPATNAM] wherein the Tribunal, after analyzing the issues at length, held that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs. Thus we hereby hold that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount given to the AEs. Decided in favour of assessee partly. Customs 2023 (8) TMI 208 Condonation of delay in filing appeal - Although there is a delay of 343 days in filing the appeal, the issues in this appeal are also covered by the judgment of this Court in Matsushita Television Audio (I) Ltd. V/s. Commissioner of Customs [ 2007 (4) TMI 5 - SUPREME COURT] and, therefore, an appropriate order may be passed in the appeal. HELD THAT:- The Civil Appeal is dismissed both on the ground of delay as well as on merits. 2023 (8) TMI 207 Issuance of Detention and Demurrage waiver certificate in favour of the importer - Constitutional Validity of Regulation 10(1)(l) of Sea Cargo Manifest and Transhipment Regulations, 2018 - seeking stay on effect to Regulation 10(1)(l) of Sea Cargo Manifest and Transhipment Regulations, 2018 until the final disposal of the matter - grievance of the petitioner is that the said certificates have been obtained on the basis of distorted facts and incorrect information and without appreciating the fact that prejudice was being caused to the petitioner by issuance of such detention and demurrage waiver certificate - HELD THAT:- As the grievance of the petitioner is in regard to the issuance of the detention and demurrage waiver certificates and considering the facts, that it is the petitioner s assertion that such certificates ought not have been issued, it is deemed appropriate that the petitioner assails the said decision/order passed under the said Regulations by availing of the statutory remedy of an appeal under Regulation 14 of the Sea Cargo Manifest and Transshipment Regulations, 2018. The petitioner are permitted to approach the Customs, Excise and Service Tax Appellate Tribunal by filing an appeal in regard to the grievance of the petitioner. Let such appeal be filed within two weeks from today. In the event, such appeal is filed, let the same be adjudicated as expeditiously as possible and without an objection as to limitation, as the present proceeding were being pursued by the petitioner bonafide. All contentions of the petitioner are expressly kept open. Vires of the assailed statutory provisions - HELD THAT:- This is a critical relief which need not be gone into considering our aforesaid observations and at this stage of proceedings. Such challenge as raised by the petitioner are kept open to be asserted in the event the need for the petitioner so arises, to challenge the vires of the provisions in future. Appeal disposed off. 2023 (8) TMI 206 Allegations of corruption against a Customs Appraiser - demanding and accepting undue advantage from Customs Broker's for issue of Let Export Order/Out of Charge Order in respect of export/import consignments - HELD THAT:- This Court finds that insofar as the request for keeping the CBLR proceedings in abeyance until the disposal of the criminal proceedings may not be justified. It is trite law that criminal proceeding, departmental proceeding and civil proceeding are independent, the purpose of each of the proceeding are distinct. The standard of proof, the objectives of the two proceedings are different. Thus the above contention of the Petitioner is liable to be rejected. The departmental proceedings initiated under CBLR need not be kept in abeyance until the disposal of the criminal proceedings. It appears that the request for cross examination has been rejected by giving reasons that are vague in terms of Regulation 17 of CBLR, which sets out the procedure for revoking licence or imposing penalty. It appears that if a request for cross-examination is made, the appropriate authority ought to examine that request and enable cross-examination and shall decline permission only after recording the reasons. The impugned proceedings rejects the request on the premise that there is no absolute right of cross-examination as there is corroborative evidence, the same appears to be vague inasmuch as what is the corroborative evidence that is available has not been set out, except for a mere assertion, there is no details set out in support thereof. This Court is of the view that Petitioner shall make a request for cross-examination within a period of two weeks from the date of receipt of copy of this order - Petition disposed off. 2023 (8) TMI 205 Absolute confiscation of seized gold weighing 999.940 grams of gold - levy of penalty - burden to prove that the goods are not smuggled goods - invocation of Section 123 of CA - HELD THAT:- The theory of reverse burden under this provision can be invoked if there is a reasonable belief that the goods in question are smuggled one. The show cause notice in the present case was issued in November, 2020 whereas the appellant had made his submission vide his letter dated 30.09.2020 mentioning that the gold recovered from his possession was the gold melted into bar/brick out of the jewellery and the ornaments belonging to the family of three brothers including the appellant. The said jewellery also included the jewellery inherited from their grandfather. The appellant along with the said letter had produced pictures/photos of his family members wearing the gold jewellery. He even had given the letter issued by the person who had melted the said jewellery. It is department s admitted case that there were no foreign markings on the gold recovered from the appellant. It is also department s own acknowledgement that case against appellant is an accidental case which is not based on any pre-information. When the seizure is not even based on any information against the appellant, the detained/seized gold had no foreign marking, nothing incriminating against appellant was recovered from Innova. The mere fact that the gold has purity of 999.80 as good as that of foreign gold is opined to be highly insufficient a fact to form such reasonable belief as is required for invoking Section 123 of the Customs Act. The most of the findings of the authority are the outcome of the presumption. While rejecting the plea of gold being melted out of family jewellery, the authority has simply held the said submission to be the concocted one, without any cogent proof or reasoning except on the presumption that it cannot be a coincidence that three of the brothers will decide at the same time to get the jewellery in their possession to be melted that too to into one common piece. There is no rebuttal to the submission that three of the brothers including the appellant had inherited the ancestral jewellery. The subsequent findings that the size and purity of the melted gold exactly matched with the world s most widely traded small gold bar, cannot be a coincident, are also presumptive. There was no reasonable belief with the DRI officers at the time of detaining/seizing the gold from appellant, the onus was upon the department to prove that the gold in the hands of the appellant was the foreign smuggled gold. Apparently and admittedly, there was no foreign marking. No doubt, in case the gold is acknowledged to be melted, there remains no possibility of any marking on the melted piece of gold. However, it is still for the department to prove that the gold with the appellant is from the illicit source - there are no such evidence by the department. The defence taken by the appellant is held to have been rejected on the basis of assumptions and surmises. In the absence of any evidence by the department but a reasonable corroborative evidence by the appellant that the gold bar in his hand was the melted gold out of his joint family entire jewellery - the gold in question is not proved to be the smuggled gold of foreign origin. Mere purity thereof being equivalent to the purity of foreign gold is wrongly held to be the criteria to hold the melted gold as the gold of foreign origin. Investigation rather is observed to be faulty. Apparently and admittedly those slips have no connection with the appellant. The only slip discussed in the entire order is the slip which was recovered from the appellant who was accidently found present in M/s. New Satyam Tounch Centre when a search was effected in the said centre pursuant to recovery of its slips from the Innova car about along with a huge quantity of gold (five times the gold detained from the appellant) - Since department, despite query raised, was unable to inform about any other proceedings/prosecution with respect to the said recovery of 5514.8 grams of gold, an intimation is hereby given to the Chairman, Central Board of Indirect Taxes and Customs (CBIC) to enquire about the proceedings, if any, pursuant thereto and to take appropriate action about the recovery of that huge quantity of gold, if no action found taken. Copy of this order accordingly be forwarded to the Chairman, CBIC. The chairman is also required to send the report of said enquiry to this Tribunal. The order under challenge is not at all sustainable - Appeal allowed. 2023 (8) TMI 204 Parallel proceedings - Levy of penalty u/s 112(b) of Customs Act, 1962 on the appellant who was a co-noticee in show cause notice - adjudication order was already passed by Commissioner of Customs, JNCH, Navi Mumbai - present order passed again on the same show cause notice - H ELD THAT:- It is found from the record that it is clear that the show cause notice was already adjudicated by Commissioner of Customs, JNCH, Navi Mumbai vide order-in-original No. 5/2013-14/CC(I)JNCH dated 30.06.2014. Accordingly, the present impugned order is ab-initio void and illegal. cordingly, the same is set-aside the appeal is allowed. Corporate Laws 2023 (8) TMI 203 Professional Misconduct - Acceptance of audit engagement disregarding Independence requirements - Tampering of Audit File and related lapses (SA 230, Audit Documentation) - Failure to understand the audited entity, to perform risk assessment procedure to identify, assess respond to Risk of Material Misstatement due to fraud, and to prepare Audit Plan - Lapses in audit of fraudulent loan transactions with MACEL, fraudulent understatement of loans and evergreening of loans through structured circulation of funds - Lapses in audit of fraudulent recognition of Interest income - Lapses in audit of fraudulent diversion of funds to Giri Vidhyuth (India) Limited (GVIL) - Lapses in audit of fraudulent loan transactions with Tanglin Retail Reality Developments Pvt Ltd (TRRDPL) - Lapses in audit of suspected fraudulent diversion of amount given as land advances to related parties - Penalties and sanctions. Acceptance of audit engagement disregarding Independence requirements - HELD THAT:- In this case, the Auditors failed to perform appropriate audit procedures to evaluate and maintain their independence from TDL. In spite of the Auditors having an independence threat, they accepted the audit engagement as statutory auditor of TDL from FY 2018-19 by disregarding and grossly violating the principles of lndependence mentioned in the Standards on Auditing and the Code of Ethics. In view of this, the charge stands proved that the Auditors have violated SQC 1, SA 200 and SA 220. Tampering of Audit File and related lapses (SA 230, Audit Documentation) - HELD THAT:- It is clear that even the ICAI had also advised to document the timing of performing audit procedures in the Audit File. Therefore, the reply of the Auditors is misconceived. We cannot also give credence to the claim that the dates of conducting the audit by article assistants are available in time sheet maintained separately, because these records have not been maintained as part of the Audit File as required under SA 230 - The clear evidence of the Auditors tampering with the Audit File without valid reasons displays unprofessional behavior unbecoming of a professional auditor. We have already seen in the cases decided by PCAOB that internationally any attempt to tamper with the audit file is taken very seriously by the auditing regulators and entails significant regulatory sanctions - the charge that the Auditors have violated SQC 1, SA 200, SA 220 and SA 230 is proved. Failure to understand the audited entity, to perform risk assessment procedure to identify, assess respond to Risk of Material Misstatement due to fraud, and to prepare Audit Plan - HELD THAT:- As per SA 300, an auditor is required to establish an audit strategy including nature, timing and extent of planned risk assessment procedure. As per SA 315, an auditor is required to perform risk assessment procedures to provide a basis for identification and assessment of RoMM at the financial statement and assertion level. As per SA 330, an auditor is required to respond to the assessed RoMM. These are mandatory logical sequential audit procedures required for effective performance of an audit engagement. which the Auditors failed to perform. They failed to even understand TDL so as to perform an effective audit - It is found that the Auditors failed to perform these basic audit procedures in this case, and thus violated SA 300, SA 315 and SA 330. Lapses in audit of fraudulent loan transactions with MACEL (Rs 2614.35 crores), fraudulent understatement of loans (Rs 474 crores) and evergreening of loans through structured circulation of funds - HELD THAT:- The disclosure of related party transactions in the Financial Statements and its routing through banking channel does not provide immunity to such transactions from PMLA. The fact is that Rs 474 crores was diverted to promoter owned company-MACEL and attempts were made to conceal this diversion by fraudulently understating this balance in the financial statements. Total fraudulent transactions with MACEL during the year were Rs 2614.35 crores. There was large scale evergreening of loans through structured circulation of funds involving many group companies. All this was done without proper authorization by the Board of Directors, without entering into any agreement and without obtaining any security. Money has ultimately moved to promoter owned company-MACEL. These are ample proof of cheating and dishonesty. Therefore, this is a clear case of money laundering as per PMLA, which Auditors failed to report in the Independent Audit Report. The Auditors' contention that section 143(1) of the Act provides certain rights to auditor and does not cast any duty on the auditor is not acceptable as the auditor is required by section 14 3 (1)(b) to inquire whether the transactions of the company which are represented merely by book entries are prejudicial to the interest of the company. Obviously, the Auditors have failed to comply with these provisions in this case - the charge that the Auditors have violated section 143(1)(b), 143(12) of the Act, CARO, SA 200, SA 240, SA 250, SA 315, SA 330 and failed to report violation of section 179(3) of the Act by TDL, is proved. Lapses in audit of fraudulent recognition of Interest income of Rs 75.58 crores - HELD THAT:- The importance of revenue recognition can be understood from the fact that SA 240, which deals with the auditor's responsibilities relating to fraud in an audit of financial statements, made it mandatory for auditors to presume fraud in recognition of revenue. The risk of material misstatement due to fraud is a significant risk and the auditor is required to obtain an understanding of the entity's related controls including control activities. The risk of fraud in revenue recognition is greater in listed companies where performance in measured in terms of year-over-year revenue growth or profit. TDL is a subsidiary company of a listed company, CDEL. Fraudulent recognition of interest income of Rs 75.58 crores has resulted in overstatement of revenue and profit of TDL and in tum profit of the listed company CDEL. This has materially impacted the financial performance of TDL and CDEL. We note that the Auditors had shown their gross negligence by not obtaining sufficient appropriate audit evidence in this important matter - the Auditors violated section 143(12) of the Act, SA 200, SA 240, SA 315 and SA 330, hence this charge stands proved. Lapses in audit of fraudulent diversion of funds of Rs 507.05 crores to Giri Vidhyuth (India) Limited (GVIL) - HELD THAT:- It is already detailed how the loans were not actually recovered from MACEL but fraudulently understated by Rs 474 crores through receipt of cheques from MACEL. Further, evergreening of loans through structured circulation of funds among group companies including MACEL, GVIL TRRDPL to clear cheques has also been proved. The financial positions of these companies clearly shows that MACEL had negligible business and GVIL did not have any business. MACEL GVIL had negative net worth and were used by the promoters as conduits for diversion of funds. There were enough evidences that MACEL and GVIL did not have financial strength to repay loans. Accordingly, recognition of impairment loss allowance and writing off of non-recoverable portion of loans was required to be made, which was not done by TDL. The Auditors have failed to report non-compliance with Ind AS 109. The financial jugglery adopted by the TDL and GVIL was known to them as they were the Auditor for both TDL and GVIL - the charge that the Auditors have violated section 143(3)(e), 143 (12) of the Act, the CARO, SA 200, SA 240, SA 315 and SA 330, is proved. Lapses in audit of fraudulent loan transactions of Rs 1743.42 crores with Tanglin Retail Reality Developments Pvt Ltd (TRRDPL) - HELD THAT:- The fact of TRRDPL becoming the nodal intermediary for sale of Mindtree shares is not documented in the Audit File. The Auditors have tried to give rationale to cover part of transactions of Rs. 1,743.42 crores with TRRDPL. Out of Rs 992.66 crores loan taken from TRRDPL, reply is given for Rs 775 crores only and similarly, out of Rs 750.76 crores loan given to TRRDPL, reply is given for Rs 500 crores only. Further, this part amount is not supported by any audit evidence available in the Audit File. These loan transactions were required to be evaluated by the Auditor at the time of performing audit procedures, which is not evident from the Audit File. Therefore, the Auditors have given this reply as an afterthought with intention to shield their deficiencies in audit. The bank statements and bank reconciliation statements of TDL and other group companies, given in Chapter C-4 of this Order, all points to the fact that TRRDPL was used by the TDL for evergreening of loans and understatement of loans given to MACEL. This shows that the Financial Statements of TDL and TRRDPL were manipulated to hide diversion of funds to promoter controlled entity-MACEL. It was the Auditors' duty to exercise due diligence while conducting Audit of transactions with TRRDPL. Failure to do so shows their gross negligence in discharging the statutory duty cast upon them by the Auditing Standards and the Act - tthe charge that the Auditors have violated the CARO, SA 200, SA 240, SA 315, SA 330 and failed to report violation of section 179(3) of the Act by TDL is proved. Lapses in audit of suspected fraudulent diversion of Rs 415 crores given as land advances to related parties - HELD THAT:- Release of huge amount to related parties on the pretext of land advance, title disputes of land for which money is advanced and return of advance on the flimsy explanation of non-suitability of land, were required to be evaluated by the Auditors with professional skepticism. But this was not done indicating that the Auditors had performed the audit in a perfunctory manner - the charge that the Auditors have violated section 143(12) of the Act, SA 240, 315 and SA 3 3 0 is proved. Penalties and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed is evident from the fact that a minimum punishment is laid down by the law. In the instant case, the Auditors, chose to preserve their professional relationship with the promoters of the auditee company, instead of discharging their statutory duty to protect public interest by exercising professional skepticism and questioning the promoters dubious activities and transactions leading to diversion of shareholders and stakeholders money on a large scale. Had they performed the required audit procedures with due professional skepticism, many of the dubious transactions would have been perhaps detected. But by failing to do so, they foreclosed this possibility causing immense harm to shareholders and stakeholders - Auditors were required to ensure compliance with Standards on Auditing, Laws and Regulations to achieve the necessary audit quality and lend credibility to Financial Statements to facilitate their users. As detailed in this Order, substantial deficiencies in Audit, abdication of responsibility and inappropriate conclusions on the part of the Auditors establish their professional misconduct and lack of due diligence. Despite being qualified professionals, the Auditors have not adhered to the Standards and have thus not discharged the duty cast upon them. Considering the proved professional misconduct and keeping in mind the nature of violations, principles of proportionality and deterrence against future professional misconduct, it is ordered as below: (i) Imposition of a monetary penalty of Rs One crore upon M/s Sundaresha Associates. In addition, M/s Sundaresha Associates is debarred for a period of two years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. (ii) Imposition of a monetary penalty of Rs Five Lakhs upon CA C. Ramesh. In addition, CA C. Ramesh is debarred for a period of five years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. Securities / SEBI 2023 (8) TMI 202 Violation of Regulation 11(1) of the SAST Regulations - Non issue of open offer as warrants were converted into shares - SAST Regulations retrospective or prospective application - AO held that the promoters of Reliance and persons acting in concert acquired the shares and voting rights on 7th January, 2000 which is the date of acquisition and on which date the obligation to make a public announcement for an open offer under Regulation 11(1) was triggered, and that the acquisition of 6.83% of the shares was in excess of the ceiling of 5% prescribed under Regulation 11(1) of the SAST Regulations and, therefore, it triggered the obligation to make an open offer - penalty under Section 15H of the SEBI Act imposed - whether the promoters were liable to make a public announcement under Regulation 3(2) of the 2011 SAST Regulations. ? HELD THAT:- Tribunal erred in concluding that the appellants were required to make an open offer in terms of Regulation 3(2) of the SAST Regulations as it failed to consider the definition of the term shares as contemplated in the SAST Regulations as well as in the 2011 SAST Regulations. The Tribunal only followed the decision in Sohel Malik [ 2008 (10) TMI 730 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] and Eight Master Capital Fund [ 2009 (7) TMI 1386 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] which as we have pointed out is distinguishable on facts as well as on law. In any case, it was not a case involving warrants. Further, in our view, the obligation cast on the appellants to make an open offer which was triggered under the SAST Regulations had to be made under the 2011 SAST Regulations since the SAST Regulations had been repealed. Bombay High Court in M. Sreenivasalu Reddy and Ors. vs. Kishore R. Chabbaria Ors. [ 1999 (4) TMI 570 - HIGH COURT OF BOMBAY] is squarely applicable in the instant appeal as held that a person who has acquired securities convertible into equity shares carrying voting rights prior to the coming into force of the 1994 SAST Regulations is not an acquirer under the 1994 SAST Regulations and that the conversion of such securities into shares carrying voting rights is not an acquisition triggering a public announcement under the 1994 SAST Regulations. Thus we hold: (i) in terms of Regulation 11(1) read with Regulations 2(1)(b) and 2(1)(k) and 14(1) and (2) of the SAST Regulations an obligation to make a public announcement for an open offer is triggered at the time of acquisition of such convertible securities. (ii) The contention of the respondent that under Regulation 11(1) read with Regulation 14(2) an obligation to make an public announcement for an open offer is triggered under the SAST Regulations at the time of conversion of warrants into equity shares carrying voting rights is rejected. (iii) Only a person who acquires such convertible securities after coming into effect the SAST Regulations will be an acquirer within the meaning of Regulation 2(1)(b) of the SAST Regulations and only such acquisition will be an acquisition governed by the SAST Regulations. Further, a person who has acquired convertible securities before SAST Regulations coming into force will not be an acquirer for the purpose of the SAST Regulations in as much as there is no acquisition under the SAST Regulations. The right to obtain shares was vested in the appellants in 1994 when detachable warrants were issued. Such vested rights cannot be rendered nugatory on the enactment of the SAST Regulations. (iv) We further hold that the appellants who acquired the warrants on 12th January, 1994 were not acquirer within the meaning of Regulation 2(1)(b) of the SAST Regulations and that there is no acquisition by them under the SAST Regulations and, consequently, the provision of the SAST Regulations cannot be applied to the warrants allotted to them on 12 th January, 1994. The detachable warrants that was acquired prior to the coming into force of the SAST Regulations were not governed by any of the provisions of the SAST Regulations. Thus, taking into account the scope, purpose and objective of the SAST Regulations, we are of the opinion that since the acquisition took place on 12th January, 1994 much before the enforcement of the SAST Regulations, we are of the opinion that the appellants are not acquirers under the SAST Regulations. Whether the SAST Regulations had a retrospective application or a retroactive application with regard to the warrants that was acquired in January, 1994? - As held that the obligation to make a public announcement under Regulation 11(1) is triggered at the time of acquisition of the warrants and not at the time of conversion of such warrants into equity shares with voting rights. If the appellants are directed to make a public announcement in respect of the equity shares of the Company allotted to the persons acting in concert in January, 2000 by conversion of warrants held by them then it will be a retrospective application of the SAST Regulations. Admittedly, the SAST Regulations is not retrospective in their application and there is nothing in the Regulations suggesting its application prior to its enforcement i.e. prior to 20th February, 1997. In our view, retrospective application or retroactive application of the SAST Regulations is not relevant. The Companies Act gave the warrant holders the right to receive shares carrying voting rights upon conversion of warrants without any obligation attached to such warrants. The obligation to make an open offer is a substantive obligation under the SAST Regulations and if the legislature decided to impose an obligation on warrants and other convertible instruments outstanding at the time of enactment of the SAST Regulations it could have done so by inserting a specific provision for the same. Admittedly, there is no such provision under the SAST Regulations dealing with warrants and other convertible instruments outstanding at the time to enactment of these Regulations. Period of limitation:- As we are of the opinion that there has been an inordinate delay in the issuance of the show cause notice. Even though there is no period of limitation prescribed in the Act and the Regulations for issuance of a show cause notice and for completion of the adjudication proceedings, nonetheless, the authorities are required to exercise its powers within a reasonable period. In AO, SEBI vs Bhavesh Pabari, [ 2019 (3) TMI 197 - SUPREME COURT] the Supreme Court held that an authority is required to exercise its powers within a reasonable period. Admittedly, it took 11 years from the date of the commission of the alleged violation in January, 2000 to issue a show cause notice. It took SEBI 9 long years to decide the consent application. The impugned order has come after 21 years of the alleged violation. We find that the delay has caused serious prejudice to the appellant. There is an inordinate delay in the initiation of the proceedings but also in the disposal of the proceedings. The impugned order, thus, is liable to be set aside also on this ground. Penalty of Rs. 25 crores has been imposed u/s 15H of the SEBI Act which came into existence with effect from 8th September, 2015 - As the provision 15H existing as on January, 2000, would apply which at that point was a maximum penalty of Rs. 5 lakh, Thus, in our opinion, a penalty of Rs. 25 crores could not have been imposed and even assuming that the violation had occurred, a maximum penalty of Rs.5 lakhs could be imposed. We find that the appellant has not violated Regulation 11(1) of the SAST Regulations. The imposition of penalty upon the appellant is without any authority of law. Consequently, the impugned order cannot be sustained and is quashed. The appeal is allowed. All the misc. applications are accordingly disposed of. We have been informed that the penalty amount pursuant to the impugned order was deposited by the appellants under protest. Since we have set aside the impugned order, the respondent is directed to refund the amount of Rs. 25 crore within four weeks from today. In the circumstances of the case, parties shall bear their own costs. 2023 (8) TMI 201 Violation of the SEBI (Prohibition of Insider Trading) Regulations - Financial assistance to the preferential allottees - limiting genuine capital infusion - direction of the WTM directing the appellants to pay the amount jointly or severally - HELD THAT:- We are of the opinion, that when the Company uses its own funds and distribute it to the allottees for the purpose of subscription to the shares it deceives the genuine investors and falsely leads the investors to invest in the shares of the Company. Such scheme in our opinion perpetuates a fraud on the ordinary investors and gives a false impression that there was an infusion of funds through preferential allotment. We are further of the opinion, that this kind of fraudulent act which is an unfair device was meant to deceive the investors and such act is clearly prohibited u/s 12A of the SEBI Act read with Regulations 3 and 4 of the PFUTP Regulations. In view of the aforesaid, the contention raised by the learned counsel for the Company does not hold any merit. Direction of the WTM directing the appellants to pay the amount jointly or severally - A person can be directed to disgorge amount equivalent to the wrongful gain made by him. By such contravention, the liability to disgorge the amount is individual and not collective - Direction of the WTM directing the appellants to pay the amount jointly or severally is against the provisions of Section 11B and to that extent, it cannot be sustained. There is no inter se connection of noticees no. 10, 11 and 14 with the other noticees except that these noticees are connected to the Company noticee no. 1. In our view, the directions to pay the penalty amount jointly and severally was not proper and is arbitrary. The appellants have been found to be part of the scheme planned by the Company and have been involved in transferring the funds to the preferential allottees for subscription of the preferential allotment of the shares. The AO has imposed a penalty of Rs. 46 lakhs upon 23 noticees to be paid joint and severally which works out to Rs. 2 lakhs per noticee. However, considering the peculiar facts and circumstances of the present case, which shall not be treated as a precedent in other cases, we are of the opinion, that the penalty of Rs. 4 lakhs would be just and proper for each of the appellants i.e. noticees no. 10, 11 and 14. 2023 (8) TMI 200 Order directing SEBI to appoint another Whole Time Member (WTM) - no WTM at the present moment to hear and decide the matter - Delegation of Statutory and Financial Powers - HELD THAT:- As a result of the delegation of powers stipulated in serial no. 19 and 19A, only the WTM under Serial no. 19 can consider the appellants reply and objection for modification / vacation of the ex-parte ad-interim order dated June 12, 2023. It is not known as to when the Central Government will appoint new WTM. The matter is one of urgency since the appellants have been restrained from acting as a directors and / or key managerial personnel of the company and have been further restrained from accessing the securities market and that is why we have framed the timeline to the WTM to pass an order within a stipulated period. We also find that under Clause 3(2) of the Order of 2019, the power and functions delegated to any member or officer of the Board or authority could be exercised by any officer or authority, higher in grade or rank or position. We direct SEBI to appoint another WTM and if no WTM is available, then any authorised officer higher in grade or rank or position to the WTM would hear and decide the matter. This would be in consonance with the Clause 3(2) of the Order of 2019 relating to delegation of powers dated July 31, 2019. The person who is appointed shall pass the order within the stipulated period as per paragraph no. 32 of our order dated July 10, 2023. 2023 (8) TMI 199 Siphoning of the funds of the listed company through related entities - offence under SEBI Act - Need for Urgent provisional action for passing ex parte ad interim order - As contented issue relates to the financial year 2019-20 and therefore there was no emergent circumstances which led the respondent to pass an interim order after more than 3 years - HELD THAT:- In the instant case the WTM has found that the related entities of ZEEL had defaulted in the repayment of the loan taken by them, as a result of which, the fixed deposit given by ZEEL was encashed by the Bank. The related entities alleged that the money was eventually repaid to ZEEL along with interest. In this regard, the details of the payment was sought by SEBI and the information supplied by ZEEL led to a further enquiry which showed prima facie a round tripping of the funds by ZEEL. It was found that the funds originated from ZEEL and listed companies of Essel Group and ultimately through multiple layers the funds travelled back to ZEEL within 2 to 3 days. This evidence based on bank statements prima facie led to a conclusion that there has been a siphoning of the funds of the listed company through related entities and which is to the detriment of the shareholders and the investors. These bank statements made the WTM to observe prima facie that there has been a siphoning of the funds and round tripping of the funds from ZEEL to ZEE through related entities. Contention of the appellants that the transaction related to the financial year 2019-20 and therefore there was no tearing hurry to pass such kind of interim order at this stage is not acceptable. There is nothing on record to indicate that the details of the repayment made by the related entities was made known to the SEBI or to the Stock Exchange in 2019-20. These details only surfaced when ZEEL provided the information on May 8, 2023. Thus, prima facie at this stage there is no delay in the passing of the impugned order. Contention that no prima facie case existed in passing the impugned order is wholly erroneous. The contention that the conclusion of siphoning of the funds cannot be arrived at on the basis of the bank statements is an attractive argument but such contention cannot be considered in view of the fact that a prima facie opinion was arrived at based on objective facts indicating diversion of funds from a listed company which was not in the interest of its shareholders and the investors coupled with the fact that no evidence of any sort has been placed before us to show that the prima facie finding is perverse. In the instant case we find that an ex parte ad interim order was issued considering the sense of urgency which was infused by a host of circumstances, namely, diversion of funds from a listed company to related parties which are controlled by the appellants. In the absence of any evidence being filed by the appellants before us, we do not find any perversity, irregularity, illegality or irrationality in passing of the impugned order. Since the appellants have failed to provide any cogent evidence barring the fact that one of the entities, namely, Pen India Ltd. which according to the appellants is not a related entity, we are of the opinion that the appellants should file an appropriate reply for vacation / modification of the impugned order dated June 12, 2023. No possible reason to interfere in the impugned order at this stage and we dispose of the appeals directing the appellants to file a reply / objection along with a stay vacating application to the ex parte ad interim order dated June 12, 2023 within two weeks from today. 2023 (8) TMI 198 Delay in the initiation of the proceedings by SEBI - False impression given to the investors regarding the subscription of the GDR - HELD THAT:- We find that the GDR was issued by the Company on December 12, 2007 and the present show cause notice was issued on June 9, 2019 after an undue delay of 12 years. we are of the opinion that there has been an inordinate delay in the issuance of the show cause notice. Even though there is no period of limitation prescribed in the Act and the Regulations for issuance of a show cause notice and for completion of the adjudication proceedings, nonetheless, the authorities are required to exercise its powers within a reasonable period. In AO, SEBI vs Bhavesh Pabari [ 2019 (3) TMI 197 - SUPREME COURT ] the Supreme Court held that an authority is required to exercise its powers within a reasonable period. Thus we are of the opinion that power to adjudicate has not been exercised within a reasonable period. Consequently, no penalty could be imposed. Insolvency & Bankruptcy 2023 (8) TMI 197 Termination of Lease agreements - Petitioners have been constrained to move this Application on account of the fact that the Respondent No. 9/RP of Go Airlines has commenced flying the Aircrafts of the Petitioners despite the fact that the Lease Agreements with respect to such Aircrafts have been terminated by the Petitioners - HELD THAT:- The provisions of the Aircraft Act, 1934 and the Aircraft Rules, 1937 provide that no person shall use and operate an Aircraft unless it is in accordance with the Aircraft Rules, 1937. Rule 30(6)(iv) of the Aircraft Rules, 1937 provides that the registration of an Aircraft registered in India may be cancelled where the lease in respect of the Aircraft has expired or been terminated - Non-payment of lease rentals by the Respondent No. 9/RP of Go Airlines constituted an event of default under the Lease Agreement(s) executed between the Petitioners and Respondent No. 9/RP of Go Airlines. Hence, the Lease Agreement(s) were terminated by the Petitioners. It is not disputed by the parties that Lease Agreements qua the Aircrafts in paragraph 7.1 above have been terminated and the process of deregistration of the Aircrafts has commenced. Once an event of default has occurred and the Petitioners have terminated the Lease Agreement(s) and commenced the process of deregistration of the Aircraft, flying such Aircraft will be contrary to the provisions of the Aircraft Act, 1934 and the Rules framed thereunder. The document termed as the Airbus Manual (which appears to only be an extract of the complete Airbus Manual) has been relied upon to submit that during the parking period such flights require to be undertaken at intervals of 3 months. This document also does not help the case of the Respondent No. 9/RP, as Paragraph 3 of this document itself contains multiple options qua storage and maintenance. Paragraph 3(A)(4) also states that a maintenance/handling flight is requisite every two years, during a storage period, so that the Aircraft is preserved. It cannot be disputed by the either party that these Aircrafts have not been grounded for two years. Therefore, reliance placed on the Airbus Manual extract, as has been done by the Respondent No. 9 /RP of Go Airlines, cannot be accepted either - thus, the contention of the Respondent No. 9/RP of Go Airlines, that the reason, 2 of the 10 Aircrafts have been flown by Go Airlines is that these were handling flights forming part of the scheduled maintenance activity for the Aircraft, is misconceived. Let status quo be maintained in respect of handling/non-revenue flights of the Petitioners Aircrafts till the next date of hearing - List this Application for further hearing/disposal on 03.08.2023 at 3:00 PM. 2023 (8) TMI 196 Seeking refund of security deposit - adjustment was done while the moratorium was in operation or not - HELD THAT:- It is found that firstly the Appellant did not file any claim and secondly, it did not choose to appear to contest the application. After the liquidation order was passed on 21.01.2020, all tangible or intangible, movable or immovable properties as evidenced in balance sheet of the Corporate Debtor, being a part of the liquidation estate in terms of Section 36(3) of the Code, could not have been utilised by the Appellant by invoking general terms of supply of electricity. The electricity bills incurred by CD during the moratorium period were paid and the Appellant after the commencement of liquidation unilaterally adjusted the outstanding bills. There are no merit in the present appeal and the same is hereby dismissed. 2023 (8) TMI 195 Validity of impugned order - CIRP expenses required to be approved and the Appellant/Petitioner had already made claim - Impugned Order granting liberty to agitate the same issue before the Appropriate Forum - HELD THAT:- Taking note of the fact that the claim of the Appellant/Petitioner was admitted and it is for the Committee of Creditors to take a final call in the subject matter in issue, at this stage, simpliciter is not inclined to entertain the Appeal. In reality, this Tribunal is in complete agreement with the view arrived at by the Adjudicating Authority in the Impugned Order that the said application was closed with liberty to agitate before the appropriate Forum. Appeal dismissed. 2023 (8) TMI 194 Rejection of the Claim by the Liquidator - challenge to the rejection dismissed on the grounds that the Appellant did not file any Order passed under the EPF MP Act, 1952 and that no supporting documents have been enclosed in that regard - HELD THAT:- It is seen from the record that the Corporate Debtor has declared the Contribution amount in the monthly returns, but while remitting the amounts admittedly he has permitted amounts short of the already declared contribution and the same is reflected in the Establishment Ledger. The Employees Provident Fund Scheme, 1952 requires the Employer / Corporate Debtor to prepare a Contribution Card which would deal all the payments made by the Corporate Debtor against the monthly PF dues payable by the Corporate Debtor and the shortcomings in the remittance of the said dues would be automatically reflected in the Establishment Ledger. The contention of the Learned Counsel appearing for the Liquidator that an Assessment Order is an essential prerequisite for realising the amounts, is untenable in the light of the aforenoted discussion. This Tribunal is of the considered view that the ratio of the NCLAT, Principal Bench in the matter of JET AIRCRAFT MAINTENANCE ENGINEERS WELFARE ASSOCIATION VERSUS ASHISH CHHAWCHHARIA RESOLUTION PROFESSIONAL OF JET AIRWAYS (INDIA) LTD. ORS; ASSOCIATION OF AGGRIEVED WORKMEN OF JET AIRWAYS (INDIA) LTD. VERSUS JET AIRWAYS (INDIA) LTD. ORS. [ 2022 (11) TMI 332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] upheld by the Hon ble Apex Court in JALAN FRITSCH CONSORTIUM VERSUS REGIONAL PROVIDENT FUND COMMISSIONER ANR. [ 2023 (3) TMI 223 - SUPREME COURT] , with respect to the full payment of the Provident Fund dues, is squarely applicable to the facts of this case. The Order of the Adjudicating Authority is set aside and the Liquidator is permitted to admit the Claims based on the Establishment Ledger - appeal allowed. 2023 (8) TMI 193 Approval of the Resolution Plan challenged - challenged on the ground that as per the Resolution Plan, only 0.13% has been earmarked towards Government dues, and the Financial Creditor is getting 44.5% of the Claim amounts and the other Operational Creditors are getting 0.51% of their Claim amounts, which is stated to be unfair. HELD THAT:- The Hon ble Supreme Court in a Catena of Judgments in the matter of KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT ] has observed that the Commercial Wisdom of the CoC is non-justiciable, unless it is not in accordance with Section 30(2) of the Code. In the instant case, this Tribunal do not find any such irregularity in the Provisions of the Resolution Plan, as specified under Section 30 (2) of the Code. Additionally, this Tribunal is quite alive and conscious of the fact that the Resolution Plan was fully implemented and the Successful Resolution Applicant had made payments amounting to Rs. 35,25,00,000/- to all the Creditors and almost 2 years has passed since the approval of the Resolution Plan and this Tribunal does not find any tangible and substantial reasons to set the clock back at this point of time. Appeal dismissed. 2023 (8) TMI 192 Refund of the EMD Amount - respondent was considered to be disqualified under Section 29A of the Code for Submission of the Plan - HELD THAT:- It is an admitted fact that the First Respondent had deposited an amount of Rs. 2,00,00,000/- on 23/01/2020 towards EMD/ Binding Submission Bank Guarantee (BSBG), and was subsequently informed by the Appellant vide email dated 27/02/2020 that he was disqualified under Section 29A of the Code and hence was not eligible to submit a Resolution Plan. While so, the Adjudicating Authority vide Order dated 29/05/2020 had ordered for Liquidation of the Corporate Debtor Company. As regarding the forfeiture of BSBG, it is clearly stated in the terms that only when the Resolution Applicant is found to have made false or misleading representation , it can be forfeited. In the instant case, there is absolutely no material evidence on record to substantiate the contention of the Appellant that the 1st Respondent had deliberately or maliciously sought to derail the CIRP Process or given any misleading representation. It is not the case of the Appellant that the 1st Respondent had challenged his ineligibility under Section 29A of the I B Code, 2016 by way of an Appeal. It is pertinent to mention that under Regulation 36B of the IBBI (CIRP) Regulations, 2016, there is no requirement to obtain a non-refundable deposit for submission of the Resolution Plan. The Record shows that the Company had gone into Liquidation on 29/05/2020 and the IA/829/2020 filed by the 1st Respondent was allowed, vide the Impugned Order on 04/10/2021 and the EMD amount of Rs. 2,00,00,000/- has still not been refunded. The Adjudicating Authority in the Impugned Order has observed that the Resolution Plan given by the 1st Respondent was not even placed before the CoC for its consideration and therefore the question of delay in procedure does not arise and that the Liquidator was not right in holding back the EMD amount. There are no illegality or infirmity in the reasoning given by the Adjudicating Authority in the Order impugned - appeal dismissed. 2023 (8) TMI 191 Initiation of CIRP - NCLT rejected the application - Pre-existing dispute - Maintainability of application u/s 9 of IBC - application was dismissed on the ground that the Application was filed solely with an intention to recover the outstanding amount - HELD THAT:- From the letter addressed by the Corporate Debtor to the Appellant / Operational Creditor, it is clear that the accounts were confirmed showing an amount of US $ 50,200. The contention of the Learned Counsel for the Respondent that this amount is not shown as due and payable in their financials, pales into insignificance, taking into consideration that this letter has been signed by the Authorised Signatory of the Corporate Debtor and it is clearly stated that the said amounts have been examined by their Statutory Auditors and to confirm the said amount. Further, this Tribunal is of the considered view that having admitted that this amount is due and payable and having agreed to pay the said amount in two tranches, a sum of $20,000 by the end of May 2021 and the entire balance by the end of July 2021, the Corporate Debtor cannot now turn around and say that there was a dispute and that the amounts are not due and payable. Keeping in view the facts of the attendant case on hand, this Tribunal is of the considered view that the Judgment of ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS UNIWORTH TEXTILES LIMITED [ 2023 (7) TMI 484 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] is not applicable to the facts of this case. Specifically, since there was a clear acknowledgement of payment of the amounts in two tranches within specific time periods. It is settled law that what has to be seen is whether a dispute raised is spurious or genuine. Keeping in view the documentary evidence on record, this Tribunal is satisfied that the dispute raised is a spurious one specifically having regard to the admission of liability on 31/05/2019. The Adjudicating Authority has erred in observing that Corporate Insolvency Resolution Process cannot be initiated against the solvent company in a pandemic situation and that it is a recovery proceeding. To reiterate, the debt was due and payable since May 2018 and therefore Section 10A is not applicable to the facts of this case. The matter is remanded to the Adjudicating Authority for initiation of Company Insolvency Resolution Process against the Corporate Debtor Company in accordance with law - appeal allowed. 2023 (8) TMI 190 Jurisdiction of Tribunal to entertain/initiate, the Insolvency Proceedings of the Personal Guarantors, even when no Corporate Insolvency Resolution Process proceedings, is pending, against the Corporate Debtor. HELD THAT:- In the present case, it is brought to the notice of this Tribunal , on Record that the Corporate Insolvency Resolution Process proceedings, against the Corporate Debtor , were pending, on the Date , when the Petition , was filed before the Adjudicating Authority / Tribunal , by the 1st Respondent / Financial Creditor , and on the Date , when the impugned order , came to be passed, as on date, they continued to be pending - It is well settled by now, that the Insolvency Proceedings , can be initiated against the Personal Guarantor , even when no proceedings , are pending against the Corporate Debtor . Going by the ingredients of Section 60 (1) of the I B Code, 2016, it is quite clear, that for Insolvency Resolution and Liquidation , for Corporate Persons , including Corporate Debtors and Personal Guarantors , the National Company Law Tribunal ( Adjudicating Authority ), having territorial jurisdiction , over the place, where the Registered Office of the Corporate Person , is located, and in the instant case, in the State of Telangana , the Corporate Debtor s Registered Office , is situated, which comes within the ambit of territorial jurisdiction of the Adjudicating Authority ( National Company Law Tribunal , Bench I, Hyderabad). This Tribunal , keeping in mind the respective contentions advanced on either side, and considering the facts and circumstances of the instant case, in a conspectus manner, comes to a resultant conclusion that the Adjudicating Authority / Tribunal , has jurisdiction , to entertain / initiate , the Insolvency Proceedings of the Personal Guarantors , even when no Corporate Insolvency Resolution Process proceedings, is pending , against the Corporate Debtor , and in any event, the Corporate Insolvency Resolution Process proceedings, is pending, and continued to be pending, against the Corporate Debtor . Appeal dismissed. Service Tax 2023 (8) TMI 189 Levy of Service Tax - Business Auxiliary service - fee collected by the Appellant from applicants for issuance of SOC-VRC - it was held by Tribunal that no Service Tax under the category of BAS could have been levied upon the Appellant - HELD THAT:- There are no reason to interfere with the impugned judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal. The appeal is, accordingly, dismissed. 2023 (8) TMI 188 Levy of penalty u/s 77 and 78 of FA - Service tax alongwith interest already paid, prior to issuance of SCN - invocation of extended period of limitation under Section 73(3) of the Act - audit on the appellant has not been conducted and no audit objection was raised - HELD THAT:- On perusal of Section 73(3) shows that if a tax is paid along with interest before the issuance of show cause notice then in that case show cause notice shall not be issued and in the present case also, it is found that the contention of the appellant that they had bona-fide belief that they are not liable to pay service tax but when they realised on their own, they immediately paid the service tax along with interest which is admitted in the impugned order itself. In the case of YCH LOGISTICS (INDIA) PVT. LTD. VERSUS C.C.E C.S.T. -BANGALORE SERVICE TAX- I [ 2020 (3) TMI 809 - CESTAT BANGALORE] , this Tribunal in identical facts has held In the present case, we find that the contention of the appellant that they bona fidely believed that they are not liable to pay service tax but when the audit party raised the objection that they are liable to pay service tax, then they immediately paid the service tax along with interest which is admitted in the impugned order, is justified. It is found that the case law relied upon by the Ld. DR is not applicable in the facts and circumstances of the present case because in that decisions the assessee has challenged the levibility of service tax on outdoor catering services which was adjudicated by the authorities below whereas in this case the appellant suo-moto without being pointed by the department paid the service tax along with interest much before the issuance of show cause notice hence the issue of imposition of penalty is covered by the various decisions cited in favour of the appellant. The appellants are not liable to pay penalty under Section 77 78 - Appeal allowed. 2023 (8) TMI 187 SSI Exemption - use of brand name of another person - Commission Agent Service - Case of appellant is that service of Commission Agent is on behalf of the principal, cannot be treated as branded service as for providing a Commission Agent Service there is no need of using the brand name of their client - benefit of exemption under N/N. 6/2005-ST denied - HELD THAT:- The appellant has provided Commission Agent service to their clients. The appellant as a commission by mediates between their client and customer of the client, while providing commission agent service and does not use the brand name of the service providers for the reason that they are providing service on behalf of the client and there is no need of brand name for providing service to the same client. Therefore, the department without any basis made a bald allegation that appellant is using brand name for providing Commission Agent service. This identical issue has been considered in the case of M/S. REETIKA CABLE VERSUS COMMISSIONER OF CGST, CHANDIGARH [ 2021 (7) TMI 887 - CESTAT CHANDIGARH] - on perusal of this decision, it is settled that in case of providing a Commission Agent servicer, is not a branded service. Thus, it can be seen that Commission Agent service provided by the appellant cannot be treated as branded service. Accordingly, the exemption Notification No. 6/2005-ST cannot be denied - the demand confirmed by the lower authorities denying exemption Notification 6/2005-ST is without any basis - appeal allowed. 2023 (8) TMI 186 Levy of Service tax - renting of immovable property for the sale of agricultural produce, for the purpose incidental to agriculture - effect of Section 66D in the Finance Act from 01.07.2012 - HELD THAT:- It is observed from the decision of Hon ble Supreme Court in Krishi Upaj [ 2022 (2) TMI 1113 - SUPREME COURT] case as relied upon by learned Departmental Representative that the licence fee collected for renting of immovable properties even by the public undertaking is liable to tax. However, from section 66D (d)(iv) of Finance Act (post negative list), it is clear that renting of land with or without structure for the purpose incidental to agriculture is not liable to tax. The demand in question is with reference to renting of immovable property for the sale of agricultural produce i.e. for the purpose incidental to agriculture. Hence, subsequent to introduction of Section 66D in the Finance Act from 01.07.2012 the activity in question doesn t attract service tax liability. The demand for the period 2008-09 to 2011-12 confirmed - with respect to financial year 2012-13 the demand is confirmed for the period 1st April 2012 to 30th June 2012 but for the period with effect from 1st July 2012 to March 2013, the demand is hereby set aside - appeal allowed in part. 2023 (8) TMI 185 Wrong classification of services availed by the appellant - providing travel facility by air by way of providing its aircraft on charter basis - supply of tangible goods for use (SOTG) service of transport of passengers by air service - non-payment of service tax under the reverse charge mechanism on payments made to foreign vendors for repair works aircraft outside India - Denial of CENVAT credit of Rs. 33,96,323/- as the appellant had not submitted the relevant documents relating to credit availed by it. Wrong classification of services availed by the appellant as the services provided by the appellant would fall under SOTG as defined under section 65(105)(zzzzj) of the Finance Act, 1994 [the Finance Act] instead of transport of passengers by air as defined under section 65(105)(zzzo) of the Finance Act - HELD THAT:- It is not in dispute that SOTG service became leviable to service tax only with effect from 16.05.2008. The service tax, therefore, for the period from 01.04.2008 to 15.05.2008 deserves to be set aside - Though the appellant has asserted that service tax was paid under category of transport of passenger by air services, but this fact needs to be verified. Non-payment of service tax under the reverse charge mechanism on payments made to foreign vendors for repair works aircraft outside India - HELD THAT:- Rule 3(ii) provides that subject to Section 66A of the Finance Act, the taxable services provided from outside India and received in India, shall, in relation to the taxable service specified in sub-clause (zzg) of section 65 (105) of the Finance Act be such services as are performed in India. The contention of the learned counsel for the appellant is that it is an admitted fact that the services were provided from outside India and, therefore, would not be leviable to service tax - this submission deserves to be accepted. It is only in a case where such services are performed in India that they would be leviable to service tax. In the present case, it is not in dispute that the services were provided outside India. Service tax, therefore, could not have been demanded from the appellant under the reverse charge mechanism. Denial of CENVAT credit of Rs. 33,96,323/- as the appellant had not submitted the relevant documents relating to credit availed by it - HELD THAT:- A perusal of the letter dated 24.05.2016 sent by the appellant to the Principal Commissioner does indicate that during the course of hearing the appellant had offered to produce the entire original record for verification and the Principal Commissioner had assured the appellant that a date for this purpose would be intimated to the appellant. However, as the date was not intimated, the appellant had offered to produce the documents. The Principal Commissioner has stated in paragraph 7.5 of the impugned order that the appellant had not produced all the invoices of all the service providers. It is, therefore, appropriate that the matter is remanded to the adjudicating authority to permit the appellant to produce the records so that a fresh order on this aspect can be passed after examination of the documents. Appeal allowed in part and part matter on remand. Central Excise 2023 (8) TMI 184 Violation of principles of natural justice - Cenvat Credit - use of the goods in the machineries equipments fabricated by the appellant, were not appreciated properly - contradictions between the show cause notice and adjudication order CENVAT Credit - items like M.S. Beams/Angles/ Channels/Flats/Joists etc. claimed to have been used in the fabrication of plant and machinery in the factory during January 2008 to April 2010 - extended period of limitation - HELD THAT:- There are number of discrepancies/ contradictions between the show cause notice and adjudication order such as, in the show cause notice the Cenvat credit was proposed to be denied on the ground that the goods were used in the construction. However, in the impugned order though it was admitted that the goods were used in fabrication of machinery but the same was denied on the ground that these machineries are embedded to earth. The Adjudicating Authority has not appreciated in proper perspective, regarding the use of the goods in the machineries equipments fabricated by the appellant. After passing of the adjudication order much water has flown on this issue and various judgments were passed by various forums. Therefore, the entire matter needs reconsideration in the light of the facts of the present case vis-a-vis the law in terms in various judgments of the High Courts/ Tribunals. All the issues are kept open. The appeal is allowed by way of remand to Adjudicating Authority for passing a fresh order after compliance of the principles of natural justice. 2023 (8) TMI 183 Interest on the refund sanctioned by the department - provisions of the Central Excise Act namely Sections 11B and 11BB apply to the refund of Cenvat Credit or not - whether the respondent is entitle for interest on refund already sanctioned and if yes, from which date? HELD THAT:- The refund which was filed on 01.06.2004 and 25.06.2004 for the period April-03 to September-03 was kept pending by the department, on the dispute that since the respondent s activity i.e. drawing of wire was held does not amount to manufacture, the respondent was not entitle for the Cenvat Credit and consequential refund of the said Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004 was also under dispute. The eligibility of Cenvat Credit in the above facts was extended by retrospective amendment of Rule 16 of Central Excise Rules, 2002. Whereby, the assessee (wire drawing units) becomes entitled for the Cenvat Credit on 13.07.2006. The revenue s contention that the Rule 5 refund is not eligible for interest as the provisions of Section 11B and 11BB are not applicable, for such refund under Rule 5 is no longer under dispute in the light of the jurisdictional High Court of Gujarat judgment in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS RELIANCE INDUSTRIES LTD. [ 2010 (10) TMI 190 - GUJARAT HIGH COURT] . Therefore, there is no doubt that the respondent are legally entitle for the interest under Section 11BB of Central Excise Act, 1984. Period for which the respondent should be granted interest of refund - HELD THAT:- Even though the respondent had filed the refund claim on 01.06.2004 and 25.06.2004 but at that time there was no clear provision for allowing the Cenvat Credit on the inputs to the Wire drawing units therefore, there was no reason for revenue to grant the refund under Rule 5 till the retrospective amendment in Rule 16 was brought i.e. on 13.07.2006. However, after the amendment dated 13.07.2006 in Rule 16 the respondent became eligible for refund of accumulated Cenvat credit under Rule 5 of Cenvat Credit Rules, 2004. Therefore, the revenue was supposed to sanction the refund within three months from the date of retrospective amendment i.e. from 13.07.2006 however, the refund was sanctioned on 14.06.2012. Therefore, there is a delay in sanction of the refund after three months from the date of retrospective amendment dated 13.07.2006. The respondent is entitled for the interest only for the period i.e. from the date of three months of 13.07.2006 till the sanction of refund i.e. 14.06.2012 - Sanctioning Authority shall recalculated the interest accordingly and grant the same to the respondent. Appeal allowed in part. 2023 (8) TMI 182 Imposition of penalty under section 11AC of the Excise Act equivalent to the amount of duty - excise duty with interest had been deposited by the appellant before the issuance of the show cause notice - suppression of facts or not - HELD THAT:- The appellant has given reasons as to why the excess excise duty paid by the appellant was adjusted in the excise duty payable in the month of June 2017. According to the appellant, Goods and Service Tax was introduced with effect from 1 July 2017 and the appellant believed that it was better to adjust the excess excise duty paid. The appellant has also stated that, in the facts and circumstances of the present case, it cannot be alleged that there was any suppression of facts with intent to evade payment of excise duty. The Assistant Commissioner, in the order dated 23.03.2021, has merely observed that since the appellant in reply to the show cause notice had not produced any document/proof affirming the non involvement of any fraud/collusion of tax it has to be concluded that there was involvement of fraud/collusion and so penalty could be imposed. This finding of the Assistant Commissioner is not correct. The penalty could not have been imposed if the amount with interest had been deposited before the issuance of the show cause notice but there was no intention to evade payment of excise duty. In the present case, not only had the department failed to substantiate that the appellant had suppressed facts with intent to evade payment of excise duty, but even otherwise it is not a case where it can be said that the appellant had intention to evade payment of excise duty. In such a situation, penalty could not have been imposed upon the appellant since the excise duty with interest had been deposited by the appellant before the issuance of the show cause notice - appeal allowed. 2023 (8) TMI 181 Method of valuation - Rule 9 read with Rule 11 of the Central Excise (Determination of Value) Rules 2000 or Section 4 of the Central Excise Act, 1944 - related party transaction - same goods are sold to TWL and independent buyers at the same rate - demand of differential value arrived at by 110% of cost of production - HELD THAT:- The impugned order has cited Board Circular No. 643/34/2002-CX., dated 1-7.2002 and concluded that When the goods are sold partly to related person and partly to independent buyers, there is no specific rule covering such a contingency. The adjudicating authority observed that in such cases, transaction value in respect of sales to unrelated buyers cannot be adopted for sales to related buyers since as per Section 4(1) transaction value is to be determined for each removal. It is observed that the adjudicating authority has wrongly interpreted the Board Circular. As per the Circular, when there is independent sale along with sale to related persons , Rule 9 is not applicable and recourse will have to be taken to the residuary Rule 11. As per the best judgment method under Rule 11, the value of the goods sold to the independent buyer should be the value for the sale to related persons also - This view has been taken by the Hon ble Apex Court in the case of Commissioner of Central Excise Service Tax, Rohtak Vs. Merino Panel Products Ltd. [ 2022 (12) TMI 453 - SUPREME COURT ]. The demands confirmed in the impugned order are not sustainable and are set aside - appeal allowed. 2023 (8) TMI 177 Reversal of Cenvat credit lying unutilized in respect of ADE(T TA) in terms of transitional provision of Rule 11(3)(ii) of the Cenvat Credit Rules, 2004 - HELD THAT:- The said Rule 11(3) has come into effect only with effect from 01.03.2007 therefore any credit availed prior to that and carried forward the same cannot be recovered by invoking Rule 11(3) as the said Rule does not have retrospective effect. It shall be applicable only in a case when any exemption notification is availed on or after 01.03.2007 when the Rule 11(3) came into effect - In the present case, the appellant s final product was exempted as well as credit of ADE(T TA) was lying during the period much before the insertion of Rule 11(3) in Cenvat Credit Rules. Therefore the said Rule cannot be applied and consequently ADE(T TA) cannot be demanded. The very same issue has been considered by this Tribunal in the case of IBM India Private Limited [ 2019 (11) TMI 299 - CESTAT CHENNAI] , wherein the Tribunal has held that after the introduction of Rule 11(3) by Notification No. 10/2007 dt. 01.03.2007 the Tax Research Unit of CBEC has issued Circular No. 334/1/2007-TRU dt. 28.02.2007 clarifying that it will come into effect immediately. The letter does not suggest that Rule 11(3) was supposed to have retrospective effect. Therefore, we find that it has never been the intention to give retrospective application to Rule 11(3). The issue in hand has been addressed by the Tribunal in the above decision whereby it was held that Rule 11(3) of Cenvat Credit Rules, 2004 though provides for reversal of unutilized Cenvat credit but the same cannot be applied retrospectively in the absence of specific provision under the statute. The appellant is neither liable to reverse the accumulated Cenvat credit of ADE (T TA) nor the demand of the same is sustainable - Appeal allowed. CST, VAT & Sales Tax 2023 (8) TMI 180 Seizure of goods - twenty four cartons containing gold and silver jewellery along with cash - Validity of report of the three-member committee set up to examine the claims of the Petitioners/Angadias - seeking constitution of new committee and conduct a fresh enquiry to determine the ownership of the seized jewellery and to submit a fresh/new report - HELD THAT:- It is the petitioners case that their claims were communicated through the Angadias. The said contention is noticed only to be rejected. If the petitioners were claiming ownership over the seized articles, they were obligated to raise those claims before the Committee. It is the case of the respondents that none of the petitioners apart from petitioner no. 5 had submitted any claim for the consideration of the respondents. In the absence of any material having been placed by the petitioners before the respondent DT T in support of their asserted title over the seized goods, there exists no justification for this Court to consider granting the writs as prayed for. Petition disposed off. 2023 (8) TMI 179 Classification of commodities - rate of tax - Clohex - Clohex Plus - to be treated as medicament and taxable at 5% or not - Senquel-AD Mouthwashes - taxable at the rate of 14.5% by virtue of entry No.92(6) of SRO 82/2006 or not - HELD THAT:- On a reading of the principles emerging from the decisions in Heinz India Limited v. The State of Kerala [ 2023 (5) TMI 290 - SUPREME COURT] and Puma Ayurvedic Herbal Private Ltd. v. Collector of Central Excise [ 2006 (3) TMI 141 - SUPREME COURT] , it can be seen that when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive, and what is of importance is the curative attributes of such ingredients that render the product 'medicament' and not a cosmetic. Although a product is sold without a medical practitioner's prescription and is available over the counter, it does not lead to the conclusion that they are cosmetics - A product used mainly in curing or treating ailments or diseases and containing curative ingredients, even in small quantities, is to be branded as a medicament. The dominant use to which the product is being used certainly has a bearing. It is also to be seen that whenever a product has curative or prophylactic value as well, but the revenue still wants the said product to be brought under a different Chapter, the onus is on the revenue to show that it is not a medicament; the revenue will have to demonstrate that curative or prophylactic value is only subsidiary in nature or that the description covers the product under the Chapter wherein it is sought to be excluded. The product in the instant case normally should have come under Chapter 30 but for the specific exclusion under Note to Chapter 30 - it is also found that if a product is registered as a medicament by the Drugs Controller, that would be a strong factor to consider it as having curative or prophylactic value as a medicament. The department also did not discharge its onus of proving that the product cannot be classified as a medicament, though it certainly has attributes of a medicament - it is also found that the clarification order accepts the classification accorded to the other products Clohex and Clohex Plus by the assessee, as medicament based on the fact that they were manufactured under a drug licence. However, there is no reason discernible from the clarification order as to why Senquel-AD Mouthwash which is presented in a similar form cannot also be classified as a medicament more so when the Central Excise authorities had accepted the said classification during the relevant period. Since the clarificatory authority did not consider these aspects, it is deemed appropriate to remit it to the same authority to consider all the above aspects in the first instance. Accordingly, the impugned order (Order No. C3/26631/13/CT) of the authority for clarification dated 09.01.2015 set aside and matter remitted to the said authority for fresh consideration. Appeal allowed by way of remand. Indian Laws 2023 (8) TMI 178 Dishonour of Cheque - 1st defendant had borrowed money on the basis of daily, weekly Kandu from P.S.K. Finance Ltd., Salem belong to the family of T.K.Kuppusamy in 2002, 2003 and signed in blank papers, and blank promissory notes and they are used in this case for filling this caseor not - signature of the defendants 1 and 3 were obtained by threat and coercion through rowdy elements and the letters for creating equitable mortgage by depositing of title deeds was created or not? - fabricated guarantee letters or not - recovery of amount alongwith interest and penalty. Whether the plaintiffs have proved that the defendants have borrowed a sum of Rs. 10,00,000/- and executed the suit promissory note/Ex.A-2 and Ex.A-6/memorandum of deposit of title deeds creating equitable mortgage? HELD THAT:- As far as Ex.A-2/promissory note is concerned, the second defendant had denied his signature in the same, specifically contending forgery. They have also taken out an application to compare the signatures, which was opposed by the plaintiffs and it was dismissed with an observation that it was for the plaintiffs to take steps to prove the signatures. The law and the point are very well settled that when there is a categorical and clear denial of the signature and allegation of forgery, it was for the plaintiffs to prove the signature by sending the suit promissory note for analysis of an expert by comparing it with admitted signatures. When the plaintiffs have not discharged their onus, then the claim based on Ex.A-2/promissory note is bound to fail. On the other hand, the plaintiff in the cross-examination evades and ducks by saying that the defendants had brought the letters after being typed and signed from outside. Therefore, Ex.A-3 to A-5 /Letters were also not proved by the plaintiffs. The only document in which the signature is obtained is Ex.A-6(series)/the memorandum of title deeds. Even though the said memorandum of title deeds can be taken as correct, especially, in the absence of any criminal complaint regarding the abduction of the first defendant, when the borrowal itself is not proved by the plaintiffs, and the execution of the memorandum of title dates is not supported by any consideration. The plaintiffs' case is compounded by the fact that there are interpolations and alterations in the Account Books - There are no clear-cut pleadings in the plaint as to the other transactions and a perusal of the judgments in the criminal appeals also is clear that there are no clear-cut pleadings and that those transactions were apart from the suit transaction. When between the same persons, there is more than one transaction of borrowal, normally, in the pleadings, it would have been mentioned by the plaintiffs. This is yet another circumstance. When P.W.1 s personal knowledge itself, is in doubt, in view of his admission in the cross-examination and non-production of his passport, this Court has to conclude that the plaintiffs have not proved the borrowal and the execution of the suit promissory note and consequently, they are not entitled for any relief based on Ex.A-2/promissory note or Ex.A-6/memorandum of deposit of title deeds. Appeal suit dismissed.
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H: Tax exemption limit for leave encashment: Local authorities' employees...

H: Tax assessments beyond 6-year limit quashed, satisfaction note lacked ...

H: Cash found in lockers linked to temple trust and educational foundatio...

H: Microphone Tech Classification: Functionality Over Technology.

H: Exemption from Social Welfare Surcharge on duty-free imports via scrips.

H: Claim for performance pay not an operational debt under IBC; Multiple ...

A: Director Identification Number

A: No GST is applicable for the services provided by the Director under p...

A: Income Tax Act Revamp (Comprehensive Review): Status and Suggestion on...