Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 14, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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60/2024 - dated
12-9-2024
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Cus (NT)
Courier Imports and Exports (Electronic Declaration and Processing) Amendment Regulations, 2024.
DGFT
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28/2024-25 - dated
13-9-2024
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FTP
Amendment in Export policy conditions of onions
SEZ
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S.O. 3918(E) - dated
12-9-2024
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SEZ
Central Government rescinds the Notification Number S.O. 3025 (E) dated 11.09.2017 - De-notification of area - SEZ for Information Technology and Information Technology Enabled Services at Plot No.2, MIDC, Phase1, Hinjawadi, Mulshi, Taluka, Pune, in the State of Maharashtra
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S.O. 3906(E) - dated
12-9-2024
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SEZ
Central Government de-notifies an area of 4.37 hectares, thereby making resultant area as 1.40 hectares at Puppalguda Village, Rajendra Nagar Mandal, Ranga Reddy District, in the State of Telangana;
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S.O. 3917(E). - dated
11-9-2024
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SEZ
Central Government rescinds the Notification No. S.O. 1909(E) dated 04.08.2010 - De-notification of area - SEZ for Engineering sector at Village Survadi and Nandal, Taluka Phaltan, District Satara, in the State of Maharashtra
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S.O. 3905(E) - dated
11-9-2024
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SEZ
Central Government rescinds the Notification No. S.O. 4775 (E) dated 16.11.2021 - De-notification of certain area - SEZ for Information Technology and Information Technology Enabled Services at Pocharam Village, Hayathanagar Taluk, Ghatkesar Mandal, Ranga Reddy District, Hyderabad in the State of Telangana (erstwhile Andhra Pradesh)
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Petitioner wins stay on recovery, must appeal & pre-deposit 10% tax (excluding 'Fish Meal') within 30 days.
The High Court, considering the precedent set in the case of Rehoboth Fish Meal and Oil Plant, held that the petitioner should be granted a stay on recovery proceedings pending further orders from the Supreme Court. The petitioner was directed to file a statutory appeal before the Appellate Authority/Commissioner of GST & Central Excise (Appeals) within 30 days. Additionally, the petitioner was required to pre-deposit 10% of the disputed tax, excluding the tax on 'Fish Meal', in accordance with Section 107 of the respective GST enactments, within the same 30-day period. The writ petition was disposed of with these directions.
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Petitioners to get refund on differential GST paid for pre-GST works contracts/composite supplies.
The High Court directed the respondents to refund the differential GST amount, being the difference between GST and VAT, paid by the petitioner for each works contract/composite supply executed before July 1, 2017. The Court held that payments received by the petitioners pre-GST for works executed before July 1, 2017, are assessable under the KVAT tax regime, either under the Composition Tax or VAT scheme as applicable. The respondents were ordered to reimburse the GST amount within six weeks from the date of receipt of the order. The petition was allowed.
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Tax demand on service part of composite import supply quashed; other demands upheld.
The High Court held that the demand for tax on the service aspect of a composite supply involving import of goods and related services like transportation and insurance is in violation of Section 2(30) read with Section 8 of the CGST Act, following the Supreme Court's decision in Union of India Vs. M/s.Mohit Minerals Pvt. Ltd. Consequently, the demand confirmed in paragraphs 15(g) and 15(h) of the impugned order was dropped. However, the demand arising from the mismatch between Input Tax Credit availed and tax paid by the supplier, and the demand for tax on renewal charges for the Factory License, can be adjudicated by the petitioner before the Appellate Commissioner. The petitioner was granted liberty to file a statutory appeal before the Commissioner of GST & Central Excise (Appeals) regarding the remaining demands confirmed in the impugned order. The writ petition was partly allowed.
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Dismissal of plea against tax evasion proceedings, refund misuse.
Wrongful availment and passing on of input tax credit, wrongful availment of IGST refund under Advance Authorisation scheme. Constitutional validity of Notification No. 09/2023-Central Tax dated 31.03.2023 questioned, whether ultra-vires the CGST Act provisions. Held that the challenged order is dated 21.02.2024, and the challenge is on merits. Appeal lies before the Appellate Authority u/s 107 of the CGST Act to examine questions of fact and law. The petition regarding the impugned orders is not entertained. Regarding initiation of proceedings u/s 74 instead of Section 73 of the CGST Act, the Appellate Authority can examine the questions of law while examining the facts. The challenge to the notification dated 31.03.2023 does not arise as no notice was issued u/s 73 of the CGST Act. The present petition is misconceived and dismissed.
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Reversal of GST credit due to unutilized ITC under VAT.
The petitioner had unutilized Input Tax Credit (ITC) of Rs.2,42,15,906/- under the VAT Act for the period from 1st April 2017 to 30th June 2017, which was carried forward to the GST regime by filing Form GST TRAN 1. Subsequently, the petitioner reversed the ITC in the Electronic Credit Ledger by filing Form DRC-03. The High Court, relying on its previous decision in R. N. Laboratories Pvt. Ltd., directed the respondent authorities to process the petitioner's application for refund of Rs.2,42,15,906/- along with statutory interest payable u/s 38 of the VAT Act, as the petitioner had not availed any credit amount carried forward to GST. The authorities were directed to complete the exercise within 12 weeks from the date of receipt of the order.
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Rejected damaged paddy not fit for human consumption, taxable; exemption denied.
Rejected damaged paddy is classified under HSN 1006 10 90, not 1006 10 10, as it lacks characteristics of seed quality cereal crop and is unfit for human consumption. The exemption under S.No.70 of N/N. 02/2017-Central Tax (Rate) for rice (other than pre-packaged and labelled) is inapplicable as rejected damaged paddy has lost its food quality and human consumption value, being used for industrial usage or cattle feed. It fails to meet the criteria of being fit for human consumption required for the exemption. Therefore, rejected damaged paddy is taxable and does not qualify for the exemption.
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Determining GST Rate for Natural Fibre Composite Board: Wood vs Fibreboard Classification Conundrum.
The matter pertains to the classification and applicable GST rate for a Natural Fibre Composite board manufactured by the applicant. The board comprises natural fibre, calcium carbonate, recycling waste, processing aids, and PVC resin as a binding agent. The issue revolves around whether the product should be classified under Chapter 44 as wood and articles of wood, attracting a 12% GST rate, or under a different classification with a different rate. The Authority held that the product is a fibreboard, classifiable under CTH 441193 as 'Others', since it is not a Medium Density Fibreboard. The applicable GST rate for rice husk boards or fibreboards manufactured from agricultural crop residues, irrespective of the chapter classification, is 6% CGST and 6% SGST. The individual properties of the product may further determine the classification.
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Not qualify for - Installation and upgradation works exceed repair/maintenance scope.
The applicant's services related to a naval vessel do not qualify as "Maintenance, repair or overhaul services" (MRO services) under Entry 25(ib) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 02/2021-Central Tax (rate) dated 02.06.2021. The services provided by the applicant, while related to a naval vessel, do not primarily constitute maintenance, repair, or overhaul in the conventional sense. Instead, they appear to be in the nature of upgradation or renovation works, involving supply and installation of goods. There is no specific maintenance agreement between the applicant and the Naval Dockyard, and the scope of work primarily involves up gradation and installation activities rather than repair or maintenance of existing equipment. The tender work rendered by the applicant does not fall under the scope of the concessional rate of tax provided in the amended notification.
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Frozen shrimps in printed pouches/boxes up to 25kg attract 5% GST for export.
This legal case deals with the applicability of Goods and Services Tax (GST) on the export of pre-packaged and labelled frozen shrimps. The key points are: According to the Legal Metrology Act, 2009 and rules, if the inner packaging is printed with a pre-determined quantity, it is considered a 'pre-packaged and labelled' commodity for retail sale, regardless of whether the outer packaging is printed or not. Consequently, the inner packaging of shrimps ranging from 250 grams to 2 kilograms falls under the 'pre-packaged and labelled' category and is liable for GST. The supply of shrimps in pouches or boxes up to 25kg, which are duly pre-packaged and labelled as per the Legal Metrology Act, is a taxable event and not an exempted or nil-rated supply. Where the quantity involved is 25kg or less for specified commodities like shrimps (HSN 0306), which are pre-packed, they are covered under the Legal Metrology Act, 2009, and rules. Therefore, GST at 5% is applicable on the supply of 'pre-packaged and labelled' shrimps up to 25kg, irrespective of whether it is for domestic supply or export, as long as they are specified pre-pack.
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Domestic supply treated as local sale; no zero-rating for unregistered non-exporter.
Determination of whether an outward supply of goods procured by the applicant from an Indian company undergoing liquidation can be considered a zero-rated supply under GST, allowing export without payment of tax against a Letter of Undertaking (LUT). The key points are: The place of supply is within India as the goods are delivered to the applicant's premises in India. The applicant lacks GST registration in India, and the transaction does not qualify as an export of goods under GST law. Consequently, the transaction cannot be treated as a zero-rated supply under the GST Act, 2017, precluding the applicant from exporting the goods without paying tax against an LUT.
Income Tax
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Revenue authority's revision to add rent recovered & foreign contribution as income overturned.
Case involved revision u/s 263 by the Commissioner of Income Tax (CIT) setting aside assessment order regarding rent recovered from specified persons and treatment of foreign contribution as income. Held: Case selected for limited scrutiny on two points - income/property lent to specified persons and land/building made available for use. Assessing Officer (AO) made adequate inquiry, accepted return. CIT cannot impose views when plausible view taken by AO. Every revenue loss due to AO's order cannot be treated as prejudicial to revenue interest. On foreign contribution, case not selected for scrutiny on that point. AO had no jurisdiction, cannot extend limited scrutiny scope. When two possible views and AO took one, CIT cannot treat it as erroneous unless AO's view unsustainable. AO's view not erroneous or prejudicial to revenue. Decided in favor of assessee.
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Disability deduction: Court denies retrospective benefits for insurance payouts after death.
This case deals with the deduction u/s 80DD of the Income Tax Act for maintaining and providing medical treatment to a dependent person with disability. The key points are: The petitioner sought retrospective application of an amendment to Section 80DD, allowing deduction for payment of annuity or lump sum for the benefit of a disabled dependent after the subscriber's death. The court rejected the plea for retrospective application, as it would go against the object of the insurance policy taken for the disabled person's benefit after the subscriber's demise. Giving retrospective effect would remove the substratum of the insurance contract, a commercial agreement with specific terms and conditions. The court considered various laws and conventions related to the rights and welfare of persons with disabilities. The grievance of the petitioner was addressed prospectively through the amendment to Section 80DD, as per the court's earlier order.
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Fresh reassessment notices challenged after completion of initial proceedings.
Validity of reopening an assessment and the legality of issuing a new Show Cause Notice u/s 148-A(b) after the conclusion of initial reassessment proceedings. The key points are: The respondents issued a Show Cause Notice u/s 148-A(b) on the premise that the Supreme Court's judgment in Ashish Agarwal requires all notices issued u/s 148 between April 1, 2021, and June 30, 2021, to be treated as notices u/s 148-A(b). However, the assessment proceedings in this case were already concluded on March 30, 2022. Subsequently, reassessment action was re-initiated on the same set of reasons via a Show Cause Notice dated June 2, 2022, u/s 148-A(b), leading to an order u/s 148-A(d) and a notice u/s 148 dated July 19, 2022. The High Court held that there was no justification for the respondents to issue fresh notices seeking to reopen the proceedings that had been concluded prior to the Ashish Agarwal judgment. The judgment does not mandate the reopening of completed assessments. Consequently, the impugned action for reassessment could not be sustained.
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Tax reassessment notice invalid due to time limitation under amended law.
Reassessment action initiated based on Section 148 notice and subsequent Section 148A(b) notice violated the First Proviso to Section 149(1) and was barred by the limitation period. The reassessment action commenced post April 1, 2021, was subject to the amended provisions. The Supreme Court in Ashish Agarwal held that notices issued under unamended provisions should be treated as notices u/s 148A(b), subject to compliance with procedural requirements and defenses available under amended provisions, including Section 149. However, the terminal date of March 31, 2022, for commencing reassessment had passed when the Section 148A(b) notice was issued on May 27, 2022, contravening the First Proviso to Section 149(1). Ashish Agarwal cannot be construed as depriving the assessee of objections based on Section 149(1) or reinventing proceedings unchallenged earlier. The May 27, 2022 notice cannot be viewed as a continuation or substitution of the original Section 148 notice, as no legal challenge was instituted against the original notice, and no court order interdicted the reassessment action. The assessing officer failed to take corrective action despite being apprised of the amended procedure. Consequently, the impugned notice u/s.
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Taxpayer wins big: New grounds allowed in appeal, interest on share deposits not taxable income.
Legal principles regarding raising new grounds in an appeal before tax authorities, and the treatment of interest income earned on compulsory deposits of share application or subscription money. The Supreme Court held that tax authorities cannot take a narrow view and prevent an assessee from raising new grounds, as long as the relevant facts are on record and the ground is raised bona fide. Regarding interest income, the Supreme Court ruled that interest earned on compulsory deposits made for share issue is incidental and should be set off against share issue expenses, since the purpose of deposit is compliance with statutory requirements, not earning income. The court decisions favored the assessee's position on both issues.
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Conversion from partnership to company doesn't bar 80-I deduction for unexpired period if same activity continues.
Section 80-I deduction was denied for the unexpired period when a partnership firm was converted into a private limited company carrying on the same activity. However, based on the Supreme Court's decision in Chetak Enterprises and the Allahabad High Court's ruling in Prisma Electronics, the benefit of Section 80-I deduction should be allowed for the unexpired period even after the conversion from a partnership firm to a private limited company, as long as the same activity is continued. The appeals were allowed, entitling the assessee to the Section 80-I deduction and consequent benefit for the unexpired period.
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Tax additions based on retracted admission sans corroborative evidence set aside.
The case pertains to additions made by the Assessing Officer on account of bogus share application money and commission for bogus accommodation entries. The ITAT deleted the additions. The High Court found that the question raised by the appellant is not a substantial question of law. The findings by the appellate authority and the Tribunal are in consonance with the law of evidence and the Income Tax Act. The assessment was based solely on the statement given by Shirish Chandrakant Shah, which he later retracted. An admission by the assessee cannot be the basis for addition in the absence of corroborative evidence. The substantial questions of law framed by the appellant pertained to an open issue already concluded by the Supreme Court decision in M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another. Therefore, the High Court held that no substantial question of law arises between the parties.
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Excess Tax Deducted on Enhanced Land Acquisition Compensation Refundable Despite Time Limit.
Tax deducted at source (TDS) credit against enhanced compensation received under Land Acquisition Act. Petitioner's application for revised tax return rejected based on time limitation and circular. Court held revised return along with tax certificate need not be furnished if certificate produced within two years from assessment year-end. Assessing Officer bound to amend assessment order u/s 155(14). Excess tax paid entitles assessee to claim refund u/s 237. Limitation inapplicable due to court's prerogative writ. Land Acquisition Collector responsible for TDS deduction u/s 204, assessee not liable u/s 205. Impugned order quashed, directing respondents to process revised return for refund u/s 227 with applicable interest for delayed credit.
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High Court quashes tax order for violating natural justice, directs fresh assessment considering assessee's evidence.
The High Court held that the assessing officer failed to issue a notice before reaching an adverse conclusion regarding the certificate not mentioning the Capital Gains Account, thereby violating the principles of natural justice. Consequently, the impugned assessment order was set aside, and the case was remanded to the assessing officer to pass appropriate orders on merits within six months, adhering to due process and considering the bank certificate issued to the assessee. The court emphasized the necessity of providing an opportunity to the assessee before arriving at an adverse finding, upholding procedural fairness in tax assessments.
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IT firm's transfer pricing adjustment: Comparable firms excluded due to functional differences, business models, extraordinary events & lack of data segmentation.
Tribunal held that Vishal Information Technologies Ltd. and Nucleus Net soft & GIS (India) Ltd. should be excluded from comparable selection for determining arm's length price of international transactions. Vishal Information Technologies Ltd. engaged in data conversion, digitization of documents, text conversion, and e-publishing, functionally different from assessee providing voice, communication, data entry, and financial management services. Nucleus Net soft & GIS Ltd. excluded due to different business model, export revenue filter, extraordinary events, and lack of segmental details. Company outsourced most business activities with major operating expenses for data processing charges, unlike assessee. Extraordinary event of amalgamation approved by Bombay High Court. Company had IT and ITeS segments considered as one without separate segmental details available. Therefore, these companies not comparable to assessee for transfer pricing adjustment.
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Charitable trust's pending application for fund accumulation allowed; AO to reconsider revised Form 10.
Charitable trust registered u/s 12A faced disallowance of benefit of accumulation of funds u/s 11(2) as income was not utilized for the intended purpose. The trust's application u/s 11(3A) for accumulation was pending before the Assessing Officer. The Tribunal held that Section 11(3)(c) does not apply due to the pending application, and directed the Assessing Officer to consider the application u/s 11(3A). The revised Form No. 10 filed by the trust for determining accumulated funds u/s 11(2) should be considered. The addition made by the Assessing Officer was rightly deleted by the CIT(A) as the accumulated funds could be utilized, and the trust's claim was u/s 11(2), with investments made as per Section 11(5). The Revenue's appeal was dismissed.
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Taxman's Non-Compliance Makes Final Assessment Order Invalid.
Final assessment order passed u/s 143(3) read with Section 144C(13) subsequent to Dispute Resolution Panel (DRP)/Transfer Pricing Officer (TPO) directions deemed invalid due to non-compliance with statutory provisions. Assessing Officer failed to follow DRP directions and pass rectification order as mandated. TPO issued Order Giving Effect (OGE) to TP adjustments post-DRP directions, forming part of assessment records. However, Assessing Officer's non-compliance constituted gross violation of Section 144C, rendering final assessment order contrary to the Act. Despite Revenue arguing it as a mistake, no efforts were made to rectify within reasonable time, violating law. Final assessment order quashed, assessee favored.
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TV channel's distribution revenue rightly treated as business income, not royalty.
The distribution revenues received by the assessee towards granting distribution rights of its channels cannot be taxed as royalty but as business income. Relying on the Tribunal's decision and the High Court of Delhi's ruling, it is held that the subject distribution revenue earned by the assessee should be treated as business income. Since the assessee had already offered the said income as business income in accordance with the Mutual Agreement Procedure (MAP), which was accepted by the Department in earlier years, the additions made by the Assessing Officer for the Assessment Years 2020-21 and 2021-22 are deleted. The assessee's appeal is allowed.
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Struck-off company: AO's options for tax recovery from former directors, not challenging assessment merits.
Legal provisions and remedies available to the Assessing Officer (AO) when dealing with a company whose name has been struck off from the register of companies. Key points: Sections 159-163, 166-167 of the Income Tax Act, dealing with legal representatives, representative assessees, agents, and remedies against property, are not applicable in this case. Section 170, concerning succession of business, is also irrelevant. Section 176(1) allows assessment of income for the period until discontinuance of business. Section 178, regarding companies in liquidation, does not apply as this was a voluntary dissolution. u/s 179, the former director can be proceeded against for recovery of tax payable by the erstwhile company but cannot challenge the merits of the assessment order through appeals u/ss 246(1) and 253, as only the 'assessee' can do so. The maintainability of an appeal filed on behalf of a company whose name is struck off is questionable. However, the certificate of incorporation cannot be treated as cancelled for realizing dues and discharging liabilities, as per the Delhi ITAT ruling in Dwarka Portfolio (P) Ltd.
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Loan or Gift? Taxability Depends on Evidence, Not Assumptions.
Distinction between Section 69 and Section 56(2) regarding unexplained investment and gift. Section 69 requires the Assessing Officer to establish that the assessee made investments not recorded in books, and the assessee's inability to explain the nature and source. In this case, the payment was made by another person, not the assessee, and the source was satisfactorily explained with evidence. Hence, Section 69 is inapplicable. Section 56(2) regarding taxability as gift was never discussed by authorities. Revenue cannot make a fresh case or improve the order. Documents confirming loan and repayment cannot be denied. Mere lack of repayment capacity does not make it a gift when parties confirm it as a loan secured by joint ownership. Addition u/s 69C for car purchase was rightly deleted as the source was admitted to be from another person's bank account, not the assessee's undisclosed expenditure. Revenue's appeal dismissed.
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Actual operating entity with commercial activities in Singapore disputes tax evasion, treaty shopping allegations.
Tax residency certificate issued by Singaporean authorities is statutory evidence of the company's residency, and the burden lies on the Revenue authorities to establish that the entity was formed solely to avail tax treaty benefits without any actual economic activity. The company was incorporated in 1996, and the relevant investments were made in 2012, 16 years later. The company is an actual operating entity conducting regular business, generating revenue from sale of goods, employing staff, and recognized by Singapore's Economic Development Board as the Asia Pacific headquarters and regional trading hub. The company has consistently filed returns in India and availed treaty benefits for several years without objection from the tax authorities. Without assigning reasons for deviating from the rule of consistency, the Dispute Resolution Panel could not sustain the draft addition alleging tax evasion and treaty shopping. The assessee's submissions establish that the transaction was a long-term investment decision by an entity with sufficient operational structure in Singapore.
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Foreign NGO recognizes unspent grants as income/liability based on accrual accounting for FY2020-21, offers in FY2021-22.
Foreign contribution income recognition based on accrual accounting - assessee recognized income and unspent grant liability for AY 2021-22, offered unspent grant as income in AY 2022-23 along with other receipts - detailed workings provided - unspent grant income offered in subsequent year - no addition warranted in the year under consideration - appeal allowed by Appellate Tribunal deleting the addition made by the Assessing Officer.
Customs
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Govt levies countervailing duty on 'Atrazine Technical' imports from China to protect domestic industry.
This notification seeks to levy countervailing duty on imports of 'Atrazine Technical' originating in or exported from China, following the final findings of the Designated Authority that cessation of duty is likely to lead to continuation or recurrence of subsidization and injury to domestic industry. The countervailing duty rates specified range from 9.28% to 11.94% of CIF value based on the country of origin, export, and producer. The duty is imposed for five years from the notification date and will be payable in Indian currency. Relevant legal provisions, explanations, and procedures related to duty calculation and implementation are also provided.
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Imports of stainless steel pipes face anti-subsidy duty for 5 years.
This notification seeks to impose a countervailing duty on imports of welded stainless-steel pipes and tubes originating in or exported from China and Vietnam. The designated authority concluded that cessation of the countervailing duty is likely to lead to continuation or recurrence of subsidization and injury to the domestic industry. Consequently, a countervailing duty ranging from 0% to 29.88% of the CIF value has been imposed on imports from specific producers and countries as detailed in the table. The duty will be levied for five years from the date of publication, unless revoked, superseded or amended earlier. The notification provides details on tariff items, duty rates for different producers/countries, and calculation methodology for the countervailing duty amount.
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Fake duty exemption licenses used for chemical import, penalty reduced on lack of fraud evidence.
Penalty imposed for import of chemicals using fake duty exemption licenses. Appellant claimed exemption under DEPB but used fake licenses and TRAs. Statement of witness Chandran retracted, no nexus established between brokers and imported goods. No finding of fraudulent conduct by Appellant. Tribunal considered relevant facts, reduced penalty from Rs. 5 lakhs to Rs. 3 lakhs based on evidence. HC upheld Tribunal's factual findings and conclusions, dismissed appeal.
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Customs classification battle: Motor controllers & e-trike parts valuation disputed.
Valuation and classification of imported goods, specifically motor controllers and electric tricycle spare parts. The key issues addressed are the enhancement of CIF value, rejection of the declared value, and the classification of the motor controller under either CTH 8503 0090 or CTH 8708 9900. The Tribunal held that based on the explanatory notes to Section XVII and the notes to CTH 8503, the motor controllers are rightly classifiable under CTH 8503 0090 as claimed by the importer in the respective bills of entry. Consequently, the Revenue Appeals were dismissed. The Tribunal's decision was based on a previous ruling in a related case involving the same appellant.
SEZ
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New Free Trade Zone Approved for M/s. Venkatesh Coke & Power in Tamil Nadu.
The notification pertains to setting up a Free Trade Warehousing Zone (FTWZ) at Athipattu, Nandiambakkam and Puzhuthivakkam Villages, Ponneri Taluk, Tiruvalur District in the State of Tamil Nadu by M/s. Venkatesh Coke & Power Limited under the Special Economic Zones Act, 2005. It specifies the survey numbers and area spanning 42.829 hectares across the three villages. The notification constitutes an Approval Committee for the SEZ, comprising ex-officio members from various government departments and the developer's representative as a special invitee. It also appoints 9th September 2024 as the date from which the SEZ shall be deemed an Inland Container Depot under the Customs Act, 1962.
Corporate Law
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IPO fund diversion charges: Dismissed case can't revive, fresh filing allowed.
Criminal court lacks inherent power to revive dismissed complaint. Filing fresh complaint allowed, not recalling dismissed one. IPO fund diversion allegation under Companies Act 2013 Sections 447/448. Order restoring dismissed complaint quashed as lacking jurisdiction under Supreme Court precedent. Consequential proceedings set aside. Petition allowed.
IBC
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Insolvency Board's Chairperson, Members' Salaries Hiked Retrospectively from Jan 2024.
Amendment to rules governing salary, allowances and service conditions of Chairperson and members of Insolvency and Bankruptcy Board of India. Key changes: Chairperson's salary increased from Rs. 4,50,000 to Rs. 5,62,500. Whole-time member's salary increased from Rs. 4,00,000 to Rs. 5,00,000. Revised salaries applicable retrospectively from January 1, 2024. Consequential amendments to rules regarding leave salary and pension. Notification issued under Insolvency and Bankruptcy Code, 2016. No person adversely affected by retrospective application.
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Insolvency sale upheld despite allegations, purchaser's delay condoned with additional payment.
Liquidator's discretion in fixing reserve price upheld. COVID-19 lockdown considered valid reason for extension to deposit balance sale consideration. Allegation of undervaluation rejected as appellant failed to bring higher bidders despite opportunities. Non-constitution of Stakeholders' Consultation Committee not violative due to clarificatory explanation. Regulation 33 considered directory, Adjudicating Authority's extension of time justified under extraordinary circumstances. Attachment order no ground to deny balance payment, purchaser's due diligence obligatory. Cancellation of sale refused considering purchaser's investments, appellant's delayed objections. Additional amount imposed on purchaser to balance equities.
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Corporate Debtor's insolvency resolved through settlement with Operational Creditor; CIRP expenses determined, bank guarantee ordered.
CIRP initiated against the Corporate Debtor terminated upon reaching full and final settlement with the Operational Creditor who filed Section 7 application. Quantum of CIRP expenses till termination date to be determined by NCLT, to be borne by Corporate Debtor. Corporate Debtor directed to furnish bank guarantee for claimed CIRP expenses amount within two weeks in Resolution Professional's name. Operational creditors and other creditors retain rights to pursue legal remedies for their claims, if any. Impugned NCLAT order set aside, CIRP terminated, appeal allowed.
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Tribunal upholds jurisdiction to recall orders; rejects time-barred plea in insolvency case.
The Appellate Tribunal examined whether there were sufficient grounds to recall its previous order dated 02.04.2024, wherein liberty was granted by the Supreme Court to file a review limited to the grounds of limitation. The Tribunal held that it possesses inherent jurisdiction to entertain recall applications on cogent grounds, subject to not violating statutory provisions. The Adjudicating Authority had relied on Supreme Court judgments affirming the applicability of Article 137 of the Limitation Act for Section 7 applications under the Insolvency and Bankruptcy Code (IBC), considering the date of default as the starting point. The Appellant's contention that the application should be time-barred under Article 21 was found misconceived and untenable. The Adjudicating Authority correctly held that the application was within the limitation period. Consequently, the Appellate Tribunal found no error in the Adjudicating Authority's order and dismissed the recall application.
Indian Laws
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Judicial Powers on Time Extension for Arbitral Awards - The Pragmatic Interpretation.
Application for extension of time u/s 29A(5) of the Arbitration and Conciliation Act, 1996 can be filed even after the expiry of the period for making the arbitral award. The court has the power to extend the time period for making the award, not the arbitral tribunal. If an award is pronounced during the pendency of an application for extension, the court must still decide the application and may invoke sub-sections (6) to (8) or the relevant provisos of Section 29A(4). While interpreting a statute, an interpretation producing an unreasonable result should be avoided if there is another acceptable, practical, and pragmatic construction.
PMLA
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Fintech firm IND-money authorized for Aadhaar authentication to prevent money laundering under supervision.
Central Government authorizes IND-money Private Limited to perform Aadhaar authentication for purposes of Section 11A of Prevention of Money-laundering Act, 2002. Satisfied that reporting entity will comply with privacy and security standards under Aadhaar Act, 2016. Necessary and expedient after consulting Unique Identification Authority of India and Securities and Exchange Board of India as appropriate regulator. Permits reporting entity to conduct Aadhaar authentication for money laundering prevention purposes.
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Special court designated in Dehradun for money laundering cases under PMLA.
This notification amends the previous notification S.O. 372(E) dated 5th February 2016 by the Ministry of Finance, Department of Revenue, Government of India. It designates the Court of the 1st Additional District and Sessions Judge, Dehradun as a Special Court under the Prevention of Money Laundering Act, 2002 for the trial of offenses punishable u/s 4 of the Act within the specified area of the State of Uttarakhand. The amendment is made in consultation with the Chief Justice of the High Court of Uttarakhand, exercising powers conferred by sub-section (1) of Section 43 of the PMLA.
Service Tax
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Ocean freight service tax refund allowed; time bar doesn't apply. Taxpayer victory despite revenue objections.
Refund claim for service tax paid on ocean freight not barred by time limitation. Section 11B(5)(B)(ec) of Central Excise Act, 1994 made applicable to Finance Act, 1994 not applicable. Applicability of Section 142(3) of CGST Act, 2017. Refund application filed on 23.11.2020 pursuant to Gujarat High Court decision dated 06.09.2019. Supreme Court dismissed revenue's appeal on 01.09.2023, holding service tax levy not maintainable. Refund claim filed before 31.08.2024, within one year from relevant date. Section 142(3) of CGST Act, 2017 states only Section 11B(2) of Central Excise Act, 1944 to be considered for refund processing. Rejection of refund claim unsustainable. Appellant entitled to refund of service tax paid on ocean freight during disputed period. Impugned order set aside, appeal allowed.
Case Laws:
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GST
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2024 (9) TMI 683
Refund of IGST - rejection on the ground that the petitioner did not respond to SCN and provide FIRC details - Violation of principles of natural justice - HELD THAT:- It is undisputed that the petitioner made an export of services and paid integrated taxes, subsequently claiming a refund on 13.04.2023 within the timeframe specified in Section 54 of the Act. In response, the first respondent issued a show cause notice dated 18.05.2023, stating that the FIRC details uploaded were in a non-openable format. The petitioner promptly addressed this issue by filing a rectified version of the FIRC details on 19.05.2023, i.e., on the next day itself. However, on 06.06.2023, the first respondent issued a second show cause notice without addressing the petitioner's response submitted on 19.05.2023 - the remarks in the order, which claims that the petitioner did not respond to the show cause notice or provide FIRC details, reflects a total non-application of mind on the part of the first respondent. The matter is remanded to the first respondent, who shall consider the reply filed by the petitioner on 19.05.2023 and, after issuing a clear 14-days notice specifying a date of personal hearing, pass appropriate orders on merits and in accordance with law, as expeditiously as possible - Petition disposed off by way of remand.
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2024 (9) TMI 682
Violation of principles of natural justice - impugned order passed without considering the request for adjournment - petitioner was unaware of the impugned order having been passed and the same was uploaded in the GSTIN portal - rejection of claim of Input Tax Credit on the premise that GSTR-2A does not reflect the same - mismatch between GSTR-2A and GSTR-3B - HELD THAT:- The impugned order is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections along with supporting documents/material, within a period of four (4) weeks from the date of receipt of a copy of this order. The Writ Petition stands disposed of.
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2024 (9) TMI 681
Confirmation of demand proposed in the show cause notice that preceded the impugned order - requirement of pre-deposit for filing appeal - HELD THAT:- There are sufficient merits in the submissions of the learned counsel for the petitioner in the light of the order passed by this Court in the case of REHOBOTH FISH MEAL AND OIL PLANT, REPRESENTED BY ITS MANAGING PARTNERSHIP J. SUDEEP FERNANDO; NPM ASSOCIATES; MARKSMEN AQUATIC PRODUCTS LLP; FINLEY MARINE PRODUCTS VERSUS ADDITIONAL COMMISSIONER, TIRUNELVELI [ 2024 (7) TMI 1521 - MADRAS HIGH COURT] where it was held that ' This Court is of the view that to balance the interest of the petitioners and the Revenue, there shall be a stay of all recovery proceedings pending further orders of the Hon'ble Supreme Court. Since the impugned orders are the appealable orders in terms of Section 107 of the respective GST enactments, the petitioners are directed to file statutory appeal before the respective Appellate Commissioner under Section 107 of the respective GST enactments within a period of 30 days from the date of receipt of a copy of this order.' The Court is inclined to dispose of this Writ Petition by directing the petitioner to file statutory appeal before the Appellate Authority/the Commissioner of GST Central Excise (Appeals), Coimbatore at Madurai, within a period of 30 days from today, for which, the said Appellate Authority is suo motu impleaded as second respondent - the petitioner shall pre-deposit 10% of the disputed tax of the other items except for Fish Meal as per Section 107 of the respective GST enactments in the light of the orders passed by this Court in Rehoboth Fish Meal and Oil Plant (cited supra) within a period of 30 days from today. Petition disposed off.
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2024 (9) TMI 680
Refund the differential GST amount (being the difference between GST and VAT) paid by the petitioner for each of the works contract/composite supply executed by the petitioner - HELD THAT:- The issue decided by the Co-ordinate Bench in SRI CHANDRASHEKARAIAH, M/S. GOVINDE GOWDA AND SONS, M/S. D.K. CONSTRUCTIONS, M/S. SRI AYYAPPA CONSTRUCTIONS, M/S. ANNAPOORNESHWARI CONSTRUCTIONS, M/S. BHOOMIKA BUILDERS, VERSUS THE STATE OF KARNATAKA, THE UNION OF INDIA, THE GOODS AND SERVICES TAX COUNCIL, PRINCIPAL COMMISSIONER OF CENTRAL TAX, COMMISSIONER OF COMMERCIAL TAXES, CAUVERY NEERAVARI NIGAMA LIMITED, AND OTHER [ 2023 (6) TMI 93 - KARNATAKA HIGH COURT] , where in the Co-ordinate Bench of this Court, has held ' The payments received by the Petitioners pre-GST for such of the works executed before 01.07.2017 are to be assessed under KVAT tax regime either under COT or VAT scheme as applicable.' The respondents are hereby directed to reimburse GST amount as indicated in the representations - The respondent / Department shall reimburse the said amount within a period of six weeks from the date of receipt of a copy of this order - petition allowed.
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2024 (9) TMI 679
Confirmation of demand proposed in SCN - tax confirmation with interest - rest of the demand arising out the mis-match between the Input Tax Credit availed and the tax paid by the supplier and the demand of tax on the renewal charges paid for Factory License. Tax confirmation with interest - HELD THAT:- The issue is now covered in favour of the petitioner in terms of the decision of the Hon'ble Supreme Court in Union of India Vs. M/s.Mohit Minerals Pvt. Ltd. [ 2022 (5) TMI 968 - SUPREME COURT ] where it was held that 'the impugned levy imposed on the service aspect of the transaction is in violation of the principle of composite supply enshrined under Section 2(30) read with Section 8 of the CGST Act. Since the Indian importer is liable to pay IGST on the composite supply , comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the supply of services by the shipping line would be in violation of Section 8 of the CGST Act.' - the demand confirmed in paragraph 15(g) and paragraph 15(h) of the impugned order is dropped. Rest of the demand arising out the mis-match between the Input Tax Credit availed and the tax paid by the supplier and the demand of tax on the renewal charges paid for Factory License - HELD THAT:- The same can be adjudicated by the petitioner before the Appellate Commissioner. Therefore, the petitioner can file an appeal on the rest of the issues. While dropping the demand in paragraph 15(g) and paragraph 15(h) of the impugned order, liberty is given to the petitioner to file a statutory appeal before the Commissioner of GST Central Excise (Appeals), Coimbatore at Madurai, C.R.Building, Bibikulam, Madurai 625 002, as far as other demands confirmed vide the impugned order are concerned. This Writ Petition stands partly allowed.
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2024 (9) TMI 678
Seeking cancellation of registration of petitioner - cancellation on the ground that petitioner had discontinued his business - HELD THAT:- Petition is disposed of directing the Proper Officer to dispose of the application of the petitioner seeking cancellation of its registration within four weeks from today, if not already done. In case the application has already been disposed of, order be communicated to petitioner within four weeks.
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2024 (9) TMI 677
Challenge to SCN and the subsequent adjudication order - jurisdiction of the adjudicating authority to not only initiate proceeding but also to determine the liability of the petitioners by issuing SCN - HELD THAT:- Taking into consideration the fact that a jurisdictional issue has been raised and a prima facie case has been made out by the petitioners, and the fact that a coordinate Bench of this Court by an order dated 13th February 2024 in an identical matter in the case of OSL Exclusive Pvt. Ltd. v. Union of India Ors. [ 2024 (3) TMI 1338 - CALCUTTA HIGH COURT] had been pleased to pass a limited interim order, the impugned demand made in the order dated 3rd April 2024 as appearing at annexure P-3 to the writ petition is stayed till the end of September 2024 or until further orders whichever is earlier. List this matter under the heading hearing in the combined monthly list of August 2024.
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2024 (9) TMI 676
Seeking cancellation of the GST Registration - Petitioner submits that there was no intimation ever given to the Petitioner with regard to any personal hearing - Violation of principles of natural justice - HELD THAT:- The Petitioner is directed to appear before the Proper Officer on 04.06.2024 at 12.00 noon in the Office of Sales Tax Officer Class-II, AVATO, Ward-39 and provide the necessary documents and clarification. The Proper Officer shall thereafter dispose of the application within a period of four weeks. Petition disposed off.
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2024 (9) TMI 675
Prayer for leave to amend/rectify the GST returns for the period April, 2018 to March, 2019 either through Online or manual mode - HELD THAT:- The petitioner at the first instance ought to approach the appellate authority since an efficacious alternative remedy in the form of an appeal under Section 107 of West Bengal Goods and Services Tax Act, 2017 is available. The contention of the petitioner that the appellate authority does not permit filing of an appeal beyond the prescribed period of limitation also cannot be accepted inasmuch as the judgment delivered by the Hon ble Division Bench of this Court in the case of S. K. Chakraborty Sons v. Union of India [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT ], has held that the appellate authority is competent to admit an appeal by condoning the delay beyond one month from the prescribed period as provided for under Section 107(4) of the said Act. Thus, no relief can be afforded to the petitioner in the present writ petition - appeal disposed off.
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2024 (9) TMI 674
Doctrine of Promissory Estoppel - withdrawal of scheme for revival of economy in Kutch District - Withdrawal of the benefit/incentive scheme to the original writ petitioners - retrospective or retroactive? - effect of subsequent N/N. 16/2008 dated 27.03.2008 - HELD THAT:- The issue involved in this writ petition is squarely covered by the decision rendered by the Apex Court in the case of UNION OF INDIA AND ANR. ETC. VERSUS M/S V.V.F. LTD. AND ANOTHER ETC. ETC. [ 2020 (4) TMI 885 - SC ORDER] where it was held that 'the original writ petitions filed by the respective original writ petitioners before the respective High Courts challenging the respective subsequent notifications/industrial policies stand dismissed'. Resultantly, the impugned order dated 22.06.2017, issued by the respondent No. 3, stands set aside and quashed and the respondents are at liberty tso proceed in accordance with law in terms of the aforesaid decision of the Apex Court. Writ petition disposed off.
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2024 (9) TMI 673
Wrongful availment / passing on of input tax credit - rong availment of IGST refund under Advance Authorisation scheme - constitutional valisity of Notification No. 09/2023-Central Tax dated 31.03.2023 - ultra- vires the provisions of the CGST Act or not - HELD THAT:- It is found that the order challenged before this Court is essentially the order dated 21.02.2024 and challenge thereto is on merits. Since, the provision is available for filing of appeal before the Appellate Authority in terms of Section 107 of the CGST Act, it is not fit to examine the same with respect to jurisdiction of the impugned order, as the appellate authority would be examining all the questions including questions of facts as well as question of law at the first stage. The present petition with regard to the orders under challenge not entertained - So far as the question regarding initiation of proceedings under Section 74 of the CGST Act instead of Section 73 of the CGST Act is concerned, it is opined that while examining the questions of facts, the questions of law can also be examined by the Appellate Authority, who can give finding in this regard. The issue relating to challenge of notification dated 31.03.2023 does not arise in the present case, as notice has not been issued to the petitioner under Section 73 of the CGST Act. The order passed elates to a case where proceedings were undertaken under Section 73 and not like the present and therefore distinguishable. The present petition is misconceived. The same is accordingly dismissed.
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2024 (9) TMI 672
Constitutional Validity of Levy of GST on Royalty - GST on the reverse charge basis on the royalty of the mining extraction - HELD THAT:- The issue decided in the case of SUDERSHAN LAL GUPTA CONTRACTOR VERSUS UNION OF INDIA, STATE OF RAJASTHAN, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, DEPUTY COMMISSIONER OF STATE TAX, CIRCLE KARAULI, RAJASTHAN [ 2022 (10) TMI 43 - RAJASTHAN HIGH COURT] where it was held that ' The prayer of the petitioners to entertain the petition on the same issue on the basis of interim order passed in the case of Shree Basant Bhandar INT Udyog Vs. Union of India [ 2022 (7) TMI 565 - RAJASTHAN HIGH COURT ] and similar interim orders passed in other cases cannot be accepted. Once we are faced with final order passed on one hand and interim orders on the other, we have to follow the final verdict of Co-ordinate Bench of this Court.' The present case is also dismissed in terms of the judgment rendered in Sudershan lal Gupta.
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2024 (9) TMI 671
Condonation of delay in filing the revocation application - Petitioner complies with all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed of.
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2024 (9) TMI 670
Seeking cancellation of the GST registration - cancellation on the ground that petitioner had closed his business - HELD THAT:- The petition is disposed of, directing the proper officer to dispose of the application of the petitioner within a period of four weeks from today.
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2024 (9) TMI 669
Recovery of the amount during the search conducted by the Goods and Service Tax Authorities - directions sought to the respondent to proceed under Sections 73 and 74 of the Central Goods and Service Tax Act, 2017 in accordance with law - counsel for the petitioner is not pressing this petition, however, seeks liberty to raise all the issues raised in this petition at an appropriate stage - HELD THAT:- The petition is disposed of.
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2024 (9) TMI 668
Condonation of delay in filing the revocation application - requirement to comply with all the requirements of paying the taxes, interest, late fee, penalty etc. due, the 3B Return Form filed by the Petitioner - HELD THAT:- In that view of the matter, the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed off.
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2024 (9) TMI 667
Refund of unutilized Input Tax Credit with statutory interest - Prohibition on grant of refund under Section 142(3) of the GST Act - period from 1st April 2017 to 30th June 2017 - HELD THAT:- The petitioner was having unutilized Input Tax Credit of Rs.2,42,15,906/- under the VAT Act for the period from 1st April 2017 to 30th June 2017, which was carried forward by filing the Form GST TRAN 1 and the amount was credited in the Electronic Credit Ledger under the provisions of Section 140 of the GST Act - The petitioner, thereafter, taking benefit of the order passed by the Hon ble Supreme Court to open the GST portal, filed the revised Form GST TRAN 1 showing the Input Tax Credit under the VAT Act as Nil and thereafter, filed Form DRC-03 reversing the Input Tax Credit in the Electronic Credit Ledger on 27th April 2022. Hence, the petitioner has not availed any credit amount, which was carried forward to GST by reversal of the Input Tax Credit. This Court, in the case of R. N. Laboratories Pvt. Ltd. [ 2024 (4) TMI 764 - GUJARAT HIGH COURT] , in similar facts, wherein the Commissioner of VAT has granted the refund of unutilized Input Tax Credit under the VAT Act which was carried forward to the GST in the Electronic Credit Ledger and later on reversed, directed the respondents authorities to give refund along with interest from the date of eligibility from 1st April 2017 to the date of payment relying upon the provisions of Section 38 of the VAT Act. The petitioner has already reversed the credit in the Electronic Credit Ledger and there is no dispute with regard to outstanding unutilized Input Tax Credit under the VAT Act as per the audit assessment done by the respondent authorities, the respondents - authorities are directed to process the application dated 24th February 2023 filed by the petitioner for refund of Rs.2,42,15,906/- and pass necessary orders for refund along with statutory interest payable under the provisions of Section 38 of the VAT Act, as held by this Court in the aforesaid decision. Such exercise shall be completed within 12 weeks from the date of receipt of the copy of this order. Petition disposed off.
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2024 (9) TMI 666
Seeking permission to delete respondent Nos.3 and 4 as the impugned order is passed by respondent No.5 Deputy Commissioner of Central GST, Division VI, Ahmedabad South - HELD THAT:- Permission is granted. Respondent Nos.3 and 4 are ordered to be deleted. Issue Notice, returnable on 24th July, 2024.
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2024 (9) TMI 665
Classification of rejected paddy seed - taxability on the sale in a bag of quantity more than 25 Kg - applicability of exemption under S.No.70 of N/N. 02/2017-Central Tax (Rate), dated 28.06.2017 - HELD THAT:- From basic characteristics of a seed quality cereal crop it is clear that repeated/damaged paddy as the name suggests, is much less likely to be of seed quality cereal crop as it won t have sprouting capacity Rejected damaged paddy is devoid of all characteristics of a seed quality cereal crop. In this regard. AAR has righty rejected the claim of appellant for putting it under HSN 1006 10 10. The AAR is not agreed upon, in placing the Rejected Damaged Paddy under HSN 1006 10 i.e. Rice in the Husk (Paddy or Rough), Paddy becomes rice after the removal of husk by threshing. Thus, rice is a par of paddy. This classification (100610) is suitable for regular rice which is fit for human consumption, which is to be understood in common parlance. Rejected Damaged paddy is altogether a different class. Rejected Damaged paddy is the one which can t he consumed by human beings as it is not fit for human consumption - it would not fall under seed quality. Therefore, appropriately it should be placed under HSN 1006 10 90. Applicability of S No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017 - HELD THAT:- It is an exemption notification and goods placed under this notification are wholly exempt from GST. At S.No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, it is, 1006 Rice (other than pre-packaged and labelled) . It is quite clear from the explanation of pre-packaged/labelled food items vis-a-vis S.No.70 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017, that Rice (Other than pre-packaged/labelled) should be of food quality and it must be fit for human consumption for being exempt. But Rejected Damaged Paddy in the instant case fails to fulfil these basic characteristics of being fit for human consumption. Rejected /damaged paddy has lost its food quality and human consumption, value. As per appellant, rejected/damaged paddy is to be used in Industrial Usage, cattle feed etc. Also, no documents have been submitted by the appellant to show that whether the said Rejected damaged paddy will be directly used by the Industries or it will undergo through some other processes Thus, Rejected Damaged Paddy doesn t fail under S No 7 of Notification No. 02/2017-Central Tax (Rate), dated 28.06.2017.
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2024 (9) TMI 664
Classification of goods - Natural Fibre Composite board manufactured by the, applicant comprising of Natural Fibre, Calcium carbonate, recycling waste and other processing aid as well as PVC resin, wherein PVC acts only as a bonding agent - to be classified as wood and Articles of Wood under Chapter 44 and attract 12% rate of GST or not - appropriate rate and classification of GST. HELD THAT:- The Fibreboard manufactured by bonding fibres extracted from wood chips or other lingo-cellulose material. They are bonded together by adding thermosetting rosins and find application such as furniture, interior decoration and in building are classified under this heading. The product in hand is a 'Natural Fibre Composite Board' and finds application in furniture, interior decoration, building, etc. In this case as per the manufacturing process, fibres arc extracted from the rice husk and then mixed with lime powder (calcium carbonate), processing additives such as lubricants, foaming agents, foam regulators, heat stabilizers, etc. PVC resin is used as a binding agent. Hence, the product is a Fibreboard and is more aptly classifiable under CTH 441193 as 'Others' as it is not a Medium Density Fibreboard. Further classification will depend on the individual properties of the product. Having decided that the NFC Board manufactured by the applicant with mam content as Rice husk, will more appropriately be classified under CTH 441193, the applicable rate of GST is taken up for consideration. The rate of CGST is notified vide Notification No. 01/2017-C.T.(Rate) dated 28.06.2017 as amended in respect of goods and that is notified vide Notification No. vide G.O. (Ms) No. 62 dated 29.06.2017 as amended - the Rice Husk Hoard or fibre board manufactured from agricultural crop residues, irrespective of the Chapter under which the same are classified, are subjected to CGST @ 6% and 6 % SGST.
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2024 (9) TMI 663
Applicability of Entry 25 (ib) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 02/2021-Central Tax (rate) dated 02.06.2021 - eligibility to avail full Input Tax Credit in respect of purchases made towards completion of works mentioned in the tender - whether the services provided by the applicant qualify as Maintenance, repair or overhaul services (MRO services) in respect of ships and vessels as per the amended notification? HELD THAT:- It is evidently clear that there is no specific, that the applicant had enter into a maintenance contract with their customer. Further, there is substance that the nature of the supply rendered by the applicant amounts to work order - The services provided by the applicant, while related to a naval vessel, do not primarily constitute maintenance, repair, or overhaul in the conventional sense. Instead, they appear to be in the nature of upgradation or renovation works. The repair activities carried out by the applicants on the ship are in the nature of supply contract and there is not scope for vivisecting the same as to separate the same into service portion i.e, maintenance, repair etc., and supply of goods portion for the purpose of applicability of the concessional rate of tax. It is observed that ,the services provided do not primarily constitute maintenance, repair, or overhaul services as envisaged in the notification, the contract is more in the nature of a works contract involving supply and installation of goods, there is no specific maintenance agreement between the applicant and the Naval Dockyard and the scope of work primarily involves up gradation and installation activities rather than repair or maintenance of existing equipment. The tender work rendered by the applicant does not fall under the scope of Entry 25(ib) of N/N. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by N/N. 02/2021 Central Tax (rate) dated 02.06.2021.
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2024 (9) TMI 662
Levy of GST - export of Crustaceans (shrimps) which are packed and labelled as per the customer requirements - whether the export of specified pre-packaged and labelled frozen Shrimp meant for export would fall within the meaning of the definition of 'pre-packaged and labelled commodity' under the Legal Metrology Act, 2009, and the rules made there under? - HELD THAT:- As per the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made there under, since the inner packing is printed and is having pre-determined quantity it immediately attains the characteristics of pre-packaged and labelled' category, meant for retail sale, irrespective of the fact whether the outer packaging is printed or not. Under these circumstances, the inner packaging which ranges from 250 grams to 2 kilograms becomes liable to GST, as the same fall within the ambit of 'pre-packaged and labelled' category which is mandated to bear the declarations. In the instant case, the authorities observation after going through the content of the matter is that the supply of shrimps in pouches or boxes of upto 25kg, which duly pre-packaged and labelled as per Legal Metrology Act 2009 and the rule made there under is a taxable event and it is not an exempted / nil rated supply. Besides Ministry of finance Govt of india clarified the applicability of GST on pre packaged and labelled goods through FAQs, which were uploaded online on 18. 07.2022 w.r.t. the notification no 6/2022 (CGST RATE). And also, in this case, the ultimate buyer is not present when commodity is placed in package and the commodity is being pre-packed for an unknown ultimate buyer, who may be indigenous or outside the country. Therefore, where the quantity involved is 25Kgs or less in respect of specified commodities including shrimps (HSN 0306, as per S.No.4 of schedule 1 of notification 01/2017-central tax (rate) dated 28th June 2017) which are pre-packed, they would mandatorily get covered within the ambit of Legal Metrology Act, 2009, and the rules made there under. Accordingly, GST would be applicable on the supply of pre-packaged and labelled shrimps, capacity upto 25 kgs, it will be liable for GST @ 5%, irrespective of the fact whether it is for domestic supply or for exported outside the country, as long as they are specified commodities that are pre-packaged.
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2024 (9) TMI 661
Zero-Rated Supplies as per Section 16 of IGST Act or not - Place of supply - outward supply of goods procured by the Applicant from an Indian company undergoing liquidation (M/s Lanco Kondapalli Power Limited) as per the Companies Act, 2013 (These goods are intended to be exported to Myanmar) - Whether the same can be exported under Zero-Rated supplies without payment of tax againstLetter of Undertaking (LUT)? HELD THAT:- It is an undisputed fact that the supply involves movement of goods and therefore the place of supply would be the termination for deliver to the recipient. The applicant purchases from LANCO, Kondapalli and the goods are procured from India and delivered in the territory of India. Hence the place of supply is location of point where goods delivered to applicant i.e, premises of Lanco Kondapalli Powder Ltd, plant office: IDA, Kondapalli, Ibrahimpatnam Mandal-521 228, Krishna District, A.P, India. It indicates that in the event the supplier located in India and the place of supply is within the territory of India. It is to mention that for determining the taxability of any transaction is to ascertain whether the transaction tantamount to supply in terms of the provisions of law. The term supply has been defined at Sec.7 of the CGST Act, 2017 - an establishment of a person in India and another establishment of the said person outside India are considered as establishments of distinct persons. In the instant case, the applicant is not having any GST registration in India. Hence, the transaction done by the applicant does not fall under the definition of export of goods. Hence, the related transactions shall not be considered as ZERO-RATED SUPPLY under the provisions of the GST Act, 2017.
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Income Tax
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2024 (9) TMI 685
Revision u/s 263 - CIT Setting aside the issue of rent recovered from the specified persons to the file of the AO - Treatment of foreign contribution as income in the Income Expenditure Account - HELD THAT:- Instant case was selected for the limited scrutiny on the two points Income or property of the Trust /Institution lent to the specified persons and Land /building or other property pf the Trust /Institution made available for the use of the specified persons. AO has made the adequate enquiry and accepted the return of the assessee. The Ld CIT (Exemption) could not impose their views, when the plausible view has been taken by the AO. Every loss of Revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of Revenue. Foreign contribution the case was not selected for scrutiny for that point because the case of assessee was selected only for limited scrutiny - AO had no jurisdiction to discuss this issue in the assessment proceedings. The AO has no power to extend the scope of scrutiny under limited scrutiny. When the two views were possible and AO has taken one view with which the CIT(Exemption) may not agree the said order cannot be treated as an erroneous order prejudicial to the interest of Revenue unless the view taken by AO is unsustainable. The view taken by the AO was not erroneous and prejudicial to the revenue - Decided in favour of assessee.
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2024 (9) TMI 660
Deduction u/s 80DD - Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability - payment of annuity of a lump sum amount for the benefit of a dependant, being a person with disability, in the event of death of the individual or the member of a Hindu Undivided Family (HUF) in whose name the subscription to the scheme stipulated in the said provision has been made - HELD THAT:- We find it difficult to accept the plea made by petitioner to the effect that the said amendment be applied retrospectively to policies which were taken prior to 2014 so that the benefit of the amendment is given to those subscribers also. The reasons are not far to see. The whole object of Jeevan Adhar Policy is to benefit disabled persons by making provision by the subscriber post his demise. The concern and apprehension of a caregiver or subscriber of a policy for a disabled family member or other person for whose benefit the policy is taken after the demise of the caregiver is of utmost significance. It is only with that object that the caregiver or a subscriber would take such a policy so that he would not leave a disabled person in the lurch on his demise. If that is the object of the policy then we do not think the subscriber or the caregiver of the subscriber should be given the liberty to discontinue the policy during his lifetime on attaining 60 years of age. That would only go against the object with which the policy has been taken and against the interest of the beneficiary, namely, a disabled person. We do not think that the plea for retrospective operation of the amendment is in the interest of the disabled persons nor can this Court give a retrospective operation to the amendment. This is particularly having regard to the fact that an insurance contract is in a sense, a commercial contract, having certain terms and conditions and the sub-stratum of the contract cannot be removed by giving a retrospective operation to the amendment. The benefit under Section 80DD of the Act would have been availed by the subscribers at the time when they have subscribed to the policy. It is also relevant to note that the order passed by this Court [ 2023 (2) TMI 1336 - SUPREME COURT] (the earlier writ petition), this Court disposed of the contempt petition for the reason that the Respondent-Union of India had amended Section 80DD of the Act via Budget 2022-2023 Finance Act and therefore, the grievance of the persons like the petitioner had stood addressed though with prospective effect. As considered the Proclamation on the Full Participation and Equality of the People with Disabilities in the Asian and Pacific Region, 1992; and the subsequent enactments, namely, the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 which has been substituted by the Rights of Persons with Disabilities Act, 2016, as well as the Convention on the Rights of Persons with Disabilities and Optional Protocol 2006; and, the provisions of the Life Insurance Corporation Act, 1956.
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2024 (9) TMI 659
Return of cash seized by department u/s 132A - inaction of the Revenue in not even obeying and complying with the orders and directions passed by ITAT as well as PCIT - seeking direction to the Revenue to return the amount as seized together with interest for pre-assessment period as well as post-assessment period until the date of payment - seized gold were handed over but the cash was not returned - as decided by HC [ 2023 (9) TMI 760 - BOMBAY HIGH COURT] Even after the Petition was filed and served and the lawyer appeared for the Revenue, still the Revenue did not consider it fit to return the money. Therefore, in our case this is nothing but a clear case of high handedness on the part of the officers of the Revenue - This is a fit and proper case in which action should be initiated against all the officers concerned who were all in charge of this case at the appropriate and relevant point of time - Cash returned to pettioner and will be entitled to interest at 12% p.a. for the post-assessment period, i.e., from 25th September 2014 until payment/realization. HELD THAT:- We are not inclined to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed.
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2024 (9) TMI 658
Delay in filling SLP - Validity of reopening of assessment - notice after a period of four years from the end of the relevant assessment year - agricultural income which included the long term capital gain arising out of the land in question as unexplained - as decided by HC [ 2022 (7) TMI 1536 - GUJARAT HIGH COURT] entire premise for reopening of the assessment that the petitioner has failed to disclose the long term capital gain by filing return of income is without any basis.AO has failed to establish any live nexus between the material relied upon to reopen the assessment HELD THAT:- We have heard learned senior counsel for the petitioner and also perused the application seeking condonation of delay. The reasons assigned for the delay are neither satisfactory nor sufficient in law to condone the same. Hence, the application stands dismissed. Consequently, the Special Leave Petition also stands dismissed on the ground of delay.
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2024 (9) TMI 657
Validity of the reopening of assessment - Legality of issuing a new Show Cause Notice u/s 148-A(b) after the conclusion of the initial reassessment proceedings - Right of the respondents to reopen the concluded assessment - issuance of SCN u/s 148-A (b) that income chargeable to tax has escaped assessment on the same set of reasons - HELD THAT:- Notice u/s 148-A (b) proceeds on the premise that the judgment of Supreme Court in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] requires all notices issued under Section 148 of the Act between the period commencing from 01.04.2021 and ending on 30.06.2021 to be treated as SCNs referable to Section 148-A (b) The assessment proceedings in this case were already concluded on 30.03.2022 and reassessment action was re-initiated on the same set of reasons vide SCN dated 02.06.2022 under Section 148-A (b) leading to passing of an order Section 148-A(d) and notice under Section 148 of the Act dated 19.07.2022. In view of the position of law as enunciated in the case of Anindita Sengupta [ 2024 (4) TMI 96 - DELHI HIGH COURT] we find that there was no justification for the respondents to issue notices afresh seeking to reopen the proceedings which had been concluded prior to the judgment passed in Ashish Agarwal. The judgment passed in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] does not mandate the completed assessment being reopened. We are therefore unable to sustain the impugned action for reassessment.
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2024 (9) TMI 656
Validity of order passed u/s 144C(3) and 144B beyond period of limitation - HELD THAT:- Issue as raised in the proceedings stood covered in view of the decision of this Court in the case of Shelf Drilling Ron Tappmeyer Limited [ 2023 (8) TMI 460 - BOMBAY HIGH COURT ] as also a similar view being taken in the case of Commissioner of Income Tax Anr. vs. Roca Bathroom Products P. Ltd. [ 2022 (6) TMI 848 - MADRAS HIGH COURT ] It was further observed that even the Delhi High Court in the case of Bid Services Division Mauritius Ltd. [ 2023 (8) TMI 1496 - DELHI HIGH COURT ] had taken a similar view. The contention of the assessee in the aforesaid proceedings was to the effect that the assessment orders as also the demand/penalty notices were illegal and void ab initio inasmuch as the same were beyond the prescribed limitation for completion of the assessment as prescribed by Section 153 of the Income-tax Act, 1961 (for short the Act ) read with Section 144C. In Shelf Drilling (supra) the Division Bench of this Court had held that the provisions of Section 153 of the Act which provide for the period of limitation is necessarily applicable to the proceedings u/s 144C of the Act. We have also noted in our order that the decisions as rendered by this Court as also the said decision of the Madras High Court as also the Delhi High Court were subject matter of challenge before the Supreme Court and the proceedings in that regard were pending. In this view of the matter, we admitted the said Writ Petition filed by the petitioner for final hearing while granting interim reliefs. Thus, by way of an interim relief the final impugned assessment order dated 11 August, 2024 passed u/s 143(3) read with Section 144C(3) and 144B as also the consequent demand notice of the even date and the penalty proceedings shall remain stayed. Let reply affidavit to the petition be filed within a period of six weeks form today.
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2024 (9) TMI 655
Validity of reopening of assessment - reassessment action was initiated based on a notice u/s 148 and the subsequent notice u/s 148A(b) - reassessment action violated the First Proviso to Section 149(1) and was barred by the limitation period - reassessment action which had been commenced post 01 April 2021 - HELD THAT:- Judgment in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT ] opined that rather than the reassessment notices issued under the unamended provisions of the Act being quashed, the High Courts would have been well advised to modulate their directions by providing that those notices issued under the unamended provisions of the Act be treated as notices under Section 148A (b). It was, while proceeding on the aforesaid reasoning that the Supreme Court held that the impugned Section 148 notices issued to respective assessees should be deemed to be under Section 148A and treated to be Show Cause Notices [SCN] as contemplated under clause (b) thereof. The judgments of respective High Courts were thus proposed to be modified in terms set forth. However, it becomes pertinent to note that while doing so, the Supreme Court in Ashish Agarwal significantly observed that the modulation of the directions in terms aforenoted would be subject to compliance with all procedural requirements and without prejudice to the various defences which may be available for assessees to adopt in terms of the substituted provisions of Section 147 to 151 of the Act as well as those which may be available in terms of Finance Act, 2021. The preservation of defences and objections which assessees could possibly take, including those comprised in Section 149 stood reiterated in Ashish Agarwal[supra]. Proceeding to invoke its powers flowing from Article 142 of the Constitution, the Supreme Court further held that its judgment would not only apply to those notices which stood impugned in the appeals forming part of that batch but would also be applicable to all similar judgments and orders passed by various High Courts irrespective of whether any appeal had been instituted and thus observed that its order would be applicable PAN INDIA . It was in purported compliance and implementation of Ashish Agarwal that the respondents proceeded to issue a notice on 27 May 2022 under Section 148A (b) of the Act to the petitioner. However, and by the time the said notice came to be issued, the terminal point for commencement of reassessment, namely, 31 March 2022 had already passed. It was in the aforesaid light that one of the objections which the petitioner took was of the same being in contravention of the First Proviso to Section 149 (1) of the Act. In terms of the First Proviso appended to sub-section (1) of Section 149, a notice for reassessment pertaining to any AY prior to 01 April 2021 would have to be in accord with the time limit specified under Section 149 (1) (b) as it stood prior to the amendments enforced by virtue of Finance Act, 2021. Insofar as our case is concerned, that time limit would constitute a maximum of six years from the end of the relevant assessment year bearing in mind the language in which Section 149 (1) (b) stood couched and existed prior to 01 April 2021. We consequently find ourselves unable to read Ashish Agarwal as a decision which deprived the assessee of the right to question the initiation of reassessment on grounds based on the First Proviso to Section 149 (1). We also find ourselves unable to construe those directions as being intended to reinvent the wheel or reverse those proceedings in respect of which no challenge had ever been mounted. Viewed in light of the above, we find ourselves unable to recognise the notice dated 27 May 2022 as a continuation of the original Section 148 notice. Although the petitioner neither assailed the original notice nor obtained a declaration of invalidity, it was the respondents who chose to commence proceedings afresh by issuing the notice dated 27 May 2022. Thus, the notice of 27 May 2022 cannot be viewed as being in continuation or substitution of the original notice dated 30 June 2021. While parting, we note that although the petitioner had while responding to the original Section 148 notice dated 30 June 2021 alluded to the amended statutory regime which had come into existence and had placed the AO on notice of an obligation to follow the procedure as prescribed under Section 148A, however, no legal challenge seeking to impugn the action commenced by virtue of the notice dated 30 June 2021 was ever instituted. The reassessment action also did not come to be interdicted by any order or injunction passed by a court. This was, therefore, clearly not a case where the subsequent notice under section 148A (b) could be countenanced to be in continuance or substitution of the original notice. The substitution of original notices was one which Ashish Agarwal had provisioned for in respect of notices which had been impugned before various High Courts and had come to be quashed. No fetter operated upon the AO to take remedial steps and follow or adopt the procedure as prescribed by Section 148A prior to 31 March 2022. This aspect assumes added significance in light of the writ petitioner itself having drawn the respondents attention to the amended procedure for reassessment. Thus, even though the AO was duly apprised and placed on notice of the aforesaid aspects, it failed to take any corrective action. Petitioner had merely asserted that the notice of 30 June 2021 was liable to be withdrawn as opposed to being placed in abeyance. In fact it had been submitted on its behalf that in case the notice of 30 June 2021 was proposed to be proceeded with, they should be provided the reasons underlying the formation of opinion that income had escaped assessment. It had also furnished a return pursuant to that notice. We thus find ourselves unable to sustain the action impugned before us. Accordingly, we allow the instant writ petition and quash the impugned notice referable to Section 148A (b), order u/s 148A (d), notice referable to Section 148 - Decided in favour of assessee.
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2024 (9) TMI 654
Additional ground of appeal as raised by the Assessee - Justification on raising of new plea in an appeal - Nature of receipt - interest income earned on compulsory deposits of share application money or subscription money - HELD THAT:- We may observe that in National Thermal Power Company Ltd. [ 1996 (12) TMI 7 - SUPREME COURT ] the Supreme Court considering the provisions of Section 254 of the Act has observed that the object of proceedings before the Taxing Authorities is to assess correctly the tax liabilities of an assessee in accordance with law. Illustratively, it was observed that as a result of a judicial decision being rendered while the Appeal was pending before the Tribunal, if it was found that a non-taxable item is taxed or a permissible deduction is denied, there was no reason why the assessee should be prevented from raising a question on such issue, before the tribunal for the first time, so long as the relevant facts are on record in respect of such item. It was observed that there is no reason to restrict the power of the Tribunal u/s 254 only to decide the grounds which arise from the order of Commissioner (Appeals). It was held that the Tribunal could not been prevented from considering the questions of law arising in assessment proceedings although not raised earlier. There was no good reason to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO. Significantly, the Court observed that there may be several factors justifying the raising of new plea in an appeal and each case has to be considered on its own facts. However, the Appellate Authority was required to be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. In these circumstances, it was observed that what was expected was that the Appellant Authority exercises its discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reasons. The law as laid down in Jute Corporation of India Ltd. [ 1990 (9) TMI 6 - SUPREME COURT ] was held to be applicable even in such situations arising before the Tribunal. The Supreme Court held that it would not be appropriate for the Tribunal to take narrow view of the matter. In considering the aforesaid clear position in law, certainly we are quite surprised as to how the revenue could raise the question of law 4.1 and 4.2. Accordingly, such question of law clearly tilts in favour of the assessee. Set-off the interest income earned on compulsory deposits of share application money or subscription money against the share issue expenses and other cost of capital assets - As decided in Shree Rama Multi Tech Limited [ 2018 (4) TMI 1374 - SUPREME COURT ] Supreme Court in dismissing the revenue s appeal held that the Share Application Money as was received was deposited in the Bank being a statutory mandatory requirement, hence the accrued interest was not liable to be taxed and was eligible for deduction against the public issue expenses. It was further observed that the issue of share relates to capital structure of the company and hence expenses incurred in connection with the issue of share are to be capitalized, for the reason that the purpose of such deposit is not to make some additional income but to comply with the statutory requirement, an interest accrued on such deposit is merely incidental. It was thus observed that the High Court was right in holding that the interest accrued on such deposit of money in the bank was liable to be set off against the public issue expenses. Decided in favour of the assessee.
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2024 (9) TMI 653
Deduction u/s 80-I on converted partnership concern - claim denied for the unexpired period merely because the partnership concern carrying on the same activity was converted into a Private Limited Company, which too continued and carried on the same activity - HELD THAT:- Having noticed the conclusions arrived at by the Supreme Court in Chetak Enterprises [ 2020 (3) TMI 360 - SUPREME COURT] as well as by the Allahabad High Court in Prisma Electronics [ 2014 (8) TMI 209 - ALLAHABAD HIGH COURT] in regard to the scope of benefit of Section 80-I upon the conversion of a proprietorship concern or the partnership firm to a Private Limited Company, is answered in favour of the assessee. We allow these appeals and hold the appellant(s) to be entitled the benefit u/s 80-I and the consequent benefit of deduction for the unexpired period. Decided in favour of assessee.
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2024 (9) TMI 652
Additions on account of bogus share application money and commission for bogus accommodation entries - Substantial question of law or fact - examination of the soft data seized and impounded in course of the search proceeding, it was detected that Shirish Chandrakant Shah had provided one-time entry to the assessee-company through a broker named Hiren Shah and such transaction was not genuine - ITAT deleted addition - HELD THAT:- We find that the question sought to be raised in this Income Tax Appeal is not even a question of law. The ground taken by the appellant that the findings recorded by the Tribunal are contrary to records seems to have been raised just for the sake of creating a ground; nothing has been shown to this Court on this point. The findings recorded by the appellate Authority and the Tribunal are in consonance with the law of evidence and the Income Tax Act, in particular. On a glance at materials on record, we find that the Assessing Officer assessed M/s Esspal International Pvt. Ltd. under section 143(3) of the Income Tax Act, 1961 only on the basis of the statement given by Shirish Chandrakant Shah; though he has recorded that the assessment order is being passed after considering the totality of the facts and circumstances the case . Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the AO - Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another [ 1971 (9) TMI 64 - SUPREME COURT] Therefore, we hold that no substantial question of law arises between the parties.
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2024 (9) TMI 651
Rejection of application for revised tax return - credit of TDS against the total enhanced compensation which had been received by the petitioner under the Land Acquisition Act, 1894, although the Land Acquisition Collector [LAC] - application has come to be negated by the respondents firstly taking into consideration Circular No. 09/2015 dated 09 June 2015 as not liable to be entertained beyond 6 years from the end of the AY for which such an application or a claim may be made - respondents also take the position that even the writ petition had come to be preferred before this Court after an expiry of 6 years from the end of the relevant AY and consequently the petitioner was not entitled to be accorded permission to file an amended tax return. HELD THAT:- A revised return along with the tax certificate need not be furnished provided such a certificate is produced before the AO within two years from the end of the AY. The AO as per the terms of Section 155 (14) was instead required to amend the order of assessment or any intimation or deemed intimation issued under Section 143 (1) of the Act. The fact that the amount which had been deducted was liable to be accorded due credit, also stands fortified from a reading of Section 237 of the Act. In our considered opinion, the aforesaid position clearly envisages and caters to contingencies and situations like the present where amount of tax paid or treated as paid for and on behalf of the assessee if found to be in excess of that which is chargeable, the assessee would become entitled to claim a refund. It is in the aforesaid context that the provision enables the assessee to place its case before the AO and to provide all material particulars for its consideration so that a prayer for refund may be processed. The provision for refund and review as conferred and mandated would also be in line with the constitutional imperatives of Article 265 of the Constitution. Form of claim for refund and limitation - Undisputedly and as things stands today that prescription would have no application bearing in mind the prerogative writ that we propose to issue. In any case, the respondents have clearly lost sight of the undisputed fact that it was only after the direction of this Court that the authority had issued a fresh certificate favouring the writ petitioner. The respondents have also failed in their duty to bear in mind the mandate of Sections 204 and 205 of the Act. While Section 204 identifies the person responsible for deduction of tax, and which in this case was the LAC (South), Section 205 in unambiguous holds that the assessee on whose account tax may have been deducted, cannot be held liable. Thus, unable to sustain the impugned order and the stand taken by the respondents. We consequently allow the instant writ petition and quash the impugned order dated 23 October 2018. We direct the respondents to take on board the revised return which the petitioner may submit within a period of four weeks from today. The return may be duly placed before the concerned AO for processing the prayer for refund bearing in mind the provisions contained in Section 227. Respondents while framing the order for refund shall also bear in mind the statutory regime which applies with respect to interest in case of delayed disbursal and credit.
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2024 (9) TMI 650
Reopening of assessment u/s 147 - as argued no notice before the adverse conclusion was reached - no communication from bank to confirm the deposit in Capital Gain Account Scheme as claimed by the assessee - as argued not only the Impugned Assessment Order was beyond the period of limitation and without jurisdiction but also without considering the Certificate issued by the Canara Bank - HELD THAT:- As petitioners are entitled to a notice before an adverse conclusion was arrived in Paragraph 3 of the Impugned Assessment Order that the Certificate did not mention Capital Gains Account. This ought to have been informed to the petitioners before an adverse order was passed against the petitioners. Under these circumstances, this Court is inclined to set aside the Impugned Assessment Order and remits the case back to the first respondent to pass appropriate orders on merits in accordance with law as expeditiously as possible preferably within a period of six months from the date of receipt of a copy of this order.
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2024 (9) TMI 649
Dismissal of appeal ex-parte by ITAT - whether petitioner was prevented by `sufficient cause and whether the order is against the principles of natural justice? - assessee s only prayer before this Court is to afford one more opportunity to go before the Tribunal and place the facts - HELD THAT:- We find that the assessee s conduct cannot be appreciated. Nonetheless, the learned Tribunal being the last fact finding authority, we are of the view that one more opportunity can be granted to the appellant to agitate the matter on merits before the Tribunal subject to certain conditions. Accordingly, the appeal is allowed and the order passed by the Tribunal is set aside subject to the conditions that the appellant pays a sum of Rs.1 Lac to the Bar Association, High Court at Calcutta, within three weeks from the date of receipt of the server copy of this order. The appellant shall submit the receipt for such payment in the office of the learned Tribunal and upon production of the said receipt for payment of cost as directed above, the learned Tribunal shall take up the matter for consideration and afford one opportunity to the appellant to appear in the matter and pass fresh orders on merits and in accordance with law.
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2024 (9) TMI 648
Advertisement, Marketing and Promotion [ AMP ] computation - adoption of the Bright Line Test - HELD THAT:- We had in terms of our order [ 2024 (4) TMI 1176 - DELHI HIGH COURT] decided all the principal questions and had left it open for learned counsels to address submissions on the question of Advertisement, Marketing and Promotion [ AMP ]. Upon going through the order of ITAT and insofar as it deals with the aforesaid issue, we find that the AMP computation was based on the adoption of the Bright Line Test. That would clearly not sustain in light of the judgement rendered by the Court in Sony Ericson [ 2015 (3) TMI 580 - DELHI HIGH COURT] We find no merit in these appeals.
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2024 (9) TMI 647
Validity of order passed u/s 143 (3) r.w.s. 144B - gross violation of the principles of natural justice on non affording opportunity of hearing to the petitioner - HELD THAT:- Though the petitioner submitted the documents, but without giving opportunity of hearing to the petitioner, even though the petitioner made a categorical request to grant opportunity of hearing, the impugned order was passed. As the opportunity of hearing has not been provided to the petitioner in spite of request made by him, applying the decision of Arati Behera [ 2023 (8) TMI 106 - ORISSA HIGH COURT ] quashed the order passed u/s 143 (3) and remitted the matter back to the adjudicating authority to pass appropriate order by affording opportunity of hearing to the petitioner.
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2024 (9) TMI 646
TP Adjustment - comparable selection - exclusion of Vishal Information Technologies Ltd. and Nucleus Net soft GIS (India) Ltd. - HELD THAT:- Vishal Information Technologies Ltd. is engaged in data conversion and digitization of documents i.e., text conversion and e- publishing which is functional different. The assessee provides services including voice and communication, data entry and financial management. On other hand, Vishal Information Technologies Ltd. is engaged in data conversion and digitization of documents i.e., text conversion and e- publishing which is functional different. Nucleus Net soft GIS Ltd company is also to be excluded on account of different business model, export revenue filter, extra ordinary events and segmental details. The assessee does not outsource work. Whereas this company has outsourced most of its business activities. Major operating expenses of Rs.1.04 crores are with regard to data processing charges. The company has a different business model than that of assessee.Further there is no extra ordinary event of amalgamation in the case of assessee. But this company had extra ordinary events. The scheme of amalgamation was approved by the Bombay High Court . Also the company has both IT and ITeS segments which are considered by the company as one segment and the segmental details are not available. Therefore, this company is not comparable with assessee on this count also. Accordingly, the above two comparables i.e., Nucleus Net Soft GIS Ltd. and Vishal Information Technologies Ltd. cannot be compared to the assessee company and be excluded from the list of comparables for determination of the arm s length price of international transactions.
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2024 (9) TMI 645
Estimation of income - Bogus purchases - HELD THAT:- We are of the considered view that a reasonable disallowance of the purchases would meet the possibility of revenue leakage. During the hearing, AR placed reliance upon the decision of the coordinate bench of the Tribunal in Mafatlal Harakchandji Bothra [ 2023 (10) TMI 1442 - ITAT MUMBAI] We find from the perusal of the aforesaid decision that while deciding a similar issue in the case of a taxpayer who was engaged in a similar business, the coordinate bench restricted the addition to 5% of the non-genuine purchases. Therefore, we deem it appropriate to restrict the disallowance to 5% of the disputed purchases. We find that the same is also in line with the judgment of Paramshakti Distributors Ltd. [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] . Accordingly, ground no.2 raised in assessee s appeal is partly allowed.
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2024 (9) TMI 644
Denial of deduction u/s 80P - assessee was in receipt of interest income derived by or accrued to it from investment held with co-operative banks/institutions in the form of Fixed/Term Deposit Receipt [ TDR ] and interest income derived by or accrued to it on the balance of saving account maintained with such co-operative banks/institutions - HELD THAT:- Admittedly, the appellant assessee is a housing co-operative society and is neither a credit co-operative society nor a co-operative bank and (b) the payer of interest income to the assessee i.e. PDCC is although is a cooperative bank in common parlance but not a co-operative bank strictly within the meaning assigned in Part V of BRA. In view therefore there is much less merits in application of s/s (4) of section 80P of the Act in denying the 80P(2)(d) deduction to the assessee. We find that, once claimant assessee falls outside the ambit of explanation (a) to section 80P(4) of the Act then denial would be contralegem finds fortified in case of PCIT Vs Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [ 2023 (5) TMI 372 - SC ORDER] where the assessee was a cooperative credit society engaged in the business of providing credit facilities to its members. The assessee claimed deduction u/s 80P(2)(a)(i) of the Act, but the Assessing Officer disallowed the deduction holding that the assessee is a cooperative bank and hence not eligible to claim deduction as per Section 80P(4) of the Act. The first and second appellate authority and the Hon ble Jurisdictional High Court held in the favour of the assessee holding that assessee is a co-operative society and not a cooperative bank, hence eligible for deduction u/s 80P(2) Section 80P(4) of the Act does not jeopardise the claim of deduction to housing cooperative society u/s 80P(2)(d) in respect of interest/dividend income from investments/share held with other co-operative society irrespective of its classification and status as to whether it attracted disqualification u/s 80P(4) of the Act or not. In consequence we hold that the views adopted by the tax authorities below in our considered opinion are not in conformity with legal position and binding judicial precedents, hence vacated. Resultantly, we reverse the denial of deduction. The grounds stands allowed in favour of assessee.
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2024 (9) TMI 643
Penalty u/s 271(1)(c) - estimated GP addition - HELD THAT:- As following the decision passed in the case of J. R. Enterprises [ 2018 (10) TMI 2037 - ITAT DELHI] direct the AO to delete the penalty levied u/s 271(1)(c) the IT Act on the basis of estimated GP addition Disallowance of proportionate interest expenses the disallowance on account of guest house expenses being capital in nature - It is true that both the above disallowances were confirmed by LD CIT(A) also sustained by the ITAT. But, we are unable to accept the contention of LD CIT(A) that mere addition / disallowance warrant the imposition of penalty u/s 271(1)(c) - In this regard, the contention of AR is that the non-charging of interest on certain loans may result into a disallowance out of interest paid to others but the assessee cannot be said to have furnished inaccurate particulars of his income or concealed any income, as all the facts were disclosed truly fully. The expenditure towards professional fee of architect for guest house renovation was treated as capital expenditure and disallowed accordingly, but in a situation like this, question of levy of penalty u/s 271(1)(c) does not arise - In this regard, LD AR again relied on the judgement passed in the case of CIT vs. Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] wherein, it was held that a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of income by the assessee. We find force in the argument of the assessee on this count and, accordingly, we direct the Assessing Officer to delete the penalty u/s 271(1)(c) of the IT Act. Thus, the grounds of appeal filed by the assessee are allowed.
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2024 (9) TMI 642
Disallowance of the benefit of accumulation of funds to the assessee u/s 11(2) - income was not utilised for the purpose for which it was accumulated or set aside - assessee is a charitable trust registered u/s 12A and was formed in the year 1952 to promote education - as per the assessee since it operates very close to the Mumbai Airport, therefore for any extension/redevelopment work it has to take NOC from the Airport Authority of India and because of the said reason the redevelopment work of its school building was delayed. Accordingly, the assessee submitted that the funds accumulated in the financial year 2012-13 for the redevelopment work could not be utilised in the year under consideration HELD THAT:- As is evident from the record, the AO considered the amount as income of the assessee for the assessment year 2018-19 as per the provisions of section 11(3)(c) of the Act on the basis that the income was not utilised for the purpose for which it was accumulated or set aside. In this regard, it is pertinent to note that there is no dispute regarding the fact that the assessee s application filed under section 11(3A) of the Act is pending consideration before the AO. Therefore, we find no infirmity in the findings of the learned CIT(A) in deleting the addition of Rs. 2,05,47,846 made by the AO, as section 11(3)(c) does not apply to the present case in view of the pendency of the aforesaid application under section 11(3A) of the Act. Further, in view of the aforesaid facts, the direction to the AO to consider the application of the assessee under section 11(3A) of the Act is also affirmed. As a result, Ground No. 1 raised in Revenue s appeal is dismissed. Non considering revised Form No. 10 for determining the accumulated funds available with the assessee under section 11(2) - We find that vide Form No. 10 filed by the assessee on 26/09/2018 the period of accumulation was stated to be ending on 31/03/2017. Similar to the contention in the year 2018-19, even in the assessment year 2017-18 we find that the resolution for accumulation was passed just 2 days prior, i.e. on 29/03/2017. Accordingly, for similar reasons stated above, we find merits in filing the revised Form No.10 on 08/03/2021 by the assessee stating the period of accumulation till 31/03/2022. Therefore, we are of the view that the revised Form No. 10 should be considered for determining the accumulated funds available with the assessee under section 11(2) - Thus discernible that the assessee s claim was under section 11(2) and not under section 11(1)(a) - mode of investment was also as per section 11(5) as the amount was deposited in scheduled banks or co-operative societies as per section 11(5)(iii) - deletion of the addition by the learned CIT(A) is upheld. Rejecting the revised Form No. 10 filed by the assessee for the assessment year 2018-19 - From the record it is evident that Form No. 10 for the assessment year 2018-19 was also rejected on the basis that the assessee did not have sufficient surplus left during the year in order to accumulate under section 11(2) of the Act. Since we have found the accumulation of Rs. 3,53,90,000 made during the assessment year 2017-18 to be available till 31/03/2022 and also in view of the fact that the assessee s application under section 11(3A) of the Act is still pending consideration, therefore the option of utilising the accumulated funds of Rs. 2,05,47,846 of the assessment year 2012-13 is available to the assessee in the year under consideration. Therefore, we find no merits in the aforesaid basis for rejecting the revised Form No. 10. Appeal of revenue dismissed.
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2024 (9) TMI 641
Validity of final assessment order passed u/s 143(3) r.w.s. 144C (13) subsequent to the direction of the Ld. Dispute Resolution Panel (DRP)/TPO - effect of non-compliance with statutory provisions - as argued final assessment order did not conform to the DRP directions - HELD THAT:- While passing the final assessment order, the Assessing Officer (jurisdictional Assessing Officer) has not followed the directions of ld. DRP as per section 144C (13) of the Act and further we observed that the relevant Assessing Officer has not taken any step to pass a rectification order till now. We further observed that the TPO has passed OGE order to give effect TP adjustments after DRP directions and this is consequently part of the assessment records and Assessing Officer no doubt made a mistake which has led to not following of statutory provisions and not followed it up for making it proper which is in line with the provisions of section 144C of the Act. This is gross violation on the part of the jurisdictional Assessing Officer and ld. DR for the Revenue vehemently argued that it is a mistake. If it is a mistake, the Department should have acted upon to rectify the mistake within reasonable time. In this case, no records were shown to make such efforts taken by the officer. It is clearly violation of law which deserves to be acted upon and the action of the Assessing Officer is contrary to the provisions of the Act and contrary to the law. For the purpose of any subsequent proceedings, what is relevant is the final assessment order for all purposes including the collection of tax. The assessment order so passed by the Assessing Officer deserves to be quashed. Decided in favour of assessee.
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2024 (9) TMI 640
Royalty receipt v/s business income - distribution revenues received by the assessee towards granting distribution rights of its channels - HELD THAT:- As relying on Tribunal in [ 2020 (10) TMI 245 - ITAT DELHI ] Hon ble High Court of Delhi [ 2024 (3) TMI 1349 - DELHI HIGH COURT] on we hold that the subject distribution revenue earned by the assessee cannot be taxed as Royalty albeit as a business income. Since the assessee has already offered the said income as business income in terms of MAP and the income as declared by the assessee in accordance with the MAP which has been accepted by the Department in earlier years has been accepted, we delete the additions made by the AO for the Assessment Year 2020-21 and 2021-22. Assessee appeal allowed.
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2024 (9) TMI 639
Order passed in the name of such non-existent entity - remedies of the AO against the property in cases of representative assessee - responsibility of director of the dissolved company - assessment order passed against earstwhile company, whose name stands struck off from register of companies - HELD THAT:- We find that the provision of section 159 of the Act is with regard to legal representatives of the assessee in case of a natural person who dies and same is not applicable as erstwhile company is not natural person. Then, section 160 of the Act, is with regard to determination of representative assessee for various class of assessee including the non-residents and then section 161 provides for the liability of representative assessee as per section and Section 162 of the Act is providing for the rights of the representative of the assessee to recover the tax paid. Then section 163 of the Act defines for the purpose of this Act, who can be considered as agent for Non- Resident Indian and Section 166 of the Act provides for direct assessment in case of assessee on whose behalf representative assessee have been appointed or for whose benefit income therein referred to is receivable. None of these provisions came to help the AO in regard to erstwhile company. We further find that the remedies of the AO against the property in cases of representative assessee under section 167 of the Act have no application in case before us and do not come for assistance of the AO, where, a foreign company opts for voluntarily closure of business and getting name struck off with ROC. We note that section 170 of the Act is applicable in cases wherever there is a succession of business otherwise than on death and in cases where the person succeeding continues to carry on the business or profession which too is not the case here. Relevant here is the section 176(1) of the Act, which provides for the assessment in case of discontinued business and the section is meant for those circumstances where any business or profession is discontinued during the assessment year and subsection (1) of section 176 provides that the income of the period from the expiry of the previous year for that assessment year upto the date of such discontinuance may, at the discretion of the AO, be charged to tax in the assessment year. Section 178 of the Act, provides for company in liquidation, which is not the case here, as there was voluntary dissolution of company followed by request to ROC for striking off name of the company. Thus as per section 179 of the Act, we are of considered view that it is only when the AO, proceeds against the former director for making a recovery of tax payable by the erstwhile company, the former director will he aggrieved with the recovery. But that too will not place the former director in the cradle of assessee , as only limited right given to former director is to deny the liability by proving that the non-recovery of tax demand cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. However, the merits of assessment order cannot be assailed by an appeal u/s section 246(1) providing for appeal before CIT(A) or under section 253 of the Act, which, provides for appeal to this Tribunal, since it is assessee who can challenge the merits of assessment order passed u/s 143(3) of the Act. Thus, based on the aforesaid discussion, the only conclusions that can be drawn is that the very filing and subsistence of the appeal before this Tribunal on behalf of the erstwhile company, through or by director of the dissolved company./Mr. Boopendradas (Vikash) Sungker becomes questionable and answered against him. Orders against non-existent entities - The second issue before us is also somehow covered against the erstwhile company and in this context, the issue has been considered by the coordinate Bench at Delhi in the case of Dwarka Portfolio (P) Ltd. [ 2022 (5) TMI 1385 - ITAT DELHI] wherein one of us, i.e., the ld. Accountant Member was also on the Bench and it was held that the appeal filed on behalf of the company whose name is struck off is maintainable thus hold holds that the certificate of incorporation issued to the assessee company cannot be treated as cancelled for the purpose of realizing the amount due to the company and for payment and discharge of the liability or obligations of the company. Though in that case assessment order was not passed against a company whose name was struck off, and name was struck off at stage of pendency of appeal before the Tribunal, however, the ratio of the order of the coordinate Bench substantiates our conclusion that as for the purpose of tax liability the provisions of the Act concerning the amalgamated corporate entities or which are liquidated, are not applicable, as different consequences follow under law, in case of the company whose name is struck off on discontinuance of business.
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2024 (9) TMI 638
Addition u/s 69 v/s Gift u/s 56(2) - unexplained investment made towards purchase of immovable property - HELD THAT:- It is an undisputed fact that the payment was made by Shri Arun Patil and not by the assessee. Thus, for applying the provisions of section 69 AO should first come to a finding that the assessee has made investments and the same are not recorded in the books of account and thereafter he can call the assessee for an explanation from about the nature and source of the investments and in case he finds that the assessee is unable to furnish the explanation or the explanation offered by him is not satisfactory, the assessing officer can treat the value of the investments to be the income of the assessee of the financial year in which she/he has made the investments. In the case of the assessee, the nature and source of payment is satisfactorily explained by the assessee with necessary supporting evidences and the AO has also not questioned the genuineness of the loan given by Shri Arun Nair and whether the loan have been completely repaid or pending is of no relevance to invoking of provisions of 69 of the Act. Therefore, we do not find any fallacy in the findings of the ld. CIT(A) in deleting the addition made by the AO u/s 69 of the Income Tax Act, 1961. DR contention that the said addition is taxable u/s 56(2) - As mentioned that applicability of section 56 was never discussed by the AO or the CIT (A) in their respective order. Thus, the department cannot make out a fresh case or improve the order of the AO. Even otherwise revenue cannot deny the documents submitted in the form of loan confirmation and part repayment of the loan. AO has not made any further enquiry to disprove bonafide of these documents. Once both the parties have confirmed the transaction as loan, then revenue cannot treat it as gift merely on the plea that assessee does not have repayment capacity. Assessee has rightly submitted that the loan is fully secured as he is joint owner of the property and assessee cannot run away with the loan amount. Hence there is no merit in the contention of the revenue. Addition u/s 69C - investment in the purchase of a car - When it is admitted by the AO that the ultimate source of car purchase is from the bank account of Shri Arun Patil, then it could not have been the undisclosed expenditure of the assessee u/s 69C of the Act. Therefore, we do not find any fallacy in the findings of the ld. CIT(A) in deleting the addition made by the AO u/s 69C. Even the plea before us that the amount should be taxed U/s 56(2) of the Act is also without merit. Appeal of the Revenue is dismissed.
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2024 (9) TMI 637
Entitlement for benefit of the tax treaty - Allegation of tax evasion and treaty shopping - denial of benefits under the India-Singapore DTAA - HELD THAT:- Tax Residency Certificate, even if it is not a conclusive evidence of a tax residency of an entity, it certainly is a statutory evidence and the burden is on the Revenue to establish from the facts and circumstance that the entity has been formed and operated in a manner that the only intention was to take benefit of the tax treaty without there being actual intention of an economic activity. As for this proposition we rely a co-ordinate bench decision in case of Tiger Global Eight Holdings, Mauritius [ 2024 (8) TMI 279 - ITAT DELHI ] It cannot be alleged that the Company is not a resident in Singapore and that it has no taxable existence in any other country. We find substance in the plea that without finding where the residence of the Assessee, it cannot be denied the treaty benefits. Further we appreciate the stance of the assessee that the company was incorporated in the year 1996 and the relevant investments were made by the Assessee in the year 2012 (which is 16 years after incorporation of Company). Also pleaded that the Assessee is an actual operating entity and is conducting business on a regular basis. The audited financials for the year 2017 reveals, it has generated revenue from sale of goods amounting to USD 2,472,828 (in 000). Further, The Assessee has employed 164 number of employees during the relevant year. The name of the employees was enclosed as Annexure 4. Assessee also pleaded that Singapore s Economic Development Board has also recognized the Company the Asia Pacific headquarters and the regional trading hub in 2016 for a period of 10 years. These aspect needed indulgence of the DRP, however, without making any enquiry the DRP has sustained the conclusion of AO. It was also pointed out that the Company has been consistently filing its return of income in India and has been availing the treaty benefits with respect to such income for all such years. The AO has not denied the treaty benefits in any of such years. We are of considered view that without assigning any reasons for drifting from the rule of consistency the DRP could not have sustained the draft addition. The aforesaid submissions of the assessee seems to have been completely left out of consideration by DRP and these submissions sufficiently establish that the transaction which the AO has alleged to be out of tax evasion and treaty shopping was, in fact, a long-term investment decision by an entity which has sufficient managerial and operational structure to run an entity based in Singapore. Assessee appeal allowed.
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2024 (9) TMI 636
Determination of Net profit rate - adopt profit at 15% on the undeclared turnover - HELD THAT:- Net profit rate subsequent to the FAA s Order is at 20.5% after taking into consideration the declared income of Rs. 7,25,000/-. It is an admitted fact (which is also noted by the AO) that for Assessment Years 2014-15 and 2018-19 in assessee s case, income was declared on a presumptive basis under section 44AD of the Act (8% of the gross receipts). For Assessment Year 2017- 18, on a gross turnover of Rs. 1,32,55,955/- assessee had declared a net profit of Rs. 10,93,391/- i.e., @ 8.24%. For Assessment Year 2017-18, the books of accounts were audited under section 44AB of the Act. Therefore, the figures for Assessment Year 2017-18 are more dependable and can be relied on. Assessee was carrying on the same line of business and was having gross receipts more or less of the same range for the relevant Assessment Year as well as in the Assessment Year 2017-18. Taking into account the expenses incurred for hiring transport of vehicle from others for the assessee s business of transportation of goods, net profit rate of 8.24% declared in the return of income and accepted by the AO for Assessment Year 2017-18 needs to be adopted in this year also. Accordingly, direct the AO to adopt a net profit rate of 8.24% on the gross receipts for the relevant Assessment Year. Appeal filed by the assessee is partly allowed.
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2024 (9) TMI 635
Treatment of foreign contribution income - difference in actual FCRA received by the assessee and the income declared by the assessee in its return of income - HELD THAT:- Assessee has been following Accrual basis of accounting, the Assessee recognized an income for AY 2021-22 and reported the said income in Serial No. B(ii) of Schedule VC and carried forward the liability as Unspent Grant for INR 1,04,99.998/- in the Balance Sheet under Note D-Other Current Liabilities which is recognized as Income in the subsequent period to the extent of expenditure incurred. Assessee has produced detailed working on recognition of income and Unspent Grant for AY 2021-22 and AY 2022-23 to prove that the Unspent grant for AY 2021-22 was recognized as income in AY 2022-23 as against actual receipt of Rs. 2,96,57,598/-, an income of Rs. 3,76,29,175/- was offered to tax in AY 2022-23, which can be corroborated from Annexure A produced. Considering the fact that the Unspent Grant income has been offered to tax in the subsequent year i.e. AY 2022-23, we find no reason to make an addition at the hands of the Assessee in the year under consideration. Accordingly, the subject addition made by the AO is hereby deleted. Appeal filed by the Assessee is allowed.
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2024 (9) TMI 634
Estimation of income - bogus purchases - HELD THAT:- Gross profit rate as show by the assessee in its audit report Form 3CD is 6.19%. Considering the gross profit rate in the light of the decision of M/S MOHOMMAD HAJI ADAM CO. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] we direct the AO to restrict the addition to 6.19% of Rs. 25,50,244/- i.e., addition to the extent of Rs. 1,57,860/- is confirmed. Assessee gets part relief.
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2024 (9) TMI 633
Disallowance of exemption u/s 11 - Disallowance of exemption due to incorrect details in the return and non-filing of audit report in Form 10B - HELD THAT:-Form 10B was based on the audit report prepared on 30th September, 2022. The fact of registration u/s 12A and approval u/s 80G under the old regime is not disputed. It is also not disputed that on 07.11.2022, application for registration u/s 12A under the new regime stood filed. Thus, the audit was completed well before the due date fixed for filing Form 10B i.e., 07.10.2022. The assessee had provided a reasonable cause of lapse on the part of the auditors. Though the condonation of delay in filing audit report in Form 10B may not have been under the jurisdiction of the CIT(E), however, being a quasi judicial authority was supposed to take into consideration the case laws relied wherein it is firmly held that non-filing of audit report along with the return of income is a procedural omission. We are inclined to allow the appeal to the extent that CIT(E) shall take into consideration the Form 10B of the assessee and pass an order afresh on merits as per law.
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2024 (9) TMI 632
Unexplained cash credit u/s 68 - assessee contended that parties returned the amount of donation back to assessee in cash after deducting 10% commission and he had withdrawn the said deduction u/s 35AC and the paid taxes thereon in all those assessment years - Further stated that the cash, which was received back was kept with him and deposited in ICICI Bank on 12.11.2016 i.e. during the demonetization period HELD THAT:- The lower authorities have rejected the contention of the assessee on the basis of the circumstantial. According to the Ld. CIT(A) in normal circumstances no one will keep the cash currency for 3 to 8 years and therefore, rejected the contention of the assessee as not reasonable or logical. Before us, no evidences have been filed in support contention that assessee withdrawn the deduction in respect of corresponding years and cash was returned back by those trusts to the assessee. Assessee has not filed any such affidavit from those trusts supporting it contention the cash was received back. No infirmity in the order of the CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the appeal of the assessee are rejected. Appeal of the assessee is dismissed.
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Customs
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2024 (9) TMI 631
Challenge to SCN - HELD THAT:- The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has found that the basis for issuance of the Show Cause Notices was suppression on the part of the respondent-importer which fact has not been established by the appellant herein. The Show Cause Notices were quashed - there are no infirmity in that portion of the order - appeal disposed off.
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2024 (9) TMI 630
Entitlement to release of the various models of Secondhand Highly Specialized Equipment - Digital Multifunction Print, Copying Scanning Machines, imported by the petitioners prior to the N/N.13/2024-25, dated 20.05.2024 - HELD THAT:- In the present cases, the bills of lading would be dated much before the date of impugned Notification dated 20.05.2024. Specifically, in both writ petitions, the Bill of Lading is dated 11.04.2024. Therefore, the learned counsel for the petitioners would submit that the said Notification will not be applicable to the petitioners, who had already initiated the process of import and the bills of lading were raised. There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioners shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of three weeks thereafter - For payment of such duty, quantification shall be made by the Customs forthwith within one week from the date of receipt of a copy of this order. On receipt of such quantifications, the payment shall be immediately made by the petitioners and on receipt of the payment in entirety, the goods shall be released as indicated above at the outer limit of three weeks.
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2024 (9) TMI 629
Penalty of Rs. 5 lakhs imposed on the Appellant - Import of chemicals under 9 bills of entry on various dates - Claim of exemption in respect of Duty Entitlement Pass Book (DEPB) - Fake DEPB licences and Telegraphic Release Advice (TRA) - Refusal to rely on the retracted statement of Shri. Chandran - no nexus established between the brokers and the goods imported by the importers - absence of a finding that the Appellant had acted in a fraudulent manner - HELD THAT:- The Tribunal has taken note of all the relevant facts. As regards the statement of B.R.Chandran implicating the appellant, the statement has been recorded on 09.11.2004 when the deponent was in custody. The order of adjudication makes it amply clear that the statement was recorded, as per the order of learned Judicial Magistrate No.1, Tuticorin, before the Senior Intelligence Officer of the Department of Revenue Intelligence in the presence of the Superintendent of the Sub Jail, Tuticorin. The adjudicating authority has applied his mind as to whether the procedure followed for recording of the statement was acceptable, noting specifically that the Superintendent of the Sub Jail is not a Police Officer and that the presence of multiple Officers in the Jail where the statement had been recorded would have protected against pressure, coercion or duress being applied on the deponent. Thus, no material has been placed warranting intervention in the above factual findings. There are no perversity in the conclusions arrived at by the Tribunal on the basis of the material on record. In fact, the Tribunal has, on appreciation of the facts, applied its discretion to reduce the penalty from Rs. 5 lakhs to Rs. 3 lakhs. Appeal dismissed.
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2024 (9) TMI 628
Valuation of imported goods - Motor Controller and different types of Electric Tricycle Spare Parts - enhancement of CIF value - rejection of declared value - classification of the item imported - Motor Controller - to be classified under CTH 8503 0090 or under CTH 8708 9900? - HELD THAT:- The same issue in respect of the same appellant came up to be decided by this Bench in COMMISSIONER OF CUSTOMS (PORT) VERSUS M/S. AAHANA COMMERCE PRIVATE LIMITED [ 2024 (9) TMI 543 - CESTAT KOLKATA] . The Bench has held that ' the controllers are not covered under the CTH 8708 as per the explanatory notes to Section XVII. It is also pertinent to note that the Notes to CTH 8503 covers the parts to be used with motor and as such merits the classification of the goods under CTH 8503. Thus, we hold that the goods imported by the Respondent are rightly classifiable under Chapter heading 8503 0090 as claimed by them in the respective Bills of Entry.' The Revenue Appeals dismissed.
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Corporate Laws
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2024 (9) TMI 627
Prayer for the quashing of the order restoring the case that had been dismissed due to non-appearance of the respondent - diversion of funds - allegation is that accused company had not utilised the IPO proceeds of 1540.56 Lakhs for the purposes stated in the prospectus - Sections 447/448 of the Companies Act, 2013 - HELD THAT:- The issue raised in the present petition is no longer re integra and, in fact, stands settled by the judgment of the Supreme Court in A.S. Gauraya [ 1986 (4) TMI 362 - SUPREME COURT ]. In the said judgment, the Supreme Court, in answering the question as to Whether a Subordinate Criminal Court has any inherent jurisdiction outside the provisions of the Criminal Procedure Code? , and in similar fact situation where the Complaint dismissed due to the absence of the Complainant therein has been restored by the learned Magistrate, held that ' Filing of a second complaint is not the same thing as reviving a dismissed complaint after recalling the earlier order of dismissal. The Criminal Procedure Code does not contain any provision enabling the criminal court to exercise such an inherent power.' In view of the above settled position in law, the order passed by the learned Special Judge was without jurisdiction and cannot be sustained. The Order dated 13.08.2019 is set aside as having been passed by the learned Special Judge without jurisdiction. Consequently, the order dated 16.04.2022 passed by learned Special Judge and all consequential proceedings emanating therefrom, are set aside - Petition allowed.
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2024 (9) TMI 626
Oppression and mismanagement - Recall of an earlier order - appeal against order should have been filed, which was not done - HELD THAT:- In Budhia Swain and others Vs Gopinath Deb and Others [ 1999 (5) TMI 596 - SUPREME COURT ] the Hon ble Supreme Court held ' The power to recall a judgment will not be exercised when the ground for re-opening the proceedings or vacating the judgment was available to be pleaded in the original action but was not done or where a proper remedy in some other proceeding such as by way of appeal or revision was available but was not availed. The right to seek vacation of a judgment may be lost by waiver, estoppel or acquiescence.' Admittedly the order dated 20th December, 2023 did not fall within the four conditions as enumerated in para 8 of Budhila Swain. Instead of filing an appeal against the order dated 20.12.2023, the appellant had preferred a recall application, not permissible under Rule 11 of NCLT Rules. There are no illegality in the impugned order dated 05.04.2024 - there is no merit in this appeal and accordingly it is dismissed.
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Insolvency & Bankruptcy
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2024 (9) TMI 625
Validity of auction conducted by the Liquidator - COVID-19 pandemic and its impact on Limitation - Allegations of undervaluation of the auctioned property - Non-constitution of a Stakeholders' Consultation Committee - Allegation of violation of Regulation 33 of the IBBI Regulations, 2016 and its effect - Impact of attachment order by the Income Tax Authorities on the sale of the auctioned property - COVID-19 pandemic and its impact on Limitation - HELD THAT:- In the present case the period of 90 days for depositing the balance sale consideration had expired just after the crucial date, i.e., 23rd March, 2020. There are no merit in the submission made by the appellant that the Tribunal ought not to have accepted the view taken by the Adjudicating Authority that Covid-19 lockdown was a valid reason for extension of time to deposit the balance sale consideration. Allegations of undervaluation of the auctioned property - HELD THAT:- Admittedly, in the first round of the Notice for sale through e-auction published by the Liquidator on 25th November, 2019, he did not receive any bid. As a result, the Liquidator reduced the reserve price of the subject property by 25 per cent to conduct a second auction on 23rd December, 2019 wherein the Auction Purchaser was declared as the successful bidder. In our view, the Liquidator cannot be faulted for having exercised the discretion vested in him under Rule 4A of Schedule I when the auction scheduled earlier, did not bear any positive result. In fact, Rule 4B empowers the Liquidator to reduce the reserve price fixed under Rule 4A for subsequent auctions with a rider that the price shall not be reduced to more than 10 per cent at a time. The said eventuality did not arise in the present case since the Auction Purchaser was declared as the successful bidder in the second round of auction - If the appellant was so confident that the subject property would have fetched a much higher price, nothing precluded him from identifying a bidder who was willing to offer a better price. The Liquidator had stated that If you are confident enough that the property may fetch for more than Rs. 100.00 Crores you are at liberty to bring the proposed buyers and ask them to participate in the bidding process. Again, the Liquidator wrote a letter dated 27th November, 2019 to the appellant suggesting that ask eligible parties willing to offer a better price to participate in the auction process. The appellant did not follow up after that. The appellant cannot be permitted to argue that since the tax value of the subject property was estimated by the Registered Valuers at above ₹ 48 crores, the Liquidator ought not to have fixed the reserve price at ₹39,41,28,500/- (Rupees Thirty nine crore forty one lakh twenty eight thousand five hundred only) for the simple reason that though the reports of the Registered Valuers mentioned the tax value of the subject property at a little above ₹ 48 crores, but the liquidation value in both the reports was much lower and the Liquidator arrived at the average of the two estimated liquidation values to fix the reserve price of the subject property. Non-constitution of a Stakeholders' Consultation Committee - HELD THAT:- By virtue of the Notification dated 28th April, 2022, an Explanation was appended at the foot of Regulation 31A which clarifies that the requirement of constituting a Stakeholders Consultation Committee shall apply only to those liquidation processes that were to commence on/after the date of commencement of the IBBI Regulation, 2016. In the present case, the liquidation process in respect of the company had commenced on 17th July, 2019 and therefore, the submission made by the appellant that the Liquidator has breached Regulation 31A of the IBBI Regulations, 2016 by not constituting a Stakeholders Consultation Committee, is devoid of merits - the objection taken by the appellant that the Liquidator has breached Regulation 31A, does not hold any water. Nor is the Court inclined to examine the submission made at the instance of the appellant that in the absence of any explanation appended to Regulation 31A as it stood before 25th July, 2019, it was incumbent for the Liquidator to have constituted a Stakeholders Consultation Committee in view of his own conduct. Further, such an objection was taken for the first time at the stage the appellant filed a recall application before Adjudicating Authority on 25th September, 2020 by which time the entire sale transaction was over. Allegation of violation of Regulation 33 of the IBBI Regulations, 2016 and its effect - HELD THAT:- In THE STATE OF BIHAR ORS. VERSUS BIHAR RAJYA BHUMI VIKAS BANK SAMITI [ 2018 (8) TMI 34 - SUPREME COURT] , referring to Section 34(5) of the Arbitration and Conciliation Act, 1996, this Court has held that the absence of any consequences for infraction of a procedural provision implies that such a provision ought to be interpreted to be directory and not mandatory. Rule 12 would have to be treated as mandatory in character for the reason that it contemplates a consequence in the event of non-payment of the balance sale consideration by the highest bidder within the stipulated timeline of 90 days, which is cancellation of the sale by the Liquidator. To that extent, there is substance in the submission made on behalf of the appellant that since the second proviso under Rule 12 contemplates a consequence of cancellation of the auction on non- payment of the balance sale consideration within 90 days, the Liquidator was not empowered to extend the timeline. In the present case, records reveal that when the Auction Purchaser had approached the Liquidator seeking extension of time to deposit the balance sale consideration. The Liquidator had rightly expressed his inability to do so and indicated that such a power vests only in the Adjudicating Authority. On receiving the aforesaid response, the Auction Purchaser did take steps to move the Adjudicating Authority for seeking extension of time for making the payments. It is a matter of record that the said application was allowed by the Adjudicating Authority on 5th May, 2020 and time was granted to the Auction Purchaser to pay the balance sale consideration on the Central Government/State Government lifting the lockdown. In the facts of the present case, the Adjudicating Authority exercised statutory powers under Section 35 of the IBC read with its inherent powers under Rule 11 of the NCLT Rules, 2016 for extending the time to deposit the balance sale consideration on sufficient cause being shown, i.e., in view of the countrywide lockdown due to the Covid- 19 pandemic. This latitude that was given in the aforesaid extraordinary circumstances to meet the ends of justice, cannot be faulted. Impact of attachment order by the Income Tax Authorities on the sale of the auctioned property - HELD THAT:- It was for the Auction Purchaser as an intending bidder to have conducted a due diligence at its own end, gather all the relevant information pertaining to the subject property which included the status of the property and the liabilities attached to it, weigh all the pros and cons and only thereafter participate in the auction process. After having participated in the e-auction with its eyes wide open, the Auction Purchaser cannot be heard to state that payment of the balance sale consideration was linked with the lifting of the attachment order passed by the Income Tax Department when it knew all along that the auction was being conducted on an AS IS WHERE IS , AS IS WHAT IS and WHATEVER THERE IS basis. The subject land has been utilized by the Auction Purchaser to build a 200-bed Mother and Child hospital which is operational. Huge amounts have been pumped into the project by the Auction Purchaser. The hospital is fully functional providing medical facilities to seven surrounding districts. In contrast, the appellant has not been a vigilant litigant. His conduct shows that he has dragged his feet at every stage. Records reveal that belated applications have been filed by him for seeking recall of the orders passed by the Adjudicating Authority granting extension of time to the Auction Purchaser. For reasons best known to him, it took 19 months for the appellant to prefer an appeal before the Tribunal against the order passed by the Adjudicating Authority, as provided for in the IBC. Furthermore, the appellant resisted handing over possession of the subject property to the respondents thereby causing more delay. Given the facts noted, it is refrained from cancelling the sale or declaring the Sale Deed as void. Instead, it is deemed appropriate to balance the equities by directing the Auction Purchaser to pay an additional amount in respect of the subject property. Appeal partially allowed.
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2024 (9) TMI 624
Rejection of appeal on grounds of being filed beyond the prescribed time limit - it was held by NCLAT that 'Since the Appellants have invoked Appellate Jurisdiction under Section 61 of the I B Code, 2016, as against the Impugned Order rendered by the NCLT without giving a challenge to the Orders passed on the IAs, rejecting their intervention, the Appeal at their behest would not be maintainable.' HELD THAT:- There are no reason to interfere with the impugned order passed by the National Company Law Appellate Tribunal at Chennai - Appeal dismissed.
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2024 (9) TMI 623
Order of NCLT admitting Section 7 application filed by the first respondent, affirmed - Full and final settlement of the claim of the first respondent reached at - HELD THAT:- It appears that the Corporate Debtor has been able to provide for the claims raised against it. However, the learned counsel appearing for the second respondent submitted that the quantum of CIRP expenses till the date of termination of CIRP is yet to be determined and the same will have to be borne by the Corporate Debtor. This question is kept open for the NCLT to determine - the appellant shall furnish a bank guarantee within a period of two weeks from today for an amount of Rs 1,12,37,781 being the amount claimed towards CIRP expenses in accordance with the affidavit of the Resolution Professional. The bank guarantee shall be in the name of the Resolution Professional. The operational creditors and other creditors, if any, will have their own right to avail such legal remedies as may be available to them in law with respect to their claims if any. The impugned order passed by the NCLAT is set aside and the CIRP initiated in respect of the second respondent, namely, Bazargaon Paper and Pulp Mills Private Ltd stands hereby terminated - appeal allowed.
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2024 (9) TMI 622
Seeking recall of the order - liberty given by the Hon ble Supreme Court to file a review of the said order limited to the grounds of limitation - Rule 11 of NCLAT Rules. Whether in view of the facts and circumstances of the case, there are sufficient and cogent grounds for recall of the order of this Tribunal of 02.04.2024 at a time when liberty was given by the Hon ble Supreme Court to file a review of the said order limited to the grounds of limitation? - HELD THAT:- The law as it stands today, this Tribunal in exercise of its inherent jurisdiction can entertain an application for recall of judgment on sufficient grounds. Inherent powers not being powers which are conferred expressly upon the Tribunal but are innate powers of the court which can be exercised to dispense justice between the parties subject to exercise of these powers not contravening or violating any express provision in the statute. In the present matter, the Adjudicating Authority considering the facts of the attendant case, has relied on the ratio of the judgment of the Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] to hold that for calculating the period of limitation in an application under Section 7 of the IBC, the date of default is significant and keeping in mind that the present Company Petition is filed within 3 years from the date of default, it held that the petition was within the period of limitation in terms of Article 137 of the Limitation Act. Similar view has been espoused again by the Hon ble Supreme Court in JIGNESH SHAH ANOTHER VERSUS UNION OF INDIA ANOTHER [ 2019 (9) TMI 1121 - SUPREME COURT] wherein it held that the period of limitation for making an application under Section 7 or 9 of the IBC is three years from the date of accrual of the right to sue, that is, the date of default. Given the catena of judgments of the Hon ble Supreme Court which affirm the applicability of Article 137 of the Limitation Act in respect of Section 7 applications filed under IBC, we find that the contention of the Appellant that the present Section 7 application be held as time-barred under Article 21 of the Limitation Act is misconceived and untenable. Given the catena of judgments of the Hon ble Supreme Court which affirm the applicability of Article 137 of the Limitation Act in respect of Section 7 applications filed under IBC, it is found that the contention of the Appellant that the present Section 7 application be held as time-barred under Article 21 of the Limitation Act is misconceived and untenable. The Adjudicating Authority did not commit any error in holding that the Company Petition was not barred by limitation - there are no error in the order of the Adjudicating Authority holding that the application is well within time - there is no merit in the recall application - application is dismissed.
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PMLA
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2024 (9) TMI 621
Seeking grant of regular bail - allegation is that petitioner has been actively involved in layering of illegal proceeds of crime - evidence against the petitioner is the various hawala transactions which have been established and corroborated by the statements of various hawala operators/Angadias in their statements recorded under Section 50 of the PMLA, 2002 - twin test as laid in Section 45 of PMLA, 2002 satisfied or not - HELD THAT:- It may be observed in the context of Section 45 of PMLA, 2002 that the prosecution has filed one main Prosecution Complaint on 26.11.2022 and thereafter, five Supplementary Prosecution Complaints in none of which the petitioner had been cited as an accused. It is the 6th Supplementary Prosecution Complaint in which the petitioner has been arrayed as an accused. The petitioner has filed a flowchart in the bail Application wherein it has explained how the conspiracy started at the first level and trickled down to the seventh level where the petitioner has featured. At this stage, the only allegation is that the petitioner received Rs.45 Crores, which were part of the proceeds of the crime and had been placed, layered, and integrated by him in the expenditure incurred in the various events organized during the Goa Campaign for AAP Party. The statement of the Angadiyas and others persons, are required to be proved through cogent evidence during the trial that this particular Rs.45 Crores, which is being utilized by the petitioner, were in fact the part of the proceeds of crime and this fact was within the knowledge of the petitioner. The petitioner has sought to explain Rs.12 lakhs, which were recovered from his account by stating that he had been doing odd jobs and working and this Rs.12 lakhs were part of his earnings. Furthermore, it has been explained by him that he was a freelancer working for the political parties like BJP, TMC etc., in the past. Looking at his nature of work of a free lancer for various political parties which he has been doing in the past, merely because he spent certain amount the source of which is not certain, for the campaigning events in the election of Goa, it cannot be said that there is a strong case against the petitioner. The twin conditions as provided in Section 45 of the PMLA, 2002 are primarily satisfied. Even if it is held that these conditions are not met by the petitioner, the jurisprudence for grant of bail is that the petitioner cannot be deprived of his constitutional right of personal liberty enshrined under Article 21 especially when there is a prospect of long incarceration without the conclusion of the trial. In the present case, the petitioner is having deep roots in the society. There is no possibility of him fleeing away from the country and not being available for facing trial. Regardless, conditions can be imposed to ensure the petitioner s attendance to face the trial. The petitioner Chanpreet Singh Rayat is admitted to bail subject to fulfilment of conditions imposed.
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Service Tax
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2024 (9) TMI 684
Refund of service tax paid by them on the ocean freight - barred by time limitation in terms of Section 11B(5)(B)(ec) of the Central Excise Act, 1994 made applicable to Finance Act, 1994 vide Section 83 of the Finance Act, 1994 - aplicability of Section 142(3) of the CGST Act, 2017 - HELD THAT:- The refund application was filed by the Appellant on 23.11.2020 in pursuance of decision of Hon ble Gujarat High Court in case of SAL Steel Ltd. dated 06.09.2019 [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] . In this view of the fact, the revenue authorities were of the view that the refund claim filed by the Appellant is time barred as per the provisions of Section 11B of the Central Excise Act, 1944 made applicable to Finance Act, 1994 vide Section 83 of the Finance Act, 1994. Hon ble Supreme Court dismissed the civil appeal filed by the revenue department on 01.09.2023 in case of M/s. Kiri Dyes Chemicals Ltd. [ 2023 (9) TMI 305 - SC ORDER] holding that levy of service tax is not maintainable. Therefore, it was possible for the Appellant to file the refund claim within one year from 01.09.2023 i.e. up to 31.08.2024. Admittedly in the facts of the present case the Appellant have filed the refund claim on 23.11.2020 i.e. much before 31.08.2024. It is noted that the time limit of one year from the relevant date for filing of refund claim is only in Section 11B(1) of the Central Excise Act, 1944. The provisions of Section 142(3) of the CGST Act, 2017 states that only provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944 is to be looked in to process the refund. For this reason also the rejection of the refund claim in the facts of the present case is not sustainable. Thus, the Appellant is entitled to refund of service tax paid by them on the ocean freight during the period of dispute in the present case even in terms of Section 142(3) of the CGST Act, 2017 - the impugned order is set aside - appeal allowed.
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2024 (9) TMI 620
Maintainability of appeal - low tax effect - Levy of Service Tax - Commercial Training or Coaching Services - HELD THAT:- This appeal has to be dismissed on the ground of low tax effect as being covered by the Circular dated 06.08.2024 issued by the Revenue Division, Judicial Cell (Central Board of Indirect Taxes Customs), Ministry of Finance. The Civil Appeal is disposed of. The question of law is however kept open.
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2024 (9) TMI 619
Levy of service tax - ex-gratia job charges amount received by the appellant from M/s Parle - HELD THAT:- The issue in hand is no longer res-integra as the same has been decided in matters other contract manufacturers of biscuit of M/s Parle - reliance placed in M/S K.N. FOOD INDUSTRIES PVT. LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE, KANPUR [ 2020 (1) TMI 6 - CESTAT ALLAHABAD] where it was held that ' In the instant case, if the delivery of project gets delayed, or any other terms of the contract gests breached, which were expected to cause some damage or loss to the appellant, the contract itself provides for compensation to make good the possible damages owning to delay, or breach, as the case may be, by way of payment of liquidated damages by the contractor to the appellant. As such, the contracts provide for an eventuality which was uncertain and also corresponding consequence or remedy if that eventuality occurs. As such the present ex-gratia charges made by M/s. Parle to the appellant were towards making good the damages, losses or injuries arising from unintended events and does not emanate from any obligation on the part of any of the parties to tolerate an act or a situation and cannot be considered to be the payments for any services.' From the above decision, it can be seen that the facts in the above decision and in the present case are absolutely identical and issue involved is also common therefore the ratio of the above decision is directly applicable in the present case. In the present appeal also the impugned order is not sustainable and the same is set aside - Appeal is allowed.
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2024 (9) TMI 618
Liability of service recipient to pay service tax - Service of Supply of Manpower - Service Tax on the 75% of the taxable value was demanded from the appellant being service recipient, despite the fact that the service provider has paid Service Tax on the 100% of the value of service received by the appellant - N/N. 30/2012-ST dated 26.06.2012 as amended by N/N. 07/2015-ST dated 01.03.2015, read with Rule 2 (d) (i) (F) of the Service Tax Rules, 1994 - HELD THAT:- Even both the lower authorities have not disputed that the service provider has paid Service Tax on supply of manpower service on the 100% of the taxable value. Therefore, even as per the legal provision the appellant is liable to pay Service Tax on the 75% of the taxable value, the same cannot be demanded as the same stand paid by the service provider. The Service Tax is payable on the service as per the rate and on the value as provided under the Finance Act, 1994. Once the Service Tax has been discharged irrespective by any person on the same activity, on the same value Service Tax cannot be demanded twice by the Government otherwise it will amount to unjust enrichment to the government, which is not permissible in law. Thus, it is settled that Service Tax cannot be demanded twice, once the proper Service Tax was discharged irrespective of the payment made by any person - since admittedly the entire Service Tax has been discharged on the supply of manpower service , no further demand exist and the same cannot be recovered. The impugned order is set aside - Appeal is allowed.
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2024 (9) TMI 617
Principles of natural justice - the adjudicating authority/ Commissioner (Appeals) has completely ignored the submissions made by the appellant before them and confirmed/upheld the huge demand - non-payment of service tax - Construction of Complex Service and Commercial or Industrial Construction Service - taxability of services provided by the appellants to education institutions and government departments - HELD THAT:- It is found that some of the vital submissions made before this Tribunal but neither raised before the Adjudicating Authority/Commissioner (Appeals) nor considered by the said authorities. It is observed that the levy of Service Tax under the Construction must be based on the terms of the contract. Therefore, to arrive at a final conclusion of levy of service tax on the services in question the terms of the contract vis- -vis the judgments delivered which were relied upon by the appellant needs to be considered. However, the adjudicating authority has not properly examined the facts/terms of the contract and he has not seen the light of judgments given subsequently on the identical issue. Since the issue involved is mixed of facts and law it can be ascertained only after considering the condition therein of each case - the entire matter needs to be relooked and to be decided a fresh. The impugned order set aside - the appeals are allowed by way of remand to the adjudicating authority, for passing a fresh order.
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2024 (9) TMI 616
Valuation of security service - inclusion of accommodation provided by the service recipient to the security staff in the in the gross value of the security service or not - HELD THAT:- The issue has been decided i n case of C.G.S.T,C.C.E., DEHRADUN VERSUS COMMANDANT CISF UNIT [ 2019 (2) TMI 1175 - CESTAT NEW DELHI] where the Delhi Bench of the Tribunal has held that ' If it is consideration, then only Rule 3 Value of Determination rules will come into picture. But as observed by Commissioner(Appeals) vide the Order under challenge that there is no evidence on the point about any amount either in terms of HRA was ever paid to the respondent/CISF, the question of notional value of the free accommodation provided cannot form the part of the gross value which has to be taxed under Section 67 of the Act. We therefore do not find any infirmity in the findings of Order under challenge.' The present impugned order is not sustainable - Hence, the impugned order is set aside and appeal is allowed.
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Central Excise
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2024 (9) TMI 615
Denial of CENVAT Credit availed by the company - steel items like M.S. angles, channels, flats etc - penalty under Rule 26 of Central Excise Rules, 2002 on the Director of company - HELD THAT:- Tthe penalty on the appellant under Rule 26 was imposed consequent to the confirmation of demand of Cenvat credit against the company M/s. Raj Rayon Ltd. From the plain reading of the rule 26, we find that the penalty under the said rule can be imposed either under sub- rule (1) or sub rule (2). Sub rule (1) deal with the act of the person such as transporting, removing, depositing, keeping , concealing, selling and purchasing, or in any other manner deals with , any excisable goods which he knows and has reason to believe are liable to confiscation under the Act or these rules. As per sub rule 2 (i) any person who issues an excise duty invoice without delivery of the goods specified therein or abets in making such invoice or any other documents or abets in making such documents on the basis of which user of such invoice or document is likely to take or has taken any ineligible benefit under act or the rules made thereunder like claiming of Cenvat credit under Cenvat Credit Rules, 2004. In the present case as per the operating order reproduced above, it can be seen that no goods have been confiscated, therefore, in absence of proposal/confirmation of confiscation of goods, penalty under Rule 26 (1) cannot be imposed. It is also found that in the matter of case against the company RAJ RAYON LTD VERSUS C.C.E S.T. -SILVASA [ 2022 (7) TMI 1538 - CESTAT AHMEDABAD] the issue involved is interpretation of Cenvat Credit Rules on admissibility of inputs. This issue has been considered in catena of judgments whereby the Cenvat credit was allowed on the material in question such as steel structure goods used for fabrication of structure of plants and machinery, therefore, though we are not deciding merit of the case but considering the facts even when the case of the company M/s. Raj Rayon Ltd is prima- facie strong in their favour, for this reason also penalty under Rule 26 is not sustainable. The department could not make out any case to impose penalty under Rule 26 on the appellant Shri Gouri Shankar Poddar, Director of M/s. Raj Rayon Ltd. The penalty is set aside - Appeal is allowed.
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2024 (9) TMI 614
Demand of duty for the month of March-2015 and April- 2015 when the factory remained closed - compounded levy scheme - demand was confirmed on the ground that the appellant s factory was not remained closed for more than 3 months - HELD THAT:- It is not disputed that the closure of the factory was not on the choice of the appellant whereas, they were compelled to keep the factory closed as per the direction of the Gujarat Pollution Control Board. Therefore, closing of the production was beyond the control of the appellant. In the identical facts, this Tribunal has dropped the demand of Excise duty for the period when the assessee was forced to close their factory by their state authority - in the case of Sarthi Rubber Industries (P). Ltd. [ 2017 (3) TMI 1206 - CESTAT NEW DELHI] it was held that 'The closure of units admittedly, beyond the control of the assessee/appellant, is not to be treated as a failure to comply with the provisions and conditions of the notification during the period of forced closure of the units. The nonproduction of excisable goods during these two months can more appropriately termed as ceasing to work rather than failure to comply with the provisions.' In view of the above judgment, the facts of the same are identical to the facts of the present case, we are of the view that the appellant cannot be fastened with the duty liability during the closure of the factory even though for the 2 months as the same was beyond their control. The demand is not sustainable. Accordingly, the impugned order is set aside - Appeal allowed.
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2024 (9) TMI 613
Applicability of SSI Exemption Notification No. 8/2002-CE dated 01.03.2002 - Demand of duty on the exported goods on the procedural lapse like goods exported without bond or LUT or non-observation of specific procedure - invocatio of extended period of limitation. HELD THAT:- There is no dispute in the fact that the goods on which the excise duty was demanded have been admittedly exported, only on the premise that the goods were exported without cover of bond or letter of undertaking and ARE 1 as required under Notification No. 42/2001- CE (NT) dated 26.06.2001 issued under Rule 19 of Central Excise Rules, it was held that goods manufactured by the appellant were not exempted as there was an effective rate of duty i.e. 4% without availing CENVAT Credit and 16% with CENVAT Credit in terms of Serial No. 28 and 34 of Notification No. 10/2002 dated 01.03.2002. Irrespective of any procedural lapse once it is undisputed that the goods have been exported, in such case if any duty has been paid the same is liable to be refunded as rebate of duty in terms of Rule 18 of Central Excise Rules, 2002 and if the goods have been cleared without payment of duty then no duty can be demanded once it is established that the goods have been exported. There are force in the submission of the argument that since their entire goods have been exported and if the value of the present case is taken which comes to Rs. 2,01,92,820/-, the appellant is entitled for exemption up to the value of Rs. 1.5 crores to that extent the appellant is not liable to pay duty under SSI Exemption Notification No. 8/2002. Invocation of larger period of limitation for the issuance of show cause notice - HELD THAT:- As the appellant have cleared the goods for export whereby they have filed all the necessary documents such as export invoices which were endorsed by the Central Excise officers for the stuffing supervision, bill of lading, shipping bills, bank religion certificate etc. The appellant have also declared export clearance in their Central Excise returns. With this detailed disclosure before the department, it cannot be said that there is suppression of fact on the part of the appellant. Therefore, the show cause notice issued on 18.05.2007 for the period 01.06.2002 to 28.02.2003 is clearly time barred. Therefore, the demand is also hit by limitation. The impugned order is not sustainable on merit as well as on limitation - Appeal allowed.
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2024 (9) TMI 612
Exsicability - manufactured goods as per the Section 2(f) of Central Excise Act, 1944 or not - fly Ash arising in burning coal - HELD THAT:- This issue is no longer res integra as the Hon ble Supreme Court settled this issue pre and post 01.03.2011, wherein it was consistently held that burning of coal for the purpose of generating power and emergence of fly Ash in this process does not amount to manufacture as the coal is not raw material for manufacturing fly Ash whereas the same is required for generation of electricity, the fly Ash is generated inevitably. In this position the Hon ble Apex Court taken a view that this cannot be called as manufacture of Fly Ash and accordingly the same is not liable to duty. The relevant Judgment is in the case of UNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [ 2003 (10) TMI 47 - SUPREME COURT] wherein it was held ' it is clear that to be subjected to levy of excise duty 'excisable goods must be produced or manufactured in India For being produced and manufactured in India the raw material should have gone through the process of transformation into a new product by skilful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone though the process of manufacture. Cinder cannot be said to have gone through any process of manufacture, therefore, it cannot be subjected to levy of excise duty.' The impugned order is not sustainable and the same is set aside. The appeal is allowed.
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CST, VAT & Sales Tax
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2024 (9) TMI 611
Taxability - State Advisory Price (SAP) voluntarily paid by the petitioner mills to cane growers - HELD THAT:- In the present case, there is nothing to show that the advance payments are irrecoverable or that the petitioner does not intend to recover the same. However, and admittedly, the payment of SAP by the petitioner is voluntarily, though under compulsion, and not under a condition imposed either by contract or statute. It is agreed that the payment of SAP is voluntary, traceable solely to maintaining goodwill and a congenial relationship with the cane growers. Such payments cannot be taken to be part of purchase price for the purpose determining turnover under the Act as the payments to be taken into account for that purpose can only be the payments mandated to be paid under the statute. Incidentally, the petitioner is under a statutory obligation to pay tax in respect of SAP from the year 2018 onwards and the petitioner confirms that such payments are being made. The impugned order is set aside - petition allowed.
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Indian Laws
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2024 (9) TMI 610
Interpretation of statute - Section 29A of the Arbitration and Conciliation Act, 1996 - whether application for extension of time under Section 29A of the Arbitration and Conciliation Act, 19961 can be filed after the expiry of the period for making of the arbitral award? - HELD THAT:- As per the second proviso to Section 29A(4), the mandate of the arbitral tribunal continues where an application under sub-section (5) is pending. However, an application for extension of period of the arbitral tribunal is to be decided by the court in terms of sub-section (5), and sub-sections (6) to (8) may be invoked. The power to extend time period for making of the award vests with the court, and not with the arbitral tribunal. Therefore, the arbitral tribunal may not pronounce the award till an application under Section 29A(5) of the A C Act is sub-judice before the court. In a given case, where an award is pronounced during the pendency of an application for extension of period of the arbitral tribunal, the court must still decide the application under sub-section (5), and may even, where an award has been pronounced, invoke, when required and justified, sub-sections (6) to (8), or the first and third proviso to Section 29A(4) of the A C Act. While interpreting a statute, meaningful life must be given to an enactment or rule and avoid cadaveric consequences that result in unworkable or impracticable scenarios. An interpretation which produces an unreasonable result is not to be imputed to a statute if there is some other equally possible construction which is acceptable, practical and pragmatic. Thus, an application for extension of the time period for passing an arbitral award under Section 29A(4) read with Section 29A(5) is maintainable even after the expiry of the twelve-month or the extended six-month period, as the case may be. The appeals are directed to be listed in the week commencing 30.09.2024 for final hearing and disposal.
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2024 (9) TMI 609
Land ownership and compensation - failure to establish that the site allotted to Defendant No.20 is not part of Sy. No. 305/2 - entitlement to receive 30 per cent of amount of compensation payable in respect of the ten sites, in spite of holding that the Appellant/Plaintiff is the lawful owner of the suit property and is entitled for full rights over the same - HELD THAT:- It is not in dispute that till date, no claim whatsoever has been projected either in the appeal before the High Court or before any other competent authority for the grant of compensation for the land having been acquired. The judgment as has been passed by the High Court affirming the ownership and title of the suit property in favour of the Appellant/Plaintiff has not been challenged by any of these private Defendants. The said judgment and the findings recorded therein have attained finality. In the absence of any claim with regard to their entitlement to compensation for the land acquired, the relief granted by the High Court in the appeal is not sustainable. Given the lack of pleadings, evidence on record, and submissions made at the time of hearing before the High Court, the judgment passed by it granting 30 per cent of the amount payable by way of compensation in respect of the ten sites in possession of the private Defendants, deserves to be set aside. The Appellant/Plaintiff is entitled to receive the full amount payable in respect of acquisition of the suit property for the Metro Rail Project. Appeal dismissed.
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2024 (9) TMI 608
Permission for withdrawal of petition - improper declaration of account as NPA by respondent bank - seeking discretionary reliefs under Article 226 of the Constitution - HELD THAT:- This Court may hasten to point out that although submissions with regard to Clause 8 (2) (d) (f) are tenable in law and the Ombudsman had jurisdiction to pass appropriate orders, learned counsels for respondents No.1 and 2 clearly brought to the fore that the account of the petitioner was never declared as an NPA, instead, it was irregular for their being several blemishes on its part and evidently,the petitioner is not coming clean since after the sanction/ credit facilities by respondent No.2/bank, sale proceeds appear to have been diverted and routed through the other bank i.e. BOB as per the statement of account placed on the record by respondent No.2 (Annexure R1-2), which would show that a credit of Rs. 34,82,875/- and Rs. 39,78,746/- on RTGS from BSF, Jammu was routed and credited in the account with BOB on 23.05.2019 and 30.07.2019 respectively, instead of being credited to the account of respondent No.2/bank. The petitioner sought to withdraw the present writ petition unconditionally. However, since the misconduct of the petitioner comes out into the open, who has taken the Court for a ride, wasting much precious time of this Court and pursuing with this petition right from its institution i.e., since 08.03.2021, it is expedient that such request be not only declined, but also the petitioner should also be visited with exemplary costs. There is no gainsaying that the grant of prerogative writs are discretionary reliefs and can be denied where the petitioner has not come to the Court with clean hands. Unhesitatingly, the petitioner has abused the process of law as he was in wanton breach of the sanction letter and thus, is not entitled to any relief. The present writ petition is dismissed with token costs of Rs. 50,000/-, which be deposited with the Registrar General of this Court within a month from today, failing which the petitioner shall be liable to pay interest @ 6% per annum from the date of this order till payment.
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2024 (9) TMI 607
Setting aside the modified seniority list dated 07.10.2022 - direction to Union of India (UoI) to finalize and re-draw the seniority list of Inspectors in the Central Goods and Services Tax (CGST) and Custom Department in terms of the directions issued by the Apex Court in K. MEGHACHANDRA SINGH AND ORS. VERSUS NINGAM SIRO AND ORS. [ 2019 (11) TMI 1733 - SUPREME COURT ] - HELD THAT:- Even though, the petitioners are correct in urging that they had joined service well before the date when the decision in K. Meghachandra was rendered, the fact remains that there is a categoric finding by a co-ordinate bench of this Court in YASH RATTAN ORS VERSUS UNION OF INDIAN AND ORS. [ 2021 (4) TMI 1320 - DELHI HIGH COURT ] that the seniority list dated 15.03.2018, which included the names of the petitioners, had not been finalized when the decision in K. Meghachandra was rendered. In the light of the aforesaid categoric findings recorded in Yash Rattan that the seniority of Inspectors had not been finalized when the decision in K. Meghachandra was rendered and was therefore required to be redrawn in accordance with the principles laid therein, the learned Tribunal was justified in directing the UoI to re- draw the seniority list as per K. Meghachandra. In fact, even the petitioners plea is accepted that in Yash Rattan, this Court was not dealing with the inter se seniority of promotees and direct recruits, nothing much turns on the same. Even though the Court was not specifically dealing with the inter se seniority of direct recruits and promotees, the fact remains that the seniority list which was under consideration by the Court reflected the names of direct recruits, including the petitioners herein. Once, this Court had opined in Yash Rattan that the seniority list dated 15.03.2018 had not attained finality and was therefore required to be re-drawn as per K. Meghachandra, it is not open for the petitioners to urge that their seniority has to be fixed as per the earlier decision in UNION OF INDIA VERSUS NR. PARMAR [ 2012 (12) TMI 872 - SUPREME COURT ]. Furthermore, the decision in Yash Rattan, whereunder the seniority list was directed to be re-drawn as as per K. Meghachandra has already attained finality, having been unsuccessfully assailed before the Apex Court, both by the petitioners as also the UoI. In these circumstances, there are no infirmity with the directions issued by the learned Tribunal for re-drawing the seniority list in accordance with the principles laid down in K. Meghachandra. The writ petitions along with the pending applications are, accordingly, dismissed.
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2024 (9) TMI 606
Bar to invoke arbitration - execution of a discharge voucher towards the full and final settlement between the parties - scope and standard of judicial scrutiny that an application Under Section 11(6) of the Act, 1996 can be subjected to when a plea of accord and satisfaction is taken by the Defendant - effect of the decision of this Court in In Re: IN RE. : INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER THE ARBITRATION AND CONCILIATION ACT, 1996 AND THE INDIAN STAMP ACT, 1899 [ 2023 (12) TMI 897 - SUPREME COURT (LB)] on the scope of powers of the referral court Under Section 11 of the Act, 1996. Whether the execution of a discharge voucher towards the full and final settlement between the parties would operate as a bar to invoke arbitration? - HELD THAT:- The Appellant has contested that once a full and final settlement was arrived at between the parties, the insurance contract between the parties could be said to have been discharged. Once the contract stood discharged, it was not open to the Respondent to resile from the settlement and invoke the arbitration clause, as no obligations remained to be fulfilled under the contract pursuant to the discharge of the contract. In other words, it is the contention of the Appellant that as no arbitrable disputes remained after a full and final settlement was arrived at, there was nothing left to be referred to the arbitrator and hence the appointment of arbitrator being an exercise in futility, should not have been undertaken by the High Court. Once a contract has been fully performed, it can be said to have been discharged by performance. Once the contract has been discharged by performance, neither any right to seek performance, nor any obligation to perform remains under it - However, whether there has been a discharge of contract or not is a mixed question of law and fact, and if any dispute arises as to whether a contract has been discharged or not, such a dispute is arbitrable as per the mechanism prescribed under the arbitration agreement contained in the underlying contract. Whether the arbitration agreement contained in a substantive contract survives even after the underlying contract is discharged by accord and satisfaction ? - HELD THAT:- There is no Rule of an absolute kind which precludes arbitration in cases where a full and final settlement has been arrived at. In NATIONAL INSURANCE CO. LTD. VERSUS M/S. BOGHARA POLYFAB PVT. LTD. [ 2008 (9) TMI 864 - SUPREME COURT] , discussing in the context of a case similar to the one at hand, wherein the discharge voucher was alleged to have been obtained on ground of coercion, it was observed that the discharge of a contract by full and final settlement by issuance of a discharge voucher or a no-dues certificate extends only to those vouchers or certificates which are validly and voluntarily executed. Thus, if the party said to have executed the discharge voucher or the no dues certificate alleges that the execution was on account of fraud, coercion or undue influence exercised by the other party and is able to establish such an allegation, then the discharge of the contract by virtue of issuance of such a discharge voucher or no dues certificate is rendered void and cannot be acted upon. Once the full and final settlement of the original contract itself becomes a matter of dispute and disagreement between the parties, then such a dispute can be categorised as one arising in relation to or in connection with or upon the original contract which can be referred to arbitration in accordance with the arbitration Clause contained in the original contract, notwithstanding the plea that there was a full and final settlement between the parties. What is the scope and standard of judicial scrutiny that an application Under Section 11(6) of the Act, 1996 can be subjected to when a plea of accord and satisfaction is taken by the Defendant? - HELD THAT:- The position after the decisions in M/S MAYAVTI TRADING PVT. LTD. VERSUS PRADYUAT DEB BURMAN [ 2019 (9) TMI 1548 - SUPREME COURT] and VIDYA DROLIA AND OTHERS VERSUS DURGA TRADING CORPORATION [ 2020 (12) TMI 1227 - SUPREME COURT] is that ordinarily, the Court while acting in exercise of its powers Under Section 11 of the Act, 1996, will only look into the existence of the arbitration agreement and would refuse arbitration only as a demurrer when the claims are ex-facie frivolous and non-arbitrable. What is the effect of the decision of this Court in In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act 1966 and the Indian Stamp Act 1899 on the scope of powers of the referral court Under Section 11 of the Act, 1996? - HELD THAT:- A seven-Judge Bench of this Court, in In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act 1966 and the Indian Stamp Act 1899 speaking eruditely through one of us, Dr. Dhananjaya Y. Chandrachud, Chief Justice of India, undertook a comprehensive analysis of Sections 8 and 11 respectively of the Act, 1996 and, inter alia, made poignant observations about the nature of the power vested in the Courts insofar as the aspect of appointment of arbitrator is concerned. Once an arbitration agreement exists between parties, then the option of approaching the civil court becomes unavailable to them. In such a scenario, if the parties seek to raise a dispute, they necessarily have to do so before the arbitral tribunal. The arbitral tribunal, in turn, can only be constituted as per the procedure agreed upon between the parties. However, if there is a failure of the agreed upon procedure, then the duty of appointing the arbitral tribunal falls upon the referral court Under Section 11 of the Act, 1996. If the referral court, at this stage, goes beyond the scope of enquiry as provided under the Section and examines the issue of accord and satisfaction , then it would amount to usurpation of the power which the parties had intended to be exercisable by the arbitral tribunal alone and not by the national courts. Such a scenario would impeach arbitral autonomy and would not fit well with the scheme of the Act, 1996. The power available to the referral courts has to be construed in the light of the fact that no right to appeal is available against any order passed by the referral court Under Section 11 for either appointing or refusing to appoint an arbitrator. Thus, by delving into the domain of the arbitral tribunal at the nascent stage of Section 11, the referral courts also run the risk of leaving the claimant in a situation wherein it does not have any forum to approach for the adjudication of its claims, if it Section 11 application is rejected. The existence of the arbitration agreement as contained in Clause 13 of the insurance policy is not disputed by the Appellant. The dispute raised by the claimant being one of quantum and not of liability, prima facie, falls within the scope of the arbitration agreement. The dispute regarding accord and satisfaction as raised by the Appellant does not pertain to the existence of the arbitration agreement, and can be adjudicated upon by the arbitral tribunal as a preliminary issue. The appointment of Justice K.A. Puj, former Judge of the High Court of Gujarat as an arbitrator to resolve the disputes between the parties is affirmed - the order staying the arbitration proceedings stands vacated.
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