TMI Tax Updates - e-Newsletter
August 9, 2024

Case Laws in this Newsletter:

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

TMI Short Notes

1. Unraveling the Principles of Delay Condonation: A Comprehensive Analysis by the Supreme Court

  Indian Laws:

2. Interpreting Section 80G Provisions: ITAT's Stance on Charitable Institution Registration

  Income Tax:

3. Monetary Limits for Filing Appeals: Analyzing the CESTAT Judgment on Binding Nature of CBIC Instructions and Fair Hearing

  Customs:

4. Interpreting the Scope and Limits of Sections 153A and 153C: A Judicial Perspective

  Income Tax:

5. Section 153C and the Necessity of AO's Satisfaction: A Detailed Judicial Analysis

  Income Tax:

6. Interpreting E-Way Bill Regulations: High Court's Guidance on Proportionality and Taxpayer Intent

  GST:

Articles

1. THE APPLICATION OF LIMITATION FOR ARBITRATION UNDER THE NATIONAL HIGHWAY ACT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. THE FINANCE (No. 2) BILL, 2024 - AS PASSED BY LOK SABHA ON 7.8.2024

2. Monetary Policy Statement, 2024-25 Resolution of the Monetary Policy Committee (MPC) August 6 to 8, 2024

3. Boilers Bill, 2024 introduced in Rajya Sabha

4. Dr. Ajay Bhushan Pandey chairs Roundtable Consultation with Leading Executive Search Firms at IICA

5. CCI approves acquisition of 100% of share capital of ATC Telecom Infrastructure Private Limited by Data Infrastructure Trust and certain inter-connected transactions

6. CCI approves restructuring of existing business of Re Sustainability Limited, its subsidiaries, and joint ventures through demerger of municipal solid waste business and waste to energy business to Ramky Sustainability Solutions Private Limited

7. CCI approves acquisition of 100% equity stake, management and control in 12 special purpose vehicles of PNC Infratech Limited and PNC Infra Holdings by Highway Infrastructure Trust

8. CCI approves acquisition by 360 ONE Private Equity Fund in Vastu Housing Finance Corporation Limited

Notifications

Income Tax

1. 98/2024 - dated 7-8-2024 - IT

Exemption from specified income U/s 10(46) of IT Act 1961 – ‘Karnataka State Natural Disaster Monitoring Centre’

2. 97/2024 - dated 7-8-2024 - IT

Exemption from specified income U/s 10(46) of IT Act 1961 – 'Kalyan Karnataka Region Development Board'

SEBI

3. SEBI/LAD-NRO/GN/2024/198 - dated 5-8-2024 - SEBI

Securities and Exchange Board of India (Alternative Investment Funds) (Fourth Amendment) Regulations, 2024

Highlights / Catch Notes

GST

• Appellate order in Andhra Pradesh under CGST Act must be in Hindi & English. Rules require both languages.

  Case-Laws - HC : The appellate order u/s 107 of the CGST Act, 2017 in the State of Andhra Pradesh must be issued in both Hindi and English. Central Government Rules mandate the use of both languages for official documents. Communications from Central Government to region "C," where Andhra Pradesh is, should be in English. The Commissioner (Appeals) must provide orders in English to the petitioners within three weeks. High Court disposed of the writ petitions with this direction.
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• Refund denied for late ITC claim. Court says strict time limit not a must. No flaws in orders. Petition rejected.

  Case-Laws - HC : Rejection of refund of unutilized Input Tax Credit (ITC) due to delay of 2 days beyond the 60-day statutory limit u/s 54(7) of the Act. Court held that the term "shall" in the section is directory, not mandatory, considering the availability of interest on delayed refunds u/s 56. Rigid adherence to the time limit would not serve the legislative intent. The impugned orders were deemed well-reasoned, with no procedural flaws or legal violations. Petitioner failed to show any merit for interference. High Court dismissed the application, finding no grounds for intervention.
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• High Court Questions CBIC Notification Validity Under CGST Act Section 168(A) Due to Lack of GST Council Input.

  Case-Laws - HC : The High Court examined a challenge against a notification issued by the Central Board of Indirect Taxes and Customs, questioning its validity u/s 168(A) of the CGST Act, 2017 due to lack of GST Council recommendation. The court found the notification prima facie inconsistent with the law, indicating potential failure of actions based on it. An assessment of force majeure applicability in light of GST Council meeting minutes was deemed necessary, with authorities given a chance to present their stance and evidence. Pending further notice, petitioners were granted interim protection against coercive measures based on the contested assessment order. Respondents were instructed to submit affidavits by a specified date for further proceedings.
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• Bank accounts can be provisionally attached under CGST Act. Commissioner must decide on objections within 3 weeks.

  Case-Laws - HC : Provisional attachment of Bank Accounts upheld u/s 83(1) of CGST Act. Objection filed u/r 159(5) CGST Rules. Only Commissioner can order provisional attachment. Impugned order by Additional Director General deemed valid. Court directs Commissioner to decide objections within three weeks. Petition disposed by High Court.
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• Goods detained for incomplete E-way bill. No intent to evade tax. No penalty under sec 129(3) for technical error. HC quashed orders.

  Case-Laws - HC : Detention of goods due to incomplete Part B of E-way bill. No dispute on documents/goods. Part B filled before notice/seizure order. No mens rea found to evade tax. Citing M/S ROLI ENTERPRISES case, technical error without tax evasion intent warrants no penalty u/s 129(3). Similar ruling in PRECISION TOOLS INDIA case. Orders dated April 22, 2021 and November 20, 2021 quashed by HC. Writ petition allowed.
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• Court rules penalty under GST Act invalid without proof of tax evasion intent. Vehicle and goods to be released within two weeks.

  Case-Laws - HC : The case involved a challenge to a penalty imposed u/s 129 of the Goods and Service Tax Acts. The court held that without proof of intent to evade tax, such penalties lack legal basis. The petitioner had presented all documents during seizure, except one, which was later provided. The court found no factual support for the alleged tax evasion intent. The order dated July 20, 2024, was quashed, directing release of the vehicle and goods within two weeks. The High Court disposed of the petition.
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• Petition challenges CGST inclusion in turnover, citing Act definition. Lack of hearing violates justice. Appeal can't be avoided. Appellate Authority to assess.

  Case-Laws - HC : The petition challenges the inclusion of CGST amount in petitioner's turnover, contrary to CGST Act definition. Lack of proper personal hearing violates natural justice principles. HC holds statutory appeal remedy cannot be avoided despite 10% payment requirement. Appellate Authority can consider filed documents, assess subordinate officers' conduct. Assessing Officer's difficulty in verifying petitioner's claims due to lack of supporting documents. Court notes petitioner's submission of annual return but deems examination of supporting documents falls under Authority's jurisdiction. Petition dismissed, granting liberty to file appeal.
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• Challenge to show-cause notice dismissed due to lack of immediate rights impact. Respond to notice and raise concerns.

  Case-Laws - HC : Challenge to demand-cum-show-cause - no opportunity for written explanation - violation of natural justice. Writ Court typically doesn't entertain challenges to show-cause notices as they don't affect parties' rights immediately. Show-cause notices can be challenged if issuing authority lacks jurisdiction. Supreme Court in SPECIAL DIRECTOR VERSUS MOHD. GHULAM GHOUSE emphasized jurisdictional issues can be raised before approaching Court. Interim orders shouldn't strip authorities of decision-making power. Following this, writ appeal rejected, petitioner advised to respond to notice and raise contentions before authorities for consideration. Appeal dismissed by High Court.
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• High Court overturns cancellation of GST registration due to lack of fair process. Authorities failed to justify decision or allow sufficient time for response.

  Case-Laws - HC : The High Court quashed the impugned order canceling the petitioner's GST registration, citing violation of natural justice principles. The order and subsequent show cause notice failed to provide adequate justification for dropping the proceedings. The petitioner was given less than 24 hours to appear before authorities despite a mention of seven days. This lack of reasonable time for response and failure to consider the petitioner's reply led to the conclusion of natural justice violation. The court allowed the petition, setting aside the order.
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• Flying Training Services by Approved Institutes Exempt from GST, AAR Confirms Alignment with Maritime Training Standards.

  Case-Laws - AAR : The case involves the taxability of supply of flying training services by an Approved Flying Training Institute. The institute fulfills conditions as an Educational institute under GST regime. The Curriculum and training program are approved by the Director General of Civil Aviation (DGCA). The institute issues Course completion Certificates recognized by relevant regulations. The institute falls under Entry No. 66 of Notification No. 12/2017-Central Tax (Rate). The Circular No. 117/36/2019-GST confirms that principles for Maritime Training Institutes apply to Flying Training Institutes approved by DGCA. The supply of Flying Training Services for Commercial Pilot License is exempted from GST. The rate of GST applicable is deemed irrelevant. The Advance Ruling Authority (AAR) provided the ruling.
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Income Tax

• Income from Cloud Services subscriptions not taxable as royalty in India. Assessee's appeal allowed.

  Case-Laws - AT : The case dealt with the taxability of consideration received from subscriptions for the use of standard software application in India. The issue revolved around whether the receipts constituted royalty income under the Income Tax Act and Article 12 of the India-Ireland DTAA. The Tribunal held that the income from Cloud Services subscriptions was not taxable as royalty, citing precedent from the same Tribunal and a similar case involving Amazon Web Services Inc. Consequently, the income received by the assessee was deemed not taxable in India, and the additions made by the Assessing Officer were directed to be deleted. The assessee's appeal was allowed, with the ITAT clarifying its role as the Appellate Tribunal.
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• Court Remands Case Due to Insufficient Response Time and Portal Issues, Orders New Submission Opportunity.

  Case-Laws - HC : The High Court held that the petitioner was not given adequate time to respond to a show cause notice, as only 6 clear working days were provided instead of the required 7 days. The petitioner's inability to submit a response due to the deactivation of the portal's submission button constituted a violation of natural justice. The Court noted that the purpose of a show cause notice is to allow for a response and highlighted that the petitioner faced difficulties due to a festival falling within the response period. As the assessment order was issued without considering the petitioner's response, the matter was remanded to the Faceless Assessment Unit. The petitioner was directed to submit a response within 15 days, with the Unit instructed to reactivate the submission button within a week and inform the petitioner via email.
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• Court rules on whether deferred advertisement costs can be claimed as a deduction. Assessee wins over Revenue in a similar case.

  Case-Laws - HC : The case dealt with whether advertisement expenditure (deferred revenue) qualifies as allowable revenue expenditure. The assessee recorded different entries in audited books and income tax return, with no provision for deferred revenue expenditure under the IT Act. ITAT allowed deduction. The High Court referenced a previous judgment in a similar matter involving the assessee, where Revenue did not contest. Additionally, the case addressed the addition of expenses for workmen and staff welfare u/s 40A (9). The High Court upheld the Tribunal's decision favoring the assessee, citing a previous assessment year ruling in the assessee's favor.
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• Payments by Assessee for local welfare measures deemed allowable under sec 37(1) not disallowed under sec 40A(9). Tribunal upheld decision.

  Case-Laws - HC : The issue revolved around whether payments made by the Assessee to various institutions could be treated as allowable expenses u/s 37(1) or disallowed u/s 40A(9). The court held that the payments were for local welfare measures benefiting the business, not payments required by law, and thus fell u/s 37(1). The Memorandum of Settlement showed a nexus between the social welfare activities and the business. Section 40A(9) was deemed inapplicable, and the Tribunal rightfully deleted the disallowance. The High Court upheld the Tribunal's decision in favor of the Assessee, emphasizing that the payments were not mandated by industrial law.
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• Income tax case on royalty receipts & TDS u/s 195 in India. Court rules against retrospective application of tax laws.

  Case-Laws - HC : The case dealt with the taxability of income in India related to royalty receipts and Tax Deducted at Source (TDS) u/s 195. The respondent did not deduct tax on remittance to a foreign party for software procurement, claiming it wasn't royalty. Both the CIT(A) and Tribunal agreed. The High Court referred to precedent stating non-retrospective application of Explanation 6 to Section 9(1)(vi) of the Income Tax Act. The Supreme Court upheld this view, clarifying that Explanation 6 cannot be applied retrospectively. Rejecting the Revenue's attempt to apply Explanation 4 retrospectively, the court ruled in favor of the assessee.
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• Reopening of assessment: Power of attorney holder actions bind petitioner. High Court for public law remedy. Writ petition dismissed.

  Case-Laws - HC : The case involves the validity of reopening assessment u/s 147 of the IT Act. The Assessing Officer must have 'reasons to believe' as per the statutory scheme. The court emphasized the need to provide all information to the assessee for defense. Adjudication on information available with AO not required at the stage of passing order u/s 148A(d). The merits of the information are subject to appeal u/s 246A. The petitioner claimed no knowledge of sale by power of attorney holder, but the court held that the petitioner is bound by the actions of the power of attorney holder. The High Court's jurisdiction under Article 226 is for public law remedy. The court dismissed the writ petition.
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• ITAT Rules in Favor of Assessee: Disallowance u/s 40(a)(i) Removed for Foreign Service Payments.

  Case-Laws - AT : The case involved reimbursement of expenses u/s 195 of the Income Tax Act, concerning payments made for services rendered outside India. The payments to various entities were found to fall under exclusionary provisions of Section 9(1)(vii)(b), as they were for earning income from a source outside India. Disallowance u/s 40(a)(i) was deemed unwarranted and ordered to be deleted. Transactions with Carnegie Mellon University, Call Centre School LLC, APM Group, British Computer Society, RADTAC, and an individual for professional services were similarly analyzed and disallowances were overturned, citing legal provisions and tax residency status. The ITAT allowed the appeals of the assessee in all instances.
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• Penalty for not filing audit report upheld by Tribunal. No valid reason given by assessee.

  Case-Laws - AT : Penalty imposed u/s 271B for non-compliance with section 44AB audit report filing. Assessee failed to prove attending litigations or financial difficulties. Assessee filed audit reports for multiple years except one, indicating awareness of legal obligations. Lack of reasonable cause for non-compliance. Penalty upheld by Appellate Tribunal, dismissing assessee's appeal.
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• Tribunal rejects assessee's appeal on tax issue. No merit in objections on penny stocks. Order cannot be reviewed.

  Case-Laws - AT : The Tribunal held that the objection of the assessee regarding low tax effect was not sustainable. The addition made u/s 68 for bogus LTCG and unexplained cash credits involved penny stocks. The Tribunal cannot determine if a share is a penny stock, which is decided by BSE or investigation agencies. The transaction involved shares identified as penny stocks by the Investigation Directorate. The Tribunal found no merit in the objections raised by the assessee and dismissed the request to recall the order. The power u/s 254(2) cannot be used to review the order on its merits. The assessee's application is dismissed, citing judicial discipline and referring to a decision by the Supreme Court.
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• Invested in wife's name for tax exemption under Sec. 54F. No need for sale proceeds match. Precedent backs joint investment with spouse.

  Case-Laws - AT : Exemption/deduction u/s 54F - New investment made in wife's name. Sec.54F allows purchase/construction within specified timelines. No requirement for same sale proceeds to be utilized. Precedent supports liberal construction of Sec. 54F. Assessee paid Rs. 20 Lacs for construction, supporting claim. Common interest of assessee and wife in investment. Eligible for deduction. Precedent allows full deduction for joint investment with spouse. AO directed to allow claim.
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• Assessment reopened for undisclosed jewellery purchase. Assessee failed to prove legitimacy. Onus on appellant to show credibility. Property income taxed.

  Case-Laws - AT : Validity of reopening of assessment - Addition u/s 69 for purchase of jewellery as undisclosed investments. Assessee had substantial transactions but did not file income return. Failed to substantiate jewellery purchase with credible evidence. Onus on appellant to prove genuineness, creditworthiness, and identity not adequately discharged. Bill in assessee's name. Property purchased jointly, no evidence of beneficiary or income. Assessee deemed first owner with beneficial ownership. TDS deducted implies 50% share. Income from property considered u/s 56(2) due to lack of consideration. Dismissed appellant's arguments. ITAT affirmed CIT(A) decision.
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Customs

• Confiscation and Penalty Overturned for Imported Quilted Goods; No Fraud Found, Duty Assessment Accepted Without Challenge.

  Case-Laws - AT : The case involved confiscation of imported goods, imposition of redemption fine u/s 125, and penalty u/s 114A of the Customs Act, 1962. The goods in question were men's woven quilted/padded polyester polyfill of unpopular brands. Section 28(4) was found not applicable for recovery of differential duty. The assessment process was not completed before the goods were cleared for home consumption. The respondent importer did not challenge the duty assessment and paid as per the assessment. The Customs (Preventive) Officers took over the assessment process, and it was not a case of fraud or mis-declaration. Sections 28(4), 111(m), and 114A were deemed inapplicable. The Commissioner (Appeals) correctly set aside the confiscation and penalty. The CESTAT upheld the impugned order, dismissing the Revenue's appeal.
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• Customs broker's appeal dismissed; High Court upholds regulation limits on challenging security deposit forfeiture.

  Case-Laws - AT : The case involved the forfeiture of a security deposit under regulation 20 of the Customs House Agents' Licencing Regulations, 2014 due to breaches of regulations 13(a), 13(d), and 13(e). The issue was raised by a custom house agent before the High Court of Bombay, with the Commissioner of Customs arguing against the appeal's maintainability before the Tribunal due to limitations in the governing regulations. The Learned Authorised Representative's changed stance was deemed inconsistent and inconsequential in light of the High Court's decision in a previous case. The High Court of Bombay held that the appellate remedy for customs brokers is limited by the governing regulations, making general appeal provisions inapplicable. The decision was binding, leading to the dismissal of the appeal by the Appellate Tribunal (CESTAT).
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• Customs Broker License Revoked for Breaching Customs Act and Regulations; CESTAT Orders Fresh Decision on Flawed Proceedings.

  Case-Laws - AT : Revocation of customs broker license and forfeiture of security deposit due to diversion of goods, breach of Customs Act, 1962, and Customs Broker Licencing Regulations, 2018. Failure to adhere to regulations on client authorizations, compliance advice, due diligence, speed, and verifications. Licensing authority's presumption of obligations for revocation questioned. Customs brokers' role as facilitators between customs and clients emphasized. Need for proper inquiry into breaches before revocation. Flawed proceedings and outcome lead to remand for fresh decisions. CESTAT allows appeal for remand.
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• Customs Broker License Revocation Overturned; Allegations of Breaches Deemed Implausible by Tribunal.

  Case-Laws - AT : The case involves the revocation of a Customs Broker license, forfeiture of a security deposit, and imposition of a penalty for alleged breaches of obligations and regulations under the Customs Broker Licensing Regulations, 2018. The Licensing Authority's charges were found to lack foundation and were deemed vague or based on suppositions. Allegations of collusion and breach of obligations were considered far-fetched. The appellant's failure to provide detailed records was attributed to the exporter's inability, not a breach of obligation. The charges of breach of regulations were not sustained as there was no evidence of non-exportation or misuse of duty paid inputs. The impugned order was overturned, and the appeal allowed by the Appellate Tribunal (CESTAT).
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• Imported machine parts case: Duty dispute resolved in favor of importers. Tribunal rules parts not unassembled machines.

  Case-Laws - AT : The case involved the classification of imported spare parts for injection molding machines under Customs Tariff Heading 84779000 or 84771000. Allegations of anti-dumping duty were based on a notification regarding Horizonal Injection Molding Machines. The tribunal found that the imported goods did not meet the criteria for unassembled machines under Note (IV) of Section XVI. Rule 2(a) did not apply as the parts required complex processes for assembly. The engineer's report lacked details on essential features. The description of material indicated missing hydraulic system parts. The tribunal set aside the duty demand, allowing the appeals of the importers and dismissing the revenue's penalty imposition appeal.
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FEMA

• Court orders release of funds to petitioners frozen by 1st respondent under FEMA. High Court grants Writ, mandates Bank to release Fixed Deposit amount.

  Case-Laws - HC : Adjudication Order penalized under FEMA - Writ of Mandamus to foreclose fixed deposit created by first respondent using petitioners' money and direct Bank to release funds to petitioners. During proceedings under Foreign Exchange Management Act, first respondent froze petitioners' accounts and transferred funds. With proceedings dropped per Adjudication Order, High Court allows Writ Petition, directing release of Fixed Deposit amount to petitioners promptly.
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Corporate Law

• Court says rejection of scheme of amalgamation application under Companies Act not justified. Govt must apply to Tribunal if scheme not in public interest.

  Case-Laws - HC : The High Court held that rejection of the application u/s 233 of the Companies Act, 2013, for processing a scheme of amalgamation was not justified. The Court emphasized that if the Government deems a scheme not in public interest or creditors' interest, it must apply to the Tribunal for adjudication. In this case, as the declaration of solvency was filed and the scheme was approved, respondent should have followed the prescribed procedure by making an application to the Tribunal if any condition was not satisfied. The Court found the rejection order to be legally flawed and quashed it, disposing of the petition.
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Budget

• Finance (No.2) Bill, 2024 as passed by Lok Sabha as on 7-8-2024

  News : The Finance (No. 2) Bill, 2024 encompasses provisions relating to tax proposals for the Union Budget 2024-25. It outlines amendments to various direct and indirect tax laws, including Income Tax Act, Customs Act, Central Excise Act, and Finance Act. The bill covers changes in tax rates, deductions, exemptions, and compliance measures. It aims to streamline tax administration, promote economic growth, and enhance revenue mobilization. The bill underwent parliamentary scrutiny and was passed by the Lok Sabha, incorporating relevant amendments.
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Indian Laws

• Dispute over dishonoured cheques in a land sale case. High Court finds offence, burden on debt proof. Petition dismissed for lack of challenge.

  Case-Laws - HC : The case involves a dispute regarding the dishonour of cheques u/s 138 of the N.I. Act. The petitioner claimed to have sold 5 acres of land for Rs. 7.75 Crores, with contradictions on the execution of the Sale Deed. The respondent denied the Sale Deed's authenticity, requiring proof. The High Court held that the complaint prima facie discloses an offence, citing the burden of proving the absence of debt or liability. The petitioner's admission to issuing cheques and lack of challenge to summoning orders led to dismissal of the petition, as no prima facie case was found.
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• Court Quashes Sale, Orders New Auction; Clarifies Secured Creditor Priority in Debt Recovery Tribunal Case.

  Case-Laws - HC : Challenge to DRT order allowing sale of mortgaged property below reserve price. Unsecured creditor treated as secured creditor, prioritized over original secured creditors. SCB's rights under LLA not superior to mortgagee's. SCB wrongly converted to secured creditor, preferred over consortium of secured banks. LLA signed post-mortgage initiation, SCB's bid discounted due to wrongful priority. Sumikin Bussan case cited to highlight SCB's limited rights against Karias, not against IOB or Petitioner. Equitable considerations ignored, reserve price crucial to auction terms. DRT directed to conduct fresh auction, recognizing mortgagee as sole secured creditor. SCB can pursue recovery from Karias independently. DRT's sale confirmation quashed. Petition granted by HC.
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• Court ruled interest only on principal sum, not on interest. Interest Act, 1978 prohibits compound interest.

  Case-Laws - SC : The case dealt with the interpretation of interest clauses in an arbitration award, specifically whether interest could be payable on interest or if the awarded 15% per annum interest would apply only to the principal sum, with an additional 12% per annum interest for the preaward period. The court held that interest is generally payable on the principal sum adjudged and not on interest. The Interest Act, 1978 prohibits courts from awarding interest upon interest unless specifically provided by statute or contract terms. The court noted that neither the Act nor Section 34 of the CPC empower the court to award compound interest. The Supreme Court declined to interfere with the lower courts' decision, dismissing the Special Leave Petition.
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IBC

• Assessing IBC rules on demand notices, a payment dispute led to wrong CIRP initiation. NCLAT allows appeal, refunds fees.

  Case-Laws - AT : The case assesses the statutory construct of IBC regarding demand notices u/s 9. A dispute arose over payment to Respondent No. 2 by the Corporate Debtor, with a notice of dispute issued. The disputes, including changes in roles and responsibilities, impacted the debt claimed by Respondent No. 2. Pre-existing disputes surrounding the debt indicated it was not undisputed, making CIRP initiation inappropriate. The Adjudicating Authority erred by not considering the plausibility of disputes. The Section 9 application was wrongly admitted, leading to the release of the Corporate Debtor from CIRP. The Resolution Professional's fees are upheld, and the deposited amount is to be refunded. NCLAT allowed the appeal.
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• Court ruled interest alone on loan doesn't count as operational debt. App rejected due to interest inclusion below threshold. Dismissal upheld by NCLAT.

  Case-Laws - AT : The case deals with the maintainability of an application u/s 4 of the Code based on the minimum default amount. The court held that interest alone on a loan does not constitute operational debt. Citing relevant cases, it was emphasized that interest cannot be recovered without a signed agreement. The application, below the threshold amount, was rejected due to the inclusion of interest. Additionally, a pre-existing dispute over cheques was noted, with the Respondent alleging fraud by the Appellant. The Adjudicating Authority rightly dismissed the application, considering the threshold amount and pre-existing disputes. The appeal was subsequently dismissed by the NCLAT.
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• Tribunal failed to hear both sides before dismissing application. Unjust! Order set aside, matter remanded for fair decision

  Case-Laws - AT : Application u/s 7 dismissed without arguments addressed. Tribunal failed to adhere to the principle of hearing both parties before condemning. Order set aside, matter remanded for decision after due process. Application u/ss 60(5), 65, and 75 dismissed pre-admission of Section 7 application. Precedents establish Section 65 filing post-Sections 7, 9, or 10 without admission. Tribunal's dismissal solely on pre-admission filing unjustified. Order overturned, matter referred back for lawful consideration. NCLAT referred to as Appellate Tribunal.
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PMLA

• Appellant's Challenge to Seizure Under PMLA 2002 Dismissed; Tribunal Confirms Involvement in Rs. 15 Crore Hawala Transaction.

  Case-Laws - AT : Seizure of Indian Rupees under PMLA, 2002 due to alleged involvement in Hawala transaction. Appellant argued not being accused in FIR or ECIR, thus seizure u/s 17 not valid. However, evidence indicated Hawala transaction of Rs.15 Crore and appellant's failure to explain the source of funds. Statement u/s 50 implicated appellant in facilitating transaction. Second argument on bank withdrawals not clarifying legitimate use of funds for foreign exchange. Appellant's involvement in large transactions not substantiated. Appeal dismissed by Appellate Tribunal.
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Service Tax

• Tribunal Rules Services Not Intermediary: No Three-Party Involvement in Transactions with Foreign Universities.

  Case-Laws - AT : The case involved a dispute regarding the classification of services as intermediary services for export during 2009-10 to 2013-14. The Tribunal found that the transactions lacked the involvement of three parties, essential for intermediary services. The service was primarily rendered by the overseas party to foreign universities, with the appellant assisting Indian students. Circular No.159/15/2021-GST clarified the requirement of three parties for intermediary services. The Tribunal noted that the appellant and overseas party provided similar services, raising doubts on the applicability of the circular to service tax. Due to the appeal's success on merits, other issues, including extended limitation period and penalties, were deemed irrelevant. The appeal was allowed by the CESTAT (Appellate Tribunal).
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• CESTAT Rules Stem Cell Banking Services Taxable; No Retroactive Exemption, Willful Default Confirmed, Appeal Dismissed.

  Case-Laws - AT : The case involved the taxability of health care services related to Stem Cell/Umbilical Cord Blood Banking. The issue was whether these services fell under the Negative List or the Mega Exemption Notification. The retrospective application of Notification No. 04/2014-ST was questioned, with reference to Circular No. 334/03/2014-TRU. The court held that retrospective application was not intended by the legislative amendment. The extended period of limitation was deemed applicable. The circular was found not to support retrospective effect. The decision of the Madras High Court in a similar case was followed. The appellant's inaction on registration and non-filing of returns showed willful default. The impugned order was upheld as legally sound, and the appeal was dismissed by CESTAT (Appellate Tribunal).
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• Tribunal Rules on Service Tax: Interest Deposits Exempt, Extended Period Demand Time-Barred, Cenvat Credits Allowed.

  Case-Laws - AT : The case involved the recovery of service tax in relation to various services, including transportation of goods through pipelines, erection, commissioning, and installation services. The appellate tribunal held that interest-bearing deposits cannot be considered as part of the taxable service and thus not liable for service tax. The tribunal also ruled that certain charges, such as fuel surcharge and minimum demand charge, were correctly paid and required no further action. Additionally, amounts received against statutory provisions and refundable security deposits were deemed non-taxable. The tribunal allowed certain Cenvat credits and determined that the demand for the extended period was time-barred. The decision settled the demands under different heads, confirming some while setting aside others.
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VAT

• Court Upholds Tribunal's Medicated Ointment Tax Classification; Revenue's Challenge Dismissed Due to Lack of Proof.

  Case-Laws - HC : The case involves the statutory interpretation of Entry 41 of Schedule II of the Act regarding the classification of a product as a medicated ointment. The court emphasized harmonizing inclusive and exclusive clauses in legislative provisions. Entry 41 aims to classify products based on medicinal properties, with medicated ointments receiving favorable tax treatment. The use of "but" in the entry indicates an exception for medicated ointments. The Revenue failed to disprove the product's classification, highlighting the importance of meeting the burden of proof. The court cited precedents emphasizing the Assessee's favorable interpretation in charging sections. The Tribunal's classification of the product as a medicated ointment was supported by robust evidence, leading to the dismissal of revision petitions. The High Court's revisional jurisdiction is limited to questions of law, jurisdictional errors, or procedural irregularities, not factual re-inquiry. Perversity in decisions requires meeting legal thresholds with concrete evidence. The Tribunal's decision was supported by substantial evidence, justifying the dismissal of revision petitions.
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• Sponsorship Receipts Exempt from Entertainment Tax Under Delhi Act, Court Rules on Fashion Shows and Sporting Events.

  Case-Laws - HC : The case involved a challenge to assessment orders regarding whether sponsorship receipts constitute "payment for admission to entertainment." The court examined if the pre-amended Section 2(m) of the Delhi Entertainment and Betting Tax Act covered sponsorship of fashion shows and sporting events for extending tax u/s 6. The court held that sponsorship receipts did not fall under the taxable event for entertainment tax as defined in Section 6. The retrospective introduction of Explanation 2 was deemed burdensome and onerous, not clarificatory. The court concluded that the Act lacked a specific charging provision for taxing sponsorships and did not provide a mechanism for assessing and collecting tax on sponsorships. Therefore, the petition was allowed by the High Court.
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Case Laws:

• GST

• 2024 (8) TMI 461
  Rejection of an appeal under section 129(3) of the UPGST Act - goods were accompanying without proper documents as required - HELD THAT:- It is not in dispute that the goods were accompanying without proper documents as required under the GST Act and the Rules framed thereunder. When the goods were detailed, even before issuance of notice or at any stage, the required documents could not be produced. Even before this Court, neither any pleading, nor any material has been brought on record to show that the goods in question were accompanying with the relevant documents. In absence of which pleading or argument, no interference is called for by this Court in the impugned order. Petition dismissed.

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• 2024 (8) TMI 460
  Cancellation of registration of the petitioner under the Central/West Bengal Goods and Services Tax Act, 2017 - non-filing of returns - no reply to the show cause was given by the petitioner - HELD THAT:- Admittedly, it is found that the registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had been adopting dubious process to evade tax. Taking note of the fact that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not be able to carry on its business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on its business. Having regard to the aforesaid and taking note of the direction issued by the Hon ble Division Bench of this Court in the case of SUBHANKAR GOLDER VERSUS ASSISTANT COMMISSIONER OF STATE TAX, SERAMPORE CHARGE ORS. [ 2024 (5) TMI 1262 - CALCUTTA HIGH COURT] , It is proposed to set aside the order dated 15th December, 2022 cancelling the registration of the petitioner subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax and interest and fine and penalty. The respondents are directed to activate the portal within one week from date, so that the petitioner can file its returns, pays requisite amount of tax, interest, fine and penalty - Petition disposed off.

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• 2024 (8) TMI 459
  Maintainability of petition - availability of alternative remedy - Imposition of penalties to get the goods released - E-Way bill not tendered for goods in movement - HELD THAT:- Already, the entire penalty is covered by the bonds and bank guarantee. So long such bonds and bank guarantee are valid, there cannot be any question of the appellate authority once again calling upon the petitioners to make payment of pre-deposit in terms of the proviso to Section 107 (6) of the said Act. The writ petition is disposed of with a direction that in the event the petitioners approach the appellate authority within 15 days from date, the appellate authority having due regard to the pendency of the writ petition before this Court shall hear out and dispose of the appeal on merits within a period of eight weeks from the date of communication of this order without insisting for pre-deposit. Petition disposed off.

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• 2024 (8) TMI 458
  Language of appellate order - whether the appellate order under Section 107 of the CGST Act, 2017 can be issued, in the State of Andhra Pradesh, in Hindi only? - HELD THAT:- The Central Government, under Section 8 of the Act, had made Rules known as the Official Language (Use for Official Purposes of the Union) Rules, 1976. Rule 6 of the Rules states that both Hindi and English shall be used for all documents referred to in Section 3(3) of the Act and it shall be the responsibility of the persons signing such documents to ensure that such documents are made, executed or issued both in Hindi and in English. Apart from this, Rule 3(3) of the Rules stipulates that communications from a Central Government Office to a State or Union territory in region C or to any office (not being a Central Government office) or person in such State shall be in English. Thus there are clear guidelines to officers working in Central Government offices, in region C (within which the State of Andhra Pradesh is situated) that all communications to persons residing in such a region, should normally be in English. However, such communication can also be sent both in English and Hindi. This would require, the Commissioner (Appeals), to either serve a copy of the order passed by him in English, or to serve copies of the orders passed by him in both Hindi and English. In the circumstances, service of the order passed by the Commissioner (Appeals) only in Hindi language is not permissible. These writ petitions are disposed of with a direction to the Commissioner (Appeals), to furnish copies of the orders passed by him in these three writ petitions, in English, to the petitioners, within three weeks from the date of receipt of a copy of this order.

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• 2024 (8) TMI 457
  Refund claim - application rejected on the sole ground of delay in filing the application - HELD THAT:- Reliance placed upon a Circular dated 5th July 2022 issued by the Central Board of Indirect Taxes and Customs (CBIC) by which the Government, on the recommendations of the council, excluded the period from 1st March 2020 to 28th February 2022 for computation of period of limitation for filing refund application under Section 54 or Section 55 of the CGST Act. The Circular also says that the notification shall be deemed to have come into force w.e.f. 1st March 2020. Therefore, if one goes by the table reproduced above, the applications have been made during this excluded period and, therefore, it does appear that the applications have been made within time. The rejection orders set aside and matter remanded for fresh consideration - petition disposed off by way of remand.

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• 2024 (8) TMI 456
  Rejection of refund of unutilized Input Tax Credit (ITC) - failure to consider the claim for refund within the stipulated mandatory time limit of 60 days under section 54 (7) of the Act - delay of two days from the expiry of the statutory period of 15 days - HELD THAT:- It is always a question of interpretation whether a provision in a statute is mandatory or directory. This depends upon the intent of the legislature. The intention of legislature is to be ascertained not only by the phraseology of the relevant provision, but also by the context, the subject matter and object of the relevant provision. In ascertaining the real intention of the Legislature, the Court considers inter alia, the nature and the design of the statute and the consequences which follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstances, namely, that the statute provides for a contingency of non-compliance with the provisions, the fact that non-compliance with the provisions is or is not visited by some penalty, the serious or the trivial consequences, that flow therefrom, and, above all, whether the object of the legislation would be defeated or furthered . Ordinarily, the use of the term shall is intended to be mandatory but phraseology per se is not the sole determining factor. There are numerous cases where the word shall has been construed as merely directory. Of course, the term raises a presumption that a particular provision is imperative, but such prima facie inference is rebuttable by other considerations such as the object, scope and consequences of such enactment - It also requires to be examined, that where a statute imposes a public duty and lays down the manner in which and the time within which a duty shall be performed, injustice or inconvenience resulting from such rigid adherence to such interpretation must be considered to hold such provisions directory. Thus, on a reading of section 54 of the Act, it appears that the term shall used in the section is directory in nature since any delay beyond the prescribed period of time in cases where a refund has been ordered is remedied by section 56 of the Act which provides for interest on delayed refunds. On the other hand, failure to pass any order within the specific period of time does not defeat, nullify nor prejudice the purpose or object behind enactment of the section. The injustice and inconvenience resulting from such rigid adherence to the statutory prescription is also a relevant factor in holding that the above provision is merely directory. Any other construction would defeat the object of the section. The impugned orders are well reasoned and have been passed after taking into account all the relevant considerations. There is no procedural infirmity nor contravention of any law nor erroneous exercise of jurisdiction in passing either of the impugned orders. There is also nothing on merit which the petitioner has been able to demonstrate warranting any interference with the impugned orders. There are no grounds warranting any interference with either of the impugned orders - Application dismissed.

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• 2024 (8) TMI 455
  Extention of time limit as for issuing notice / passing the order u/s 73(9) - Challenge to action on the part of the Central Board of Indirect Taxes and Customs in issuance of a notification bearing No. 56/2023 dated 28.12.2023 - notification so issued by the Central Board of Indirect Taxes and Customs is ultra vires Section 168A of the CGST Act, 2017 or not, on the ground that there is no recommendation of the GST Council which is the mandatory requirement for the purpose of issuance of the said notification? HELD THAT:- It prima facie appears that the notification bearing No.56/2023 is not in consonance with the provisions of 168(A) of the Central GST Act, 2017. If the said notification cannot stand the scrutiny of law, all consequential actions so taken on the basis of such notification would also fail. This Court finds that an examination would be required as regards the applicability of the force majeure in respect to the notification bearing No. 56/2023 taking into account the contents of the Minutes of the 49th Meeting of the GST Council. However for the purpose of deciding the same, this Court is of the opinion that an opportunity has to be granted to the Respondent Authorities to place on record their stand as well as bringing on record the materials on which they claim the applicability of the force majeure. This Court is of the opinion, that the Petitioners herein are entitled to an interim protection pending the notice. Till the next date, no coercive action shall be taken on the basis of impugned assessment order dated 26.04.2024. The Respondents are directed to file their affidavits on or before 19.08.2024 - List accordingly.

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• 2024 (8) TMI 454
  Provisional attachment of Bank Accounts - Blocking of Electronic Credit Ledger (ECL) - objection filed under Rule 159 (5) of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- It is clear from the plain language of Section 83 (1) of the CGST Act, that only the Commissioner has the power to pass an order of provisional attachment under Section 83 (1) of the CGST Act. Thus, the petitioner s contention to the aforesaid effect is merited - The impugned order has been passed the Principal Additional Director General of Goods and Services Tax Intelligence. Thus, the petitioner s contention that the impugned order has not been passed by the Commissioner is unmerited. It is considered apposite to dispose of the petition by directing the Commissioner to decide the petitioner s objections as expeditiously as possible and, in any event, within three weeks from date - petition disposed off.

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• 2024 (8) TMI 453
  Detention of goods - Part B of the E-way bill was not duly filled - HELD THAT:- It is not in dispute that there was no variation with regard to the documents and goods detained/seized. It is also not in dispute that the Part B of E-way bill, even before issuance of notice and before passing of the seizure order, was duly filled and was produced before the authority. It is also not the case of the revenue that the authorities below have recorded any finding with regard to mens rea i.e. intention of petitioner to evade payment of tax. This Court in the case of M/S ROLI ENTERPRISES VERSUS STATE OF U.P. AND 2 OTHERS [ 2024 (1) TMI 813 - ALLAHABAD HIGH COURT] held that I see no reason why this Court should take a different view of the matter, as the invoice itself contained the details of the truck and the error committed by the petitioner was of a technical nature only and without any intention to evade tax. Once this fact has been substantiated, there was no requirement to levy penalty under Section 129(3) of the Act. Similarly, this Court in the case of PRECISION TOOLS INDIA VERSUS STATE OF U.P. AND 3 OTHERS [ 2024 (2) TMI 183 - ALLAHABAD HIGH COURT] held that In the present case also, the defect was of a technical nature only and without any intention to evade tax. Accordingly, the penalty imposed under Section 129(3) of the UPGST Act is unsustainable. The orders dated April 22, 2021 and November 20, 2021 are quashed and set aside. The writ petition is allowed.

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• 2024 (8) TMI 452
  Seizure of goods - levy of penalty - expiry of time mentioned in E-way bill - Existence of mens rea or not - HELD THAT:- In the case in hand, the goods were detained and the order dated 17.08.2021 was passed on the ground that E-way bill had expired. It is not the case of the revenue that before passing of the seizure order, an amended E-way bill was not produced. It is also not the case of the revenue that any finding of mens rea with regard to intention to evade payment of tax, was recorded as even the revenue authority before this Court fails to show the same. This Court in the case of Shyam Sel [ 2023 (10) TMI 218 - ALLAHABAD HIGH COURT ] has held Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach. The authority could have initiated proceedings under section 122 of the CGST Act instead of proceedings under section 129 of the CGST Act. Thus, the impugned order cannot be sustained in the eyes of law and the same is hereby quashed - petition allowed.

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• 2024 (8) TMI 451
  Cancellation of GST registration of petitioner with retrospective effect - failure to furnish the returns for a continuous period of six months - HELD THAT:- In terms of Section 29 (2) of the CGST Act, the Proper Officer is empowered to cancel the taxpayer s registration, including from a retrospective date, as he deems fit, for the reasons as set out in the said Section. However, it is trite that cancellation from retrospective date cannot be whimsical or arbitrary. The Proper Officer s decision to cancel the registration with retrospective date must be informed by reason. The failure to file the returns for a continuous period of six months, absent anything additional, does not present any reason for cancellation of the taxpayer s GST registration even during the period for which returns were duly filed. In the present case, the decision for cancellation of the petitioner s GST registration with retrospective date, cannot be sustained, essentially for two reasons. First, that the impugned SCN did not propose any such action and therefore, retrospective cancellation of the petitioner s GST registration is in violation of the principles of natural justice. And, second, that the decision to cancel the petitioner s GST registration with retrospective effect is not informed by reason. It is considered apposite to direct the impugned order would be operative with effect from the date of the impugned SCN, that is, with effect from 13.11.2023. The impugned order is modified to the aforesaid extent - petition disposed off.

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• 2024 (8) TMI 450
  Refund of ITC for purchases made for different period - violation of time period prescribed under Section 54 (7) of the Central GST Act, 2017 for issuance of order in a claim for input tax credit - HELD THAT:- Even though a Special Appeal is pending before this Court in a case relating to the writ petition but the cause of action in the said Special Appeal is different. The writ petition is disposed of with the direction to the petitioner to approach the appellate authority against the orders impugned. It is directed that the appellate authority shall consider the appeal of the petitioner on its merits as the petitioner has spent valuable time in pursuing the writ petition filed mistakenly before this Court.

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• 2024 (8) TMI 449
  Violation of principles of natural justice - writ petition challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits - HELD THAT:- In these circumstances, it appears prima facie that the imposition of GST on the entire differential turnover does not appear tenable. However, these aspects are required to be verified by the assessing officer on closely examining all relevant documents. The other discrepancies based on the difference between the GSTR returns and the financial statements may also require reconsideration since the financial statements appear to be prima facie prepared on All India basis. Since the petitioner failed to participate in proceedings in spite of being provided several opportunities, it is just and necessary to put the petitioner on terms. The impugned order dated 16.04.2024 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of three weeks from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice, including the quantification made in the impugned order, within the aforesaid period. The writ petition is disposed off.

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• 2024 (8) TMI 448
  Maintainability of petition - availability of efficacious remedy - Refund claim - Seeking direction from the respondents to consider his representation in relation to refund of GST - HELD THAT:- Admittedly, the petitioner had completed the work from 2017 until 2021 after the applicability of the GST Act w.e.f. 1.7.2017. The petitioner must have purchased raw materials to do the awarded work and availed input credit. According to the petitioner, if GST was not liable to be paid and the same has erroneously been recovered and deposited by the Public Works Department with the GST Department, the petitioner may submit a claim under Section 54 of the GST Act. The competent authority shall examine whether the petitioner is entitled to a refund or not. The complete procedure for refunding tax is provided under Section 54 of the CGST Act and Chapter X of the CGST Rules, 2017. Therefore, the petitioner has an efficacious remedy to approach the competent authority for a refund. The writ petition is not maintainable before this Court - Petition disposed off.

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• 2024 (8) TMI 447
  Levy of penalty - intent to evade tax or not - challenge to order passed under Section 129 of the Uttar Pradesh Goods and Service Tax/Central Goods and Service Tax Act, 2017 read with Section 20 of the Integrated Goods and Service Tax Act, 2017 - HELD THAT:- In absence of any finding as to evasion of tax, the penalty imposed is argued to be without any authority of law. The law on the above subject is very clear that without there being any intention/ mens rea for evasion of tax, no penalty can be imposed. Furthermore, at the time of seizure all the documents were presented except one document being the e-invoice, which was also downloaded on the very same day. The finding of the authorities with regard to intention to evade tax is not supported by the factual matrix of the case, and accordingly, the impugned order dated July 20, 2024 is quashed and set aside with a direction upon the authority concerned to release the vehicle and goods within a period of two weeks from date - Petition disposed off.

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• 2024 (8) TMI 446
  Breach of principles of natural justice - levy of penalty on the consignee of the goods - no opportunity of hearing provided, before levy of penalty - HELD THAT:- The tax invoice is on record. This document clearly shows that the invoice was raised on Bill To Ship To basis. The particulars of the consignee, i.e., the petitioner, are set out therein. The notices issued at the time of detention in Form GST MOV-01 and MOV-02 do not contain the name of the petitioner. It appears that these notices were served on the driver of the vehicle and the notices contained the names of the supplier and purchaser. By contrast, the impugned order has been issued to the petitioner without any prior opportunity to the petitioner to respond thereto or contest the matter. This clearly constitutes breach of principles of natural justice. For such reason, the impugned order is not sustainable. The impugned order dated 27.05.2024 is set aside by leaving it open to the respondents to initiate fresh proceedings in accordance with law - petition disposed off.

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• 2024 (8) TMI 445
  Maintainability of petition - availability of remedy of statutory appeal - amount of CGST has been included mistakenly in the annual turnover of the petitioner which is contrary to the definition of turnover given in CGST Act, 2017 - Petitioner has not been given proper opportunity of personal hearing - violation of principles of natural justice - HELD THAT:- The remedy of statutory appeal cannot be avoided or bypassed merely because the assessee is liable to pay 10% of the total recovery amount. If the Assessing Officer has not considered the documents filed by the petitioner, the same can be considered by the appellate Authority and if the petitioner succeeds in appeal, the amount so deposited will be refunded to him. The appellate Authority is also liable to examine the conduct and working of its subordinate officers as to whether they are working properly or not while exercising quasi judicial powers. In paragraph 14, the Assessing Officer has observed that it is very difficult to verify the contention of the noticee merely on the basis of copy of profit and loss account submitted in two pages, as the noticee had not provided any concurrent documentary evidences i.e. any ledgers, financial details, ledgers related to notes of profit and loss accounts and any other details by which it could be ascertained whether the contentions of the noticee are justifiable. Before this Court also, the petitioner has only filed annual return as Annexure P/4 (Form GSTR-9) and Reconciliation Statement (Form GSTR- 9C, Anenxure P/5) in which these figures are mentioned in tabular form, but documents in support of these figures are liable to be examined by the Assessing Authority or Appellate Authority and not by the writ Court. The petition is dismissed with liberty to file appeal.

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• 2024 (8) TMI 444
  Seeking to quash the alert issued by the NCTC against the Petitioner company as the same is not supported by any statutory of provision of Customs Act, 1962 or the guideline for the execution of the same - provisional release of the export consignment - HELD THAT:- The respondents to process the petitioner s refund claim and if the same is to be denied, a show cause notice indicating the reasons for the same be issued to the petitioner as expeditiously as possible and preferably within a period of eight weeks from date. Petition disposed off.

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• 2024 (8) TMI 443
  Appeal barred by time limitation - applicability of circular No.148/04/2021- GST dated 18th May 2021 - HELD THAT:- The powers under Article 226 of the Constitution of India are founded on justice, equity and good conscience and are exercised for public good. The Revenue has referred to a decision of this Court in Ashok Varandan Vs. Central Baurd of Indirect Taxes and Customs Ors. [ 2024 (3) TMI 1085 - RAJASTHAN HIGH COURT ] to submit that in view of the express bar of limitation under Section 107 of the CGST Act the present writ petition is not maintainable. In this context, it is indicated that the issue in Ashok Varandani pertained to filing of statutory return in form GSTR/3B and connected issues. This Court referred to the decision in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [ 2020 (5) TMI 149 - SUPREME COURT ] , wherein the Hon ble Supreme Court observed that if the Assessee did not avail the alternative remedy of statutory appeal even within the extended period of limitation by seeking condonation of delay then a writ petition shall not be entertained. Quite apparently, the language employed in Glaxo Smith Kline Consumer Health Care Limited reflects that the Court has ample powers to condone the delay in preferring the appeal. The present writ petition is entertained and the order dated 11th June 2024 passed by the Joint Commissioner of CGST is quashed - petition allowed.

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• 2024 (8) TMI 442
  Challenge to demand-cum-show-cause - opportunity to submit written explanation not provided - violation of principles of natural justice - HELD THAT:- Normally, writ Court would not entertain writ challenging show-cause notice. Show-cause notice would not affect the rights of the parties. No person would be aggrieved on receiving show-cause notice. A person would be aggrieved only when show-cause notice is translated into adverse order. It is not that show-cause notice cannot be challenged at all. Show-cause notice could be challenged, if one establishes that authorities which issued show-cause notice lacks inherent jurisdiction and is not competent to issue such show-cause notice. The Hon ble Apex Court in the case of SPECIAL DIRECTOR VERSUS MOHD. GHULAM GHOUSE [ 2004 (1) TMI 378 - SUPREME COURT ], while considering appeal arising out of show-cause notice issued under the provisions of Foreign Exchange Regulation Act, 1973 and Foreign Exchange Management Act, 1999, has held Whether the show cause notice was founded on any legal premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the Court. Further, when the Court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is accorded to the writ petitioner even at the threshold by the interim protection, granted. By following the principles laid down by the Hon ble Apex Court in the case of Mohd. Ghulam Ghouse, the writ appeal is declined to be entertained and the petitioner is relegated to approach the authorities by replying to the demand-cum-show-cause notice dated 23.09.2021. It is open for the petitioner to raise all contentions raised here before the authorities and authorities shall consider the same and pass appropriate orders in accordance with law. Appeal disposed off.

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• 2024 (8) TMI 441
  Maintainability of petition - alternative remedy of appeal - Challenge to order passed by the Proper Officer u/s 73 of the GST Act - challenge on the ground that the Proper Officer has not applied its mind to the stand taken before it and, as such, the order is not a speaking one - principles of natural justice - HELD THAT:- Since the petitioner has a remedy of appeal available under the Statute and there are no reason to exercise the jurisdiction under Article 226 of the Constitution. Liberty granted to the petitioner to withdraw the writ petition with liberty to approach the appropriate appellate forum for redressal of his grievances. Petition disposed off.

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• 2024 (8) TMI 440
  Cancellation of GST registration of the petitioner with effect from 18-4-2023 - violation of the principles of natural justice - HELD THAT:- The impugned order dated 16-11-2023, the subsequent show cause notice dated 26-10-2023, both do not disclose either these facts giving justification of dropping of the proceedings. Moreover, the subsequent show cause notice though mentions that seven days time is granted, but the petitioner was directed to appear before the respondent authorities within less than 24 hours of time, which apparently compels this Court to reach to the conclusion that there has been violation of principles of natural of justice. Firstly, for not giving reasonable time for the petitioner to respond to the show cause notice and secondly, the reply which the petitioner had submitted not having been considered or appreciated while passing the impugned order on 16-11-2023. The impugned order is quashed - petition allowed.

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• 2024 (8) TMI 439
  Taxability - supply of flying training services provided by the Applicant to their trainees - Applicability of Circular No. 117/36/2019-GST dated-11-10-2019 - rate of GST applicable. Taxability - HELD THAT:- Applicant being a Approved Flying Training with approved curriculum fulfils the additional conditions laid down under GST regime in Clause (ii) of the definition of Educational institute. The Course completion Certificate issued by the Applicant is also recognised by Rule 41A, 41B, Schedule II-Section A-General Sectio J-Section J-Commercial Pilot s Licence (Aeroplanes) -Sub-clause 1 (f) And Civil Aviation Requirement (CAR)-Section 7-Flight Crew Standards Training and Licensing, Series D Training Organisation, Part I-Issue -II-dated 30 January 2015. Clause 14.3 Completion Certificate. The applicant is education institute for the purpose entry no. 66 of Notification No 12/2017-Central Tax (Rate) dated 28-06-2017. Applicability of Circular No. 117/36/2019-GST dated-11-10-2019 - HELD THAT:- From Circular it is clear that Maritime Training Institutes are approved and its Curriculum and training programme are approved by the Regulator Director General Shipping (DG Shipping) under provisions of Merchant Shipping Act, 1958, and Rules as aforesaid. Further Licensing examination is conducted by the Assessment Centres , which actually results in grant of License under the Merchant Shipping Act, 1958, which is mandatory under the Law. In case of applicant also, it is a Approved Flying Training Institute, its curriculum is approved by the Director General of Civil Aviation ( DGCA ), Training is Certificate is granted only after passing of examination as per guidelines issued by DGCA The examiners are also approved examiners only by DGCA. Further Licensing examination are conducted by the DGCA at Examination centers approved under rule 41A of the Aircraft Rules. Only after this Examination conducted by DGCA through Examination center, the Commercial Pilot License is granted, which is mandatory for aviation. There are no hesitation that the principles and reasons explained in the aforesaid Circular for Maritime Training Institutes are equally applicable to Flying Training Institutes approved by the DGCA, having approved curriculum. Supply of Flying Training Services to trainees for completion of approved course for Commercial Pilot License (Aeroplanes), is exempted If such a supply is taxable, what will be the rate of GST applicable? - HELD THAT:- Not relevant question.

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• Income Tax

• 2024 (8) TMI 467
  LTCG - accrual of income - Taxability of part consideration which the assessee did not receive under the transaction to sell/transfer plot of land - tribunal opined in favour of the assessees and against the Revenue - HELD THAT:- In the present appeal the assessee is an individual, hence, the asseessee was maintaining his accounts on accrual/cash basis, is also an additional factor. In any event, the amounts of balance consideration as received by the assessee and as actually accrued, was offered to tax in the subsequent year. As decided in MRS. HEMAL RAJU SHETE [ 2016 (4) TMI 1082 - BOMBAY HIGH COURT] contention of the Revenue that the impugned order is seeking to tax the amount on receipt basis by not having brought it to tax in the subject assessment year, is not correct. This for the reason, that the amounts to be received as deferred consideration under the agreement could not be subjected to tax in the assessment year 2006-2007 as the same has not accrued during the year. As pointed out above, accrual would be a right to receive the amount and the respondent-assessee alongwith its co-owners have not under the agreement obtained a right to receive Rs. 20 crores or any specified part thereof in the subject assessment year. - Decided against revenue.

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• 2024 (8) TMI 466
  Revision u/s 263 - Payment made in cash against the purchase of immovable property - AO accepted the declared income and passed the assessment order u/s 147 r.w.s. 144 r.w.s.144B - HELD THAT:- Section 263 of the Act empowers the Ld.PCIT to revise any order passed by the AO if it is erroneous and prejudicial to the interests of the revenue. An order can be considered erroneous if it is passed without proper verification, inquiry, or based on incorrect facts or law and it is prejudicial to the interests of the revenue if it results in the loss of revenue or incorrect computation of taxable income. In the present case, it is evident that even after persistent requests by the assessee, the AO could not provide the documentary evidence based on which the assessment was reopened and passed order u/s. 147 read with section 144. It is only the case where the evidence available with the Ld.PCIT gave rise to suspicion about its veracity that further scrutiny is called for. The circumstances can certainly be termed as inadequate inquiry. Therefore, in our opinion, the Ld.PCIT is not wrong in assuming jurisdiction u/s. 263 of the Act. Therefore, the first ground of the assessee s appeal is dismissed. Addition based on inference from the impounded documents - Validity of a notice issued u/s 263 based on incorrect grounds or unsupported evidence can be questioned. If the reasons cited in the notice are factually incorrect or legally unsustainable, the notice can be challenged as invalid. PCIT must have sufficient evidence to support the claim that the order is erroneous and prejudicial to the interests of the revenue. Mere suspicion or conjecture is not sufficient. As evident that for the Ld.PCIT to invoke Section 263 of the Act, it must be conclusively proven that the AO s order is both erroneous and prejudicial to the interests of the revenue. In this case, the AO made inadequate inquiries, during the proceedings, the AO could not provide any documentary evidence that formed the basis for reopening the assessment. This lack of evidence, supports the conclusion that the Ld.PCIT s action of setting aside the order of AO and directing him to pass a fresh order is unwarranted. In view of the above, the order passed by the Ld.PCIT under Section 263 is set aside. Accordingly, the second ground of appeal of the assessee is allowed.

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• 2024 (8) TMI 465
  Assessment u/s 153A - additions made on account of deemed dividend and due to re characterisation of the land as non agricultural land instaed of agricultural land, as claimed by the assessee - incriminating material found in search or not? - HELD THAT:- Assessee has disclosed in his return of income a sum of Rs. 2,55,00,000, as an exempt income and hence it is not the case that the assessee had ever tried to hide the matter from the Income Tax Authorities, because the assessee has voluntarily disclosed in the return of income. We find that the documents seized during the search are not in the nature of incriminating documents, because these were duly recorded in the books of account of the Company. The assessment year 2010 11 is undisputedly an unabated assessment year. Even upon a meticulous examination of the statement under section 132(4) of the Act and in the assessment order, there is no reference to any document that has been seized from the assessee upon which the addition has been made. As decided in Murli Agro Products Ltd. [ 2010 (10) TMI 1052 - BOMBAY HIGH COURT] wherein it was held that once the assessment has attained finality before the date of search and no material is found in the course of proceedings under section 132 of the Act, then, no addition can be made in the proceedings under section 153A of the Act and deleted the additions made on account of deemed dividend We are in complete agreement that no incriminating materials were unearthed by the Revenue during the course of search irrespective of unabated assessment and hence no addition can be made by the AO in the absence of any incriminating material. Accordingly, there is no merit in both the additions made by the Assessing Officer and confirmed by the learned CIT(A). The very basis of assumption of jurisdiction in completing the assessment u/s 153A of the Act is fragile and unsustainable - Decided in favour of assessee.

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• 2024 (8) TMI 464
  Unexplained cash deposits u/s 69A r.w.s 115BBE - no source of cash deposit explained during demonetization period - assessee is covered by presumptive taxation scheme and filed return of income as per provisions of Section 44AD - HELD THAT:- It is unbelievable that the assessee would keep large cash in hand and continue to keep the cash generated from sales in its custody without any corresponding payments for purchases in the intervening period on deposit in Bank. The explanation offered towards source of cash deposit, when the facts are seen in perspective, do not inspire any confidence. The assessee has done nothing to dispel the perception of the Revenue towards propriety of source of deposits. In the same breath however, it is difficult to assign a particular degree or standard of proof to establish the holding of cash in a conclusive manner with precision. The assessment towards source of cash deposits involves a process of evaluation of facts which involves guess and estimation. It is difficult to test the reliability of explanation towards cash deposit to the hilt in the circumstances existing in the case. We, thus, in fitness of things, would consider it appropriate to grant some benefit of doubt to the assessee. The possibilities of part of cases deposits out of cash withdrawals in the past and cash sales during the year cannot be wholly ruled out. In the balance of things, we consider it appropriate to grant partial relief to the extent of Rs. 25,00,000/- over and above the relief granted by the CIT(A). The First Appellate order is, thus, modified by such further relief over and above relief granted by him. Appeal of the assessee is partly allowed.

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• 2024 (8) TMI 463
  Denial of Foreign Tax Credit - assessee failed to furnish Form 67 on or before the due date for furnishing the return prescribed u/s 139(1) which is mandatory - HELD THAT:- As an admitted position that the assessee filed Form 67 on 08.01.2022 before the end of the relevant AY 2021-22 which is in conformity with the CBDT notification No. 100/2022 amending sub-rule (9) of Rule 128 of the Rules. The Rule nowhere provides that if Form 67 is not filed within time, relief sought by the assessee under section 90 of the Act would be denied. The assessee filed Form 67 before the return for the relevant AY was processed u/s 143(1) of the Act by the Ld. AO. Various coordinate benches of the Tribunal have held that filing Form 67 is a procedural/directory requirement and is not a mandatory requirement. We find Tribunal in the case of Baburao Atluri [ 2022 (12) TMI 525 - ITAT HYDERABAD] has allowed the FTC despite delay in filing the FTC certificate in form No.67. Since the FTC certificate/statement in Form No. 67 was not examined by the Ld. AO, therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it appropriate to restore the issue to the file of the AO with the direction to verify Form No. 67 and allow consequential FTC in accordance with law - Grounds raised by the assessee allowed for statistical purposes.

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• 2024 (8) TMI 462
  Accrual of income in India - Taxability of consideration received from subscription from use of standard software application - royalty receipts under the Income Tax Act read with Article 12 of the India - Ireland DTAA - HELD THAT:- The issues involved in the present appeal stands covered by the order of the Tribunal in assessee s own case [ 2023 (9) TMI 1523 - ITAT DELHI] no substantial question of law arises out of the order of the Tribunal in accepting that subscription receipts from Cloud Services is not taxable as royalty. In case of Amazon Web Services Inc [ 2023 (8) TMI 331 - ITAT DELHI] the coordinate Bench of the Tribunal has also expressed identical view holding that subscription received from Cloud Services is not taxable as royalty. The income received by the assessee from Cloud Services is not taxable in India, as they cannot be treated as royalty income. Accordingly, we direct the AO to delete the additions. Assessee appeal allowed.

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• 2024 (8) TMI 438
  Maintainability of appeal before SC on low tax effect - Whether Deduction as computed u/s 80IB should be reduced from the deduction computed u/s. 80HHC - HC [ 2011 (1) TMI 1592 - BOMBAY HIGH COURT] decided issue in favour of assessee - HELD THAT:- As appellant(s) states that the tax effect in all these appeals is below Rupees Two Crores. In view of Circular No.F.No.279/Misc.142/2007-ITJ(Pt.), dated 8th August, 2019, issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board Direct Taxes, we decline to entertain these appeals, which are consequently dismissed in terms of the said Circular. The pending interlocutory application, if any, also stand disposed of.

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• 2024 (8) TMI 437
  Sought permission to withdraw the Review Petition - Exemption u/s 10(22) - denial of exemption objects of the Trust include commercial activity - as submitted that the reason as to why the aforesaid Review Petition was withdrawn was in order to pursue the Special Leave Petition before this Court - Filing of second Review Petition - HELD THAT:- We do not think this petition ought to be entertained for the reason that when the earlier Review Petition was withdrawn before the High Court, there was no liberty sought by the petitioner herein to file another Review Petition. The petitioner herein took his chance before this Court in the aforesaid Special Leave Petitions which were dismissed on 17.04.2023. In case the petitioner intended that the original order of the High Court was to be reviewed by the Division Bench of the High Court then the petitioner could have sought permission to withdraw the Special Leave Petitions with liberty to file a Review Petition. At that stage also no such withdrawal of the Special Leave Petitions with the aforesaid liberty was sought for by the petitioner before this Court. On the other hand, the petitioner took a chance to argue the Special Leave Petitions on merits and when this Court was disinclined to interfere in the matter, once again, the Review Petition No.253/2023 was filed by the petitioner before the High Court. We find that that the said vacillation of the petitioner vis-a-vis the filing of the initial Review Petition and thereafter withdrawing the same and pursuing the Special Leave Petitions and on its dismissal once again filing another Review Petition is not in accordance with the policy of attaining finality in litigation. Moreover, the non-seeking of liberty by the petitioner at the initial stage or before this Court is fatal to the case of the petitioner. In the instant case, when the first Review Petition was withdrawn owing to the filing of the Special Leave Petitions before this Court, no liberty was sought to file a Review Petition once again. This would imply that the petitioner had aborted hearing of the Review Petition by the High Court in order to prosecute the matter before this Court in the Special Leave Petitions. Even if after the dismissal of the first review petition by the High Court on merits, the petitioner could have challenged the original order as well as the order passed in the first review petition but the fact of the matter is first Review Petition was dismissed as withdrawn without any liberty and the petitioner once again filed another Review Petition in the case after the Special Leave Petitions before this Court were also dismissed on merits, without withdrawing the same with liberty to revive the earlier Review Petition. This would clearly indicate the intention of the petitioner which was to prosecute the Special Leave Petitions before this Court. After dismissal of the special leave petitions by this Court, the petitioner could not have filed another Review Petition before the High Court. There has to be a finality to the lis at some point of time and at some stage of the case. On the other hand, the second Review Petition filed by the petitioner being dismissed, has led to the petitioner once again filing the Special Leave Petitions as against the said order before this Court. This case is similar to Abbai Maligai Partnership Firm vs. K. Santhakumaran, [ 1998 (9) TMI 663 - SUPREME COURT ] wherein Special leave petitions preferred were dismissed by this Court and thereafter, Review Petitions were filed and entertained by the High Court. Therefore, strong strictures were passed by this Court against vis- -vis the order of the High Court. SLP dismissed.

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• 2024 (8) TMI 436
  Delay in passing final orders by the CIT(A) - demands are now being considered by department against the petitioner in considering the refund claims of the petitioner for certain assessment years, which is causing a serious prejudice to the petitioner - HELD THAT:- Proceedings of these appeals, which are pending before the CIT(A) need to be taken to the logical conclusion by a decision being rendered on such appeals as expeditiously as possible, this, more particularly, as earlier substantive order passed has also remained to be complied, in the spirit in which the same was made by the Court. As similar issues arise for consideration in both such appeals, we direct the CIT(A) to decide both the appeals in accordance with law within a period of four months from today and after an opportunity of hearing is granted to the petitioner.

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• 2024 (8) TMI 435
  Validity of reassessment proceedings - petitioner not being afforded with adequate opportunity to respond to the show cause - HELD THAT:- From the digital signature appearing on the show cause, it would appear that the same was issued on 13th February, 2024, at around 18.37 hrs. As such 7 clear days time was not afforded to the petitioner. Petitioner ought to have been granted 7 clear working days time and the time period of 7 days is only the minimum period which has been provided for - Admittedly, in this case after expiry of the time specified for submitting the response, the submit response button on the portal was deactivated and as such the petitioner had no opportunity to file her response. The aforesaid constitutes violation of principles of natural justice. Admittedly, in this case limitation for completion of assessment proceeding do not intervene for not providing of clear days response time. It may be noticed that the object of show cause is to offer an opportunity to respond. Admittedly, in this case it would appear that Saraswati Puja was on 14th February, 2024 and as such, the same coupled with the short response time as indicated hereinabove, may have made it unviable for the petitioner to offer response, within the specified time. The above constitutes violation of the principles of natural justice. Since, the assessment order was passed without considering the petitioner s response, the matter is remanded back to the Faceless Assessment Unit. The petitioner is directed to submit her response with the Faceless Assessment Unit within a period of 15 days from date. For such purpose, the Faceless Assessment Unit shall reactivate the submit response button in the portal within a week from date and communicate the same to the petitioner via email. .

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• 2024 (8) TMI 434
  Advertisement expenditure (deferred revenue) - allowable revenue expenditure or not? - assessee has made different entries in the audited books of accounts and in the return of income and there is no such concept of deferred revenue expenditure as per the I.T. Act - ITAT allowed deduction - HELD THAT:- This Court by the judgment and order passed on the Revenue s appeal in Tata Chemicals Ltd. [ 2024 (7) TMI 94 - BOMBAY HIGH COURT ] did not entertain the said questions on the ground that on the similar issues the revenue has accepted the previous orders passed in the assessee s own case. Addition of expenses towards workmen and staff welfare u/s 40A (9) - Supreme Court in Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT ] this Court did not find fault in the findings as rendered by the Tribunal in deciding the issue in regard to allowing of the expenses incurred by the assessee towards workmen and staff welfare u/s 40A (9) of the Act. Thus, the Tribunal on such issue having held in the assessee s favour in the assessess s own case for the Assessment Year 1997-98, we are not persuaded to re-examine such question.

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• 2024 (8) TMI 433
  Disallowance u/s 40A(9) v/s 37(1) - Determination of nature and character of expenditure - whether payments made to various institutions by Assessee under six heads, could have been treated as allowable expenses - whether the aforesaid payments could be allowed as revenue expenditure u/s 37(1) but disallowance canvassed by Revenue is based on the purported applicability of Section 40A (9) of the Act? HELD THAT:- The payments in question are made towards wider local welfare measures that would boost its presence in the local ecosystem and enable harmonious conduct of its factory and business operations in the vicinity. Merely because a commitment to continue such welfare measures is recited in the Memorandum of Settlement with the Workmen s Union, these payments would not partake the character of payments made under the Memorandum of Settlement or payment required to be made under labour law, or for that matter, payment that is made as an employer . It is apparent that both forums have found that the payments had a commercial linkage to the business and led to benefits for the conduct of the business of the assessee in those years. The payments made by the Respondent-Assessee were for public causes in the locality of the business operations and benefits flowed from it to the business of the Assessee. In our view, if at all the Memorandum of Settlement is relevant, it would be to show that there was a nexus between such social welfare activity undertaken by the Respondent-Assessee and the business of the Respondent-Assessee. The local harmony and goodwill that the social welfare and community expenses generated, benefited the Respondent-Assessee s conduct of business. That such expenses were being incurred was acknowledged and recited as a continuing commitment. Thus, merely because such expenditure finds a place in the Memorandum of Settlement, the nature and character of such expenditure would not be altered, so as to fall under Section 37 (1), or to attract Section 40A (9). Therefore, the two concurrent views expressed by the CIT-A and the Tribunal need not be faulted. This Court, in appellate jurisdiction on substantial questions of law should not substitute an alternate view, merely because another view is possible, unless the views expressed in the concurrent findings are not at all a plausible view. As already found above that Section 40A (9) has no application to the facts of the case. But for adjectival arguments about such payments being stretched into the realm of payments made under law governing industrial disputes, in our opinion, there was no scope for considering the relevance of Section 40A (9) to the matter at hand. In these circumstances, also taking into account that the distance of time has already led to four appeals against the same Impugned Order being withdrawn owing to low tax impact, we see no reason to interfere with the two concurrent findings by considering substituting an alternate view. Tribunal was indeed justified in law in upholding the view of the CIT-A in deleting the disallowance made by the Assessing Officer (who had relied upon Section 40A (9) of the Act), of the amounts expended towards the six heads of payments made in the respective assessment years. And the payments made in the facts of this case were not payments required to be made under the Industrial Disputes Act or payment required by or under any other law, but the same is irrelevant for the matter at hand since Section 40A (9) was not at all attracted. Unless it was attracted, there was no necessity to rely on the exception in that section in relation to payments required to be made or under any law. Decided in favour of assessee.

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• 2024 (8) TMI 432
  Taxability of income in India - royalty receipts - TDS u/s 195 - remittance made by the respondent/assessee to a foreign party in relation to the procurement by the assessee of software used in the business of the assessee - CIT(A) and the Tribunal have returned concurrent findings that considering the nature of the transaction and the placement of the assessee and the foreign suppliers, the payments as made by the assessee are not in the nature of royalty and for such reason, it would not be incumbent for the assessee to deduct tax at source u/s 40 (a) (i) HELD THAT:- As rightly pointed out on behalf of the assessee, the issue of law as raised on behalf of the revenue, in our opinion, would be required to be held to be no more res integra, as the view taken by this Court in M/s. NGC Networks (India) Pvt. Ltd. [ 2018 (5) TMI 1148 - BOMBAY HIGH COURT] on non-retrospective amendment of Explanation 6 to Section 9 (1) (vi) of the Act, was subject matter of consideration of the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] The Supreme Court affirming the decision of this Court in M/s. NGC Networks (India) Pvt. Ltd. [ 2018 (5) TMI 1148 - BOMBAY HIGH COURT] has held that Explanation 6 cannot have retrospective effect/application. As in our considered opinion, the Revenue s endeavour to retrospectively apply Explanation 4 introduced by Finance Act, 2012 to Section 9 (1) (iv) so as to tax the assessee under such provision cannot be accepted. Decided in favour of assessee.

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• 2024 (8) TMI 431
  Validity of Reopening of assessment u/s 147 - statutory scheme of the Procedure for Assessment under Chapter XIV of the IT Act - requirement of having reasons to believe - 13 plots sold during the assessment year the considerations for which are said to have been received in cash. HELD THAT:- Explanations (1) (2) to section 148 of the IT Act explain the expression information on the basis of which the Assessing Officer can proceed under section 148A. In Union of India Ors. Vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] the Hon ble Supreme Court held that the Assessing Officer is required to provide all information and materials to the assessee on which the Revenue seeks to place reliance so as to enable the assessee to effectively make its defence to the notice under section 148A(b) of the Income Tax Act. We find that the inquiry report was uploaded on VRU functionality on Insight portal and, as noticed above, a copy thereof was enclosed with the notice dated 28th March 2024. We are of the opinion that a detailed adjudication on the merits of the information available with the AO and defence set up by the assessee is not contemplated at the stage of passing an order u/s 148A (d). It is true that the AO is required to pass an order which should contain a brief narration of facts and the defence set up by the assessee, but then, a conclusive finding as regards the defence taken by the assessee by the AO is not required at this stage as the same may prejudice the further proceedings. Determination made by the Assessing Authority u/s 147 is otherwise subject to appeal under section 246A of the Income Tax Act and therefore the merits of the information referable to section 148A remains subject to the assessment proceedings initiated under section 148. Petitioner-company in its reply set up a defence that it has no knowledge about sale of 13 plots by Mr. Kamlesh Kumar Deora who was given a power of attorney on 7th June 2019 by Mrs. Manju Agarwal - The law relating to the power of attorney is governed by the provisions of the Powers of Attorney Act, 1882 and it is well-settled that an agent acting under the power of attorney always acts in the name of his principal and any document executed or thing done by an agent on the basis of power of attorney is as effective as if executed or done by the principal himself. It is well-known that a power of attorney is a document of convenience and except in cases where a power of attorney is coupled with interest, it is revocable. No doubt the power of attorney holder acts in a fiduciary capacity but any act of infidelity or breach of trust shall necessarily be a matter between the donor and the donee. In that event, the remedy of the petitioner-company shall lie elsewhere and not before the writ Court by raising such a technical plea. The jurisdiction conferred on the High Court under Article 226 is no doubt very wide but it is an accepted principle that the High Court exercises its jurisdiction under Article 226 of the Constitution of India for a public law remedy and it is available against a body or person performing public law function. The stand taken by the petitioner-company that it had no knowledge about the sale transaction by the power of attorney holder is not a ground for the Revenue not to proceed against it . The petitioner-company shall be bound by the doctrine of agency and whatever act the power of attorney has done on his behalf by virtue of the power of attorney dated 07th June 2019 shall bind the petitioner-company. This is another issue to say that the power of attorney holder acted beyond the power authorized to him and, then in that case, the dispute shall be between the petitioner-company and the power of attorney holder. WP dismissed.

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• 2024 (8) TMI 430
  Disallowance of certain expenses - applicability of the rate of disallowance at 20% - HELD THAT:- Though before the AO the assessee did not appear, however, before Ld. First Appellate Authority assessee did appear and furnish certain evidences to justify the claim of expenses. Surprisingly, even though the evidences were forwarded to the AO for verification and to furnish a Report, however, ultimately FAA declined to entertain the evidences. This, is in our view is unjustified. Be that as it may, ultimately FAA has found some merit in the submissions made by the assessee as well as evidences furnished, as he has deleted the disallowance made out of Opening Stock and WIP, whereas, he has restricted the disallowance of purchase and administrative expenses at 20% of the amount claimed. On perusal of record, we do not find any basis for applicability of either 50% or 20% rate of disallowance. Considering the fact that the assessee is in construction business, in our view, disallowance @5% of purchases and administrative expenses would meet the ends of justice. Accordingly, the AO is directed to do so. Appeal of the assessee is partly allowed.

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• 2024 (8) TMI 429
  Revision u/s 263 - assessment order was drawn in the name of a deceased individual - HELD THAT:- As pointed out on behalf of the assessee, the assessment order was drawn in the name of Late Mr. Ramesh Chandra who was deceased at the time of framing of the assessment order on 17.10.2019. This being so, in the light of the judgments rendered in the case of Savita Kapila [ 020 (7) TMI 441 - DELHI HIGH COURT ] and Rajendra Kumar Sehgal [ 2018 (12) TMI 697 - DELHI HIGH COURT ] the assessment order framed in the name of deceased is apparently not sustainable in law. Consequently, the revisional action of a non-existent assessment order is not permissible in law. Thus, without going into the merits of the plea towards lack of prerequisites for the purposes of Section 263, we hold that the revisional action under challenge is outside the sanction of law. Appeal of the assessee is allowed.

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• 2024 (8) TMI 428
  Penalty u/s 271(1)(c) - wrong claim of deduction u/s 11(1) of the Act in respect of building construction - HELD THAT:-The wrong claim of business construction amount towards application of income had no impact on the total income of the assessee either in the current year or in the future years. Under the circumstances, the machinery provision to work out the penalty amount @ 100% of tax sought to be evaded doesn t work out as there was no evasion of income either in the current year or in future years. Therefore, the AO was not correct in imposing the penalty under Section 271(1)(c) of the act. The mistake on the part of the assessee was a bona-fide mistake, which ultimately had no impact on the taxable income of the assessee. Therefore, the penalty levied under Section 271(1)(c) of the Act is cancelled. Appeal of the assessee is allowed.

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• 2024 (8) TMI 427
  Validity of reassessment proceedings - addition on account of receipt of share capital/share premium - unexplained money of the assessee company u/s. 68 - HELD THAT:- Since in the present case during the course of original assessment proceedings, the AO had not formed any opinion in respect of receipt of share capital/share premium, it cannot be said that the reassessment proceedings are prompted by mere change of opinion. Therefore, we uphold the validity of the reassessment proceedings in view of law laid down in the case of Tech Span India Pvt. Ltd. [ 2018 (4) TMI 1376 - SUPREME COURT ] Cross objection filed by the assessee company is dismissed. Addition u/s 68 - Mere production of incorporation details, PAN Numbers, etc. receipt of money through banking channel prove the Identity and creditworthiness of investors but not the genuineness of the transaction is not established by merely contending that transaction was done through banking channel or account payee instrument. The assessee company has to discharge the onus cast upon it by demonstrating as to how the two parties are known to each other, the manner and mode by which the parties approached each other, whether transaction was entered through written agreement to protect the investment, creditworthiness, objects and purpose for which the investment was made. In the present case, these facts and information are within the exclusive knowledge of the assessee company. The fact that the assessee company received huge share capital/share premium when the Rainbow Ventures Limited is a loss making company triggered the doubts in the mind of the AO as to the genuineness of the very transaction. AO gave a finding that it is nothing but unaccounted money of the assessee company. This allegation had not been proved to be wrong by the assessee company. In the circumstances, the order of the CIT(A) is bereft of factual discussion on the above aspects. Nor the assessee company filed any evidence or material in an attempt to discharge the onus cast upon it in terms of provisions of section 68 of the Act. Therefore, the finding of the CIT(A) to the extent of deleting the addition on account of share capital/share premium from the above parties is reversed. In the absence of any material on record discharging the onus cast upon the assessee company in terms of provisions of section 68 of the Act, we are not inclined to remand the matter to the lower authorities. Accordingly, the assessment order is restored and the appeal filed by the Revenue stands allowed.

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• 2024 (8) TMI 426
  TDS u/s 195 - reimbursement of expenses - Addition u/s 40(a)(i) the amounts paid to QAI Singapore Pte. Ltd. and KCS Hong Kong Ltd. in relation to services rendered for earning income from outside India which specifically falls under the exclusionary provision of Section 9(1)(vii)(b) - HELD THAT:- The assessee had utilized the services of QAI Singapore Pte. Ltd. and KCS Hong Kong Ltd. in order to deliver the SCAMPIA appraisal services to its clients in Vietnam. The services have been rendered in Vietnam for the purpose of earning income from a source which is outside India. Therefore, the services rendered by QAI Singapore Ltd. and KCS Hong Kong Ltd. have been utilized in Vietnam i.e. outside India and the payment which has been made to QAI Singapore Ltd. and KCS Hong Kong Ltd. is for the purpose of earning income from a source outside India which specifically falls under the exclusionary provisions of Section 9(1)(vii)(b) of the Act Thus, disallowance made by the AO and the CIT(A) u/s 40(a)(i) of the Act is unwarranted and liable to be deleted. Decided in favour of assessee. Payments to Carnegie Mellon University and Call Centre School LLC - HELD THAT:- The transaction entered into by the assessee nowhere falls within the definition of Fee for Technical Services. Therefore, the addition made by the AO by holding such amount as Fee for Technical Services is absurd and without any basis and is thus liable to be deleted. In the present case, trademarks have been used for imparting trainings to the employees of assessee s clients outside India and for the purpose of earning an income from a source outside India. No defect or discrepancy has been pointed out by the AO or the ld. CIT(A) in the chart furnished by the assessee. It is also not the case of the AO or the ld. CIT(A) that the details mentioned in the chart are vague or arbitrary. Thus, the income was even otherwise not taxable in the hands of the recipient in view of the specific exclusionary provisions of Section 9(1) (vi)(b) of the Act - Thus disallowance made by the AO and the ld. CIT(A) u/s 40(a)(i) of the Act is unwarranted and liable to be deleted. Payments to the APM Group for purchase of course material -HELD THAT:- From a plain reading of the above section, it is clear that the transaction entered into by the assessee nowhere falls within the definition of Fee for Technical Services. Therefore, the addition made by the AO by holding such amount as Fee for Technical Services is absurd and without any basis and is thus liable to be deleted. Payments to the British Computer Society - disallowance u/s 40(a)(i) r.w.s. 195 - HELD THAT:- Transaction entered into by the assessee do not postulate any kind of services in the nature of technical, managerial or consultancy As per DTAA, simple rendering of services is not sufficient for a service to qualify as Fee for Technical Service when the expression Make Available is used within the definition of Fee for Technical Services. Rather, the provision of services should enable the recipient to make use of the technical knowledge etc. by himself without taking help from the provider of the services - Thus addition made by the AO by holding such amount as Fee for Technical Services is absurd and without any basis and is thus liable to be deleted. Payments to RADTAC - services rendered for earning income from outside India which specifically falls under the exclusionary provision of Section 9(1)(vii)(b) - HELD THAT:- Disallowance made by the AO and the ld. CIT(A) u/s 40(a)(i) of the Act is unwarranted and liable to be deleted. Payments to Mr. Tejinder Pal Singh - payment made to individuals for professional services - HELD THAT:- Income derived by an individual being resident of a contracting state is taxable in that contracting state only i.e. country of domicile except where such individual has a fixed base in other contracting state or period of stay of such individual in other contracting state exceeds 90 days in the relevant taxable year. The fact reveals that Mr. Tejinder Pal Singh does not have a fixed base in India nor does his stay in India has exceeded a period of 90 days.Thus, the income earned by Mr. Tejinder Pal Singh is taxable in the country of his residence i.e. USA and not chargeable to tax in India. Therefore, no TDS u/s 195 ought to have been deducted by the assessee on making such payment to Mr. Tejinder Pal Singh. Appeals of assessee allowed.

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• 2024 (8) TMI 425
  Reopening of assessment - addition u/s 68 - unexplained cash credit - share application money so received by the assessee company from the mentioned companies is nothing but the assessee s own money - HELD THAT:- AO has called for various details during the course of original assessment proceedings and no new tangible material exist for coming to bonafide belief as contemplated u/s 147 of the Act, therefore, such reopening of the assessment in our opinion was merely based on change of opinion which is not in accordance with law as contemplated by the recent decision of Godrej Projects Development Pvt. Ltd. [ 2024 (2) TMI 166 - BOMBAY HIGH COURT] . In view of the detailed reasoning given, we hold that the re-assessment proceeding initiated by the Assessing Officer is merely on account of change of opinion and therefore, is not sustainable. Accordingly, on this ground also, the re-assessment proceedings are quashed. Decided in favour of assessee.

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• 2024 (8) TMI 424
  Revision u/s 263 - CIT setting aside the original assessment order with the direction to examine two issues afresh value of investment u/s 56(2)(via) read with rule 11UA to ascertain income under that provision - Issue referred in SCN though with changed basis and Sources of long terms loans with income thereon. HELD THAT:- From the record and the order of the PCIT, we find that no show cause notice has been issued to the assessee asking for any explanation with regard to sources of long terms loans with income thereon, however, the same has been directed to be examined by the AO. PCIT has fall into error by directing the AO on the issue for which no show cause has been issued to the assessee. We find that the case was selected for limited scrutiny to enquire large investment in unquoted share and AO duly examined the source and genuinity of such investment with reason thereof whereby assessee had a vested interest in Sanwariya Gas Ltd., as per scope and ambit of limited scrutiny, therefore the issue of valuation of shares with applicability of provisions of section 56(2)(viib) as raised in SCN u/s 263 being beyond the scope of limited scrutiny is also beyond the scope of section 263. Order u/s 263 based partially on the issue raised in the notice and also on entirely new issue without any SCN or without providing any opportunity is beyond the mandate of section 263. Keeping in view the entire facts and circumstances of the case and the judicial pronouncements mentioned above, we hold that, the order of the ld. PCIT passed u/s 263 cannot be affirmed owing to the reasons of, i) the order is passed beyond jurisdiction, ii) the order passed is beyond the limited scrutiny, iii) the order has been passed on the issues for which no show cause notice has been issued, iv) the issues flagged by the PCIT have examined by the AO, v) the decision of the ld. PCIT determining the difference on the value of the shares at Rs. 1.50 per share is against the provisions of the Act as the assessee can resort to the method of valuation as per DCF/NAV as per Rule 11UA at their discretion. Appeal of the assessee is allowed.

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• 2024 (8) TMI 423
  TP Adjustment - Corporate guarantee - international transaction or not? - HELD THAT:- As in view of the decision of Redington (India) Ltd. [ 2020 (12) TMI 516 - MADRAS HIGH COURT] we have no second thought, and this decision is applicable to the facts of the case. No further debate by the Tribunal is permissible, when the higher forum decided the issue. Corporate guarantee is an international transaction, requiring benchmarking. Coordinate Bench of this Tribunal in assessee s own case for the assessment year 2018-19 [ 2023 (4) TMI 1254 - ITAT HYDERABAD] considered this issue in extenso and held that ALP on account of corporate guarantee at the 0.50% on the amount guaranteed is proper commission. Interest on receivables - AR argued that this particulars transaction is not covered in the definition of international transaction as defined under section 92B - HELD THAT:- We are of the considered opinion that when the assessee is extending the credit period between 60 days and 240 days to the non-AEs, and basing on this the learned DRP in the assessment year 2018-19 took a view that the credit period as agreed between the parties shall be respected and followed and such a finding of the learned DRP has become final without the Revenue challenging the same, the credit period which is extended to the non-AEs by the assessee shall be extended to the AEs also. On this reasoning we do not find any illegality or irregularity in the findings returned by the CIT(A) that the interest shall be record beyond the credit period as agreed between the parties. Ends of justice would be met by accepting the interest rate on similar foreign currency receivables/advances as LIBOR+200 points. We direct AO / TPO to adopt the same. Grounds are partly allowed accordingly. Weighted Deduction u/s 35(2AB) - weighted deduction claimed in respect of the expenditure incurred on the expenditure not quantified in the expenditure approved by the DSIR reflected in part B of form 3CL, and on clinical trials - HELD THAT:- Both the authorities held that for claiming weighted deduction, such an expenditure must have been approved by the prescribed authority and that no exceptions to this rule are provided in the Act. Though such an expenditure was incurred in relation to the scientific research and development, the requirement of approval by the prescribed authority is not fulfilled in this case and therefore, it is not qualified for weighted deduction, but at the same time since there is no dispute as to the incurring of such expenditure by the assessee, the said expenditure is qualified for hundred percent deduction. To the extent we approve the view taken in the impugned order. The issue has clearly been covered by the decision of Cadila healthcare Ltd [ 2013 (3) TMI 539 - GUJARAT HIGH COURT] referred to and followed in the case of M/s Sun Pharmaceuticals Industries Limited [ 2020 (3) TMI 345 - GUJARAT HIGH COURT] . A coordinate Bench of this Tribunal in assessee s own case for the assessment year 2018-19 having noticed the judicial review on this aspect, including the argument advanced in that case, and basing on CIT vs. Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] reached a conclusion that when once the clinical trial expenses incurred outside the approved R D facilities, were approved by the prescribed authority the assessee is entitled to claim deduction under section 35(2AB) of the Act. Respectfully following the same we hold the issue in favour of the assessee and allow weighted deduction in respect of the expenses incurred on clinical trials.

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• 2024 (8) TMI 422
  Penalty levied u/s. 271B - violation of the provisions of section 44AB of the Act for not filing the audit report - HELD THAT:- First of all, the assessee has not furnished any evidence to show that the assessee was attending to litigations and he was long defaulter running after the funds to procure company inputs. Secondly, the assessee knows the legal provisions for filing of audit report which is evident from the fact that for all the years he has filed audit report from the assessment years from 2014-15 to 2022-23 except AY 2017-18. It means that he did not want to get his audit completed or he knowingly he has not filed audit report for the relevant assessment year. Since, there is no reasonable or sufficient cause shown by the assessee for not complying with the legal provisions of section 44AB of the Act, we confirm the penalty and dismiss the appeal of the assessee.

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• 2024 (8) TMI 421
  Rectification of mistake - Tribunal has observed that the objection of the assessee on the issue of low tax effect was not sustainable - Addition made u/s 68 - Bogus LTCG - unexplained cash credits - whether shares involved were penny stocks? - as submitted AO had elaborately discussed in the assessment order that share as dealt in by the assessee was penny stock and that the CBDT Circular No. 5/2024 was squarely applicable to the facts of the present case and ITAT had rightly rejected the objection of the assessee on the issue of low tax effect - HELD THAT:- Whether a share is penny stock or not can t be decided by the Tribunal. This decision is taken by the BSE or the Investigation agencies after analyzing the trend of trading of such stocks. The Investigation Directorate, Kolkata had carried out a detailed study and analysis of such penny stock companies - As in the case of PCIT Vs. Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] has upheld the report of the Directorate of Investigation, Kolkata in respect of penny stock companies. The transaction in the case of the assessee was in respect of shares included in the report of the Investigation Directorate, Kolkata, wherein the share of Unno Industries Ltd. was reported as a BSE listed penny stock. No merit in the objection of the assessee and there is no mistake in our finding as given in the order [ 2024 (5) TMI 692 - ITAT AHMEDABAD] Regarding objection of the assessee to the observations as made in Para 16 of the order, the assessee has quoted only a part of the observation. It was also mentioned in the said Para that It is found from the contract memo that no brokerage was charged by M/s. Jwalaji Suppliers Pvt. Ltd., Kolkata for sale of the shares to the assessee. The broker in Calcutta was after all doing a business and not running a charity. It is, thus, apparent that finding as given by the Tribunal was not only on the basis of the portion of the order to which the assessee has raised objection. The finding as recorded by the Tribunal is not disputed as incorrect and no mistake in the findings has been pointed out. By raising objection in respect of this finding, the assessee has precisely requested to recall the order and to allow another opportunity of being heard. The provision of Section 254(2) of the Act is intended to only rectify the mistake apparent from the records and we don t find any such mistake apparent in the order. The power of Section 254(2) of the Act cannot be utilized to recall and review the order on its merit. M.A. filed by the assessee is required to be dismissed for the reasons as discussed above and also on account of judicial discipline following the decision of the Hon ble Supreme Court in the case of Reliance Telecom Ltd. [ 2013 (9) TMI 374 - ITAT MUMBAI]

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• 2024 (8) TMI 420
  Addition of unproved loans - Disallowance of interest to bank - assessee had taken secured loans from different banks - assessee argued that 3 loans are from earlier years and was only the balance is carried over to this year - HELD THAT:- As directed to the ld. AO that the additions are liable to be deleted on the ground that the loans are brought forwarded from earlier years, not related to this impugned assessment year. In the case of Mrs. Binita Doshi, the assessee received the amount of Rs. 1 crore and the legal case was going on u/s 138 of the N.I. Act, 1881 - The assessee has shifted the onus by submitting evidence in his favour. But the matter is unverified before the revenue authorities. In our considered view we remit the matter back to the file of the ld. AO to verify the loan creditor after giving the proper opportunity to the assessee. Related to other loans, which are taken during this year, the assessee submitted the confirmations, PAN, entry in bank account and the identity of loan creditors - We consider the submission of the assessee and remand the matter back to the file of the ld.AO for further verification of loan creditors. DR had not made any strong objection against the setting aside matter to the ld. AO. Accordingly, the impugned appeal order is set aside. The matter is remanded back to the file of the ld. AO. Interest of the bank , the issue is also unverified before any of the revenue authorities below. So, the interest amount from the bank to receive amount of Rs. 56,08,404/- is also remitted back to the file of Ld.AO. Needless to say, the assessee should get a reasonable opportunity of being heard in set aside proceedings.

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• 2024 (8) TMI 419
  Long-Term Capital Gains (LTCG) - interest expenditure allowable to the assessee in the computations - HELD THAT:- Assessee was engaged in real estate projects. The assessee acquired vacant land towards projects and availed certain loan from the bank in two concerns. However, the project did not take-off and the assessee defaulted in repayment. Admittedly, the assessee was engaged in the business of real estate projects. Since the project did not take-off and no activities was carried out, the assessee may not be in a position to establish that the land was acquired for business purposes. As further be seen that one-time settlement was arrived at and the land was possessed and sold by the bank. The entire sale proceeds have been retained by the bank and nothing has come to the assessee. In such a case, the decision of case of Sri Hariram Hotels P Ltd. [ 2009 (12) TMI 369 - KARNATAKA HIGH COURT ] would apply which has, more or less, similar facts. In this case, the assessee purchased an immoveable property for a project which did not materialize on account of various reasons and ultimately assessee-company sold the said property. While computing amount of capital gains, assessee claimed deduction in respect of interest paid to Directors on loans borrowed from them in order to purchase property in question. The same was denied by lower authorities. Tribunal allowed assessee s claim on the ground that since the property had been purchased out of loans borrowed from Directors, any interest paid thereon was to be included while calculating cost of acquisition of asset. The Hon ble Court upheld the order of Tribunal. Similar is the decision of Mithlesh Kumari [ 1973 (2) TMI 11 - DELHI HIGH COURT ] In this case, the assessee purchased perpetual leasehold rights in a plot of land and raised a loan for paying price of land. The assessee paid interest on such borrowings. The assessee sold the land and offered gains after including amount of interest and ground rent in actual cost. The revenue denied the claim. Tribunal allowed assessee s claim holding that all expenses incurred by the assessee in acquiring capital asset were distinct from items of expenditure incurred for retaining and maintaining capital asset. The Hon ble Court confirmed the stand of Tribunal qua claim of interest component. Therefore, we would hold that the impugned interest expenditure would be allowable to the assessee in the computations. AO is directed to re-compute the income of the assessee. The assessee is directed to provide the requisite details.

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• 2024 (8) TMI 418
  Exemption/deduction u/s 54F - new investment has been made in the name of his wife - HELD THAT:- As per the provisions of Sec.54F, the assessee could purchase new house within a period of one year before or two years after the date on which the transfer has taken place. Alternatively, the assessee could construct new house within a period of three years from the date of transfer. In such a scenario, in our considered opinion, there is no requirement that the same sale proceeds should have been utilized to make the new investments. In a case, where the assessee purchases new house within one year before the date of transfer, he would not be in a position to utilize the same sale proceeds which would accrue to him in future. Therefore, this logic of lower authorities that the same money should have been utilized to make the new investments does not find our acceptance. The decision of C. Aryama Sundaram [ 2018 (8) TMI 864 - MADRAS HIGH COURT ] supports our view. Investment has been made in the name of assessee s wife out of Bank Loan - As settled position that the provisions of Sec. 54F are beneficial provisions and should be given a liberal construction to the maximum extent possible. AR has placed on record bank statements of the assessee. It could be seen that the assessee himself has paid an amount of Rs. 20 Lacs to the builder on 22-03-2016 towards cost of construction of new property. The various payments to sub-registrar have also been paid on 24-03-2016 from the same bank account. The same lend certain credence to the claim of the assessee. The assessee and his wife would have commonality of interest to make investment in new house. We are of the considered opinion that the assessee would be eligible to claim the said deduction. The decision of Ravinder Kumar Arora [ 2011 (9) TMI 343 - DELHI HIGH COURT ] supports our view. In this case, the investment was made by the assessee jointly with his wife. AO restricted the deduction to the extent of 50%. Tribunal allowed full deduction and Hon ble High Court upheld the action of Tribunal. We are of the considered opinion that similar ratio would apply here. Therefore, we direct AO to allow the claim of the assessee.

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• 2024 (8) TMI 417
  Validity of reopening of assessment - Addition on account of purchase of jewellery as undisclosed investments u/s 69 - HELD THAT:- We note that assessee has carried out substantial transactions during the year and she did not file her return of income. After receiving notice u/s 148, return was filed. In regard to purchase of jewellery by Mr. Puttarangaiah, the assessee could not substantiate with credible evidence of agricultural income or savings of jewellery buyer in regard to cash purchase and the confirmation is from Mr. P. Venkatachaliah, his son. The assessee has also not submitted the death certificate of Mr. Puttarangaiah. It is pertinent to mention here that the onus to prove the genuineness of the transaction, creditworthiness and identity lies with the appellant and it is to be discharged with reasonable explanation which has not been put forward unequivocally by the appellant. The bill is also in the name of assessee. As we concur with the order of the CIT(A). Accordingly we reject this ground of the assessee. Addition of property has been purchased in the joint name of assessee and Srinivasan Mahesh with 50% share - During the course of hearing it was asked who is/are the beneficiary of the property and if any income is derived from that property and if any amount is remitted to Srinivasan Mahesh or any utility cost is borne by the second joint holder or property is lying vacant, electricity bill , water bill or property tax payment, but the assessee could not submit any document. Even the statement of affairs of Srinivasan Mahesh to prove that assessee is a debtor in his books was not furnished. As per the Sale Deed, the assessee is the first owner of the immovable property which clearly bestows beneficial ownership to her. There is no definite share defined in the purchase deed but the assessee has deducted TDS on purchase of property of Rs. 1,55,645/- which is 1% of Rs. 1,55,64,500/- and transaction amount is also the same as reported in Form No. 26AS, in view of this the assessee s share is 50% in the purchased property. The assessee has got benefit without any payment more than the prescribed limit as per section 56(2) - CIT(Appeals) has rightly considered it as income from other sources u/s. 56(2) since payment of share of the appellant is without consideration. We reject the argument of the ld. AR that loan is still outstanding and it is liability of the assessee, since it is not substantiated with cogent evidence. Accordingly we dismiss the grounds of assessee.

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• 2024 (8) TMI 416
  Cash deposits made by the assessee during the demonetization period - assessee had collecting the cash from borrowers is supposed to deposit the money in the bank account of FRB - HELD THAT:- Merely because certain cash was deposited in the specified bank notes by the assessee during the demonetization period will not make the assessee tainted party when the very same transaction are being made by the assessee in the part as well as in the future. As stated cash deposits made by the assessee during AY 2016-17, during the period 01.04.2016 to 08.11.2016; cash deposit made during 01.01.2017 to 31.03.2017 and the cash deposit in other than SBN during the period 09.11.2016 to 30.12.2016 has been accepted as genuine. It is not the case of the revenue that assessee was in receipt of SBN from the customers of FRB during the period 09.11.2016 to 30.12.2016. With regard to observation made by the AO of his order that PAN and phone no of the borrower furnished by the assessee are incorrect and incomplete. As stated earlier the assessee is merely a loan collection agent. The entire details have been obtained by the assessee from the bank. The assessee had duly explained in this regard that the phone numbers given there are there complete in view of the fact that first two digits are given in previous column and remaining 8 digits in next column thereby making mobile no and land line no complete. Assessee had conducted enquiry on few borrowers on test check basis and found the borrowers to be genuine and had also verified PANs with them. These details are also placed on record before the lower authorities. Hence, the observations made by the AO in this regard in the assessment order is completely devoid of merit. There is absolutely no case for making any addition on account of cash deposit made by the assessee in his bank account and that the entire cash deposit made in his bank account stands thoroughly and properly explained. Hence, we have no hesitation to accept the stand of the assessee herein. Grounds raised by the assessee are allowed.

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• 2024 (8) TMI 415
  Validity of re-assessment proceedings u/s 148 - sale of immovable property by the assessee - difference between the stamp value and consideration is taxable u/s 50C - HELD THAT:- Transaction of sale actually got concluded in AY 2007 08 itself and assessment u/s 143(3) of the Act was also framed accepting the stand of the assessee. While this is so, for the very same property, how can there be capital gains in AY 2011- 12. Admittedly, there was no reopening made for AY 2007 08 or revision proceeding made u/s 263 of the Act for AY 2007-08 disturbing the findings recorded by the ld AO with regard to capital gains in the scrutiny assessment proceedings for AY 2007 08. In our considered opinion, mere execution of the sale deed dated 20.09.2010, which was effectively a registration deed on account of certain objections raised by the local authorities could not fasten any capital gains tax liability on the assessee for AY 2011-12 when the capital gains for the very same property had already offered by the assessee and assessed by the ld AO in scrutiny assessment proceedings in AY 2007-08. This view of ours is further fortified by the decision of case of Poddar Cements [ 1997 (5) TMI 2 - SUPREME COURT ] Hence, there cannot be any application of provisions of section 50C of the Act for the subject mentioned property in AY 2011-12 when there cannot be any assessment of capital gains per se on the subject mentioned property in AY 2011-12. Thus, we hold that very assumption of the jurisdiction by the ld AO u/s 147 of the Act is illegal and in any case, there cannot be any assessment of capital gains on merits and on law for AY 2011-12. Accordingly, the grounds raised by the assessee are allowed.

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• Customs

• 2024 (8) TMI 414
  100% EOU - non-accountal of certain goods, both imported and indigenously procured - non-fulfilment of conditions of N/N. 22/2003-CE dt. 31.03.2003 in respect of procurement of indigenous goods without payment of duty and N/N. 52/2003-CUS dt. 31.03.2003 in respect of imported goods - HELD THAT:- One has to appreciate that both these notifications are self-contained exemption notifications and in order to avail the exemption from payment of Customs duty or Central Excise duty, the 100% EOU has to fulfill several conditions including achievement of positive NFE. In so far as the issue of NFE is concerned, the Department s case is that Respondents have not achieved positive NFE during the notice period but only subsequent to that. However, we find from the Order dt.18.05.2010 of the Development Commissioner submitted by the Respondent that non-achievement of positive NFE has been regularized by the competent authority on payment of penalty, subject to certain conditions and admittedly, those conditions have been fulfilled by the Respondent in the said period. Therefore, this ground is no longer in breach in so far as the conditions required to be fulfilled by the Respondent is concerned. Several issues which have bearing on admissibility or otherwise of the Notifications in respect of which the Respondents have claimed exemption have apparently not been fulfilled and thus, these factual aspects should have been examined in detail by the Commissioner (Appeals), based on the evidence adduced by both sides, when the Department preferred an Appeal before the Commissioner (Appeals) against the OIO. In the case of Big Bags India Pvt Ltd (supra), there was evidence to suggest that Assessee was diverting the duty-free materials to local bonded warehouses, which has not been alleged in the present SCN, hence the facts are distinguishable. However, it is found that if there is a clear case of non-fulfillment of condition for exemption notifications and there is an unauthorized removal of goods, then merely meeting export obligation cannot lessen the gravity of offense. The Order of the Commissioner (Appeals) is required to be set aside and the matter is required to be remanded back to the Commissioner (Appeals) for examining all the conditions independently in respect of both the Notifications 22/2003-CE 52/2003-CUS - Appeal is allowed by way of remand to the Commissioner (Appeals).

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• 2024 (8) TMI 413
  Confiscation of the imported goods - imposition of redemption fine under section 125 and imposition of penalty under section 114A of the Customs Act, 1962 - classification of the imported goods - men s woven quilted/padded polyester polyfill (unpopular brands) - Applicability of Section 28(4) of the Customs Act, 1962 for recovery of differential duty - HELD THAT:- In this case, assessment under section 17 and the issue of order clearing the goods for home consumption under section 47 were not completed. Since all the events in this case happened before the goods were cleared for home consumption, it was still a process of assessment even though the Joint Commissioner did the assessment instead of letting the proper officer do it in the normal course. The respondent did not challenge before us through any cross appeal the assessment of duty. In fact, the respondent also paid duty as per the assessment. Since section 28(4) does not apply in this case neither would be the imposition of penalty under section 114A. In a nutshell, this is a simple case of assessment on first check basis on the request of the respondent importer but before the proper officer could get the goods examined and complete the re-assessment in the normal course, the Customs (Preventive) Officers intervened, took over and the Joint Commissioner (Preventive) completed the assessment. It is certainly not a case where the officers of Commissioner of Customs (Preventive) detected any fraud or mis-declaration. Section 28(4), section 111(m) and section 114A do not apply to this case at all. The Commissioner (Appeals) was correct in setting aside the confiscation and penalty through the impugned order. The impugned order upheld - the appeal filed by the Revenue is dismissed with consequential relief, if any, to the respondent.

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• 2024 (8) TMI 412
  Forfeiture of security deposit under regulation 20 of the erstwhile Customs House Agents Licencing Regulations (CHALR), 2014 - breach of regulation 13 (a), regulation 13(d), regulation 13(e) of Customs House Agents Licencing Regulations, 2014 - HELD THAT:- The issue had been agitated by an aggrieved custom house agent before the Hon ble High Court of Bombay and, though in the context of empowerment of prohibition under the prevailing Regulations, Commissioner of Customs (General), Mumbai had then argued on non-maintainability of appeal before the Tribunal in the light of limitation in recourse to appellate remedy under the governing Regulations. Not only is the contrary stand now taken by Learned Authorised Representative inconsistent thereby but is also inconsequential in the light of the decision of the Hon ble High Court of Bombay in SR. SALE CO. VERSUS COMMISSIONER OF CUSTOMS (GENERAL), MUMBAI [ 2013 (4) TMI 477 - BOMBAY HIGH COURT] . The Hon ble High Court of Bombay has, thus held that the limiting scope of appellate remedy in the Regulations governing customs brokers is deliberated restriction and that, in such circumstances, the general provision for appeal cannot be resorted to. The judgement of the jurisdictional High Court is binding here. Appeal dismissed.

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• 2024 (8) TMI 411
  Revocation of Customs broker license and forfeiture of security deposit repeatedly - levy of penalty - export promotion schemes - diversion of electrolytic tough pitch copper rods instead of being used in manufacture of lead wire for electronic parts as required in terms of Customs (Imported Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - omissions and commissions leading to proceedings under Customs Act, 1962 - breach of regulation 10 (a), regulation 10 (d), regulation 10(e), regulation 10 (m) and regulation 10 (n) of Customs Broker Licencing Regulations, 2018. HELD THAT:- It is noticed that regulation 10(a) of Customs Broker Licencing Regulations, 2018 pertains to obtaining of authorisations from the importer before taking up work for a client. Regulation 10(d) of Customs Broker Licencing Regulations, 2018 pertains to advising client to comply with provisions of Customs Act, 1962. Regulation 10(e) of Customs Broker Licencing Regulations, 2018 pertains to due diligence in ascertaining correctness of information imparted to a client - Regulation 10(m) of Customs Broker Licencing Regulations, 2018 pertains to discharging duties with speed and efficiency. Regulation 10(n) of Customs Broker Licencing Regulations, 2018 pertains to verifications and antecedent checks of the client. The sole imputation of misconduct, however, does not appear to relate most of these and, considering that the Central Board of Indirect Taxes Customs (CBIC) has set these out painstakingly, it was incumbent on the licencing authority to have inquired into, and to decide upon, the various facts and circumstances from which breach of each of the obligations could be imputed. Those are glaringly deficient except in relation to regulation 10(n) of Customs Broker Licencing Regulations, 2018. It is also apparent that the licencing authority has presumed that the obligations exist solely for the purpose of initiating proceedings for revocation of licence issued to customs broker and, therefore, to be dealt with thus. Obligations of customs brokers are manifold. The institution has been established under the authority of Customs Act, 1962 to act as a bridge between customs houses, or more properly speaking, between proper officer and importers/exporters in making their knowledge and experience available for facilitation of clearance of cargo. There are, therefore, obligations towards the proper officer and, doubtlessly, towards clients - Every government servant of the Union is aware, or should be, about the requirements under the Central Civil Service (Classification, Control and Appeal) Rules, and its linkage with Central Civil Service (Conduct) Rules, for invoking detriment to conditions of service of their employment under the Union; detriment to the continuation of licenced service of customs broker , whose appointment and renewal are governed by Customs Broker Licencing Regulations, 2018, is not dissimilar. A similar diligence in the approach to proceedings that jeopardize the livelihood of customs brokers is warranted. It is certainly beyond the stretch of credulity that advise to a client includes explaining all the provisions of Customs Act, 1962 with the presumption of not having done so because a breach of Customs Act, 1962 has occurred. Moreover, it does not escape attention that advise does not extend beyond Customs Act, 1962 - The obligation to ascertain the correct procedure and position is also obviously in relation to a client who would have to allege having been misled by customs broker for this charge to hold. Likewise, speed and efficiency are in interests of the client and it is for the client to fire the opening salvo before the charge to the contrary becomes meaningful. The proceedings are flawed and the outcome is, accordingly, flawed. That warrants fresh proceedings in each, and not simultaneously or in common, for which purpose the three impugned orders are set aside and remanded to the licencing authority for decisions in accordance with the framework set out - Appeal allowed by way of remand.

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• 2024 (8) TMI 410
  Revocation of Customs Broker licence, forfeiture of security deposit under regulation 14 of Customs Broker Licencing Regulations, 2018 along with imposition of penalty under regulation 18 of Customs Broker Licencing Regulations, 2018 - breach of the obligations of customs broker or contravention of the restrictions entailed to the licence in the Customs Broker Licencing Regulations, 2018 - HELD THAT:- It is seen that the charge of not having advised the client to comply with Customs Act, 1962 and rules and regulations thereof is not founded on any allegation that advice sought had not been rendered and nor is there an allegation that customs broker is expected to explain the entirety of the law to the client; either the allegation is vague or the obligation is vague with neither contingency furthering the case against the appellant. It is, probably, owing to this conceptual commotion that the licencing authority has proceeded to uphold the charge on the supposition that exporter could not have executed overvalued exports without collusion from the appellant. That bridging of supposition with breach of obligation is too far-fetched to accept. The easiest of misdeclaration to undertake is overvaluation of export goods for the requirement to repatriate export proceeds confers advantage of presumption of correctness of contracted value combined with incomparability of local prices; it would appear that unnecessary premium has been placed on the need of a fellow conspirator for such overvaluation to succeed. The conclusion in the impugned order has nothing to do with obligation and is also not founded on any fact on record. The charge of having breached regulation 10(d) of Customs Broker Licencing Regulations, 2018 has been inappropriately held to be proved. The alleged breach of obligation to forbear from withholding information contained in any order, instruction or public notice from a client who is entitled to receive them has been established with the finding that details of local procurement said to be prescribed in circular no. 16/2009-Cus dated 25th May 2009 was in breach; however, this fact had not been set out in the notice issued to appellant. There is also no reference to the said circular in the report of the inquiry officer. As the appellant has pointed out, the regulation is studiously silent on the period for which the records are required to be preserved and the claim of the appellant that records were trashed has not been countered with any instruction requiring preservation beyond reasonable period - there are no reference to any stipulation by the officer designated for the purpose in the said regulation which should have been the foundation of this allegation and it was merely the inability of the exporter to furnish detailed records that has been attributed to flawed performance of obligation by the appellant. It would appear that the intent of the obligation has been incorrectly appreciated by the licencing authority; the allegation of having breached regulation 10(k) of Customs Broker Licencing Regulations, 2018 does not sustain. The charges of breach of regulation 10 of Customs Broker Licencing Regulations, 2018 do not sustain. There is no case that the goods had not been exported or evidence even that the impugned goods had not been manufactured out of duty paid inputs. The drawback involved in all the exports during the said period by M/s World Wide Export is not of such high order as to warrant penalties and detriments that were heaped upon them in the impugned order and those handled by the appellant were not under any claim at all. The impugned order canot be upheld - appeal allowed.

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• 2024 (8) TMI 409
  Classification of imported goods - spare parts for injection moulding machine - classifiable under Customs Tariff Heading 84779000 or under heading 84771000 - allegations in the notice were that in terms of Notification 09/2016-(ADD) dated 15.03.2016 Horizonal Injection Moulding Machine imported from Chinese Taipei attract anti dumping duty at the rate of 27.98% of the landed value - HELD THAT:- Note (IV) of the Section XVI relates to unassembled machines i.e. an assembly of parts so far advanced that it already has the main essential features of the complete machine. In the instant case, there is no allegation that what has been imported is partly assembled. A perusal of the Chartered Engineer Report also indicate that it does not indicate that the goods are either partly assembled or have the essential feature of the complete machine - The report of the Chartered Engineer does not indicate that the goods imported are in partly assembled condition or if they have any essential feature of the finished goods. In view of above Note (IV) of the Section XVI of HSN cannot be applied to the instant case. Rule 2(a) would apply only when the imported articles presented in unassembled or disassembled can be put together by means of simple fixing device or by riveting or welding. In the instant case, there is no evidence that the parts imported by the appellants can be assembled into machines by simple procedures. The report of Chartered Engineer is silent on this aspect. Whereas the appellants have claimed that the individual parts need processes like polishing, grinding, drilling, tapping, T slotting, scraping, wiring, painting or some parts like T slot in platens, scraping of base for partial adjustment and all these processes were required to be completed with the help of some mechanical/ electrical machines. The said argument that these processes are necessary for assembly of the finished Horizontal Moulding Machines has not been contested by the adjudicating authority. Thus, the goods cannot be treated as complete or incomplete machines. A perusal of the description of material found in the black coloured folder, it is apparent that it runs into more than 60 pages. It not only contains the details of assembly but also details of a lot of sub-systems of the machines. The page 65 contains hydraulic system parts list printed on the bottom left side. From the list of parts annexed to the report of Chartered Engineer, it is found there is no mention of any hydraulic system or hydraulic manifold distribution in the list of parts imported. From the above, it is also apparent that the details of the parts necessary for manufacture of the complete machine was available however, the Engineer has not made any attempt to compare the said list with the actual imports to identify the parts which were missing. There are no merit in the order changing the classification and demanding duty. The impugned order is therefore, set aside and appeals of M/s Huarong Plastic Machinery India Limited, Jitesh Virendra Kumar Papaiyawala and Shri Yao Hui Hsiao are allowed - appeal of revenue seeking imposition of penalty under section 114A is dismissed.

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• Corporate Laws

• 2024 (8) TMI 408
  Rejection of application of petitioners for processing the scheme of amalgamation between petitioner nos.2 to 5 with petitioner no.1 - rejection of application under Section 233 of the Companies Act, 2013 - HELD THAT:- The observation mentioned in paragraph 3 of the quoted portion of the impugned order amounts to forming an opinion, still respondent no.2 could not have rejected the application but instead should have filed an application before the NCLT on or before 27th November 2018 stating its objections and requesting that the Tribunal may consider the scheme under Section 232. This is a mandatory provision because respondent no.2 had to form an opinion that the scheme is not in public interest or in the interest of the creditors, notwithstanding no objections having come from the Registrar or the Official Liquidator or each of the companies involved in the merger of filing of declaration of solvency with the Registrar and the scheme having been approved by majority representing nine-tenths in value of the creditors or class of creditors of respective companies indicated in the meeting convened by the company. On a conjoint reading of sub-sections (2), (3), (4) and (5), the phrase may used in sub-section (5) will have to be construed as mandatory. It is said so because if the Government is of the view that the scheme is not in the public interest or in the interest of the creditors then same is to be decided by the Tribunal. If the phrase may in sub-section (5) is used as optional then company involved in the amalgamation scheme would be at the mercy of the Central Government if the scheme is rejected without any adjudication. It is, therefore, mandatory for the Central Government to make an application before the Tribunal and get adjudication on said issue. In the instant case, the declaration of solvency has been filed. The scheme has also been approved as required by sub-section (1) of Section 233. The said section does not empower respondent no.2 to reject the declaration filed but if at all respondent no.2 is of the opinion that any of the conditions is not satisfied then appropriate application has to be made to the Tribunal within the prescribed period objecting to the scheme. Respondent no.2 not having followed the mandatory procedure prescribed, the impugned order dated 12th November 2018 is bad in law. The same is hereby quashed and set aside - Petition disposed off.

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• Insolvency & Bankruptcy

• 2024 (8) TMI 407
  Statutory construct of IBC post issue of demand notice by the Operational Creditor as laid down in Section 9 of IBC - whether payment to the Respondent No. 2 was due from the Corporate Debtor? - whether a default has been committed by the Corporate Debtor in respect of payment of such debt and whether there was any pre-existing dispute surrounding the debt? HELD THAT:- From a plain reading of the statutory provisions, it is clear that the existence of dispute and its communication to the Operational Creditor is statutorily provided for in Section 8. In the present case, it is an undisputed fact that Section 8 demand notice was issued by the Operational Creditor- Respondent No. 2 on 20.06.2018 and in response a notice of dispute was also raised by the Corporate Debtor on 29.06.2018. Besides attributing a grave charge against Respondent No. 2 for bankrupting SPIN, the Corporate Debtor had effectuated revision of the role, responsibilities and salary compensation of Respondent No. 2. More significantly, the disputes raised in these letters are central to the payments claimed by Respondent No. 2 and had a bearing on the computation of outstanding dues arising out of the hand written agreement of 18.09.2013 which has been the bone of contention between the two parties. These disputes, raised prior to demand notice, were germane to deciding whether there was a debt and if the debt was disputed by the Corporate Debtor. The present is therefore not a case where there is an undisputed debt for which Corporate Debtor can be brought under the rigors of CIRP. Triggering the drastic consequences of CIRP on the Corporate Debtor on the basis of debt and default which is mired in pre-existing disputes, in our considered view, is not acceptable. It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication into the disputes between the parties regarding operational debt. In terms of the Mobilox judgement [ 2017 (9) TMI 1270 - SUPREME COURT ], all that the Adjudicating Authority was required to do was to see whether any notice of dispute was raised by the Corporate Debtor and take a call on the plausibility of these disputes which in the present facts of the case the Adjudicating Authority has hopelessly failed to do. Disputes once raised and found plausible, they require detailed consideration which is beyond the ambit of the Adjudicating Authority since IBC only provides for summary proceedings. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. The Adjudicating Authority committed serious error in admitting Section 9 application. The impugned order initiating CIRP of the Corporate Debtor is set aside. The Corporate Debtor is released from the rigours of CIRP with immediate effect. The Resolution Professional shall however be paid his fees/expenses by the Appellant. The Registry is directed to take appropriate action without any delay to refund the amount which was deposited by the Appellant in Fixed Deposit Receipt in pursuance of the interim order of this Tribunal dated 10.11.2023. Appeal allowed.

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• 2024 (8) TMI 406
  Maintainability of application - application is within the minimum default amount of Rs. 1,00,00,000/- as provided under Section 4 of the Code or not - pre-existing dispute with respect to the amount claimed to be due in the application or not in the instant case. Threshold amount - HELD THAT:- In this claim amount towards interest alone on loan was not termed as an operational debt. This may not fully support the case of the Respondent - reliance can be placed exclusively on SS Polymers Vs. Kanodia Technoplast Limited [ 2019 (11) TMI 1428 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] cross referenced in Steel India [ 2020 (8) TMI 578 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] on the issue of the interest to be charged in the invoice which was not signed by the Appellant. It was held to be a unilateral document and such interest could not have been recovered. In the instant case also, the unilateral stipulation of interest by the Appellant without any agreement or understanding between the parties further weakens the Appellant s claim. Furthermore, according to Section 5(21) of the IBC, operational debt is defined as a claim for the provision of goods or services, including employment, or a debt for the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government, or a local authority. Section 5(8) of the Code defines financial debt as a debt along with interest, if any, which is disbursed against the consideration for the time value of money. - the Appellant s inclusion of interest in the claimed amount is untenable as interest cannot be termed as operational debt under the Code. The present application is below the threshold limit of Rs.1,00,00,000/- and cannot agree with the claims of the Appellant in terms of the threshold amount and there are no infirmity in the findings of the Adjudicating Authority. Existence of any pre-existing disputes or not - HELD THAT:- Both the parties were having a dispute with respect to some cheques issued by the Respondent. Appellant had issued a legal notice dated 05.09.2022 for dishonouring of cheques. The Respondent claims that these cheques were issued in the year 2020 and they were stopped for payment as necessary payment was made through RTGS in the same year. The Respondent has claimed that the Appellant has fraudulently changed the dates of cheques and presented them in the bank for clearing but the Respondent immediately stopped the payment of the cheques and also filed a police complaint against Appellant for committing cheating and forgery. This is another dispute which has been going on between the parties. Without going into the details of the criminal case, apart from this material also there is sufficient other material on record that suggests there was a pre-existing dispute. It is well settled that if the Corporate Debtor raises a plausible contention about a pre-existing dispute, which is not just a moonshine or feeble legal argument, it would suffice for the Adjudicating Authority to reject the application filed under Section 9 of the Code, the Adjudicating Authority being precluded from determining as to whether the Corporate Debtor would be successful or not, with regard to the said dispute, at the time of decision making. It is evident that the Adjudicating Authority s Order dated 17th January 2024 is well-founded and does not warrant interference. The operational debt amount claimed by the Appellant is less than the threshold limit required under Section 4 of the Code, and there are pre-existing disputes between the parties. The present appeal is dismissed.

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• 2024 (8) TMI 405
  Application filed under Section 7 of the Code by the Appellant dismissed without the arguments having been addressed - HELD THAT:- Since the Tribunal has not followed the basic principle that nobody should be condemned without hearing, therefore, the impugned order deserves to be set aside and be remanded back to take a decision on the application in accordance with law after hearing both the parties and passing a speaking order - the present appeal is allowed and the impugned order is set aside - petition is hereby restored and the matter is remanded back to the Tribunal. Application under Section 60(5), 65 and 75 of the Code has been dismissed on the ground that the application has been filed before the admission of the application filed under Section 7 of the Code - At what stage the application under Section 65 is maintainable? - HELD THAT:- The answer of this question is not farfetched because of the decisions in the cases of Beacon Trusteeship Limited [ 2020 (4) TMI 516 - SUPREME COURT] , Ashmeet Singh Bhatia [ 2023 (3) TMI 646 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] and Shree Ambica Rice Mill [ 2021 (7) TMI 581 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] . In the case of Beacon Trusteeship Limited, the Hon ble Supreme Court has held that The plea of collusion could not have been raised for the first time in the appeal before the NCLAT or before this Court in this appeal. Thus, we relegate the appellant to the remedy before the Adjudicating Authority . In the case of Ashmeet Singh Bhatia a specific question was framed in para 12 that as to whether an application filed under Section 65 of the Code is maintainable after the filing of the application under Section 7, 9 or 10 of the Code or could be maintainable only after the admission of such an application? - The answer to the aforesaid question is captured in para 16 where this order as this Court has held that the application filed under Section 65 of the Code is maintainable after the application is filed either under Section 7, 9 or 10 of the Code and not after the admission. Thus, in view of the aforesaid discussion and law laid down by the Hon ble Supreme Court and this court dismissal of the application by the Tribunal only on this ground that the application has been filed before the admission of the application under Section 7 is not sustainable. The impugned order is set aside - the impugned order is restored and the matter is remanded back to the Tribunal to decide the aforesaid application in accordance with law.

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• FEMA

• 2024 (8) TMI 404
  Adjudication Order imposing penalties under FEMA - Writ of Mandamus directing the respondent to foreclose the fixed deposit opened by the first respondent out of the money of the petitioners and direct the second respondent Bank, to release the money in favour of the petitioners - HELD THAT:- At the time when the proceedings were pending against the petitioners before the Adjudicating Authority under Section 3 of the Foreign Exchange Management Act, 1999, the Accounts of the petitioners, in which, Fixed Deposit were made by them, were ordered to be freezed by the first respondent and the amounts were transferred to the account of the first respondent. Since the proceedings against the petitioners have been dropped vide the aforesaid Adjudication Order, we see no impediment in allowing this Writ Petition. The respondents are directed to take steps to release the amount in the Fixed Deposits to the petitioners, in accordance with the aforementioned Adjudication Order, as expeditiously as possible. WP allowed.

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• PMLA

• 2024 (8) TMI 403
  Seizure of Indian Rupees under PMLA, 2002 - allegation of involvement of the appellant in Hawala transaction. The first argument was that the appellant is not an accused in the FIR or ECIR thus the currency, apart from the mobile phone and the documents could not have been seized by invoking Section 17 of the Act of 2002 - HELD THAT:- The material on record shows Hawala transaction of total sum of Rs.15 Crore and odd. It is also that the appellant failed to indicate as to from where he was getting and putting the money in the bank account. No material to show innocence of the appellant could be produced and otherwise the statement recorded under Section 50of Arun Muthu proved involvement of the appellant in Hawala transaction, that too at his instance or to facilitate Sukesh Chandrasekhar and his wife, Leena Paulose. Thus, the first argument raised by the appellant cannot be accepted. The second argument is in reference to the facts of the case. It is submitted that the amount was withdrawn by the appellant from time to time and has been reflected in the bank account - HELD THAT:- The bank account shows withdrawal of Rs.6.5 lakhs and 8 lakhs on the relevant date and may be lying in the office for that reason but appellant has failed to clarify as to how the Company used to utilize the money after its withdrawal because if the matter is looked in sequence of events, the total transaction in the hands or through the appellant s company comes to Rs.15 Crore and odd. If the appellant was involved in foreign exchange business, the withdrawal of the amount should have been shown to have utilized for foreign exchange and for that to produce the document. The appellant has failed to do so - there are no case in favour of the appellant. Appeal dismissed.

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• Service Tax

• 2024 (8) TMI 402
  Rejection of 9 declarations made under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the application cannot be filed on the basis of bank guarantee and the amount is not quantified - HELD THAT:- Petitioners and Respondents agrees that since in case of Petitioner No. 1, the declaration made has been held to be valid on the ground that the amount was quantified before 30th June 2019, the basis of rejection would not survive since the main noticee-Petitioner No. 1 has been allowed the benefits of SVLDRS Scheme and consequently, Petitioner No. 3 being a co-noticee would also be entitled. Since Respondents are directed to accept the declaration made by Petitioner No. 1-Firm who is the main noticee, the declaration made by co-noticee-Petitioner No. 3 is consequently required to be accepted - Respondents are directed to accept the application made by Petitioner No. 3 and inform Petitioner No. 3 of any payment to be made within a period of four weeks from the date of uploading the present order. Petition allowed.

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• 2024 (8) TMI 401
  Denial of CENVAT Credit - availment of CENVAT Credit irregularly without the support of valid duty-paid documents and without submitting copies of relevant invoices - extended period of limitation - interest - penalties. Credit to the tune of Rs. 16,19,472/-has been denied on the ground that the ISD cannot distribute the input or capital goods credit - HELD THAT:- It is found that N/N. 10/2008- C.E.(N.T.) dated 01.03.2008 allows the transfer of credit on inputs and capital goods by an ISD with effect from 01.04.2008. Further, it is observed that there is no suppression of fact with intention to evade payment of tax established in this case. Accordingly, denial of credit availed by invoking extended period of limitation is not sustainable. Distribution of credit of capital goods, inputs and input services are allowed within the normal period of limitation vide N/N. 10/2008. CE (NT). Thus, the CENVAT Credit denied to the appellant on this count in the impugned order is not sustainable. Denial of credit to the tune of Rs.7,18,797/- - credit disallowed on the ground that no documents were submitted by the appellant for availment of this credit - HELD THAT:- It is observed that there is no dispute with regard to receipt and utilization of credit for the purpose of the taxable services rendered by them. It is found that the credit availed by the appellant pertains to the period 2006-07 and the Notice has been issued for disallowance of the credit in the year 2011, which is clearly beyond the normal period of limitation. The suppression of facts with intention to evade payment of duty has not been established in this case. Accordingly, the disallowance of credit beyond the normal period by invoking the extended period of limitation in this regard is not sustainable. Credit to the tune of Rs.4,45,016/- been denied on the basis that the documents issued by M/s. Exide are not in conformity with Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- The credit availed by the appellant pertains to the year 2009 (two Bills both dated 31.05.2009). However, the Notice has been issued beyond the normal period of limitation. Accordingly, the denial of credit by invoking the extended period of limitation in this regard is not sustainable. Therefore, the credit availed by the appellant amounting to Rs.4,45,016/- by the appellant on the strength of the bills issued by M/s. Exide cannot be denied. Denial of credit of Rs.17,174/- by invoking extended period of limitation - HELD THAT:- It is observed that the said input service credit pertains to the period from May 2010 to September 2010 and also during March 2009, which has been disallowed by invoking the extended period of limitation by way of the impugned Show Cause Notice issued on 11.11.2011. As the Notice was issued beyond the normal period of limitation, the denial of credit in this regard by invoking the extended period of limitation is not sustainable. Disallowance of Cenvat credit of Rs.21,68,423/- - Rent-a-cab operator service - Revenue alleges that the said bills raised by these service providers do not bear mandatory details as required to be mentioned under the provisions of Rule 9(2) of CENVAT Credit Rules, 2004 read with Rule 4A (1) of the Service Tax Rules, 1994 - HELD THAT:- It is found that the documents based on which credit has been availed by the appellant contains all the requisite details as mandated under Rule 9(2) of CENVAT Credit Rules, 2004 read with Rule 4A (1) of the Service Tax Rules, 1994.Thus, the invoices and bills based on which credit has been availed by the appellant are valid documents. Accordingly, the credit cannot be denied on account of procedural infirmities as alleged by the Revenue in the impugned order. The denial of credit of Rs.21,68,423/- is therefore not sustainable and hence, the disallowance of credit on this count is set aside in the impugned order. Interest and penalties - HELD THAT:- Since the entire credit availed by the appellant is held to be eligible, the question of demanding interest and imposing penalties on account of irregular availment of credit does not arise. The impugned order is set aside - appeal allowed.

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• 2024 (8) TMI 400
  Levy of service tax - Interest Free Maintenance Security (IFMS) - Prime/Preferential Location Charges (PLC) charges - period 2010-11 to 2014-15. Inclusion of the amount collected by the Appellant as IFMS - Revenue s contention is that the said collected amount would fall under the category of Management Maintenance and Repair Services and would be liable to service tax separately - HELD THAT:- The said amount collected by the Appellant from the flat owners is towards the security for the purpose of maintenance of the building and to cover the eventual default made by any of the flat owners for payment of monthly maintenance charges. As per the Agreement with the flat owners, the said amount is liable to be refunded to them within the period of Six months from the date of termination of the said agreement. The Adjudicating Authority observed that the genuineness of the said term is very much doubted inasmuch as the Appellant had not produced any evidence to show that the said IFMS was ever refunded to anyone. The amount is refundable in case of termination of the ownership agreement and if no such termination has taken place till date, the amount would not be refunded. As long as the provisions for refund of the said amount in the agreement itself is there, it has to be considered that the said amount is refundable and was towards security deposit and was not for the purpose of providing any services, so as to levy tax on the same. Reference can be made to the Tribunal s decision in the case of C.C.E. S.T. -JAIPUR-I VERSUS SAND DUNES CONSTRUCTION PVT LTD [ 2018 (7) TMI 1383 - CESTAT NEW DELHI ], whereby while taking note of the precedent decision of the Tribunal in the case of Kumar Beheray Rathi vs. CCE, Pune 2013 (12) TMI-269-CESTAT Mumbai, it was held that the security deposits collected by the Builder for providing maintenance to immovable property services would not be taxable under the category of Management Maintenance or Repairs Services . Prime/Preferential Location Charges (PLC) - Appellant submits that the PLC charges collected by the Appellant from it s customers is not a consideration for any individual service rendered by the Appellant to it s customers - HELD THAT:- Although the Appellant may have prepared a price list showing preferential location charges, car parking charges etc. separately, but it is evident from the buyer-agreements (sample buyer agreement produced at the time of hearing), that the Appellant have charged the negotiated sales price per sq. ft. and in addition have charged IFMS and EDC/IDC per sq. ft. basis. In addition, there is power back up charges in some of the cases. Evidently, we find that Revenue have calculated preferential location charges, IFMS charges, EDC/IDC, power back up charges based on the price list - service tax is not payable on such hypothetical calculation, there being no actual consideration towards these, which is an admitted fact - service tax levied in this manner based on the price list is wrong, when there is no actual receipt of consideration under these heads. There are no reason to take a different view. Accordingly demand on the said account is set aside, alongwith setting aside of penalty - Appeal filed by the Appellant is allowed.

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• 2024 (8) TMI 399
  Classification of service - intermediary service or not - whether the services rendered by the appellants to the overseas master i.e. M/s OCA constitutes an export of service during the impugned period i.e. 2009-10 to 2013-14? - Intermediary Service post 01.07.2012 or not - violation of principles of natural justice - extended period of limitation - penalties. HELD THAT:- It is found that in any of the transactions, three parties are not involved; be it between the Australian universities and M/s OCA or be it M/s OCA and the Indian students. M/s OCA is rendering services to the Australian universities and the universities pay remuneration to M/s OCA; M/s OCA has appointed the appellant to help the Indian students who intend to study in Australian universities. In the scheme of arrangements, it is not brought on record if there is any agreement or arrangement between the foreign universities and the appellant or M/s OCA and Indian students. Therefore, it appears that the primary requirement of existence of three parties in the scheme of things is absent in the instant case. The main service is rendered by M/s OCA to the foreign universities and the appellant helps M/s OCA as far as the Indian students are concerned; neither the appellant nor M/s OCA charged any amount from the Indian students. Circular No.159/15/2021-GST dated 20.09.2021 issued by CBIC envisages that in respect of Intermediary Services, there should be a minimum of three parties and two distinct supplies i.e. main supply and ancillary supply; it also clarifies that a person involved in supply of main supply on principal-to-principal basis to another person cannot be considered as supplier of Intermediary Service. In the instant case, the appellants and M/s OCA are rendering the same service i.e. helping the students get admission in Australian universities and the appellants are rendering the same main service as M/s OCA; whereas M/s OCA get the remuneration from the universities on the fees paid by the students, the appellants get their remuneration. A doubt can arise as to whether the clarification issued by CBIC in the contacts of GST Act can be applicable to service tax. Extended period of limitation - penalties - HELD THAT:- As the appeal succeeds on merits, other submissions are rendered superfluous as far as the facts of this case is concerned. Appeal allowed.

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• 2024 (8) TMI 398
  Classification of services - indivisible works contract - commercial or industrial construction service or works contract services - services pertaining to construction of buildings, godowns, roads and railways etc and repair maintenance against work contracts/orders awarded by Government departments and PSUs namely CPWD, PWD, Railways, HAFED, HSWC and Haryana Police Housing Corporation etc. - HELD THAT:- The issue is no longer res integra being decided in a catena of cases. In view of the judgment of Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ]; this Tribunal in the case of H P Singh Chadha vs. CGST, Ludhiana [ 2024 (1) TMI 680 - CESTAT CHANDIGARH ] has taken a view that indivisible work contract cannot be classified under commercial or industrial construction services . The demands confirmed by the impugned orders cannot be sustained and is set aside - appeal allowed.

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• 2024 (8) TMI 397
  Taxability - Health Care Services or not - providing Stem Cell/ Umbilical Cord Blood Banking Services - covered under the Negative List or under the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 or not - Retrospective application of Notification No. 04/2014-ST or not - reliance placed on Circular No. 334/03/2014-TRU dated 17.02.2014, to emphasize that services provided by cord blood banks by inserting Entry Sl. No. 2A in Exemption Notification No. 25/2012-ST dated 20.06.2012 - invocation of Extended period of limitation. HELD THAT:- In the absence of any expression in amending notification supporting retrospective application, it is clear that as per trite law, same cannot be given retrospective application. This Court is, therefore, inclined to follow the principles as laid down in the decision of M/S. LIFE CELL INTERNATIONAL (P) LTD. VERSUS UNION OF INDIA, DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE, THE COMMISSIONER OF SERVICE TAX [ 2015 (4) TMI 290 - MADRAS HIGH COURT] and hold that the retrospective application was never intended through legislative amendment. Even on limitation, the finding of the adjudicating authority correctly upholds the extended period as applicable to the facts and circumstances of the case. Circular No. 334/03/2014-TIU dated 17 February, 2014 cannot therefore, be stated to be supporting retrospective effect and as has been laid down by the Hon ble High Court of Madras and cannot be stated to be clarificatory in the absence of any provision in the notification stating the same to be so. In view of the aforesaid legal position, specifically relating to retrospective application of any amendments, it cannot be held that any serious legal issue of interpretation was involved, which needed fresh ice to be broken. The inaction to take registration despite department s insistence and contents of the Board Circular No. 334/03/2014-TRU dated 17.0.2024. The circular does not indicate in any case, its applicability to the past. Extended limitation therefore has been correctly applied. The legislative mandate or absence of it cannot be expended through Board Circular, in any case. On limitation non filing of returns etc is an action showing persistent and wilful default by appellant specifically considering the testimonial evidence of the concerned staff. The impugned order is well reasoned and backed by sufficient legal and factual materials - the same is therefore sustainable - appeal dismissed.

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• 2024 (8) TMI 396
  Recovery of service tax - Transportation of goods through pipeline/conduit service - Erection, Commissioning Installation Services - recovery of inadmissible Cenvat Credit - time limitation. Recovery of service tax - Advance Received against Transmission Charges from Tea Estate and other consumers - HELD THAT:- It is settled proposition of law that such interest bearing deposit cannot be considered as part of service and leviable to service tax. Any interest accrued (or notional) on such sums by way of a security advance, cannot form part of the value of a taxable service rendered. The of the Hon ble Apex Court in the case of MORIROKU UT INDIA (P) LTD. VERSUS STATE OF UP. [ 2008 (3) TMI 513 - SUPREME COURT ] is squarely to this legal proposition. Moreover, such amount of interest as accrued on security deposits cannot be considered as part of a taxable service, towards consideration received by the appellant without establishing as to how the said security deposit is includible in the amount of consideration charged for the taxable value. Since it is a returnable deposit with no nexus to the nature of service provided, there is no justification in levying Service Tax on the said deposit amounts. In support of the proposition that a security deposit obtained by the person for purpose of keeping business viability during the period of service in question, without any nexus between deposit and the consideration cannot be constituted as a part of the taxable service. Any interest therefore earned thereon shall not be includible in the gross taxable value for purpose of assessment. The department has woefully failed to establish any nexus with the security deposit to the discharge of the taxable service per se nor has it been borne out of record that such deposit in any way influences the value of the service rendered. It thus cannot form part of the taxable service and demand on this account for the aforesaid amount of Rs.40,77,945/- is required to be set aside. Fuel Surcharge - HELD THAT:- The amount has not been contested and was paid correctly by the appellant and therefore the subject needs no further elaboration. Minimum Demand Charge (MDC) - HELD THAT:- Upon failure of the customer to derive, more than the contractual quantity i.e. 90%, through pipeline, in the circumstances is by way of a penalty charged on the customer for failure in meeting the contractual obligation. The amount thus received by the appellant by way of penalty can by no stretch be termed as provision of any service. Thus, respectfully following the precedent decision, we are of the view that no Service Tax is leviable this count - Appeal allowed. Advance Received against Transmission Charges from PWD APGCL - HELD THAT:- In view of the demand already having been paid appropriately by the appellant on this count, in accordance with law, there is no case for elaborating on the demand aforesaid. The balance demand with all attendant liabilities is thus set aside. Amount received against Cost of Gas Meter and Installation Charges - HELD THAT:- The amount of Service Tax of Rs.9,50,633/- thereon has already been paid and appropriated and therefore stands concluded. No contest thereto by the appellant is recorded in the impugned order. Amt. against cost of Meter and Installation Charges received from Domestic Consumers - HELD THAT:- An amount of Rs.22,63,502/- has been made out and confirmed by the adjudicating authority. However, it is noted that the said amount is required to be collected by way of a security deposit in terms of section 14 of the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act). Since this amount is required to be collected in terms of a statutory provision and is refundable at the time of surrender of the connection, this amount cannot form part of the taxable value for consideration for provisioning of taxable service and therefore not liable to Service Tax. Service Tax confirmed thereto by the lower authority is set aside. Reconnection Charges Collection against Re-installation - HELD THAT:- This amount is stated to accrue to the appellant, for failure of the customers in default of payment of Bills in time and subsequently dis-connection/re-connection of the said facility. The said amount has accrued on account of dis-connection charges/resumption of supply. There are no merit in the plea of the appellant in stating the same as penal in nature and not a provision of service. Therefore such charges account for provision of service whether by way of initial connection or re-connection or any other name assigned. The appellant is liable to pay Service Tax of Rs.18,491/- thereon and the same is confirmed. Amount of Cenvat Credit taken on Capital Goods utilized against Output Services - HELD THAT:- The appellant submits that they have taken the said credit of erection, commissioning and installation service, as an input service, but have erroneously indicated the same as input and capital goods. Since such mistake is a curable defect, the said amount is otherwise eligible for availment of Cenvat credit and therefore allowed. Time Limitation - HELD THAT:- The matter did not call for invocation of extended period at all. It is on record that the DGCEI authorities had sourced all information and records from the appellant way back in 2004 under summons seeking from them their written profile and disclosing the nature of business activities carried out along with the requisite records of the case. Hence the confirmed demand for the extended period is time barred. The amount of demands paid, under various heads stated herein - paid/not contested and/or appropriated by the lower authority are settled accordingly. The demand under various heads as held payable are accordingly confirmed - Appeal allowed.

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• 2024 (8) TMI 395
  CENVAT Credit on the capital goods was denied - levy of penalty - credit denied to the assessee solely for the reason that availment of CENVAT Credit on such goods is restricted to works contractor who installs such goods in the assessee s premises - HELD THAT:- It is observed that the capital goods have been procured by the appellant/Tata under a separate contract, on payment, which has become the property of the appellant and the same has been handed over by Tata to L T for installation and commissioning. L T paid Service Tax on the said activity without taking CENVAT Credit on inputs used in providing the said service. In these circumstances, the goods remain the property of the appellant namely, Tata during the impugned period. The appellant-Tata has correctly taken CENVAT Credit on the capital goods procured by them which have been ultimately used in the manufacture of final products. In these circumstances, the denial of CENVAT Credit is not sustainable. Penalty - HELD THAT:- As the appellant-Tata has taken CENVAT Credit correctly, it is held that no penalty is imposable on the appellants. Consequently, the penalties imposed on all the appellants is set aside. The impugned order is set aside - Appeal allowed.

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• Central Excise

• 2024 (8) TMI 394
  Reversal of proportionate CENVAT credit - generation of electricity - CENVAT credit of Counterveiling Duty (CVD) on import of Coal - quantum of power wheeled out to sister units - it was held by High Court that there are merit in the position that electricity captively generated is an input, wherever used by the assessee concerned. The use of the term captive is, in our view a qualification of the location where it is generated and not of the location where it is used. HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are, accordingly, dismissed.

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• 2024 (8) TMI 393
  Rejection of refund claim of Cenvat Credit of CVD and SAD paid by the appellant in terms of Section 142(3) of CGST Act, 2017 - lower authorities have rejected the claim on the ground that the refund of Cenvat is not appearing under Clause (a) to (f) of Section 11 B (2) - HELD THAT:- Since, the refund was otherwise not admissible in cash in respect of Cenvat credit but by virtue of Section 142 (3), the assessee is eligible for refund. Therefore, Clause (a) to (f) are not relevant for the purpose of refund of Cenvat credit in terms of Section 142 (3). Accordingly, on this ground the refund was wrongly rejected. From Section 142(8)(a) of CGST Act, 2017 it is clear that it provides that any amount of tax which was recoverable under the existing law before 01.07.2017 and the same is recovered, the amount recovered shall not be admissible as input tax credit under this Act. There is no ambiguity in the provision that any amount of tax paid under the existing law as was done in the present case no input tax credit is admissible. Here we are dealing with the Cenvat credit and not with the input tax credit - the finding of both the lower authorities dealing with the Section 142(8)(a) of the CGST Act, 2017, for rejecting the present refund claim is absurd and absolutely illegal. Therefore, on this ground also refund could not have been rejected. As regard the contention of the lower authorities that since the amount of service tax was paid on pursuance by the audit party, the refund is inadmissible - it is found that neither any show cause notice for recovery of the service tax invoking any extended period was issued nor adjudication of such proceeding was done. Therefore, in not paying the service tax, no mala fide intention or suppression of fact is involved. Therefore, merely because the appellant have paid the service tax on pursuance by the audit will not be a reason for denying the refund under Section 142. However, except the grounds for rejection no other issues have been dealt by the sanctioning authority such as admissibility of the input service for Cenvat credit, unjust enrichment and relevant documents verification. Accordingly, the matter deserves to be remanded to the adjudicating authority only for the limited purpose, as discussed. The impugned order is set aside - Appeal is allowed by way of remand to the adjudicating authority.

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• CST, VAT & Sales Tax

• 2024 (8) TMI 392
  Statutory interpretation of Entry 41 to Schedule II of the Act - classification of Boro-Plus Antiseptic Cream (BPAC) - to be treated as a medicated ointment and covered under entry no. 41 of Schedule II Part (A) - HELD THAT:- In the case of Sardar Gurmej Singh [ 1959 (9) TMI 71 - SUPREME COURT ], the Hon ble Supreme Court shed light on the importance of interpreting legislative provisions as a whole, ensuring that both inclusive and exclusive clauses are harmonised. This aspect in particular is indispensable when it comes to understanding Entry 41, where the conjunction but introduces an exception, which specifically includes medicated ointments regardless of the exclusion of other similar products. A careful construction of Entry 41 showcases a deliberate legislative intent to classify products based on their medicinal properties and usage, establishing that specific therapeutic items are included for beneficial tax treatment. The clear separation of excluded and included items brings out the distinct nature and purpose of the products, with medicated ointments being recognised for their essential therapeutic roles. Even though antiseptic creams are excluded from Entry 41, medicated ointments would be included due to the use of the word but . The word but is a clear indication that the legislature intended to include, as an exception, medical ointment, even though certain medicated ointments may be categorised as antiseptic creams. If a product is more than just an antiseptic cream and qualifies as a medicated ointment, it will be included in Entry 41. Whether BPAC is to be classified as a medicated ointment or not? - HELD THAT:- The onus was on the Revenue to disprove the Respondent s claim and establish that BPAC is solely an antiseptic cream. To meet this burden, the Revisionist needed to provide compelling evidence that BPAC s primary and exclusive function was antiseptic in nature. This required a detailed analysis and presentation of the product s composition and therapeutic effects, demonstrating that any additional benefits were either negligible or ancillary to its antiseptic properties. However, the Revisionist failed to provide such evidence. The absence of contrary evidence from the Revisionist means that the Tribunal s findings, based on the Respondent s robust evidence, stand unchallenged and are not perverse. This failure underscores the critical importance of meeting the burden of proof in legal and regulatory disputes. In Dilip Kumar [ 2018 (7) TMI 1826 - SUPREME COURT ], the Hon ble Supreme Court highlighted the distinction between provisions relating to chargeability and exemption. The Hon ble Supreme Court further espoused that even if two views are possible in interpreting a charging section, the one favouring the Assessee needs to be adopted. The Supreme Court, in National Cereal s case [ 2005 (3) TMI 448 - SUPREME COURT ], has clearly held that the onus to prove the chargeability of a particular item in a provision other than the provision chosen by the Assessee falls squarely on the revenue. In our present case, the revenue s argument that the inclusion of medicated ointment as a drug and cosmetic under Entry 41 of Schedule 11 of the Act is an exemption is completely misplaced. It is to be noted that whether BPAC falls within Entry 41 is in relation to chargeability in a particular schedule and not that of an exemption. It is trite law that an item would be classified as a residuary item only when it does not fall in any other classification. In the present case, using tools of interpretation, the Tribunal has categorically held that BPAC would fall within Entry 41 of Schedule II. The burden of proof was upon the revenue to indicate that the said classification made by the Tribunal was absolutely incorrect and without any basis in law. It is well settled that the Tribunal is the last fact-finding body and that this Court, in revision, would not go into an enquiry with regard to the factual aspects that have been decided by the Tribunal. In the exercise of revisional jurisdiction, the High Court has a limited mandate. The scope of revisional jurisdictional, is primarily focused on questions of law, jurisdictional errors, or procedural irregularities. The High Court, in a revision petition, must refrain from engaging in a de novo inquiry into factual matters already adjudicated upon by the Tribunal unless compelling grounds warranting such intervention are made. The concept of perversity in legal contexts refers to a situation where a decision or finding is so unreasonable or contrary to the evidence that no reasonable person could have arrived at it. When dealing with administrative and judicial reviews, including tax and regulatory matters, perversity is a crucial ground upon which decisions can be challenged or revised. However, for perversity to be successfully invoked, certain legal thresholds and evidentiary standards must be met - Simply disagreeing with the Tribunal s decision without substantiating such disagreement with concrete evidence or legal arguments does not meet the threshold for invoking perversity. In Cadbury India [ 2019 (6) TMI 1132 - UTTARAKHAND HIGH COURT ], the lack of sufficient evidence presented by the Assessee necessitated further examination and led to the remanding of the case. The tribunal needed a more comprehensive evidentiary basis to make an informed decision about the classification of the goods in question. Consequently, the High Court s decision to remand the matter was appropriate in that context, aiming to ensure that all relevant facts and evidence were adequately considered. In the instant case, however, the Tribunal s decision was not made in a vacuum but was grounded in substantial and persuasive evidence that supported the classification of BPAC as a medicated ointment. The Respondent had established beyond doubt that BPAC is a medicated ointment, and no contrary evidence was presented by the Revisionist to challenge this classification effectively. The principles of judicial efficiency and finality also argue against remanding a matter when the evidence has been thoroughly considered and no new facts have emerged to challenge the established findings. There are no reason to interfere with the findings of the Tribunal, and accordingly, the instant revision petitions are dismissed.

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• 2024 (8) TMI 391
  Challenge to assessment orders - whether sponsorship receipts constitute payment for admission to entertainment ? Did the pre-amended Section 2 (m) of the Delhi Entertainment and Betting Tax Act, 1966 cover sponsorship of fashion shows and sporting events so as to extend the incidence of tax under Section 6? - HELD THAT:- Section 6 of the Entertainment Tax Act is the charging provision. There is also no dispute that sub-Section (1) of Section 6 gives a clue as to the nature of the tax, i.e., the taxable event. Thus, the expression payments for admission to any entertainment characterises what would be a taxable event for levy of Entertainment tax, save and except those services referred to in Section 7 which are accessed for entertainment. Section 7, amongst other things, refers to cable network, video, and DTH services - A careful perusal of Section 2 (m) of the Entertainment Tax Act would show that it is an inclusive definition and adverts to payments made by a person to gain access to either the seats or other accommodation in any form made available in a place of entertainment or payments made to gain access to entertainment or even payments made in connection with entertainment as a condition for attending or continuing to attend the entertainment event. The modes of payment are illustrative as the definition is inclusive and not exhaustive. Therefore, a circumstance where a person gets physical access to a place of entertainment by paying money for seats or accommodation provided therein is an aspect covered in sub-Clause (i) of Clause (m) of Section 2. The contention put forth on behalf of GNCTD that Explanation 2 appended to Section 2 (m) was clarificatory, which is why it was triggered retrospectively, has no merit. Whether the introduction of Explanation 2, with retrospective effect by the amendment in 2012, is contrary to Article 14 of the Constitution, or is it merely clarificatory? - HELD THAT:- Explanation 2 was not clarificatory, imposition of Entertainment Tax on goods supplied, services rendered, and amounts paid by sponsors, that too since 01.04.1998 [almost the date when Entertainment Tax Act was first brought into force], for which no provision was made, by the organisers/proprietors, would indeed, be burdensome and onerous. This is especially so when seen against the backdrop of the admitted fact that entities such as FDCI were given a 100% exemption from tax levy from 2002-2007, while for 2008-2009, the exemption was 50%. Does the levy of tax (on sponsorship) under the Act fail by reason of [the] absence of a specific charging provision? - HELD THAT:- Section 6 of the Entertainment Tax Act remained unamended after the introduction of Explanation 2 - Unlike the amendments made for DTH, video service, and cable TV network, no such attempt was made for sponsorships. The imposition of a tax on sponsorship under the Entertainment Tax Act must fail in the absence of a specific charging provision. Does the Act contain a mechanism for assessment and collection of tax on such sponsorships, if it validly levies the tax, or is such mechanism absent? - HELD THAT:- Rule 11 of the 1997 Rules prescribes Forms 5 and 6 for ticketed and non-ticketed events, respectively. Form 5 does not reference sponsors or sponsorships, while Form 6 seeks information on sponsors for non-ticketed events - the requirement to disclose information about sponsors in Form 6 does not imply that sponsorship receipts are subject to Entertainment Tax. The Act does not provide a separate machinery for assessing and collecting tax on sponsorships. The Entertainment Tax Act does not contain a mechanism for assessing and collecting tax on sponsorships. Petition allowed.

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• Indian Laws

• 2024 (8) TMI 390
  Interpretation of interest clauses in an arbitration award - whether interest is payable on interest or whether 15% interest per annum awarded would be on the principal sum award plus 12% per annum interest on it for the preaward period? - HELD THAT:- Section 34 of the CPC provides that where the decree is for payment of money, the court may order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged. Again, the reading of the aforesaid Sub-Section (1) of Section 34 CPC would reveal that the interest is payable on the principal sum adjudged and not on interest part of the award. The Interest Act, 1978 vide Sub-Section (3) of Section 3 specifically lays down that nothing in Section 3 which permits the court to award interest shall empower the court to award interest upon interest. It means that ordinarily the courts are not entitled to award interest upon interest unless specifically provided either under any statute or under the terms and conditions of the contract. It is evident that ordinarily courts are not supposed to grant interest on interest except where it has been specifically provided under the statute or where there is specific stipulation to that effect under the terms and conditions of the contract. There is no dispute as to the power of the courts to award interest on interest or compound interest in a given case subject to the power conferred under the statutes or under the terms and conditions of the contract but where no such power is conferred ordinarily, the courts do not award interest on interest. Neither the Act specifically empowers the Arbitrator or the court to award interest upon interest or compound interest nor there is any other provision which provides for grant of compound interest or interest upon interest. Even Section 34 CPC is silent in this regard whereas Sub-Section (3) of Section 3 of the Interest Act specifically prohibits the same. It is not deemed appropriate under the facts and circumstances of the case to exercise our discretionary jurisdiction under Article 136 of the Constitution of India so as to interfere with the opinion expressed concurrently by the two courts below - SLP dismissed.

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• 2024 (8) TMI 389
  Dishonour of cheque - existence of legally and enforceable debt or liability - dispute of Civil nature for which the institution of criminal proceedings warranted or not - HELD THAT:- It is admitted that the entire deal was for purchase of 5 Acres of land for a total sale consideration of Rs. 7.75 Crores from the petitioner, which initially was agreed to be purchased by one Ms. Sindhu, who subsequently, introduced the petitioner and buyer No. 1, Mr. Ramalingu, who agreed to substitute Ms Sindhu and instead purchased the entire piece of land. The perusal of these documents would show that while an Agreement to Sell was admittedly executed on 12.05.2022, there are inherent contradictions in the assertions made by the petitioner about the Sale Deed having been already executed; if the Sale Deed was already executed, there was no question of there being an Agreement to Sell. Rather from the perusal of these documents, aside from there being inherent contradictions in the various clauses, it is the defence of the petitioner that he has paid the entire sale consideration that these cheques were issued as the security cheques and that a Sale Deed had been duly executed in his favour on payment of the sale consideration. The respondent has denied the execution of Sale Deed and has claimed it to be a fabricated document produced by the Petitioner in his defence, which needs to be proved by him by way of evidence. In fact, the cross examination of the respondent got deferred for production of the Original sale Deed. It cannot be said that a complaint under Section 138 of the N.I. Act, filed by the respondent No. 2, does not prima facie disclose the commission of an offence or that it is liable to be quashed - Pertinently, the Apex Court in the case of M.M.T.C Ltd. vs. Medchl Chemicals Pharma (P) Ltd. [ 2001 (11) TMI 837 - SUPREME COURT] has held that the burden of proving that there is no existing debt or liability on the respondents and merely on the basis of averments in the petition, the Court cannot conclude that there was no existing debt or liability in that regard. The petitioner has admitted the issue of cheques by him and date of 22.05.2023 has also been put by him giving rise to the presumption in favour of the respondent. Secondly, the petitioner had neither challenged the Order of summoning or framing of Notice. Thirdly, it is at the stage of cross-examination of the complainant when the petitioner intends to confront with the alleged Sale Deed which is denied by the respondent, which is being produced by him and he needs to prove his defence. There is absolutely no merit in the present Petition claiming that no prima facie case is disclosed by the petitioner in his complaint under S.138 N.I. Act, which is hereby dismissed.

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• 2024 (8) TMI 388
  Challenge to order passed by the Debt Recovery Tribunal (DRT), allowing the sale of a mortgaged apartment at below the approved reserve price in an auction - unsecured creditor treated as a secured creditor and that too with priority over the secured creditors (beneficiaries of a mortgage over the secured asset) - HELD THAT:- SCB is a creditor of the Karias and may have a cause of action to recover its dues from the Karias, for which it has instituted the SCB Recovery Suit, which would be eventually adjudicated. Should SCB succeed, the decree therein would have to be executed against the Karias. The issue at hand is not whether SCB may have a legitimate right to recovery of the security deposit under its LLA which was admittedly entered into not only after the creation of the mortgage in favour of the Petitioner, but also after the Original Application was filed. Instead, the issue at hand is whether SCB has any right over the Secured Asset to recover its dues from the Karias. The Petitioner being a prior mortgagee in whose favour the Karias created the mortgage over the Secured Asset, it is the Petitioner who has the foremost and highest priority over recovery of proceeds of sale of the Secured Asset. SCB does not have a charge over the Secured Asset, and even if one were to treat its rights under the LLA as a fetter of some kind over the Secured Asset (and thereby an encumbrance ), such fetter cannot in any manner rank superior to the rights of the mortgagee over the Secured Asset. SCB, the unsecured creditor was now, by virtue of the Impugned Orders converted into a secured creditor, and worse, in preference to the consortium of banks led by IOB, the secured creditors, whose interest is now owned by the Petitioner. The LLA having been executed after initiation of the proceedings for enforcement of the mortgage, and the entry of SCB into the premises of the Secured Asset behind the back of the mortgagee, inexorably lead to even equities not being in favour of SCB, on whose strength, the Purported Acquirers seek to justify that their bid was made at a deep discount to the reserve price. SCB having been treated as a holder of a charge and such charge being effectively treated as superior to even a mortgagee, no option left, but to set aside the Impugned Orders and direct the DRT to conduct the auction afresh. Sumikin Bussan [ 2006 (5) TMI 567 - BOMBAY HIGH COURT ] and its implications - HELD THAT:- It is evident that SCB may be a protectee against the Karias on terms reduced to writing in the LLA. SCB would have recourse to the Karias to enforce its protection. However, SCB would simply be unable to claim any protection against IOB and the Petitioner, and those claiming through such mortgagee. SCB cannot claim to have any recourse to the proceeds of the sale of the Secured Asset, and towards this end, the DRT and the DRAT failed to apply their mind to this vital facet of the matter, and instead, perhaps thinking of their decision as a practical matter, permitted the sale in the auction at a price below the reserve price, justifying such sale by alluding to SCB having a charge and taking into account the amount they believed would need to be paid to SCB for SCB to give up possession. Equitable Considerations do not arise - HELD THAT:- The DRT and the DRAT ought to have been mindful of the fact that the reserve price was one of the core features of the auction. Just as the Purported Acquirers submit that IOB had agreed to the approach of the DRT to auctioning the Secured Asset (for the element of leaving it to the buyer to evict SCB after the acquisition), it must also be remembered that an integral feature of the terms of the auction was that the sale would not be at below the reserve price - the DRT Receiver, upon receiving the bids and comparing them with the DRTapproved reserve price, rightly concluded that the auction deserved to be declared as a failure. The only means for the DRT over-ruling this obvious position was the treatment of SCB as a beneficiary of a charge and that too superior to the mortgagee, which aspect has been dealt with extensively earlier. The Impugned Orders have not only granted relief on issues that form the subject matter of the SCB Recovery Suit, but also execute the same against the Secured Asset (the execution would have had to be against the Karias). We say nothing more, particularly since the matter is relegated to the DRT to conduct the proceedings afresh and to auction the Secured Asset in accordance with law and to rule on the same in accordance with the law declared by us in this judgement. The DRT Order upholding the sale of the Secured Asset to the Purported Acquirers, and all consequential actions such as issuance of the sale certificate and other formalities flowing from the DRT order are hereby quashed and set aside - The DRT is directed to conduct and oversee an auction afresh in accordance with law, treating the mortgagee as the only secured creditor with a charge in the form of the mortgage over the Secured Asset - SCB is free to pursue recovery proceedings against the Karias to recover the amount so deposited, which is in fact, the subject matter of the SCB Recovery Suit. Petition allowed.

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• 2024 (8) TMI 387
  Payment of interest during the period from 1 July 2016 to 31 December 2019 - rejection of prayer of Appellant for exclusion of Covid-19 lockdown period for payment of interest. Payment of interest from 1 July 2016 - HELD THAT:- It is undisputed position that the possession has not been handed over by 31 December 2019 and therefore it is quite unnecessary to decide the exact effect of the statements made by the Respondents before the MahaRERA on 4 July 2018. Therefore, Appellant cannot rely upon order dated 4 July 2018 for the purpose of escaping the liability to pay interest for the period prior to 31 December 2019. Whether indication of fresh date of completion of project while registering ongoing project under Section 4(2) (l)(C) of RERA read with Rule 4(2) of Maharashtra Regulations would amount to alteration of agreement between the parties vis-a -vis Promoter s liability to pay interest under Section 18? - HELD THAT:- Under Section 4(2)(l)(C) of RERA, the promoter is required to make a declaration about the time period within which he undertakes to complete the project - under the provisions of Section 4(2)(l)(C) of RERA read with Rule 4(2) of Maharashtra Regulations, it is incumbent for a promoter to make declaration of the period within which he undertakes to complete the pending project. It is Appellant s case that since it has declared 31 December 2019 as the date for completion of the project, the said date must be taken into consideration for the purpose of determination of interest under the provisions of Section 18 of the Act. The issue as to whether the provisions of Section 4(2)(l)(C), of RERA Act enables the promoter to give fresh timeline in violation of the time period stipulated in the agreement came up before the Division Bench of this Court in Neelkamal Realtors [ 2017 (12) TMI 1580 - BOMBAY HIGH COURT] . In that case, constitutional validity of certain provisions of RERA were challenged. The two learned Judges of the Division Bench have rendered separate Judgments with same conclusion in Neelkamal Realtors. Justice Naresh Patil (as he then was) in his Judgment has held in para 128 that RERA does not contemplate rewriting of contract between the flat purchaser and the promoter. Mere indication of date 31 December 2019 by the Appellant while registering the project under the provisions of Section 4(2)(l)(C) of RERA and Regulation 4(2) of Maharashtra Regulations does not affect the obligations on his part arising out of agreement executed with the Respondents. Under that agreement, the Appellant undertook to hand over possession of the flat to the Respondents on 30 June 2016. Therefore, the Tribunal has rightly directed the Appellant to pay interest to the Respondents from 1 July 2016. I do not find any serious error being committed by the Tribunal in directing payment of interest by taking into consideration the timeline specified in the agreement and by ignoring the timeline declared at the time of registration of the project. Liability of the Appellant to pay interest after issuance of Occupancy Certificate on 27 April 2022 - HELD THAT:- The conduct on the part of the Appellant exhibited vide letter dated 17 May 2022 in not adjusting the amount of interest payable from 1 January 2020 and in demanding interest from the Respondents is totally unreasonable and exhibits disinclination to hand over possession of the flat to the Respondents. The Appellant is responsible for non-handing over of possession of the flat even after issuance of Occupancy Certificate and must be made liable to pay interest till possession of the flat is delivered. In fact during the course of hearing of the present Appeals, the dispute was referred to mediation which unfortunately failed - The conduct exhibited by the Appellant leaves no manner of doubt that it is solely responsible for non-handing over of possession of the flat to the Respondents after issuance of Occupancy Certificate. Therefore, no solace can be provided to the Appellant in respect of liability to bear interest after issuance of Occupancy Certificate. No substantial question of law is involved in the Appeals filed by the Appellant - appeals dismissed.

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