Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 2, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Once proceedings initiated under GST Acts, no other officer can start on same matter. Power exercised is judicial.
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Registration Cancellation Conundrum: Lack of Reasons Violates Natural Justice, Impedes Business.
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Tax Tussle Resolved: Company's Plea Upheld for Fresh Assessment.
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Holding Co's equity capital and ECB not liable for IGST, Show Cause Notice quashed & reconsidered.
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GSTR mismatch: Firm allowed to furnish suppliers' self-declarations after ITC claim rejection.
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Trader's GST registration revived after showing bona fide delay in filing returns.
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GST credit for vehicle purchase wrongly availed; order passed without fair hearing violated natural justice.
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Accused granted bail in GST evasion case involving TMT bars supply amid lack of evidence.
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Cancellation of GST registration can't be refused due to pending tax dues; court directs approval.
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Fake Invoices for Tax Evasion: Court Cancels Bail in GST Fraud Case.
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Tax determination notice violated; right to personal hearing denied.
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Aluminium foil containers classified under 7615 with 12% GST, refund ordered after legal battle.
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Revocation of GST registration for non-filing returns contested; Court restores registration following precedent.
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Offline Bridge Tournaments for Money: Skill Game, Not 'Specified Actionable Claims'.
Income Tax
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New manufacturing R&D center in Chennai approved for income tax exemption.
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Assessment order cancelled due to lack of show cause notice.
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Global firm's appeal dismissed over transfer pricing adjustments for intra-group services.
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Royalty on software payments? Court says no proprietary rights transfer, mere usage rights don't qualify.
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Tax audit report delay: Court quashes unfair findings by tax officer lacking evidence of mala fide intent.
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Pre-clinical lab services for testing drug samples by Canadian firm not "technical services" under India tax treaty.
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Cost reimbursements for IT support services not taxable as fees for included services under India-USA tax treaty.
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Excess stock found in survey not taxed under strict laws; AO's reasoned order upheld.
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Assets under directors' names eligible for depreciation, expenses disallowance rejected, unsecured loans accepted based on evidence.
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Limitation period exceeded, assessment notice quashed by court.
Customs
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High import tariffs set for edible oils, gold, silver, and scrap metal from August 31.
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Customs broker's license revoked over delayed show cause notice & insufficient evidence of direct involvement in import irregularities. Penalty reduced, license reinstated.
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Handgun Parts Import Clearance: Ex Post Facto License Granted for Pre-fitted Components.
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Lack of evidence leads to discharge in alleged corruption case.
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Goods' Release Ordered With Bond, Director's Undertaking.
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Imported goods misclassified as scrap, duty demanded, but penalties waived.
DGFT
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Revised Wastage Norms for Gold/Platinum/Silver Jewellery Exports Proposed.
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Trade body's authority to issue non-preferential Certificates of Origin revoked by DGFT.
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Temporary restoration of pre-revision wastage norms for precious metal exports pending finalization.
SEZ
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Govt de-notifies 17.6 hectares from Ahmedabad apparel SEZ, reducing total area to 20.4 hectares.
State GST
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New GST guidelines for corporate guarantees between related parties: valuation methods, tax treatment.
Indian Laws
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Court rejects respondent's coercion claim; burden to prove agreement's invalidity. Appeal allowed, order set aside, but costs imposed.
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Real estate dispute: Flat buyer wins against builder for unfair forfeiture.
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Offense under NI Act not compoundable, HC erred in invoking S.482 CrPC & S.147 NI Act to compound w/o complainant's consent.
IBC
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Corporate Articles can be amended through Special Resolution, no need for all members' approval. Board nominee has discretion if no specific decision.
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Tea estates leasehold saga: RP gains control, renewals valid despite unpaid Salami. State possession upheld for expired leases.
PMLA
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Statements given under duress inadmissible: SC upholds fair trial in money laundering cases.
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Woman accused in money laundering case entitled to bail benefit, court must give reasons for denial.
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Bail denied for coal scam accused citing money laundering, illegal extortion.
SEBI
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New eligibility norms for stock derivatives tightened to curb manipulation.
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New rules restrict ties with unregulated investment advisors, except via approved digital platforms.
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New SEBI regulation restricts unauthorized advice on securities.
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New SEBI rules curb depositories' tie-ups with entities advising/claiming returns on securities, except approved digital platforms.
Service Tax
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Road Cutting Exempt, Land App Fees Not Taxable, Street Light Charges Contested in Service Tax Appeal.
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MMR service providers contested tax demand on reimbursements for consumables purchased for clients.
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Refund of Krishi Kalyan Cess input credits allowed under GST transition scheme.
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Service tax paid by provider, recipient eligible for CENVAT credit - no double taxation allowed.
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Labor supply, not cargo handling, cement loading exempt from service tax.
Central Excise
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Cut on Crude Oil Production Tax: Rs. 1850/tonne from Aug 31, 2024.
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Fire accident destroys goods, no CENVAT reversal needed earlier. Duty remission granted. Tribunal modifies order favoring appellant.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (8) TMI 1460
Direction to deposit a sum of Rs. 5.61 crores as amount payable in lieu of GST for allotment of a plot for long term lease - petitioner has deposited the amount under protest - HELD THAT:- The respondent No.2 should grant an opportunity of personal hearing to the petitioner, consider the objection raised by the petitioner and thereafter pass a reasoned order on the same within a period of eight weeks from date. The petition is disposed off.
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2024 (8) TMI 1459
Violation of principles of natural justice - petitioner was not given any opportunity of hearing and in the column meant for mentioning the date, place and time of personal hearing the term NA (not applicable) was mentioned - HELD THAT:- Initially, the notice under Section 61 was issued to the petitioner. The petitioner did not file any reply to the said notice. Later on notice under Section 73 was issued indicating that there was discrepancy in the GST return with regard to turn over as disclosed by the petitioner and to show cause as to why proceedings be not initiated against him. The petitioner neither filed any reply nor did he seek time to file a reply nor prayed for adjournment of hearing. The petitioner even did not think it proper to seek personal hearing in the matter as no reply at all was submitted and notice under Section 73 was ignored. It is not disputed by the petitioner that he did not choose to reply either to notice under Section 61 or to the notice under Section 73. When a show cause notice is issued the normal reaction of a businessman is to submit a reply and ask for a personal hearing. In case reply cannot be submitted in time such assessee can ask for extension of time indicating the difficulty that he faces in submitting and reply in time. Nothing was done by the assessee. He chose to ignore the show cause notice when opportunity of hearing was given, no interference in the procedure followed by the respondents is warranted in the writ jurisdiction. Petition disposed off.
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2024 (8) TMI 1458
Authorisation of officers of State Tax or Central tax as proper officer - initiation of proceedings by another proper officer on the same subject matter - Wrongful availment of Input Tax Credit - HELD THAT:- The power of Inspection, Search, Seizure and Arrest as provided under Chapter XIV of the Central Goods and Services Tax Act, 2017 reflects that the power which is being exercised by the proper officer in terms of Sections 69, 70, 71 and 72 of the CGST Act are purely judicial in nature. In terms of Section 70 (2) of the HGST Act, every inquiry shall be deemed to be a judicial proceedings. Issuance of show cause notice is the point of commencement of any legal proceedings. Thus, once a proper officer has initiated any proceedings as per Section 6 (2) (B) of the Act, on a subject matter, no proceedings can be initiated by another proper officer on the same subject matter. The proper officer, who has initiated proceedings in the present case, the State Tax Officer, would be empowered to summon persons to give evidence and produce documents, while the other tax statutes provide for transfer of cases from one officer to another. The scheme of the Central Goods and Services Tax Act, 2017 or the Haryana Goods and Services Tax Act, 2017, no where provides for transferring the proceedings from one proper officer to another. Merely because the DGGI has information relating to similar fraudulent availment of ITC by other firms who may be related to the firm against which the proceedings have been initiated under Section 74 of the HGST Act by the State authority itself would not be a sufficient ground to presume that the State GST authority would not be able to conduct the proceedings or examine the culpability of the firm against whom proceedings under Section 74 of the HGST Act have been initiated. Merely because there may be other firm also against whom proceedings are initiated, there is no concept of joint proceedings. The import of the circular dated 05.10.2018 is to be understood to mean that when an inquiry is conducted by a proper officer of the State and investigation is required to be done by the Central Tax Officer, the Central Tax Officer would exercise the said power for the purpose of investigation - There is no reason to believe that the proceedings in any manner would be hampered or would suffer as against the company/ firm against which proceedings have been initiated under Section 74 of the Act. The entire proceedings under the GST Act for investigation relating to fraudulent availment of ITC are related to a particular firm which is registered in State of Haryana. If there is another firm which has also been found to be availing fraudulent ITC, the Central Government authorities are not precluded from taking action against that firm. Thus, independent action against some other firm would not impede the proceedings already initiated by the State Tax Authorities against the present firm. Neither it can be said to be creating any complication or multiplicity of proceedings - Any new information which the respondents may have gathered relating to fraudulent availment or passing on, can always be informed to the authority who is already conducting the investigation and inquiry and proceedings under Section 74 (1) of the Act. The proper officer, namely, Excise Taxation Officer, Shahbad had no jurisdiction to transfer the proceedings to the Central Government vide letter dated 08.07.2020 and 15.03.2022 and the same are quashed and set aside - the Excise Taxation Officer-cum-proper officer, Shahbad, shall continue with the proceedings initiated under Section 74(1) of the HGST Act against the petitioner-company and shall also examine all the aspects which may have been revealed relating to evasion of tax or availment of ITC after 22.07.2019. Petition allowed.
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2024 (8) TMI 1457
Violation of principles of natural justice - respondent No.2 failed to consider all the documents on record including the submission made by the petitioner - Time limitation - suppression of facts or not - HELD THAT:- Consideration on both questions of fact and law and that the petitioner has earlier also approached the appellate forum, it is opined that the petitioner should first exhaust the statutory remedy before approaching this Court. The writ petition is disposed of with liberty to the petitioner to approach the appellate authority within a period of 10(ten) days from today. Petitioner is at liberty to raise all grounds of fact and law before the Appellate Authority.
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2024 (8) TMI 1456
Doctrine of merger - Cancellation of the registration of the petitioner - no reason has been assigned for cancellation of the registration - Violation of principles of natural justice - HELD THAT:- Admittedly from the perusal of the order dated 15.02.2023. it transpires that no reason has been assigned for cancellation of the registration of the petitioner. The order of cancellation is in the teeth of various judgments of this Court as also referred to above. The reasons are heart and soul of any judicial and administrative order. In absence of the same the order cannot be justified in the eye of law. Further since the appeal of the petitioner was dismissed on the ground of delay, this Court finds that the doctrine of merger will have no application considering the facts and circumstances of the present case. The purpose of inserting the provision under Rule 23 of Rules, 2017 as to service of notice upon the assessee is to provide an opportunity to him to move a revocation application so as to save the registration from being cancelled permanently and his business being hampered. The coordinate Bench of this Court in M/s Ansari Constructions Vs. Additional Commissioner Central Goods and Services Tax (Appeals) and two others [ 2020 (12) TMI 266 - ALLAHABAD HIGH COURT ] while dealing with Section 29 of the GST, 2017 and Rule 23 of Rules, 2017, has held that once the Department has accepted the return and there remains no dues, the Department should not obstruct the business of an assessee. The order dated 15.02.2023 passed by the Assistant Commissioner, respondent no.3 is hereby quashed - it is directed that the petitioner shall file reply to the show cause notice within a period of three weeks from today. Petition allowed.
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2024 (8) TMI 1455
Challenge to order passed by the respondent No.2 under Section 74 read with Section 122 of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- The factual matrix is such that the matter is squarely covered by a coordinate Bench judgment of this Court in MAHAVEER TRADING COMPANY VERSUS DEPUTY COMMISSIONER STATE TAX AND ANOTHER [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT ] where it was held that ' the impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice.' Upon a perusal of record, it appears that the factual matrix is very similar to one in Mahaveer Trading Company's case - there are no reason to take a different stand. The impugned order dated June 21, 2024 is quashed and set-aside with a direction given to the officer concerned to grant the petitioner another opportunity of filing a fresh reply and thereafter fix a date of hearing and pass a reasoned order - Petition disposed off.
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2024 (8) TMI 1454
Challenge to impugned order and the impugned recovery notice passed by the respondent - petitioner submitted that the entire tax liability has been paid by the petitioner by reversal of wrongly availed ITC, and hence, the petitioner is not liable to pay any amount - principles of natural justice - HELD THAT:- It is not disputed that the petitioner has already paid the entire tax demand, and is only seeking an opportunity to file the reply to the show cause notice and personal hearing with respect to imposition of interest and the penalty, which the petitioner claims that they are not liable to pay. Even otherwise, as per the decision taken in the 53rd GST Council Meeting, the time is extended upto 31st March 2025. By applying the proposed amendment to Section 128(A) of the Act, the petitioner is not liable to pay any amount, since the enough amount is available in the ITC. The order impugned herein is set aside and the matter is remanded to the respondent in respect of the assessment years 2017-2018 for fresh consideration. In view of the setting aside of the order dated 19.07.2021, the consequential final notice dated 05.05.2023 is also set-aside - Petition disposed off by way of remand.
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2024 (8) TMI 1453
Legality of SCN demanding IGST - Levy of GST on the activity of holding equity capital by the Holding Companies in the Petitioner company and on the ECB received by the Petitioner from AOSH - HELD THAT:- Though the petitioner submitted a response on 16.01.2023 specifically referring to the aforesaid Notification dated 28.06.2017, respondents have not considered nor referred to the same in the impugned Show cause Notice. Consequently, the same deserves to be quashed and matter remitted back to respondent No.3 for reconsideration after providing an opportunity to the petitioner to the limited extent of Table No.IX referred to in the impugned Show Cause Notice. The impugned SCN insofar as it relates to proposal to levy/demand GST under the heading Continuous Equity Share holding is hereby quashed - the impugned SCN relating to proposal to levy / demand GST under the heading Value of the Credit Grant in Service determined as a service fee @1% is concerned, petitioner is reserved liberty to submit its response / reply to the same within a period of four weeks from today. Petition allowed.
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2024 (8) TMI 1452
Violation of principles of natural justice - not providing of sufficient time to furnish the self declarations received from its suppliers - Challenge to assessment order - discrepancies in respect of the claim of ITC in GSTR-3B and GSTR-2A returns - petitioner had not furnished the required self-declarations of the suppliers - HELD THAT:- Having regard to the grievance expressed by the petitioner, this court is inclined to grant an opportunity to the petitioner to substantiate their claim, for which, the learned counsel appearing for the respondent has no serious objection. Accordingly, the order impugned herein is set aside and the matter is remanded to the respondent for reconsideration. The petitioner is directed to file all the self-declarations obtained from its suppliers within a period of two weeks from the date of receipt of this order. The writ petition is disposed of.
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2024 (8) TMI 1451
Filing of belated returns on 07.07.2020, by which time the Input Tax Credit had partly expired - demand confirmed invoking Section 18(2) of the GST Act, 2017 - HELD THAT:- Clause 114 of the Finance (No.2) Bill, 2024 proposes to regularize the delay in filing Input Tax Credit by inserting Section 16(5) and 16(6) of the CGST Act, 2017. A similar exercise is expected in the context of TNGST Act, 2017 as well. This Court has taken a consistent view under similar circumstances by quashing the Impugned Order and remitting the case back to the 2nd Respondent to pass a fresh order subject to the Finance Act being passed. The impugned Order dated 16.10.2020 is set aside and the case is remitted back to the 2nd Respondent to pass a fresh order on merits and in accordance with law after the Finance Bill is passed and is enacted and the amendment to Section 16 of the respective GST Act - petition allowed by way of remand.
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2024 (8) TMI 1450
Cancellation of GST registration and seeking a direction to the respondent to restore the registration of the petitioner - delay of six months in filing the returns - valid reason for delay or not - HELD THAT:- This court is of the view that the reason assigned by the petitioner for non compliance with the relevant provisions of the Act within the time, appears to be bona fide. The petitioner is directed to file returns for the period prior to the cancellation of registration, if not filed, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - the cancellation of Registration stands revoked subject to the fulfilment of the conditions imposed - petition disposed off.
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2024 (8) TMI 1449
Violation of principles of natural justice - sufficient opportunity to the petitioner to substantiate their claim - Wrongful availment of input tax credit on the purchase of motor vehicles as reflected from the statement in GSTR-2A - availment of wrongful input tax credit in the corresponding month of GSTR- 3B, which is in violation of section 17(5) of the TNGST Act 2017 / CGST Act 2017 - HELD THAT:- Admittedly, the respondent passed the order dated 17.08.2023, without providing reasonable opportunity to the petitioner to put forth their case and hence, the same is in violation of the principles of natural justice. According to the petitioner, the reason for not submitting their objections to the notice is that they were unaware of the notice issued through the GST Portal, and that, they would be able to establish their case if an opportunity is provided. It is also to be noted that the appeal filed by the petitioner as against the order impugned herein, was dismissed on 25.04.2024 solely on the ground that there is no provision under the Act to condone the delay. Considering the facts and circumstances of the case and having regard to the submissions made by the learned counsel on either side, this court, in the interest of justice, is inclined to condone the delay in filing the appeal by the petitioner before the Appellate Authority and is accordingly, condoned. Petition disposed off.
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2024 (8) TMI 1446
Challenge to order passed u/s 73 of the Central Goods and Services Tax Act, 2017 - impugned SCN was uploaded on the portal in the category of View Additional Notices Orders , which the petitioner claims was not easily accessible - It is contended that the show cause notices were required to be placed under the heading of View Notices Orders but the same was not done - violation of principles of natural justice - HELD THAT:- The GST Authorities have addressed the issue and have re-designed the portal to ensure that View Notices tab and View Additional Notices tab are placed adjacent to one another and under one heading - Admittedly, the impugned SCN was issued before the portal was re-designed. The present petition is allowed and the impugned order is set aside - the matter is remanded to the concerned authority to adjudicate the impugned SCN afresh - petition allowed by way of remand.
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2024 (8) TMI 1445
Challenge to SCN issued u/s 73 of the Central Goods and Services Tax Act, 2017 (CGST Act)/Delhi Goods and Services Tax Act, 2017 - vires of N/N. 09/2023-Central Tax dated 31.03.2023 and N/N. 56/2023 dated 28.12.2023 - extension of time limit for passing an order u/s 73 (10) of the CGST Act - HELD THAT:- The respondents fairly submits that the petitioner may be granted one more opportunity to file a reply to the SCN. The petitioner is satisfied with the same and states, on instructions, that he is not pressing the challenge to the Notifications (Notification No. 09/2023 dated 31.03.2023 and Notification No.56/2023 dated 28.12.2023). The impugned order is set aside and the matter is remanded to the adjudicating authority for consideration afresh - petition disposed off by way of remand.
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2024 (8) TMI 1444
Seeking grant of bail - clandestine supply of branded TMT bars - evasion of GST - whole prosecution case is based upon the statement of Rippan Kansal and no incriminating article or evidence was discovered by the department from the search and inspection of the premises and office of the present applicant - reliability of statement - HELD THAT:- In Sanjay Chandra v. CBI [ 2011 (11) TMI 537 - SUPREME COURT ], the Hon'ble Apex Court noticed that it was a case of fraud wherein by cheating and dishonestly inducing delivery of property by using as genuine a forged document was involved but the punishment for the offence was imprisonment for a term which may extend to seven years. The Hon'ble Apex Court held that it is, no doubt, true that the nature of the charge may be relevant but at the same time the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. Considering the entire facts and circumstances of the case and keeping in view the fact that in the instant matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial and everything relevant to the matter is under control of the department itself and there is probably nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial; further no final verdict of any Court / Authority for any criminal liability to the credit of the applicant has been brought to the notice of this Court and noticing that the alleged offence is punishable with the maximum period of imprisonment of five years, the applicant is in jail since 20.6.2024, without commenting upon the merits of the case, it is opined that the applicant has made out a case for bail. Let the applicant be released on bail subject to fulfilment of conditions imposed - the bail application of the accused-applicant is allowed.
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2024 (8) TMI 1443
Failure on the part of the respondent to process its application for cancellation of GST registration - reason for seeking cancellation of GST registration was that it had discontinued its business - requirement to submit details as to the tax paid along with stock register and bank statements etc. HELD THAT:- The first ground, Cancellation Details Others (Please specify) Please pay due tax and penalties , is untenable. The petitioner stated that its reason for seeking cancellation of GST registration was that it had discontinued its business. The cancellation of GST registration would not impinge upon the liability of the petitioner to pay the outstanding tax and penalties, if any. The second reason for proposing to reject the petitioner s application dated 13.06.2024 appears to be a requirement to submit details as to the tax paid along with stock register and bank statements etc. This is also untenable in view of the settled law that the cancellation of the GST registration would not affect the petitioner s liability to pay the taxes due or to be answerable for any statutory violation prior to the date of cancellation. The scrutiny as to the petitioner s tax liability for a prior period cannot be a ground for refusing cancellation of GST registration - the respondent is directed to process the petitioner s application for cancellation of GST registration. Petition disposed off.
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2024 (8) TMI 1442
Grant of bail - wrongful availment ITC by generating fake invoices causing wrongful gain to the three companies and wrongful loss to the Government - evidence available against the petitioner regarding committing a crime under the CGST Act or not - HELD THAT:- The analysis of the Court below suffers from perversity as it is not the condition precedent for prosecuting a person under section 132 of the CGST Act. The provisions explicitly state that whoever commits or causes to commit and retain the benefits arising from any supplies, goods, or both without the issue of any invoice or without supplying the goods avails input tax credit is liable to prosecution. Thus, the absence of material indicating the accused petitioner as the manager of the three firms is not essential. The Court below did not assess the consequence and spirit of the provision under section 132 of the CGST Act. The Court completely ignored the incriminating material collected against the petitioner. The Court below while considering the bail application of respondent, did not consider the gravity of the offences and enlarged the respondent on bail misconstruing the facts and the legal position. It is also pertinent to mention here that while considering the bail application, it is not desirable for the Court to enter into the question of legality of the arrest, the legality of the arrest can be questioned only if there is a gross violation of any provision of the Act. In the present case, before arresting the respondent, the respondent was duly informed regarding grounds of arrest. The application for cancellation of bail is allowed and the order granting bail dated 03.11.2023 passed by learned Additional Sessions Judge No.2, Jaipur Metropolitan-II is cancelled accordingly.
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2024 (8) TMI 1441
Violation of principles of natural justice - petitioner s right of opportunity of personal hearing in the manner as provided under the law has been violated - HELD THAT:- Section 75 of the RGST Act of 2017/the CGST Act of 2017 contains general provisions relating to determination of tax. Sub-section (2) thereof explicitly provides that where any Appellate Authority or Appellate Tribunal or Court concludes that the notice issued under sub-section (1) of Section 74 of that Act is not sustainable for the reason that the charges of fraud or any willful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice was issued under sub-section (1) of Section 73 of that Act. The respondents have admitted the fact that even though the respondents intended to grant opportunity of personal hearing to the petitioner and notices to that effect were also uploaded on the portal of the Department, the petitioner s case is that the same were though uploaded on the portal of the Department, but were not reflected on the GSTIN Portal of the petitioner, which also goes as an undisputed factual position. This is clear from the additional affidavit filed by the petitioner and the response received pursuant to that query which is also annexed along with the additional affidavit filed by the petitioner. It is, therefore, apparent that the statutory mandate was not complied with and impugned orders were passed against the petitioner in respect of different assessment years. The matters are remanded back to the competent authority for affording opportunity of personal hearing to the petitioner and passing appropriate orders in accordance with law - Petition allowed by way of remand.
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2024 (8) TMI 1440
Classification of goods - case of the petitioner is that the products of the petitioner are classifiable under the heading 7615 of Customs Tariff Act, 1975, wherein, a contention of the Department so that the some products are liable to be classified under the heading of 7607 - HELD THAT:- Earlier, the petitioner had suffered similar orders in the hands of the second respondent herein vide order No.13/2020, dated 28.10.2020, in respect of which, the second respondent had passed a Common Order No.13-19/2020 on 28.10.2020. The petitioner filed W.P.(MD)Nos.6485 to 6492 of 2023 against the said Order dated 28.10.2020. The Court disposed of these Writ Petitions filed by the petitioner in W.P.(MD)Nos.6485 to 6492 of 2023, vide Order dated 13.09.2023, following order of the Hon'ble Supreme Court in Commissioner of Central Excise vs. Hindalco Industries Limited in Civil Appeal No.7561 of 2009, dated 08.02.2022 [ 2023 (6) TMI 844 - SC ORDER] . The Writ Petition was allowed holding that ' this Court is of the considered opinion that the product Aluminium Foil Container is classifiable under 7615 with GST 12%. Hence the impugned order is liable to be quashed and accordingly quashed.' These Writ Petitions have to be allowed as the order of this Court has been accepted by the Commissioner GST Central Excise, Madurai. Consequently, the amount, that was pre-deposited by the petitioner, was directed to be refunded in accordance with law within 30 days from the date of receipt of a copy of this order. Petition allowed.
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2024 (8) TMI 1439
Seeking revocation of cancelled GST registration - no business for twelve months on account of resurgence of the COVID 19 pandemic - non-filing of returns - HELD THAT:- The reason set out in the order of cancellation is non filing of returns for a continuous period of more than twelve months. In Suguna Cutpiece [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , this Court directed restoration of GST registration subject to several terms and conditions. The said judgment was followed thereafter in many cases. In the present case also, the restoration of the GST registration is directed subject to and conditional upon fulfilling the conditions imposed - petition disposed off.
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2024 (8) TMI 1438
Supply of specified actionable claims under section 2(102A) of the GST Act, 2017 or not - contributions/participation money paid/ stakes bought by the players for playing physical/offline game of bridge (when played for money) or winning thereof or organizing games/tournaments of bridge (when played for money) - HELD THAT:- The actionable claim is a claim to unsecured debt or a claim to beneficial interest in movable property not in possession of the claimant. The applicant has submitted that contract bridge or simply bridge is a trick taking card game using a standard 52 card deck. In its basic format, it is played by four players in two competing partnerships with partners sitting opposite to each other around a table. The game consists of a number of deals each progressing through four phases. The cards are dealt with the players then the players call or bid in an auction seeking to take the contract specifying how many tricks the partnership receiving the contract needs to take to receive points for the deal. During the auction, partners use their bids to exchange information about their hands including overall strength and distribution of the suits. No other means of conveying or implying any information is permitted. In the case of State of Andhra Pradesh v. K. Satyanarayana Ors. [ 1967 (11) TMI 109 - SUPREME COURT ], the Hon ble Supreme Court tested the game of Rummy on the principle of skill versus chance and held that The game of Rummy is not a game entirely of chance like the 'three-card' game mentioned in the Madras case to which we were referred. The 'three card' game which goes under different names such as 'flush', 'brag' etc. is a game of pure chance. Rummy, on the other hand, requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards - it cannot be said that the game of Rummy is a game of entire chance. It is mainly and preponderantly a game of skill. The chance in Rummy is of the same character as the chance in a deal at a game of bridge. In Gameskraft Technologies (P.) Ltd vs Directorate General of Goods Services Tax Intelligence [ 2023 (5) TMI 926 - KARNATAKA HIGH COURT ] the issue before the Hon ble High Court of Karnataka was whether offline/online games such as Rummy which are mainly/preponderantly/ substantially based on skill and not on chance, whether played with/without stakes tantamount to gambling or betting as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017. It is found that the issue whether offline/online games such as Rummy which are played with/without stakes tantamount to gambling or betting as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017 is pending before the Hon ble Supreme Court. It appears that the proviso to section 2 (105) specifically deals with the supplier who organizes or arranges, directly or indirectly, supply of specified actionable claims. The issue in the present case is also to determine whether organizing games/tournaments of bridge (when played for money) qualifies as supply of specified actionable claims . However, the aforesaid proviso specifically mentions that consideration in money or money s worth has to be paid or conveyed to the supplier or through the supplier or placed at the disposal of the supplier - in the instant case, the applicant neither provides any online platform for participating in the game of bridge nor retains any amount of money as platform fee from the deposit amount made by each player. Further, the applicant being the organizer of the bridge tournament does not lien over the money or money s worth contributed by players. The applicant has submitted that the contribution of money is deposited in a common pool and an independent person sponsors prize money. Undisputedly organizing a tournament and allow the players to take part in the tournament against participation fee would qualify to be a supply of services by the organizer to the participants. However, even it is held that playing of bridge against money qualifies to be specified actionable claim , the applicant cannot be held to be engaged in supply of specified actionable claim by organizing the tournament of bridge where contribution of money deposited in a common pool and the applicant does not lien over this money or money s worth contributed by players. The applicant cannot be held to be a supplier of specified actionable claim and therefore shall not be liable to pay tax by way of organizing a tournament of physical /offline games of contract bridge when played for money.
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Income Tax
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2024 (8) TMI 1437
Delay in filing the revision application u/s 264 - Nature of receipt - subsidies received by the petitioner - capital receipts or revenue receipts - According to the petitioner the aforesaid subsidies were erroneously treated as revenue receipts instead of capital receipts and return of the income was processed under Section 143(1) without framing any assessment u/s 143(3) - HELD THAT:- It is not in dispute that as per the decision of the Hon ble Supreme Court in case of Chaphalkar Brothers [ 2017 (12) TMI 816 - SUPREME COURT] the subsidies received by the petitioner would be capital receipt and not revenue receipt. This aspect is also considered by the Tribunal in the case of the petitioner while allowing the additional ground raised by the petitioner for Assessment Year 2012-13. The order of the Tribunal was pronounced on 20th February, 2019 and the petitioner has field the Revision Application on 01.07.2019 i.e. within five months from the date of receipt of the order of the Tribunal. In such circumstances, as held in case of Hindalco Industries Ltd. [ 2024 (1) TMI 1039 - BOMBAY HIGH COURT] the Commissioner should not have taken a pedantic approach but the approach ought to have been liberal and as per the provisio to Section 264(3) of the Act, he ought to have considered the sufficient cause for delay in preferring the application as there was no negligence on the part of the petitioner nor there was any bona-fide which can be imputable to the petitioner and revisional power ought to have been exercised to advance the substantial justice. Adopting the above reasoning and considering the facts of the case, the impugned order passed by dated 20th March, 2020 passed by the respondent under Section 264 of the Act is hereby quashed and set aside and the delay in preferring the revision application is ordered to be condoned and the matter is remanded back to the respondent to decide the same on merits.
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2024 (8) TMI 1436
Validity of the assessment order u/s 143(3) - Non issuing of Show cause notice - case of the petitioner was transferred by order from faceless Assessing Officer to the respondent Jurisdictional Assessing Officer u/s 144(B)(8) - HELD THAT:- Since 2015 as per the desire of the Board, AO is mandatorily required to issue an appropriate show cause notice duly indicating the reasons for the proposed additions/ disallowance along with necessary evidence/reasons forming basis of the same before passing the final order. As the matter of fact, such position will continue even when the case is transferred to the respondent AO u/s 144B(8) as per Circular No. 27/2019 which was issued by the CBDT applicable to the cases where the assessment were framed not covered under the E-assessment notified by the Board. As per clause 4 of the Circular No. 27/2019 it is specifically provided that in case where assessment proceedings are being carried out through E-proceedings includes all the cases other than cases covered under the E-Assessment Scheme ,2019, personal hearing/attendance may take place where a show-cause notice contemplating any adverse view is issued by the AO and the assessee requests through the E-filing account for personal hearing to explain the matter. Thus, when the case of the petitioner is transferred to AO u/s 144 (B)(8), the Circular dated 06.09.2021 would be applicable which also provides for that the request for personal hearing shall be allowed after the assessee has filed written submissions to the show-cause notice meaning thereby that the show cause notice is a prerequisite for granting personal hearing to the petitioner assessee and in absence of the show-cause notice, no opportunity of personal hearing would be made available to the assessee in cases which are transferred from faceless Assessment Unit to the JAO. Reliance placed by the learned advocate for the respondent on the notices issued under section 142(1) of the Act would not be of any help as section 142(1) is with regard to the inquiry before the assessment where the Assessing Officer for the purpose of making the assessment under the Act may serve any person who has made a return for furnishing the return, a notice requiring to provide various details for the purpose of framing the assessment. As the petitioner assessee has furnished all the details it would be incumbent upon respondent Assessing Officer to issue show cause notice for the proposed addition duly indicating the reasons for the proposed addition/disallowance along with necessary evidence/reasons forming the basis of the same as per the Instruction No. 20/2021 read with Circular No. 27/2019 to enable the petitioner to avail the opportunity of hearing in compliance of the principle of natural justice. AO has committed fragrant breach of the principle of natural justice by not issuing show-cause notice indicating reasons for proposed addition/disallowance along with necessary evidence forming basis of the same and therefore, impugned assessment order is hereby quashed and set aside and the matter is remanded back to the stage of issuance of show-cause notice by the Assessing Officer to the petitioner duly indicating the reasons for proposed addition/disallowance along with necessary evidence reasons.
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2024 (8) TMI 1435
Applicability of provisions of section 92(3) to prohibit the determination of the arm's length price of intra-group services - whether ITAT is legally justified in holding that adjustment on account of determination of arm's length price of intra-group services has to be reduced from the cost base of the assessee - ITAT justification in holding that in case of deternunation of arm's length price of several categories of international transactions separately the transfer pricing adjustment in respect of one transaction will require adjustment to second category of transaction resulting in reduced profit HELD THAT:- The fact that if the challenge as raised by the appellant were to be accepted, it would result in a reduction of the income chargeable to tax is not questioned or disputed before us. In view of the aforesaid, we find that no exception can possibly be taken to the view as expressed by the ITAT. No substantial question of law arises. The appeal is thoroughly misconceived and shall consequently stand dismissed.
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2024 (8) TMI 1434
Denial of Tax Withholding Certificate u/s 197 - supply of computer software to associated entities - whether constitute royalty under the Income Tax Act and the India-US Double Tax Avoidance Agreement (DTAA)? - as argued reimbursement payments made by it did not constitute income liable to tax under the Act - HELD THAT:- As is apparent from a reading of Rule 28AA(2), the competent authority stands placed under a statutory duty to determine the estimated liability taking into consideration aspects such as tax payable on estimated income, tax payable on the assessed or returned income in the previous years, existing liabilities, advance tax payments as well as tax deducted at source or tax collected at source in the previous years. Rule 28AA of the 1962 Rules thus clearly required the authority to confer and accord due consideration on aspects pertaining to chargeability when raised by the assessee. What needs to be emphasised is that merely because the grant of a certificate under Section 197 of the Act is not accorded finality or may not amount to a definitive determination on the question of taxability, the same would not absolve the authority from considering all aspects in light of the statutory mandate referred to above. We are constrained to observe that while passing the impugned order, the respondent has clearly failed to bear the aforesaid aspects in consideration. Not only was the decision in Engineering Analysis cited for its consideration, it also appears to have been vehemently urged that the supply or licensing of software cannot possibly be viewed as being royalty either under the Act or the DTAA. The aforesaid submissions could not have possibly been negated merely on the basis of a Draft Assessment Order. In the scheme of Section 144C of the Act, a draft order of assessment is clearly inchoate and does not represent a final or conclusive verdict on the question of chargeability to tax. This, since on receipt of the draft order, the assessee is entitled in law to file objections before the DRP, and if the said objections are not accepted, the same can always be assailed before the ITAT. In any case, the final Assessment Order would have to await the completion of determination by the DRP. Till such time, the Draft Assessment Order clearly does not constitute a determination under the Act of which cognizance could have possibly been taken. As decided in EY Global Services Ltd. [ 2021 (12) TMI 571 - DELHI HIGH COURT] for the payment received by EYGSL (UK) from EYGBS (India) to be taxed as royalty , it is essential to show a transfer of copyright in the software to do any of the acts mentioned in section 14 of the Copyright Act, 1957. A licence conferring no proprietary interest on the licensee, does not entail parting with the copyright. Where the core of a transaction is to authorise the end- user to have access to and make use of the licenced software over which the licensee has no exclusive rights, no copyright is parted with and therefore, the payment received cannot be termed as royalty . EYGBS (India), in terms of the service agreement and the memorandum of understanding, merely receives the right to use the software procured by the EYGSL (UK) from third-party vendors. The consideration paid for the use of the same therefore, cannot be termed as royalty as held by the Supreme Court in Engineering Analysis Centre [ 2021 (3) TMI 138 - SUPREME COURT] . In determining the same, the rights acquired by the EYGSL (UK) from the third-party software vendors are not relevant. What is relevant is the agreement between the EYGSL (UK) and the EYGBS (India). As the same does not create any right to transfer the copyright in the software, the same would not fall within the ambit of the term royalty . We, accordingly, allow the instant writ petitions and quash the impugned orders - The application of the petitioner for grant of Nil Withholding Tax Certificates shall consequently be examined afresh.
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2024 (8) TMI 1433
Withdrawal of immunity as granted by the Settlement Commission - immunity as extended on the applicants paying up the amounts as directed therein i.e., 25% of the demand by 15.03.2016 and the balance 75% in equal monthly installments to be paid in Financial Year 2016-17 but petitioner did not pay up the amounts within the period provided in the order - present writ petition was filed challenging the withdrawal of immunity on the ground that the petitioner was not heard HELD THAT:- We find that the communication of the Government of India only permitted further proceedings and it cannot be considered to be an order of withdrawal of immunity. The immunity was granted by the Settlement Commission and was subject to the condition of payment being satisfied. The Central Government cannot withdraw the immunity granted by the Settlement Commission, if the conditions are satisfied. But, on the other hand if the conditions are not satisfied within the time period, the immunity would automatically cease to operate. The order of the Central government hence only directs proceedings on the cessation of immunity. The hearing of the petitioner is an empty formality because the petitioner does not have a case that he even paid one pie as per the settlement order. The immunity granted was on condition of the petitioner satisfying the Settlement Commission s order which also prescribed specific time frame for payment. The Settlement Commission s order works itself out if the payment is not made in accordance with the directions therein and automatically, the immunity stands withdrawn. We find absolutely no reason to interfere with the order. Now, the learned counsel specifically takes us to an order passed by this Court at the time of admission by a different Division Bench, on 25.08.2021. After referring to the submission made by the learned counsel for the Department that there was default in compliance of the Settlement Commission s order based on which the immunity ceased; the learned Judges opined that still the revenue is at fault for not having taken appropriate proceedings. We agree with respondent that the interim order passed by another Division Bench, was only on the petitioner s submission that the amounts to be paid are Rs. 2,72,40,648/-. It is also pertinent that even the undertaking as seen from the interim order has not been complied with. We also have our own reservation as to whether by a judicial order, the necessary consequences of an order of the Settlement Commission, on non-compliance, can be set at naught by this Court. However, we need not look into that aspect since even according to the petitioner he has not complied with the interim order. The order of the Settlement Commission and the interim order of this Court has worked itself out; both, on noncompliance of the conditions of payment, by the petitioner. The consequences with respect to immunity having been set at naught, would be visited on the petitioner. The Settlement Commission s order would not be enforceable, but we made it clear that the delayed payments made would be set-off against the demands raised against the petitioner either interest or principle due, as the statute mandates.
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2024 (8) TMI 1432
Penalty u/s 271B - petitioner failed to submit the audit report in time - AO concluded that the filing of the tax audit report belatedly shows the mala fide intention of the assessee to evade tax on his income - HELD THAT:- In view of the fact that the gross income disclosed by the assessee was accepted subsequently by the Assessing Officer and the total tax liability shown in such return was also accepted, the conclusion that the assessee filed the tax audit report belatedly with the mala fide intention to evade tax cannot be sustained. In clause (iii) of paragraph 5, the Assessing Officer concluded that the plea that the return of income and audit report could not be filed in time due to severe low back pain of the assessee appears to be a fabrication to mislead the penalty proceedings. In support of the submission that the assessee suffered lower back pain, the impugned order discloses that photocopies of the doctor's prescription was provided. Once again, in view thereof and in view of the factual position with regard to the return of income, this conclusion cannot be sustained. Thus, the order impugned calls for interference because speculative findings contrary to the facts on record were recorded therein. Therefore, the writ petition is disposed of and the order impugned herein is quashed. As a corollary, the matter is remanded for reconsideration. The Assessing Officer is directed to provide a reasonable opportunity to the petitioner, take into account all material facts and applicable provisions, including Section 273B and issue a reasoned order.
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2024 (8) TMI 1431
Tax payable u/s 115A or 20% under India-Italy DTAA - Royalty agreement as a new agreement or extension of the License and Technical Assistance agreement - whether the second agreement was a continuation of the first agreement or it was a separate agreement and that would decide whether the tax payable was at 10.56% or 20% u/s 115A of the Act. HELD THAT:- Tribunal has analysed both the agreements and came to a factual finding that agreement dated 1st April 2008 was an independent agreement. ITAT has spelt out the difference between two agreements and also the law as prevailing. One of the factors which has influenced the ITAT to arrive at the conclusion that the old agreement provided the trademarks to be used by assessee were only restricted to Ape 501 and Ape 601, whereas, as per the new agreement assessee has provided the license to manufacture and sell the vehicles under the name of Ape, which encompasses all kinds of vehicles. ITAT also has considered the fact that assessee in view of the extended license provided also launched Ape city diesel of three wheelers under Ape brand which was different from Ape 501 and Ape 601 brands, which it could not have done under the old agreement. The ITAT also observed that the territory which was covered under the old agreement was different from the territory that was covered under the new agreement and so on. In view of these differences, the ITAT came to the conclusion that the agreement dated 1st April 2008 was an independent agreement and distinct from the earlier agreement dated 26th March 1998 and not an extension of the first agreement. Since these are factual findings and in our view possible findings and by no stretch of imagination can be termed perverse, no substantial questions of law arise.
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2024 (8) TMI 1430
Denial of exemption claim u/s. 80P(2)(d) - interest income has not been earned from the investment in another cooperative society - HELD THAT:- The assessee has claimed a sum as exempt income u/s. 80P(2)(d) stating that the said income has been earned as interest from the deposit with cooperative banks. Since the facts in the case of the Coordinate bench in [ 2024 (6) TMI 1390 - ITAT MUMBAI] were same and similar, therefore, is squarely applicable to the facts and circumstances of the present case also. Thus, we hold that the assessee is entitled for deduction u/s. 80P(2)(d) of the Act towards income received from deposit with cooperative bank for the A.Y. 2015-16 and 2018-19. Accordingly, the Ld. AO is directed to allow the deduction claimed by the assessee for the A.Y. 2015-16 and 2018-19. Appeal by assessee allowed.
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2024 (8) TMI 1429
Admission of additional evidences by CIT(A) - Whether CIT(A) did not insist on the comments of the AO through the remand report under Rule 46A of the Income Tax Rules? - AO disallowed the sampling/designing expenses and foreign travel expenses primarily on the basis that the assessee did not submit any explanation as to how the same were for the business of the assessee - HELD THAT:- As discernible from the perusal of the impugned order that the CIT(A) requested the AO to offer his comments/report on the submissions of the assessee, in conformity with the provisions of Rule 46A of the Rules. AO did not respond to such a request and did not file any remand report in response to the submissions filed by the assessee. Thus, it is evident from the record that a reasonable opportunity was allowed to the AO to respond to the written submissions of the assessee and since the AO chose not to file any remand report, CIT(A) proceeded to adjudicate the appeal based on documents/evidence on record. From the plain reading of Rule 46A of the Rules, we find that there is no provision which requires the learned CIT(A) to insist on the comments of the AO. Therefore, we find no merits in the contention of the Revenue raised in grounds no. A and B of the present appeal, and accordingly the said grounds are dismissed. Addition on account of sampling/design expenses - CIT(A) deleted addition - It is the submission of the assessee that these expenses were incurred for the purpose of the business of the assessee and form an integral part of its operations as a marketing support service provider. In support of its claim, the assessee has also furnished various evidence of sampling/designing expenditure, such as bank statements, payment vouchers, sample reimbursement statements, purchase bills of fabrics, etc., which forms part of the paper book. Revenue apart from harping that opportunity was not granted to the AO to comment on the evidence produced by the assessee before the learned CIT(A), did not bring any material on record to controvert the detailed submissions of the assessee supported by documentary evidence. Accordingly, we are of the view that considering the business model of the assessee the expenditure incurred on sampling/designing is pivotal for the conduct of its business efficiently and profitably, and therefore has rightly been allowed by CIT(A). Accordingly, ground no. C raised in Revenue s appeal is dismissed. Addition on account of foreign travel expenses - CIT(A) deleted addition - As per the assessee, the entire expenditure incurred by the said employee on its boarding, lodging, and local travel was authorised by the management of the assessee company and was fully incurred for the advancement/expansion of the assessee s business. In support of the aforesaid claim, the assessee has placed on record documentary evidence containing ledger account, chart of expenses furnished by the employee, and invoices of boarding, lodging and currency purchase. No material has an brought on record by the Revenue to doubt the genuineness of the claim of the assessee that the said expenditure was incurred for the purpose of the business. Accordingly, we find no infirmity in the impugned order in allowing the foreign travel expenses incurred by the assessee. As a result, ground no. D raised in Revenue s appeal is dismissed. Addition on account of website design expenses - CIT(A) deleted addition - It cannot be disputed that in today s corporate world having a website and digital presence has become essential for increasing the digital footprint of the company. Considering the business profile of the assessee, wherein it acts as an intermediary between foreign customers and Indian manufacturers, having a fully functional and updated website is a necessity not only for having a digital presence but also for the efficient working of its business - any expenditure for keeping the website operational and updated with the latest product catalogues cannot be said to be providing enduring benefit to the assessee, and therefore, is not capital in nature. Apart from merely doubting the genuineness of the expenditure, the Revenue did not examine the fact that the website is still functional and provides information regarding various brands, partners, etc. with whom the assessee is having business transactions. Accordingly, we find no infirmity in the impugned order in allowing the website designing expenses. Addition on account of excess salary paid to directors and their relatives - CIT(A) deleted addition - The assessee submitted that the salary paid to the directors is commensurate with their services. It is evident from the record that the AO has merely compared the salary of the directors, without examining the services rendered by them to the assessee company. Therefore, considering the experience and magnitude of operations handled by the aforenoted directors, we are of the considered view that the learned CIT(A) has rightly deleted the disallowance of salary made by the AO. Appeal by the Revenue is dismissed.
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2024 (8) TMI 1428
TP Adjustment on bank guarantee - HELD THAT:- As decided in own case [ 2023 (12) TMI 273 - ITAT MUMBAI] for AY 2009-10 it can be seen that the impugned transactions were considered as international transactions and yet the Bench came to the conclusion that no TP adjustment can be made and the addition was deleted. Similar was the fact in AY 2010-11 [ 2024 (6) TMI 1391 - ITAT MUMBAI] where the Co-ordinate Bench, has decided the quarrel in favour of the assessee and against the revenue. Allowance of depreciation on the written down value (WDV) of plant machinery - HELD THAT:- As decided in own case AY 2010-11 [ 2024 (6) TMI 1391 - ITAT MUMBAI] machinery was purchased by the principal but the assessee had been vested with the possession of them and utilized them for its business.It is not disputed that the principal has debited the cost of machinery to the assessee's account and the assessee has capitalized it in its books of account.Ground raised by the Revenue is dismissed. Addition out of professional fees paid for arbitration awarded - HELD THAT:- The reason for disallowance during the year under consideration is simply to follow the earlier year disallowance and to keep the issue alive. AO for the year under consideration also has not disputed the fact that the professional fee is incurred for the purposes of business. Therefore, respectfully following the decision of the Co-ordinate Bench AY 2010-11 [ 2024 (6) TMI 1391 - ITAT MUMBAI] we hold that the CIT(A) has rightly deleted the disallowance made by the AO. Exclusion of tax on ESOP in computing the book profit u/s 115JB - HELD THAT:- Any any tax payment made by the employer on behalf of the employee is not covered under the definition of income tax. In fact, Section 40(a)(v) of the Act disallows such payments by the employer on behalf of the employee. Considering the definition of Income tax in Clause (a) of Explanation 1 to Section 115JB of the Act, we do not find any reason to interfere with the findings of the ld. CIT(A). This Ground is accordingly dismissed.
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2024 (8) TMI 1427
Deduction u/s 80P(2)(a) - interest on fixed deposit receipt and savings bank account received by the assessee from the cooperative banks for - HELD THAT:- According to section 2(10) of the Maharashtra State cooperative societies act 1860 provides Co-operative bank means a Co-operative society which is doing the business of banking as defined in clause (b) of sub-sections (1) of section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as an Agricultural and Rural Development Bank under Chapter XI. The cooperative banks are also the cooperative societies which are doing the banking business. In view of this it cannot be said that the interest income earned by the assessee on account of fixed deposit receipt is in savings bank account is not received from a co-operative society. It may be an altogether another thing that such cooperative societies are carrying on the banking business. Therefore, these banks are accepting fixed deposit receipts from the assessee. In view of the above analysis, it is clear-cut that cooperative banks are also co-operative society and interest income earned by the assessee on fixed deposit as well as savings bank account is an investment income of the assessee and therefore it qualifies for deduction u/s 80P(2)(d) of the act. Number of decisions of the coordinate benches are cited wherein it has been held that a co-operative society is eligible for deduction of investment income if it is placed with other co-operative banks which is also a co-operative society. DR has failed to show that the cooperative banks are not registered under the cooperative societies. AO is directed to grant deduction to the assessee u/s 80P(2)(d) of the act on interest on fixed deposit receipt and savings bank account received by the assessee from the cooperative banks for both the years. Assessee appeal allowed.
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2024 (8) TMI 1426
Penalty u/s 271(1) - alleged willful furnishing of inaccurate particulars of sales tax concession - HELD THAT:- There appears to have been no intent of the assessee to submit inaccurate particulars as alleged and the CIT(A) has sustained the penalty only on presumption that since the assessee is a big organization, the mistake could not have crept. We are of the considered view humans in all organizations are fallible to mistake and only because assessee happens to be an organization, a malice cannot be attributed. In fact, assessee reported correct facts at two places in the return at one place it left unreported. Thus, the findings of the CIT(A) to that extent deserves not to be sustained. Decided in favour of assessee.
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2024 (8) TMI 1425
Accrual of income in India - receipt as FIS/FTS - scope of India - Canada Tax Treaty - assessee, incorporated under the laws of Canada, engaged in rendering pre-clinical laboratory services to enable the determination of a safe dose and assess the potential toxicity of new drugs prior to human clinical trials by way of conducting in vitro and in vivo tests and trials. These services are largely catered towards Indian customers in the pharmaceutical, medical device and biotechnology industries. The Indian customers provide samples prior to undertaking human clinical trials which is tested by the Assessee. HELD THAT:- As pre-clinical laboratory services rendered by the assessee to its customers in India were quite limited items of the benefit which the client would derive from any intellectual property, hardware, software or knowledge of its employees. As decided in case of sister concern of assessee [ 2023 (6) TMI 176 - ITAT BANGALORE] Charles River Laboratories Inc. utility of the services available in the form of a report, though highly technical in nature, comes to an end, little thereafter, if not immediately, after its rendition. The Support that the Indian entity seeks after the report is delivered is to understand the report from the assessee. The elements necessary for make available is absent in the services rendered by the assessee to its Indian customers/clients, inasmuch as even for the said reports, the customers have to continuously refer to the assessee and the same is not freely r made available to the Indian customers. Thus, technical services rendered by the affiliates do not make available technical knowledge, experience, skill, know-how or process while preparing these reports for their, Indian customers/clients. In light of the aforementioned judicial decisions, we are of the considered view that the service recipient of the assessee is unable to make use of the said technology only by itself in its business or for its own benefit without recourse to the assessee year after year The clients of the assessee, on receiving the report may use it for commercial or technical knowledge to evaluate the product and material, but that report is not of the nature by which, independently, any technological knowledge was transferred to the customers. This report does not contain any information that would enable the client to carry on the clinical test on new products in future on its own accord. It is not disputed that this study/testing of samples was conducted by the assessee outside India based laboratories and merely the samples were provided by the clients and the assessee was supposed to conduct the study only according to the protocol provided by the assessee. Thus, we are convinced that the ld. tax authorities below have fallen in error to consider the receipt as FIS/FTS and, consequently, we sustain the grounds and allow the appeal of the assessee.
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2024 (8) TMI 1424
Income taxable in India or not - addition towards reimbursement of cost for providing IT/Support services - addition of fees for included services (FIS) under Article 12 of the India- USA - whether amount received by the Appellant is a cost-to-cost reimbursement and there is no income clement embedded in it? - HELD THAT:- We are of considered view the condition of make available was not satisfied for services when provided by assessee did not enabled the AEs to apply the technology independently, on conclusion of the yearly contract. As with regard to the observations of tax authorities below treating the services rendered by Assessee as FIS on the basis that the Assessee was providing training to the personnel of Invesco Group and thus the 'make available condition stands satisfied in the present case the Ld. Counsel submitted that the Assessee only supports and administers IT training and same does not lead to transmission of specialized knowledge or skill. In regard to IT administration services the assessee was providing services where the IT training and facilities training, were of desktop application tools such as Microsoft Word, excel and power point etc to staff of the group. There is nothing to show in the assessment order that the AO had made any enquiry on his own or relied any provisions of the Master Inter-Company Services Agreement (in short MSA ) to show that the training as imparted was of such nature that it made available , the technology to the associate enterprises so that on conclusion of the training the employees of AE s will be unable to use technology on their own. Rather we observed that very common softwares used in offices are mentioned for which the training was provided. Then AO has merely relied the assessee s own submissions to conclude that as the assessee is training personnel of the group. The provisions of make available would become applicable. Thus we are inclined to sustain the contention of the Ld. Counsel. AO has not made any enquiry to rebut the claim of the assessee that the cost incurred by the assessee company for providing IT support services is allocated to its AE s without any element of profit. In this context as we consider the copy of a MSA dated 20.05.2019 as made available alongwith the copies of debit note made available on pages-150 to 153 of the paper book. We find that it was agreed that remuneration for the services has been calculated with the objective of determining an arms length price for the services provided by using methodology as set forth under service fee clause . In the light of aforesaid were inclined to hold that the tax authorities below have fallen in error in not appreciating that the reimbursement was on cost to cost basis. Accordingly we sustain this argument of the Ld. Counsel also. Assessee appeal allowed.
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2024 (8) TMI 1423
Revision u/s 263 - during survey proceedings excess stock was found which is surrendered by the assessee - HELD THAT:- AO taking cognizance of the finding of the survey team, document found during course of survey, statement of the assessee the return of income and after examination thereof and due application of mind has accepted that the income surrendered is chargeable to tax as business income of the year under consideration. Thus the view taken by the AO is clearly a plausible view considering the facts circumstances of the present case and nothing has been pointed out as to how the view so taken is unsustainable in the eyes of law. As we are of the considered view that the order so passed by the AO cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO more particularly when PCIT(Central) has not recorded any finding as to how considering the decision of Rajasthan High Court and other ITAT decisions placed before him, the order passed by AO is erroneous. Thus, merely stating that there was survey operation at the business premises of the assessee where excess stock is found on which provisions of section 115BBE are attracted, the same cannot be a basis for exercise of jurisdiction u/s 263 of the Act. In view of the same, order so passed by the Ld. PCIT(Central) u/s 263 is set aside by cancelling the order passed by him. Appeal of the assessee is allowed.
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2024 (8) TMI 1422
Disallowance of depreciation relating to assets held in the name of directors - whether the assessee can claim depreciation on the assets when it did not hold a formal title of ownership but was in possession and used for business purposes? - HELD THAT:- Hon ble Supreme Court in case of Mysore Mineral Ltd [ 1999 (9) TMI 1 - SUPREME COURT] noted the legislative intent behind Section 32, emphasizing the words owned by the assessee. The ownership is a relative term that can include not just full legal ownership but also various shades of possession and control over the property. The Court recognized the concept of beneficial ownership where the person in control and possession of the property could be considered as the owner for tax purposes. The Hon ble Supreme Court decided in favour of assessee holding that for the purpose of claiming depreciation under Section 32, the term owner should be interpreted in a wider sense to include not only legal ownership but also cases where the assessee has acquired dominion over the asset and is in possession and control of the same. In the present case the assessee is using these assets for the purposes of business of the assessee - AO has not denied the same - AO has allowed all expenses relating to operating of these assets therefore, we allow the claim of depreciation of the assessee. Thus, this ground of the assessee is allowed. Disallowance of expenditure being 20% of total expenses - AO observed that during the assessment proceedings, the assessee had claimed various office and other expenses, which showed a significant increase compared to the previous year - AO s disallowance was primarily based on the assessee s failure to furnish complete documentary evidence for the claimed expenses - HELD THAT:- Tribunal concludes that the disallowance made by the AO was based on assumptions and not on concrete evidence. The assessee s increased expenses are justified by the corresponding increase in turnover, and the consistency in net profit margin further supports the genuineness of the expenses. Therefore, we direct the deletion of the disallowance of 20% of the total expenditure made by the AO. Therefore, this ground of assessee s appeal is allowed. Protective addition - unsecured loan u/s 68 - HELD THAT:- We noted that the assessee had furnished substantial evidence, including bank statements, ITR copies, and confirmations from TIPL. These documents prima facie established the identity, creditworthiness, and genuineness of the share application money received. We also noted that that the AO's primary concern was TIPL not being found at the given address. However, it was emphasized that the AO did not conduct further investigations, such as verifying the bank accounts or pursuing information from the Registrar of Companies. There was no substantive addition in the hands of TIPL. Protective assessments are primarily made to safeguard the revenue in situations of uncertainty. The protective assessment is inherently linked to the substantive assessment, and without a substantive addition, the protective assessment should also be nullified. As noted the decision of Pravinkumar Valjibhai Pujara HUF [ 2021 (7) TMI 1005 - ITAT AHMEDABAD] wherein it was decided that substantive assessment has to precede protective assessment. AO s action to make protective assessment in the hands of assessee because TIPL has failed in producing it books of accounts at the time of their own assessment is not justifiable. As assessee has discharged the initial burden of proof by furnishing adequate evidence. The AO's failure to provide further substantial evidence or conduct thorough investigations meant that the protective addition under section 68 was not justified - this ground of assessee s appeal is allowed.
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2024 (8) TMI 1421
Validity of proceedings u/s. 153C - assessment period beyond the stipulated period/Period of limitation - additions towards share premium u/s. 68 - As argued assessment year falls beyond stipulated six assessment years and four relevant assessment years, considering the satisfaction note recorded by the Assessing Officer of the searched person u/s. 132 and AO of the other persons as required u/s. 153C HELD THAT:- As following the decision of Hon ble Supreme Court in the case of CIT vs Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] we are of the considered view that for the purpose of proviso to section 153C(1) of the Act, in case of such other person, the reference to the date of initiation of search u/s 132 of the Act in the second proviso to section 153A(1) of the Act, shall be construed as reference to the date of receiving the books of accounts or other documents by the AO having jurisdiction over such other person and said date is considered in the present case i.e. on 31.12.2021. The assessment year before us is beyond stipulated six assessment years and four relevant assessment years and thus, notice issued by the AO u/s. 153C of the Act, dated 31.12.2021 and consequent assessment order passed u/s. 143(3) r.w.s. 153 of the Act, dated 31.03.2022 is barred by limitation and liable to be quashed. Thus, we quash assessment order passed by the AO u/s. 143(3) r.w.s. 153C of the Act, dated 31.03.2022. Decided in favour of assessee.
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Customs
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2024 (8) TMI 1420
Challenge to impugned order - interim nature - HELD THAT:- As the order impugned is interim in nature, it is not required to interfere with the order passed by the High Court. However, the High Court is requested to dispose of the D.B. Civil Writ Petition No. 315 of 2024 as expeditiously as possible. In the meanwhile, the petitioner may file a representation before the Jurisdictional Officer along with all the necessary material. Upon filing of the representation, the Jurisdictional Officer should consider the representation with Circular dated 07.06.2023 and dispose of the same within a period of three weeks. SLP dismissed.
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2024 (8) TMI 1419
Release of consignment of the writ petitioner comprising inter alia, frames and slides of handguns, which had been seized by the respondents - Whether the import license granted to Syndicate for frames and slides would include other parts that are pre-fitted into the said frames and slides under the provisions of the Act and the 2016 Rules? HELD THAT:- Form X was issued when there was already a lis pending before the Writ Court wherein a specific issue was raised whether a separate import license is required for import of embedded sub-components. Furthermore, the Delhi Police had inspected the import consignments of Syndicate as they had already arrived in India and the appellants were aware that the frames and slides were pre-fitted with sub-components. Yet, while issuing Form X, the appellants did not object to the fact that the imported frames and slides were pre-fitted with other parts such as firing pin , extractor and hammer which, as per the appellants, required a separate license. Nor did the appellants insist on Syndicate obtaining a separate license for these pre-fitted parts. The objections raised by the appellants were only in respect of some of the parts that were pre-fitted in the frames and slides imported by Syndicate, i.e., hammer , extractor and firing pin . Concededly, the appellants did not raise any objection in respect of other sub-components such as catch magazine , safety lock , safety lock support pin , trigger , trigger action mechanism part , spring of firing pin and lock of firing pin , which were pre-fitted inside the frames and slides and also mentioned in the communication dated 21st June, 2022 sent by the Delhi Police to the DGFT. The issuance of the aforesaid Form X would also nullify the objection taken by the appellants that Syndicate, as an importer had to compulsorily apply for an import license with the MHA in terms of Rule 88 (2) - the power to issue licenses for import and export of arms and ammunitions under the Act were delegated by the MHA to the DGFT via notification dated 1st November, 2018. This would show that there was no mandatory requirement for an importer to separately apply to DGFT for an import license under Rule 88 (2) of the Rules, once an import license has already been granted by the DGFT, as the issuing authority was the same. In view of the issuance of Form X to Syndicate, the requirement of permission under Rule 57 (4) of the 2016 Rules would also not survive. The Form X license granted to Syndicate was unconditional and unqualified and did not refer to any permission that may be required under Rule 57 (4) of the 2016 Rules. Once Form X has been issued by the competent authority, it would amount to a deemed clearance of the competent authority under Rule 57 (4) of the 2016 Rules. Both the objections taken by the respondent with regard to requirement of a Form X as well as permission under Rule 57 (4) of the 2016 Rules were taken as an afterthought. The ex post facto issuance of the aforesaid Form X amounts to a clear admission on the part of the appellants that as long as an importer held an import license for frames and slides , the importer was not required to apply for a separate license under Rule 88 (2), nor did it require a permission under Rule 57 (4) of the 2016 Rules. The limitation imposed on Syndicate via order dated 6th February, 2023, restraining them from disposing of the goods imported by them via Bill of Entry No.9037350 dated 9th June 2022 and Bill of Entry No.9038081 of even date, shall stand dissolved. Appeal disposed off.
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2024 (8) TMI 1418
Rejection of discharge application - non-forwarding of bills of user departments for scrutiny - delay in uploading soft copies of the bills - incorrect claim of expenditure towards conveyance of custom officials - HELD THAT:- The material sought to be produced by CBI clearly falls short of the accusations that are sought to be pressed. From the material available on record and in the light of discharge of the SCI officials, it cannot be stated that any grave suspicion can be raised against Petitioners. As held by the Apex Court in Union of India Versus. Prafulla Kumar Samal and anr [ 1978 (11) TMI 151 - SUPREME COURT ] if the judge is satisfied that only suspicion arises on prima-facie examination of evidence and not grave suspicion, the accused is entitled to discharge. In absence of prosecution of public servants, it otherwise becomes questionable as to whether CBI can be permitted to carry forward prosecution against Petitioners in the light of ratio of the judgment of the Delhi High Court in Kartongen Kemi Och Farvaltning AB and Ors. Versus. State through CBI [ 2004 (2) TMI 745 - DELHI HIGH COURT] ., holding that once charge of conspiracy against the main public servant is dropped, then the charge of abatement of conspiracy can neither be framed nor can be subjected to trial. Thus, no case of grave suspicion is made out on the basis of material available on record. Continuation of proceedings against Petitioners would therefore be a mere empty formality, with no chance of prosecution securing conviction. Continuing of prosecution in such circumstances would be abuse of process of law. The order dated 23 November 2017 passed by the learned Special Judge is set aside and Petitioners are discharged - petition allowed.
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2024 (8) TMI 1417
Request for provisional release of the goods for back to town - It is Petitioner s case that there is no point in keeping the goods in the port anymore because the goods are not going to be exported and unnecessarily detention charges, container rental charges etc. are being incurred - HELD THAT:- Respondent No.3 has annexed documents relating to various other cases where Petitioner has been imposed with penalty which, according to Dr. Kantawala, are under challenge in this Court. In the affidavit-in-reply, it appears that this past history of Petitioner is being narrated to justify insistence of a security by way of bank guarantee / cash security. According to Respondent No.3 since investigation is in progress, the adjudicating authority has allowed provisional release of the goods on execution of bond equivalent to total FOB value of Rs.4,57,67,604/- and furnishing a security cover in form of bank guarantee / cash security of Rs.68,65,140.60/- being 15% of the declared FOB value. Reliance placed upon paragraph 4 of the Board Circular No.01 of 2011 dated 4th January 2011 - the Circular says endeavour should be to quickly undertake the necessary action and take appropriate legal action there is nothing to indicate this has been achieved. There is no explanation as to how a Board Circular can be issued in variance with the provisions of Section 110A of the Act - Section 110A only provides for releasing goods to the owner on taking a bond with such security and conditions as the adjudicating authority may require where goods are seized under Section 110A. In this case admittedly there is no seizure of any goods. The impugned communication dated 18th June 2024 set aside - Respondent No.3 shall release the goods back to town within two weeks upon Petitioner submitting (i) a bond in the format as prescribed by the department, (ii) solvency certificate from its bank and (iii) an undertaking from Petitioner s Director Mr. Yadavendra Kumar Roy to remain present whenever summoned subject to atleast 5 days advance notice being given - petition disposed off.
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2024 (8) TMI 1416
Time lines for filing SCN - failure to follow the time frame in the present proceedings - Mandatory requirement of issuing the show cause notice within 90 days from the date of receipt of offence report not getting fulfilled - HELD THAT:- Regulation 20(7) of the CBLR 2013 is paramateria with the Regulation 17(7) of the present Customs Broker License Regulation, 2018 which is applicable in the present case before - As per the ratio laid down by the Hon ble High Court in M/S. A.B. AGENCIES VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL AND COMMISSIONER OF CUSTOMS [ 2015 (8) TMI 143 - KERALA HIGH COURT] , it is that the time limits set are not mandatory in nature but only directory in nature. Therefore, the view of the appellant cannot be subscribed that the entire proceeding would get vitiated, since the time limit framework has not been followed by Revenue. However, even if these time limits are taken as directory, still we find that the Department has taken unduly high time to issue the show cause notice and to finalise the Order-in-Original even after the Enquiry Report was received from the Deputy Commissioner, Customs. Coming to the facts of the case, admittedly, there are no reference to the present appellant in the show cause notices issued to two importers. As a matter of fact, these show cause notices should have brought in the role, if any, played by the present appellant in the alleged clandestine activities, which the Revenue has failed to do so. Thus, the only point on which the Department is relying upon is the alleged offence committed by the H-cardholder employee who is operating at Chennai, whereas the appellant is located at Hyderabad. The fact that the activity was carried out during the COVID period is also required to be considered, wherein the appellant had to operate with very minimum staff and had no direct control over the transactions being carried out by the employee at Chennai. The revocation of CHA License set aside - the Authorities are directed to immediately restore the CHA License - Though no direct involvement of the appellant is brought out in the entire transaction, but still some part of negligence cannot be ruled out. Therefore, this would call for penalty. However, considering the fact that the appellant has been out of business for more than one year and has suffered loss on account of this, the penalty reduced to Rs. 5,000/-. Appeal allowed in part.
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2024 (8) TMI 1415
Confiscation - levy of redemption fine and penalty - misdeclaration of imported goods - the entire consignment was not heavy melting scrap but consisted of iron rods - HELD THAT:- The examination report placed on record clearly establishes that the goods imported were partly Heavy Melting Scrap and partly Iron Rods, this fact is not disputed. Based on this examination report, the appellant requested for reassessment and as rightly argued by the Revenue they have not asked for mutilation instead sought reassessment. At the time of reassessment, the classification and valuation undertaken by the Revenue is also not disputed. Having cleared the goods on the basis of the examination report which is not disputed, now in the grounds of appeal cannot challenge the classification of the said goods. In fact, the appellant admits that inadvertently the supplier could have sent the rods along with the scrap. Taking into account that in similar circumstances this Tribunal in the case of M/S. MINAR ALLOYS AND FORGINGS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (APPEALS) , COCHIN. [ 2024 (8) TMI 1320 - CESTAT BANGALORE] had upheld the classification of Iron Rods and valuation based on contemporaneous prices. Hence, there are no reason not to accept the classification and valuation as decided by the Commissioner in the impugned order. However, the fact that all the documents that accompanied the consignment declared the goods only as Heavy Metal Scrap; and there is no dispute that the appellant had also placed the purchase order only for Heavy Metal Scrap; and only after examination part of the goods, it was found to be Iron Rods cannot be alleged as misdeclaration on the part of the appellant - the confiscation of goods under Section 111 (l) and (m) is set aside along with redemption fine and penalty under Section 112 (a) of the Customs Act, 1962. The demand of duty is confired - the impugned order modified only to the extent of setting aside redemption fine and penalty - appeal disposed off.
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Insolvency & Bankruptcy
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2024 (8) TMI 1414
Amendments made in the Articles of Association in Extra Ordinary General Meeting held on 30.09.2014 amending Article of Association, Article 59 and Article 60 - entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013 or not - amendment of Articles 59 and deletion of Article 60 could be done by a special Resolution as passed in the AGM dated 03.05.2019 or for amendment of Article 59 and deletion of Article 60, requirement was that all Members of the Company to agree for amendment, i.e., all 12 Members as existing on the relevant date - error in approving the meeting held on 03.05.2019 - nominee under Section 113 of the Companies Act is bound to exercise his powers as per the decision of Board of the Company - reappointment of Deepak as Executive Chairman of the FCL. Whether the amendments made in the Articles of Association in Extra Ordinary General Meeting held on 30.09.2014 amending Article of Association, Article 59 and Article 60 were to be treated to be entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013? - HELD THAT:- There was no concept of entrenched articles in 1956 Act, as now has been brought by Section 5, sub-sections (3) and (4). An entrenchment provision in the Articles, which identifies special provisions, which can be altered only, if the conditions or procedure, which are much more restrictive than those applicable in the case of special resolution as is applicable for altering any provision of the Articles are met - The Resolution passed on 30.09.2014, cannot be said to be a Resolution, which was agreed to by all the Members of the Company. In the Meeting held on 30.09.2014, neither Prakash, nor Vijay the brother of Deepak were present. Thus, the Resolution dated 30.09.2014, cannot be said to be agreed to by all the Members of the Company. Hence, the statutory requirement to treat the Articles as entrenched Articles cannot be accepted. The statutory scheme of Section 5, sub-section (4) provides that amendment in the Articles providing for entrenchment shall only be made by an amendment in the Articles agreed to by all the Members of the Company in the case of a private Company. Thus, Articles 59 and 60, which were approved by the Company in the AGM dated 30.09.2014, cannot be held to be entrenched Articles. It goes without saying that entrenched Article within the meaning of Section 5, sub-section (3) can be amended only when its is agreed by all the Members of the Company. The amendments made in Articles of Association in AGM held on 30.09.2014, amending Articles 59 and 60, cannot be treated to be entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013. Whether the amendment of Articles 59 and deletion of Article 60 could be done by a special Resolution as passed in the AGM dated 03.05.2019 or for amendment of Article 59 and deletion of Article 60, requirement was that all Members of the Company to agree for amendment, i.e., all 12 Members as existing on the relevant date? - Whether the Adjudicating Authority committed error in approving the meeting held on 03.05.2019 by the impugned order? - HELD THAT:- The amendment in Article 59 and deletion of Article 60 was made in exercise of power under Section 14 by Special Resolution. The Resolution dated 03.05.2019 was passed as a Special Resolution, which is apparent from the result of the Scrutinizer. Thus, alteration of Article 59 and deletion of Article 60 was fully permissible by Special Resolution and it did not require agreement of all the Members of the Company, Articles 59 and 60 being not entrenched Articles as held above. Thus, it cannot be held that Resolution passed by EOGM on 03.05.2019 was not in accord with the provisions of the Companies Act, 2013 and the Articles of Association. The amendment of Article 59 and deletion of Article 60 could be done by Special Resolution as passed in EOGM dated 03.05.2019 and there was no requirement of agreement by all the Members of the Company, i.e., all twelve Members, as existing on the relevant date. (Pralhad Prakash Chhabria having died on 05.05.2016, reducing the Member numbers from 13 to 12) - The Adjudicating Authority did not commit any error in approving the EOGM held on 03.05.2019. Whether nominee under Section 113 of the Companies Act is bound to exercise his powers as per the decision of Board of the Company? - HELD THAT:- Section 113 of the Companies Act is bound to exercise his power as per the decision of the Company or he having been appointed a representative of the Company is free to exercise his right, as per his discretion. Sub-section (2) of Section 113 throws a clear light on the statutory intendment. Sub-section (2) provides that a person authorised by resolution under sub-section (1) shall be entitled to exercise the same rights and powers, including the right to vote on behalf of the body corporate, which he represents as that body could exercise if it were an individual member. What is manner and exercise of a representative of the Corporation at the meeting of Companies is, as per the decision of the Body, which has authorized individual Member to cast his vote. Authorised representative is merely an Agent of the Company and is bound to act as per directions of the Board or Board of Directors. A representative under Section 113 of the Companies Act, 2013 is bound to exercise his representation as per the decision of the Board of the Company. In event Board has not given any specific decision for exercise of power, the representative is free to exercise his representation as per his will. Whether the result of the Annual General Meeting held on 29.09.2023 on Resolution No. 4 with regard to reappointment of Deepak as Executive Chairman of the FCL need to be interfered with in this Appeal? - HELD THAT:- The result of AGM held on 29.09.2023 on Resolution No.4 with regard to re-appointment of Mr. Deepak Chhabria as Executive Chairman of the FCL, need no interference in this Appeal. The relief, if any, to which the Appellant is entitled to in this Appeal? - HELD THAT:- NCLT should proceed to decide the Company Petition No. 47 of 2016 finally. The pleadings by both the parties in the Company Petition having already been completed long ago, we are of the view that ends of justice will be served in observing that NCLT shall endeavour to dispose of Company Petition No. 47 of 2016 as early as possible, preferably within a period of six months from the date of copy of this order is produced. The impugned order dated 31.12.2019 passed in MA No. 1449 of 2019 is not interfered with - The decision of Annual General Meeting held on 29.09.2023 on Resolution No. 4, which took place during the pendency of this Appeal is not interfered with - The NCLT is requested to finally decide the Company Petition No. 47 of 2016 expeditiously, preferably within a period of six months from the date of copy of this order is produced.
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2024 (8) TMI 1413
Lease hold right in the Tea Gardens - control to be taken by the Resolution Professional under Section 18(f) and Section 25 of the I B Code - renewal of period of lease - non-payment of Salami as required under West Bengal Estate Acquisition Rules 1954 by the Corporate Debtor while executing the renewal of the lease deed - possession of all the Tea Estates. Whether the Corporate Debtor has lease hold right in the Tea Gardens, which are assets of the Corporate Debtor which need to be taken control by the Resolution Professional under Section 18(f) and Section 25 of the I B Code? - HELD THAT:- The Tea Gardens which have been leased out to the Corporate Debtor are Tea Garden which are owned by the State of West Bengal. The Corporate Debtor does not have any Ownership Right in the Tea Garden hence the main sub-Clause (f) of Section 18 does not cover the Tea Garden. However, the definition in Section 18 (f) is inclusive definition which is apparent in the expression including occurring in the end of sub-Section (f) and sub-Clause (iv) refers to Intangible Assets including Intellectual Property. The Leasehold Rights are Intangible Assets, which is now a settled proposition of law. The present is the case where Tea Gardens are owned by State of West Bengal and the Corporate Debtor claimed possession by virtue of Contractual Arrangement i.e., Lease Arrangement. In the present case, thus whether by virtue of explanation to Section 18(1) of the IBC, Tea Gardens had to be excluded from the definition of Assets is a question to be answered. The submission which has been advanced by the Respondent is that Leasehold Rights of the Corporate Debtor had come to an end by efflux of time on the date, when CIRP commenced, hence the provision of Section 18(1)(f) and Section 25 does not empower the RP to pray for possession and custody and control of the Assets. Whether with regard to those Tea Gardens where period of lease has come to an end before commencement of the CIRP and application for renewal has been filed by the Corporate Debtor, the lease shall be deemed to be renewed since no decision has yet been taken by the State of West Bengal either accepting or rejecting the application? - HELD THAT:- Case of the Appellant is that Application for renewal was filed before the expiry of the term of the Lease. The Clause 16 of the Lease as extracted above clearly indicates that Lease shall be entitled to renewal for further period of 30 Years subject to the rules and terms and conditions of the Lease and such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases - the Clause itself contemplates that renewal is not automatic nor Clause 16 contains concept of extension of the Lease. Renewal has to be made by the State in such terms and conditions as State Government may impose while renewing the Lease. The law is well settled that when original Lease Deed contemplates the renewal of the Lease, the renewal has to be in accordance with the terms of renewal as contemplated in the Lease in question. Although, renewal is contemplated for further period of 30 Years, but the said renewal is hedged by the rules and terms and conditions of the Lease and such other terms and conditions as the State Government may from time to time may impose. Whether renewal of the lease deed of Kilcott Tea Estate w.e.f. 15.11.1995 till 23.08.2025 has to be treated to be valid renewal, similarly, renewal of lease deed of Garganda w.e.f. 08.11.1996 to 18.09.2026 has to be treated as valid renewal and renewal of lease deed of Bagrakote Tea Division-I dated 19.06.1998 has to be treated as a valid renewal? - Whether non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules 1954 by the Corporate Debtor while execution of renewal of lease deed shall make the renewal void and inoperative? - HELD THAT:- At the time of renewal, it was open for the State to put terms and conditions and renewal could have been granted on such terms and conditions as the State Government may from time to time consider it necessary to impose. Admittedly, at the time of renewal, which was dated 15.11.1995, the Notification dated 01.06.1994 was already enforced, adding Clause 1-A and 1-B in the Form-1, requiring payment of Salami of Rs.15,000/- per hectare at the time of execution of lease. However, in the renewed Lease Deed, as extracted above dated 15.11.1995, it is clear that although expression Salami has been used in the Lease Deed, but no amount of Salami was mentioned and only rent was mentioned, which was @ Rs.13,180 per annum. It is further relevant to notice that renewed Lease Deed was executed on behalf of State by Additional District Magistrate Additional Collector, Jalpaiguri - the execution of Lease by Additional District Magistrate and Additional Collector, Jalpaiguri was on behalf of the Governor, who was competent to execute the lease. Earlier, original leases were also executed by District Authority of similar designation. Renewal of Lease Deed of Kilcott with effect from 15.11.1995 till 23.08.2025 and renewal of Lease Deed of Garganda, with effect from 08.11.1996 to 08.09.2026 and renewal of Lease Deed of Bagarcote from 19.06.1998 till 22.05.2028 are valid renewals and the Corporate Debtor shall have subsisting leasehold rights in the above Tea Gardens on the date of commencement of CIRP, i.e. 05.03.2020 - Non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules, 1954 (as Amended) by the Corporate Debtor by execution of lease of renewal, does not make the renewal void and inoperative, whereas the renewal of Lease Deed also uses expression Salami , but it does not provide for payment of any Salami as condition of renewal of lease. Whether order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256/KB/2020 rejecting the application with regard to four Tea Gardens - Dhumchipara, Garganda, Tulsipara and Hantapara deserve to be set aside? - HELD THAT:- The order of Adjudicating Authority dated 28.05.2021, although is liable to be affirmed with regard to rejection of Application, with regard to three Tea Gardens, namely Dumchipara, Tulsipara and Hantapara, but the Application was not liable to be rejected with regard to Garganda Tea Garden, which lease was renewed by the State of West Bengal by executing a registered renewed Lease Deed dated 08.11.1996. Thus, the order dated 28.05.2201 deserve to be partly set aside, insofar as it related to Tea Garden Garganda. It is held that RP was entitled to take custody and possession of Tea Garden Garganda, whose lease having been renewed on 08.11.1996 and the Corporate Debtor has subsisting right in the Lease Deed till 08.09.2026. Whether the Adjudicating Authority committed error in relying on order dated 28.05.2021 in IA No.1256/KB/2020 while deciding the subsequent applications filed by the Resolution Professional for taking possession of different Tea Estates? - HELD THAT:- While rejecting other Applications filed by the RP for taking possession of Tea Gardens, reliance has been made on order dated 28.05.2021 passed in IA No.1256/KB/2020. It is to be noted that the possession of all four Tea Gardens, which was subject matter of IA No.1256/KB/2020 was handed over to the Merico by the Corporate Debtor under Bipartite Agreement and hence, the possession of those four Tea Gardens were handed over prior to initiation of CIRP - mechanically relying on the order dated 28.05.2021 in IA No.1256/KB/2020 is not sustainable. While passing the subsequent orders, rejecting the IAs filed by the RP, the Adjudicating Authority was required to consider the Applications. In any view of the matter, we have already considered and held above that the leasehold rights of the Corporate Debtor, subsisting in three Tea Gardens namely Garganda, Kilcott and Bagarcote. Hence, the Applications filed by the RP, insofar as above three Tea Gardens, deserve to be allowed. Whether possession taken by the Sammelan and Marico subsequent to order dated 05.03.2020 is in violation of provisions of Section 14 of the I B Code with respect to Tea Gardens except the four Tea Gardens which were subject matter of IA No.1256/KB/2020? - HELD THAT:- The Corporate Debtor has subsisting rights in three Tea Gardens, i.e., Garganda, Kilcott and Bagracote-I as noticed above. Although, possession of Garganda was taken prior to enforcement of moratorium, but possession of Kilcott and Bagaracote was taken respectively on 03.11.2021 and 01.07.2021 as noticed above. The Corporate Debtor has subsisting rights in the above leases of Bagaracote and Kilcott, which were renewed. Hence, after the enforcement of the moratorium on 05.03.2020, the possession of Tea Estates of the Kilcott and Bagaracote could not have been taken. It is true that the State was the owner of Tea Estates and due to suffering of labour, the Department of Labour, Govt. of West Bengal and Labour Commissioner held various meetings to mitigate the sufferings of the labourers, the possession of different gardens were handed over to Sammelan to the aforesaid two Tea Gardens, but moratorium having enforced, taking possession of aforesaid two Tea Gardens is in clear breach of Section 14 (1) (d). With regard to other Tea Gardens whose leases have expired, State was owner of all the Tea Estates and it is a case of the Department that lease of Tea Gardens were not renewed and possession was taken. There being no subsisting right of the Corporate Debtor in the Tea Gardens, except the three Gardens, i.e. Garganda, Kilcott and Bagracote. We do not find any infirmity with regard to handing over possession to Marico and Sammelan for running other Tea Gardens after enforcement of moratorium. Thus, violation of moratorium under Section 14(1)(d) has to confine to two Tea Gardens where the Corporate Debtor has subsisting rights, i.e., Kilcott and Bagracote. Whether Appellants are entitled to be handed over the possession of all the Tea Estates for which applications were filed? - HELD THAT:- It is already observed that the rejection of the Application, IA No.1256/KB/2020 is not sustainable with regard to Tea Estate of Garganda for which lease was renewed on 08.11.1996 as the Corporate Debtor had subsisting leasehold right in Garganda. Hence, the Application filed by RP, ought not to have been rejected for Tea Garden Garganda. Similarly, coming to IA No.1111/KB/2021, which was filed for possession for Nagaisuree and Kilcott Tea Gardens. We have already held that lease for Kilcott was renewed with effect from 15.11.1995 till 23.08.2025. Hence, the Application, IA No.1111/KB/2021, ought not to have been rejected with regard to Tea Garden Kilcott and the RP was entitled to take possession and custody of Tea Garden Kilcott - Coming to the Application, IA No.665/KB/2021, which was filed for taking possession of Bagracote Tea Estate Div.I, II, III and IV. We have noticed above that with regard to Bagracote Div.I, lease was renewed with effect from 19.06.1998 for 30 years, hence, the Corporate Debtor/ has subsisting right. Thus, the Application, IA No.665/KB/2021, ought not to have been rejected with regard to Bagracote Div.I. Relief, if any, to which Appellant may be entitled? - HELD THAT:- The leasehold rights of the Corporate Debtor subsist in three Tea Gardens, namely- Garganda, Kilcott and Bagracote, where the lease has been renewed and valid as follows: 1. Garganda valid upto 08.09.2026; 2. Kilcott valid upto 23.08.2025; and Bagarcote Div. I valid upto 22.05.2028. The orders rejecting the IAs of RP insofar as the aforesaid three Tea Gardens are concerned are unsustainable and deserve to be set aside - appeals disposed off.
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PMLA
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2024 (8) TMI 1412
Seeking grant of regular bail - money laundering - Scheduled Offence - Admissibility of statements - Scope of Inquiry under Section 45 of PMLA -reasonable grounds for believing - foundational facts-under Section 24 PMLA - Admissibility of the Statement of the Appellant - when a person is in judicial custody/custody in another case investigated by the same Investigating Agency, whether the statements recorded (in this case the statements dated 03.08.2023, 04.08.2023, 11.08.2023) for a new case in which his arrest is not yet shown, and which are claimed to contain incriminating material against the maker, would be admissible under Section 50? HELD THAT:- Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ] though held that the authorities under the PMLA are not police officers, did anticipate a scenario where in a given case, the protection of Section 25 of the Evidence Act may have to be made available to the accused. The Court observed that such situations will have to be examined on a case-to-case basis. This Court in Vijay Madanlal Choudhary anticipated the myriad situations that may arise in the recording of the Section 50 statement and discussed the parameters for dealing with them. In Rajaram Jaiswal vs. State of Bihar [ 1963 (4) TMI 68 - SUPREME COURT ], a judgment quoted in extenso in Vijay Madanlal Choudhary, this Court observed that the expression police officer in Section 25 of the Evidence Act is not confined to persons who are members of the regularly constituted police force. In the facts of the present case, we hold that the statement of the appellant if to be considered as incriminating against the maker, will be hit by Section 25 of the Evidence Act since he has given the statement whilst in judicial custody, pursuant to another proceeding instituted by the same Investigating Agency. Taken as he was from the judicial custody to record the statement, it will be a travesty of justice to render the statement admissible against the appellant. There are no hesitation in holding that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under Section 50 PMLA to the same Investigating Agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same Investigating Agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker, as such a course of action would be contrary to all canons of fair play and justice. Since the words procedure established by law occurring in Article 21 has to be a reasonable and valid procedure, the statement of the appellant under Section 50 cannot be read upon in ECIR No. 5 of 2023 even though the appellant was at that point in custody in ECIR No. 4 of 2022. Misuse of Jail facilities by the Appellant - HELD THAT:- Elaborate contentions have been made on the conduct of the appellant about certain facilities having been extended to him in jail. It is not rrequired to comment on them and if at all there is any violation of the prison Rules, the Investigating Agency ought to take up with the higher officials of the Jail. On the facts of the present case, they are not reasons enough to deny the appellant his liberty. The judgment of the High Court of Jharkhand at Ranchi is set aside - the Trial Court is directed to release the appellant on bail on furnishing bail bonds for a sum of Rs. 5 lakh with 2 sureties of the like amount and subject to fulfilment of conditions imposed - appeal allowed.
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2024 (8) TMI 1411
Refusal to grant bail to the appellant (woman) - Applicability of proviso to Section 45(1) of the Prevention of Money-Laundering Act, 2002 (PMLA) for women - appellant indulged herself into tampering with the evidence and influencing the witnesses - HELD THAT:- The proviso to Section 45(1) of the PMLA permits certain category of accused including woman to be released on bail, without the twin requirement under Section 45 of the PMLA to be satisfied. No doubt that, as argued by the learned ASG, in a given case the accused even if a woman may not be automatically entitled to benefit of the said proviso and it would all depend upon the facts and circumstances of each case. However, when a statute specifically provides a special treatment for a certain category of accused, while denying such a benefit, the Court will be required to give specific reasons as to why such a benefit is to be denied. The learned Single Judge in the present case, while denying the benefit of the proviso to Section 45(1) of the PMLA, comes to a heartening conclusion that the appellant is highly qualified and a well-accomplished person. The learned Single Judge further observed that the appellant has made significant contributions to politics and social work. The learned Single Judge further observed that while deciding her bail application, the Court may appreciate her accomplishment, however, it cannot lose sight of the serious allegations levelled by the prosecution and the evidence collected during the course of the investigation and presented before the Court. The learned Single Judge thereafter proceeds to observe that the present appellant cannot be equated to a vulnerable woman - the learned Single Judge erroneously observed that the proviso to Section 45(1) of the PMLA is applicable only to a vulnerable woman . A perusal of the judgment of this Court in the case of Saumya Chaurasia [ 2023 (12) TMI 685 - SUPREME COURT ] would show that this Court has observed that the Courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45 of the PMLA and similar provisions in the other Acts. The Court observes that the persons of tender age and women who are likely to be more vulnerable may sometimes be misused by unscrupulous elements and made scapegoats for committing such crime. The learned Single Judge of the High Court has totally misdirected herself while denying the benefit of the proviso to Section 45(1) of the PMLA. The impugned judgment and order passed by the learned Single Judge of the High Court of Delhi at New Delhi are quashed and set aside - Appeal allowed.
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2024 (8) TMI 1410
Grant of regular bail - third bail application filed under Section 439 of the Code of Criminal Procedure, 1973 - Money laundering - scheduled offences - illegal extortion on Coal Transportation - applicability of Section 45 of the PMLA, 2002 - offence punishable under Sections 3 4 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- From bare perusal of ECIR as well as observation made by Hon ble the Supreme Court in case of the present applicant wherein Hon ble the Supreme Court while rejecting the bail of the applicant has recorded its finding that there is sufficient evidence collected by the respondent Enforcement Directorate to prima facie come to the conclusion that the applicant who was Deputy Secretary and OSD in the Office of the Chief Minister, was actively involved in the offence of Money Laundering as defined in Section 3 of the PMLA, 2002. As against that there is nothing on record to satisfy the conscience of the Court that the applicant is not guilty of the said offence and the special benefit as contemplated in the proviso to Section 45 of the PMLA, 2002 should be granted to the applicant who is a lady. The order-sheet of the case would demonstrate that the trial could not be proceeded on the count that other accused are not available or various applications were filed by different accused to delay the trial. The order-sheet further reflects that despite the directions issued by the trial Court seeking presence of the accused, the accused have not appeared before the trial Court causing delay in trial, therefore, various steps have been initiated for seeking their presence - the other accused are not seeking their presence before the trial Court, therefore, the trial has not begun, as such it cannot be said that the trial is being delayed without any rhyme and reason. Therefore, the submission made by learned senior counsel for the applicant that there is delay in trial, therefore, the applicant is entitled to be released in bail, deserves to be rejected. In the present case, considering that the applicant has remained only 1 year 8 months, the accused are not cooperating with the trial and the applicant has not fulfilled the twin conditions for grant of bail under the PMLA, 2002 - the third bail application filed by the present applicant also deserves to be rejected and accordingly, it is rejected - Application dismissed.
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Service Tax
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2024 (8) TMI 1448
Levy of service tax - Real Estate Agent - sale of land which was intended to be purchased initially for a profit - HELD THAT:- The appellant is dealing in purchase and sale of the land during which some profit is earned. As per the department, the said profit is liable to be taxed as Real Estate Agent Service. This issue has been considered in various judgments - reliance can be placed in NILESH T PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2023 (5) TMI 97 - CESTAT AHMEDABAD] where it was held that ' We find that under the same arrangement of activity of purchase of land from farmers / landowners and re-sale the same to Real Estate Developers, in the present case M/s. Sahara India Commercial Corporation Limited, this Tribunal has taken a view that under this arrangement the purchaser and re-seller of land cannot be treated as Real Estate Agent for charging service tax under the said category.' Thus, the issue in hand stand settled in favour of the appellant, therefore, the demand is not sustainable - the impugned order is set aside - appeal allowed.
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2024 (8) TMI 1409
Levy of service tax - Road Cutting Charges - Land Application Processing Charges - Street Light Charges - whether nature of service on which demand of service tax has been confirmed are either exempted services or no service element is involved? - determination of differential value of service tax - invocation of extended period of limitation - suppression of facts or not. Road cutting charges - demand confirmed as no documentary evidence has been produced by the appellant to show that the said amount is actually used for construction or repair of road - HELD THAT:- The case of the revenue is not that the roads are not for use by general public. The objection rather is that in the absence of documentary evidence, it is not clear that this amount is actually used for construction or repair of roads. The appellant has submitted the copy of the ledger which shows that against the total amount of ₹67, 500, the appellant received sum of ₹57,700/- for road cutting charges from Gail Gas Dewas and thereafter small amounts of ₹3,000/- have been received from other companies which, according to the appellant have been received for construction of public road, which has been damaged by them on account of their personal work done on the public road at industrial area in Dewas. There is no reason to deny the benefit of the exemption notification and therefore, the demand of service tax is unsustainable. Land Application Processing Fees - HELD THAT:- The description given by the appellant is that the fees charged for processing the land application form for the allotment of land to industrial units, is actually the purchase of land application form for purchase of land for which forms are generally published online and the industrial units submit the required details in the said application along with the land premium which is actually related to the purchase of the land. The processing fees does not relate to any specific activity of processing. The learned counsel for the appellant agreed upon that the term land application processing fees has been wrongly interpreted by the revenue without appreciating the nature of activity involved. Hence, there is no service element involved therein and therefore, no service tax is leviable. Street Light Charges - HELD THAT:- The first and the primary condition is that the person enters into a contractual agreement with the recipient of service to incur expenditure or cost in the course of providing taxable service, however, as noted by the authorities below, the appellant failed to submit the copy of agreement or contract with MPEB to show that he was acting as their pure agent. Further, the appellant has not even submitted any proof of payment or expenses to MPEB, which is specifically provided in the definition that the person receives the actual amount incurred to procure such goods or services. In view thereof, the appellant is not entitle to any relief on that account and is liable to pay the service tax as confirmed by the authorities below. The differential value of service tax has been included by the revenue on the ground that the appellant had justified sum of ₹25,27,169/- only out of the total taxable value shown as Rs.25,83,338/- and therefore on the amount of ₹56,169/-, service tax is leviable - HELD THAT:- It appears that amount of Rs.25,83,338/- has been directly taken from Note 16 of the balance sheet, whereas the appellant had taken the amount as per the Ledger records. The revenue was required to clarify the service under which the differential amount of ₹56,169/- was chargeable. The appellant has rightly contended that no service tax can be determined without clarifying the category of service under which the said amount can be attributed. Consequently, the service tax on account of differential value cannot be sustained. Extended period of limitation - suppression of facts or not - HELD THAT:- The revenue has taken the details of the valuation from the balance sheet and the profit and loss account maintained by the appellant. Hence there is no suppression justifying the invocation of the extended period of limitation. Since the demands under the different categories has been confirmed by invoking the extended period of limitation, which is not invokable, the impugned demands are unsustainable. The impugned order deserves to be set aside - Appeal allowed.
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2024 (8) TMI 1408
Levy of service tax on the amount received as reimbursements towards the expenses incurred for purchase of consumables - demand has been confirmed on the ground that the consumables used by the appellants for providing the MMR services were agreed to be reimbursed to the appellant but the appellant had failed to fulfill the conditions prescribed under Rule 5 (2) of the Valuation Rules. HELD THAT:- The dispute is with respect to all the consumables supplied by the vendors to the appellants for being used for clients while rendering MMR Service. In the agreements it is expressly agreed that the consumables shall be directly purchased by the appellant on behalf of the clients. The cost of the same is agreed to be recovered from the clients and there is no element of profit involved in it. The recovery of cost of the same should not be the part of the gross value of services provided by the appellant. The expenses incurred by the Appellant towards consumables, which are reimbursed on actuals by service recipient, are not towards any service provided by the Appellant. The consideration or gross amount charged for the MMR Service of property (mall) is the management fee charged by the Appellant, on which service tax has already been paid by the Appellant. Hence, the said amount cannot be subject to service tax. There is nothing on record to show that any of the purchase remained unutilized and reverted to the appellant. There is no denial to the fact that the appellant recovers only the amount which has been paid on behalf of the recipient of service that the appellant only charges the cost of consumables and does not recover anything over and above the cost incurred by the appellant for the procurement of the said goods. The expenses incurred in procurement of consumables is recorded as cost/expense, while the amount reimbursed by the service recipient is recorded as income - in case of Bhayana Builders [ 2018 (2) TMI 1325 - SUPREME COURT ] establishes that the amount reimbursed for the goods used in providing MMR service does not quality to be called as consideration of section 67. Hence no tax liability arises on this count. Thus, it stands established even by the Hon'ble Apex Court that value of reimbursable expenses incurred by the service provider, which are reimbursed by the service recipient, are not to be included in the gross amount charged for the provision of taxable service in terms of Section 67 of the Act, and Rule 5(1) of ST Valuation Rules, stipulating inclusion of such value into the value of taxable service is ultra-vires Section 67 of the Act. Invocation of extended period of limitation - suppression of facts or not - HELD THAT:- In the instant case, the sole ground for invoking extended period of limitation is that the appellant has not intimated the department of the fact of non-payment of service tax on reimbursable expenses received from service recipient under rule 5(2) of the ST Valuation Rules - Since the service tax was not payable on the said amounts, and there was no requirement to disclose the non-taxable amounts, there is neither a suppression of fact nor any intention to evade payment of service tax is imputable to the Appellant. Once the information is completely and clearly disclosed in the return in respect of taxable service, and there is no requirement to disclose non-taxable amounts, there can be no suppression by the Appellant, since the information is already available with the department - the extended period has wrongly been invoked. The service tax demand on the reimbursed amount has wrongly been confirmed. Present is not the case where the extended period of limitation should have been invoked. For the same reason penalty is also held to have been wrongly imposed - appeal allowed.
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2024 (8) TMI 1407
Denial of refund of Krishi Kalyan Cess (KKC) not transited as input tax credit to Tran-I GST Register - Transitional provisions for input tax credit under Section 140 of CGST Act - HELD THAT:- In the instant case, Krishi Kalyan Cess (KKC) was allowed to be taken as CENVAT Credit on inputs but was permitted only to be used towards payment taxes on output services or clearance of goods, also as KKC. This being the dictate of the law, framed under the CENVAT Credit Rules 2004, KKC, being collected for promotion and development of agriculture, should not be refunded as specifically denied but this denial has its effect till introduction of CGST Act w.e.f. 01.07.2017, after which the KKC was discontinued. Now the question would arise as to how the accumulated KKC as input credits could be utilised/adjusted when the CESS itself was discontinued and the existing law had authorises its use only for the purpose of payment of KKC. The answer lies in Section 142(6) and was consciously dealt by the legislature to meet such contingency. The provision contained in Section 142(6)(a) comes with a non-obstinate clause and it says that even if contrary provision is available in the existing law, then also notwithstanding availability of such provision, cash refund of CENVAT Credit lying in balance could be directed to be made in an appeal proceeding and the only exception to it is Section 11B sub- Section 2, which in the present case would not even dictate the Appellant to justify unjust enrichment, since Appellant can never go back to the existing law, upon introduction of CGST Act, to collect the same from any other person. This being the factual and legal position, there are no hesitation to hold that Appellant is entitled to get cash refund of KKC against which it had appropriately filed the refund application under Section 11B of the Central Excise Act. The order passed by the Commissioner of CGST Central Excise (Appeals-II), Mumbai hereby set aside - Appellant is entitled to get cash refund of Krishi Kalyan Cess of ₹28,30,992/- with applicable interest as per law and Respondent-Department is directed to pay the same within two months of receipt of this order - Appeal allowed.
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2024 (8) TMI 1406
Levy of service tax - Business Auxiliary Service - cash discount given by M/s. Reliance Industries Ltd in respect of early payment of the goods sold to the customer - HELD THAT:- It is found that the identical arrangement is their between Reliance Industries Ltd., and many Del-Credere Agent who was similarly placed as the present appellant. In a similar case of KHANNA POLYMERS VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2016 (8) TMI 497 - CESTAT ALLAHABAD ] the Tribunal held that ' early payment discount in this case are cash discount and received in view of early payments made to the principles and are linked to the number of days by which payment is made early and has no relation with the consideration received for rendering the service in the form of commission under the category of Business Auxiliary Services .' Thus, the demand is not sustainable. Accordingly, the impugned order is set aside - appeal allowed.
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2024 (8) TMI 1405
Liability of appellant to pay service tax - reverse charge mechanism - recovery of service tax twice - eligibility of CENVAT Credit - HELD THAT:- As per the facts, even though the appellant is liable to pay service tax but the same service tax was discharged by the service provider. This has been accepted by the revenue and on that basis the original authority has dropped the proceeding. In this fact, even though any activity liable to service tax but the service tax has been discharged even though by different person other the person liable to pay the recovery of service tax again will amount to recovery of service tax twice of the same Tax which is not permissible under any circumstances. This very issue has been considered by this Tribunal in the case of Dhariwal Industries Limited [ 2023 (10) TMI 595 - CESTAT AHMEDABAD] wherein considering the various judgments the Tribunal has held that ' once the payment of service tax was made by the transport agency which has not been altered by taking any action by the department, the cenvat credit of the said amount is also rightly available to the appellant.' Thus, it has been settled that once the service provider discharged the service tax where the service recipient is liable to pay the service tax, demand of service tax on the same service from the service recipient shall not sustain on the ground that the particular service which already suffered the service tax cannot be suffer the service tax twice on the same service. Accordingly, the service tax paid by the transport agency in the facts of the present case is the payment of service tax and not deposit. Therefore, no demand can be raised from the appellant, for the same reason once the amount paid by the transport agency being service tax amount, the appellant is eligible for cenvat credit. In the present case also the demand is not sustainable - the impugned order is set aside - appeal allowed.
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2024 (8) TMI 1404
Classification of service - Cargo handling service or construction service - Cargo handling service or manpower supply service? - Demand of service tax construction services rendered by the assessee - Penalties under Sections 77(1)(a), 77(1)(b) and 77(1)(c) of the Finance Act, 1994 as well as Rule 7C of the Service Tax Rules, 1994 - assessee have failed to take registration and not filed returns in respect of the services rendered. Cargo handling service or construction service - HELD THAT:- The entire demand has been raised only on cargo handling service and there is no separate demand raised for construction service . It is a settled law that no service tax liability can be fastened on unidentified service. It is observed that the Notice in this case was issued without specifying the nature of activity carried out by the appellant-assessee and without classifying the service under any particular category of taxable service. The entire demand has been raised in the Notice on the basis of comparison of the figures as reflected in their Balance Sheet, profit and loss account and S.T.-3 Returns, for the period from 2008-09 to 2012-13. The demand of Service Tax by comparing the turnover found in the Profit Loss Accounts/Balance Sheets/Bank Statements with that of the ST-3 Returns, without proper inquiry/investigation carried out by the Revenue and without any admissible evidence, is not sustainable - the submission of the appellant-assessee agreed upon that the demands confirmed in the impugned order without quantifying the service tax liability under each category of taxable service is not sustainable. Demand of Service Tax under the category of cargo handling service - Cargo handling service or manpower supply service? - appellant-assessee contended that they have only supplied manpower for the purpose of loading of cement in the trucks and wagons - HELD THAT:- A similar issue, in their own case for the earlier period, has already been decided by this Tribunal in M/S. SEN BROTHERS VERSUS COMMR. OF CGST CENTRAL EXCISE, BOLPUR [ 2023 (12) TMI 1345 - CESTAT KOLKATA] wherein this Tribunal held that the activity of supply of manpower for loading of cement would not be classifiable under the category of 'Cargo Handling Service' - the activity of supply of manpower for loading of cement in trucks and wagons is not liable to be classified under the category of cargo handling service - the demand of Service Tax under the 'category of cargo handling service is not sustainable. Demand of service tax construction services rendered by the assessee - HELD THAT:- The ld. adjudicating authority has excluded the value of construction services rendered to IIT - Kharagpur, NIT- Durgapur and M/s. BIT, Mesra also. The ld. adjudicating authority has arrived at the balance Service Tax payable by the appellant-assessee as Rs.2,46,75,336/-. However, the ld. adjudicating authority has not mentioned under which category the appellant-assessee is liable to pay Service tax. It is already observed that the demand of Service Tax confirmed in the impugned order is not sustainable, without specifying the category under which Service Tax is liable to be paid. In view of the above the demand of service tax under the category of 'Construction service' is not sustainable. Since the demand of Service Tax itself is not sustainable, the question of demanding interest and imposing penalty on this demand does not arise. Penalties under Sections 77(1)(a), 77(1)(b) and 77(1)(c) of the Finance Act, 1994 as well as Rule 7C of the Service Tax Rules, 1994 - assessee have failed to take registration and not filed returns in respect of the services rendered - HELD THAT:- As the services rendered by the assessee have been held to be not liable to Service Tax under the category of cargo handling service , we hold that no penalty is imposable under Sections 77(1)(a), 77(1)(b) and 77(1)(c) and Rule 7C ibid. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (8) TMI 1447
Refund of excise duty paid under protest - duty paid on by-product molasses, on its captive consumption (being exempted under Notification No. 67/95CE dated 16.3.1995, as amended) for the manufacture of exempted final products viz., Rectified Spirit and Extra Neutral Alcohol - duty paid during April 2008 to March 2010 - HELD THAT:- The issue has already been considered by this Tribunal in their own case in BANNARI SMMSN SUGAR LTD VERSUS C.C.,C.E. S. T-MYSORE [ 2018 (2) TMI 813 - CESTAT BANGALORE ]. Also taking note of the various aspects on the issue and precedent judgments and analysing the submissions made by both sides, recently this Tribunal in the case of M/S. NSL SUGARS LTD. (FORMERLY M/S. SCM SUGARS LTD.) VERSUS THE COMMISSIONER OF CENTRAL EXCISE MYSORE-I DIVISION, MYSORE [ 2024 (8) TMI 992 - CESTAT BANGALORE ] following the judgment rendered in the case of GODAVARI SUGAR MILLS LTD. VERSUS COMMISSIONER OF C. EX., BELGAUM [ 2006 (11) TMI 497 - CESTAT, BANGALORE ] has held ' relevant provisions of Rule 6 of CCR, 2004 has taken a view that credit on inputs availed and used in the manufacture of molasses, an input and intermediate by-product, which in turn is used in the manufacture of exempted final products viz., Ethyl Alcohol and denatured spirit, therefore, inputs attributable to the manufacture of molasses, on its reversal, is a sufficient compliance of Rule 6 of CCR, 2004; hence, eligible to the benefit of Notification No.67/95-CE dated 1.3.1995.' The impugned order is set aside and the appeal is allowed.
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2024 (8) TMI 1403
Rejection of appellant s preliminary objections - Appellant had raised a preliminary objection that the pre-deposit made by the Electronic Credit Ledger was not valid as due compliance to Section 83 of the Finance Act, 1994 read with Section 35F of the Act - HELD THAT:- The preliminary objections by revenue was rejected because the CESTAT rightly concluded that the circular had come into force only on 28th October 2022 and the appeal had been filed much before the circular came into force. Relying upon the judgment of the Hon ble Apex Court in COMMR. OF C. EX., BANGALORE VERSUS MYSORE ELECTRICALS INDUSTRIES LTD. [ 2006 (11) TMI 202 - SUPREME COURT ] the CESTAT held that the circular would apply only prospectively. In fact, this court in OASIS REALTY, ROMA BUILDERS PVT LTD. AND MACROTECH DEVELOPERS LIMITED, VERSUS THE UNION OF INDIA, THROUGH THE SECRETARY, (REVENUE) MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI THE JOINT COMMISSIONER OF STATE TAX, (APPEAL) V, THE DEPUTY COMMISSIONER OF STATE TAX, MUMBAI LTU THE STATE OF MAHARASHTRA [ 2022 (10) TMI 42 - BOMBAY HIGH COURT ] has held that assessee may utilize the amount available in the Electronic Credit Ledger to pay 10% of the amount of tax in dispute under Section 107 (6) of the Maharashtra Goods and Services Tax Act, 2017. Appeal dismissed.
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2024 (8) TMI 1402
Area based exemption under the provisions of the N/N. 50/2003-CE dated 10.06.2003 - denial of benefit on the ground that the khasra numbers on which the appellant unit is situated, is not notified in the Annexure II or III appended to the said Notification dated 10.06.2003 - benefit of cum-duty price - HELD THAT:- An identical issue pertaining to the previous period has been decided by the Division Bench of this Tribunal in M/S PARVATIYA PLYWOOD PRIVATE LIMITED AND AKHILESH PRATAP MD VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX-MEERUT-II AND COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS AND CENTRAL EXCISE-DEHRADUN [ 2022 (12) TMI 451 - CESTAT NEW DELHI] where it was held that ' the appellant is entitled to the benefit of recalculation of demand on cum- duty basis in accordance with explanation to Section 4(1)(b) of the Central Excise Act. We find that admittedly appellant have not collected Central Excise duty in addition to the sale price, in view of their claim of Area based exemption. Thus, the appellant shall be entitled to benefit of calculation of duty on cum-duty-price.' Cum duty benefit - HELD THAT:- It is also noted that the impugned order has allowed the benefit of cum-duty and has denied the benefit of CENVAT credit on inputs. The matter to the original authority for verifying the claim for availing Cenvat credit on the duty paid inputs, giving an opportunity to the appellant to produce all relevant invoices/ledgers and other relevant documents before the adjudicating authority to substantiate their claim for CENVAT credit - Appeal allowed by way of remand.
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2024 (8) TMI 1401
CENVAT Credit - inputs - whether Cenvat credit availed on inputs such as HR Plates, Shape Section, Channels under Tariff Chapter No.72 73 and Welding Electrode under Tariff Heading No.8311 would be admissible or not? - HELD THAT:- In the impugned order demand has been confirmed only on the basis of the Larger Bench decision in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] which is no longer a correct law and which has been set aside by the Hon ble High Court in the decisions cited supra by the Appellant. Further, it is found that this issue is no more res integra and it has been consistently held by the High Court that the decision of the Larger Bench in Vandana Global is not a good law and once the decision in the case of Vandana Global has been held to be not a good law, therefore, the Appellant is entitled to avail the Cenvat Credit on various steel items and welding electrodes. The impugned orders are not sustainable - the impugned order is set aside - appeal allowed.
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2024 (8) TMI 1400
Reversal of SAD in terms of Rule 3 (5) of Cenvat Credit Rules, 2004 - applicability of Section 11D when the SAD credit has been reversed but shown in the invoice - HELD THAT:- From the above rule 3 (5) it is clear that when any input is cleared as such whatever credit is availed on such input is required to be reversed. Therefore, the appellant have rightly reversed the amount equal to cenvat credit on such input. From the provision Section 11 D it is clear that any amount collected in excess of the duty assessed or determined and paid on any excisable goods under this Act or the rules made thereunder from the buyer of such goods in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government. This shows that any amount showing as excise duty collected but not paid shall be paid to the credit of Central Government. In the present case, admittedly the amount was determined and paid in terms of Rule 3 (5) of Cenvat Credit Rules, 2004. Therefore, the provisions of Section 11 D is not applicable. In the case of UNISON METALS LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD-I [ 2006 (10) TMI 171 - CESTAT, NEW DELHI-LB ], the larger bench of this tribunal held that 'The scheme of the law is that manufacturers shall not collect amounts falsely representing them as central excise duty and retain them, thus, unjustly, benefiting themselves. In the present cases, (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application.' In view of the above judgment, it is clear that once the amount of duty has been paid to the Government and the same is charged in the invoice, provisions of Section 11 D will not apply. The similar facts are available in the present case also in as much as the appellant have paid the amount shown in the invoice by reversing the credit in their Cenvat account. Therefore, in this fact the demand under Section 11 D is not sustainable. The impugned order is set aside - appeal allowed.
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2024 (8) TMI 1399
Remission of excise duty on the goods destroyed in fire - requirement to pay the Cenvat credit in respect of the inputs contained in the finished goods which were destroyed in fire. Remission of duty - HELD THAT:- There is no dispute that the goods were destroyed in fire . The fire accident was unavoidable and on the entire fire accident the Insurance Company also processed the insurance claimed and the same has been sanctioned to the appellant. In such case the appellant is clearly entitled for the remission of the duty in respect of the goods destroyed in fire as provided under Rule 21 of the Centra Excise Ryles, 2002 - From the plain reading of the rule 21, the objective of the Rule is that if the goods have been lost or destroyed by natural cause or by unavoidable accident at any time before the removal , the commissioner may remit the duty payable on such goods subject to conditions as may be imposed by him by order in writing. In the present case, there is no dispute that the goods have been destroyed in fire which is an unavoidable accident and there is no evidence of any mis-chief or malafide intention of the appellant in the fire accident. Therefore, as per the facts and circumstances on record, the appellant s case is clearly covered by Rule 21 of the Central Excise Act, 2002. Reversal of Cenvat credit on input as such destroyed in the fire - HELD THAT:- The appellant is not contesting as the same as has been reversed by the appellant. Accordingly, the said reversal is maintained. In the present case also the period involved is January-2006 during which there is no specific provision for reversal of credit which was brought by Rule 5 (D) (C) of Rule 3 of Cenvat Credit Rules, 2004 vide Notification No 33/2007 CE (NT ) dated 07.09.2007. Therefore, prior to September, 2007 there was no requirement of reversal of Cenvat Credit as held in the above judgments. Therefore, the appellant is not required to reverse the Cenvat credit in respect of inputs contained in the finished goods which were destroyed. The impugned order stands modified - Appeal allowed.
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2024 (8) TMI 1398
Availment of credit on jumbo bags and after printing and repacking these jumbo bags cleared for export - printing of the supplier s name on the jumbo bags - process amounting to manufacture or not - Extended period of limitation - suppression of facts or not. CENVAT Credit - process amounting to manufacture or not - HELD THAT:- The jumbo bags received by the appellant even after printing remains as jumbo bags and the same are marketable even without printing. Hence, printing cannot be incidental or ancillary to the completion of a manufactured product as is held in the case of BRAKES INDIA LTD. VERSUS SUPERINTENDENT OF CENTRAL EXCISE [ 1997 (3) TMI 120 - SUPREME COURT ] where the Hon ble Supreme Court clearly held that 'When adopting a particular process, if a transformation takes place, which makes the product have a character and use of its own, which it did not bear earlier, then the process would amount to manufacture within the meaning of Section 2(f) irrespective of the fact whether there has been a single process or have been several processes.' Therefore, availing cenvat credit on the jumbo bags as inputs which have been received for the purpose of printing is irregular in as much as the jumbo bags remains the same even after printing. Extended period of limitation - suppression of facts or not - HELD THAT:- The revenue was aware of the irregular of availment of credit in the month of August 2008 itself. Having not issued show-cause notice during the first audit they cannot allege suppression at the time of second audit - unless there is evidence to show there is wilful suppression on the part of the appellant the demand cannot be sustained beyond the normal period. The impugned order is set aside on limitation and the appeal stands allowed.
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2024 (8) TMI 1397
Method of valuation - to be valued on MRP basis under Section 4 A or under Section 4 of Central Excise Act, 1944 - sugar confectionery falling under chapter heading under 1704.90 and 1804.90 being manufactured by the appellant, the individual piece weighing less than 10 grams per piece and the same are packed in 500 grams pack - HELD THAT:- The same issue decided in the appellant s own case SWAN SWEETS PVT LTD VERSUS C.C.E. S.T. -RAJKOT [ 2023 (7) TMI 538 - CESTAT AHMEDABAD] where it was held that ' In the identical facts in the appellant s own case SWAN SWEETS PVT. LTD. VERSUS COMMISSIONER OF C. EX., RAJKOT [ 2006 (1) TMI 269 - CESTAT, MUMBAI ] it was held that wholesale pack of 500 grams to 1 kg is not retail pack and therefore taking the weight of individual piece of confectionery which is less than 10 grams will not be governed under Section 4A.' In view of the above decision in the appellant s own case the issue is no longer res-integra - the impugned orders are not sustainable and the same are set aside - appeal allowed.
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2024 (8) TMI 1396
Classification of goods - Salmonella Antigens Sets - to be classified under Central Excise Tariff Heading No. 3822 as claimed by the Revenue or 3002 as declared by the Appellant? - HELD THAT:- The identical issue decided in the appellant s own case RECKON DIAGNOSTICS P LTD VERSUS C.C.E. S.T. -VADODARA-I [ 2023 (11) TMI 718 - CESTAT AHMEDABAD] and RECKON DIAGNOSTICS P LTD VERSUS C.C.E. S.T. -VADODARA-I [ 2023 (11) TMI 884 - CESTAT AHMEDABAD] for the previous period, this Tribunal has passed order dated 17.11.2023 27.09.2023, holding that ' the classification of product WIDAL-SALMONELLA ANIGENS KIT would be correct by classified under Chapter heading 30.02, as claimed by the assessee.' The issue in the appellant s own case stand settled and the same is no longer res-integra - Appeal allowed.
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2024 (8) TMI 1395
Time limitation for issuance of SCN - relevant date in terms of section 11A of the Central Excise Act - levy of penalty under the provision of section 11AC (1) (c) of the Central Excise Act - HELD THAT:- There is no error in the finding recorded by the Commissioner (Appeals) that the relevant date in terms of section 11A of the Central Excise Act would the date on which the Supreme Court delivered the judgment i.e. 24.09.2014. If that be so, the show cause notice was issued within the normal period of limitation and there was no necessity at all of taking recourse to the extended period of limitation. Though the impugned order proceeds to impose penalty under the provision of section 11AC (1) (c) of the Central Excise Act but as it has been found that the notice was issued within the normal period of limitation, penalty can be imposed under section 11AC (1) of the Central Excise Act which would not exceed 10% of the duty or Rs. 5,000/- whichever is earlier. When the duty was levied pursuant to the directions issued by Supreme Court and the appellant was under an impression that the judgment is prospective in nature, it would be appropriate to reduce the penalty to Rs. 10,000/-. The order impugned dated 22.03.2018 is modified to the aforesaid extent only - Appeal allowed in part.
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CST, VAT & Sales Tax
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2024 (8) TMI 1394
Appropriation of amount that was due and payable to the Petitioner after the adjustment of the tax liability of the Petitioner for various assessment years - HELD THAT:- The challenge to the Impugned Order is unsustainable. However, the appropriation made in the Impugned Order is unsustainable. If the amounts are due and payable to the Petitioner after adjustment of the tax they have to be refunded back to the Petitioner. There is no question of lapsing of the aforesaid amount so as to enable the Government to appropriate the amounts of refund that is/was due and payable to the Petitioner under the provisions of the PVAT Act, 2007 and CST Act, 1956. The Respondent is directed to refund a sum of Rs. 5,89,030/- to the Petitioner. Since the amount is refundable, the Respondent is directed to refund the amount by crediting the amount in the Electronic Cash Register in terms of Section 142(8)(b) of the CGST Act. Petition disposed off.
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Indian Laws
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2024 (8) TMI 1393
Existence of valid mortgage entitling appellant to sue for a mortgage decree or not - HELD THAT:- Quite evidently, the Division Bench did not account for Section 58(f) of the Act. Indubitably, the respondent pleaded threat and coercion whilst executing/signing the Agreement, yet having accepted that he did sign the same in his own hand, the burden was on him to prove such threat/coercion. Looked at from any angle, the First Impugned Order suffers from legal errors, and cannot withstand the scrutiny of law. How and why the appellant went into slumber? - HELD THAT:- A fantastic plea was taken that the appellant had engaged a counsel only for the delay condonation MP and not to argue the main appeal. Such a contention is noted only for the purpose of outright rejection. This fantastic plea has been dealt with correctly by the Division Bench and no legal infirmity can be found therein. It is already indicated that the First Impugned Order has to be set aside. In order to do justice, quashing of the First Impugned Order would necessarily mean that the effect of the Second Impugned Order would get nullified, for all practical purposes, despite this Court being of the view that on its own merits, the Second Impugned Order cannot be faulted. However, for such legal misadventure resulting in wastage of precious judicial time of the High Court, which could have been better spent answering the call of justice raised by the teeming millions, we impose costs of Rs.1,20,000/- on the appellant. Such cost shall be deposited within 6 weeks with the Registry of the High Court, to be utilised as follows: i. Rs.40,000 for juvenile welfare in a manner to be decided by the Juvenile Justice Monitoring Committee; ii. Rs.40,000 for welfare of the Advocate-Clerks in a manner to be decided by Hon ble the Acting Chief Justice, and; iii. Rs.40,000 for legal aid in a manner to be decided by the High Court Legal Services Committee. Appeal allowed.
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2024 (8) TMI 1392
Maintainability of the complaint of the respondent-claimant on the plea that it is not a consumer under the Consumer Protection Act, 2019 or not - deficiency in service or unfair trade practice on part of the appellant in the matter of allotment of the flat in question in favour of the respondent and in its cancellation resulting in the forfeiture of the amount deposited. Maintainability of the complaint of the respondent-claimant on the plea that it is not a consumer - HELD THAT:- The issue is no longer res integra. It is more or less covered by the two decisions which have been relied upon by the NCDRC. In LILAVATI KIRTILAL MEHTA MEDICAL TRUST VERSUS M/S. UNIQUE SHANTI DEVELOPERS ORS. [ 2019 (11) TMI 1824 - SUPREME COURT] , the Medical Trust that had purchased houses for the nurses was held to be a consumer under the Act and its action in purchasing the houses was not held to be a commercial activity. In CROMPTON GREAVES LIMITED AND ORS. VERSUS DAIMLER CHRYSLER INDIA PRIVATE LIMITED AND ORS. [ 2016 (7) TMI 1700 - NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI] , the services availed for the personal use of the director of the company were not held to be for commercial purposes. In the case at hand, the complainant specifically mentions that the flat was being purchased for the purpose of residence of one of its Directors and his family and that the company is a family owned company. The mere fact that the respondent-company is a real estate company, it does not mean that the flat was purchased by it for commercial purpose or for resale so as to earn profits. It is the appellant who is contending that the respondent is not a consumer and as such the complaint is not maintainable, therefore, the burden lies heavily upon it to lead evidence to prove that the respondent in purchasing the flat in question is indulging in real estate business. There is no evidence on record to show that the flat so purchased by the respondent was in any way connected with the real estate business rather than for personal use of its Director and his family. There are no error or illegality in the finding of the NCDRC that the purchase of the aforesaid flat was for personal use and not as part of the commercial activity and as such the complaint filed by the respondent was maintainable. Deficiency in service or unfair trade practice on part of the appellant in the matter of allotment of the flat in question in favour of the respondent and in its cancellation resulting in the forfeiture of the amount deposited - HELD THAT:- The appellant instead of refunding the amount deposited by the respondents, forfeited the same vide letter dated 18.11.2017. Since the very cancellation/ termination of the allotment of the respondents in the facts and circumstances of the case is not justified, consequently the forfeiture is also bad in law. The NCDRC upon consideration of the above facts and circumstances, irrespective of the fact that the appellant may have the power to advance the date of delivery of possession of the flat allotted or offer possession on the basis of part occupancy certificate, rightly held that the appellant was guilty of adopting unfair trade practice and since there was double allotment of the flat, there was deficiency in service. Thus, the complaint of the respondents was maintainable and that since the services rendered by the appellant were held to be deficient. It has thus rightly issued directions to refund the forfeited amount of Rs. 7,16,41,493/- along with the delay compensation @ 6% per annum from the date of deposit till refund within two months, failing which the interest would be payable @ 9% per annum. The appellant is directed to refund a sum of Rs. 3,00,00,000/- (Rupees Three Crore only) out of the total amount, as directed to be refunded, within a period of two weeks from today and the balance be refunded on or before 31st December, 2024 either in lump sum or in piecemeal, failing which it will be open for the Collector concerned to recover the entire amount as arrears of land revenue. Appeal dismissed.
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2024 (8) TMI 1391
Dishonour of Cheque - compounding of offence u/s 138, N.I. Act - core contention of the appellant is that an offence under Section 138 of the N.I. Act is not compoundable under Section 320 Cr.P.C., and in such circumstances, the application was rightly dismissed by the Trial Court. Ergo, invoking the power under Section 482 Cr.P.C., coupled with those under Section 147, N.I. Act - HELD THAT:- A bare perusal of Section 482, Cr.P.C., and Section 147, N.I. Act would reveal they are different and distinct. The former being the inherent power of High Court exercisable even suo motu to give effect to any order under Cr.P.C., or to prevent abuse of the process of any court or otherwise to secure the ends of justice. However, the provision for compounding every offence punishable under the N.I. Act, under Section 147, N.I. Act, is not a power available to a Court to exercise without the consent of the complainant. It is thus well-neigh settled position that the inherent powers under Section 482, Cr.P.C., are invocable when no other efficacious remedy is available to the party concerned and not where a specific remedy is provided by the statute concerned. The High Court had clearly fallen in error in invoking the power under Section 482, Cr.P.C., as also the power under Section 147, N.I. Act, to compound the offence under Section 138 of the N.I. Act qua the respondent-accused. Hence, the impugned judgment to the extent it compounded the offence under Section 138, N.I. Act invoking the inherent power under Section 482, Cr.P.C. and the power under Section 147, N.I. Act stands quashed and set aside. There is no point in restoring the proceedings and to permit their continuance before the trial Court - Appeal disposed off.
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2024 (8) TMI 1390
Dishonour of Cheque - existence of legally payable debut supporting the cheque or not - main contention of the revisionist is that the Revisionists has claimed that only a sum of Rs. 1,03,660/- had been paid by the complainant while the cheque amount has been claimed to be Rs. 2,40,000/- which was taken by the Complainant under duress - HELD THAT:- In M/S. KUMAR EXPORTS VERSUS M/S. SHARMA CARPETS [ 2008 (12) TMI 682 - SUPREME COURT ], the Apex Court had observed that the accused in a trial under Section 138 of the Act has two options viz. either to prove that the consideration/debt did not exist or that under the facts and circumstances of the case the non-existence of consideration and debt was so probable that no prudent person would suppose that there was a consideration or the debt that existed. Similar observations had been made in MS NARAYANA MENON @ MANI VERSUS STATE OF KERALA ANR. [ 2006 (7) TMI 576 - SUPREME COURT ], wherein the Apex Court had observed that the standard of proof is preponderance of probabilities and such an inference can be drawn not only from the material on record, but also with reference to the circumstances upon which the parties reply. The standard of reasonability is that of a prudent man. Before this Court as well, the Revisionists have not been able to agitate any ground creating a doubt in the case of the complainant about the manner in which the cheque had been issued by the Revisionists in discharge of their existing liability. It would not be out of place to observe that admittedly the cost of tour per person was Rs. 1,20,000/- which explains why Rs. 2,40,000/- were paid to the Revisionists, in respect of which the cheque was issued on account of the tour having been cancelled - the Ld. MM and Ld. ASJ have rightly observed that the Revisionist failed to rebut the presumption under Section 139 and held that the cheque had been duly issued by Bhavna Chopra for and on behalf of the Revisionist Firm, in discharge of the Legal Liability. The second aspect agitated by the Revisionists is that Amit Chopra had no concern with the cheque in question. However, it is not in dispute that M/s A B Tour Travels was a partnership Firm of which both the Revisionists were partners. The cheque had been issued by Bhavna Chopra as one of the partners of the Firm; the liability being of the Firm - Since the cheque was issued for and on behalf of the Firm of which both the Revisionists are admittedly the partners, Amit Chopra cannot avoid his liability. The third ground on which the impugned judgment has been challenged is that no valid Cheque Return Memo has been produced by the complainant. The perusal of the record shows that the cheque in question Ex.CW1/A dated 13.03.2014 got deposited in ICICI Bank by pay-in slip dated 11.06.2014 Ex.CW1/B. The cheque got rejected vide Rejection Memo Ex.CW1/C. It is correct that the said Rejection Memo neither mentions the cheque number nor the date, but it bears the stamp of the ICICI Bank. It is but natural that if the cheque got deposited on 11.06.2014, the dishonour had to be subsequent to it. The fourth aspect agitated on behalf of the Revisionists is that in the absence of the date of service of Legal Notice, it cannot be said that the complaint has been filed within the time frame as provided under Section 138 N.I Act. Thus, it is held that there is no jurisdictional error in the judgment of the learned ASJ in upholding the conviction of the Revisionist under Section 138 of N.I. Act. Learned ASJ has already taken a lenient view by reducing the compensation amount to Rs. 4 lakhs and sentencing them to only a default sentence of three months in case of payment of compensation not been made within one month. There is no merit in the present Revision which is hereby dismissed.
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