TMI Tax Updates - e-Newsletter
August 9, 2023

Case Laws in this Newsletter:

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

Articles

1. Registered recipient is liable to pay RCM under Section 9(3) even if the turnover of supplier is less than threshold limit for registration

   By: Shripada Hegde

2. RAID CONDUCTED BY GST DEPARTMENT ON CORPORATE DEBTOR DURING MORATORIUM

   By: DR.MARIAPPAN GOVINDARAJAN

3. Loan facility to credit card holder not a credit card service, exempt from GST

   By: Bimal jain

4. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

5. Revenue Department cannot pass subsequent order in the matter which is already been adjudicated

   By: Bimal jain

News

1. 5th India-Vietnam Joint Trade Sub-Commission meeting in New Delhi

2. Union Commerce and Industry Minister Shri Piyush Goyal participates in the 13th BRICS Trade Ministers' Meeting

3. APEDA facilitates export of first trial shipment of fresh pomegranate to USA via air

4. Union Commerce and Industry Minister Shri Piyush Goyal participates in the 7th BRICS Industry Ministers’ meeting

5. Auction for Sale (issue/ re-issue) of (i) ‘7.06% GS 2028’, (ii) ‘New GS 2033’, and (iii) ‘7.30% GS 2053’

6. Joint Statement on the official level dialogue as follow-up to the 9th India-U.S. Economic and Financial Partnership

Notifications

Customs

1. 59/2023 - dated 7-8-2023 - Cus (NT)

Appointment of Common Adjudicating Authority for the purpose of adjudication of finalization of Provisional Assessment in SVB case w.r.t. M/s Mageba Bridge Products Pvt. Ltd, Kolkata.

GST - States

2. F A 3-93-2017-1-V(28) - dated 31-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-93-2017-1-V(162), dated the 29th December, 2017

3. CT-8-0004-2023-Sec-1-V-(CT)(27) - dated 31-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. CT-8-0004-2023-Sec-1-V(CT) (11), dated 21st April, 2023

4. CT-8-0002-2023-Sec-1-V-(CT) (30) - dated 31-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. CT-8-0002-2023-Sec-1-V(CT) (09), dated 21st April 2023

5. CT-8-0001-2023-Sec-1-V-(CT)(29) - dated 31-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. CT-8-0001-2023-Sec-1-V(CT) (08), dated 21st April, 2023

6. F A 3-47-2017-1-V (24) - dated 27-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-47-2017-1-V (59), dated 30th June, 2017

7. F A 3-42-2017-1-V (22) - dated 27-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-42-2017-1-V (53), dated 30th June, 2017

8. F A 3-33-2017-1-V (25) - dated 27-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. F-A3-33-2017-1 -V (42) Dated 29th June 2017

9. F A 3-32-2017-1-V (23) - dated 27-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A 3-32-2017-1-V(41) date 29th June 2017

10. F A 3-04-2019-1-V (26). - dated 27-7-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-04-2019-1-V (14), dated the 8th February, 2019

11. 25/2023-State Tax - dated 3-8-2023 - Maharashtra SGST

Seeks to extend amnesty for GSTR-9 non-filers

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/139 - dated 8-8-2023

Facility to remedy erroneous transfers in demat accounts

Customs

2. 20/2023 - dated 7-8-2023

Authorization of Booking Post Offices and their corresponding Foreign Post Offices in terms of the Postal Export (Electronic Declaration and Processing) Regulations, 2022

Highlights / Catch Notes

GST

• Appeals under Tripura GST Act 2017 must comply with Section 107(4); Limitation Act 1963 does not extend deadlines.

  Case-Laws - HC : Condonation of delay in filing appeal - Since the limitation for filing appeals is prescribed under Section 107(4) of the Tripura State Goods and Services Tax Act, 2017 being a special statute, the same would be governed thereby. Any plea for condonation of delay relying upon the Limitation Act, 1963 beyond the statutory period prescribed under Section 107(4) of the Act of 2017 cannot be accepted. - HC
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• Petitioner Exempt from GST Payment; Ultimate Beneficiary (Respondent) Liable for GST on Works Contract Services.

  Case-Laws - HC : Reimbursement of GST in respect of the works contract - Scope of tender / agreement - Since the petitioner was required to make a quote excluding the GST amount, it is opined that the petitioner cannot be mulcted with a liability of payment of GST. The respondent who is the ultimate beneficiary of the services performed by the petitioner has to pay the GST in respect of the work carried out. - HC
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• High Court Quashes Vague Show Cause Notice for Registration Cancellation Lacking Specific Evidence of Fraud or Misstatement.

  Case-Laws - HC : Cancellation of registration of petitioner - vague SCN - Apart from making a bald allegation that it had been obtained by means of fraud and wilful misstatement, no particulars are provided. The impugned SCN does not disclose the fraud alleged or the statement alleged to be a misstatement. It provides no clue as to which facts have been allegedly supressed by the petitioner. - SCN quashed - HC
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• Car Dealers Can't Claim ITC on Vehicles Kept for Workshop Use, Must Repay Claimed ITC in Cash.

  Case-Laws - AAR : Input Tax Credit - Capital goods - motor vehicle - authorized car dealer - if the applicant is retaining the vehicle for his workshop as replacement vehicle as mentioned in the sales policy of MSIL, he shall not be eligible for ITC as there is no further supply at his hands. Therefore, the ITC claimed by him has to be repaid in cash - AAR
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Income Tax

• Six-Month Limitation Period for Issuing Penalty Notice u/s 271C of Income Tax Act Confirmed.

  Case-Laws - HC : Penalty u/s 271C - period of limitation to issue notice - A careful perusal of the second limb would show that the legislature has provided a limitation of six months, from the end of the month in which the action for imposition of penalty is initiated. - Even according to revenue the first limb of Section 275(1)(c) is not applicable. - HC
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• Indexed Cost of Improvement Deduction: Payments to Previous Owners Count in Long-Term Capital Gain Calculations.

  Case-Laws - AT : Capital gain computation - deduction of indexed cost of improvement - amount paid by the appellant to the erstwhile owners requires to be allowed under the head “cost of improvement” while computing taxable amount of long term capital gain - AT
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• India Resident Gets Relief from Double Taxation on Tanzania Salary u/s 90: Income Earned Abroad Exempted.

  Case-Laws - AT : Income taxable in India - salary derived from Tanzania - resident but not ordinarily resident in India - eligibility of Relief u/s 90 - the salary is earned outside India and the assessee has paid tax on the said element on foreign country and, therefore, the assessee cannot be taxed twice on the same amount. This will amount to double taxation. - AT
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• Commissioner of Income Tax's Cancellation of Section 10(23C) Registration Overturned Due to Lack of Violations by Assessee.

  Case-Laws - AT : Registration u/s 10(23C) - CIT cancelled the registration - it is established that the occurrence of one or more ‘specified violations’ is sine qua non for cancellation of registration. Since the assessee did not commit any specified violation, we are satisfied that the impugned order, cancelling the registration, is untenable. The same is, therefore, overturned. - AT
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• Court Rules Joint Venture Share Sale Gains as Capital Gains, Not Business Income; Section 55(2)(aa)(ii) Inapplicable.

  Case-Laws - AT : Correct head of income - treatment of gain on sale of shares in joint venture as capital gain or business income - CIT(A) while upholding the disallowance of set off of losses has also held that the loss as computed by the assessee is not correct for the reason that the provisions of section 55(2)(aa)(ii) of the Act is not applicable in assessee's case. - Claim of assessee as capital gain allowed - AT
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• Assessment u/s 153A Challenged for Missing Document Identification Number Before Upload and Signature by Assessing Officer.

  Case-Laws - AT : Validity of assessment u/s 153A - Document Identification Number (DIN) - the assessment order when considered establish that DIN was not generated prior to uploading the document in ITBA. It is also established that the DIN was not quoted before it was physically signed by the AO. The generation of DIN subsequently and generation of intimation to be sent to assessee are of no consequence for the purpose of assessment and raising the demand. - AT
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• Affidavit Denial in Tax Disputes Must Be Accepted Unless Disproved with Evidence, Highlights Importance of Credible Challenges.

  Case-Laws - AT : Addition on account of difference in amount with entries in ITS statement - when a fact is denied specifically on affidavit before any quasi judicial authority, specially Tax authorities who have powers of enquiry too, then without any attempt to discredit the depositions made in affidavit on basis of some facts or evidence the claim should be believed. Specially when an assessee is telling on oath - AT
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• Penalty Proceedings Deemed Arbitrary Due to Lack of Specifics on Misreporting u/s 270A.

  Case-Laws - AT : Penalty proceedings u/s. 270A - Additions made u/s 43CA r.w.s. 56 (2) (x) i.e. deeming sections - There is not even a whisper as to which limb of section 270A of the Act is attracted and how the ingredient of sub-section (9) of section 270A is satisfied. - Mere reference to the word "misreporting" by the Revenue in the assessment order, for imposition of penalty makes the impugned order manifestly arbitrary. - AT
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Customs

• Court Rules Watermelon Seeds as Restricted, Not Prohibited Goods; Provisional Release Allowed Without DGFT Permission.

  Case-Laws - HC : Provisional release of the goods - Water Melon Seeds - prohibited goods or restricted goods - the Watermelon seeds are restricted goods but they cannot be treated as prohibited goods and in the absence of any permission/authorization for DGFT, provisional release can be done - HC
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• Imported Computer Systems for Gaming Not Classified as Video Game Consoles Under HSN Explanatory Note (2.

  Case-Laws - AT : Classification of imported goods - Computer Systems with modifications for enhancement of gaming - it is amply clear that such ‘video game consoles’ and ‘video game machines’ alone fall under the purview of HSN Explanatory Note (2), whether or not they satisfy the conditions of Note 5(A) to Chapter 84. - However, the impugned goods/Computer System Desktop are neither ‘video game consoles’ nor ‘video game machines’, but are an entirely different product - AT
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• Court Rules Lowest Price Must Be Used When Multiple Contemporaneous Prices Exist for Imported Goods Valuation.

  Case-Laws - AT : Valuation of imported goods - The contentions of the appellant that where more than one price are available as the contemporaneous prices, the lowest of the prices has to be adopted for the purpose of valuation. - While determining a particular import to be considered as a contemporaneous import for enhancement, it is necessary to match all commercial level details - Enhancement resorted to is not legally justified and so un-sustainable - AT
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• Customs Broker License Revocation Overturned Due to Lack of Involvement in Mis-declared Goods Case.

  Case-Laws - AT : Revocation of Customs Broker License - Mis-declaration of goods - When the appellants have not been engaged as a customs broker in the aforesaid transaction, there can be a case for taking action against violations of CBLR. Hence, the impugned order does not sustain on this very ground alone. - AT
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• Penalty under Customs Act Section 112(b) dropped due to lack of evidence in gold smuggling case. Employee statements insufficient.

  Case-Laws - AT : Levy of penalty u/s 112 (b) of the Customs Act, 1962 - Smuggling - gold biscuits of foreign origin - demand merely on the basis of the statements of the employees of the appellant - no evidence has been adduced against the appellant for involvement in the activity of smuggled gold and no cogent evidence has been produced apart from the statements recorded during the course of investigation - No penalty - AT
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Indian Laws

• Courts Affirm Cheque Issued for Legally Enforceable Debt; Judgments Free of Errors, No Revisional Interference Required.

  Case-Laws - HC : Dishonour of Cheque - misuse of blank cheque or not - Both the courts below concurrently found that the cheque in question was issued towards the legally enforceable debt and execution of it has been satisfactorily proved. There are no impropriety or illegality in the judgments of the court below warranting interference under the exercise of revisional powers vested with the courts. - HC
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• False Credit Report Entries May Lead to Defamation Claims; Follow Section 23 of CIC Act for Remedies.

  Case-Laws - HC : Defamation - false entry in CIBIL - Section 23 of the CIC Act provides for offences and penalties if any false entry is made by any person in any written or other document or in any information furnished by him, then, he shall be liable for prosecution - The respondent ought to have resorted to the remedy provided under the CIC Act if they were sure of their allegation that the entries made by the petitioners were false. - By-passing the above said procedure is inappropriate, to say the least. - HC
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IBC

• NCLT Orders Recovery with Interest for Preferential Transactions Amid Forensic Report Errors in CIRP Case.

  Case-Laws - AT : Preferential Transactions - Validity of impugned order - error in accepting the conclusions in Forensic Report - the Transactions that took place between the period from 27.12.2019 and 12.04.2021 - CIRP beginning date, was 21.12.2021 - As far as the present case is concerned, on account of the Preferential Transactions, the Individual and the Companies, were gained at the cost of Creditors and in Law - Recovery with interest was rightly ordered by NCLT - AT
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Service Tax

• Decision-Making Authority Failed to Properly Address Request in Reward to Informers Scheme; Reasons Must Be Recorded Initially.

  Case-Laws - SC : Entitlement to a reward under the Reward to informers - The minutes show complete non application of mind on the prayer made by the appellant. It is well settled that if the decision making authority does not record reasons for coming to a particular conclusion, the reasons cannot be supplied by filing affidavits - SC
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• Court Rejects Petitioner's Interest Claim Due to Misinterpretation of Refund Application Date; Order Deemed Incorrect.

  Case-Laws - HC : Denial for petitioner’s claim for interest on refund sanctioned - Period beyond 3 months - The authority erred in holding that the petitioner’s letter dated 07.02.2023, requesting for processing its claims for refund is to be considered as its application for refund. - The impugned order is, ex facie, erroneous to the extent it rejects the petitioner’s claim for interest. - HC
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• High Court Overturns Service Tax Demand Due to Unreasonable Delay in Adjudicating Show Cause Notice.

  Case-Laws - HC : Belated adjudication of SCN - Recovery of Service Tax - A substantial delay and inaction on the part of the department to adjudicate the show cause notice would seriously nullify the noticee’s rights causing irreparable harm and prejudice to the noticee. A protracted administrative delay would not only prejudicially affect but also defeat substantive rights of the noticee. - Entire demand set aside - HC
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• Court Upholds Classification of 'SS Music' and 'Sur Sangeeth' as Broadcasting Services; Penalties and Extended Demand Validated.

  Case-Laws - AT : Classification of services - Broadcasting Services or not - The permission letters submitted before the competent authority for issuing licence shows that these channels ‘SS Music’ and ‘Sur Sangeeth’ are owned by appellant. On merits, we do not find any grounds to accept the contention of appellant that they are not rendering any broadcasting services. - the demand invoking extended period and imposition of penalties are legal and proper. - AT
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Central Excise

• Concrete Evidence Needed for Allegations of Clandestine Removal in Central Excise Matters, Mere Discrepancies Insufficient.

  Case-Laws - AT : Clandestine Removal - Demand based on Balance Sheet / Profit and loss account figures - There must be some positive evidence brought on record to substantiate the allegation of clandestine clearance. Mere allegation of shortage based on the difference in sales figures found between the balance sheet and the and ER-1 Returns, cannot be the basis for confirming the central excise duty on the differential quantity. - AT
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Case Laws:

• GST

• 2023 (8) TMI 399
  Validity of SCN - SCN failed to disclose that any tax has not been paid or short paid or erroneously refunded or input tax credit has been wrongly availed or utilized by reason of fraud or any wilful misstatement or suppression of facts have been made to evade tax - HELD THAT:- The challenge in this writ petition is merely to the show cause notice issued under Section 74 of the Act, 2017 whereby the petitioner has been called upon to submit its explanation/reply/objections to the show cause notice. It is not within the domain to opine anything whether there has been any evasion of the tax or not, which has to be assessed by the department in appropriate proceedings for which the petitioner has been called upon to show cause. Petition dismissed.

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• 2023 (8) TMI 398
  Recovery of interest and penalty from the petitioner - no intent to evade - suppression of facts - HELD THAT:- On perusal of Bar, particularly the fact that independent orders dated 22.10.2021 have passed by the second respondent, the proceedings leading to Exts P10 to P12 show cause notices have been finalised. In the light of the orders passed by the second respondent and the petitioner having an alternative statutory remedy, the writ petition not entertained - petition dismissed.

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• 2023 (8) TMI 397
  Condonation of delay in filing appeal - appeal rejected on grounds of delay by the appellate authority as beyond the stipulated period under Section 107(4) of the Tripura State Goods and Services Tax Act, 2017 - HELD THAT:- Since the adjudication order was passed on 3rd June, 2020 during the Covid-19 period and the lockdown, any appeal arising therefrom under Section 107(1) of the Tripura State Goods and Services Tax Act, 2017 would have been filed by 28th May, 2022 and not beyond it. The appeals have been preferred on 24th March, 2023 after the delay of almost nine months thereafter. The learned appellate authority vide impugned order dated 02.05.2023 in the respective appeals has also taken into consideration the Covid-19 related grounds and the extension of limitation period as per the order passed by the Apex Court in Suo Moto Writ Petition (C) No.3 of 2020 [ 2022 (1) TMI 385 - SC ORDER] . The order of the Apex Court in Suo Moto Writ Petition (C) No. 3 of 2020 extending period of limitation in all such matters including appeal. The respondents-State have also taken the same plea in their counter affidavit. They also state that apart from the appellate order no other challenge has been made. Therefore, the challenge is confined to the legality and correctness of the appellate order dated 02.05.2023. Since the limitation for filing appeals is prescribed under Section 107(4) of the Tripura State Goods and Services Tax Act, 2017 being a special statute, the same would be governed thereby. Any plea for condonation of delay relying upon the Limitation Act, 1963 beyond the statutory period prescribed under Section 107(4) of the Act of 2017 cannot be accepted. There are no merit in these appeals. Accordingly, the writ petitions are dismissed.

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• 2023 (8) TMI 396
  Reimbursement of GST in respect of the works contract - Scope of tender / agreement - respondents contend that even though the form required the quoting of the amount less GST, since the contract itself provided that the contract amount would be inclusive of all taxes, GST has to be suffered by the petitioner - HELD THAT:- The Division Bench of this Court in THE KERALA LAND DEVELOPMENT CORPORATION LIMITED AND ORS VERSUS SEBASTIAN JOSE AND ORS. [ 2022 (6) TMI 1415 - KERALA HIGH COURT] has specifically considered an identical issue. It was found that the petitioner therein had bid for the work and had quoted the amount specifically excluding the component of GST from the quote in view of the condition contained in the notice inviting tender. It was further found that GST being a tax to be suffered by the ultimate beneficiary, the Corporation for whom the work is done by the contractor has to remit the same. It was held that The learned single judge was right in declaring that the GST component was not to be included as per clause 3.3.3 of Ext.P1 and the direction to pay the GST component by respondents 2 and 3 is in tune with the clauses of Ext.P1 and hence there are no ground to interfere with the judgment of the learned Single Judge, and hence the writ appeal is dismissed. Since the petitioner was required to make a quote excluding the GST amount, it is opined that the petitioner cannot be mulcted with a liability of payment of GST. The respondent who is the ultimate beneficiary of the services performed by the petitioner has to pay the GST in respect of the work carried out. The impugned orders are set aside - appeal allowed.

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• 2023 (8) TMI 395
  Violation of principles of natural justice - respondents had not dealt with the reply of petitioner and also has not referred the document which the petitioner has filed along with the reply - difference of Rs. 50 lakhs in exempted turn over reported as per GSTR 3B and GSTR 1 - validity of assessment order - HELD THAT:- This Court is of the considered opinion that the respondents have not considered the reply of the petitioner along with the evidence. Further, if the respondents need any further clarification ought to have directed the petitioner to clarify and submit further evidence for sales under Agriculture. Without doing so, the respondents have mechanically passed an order. Therefore, this Court is inclined to set aside the impugned order and the same is quashed. The respondents are directed to redo the same, within a period of 4 weeks - Petition allowed.

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• 2023 (8) TMI 394
  Provisional attachment of savings account - Section 83(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In terms of Section 83(2) of the Act, every provisional attachment order under Section 83(1) shall cease to have effect after the expiry of the period of one year from the date of the order. Thus, the impugned order dated 17.05.2022 whereby the bank accounts of the petitioners were attached, cease to be operative. This Court further directs the concerned banks to permit the petitioners to operate their bank accounts that were frozen in terms of the order dated 17.05.2022, on the strength of this order - Petition disposed off.

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• 2023 (8) TMI 393
  Cancellation of registration of petitioner - vague SCN - SCN bereft of particulars - Bald allegations - HELD THAT:- There are merit in the contention that the impugned SCN is bereft of any particulars. The allegations made were bald and not capable of eliciting any meaningful response. It is settled law that a show cause notice must clearly set out the reasons for proposing the adverse action to enable the noticee to respond to the same. In the present case, impugned SCN does not provide any clue as to why the petitioner s registration was sought to be cancelled. Apart from making a bald allegation that it had been obtained by means of fraud and wilful misstatement, no particulars are provided. The impugned SCN does not disclose the fraud alleged or the statement alleged to be a misstatement. It provides no clue as to which facts have been allegedly supressed by the petitioner. The impugned Order-in-Original dated 04.10.2022 also does not set out any detailed reasons for cancellation of the registration - it is conceded that the impugned SCN is inchoate and did not indicate the detailed reasoning for proposing an adverse action. The impugned SCN cannot be sustained. Petition allowed.

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• 2023 (8) TMI 392
  Input Tax Credit - Capital goods - inward supply of motor vehicle which are used for demonstration purpose in the course of business of supply of motor vehicle and was disposed off after 2 years - HELD THAT:- Sub section 5 of Section 17 of CGST Act, 2017 restricts availment of ITC on motor vehicles purchased by a tax payer even though they may be used in the course of furtherance of business. Thus, from the plain reading of the section no ITC can be claimed by the applicant or purchase of test drive vehicles even though they are used in the course of furtherance of business. The word supply as defined under Section 7 of the CGST Act, 2017 would include sale, lease, rental etc., Thus the exception is made not only for sale of motor vehicles but for the purpose of lease, rent etc., wherein there is no immediate transfer of property in goods and such motor vehicle may be capitalized in the books of the purchaser in case of an intention to lease, rent etc. - Hence capitalizing the motor vehicle purchased does not make the tax paid on their purchases ineligible for ITC if there is a further supply of such motor vehicles within the meaning of Section 7 of CGST Act, 2017. For example supply of cars for lease / rent etc., can not be made without them being capitalised in the books of such supplier. And, whether the applicant is eligible for ITC depends on occurrence of a future event i.e., either he retains the vehicle in his work shop as a replacement vehicle or sells such vehicles. (i) If the applicant is making further supply of such vehicle is eligible for the ITC claimed. (ii) if the applicant is retaining the vehicle for his workshop as replacement vehicle as mentioned in the sales policy of MSIL, he shall not be eligible for ITC as there is no further supply at his hands. Therefore, the ITC claimed by him has to be repaid in cash in view of the amended section 16(4) notified vide notification No. 18/2022, Central Tax dt. 28.09.2022 w.e.f: 01.10.2022.

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• Income Tax

• 2023 (8) TMI 391
  Reopening of assessment u/s 147 - unexplained cash deposits - scope of term change of opinion - as per HC just because the Appellate Authority has the power to modify an assessment order with regard to a source of income that has not been considered during assessment proceedings does not mean that the jurisdiction of the authorities u/s 148 would be excluded when the issue involved in the proceeding u/s 148 is not the same as that being considered u/s 251 - HELD THAT:- We do not find any merit in the Special Leave Petitions. Special Leave Petitions are dismissed.Pending application(s) shall stand disposed of.

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• 2023 (8) TMI 390
  Disallowance of the assessee s claim of exemption in respect of profit on sale / redemption of investments and Addition u/s 14A[Appeal admitted for substantial question of law] - Disallowance of 25% of Bogus Risk Inspection Survey Expenses - HC said ITAT restricted the disallowance to 25% on the ground that there was evidence only with respect to part of the claim namely in relation to the inspection charges and entire issue is based on appreciation of evidence and no question of law arises. HELD THAT:- This Court is of the opinion that the impugned order does not call for interference. The special leave petition is accordingly dismissed. All pending applications are disposed of.

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• 2023 (8) TMI 389
  Prohibition of Benami Property Transactions Act as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - whether has a prospective effect? - HELD THAT:- Since as of now the issue stands covered by the judgment in the case of Ganpati Dealcom Pvt. Ltd. case [ 2022 (8) TMI 1047 - SUPREME COURT] we dismiss this special leave petition for the same reasons and ground. Delay, if any, is condoned. Liberty to the petitioners to approach this court again by filing a fresh petition in case the review petition(s) is allowed, is kept reserved. Pending application(s), if any, shall stand disposed of.

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• 2023 (8) TMI 388
  Revision u/s 263 by CIT - scope of revision proceedings - ITAT came to a finding that the Principal CIT could not have invoked jurisdiction u/s 263 as AO has taken a possible view in the matter and there is nothing to indicate that the AO has applied the provisions on an incorrect way - HELD THAT:- Since the view taken by the Assessing Officer is a possible view, the Principal CIT has assumed jurisdiction u/s 263 of the Act without properly complying with the mandate of Section 263 - ITAT held that the Principal CIT has failed to show that the Assessment Order was erroneous, causing prejudice to the Revenue. This finding of the ITAT that the Principal CIT could not have exercised its jurisdiction under Section 263 of the Act has not been even challenged. Since that has not been challenged, we do not think it permissible to go into the merits of the case - No substantial questions of law arises.

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• 2023 (8) TMI 387
  Penalty u/s 271C - period of limitation to issue notice - show cause notice issued u/s 271C which was nearly eleven (11) years after the assessment order was passed, and fourteen (14) years from the time when the return was filed - HELD THAT:- As decided in Clix Capital Services Pvt. Ltd. [ 2023 (3) TMI 369 - DELHI HIGH COURT ] penalty ought to be levied within a reasonable timeframe. This attains criticality, as Section 275(1)(c) of the Act does not fix a date for the commencement of the period of limitation. This legislative gap in the provision works to the disadvantage of the assessee, as often, the AO takes his own sweet time in making a proposal for the initiation of penalty proceedings. In this case, as noticed above, more than 11 years have passed since the time the assessment order was passed, and if the date of filing of the return is taken into account, there is a yawning 14 years of time gap. A careful perusal of the second limb would show that the legislature has provided a limitation of six months, from the end of the month in which the action for imposition of penalty is initiated. Even according to revenue the first limb of Section 275(1)(c) is not applicable. Therefore if the dates and events, (which obtain in the matter and are not in dispute), are taken into account, even then, the proceedings would be time-barred as initiation of penalty proceedings commences with the proposal being submitted for triggering penalty proceedings. In this case, the proposal, as noticed above, for commencing of penalty proceedings was submitted by the JCIT on 27.03.2019.The record shows that the order under Section 271(1)(c) of the Act was passed only on 31.10.2019, which is a date well beyond six months, that expired on 30.09.2019. Although it is revenue argument that six month period should commence from the date when show cause notice is issued, in our view, once again, this is a submission which cannot be accepted, as it would provide a scope to the AO to trigger the penalty proceedings at the date of his choosing, as is palpably evident in this case. The word used in the provision is initiated which according to us, is an act which would get triggered on the date when the proposal is made. This rationale ties in with our view, as noted hereinabove, that penalty proceedings should be initiated within a reasonable period. Decided against revenue.

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• 2023 (8) TMI 386
  Addition made on the basis of a survey report - Reliance on the statement recorded u/s 133A of directors - HELD THAT:- As it is not in dispute that the assessee was not furnished with a copy of the survey report. This is an aspect which the Tribunal has noted in the impugned order. Concededly, the directors were not confronted with the contents of the survey report. Given this position, the Tribunal, in our view, quite correctly has concluded that since there was no corroborative material available for making addition, the assessment order, qua this aspect, could not be sustained. As observed in S. Khader Khan Son s case [ 2013 (6) TMI 305 - SC ORDER] , there is a qualitative difference between the statement recorded under Section 133A and Section 132(4) of the Act. The statement recorded u/s 133A of the Act has no evidentiary value, since the officer concerned is not authorized to administer oath and record a sworn statement. This is in contradiction with the statement recorded u/s 132(4) of the Act, which is recorded on oath by an officer who is vested with necessary powers. No corroborative evidence was found to support the addition, we are not inclined to interfere with the impugned order passed by the Tribunal. No substantial question of law arises.

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• 2023 (8) TMI 385
  Reassessment against dead person - Respondent-authorities issued the notice to the legal heir of late Assessee u/s 292B - scope of amended provisions of Act - HELD THAT:- As in the case on hand, the Respondent-authorities initiated the proceedings, u/s 148 of the Act, against the dead person, by issuing notice on 27.03.2021. Subsequently, an amendment in the Act came into force with effect from 01.04.2021. Under the circumstances, we are of the considered opinion that, if, any notice is to be issued under Section 148 of the Act in post 01.04.2021 period, the procedure required under the amended Act was required to be followed. Here, it is pertinent to note that the notice was issued in the name of the present petitioner, who happens to be the legal heir of the original assessee, i.e. late Ms. Shah. Thus, it becomes clear that, before issuing the notice to the present petitioner, the Respondent-authorities failed to comply with the provisions of the amended Act. It is not being disputed by the Respondent-authorities that the impugned order is also passed in the name of the dead person, i.e. late Ms. Shah, which is a nullity. The provisions of Section 292B and 292BB of the Act shall not apply in the facts of the case on hand, as discussed herein above. Keeping in mind the ratio laid down by the Apex Court [ 2019 (7) TMI 1449 - SUPREME COURT ] on the issue involved in this matter as well as the decisions of the other High Courts, we are of the view that the proceedings initiated by the Respondent-authorities against a dead person, in this case, as well as the impugned orders passed by it deserves to be quashed and set aside.

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• 2023 (8) TMI 384
  Capital gain computation - Disallowance of deduction of indexed cost of improvement - assessee claimed that expenditure incurred by him being the additional cost to effectuate the sale transaction is a capital expenditure and thus should be allowed in the light of Section 55(1)(2)(ii) - HELD THAT:- We find that the case made out by the assessee is this that the compensation was paid by the appellant to the parties with whom he initially entered into an agreement to sell the plot of land as the sale did not materialize. Such compensation is deductible while computing the capital gains arising from the sale of such plot to another party. We find substance in such submission made by the Ld. AR. As considered the judgment passed in the case of ACIT vs. Pushkar Dutt Sharma [ 2015 (6) TMI 844 - ITAT DELHI ] wherein it has been clearly held that the expenses incurred to remove impediments or encumbrances in way of transfer of capital asset has to be allowed as deduction under the head cost of improvement while computing taxable amount of capital gain. Also in the case of Kaushalya Devi [ 2018 (4) TMI 1137 - DELHI HIGH COURT ] wherein payment of certain liquidated damages in terms of earlier agreement to sell which did not materialize has been ultimately held to be treated as expenditure incurred wholly and exclusively in connection with transfer of immovable property and thus found to be allowable as deduction under Clause (1) of Section 48 of the Act. Thus the expenditure incurred solely and exclusively on the immovable property as an expenditure to be deducted while computing capital gains. Link and connection with the transfer of a capital asset and the expenditure must be inextricable which has been found to be established by the appellant before us. We, thus, do not hesitate to hold that the impugned amount paid by the appellant to the erstwhile owners requires to be allowed under the head cost of improvement while computing taxable amount of long term capital gain - Decided in favour of assessee.

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• 2023 (8) TMI 383
  Correct head of income - addition being agricultural income treated as other income - HELD THAT:- AO neither consider extent of land held by the assessee nor certification of the VAO who is competent authority to certify the agricultural activities carried out by the assessee. Therefore, we are of the considered view that the AO and the Ld.CIT(A) are erred in not appreciating the fact while disallowing the claim of agricultural income. At the same time, the assessee also could not file credible evidence to justify the claim of agricultural income. Even if you go by the claim of the assessee, income declared under agricultural operations is not commensurate with extent of land held by the assessee and agricultural operations carried out during relevant assessment year. As both the parties failed to make out their case with necessary evidences and reasons,nly option left with us is to settle the dispute between the assessee and the AO by estimating income from agricultural operations. Therefore, considering the extent of land held by the assessee and also certificate issued by the VAO, we direct the AO to allow 50% of agricultural income claimed by the assessee for three assessment years - Decided partly in favour of assessee.

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• 2023 (8) TMI 382
  Income taxable in India - salary derived from Tanzania - resident but not ordinarily resident in India - eligibility of Relief u/s 90 - TDS deducted in Tanzania as per the DTAA within the Governments of India and Tanzania - assessee has belatedly filled the required Form No.67 alongwith certificate of tax withheld issued by the Tanzanian Revenue Authorities - HELD THAT:- The observation of the CIT(A) that the assessee has not disclosed the salary from Tanzania appears to be incorrect as the assessee has categorically in his return of income mentioned salary which is none other than the salary derived from Tanzania. It is pertinent to note that the late filing of Form No.67 cannot deny the entitlement of the assessee the benefit of treaty when the salary earned is from Tanzania and there is DTAA between India and Tanzania. It is undoubtedly clear that the salary is earned outside India and the assessee has paid tax on the said element on foreign country and, therefore, the assessee cannot be taxed twice on the same amount. This will amount to double taxation. Hence, the CIT(A) as well as the Assessing Officer was not right in denying the claim of the assessee. Appeal of the assessee is thus allowed.

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• 2023 (8) TMI 381
  TDS u/s 194H - assessee has paid commission through banking channel as well as in the form of transfer of shares - AR stated that the turnover of the assessee was below the taxable limit and therefore section 194H regarding deduction of tax at source is not applicable - revenue authorities have disallowed the same since the assessee failed to establish that it was genuine expenditure and it is also held that the assessee failed to comply with the TDS provisions u/s. 194H - HELD THAT:- We think it fit to remit the matter to the file of the AO for fresh consideration in the light of additional evidence. Needless to say that the assessee may be reasonable opportunity of being heard by the AO before making fresh assessment as per law. The assessee is directed to produce all the relevant documents to substantiate its claim and avoid seeking unnecessary adjournment for early disposal of the case. The issue being common on identical facts, both the appeals are remitted to the file of Assessing Officer in the above terms. Appeals allowed for statistical purposes.

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• 2023 (8) TMI 380
  Registration u/s 10(23C) - CIT cancelled the registration by invoking clause (b)(ii) of the 15th proviso to section 10(23C) of the Act, pursuant to the reference made by the AO - present case is that of survey - HELD THAT:- We have noted that the survey party found certain expenses not properly vouched, which were deficient in some aspects. No quantification of such vouchers w.r.t. the books has been done and simply a surrender of Rs. 9.00 crore came to be made by the assessee. This shows that either the statement was recorded unintentionally u/s 131(1); or as a smart move to get rid of the compliance of the rigid requirement of having corroborative evidence for surrender in the statement u/s 133A(3). We leave this issue here only by making it clear that the discussion anent to the legitimateness and legality of surrender is made only to examine the factual matrix of the case in the context of cancellation of registration. It has nothing to do with the assessments based on such surrender, which have already attained finality. As manifest that the edifice of cancellation of registration has been erected on the statement of the trustee recorded during the course of survey action. Arguendo, it is presumed that the contents of the statement have a binding force and has evidentiary value, still it does not bring the case within any of the specified violation . The 15th proviso to section 10(23C) unambiguously provides that - the Principal Commissioner shall, pass an order in writing cancelling the approval of such fund or institution or trust if he is satisfied that one or more specified violation has taken place. Thus, it is established that the occurrence of one or more specified violations is sine qua non for cancellation of registration. Since the assessee did not commit any specified violation, we are satisfied that the impugned order, cancelling the registration, is untenable. The same is, therefore, overturned. Both the sides are in agreement that the facts and circumstances of the other appeal by the related trust in are mutatis mutandis similar. Following the view taken hereinabove, we set aside the impugned order cancelling the registration originally granted u/s. 10(23C)(vi) of the Act. Appeal of assessee allowed.

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• 2023 (8) TMI 379
  Correct head of income - treatment of gain on sale of shares in joint venture as capital gain or business income - HELD THAT:- From perusal of the method adopted for valuation of shares by the assessee, it is noticed that the assessee has agreed for a lump sum consideration without any breakup of what is attributable to assets, liabilities and future business. It is to be noticed that the Act does not contain provisions to state that determination of the head of income under which the gain on sale of shares is to be taxed is based on the valuation used for arriving at sale consideration for transfer of shares. In assessee s case the assessing officer did not question the method or basis of the valuation of shares and has not disputed the consideration received towards sale of shares but held the gain to be a business income on the ground that the valuation is arrived at based on future business. This in our opinion is not tenable since the treatment of shares in the books of accounts whether as stock-in-trade or investment is also one of the determining factor for taxation under capital gain or business income and it cannot be said that the method adopted for arriving at the sale consideration determines the nature of transaction. There is merit in the submission of the ld AR that since section 50CA of the Act is inserted by the Finance Act, 2017 with effect from 02/04/2018 and therefore, the said insertion for valuation of capital asset transferred being shares of a company other than equity shares or the purpose of section 48 being fair market value determined as prescribed, is not applicable to the assessee for the year under consideration. The intention of the assessee is to hold to the shares of JMMSSPL as investment is demonstrated by the reflection of the shares under investments in the financial statements and from the factual finding given by the CIT(A) that the Board Resolution dated 18.04.1998 passed while making the investment clearly mentions that the assessee has made a capital investment. Accordingly in our view treatment of the gain as business income on this ground is not sustainable. In view of these discussions we hold that that the gain arising on transfer of 49,00,000 equity shares of JMMSSPL by the assessee is chargeable to tax under the head capital gains and the assessee be allowed to claim the indexed cost of acquisition considering the period of holding of the shares.Decided in favour of assessee. Disallowance of set off of short term capital gain / loss - loss is artificially created to reduce the tax payment on gain on sale of shares in JMSSPL - CIT(A) in the second time held that the entire transaction had taken place not for any commercial purposes but with a motive to create loss in books of account - HELD THAT:- In the present case genuineness of the claim cannot be impeached - we notice that the shares were sold by the assessee from the Demat account for which the consideration is received by the assessee and that shares sold had been issued under the ESOP scheme of the Trust where the options are being exercised by the assessee. We further notice that the assessee has also shown short term capital gain on sale of JMFPPL which supports the submission of assessee that the intention of the assessee was not purposely to reduce the payment of tax. On the other hand the revenue has not brought any material to controvert the contention of assessee. So we cannot countenance the action of Ld.CIT(A)/AO on this issue and uphold the claim of assessee. We therefore set aside the order of the CIT(A) disallowing the setoff of long term capital loss and short term capital loss CIT(A) while upholding the disallowance of set off of losses has also held that the loss as computed by the assessee is not correct for the reason that the provisions of section 55(2)(aa)(ii) of the Act is not applicable in assessee s case. During the course of hearing the ld AR presented various arguments in this regard contending that the provisions of section 55(2)(aa)(ii) is applicable to the impugned transaction. Since we have already held that the set off of loss should allowed in the case of the assessee in the foregoing paras., the submissions of the ld AR and ld DR in this regard is left open.

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• 2023 (8) TMI 378
  Validity of assessment u/s 153A - Document Identification Number (DIN) not quoted - Generation of DIN is condition precedent for making an assessment manually or otherwise on the ITBA and then before it is uploaded on ITBA - HELD THAT:- The Bench is of considered view that forwarding of the intimation of generation of the DIN in ITBA is only a subsequent action and that is not part of assessment order. The manner in which the word communication is defined shows every notice, order, summons, letter and any correspondence from Tax authorities should have a DIN quoted and it is for this reason that the Intimation issued about the DIN of assessment order itself has a DIN quoted on it. In the case in hand the facts coming from the assessment order when considered establish that DIN was not generated prior to uploading the document in ITBA. It is also established that the DIN was not quoted before it was physically signed by the AO. The generation of DIN subsequently and generation of intimation to be sent to assessee are of no consequence for the purpose of assessment and raising the demand. Decided in favour of assessee. Extension of Period of limitation - The orders as uploaded on the ITBA were incomplete and that would only come to aid of assessee for extending the period of the limitation for filing the appeal but order does not become void on that ground and there is no case of time barred assessment. So issue number two is decided against the assessee. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. That is best achieved with the introduction of DIN but once the order is complete in all respects and within the prescribed period, the actual service of the order may be beyond that period and that will only give rise to question of start of limitation period for challenging it but that does not invalidate the order itself. Thus the orders as uploaded on the ITBA were incomplete and that would only come to aid of assessee for extending the period of the limitation for filing the appeal but order does not become void on that ground and there is no case of time barred assessment. So issue number two is decided against the assessee.

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• 2023 (8) TMI 377
  TP adjustment - corporate guarantee - international transaction or not? - as alleged standby letter of credit given by the assessee on behalf of its associate enterprise (AE) - AO was of the view that the transactions in relation to Corporate Guarantee (CG) and standby letter of credit (SBLC) were international transactions and proceeded to make a reference to the ld. TPO for determining the arm s length price - HELD THAT:- CG and SBLC was intended to be issued only from 01.04.2011 which falls in AY 2012-13. Hence, this fact goes to prove categorically that no guarantee/SBLC was neither intended nor given by the assessee on behalf of the aforesaid two parties upto 31.03.2011. Hence, there is no international transaction at all carried out by the assessee. In any case, only in the event of acquisition of the aforesaid two overseas entities by the assessee, they would become Associated Enterprises in the capacity of subsidiaries. We hold that the assessee including these transactions of CG and SBLC intended to be issued as an international transaction in its transfer pricing study report, is only as a matter of abundant caution and hence the argument of the assessee in this regard holds lot of force. In the absence of any international transaction and in the absence of any existence of AE, there is no requirement of any benchmarking. Hence, the transfer pricing adjustment made on the alleged issuance of CG and SBLC is hereby directed to be deleted for the AY 2011-12. Accordingly, grounds No.2 to 4.5 raised by the assessee are allowed on merits. TP Adjustment made on account of interest on outstanding receivables from AE - In the instant case, the assessee is exporting goods to its AEs as well as to its Non-AEs. It has been the argument of the assessee that it is not charging interest on delayed receivables from both AEs and Non-AEs. In order to give the true weightage to the provisions of Chapter X of the Act, every transaction carried out with the AE is to be benchmarked if it falls within the ambit of an international transaction as defined in Section 92B of the Act read with Explanation thereon. Hence interest on delayed receivables from AEs would have to be benchmarked separately by the assessee. TPO, in the instant case, had granted credit period of 70 days to the assessee to recover its dues from its AEs. Hence, the ld. TPO is directed to look into the following:- (a) In respect of bills raised on or after 01.04.2010 to its AEs, what was the date of realization and whether the same has been realized within the credit period allowed of 70 days. If not, interest is to be imputed on those bills also. (b) In respect of outstanding bills as on 01.04.2010 (i.e., opening balance) from these AEs, what was the date of realization thereof and if the bills are realized beyond the granted credit period of 70 days, interest is to be imputed on those bills also. The aforesaid directions to ld. TPO to recompute the interest on outstanding receivables would meet the ends of justice as it would be in true spirit of the decision of the Hon ble Delhi High Court and also the provisions of Explanation (iii) to section 92B of the Act. With these directions, ground Nos.5 and 5.1 raised by the assessee are allowed for statistical purposes.

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• 2023 (8) TMI 376
  Exemption u/s 11 - assessment of trust - application u/s 12AB rejected - Despite various opportunities as per the statutory provision, the appellant failed to submit the complete set of details and therefore, satisfaction in regard to the genuineness of the activities or verification of its activities whether the same is in consonance with its objects was unable to be arrived at by the CIT(E) and the application for grant of the registration of the Trust u/s 12AB of the Act stood rejected - HELD THAT:- We, in order to prevent the miscarriage of justice, find it fit and proper to provide another opportunity of being heard to the appellant in support of his case for registration of the Trust u/s 12AB. Upon considering the entire set of documents and upon affording an opportunity of being heard to the appellant the Ld. CIT(E) to dispose of the application for grant of registration of the Trust under Section 12AB of the Act with a reasoned order.

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• 2023 (8) TMI 375
  Disallowance u/s 68 - amounts received as loans - CIT(A) directing the AO to disallow interest on above mentioned loans - HELD THAT:- In the present case, undisputedly the assessee obtained unsecured loan from 9 entities and submitted details of PAN and copies of ITR, copies of ledger accounts and documentary evidence showing repayment of loans along with interest after deducting TDS as per IT Rules then the allegations of authorities below doubting the creditworthiness and genuineness of the transaction cannot be held as unproved particularly when there is deliberations by the ld CIT(A) in his order regarding documentary evidences submitted before him as well as before AO. The identity and creditworthiness of the creditors and genuineness of the transaction rooted through banking channel. As the factual position also gets strong support from the fact that the authorities below have not disputed or controverted the very relative fact that the assessee has repaid entire loan amount along with interest payable thereon during the relevant financial period securing by the loan account and at the end of the year there was no credit or unsecured loan was issued in the books of account of the assessee. After submission of documentary evidence and details of 9 loan creditors there is deliberation on the documentary evidences submitted by the assessee by the CIT(A) and thus, the Tax Authorities below did not discharge onus shifted on him by disapproving unsecured loan creditors. Therefore, the addition made by the AO and sustained by the ld CIT(A) is not justified and sustainable. Addition u/s 68 - amount received as advance against property - HELD THAT:- As cause of cancellation agreement to sale of property and other compensation etc to be given by one party to other is concerned. Firstly, these facts are not clear from the material available on record and secondly, these fact have no bearing on the glaring factual position that the assessee received advance and repaid back to the said entity due to cancellation of agreement. In such a situation, no addition can be made and sustained in the hands of the assessee by invoking deeming provision of section 68 and by alleging and considering the same as unexplained in the hands of the assessee. Accordingly, AO is directed to delete the impugned addition and thus, ground of assessee is allowed.

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• 2023 (8) TMI 374
  Rejection of books of account u/s 145(3) - Non maintenance for the foreign projects - maintenance of accounts by certain persons carrying on profession or business u/s 44AA - assessee is not eligible to claim depreciation @ 60% on survey equipments - assessee has failed to produce its books of accounts, bills and vouchers and relevant documents in relation to its foreign projects therefore the Balance Sheet of the assessee company does not represent true and fair picture of the affairs HELD THAT:- The assessee is duty bound to maintain books of account and same shall be produced before the A.O. so as to deduce the result of the assessee business, irrespective of the business made in foreign country or otherwise. The observation of the CIT(A) contrary to the above provisions of the Act i.e. Section 44AA and Section 145 of the Act. Hence, in our opinion, the CIT(A) is not justified in deleting the addition. AO had made addition in view of non maintenance of books of account, however, we are of the opinion that the assessee is entitled for depreciation at the prescribed rate in the provisions. Accordingly, we direct the A.O. to estimate the income of the assessee at 10% and grant the applicable rate of depreciation on fixed assets and re-compute the income of the assessee. Appeal of the assessee is partly allowed for statistical purpose.

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• 2023 (8) TMI 373
  Disallowance of foreign exchange fluctuation loss on External Commercial Borrowing (ECB) - whether assessee had not discharged its primary onus u/s 37(1)? - HELD THAT:- CIT(A) has followed the Hon ble Delhi High Court s in regard to assessee s own case where considering the ECB loan as an old one the treatment of the foreign exchange fluctuation as revenue income or loss was sustained and Ld. DR was unable to cite any change of facts or law. There is no force in the ground raised by Revenue. Disallowance u/s 14A read with rule 8D - HELD THAT:- It appears admitted from the matter on record that during the year under consideration, no exempt income has been earned by the assessee and ld. CIT(A) has although taken note of judgment of Maxopp Investment Ltd. [ 2011 (11) TMI 267 - DELHI HIGH COURT] but failed to distinguish it on facts, as present assessee had no exempt income. On the contrary the judgments relied on behalf of the assessee expressly held that as assessee has not claimed any exempt income, no disallowance u/s 14A is required. Ground is allowed in favour of assessee. Disallowance on account of depreciation - damaged assets as for the destroyed - AO had directed the disallowance of depreciation, on the understanding, that the WDV is liable to be adjusted with the Claim amount raised with the insurance company - CIT(A) also sustained the addition with the further reasoning that if the assets were destroyed or lost in the earlier years then such an asset was not put to use for the business purpose, therefore entire claim of depreciation of such use plant and machinery has to be disallowed - HELD THAT:- The order of Ld.CIT(A) on basis of non use of assets is not sustainable. CIT(A) erred in giving directions to Ld AO to examine the insurance claim of the appellant and identify assets which were required to be replaced as these had got destroyed and those which were damaged and required repair and that the WDV will be reduced in respect of only those assets which were destroyed is not sustainable. In relevant year the Assessee was not required to adjust the WDV of the block of assets, for the amount of insurance claim submitted irrespective of assets being of the category destroyed or damaged. Grounds of assessee is allowed. Nature of expenditure - disallowance of repair and maintenance expenditure treating the same as capital expenditure - As submitted on behalf of the assessee that assets replaced were existing assets and no new asset has come into the existence - HELD THAT:- There appears to be no error in the findings of Ld. CIT(A) while referring the matter back to ld. AO to consider the expenses into repair and maintenance expenses or replacement expenses. As a distinction has to be made if the replacement is of a baby part only, then the same cannot be considered to be a capital expenditure. It is only when a baby part alone cannot be repaired and the whole of machine is required to be replaced, the expenditure of replacement will be of capital nature. Thus, in regard to these grounds there is no substance in the contentions on behalf of the revenue or the assessee.

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• 2023 (8) TMI 372
  Addition on account of difference in amount of income offered by assessee and entries mentioned in ITS statement - HELD THAT:- CIT(A) while giving finding has not taken into consideration the affidavit as with regard to REVO Content Services (P) Ltd. The Bench is of considered opinion that when a fact is denied specifically on affidavit before any quasi judicial authority, specially Tax authorities who have powers of enquiry too, then without any attempt to discredit the depositions made in affidavit on basis of some facts or evidence the claim should be believed. Specially when an assessee is telling on oath that it has no concern with a particular party then that should be enquired into and which is missing in the orders of Ld. Tax authorities here. Addition on that account is not sustainable. For Huawei Telecommunication (India) Company (P) Ltd. once assessee does not deny its transaction with then in the absence of any confirmation being filed from the said company that the amount involved was only 6,09,083/- and not 6,93,767/- the assessee can only benefit to the extent that addition can be restricted to Rs. 84,684/- (6,93,767- 6,09,083) but that will entitle assessee to full credit of Rs. 52,881/- against Rs. 16,500/-. Accordingly, the issue is allowed to the benefit of assessee however, Ld. AO will re-compute the disallowance and credit as per aforesaid observations. Disallowance of interest against interest free loans given to subsidiary companies - money was given out of internal accruals and no disallowance is required to be made - HELD THAT:- As observed admitted states of affairs appearing on record there appears to be no dispute to the fact that assessee s total reserves and funds far exceeded the interest free advances - bifurcation of the funds available with the company and assets held as on 31.03.2011 has been provided which support the contentions of Ld. AR that there is a presumption that interest free funds are used when available to give interest free advances for non-business purposes.See CIT vs. Reliance Utility and Power ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT ] - Decided in favour of assessee.

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• 2023 (8) TMI 371
  Penalty proceedings u/s. 270A - quantum addition in the case of the assessee was made u/s 43CA r.w.s. 56 (2) (x) i.e. deeming sections - Proof of misreporting of income - HELD THAT:- Penalty was initiated and imposed under section 270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the Respondents have failed to specify the limb - underreporting or misreporting of income, under which the penalty proceedings had been initiated. There is not even a whisper as to which limb of section 270A of the Act is attracted and how the ingredient of sub-section (9) of section 270A is satisfied. In the absence of such particulars, the mere reference to the word misreporting by the Revenue in the assessment order, for imposition of penalty makes the impugned order manifestly arbitrary. No penalty can be imposed in this case, as there is no misreporting is there by assessee for the purposes of section 270A. Even addition u/s. 43CA was not sustainable in view of Jai balaji Business Corporation (P.) Ltd. v. ACIT [ 2023 (2) TMI 421 - ITAT PUNE] . But as assessee before us is for penalty issue only and matter of quantum issue is not before us that are of no use to assessee in present appeal. In the result grounds of appeal raised by assessee is allowed.

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• 2023 (8) TMI 370
  Disallowance being advance written off in the revised return - claim not made in original ROI [Return of income] - HELD THAT:- We don t see any force in the decision of Ld. CIT(A) in rejecting the claim of the assessee, simply because the same was not claimed in the original return and was claimed in the revised return filed in compliance to C AG. As gone through the submissions of the assessee and found the decision of assessee well founded on facts and logics. Being, a State PSU question on the sanctity of decisions and accounting can t be raised as the same is being owned by State Govt. and Audited by the C AG of India. More, over even if version of Revenue is accepted for the time being, still same has to be allowed in next F.Y. and it results into a deferment only, but nothing on merits of the claim Disallowance of Leave Encashment - disallowance was made because of non-Acceptance of revised return by the Revenue - We set aside this disallowance and restore the matter back to the file of AO for fresh adjudication on the basis of evidences to be adduced by the assessee. Assessee is directed to cooperate with the AO and advance evidences of actual payment during the year in favour of his claim. In the result this ground of appeal raised by the assessee is allowed for statistical purposes. Disallowance of depreciation towards capital assets - filing revised return and non-acceptance of the same by Revenue - Assessee claimed depreciation on the basis of figures capitalised on the directions of the C AG of India. As we already approved the filing of revise return on the given facts of the case, no disallowance can be made by the AO, if assessee claimed some allowance based on the accounts approved by the C AG of India. In the result AO is directed to delete the addition and Ground Raised by the assessee is allowed. Disallowance made u/s. 40A (3) - wrong reporting in the Tax Audit Report and actually these amount were not claimed as an expense, same is restored back to the file of AO for re-verification by AO, based on evidences advanced by the assessee. Assessee is directed to substantiate its claim with relevant evidences that the same is not claimed as expense, hence not disallowable u/s. 40A(3). Ground of appeal raised by the assessee is allowed for statistical purposes. Addition on account of difference in Original Return and Revise Return - As submitted by the assessee that this difference arisen because of different treatment given by the C AG of India w.r.t. revenue of the assessee - As already hold by us that revise return filed by the assessee is proper on the given facts of the case, revenue has to be considered as declared in the revise return and department cant disturb the same on the basis of original return. This ground of appeal raised by the assessee is allowed.

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• 2023 (8) TMI 369
  Revision u/s 263 - Various grounds of revision - Directions issued by the CIT to verify the tranactios - Difference in stock reporting - HELD THAT:- With reference to the assessee s tax audit report in Form 3CD reflecting the quantitative details as to consumption, production, and yield, it was shown to us by Sh. Nair that there is no inconsistency in, nor any excess, stock. There is, on the contrary, loss in manufacturing, which, at 1%, was normal and minimal. Further, while the raw materials, i.e., copper and PVC, are measured by weight (in kg.), the finished product, viz. stabilizers, pumps, water heaters, electrical fans, Digital UPS, are in individualized units, i.e., in numbers. The assessee s reply stands perused for the purpose. It s case is clearly borne out by it s return of income for the year, of which Form 3CD is a part. We find no substance in the Revenue s claim, nor any case for revision; the ld. Pr. CIT in his final observation only reiterates what stands stated by the assessee. Claim for Additional Depreciation - Depreciation had been correctly claimed at 50% of the normal depreciation for the assets put to use for less than 180 days. The confusion arose as, due to large number of additions in the second half of the year, these were stated as made and, accordingly, put to use, on one date (31/3/2016). The matter stands looked into by the AO. Now, the difference in depreciation, if any, for AY 2015-16, could in our view be rectified, pursuing a remedial course, only for that year, even if by way of rectification u/s. 154. The depreciation claimed and allowed for that year would be irrespective of the extent unabsorbed entitled to be carry-forward for this year, forming part of the current year s depreciation, reducing the open written down value (WDV) thereby. No issue therefore, in our view, arises for being considered by the AO. The Revenue has no case, with the ld. Pr. CIT having himself not made any adverse comment in the matter. Non-consideration of expenses disallowed, u/s. 115-JB - Non consideration of certain claims of expenditure for computation of book-profit., assessee in reply, admits to the said deficiency, though claims that it would be of no consequence as the tax liability u/s. 115JB, even after considering all the adjustments referred to while that under the normal provisions of the Act , and toward which Shri Nair would take use through the relevant working. As assessee s stand is that the impugned order, even if erroneous on that account, is not prejudicial and, therefore, not liable to be subject to revision on that score. We agree, both in principle as well as on facts. This is as even if the assessee agitates the said additions/disallowance made in regular assessment, the tax liability u/s. 115JB would be lower than that on the returned income. Again, we observe no adverse remark by the Pr. CIT in the matter (para 6.1). Non-charge of interest to MSME units - CIT, while recording this clarification by the assessee, states it to have not clarified the position (para 6.2). What, pray, we wonder, does that mean, and what further clarification the Revenue seeks we are unable to understand. Once the expenditure has not been claimed, the question of it s disallowance for the relevant year cannot arise, so that there is no prejudice per the impugned order to the Revenue. Sure, there is non-observance of the said Act, but that is outside the domain of the Act. No case for revision is made out. Provision for warranty expenses - The basis for the provision of warranty, claimed to be on empirical evidence, generated by past data, would have to be examined by him, even if on a test-check basis, arriving at a satisfaction before accepting the same, as explained in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] - The invocation of s. 263 in its respect is thus valid. Claim in respect of employee stock option scheme - As the time of expenditure assumes relevance only where it is, firstly, regarded as so; and only seek to highlight the different issues arising for determination. They may accordingly not be construed as our final findings, though shall be taken into account, and the assessee required to meet the same, by the assessing authority, before whom the matter is at large. The assessee has also relied on the decision in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] We may though clarify that the same has to in any case satisfy the test of s. 37(1) Ram Bahadur Thakur Ltd. v. CIT [ 2003 (1) TMI 66 - KERALA HIGH COURT] , and that the same cannot be compromised on the ground of consistency refer CIT v. British Paints India Ltd [ 1990 (12) TMI 2 - SUPREME COURT] , qua which there is though no finding by the AO. Why, such a contention could be raised only where there is a finding in assessment in an earlier year, even as the principle of res judicata is not applicable to the proceedings under the Act. AO shall decide on merits in accordance with law, issuing definite findings of fact, per a speaking order after hearing the assessee. We decide accordingly. Non-verification of huge claims for expenditure - As nothing on record to indicate any enquiry, much less verification, made by the AO in the matter, which was also the admitted position before us. The same would per se render the order erroneous and prejudicial to the interests of the Revenue. It is well settled that once the AO assumes jurisdiction to assess or reassess, he is duty bound to assess the total income for the relevant assessment year. Each of the expenditure referred to by the ld. Pr. CIT is material in relation to the returned income of Rs. 16314 lacs, with the AO having not made an iota of enquiry on the relevant aspects. Explanation 2(a) is clearly attracted under the circumstances. We find no reason to interfere. Assessee s appeal is partly allowed.

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• 2023 (8) TMI 368
  TP Adjustment - comparable selection - turnover filter application - AR contended that the comparability of the companies has to be made with reference to the functional analysis which according to the assessee was not disputed by the TPO nor was the functionality of the comparables distinguished by the lower authorities - HELD THAT:- As held that where in case the assessee has failed to apply the turnover filter on quantitative level then only the qualitative level based on the FAR analysis has to be made. In the present case in hand the ld. DRP/TPO has not differentiated the comparable company in view of the assets deployed, risk assumed effecting the cost or margin, the same cannot be rejected merely on the basis of low turnover. We would like to place our reliance on the decision in the case of Cadence Design Systems India (Pvt.) Ltd. [ 2018 (4) TMI 1574 - ITAT NEW DELHI] which has considered the decision of Chryscapital Investment Advisory India Ltd. [ 2015 (4) TMI 949 - DELHI HIGH COURT] and also which has dealt with on identical issues, wherein it was held that a company cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that asset/risks are completely different and are incomparable. From the above observation, we hold that Infosys Technology Ltd. and ACE BPO Services should be included as comparable company for determining the arms length price of the assessee s international transaction. Ground no. 3.2 raised by the assessee is allowed. Comparables Excel Infoways Ltd. - TPO s comparable of Excel Infoways Limited has been rejected for the reason that it had not bifurcated employee cost for infra activities segment, which according to the said decisions were highly impractical and contradictory in facts or data sourced from the annual report. On identical facts, we are of the considered view that Excel Infoways Limited should be rejected as a comparable company for determining the ALP of the international transaction of the assessee company. Infosys BPO Limited be excluded as a comparable company for the reason that it was functionally not comparable and the presence of brand and extraordinary event of acquisition of the Australian company. It is pertinent to point out that the assessee has alleged that TPO has included both the comparables without notices or neither any data base nor any such process was conducted by the TPO. It is also evident that the Hon ble DRP has also not given a specific finding on the objection raised by the assessee. As we hereby direct the A.O./TPO to exclude Excel Infoways Ltd. and Infosys BPO Limited as comparable company to the assessee

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• 2023 (8) TMI 367
  TP adjustment - ALP for Corporate Guarantee Commission - HELD THAT:- Relying on the decision of Everest Kanto Cylinder Limited, [ 2012 (11) TMI 1099 - ITAT MUMBAI] as consistently considered 0.50% as ALP for benchmarking the Corporate Guarantee Commission issued to the Associated Enterprises [AEs]. Thus we are of the considered view that the ALP for Corporate Guarantee Commission shall be benchmarked @ 0.50% of the Corporate Guarantee issued to the AEs. We therefore direct the Ld. TPO to adopt 0.50% as the Corporate Guarantee Commission and accordingly this issue raised by the assessee in the relevant grounds of appeal is partly allowed. Notional interest on Outstanding Guarantee Commission - HELD THAT:- We find merit in the argument of the Ld. AR that the assessee has not indulged in any systematic or organized activity of allowing the undue credit to the AEs. In the light of the facts and circumstances discussed above, we deem it fit and appropriate to consider the alternative plea raised by the Ld.AR in his written submissions and therefore direct the Ld. TPO to adopt the USD LIBOR rate while benchmarking the ALP for the interest on outstanding guarantee commission receivable by the assessee. Accordingly, this ground is allowed for statistical purposes. Notional interest on share application money given to the AEs - HELD THAT:- As nothing brought on record by the Ld. Revenue Authorities to suggest that the transaction was a sham. Therefore judicially following the case of Aegis Limited [ 2019 (4) TMI 858 - BOMBAY HIGH COURT] we are inclined to delete the addition of notional interest made by the Ld. TPO and hereby direct the TPO to delete the addition made on account of notional interest on the share application money outstanding. We therefore allow the appeal of the assessee on this ground.

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• Customs

• 2023 (8) TMI 366
  Concessional rate of duty - N/N. 21/2002-Cus - import of 27 consignments of crude palm oil - it was held by CESTAT that The reliance placed on the test report which emanated long after the date of import, does not sustain in the absence of any other evidence that imported goods were refined palm oil - HELD THAT:- There are no reason to interfere with the impugned judgment and order of the High Court. Appeal dismissed.

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• 2023 (8) TMI 365
  Violation of principles of natural justice - non-speaking order - HELD THAT:- The Impugned Order is not a speaking order. It is therefore liable to be set quash and the case is liable to be remitted back to the second respondent to pass a speaking order on merits within a period of sixty (60) days from the date of receipt of a copy of this order. Petition disposed off.

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• 2023 (8) TMI 364
  Scope and power of the authority under Section 154 of the Customs Act, 1962 - each and every kind of omission or error arising from an accidental slip permitted to re-visit the order of assessment passed by the competent officer - HELD THAT:- The authorities have accepted the order of remand passed by the appellate authority on the first occasion and proceeded thereupon and therefore, it is too late in the day to take such a plea at an advance stage of the litigation which is practically a second round of litigation, though commenced from the original cause. A further argument is advanced by appellant that it is a paramount duty of the exporter to make a self-assessment of the duty as envisaged under Section 17 of the said Act. The reliance appears to have been placed upon Sub-section (1) of Section 17 which is misplaced for the simple reason that Section 17 has undergone a radical change by way of an amendment (Act 8 of 2011) with effect from 08.04.2011. The instant case pertains to transactions of export prior to 2011 and therefore, the Section which stood as on the date of such export has to be applied which does not mandate the exporter to self-assess the duty by submitting the shipping bills. The amended provisions cannot be pressed in action in relation to transactions prior to coming in force thereof unless the amending Act clearly provides the applicability of such amended provisions to operate retrospectively or by necessary implications. In absence of any such mandate in an amending Act, the law cannot be perceived to operate retrospectively but to operate prospectively i.e. from the date when it came into existence and/or was enforced. The law is always to be look forward and not backward. There is no fetter on the part of the legislature to express any amendment of the law to operate retrospectively. There are no question of law, far less to speak of substantial question of law, involved in the instant appeal - appeal dismissed.

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• 2023 (8) TMI 363
  Provisional release of the goods - Water Melon Seeds - prohibited goods or restricted goods - notifications dated 26.04.2021 and 21.06.2022 - HELD THAT:- The intention of the notification dated 21.06.2022 was not to reject the import of Water Melon Seeds which were already before the Customs Authority for examination by 31.10.2022 on the ground that they were restricted. Prior to notification dated 26.04.2021, the import of Water Melon Seeds was free and the importers did not require any permit for importing to India. A perusal of provisional release order dated 23.02.2023 (Annexure P-1) shows that the importer did not possess any license for import of restricted Water Melon Seeds and on this ground they were held liable to be confiscated under Section 110A of the Customs Act. In the present case, as per notification dated 26.04.2021 read with notification dated 21.06.2022, Watermelon Seeds fall in the category of restricted after 30.09.2022 and for importing the same, a valid permit is required to be issued by the competent authority which the petitioner did not have. The provisional release of Watermelon Seeds is rejected vide order dated 23.02.2023 (Annexure P-1) on the ground as prohibited goods . The said observation in itself is not correct as per notifications dated 26.04.2021 and 21.06.2022. Moreover, in the present case, the report of Plant and Quarantine Department has already come in favour of the petitioner and the only ground available with the respondent now is that the Watermelon Seeds are restricted and the petitioner did not have valid permit to import the same. In the present case, the Watermelon seeds are restricted goods but they cannot be treated as prohibited goods and in the absence of any permission/authorization for DGFT, provisional release can be done as per the judgment of Hon ble Supreme Court passed in Commissioner of Customs s case [ 2019 (1) TMI 1324 - SUPREME COURT ] - Petition allowed.

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• 2023 (8) TMI 362
  Classification of imported goods - Computer Systems with modifications for enhancement of gaming - Computer System Desktop (personal computers with accessories like mouse, power adapter and gaming console) - to be classified under CTH 9504 5000, as the principal function was gaming or classifiable under Chapter Heading 8471 3090 as automatic data processing machines? - HELD THAT:- An automatic data processing machine or personal computer is said to be capable, in terms of Chapter Note 5(A) to Chapter 84, of storing the processing programmes and is also freely programmable in accordance with the requirements of the user and capable of computing and executing without human intervention. Whereas video game consoles are simply plug and play devices, which are more user friendly, and meant purely for gaming or entertainment purposes and are not capable of computing, internet surfing, word processing, etc. Any Computer System which has got additional features for playing games, continues to be a Computer System and can also be used for general purposes other than as an entertainment device. The impugned goods are freely programmable whereas video game consoles only operate on fixed programmes. As the impugned goods answer to the requirements of the HSN Explanatory Notes to Heading 84.71 as well as Chapter Note 5 (A) to Chapter 84, they are more appropriately classifiable under CTH 8471 as automatic data processing machines. Though the imported goods, declared as computer desktop systems, are known in the market parlance as gaming computers, they are to be treated as computers / automatic data processing machines though many modifications have been brought out in the form of enhancements like inclusion of higher version of graphics cards, hardware for enhancement of audio and other gaming equipment. Thus, it is amply clear that such video game consoles and video game machines alone fall under the purview of HSN Explanatory Note (2), whether or not they satisfy the conditions of Note 5(A) to Chapter 84. Thus, primarily, to fall within the ambit of the above Note, the goods necessarily have to be such video game consoles/machines as defined above. However, as differentiated by us elsewhere in this order, the impugned goods/Computer System Desktop are neither video game consoles nor video game machines , but are an entirely different product which, though have gaming capabilities, are also having a wide array of functionalities such as internet surfing, multimedia playing, etc., and can be put to multiple uses in business and industry - the reliance on the HSN Explanatory Note (2) to Heading 95.04 by the lower appellate authority is misplaced. The fact is also noted that Computer Systems with modifications for enhancement of gaming, by inclusion of additional audio/video devices, are being classified under CTH 8471 as ADPs. In support of his contention, the Ld. Advocate has submitted many copies of Bills-of-Entry where similar products by the same manufacturer with the latest configuration in new series of machines have been classified under CTH 8471 in various Custom Houses and Air Cargo Complexes. Considering the differences that exist between video game console, video game machine and the imported product, it is held that the imported Computer System Desktops are classifiable under CTH 8471 as automatic data processing machines - the impugned order set aside - appeal allowed.

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• 2023 (8) TMI 361
  Valuation of imported goods - Polyester Nylon Warp Knitted Fabrics and Nylon Warp Knitted Fabrics purchased on High Seas Sales basis - rejection of declared value - enhancement of assessable value - value enhanced on the basis of Bills of Entry relating to the import of M/s. Star Mint Fields P. Ltd., Surat considering them as a contemporaneous import - Confiscation - redemption fine - Penalty - HELD THAT:- The type of fabric i.e, whether grey, semi dull or dull or bright and the quality of fabric and even width affect the price of the products. Even in case of the contemporary imports relied upon by the Department all other factors remaining the same, grey warp knitting fabric Bright value was declared at US$ 9.2/kg whereas Semi Dull was declared at US$ 8.55/kg. Similarly the values of Nylon Warp Knitted Fabrics with semi dull and grey having an effect on the price. The contentions of the appellant that where more than one price are available as the contemporaneous prices, the lowest of the prices has to be adopted for the purpose of valuation. The basis for enhancement of the value of the impugned goods is the declared/assessed value of similar imports by M/s. Star Mint Fields Pvt. Ltd., Surat which are found to be provisionally assessed. On this count also the enhancement of the declared value is not sustainable and is not in accordance with the provision of Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The proper officer can, on certain reasons , raise doubts about the truth or accuracy of declared value and these certain reasons can be higher value of identical / similar goods of comparable quantities in a comparable transaction, abnormal discounts or abnormal deduction from competitive prices, mis-declaration on parameters such as description, quality, quantity, country of origin, year of manufacture or production, non-declaration of parameters such as brand and grade and fraudulent or manipulated documents. In these appeals, the only reason for rejecting the transaction value is on account of noticing higher values of the contemporaneous imports. However, while determining a particular import to be considered as a contemporaneous import for enhancement, it is necessary to match all commercial level details like quality, quantity, type whether under a contract, physical characteristics, brand, reputation, country of origin, time of import, stock lot sale, manufacturers sale, etc. Thus, there was no allegation that the importer has mis-declared the description of goods or whether any excess quantity found or whether there is any mis-declaration of brand or country of origin or type or as to any other aspect in relation to imported goods. The appellant has clearly explained the sequence of events in respect of impugned goods as to what rate the manufacturer has sold the goods to M/s. J.S. Fashions (L.L.C), Dubai and at what rate M/s. J.S. Fashions has sold to M/s. Sainath Knitex Pvt. Ltd., Surat and considering the rate at which he has purchased the goods on high seas sales from M/s. Sainath Knitex Pvt. Ltd., Surat and considering the fact that Department s reliance was mainly on the basis of the values declared by M/s. Star Mint Fields Pvt. Ltd., Surat, it is held that enhancement resorted to is not legally justified and so un-sustainable. Redemption Fine - Penalty - HELD THAT:- The redemption fine and penalty imposed on the appellant are dis-proportionately high when compared to the declared value of the impugned goods at Rs.27,93,043/- which was enhanced to Rs.48,59,847/-. The confiscation of the imported goods, imposition of redemption fine and penalty on the appellant are not legally justified and so set aside - appeal allowed.

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• 2023 (8) TMI 360
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - it is alleged that the Agency knew that E-waste i.e., old and used computers, laptops in place of declared items, are being imported by syndicate in violation of extant legal provisions - retraction of statements - cross-verification not allowed - time limitation - HELD THAT:- From the perusal of the records, it is found that the appellants have not been engaged as the customs broker in the transaction of transshipment of imported goods from JNCH to ICD, Pune. While the investigation reveals that Shri Kishor Auti, Proprietor of appellants CB firm had introduced or acted as via-media between Shri Bhavik Mehta, the beneficial importer and Shri Sagar Rohidas Bangar, who had handled the actual work of customs formalities. The appellants and/or the proprietor i.e., Shri Kishor Auti of the appellants CB firm was not engaged as customs broker in any of the transaction involving the above violations in the instant case. It is true that as an individual person Shri Kishor Auti, is responsible for the omission and commission which had led to import of e-waste in violation of the Customs Act, 1962 read with relevant Rules and Regulations. We also find that separate show cause proceedings have been initiated for the role played by Shri Kishor Auti in his individual capacity in the above transactions under the Customs Act, 1962 by DRI vide show-cause notice dated 22.09.2020. In view of the factual details, under no circumstances, particularly when the appellants have not been engaged as a customs broker in the aforesaid transaction, there can be a case for taking action against violations of CBLR. Hence, the impugned order does not sustain on this very ground alone. CBEC Circular No. 46/2005-Cus. dated 24.11.2001, automated transshipment module was introduced for permitting transshipment of containerized cargo from one port to ICD/CFS, as per Section 54 of the Customs Act, 1962 and the Rules framed therein. Accordingly, the shipping agents or ICD/CFS operator, who act as an authorized carrier of goods under transshipment is responsible for such goods and are required to safeguard the customs duty, safety of cargo and avoid pilferage during enroute etc. and for this purpose they execute bond and bank guarantee before the customs authorities at gateway port. Hence, these persons are responsible for the transshipment of the cargo, and the appellant custom broker is not responsible for such act under Section 54 of CBLR, 2018. Time Limitation - HELD THAT:- As the SCN was issued in this case on 31.03.2022 after having the investigation completed on 22.09.2020, obviously this requirement of CBLR has not been fulfilled in this case. There is no reasonable explanation given for the delay in initiating action under CBLR in the impugned order. Hence on this count also, the impugned order confirming the revocation of the customs broker s license on the basis of the enquiry report against the show cause notice dated 31.03.2022 is not sustainable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants, as well as in imposition of penalty against them and for forfeiture of security deposit - appeal allowed.

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• 2023 (8) TMI 359
  Levy of penalty u/s 112 (b) of the Customs Act, 1962 - Smuggling - gold biscuits of foreign origin - demand merely on the basis of the statements of the employees of the appellant - existence of corroborative evidences or not - HELD THAT:- The similar issue has been examined by the judicial pronouncement in RAMCHANDRA VERSUS COLLECTOR OF CUSTOMS [ 1991 (9) TMI 206 - CEGAT, NEW DELHI] , wherein this Tribunal has observed no sale has been established, identity of the buyer and seller has not been established. As a consequence, the currency cannot be considered to represent the sale proceeds of the contraband goods and, therefore, no violation of Section 121 has been made out. Since the charge under Section 121 of the Customs Act has not been proved against the appellant the currency notes cannot be retained by the Department and have to be returned to the appellant. Imposition of penalty is also not legal and proper in the absence of proof of violation of any provisions of the Customs Act. Further, in the case of SHRI HEM RAJ SONI, S/O SHRI HEERA LAL AND SHRI DWARKA DASS, S/O SHRI POKAR DASS VERSUS CCE, JAIPUR [ 2014 (5) TMI 88 - CESTAT NEW DELHI] , this Tribunal has observed The contention of the Revenue that they are competent to confiscate the sale proceeds of the smuggled goods under Section 121 of the Customs Act is wholly fallacious. Thus, no evidence has been adduced against the appellant for involvement in the activity of smuggled gold and no cogent evidence has been produced apart from the statements recorded during the course of investigation that the appellant was involved in the activity of smuggled gold and cash recovered during search was the sale proceeds of smuggled gold. Therefore, the penalty on the appellant is not imposable. In the light of the above observations by the Hon ble High Court of Punjab Haryana in M/S G-TECH INDUSTRIES VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 957 - PUNJAB HARYANA HIGH COURT] , it is held that as the statements which have been relied upon the adjudicating authority have not been examined in terms of Section 138 (B) of the Customs Act, 1962, therefore, the said statement cannot be relied upon to impose penalty on the appellant. Thus, in the facts and circumstances of the case, there is no evidence available against the appellant to impose penalty under Section 112(b) of the Customs Act, 1962 on the appellant. Therefore, the penalty imposed on the appellant is set aside - appeal allowed.

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• Corporate Laws

• 2023 (8) TMI 358
  Professional Misconduct - Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - Non-Compliance with SA 210 Agreeing the Terms of Audit Engagements - Non-Compliance with SA 230 Audit Documentation - Non-Compliance with SA 700, Forming an Opinion and Reporting on Financial Statements - Non-Compliance with other SAs - Non-Compliance with other SAs - Penalties and sanctions. Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - HELD THAT:- The absence of due diligence and display of gross negligence by the EP run afoul of the provisions of the Chartered Accountants Act, 1949 and resulted in professional misconduct as conceived under Section 22, Clause 9 of Schedule I of the Chartered Accountants Act, 1949. The acceptance of an invalid appointment letter for the Statutory Audit of the Branch, the conduct of the audit based on an invalid appointment, convoluted logic and baseless reading of the law to justify the actions show the absence of professional skepticism and gross negligence on the EP s part. Therefore, we find that the charges in paras 13 and 14 above stand proven. Non-Compliance with SA 210 Agreeing the Terms of Audit Engagements - HELD THAT:- The EP accepted the appointment letter issued by DHFL and issued the audit report without complying with the requirements of SA 210. Between 2015-16 and 2016-17, there was a significant change in the circumstances relating to the branch audit. In 2015-16 the AGM decided to have a separate branch auditor and company s auditor, while in subsequent years there was only one auditor (CAS) to audit the Company and all its branches. This calls for the application of para 13 of SA 210 as well. EP s negligence of the provisions of SA 210 resulted not only in accepting an illegal appointment and non-compliance with SA 210 but also in the absence of professional skepticism and professional judgment in understanding the objective and scope of the audit, thereby violating SA 200 also. Therefore, the charges stand proven. Non-Compliance with SA 230 Audit Documentation - HELD THAT:- On examining the additional documents added by the EP in the interest of fairness, and have taken the evidence into consideration wherever it is supporting or corroborating the original audit documentation submitted to NFRA. However, the conclusion is inescapable that additional documentation submitted to NFRA was deficient in terms of the nature, timing and extent of the audit procedures performed, who prepared and reviewed the audit working papers (WPs) and the timing of the audit procedures. For example, the majority of the additional documents submitted (purportedly from the EP s previous year s audit file), only have the sign and stamp of the Audit Firm. It carries no indication of any audit procedure being performed in respect of the financial year in question i.e. 2017-18 - the EP did not follow the requirements of SA 230 and that the audit documentation does not give evidence of the nature, timing and extent of audit procedures performed, results of those audit procedures and conclusions reached during the. Hence the charges regarding non-compliance with SA 230 stand proven. Non-Compliance with SA 700, Forming an Opinion and Reporting on Financial Statements - HELD THAT:- SA 700 is applicable in this audit and as per the SA 700, the EP is required to evaluate the effect of the misstatements and decide to appropriately modify the opinion. Determination of materiality is therefore important in an audit. Despite noting the evidence for control deficiency such as the observations noted by EP in his working paper titled Audit observation for the Koehl branch, the EP did not document how this deficiency was immaterial and how it did not affect the financial information - There is also no determination of materiality thresholds in the audit file. In the absence of documented conclusions, insufficient audit documentation, determination of materiality and assessment of the risk of misstatements and the test of controls we observe that the audit opinion issued by the EP does not comply with SA 700. Hence, the charges stand proven. Non-Compliance with other SAs - HELD THAT:- Non-compliance with para 6, 7, 8, 9 10 of SA 300 as the EP failed in establishing an overall audit strategy and development of audit plan etc. in accordance with SA 300 - the audit plan is not required since the scope of work is well defined have no basis in the SAs and show the EP s absolute disregard to the quality of audit. Moreover, the audit plan now submitted by the EP was not forming part of the Audit File for 2017-18. Such contentions of the EP are against the fundamentals of SA 230 that require the maintenance of an Audit File that can enable an experienced auditor having no connection with the audit to understand the nature, timing and extent of the audit procedures performed to comply with the SAs. To evidence compliance with the requirements of the SAs, it is the fundamental stipulation of SA 230 that the auditor shall assemble the audit documentation in one audit file (and not multiple audit files of different years). Non-compliance with para 5, 6 11 of SA 315 and para 1, 5 6 of SA 330 - HELD THAT:- A s the audit file lacks any documentation regarding the performance of risk assessment procedures for material misstatements at the financial statement level and assertion level and response to such risks etc. - In the absence of any documentation in the audit file, the contention is only an afterthought and hence not admitted. Non-compliance with para 10, 11 14 of SA 320 - HELD THAT:- Mandatory documentation requirements of SA 320 include the factors considered in the determination of materiality and materiality for the financial statements as a whole, the materiality level or levels for particular classes of transactions, account balances or disclosures, performance materiality and any revision of the materiality amounts as the audit progress. The audit documentation in the present case did not contain any of these details and hence the replies of the EP are not acceptable. Non-compliance with para 5, 6, 8, 14 15 of SA 450 in the absence of the evaluation of identified misstatements and uncorrected misstatements - HELD THAT:- The EP submits that there were no instances of identified misstatements and material misstatements and hence SA 450 is not applicable. The reply of the EP is not acceptable in the absence of any documentation or conclusions in the audit file in this regard. Non-compliance with para 6 9 of SA 500 in not designing and performing audit procedures to obtain sufficient appropriate audit evidence and not evaluating the reliability of information produced by the company - HELD THAT:- The replies are not accepted since there is no evidence in the Audit File of designing and performing audit procedures, such as an audit plan, the substantive procedures performed and the conclusions drawn. Non-compliance with para 6 of SA 520 relating to the design and performance of analytical procedures - HELD THAT:- The EP submits that SA 520 is not applicable since it is not a financial statement audit. The reply is not accepted since, as explained earlier in this order, the SAs are applicable for the branch statutory audit also. Non-compliance with para 4, 6, 7, 8 9 of SA 530 relating to the determination of sample design, sample size and required audit procedures - HELD THAT:- The conditions in the appointment letter do not evidence basis for EP s work and conclusions. The SAs casts a responsibility 22 on the auditor to design and perform audit procedures to obtain sufficient appropriate audit evidence on which to base the audit opinion. The terms dictated by the company cannot substitute this responsibility. There is no evidence that any of the sampling and the related procedures as detailed in SA 530 have been complied with by the EP, while the audit opinion is based on sample testing. In the absence of any evidence to show compliance with the determination of sample design, sample size and audit procedures performed on it, the contentions of the EP are not accepted. Penalties and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The law lays down a minimum punishment for such misconduct - The EP in the present case was required to ensure compliance with SAs to achieve the necessary audit quality and lend credibility to the reports issued to facilitate the Company s Auditor to form their opinion on the Financial Statements. As detailed in this order starting from the acceptance of the Audit to the conduct and conclusion of the audit, there were substantial deficiencies in the Audit and abdication of responsibility on the part of EP, CA Sam Varghese, which establishes the professional misconduct. Despite being a qualified professional, it is found that the EP, CA Sam Varghese has not adhered to the Standards of Audit. Considering the fact that professional misconducts have been proved and considering the nature of violations and principles of proportionality and keeping in mind the deterrence, proportionality, signalling value of the sanctions and time required for improvement in knowledge gaps, in the exercise of powers under Section 132(4)(c) of the Companies Act, 2013, proceed to order the following sanctions: i. Imposition of a monetary penalty of Rs 100,000 (One Lakh) upon CA Sam Varghese; ii. CA Sam Varghese is debarred for one year from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.

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• Insolvency & Bankruptcy

• 2023 (8) TMI 357
  Validity of SCN issued - payment of Rs.1 crore has been made to respondent no. 1 operational creditor - HELD THAT:- It will be open to the appellant to point out the aforesaid factum before the National Company Law Tribunal (NCLT)/National Company Law Appellate Tribunal (NCLAT) - A number of applications have been filed for intervention/impleadment by other operational/financial creditors of respondent no. 2 Balaji Fiber Reinforce Pvt. Ltd. It will be open to the appellant and the parties who have filed application(s) for intervention/impleadment to take steps under the Insolvency and Bankruptcy Code, 2016. Appeal disposed off.

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• 2023 (8) TMI 356
  Preferential Transactions - Validity of impugned order - error in accepting the conclusions in Forensic Report - Delegation of Powers of the Resolution Professional or not - HELD THAT:- It is brought to the fore, that the Corporate Debtor, had transferred Sums, from its Bank Account, to the Appellants / Respondents, with a view to Discharge its Antecedent Operational Debt, and by virtue of the Payments so made, the Appellants / Creditors, were placed in a higher Beneficial Pedestal, than that of the Financial Creditors, when Distribution of Assets, are made as per Section 53 of the Code. In the instant case, the Transactions that took place between the period from 27.12.2019 and 12.04.2021, were rightly taken into account, and undoubtedly, the period specified in Section 43 (4) (a) of the Code, is fulfilled, considering the fact that the Insolvency beginning date, was 21.12.2021, and the Transactions, were held between the Related Parties / Appellants / Respondents, being the Former Directors of the Corporate Debtor. No wonder, the lookback period of two years, squarely applies to the facts of the instant case. Although, on behalf of the Appellants / Respondents, a stand was taken (Before the Adjudicating Authority), that the Transactions, were made in the Ordinary Course of their Business, and the amounts, withdrawn from the Corporate Debtor s Account, etc., and usurping the same in respect of the Antecedent Debt, cannot tantamount to carrying on business in an ordinary manner of the Corporate Debtor, or in the Financial Affairs of the Respondents. Looking at from any angle, the impugned transactions, are not exempted transactions, as per Section 43 (3) of the Code, in the considered opinion of this Tribunal - In the present case, the NPA, was made on 23.02.2021 and the transactions, pointed out by the Appellants / Respondents, were before the earlier Date of the NPA, is not omitted. As far as the present case is concerned, on account of the Preferential Transactions, the Individual and the Companies, were gained at the cost of Creditors and in Law, the Appellant Nos. 1, 3 and 5 / Respondent No. 1, 3 and 5 and Paptrade India Pvt. Ltd. / Company (6th Respondent in IA (IBC) / 206 / KOB / 2022, are in Preferential Transaction. The impugned order passed by the Adjudicating Authority / Tribunal, in directing the 1st Appellant / 1st Respondent, to pay an amount of Rs.3,96,04,622/-, the 2nd Appellant / 3rd Respondent, to pay an amount of Rs.30,39,400/- and the 3rd Appellant / 5th Respondent, to pay a Sum of Rs.37,86,943/-, and the Paptrade India Pvt. Ltd. (6th Respondent in IA (IBC) / 206 / KOB / 2022), to pay a Sum of Rs.47,13,869/-, within a month from the date of Order, failing which, the amounts will carry 12% Simple Interest, till the date of Realisation, is free from any Legal Infirmities. Accordingly, the Appeal, sans merits and it fails. Appeal dismissed.

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• Service Tax

• 2023 (8) TMI 354
  Entitlement to a reward under the Reward to informers and Government Servants Review of Policy-Procedure and Guidelines - reward upto 20% of the amount of duty evaded plus amount of fine and penalty imposed and recovered or not - case of appellant is that though he was entitled to the reward of Rs. 51.87 lakhs, he was sanctioned only a sum of Rs. 5.50 lakhs by way of reward. HELD THAT:- The minutes show complete non application of mind on the prayer made by the appellant. It is well settled that if the decision making authority does not record reasons for coming to a particular conclusion, the reasons cannot be supplied by filing affidavits - the Committee constituted under the State Government Policy dated 20.06.2001 directed to reconsider the case of the appellant. The pleadings in this appeal and other documents which are on record shall be placed before the Committee. Appeal allowed in part.

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• 2023 (8) TMI 353
  Denial for petitioner s claim for interest on refund sanctioned - denial on the ground that the petitioner s claim was processed within a period of three months from the receipt of its letter - Section 11BB of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - HELD THAT:- In a case where Revenue denies the claim for refund and the assessee succeeds before the Appellate Authorities, the interest is required to be calculated from the date immediately after the expiry of three months from the date of application for the refund and not from the date of the appellate orders. This issue was settled by the Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT ] . Although it was suggested by the learned Counsel for the Revenue that the refund should be calculated from the date after the expiry of three months from the date of the CESTAT Order, that is, three months from the order dated 07.12.2022. The said contention is unmerited and as stated above, the said issue stands authoritatively settled by the Supreme Court in Ranbaxy Laboratories Ltd. - The above question does not arise in the present case as the Adjudicating Authority has correctly proceeded on the basis that the interest under Section 11BB of the Excise Act would be payable from the date immediately after the expiry of three months from the date of application for refund, if the same is not processed within the said period of three months. He has, however, erred in holding that the petitioner s letter dated 07.02.2023, requesting for processing its claims for refund is to be considered as its application for refund. The impugned order is, ex facie, erroneous to the extent it rejects the petitioner s claim for interest. The impugned order sets out a tabular statement as reproduced hereinbefore, clearly stating the dates on which the petitioner had made its claim for refund - Petition allowed.

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• 2023 (8) TMI 352
  Belated adjudication of SCN - Recovery of Service Tax - Authority acting under Section 73 of the Finance Act, 1994 to keep the SCN in a cold storage for such a long period - justification as furnished by the department is acceptable or or not - whether the law would permit adjudication of such a belated adjudication of the show cause notice? HELD THAT:- It is opined that there has to be a holistic approach and reading of the provisions of Section 73, when it concerns the obligation and repository of the power to be exercised by the concerned officer to recover service tax, in adjudicating any show cause notice, issued against an assessee considering the raison d etre of the provision. It is hence expected that the approach and expectation from the officer adjudicating the show cause notice would be to strictly adhere to the timelines prescribed by provisions of the Act, as there is a definite purpose and intention of the legislature to prescribe such time limits, either under Section 73(4B) of six months and one year respectively or of five years under Section 73(1). In the facts of the present case, such requirement and obligation the law would mandate is completely overlooked by the officer responsible for adjudicating the show cause notice. We are not shown any provision, which in any manner would permit any authority to condone such inordinate delay on the part of the adjudicating officer to adjudicate show cause notice. There can be none, as the legislature has clearly intended to avoid uncertainty, which otherwise can emerge. Thus, what would become applicable are the settled principles of law as laid down in catena of judgments, that the period within which such adjudication should happen is as mandated by law and in any case it needs to be done within a reasonable period from the issuance of the show cause notice. Further, whether such period is a reasonable period would depend upon the facts and circumstances of each case. An inordinate delay is seriously prejudicial to the assessee and the law itself would manifest to weed out any uncertainty on adjudication of a show cause notice, and that too keeping the same pending for such a long period itself is not what is conducive. A substantial delay and inaction on the part of the department to adjudicate the show cause notice would seriously nullify the noticee s rights causing irreparable harm and prejudice to the noticee. A protracted administrative delay would not only prejudicially affect but also defeat substantive rights of the noticee. In certain circumstances, even a short delay can be intolerable not only to the department but also to the noticee. In such cases, the measure and test of delay would be required to be considered in the facts of the case. This would however not mean that an egregions delay can at all be justified. Petition allowed.

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• 2023 (8) TMI 351
  Classification of services - Broadcasting Services or not - operating television channel and also uplinking facility for third party - It appeared to the department that the allotment of air time was relating to broadcasting service and that the appellant is primarily engaged in the business of television broadcasting - extended period of limitation - HELD THAT:- After 16.06.2005, the taxable service under Section 65 (105) (zk) has become wide so as to include transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operators (MSO) or any other person on behalf of the said agency or organisation. Thus the clarification issued by the Board vide its circular dt.09.07.2001 that MSO is not a broadcasting agency as they merely transmit signals looses its relevancy after the amendment brought forth in the definition. The argument of the appellant taking shelter of the circular dt. 09.07.2001 therefore fails. It is stated that the channels SS Music as well as Sur Sangeeth are owned and operated by the appellant. Again, the accounts maintained by appellant show collection of charges towards airtime allotment. This fact of collecting charges for airtime allotments would lead to a strong inference that the appellant has indeed been rendering Broadcasting Service - The present status of the application shows abandoned . Merely because an application was given by M/s.Fortune Media (P) Ltd. it cannot be said that the said channel belonged to them and is discussed in this order. The permission letters submitted before the competent authority for issuing licence shows that these channels SS Music and Sur Sangeeth are owned by appellant. On merits, we do not find any grounds to accept the contention of appellant that they are not rendering any broadcasting services. Time Limitation - HELD THAT:- The appellant has totally suppressed these facts and has tried to create confusion so as to escape the liability to pay tax. The agreement entered by M/s.Coxswain Technologies Ltd. with M/s.Fortune Media Pvt. Ltd. and M/s.Mindscape Creations Pvt. Ltd. has to be considered as a sham document to cover up the broadcasting service rendered by the appellant. Proceedings before quasi-judicial authority is not tied up in the heavy shackles of Procedures and Evidence Act. The same should not be taken advantage by parties to misrepresent facts and furnish fabricated and sham documents - the demand invoking extended period and imposition of penalties are legal and proper. Appeal dismissed.

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• 2023 (8) TMI 350
  Extended period of limitation - service tax on chartered accountant service provided by the appellant as a sub-contractor to the main contractor M/S. Deloitte Haskins and Sells - HELD THAT:- There is no contest of taxability on merit however, the appellant have strongly submitted that the demand is hit by limitation. In this regard, it is found that the appellant were issued other show cause notice and this tribunal has dropped the demand on limitation in CC CHOKSHI CO. VERSUS C.S.T. SERVICE TAX-AHMEDABAD [ 2019 (1) TMI 2028 - CESTAT AHMEDABAD] . From the above decision in the appellant s own case it is clear that the issue has been raised earlier also by the Revenue therefore, the activity of the appellant was very much known to the department, hence, the department was not prevented to issue the show cause notice for the subsequent period within a normal time period. It is also noted that during the relevant period i.e. 2005 -2006, the board circular dated 31.10.1996 was in force and according to which the appellant was not required to pay the service tax being a sub-contractor. For this reason also the appellant had a bona fide belief that they are not liable to pay any service tax. The issue of limitation has been decided by the Hon ble Supreme Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [ 2006 (4) TMI 127 - SUPREME COURT ] wherein it was held that once on a particular issue the show cause notice has been issued, on the same issue for the subsequent period no extended period can be invoked as demand for the extended period do not sustain being time bar. The demand is clearly hit by limitation. Hence, the impugned order is set aside - Appeal allowed.

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• 2023 (8) TMI 349
  Levy of Service Tax - maintenance or repair service in respect of roads - HELD THAT:- It is an admitted fact that the Appellant has provided repair, management and maintenance of roads services for NHAI and others, which fall under the category of maintenance or repair service. It is found that by virtue of insertion of Sec 97(1) vide Finance Act, 2012 with retrospective effect from 16.06.2005, applicable till 26.07.2009, no service tax is leviable on the activity of repairs, management and maintenance of roads. The impugned order set aside - appeal allowed.

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• 2023 (8) TMI 348
  Taxability of Construction Services provided to State Governments - providing services inter-alia related to construction works and repairs/renovation for police quarters, Police Stations, Education Institution, Educational Museum, Court Building, Public Health Centers and other Buildings as per the requirement of State Government - HELD THAT:- In the present matters demand of Service tax has been confirmed by the Ld. Commissioner under the category of Construction of Complex Services and Commercial or Industrial Construction Services as defined under the Section 65(30a) 65(91a) and 65(105)(zzzh) 65(105) (zzq) of Finance Act, 1994. Appellants claimed that their construction activity provided to the government not covered under the above sections as per the Explanation of Section 105 (zzzh) of the finance Act, 1994 and not covered under Section 105(zzq) of the Finance Act, 1994 as they have not provided services to commerce or industries. It is observed that in impugned orders Learned Commissioner has not considered the aforesaid claim of the appellants and confirmed the service tax demand on the ground that appellants have not directly provided the services to the government of Gujarat or Police department or others. The facts of each case needs to be examined to apply the ratio of the judgments relied upon by the appellants, which has not been done by the adjudicating authority in the present case. Since the adjudicating authority has not examined the claim of the appellants and the judgments relied upon in impugned orders, the matter needs to be remanded to the Adjudicating authority for fresh decision. Appeal allowed by way of remand.

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• Central Excise

• 2023 (8) TMI 355
  Rejection of Refund claim - assessee is an intermediary in the entire chain, who collects the duty from his customer and deposits the same to exchequer - burden of duty on appellant or not - applicability of bar of unjust enrichment - time limitation - HELD THAT:- On the issue whether the bar of unjust enrichment will not apply to refund claims filed by the manufacturer, if he issues the credit notes subsequent to clearance of the goods from the place of clearance, refunding the excess duty recovered by him at the time of clearance of the goods, a three judges bench of Hon ble Supreme Court has in the case of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. [ 2016 (8) TMI 1071 - SUPREME COURT] , observed T he word buyer in Clause (e) to proviso to Section 11B(2) of the Act cannot be restricted to the first buyer from the manufacturer. Another submission which remains to be considered is the requirement of verification to be done for the purpose of finding out who ultimately bore the burden of excise duty. It might be difficult to identify who had actually borne the burden but such verification would definitely assist the Revenue in finding out whether the manufacturer or buyer who makes an application for refund are being unjustly enriched. If it is not possible to identify the person/persons who have borne the duty, the amount of excise duty collected in excess will remain in the fund which will be utilized for the benefit of the consumers as provided in Section 12D. In the present case, admittedly the application for the refunds have been filed by the appellant in respect of the goods which were cleared by them on payment of duty assessed by them on the value determined at the place and time of removal. It is settled law that the duty has to be determined and paid by the appellant assessee at the time of clearance of the goods on the invoice made by them. It is also settle principle of accounting that the accounts are maintained on the accrual basis and the appellant assessee recovers determined on the invoice from his customer the moment he clears the goods after assessing the duty on the invoice. Central Excise Duty, is indirect tax and is tax on the consumer of the goods. The assessee is only an intermediary in the entire chain, who collects the duty from his customer and deposits the same to exchequer. Thus the burden of the duty is always on the customer and that forms the basis of the principles of unjust enrichment enshrined in section 11B of the Central Excise Act, 1944. This principle of unjust enrichment has been held by the Hon ble Apex Court, in case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] as constitutional. Section 12D creates a statutory presumption to the effect that the burden of the duty reflected on the invoice has been passed on to the consumer of the goods. It is also interesting to note that credit notes which form the basis of the refund claim filed are the documents which have no statutory recognition under any of the provision of the Central Excise Act, 1944 - Further the seller is not having any authority to refund any excise duty the burden of which has been passed on by him to the buyer of goods. In case of the Mafatlal Industries ltd Addisson Co referred, Hon ble Supreme Court has after referring to the provisions of the Section 11 B, concluded that the purchaser/ buyer of the goods could have claimed the refund of any excess duty paid. It is settled law that when statute provides for a manner of doing a thing it should be done in the manner as provided or not at all. The basic crux of the above referred decision of the Hon ble Apex Court is that the claim for the refund of any excess duty paid should be made in accordance with the provision of the Section 11 B of Central Excise Act, 1944 by the person who has borne the burden of duty and adjudicated accordingly. It can be the first purchaser or the second purchaser or so on of the goods cleared on payment of duty sought as refund. Hon ble Bombay High court has in the appellant case M/S. VILSON ROOFING PRODUCT PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE KOLHAPUR COMMISSIONERATE [ 2018 (10) TMI 24 - BOMBAY HIGH COURT] , referred to para 35 and 36 of the decision of the Hon ble Apex Court in case of Addisson Co. - As directed by the Hon ble High Court vide order dated while remanding the matter for reconsideration to the tribunal vide order dated 24.09.2018 we refer to the Certificate of Chartered Accountant produced by the Appellant Assessee - From the above certificate what is evident that certain amounts paid towards central excise duty is shown as amount receivable in the books of account of the appellant. Said certificate is totally silent on the aspect as to who has borne the burden of duty as the same do not refer to any invoice or the credit notes issued by the appellant assessee. Hon ble Supreme Court has dismissed the appeal against this order by referring to the Chartered Accountant certificate which clearly contained the details of credit notes and the cheques issued. There are no such details in the CA Certificate produced, hence it cannot be said that this CA Certificate establishes that the burden of the duty claimed as refund has not been passed on to the customers. Thus there are no merits in the submission made to remand the matter for consideration of the issue in light of the CA Certificate. Whether the Appellant could have filed the refund claim without the self assessment made by the appellant on the invoice determining the duty payable on the goods cleared by the appellant being modified by the appellate authority? - HELD THAT:- A larger bench of tribunal has in the case of COMMR. OF CUS. (IMP.) , NHAVA SHEVA VERSUS EUROTEX INDUS. EXPORTS LTD. [ 2007 (8) TMI 364 - CESTAT, NEW DELHI] has observed A refund claim is not maintainable unless the assessment order in pursuance of which the duty paid is challenged and modified/set aside. In the present cases nothing has been produced before us to hold that the assessment orders made by the appellants have ever been modified by any authority in appellate proceedings - thus, specific averments on the merits of the refund have been made in the show cause notice including the averment that refund claimed is not on account of the decision rendered in the favour of appellant assessee. Thus there are no merits in the submissions made by the appellant assessee on this account. Maintainability of appeals filed by the revenue on the ground that they are contrary to the litigation policy of the Government of India in terms of the amounts involved in the dispute - HELD THAT:- At the time when the said appeals were filed they were not barred as per the litigation policy. With the passage of the time the monetary limit, for filing the appeals have been enhanced. Revenue authorities were also directed to examine in respect of withdrawal of the appeals that are below the thresh hold level specified - In the present case revenue has not filed any application seeking withdrawal of these two appeals - thus in absence of any such application seeking withdrawal of the appeal the appeal will have to be considered and decided on the merits. Time Limitation - HELD THAT:- Appellants have in their submissions admitted that certain refund claims filed by them are time barred as they were filed beyond the period of limitation as per Section 11B of the Central Excise Act, 1944 and they do not dispute the rejection of these refund claims on ground of limitation. Where so ever the refund is held admissible, but cannot be paid to them for the reason of unjust enrichment, the amount to be refunded needs to be credited to the Consumer Welfare Fund. Appeal of revenue allowed.

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• 2023 (8) TMI 347
  Maintainability of appeal - low tax effect - Export Oriented Unit, 100% EOU - Manufacture - Demand and penalty - Tribunal had granted relief with the regard to extended period of limitation and penalty - HELD THAT:- The Appeals are dismissed, leaving question of law, if any, open.

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• 2023 (8) TMI 346
  Clandestine Removal - demand mainly due to the difference between the sale figures available in the Schedule of the Balance Sheet for financial years 2004-05, 2005-06, 2006-07 and 2007-08 and the quantity of clearance of those products declared in the monthly ER-1 returns filed by them during the corresponding financial years - whether the correction Certificates dated 18.06.2008 issued by the Charted Accountant can be accepted or not? - HELD THAT:- The Correction Certificates are added as Corrigendum to the Schedule. They are submitted to the Registrar of Companies and accepted by them. Hence, the corrected certificates become part and parcel of the Schedule to the Balance Sheet. The Ld A.R submitted that before correcting the Schedules of the Balance Sheets, it must be approved by the extraordinary General Body Meeting. Also, there is no evidence on record that the Registrar has accepted these changes. Irrespective of acceptance or otherwise of the changes in the Schedules of the Balance Sheet, it is found that there is nothing on record to doubt the veracity of the Certificates issued by the Charted Accountant or the reconciliation statements submitted by them - it is observed that duty cannot be demanded merely based on the difference in sales figures found between the balance sheet and the and ER-1 Returns. There must be some positive evidence brought on record to substantiate the allegation of clandestine clearance. Mere allegation of shortage based on the difference in sales figures found between the balance sheet and the and ER-1 Returns, cannot be the basis for confirming the central excise duty on the differential quantity. In the case of KUTCHH STEELS PVT. LTD. VERSUS COMMISSIONER OF C. EX. ST., RAJKOT [ 2014 (6) TMI 483 - CESTAT AHMEDABAD ], it has been held that the demand based on difference of sale, income as indicated ER-1 and Balance Sheet, in the absence of any evidence of clandestine manufacture and sale of goods, is not sustainable - In the case of MARTIN HARRIS LABORATORIES LTD. VERSUS COMMISSIONER OF C. EX., GURGAON [ 2005 (3) TMI 240 - CESTAT, NEW DELHI ], it has been held that the Balance sheet cannot be held as sacrosanct document to prove clandestine removal. The demands made in the impugned order on the basis of the difference in Balance Sheet and ER-1 figures is not sustainable. Excess of stock of 2260 kgs. of Master Batch found on physical verification of stock of raw materials on 12.06.2008 - HELD THAT:- It is observed that they have not taken Cenvat credit on the excess quantity of Master Batch found. The Appellant has given the explained that the difference might have occurred due to excess consumption of Master Batch recorded by the supervisor over a long period time. However, since no Cenvat credit was taken on such excess quantity of Master Batch, confiscation of the same does not arise. This view has been taken by the Tribunals in a number of cases and hence no penalty is imposable on the appellants on this count. However, the excess quantity has already been seized and then released provisionally. There is no allegation in the Notice that they have taken any excess credit on account of this excess quantity of master batch found. There is no finding in the impugned order also that the excess quantity has been kept for manufacturing and clearance of the goods clandestinely - the confiscation of the excess quantity of master batch and the redemption fine imposed in the impugned order. Penalty imposed on the Director Shri.S.S. Jindal and the Authorized Representative Shri. B. Kamilla - HELD THAT:- There was no role of them in the alleged short payment of duty. The demand has been confirmed based on the difference between the sales figures available in the Balance Sheet and the value declared in the ER-1 returns. The Director and the Authorized Representative has no role in the difference between the figures. The error in the figures, if any, has been committed by the Charted Accountant, which has been admitted by the Firm and rectified. The issue in respect of the alleged clearance without payment of duty by issuing the cash memos has been settled before the settlement commission in respect of 50 cash memos - the role of any of the official has not been established in the alleged clearance of goods in respect of the 14 cash memos, the penalty cannot be imposed on them. In view of the above, it is held that the penalty imposed on the Director and Authorized representative, not sustainable. The demand confirmed in the impugned order, except Rs 4,65,299/- accepted and paid by the Appellant, in respect of the 14 cash memos. The confiscation of the excess quantity of master batch found and the redemption fine imposed in the impugned order upheld - penalties set aside. Appeal disposed off.

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• CST, VAT & Sales Tax

• 2023 (8) TMI 345
  Grant of Selection Grade cancelled - recovery order on the ground that the earlier service rendered in Khadi Board is not eligible service for awarding Selection Grade and Special Grade in the Government department - HELD THAT:- Admittedly, the petitioner was appointed as Khadi Assistant Grade-III in Khadi Board and thereafter, the petitioner found as excess staff in Khadi Board, thereby totally she was absorbed in other Government department. While she was working in the respondent department, she was awarded with Selection Grade and Special Grade on completion of 10 years and 20 years service, respectively. That the incentive increment sought to be recovered subsequently, on the ground that the service rendered in the Khadi Board, is not eligible to get benefits in the respondent department, thereby, the present recovery order was passed. Though there is no violation of principles of natural justice, the present recovery order is passed after hearing the petitioner. Similar issue came up for consideration before the Hon ble Apex Court in State of Punjab and others Vs. Rafik Masih [ 2014 (12) TMI 1415 - SUPREME COURT] , wherein, the Apex Court held that in the absence of any misrepresentation, if any benefits granted to the clause 3 and 4 employees cannot be sought to be recovered subsequently, at a later point of time. The Recovery proceedings, initiated by the respondents is not sustainable, and accordingly, the present impugned order is quashed - Petition allowed.

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• Indian Laws

• 2023 (8) TMI 344
  Dishonour of Cheque - discharge of existing liability - petitioner s right to cross-examine denied - dismissal of petitioner s application u/s 311 Cr P. C. - HELD THAT:- It is a stark case of impugnity with which the petitioner has taken the system for a ride. Complaint under Section 138 NI Act was filed in 2014 and more than 9 years have elapsed since then. The petitioner had been seeking adjournments on one pretext or the other. Time and again, the petitioner got the coercive process/execution of NBWs halted by stating that he was ready to amicably settle the matter. The fact that the same was only a ploy, is evident from the fact that he did not even diligently appear before the mediator. In the second round of mediation, even after arriving at settlement on 13.08.2019, despite repeated opportunities neither did the petitioner honour his own undertaking in the MOU to pay the dues nor did he comply with the undertaking given by him before the court from time to time to make the payment - even two cheques issued by the petitioner pursuant to settlement, were dishonoured, thus compelling the respondent herein to file the petition for contempt bearing Cont. Cas(C) 424 of 2020, which is stated to be pending. It is well settled that though Section 311 Cr.P.C confers wide power on the Court, the same needs to be exercised only to meet the ends of justice. This power has to be exercised with great care, caution and circumspection and only for strong and valid reasons. Power under this provision shall not be exercised, if the court is of the considered view that the application has been filed as an abuse of process of law. One can also not lose sight of the intent of the legislature in providing a criminal sanction for dishonour of the cheque, that is, to ensure the credibility of transactions involving negotiable instruments. As noted above, the petitioner delayed inordinately, conclusion of the proceedings under Section 138 NI Act, thus impacting not only the faith in negotiable instruments, but also in the justice dispensation system. The petitioner even made mockery of process of negotiated settlement through mediation. Thus, the application under Section 311 Cr.P.C was nothing but a gross abuse of process of law. Thus, no infirmity is found in the impugned order rejecting the petitioner s application u/s. 311 Cr.P.C and the same does not call for any interference. The petition is accordingly dismissed with the cost of Rs. 25,000/- to be paid to the respondent.

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• 2023 (8) TMI 343
  Dishonour of Cheque - misuse of blank cheque - passing of consideration as contained in Section 118 of NI Act - presumption that the holder of a cheque received the same of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability - rebuttable presumption or not - HELD THAT:- The presumption under Section 139 is rebuttable in nature. If the basis for drawing a presumption under Section 139 of the N.I.Act exists, the court shall draw a presumption under the said Section, in which case the evidential burden will be on the accused to prove that there was no debt or liability. Whether the presumption is rebutted or not would depend upon the facts and circumstances of each case. As stated already, PW1 gave evidence that the cheque in question was issued by the revision petitioner towards the discharge of the loan liability. Both courts below found that the evidence tendered by PW1 is sufficient to prove the execution of the cheque. The defence case is that, the cheque in question was issued in blank as a security by the revision petitioner at the time of executing the hire purchase agreement. When a blank cheque leaf is voluntarily signed and handed over by the accused towards some payment, it would attract presumption under Section 139 of the N.I.Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. It is true that the respondent No.1 re-possessed the vehicle and sold it. But the evidence on record would show that after repossessing the vehicle, the notice was issued for the balance amount and in response of the said notice, the revision petitioner as the surety of the borrower appeared before the respondent No.1 and issued Ext.P1 cheque towards the final settlement. It is settled that the revisional jurisdiction under Sections 397 and 401 of Cr.PC is to confer power upon superior criminal courts a kind of paternal or supervisory jurisdiction, in order to correct miscarriage of justice arising from misconception of law, irregularity of procedure, neglect of proper precautions or apparent harshness of treatment - It has been consistently held by the apex court that the jurisdiction of the High Court in revision is severely restricted and it cannot embark upon re-appreciation of evidence. Since there are concurrent findings of the two courts below, this Court would be circumspect in invoking the revisional powers under Sections 397 r/w 401 of the Code of Criminal Procedure. It is only if the decisions rendered by the courts below can be said to be either perverse, arbitrary or capricious, this Court can invoke such powers - Both the courts below concurrently found that the cheque in question was issued towards the legally enforceable debt and execution of it has been satisfactorily proved. There are no impropriety or illegality in the judgments of the court below warranting interference under the exercise of revisional powers vested with the courts. Thus the judgment of conviction rendered by both the court below does not warrant any interference. The revision petitioner shall appear before the trial court within two months from today to suffer the imprisonment till rising of the court. On that day, he shall deposit the fine amount of Rs.77,000/- also. In default of payment of fine amount, the revision petitioner shall suffer simple imprisonment for a period of three months - revision petition allowed in part.

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• 2023 (8) TMI 342
  Defamation - false entry in CIBIL - Whether false entries were made by the petitioners in CIBIL and if so whether that would amount to defaming the respondent? HELD THAT:- This Court finds that the CIC Act is a Special Act which provides for a composite mechanism to deal with all situations, including the one complained of by the respondent. In fact, Section 23 of the CIC Act provides for offences and penalties if any false entry is made by any person in any written or other document or in any information furnished by him, then, he shall be liable for prosecution - The respondent ought to have resorted to the remedy provided under the CIC Act if they were sure of their allegation that the entries made by the petitioners were false. The CIC Act further states that such a complaint has to be filed only by the credit information agency, in which case the credit information agency would have to be first satisfied with the allegations in the complaint and thereafter initiate prosecution against the offender. By-passing the above said procedure, which provides a remedy to the victim and protection to all parties concerned, and resorting to a penal provision by making statements such as friends and others in the business circle came to know about entries etc., which are not factual, is inappropriate, to say the least. In such circumstances, the impugned complaint which does not disclose the offence of defamation is unsustainable for the reasons stated. This Criminal Original Petition is allowed.

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