TMI Tax Updates - e-Newsletter
September 25, 2024

Case Laws in this Newsletter:

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

Articles

1. Demand Order cannot be passed without issuance of SCN

   By: Bimal jain

2. Benefit of refund cannot be claimed under Inverted Duty Structure relating to manufacturing of non-edible neem oil

   By: Bimal jain

3. refund claimed by the recipient

   By: Gnanamuthu samidurai

4. Penalty cannot be imposed for expired E-way bills in the absence of intent to evade taxes

   By: Bimal jain

News

1. Archival of GST Returns data on GST portal

2. Frequently Asked Questions on IMS

3. Commerce and Industry Minister Shri Piyush Goyal attends 22nd CREDAI National Conference on second day of Australia visit

4. Union Budget 2024-25 provided for an enhanced monetary limit for filing appeals related to Direct Taxes, Excise and Service Tax in various judicial fora

5. India attends Ministerial Meeting of Indo-Pacific Economic Framework for Prosperity

6. Curtain Raiser

7. Auction for Sale (re-issue) of (i) ‘7.04% GS 2029’, ‘7.23% GS 2039’ and (iii) ‘7.09% GS 2054’

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/128 - dated 24-9-2024

Usage of UPI by individual investors for making an application in public issue of securities through intermediaries

2. SEBI/HO/MRD/POD-III/CIR/P/2024/127 - dated 24-9-2024

Parameters for Performance Evaluation of Market Infrastructure Institutions

DGFT

3. Policy Circular No. 07/2024-25 - dated 24-9-2024

Procedure for implementation of DGFT Notification no. 23/2023 dated 03.08.2023; 26/2023 dated 04.08.2023; 38/2023 dated 19.10.2023; and Policy circular no. 06/2023-24 dated 19.10.2023 beyond 30.09.2024

Customs

4. 18/2024 - dated 23-9-2024

Classification of laboratory chemicals

Highlights / Catch Notes

GST

• GST assessee's Input Tax Credit claim denied without examining evidence; High Court remands case for fresh adjudication.

  Case-Laws - HC : The petitioner had availed Input Tax Credit (ITC) from certain suppliers whose registration was subsequently cancelled. The petitioner contended that at the relevant time, the suppliers were registered under GST laws, and the petitioner had paid the invoiced amount including GST, entitling it to claim ITC. However, the adjudicating authority did not examine this contention. The High Court set aside the impugned order and granted the petitioner an opportunity to file supporting documents substantiating its claim to avail ITC within two weeks, remanding the matter for fresh consideration.
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• High Court Rules Approved Insolvency Plan Extinguishes Unlisted Statutory Dues, Overrides Tax Demands Under IBC.

  Case-Laws - HC : The High Court examined the issue of liability to clear statutory dues post-insolvency proceedings under the Insolvency and Bankruptcy Code 2016. The resolution plan approved by NCLT provided for payment of Rs. 25 crores towards clearing all statutory dues, including claims by government authorities. Referring to the Supreme Court's decision in Ghanshyam Mishra and Sons Pvt. Ltd. case, the High Court held that on the date of approval of the resolution plan, all claims not part of the plan stand extinguished. Consequently, the petitioner's liability arising under the AP VAT Act or GST Act stands extinguished to the extent of its liability up to the date of approval of the resolution plan. The contention that NCLT's order is not binding due to Section 88 of the GST Act was rejected, as Section 238 of the IBC provides for a non-obstante clause overriding other laws. The High Court allowed the petitions, setting aside the demand-cum-adjudication orders issued by the tax authorities.
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• Court Rules Against Consolidated Tax Notices; Flawed Show Cause Notices Under CGST Act Violate Legal Precedents.

  Case-Laws - HC : The High Court held that the show cause notices issued by the respondent u/s 73 of the Central Goods and Services Tax (CGST) Act, 2017, were flawed due to the improper consolidation of multiple tax periods into a single notice. Section 73(10) mandates a specific time limit from the due date for furnishing the annual return for the financial year to which the tax due relates. The law requires particular actions to be completed within a designated year, in accordance with the provisions. The Court found that issuing a consolidated show cause notice for multiple assessment years from 2017-18 to 2020-21 contravened the CGST Act and established legal precedents, such as the Supreme Court judgment in THE STATE OF JAMMU AND KASHMIR AND OTHERS VERSUS CALTEX (INDIA) LTD. The Court concluded that the respondent erred in this practice and allowed the petition.
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• Taxpayer gets opportunity to challenge Cess levy before appeals authority in GST dispute.

  Case-Laws - HC : Writ petition filed challenging the order passed by Joint Commissioner of Commercial Taxes (Appeals) regarding levy of Cess while calculating applicable tax u/s 129(1)(a) of KGST and CGST Act. Petitioner did not raise contention regarding levy of Cess before JCCT (Appeals). High Court held since ground regarding levy of Cess raised for first time, opportunity be accorded to petitioner to raise this ground before JCCT (Appeals). Matter remanded to JCCT (Appeals) permitting petitioner to raise ground regarding levy of Cess. Order of JCCT (Appeals) quashed. All other contentions kept open.
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• Taxpayer's mistaken claim of ITC rectified in revised return; High Court orders fresh hearing.

  Case-Laws - HC : The petitioner wrongfully availed input tax credit while filing GSTR-3B for 2017-18. However, the petitioner, being an honest taxpayer, noticed the mistake and rectified it by filing a revised return in August 2018, reversing the wrongly claimed input tax credit. Section 39(9) of the CGST/SGST Acts allows rectification of returns before November 30 of the following financial year. The High Court set aside the order and remitted the matter for fresh consideration by the respondent after providing an opportunity of hearing to the petitioner.
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• Enabling manual appeal filing due to non-uploading of order on portal within 1 week from certified copy receipt.

  Case-Laws - HC : Writ petition disposed of directing petitioner to file appeal against order manually within one week from receipt of certified copy of judgment as per proviso to sub-rule (3) of Rule 108 of CGST/SGST Rules, despite inability to file appeal online due to non-uploading of order on portal. Appeal to be treated as filed in time and disposed of by Appellate Authority in accordance with law after granting opportunity of hearing to petitioner.
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• Denial of input tax credit during transition to permanent registration needs reconsideration for lack of reasoning.

  Case-Laws - HC : The court held that the denial of input tax credit to the petitioner by the respondent authority requires reconsideration. The respondent failed to consider the petitioner's contention that the payments for which input tax credit was sought were made against the provisional registration number before the permanent registration number was granted. There were no reasons provided for disallowing such credit to the petitioner. Consequently, the matter was remanded for fresh consideration by the respondent authority.
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Income Tax

• Tribunal's Decision on Short-Term Loss Claim Upheld; High Court Confirms No Substantial Legal Question Involved.

  Case-Laws - HC : The Tribunal set aside the disallowance of short-term loss claimed by the assessee in the Profit and Loss Account, holding that the shares were acquired under a normal business transaction and can be treated as stock-in-trade. The High Court held that u/s 260-A of the Act, it could entertain an appeal only if it involves a substantial question of law. In the present case, the question raised by the Revenue is not a substantial question of law but a question of fact. The Revenue did not file an appeal before the Tribunal regarding the colorable device or genuineness of the transaction or the allowance of loss. The substantial question of law raised by the Revenue emanates from the order of the Commissioner of Income Tax (Appeals), not the Tribunal's order. The Revenue did not raise the issue of the genuineness of the transaction or colorable device before the Tribunal. Therefore, the High Court is not inclined to interfere with the Tribunal's order and answered the substantial question of law raised by the Revenue against them and in favor of the assessee.
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• Builders' Allotment Letters Triumph Over Tax Addition on Property Undervaluation.

  Case-Laws - AT : Section 56(2)(x) deals with the addition of the difference between the fair market value of a property and the consideration paid, to the income of the recipient. The key points are: When the consideration is fixed on the agreement date, and registration occurs later, the stamp duty value on the agreement date is relevant if payment is made through banking channels by that date. The allotment letter from the builder, containing agreed terms and payment schedule, qualifies as an agreement under this provision. If the payment made by the agreed date exceeds the stamp duty value on that date, no addition u/s 56(2)(x) can be made. The Appellate Tribunal dismissed the Revenue's appeal on these grounds.
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• Tribunal Rules Rs. 1 Crore Limit Applies Separately to Each Educational Institution's Receipts, Not Combined Total.

  Case-Laws - AT : The tribunal held that the monetary limit of Rs. 1 crore prescribed u/s 10(23C)(iiiad) read with Rule 2BC should be applied separately to the gross receipts of each educational institution run by the assessee, and not to the aggregate receipts of both institutions. The CIT(A) erred in not considering this aspect and denying the exemption claim solely on the ground that the assessee's total receipts exceeded Rs. 1 crore. The tribunal also held that the assessee's total income should be computed as per commercial principles, allowing eligible expenditure against gross receipts. Consequently, the CIT(A)'s order was set aside, and the matter was remanded to the Assessing Officer for fresh adjudication, allowing the assessee's appeal for statistical purposes.
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Customs

• Intermediaries Penalized Rs. 4,00,000 Each for Failing KYC in Export of Banned Red Sanders Under Customs Act 1962.

  Case-Laws - AT : Failure to comply with Know Your Customer (KYC) requirements in an export transaction involving banned goods (Red Sanders) resulted in the imposition of penalties u/s 114(i) of the Customs Act, 1962. The appellants, Shri Arup Mukherjee and M/s. Bose Enterprises, acted as intermediaries without adhering to prescribed procedures, neglecting to ascertain the identities and verify the credentials of their clients. Their defense that no allegation of abetment was made against them was rejected. Their omissions facilitated the attempted export of banned goods through a chain of intermediaries, and their lack of due diligence in fulfilling KYC requirements was considered a serious and deliberate omission. Although the appellants did not make a convincing case for non-imposition of penalties, considering the circumstances, a penalty of Rs. 4,00,000/- each was deemed appropriate to meet the ends of justice.
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• Customs broker cleared of misclassification charges; appeal allowed due to lack of evidence and precedent on complex classification.

  Case-Laws - AT : Customs broker misclassified goods (safety matches) to obtain higher MEIS benefit for exporter. Charges were levied u/s 114(iii) of Customs Act, 1962. Key points: Classification of goods was a long-standing practice at the Custom House; classification being complex, it is a matter of belief, not amounting to misdeclaration as per Supreme Court precedent. No evidence of customs broker colluding with exporter or illegally benefiting. Acts cannot be considered willful, deliberate, or dishonest to evade duty as per Madras High Court ruling. For lapses by customs brokers, matter should be examined under Customs Brokers Licensing Regulations, 2018. No grounds for penalty were established; hence, the order was set aside, and the appeal was allowed.
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IBC

• NCLAT Overturns Order, Highlights Key Amendments to Insolvency Code on Critical Goods and Services During Moratorium.

  Case-Laws - AT : The NCLAT held that the Adjudicating Authority failed to consider the amendments to Section 14 of the IBC introduced by Act 1 of 2020. The impugned order conflicted with the legislative scheme u/s 14(1) Explanation and Section 14(2-A). These provisions allow termination, suspension or interruption of supply of goods or services critical to preserving the Corporate Debtor's value if dues arising during the moratorium period are unpaid. The protection u/s 14(1) is subject to no default in payment of current dues. Section 14(2-A prohibits interruption of such supply only if the RP considers it critical for preserving value and managing operations as a going concern, except when moratorium dues are unpaid. The NCLAT set aside the impugned order as legally unsustainable and allowed the appeal.
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• NCLT's Jurisdiction Questioned on Pre-CIRP Closure Notice; Supreme Court Highlights Limited NCLAT Authority.

  Case-Laws - AT : Jurisdiction of the Adjudicating Authority (NCLT) to adjudicate upon a closure notice issued prior to the initiation of the Corporate Insolvency Resolution Process (CIRP). The key points are: The Adjudicating Authority did not determine its jurisdiction to pronounce on the closure notice dated 31.07.2017, issued before CIRP initiation. After CIRP initiation, all claims must be filed and examined within the CIRP/Liquidation Process. The High Court and Supreme Court orders granted liberty to raise claims and contentions before NCLT but did not adjudicate on NCLT's jurisdiction over the pre-CIRP closure notice. The Supreme Court's judgment in Embassy Property case clarified NCLAT's limited jurisdiction u/s 60(5). The closure notice, issued under the state Industrial Disputes Act prior to CIRP, is unrelated to the CIRP process. Hence, the Adjudicating Authority rightly rejected entertaining the challenge to the pre-CIRP closure notice, being outside its competence. Consequently, the appeal was dismissed as the Adjudicating Authority did not err in rejecting the application challenging the pre-CIRP closure notice.
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• Appeal Denied: Claims and Liabilities Extinguishment Limited to Pre-CIRP; E-Auction Reliefs Rejected Under IBC Regulations.

  Case-Laws - AT : The Appellate Tribunal dismissed the appeal, holding that the Adjudicating Authority rightly refused to grant reliefs and concessions to the Appellant regarding extinguishment of claims and liabilities up to the date of e-auction sale of the Corporate Debtor as a 'going concern'. The reliefs and concessions granted were limited to the period prior to the date of CIRP commencement. Claims, known or unknown, disclosed or undisclosed, are to be dealt with as per Section 53 of the IBC up to the cut-off date, i.e., the date of commencement of liquidation, as per the e-auction Notice. Regulations 12 and 16 contemplate filing of claims as on the liquidation commencement date, and there can be no extinguishment of claims up to the date of e-auction sale. The prayer for granting reliefs and concessions up to the e-auction date is not in accord with the statutory scheme of the IBBI (Liquidation Process) Regulations, 2016.
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Indian Laws

• Supreme Court: Himachal Pradesh Land Acquisition Violated Statutory Compensation Requirements, Appeal Allowed.

  Case-Laws - SC : The Supreme Court held that the acquisition proceedings failed to comply with the statutory requirement of paying full and final compensation to the landowners before taking possession of their land, as mandated by Section 38 of the Companies Act, 2013. The Court observed that the State of Himachal Pradesh regrettably took possession of the land before ensuring payment of compensation to the respondents, who had to approach the High Court for directions to pass a supplementary award. Additionally, Section 41 of the Land Acquisition Act, 1894, necessitates an agreement between the government and the company for whose purpose the land is acquired, ensuring payment towards the cost of acquisition by the company before the land transfer. However, in this case, the land was transferred to the company before determining the compensation amount through a supplementary award, contravening both statutory provisions. Consequently, the Supreme Court set aside the impugned High Court order and allowed the appeal.
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VAT

• Private company director's liability arises only after winding up order under relevant Act; else can't recover dues from them.

  Case-Laws - SC : The Supreme Court held that the liability of directors of a private company arises only when the company is wound up after the commencement of the relevant Act. Since no order of winding up was produced, Section 12(1) of the Act had no application. The court quashed the recovery notice issued against the appellant director, as there was no provision under the Act to recover dues of a limited company from its directors. The judgments of the Single Judge and Division Bench were set aside, and the appeal was allowed.
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Case Laws:

• GST

• 2024 (9) TMI 1351
  Levy of GST - pure agent or not - IIT Roorkee - Real Estate Owners, Resident Welfare Associations (RWAs), Real Estate Developers etc. as referred in circular No. 206/18/2023-GST dated 31st October 2023 or not - electricity charges that it recovers from its commercial occupants against the consideration that represents only-reimbursement of actual cost of Electricity charges (on the basis of sub-meter / separate meter) that is being charged by Uttarakhand power corporation limited (UPCL) to the IIT Roorkee - HELD THAT:- On considering the first proviso to section 98 (2) of the Act comprehensively, it is apparent that the first proviso covers any proceedings in the case of an applicant under any of the provisions of the Act including Section 65 of the Act, under which Audit under section 65 of the CGST Act, 2017 was conducted by the CGST Audit Commissionerate, Dehradun. It is found that such situation have been covered under sub section (2) of the Section 98 of the Central Goods And Services Tax Act, 2017. The proviso to sub section 2 of the Section 98 of the Central Goods And Services Tax Act, 2017, could be best interpreted that the legislative intent in its wisdom is to empower the advance ruling authority to reject the application in the cases where there is repeated filing of the application before the advance ruling authority on the same issue which is either pending for decision or already decided. It is observed that during the personal hearing, the applicant s representatives were specifically asked about the issue raised in the instant application and the issue raised by the CGST Audit Commissionerate, Dehradun, wherein it was admitted by them that the issue concerning applicability of GST on electricity charges recovered from their commercial occupants viz.-a-viz. pure agent is identical and similar in nature as raised by the Department in their audit proceedings. It was also accepted by them that they had voluntary deposited the entire GST liability along with interest through DRC-03 dated 14.03.2023. The applicant has approached the authority again, for the identical and similar issues and hence we observe that the applicant has approached this authority, on the issue which has already been decided in applicant s own case under the provisions of the Central Goods And Services Tax Act, 2017 and hence in terms of section 98 (2) of the Central Goods And Services Tax Act, 2017, the present application is not admitted and rejected without going into the merits of the case. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of Section 98 (2) of the CGST Act, 2017 and UK GST Act, 2017.

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• 2024 (9) TMI 1350
  Challenge to order-in-original - order has been passed beyond the period of limitation provided under Section 73 (10) of both the Central Act as well as the State Act - HELD THAT:- This Court had duly heard the learned counsels appearing on behalf of the parties and has given anxious consideration to the respective submissions. It is seen that there is no Notification passed under Section 168 A of both the Central Act as well as the State Act, thereby extending the period for passing the order in terms with Section 73 (10) beyond 30.04.2024 for the financial year 2018-19. Taking into account that the impugned order has been passed on 04.05.2024, the same is, therefore, without jurisdiction and accordingly is set aside and quashed. Petition disposed off.

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• 2024 (9) TMI 1349
  Wrongful availment of Input Tax Credit - registration of certain suppliers from whom the petitioner had availed the supplies, was cancelled - HELD THAT:- The petitioner responded to the impugned SCN on 30.10.2023 claiming that at the material time the suppliers from whom the petitioner had availed the supplies were registered under the CGST Act and the SGST Act. The petitioner also stated that it had paid the amount of invoice raised by the said suppliers, which included the Goods and Services Tax (GST) and, therefore, the petitioner was entitled to avail the ITC as claimed - It appears that said contention has not been examined by the adjudicating authority as the impugned order does not reflect any such consideration. The impugned order is set aside. The petitioner is granted one more opportunity to file all documents and material in support of his contention that it is entitled to avail ITC within two weeks from date - petition disposed off by way of remand.

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• 2024 (9) TMI 1348
  Liability to clear statutory dues, post-insolvency proceedings under the Insolvency and Bankruptcy Code 2016 - It is contended that the resolution plan, which was approved by the NCLT, on 04.09.2019, provided for payment of Rs. 25 crores towards clearing all the statutory dues, including claims by all Government authorities - HELD THAT:- The question of extinguishment of liability of corporate which have undergone the CIRP process came to be considered by the Hon ble Supreme Court of India in the case of Ghanshyam Mishra and Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company [ 2021 (4) TMI 613 - SUPREME COURT ]. The Hon ble Supreme Court held that On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. In the circumstances, it must be held that the liability of the petitioner, arising out of the AP VAT Act or the GST Act stands extinguished to the extent of its liability up to 4th September, 2019. The contention of the learned Government Pleader for Commercial Taxes that the order of NCLT is not binding on the State of Andhra Pradesh in view of Section 88 of the GST Act would have to be negatived in as much as Section 238 of the Insolvency and Bankruptcy Code provides for a non-obstante clause overriding all other laws. Both the Writ Petitions are allowed by setting aside the Demand-cum-Adjudication orders dated 03.06.2023, issued by the Assistant Commissioner (ST)(FAC), Kakinada and the order dated 25.11.2023 passed by the Deputy Commissioner (ST), Vijayawada - Petition allowed.

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• 2024 (9) TMI 1347
  Flawed SCN - it is contended that notices issued u/s 73 of the Central Goods and Services Tax (CGST) Act, 2017, are flawed due to the improper consolidation of multiple tax periods into a single show cause notice - HELD THAT:- This Court finds that the respondent erred in issuing a consolidated show cause notice for multiple assessment years, spanning from 2017-18 to 2020-21. Section 73 (10) of the CGST Act mandates a specific time limit from the due date for furnishing the annual return for the financial year to which the tax due relates. The law stipulates that particular actions must be completed within a designated year, and such actions should be executed in accordance with the law s provisions. The principles enunciated in the judgment cited by the Hon ble Supreme Court in THE STATE OF JAMMU AND KASHMIR AND OTHERS VERSUS CALTEX (INDIA) LTD. [ 1965 (12) TMI 125 - SUPREME COURT] are directly applicable to the present case. This Court concludes that the show cause notices issued by the respondent are fundamentally flawed. The practice of issuing a single, consolidated show cause notice for multiple assessment years contravenes the provisions of the CGST Act and established legal precedents. Petition allowed.

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• 2024 (9) TMI 1346
  Levy of Cess while calculating the applicable tax under section 129 (1) (a) of the KGST and CGST Act - contention regarding the levy of Cess was not raised before JCCT (Appeals) - HELD THAT:- Since the ground regarding the levy of Cess is raised for the first time before this Court hence, in my opinion, an opportunity may be accorded for the petitioner to raise this as a ground before the Joint Commissioner of Commercial Taxes (Appeal). Therefore, the matter requires a remand. The Writ of Certiorari is ordered. The order dated 17.09.2021 passed by the Joint Commissioner of Commercial Taxes (Appeals), Dharwad Division, Hubli in Appeal No. GST-05/2019-20 vide Annexure-A is quashed. The matter is remanded to the Joint Commissioner of Commercial Taxes (Appeals) permitting the petitioner to raise the ground regarding the levy of Cess. All other contentions are kept open - Petition allowed by way of remand.

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• 2024 (9) TMI 1345
  Wrongful availment of input tax credit while filing return in Form GSTR-3B, for the year 2017-18 - HELD THAT:- The petitioner failed to make use of the opportunity given to him to respond to the notices issued prior to the issuance of Ext. P4 order. However, the fact remains that the input tax credit claimed in Ext. P5 was so claimed at a time immediately after the introduction of GST and when the procedures were not fully clear to all the assessees. It is also evident from the record that the petitioner had not utilized the input tax credit claimed in Ext. P5 and had actually filed Ext. P6 return in the month of August 2018, reversing the input tax credit claimed in Ext. P5. The petitioner is an honest taxpayer, who had noticed his mistake and had taken steps to rectify the same by filing Ext. P6 return during the month of August-2018. Section 39 (9) of the CGST/SGST Acts indicates that where a registered person is required to revise any return filed by him, the same has to be done before the 30th day of November of the year following the financial year to which such details pertain. Therefore, in the facts of the present case, the petitioner had time till 30.11.2018 to file an application for rectification of any incorrect particular in Ext. P5. The petitioner filed Ext. P6, reversing the input tax credit wrongly claimed in Ext. P5, in the month of August-2018. The writ petition is allowed by setting aside Ext. P1 and remitting the matter for fresh consideration of the 1st respondent, who shall pass fresh orders in the matter, after affording an opportunity of hearing to the petitioner.

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• 2024 (9) TMI 1344
  Challenge to assessment order - cancellation of registration of the petitioner - HELD THAT:- The impugned orders can be set aside and the matter can be remitted to the file of the Jurisdictional Assessing Authority, namely the 1st respondent. It is inclined to do so taking into consideration the fact that the registration of the petitioner had been cancelled in the month of December 2021 and also taking into consideration the submission of the learned counsel for the petitioner that the petitioner had also stopped business thereafter. This writ petition will stand ordered directing that if the petitioner remits a sum of Rs.10 lakhs towards the GST liabilities for the months of July and August of 2017, within a period two weeks from the date of receipt of a certified copy of this judgment, Exts.P5, P5(a), P6 and P6(a) orders will stand set aside and the matter will stand remanded to the files of the 1st respondent, who shall pass fresh orders, after affording an opportunity of hearing to the petitioner. Petition disposed off.

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• 2024 (9) TMI 1343
  Inability to file appeal under Section 107 of the CGST / SGST Acts against Ext.P3 order on account of the fact that the order has not been uploaded on the portal - It is the specific case of the petitioner that though it attempted to file the appeal manually as per the proviso to sub-rule (3) of Rule 108 of the CGST / SGST Rules, the same was not accepted by the Appellate Authority - HELD THAT:- This writ petition will stand disposed of directing that the petitioner shall be permitted to file an appeal against Ext.P3 order, manually, as contemplated by the proviso to sub-rule (3) of the Rule 108 of the CGST / SGST Rules provided such appeal is filed within a period of one week from the date of receipt of a certified copy of this judgment. If such appeal is filed within the aforesaid period, the same shall be treated as an appeal filed in time and shall be disposed of by the Appellate Authority, in accordance with the law, after affording an opportunity of hearing to the petitioner. The writ petition will stand disposed of.

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• 2024 (9) TMI 1342
  Denial of benefit of Input Tax Credit - denial on the ground that no such payment was made against the Permanent Registration Number of the petitioner - HELD THAT:- The matter requires reconsideration at the hands of the 1st respondent. A reading of Ext.P4 order does not show that the 1st respondent had considered the contention of the petitioner that the payments in respect of which he was seeking the benefit of Input Tax Credit were actually payments which were reflected against the Provisional Registration granted to the petitioner under Registration Number 32AACFK4681K1Z9 and before the petitioner was granted the Permanent Registration Number - 32AACFK4681K2Z8. There are no reason as to why such credit should be unavailable to the petitioner - petition disposed off.

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• Income Tax

• 2024 (9) TMI 1341
  Allowability u/s 37(1) - whether Tribunal was erroneous in not properly appreciating the decision of Ramaraju Surgical Cotton Mills a later decision of the Hon ble Supreme Court and specifically referred to in the petitioner s submission before the Tribunal? - HC 2024 (2) TMI 1434 - CALCUTTA HIGH COURT] decided issue in the favour of revenue - HELD THAT:- SLP dismissed.

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• 2024 (9) TMI 1340
  Accrual of income in India - sale of software product - royalty receipts - India USA DTAA - delay filling SLP - as decided by HC [ 2023 (2) TMI 1251 - DELHI HIGH COURT] amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195. HELD THAT:-There is a gross delay of 384 days in filing and 66 days in refiling this special leave petition. Delay in refiling is condoned. However, the explanation offered for seeking condonation of delay of 384 days in filing is neither satisfactory nor sufficient in law so as to condone the same. Hence, the application seeking condonation is dismissed. Even otherwise, the special leave petition is covered on merits by virtue of the judgment of this Court in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] which judgment has also been sustained in the review petition filed by the petitioner by a three-Judge Bench of this Court. SLP dismissed both on the ground of delay as well as on merits.

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• 2024 (9) TMI 1339
  Disallowance made u/s 40A(2) - Slump Sale Transfer of hospital as a going concern - amount spent on projects for establishing and operating hospitals - Nature of expenditure on hospital projects as revenue or capital expenditure - Disallowance of service charges paid to a company - Disallowance of expenditure for inflow of equity - disallowance towards non-recoverable projects cost by holding that the expenditure is in the nature of revenue expenditure - disallowance of legal and professional charges by holding that the same is in the nature of capital expenditure - HELD THAT:- On a query made by this Court, the learned counsel appearing for the petitioners, on instructions, states that the judgments referred to in paragraph 3 of the impugned judgment have not been challenged by the petitioners. Hence, no case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed.

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• 2024 (9) TMI 1338
  Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A - HELD THAT:- As decided in recent decision of this Court in Hexaware Technology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. We find substance in contentions as urged on behalf of the petitioner considering that the impugned notice has been issued by the Jurisdictional Assessing officer, which is outside the faceless mechanism as provided under the provisions of Section 144(B) read with Section 151A and the Scheme notified by the Central Government dated 29 March 2022 under Section 151A. It is also correct that in several proceedings which had come up before this Court, the Court had taken into consideration the said decision and had granted reliefs, finally disposing of the petitions. What now bothers us and more so judicially, is that neither for the assessee nor for the revenue, the ball would stop rolling. This, in as much as, the decision of this Court in Hexaware, being already assailed by the Revenue before the Supreme Court, it is stated by Mr. Sharma, that all our judgments which follow the decision in Hexaware and the other connected decisions, are now being assailed by the Revenue before the Supreme Court, in the proceedings of a Special Leave Petition being filed under Article 136 of the Constitution of India. This has entailed a peculiar situation, namely that the Revenue is now required to initiate proceedings before the Supreme Court and the assessee would be required to face such proceedings. Thus, the proceedings which stood disposed of by this Court, by such method, in fact, would get transferred to the Supreme Court, in view of the pendency of the Revenue s challenge to the decision of this Court in Hexaware. In such circumstances, in our opinion, it is in the interest of the parties, that henceforth we need to have a different approach considering that in disposing of such petitions following Hexaware, it would involve both the Revenue as also the assessee to face further proceedings, for the reason that our orders in such manner create further litigation between the Revenue and the assessees. We may observe that the endeavor of the Court would always be, that at least, the orders passed by the Court ought not to generate any litigation between the parties much less a further litigation with which we are concerned.

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• 2024 (9) TMI 1337
  Maintainability of appeal before High court - substantial question of law or fact - Tribunal setting aside the disallowance of short term loss claimed by assessee in P L A/c by holding that the shares have acquired by assessee under normal business transaction and can be taken as stock-in-trade - Whether the impugned order of the Tribunal requires interference at the hands of this Court? - HELD THAT:- It is settled position of law that under Section 260-A of the Act, the High Court could entertain the appeal or appeals only if it involves substantial question/s of law. In the instant case, we are of the view that in the peculiar facts of the case, the question raised by the Revenue is not a substantial question of law and it is a question of fact. Moreover, the Revenue had not filed appeal before the Tribunal with regard to colorable device or the genuineness of transaction or on allowance of loss in a sum of Rs. 11,27,00,000/-. But, the Revenue s appeal was in respect of other disallowances allowed by the Assessing Authority. The substantial question of law raised by the Revenue would not emanate from the order of the Tribunal, but from the order of the Commissioner of Income Tax (Appeals). The Revenue had not raised the genuineness of transaction or colorable device before the Tribunal. Hence, in the peculiar facts and circumstances of the case, we are not inclined to interfere with the order of the Tribunal. Accordingly, the substantial question of law raised by the Revenue is answered against them and in favour of the assessee.

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• 2024 (9) TMI 1336
  Reopening of assessment u/s 147 - Issuance of three successive notices - there was no return to cross-check - HELD THAT:- Company brought to the notice of the officer concerned about the filing of the returns in the year 2010 i.e., on 08.10.2010 and about the One Time Settlement. However, the officer concerned without application of mind, disposed of the objections concluding that there are reasons to believe that income has escaped assessment and the same was established on the intimation received from the Investigation wing, Mumbai and there was no return in hand for the relevant assessment year to cross-check the facts. This is untenable. The reason is apparent. It is relevant to note that the company had already filed its returns in the year 2010 and it was also brought to the notice of the department about the one-time settlement. However, the same was not noticed and the officer concerned concluded that there was no return to cross-check. Absolutely, there is no application of mind by the officer concerned in dealing with the objections and reopening the assessment. The reasons recorded for reopening of assessment are without application of mind and cannot be said to be reasons to believe which is a mandatory condition to invoke the provisions of Section 147 R/w Section 148 of the Act. The reasons recorded for reopening of assessment are based on a borrowed satisfaction which is impermissible in law. Hence, the reasons for reopening of assessment are untenable. Furthermore, the issuance of successive notices under Section 148 of the Act is also unsustainable in law. Therefore, the Communication dated 27.11.2017 and the notices are liable to be quashed. Accordingly, they are quashed. WP allowed.

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• 2024 (9) TMI 1335
  Validity of order passed u/s 264 - written submissions filed by the petitioner not considered before passing order - denial of principle of natural justice - HELD THAT:- A perusal of the postal cover produced at Annexure-E would indicate that though the impugned order is purported to have been passed on 20.11.2023, but the impugned order is seen to have been dispatched only on 29.11.2023, subsequent to the written submissions filed by the petitioner. In view of this ambiguity and discrepancy that is apparent on the face of the record, as regards the purported date of the impugned order and date of dispatch by the respondent No.1, matter is required to be reconsidered afresh by considering written submissions filed by the petitioner on 23.11.2023. A perusal of the written submissions filed by the petitioner would also indicate that the same are relevant and necessary for the purpose of adjudication of the issues involved in the petition and since the same would have bearing/impact on the claim of the petitioner, the impugned order deserves to be set-aside. Also the material on record demonstrates that the petitioner had made investment and availed the benefit of Income Declaration Scheme under Section 183 of the Finance Act, 2016, which would have an impact on the claim of the petitioner and the said aspect having not been considered by the respondent, is yet another circumstance that would vitiate the impugned order, which deserves to be set-aside and the matter remitted back for reconsideration afresh in accordance with law. So also, the additional written submissions filed on 14.11.2023 having not been considered fully and in the proper perspective. Impugned orders in so far as it relates rejecting the claim of the petitioner are hereby set-aside.

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• 2024 (9) TMI 1334
  Ex-parte order passed by CIT(A) - assessee could not represent his case before Ld. CIT(A) and the order being an ex parte order, stood vitiated on account of violation of principle of natural justice - HELD THAT:- As seen that during the appellate proceedings, the assessee did not submit details and documents before the Ld. CIT(A), therefore, the Ld. CIT(A) passed an ex parte order. We note that assessee could not plead his case successfully before the Ld. CIT(A) and also note that Ld. CIT(A) has not passed the order as per the mandate of provisions of section 250(6) of the Act. That is, Ld. CIT(A) did not pass order on merit based on the entire material available on record. One more opportunity should be granted to the assessee to plead his case before the Ld. CIT(A). We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of Ld. CIT(A) for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee.

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• 2024 (9) TMI 1333
  Addition u/s 56(2)(x) - difference in Fair Market Value of the property as per Stamp Duty Valuation Authority - HELD THAT:- When on the date of agreement amount of consideration is fixed for the transfer of immovable property and the date of registration is not the same, then the Stamp duty Value on the date of agreement is to be taken. The section further provides that the value as on date of agreement can be taken only when the amount of consideration in the agreement has been paid by way of account payee cheque or by the electronic clearing system through a bank account on or before the date of agreement transfer of such immovable property. Thus, the aforesaid provisos carve out exception by taking the stamp duty value as on the date of agreement when the payments have been made through banking channels. AO has stated that allotment letter is not a registered agreement, therefore, the value of the property has to be taken as on the date of sale registration. First of all, when builder gives an allotment letter with terms and conditions and all the rights and the value of purchase is agreed upon and assessee has acted upon by accepting the terms and conditions and starts making the agreed payment, then it is clearly covered under aforesaid proviso to section 56(2)(x). The assessee has agreed to purchase in the year 2012 in terms of allotment letter and also made the payments before the sale was registered. Therefore, the value as on date of allotment has to be treated as stamp duty value for the purpose of aforesaid provision of section 56(2)(x) of the Act and since at that time payment made was more than the stamp duty value therefore, no addition can be made. Appeal of the Revenue is dismissed.

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• 2024 (9) TMI 1332
  Disallowance of the exemption u/s 10(23C)(ad) and/or 10(23C)(vi) - disallowing the expenditure Incurred for running the education institute / schools, affiliated with State Govt. Education board against the fee income, received from the students - Addition on the ground that the gross receipt of the assessee exceeds Rs.1 crore as prescribed monetary limit u/s 10(23C)(iiiad) of the Act - HELD THAT:- Before CIT(A) assessee has specifically pointed out that it operates two educational institutions namely Rose Mary High Convent Higher Secondary School and Rose Mary High School and contended that the monetary limit of Rs.1 crore as prescribed u/s 10(23C)(iiiad) read with Rule 2BC of the Act should be applied in respect of the gross receipts of each of the educational institutions and not on the aggregate receipts of both the educational institutions. Assessee also pointed out that the entire gross receipt cannot be assessed to tax without allowing eligible deduction against said income. We find that the above stated facts have not been properly considered by CIT(A) while passing the impugned order as the claim of the assessee was disallowed on the ground that the assessee is neither registered u/s 12A/12AA nor approved/notified under the provisions of Section 10(23C)(iiiad) of the Act and therefore, the claim of the assessee was denied as the total receipts are more than Rs.1 crore as prescribed under the said provisions of Section 10(23C)(iiiad) read with Rule 2BC CIT(A) has not disputed the fact that the assessee is running two separate educational institutions and therefore, in our considered view the gross receipts of each of the educational institutions has to be separately considered for the purpose of allowing the claim of exemption u/s 10(23C)(iiiad) of the Act. In any case the total income of the assessee ought to have been assessed as per commercial principles and the eligible expenditure against the gross receipts should have been allowed while computing the total income. Accordingly, in the facts and circumstances of the case we set aside the impugned order of CIT(A) and the matter is remanded to the record of the jurisdictional A.O for fresh adjudication - Appeal of the assessee is allowed for statistical purposes.

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• 2024 (9) TMI 1331
  Delay in filing the appeal - assessee has filed the appeal after a delayed of 506 days - Registration of Trust u/s 12AB(1)(b)(ii)/ 12A denied - HELD THAT:- The reason given is that while checking status of the assessment order, the CA also checked the status of application for registration and found that the application has been rejected. It means that the assessee was primarily concerned about the fate of assessment order. The CA also checked the status of the application filed for registration while checking the assessment order. It is thus crystal clear that after filing the application, it has remained inactive and was negligent. There was no due diligence on the part of the assessee. This fact shows the lackadaisical attitude of the assessee towards the registration of the trust and subsequent follow up action indulging filing of appeal. Such casual and lackadaisical approach towards the order of rejection of registration cannot constitute sufficient cause within the meaning of section 253(5) of the Act. In view of the above facts and respectfully following the authoritative precedents cited supra, we refuse to condone the delay, requested by the assessee. Since, delay has not been condoned it becomes academic in nature to discuss the merit of the case. Assessee appeal dismissed.

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• 2024 (9) TMI 1330
  Reopening of assessment u/s 147 - capital gain on sale of land or profit on sale of land - as argued no addition made on account of income escaped as per reasons recorded - reopening of assessment based on different grounds than those included in the reason for reopening - HELD THAT:- On perusal of Section 147 of the Act would show that, if, the Revenue makes an attempt to reopen the assessment, all that the AO has to show is that, AO has reason to believe that any income chargeable to tax has escaped assessment for the concerned assessment year and while doing so, AO is also empowered to assess any other income, which has escaped assessment and, which comes to AO s notice, subsequently, albeit, during course of the assessment proceedings. Careful reading of Section 147 of the Act would show that it empowers an Assessing Officer to reopen the assessment, if, AO has reason to believe, that any income chargeable to tax has escaped assessment for the relevant year, and also bring to tax , any other income, which may attract assessment, though, it is brought to AO s notice, subsequently, albeit, in the course of the reassessment proceedings. To put it plainly, the purported income discovered subsequently during the course of reassessment proceedings, can be brought to tax, only, if the escaped income, which caused, in the first instance, the issuance of notice under Section 148 of the Act, is assessed to tax. In the present case before us admittedly the AO has reopened the assessment for assessing capital gain on sale of land or profit on sale of land, as noted in the reasons recorded above and while framing reassessment u/s. 143(3) r.w.s.147 of the Act, he has not touched upon this issue and added TP adjustments made for determination of ALP of the assessee. We quash the reassessment order and allow this appeal on jurisdictional issue. Appeal filed by the assessee is allowed.

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• 2024 (9) TMI 1329
  Disallowance made of expenses incurred in relation to earning exempt income u/s 14A - expense suo moto disallowed by the assessee u/s 14A pertaining to the earning of exempt income was Nil - persistent plea of the assessee against any disallowance of expenses to be made u/s 14A of the Act was that it had sufficient interest free own funds for the purposes of making this investment - HELD THAT:- No change in facts and circumstances from the preceding year having been pointed out to warrant NIL disallowance of expenses in the impugned year, except for stating that it had sufficient own funds for making the investments. But this fact was present in the preceding year also when also there were sufficient own funds available with the assessee for making investments yet it had suo moto made a disallowance of Rs. 31 lacs u/s 14A of the Act. Further, we agree with the AO that the possibility of incurrence of NIL administrative expenses was not feasible considering the huge quantum of investments made by the assessee earning exempt income to the tune of approx. 25.65 Crs nor do we find it was explained by the assessee with cogent reasons. AO, we hold, was correct in being not satisfied with the claim of the assessee of NIL expense being incurred for earning exempt income. The invocation of Rule 8D of the Rules, as a consequence, we hold, has been rightly held by the Ld. CIT(A) to be in accordance with law as per section 14A(2)/(3) of the Act. The order of the Ld. CIT(A) confirming the disallowance made u/s 14A is accordingly upheld. - Decided against assessee. Disallowance of deduction claimed u/s 80IA - reduction of profits of the eligible unit by allocating certain Head Office/Common expenses to the eligible unit - HELD THAT:- No merit in the disallowance made by allocating the common expenses to the eligible unit and thus reducing the deduction claimed u/s 80IA of the Act to Rs. 1,07,897/-. Firstly, it is a fact on record that the quantum of operation of the eligible unit was miniscule as compared to the ineligible unit, with the ineligible unit accounting for almost the entire turnover of the assessee to the tune of 99.733% and the eligible unit s turnover being only 0.2676%. The entire exercise of allocation of expenses, therefore, is a waste exercise by which only 0.26% of the alleged common expenses have been allocated to the eligible unit amounting to Rs. 1,07,897/- , out of total of such expenses to the tune of Rs. 4 crores approximately. On the principle of materiality itself, this entire exercise of allocating expenses to the eligible unit, therefore, fails. Even otherwise, we have noted that the ITAT in the case of the assessee in AY 2008-09 found identical allocation of expenses to the eligible unit of the assessee claiming exemption of its income u/s 10B of the Act on account of audit fees, managerial remuneration etc. to be inappropriate finding these expenses to have no bearing on the earning of income. Therefore, considering the materiality of the entire exercise and taking note of the decision of the ITAT in the case of assessee in AY 2008-09, we hold that the disallowance made by allocating commission expenses to the eligible unit of the assessee claiming deduction u/s 80IA is not sustainable. The disallowance so made is, therefore, directed to be deleted. Decided in favour of assessee.

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• Customs

• 2024 (9) TMI 1328
  Levy of penalty u/s 114(i) of the Customs Act, 1962 - smuggling - export of Red Sanders - Failure to comply with KYC requirements - HELD THAT:- The role played by Shri Arup Mukherjee and M/s. Bose Enterprises was shorn of adhering to prescribed procedures and formalities as enshrined in law. Both the appellants herein completely failed in ascertaining the whereabouts by way of KYC of the persons associated from whom they had sourced the business nor were they in possession of any letters of authorization or profile assessment and verification report etc. of their ultimate client M/s. Bhadrakali Export Pvt.Ltd., Nepal for whom they undertook the said transit clearance of Nepal based cargo meant for export to Korea. The appellant s plea that as the show cause notice makes out no allegation of abetment against the appellants, no penalty can be imposed on them under section 114(i) of the Customs Act, 1962, cannot be agreed upon. The fact that the present attempted export of Red Sanders was attempted through a chain of intermediaries with at no stage of any mention of KYC documents coming through is a pointer to the grave omissions at different stages facilitating the said export of banned goods. Shri Arup Mukherjee who used to make payments to the appellant M/s. Bose Enterprises with reference to services rendered by them thus cannot absolve himself of his role as an intermediary in the sordid saga of the said attempted export. The fact that he was an important link and sourcing the business for the customs broker without either knowing his clients nor having obtained necessary documents to ascertain and fulfill the KYC requirements is certainly an omission of serious proportions and having admittedly been in the trade sourcing business for several years it indeed is an omission of multitude ramifications and no less casual and deliberate in nature. The appellants have not made out a convincing case for non-imposition of penalty on them. However, considering the facts and circumstances of the case and the totality of the action on part of the two appellants, a penalty of Rs.4,00,000/- each would meet the ends of justice - Appeal disposed off.

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• 2024 (9) TMI 1327
  Requirement to issue fresh SCN - Misdeclaration of value of imported goods - mis- classification of goods - rejection of declared value - right to cross-examination - Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR, 2007) read with Section 14 of the Customs Act, 1962 - Requiremnet of fresh SCN - assessment by itself being appealable even by the department whether the facts justified a fresh show cause notice? - HELD THAT:- The valuation has to be determined even if be on contemporaneous price by sequentially following Customs Valuation Rules by rejecting all those which are not legally accepted. Also the statement of the Director (Finance of M/s. Glanbia Performance Nutrition India Pvt. Ltd) which has been relied upon to indicate mis-description and valuation is required to be tested on cross-examination and all documents of contemporaneous price to be adopted by the department are required to be supplied to the appellants. The statement of Director (Finance) of another rival Company even if is to be relied upon same has to be backed with import data. It is found that no such exercise has been carried out by the department in instant matter and in the absence of same, appellants cannot offer effective reply. Further, some of the products that do contain proteins do not prima facie merit consideration under T.H 21069099. Same needs detailed Consideration. The matter deserves to be re-considered by the adjudicating authority by offering a proper opportunity, as well as relevant import data/ documents as may be relied upon by the department and required in defence by the party - Appeal is allowed by way of remand.

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• 2024 (9) TMI 1326
  Levy of penalty u/s 114(iii) of the Customs Act, 1962 - Customs Broker - Mis-classification of goods with an aim to get higher MEIS benefit for the exporter - safety matches - to be classified under CTH 36050090 or under CTH 36050010? - HELD THAT:- The charge against the appellant is that even though they knew the classification of the goods they did not advice the exporter to classify the goods correctly, facilitating the exporter to get undue higher MEIS benefits. Firstly, it is found that the matter pertains to the period 2018-19 to 2020-21, covering a large number of Shipping Bills as seen from the Annexure to the SCN dated 25/05/2022. It hence shows that there was a practice in the Custom House to classify safety matches under CTH 3605.0090. In such a situation it would have been highly unusual for a Customs Broker to seek to change a long-followed classification and advice the exporter to file a classification of the impugned goods under CTH 3605.0010. Secondly as pointed out by the Apex Court in NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE [ 1998 (7) TMI 91 - SUPREME COURT] and also by a Co-ordinate Bench of this Tribunal in HIM LOGISTICS PVT. LTD. VERSUS CC, NEW DELHI [ 2016 (4) TMI 1153 - CESTAT, NEW DELHI] , classification of goods being complex, it is declared as a matter of belief of an assessee and does not on its own amount to mis-declaration. Further it is not for CHA to have opinion on how the goods are to be classified. It was for Customs Authorities to correctly classify goods. Hence, there cannot be a dilution of the statutory responsibility of the Customs Officers in ensuring correctness classification / assessment and payment of duty by putting the responsibility of classification on the CHA, without proving any blame worthy action willfully done by him impacting the classification done. Thirdly there is no iota of proof in the impugned order of the CHA colluding with the exporter or illegally benefiting from the export of goods. Assumptions and presumptions or bald statements do not make for proof. Hence as pointed out by the Hon ble Madras High Court in M/S. NOVEL DIGITAL ELECTRONICS VERSUS THE COMMISSIONER CUSTOMS (IMPORTS) , CUSTOMS HOUSE [ 2015 (4) TMI 347 - MADRAS HIGH COURT] in such circumstances, it cannot be said that the act was wilful, deliberate and dishonest, in that he wanted to avoid payment of duty, thereby evading tax liability and is not a case where penalty could have been imposed. Fourthly when action is proposed to be initiated against Custom Brokers for lapses on their part for their duties to be performed as a Customs Broker and not for any other blame worthy act under the Customs Act 1962, then the matter should be examined under the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018) which regulates the working of Customs Brokers and contains provisions for action to be initiated against them for lapses on their part. There are no grounds for imposition of penalty has been made out and hence the impugned order is set aside - appeal allowed.

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• Corporate Laws

• 2024 (9) TMI 1325
  Imposition of moratorium u/s 14 of the IBC, 2016 during CIRP - stay of the moratorium imposed - HELD THAT:- There is a clear distinction between a direction not to take further steps pursuant to the order dated 16 October 2023 and stay of the moratorium imposed by the said order. Had the learned NCLAT decided to stay the moratorium, it could have done so. There is no stay of the moratorium imposed by the learned NCLT, in the order dated 9 November 2023 of the NCLAT. Reliance on the judgment of a coordinate Bench of this Court in SSMP Industries Ltd v Perkan Food Processors Pvt Ltd [ 2019 (8) TMI 916 - DELHI HIGH COURT ] where it was held that this court is of the opinion that the Plaintiff s and the defendant s claim ought to be adjudicated comprehensively by the same forum. At this point, till the defence is adjudicated, there is no threat to the assets of the corporate debtor and the continuation of the counter claim would not adversely impact the assets of the corporate debtor. Once the counter claims are adjudicated and the amount to be paid/recovered is determined, at that stage, or in execution proceedings, depending upon the situation prevalent, Section 14 could be triggered. At this stage, due to the reasons set out above, the counter claim does not deserve to be stayed under Section 14 of the Code. The suit and the counter claim would proceed to trial before this Court. This decision is of no avail to the petitioner. It holds that the counter claims by the company which is facing insolvency is maintainable even during the currency of the moratorium. This decision is clearly in terms of the moratorium imposed, as the moratorium restrains actions being instituted or taken against the corporate debtor, whereas a counter claim is a counter claim by the corporate debtor. The moratorium imposed by the NCLT specifically restrains institution and continuation of any proceedings including arbitral proceedings against the respondent. The prayer in this petition is specifically for institution of arbitral proceedings against the respondent. It cannot, therefore, be granted while the moratorium is in place. As such the petition is adjourned sine die, awaiting the proceedings before the NCLAT or any order modifying or lifting the moratorium issued by the NCLT.

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• Insolvency & Bankruptcy

• 2024 (9) TMI 1324
  Liability to pay electricity dues which had arisen during the CIRP period - Failure to take into account the current position of law with respect of Section 14 of the IBC - whether the Appellant was lawfully entitled to demand the payment of current electricity dues incurred by the Corporate Debtor during the period of moratorium and whether it was entitled to disconnect the electricity connection in the event the current dues are not met? HELD THAT:- The Adjudicating Authority has failed to appreciate the amendments which were brought about in Section 14 of the IBC by Act 1 of 2020. The impugned order is clearly in conflict with the legislative scheme as contemplated in Explanation appended to Section 14(1) and the provisions contained in Section 14(2-A). Section 14(1) Explanation and Section 14(2-A) was clearly introduced by way of an amendment to fill critical gaps in the Corporate Insolvency framework and that a substantive provision was introduced into IBC framework which clearly provided that the supply of goods or services, critical to protect and preserve the value of the Corporate Debtor, could always be terminated or suspended or interrupted during the period of moratorium when the dues arising from such supply during the moratorium period is not paid. Thus, the benefit of electricity supply which is enjoyed by any Corporate Debtor given by government or authority should be continued subject to the condition that there is no default of payment of current dues. Explanation to Section 14(1) and Section 14(2-A) of the IBC is clearly attracted in the facts of the present case. The protection granted by Section 14(1) is clearly subject to no default in the payment of current dues as clearly stipulated in the explanatory clause. Further, Section 14(2-A) only prohibits interruption, termination or suspension of any such supply of goods or services to the Corporate Debtor which the RP considers critical to protect and preserve the value of the Corporate Debtor and manage the operations of the Corporate Debtor as a going concern but with an exception carved out which provides that in case the Corporate Debtor has not paid dues arising from such supply during the period of moratorium. The impigned order is held to be legally unsustainable and accordingly set it aside - appeal allowed.

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• 2024 (9) TMI 1323
  Challenge to closure of factory - validity of closure notice - jurisdiction of Adjudicating Authority to adjudicate upon the closure - HELD THAT:- After the order dated 08.08.2019, matter was placed before the CoC in the meeting held on 02.09.2019 in which meeting the issue was left for the Resolution Applicant to take a call and thereafter the CoC to look into. However, no Resolution Plan having been approved, the liquidation was subsequently directed on 09.01.2020. There was no determination with regard to notice dated 31.07.2017 - the Adjudicating Authority has not taken any decision and has not expressed any view that the Adjudicating Authority has jurisdiction to adjudicate the notice dated 31.07.2017. What is recorded in the order is the statement made by the Resolution Professional. Hence, the order dated 08.08.2019 cannot be read to be determination by the Adjudicating Authority of its jurisdiction to pronounce on the closure notice. It is well settled that after initiation of the CIRP all claims against the corporate debtor has to be filed and examined in the CIRP/ Liquidation Process. It has also come on the record that after liquidation proceedings, the claims were also filed by the Appellant before the liquidator and the liquidator has admitted their claims to the extent of Rs.1,09,70,698.27/-. The direction of the High Court dated 27.04.2019 cannot be read to mean that High Court adjudicated the issue as to whether NCLT can examine the challenge to the closure notice dated 31.07.2017. The order of the High Court, thus, has to be read to mean that Appellants were given liberty to raise their claims in the proceedings before the NCLT and raise all contentions. The mere fact that liberty was granted by the High Court to file claim and raised all contentions cannot be read to mean that High Court has adjudicated and directed that the closure notice dated 31.07.2017 be also adjudicated by the NCLT. From liberty to raise all contentions and issues are not akin to any direction or adjudication that issue pertaining to challenge to the closure notice has to be undertaken by the NCLT. The above order of the Hon ble Supreme Court does not in any manner support the submission of the Appellant that NCLT has to adjudicate on the closure notice dated 31.07.2017 - neither of the judgment of the High Court of Uttarakhand or the Judgment of the Hon ble Supreme Court can be read to mean that after an adjudication, the High Court or the Supreme Court has held hat question of closure of notice dated 31.07.2017 has to be examined and adjudicated by the NCLT. The judgment of the Hon ble Supreme Court in Embassy Property Developments Pvt. Ltd. vs. State of Karnataka [ 2019 (12) TMI 188 - SUPREME COURT ] also throws considerable light on the jurisdiction which can be exercised by the NCLAT under Section 60(5). In the aforesaid case, with regard to mining lease which was granted to the corporate debtor notice of premature termination was issued by Government of Karnataka. Government of Karnataka subsequently rejected the proposal for extension of the lease. The Resolution Professional filed an application before the NCLT, Chennai Bench praying for setting aside the order of the Government and seeking declaration that lease should be deemed to be valid after 31.03.2020. NCLT, Chennai had allowed the application setting aside the order of the Government of Karnataka. It is clear that the closure/lockout notice which was issued on 31.07.2017 much prior to initiation of the CIRP and the closure and lockout notice was nothing to do with the CIRP process. Challenge to the closure and lockout notice cannot be raised before the Adjudicating Authority who is not competent to adjudicate the said issue which arises out of the provision of the Uttar Pradesh Industrial Disputes Act, 1947. Hence, the Adjudicating Authority did not commit any error in not entertaining the challenge to the closure notice dated 31.07.2017. Thus, no error has been committed by the Adjudicating Authority in rejecting the application filed by the Appellant where Appellant has sought to challenge the closure dated 31.07.2017 and transfer order dated 20.06.2017 - there are no merit in the Appeal - appeal dismissed.

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• 2024 (9) TMI 1322
  Applicability of clean slate principle only to liabilities prior to the insolvency commencement date or will extend to the date of actual sale of the Corporate Debtor as a going concern - refusal of Adjudicating Authority to grant necessary reliefs and concessions without even considering them and without assigning any reasons - whether the Appellant was entitled to grant of reliefs and concessions not on the date prior to insolvency commencement date, but ought to have been granted the reliefs and concessions till the date of actual sale of the Corporate Debtor as a going concern ? HELD THAT:- The reliefs and concessions was granted to the Appellant with regard to declaration that Corporate Debtor shall not be liable on account of any transaction, dealing, or arrangement between it or any other person relating to the period prior to the date of CIRP. We do not find any illegality in the above relief granted to the Appellant prior to the date of CIRP. Insofar as claims of known or unknown, disclosed or undisclosed liabilities, the obligation is up to the cut-off date, i.e. date of commencement of liquidation. The e-auction Notice clearly mention that transactions prior to the cut-off date shall be dealt as per Section 53 of the IBC. Thus, all claims known or unknown on the date of liquidation commencement date has to be dealt as per Section 53. The prayer of the Appellant in this Appeal is to grant reliefs and concessions for all claims and liabilities up to the date of sale by e-auction i.e. 30.03.2023. When the eauction Notice itself does not contemplate grant of any relief from claims and liabilities up to the date of e-auction sale, the Appellant cannot be granted reliefs and concessions, which is not contemplated by e-auction Notice itself. Regulations 12 and 16 contemplate filing of a claim as on the liquidation commencement date. There can be no question of extinguishment of claim up to the date of sale of e-auction of the Corporate Debtor as going concern . When claim itself are as on the liquidation commencement date in the liquidation process, the argument that extinguishment of claims and liabilities should be granted till the date of sale by e-auction is not in accord with the statutory scheme as delineated by IBBI (Liquidation Process) Regulations, 2016 - the prayer of the Appellant that it should have been granted reliefs and concessions up to the date of e-auction sale, cannot be accepted and has rightly not been granted by the Adjudicating Authority. The relief claimed by the Appellant to grant extinguishment of all claims and liabilities up to the date of e-auction, i.e. 30.03.2023, cannot be accepted and Adjudicating Authority by the impugned order has granted reliefs and concessions to which the Appellant was entitled and the reliefs and concessions not granted were in accordance with law and statutory scheme of the liquidation process - there are no error in the order impugned, warranting interference in this Appeal - appeal dismissed.

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• 2024 (9) TMI 1321
  Lifting of attachment - invocation of provisions of Sub Regulation 8 of Regulation 39 of Regulations of 2016 - HELD THAT:- The instant Appeal would stand disposed off leaving it open for the Appellant to file an appropriate application falling within the domain of Sub Regulation 8 of Regulation 39 of Regulations of 2016 to be read with sub Clause (i) of XV of the Impugned Judgment of 20th March 2024, and if the Appellant does so, the Application thus to be preferred by the Appellant for the purposes of lifting the embargoes for enforcement of the Resolution Plan, by lifting attachment, the same would be adjudicated upon by the Learned Adjudicating Authority, in accordance with law. Since the Appeal is only the enforcement of the approved resolution plan, which has been sought by the appellant for that, he will have to abide by Sub Regulation 8 of Regulation 39 of Regulations of 2016 and if the appellant does so, it may be proceeded to be decided in accordance with law. Subject to the above, the Company Appeal stands disposed off.

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• Service Tax

• 2024 (9) TMI 1320
  Levy of service tax - Business Auxiliary Services (BAS) - expenses reimbursed to the foreign distributors under reverse charge mechanism - Extended period of limitation - it was held by CESTAT that in the instant case, the gross value of taxable service for the purpose of computation of service tax shall be the gross amount paid by the recipient of such service. HELD THAT:- No case is made out for grant of stay. However, time of three months granted to the appellant to deposit the demand for the normal period. The application for stay is disposed of accordingly.

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• 2024 (9) TMI 1319
  Seeking permission of the Court to withdraw the impleadment application - monetary limit involved in the appeal - HELD THAT:- By a Circular dated 6 August 2024 of the Revenue Division, Judicial Cell (Central Board of Indirect Taxes Customs), Ministry of Finance, the monetary threshold of the tax effect for filing an appeal to the Supreme Court has been increased from Rupees two crores to Rupees five crores. The Additional Solicitor General has confirmed that the tax effect in the present matter is less than Rupees five crores. The application is permitted to be withdrawn.

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• 2024 (9) TMI 1318
  Denial of CENVAT credit - rent of building taken by the appellant for the purposes of its job workers - taxability of service under renting out immovable property services - HELD THAT:- It is an admitted position that the manufacturer-appellant had shifted his machinery to the rented premises. The raw material was also provided by the appellant. The contract was entered into between the appellant and the job workers to perform the job of manufacturing additionally at the rented premises and handover the final product to the appellant. The premises were thus made available to the job workers for the purpose of performing their work and therefore, the necessary ingredients as required for taxable service would be fulfilled namely that the service has been provided by the job workers in the rented immovable property and secondly the rented immovable property was being utilized for the furtherance of business or commerce by the manufacturer appellant. It is found that none of the authorities below examined this aspect while deciding the case and both the appellate authorities proceeded on examining the case in light of the definition of job workers. A perversity has crept in the order as the claim of Cenvat credit is not for the job workers and payment made was for the rent paid for the premises. In the circumstances, it is not found that the orders impugned to be sustainable in the eyes of law and the same are accordingly set aside. The order dated 28.04.2014, passed by the Customs, Excise and Service Tax Appellate Tribunal is set aside - the appellant entitled for the benefit of Cenvat credit as claimed - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (9) TMI 1317
  Challenge to recovery notice - recovery of the dues of a Company from its Directors - alternative remedy under Section 287-A of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 - HELD THAT:- On a plain reading of sub-Section (1) of Section 12 of the Act, the liability of the Directors of a private company will arise when a private company is wound up after the commencement of the Act. Therefore, Section 12 (1) will have no application as an order of winding up has not been produced. Therefore, when there was no provision under the Act under which dues of a limited company could have been recovered from its Directors, the third respondent was not justified in issuing the recovery certificate and demand notice against the appellant. These crucial factors have been ignored by the High Court. It ought to have been noted by the High Court that an attempt to recover tax payable by the Company from the appellant from its inception was illegal and, therefore, the appellant ought not to have been driven to the remedy of preferring an appeal. The impugned judgments and orders of the learned Single Judge and the Division Bench are set aside. The notice of recovery dated 6th June, 2019 issued by the third respondent is hereby quash and set aside - Appeal allowed.

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• 2024 (9) TMI 1316
  Seeking waiver of tax - non-production of C-Forms - Whether the petitioners can file their documents for obtaining waiver of tax, at a later date? - whether such waiver of tax can be given without any further assessment/re-assessment/appellate order being passed by the concerned taxing authorities? HELD THAT:- The conditions for grant of waiver are contained in the memo dated 27.09.2016 which has been extracted above. A perusal of the terms and conditions, in this memo, make it clear that the waiver of tax given under the memos, is applicable to those dealers who remit their tax completely as per the provisions of the CST, Act for the period from 01.06.2014 to 31.12.2015 before 30.09.2018; complete their assessment for the period from 01.06.2014 to 31.12.2015 before 30.09.2018; produce documents of movement of goods in the form of lorry receipts/railway receipts and CST waybills; production of proof of exit of the goods from the State Andhra Pradesh by producing proof of exit from the last notified check post in the State or by production of ledger accounts or book entries relating to payment of charges for transporting goods to other States. A cutoff date is prescribed only in relation to payment of tax under the CST, Act and for completion of the assessment for the period from 01.06.2014 to 31.12.2015. There is no cutoff date prescribed for production of the other documents mentioned above. In the circumstances, the contention of the learned Government Pleader for Commercial Tax, that the documents required for grant of waiver should be produced before the cutoff date cannot be accepted. As far as the non-production of documents is concerned, the said non-production would be a question of fact, which would have to be gone into by the assessing authorities after considering whether the documents produced by the petitioners meet the terms and conditions set out in the memos. It would be inequitable, to grant relief to those dealers who approached in the year 2019 while denying such relief to the dealers who approached later. In any event, the applications are only for the purposes of ascertaining the eligibility of the dealers/petitioners for grant of waiver. The Endorsements issued by the respective tax authorities are set aside - The respective tax authorities, shall consider the applications of the petitioners afresh and grant waiver to those petitioners who are able to comply with the requirements of the documents set out in the memos - Petition disposed of.

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• Indian Laws

• 2024 (9) TMI 1315
  Requirement to pay the requisite amount towards compensation as determined in the Supplementary Award - Scheme of Arrangement between the Appellant and JAL under Sections 391 to 394 of the Companies Act, 1956 - HELD THAT:- A bare reading of Section 38 of Companies Act, 2013 indicates that the payment of full and final compensation to the land owners is a precursor to taking possession of the land sought to be acquired from such persons. It is clear from the facts that the acquisition proceedings herein failed to confirm to this statutorily mandated sequence of events. It is regrettable that the State of Himachal Pradesh, being a welfare state, did not ensure payment of compensation to the Respondent Nos. 1-6 before taking possession of their land. In fact, the landowners had to approach the High Court to seek directions to the LAC for passing of the supplementary award which was finally passed on 02.05.2022 that is, after a period of almost four years from the date of passing of the Award of 2018. Section 41 necessitates an agreement between the appropriate government and the company for whose purpose the land is being acquired. One of the purposes of such an agreement is to ensure that payment towards the cost of acquisition is made by the company to the appropriate government and it is only upon such payment that the land is transferred to the company. Thus, it can be said that JAL was mandated to make the requisite payment to the State of Himachal Pradesh prior to the subject land being transferred to it. Thus, even before the amount of compensation could be determined by way of a supplementary award as stipulated in the Award dated 08.06.2018, the subject land stood transferred to JAL - this is in contravention of Section 38 of the 2013 Act and Section 41 of the 1894 Act respectively. The impugned order dated 12.07.2022 passed by the High Court is set aside - appeal allowed.

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