Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 6, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Delay in availing Input Tax Credit disputed. Rs. 23,35,892/- relief granted. Case remitted for considering GST Council proposals.
Demand on account of alleged delay in availing Input Tax Credit purportedly Rs. 23,35,892/- out of Rs. 57,12,114/-. Impugned order set aside to that extent, case remitted to consider proposals in GST Council's 53rd Meeting and Finance (No.2) Bill, 2024 (Bill No.55 of 2024) Clause 114 & 146. For balance amount Rs. 33,76,222/-, petitioner given liberty to file statutory appeal within 30 days. Petition disposed.
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Pre-deposit not made for appeal initially; later paid over 11% of disputed tax. Appellate authority to decide on merits.
Petitioners did not make required pre-deposit for maintaining appeal - appeal initially filed belatedly, defective and rejected without merits - subsequent appeal filed with pre-deposit also belated - no lack of bona fide - petitioners already paid over 11% of disputed tax, more than required for appeal - matter remanded to appellate authority for decision on merits as substantial compliance with pre-deposit.
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Petitioner entitled to refund of unutilized ITC on exports. BRCs for realization suffice; can't reject refund for delay in BRC submission.
The High Court held that the petitioner is entitled to refund of unutilized Input Tax Credit (ITC) on export of goods u/s 16(3) of the Integrated Goods and Services Tax Act, 2017. The petitioner furnished Bank Realization Certificates (BRCs) evidencing realization of sale proceeds, and the application for refund could not be rejected solely on the ground of non-production of BRCs within nine months. Regarding furnishing bank statements and ledger accounts of suppliers, the matter was remanded to the adjudicating authority to decide afresh whether the petitioner made payment to suppliers for inward supplies against which refund of accumulated ITC is claimed.
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Petitioner's Input Tax Credit claim rejected due to lack of supplier certificates & GSTR mismatch. Recovery stayed for 3 months.
Petitioner failed to substantiate Input Tax Credit claim due to lack of supplier certificates. Discrepancy noted between Input Tax Credit availed in GSTR 3B and auto-populated in GSTR 2A. Electronic Credit Ledger balance after adjustment indicates inadequate explanation. Petitioner's credit tax position appears incorrect, unable to avail claimed IGST amount under CGST and SGST credit. Court grants temporary relief, staying recovery proceedings for three months, allowing petitioner to file revision petition u/s 161 within 30 days. Petition disposed.
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RBI penalties for law violations & vendor liquidated damages not taxable under GST as per circular. Disciplinary, not service consideration.
Penalties, late fees, penal interest, and fines levied by RBI for contravention or violation of laws are for maintaining discipline and deterrence, not consideration for services, hence not taxable under GST as per circular. Penalties for non-performance or underperformance by vendors as per contract with RBI are liquidated damages to compensate for loss, not consideration for services, hence not taxable under GST as per circular.
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Govt company with equal Central & State equity denied exemption on leasing services as govts own >20%. 18% GST applicable.
Applicant, a government company established by Central and State governments with 50% equity participation each, sought advance ruling on eligibility for exemption under Sr. No. 41 of Notification No. 12/2017-Central Tax (Rate) for leasing services provided. The Authority ruled that since the Central/State government has 20% or more ownership in the applicant entity, it is ineligible for the exemption. Hence, 18% GST is applicable on the leasing services provided.
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Error not apparent, refund customers first. "Other charges" classification not rectifiable. AAR upheld for equity & uniformity.
Rectification application dismissed as error not apparent on record. Excess GST collected from customers to be refunded to them before claiming refund from tax authorities to avoid unjust enrichment. Classifying "other charges" as consideration for construction services under HSN Code 9954 or separate services under respective heads not a rectifiable mistake. AAR ruling upheld in interest of equity and uniformity among flat buyers, irrespective of projects or timelines.
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Polymer coating for bridges is a 'works contract' under CGST Act, taxable as service. 18% GST applies for bridge construction/maintenance. Tax rate varies based on time of supply.
The works rendered by the applicant involving application of polymer protective coating for bridges, as part of construction or routine maintenance/renovation, falls under the definition of "works contract" u/s 2(119) of the CGST Act, 2017, and will be treated as supply of service under Service Code 995473. The composite supply of such works contract for construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a bridge for road transportation for use by the general public is taxable at 12% under Notification 11/2017-Central Tax (Rate), as amended. The status or category of the recipient is immaterial for determining the tax rate. The applicable tax rate may vary based on the time of supply, being 18% (9% CGST and 9% SGST) from 01.07.2017 to 21.08.2017, 12% (6% CGST and 6% SGST) from 22.08.2017 to 17.07.2022, and 18% (9% CGST and 9% SGST) from 18.07.2022 onwards. The eligibility for exemption under Notification 12/2017-Central Tax (Rate) is deemed irrelevant based on the ruling.
Income Tax
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Registration for tax deduction on donations for charitable activities - technicalities shouldn't override charitable purpose.
Registration u/s 80G(5)(vi) - charitable activities and utilization of funds - deduction from total income on donations to be made available to donors based on such registration - infirmity in submission of income-tax return and non-submission of Form-10B - donations utilized for construction of Public Library. Held that there was no specific finding that donations/funds received were utilized for profit, personal gains, or other purposes. Use of donations/funds by renowned Society/Trust already working for charitable purposes should not be discarded from seeking exemption merely on technicalities like non-production of receipts/entries. No specific finding that the Society failed to meet its aims and objects. Registration/exemption u/s 80G granted from time to time, except for the period in question. Society continuously enjoyed registration u/s 12AA and comes within the definition of charitable Society/Trust/Establishment under the Income-tax Act, 1961. Construction of Public Library would form part of charitable function. Orders of CIT quashed/set aside and directed to reconsider application and grant renewal of registration u/s 80G(5)(vi).
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Reopening disallowed: AO can't reopen on same issue after regular assessment, else it's change of opinion.
Reopening of assessment u/s 147 was challenged. The Assessing Officer (AO) had disallowed 20% of total sundry creditors in the regular assessment u/s 143(3). The AO sought to reopen assessment on the ground that the remaining 80% required verification. The High Court held that since the issue of sundry creditors was considered during the regular assessment, the AO cannot reopen assessment on the same issue as it would amount to a change of opinion. Further, the matter of 20% disallowance is pending before the CIT(Appeals), and the AO cannot reopen assessment on the remaining 80% due to the principle of merger. Mere audit objection cannot be the basis for reopening assessment. The petition was allowed, quashing the reopening notice u/s 148.
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Faceless assessment scheme: JAO's reassessment notice invalid if jurisdictional transfer not per facts. Circulars can't override laws. Authorities can't bypass provisions.
Faceless assessment scheme - jurisdictional issue regarding Jurisdictional Assessing Officer (JAO) issuing notice u/s 148 for reassessment. Principal authority's power to transfer case to JAO available but to be exercised considering specific facts and circumstances, not by general order. Circulars cannot override statutory provisions, especially those with financial implications which must be strictly followed. Authorities cannot usurp legal provisions for convenience causing hardship to assessees. Notices issued by JAO u/s 148 and subsequent proceedings without conducting faceless assessment u/s 144B contrary to law, hence notices set aside for want of jurisdiction.
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Assessee rightly offered 50% rental income from jointly-owned Singapore property. Revised return accepted. No willful concealment. Penalty deleted.
Rental income determination - assessee jointly owns 50% house property in Singapore with wife - offered 100% rental income for AY 2014-15 erroneously, rectified in revised return offering 50% - lower authorities accepted revised return - no specific grievance raised by assessee. Additional ground for 50% rental income assessability not pressed. Penalty u/s 271(1)(c) deleted - no willful concealment as revised return filed rectifying errors, income accepted by revenue - penalty levy not justified based on Supreme Court ruling.
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Deferred consideration contingent on revenue targets, accrual upon enforceable right. Cost of shares remanded. MFN clause for lower dividend tax rate remanded.
Deferred (contingent) consideration not accrued during relevant previous year as right to receive it was contingent upon achievement of revenue targets. Charging and computation provisions for capital gains to be read together. Accrual stage reached only when legally enforceable right to receive arises. Cost of acquisition of shares remanded for verification. Admission of additional ground regarding application of Most Favoured Nation clause for lower dividend tax rate as per India-Slovenia DTAA, remanded to AO for adjudication.
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Notice u/s 148 valid sans DIN if assessee participates. Cash deposits treated as income when unsubstantiated source contradicts documents.
Validity of notice issued u/s 148 in absence of Document Identification Number (DIN) was rejected. The Court observed interim stay by Supreme Court on Delhi High Court's order favouring assessee on DIN issue. Assessee's contention of invalidity of notice u/s 148 without DIN was rejected, relying on Section 292BB deeming notice as served when assessee participates in proceedings. Assessee's explanation of cash deposits from sale of agricultural land was rejected as unregistered agreement contradicted registered sale deed. Addition of cash deposits as income was upheld. Penalty u/s 271(1)(c) for concealment of income was upheld as assessee failed to substantiate source of cash deposits.
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Addition u/s 68 requires corroborative evidence, not mere statements. Onus on Dept to collect cogent proof. Tax actual gains, not assumptions.
Addition u/s 68 cannot be made solely based on sworn statement recorded u/s 132(4) without corroborative materials. Onus lies on the Department to collect cogent evidence to corroborate notings on loose sheets. Additions cannot be made based on assumptions, suspicions, or irrelevant inadmissible material. Capital gains should be taxed on actual gains, not fictional income. Unless evidence shows more was received than stated, no higher price can be the basis for addition. Issue remitted to Assessing Officer to re-examine if ingredients of section 68 are present based on corroborative seized material, not statements u/s 132(4) or 131. For section 69B and 69C additions in assessment years 2017-18 and 2018-19, additions based on unsubstantiated seized material and statements u/s 132(4) cannot be sustained. Accordingly, additions deleted.
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Indexed cost disallowed based on DVO report. Assessee's valuer Rs. 89,800/sq. yard, DVO Rs. 72,000/sq. meter. No mistake in assessee's valuation.
Indexed cost of acquisition disallowed based on DVO report u/s 142A. Assessee's valuer determined cost at Rs. 89,800 per sq. yard, DVO at Rs. 72,000 per sq. meter. Properties not exactly located in Gulmohar Colony. Realistic estimation based on land area, road width, land cost, FMV of structure, land rate per sq. meter. Assessee's property 418.06 sq. meters, 100 ft. main road, back service lane. Baseline property 337.11 sq. meters, 45 ft. internal road, no service lane. Assessee's valuation closer to sale date. No mistake in assessee's valuation. No addition for land cost warranted. Brokerage, documentation, litigation, mutation/conversion, probate expenses allowed as compulsory for acquisition and sale. Appeal allowed.
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Interest, depreciation claims wrongly disallowed. SBI interest paid. Audited reports furnished. AO verification lapse. Brought forward losses allowable.
Disallowance of interest and financial expenses was not justified as the appellant paid interest and financial expenses to State Bank of India, Overseas Branch, Parliament Street, New Delhi, which was evident from the bank statement furnished. The disallowance of depreciation claimed was incorrect as depreciation is an allowance, not an expense, and the audited balance sheet and tax audit report revealed the claim of depreciation certified by the auditor. The AO should have verified the claim from the previous year's records. Depreciation allowed in earlier years on fixed assets should be allowed in the current year, except for additions during the year due to lack of details. The non-allowability of credit for brought forward losses/unabsorbed depreciation was incorrect as the assessee had shown brought forward losses/depreciation in returns filed from year to year, which should be allowed as per the Income Tax Act while calculating tax demand. The appeal of the assessee was allowed.
Customs
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Goods allowed for re-export: No redemption fine. Penalty reduced to Rs. 1L. HCL Hewlett Packard precedent cited.
In a case involving the imposition of a redemption fine and penalty, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that when goods are allowed for re-export, the adjudicating authorities do not have the power to impose any redemption fine, citing the precedent of HCL Hewlett Packard Ltd. versus Collector of Customs, Delhi. Consequently, the redemption fine imposed on the appellant was set aside. Regarding the penalty, the Tribunal found it to be excessive and reduced it to Rs. 1,00,000/-. The appeal was disposed of accordingly.
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Licensed money exchanger's penalties for alleged illegal currency export/gold import set aside due to lack of evidence. Exchanging currency sans invoice violated license, not law.
Appellate Tribunal set aside penalties imposed on licensed money exchanger for alleged illegal export of currency and import of gold. Observed no evidence of illegal exports/imports or violation of Customs Act. Held exchanging currency without invoice, though violating license conditions, cannot be termed illegal export/import. Penalties wrongly imposed under Customs Act Sections 114, 114AA, 117 and FEMA Act Section 13 without mentioning reasons. Appeal allowed.
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Gold bars wrongly seized despite proper docs. Lack of reasonable belief for smuggling at seizure time. Mere presumptions insufficient.
Customs Officers seized gold bars believing they were liable for confiscation under reasonable belief of smuggling. However, the gold was covered under proper documents, so there was no reasonable belief of smuggling on seizure date. Section 123 presumption was not invokable as reasonableness must be judged by circumstances at seizure time. Department failed to conclusively prove gold was smuggled, foreign origin, and re-melted with false markings. When Section 123 is not invokable and appellants disclosed legitimate purchase source, Department must prove smuggling and liability. Mere presumptions are insufficient. Confiscation and penalty on appellants not legally tenable. Commissioner (Appeals) order upholding absolute confiscation set aside by Appellate Tribunal. Appeal allowed.
Indian Laws
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Banks must follow RBI's restructuring framework for MSMEs without application. MSMEs to produce documents to avail benefits.
Notification dated 29.05.2015 issued by Central Government under MSMED Act mandates Banks/NBFCs to follow restructuring process for MSMEs without application. RBI revised Framework on 17.03.2016 for compatibility with regulatory guidelines. Banking Regulation Act empowers RBI to frame policy and give directions to banks regarding advances, which have statutory force. Banks, though secured creditors under SARFAESI Act, are bound to follow Framework before classifying MSME loan as NPA. MSMEs must also vigilantly follow process and produce documents to avail Framework benefits. High Court erred in holding Banks not obliged to adopt restructuring process on their own and Framework not mandatory. Impugned order set aside, appeal allowed.
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Arbitration allowed. Court's role limited. Denial of claim triggers dispute. Limitation period upheld. Negotiations don't extend limitation.
Arbitration application allowed u/s 11(6) of Arbitration and Conciliation Act, 1996. Court's role limited to determining existence of arbitration agreement and not touching merits. Mere failure to pay may not give rise to cause of action, but denial of claim gives rise to dispute. Applicant raised dispute within limitation period after settlement of final bill. Whether claim barred by limitation to be decided by arbitrator u/s 20. Negotiations don't postpone limitation period u/s 43 read with Limitation Act, 1963.
IBC
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Petition u/s 9 rightly rejected due to pre-existing dispute. Plausible forgery allegations & contractual breach claims led to dispute.
The Adjudicating Authority rightly rejected the petition filed u/s 9 of the Code due to a pre-existing dispute between the parties. The Corporate Debtor raised a plausible contention about forgery allegations and a pre-existing dispute, which is not a feeble legal argument. The Appellant did not complete the project as per the contractual terms, and there were claims and counterclaims leading to a dispute. The issue of limitation was also raised, as the statutory demand notice was issued beyond the prescribed period from the date of the last invoice. The Impugned Order dismissing the petition u/s 9 was upheld, and the Appeal was dismissed, as there existed a pre-existing dispute between the parties, which is not a moonshine.
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Tribunal rules allow registrar to grant time to cure defects. Appeal refiling date after curing defects can't be treated as fresh filing date for limitation.
The Appellate Tribunal Rules 2016 empower the Registrar to decline registration of an appeal when defects are not cured, and to grant time for curing defects. If defects are cured and the appeal is registered, the date of refiling after curing defects cannot be treated as the fresh filing date for computing limitation. In this case, the appeal was e-filed within 30 days from the impugned order, so it cannot be barred by time limitation. Non-compliance with the rule requiring a certified copy of the order does not warrant rejection, as the court has power to extend time or waive compliance. The delay of 86 days in refiling the appeal after curing defects was condoned, and this order does not warrant interference. The appeal is dismissed.
PMLA
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Appeals to High Court allowed within 60 days of order on questions of law/fact. 'High Court' defined as per aggrieved party's residence/business location.
The statute outlines that appeals can be filed to the High Court within sixty days from the date the decision or order is communicated to the aggrieved party, addressing any question of law or fact arising out of such order. 'High Court' has been defined to be the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain. The Petitioner is based in Mumbai, conducting business and presumably working for gain there. Consequently, based on the explicit language of Section 42, the High Court of Bombay would ordinarily have jurisdiction to hear appeal against decision passed by the Appellate Tribunal. The Petitioner cannot override the statutory mechanism by relying on the geographical location of the Appellate Authority within this Court's jurisdiction. There is no basis for the Court to conclude that the alternate remedy is not equally efficient and adequate. The Court finds that the said remedy is both appropriate and sufficient for addressing the grievances presented by the Petitioner. There is no evidence to suggest that the remedy would be ineffective or lead to an injustice that justifies bypassing them. The Petitioner is free to pursue the available statutory remedies, which are deemed adequate for resolving the legal challenges at hand. Petition dismissed.
Service Tax
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Writ maintainable. University's educational services non-taxable. Non-edu income like rent taxable unless exempt. Affiliation fees, penalties not taxable. Exemption notifications valid.
Writ petition maintainable. Respondent-University qualifies as 'educational institution'. Income from specified educational services not taxable due to Negative List. Income from non-educational activities like building rent taxable unless exempt under notifications. Affiliation fees, penalties, fines not 'activity for consideration', hence not taxable. Exemption notifications applicable, not contrary to parent statute. Difference between Negative List and exemption notifications explained. University provides auxiliary educational services, eligible for exemption under relevant notifications.
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Reimbursement cost from landowner for flat construction under JDA not liable to service tax. Follows Mormugao Port Trust case.
Service tax demand with interest and penalty on reimbursement cost received from landowner for constructing flats under Joint Development Agreement set aside. Reimbursement between joint venture partners not liable to service tax as held in Mormugao Port Trust case. Extended period of limitation not invokable when service tax held not payable and department had full knowledge of facts. Appellate Tribunal allows appeal and sets aside impugned order.
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Service tax not leviable on logistics/handling charges for car sales as it's part of sale value, pre-sale activities exempt.
Service tax not leviable on logistics/handling charges collected by appellant for customers while selling cars, as such charges form part of sale value of cars covered under exclusion from service definition viz. transfer of title in goods; pre-sale activities not taxable as per CBEC circular; charges incurred for all cars sold, bifurcation in accounts does not constitute service; appeal allowed, impugned order set aside.
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Service tax demand for Rs.41.43 crore dropped; tax leviable on payments received, not accrual basis. Dept failed to negate CA certificate.
Service tax demand amounting to Rs. 18,95,70,056/- for 2007-08 to 2011-12 and Rs. 22,47,16,252/- for 2012-13 was dropped by adjudicating authority on account of short payment of service tax on Works Contract Service. Relying on CESTAT decisions, it held that service tax was leviable only on payments received, not on accrual basis. Appellant submitted CA certificate, shifting onus on department to negate it. Department failed to provide contrary evidence. Estimated inflated demand based on previous year's turnover was rightly rejected. No infirmity found in impugned order, hence appeal dismissed.
Central Excise
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Duty rebate eligibility on overseas packing costs disputed. Rebate on "duty paid", not "duty payable". Transaction value includes buyer's expenditure.
Recovery of rebate of duty - eligibility to claim rebate on portion pertaining to special packing done overseas - excess payment of duty on additional protective packing to avail wrongfully claimed rebate - Rule 18 of Central Excise Rules, 2002 - time limitation - penalties. Rebate sanctioned on "duty paid" not "duty payable". No distinction in Section 4 to exclude expenditure incurred by non-manufacturer/exporter from assessable value. Transaction value includes price paid/payable by buyer regardless of who bears expenditure. Demand u/s 11A unsustainable as rebate order unchallenged. Time limitation - Revenue failed to prove omission/commission by assessee to evade duty payment. Department had opportunity to verify rebate claims but failed to do so, extended period invocation impermissible. Penalties on appellants, CFO, and DGM not maintainable. Impugned order unsustainable on merits and limitation - Appeal allowed.
VAT
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Strict interpretation of tax statutes. "Purchase price" excludes purchases sans VAT credit. Taxable turnover excludes VAT paid.
The Supreme Court interpreted the definition of "purchase price" u/s 2(18) of the Gujarat Value Added Tax Act, 2003 (GVAT Act). It held that purchases on which value added tax is neither claimed nor granted are required to be excluded for computing "taxable turnover of purchases" u/s 11(3)(b) of the Act. The Court emphasized the strict interpretation of tax statutes, adhering to the natural construction of words used in the provisions. The definition of "purchase price" is enumerative and exhaustive, limited to the categories enumerated, excluding components not covered. Consequently, the taxable turnover of purchases must be calculated after deducting purchases on which no tax credit was claimed or granted, and the value added tax component already paid. The Tribunal's order, upheld by the High Court, correctly excluded such components from the respondent dealer's turnover for computing tax liability u/s 11(3)(b) of the GVAT Act.
Case Laws:
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GST
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2024 (8) TMI 250
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - reversal of ITC - HELD THAT:- The petitioner has placed on record the GSTR 3B returns for September and March 2022-23. On examining these two returns, it appears prima facie that the entire Input Tax Credit availed of in September was reversed in March 2022-23. In the affidavit, the petitioner has asserted that a sum of Rs. 6,57,647/- was appropriated from his bank account on 05.04.2024. This amount matches the total demand, including interest and penalty. As such, revenue interest is fully secured at this juncture. These facts and circumstances justify a remand. The impugned order dated 26.12.2023 is set aside and the matter is remanded to the respondent for re-consideration. The petitioner is permitted to submit a reply to the show cause notice within a period of fifteen days from the date of receipt of a copy of this order - petition disposed off by way of remand.
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2024 (8) TMI 249
Maintainability of writ petition - availability of statutory remedy of filing an appeal - Refund of ITC - HELD THAT:- Even though, a Special Appeal is pending before this Court in a case relating to the writ petition, but the cause of action in the said Special Appeal is different. The writ petition is disposed of with the direction to the petitioner to approach the appellate authority against the orders impugned. It is directed that the appellate authority shall consider the appeal of the petitioner on its merits as the petitioner has spent valuable time in pursuing the writ petition filed mistakenly before this Court.
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2024 (8) TMI 248
Issuance of show cause notice electronically under Rule 142 (1) (a) of the CGST/HGST Rules, 2017 - HELD THAT:- The provisions of law cannot be allowed to be twisted for the convenience of persons, who have been found to be prima facie utilizing the fraudulent ITCs. The filing of present writ petition is a gross abuse to the process of law - Petition dismissed.
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2024 (8) TMI 247
Levy of penalty without taking into consideration the amounts remitted by the petitioner earlier - ineligible Input Tax Credit (ITC) was reversed - HELD THAT:- It is evident that the petitioner had remitted a sum of Rs. 59,05,950/- towards ineligible ITC in respect of IGST and a further sum of Rs. 44,62,969/- towards ineligible ITC in respect of CGST. Such remittances were made in 2017 and 2018, which is prior to the issuance of the show cause notice. Learned counsel for the petitioner contends that 10% of such amounts should have been imposed as a penalty in those circumstances and that such imposition contravenes sub-section (9) of Section 73 and the newly introducing Section 128A of applicable GST enactments. These facts and circumstances justify reconsideration only in so far as imposition of penalty is concerned. The impugned order dated 22.11.2022 is set aside only in so far as the imposition of penalty is concerned. Consequently, the matter is remanded to the respondent for the limited purpose indicated above and after providing a reasonable opportunity to the petitioner, including a personal hearing, a fresh order shall be issued in respect of penalty within a period of three months from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (8) TMI 246
Delay in availing the Input Tax Credit - Challenge to order in Form GST DRC-07 summarizing the demand - HELD THAT:- The demand on account of the alleged delay in availing the Input Tax Credit purportedly comes to Rs. 23,35,892/- out of Rs. 57,12,114/-. If that being so, and if the submission of the petitioner is accepted, the aforesaid Input Tax Credit of Rs. 23,35,892/- is prima facie covered by the proposals in Clause 114 146 of the Finance (No.2) Bill, 2024 (Bill No.55 of 2024). It would require a detailed consideration. The impugned order to that extent is set aside and the case is remitted back to the third respondent to pass fresh order duly considering the proposals in the recommendation of the GST Council in its 53rd Meeting held on 22.06.2024 and the proposals in Clause 114 146 of the Finance (No.2) Bill, 2024 (Bill No.55 of 2024). As far as the balance amount of Rs. 33,76,222/- out of the confirmed demand of Rs. 57,12,114/- is concerned, a liberty is given to the petitioner to file a statutory appeal, within a period of thirty (30) days from today. Petition disposed off.
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2024 (8) TMI 245
Claim of excess Input Tax Credit - reply to the impugned SCN not considered - violation of principles of natural justice - HELD THAT:- It is apparent that the adjudicating authority has not considered the reply to the impugned SCN submitted by the petitioner and has confirmed the demand as proposed, by the impugned order. The impugned order does not indicate any reason as to why the reply of petitioner that it had paid the subject tax with interest and had not availed ITC was rejected - the impugned order is not informed by reason. The matter remanded to the adjudicating authority to consider the petitioner s response to the impugned SCN and decide afresh after affording an opportunity of hearing to the petitioner - petition disposed off by way of remand.
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2024 (8) TMI 244
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax demand on merits - SCN and other communications were merely uploaded on the GST portal and not communicated to the petitioner through any other mode - mismatch between the petitioner's GSTR 3B and 1 returns - HELD THAT:- On examining the impugned order, it is clear that the tax proposal was confirmed because the tax payer neither paid the amounts demanded nor filed any objections. By taking into account the assertion that such non participation was on account of not being aware of proceedings since communications were uploaded on the GST portal, the interest of justice warrants reconsideration by putting the petitioner on terms. The impugned order dated 27.11.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period. Petition disposed off by way of remand.
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2024 (8) TMI 243
Appeal dismissed on the ground of delay - petitioners did not make payment of the required pre deposit for maintaining an appeal - HELD THAT:- Admittedly, in this case a determination has been made by the proper officer under Section 73 of the said Act. The petitioners claim to be aggrieved by the same. Initially, the petitioner no.1 had preferred an appeal by depositing 1 per cent of the amount of tax in dispute. Admittedly, such appeal was filed beyond the time prescribed for preferring the appeal and the same was also not accompanied with the proper pre deposit for maintaining the appeal. The appeal was defective and was accordingly rejected without entering into the merits. Admittedly, therefore, the appeal filed by the petitioner no.1 on this occasion as well was out of time - there is no lack of bona fide on the part of the petitioners in preferring the appeal. The appeal filed on 6th October, 2023, which was rejected on 31st January, 2024, apart from being belatedly filed was defective as the amount required for pre deposit was not made. Following the same within five days, the subsequent appeal along with the required deposit was filed on 5th February, 2024. The appeal filed on 6th October, 2024 was a defective appeal. There has been no decision on merit. The petitioners do not stand to gain by filing a belated appeal. Since, the petitioners had already paid approximately 11 per cent of the amount of tax in dispute, i.e., more than the amount required for maintaining an appeal under Section 107(6) of the said Act, the matter is required to be remanded back to the appellate authority - Petition disposed off by way of remand.
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2024 (8) TMI 242
Challenge to SCN issued under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act)/ the Delhi Goods and Services Tax Act, 2017 (DGST Act) - unreasoned order - violation of principles of natural justice - HELD THAT:- It is apparent from the plain reading of the impugned order that the Adjudicating Authority has not considered any of the contentions advanced by the petitioner - Plainly, the impugned order is an unreasoned order and therefore, cannot be sustained. It is considered apposite to set aside the impugned order and the matter remanded to the Adjudicating Authority to consider afresh after affording an opportunity to the petitioner of being heard - petition disposed off by way of remand.
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2024 (8) TMI 241
Dismissal of petitioner s appeal under Section 107 of the CGST Act - refund of the accumulated ITC - zero-rated supply under Section 16 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- In the present case, the Proper Officer has not issued any deficiency memo and thus, it must be assumed that all documents necessary for processing the refund claim, as required under Rule 89 (2) of the CGST Rules, were filed along with the refund application. In the aforesaid view, the proper officer s demand to provide BRCs, bank statements and ledger accounts of the suppliers for further evaluation was not sensu stricto in conformity with Rule 92 (3) of the CGST Rules inasmuch as there is no ground for the proper officer to be satisfied that the petitioner s application for refund was required to be rejected on those grounds. Insofar as failure to furnish BRCs before the proper officer is concerned, it is relevant to note that the petitioner s claim for refund was on account of export of goods. Section 16 (1) of the IGST Act provides that the expression zero rated supplies includes export of goods or services or both. Section 16 (3) of the IGST Act provides that a registered person who makes zero rated supplies shall be eligible to claim refund of unutilized ITC on supply of goods or services or both without payment of integrated tax under a bond or a Letter of Undertaking, in accordance with the provisions of Section 54 of the CGST Act. Thus, in terms of Section 16 (3) of the IGST Act, the petitioner is entitled to refund of unutilized ITC on export of goods. The petitioner did furnish the BRCs evidencing the realization of sale proceeds of export of goods. This is noted by the appellate authority in the impugned order. Notwithstanding the same, the appellate authority did not accept the BRCs by referring to Rule 96B of the CGST Rules. Rule 96B(1) of the CGST Rules provides that where refund of unutilized ITC on account of export of goods has been paid to an applicant but the sale proceeds have not been realized in full within such period as provided under FEMA including any extension thereof, the persons to whom refund is made are required to deposit the same along with applicable interest within a period of thirty days of the stipulated period within which the sale proceeds were required to be realized. Since in the present case, the petitioner had produced the BRCs evidencing realization of sale proceeds as also noted in the impugned order the petitioner s application for refund could not be rejected for the reason that BRCs evidencing receipt of sale proceeds, were not produced within the period of nine months of export of goods and that was fatal to the petitioner s claim for refund of unutilized accumulated ITC in respect of zero-rated supply. Furnishing of bank statements and ledger accounts of suppliers - HELD THAT:- The petitioner provided the bank statements and had also provided the details of the suppliers as is evident from the petitioner s response in FORM GST RFD-09 furnished on 21.10.2022. However, the adjudicating authority found that the ledger accounts provided by the petitioner were incomplete and hence, the payments against the inward supplies could not be verified with the bank statements. It thus, rejected the petitioner s application for refund. The appellate authority upheld the said order. However, the reason set out in the impugned order are somewhat different from the reason as set out in the impugned refund rejection order. The adjudicating authority had rejected the petitioner s claim as it was not satisfied that the petitioner had made payment for the inward supplies. In this regard, the learned counsel for the petitioner submits that the petitioner had, in fact, provided details of its bank accounts as well as the ledger accounts of the suppliers maintained in its books of account - The adjudicating authority was not satisfied that inward supplies were paid for by the petitioner. As noted above, the petitioner claims that it had paid for inward supplies in respect of which it had claimed refund of ITC. It is considered apposite to remand the matter to the adjudicating authority for a decision afresh on the limited question whether the petitioner had made payment to the suppliers for inward supplies in respect of which it claims refund of accumulated ITC - petition disposed off by way of remand.
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2024 (8) TMI 240
Input Tax Credit - Non-production of any documentary evidence, in the form of a certificate from the supplier - Difference between the Input Tax Credit availed in GSTR 3B and auto populated Input Tax Credit in GSTR 2A - HELD THAT:- It is noticed that the Electronic Credit Ledger of the petitioner for the period in dispute between 01.05.2018 to 30.04.2019 also indicates that there was only balance after adjustment. The petitioner ought to have given a clear explanation - It is noticed that the table to the reply dated 26.02.2024, which has been extracted above gives an exaggerate figure. The Court cannot decide the correctness of the same. Prima facie it appears to be an credit tax position explained by the petitioner is incorrect as it is imposible to avail IGST amount of Rs. 37,22,528/-, each under CGST credit and SGST credit. Be that as it may, the Court is inclined to give temporary relief to the petitioner by directing the respondent to keep the recovery proceedings in abeyance for a period of three months from today. The petitioner may at its discretion file a revision petition under Section 161 of the respective GST enactments within a period of 30 days from today. Petition disposed off.
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2024 (8) TMI 239
Challenge to order - two parallel proceedings were initiated in respect of the same assessment period - petitioner asserts that two parallel proceedings were initiated in respect of the same assessment period pursuant to scrutiny of returns - mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal relating to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A was confirmed solely on the ground that the tax payer did not reply to the show cause notice. The admitted position is that a sum of Rs. 3,17,300/- was appropriated from the petitioner's bank account. This amount represents more than 10% of the disputed tax demand in respect of assessments forming the subject of this writ petition and W.P.No.18428 of 2024. In these circumstances, reconsideration is necessary. The impugned order dated 26.12.2023 is set aside and the matter is remanded for reconsideration - Petition disposed off by way of remand.
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2024 (8) TMI 238
Interpretation of obligations under a concession awarded on Hybrid Annuity Model (HAM) and EPC contracts - Defects pertaining to the value of supplies made by the EPC contractor in comparison to the outward supply values indicated by the petitioner - HELD THAT:- Circular No.221/2024 was placed on record. Such circular was issued in exercise of powers conferred under Section 158(1) of the Central Goods and Services Tax Act, 2017 (the CGST Act). The Circular is clarificatory. In the Circular, the CBIC noticed that a HAM contract is a single contract for construction and operation and maintenance. The Circular also draws reference to sub-section (5) of Section 31 of the CGST Act which deals with continuous supply of service. On closely examining the Circular, especially in view of such circular being labelled and characterized as clarificatory, it could have a bearing on the adjudication of this dispute. Consequently, the matters requires re-consideration. The impugned order dated 28.02.2024 is set aside and the matter is remanded for re-consideration. The third respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order by taking into account Circular No.221/2024. Petition disposed off by way of remand.
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2024 (8) TMI 237
Challenge to correctness of the order at Annexure-A passed under Section 73 (1) of the KGST/CGST Act, 2017 - HELD THAT:- In light of the assertion that the petitioner was not keeping well and had also returned to his native place after winding up his business and accordingly he was not in a position to diligently follow up is required to be taken note of. However, in light of the lapse, the petitioner ought to be saddled with costs. In light of conclusion arrived at by the Officer, it would be appropriate that the petitioner be availed of another opportunity to produce the documents which may be taken note of and appropriate orders could be passed. The matter is remitted for fresh consideration. Petitioner to pay cost of Rs.10,000/- to the respondents. Petitioner to appear before the first respondent on 05.08.2024 - Petition disposed off by way of remand.
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2024 (8) TMI 236
Levy of GST on the royalty paid to the Government for mining - HELD THAT:- This Court had disposed of a batch of Writ Petitions in the light of the decision of a Division Bench of this Court dated 08.01.2024 in the case of TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT] , in view of the pendency of the issue before the Hon'ble Supreme Court. This Court has disposed one of such Writ Petition in the case of SRI A.D. VEE RAJA MINES MINERALS, REPRESENTED BY ITS PROPRIETOR K.J. AJAY THULASIDHARAN VERSUS THE ASSISTANT COMMISSIONER (ST) (FAC) , TENKASI. [ 2024 (8) TMI 192 - MADRAS HIGH COURT] . Petition disposed off.
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2024 (8) TMI 235
Challenge to assessment order - restraining the Ford India Private Limited from making any payment - HELD THAT:- This Court is inclined to grant partial relief to the petitioner by setting aside the impugned order considering the fact that a sum of Rs1,84,947/- has been recovered from the petitioner s account maintained with HDFC Bank, 150/2599, South Main Street, Kailaash Complex, Opp to Thangavel Chettiar, Kalyana Mandapam, Thanjavur 613 009 towards tax liability of Rs. 6,58,181/- (Rs. 2,97,382/- towards SGST, Rs. 2,97,382/- towards CGST and Rs. 63,417/- towards IGST). The impugned orders are quashed and the cases are remitted back to the respective respondent to pass a fresh order on merits and in accordance - Petition disposed off by way of remand.
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2024 (8) TMI 234
Taxability under GST - penalties, late fees/penal interest, fine of the nature, levied and collected by RBI, for contravention or violation of provisions of Law - penalty of the nature for non-performance or under-performance as per contractual agreement by RBI with third party vendors. Penalties, late fees/penal interest, fine of the nature, levied and collected by RBI, for contravention or violation of provisions of Law - HELD THAT:- Penalty, late fees, penal interest, fine etc. levied and collected by RBI for contravention or violations of various laws administered by RBI are for the purpose of maintaining discipline and deterrence in the regulatee banks, non-banking financial institutes other institutes. Therefore, squarely are covered by explanation given para 7.4 of the aforesaid circular and as explained in the FAQ referred above as answer to question no. 49. The principal laid down in the circular is applicable to the penalties etc. levied by RBI for contravention of provisions of law as stated in para 1.4. The circular is binding and hence are of the opinion that these activities are not in the nature of a consideration for an activity and hence, would not constitute a supply of service, service. Penalty of the nature for non-performance or under-performance as per contractual agreement by RBI with third party vendors - HELD THAT:- The penalty of the nature for non-performance or under-performance as per contractual agreement by RBI with third party vendors. It is in nature of liquidated damages and the amount is paid only to compensate for injury, loss or damage suffered by the RBI due to breach of the contract. RBI is interested in getting services within stipulated time lines and not collecting penalty. The principal laid down in the circular is applicable to these penalties in nature of liquidated damages levied by RBI on third party vendors for non-performance or under-performance as per contractual agreement - these activities are not in the nature of a consideration for an activity and hence, would not constitute a supply of service, service.
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2024 (8) TMI 233
Eligibility for exemption under Sr. No. 41 of Notification no. 12/2017-Central Tax (rate) dated 28 June 2017 - whether 18% GST Will be applicable on the leasing services provided to M/s. Abhijit Realtors and Infraventures Pvt. Ltd.? HELD THAT:- As the entity is created as Government Company established by both the Central government and State government with 50% participation in equity. Hence the applicant is covered by the term the Central Government, State Government or Union territory shall have 20 per cent, or more ownership in the entity directly . The Applicant is not eligible for exemption under Sr. No. 41 of Notification no. 12/2017-Central Tax (rate) dated 28 June 2017 - 18% GST Will be applicable on the leasing services provided to M/s. Abhijit Realtors and Infraventures Pvt. Ltd.
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2024 (8) TMI 232
Rectification of mistake - error apparent on the face of record or not - Classification of other charges received by the company from the customers of the flats - to be treated as consideration for the construction services, and will be classified under the HSN Code 9954 along with the main residential construction services or whether the same will he treated as consideration for independent services under the respective heads? - Rate of GST on such other charges . HELD THAT:- Since, the Appellant have filed this application for rectification or. 28.06.2023, i.e., within the stipulated period of 6 months from the date of the Order. i.e.. 30.03.2023, we, at the outset, proceed to decide whether the error. being pointed out by the Appellant in the impugned order, is actually apparent on the face of the record, or not. The mistake to be rectified must be one that is apparent from the record, A decision on a debatable point of law or on a disputed question of fact is not a mistake apparent from the record. The plain meaning of the word apparent is that it must be something which appears to be so ex-facie that there cannot be any argument or debate in that regard. Thus, rectification of mistake does not envisage the rectification of an alleged error of judgment or a different interpretation. Since, it is not in dispute that the Appellant have collected execs tax from their customers, therefore, the Appellate Authority deemed it completely proper and legal that the said excess GST amount be refunded back to the customers from whom such excess amount have been collected by the Appellant. Such a ruling was made by the Appellate Authority in the interest of equity and justice of such customers from whom the Appellant had collected the said excess GST amount, thereby, seek to restore uniformity and parity among the flat buyers, irrespective of the residential projects and time. in which and during which, they are buying a or hate bought the residential apartments - it is crystal clear that there is no such error which is apparent from the face of record, which would warrant rectification under section 102 of the CGST Act, 2017. The Appellant will have to first refund the excess GST amount under question to their customers before they could file the refund claim to the tax authority so as to establish that the incidence of the tax claimed as refund had not been passed to any other person, thereby, ensuring the absence of the unjust enrichment in the refund claim. In view of the foregoing, the aforesaid proposal put forth by the Appellant is not legally viable, and hence, the same is not tenable.
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2024 (8) TMI 231
Classification of goods - SAC rate - Polymer protective coating for bridges - rate of tax as applicable under Notification 11/2017-Central Tax (Rate) as amended from time to time for the period 01-07-2017 till date - eligibility for exemption from the whole or part of the tax leviable thereon under Notification 12/2017-Central Tax (Rate). Classification of goods - HELD THAT:- The works rendered by the applicant to awarders squarely falls under the definition of works contract in section 2 (119) of the CGST Act 2017 including material by way of application of polymer protection to bridges as part of construction of bridges as well as for routine maintenance/renovation of the bridges and the same will be treated as supply of service under Service Code (Tariff) 995473. Rate of tax as applicable under Notification 11/2017-Central Tax (Rate) as amended from time to time for the period 01-07-2017 till date - HELD THAT:- The applicant is providing works contract services by way of application of polymer protection to bridges as part of construction of bridges as well as for routine maintenance/renovation of the bridges and the bridges are for road transportation for use by the general public - Vide sl. no. 3 (iv)(a), the composite supply of works contract supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a bridge for road transportation for use by general public would be taxable @ 12%. Moreover, it is noted that such rate of tax is applicable in all cases where said works contract services are provided for the use of the general public. The status or class or category of the recipient of such works contract service is immaterial to decide the rate of tax. If the time of supply of the said services discussed in this ruling as determined in accordance with section 14 of the CGST Act falls between 01.07.2017 to 21.08.2017, the supply will be taxable @ 18% (CGST @ 9% and SGST @ 9%), if the supply is made between 22.08.2017 to 17.07.2022, the same will be taxable @ 12% (CGST @ 6% and SGST @ 6%) and thereafter, it will be taxable @ 18% (CGST @ 9% and SGST @ 9%) w.e.f. 18.07.2022. Eligibility for exemption from the whole or part of the tax leviable thereon under Notification 12/2017-Central Tax (Rate) - HELD THAT:- This question is irrelevant on the basis of the ruling given above.
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2024 (8) TMI 192
Levy of GST on royalty paid to the Government - HELD THAT:- It is noticed that the assessee has been permitted to file their replies. The Authorities have been asked to keep adjudication in abeyance until the Nine Judges Constitutional Bench of the Hon ble Supreme Court decides the case. These Writ Petitions are disposed of by directing the respondent to keep the recovery abeyance, pending further orders of the Hon ble Supreme Court.
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Income Tax
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2024 (8) TMI 230
Registration u/s 80G (5) (vi) - charitable activities and utilization of funds - deduction out of total income on donation to be made available to donors on the basis of such registration - infirmity in the submission of the income-tax return and Form-10B was not submitted - donations utilized for construction of Public Library. HELD THAT:- As in the case of Sonepat Hindu Education and Charitable Society [ 2005 (5) TMI 52 - PUNJAB AND HARYANA HIGH COURT] we find that there is sufficient substance in the arguments advanced by learned Senior counsel for the petitioner society. The judgement passed in Kirti Chand Tarawati Charitable Society [ 1998 (3) TMI 113 - DELHI HIGH COURT] was on the facts of said case. As it cannot be said that the law has been laid down that investment by a charitable organisation for public purposes, which are incidently for the charitable purposes, cannot be a ground to deny registration u/s 80G. Neither in the report submitted by the ACIT, Circle, Panipat, nor in the impugned order, passed by respondent No. 1 CIT, there is a categoric discussion or specific finding that the donations/funds received by the petitioner society have been utilised for any profit, personal gains or any other purposes. In the said report dated 17.03.2006, which has been primarily relied upon by respondent No. 1 CIT while passing the impugned order, only prime allegation against the petitioner society is that the proofs of the expenses made by it have not been produced or the books of accounts have not been properly maintained. This Court finds that the use of donations/funds by renowned Society/Trust already working for the charitable purposes, should not be discarded from seeking exemption merely on technicalities, such as production of the receipts/entries. Position could be said differently had there been any allegation of using the donations/funds for personal gains, profits or otherwise. Even there is no specific finding recorded by respondent No. 1 CIT that the petitioner society has failed to meet out its aims and objects. Neither, there is any denial, nor any adverse observation in regard to the exemption/renewal granted from time to time to the petitioner society under the provisions of law i.e. Section 80G (5) (vi) of the 1961 Act. As also not denied that except for the period in question, ever before, renewal under the said provision of law i.e. Section 80G was rejected. Grant of registration/exemption u/s 80G in favour of the petitioner society, right from 1974 is also an admitted position. The view point expressed by this Court is fortified with the observations made by this Court in the case of Sonepat Hindu Education and Charitable Society [ 2005 (5) TMI 52 - PUNJAB AND HARYANA HIGH COURT] the relevant portion of which has already been noticed and reproduced hereabove. As noticed that the petitioner Society continuously enjoyed registration u/s 12AA and comes within the definition of charitable Society/Trust/Establishment as defined in the Income-tax Act, 1961. Merely because there is an infirmity in the submission of the income-tax return and Form-10B was not submitted, would not result in presumption that the petitioner Society is not performing charitable functions. From the contentions, which have been placed on record and the same having not been denied by the respondents, we are satisfied that the entire donations and the amount received by the petitioner Society are solely utilized for the purpose of charitable functions. In the opinion of this Court, the construction of Public Library would also form part of charitable function and any work done with the same purpose has to be noticed for granting exemption u/s 80G of the 1961 Act. It was also submitted that certain sources of donations could not be traced, however, the same would not in any manner deprive the petitioner Society for getting exemption under Section 80G of the 1961 Act and, for such donations alone the matter can be examined separately. We also deal with the argument raised by learned counsel for the revenue that there is an alternative remedy of appeal before the ITAT against the impugned order of the CIT. We find that this writ petition was filed in the year 2006 and it would be travesty of justice if, we relegate the petitioner Society after about 18 years to avail the alternative remedy by filing an appeal before the ITAT. Orders passed by respondent No. 1 CIT is hereby quashed/set aside and direct the respondents to reconsider the application of the petitioner Society and proceed to grant renewal of registration under Section 80G (5) (vi) of the 1961 Act. Accordingly, the writ petition is allowed.
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2024 (8) TMI 229
Reopening of assessment u/s 147 - Reason to believe - AO passing the order u/s 143(3) has disallowed 20% of the total sundry creditors reflected in the balance-sheet - HELD THAT:- Considering the submissions made by both the learned advocates for the parties and on perusal of the facts emerging from the material placed on record, it is not in dispute that the issue of sundry creditors was considered by the AO during the regular course of assessment by issuance of notice followed by notice in respect of the sundry creditors appearing in the balance-sheet of the petitioner. As apparent that the very issue of sundry creditors has been considered during the course of regular assessment and therefore, the respondent-AO cannot assume the jurisdiction to reopen the assessment for the year under consideration on the very same issue as it would amount to change of opinion. From the above observation made by the respondent-AO while rejecting the objection it is clear that there is violation of principle of merger as the very issue of sundry creditors is pending before the CIT(Appeals) and the respondent-AO therefore, cannot reopen the assessment on the ground that the remaining 80% is required verification in re-assessment proceedings. AO while framing the regular assessment under section 143(3) after considering the total sundry creditors made addition of 20% thereof which is subject matter of appeal before the CIT(Appeals). Therefore, the very basis of the rejection on the objection by the respondent is fallacious and contrary to the principle of merger. Merely on the basis of the audit objection, the respondent-Assessing Officer could not have assumed the jurisdiction to issue the impugned notice u/s 148 of the Act to reopen the assessment for the year under consideration. The petition succeeds and is accordingly allowed.
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2024 (8) TMI 228
Faceless assessment scheme - Jurisdiction of the Jurisdictional Assessing Officer (JAO) to issue notice u/s 148 - admittedly notice was issued by the JAO for re-assessment - HELD THAT:- Principal Chief Commissioner or the Principal Director General, as the case may be, transfer the case to the Assessing Officer having jurisdiction over such case i.e. JAO. Thus, the power of transfer to the JAO is although available but it has to be exercised only in a particular case considering the facts and circumstances therein and not by way of general order as passed vide letter dated 19.01.2024. Circular or instructions by the Board could not have been issued to override statutory provisions or to make them otiose or obsolete. Legislative enactments having financial implications are required to be followed strictly and mandatorily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 8), the authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees Notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B have been found to be contrary to the provisions of the Act, 1961 and accordingly notices issued are set aside for want of jurisdiction.
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2024 (8) TMI 227
Validity of Assessment Order - violation of principles of natural justice - Shorter time for reply to SCN - as argued show cause notice issued directed furnishing of reply which was inadequate time and despite reply being made within short period of time made available, prejudice has been caused as the reply was made hurriedly and subsequently - HELD THAT:- The show cause notice issued on 24.04.2024 at 10.35 hours sought for a reply by 26.04.2024 by 17.00 hours. This by itself is in violation of the Standard Operating Procedure as it provides that the response time for show cause notice ought to be seven days. No doubt, in the present case, written response has been made within the time sought for by the Revenue and the first of such reply at Annexure- P-1' was made on 26.04.2024 and upon subsequent opportunity, another reply was made on 28.04.2024 at Annexure- Q-1'. However, furnishing of replies within short time can be construed to be replies filed in order to meet the timeline and in case of such replies filed within short time, contention of prejudice due to lack of sufficient time to make out a reply and lack of opportunity of personal hearing to make out clarifications, as raised by the assessee, requires acceptance. Assessee submitted that the petitioner may be permitted to have opportunity of a personal hearing - The contention of the petitioner requires acceptance as the process of consideration of replies cannot be hurried in the light of last date for completion of assessment, which in the present case, was 30.04.2024. The petitioner's reply requires sufficient consideration and if an opportunity of personal hearing is furnished, not only would the petitioner be in a position to make out clarification, but, it would afford sufficient time for the Assessing Officer to consider detailed replies and to pass the orders. Accordingly, impugned Assessment Order are set aside. The matter is relegated to the stage of providing an opportunity of personal hearing to the petitioner consequent to the replies. Authority must take note of the time available under Section 163 (6) of the Income Tax Act, so as to avoid passing of an order at the fag end, which, in the present case, has caused prejudice to the assessee. All contentions are kept open.
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2024 (8) TMI 226
Validity of reopening of assessment u/s 147 - non-consideration of the petitioner's detailed response against notice - HELD THAT:- As detailed response / reply submitted by the petitioner has not been considered or appreciated by the respondents, which is sufficient to vitiate the impugned order. Under these circumstances, non-consideration of the aforesaid reply / response of the petitioner, by passing the impugned unreasoned and non-speaking order, is violative of principles of natural justice and on this ground alone, the impugned order is liable to be set aside and the matter be remitted back to the respondents for reconsideration afresh in accordance with law.
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2024 (8) TMI 225
Reopening of assessment u/s 147 - Violation of principles of natural justice - petitioner has failed to respond to notices - HELD THAT:- Petitioner had not submitted his response / reply to the Notice issued u/s 148A(b) and had not contested the proceedings, which culminated in the impugned order passed under Section 148A(d) of the I.T.Act. Under these circumstances, by adopting a justice oriented approach and in order to provide one more opportunity to the petitioner to submit his response, documents etc., and contest the said proceedings, we deem it just and appropriate to set aside the impugned order at Annexure-A1 and subsequent notices, orders etc., at Annexures-A2 to A6 and remit the matter back to the 1st respondent for reconsideration afresh.
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2024 (8) TMI 224
Determination of rental income - assessee is owner of 50% of the house property in Singapore jointly with his wife - assessee, who is residing in Singapore, has become a resident and ordinarily resident during AY 2014-15 and AY 2015-16 and thereby offered his global income to tax in India - For AY 2014-15 the assessee has erroneously offered 100% of the rental income from the Singapore property instead of 50% but during the year under consideration the assessee has realized the error and in the original return of income offered only 50% of the rental income and filled revised return - HELD THAT:- We notice that the AO has accepted the additional income offered as per the revised return while completing the assessment under section 143(3) and the CIT(A) upheld the order of AO. In other words, the lower authorities have accepted the income as offered by the assessee in the revised return of income without making any other additions. Therefore when the assessee himself has offered the above two incomes in the revised return, we are unable to appreciate in what way the assessee is aggrieved by the orders of the lower authorities. Further on perusal of the grounds of appeal raised by the assessee we notice that no specific contention is raised on the grievance caused by the orders of the lower authorities. Accordingly we dismiss the various grounds raised by the assessee as not tenable. Assessee raised additional ground stating that only 50% of the rental income is assessable in his hands since the House Property is jointly owned by him along with his wife. The assessee also submitted additional evidences in this regard. However during the course of hearing the ld AR did not press for admission of the additional ground and the evidences submitted. Accordingly the additional ground and additional evidences are not admitted for adjudication - Appeal dismissed. Penalty levied u/s 271(1)(c) - The assessee is a Singapore citizen and is assessed to tax there. The assessee claims that assessment year in Singapore is different (calendar year) and therefore there is a time lag in getting the correct details of his Singapore income. Accordingly, to file the return of income in time, the assessee has filed the original return with the details best available at that point in time. This is substantiated by the fact that the assessee has declared excess salary income and that in the revised return rectified the same by filing the correct income from salary. From the perusal of the facts peculiar to assessee's case, in our considered view there is no willful intention on the part of the assessee to conceal the income since the assessee has filed the revised return of income rectifying all the errors in the original return of income. It is also relevant to note that the revised return of income was filed by the assessee on 30.03.2017 and the assessment under section 143(3) was completed on 08.12.2017 where the AO has assessed the income as per the income declared in the revised return by the assessee i.e. revenue has accepted the income declared in the revised return. As relying on HINDUSTAN STEEL LIMITED VERSUS STATE OF ORISSA [ 1969 (8) TMI 31 - SUPREME COURT] we are of the view that the levy of penalty under section 271(1)(c) is not justified and accordingly we direct the AO to delete the penalty levied.
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2024 (8) TMI 223
Unexplained cash deposits in bank account - unexplained money u/s 69A - HELD THAT:- Prior to aforestated cash deposit the assessee had obtained a Gold-Loan from the same bank and made equal cash withdrawal for the purpose of his daughter s marriage who recently completed her Master in Pharmacy. Postponing assessee-father s plan, the daughter wanted to continue further education/studies and by her fortunate she was able to get admission in Narsee Monjee Institute of Management Studies, Shirpur, Dist. Dhule on 16/07/2016 for MBA degree . But natural the assessee had to postpone daughter s marriage plan due to which the balance cash available with him after payment of MBA admission Fee was deposited into the same bank, since as was not required for the time-being. Though the period of cash deposits coincided with period of demonetisation, the source available with assessee in our considered view has been fully satisfactorily explained by him before both the tax authorities below. Revenue on the other hand could hardly dismantle the explanation by bringing any deprecative material on record to prove otherwise. The burden of proof that, the nature sources of amount of cash deposits made into bank account do not in any way represents income is on claimant assessee and when discharged the same fully satisfactorily then the Revenue in view of Hon ble Apex Court decision in Shashi Garg [ 2019 (7) TMI 410 - SC ORDER ] is not entitled to treat the same as unexplained income u/s 69A of the Act and saddled the assessee on mere conjecture guesswork. We set-aside the impugned order and direct the Ld. AO to delete the addition in its entirety. Assessee appeal allowed.
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2024 (8) TMI 222
Year of taxability of deferred (i.e., contingent) consideration - AO not granting corresponding credit of taxes withheld by the buyer on the said deferred (i.e., contingent) consideration and appearing to the credit of the Appellant in AY 2022-23 - consideration whose accrual as well as timing and quantum was contingent at the time of entering into the Share Purchase Agreement (in short SPA) - HELD THAT:- As per clause 2.6 (c) if the Revenue reflected in the agreed Revenue Certificate did not exceed the Target Revenue, the Purchaser shall not be obligated to pay any portion of the deferred consideration to the Sellers. If this contingency occurs, then the assessee would not receive any part of the deferred consideration. Hence, it is not merely the point of time and quantum of consideration but also the right to receive deferred consideration which was contingent. As per SPA clause 2.6(d), if during this period any one or more of the agreed Revenue Certificates reflects Revenue higher than the Target Revenue but lower than the 2019 Revenue, then, the manner of determination of the quantum of deferred consideration and its time of accrual shall be as prescribed therein. We find that as per section 45 any profits or gains arising from the transfer of a capital asset shall be chargeable to income-tax in the previous year in which the transfer took place, such capital gains has to be computed as per section 48 of the Act. It is well settled by now that, the charging provision and the computation provision has to be read together. A bare perusal of section 48 shows that such income has to be computed by deducting from the full value of consideration received or accrued as a result of the transfer of the capital asset the specified heads of expenses/cost as provided therein. Therefore, what is relevant is the full value of consideration 'received' or 'accruing' as a result of the transfer. In the present case, it is an admitted position that the deferred consideration was not received during the previous year relevant to AY 2021-22. Hence, the issue is whether such consideration could be regarded as accrued during the said year. The stage of 'accrual' is reached only when the assessee has a legally enforceable right to receive the said amount. In the present case, as explained in greater detail hereinabove, the deferred consideration was contingent on achievement of Revenue in excess of the Target Revenue/ the 2019 Revenue by HAMSPL. If the said event had not occurred, the assessee would not be entitled to any deferred consideration. AO has erred in not appreciating the deferred (contingent) consideration was contingent in nature and accrued only in the AY 2022-23. We respectfully relied on the order of Mrs.Hemal Raju Shete [ 2016 (4) TMI 1082 - BOMBAY HIGH COURT] and order of Universal Medical (P) Ltd [ 2020 (4) TMI 28 - ITAT MUMBAI] . So, the ground of the assessee succeeded. Accordingly, the appeal of the assessee in Ground no 1.1 is allowed. Adopting of the correct cost of acquisition of shares i.e. cost of Rs. 56 per share has been erroneously taken as Rs. 10 per share as there was a mistake in the computation of income with respect to the cost of acquisition of shares acquired on 05.05.2012 - AR submitted the documents against it s claim. The said is fully technical - HELD THAT:- We remand back the matter to the file of the ld. AO for considering the claim of the assessee related cost of share Rs. 56/-.Accordingly, the appeal of the assessee in Ground No. 2.1 is allowed for statistical purposes. Admission of additional ground of the assessee - Most Favoured Nation clause in the Protocol to the Double Taxation Avoidance Agreement (DTAA) between the Government of India and the Government of Netherlands - charging of dividend income to tax at the rate of 5% as per a later DTAA between India and Slovenia - AR respectfully relied on the order of NTPC Ltd [ 1996 (12) TMI 7 - SUPREME COURT] related to admission of additional ground - HELD THAT:- The assessee earned dividend amount to Rs. 209,57,89,065/- and offered tax @5% in view of Most Favoured Nation (MFN) clause in the protocol to India Netherlands Treaty (DTAA) read with India Slovenia DTAA and the decree issued by the Netherlands accepting the lower tax rate applying MFN. The revenue has imposed tax @10% on dividend income and accordingly the DRP had taken the view against the assessee. But the assessee is interested in arguing the matter further before the AO. DR had not made any strong objection against the assessee. So, we admit the additional ground of the assessee and we remand the matter back to the file of the AO for adjudication denovo.
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2024 (8) TMI 221
Bogus LTCG - addition made u/s 68 - denial of exemption claimed u/s 10(38) for the sale proceeds of listed equity shares alleged as penny stock - addition u/s 69C as unexplained commission estimated @ 5% on the sale proceeds - HELD THAT:- CIT(A) has without dealing with the facts and detailed documentary evidences placed on record by the assessee, dismissed the appeal by stating that issue is a covered matter by the decision in the case of Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] wherein as held that assessee had to establish the genuineness of rise in price of shares within a short period of time that too, when general market trend was recessive.However, we note that there are several decisions of Hon'ble Jurisdictional High Court which are in favour of the assessee. Accordingly, the same would prevail on the issue before this Tribunal. When there are conflicting decisions of various High Courts on the same issue, in the case of Vegetable Products [ 1973 (1) TMI 1 - SUPREME COURT] had held that construction that is favourable to the assessee should be adopted. Hence by following this principle, reliance placed by ld.CIT(A) on the decision of Hon'ble Calcutta High Court in Swati Bajaj (supra) does not hold its fort. Further in the present case, we find that assessee has duly established the nature and source of credit representing sale proceeds of shares of PS IT. Thus, we delete the addition made u/s 68 towards proceeds of sale of listed shares of PS IT which gave rise to Long Term Capital Gain on the said sale, claimed exempt by the assessee u/s 10(38). Accordingly, grounds taken by the assessee in this respect are allowed. Addition on estimate basis towards commission for arranging alleged artificial capital gains @ 5% is consequential to the addition made towards receipt of sale proceeds of alleged penny stock. Since we have deleted the said addition towards sale proceeds of alleged penny stock in terms of above stated observations and findings, this consequential addition of commission has no foundation to stand. Accordingly, the same is deleted. Grounds taken by the assessee in this respect are allowed.
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2024 (8) TMI 220
Validity of the notice issued u/s. 148 in absence of DIN - HELD THAT:- . We may herein observe that the issue concerning communication of assessment order without mentioning of DIN was decided by Hon ble Delhi High Court in the case of Commissioner of Income-tax Vs. Brandix Mauritius Holdings Ltd.[ 2023 (4) TMI 579 - DELHI HIGH COURT] in favour of the assessee, but Hon ble Apex Court, wherein an interim stay order has been passed [ 2024 (1) TMI 276 - SC ORDER] . Accordingly, the order of Hon ble High Court of Delhi a/w ITAT, Delhi [ 2022 (11) TMI 34 - ITAT DELHI] has been kept under status quo We are unable to comprehend, accept and to concur with the contention of the Ld. AR that the notice u/s. 148 of the Act, dated 26.02.2020 issued without mentioning of DIN shall render the same as was never issued in terms of CBDT circular, and thus, is bad in law. Accordingly, we, thus, in terms of our aforesaid observations, reject the contention of the Ld. AR. Accordingly, the reliance placed by the Ld. AR on the judgment of Hexaware Technologies Limited [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] would not carry his case any further. The impugned assessment had been framed by the A.O de-hors any valid service of notice u/s. 148 - as can be gathered from the assessment order, the assessee had in the course of assessment proceedings furnished copy of an incomplete deed to explain the source of the cash deposits in his bank account. Accordingly, as it is a case where the assessee had participated in the assessment proceedings but had failed to raise any objection as regards the service of notice u/s. 148 of the Act, therefore, he stands precluded of his right from raising such objection in the course of present appellate proceedings. Before proceeding any further, we deem it fit to cull put the provisions of Section 292BB wherein as held where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection. Thus the claim of the assessee as regards invalidity of the assessment framed by the A.O in absence of valid service of notice u/s. 148 of the Act dated 26.02.2020 being devoid and bereft of any merit cannot be accepted. Cash deposits as sourced out of the sale consideration of agricultural land that was sold by the assessee along with family members - Sale consideration mentioned in the registered sale deed ( as deposed by the assessee in his affidavit dated 25.10.2023) cannot be dislodged or substituted by that mentioned in the unregistered agreement to sell ( uncertified copy placed on our record), which is found to be nothing short of a dumb document, therefore, the aforesaid explanation of the assessee as regards the source of the cash deposits in his bank account cannot be accepted. Accordingly, as the Ld. AR had failed to substantiate the source of the cash deposits therefore, we find no infirmity in the view taken by the CIT(Appeals) who had rightly sustained the addition to the said extent. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the CIT(Appeals), uphold the same. Decided against assessee. Penalty u/s. 271(1)(c) - As the assessee had failed to substantiate his explanation as regards the source of the cash deposits in his bank account during the subject year and there is nothing on record which would prove that the same was bonafide and all the facts material to the computation of his total income were disclosed by him, therefore, lower authorities had justifiably saddled him with penalty as per Explanation 1 of Section 271(c) of the Act. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who had rightly sustained the penalty imposed by the A.O u/s. 271(1)(c) - Decided against assessee.
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2024 (8) TMI 219
Addition u/s 68 - Addition on the basis of sworn statement recorded u/s 132(4) without any corroborative materials - HELD THAT:- It is settled position of law that onus lies upon the Department to collect cogent evidence to corroborate the notings on the loose sheets. The additions cannot be made merely on the basis of notings on the loose sheet papers which are in the nature of dumb documents having no evidentiary value. The onus lies on the Department to collect the evidence to corroborate the notings on the loose sheets. In the present case, it is undisputed position that as a result of search and seizure action in the case of respondent-assessee and its group companies, no material whatsoever was seized and found indicating payment of on-money consideration at the time of purchase of the lands. We find that the conclusions reached by the AO are merely based on presumptions and assumptions without bringing corroborative material on record. It is settled position of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material. As in the case of K.P. Varghese [ 1981 (9) TMI 1 - SUPREME COURT] held that the capital gains is intended to tax the gains of assessee not what an assessee might have gained and what is not gained cannot be computed as gain and the assessee cannot fastened with the liability on a fictional income. Similarly, the Hon ble Supreme Court in the case of CIT Vs. Shivakami Co. (P.) Ltd. [ 1986 (3) TMI 2 - SUPREME COURT] held that unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis for making addition. We remit this issue to the file of ld. AO with a direction to the assessee to prove the ingredients of section 68 of the Act. If these ingredients are appearing in the balance sheet as on 31.3.2017, which is emanated from the corroborative seized material only and not based on statement recorded u/s 132(4) or 131 of the Act. Hence, we are of the opinion that it is appropriate to remit the issue to the file of ld. AO to re-examine the issue with a direction to assessee to furnish the necessary details before ld. AO. The contention of the Dr is that the assessee has not proved the identity, genuineness and creditworthiness of the parties. Admittedly, these credits are appearing in the books of accounts of the assessee for the year ended on 31.3.2018. The assessee is required to prove the credit with regard to identity, genuineness and creditworthiness of the parties to the extent of credit appearing in the balance sheet as n 31.3.2017 excluding the opening balance. Accordingly, this issue is remitted to the file of ld. AO for reconsideration on similar lines as in assessment year 2017- 18. Assessment u/s 153C - AYs 2017-18 2018-19 - addition u/s 69B of the Act towards payment made to MKH Infrastructure in cash and u/s 69C towards unexplained expenditure incurred by the assessee - HELD THAT:- AO made addition of expenditure incurred in cash which is based on the unsubstantiated seized material and another addition which is relating to the payment has been made by Mr. Basheer on behalf of assessee company. This total addition made in the assessment year 2017-18 is based on statement recorded u/s 132(4) of the Act and unsubstantiated loose slips by choosing only the cash payments and ignoring the payment received by cash by the assessee, which cannot be sustained. Accordingly, the addition made in the assessment year 2017-18 is deleted.
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2024 (8) TMI 218
Capital gain computation - Disallowance of Indexed cost of acquisition on the basis of report issued by DVO u/s 142A - determination of cost of acquisition of land as on 01.04.2001, the valuer of the assessee has determined the cost @ Rs. 89,800 per sq. yard whereas the DVO determined the value @ of 72,000/- per square meter - HELD THAT:- We find that none of the properties pertained to the exact location of the property in question i.e, Gulmohar Colony. Hence, the realistic estimation of the cost of property is resorted to, based on the land area, road width, land cost, FMV of structure, land rate per sqm (as per DVO) etc. The land area of the assessee property is 418.06 square meters whereas the land area of the base line the property at SDA was 337.11 square meters. The road width of the assessee property was 100 ft. and on the main road whereas the road width of the base line the property at SDA was 45 ft. internal road. Further, the assessee property as a back side service lane and base line the property at SDA do not have any service lane. Further, the property of the assessee was valued based on the comparable date of 2nd May, 2001 whereas base line the property at SDA date of sale was 19.10.2000. Thus, the property valued taken by the valuer of the assessee was at a closer date than that of the DVO. Hence, keeping in view, the tangible differences it can be held that the absence of any mistake pointed out in the valuation report submitted by the assessee no addition on account of cost of land is warranted in this case. Disallowance of cost of improvement and transfer expenses - We hold that the expenses of brokerage, documentation fee, litigation expenses mutation / conversion expenses and probate expenses or commonly incurred expenses in regularizing the will , transfer of the property to the assessee and for sale of the such acquired property. In the absence of any contrary evidences to prove that the expenses are bogus or not incurred, we hereby direct that no disallowance is called for on such compulsory expenses required for acquisition and sale of property. Appeal of the assessee is allowed.
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2024 (8) TMI 217
Disallowance of Interest and Financial Expenses - AR submitted that during the course of assessment proceedings copies of the ledgers, bank statement, and various details were furnished. The assessee could not produce other documents and records as asked by the AO due to the fact that factory was under the possession of the bank and other records were lost for which FIR was lodged in the police station - HELD THAT:- From the attached details, it is clear that the Appellant paid interest, financial expenses to State Bank of India, Overseas Branch, Parliament Street, New Delhi. These details are available in the bank statement of State Bank of India for F.Y. 2006-07 which was available before the revenue authorities. Since, the payment pertain to interest and other financial expenditure as can be examined from the bank statement of SBI, we hold that the disallowance made by the AO is not justified and therefore, liable to be deleted. Disallowance of depreciation claimed - Depreciation is an allowance and not an expense - HELD THAT:- Audited Balance Sheet and Tax Audit Report were furnished during the course of assessment proceedings. Tax audit report reveals claim of the depreciation as certified by the auditor. Even, the AO could have verified the claim of depreciation from the last year's records but he did not prefer do so. The depreciation which was allowed by the revenue authorities in the earlier years on the fixed assets has to be allowed in the current year. No depreciation is allowed on the additions made to the fixed assets, if any, during the year, owing to the absence of basic details. Thus, claim of depreciation of the assessee is justified. Non allowability of credit for brought forward losses/unabsorbed depreciation - HELD THAT:- It is evident from the various returns filed by the assessee that the company shown brought forward losses/depreciation from year to year. While calculating tax demand, the AO is directed to allow credit of the same as per the provisions of Income tax Act. Appeal of the assessee is allowed.
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Customs
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2024 (8) TMI 216
Seeking waiver of redemption fine and reduction of penalty imposed - whether redemption fine can be imposed in case the goods are allowed for re-export or not? - HELD THAT:- In the case of HCL HEWLETT PACKARD LTD. VERSUS COLLECTOR OF CUSTOMS, DELHI [ 1997 (1) TMI 218 - CEGAT, NEW DELHI] , this tribunal held that in case of re-export of goods, the adjudicating authorities do not have power to impose any redemption fine. As in this case the goods were allowed for re-export on payment of redemption fine, no redemption fine is imposable on the appellant. Therefore, redemption fine imposed on the appellant is set aside. Penalty - HELD THAT:- The penalty imposed on the appellant is also on higher side and hence, the same is also reduced to Rs.1,00,000/-. Appeal disposed off.
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2024 (8) TMI 215
Levy of penalty - smuggling - illegal export of currency and illegal import of gold - violation of FEMA regulations as well - HELD THAT:- It is observed that Shri Suneet Kalra and Shri Rajinder Kalra have been held to have illegally imported gold into India from Dubai without payment of duty but having full knowledge and intention of committing the alleged act. Both of them have also been held to have illegally exported foreign currency of UAE Dhirams valuing INR 244000. There is a voluntary admission of both Shri Suneet Kalra and Shri Rajinder Kalra for these acts. Both of them have also been held to have violated the provisions of Foreign Exchange Management (posession and retention of foreign currency) Regulations, 2015. There is no denial that the appellant is a licensed money exchanger i.e. he is authorized to exchange currencies pertaining to different countries into various respective denominations. Resultantly, it is clear that he was authorized to exchange. INR into UAE Dhirams though he has exchanged the money without any legal document admittedly no invoice was issued but this admission proves violation of conditions of his license or the respective regulations and the directions of RBI, if any. In no circumstance the act of the licensed money exchanger to exchange the money but without issuing an invoice cannot, from any stretch of imagination, be called as an act of illegal export or illegal import. It is further observed that appellant premises were also search and nothing incriminating which may suggests his involvement/indulgence in any kind of illegal exports or imports. In fact, the original adjudicating authority has refrained itself from ordering confiscation of money as was detained from the appellant premises at the time of search. I also observe that there is no finding discussed by the adjudicating authorities below while imposing penalty on the appellant under Section 114, Section 114 AA and Section 117 of the Customs Act, 1962. Under Section 114 penalty is to be imposed for attempts to export goods improperly - the appellant has not contravened any provision of the Customs Act nor has failed to comply therewith. Hence, the penalties under three of the sections have wrongly been imposed on appellant no. 3. The order under challenge is absolutely silent about specifically mentioning the reason for imposing penalty under each respective section. The order confirming imposition of penalty upon appellant is therefore liable to set aside. Similarly, the penalty under Section 13 of FEMA Act confined under discussion in the order under challenge. The said penalty is also liable to be set aside - Appeal allowed.
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2024 (8) TMI 214
Smuggling - gold bars of foreign origin - reasonable belief by the Customs Officers that such gold bars were liable for confiscation on the date of seizure or not - whether the Department has been able to establish conclusively that said gold bars were of foreign origin and were smuggled initially and subsequently re-melted and affixed with false markings? - presumptions available under Section 123 of CA. Whether there was a reasonable belief by Customs Officers that such gold bars were liable for confiscation on the date of seizure? - HELD THAT:- Since there were many consignments containing different types of gold and jewelleries and in view of certain un-specified intelligence/information, there could have been a reasonable belief by the Department that certain goods were of offending nature and were liable for confiscation under the Customs Act. However, what is important to note is that in order to invoke Section 123, the seizure of the gold has to be under reasonable belief that it was smuggled gold. When the gold was covered under proper documents like job work gold invoice vouchers and GST purchase invoice etc., as apparent from Panchanama, there did not exist any reasonable belief that the said golds were smuggled in nature, on the date of seizure. Therefore, merely on presumption without any tangible documents or belief, invokation of the Section 123 for the purpose of shifting the onus of burden cannot be sustained - though the goods which were seized under the reasonable belief that they were liable for confiscation under the Customs Act and CGST Act, there was no sufficient material available to the customs officials on the date of seizure to form a reasonable belief in respect of appellants gold that they were smuggled gold or were of foreign origin. Presumption under Section 123 - HELD THAT:- In the case of COLLECTOR OF CUS., MADRAS VERSUS NATHELLA SAMPATHU CHETTY [ 1961 (9) TMI 3 - SUPREME COURT] Hon ble Supreme Court, inter alia, observed in para 44 that reasonableness of the belief has to be judged by all the circumstances appearing at that moment. Therefore, even though subsequently they would have found some evidence to suggest that one of the documents might not be authentic document for coverage of the impugned gold, at the time of seizure, there was no material ground to hold such a belief. Therefore, in the given set of facts, I do not find that Section 123 was invokable. Whether Department was able to establish that said gold bars were of foreign origin and were smuggled and subsequently re-melted as held by the Original Adjudicating Authority? - HELD THAT:- Since Section 123 is not invokable in the present case, therefore, onus was on the Department to conclusively prove that the gold in question were smuggled and subsequently re-melted etc., as concluded by the Original Adjudicating Authority and upheld by the Appellate Authority. There is also force in the submissions of the appellant that they have never claimed that the golds were purchased from MMTC and in fact the Adjudicating Authority has also held that it is case of a wrong marking to mislead Customs. Therefore, the Adjudicating Authority accepts that these markings were not of foreign origin. Therefore, when the markings were not of the foreign origin and fact that gold of purity 999 can be sold in domestic market under legitimate invoices etc., the Customs needs to have proved with sufficient evidence that the gold was actually made out of re-melted gold bar initially smuggled into India. There is no evidence to that effect in the show cause notice. Thus, the conclusion drawn by the adjudication is based on presumptions and surmisings. The Department has not been able to prove conclusively that the said gold bars were of foreign origin which were subsequently smuggled and re-melted and were carrying fake markings. Since Section 123 cannot be invoked and appellants had already discharged the initial burden by disclosing the source of legitimate purchase, it was for the Department to carry out further investigation and establish that such golds were actually smuggled gold and were liable for confiscation under the Customs Act 1962. Thus, in the facts of the case, the confiscation and more so absolute confiscation of the seized gold is not legally tenable and therefore the order of the Commissioner (Appeals) upholding the absolute confiscation is required to be set aside. Since, the seized goods were not liable for absolute confiscation, the penalty is also not imposable on the appellant. The order of the Commissioner (Appeals) is set aside - Appeal allowed.
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Corporate Laws
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2024 (8) TMI 191
Oppression and mismanagement committed by the Respondents - Section 241-242 of the Companies Act, 2013 read with the other provisions of the Companies Act, 2013 - Seeking injunction against offer letters, action pursuant to the offer letters and further issuance of shares - matter regarding first Rights Issue is pending before this Tribunal for consideration - HELD THAT:- After going through the prayers, in this application and also on the facts that when the matter regarding first Rights Issue is pending before this Tribunal for consideration; the subsequent Rights Issue during the pendency of the Company Petition i.e. CP No. 18/BB/2024 comes very much in the purview of this Tribunal for necessary orders. In the present facts and circumstances of the matter, this Tribunal hereby restrains the Respondents from going ahead with the present rights issue which is in progress till the disposal of the main CP No. 18/BB/2024. The Respondents are further directed to keep the amounts collected so far since opening of the second rights issue in relation to this offer in a separate account which should not be utilised till the disposal of the main petition in CP No. 18/BB/2024. Further, status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition CP No. 18/BB/2024. The Respondents are directed to comply with the directions given, regarding the details of allotment of shares on 02.03.2024 and the details of the Escrow banks accounts by filing a compliance affidavit with a memo within a period of 10 days; duly serving the copy on the otherside - List this matter before regular bench on 04.07.2024 along with main petition i.e. CP No. 18/BB/2024 for further consideration.
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Insolvency & Bankruptcy
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2024 (8) TMI 213
Maintainability of application - petition filed under Section 9 of the Code was rejected on the contentions of the Corporate Debtor that there lies a preexisting dispute between the Parties - both sides have made allegations of Forgery against each other - forgery of termination notice. HELD THAT:- It is to be noted that both sub-contracts specified a payment schedule in Clause 7, stating that 85% of the contract value was payable at certain stages, and the remaining 15% was payable upon full commissioning of the project. The Appellant did not complete the project, finishing only 11 out of 17 gates by July 2017, when they abandoned the site. Therefore, it cannot be concluded that the Appellant's claim for the outstanding amount aligns with the contractual terms, as the project was not completed or commissioned. Since there were claims and counter claims leading into a dispute. These cannot be gone into by us under the framework of the Code. Respondent has also raised the issue of limitation and claims that petition is barred by limitation, as the statutory demand notice was issued on December 27, 2021, well beyond the prescribed period from the date of the last invoice. The issue of limitation was taken up by the Adjudicating Authority in its order dated 11.05.2022 in which it was noted that since the first default had occurred in April 2013 and the present application is filed on 23rd February 2022 and where as in terms of Article 137 of the limitation Act, the applicant is required to file an application within 3 years, when the right to apply accrues. Since the invoices had been raised from 2013 and the applicant claims that the amount was also defaulted in the year 2013. Therefore, the first date of the default was in the year 2013, when the payment of the invoices was due and not paid period. Hence the present application is barred by limitation and was dismissed. The Corporate Debtor had raised a plausible contention about a pre - existing dispute, which in the instant case is not a moonshine or feeble legal argument. Therefore, the Adjudicating Authority was not incorrect to reject the application filed under Section 9 of the Code. Thus, in the instant case there were agreed-upon tasks which remained incomplete, and dispute regarding the payment amount existed prior to issuance of Demand Notice by the Petitioner to the Respondent. Based on the detailed analysis and appraisal of the facts and contentions presented, it is evident that there exists a pre-existing dispute between the Appellant and the Respondent, which is not moonshine. The Impugned Order dated May 7, 2024, passed by the NCLT dismissing the petition filed under Section 9 of the IBC is upheld - Appeal dismissed.
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2024 (8) TMI 212
Admissibility of Section 95 application - it is submitted that earlier the Adjudicating Authority has rejected the application by order dated 01.02.2024 which order was subsequently recalled by order dated 16.02.2024 and thereafter matter was heard again and impugned order was passed - entitlement to challenge the order dated 16.02.2024 in the appeal. Entitlement to challenge the order dated 16.02.2024 by which earlier order was recalled - HELD THAT:- It was open for the Appellant to challenge the order dated 16.02.2024. The Appellant did not challenge the order of recall and participated in the hearing of the application again, in consequence of which hearing order has been delivered. The provision for filing an appeal against order of Adjudicating Autohrity is provided under Section 61 of the IBC and under Section 61(2) limitation for filing appeal is only 30 days. When appellant has not filed appeal against order dated 16.02.2024, the submission of the Appellant that he can be allowed to challenge order dated 16.02.2024 in the present appeal which is filed against order dated 14.03.2024 cannot be accepted - both the orders are separate orders and both orders need to be challenged separately in the scheme of IBC as provision under Section 61 and the submission which has been made by the Appellant cannot be accepted. Appellant s proposal for OTS has not been accepted - HELD THAT:- Admittedly, in the CIRP of the Principal Borrower, the Resolution Plan has been approved, which is pending consideration before the Adjudicating Authority as communicated by letter dated 22.02.2024 - at the time of finalization of Resolution Plan of the Personal Guarantor, the Adjudicating Authority shall consider all aspects of the matter. There are no error in the order of the Adjudicating Authority admitting Section 95 application warranting any interference in exercise of appellate jurisdiction. Appeal disposed off.
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2024 (8) TMI 211
Dismissal of the appeal due to delay of 86 days in re-filing - time limitation - HELD THAT:- The NCLAT Rules 2016 itself contemplates communication of defects and the removal of the defects in the Appeal. Rule 26, sub-rule (4) further empowers the Registrar in appropriate case, to decline to register the Appeal or filing of any documents. Thus, power is vested with the Registrar to decline to register Appeal when defects are not cured. The procedure for clearing the defects, empowers the Registrar to grant further time for clearing the defects, itself contemplate that defective Appeal filed by the Appellant is permitted to be cured and in event the defects are not cured, the Appeal can be refused to be registered. But when defects are cured and the Appeal is registered, the date of refiling of the Appeal after curing the defects, cannot be treated to be the fresh date of filing of the Appeal for computation of limitation. In the present case, the Appeal having been e-filed on 25.09.2023, i.e. within 30 days from passing of the impugned order dated 28.08.2023, the Appeal cannot be held to be barred by time and the submission advanced by Shri Sanjeev Sen, the Appeal when it was refiled after curing the defects, i.e., 16.01.2024, may be treated as date of filing, cannot be accepted. The date of refiling and date of filing are two different concepts, which are clear from statutory scheme. Thus, non-compliance of Rule 22, sub-rule (2) has not been provided, nor any consequence has been provided in the Rules in the event Appeal is filed without accompanied by a certified copy of the order. When the power has been given to Court to extend the time or waive compliance of any rule, we have no doubt that the Appeal can be filed without applying a certified copy of the orders, in the facts and situation of a particular case - When an Applicant does not apply for a certified copy of the order within the limitation prescribed, he is not entitled to seek any exclusion under Section 12 of the Limitation Act and it is the Applicant, who has to comply the limitation prescribed for filing an Appeal, but the mere fact that he has not applied for certified copy of the order, cannot be a ground for rejecting the Appeal. The Appeal e-filed by the Appellant was within the period of limitation and the Appellant has given sufficient cause for condoning the delay of 86 days in refiling of the Appeal - the order dated 25.01.2024 passed by this Tribunal, condoning the delay of 86 days in refiling of the Appeal, does not warrant any interference. Appeal dismissed.
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PMLA
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2024 (8) TMI 210
Determination of jurisdiction to entertain the present writ petition - reasons to believe - relied upon documents - whether the existence of alternative remedies, as stipulated under Section 42 of the PMLA and as argued by the Respondents, precludes this Court from exercising its discretionary powers under Article 226 of the Constitution? - HELD THAT:- The statute clearly outlines that appeals can be filed to the High Court within sixty days from the date the decision or order is communicated to the aggrieved party, addressing any question of law or fact arising out of such order. For the purpose of this Section, High Court has been defined to be the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain. The Petitioner is based in Mumbai, conducting business and presumably working for gain there. Consequently, based on the explicit language of Section 42, the High Court of Bombay would ordinarily have jurisdiction to hear appeal against decision passed by the Appellate Tribunal on 25th July, 2024. In M/s Incred Financial Services Ltd. [ 2022 (6) TMI 1360 - DELHI HIGH COURT ], the Court diverged from the precedent set in Aasma Mohammed Farooq, focusing on the specific circumstances of the cases before and overruled objection of maintainability of the petition on the ground of territorial jurisdiction. The Petitioner is assailing the order of the Appellate Tribunal. They have invoked the jurisdiction of this Court based on the presence of the Appellate Authority within its geographical bounds. This fact, while establishing a basic criterion for territorial jurisdiction, does not inherently justify overlooking the structured remedies provided under statutory law. The legal framework provided by Section 42 of the PMLA specifies that appeals against decisions of the Appellate Tribunal are to be filed at the High Court within the jurisdiction where the aggrieved party resides or conducts business. The Petitioner cannot override the statutory mechanism by relying on the geographical location of the Appellate Authority within this Court s jurisdiction. There is no basis for the Court to conclude that the alternate remedy is not equally efficient and adequate - the Court concludes that the mere location of the Appellate Authority within its territorial bounds does not provide sufficient ground to deviate from the prescribed statutory appellate route. The Petitioner can easily pursue their grievances through the statutory appellate process as stipulated in Section 42 of the PMLA, by following the hierarchal judicial process intended by law. In this instance, given the specific statutory remedies provided under the PMLA, particularly the appeal mechanism outlined in Section 42, the court finds that the said remedy is both appropriate and sufficient for addressing the grievances presented by the Petitioner. There is no evidence to suggest that the remedy would be ineffective or lead to an injustice that justifies bypassing them - considering the established legal framework and the factual circumstances of this case, the Court is not inclined to exercise its discretionary powers under Article 226 of the Constitution. The Petitioner is free to pursue the available statutory remedies, which are deemed adequate for resolving the legal challenges at hand. Petition dismissed.
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Service Tax
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2024 (8) TMI 209
Maintainability of writ petition - Levy of service tax - respondent-University being an educational institution - taxability of income from affiliation and allied functions. Respondent-University, educational institution or not - HELD THAT:- The income earned by the University on account of specified educational services is not within the tax net because of Negative List. However, the income earned by the University by any other activity like renting out buildings, etc. is within the taxability, unless the same falls in the Exemption Notifications issued by the Central Government u/s. 93 of the Act. Taxability of income from affiliation and allied functions - HELD THAT:- An activity carried out without any consideration like donations, gifts or free charity ordinarily is outside the ambit of service. The concept activity for a consideration involves an element of contractual relationship wherein the person doing the activity does so at the desire of another in exchange for a consideration. There should be something like quid pro quo. An activity done without such a relationship i.e., without the express or implied contractual reciprocity of a consideration would not be an activity for consideration even though such an activity may lead to accrual of gains to the person carrying out the activity. Thus, an award received in consideration for contribution over a life time like Nobel Prize, Jnana Peeta, etc., will not be a consideration. the concept of sovereign function being impertinent, does not factor in the discussion. The function related to affiliation cannot be treated as a bundled service under clause (3) of section 66F of the Finance Act, 1994, either. The interests/fines/penalties leviable on account of default also have a thick connect with the fees regularly leviable and therefore, they would partake the character of fees only. In view of all this, the Revenue is not justified in levying Service Tax on the income accruing to the University on account of affiliation during the academic year between 2012-13 and 2016-17. The periodicity of collection of affiliation related fees pales into insignificance. Income from non-educational activities of educational institutions and service yax liability - HELD THAT:- When an activity figures in the Negative List, the same is not liable to service tax at all. This is one scenario. The other is a case of exemption from tax by virtue of statutory notifications. Former is a case of non-applicability of charging section whereas, the latter is a case of its applicability. There lies a subtle difference between these two, and mistaking one to be other will have implications to Caesar Citizen. Not recognising this difference, is consequential. Initial taxability of services is one thing and its exemption from tax is another - the question of exemption from tax liability arises when exempted activity/entity does not figure in the Negative List. The respondent-University answers the definition of educational institution since it provides services that fall into sub-clause (ii) of clause (l) of section 66D of the Finance Act, 1994. In fact, the education catered by the University broadly fits into the definition of auxiliary educational services. He is also right in pointing out that an otherwise interpretation of this Exemption Notification would defeat the very purpose for which it has been issued. The said exemption is continued vide Notification No. 3/2013-ST dated 1.3.2013, as well - No contention is taken up by the Revenue as to why these Notifications should not be taken cognizance of for according benefit claimed by the Assessee thereunder. They are not shown to be contrary to the intent policy content of the parent statute, either. Application disposed off.
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2024 (8) TMI 208
Valuation of service - amount paid to the guards of CISF and expenses incurred towards supply of arms and ammunitions, saftery shoes expenses etc. - includable in the amount of consideration for receiving the Security/Detective Agency Services from CISF in terms of section 67 of Finance Act 1994 read with Rule 5 of Valuation Rules, 2006 - applicability of Rule 5 of Valuation Rules, 2006 - Extended period of limitation. HELD THAT:- In the present case the value of freebies supplied by the service recipient to the service provider and the amount of reimbursable expenses has been considered as the part of consideration assessable to tax since the demand in question has solely been confirmed by invoking Rule 5 of Valuation Rules. The decision of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI-LB] and that of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] is sufficient to hold that demand is liable to be set aside the said demand. The above discussion also clarifies that the amount do not classify to be called as consideration. The case is no more res integra. It has been consistently held that value of amenities provide to CISF by the service recipient is not required to be included in the value of services. For the period prior to 30 June 2012, the services provided by CISF were covered under forward carge. With effect from 01 July, 2012, the services are covered under RCM vide Notification No.3/2012-ST dated 20.06.2012. For the services involving same facts, involving CIST, there have been judgements to the effect that value of infrastructure made available to CISF is not includible in the value of services. Extended period of limitation - HELD THAT:- The appellant is wrongly made liable for payment of the impugned amount of demand. There can be no reason with the appellant to not to pay the service tax liability with an intent to evade the duty - it was the incumbent duty of the department to prove the positive act of alleged fraud, suppression or wilful misstatement on part of the appellant. But except that the plea of non-payment of tax as has been considered in the impugned order, there are nothing on record which may amount to an act of suppression on part of the appellant - The allegations that appellant did not disclose the extent of taxable services in the form of ST-3 returns which amounts to concealment, also does not support the department as appellants have sufficiently established that they declared everything and every information of what they believe. As per their belief no value is attributable to the infrastructure/arms/ammunitions made available to CISF. Hence, it was inconceivable for the appellant to make any different disclosure than what they have declared. The extended period based on such allegations is held to have wrongly invoked. The demand of service tax has wrongly been confirmed upon the appellant. Rule 5 of Valuation Rules has wrongly been invoked. The show cause notice has wrongly invoked the extended period of limitation. The show cause notice itself gets time barred. The findings of original adjudicating authority are therefore not sustainable - appeal allowed.
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2024 (8) TMI 207
Levy of service tax with interest and penalty - reimbursement cost received from the land of owner (also a registered company) for constructing flats in execution of a Joint Development Agreement - proportionate reversal of CENVAT Credit - extended period of limitation. HELD THAT:- The principle is settled by this Tribunal in 2017 in the case of MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) [ 2016 (11) TMI 520 - CESTAT MUMBAI] that was found approval by the Hon'ble Supreme Court by way of dismissal of appeal of Revenue, where it was held that 'The money flow to the Assessee from SWPL, under the nomenclature of Royalty, is not a consideration for rendition of any services but infact represents the Appellant s share of revenue arising out of the Joint Venture being carried on by the Assessee and SWPL.' Thus, the reimbursable amount that was paid by one member of the joint venture and subsequently repaid by the other member would not be liable to payment of Service Tax. Extended period of limitation - HELD THAT:- When Service Tax is held to be not payable, extended period is also not invokable, apart from the fact that in the instant case, as noticed from the relied upon document namely letter dated 27.05.2017 entire factual aspect and modus operandi was known to the Respondent-Department and no proactive action in the nature of investigation, spot visit etc. were initiated by the Respondent-Department till it sought for a detail report from the Appellant on reimbursement expenses by M/s. Bhisma Realty Ltd. through its letter dated 21.02.2022, nearly after 5 years to which Appellant had furnished the figures (₹80,17,30,712/-) as total reimbursement amount received between October, 2016 and June, 2017, on which duty was straight away demanded, that would again take the Appellant out of the purview of wilful suppression since all information were available with it and furnished by it on demand and was also produced during audit. The order passed by the Principal Commissioner of CGST CX, Mumbai East Commissionerate is hereby set aside - Appeal allowed.
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2024 (8) TMI 206
Taxability - discounts/incentives received by the appellant - extended period of limitation - HELD THAT:- The relationship of the appellant, the dealer and M/s. TML is admittedly governed by the dealership agreement executed between them. Based on the scrutiny of those agreements only that the department have formed an opinion that the amount is received by the appellant for doing an act of achieving a target as specified by M/s. TML, hence, is an amount towards the consideration received for doing the said agreed act. The issue of demand on such discount/incentives is no more res integra. This Tribunal in the case of COMMISSIONER OF SERVICE TAX, MUMBAI-I VERSUS SAI SERVICE STATION LTD [ 2013 (10) TMI 1155 - CESTAT MUMBAI] has held that the amount received for achieving the targets under target incentive scheme in the form of a trade discount/year end discount. This is an incentive given to encourage the dealer to buy and sell larger number of vehicles. It is not a payment for any service rendered to the manufacturer. In the present case, under the contract of sales, since the specific targets for specific quantum of sale of cars of the manufactures that the dealer is agreed to have received some amount as incentive/discount, such amounts are not towards rendering Business Auxiliary Services but the incentives are only trade discounts which are extended to the appellant for achieving the required targets. The activity of receiving the incentives/discounts is as good as a part of trading activity and cannot be called as service as is defined under Section 65B(44) of the Finance Act. The findings of the original adjudicating authority since are contrary to the earlier decisions on the same issue, those are liable to be set aside. Extended period of limitation - HELD THAT:- The show cause notice must contain an averment to that effect pointing out specifically as to which of the various acts or omissions stated in the act have been committed/not committed by the assessee and the adjudicating authority must specifically deal with assessee s contention in rebuttal thereof. In the present case there is no such finding in the Order-in-Original except assuming that the amount in question is received by the appellant for rendering a taxable service. No such act is discussed which may amount to an act of suppression or concealment. Resultantly, we accept the appellant s contention that there was no reason with the department to issue the show cause notice after invoking the extended period. The show cause notice is therefore held to be barred by time. Thus, it is held that there was no service tax liability upon the appellant nor any alleged suppression has been committed by them. The show cause notice which has invoked almost five years period while raising the impugned demand is therefore held to be barred by time. The findings arrived at by original adjudicating authority are therefore hereby set aside - appeal allowed.
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2024 (8) TMI 205
Short payment of service tax - Business Auxiliary Services - difference in the assessable income as perST-3 returns and comparison thereof with the value from balance sheet - HELD THAT:- For the activity of maintenance/repair by way of rendering it as a Works Contract Service, the service tax is payable on 70% of the total amount charged for Works contract. The outcome of these documents and the observations above sufficiently prove that the appellant is eligible for 70% abatement in terms of Rule 2A of Valuation Rules for providing Works Contract Service (annual maintenance services along with spare parts). The eligibility has been absolutely ignored by the adjudicating authority below. It is observed that prior filing reply dated 23.03.2021, the appellant had also filed reply to the letter summoning response from the appellant. Vide his letter dated 27.10.2019 it was duly brought to the notice to the department that the appellant has two service tax registration numbers. One is for Business Auxiliary Service and various other services and another is for Survey and Exploration of Mineral Services. The amount in question is towards rendering Repair and Maintenance Services under the registration meant for Survey and Exploration of Mineral Services. The balance sheet of the appellant are also on record. Perusal thereof shows that the amount in question is towards sale of services to M/s. MECL. The contention of the appellants since beginning is that they had rendered Works Contract Services to said M/s. MECL which is already found duly supported by the documents on record. It becomes clear that the services of maintenance to be provided were inclusive of supply of spare parts/machine parts i.e. the sale of goods - the order under challenge is hereby set aside - appeal allowed.
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2024 (8) TMI 204
Levy of service tax - activity of logistic/handling services carried out by the appellant for the customer in lieu of a consideration constituted service as envisaged in clause 44 of Section 65(B) of Finance Act, 1994 - HELD THAT:- Post 01.07.2012, in order to qualify as a service , the activity has to satisfy three limbs of the definition of service viz., there has to be a service provided by a provider to a recipient, there has to be a monetary consideration and the service has to be provided in the taxable territory of India. Logistics/Handling charges are collected while selling of cars to the customers and not otherwise. Therefore, even if one has to consider the logistics/handling charges to be a consideration for a service, it is imperative to note that this handling activity is coupled with sale of car and would be called as bundled service as defined under section 66F of Finance Act, 1994. In this context as well, we observe that receipt of logistics/handling charges is naturally bundled with sale of cars since majority of similar service providers in the industry would receive the said amounts. Service tax is not leviable on logistics/handling charges, since sale of cars is covered under the exclusion part of service definition given under section 65B (44) of Finance Act, 1994 i.e. transfer of title in goods. Consequently, they will obviously form part of the value of the goods when they are subsequently sold and consequently sales tax/VAT would apply and not service tax. CBEC vide its Circular No. 699/15/2003-CX., dated 5-3-2003 clarified that it is envisaged appears that any activity of sales dealer at the pre-sale stage or at the time of sale will not come under the purview of service tax. This circular has clearly clarified that such pre-sale charges are not leviable to service tax, and the logistics/handling activities are all pre-sale activities and hence are not leviable to service tax. The Tribunal in INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [ 2015 (1) TMI 456 - CESTAT MUMBAI] held that whatever expenses have been incurred before transfer of the goods, form part of the sale price of goods . The impugned order has observed that the said charges did not form a part of sale value of the vehicle and were collected separately. However, in this context, we note that the said charges are incurred in respect of all cars which are to be sold by the dealer. The expenses incurred in this regard are passed by the original authority to the customer and collected as part of the sale value of the car. The bifurcation of the expenses and its separate accounting in the books of accounts does not amount to provision of service. The impugned order is liable to be set aside and is accordingly set aside - Appeal allowed.
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2024 (8) TMI 203
CENVAT Credit - availing credit on the strength of invoices which were not addressed to their registered premises - HELD THAT:- The adjudicating authority in the impugned order has observed that the value taken in the reconciliation chart submitted by the appellant is not in accordance with the values indicated in the show cause notice. It has also been observed that the appellant has not submitted any documentary evidence for verification or in support of the value shown in the reconciliation chart submitted by them. In the absence of any corroborative documentary evidence, the adjudicating authority has confirmed this demand. It is a fact on record that the appellant submitted a reconciliation chart before the adjudicating authority, but did not submit any corroborative evidence to substantiate their claim, as has been clearly recorded in the impugned order. It would be appropriate to remand the matter back to the original authority, giving an opportunity to the appellant to submit documentary evidences such as invoices issued during the period, along with copies of bank statement showing the advances received during that period, ledgers of the parties, copies of challans for service tax payment during the period etc. - Appeal allowed by way of remand.
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2024 (8) TMI 202
Short payment of service tax - dropping of demand - non-imposing commensurate penalty. Whether the Adjudicating authority had erred in dropping the demand amounting to Rs. 18,95,70,056/- for the period 2007-08 to 2011-12 Rs. 22,47,16,252/- for the period 2012-13 on account of short payment of service tax on Works Contract Service? - HELD THAT:- The impugned order has gone on to observe that the erstwhile Rule 6 of Service Tax Rules, 1994 did not permit recovery of tax unless the payments were received. We note that the adjudicating authority has relied on the decision of the Tribunal in the case of TURRET INDUSTRIAL SECURITY PVT. LTD. VERSUS COMMR. OF C. EX. CUS [ 2007 (10) TMI 148 - CESTAT, KOLKATA] , wherein it was held that in terms of Rule 6(1) amount of tax payable by the assessee is to be calculated on the basis of payments received in preceding month, tax cannot be calculated on the basis of value of services shown on an accrual basis in Profit Loss account. The impugned order has also relied on the decision of the Tribunal in KANPUR SECURITY SERVICES VERSUS COMMISSIONER OF C. EX., KANPUR [ 2008 (2) TMI 78 - CESTAT, NEW DELHI] , wherein it was held that service tax is leviable only on the amount received by service provider and not on amount still due from parties. In the instant case, the adjudicating authority has relied on a CA certificate submitted by the appellant which carries a date different from what has been indicated by the department in their review order or what has been submitted by the ld. AR. Further, once the CA certificate has been submitted by the appellant, the onus shifts on the department to negate the certificate to substantiate their allegation. Thus, unless evidence to the contrary is submitted by the department to disregard the CA Certificate, there are no infirmity with the findings in this regard in the impugned order. In the instant case, it is on record that the appellant had submitted the required details, but the demand notice had estimated the turnover to be 150% more as compared to the previous year s turnover. This estimated inflated demand has been rightly rejected by the adjudicating authority. There are no infirmity in the impugned order - the impugned order is upheld - appeal dismissed.
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Central Excise
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2024 (8) TMI 201
Refund of the excess tax paid - refund was proposed to be recovered by invoking the extended period of limitation - refund sanctioned order till date not challenged by Revenue - HELD THAT:- This issue is no more res integra as the same is covered by the majority decision of the Tribunal in the case of MEDLEY PHARMACEUTICALS LIMITED VERSUS CCE S.T. -CHANDIGARH-I [ 2018 (4) TMI 1495 - CESTAT CHANDIGARH] where it was held that 'denying and demanding the wrongly availed self-credit on first instance is not sustainable. Admittedly, the appellant followed the correct procedure on the second time though on the first instance they have wrongly taken direct self-credit.' Further it is found that since the department has not challenged the refund sanctioned order till date and in the absence of challenge to the refund sanction order, the refund cannot be rejected as held by the Hon'ble Gauhati High Court in the case of COMMISSIONER OF CENTRAL EXCISE, VERSUS M/S. JELLALPORE TEA ESTATE, [ 2011 (3) TMI 11 - GAUHATI HIGH COURT] . It is further found that the entire demand is also barred by limitation as the department has failed to establish the ingredients for invoking the extended period as provided in Section 11A sub-section (4) of the Central Excise Act, 1944, therefore, on this point also, the impugned order is bad. The impugned order is not sustainable in law and is thus set aside - appeal allowed.
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2024 (8) TMI 200
Recovery of rebate of duty - eligibility to claim rebate on portion of the value which pertains to the special packing more so when the packing is done overseas - excess payment of duty on the value of additional protective packing in order to avail the rebate of the duty paid in a wrongful manner and the wrongfully claimed rebate - Rule 18 of the Central Excise Rules, 2002 - time limitation - penalties. HELD THAT:- On going through the provisions of Rule 18, it appears that there is no ambiguity in the Rule in saying that rebate shall be sanctioned on the duty paid and not on the duty payable . Moreover, there is no distinction made in Section 4 to suggest that expenditure incurred by persons other than the manufacturer/ exporter shall not be included in the assessable value. A perusal of the above indicates that the price paid or payable by the buyer would become the transaction value notwithstanding the fact that the expenditure on such payment is borne by the assessee or somebody else - as the orders sanctioning rebate is not challenged, any demand under Section 11A cannot be sustained. Time Limitation - HELD THAT:- The appellants have taken a plea that the demand is time barred; Revenue has not put forth any evidence to show that the appellants have indulged in any omission or commission of suppression of fact, mis-statement, collusion etc. with intent to evade payment of duty other than making a bald statement to the effect that the assessee was under self-assessment regime and the fact of over-valuation was not detectable but for the investigation. It is found that the reasoning given by the Revenue is not acceptable as the Department while sanctioning rebates over a period of time had the opportunity to verify the claims of the appellant and to call for documents, if required - it is not open for them to invoke extended period. Penalties - HELD THAT:- The penalties imposed on the appellants, their CFO and DGM are also not maintainable. The impugned order is not sustainable both on merits and limitation - Appeal allowed.
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2024 (8) TMI 199
Valuation - inclusion of bought-out items in the assessable value or not - extended period of limitation. Valuation - HELD THAT:- It is seen that the appellants are supplying pre-fabricated buildings/ shelters to the Indian Army as per the purchase order place on them; however, the appellants are not manufacturing all the items required; some items they are procuring from outside and supplying the same along with the items manufactured by them which are basically steel structures. It is not the case of the respondents that the said bought-out items are supplied by them as per the requirement of the Indian Army; it is also not the case that these items are only accessories of the items supplied by them and are not essential parts of the items supplied by them. Records indicate that the respondents are supplied pre-fabricated buildings to the Indian Army; the invoices issued by them were for the supply of pre-fabricated buildings only and not for the items which they have claimed to have supplied. The assessment of the items cleared by a manufacturer is to be made on the basis of what is cleared from the factory. It is evident that the appellants have supplied pre-fabricated buildings, although in a disassembled manner, valuation has to be done accordingly. Therefore, the value of the bought-out items requires to be included in the assessable value of the goods. Extended period of limitation - HELD THAT:- Understandably, looking into the fact that the supplies being to Indian Army and some items were bought-out and sent along with the goods manufactured by the respondents, it is possible that the respondents entertained a belief that the they are not required to include the value of bought-out items in the assessable value of the impugned goods. It has been held by the Tribunal that when a case is made out of audit proceedings, extended period cannot be invoked. Accordingly, the extended period cannot be invoked in the instant case and duty requires to be confirmed for normal period. The duty confirmed for the extended period set aside - the duty for the normal period is confirmed - penalty imposed under Section 11AC is set aside - appeal allowed in part.
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CST, VAT & Sales Tax
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2024 (8) TMI 198
Interpretation of purchase price under Section 2(18) of the Gujarat Value Added Tax Act, 2003 (GVAT Act) - Exclusion of value added tax paid on purchases for computing taxable turnover of purchases under section 11(3)(b) of Gujarat Value Added Tax Act, 2003? - purchases on which value added tax is neither claimed nor granted are required to be excluded for computing taxable turnover of purchases under section 11(3)(b) of the Act or not - HELD THAT:- The first and foremost duty of the Court is to read the statute as it is and if the words therein are clear and unambiguous then only one meaning can be inferred. The Courts are bound to give effect to the said meaning irrespective of the consequences so far as the taxation statutes are concerned. Article 265 of the Constitution of India, 1950 prohibits the State from extracting tax from the citizens without the authority of law. The tax statutes have to be interpreted strictly which means that the legislature mandates taxing certain persons in certain circumstances which cannot be expanded or interpreted to include those who were not intended or comprehended. The assessee is not to be taxed without clear words and, for that purpose, the same must be according to the natural construction of the words which have been used in that statute. These words have to be read as it is and thus cannot be added or substituted which may give a meaning other than what is expressed in the provision. In the light of the definition as provided for under Section 2(18) of the GVAT Act, it becomes obvious that the definition is enumerative and exhaustive. The use of the word means denote the intention of the legislature to restrict the scope of the purchase price to the categories enumerated in the definition itself. The purchase price, therefore, would be the amount of valuable consideration paid or payable for any purchase which would include amount of duties, levied or leviable under the two acts as has been provided for in this Section apart from the other charges as expounded therein. The scope has been limited to the two Acts mentioned in the Section itself. The cogent reading of sub-Section (18) of Section 2 which defines purchase price , sub- Section 32 of Section 2 which defines turnover of purchases , and Section 11 of the GVAT Act which deals with entitlement to the tax credit, would lead to only one conclusion, that the purchase price would not include purchases on which no value added tax was claimed nor granted and the component of value added tax stood already paid on purchases. Accordingly, the taxable turnover of purchases would have to be calculated after deducting both the components as has been detailed aforesaid. Thus, the calculation of taxable turnover of the purchases and reduction value of purchases on which no tax credit was claimed nor granted, and component of value added tax already paid on purchases, was rightly excluded from the total turnover of the Respondent dealer while computing his tax liability under Section 11(3)(b) of the GVAT Act. The order passed by the Tribunal as has been upheld vide the impugned judgment of the High Court being in accordance with law calls for no interference and therefore, the appeals deserve dismissal - appeal dismissed.
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2024 (8) TMI 197
Challenge to assessment order - jurisdiction of Respondent No.2, the Deputy Commissioner of State Tax exercising the jurisdiction under the Maharashtra Value Added Tax Act, 2002 - HELD THAT:- Under Section 23 (2) of the MVAT Act, the Commissioner should first form an opinion that it is necessary or expedient to ensure that return is correct and complete, and after he forms such an opinion he requires to produce any documents then he shall give notice describing therein the documents which are required to be produced. If one sees the show cause notice it does not mention which are the documents that are required to be produced. The show cause notice is issued in a printed format with only the period and the date and time filled up. It does not give details of the information or documents required to be furnished notwithstanding the fact that Petitioner has vide its letter dated 6th January 2024 furnished the documents. Without even referring to those documents, a letter has been issued on 11th March 2024, simply calling upon Petitioner to submit assessment compliance. What more was required to be furnished is not mentioned. Before passing best judgment assessment, Section 23 (2) provides that if the registered dealer fails to comply with the terms of any notice issued under the sub-section, the Commissioner shall assess to the best of his judgment the amount of tax due from the assessee. The impugned order only refers to the letter dated 11th March 2024 in which letter, as noted earlier and also in the show cause notice, no details of documents required to be produced have been given. Therefore, in the present case, pre-conditions required to pass best judgment assessment is not satisfied. The impugned order dated 28th March 2024 is not sustainable. The same is hereby quashed and set aside. Consequently, the demand notice also dated 28th March 2024 is quashed and set aside - Petition allowed.
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Indian Laws
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2024 (8) TMI 252
Prayer to accept and mark as an exhibit a certified copy of sale deed - Whether certified copy of a sale deed could be considered a public document so as to allow it to be marked as an exhibit waiving the formal proof? - Whether this document could be marked an exhibit waiving the requirement of formal proof? Prayer to accept and mark as an exhibit a certified copy of sale deed - HELD THAT:- Admittedly, the document in question was filed before the settlement of issue and, therefore, it was available at the time of admission-denial of the documents. Merely marking a document exhibit does not mean it has become an admissible piece of evidence. An objection to its admissibility does not get excluded when the document is marked as exhibit. Reference could be made to the Hon ble Supreme Court decision in the case of Roman Catholic Mission Vs. State of Madras Anr., [ 1966 (1) TMI 88 - SUPREME COURT] . Therefore, the Court could always look into such document considering its relevance and other aspects to test its admissibility. Hence, the impugned order could not be faulted on the aforesaid count. Whether certified copy of a sale deed could be considered a public document so as to allow it to be marked as an exhibit waiving the formal proof? - HELD THAT:- The Division Bench of Madhaya Pradesh High Court in the case of Smt. Rekha Rana Ors. Vs. Smt. Ratneshree Jain, [ 2005 (8) TMI 727 - MADHYA PRADESH HIGH COURT] has held the proposition that a certified copy of a sale deed is a public document or a registered sale deed is a public document are erroneous. It has further been held that a registered document (deed of sale etc.) is not a public document. It is a private document. Further, a certified copy of a registered document, copied from Book and issued by the Registering Officer, is neither a public document, nor a certified copy of a private document, but is a certified copy of a public document. In other words, a certified copy of a registered document is a certified copy of public document - thus, it could be safely concluded that the certified copy of a registered sale deed would fall under the category of public document under Section 74 (2) of the Evidence Act. Whether this document could be marked an exhibit waiving the requirement of formal proof? - HELD THAT:- The definition of public document under Section 74 of the Evidence Act takes in public records kept in any state of private document. A certified copy is therefore admissible in evidence both under Section 65 (e) and 65 (f) of the Evidence Act. The certified copy is, therefore, secondary evidence of public record of sale deed kept in the office of the Registrar. Invoking Section 57(5) of the Registration Act, the said copy becomes admissible for the purpose of proving the contents of the original document itself. Therefore, the certified copy becomes admissible in evidence but proof of execution could not be dispensed with. Thus, the certified copy of sale deed can be produced in proof of the contents of the public document or part of public document of which it purports to be a copy. It can be produced as secondary evidence of the public document without laying any foundation. However, a word of caution may be added that it will only prove the contents of the original document and not be a proof of execution of the original document. There are no hesitation in holding that the impugned order passed by the learned Munsif, Begusarai does not suffer from any infirmity - petition dismissed.
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2024 (8) TMI 251
Application of limitation for arbitration under the National Highway Act - whether the writ petition is maintainable, challenging a decision of the Arbitrator under the National Highway Act, 1956, in a petition filed under Article 226 of the Constitution of India? HELD THAT:- It is clear from Section 2(4) of the Arbitration and Conciliation Act that Section 43 will not apply to every arbitration under any other enactment. This means that if no limitation is prescribed under any other enactment, provisions of the Limitation Act would not apply to such arbitration under such enactment. In the light of the above, the Limitation Act will not apply for arbitration under the National Highway Act. The question of interfering with the writ petition challenging the decision has been dealt with by the Division Bench of this Court in writ appeal No.1364/2024. This Court, in categorical terms, held that the remedy to challenge the decision of the Arbitrator, who is the District Collector, is by invoking the provisions under Section 34 of the Arbitration and Conciliation Act. Thus it is clear that the writ petition is not maintainable against the decision of the Arbitrator, who happens to be a District Collector. The writ petition is not maintainable - the impugned judgment set aside - appeal allowed.
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2024 (8) TMI 196
Notification dated 29.05.2015 issued by the Central Government in exercise of the powers conferred by Section 9 of the MSMED Act - whether Banks/ Non-Banking Financial Companies (NBFCs) are not obliged to adopt the restructuring process as contemplated in the Notification dated 29th May, 2015 issued by the Ministry of Micro, Small and Medium Enterprises, on its own without there being any application by the Petitioners/ MSMEs? HELD THAT:- The RBI in order to make the said Framework contained in the Notification dated 29.05.2015 compatible with the existing regulatory guidelines on Income Recognition, Asset Classification and provisioning pertaining to Advances issued to the banks by the RBI, had made certain changes in the said Framework, in consultation with the Central Government and issued revised Framework along with the operating Instructions vide the Communication dated 17th March, 2016, addressed to all the Scheduled Commercial Banks. It cannot be gainsaid that the Banking Regulation Act 1949 basically seeks to regulate banking business and mandates a statutory comprehensive and formal structure of banking regulation and supervision in India. Section 21 and Section 35A of the said Act empower the Reserve Bank of India to frame the policy and give directions to the banking companies in relation to the advances to be followed by the banking companies. Such directions have got to be read as supplement to the provisions of the Banking Regulation Act and accordingly are required to be construed as having statutory force and mandatory. What is contemplated in the Framework for Revival and Rehabilitation of MSMEs contained in the Instructions/ Directions stated hereinabove, is required to be followed prior to the classification of the borrower s account, (in the instant case MSMEs loan account), as Non-Performing Assets. The said Instructions contained in the Notification dated 29.05.2015 as part of measures taken for facilitating the promotion and development of MSMEs issued by the Central Government in exercise of powers conferred under Section 9 of the MSMED Act, followed by the Directions issued by the RBI in exercise of the powers conferred under Section 21 and 35A of the Banking Regulation Act, the Banking companies though may be secured creditors as per the definition contained in Section 2 (zd) of the SARFAESI Act, are bound to follow the same, before classifying the loan account of MSME as NPA. When it is mandatory or obligatory on the part of the Banks to follow the Instructions/Directions issued by the Central Government and the Reserve Bank of India with regard to the Framework for Revival and Rehabilitation of MSMEs, it would be equally incumbent on the part of the concerned MSMEs to be vigilant enough to follow the process laid down under the said Framework, and bring to the notice of the concerned Banks, by producing authenticated and verifiable documents/material to show its eligibility to get the benefit of the said Framework. The findings recorded by the High Court in the impugned order that the Banks are not obliged to adopt the restructuring process on its own or that the Framework contained in the Notification dated 29.05.2015, as revised from time to time could not be said to be mandatory in nature, are highly erroneous and cannot be countenanced - the impugned order therefore is set aside - appeal allowed.
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2024 (8) TMI 195
Direction to approach jurisdictional Assistant Commissioner of the Sub-Division, seeking redressal of grievance - substantive direction - amendment to Rule 23 as per Notification dated 08th March, 2023 - HELD THAT:- Indulgence granted in the matter broadly agreeing with the submission made by the counsel for the appellant. There is already the Grant Order and that the same is affirmed in appellant s appeal decided by the Appellate Tribunal. What has been left over for consideration at the hands of the authorities was only the question of the payment for the subject grant. When there is statutory Tribunal s order, relegating the appellant to the Assistant Commissioner for seeking a fresh grant is not justified. Awrit of mandamus issued to the second respondent to formalize the grant in favour of the appellant in terms of extant rules; the appellant is liable to pay the charges under the pre-amendment Rules of 2023. Appeal allowed.
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2024 (8) TMI 194
Maintainability of petition - availability of alternative efficacious remedy - Jurisdiction of Learned Additional District Magistrate - recovery actions under the provisions of the SARFAESI Act, 2002 - HELD THAT:- It is an admitted position that the order under Section 14 has been passed by the Additional Collector and now petitioners being the borrowers has an alternative remedy to approach the DRT by filing an appropriate application which has not been filed. The Apex Court in the case of ICICI Bank Limited and others Vs. Umakanta Mohapatra and others [ 2018 (10) TMI 1953 - SUPREME COURT] has held ' The writ petition, in this case, being not maintainable, obviously, all orders passed must perish, including the impugned order, which is set aside'. Recently, the Apex Court in the case of M/S South Indian Bank Ltd. Ors. Vs. Naveen Mathew Philip Anr. Etc Etc [ 2023 (5) TMI 798 - SUPREME COURT] has deprecated the practice adopted by the High Courts whereby the writ petitions are being entertained in SARFAESI Act matters, especially against the private banks when the statute prescribes a particular mode, an attempt to circumvent shall not be encouraged by the writ Court. The litigant cannot avoid the noncompliance of approaching the Tribunal which requires the prescription of fee and use of constitutional remedy as an alternative. The Apex Court has also deprecated the practice of approaching the High Court for consideration of an offer by the borrower. The Apex Court in the case of M/S South Indian Bank Ltd. [ 2023 (5) TMI 798 - SUPREME COURT] further went on to hold that 'we deprecate such practice of entertaining the writ petitions by the High Court in exercise of power u/S 226 of the Constitution of India without exhausting the alternative remedy available under the law.' The petition is hereby dismissed at the admission stage.
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2024 (8) TMI 193
Seeking appointment of a sole Arbitrator to adjudicate the claims and disputes between the applicant and the respondents - Section 11(6) of the Arbitration and Conciliation Act, 1996 - time limitation - HELD THAT:- It is well settled principle of law that considering the application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, this Court has to see whether there is an arbitral dispute between the parties and whether the agreement entered between the parties has an arbitration clause to refer the matter to an arbitrator or not. Further, it is also well-settled law that while deciding the question of appointment of arbitrator, the Court should not touch the merits of the case as it may cause prejudice to the case of the parties. In IBI CONSULTANCY INDIA PRIVATE LIMITED VERSUS DSC LIMITED [ 2018 (4) TMI 781 - SUPREME COURT] , the Hon'ble Supreme Court while dealing with the Arbitration Application filed under Section 11(6) read with Section 11(9) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator to adjudicate the disputes that have arisen between the parties therein in connection with the contracts in question, has held, ' It is also a well-settled law that while deciding the question of appointment of arbitrator, the court has not to touch the merits of the case as it may cause prejudice to the case of the parties. The scope under Section 11(6) read with Section 11(9) is very limited to the extent of appointment of arbitrator. This Court has to see whether there exists an arbitration agreement between the parties and if the answer is in the affirmative then whether the applicant has made out a case for the appointment of arbitrator.' It is settled law that in a commercial dispute, mere failure to pay may not give rise to a cause of action. Once the applicant has asserted his claim and the respondent fails to respond to such claim, such failure will be treated as a denial of the applicant's claim giving rise to a dispute, and thus it is the cause of action for reference to arbitration. In the case on hand, it is the case of applicant that having found in internal financial audit that the Respondent Nos. 1 2 have been deducting the GST @ 12% and labour welfare cess @ 1% from the principal bid amount instead of paying additional amounts to the tune of 13%, has addressed a letter dated 22.01.2022 to the respondent No. 3 requesting to release the amounts - the applicant soon after settlement of Final Bill, has raised a dispute that the amounts have been deducted over and above as mentioned in the statutory contract and requested the respondents to pay the amounts, otherwise treat the said communication as notice invoking the arbitration clause. Time Limitation - HELD THAT:- It is settled law that mere negotiations will not postpone the cause of action for the purpose of limitation. The limitation period of three years for filing such application would commence from the date when the cause of action arose. Since there is no provision in the Arbitration and Conciliation Act, 1996 specifying the period of limitation for filing an application under Section 11, one would have to take recourse to the Limitation Act, 1963. Section 43 of the Arbitration and Conciliation Act, 1996 provides that the Limitation Act shall apply to arbitrators, as it applies to proceedings in Court - Admittedly, in the instant case, the Final Bill of the applicant has been settled on 06.09.2022 and even before the expiry of the three years limitation period prescribed under Article 137 of the Limitation Act, 1963, the applicant has raised a dispute and sought reference to the Arbitrator. Therefore, viewing the case from any angle, the dispute sought for reference to the arbitrator is not barred by limitation. Adding further, whether the claim is barred by lapse of time is a matter which requires to be decided by the Arbitrator at the time of making an order under Section 20 of the Arbitration and Conciliation Act, 1996. This Arbitration Application is allowed.
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