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TMI Tax Updates - e-Newsletter September 26, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Securities / SEBI FEMA PMLA Service Tax Central Excise Indian Laws Articles Post registration compliances for a Private Limited Company Fitting of electrical appliances is not covered under works contract RECENT DEVELOPMENTS IN GST Adding preservatives to ayurvedic medicine will change the classification of medicine News A Customer Centric Approach-Navigating the Path to Excellence in Customer Service (Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India - September 21, 2023 - at the Conference on Customer Service held in Mumbai) Notifications DGFT 32/2023 - dated 25-9-2023 - FTP Export of Non-Basmati White Rice (under HS code 1006 30 90) to UAE through National Cooperative Exports Limited (NCEL) GST - States G.O.Ms. No. 379 - dated 4-8-2023 - Andhra Pradesh SGST Andhra Pradesh Goods and Services Tax Rules, 2017-Amendments to G.O.Ms. No. 23, Revenue (CT-II) Department, dated 18.01.2019 32/2023-State Tax - dated 8-8-2023 - Gujarat SGST Seeks to exempt taxpayers having AATO upto Rs. 2 crores from the requirement of furnishing annual return for FY 2022-23 S.O 476 - dated 13-9-2023 - Jammu & Kashmir SGST Amendment in Notification No. 380/2023-Tax, dated the 24th day July, 2023. S. O. 477 - dated 13-9-2023 - Jammu & Kashmir SGST Amendment in Notification No. 15/2015-Tax, dated the 11th January, 2018 Circulars / Instructions / Orders DGFT Trade Notice No. 27/2023 - dated 25-9-2023 Implementation of the Trade Notice No. 07/2023-24 dated 08.06.2023 in reference to the pre-import condition under Advance Authorisation Scheme Customs PUBLIC NOTICE No. 16 /2023 - dated 1-9-2023 Movement of consignments to be handled for the purpose of Section 48 of Customs Act, 1962 from existing premises of M/s FedEx Express Transportation and Supply Chain Services (India) Private Limited at Plot no C-19, Express Cargo Terminal, Survey No 90,180,181,182,183,197, Kempegowda International Airport, Bengaluru to their extended premises at Unit No. 61,62 & 63, Cargo Village, KIA, Bengaluru 560300-reg. PUBLIC NOTICE No. 15 / 2023 - dated 1-9-2023 Notified area for storage and handling of consignments under Section 48 of Customs Act, 1962 by M/s FedEx Express Transportation and Supply Chain Services (India) Private Limited-reg. Highlights / Catch Notes GST Levy of penalty u/s 129 read with Rule 138 - valid documents and e-way bill not produced during inspection - evasion of tax - The owners/dealers have to substantiate why the goods being transported did not accompanied the statutory documents. In view there of and considering the provisions of the Act was of the point that the dealer wilfully attempted to transport the goods without any documents and tried to evade the tax liability on the goods. - Penalty confirmed - HC Visit to Get Source Valuation of supply - Only the subsidies provided by Central Government and State Governments which are directly linked to the price and affects the price of supply are not a part of value of supply. Hence the exclusion provided in Section 15(2)(e) is not applicable in the instant case and the subsidies provided by Central Government and State Governments cannot be excluded in determining the value of supply. - AAR Visit to Get Source E-commerce operator or not - the applicant merely connects the auto driver and passenger and their role ends on such connection - the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by electronic commerce operator. Thus the applicant, though qualifies the definition of being an e-commerce operator, is not the person liable for discharge of tax liability under Section 9(5) of the CGST Act, 2017. - AAR Visit to Get Source Income Tax Addition towards notional profit - Suppression of sale - It is clear that what has to be considered for taxation, is not the market price of the goods which were transferred but the actual price that was received or fetched. Income which actually accrues is taxable. But income which the assessee could have but has not in fact earned cannot be taxed. - AT Visit to Get Source Year-end Provision – assessee had made certain provisions for expenses at the end of the year for which deduction of tax at source has not been made - There is a difference between the payments that are made during the year and the payments made at the fag-end of the year. - In subsequent years, TDS has been deducted when Bill were booked - Having regard to the retrospective amendment to Sec.40(a)(ia) by the finance act, 2008, additions deleted - AT Visit to Get Source Additions towards Inflated purchases - these quantities as shown in the IOCL statement are not even matching with the value shown in the same documents. Comparative chart as reproduced by the CIT(A) clearly manifest these factual mistake in the IOCL statement regarding the quantity of purchase and hence, the assessment order is entirely based on incorrect facts - CIT(A) rightly deleted the additions - AT Visit to Get Source Addition on account of interest income - the assessee has obtained the loan from DHFL only in October 2017 and has advanced the same to various parties out of the said loan, we see no logic in AO calculating interest for the whole year. - AT Visit to Get Source Validity of reassessment proceedings - transactions of commodity/derivatives trading - How can the assessee be expected to prove the negative? The assessee could be expected to give explanation for the transactions carried out by it. It could not be expected to give explanation for the transactions not carried out by it, merely because some information had already been received by the Ld. AO from the Investigation Wing, Kolkata. - AT Visit to Get Source Customs Import of goods for Research Activities - Validity of certificates of exemption granted by the Ministry of Surface Transport - the veracity of Hydraulic Study Department being the importer is not in doubt. There has been no evidence provided to substantiate the contention of the adjudicating authority that HSD was engaged in commercial activity and therefore the imported goods were not eligible to exemption benefit. - Demand set aside - AT Visit to Get Source Recovery of Countervailing duty (CVD) - petroleum product - the price of the petroleum products was fixed under the Administered Price Mechanism (APM) and it has been explained by the appellant that whenever there is excess collection of duty, the same is surrendered to the oil pool account and consideration the same, the proceedings against the appellants were dropped - the demand confirmed against the appellant by way of impugned order, are not sustainable. - AT Visit to Get Source Corporate Law Complaint against fraudulent and illegal siphoning of funds- Validity of second complaint / FIR on the same issue which was already pending - There is no doubt about the fact that the SFIO proceedings can proceed with respect to the offences under the 2013 Act and also under the IPC. In fact, it is not the other way around as the EOW cannot take over the investigation qua the offence(s) under the 2013 Act which is the specific domain of the SFIO, is a matter of fact which needs not be gone into by this Court as the same is not involved herein. - HC Visit to Get Source Indian Laws Dishonour of Cheque - issuance of summons - vicarious liability of director of company - In the present case, the Ld.MM committed an error by summoning the petitioner, who was not even an Additional Director-Non Executive in the accused company at the time when the cheques were issued and thus was not handling the affairs or the conduct of business of the accused company at the relevant time. - HC Visit to Get Source Constitutional validity of The Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 - Once any legislation is found to substantially relate to the entries in the State or Concurrent lists, even some incidental or marginal overlap is of no consequence. - Tax (Cess) versus Fee - the levy imposed by the impugned Act is a fee and that the State had sufficient legislative competence to enact the impugned Act - HC Visit to Get Source PMLA Provisional attachment - Allegation on the University for giving fake degrees - when the challenge to the action of the respondent authority in declaring the degrees awarded by the petitioner-University was negated, there may not remain much scope for the petitioners to make out a case for assailing the PMLA proceedings, the edifice of which is the action of grant of fake degrees by the petitioner-University. - HC Visit to Get Source SEBI Unregistered investment advisory activities - Investment advisory services with guaranteed assured returns causing monetary loss to the complainants - since appellants were carrying out advisory services without registration the direction to refund the amount by the WTM does not suffer from any error of law. - AT Visit to Get Source Service Tax Levy of penalty u/s 77 and 78 of FA - there was no suppression of fact with an intention to evade payment of tax, established in this case. Since the Appellant has already paid the entire service tax payable and the interest liability has also been adjusted from the excess service tax paid, it is a fit case for invoking section 80 of the Finance Act, 1994, to waive the penalties - AT Visit to Get Source Central Excise Rejection of the Refund claim - Scope and validity of the addendum issued to Show Cause Notice - Period of limitation - The Addendum was issued to add something to the already issued show cause notices. The show cause notices did mention the issuance of the Notification and also the date on which the refund applications were filed. - Addendum to SCN is valid - Refund claim cannot be allowed - AT Visit to Get Source Classification of goods - Auto feeder, Chick Drinker and Poultry cage manufactured by the appellant - the impugned goods merit classification under CETH 84361000, as adopted by the appellant. - AT Visit to Get Source Case Laws: GST 2023 (9) TMI 1130 Cancellation of GST registration - non-service of SCN - Violation of principles of natural justice - HELD THAT:- The Court had held that by issuing a cryptic show cause notice, the authorities had violated the principles of natural justice. From the impugned order as well as the show cause notice, the reasons for cancellation are not decipherable therefrom. The show cause notice and the impugned order are quashed and set aside. The petition is allowed solely on the ground of violation of principles of natural justice. The show cause notice as well as the order cancelling the registration are quashed and set aside with a liberty reserved to the respondent to issue a fresh notice with particulars of reasons incorporated with details, and thereafter, to provide reasonable opportunity of hearing to the writ petitioner and to pass appropriate speaking order on merits. Petition allowed. 2023 (9) TMI 1129 Refund of unutilised Input Tax Credit (ITC) - exports without the payment of taxes - POPOS Rules - intermediary services - rejection on the ground that the services provided by the petitioner were that of an intermediary and thus, the place of services was not located in India - HELD THAT:- Prima facie, the said controversy is covered by the decisions rendered by this Court in M/S. ERNST AND YOUNG LIMITED VERSUS ADDITIONAL COMMISSIONER, CGST APPEALS -II, DELHI AND ANR. [ 2023 (3) TMI 1117 - DELHI HIGH COURT] and in M/S. MCDONALDS INDIA PVT. LTD. VERSUS ADDITIONAL COMMISSIONER, CGST APPEALS - II, DELHI ANR. [ 2023 (5) TMI 1123 - DELHI HIGH COURT] . The exact nature of the services provided are required to be examined in the light of the aforementioned decisions, to ascertain whether the services rendered by the petitioner are for facilitating or for arranging the principal services. The petitioner s application for refund is restored to the Adjudicating Authority for consideration afresh. The Adjudicating Authority shall pass an appropriate order after hearing the parties, as expeditiously as possible and preferably within a period of eight weeks from today. Petition disposed off. 2023 (9) TMI 1128 Refund in respect of goods exported by the taxpayer - HELD THAT:- The petitioner (husband of the deceased tax payer) was advised to transfer the accumulated tax credit to a new GST number in respect of the same business. The petitioner (husband of the deceased tax payer) had thus taken the necessary steps to transfer the accumulated tax credit to a new GST number obtained in his name. However, subsequently, it was discovered that although he can utilize the transferred credit for discharge of further tax liabilities in respect of the said business, his claim for refund in cash cannot be processed, notwithstanding that the original tax payer was so entitled to such refund. The petitioner is not interested in carrying forward the accumulated tax for discharge of future liability, and is interested in obtaining the refund. He has since reversed the tax credit to the account of the deceased tax payer. The Petitioner will file fresh refund applications with his signature as the authorized signatory and husband of Late Smt. Malvinder Kaur Mujral. Matter restored back with direction to file fresh refund application and processing thereof. 2023 (9) TMI 1127 Seeking grant of regular bail - forming fictitious entities and issuing of fake invoices without actual physical movement of goods from the firms operated by him - HELD THAT:- On perusal of record, it appears that the arrest memo was made on 09.03.2023, the applicant was produced before the learned Addl. Chief Judicial Magistrate on 10.03.2023. The applicant was sent for remand on 17.03.2023 and thereafter sent to Sabarmati Jail. The facts of the complaint would be required to be proved by the Director General of GST Department who has filed the complaint. The learned Additional Chief Metropolitan Magistrate has ordered to register the complaint vide order below Exhibit 1 - summons would have been served in jail. The trial would begin on the recording of the evidence from the side of the Department. There is no time bound procedure after the cognizance of the offence. Further, the trial will take its own time to conclude. In the case of SANJAY CHANDRA VERSUS CBI [ 2011 (11) TMI 537 - SUPREME COURT ], a reference has been made to observe that the important factor while deciding the bail application certainly would be to take into consideration, the delay in concluding the trial. Section 138 of the Act makes provision for compounding of offences under the Act, even after the institution of prosecution, on payment by the person accused of the offence, such compounding amount in such manner as may be prescribed. The compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences, on payment of compounding amount as may be determined by the commissioner, the criminal proceeding already initiated in respect of the said offence shall stand abated. This Court is of the opinion that, discretion is required to be exercised to enlarge the applicant on regular bail. This Court has considered the following facts while exercising discretion in favour of the applicant - without discussing the evidence in detail, this Court, prima facie, is of the opinion that, this is a fit case to exercise discretion and enlarge the applicant on regular bail. Hence, the present application is allowed and the applicant is ordered to be released on regular bail. 2023 (9) TMI 1126 Seeking grant of bail - wrongful passing of input tax credit - bogus firms - case based on documentary evidence which are in custody of Department - HELD THAT:- The respondent department failed to point out the facts that the further custody of the applicant is necessary. The entire case is based on documentary evidence and same are in the custody of the department. The record indicates that after filing the complaint still no show cause notice for determining the liability is issued by the department. In such circumstances, considering the observations made by the Apex Court in case of P. Chidambaram Vs. Directorate of Enforcement, (2020) 13 SCC 791, i.e. even allegations of grave economic offence, it is not a rule that bail should be denied in every case and whether bail is granted or not, will have to be on the case to case basis of the facts involved therein and securing the presence of the accused to stand trial. , it is deemed fit to exercise the discretion in favour of the applicant and accordingly, the applicant is allowed to be released on bail. The applicant is ordered to be released on regular bail on executing a personal bond of Rs.25,000/-, with one surety of the like amount to the satisfaction of the learned Trial Court and subject to the conditions imposed - application allowed. 2023 (9) TMI 1125 Levy of penalty u/s 129 of the Kerala Goods and Services Tax Act, 2017 read with Rule 138 - valid documents not produced - evasion of tax - HELD THAT:- In the absence of valid documents in possession of the person in charge of the goods would be treated as a willful act of evasion of tax. If the vehicle was not intercepted and goods were not verified, it would have lead to the leakage or evasion of the revenue by the dealer. On receipt of the show cause notice the dealer produced copies of the e-way bills and claimed that transport of goods was genuine and properly covered by the statutory documents. However on verification of the e-way bills, contrary to the their claim it was revealed that the vehicle mentioned therein and the vehicle through which the goods were attempted to be transported were distinct. The adjudicating authority was of the opinion that the dealer had not been able to convincingly explain the reasons for the discrepancy. Instead, after receipt of the Show Cause Notice it was contended by the dealer by fabricating a story that the local transporter failed to arrange the statutory requirements. The owners/dealers have to substantiate why the goods being transported did not accompanied the statutory documents. In view there of and considering the provisions of the Act was of the point that the dealer wilfully attempted to transport the goods without any documents and tried to evade the tax liability on the goods. The Show Cause Notice was adjudicated and the tax is single GST of Rs.1,20,000/- with same amount of penalty and twice the assessed amount as penalty was imposed by the impugned order. Considering the provisions of Section 129 of the Kerala Goods and Services Tax Act, 2017 read with Rule 138 of the Rules made thereunder and the facts of the case, the impugned order imposing the tax and penalty does not require any interference and therefore the writ petition fails and hereby dismissed. 2023 (9) TMI 1124 Maintainability of petition - availability of alternative remedy - non-filing of Hard Copy and Appeal has been filed after a delay of 103 days - HELD THAT:- The petitioner is desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal (hereinafter referred to as Tribunal ) under Section 112 of the Bihar Goods and Services Tax Act (B.G.S.T. Act) - However, due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Petition disposed off Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. 2023 (9) TMI 1123 Levy of additional tax liability - execution of subsisting Government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) - seeking to neutralize the impact of unforeseen additional tax burden on Government contracts since the introduction of GST - HELD THAT:- These writ petitions are disposed of by giving liberty to the petitioners to file appropriate representations, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. Petition disposed off. 2023 (9) TMI 1122 Valuation of supply - subsidy received from the Central / State Government to be excluded from the value for the purpose of arriving at the GST liability - HELD THAT:- In the instant case, the supplier and the recipient are not related and the price is the sole consideration for the supply and thus the transaction value becomes the value of supply. The transaction value is the value of supply and the supplier raises the invoice for full amount i.e. for the full value of the goods being supplied. In the instant case, it is observed that the contract for supply of machinery is between the Applicant and the recipient i.e. M/s Chinnapuri silks; the applicant supplier raises the invoice for the full contract price and even if the recipient is not provided subsidy, the contract price is still recoverable from the recipient. Subsidies provided by State Government or Central Government in the escrow account are not separately recoverable by the Applicant, but are part of the price payable by the recipient. Thus, there does not arise a situation where the subsidies are to be added separately to the transaction value or value of supply payable by the recipient. Also, for the same reason, the subsidy is not affecting the price of supply. Only the subsidies provided by Central Government and State Governments which are directly linked to the price and affects the price of supply are not a part of value of supply. Hence the exclusion provided in Section 15(2)(e) is not applicable in the instant case and the subsidies provided by Central Government and State Governments cannot be excluded in determining the value of supply. The subsidy received from the Central / State Government cannot be excluded from the value of supply as the same is not affecting the price of supply. 2023 (9) TMI 1121 E-commerce operator or not - nature of supply as conceptualized in Section 9(5) of CGST Act, 2017 r/w notification No 17/2017 dated 28.06.2017 - supply by the service provider (person who has subscribed to Namma yatri) to his customers (who also have subscribed to Namma yatri) on the Applicant s computer application - supply or not - liability to collect and pay GST on the supply of services supplied by the service provider (person who has subscribed to Namma Yatri) to his customers (who also have subscribed to Namma Yatri) on the Applicant s computer application. HELD THAT:- It could be inferred from the definitions that Electronic Commerce Operator (ECO) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce i.e. for the supply of goods or services or both, including digital products over digital or electronic network. In the instant case the applicant owns digital platform ( Namma Yatri APP), for the supply of services. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. Vide Notification 17/2017-Central Tax(Rate) dated 28.06.2017, issued under Section 9(5) of the CGST Act, 2017, Government has notified that tax on intra-state supplies for (i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; shall be paid by the electronic commerce operator. Further explanation (b) to the said notification specifies that maxicab , motorcab , and motor cycle shall have the same meaning as assigned to them respectively in clauses (22), (25) and (26) of Section 2 of the Motor Vehicles Act, 1988 - In the instant case the services of transportation of passengers are provided by an auto rickshaw, which is a motor vehicle adapted to carry maximum three passengers excluding driver and thereby it can carry not more than six passengers excluding the driver and hence qualifies to be a motorcab . Thus the first two conditions viz., (a) and (b) are satisfied in the instant case, in as much as the category of services of Intra-state supplies are notified by the Government covering services by way of transportation of passengers by motor cab. In the instant case, it is observed that the applicant, because of their unique business model, merely connects the auto driver and passenger and their role ends on such connection; they do not collect the consideration; they have no control over actual provision of service by service provider; they do not have the details of the ride; they do not have control room/call centre etc. The supply happens independent of the applicant and the applicant is involved only in the identification of the supplier of services and doesn t take responsibility for the operational and completion of the ride - Thus it is observed that supply of services are not through the electronic commerce operator, but are independent. Therefore, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by electronic commerce operator. Thus the applicant, though qualifies the definition of being an e-commerce operator, is not the person liable for discharge of tax liability under Section 9(5) of the CGST Act, 2017. Income Tax 2023 (9) TMI 1120 Offence u/s 276CC - Clear case of willful and deliberate commission of default of the accused by not furnishing the return of income for the Assessment Year 2014 2015 within the due time allowed under Section 139 (1) - charges have not been framed and that the respondent has let in only pre-charge evidence and thus the petitioner would be entitled to file an application for discharge under Section 245 of Cr.P.C. - As per HC [ 2022 (8) TMI 1434 - MADRAS HIGH COURT] it is not inclined to grant the relief as sought for by the petitioner, since the cognisance has already been taken. Accordingly, this Criminal Original Petition is dismissed. However, it is made clear that the respondent Department cannot substitute any new sanction order, in the name of additional documents - HELD THAT:- After arguing the case for some time, learned Senior counsel appearing for the petitioner seeks permission to withdraw the Special Leave Petition. In view of the request made, the Special Leave Petition is dismissed as withdrawn. 2023 (9) TMI 1119 Valuation of shares - price at which the shares of Scorpio Beverages Pvt. Ltd. were sold by the petitioner/assessee and his wife - petitioner has, inter alia, alluded to the fact that insofar as his wife is concerned, the valuation offered by her with respect to the subject shares, which was pegged at Rs. 70.59 per share, has been accepted by the Tribunal - petitioner says that this writ petition can be disposed of with a direction to the Tribunal to reexamine the merits of the miscellaneous application as dismissed - HELD THAT:- As revenue, says that he can have no objection if this court were to direct the Tribunal to re-examine the merits of the miscellaneous application. It is ordered accordingly. The impugned order dismissing MA set aside - The miscellaneous application is restored to its original number and position. Tribunal is directed to pass a fresh order, after hearing the counsel for the parties. List the aforementioned miscellaneous application before the concerned Bench of the Tribunal on 20.10.2023 for directions. 2023 (9) TMI 1118 CIT(A) justification in accepting addition evidences u/r 46A - HELD THAT:- CIT(A) afforded opportunity to the Ld. AO and asked for remand report from him. The Ld. AO in his remand report only objected to admittance of additional evidence by the CIT(A). If he wanted, he could have examined the contents of the additional evidence furnished by the assessee during the course of remand proceedings but the Ld. AO did not do anything of the sort. On these facts, we are of the view that in the interest of justice and backed by the decision of Hon ble Delhi High Court in Virgin Securities Credits (P) Ltd. [ 2011 (2) TMI 207 - DELHI HIGH COURT] Ld. CIT(A) was perfectly justified in admitting the additional evidence. Disallowance of 40% of total direct/indirect expenses and disallowance of claim u/s 80C - HELD THAT:- On the basis of evidence produced by the assessee and admittance thereof under Rule 46A of the Rules, the Ld. CIT(A) has deleted the above disallowances. Nothing has been brought on record by the Revenue to enable us to take a view different from that of the Ld. CIT(A). Accordingly, we reject the grounds related to deletion of these disallowances by the Ld. CIT(A) in both the AY(s). Addition on account of difference in opening stock of the current year and closing stock of the preceding year - CIT(A) has accepted the explanation offered by the assessee before him and deleted the addition. The explanation furnished by the assessee before the Ld. CIT(A) could not be faulted before us by the Revenue. We, therefore, reject this ground of the Revenue raised in AY 2012-13. Revenue appeal dismissed. 2023 (9) TMI 1117 Disallowance of royalty u/sec. 43B - violation of Rule 46A by the ld. CIT(A) while providing relief to the assessee - HELD THAT:- As on the merits of the addition u/sec. 43B, the law laid down specifically by the decision of State of West Bengal v. Kesoram Industries Ltd. [ 2004 (1) TMI 71 - SUPREME COURT ] is that royalty is not tax. Further, the Hon'ble Gujarat High Court in the case of CIT v. Kutch Minerals [ 2008 (1) TMI 1001 - GUJARAT HIGH COURT ] has held that royalty is not tax and hence the provisions of sec.43B would not be attracted. When the merits of addition under the said provision is not sustainable, then in such scenario, the issue whether there has been any violation of Rule 46A by the ld. CIT(A) while providing relief to the assessee on this very section itself becomes redundant and infructuous. DR also could not refute the said proposition of law as laid down by the Hon'ble Supreme Court (supra) by citing any decision favouring the Revenue. Accordingly, there is no infirmity in the order of the ld. CIT(A) on this issue and it is upheld. Hence, ground No.1 of the Revenue s appeal is dismissed. Suppression of sale - Assessee has resorted to manipulation of sales price of iron ore sold to its sister concerns to evade payment of Royalty - HELD THAT:- Hon'ble Supreme Court in the case of CIT v. Calcutta Discount Company Ltd. [ 1973 (4) TMI 6 - SUPREME COURT ] held that when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into account the market price of those goods ignoring the real price fetched. In this case of the assessee, the AO has not alleged that the assessee has not offered its income for purposes of taxation in the return of income. AO also has not doubted the transaction as such. It is also not the case of the AO that the assessee has earned more than it has offered to tax merely because the sale to sister concern is at a price lower than the sale price charged by the sister concern. It is clear that what has to be considered for taxation, is not the market price of the goods which were transferred but the actual price that was received or fetched. Income which actually accrues is taxable. But income which the assessee could have but has not in fact earned cannot be taxed. Assessee appeal allowed. 2023 (9) TMI 1116 Addition u/s 68 - unexplained cash credit for alleged bogus long-term capital gain - Penny stock transactions - HELD THAT:- Genuineness of the claim of exempt income u/s 10(38) of the Act in respect of long-term capital gain arising sale of equity shares from the listed companies, which were found to be the penny stock companies by both the lower authorities and the long-term capital gain so claimed found to be bogus in nature. We find that the said judgment of the Hon ble Jurisdictional High Court in the case of Swati Bajaj Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] is completely applicable on the facts of the instant case. So far as the reliance placed by the ld. A.R. on the decision of this Tribunal in the case of M/s. Gateway Financial Services Limited [ 2023 (7) TMI 743 - ITAT KOLKATA] we find that this Tribunal after considering the order of the Security Exchange Board of India, in which one of the parties was the assessee dealt by this Tribunal and the SEBI after detailed investigation and considering the facts of the case exonerated the assessee from the charges leveled in the show-cause notice, which means that SEBI which controls the platform on which transaction of purchase and sale of equity shares is carried out, has specifically carried out the detailed investigation and the preponderance of probability was ruled out and the assessee was not found to be engaged in the manipulation of price of the alleged penny stock companies. Thus the facts of the case before us in the case of M/s. Gateway Financial Services Limited are totally distinguishable and cannot be applied in the facts of the case of the assessee in the instant appeal as no such order of the SEBI exonerating the assessee has been placed before us. Therefore, since no other binding precedence in favour of assessee is placed before us, we respectfully following the decision of this Tribunal as well as the judgment of the Hon ble Jurisdictional High Court in the case of Swati Bajaj Others (supra) find no infirmity in the orders of the ld. CIT(Appeals) and, thus, dismiss all the grounds raised by the assessee for A.Y. 2015-16. Appeal of the assessee is dismissed. 2023 (9) TMI 1115 Nature of expenses - disallowance is in respect of capital expenses of buildings, which was treated by the assessee as revenue - AO held such gross amount to be capital expenditure not eligible for deduction as revenue - total gross amount of disallowance is in respect of capital expenses of buildings, which was treated by the assessee as revenue - AO held such gross amount to be capital expenditure not eligible for deduction as revenue - AR submitted that necessary details were furnished before the AO, who failed to examine the same - HELD THAT:- Similar stand was reiterated before the ld. CIT(A) as well. It is observed from the impugned as well as the assessment order that the AO has not specifically referred to the detail, whose supporting bills were not available. In contrast, the ld. AR submitted that all the bills are available, which can be explained before the AO. Considering all it would be in the fitness of things if the impugned order on this issue is set-aside and the matter is restored to the file of the AO. Addition towards notional rent in respect of its self-occupied units - assessee had two units under the Business plaza, which remained vacant throughout the year - As argued no disallowance be made as the assessee was making attempts for letting out the property - as not convinced, the AO computed the annual rental value from these two floors by arriving at reasonable rent - After allowing standard deduction @30%, he made the addition -No relief was allowed in the first appeal - HELD THAT:- Though the assessee kept on making attempts for leasing out this property, but could not find a suitable lessee. This shows that the 7th floor was fully let out in the earlier three years, but was fully vacant from November, 2014 covering the full year under consideration. In this scenario, the annual value of 7th floor in terms of section 23(1)(c) has to be taken as Nil, provided the contention of the assessee that it was let out in the past, is correct. It is seen that no such contention was taken before the AO. In such circumstances, we deem it necessary to set aside the impugned order and remit the matter to the AO for examining the assessee s contention about the 7th floor having been let out in the three earlier years. If the contention turns out to be true, then no annual value should be computed for the year under consideration in respect of 7th floor. Needless to say, the assessee will be allowed a reasonable opportunity of hearing for proving its case. As regards the 5th floor, the ld. AR fairly admitted that the vacant area of 5071 sq.ft., was not let out in the past. The provisions of section 23(1)(a) get triggered without recourse to section 23(1)(c) and as such, the annual value of such property needs to be determined. AO computed the annual value of the 5th floor by considering the rent realized by the assessee from other floors. Necessary details as to whether the property was subject to Rent Control Legislation or the amount of standard rent etc. are not available on record. We set-aside the impugned order on this score and remit the matter to the file of the AO for re-computing the annual letting value of the 5th floor u/s. 23(1)(a) in the hue of the above decision of Smt. Kokilaben D. Ambani [ 2014 (9) TMI 763 - BOMBAY HIGH COURT] as held held that while determining the annual value in respect of properties which are subject to Rent Control Legislation and in case where the standard rent has not been fixed, the AO shall determine the same in accordance with the relevant Rent Control Legislation. Addition u/s. 56(2)(viia) - shares acquired by the assessee from ABIL were undervalued as against the rate of per share charged from Indiabulls - differential amount of Rs. 884.94 per share as applied to 34000 shares, was liable to be added to the assessee s income - HELD THAT:- It is only the valuation as determined under the unamended Rule 11UA(1)(c)(b), as applicable to the year under consideration, which has to be considered for applying the mandate of section 56(2)(viia) - In that view of the matter it is crystal clear that the benchmark for the application of this provision is the value so determined as per the rule and not the value as computed by the assessee under DCF method or the value as taken note of by the AO being, higher purchase price of shares from India bulls vis- -vis that from ABIL. Since the mandate of Rule 11UA, which is obligatory for section 56(2)(viia), has not been considered, we are of the opinion that it would be just and fair if the impugned order on this score is set-aside and the matter is restored to the file of the AO. We order accordingly and direct him to compute the fair market value of equity shares of Diana under Rule 11UA(1)(c)(b) and thereafter consider the applicability of section 56(2)(viia) to that extent. It goes without saying that the assessee will be allowed reasonable opportunity of hearing in such fresh application of section 56(2)(viia) of the Act. Disallowance u/s. 14A r.w. rule 8D - HELD THAT:- The investment in Equity shares of Diana needs to be excluded both from the opening and closing balances of investments for working out the average value of investments to find out the amount of interest to be disallowed under Rule 8D(2)(ii). Similar is the position regarding the applicability of Rule 8D(2)(iii), which talks of making disallowance at 0.5% of the average of the value of investments, income from which does not form part of total income. AO has again considered investment in shares of Diana also for computing the average value of investments for the purpose of making disallowance under clause (iii) of Rule 8D(2). In view of the afore referred precedents, we set aside the impugned order to this extent and remit the matter to the file of the AO for recomputing the disallowance under Rule 8D(2)(ii) and (iii) by considering only such investments in calculating the average value of investments, which yielded exempt income during the year. Disallowance u/s. 32 towards depreciation on the fixed assets - HELD THAT:- Both the sides are in agreement that this is a recurring issue and the Tribunal for the immediately preceding assessment year and earlier years has sent the matter back to the file of the AO for deciding in conformity with the decision taken in earlier years. We also follow the same. Addition towards notional rent in respect of one vacant unit at the 10th floor having area of 2520 sq.ft. - HELD THAT:- AR submitted that this unit was also let out in the earlier years and hence the AO erred in determining the annual value of this property u/s. 23(1)(a). It was also conceded that the factum of such unit having been let out in the earlier years was not brought to the notice of AO, as is the case for the immediately preceding A.Y. 2016-17. Following the view taken hereinabove, we set-aside the impugned order on this score and remit the matter to the file of the AO for deciding it in the light of directions given in our above order for the A.Y. 2016-17. 2023 (9) TMI 1114 Disallowance of subscription to Clayton Christensen Institute (CCI) and to the royal hospital for women Foundation treating the same as in the nature of donation - assessee submitted that this is paid towards sponsorship and not donation and hence is allowable u/s 37(1) - HELD THAT:- On perusal of the MOU entered into between the assessee and CCI, we notice that as part of the research programme towards which, the impugned payment is made by the assessee, the employees of the assessee would undergo training in the theory of disruptive innovation. Under the fellowship programme CCI trains the employees of assessee which as per the programme, would help in the future growth of business of the assessee. We, therefore, see merit in the contention of the Ld.AR that though the amount is paid under the head donation , the actual nature of payment is towards the research programme which would benefit the assessee in long term and the same should be allowed as a deduction under section 37(1). Thus payment to CCI towards research program is incurred for the purpose of assessee's business and therefore should be allowed as a deduction under section 37(1). Payment made to Royal Hospital For Women amount is paid towards sponsoring the luggage prize at their annual dinner. Nothing has been brought on record by the assessee to substantiate the claim that sponsoring the prize at the dinner would help the business of the assessee. For the purpose of claiming deduction under section 37(1), it is important for the assessee to establish that the expenditure is incurred wholly and exclusively for the purpose of business, which, in our opinion, is not established by the assessee with respect to the payment made to Royal Hospital For Women. We hold that the amount paid towards sponsoring of prize at the dinner of the Royal Hospital For Women Foundation cannot be held to be incurred for the purpose of the business of the assessee. Accordingly, we uphold the order of the CIT(A) to this extent. This ground raised by the assessee is partly allowed. Advertisement expenditure - AR submitted that the expenditure in respect of advertisement in newspaper / magazine is routinely incurred for the ongoing business of the assessee and is not in the nature of any brand building - As submitted the additional evidence for the first time before Tribunal. Therefore respectfully following the above decision of the co-ordinate bench in assessee s own case for AY 2012-13 [ 2022 (4) TMI 1558 - ITAT MUMBAI] we remit the issue back to the Assessing Officer with similar direction with regard to the additional evidences submitted by the assessee. This ground is allowed for statistical purpose. Claim of deduction u/s 10AA in respect of interest income - claim denied for the reason that the claim is not made through filing the revised return - HELD THAT:- In Goetze (India) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] held that the assessee can make a claim for deduction, which has not been claimed in the return, only by filing a revised return within the time allowed. In assessee's case, we notice that the assessee, in the computation of income has claimed the deduction under section 10AA without including the interest income to the profits of the business and has only revised the amount of deduction before the lower authorities by including the interest income. Therefore, we see merit in the contention of the Ld.AR that this is not a fresh claim, but a re-computation of the deduction already claimed while filing the return of income. We further notice that a similar view is expressed in the case of Symantee Software India P Ltd [ 2015 (1) TMI 110 - BOMBAY HIGH COURT] while considering the deduction under section 10A of the Act. It is relevant to mention here that the manner of computing deduction under section 10A as per the provisions of subsection (4) of the said section is similar to subsection (7) of section 10AA and therefore the ratio of the above decisions rendered in the context of deduction under section 10A would equally be applicable to deduction claimed under section 10AA - we hold that interest income is also to be considered for the purpose of arriving at the profits eligible for deduction under section 10AA.AO is directed to re-compute the deduction under section 10AA accordingly. Foreign Tax credit in respect of income - AR submitted that foreign tax credit should be provided for taxes paid in overseas jurisdiction in respect of section 10AA eligible income in India as per the tax credit provisions of respective DTAA - HELD THAT:- AR brought to our attention that the list of countries involved for the year under consideration from which we notice that the countries listed are same as considered in the above decision of the coordinate bench. Therefore, respectfully following the above decision of the coordinate bench, we hold that the foreign tax paid shall be eligible for the 9 countries as listed in the order of the co-ordinate bench. This ground of the assessee is allowed. Deduction u/s 10AA should be on commercial profit or income from business or profession - HED THAT:- As similar issue in assessee s own case for A.Y. 2012-13 [ 2022 (4) TMI 1558 - ITAT MUMBAI] we remand the issue to the file of the Assessing Officer for de novo consideration of the issue keeping in mind the decision of the Hon ble Supreme Court in the case of Vijay Industries Ltd [ 2019 (3) TMI 171 - SUPREME COURT] This ground is allowed for statistical purpose. State taxes paid in overseas countries - assessee submitted that the state taxes paid in the USA cannot be disallowed under the provisions of section 40(a)(ii) for the reason that the Explanation inserted with effect from April 1, 2006 provides that the taxes which are eligible for relief under sections 90 or 91 are not eligible for deduction - CIT(A) held that state taxes paid in USA is not eligible for relief under section 90 / 91 and, therefore, directed the Assessing Officer to factually verify and give relief to the assessee - HELD THAT:- The deduction claimed towards state taxes paid in the USA has been a recurring issue in assessee s own case for AY 2012-13 [ 2022 (4) TMI 1558 - ITAT MUMBAI] as held taxes levied overseas which are not eligible for relief either under section 90 or 91 of the Act, would not come within the purview of section 40(a)(ii) of the Act. It is the specific plea of the assessee that the State tax is not covered either under Indo-US or Indo-Canada tax treaty, hence, not eligible for any relief under section 90 of the Act. Pertinently, unlike section 91 read with Explanation(iv), section 90 does not provide for inclusion of tax levied by any State/ local authority of that country within the expression 'income tax'. In view of the aforesaid, we direct the Assessing Officer to verify whether the State taxes paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, assessee's claim of deduction should be allowed. TDS u/s 195 - Expenditure on imported software disallowed u/s 40(a)(i) - HELD THAT:- As in assessee s own case [ 2022 (4) TMI 1558 - ITAT MUMBAI] given the definition of royalties' contained in article 12 of the DTAAs there was no obligation on the persons mentioned in section 195 of the Act to deduct tax at source, as the distribution agreements and end-user licence agreements did not create any interest or right in such distributors or end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Act which deal with royalty, not being more beneficial to the assessees, had no application in the facts of these cases. The amounts paid by resident Indian end-users or distributors to non-resident computer software manufacturers or suppliers, as consideration for the resale or use of the computer software through enduser licence agreements or distribution agreements, was not royalty for the use of copyright in the computer software, and did not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Act were not liable to' deduct any tax at source under section 195. Disallowance u/s 14A - AO held that the assessee has not worked out any expenditure relatable to earning the exempt income and that it is difficult to believe that such a meager expense is incurred for earning the huge exempt income - HELD THAT:- We notice that the assessee has made a very detailed submission before the Assessing Officer with regard to the suo motu disallowance - AO in his finding, has simply stated that he is not satisfied with the correctness of the claim of expenditure since the amount disallowed by the assessee is very meager. It is the settled position that the AO cannot invoke the provisions of disallowance under section 14A read with rule 8D without recording any cogent reasons as to why he is not satisfied with the correctness of the claim of the assessee. Mere recording that the amounts being meager compared to the exempt income earned, cannot be construed as recording of satisfaction. Therefore, CIT(A) has correctly deleted the addition made by the Assessing Officer for want of recording of objective satisfaction with cogent reasons. This ground of the revenue is dismissed. Advertisement Expenses (Brand building expenses) - AO held that these expenses are more in the nature of brand building expenses and called on the assessee to file the details and the reason as to why the same cannot be treated as capital in nature - AR submitted that since the expenditure incurred are towards advertising and marketing is a routine expenditure and, therefore, should be allowed as revenue expenditure - HELD THAT:- We notice that this ground is same as Ground No.2 contended by the assessee with regard to advertisement expenses in which the CIT(A) granted partial relief to the assessee. While adjudicating the ground raised by the assessee we have remitted the issue back to the Assessing Officer for a denovo adjudication based on the details that are submitted by the assessee. Since the issue contended by the revenue is same this ground of the revenue is disposed of in the same terms. Year-end Provision assessee had made certain provisions for expenses at the end of the year for which deduction of tax at source has not been made - HELD THAT:- As similar issue for A.Y. 2013-14 in assessee s own case [ 2022 (4) TMI 1558 - ITAT MUMBAI] held AO has not examined the issue about year-end payments. There is a difference between the payments that are made during the year and the payments made at the fag-end of the year. In our humble opinion in 2nd category of payments tax has been detected in the subsequent year when Bills are booked. In this regard we have also considered the amendment made to Sec.40(a)(ia) by the finance act, 2008, with retrospective effect from 1.4.2005. Principles discussed is also support our view that provisions of tax deducted at source were not applicable in case consideration. Ground decided in favour of the assessee. TP adjustment on provision of software and consultancy services - HELD THAT:- As in assessee s own case for A.Y.2012-13[ 2022 (4) TMI 1558 - ITAT MUMBAI] Commissioner (Appeals) has taken pains to examine in detail the alternative benchmarking done by the assessee with foreign comparables and after detailed analysis has shortlisted the final comparables to be considered for comparability analysis. No convincing argument or evidence has been brought on record by the learned Departmental Representative to persuade us to disturb the finding of learned Commissioner (Appeals) on these issues. In view of the aforesaid, we do not find any merit in the grounds raised by the Revenue on the issues. Accordingly, grounds are dismissed. Provision of loans to AE - HELD THAT:- Lower authorities have not considered the submissions of the assessee that extending the loan is part of shareholder activity. Therefore respectfully following the assessee's own case for AY 2012-13 [ 2022 (4) TMI 1558 - ITAT MUMBAI] we remit the issue back to the Assessing Officer / TPO for denovo adjudication after giving a reasonable opportunity of being heard to the assessee. This ground is accordingly allowed for statistical purposes. Provision of guarantee to AEs - HELD THAT:- We hold the provision of guarantee as an international transaction and direct the assessing officer to charge guarantee commission at the rate of 0.5% following the decision of the Hon'ble jurisdictional High Court in Everest Canto Cylinders Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . Adjustment made towards receipt of brand royalty from AE - HELD THAT:- We have in the earlier part of this order already held that the fee paid by the assessee towards the brand to Tata and Sons Ltd. is not capital in nature for the reason that the brand is not owned by the assessee. Accordingly there cannot be any royalty that needs to be charged on the brand since assessee is not the owner of the brand and there cannot be any TP adjustment towards the amount that ought to have been received by the assessee towards brand royalty. We therefore see no infirmity in the order of the CIT(A). This ground of the revenue is dismissed. 2023 (9) TMI 1113 Additions towards Inflated purchases - mistakes regarding the quantity of purchase of HSD MS - short quantity shown in the ledger maintained by the IOCL by comparing the same with invoices of the purchase as well as the payment made by the assessee as reflected in the bank account statement - CIT(A) deleted the additions - HELD THAT:- The additional evidence produced by the assessee in the shape of invoices issued by the IOCL as well as bank account statements are independent record maintained by the bank and IOCL which cannot be manipulated by the individual assessee. Therefore, scope of any manipulation is completely ruled out in respect of these evidences produced by the assessee before the CIT(A). AO ought to have verified correctness of the details but he opted not to do so and raised the objection against the admission of the additional evidence. Once the additional evidence is not prepared by the assessee and the scope of any manipulation on the part of the assessee is ruled out then we do not find any reason for not admitting the additional evidence produced by the assessee. As noted from the monthly details of purchase made by the assessee as well as the payments as reflected in the bank account statement of the assessee that the quantity of the purchase and corresponding payments are duly matched without any discrepancy whereas in the ledger account maintained by the IOCL the factual mistakes are apparent regarding the quantity of purchases as shown only 6 kl instead of 12 kl and in some cases it is shown only 3 kl or 9kl. Therefore, these quantities as shown in the IOCL statement are not even matching with the value shown in the same documents. Comparative chart as reproduced by the CIT(A) clearly manifest these factual mistake in the IOCL statement regarding the quantity of purchase and hence, the assessment order is entirely based on incorrect facts without verifying the correct details and the facts from the supporting documents being the invoices issued by the IOCL and corresponding purchase consideration paid by the assessee. Accordingly in the facts and circumstances of the case as discussed above we do not find any error or illegality in the impugned order of the Ld. CIT(A), same is upheld. Appeal of the revenue is dismissed. 2023 (9) TMI 1112 Revision u/s 263 - PCIT observed that in the computation of STCG, the amount debited on account of addition made during the year under consideration, without any documentary evidence, PF and ESI contribution received from employees but deposited after the due date, failure to pay service tax upto the date of filing of return of income and interest paid on late payment of TDS are not allowable as per the income Tax Act, 1981 - HELD THAT:- We note that regarding the claim of deduction being the amount debited on addition made during the year under consideration, from the STCG on sale of the Multiplex, we find merit in the submission of Counsel. We note that information regarding addition to multiplex account was available in the Schedule (2.3) of Fixed assets and the depreciation was a part of Statutory Audit Report and the assesses has disclosed the details in Form No. 3CD attached with the return of income (ROI). Assessment order was finalised after perusal of ROI, material available on record and replies filed in response to notice issue u/s 142(1) of the Act, therefore order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue, hence we allow this issue of the assessee. Late payment of PF ESI - We note that this issue is covered against the assessee by the judgment of the Hon`ble Supreme Court in the case of CHECKMATE SERVICES P. LTD [2022 (10) TMI 617 - Supreme Court] Therefore, we dismiss this ground of assessee. Claim of service tax expense - We note that as per the Provisions of Service tax Act, assessee had paid service tax under reverse charge mechanism and 0.5 % of Swatchh Bharat Abhiyan and 0.5 % of Krishi Kalyan Cess, out of total service tax was claimed, as expenditure and remaining portion of service tax @ 14% was set off against the amount payable. Therefore the AO has rightly allowed the claim of Service tax Expense, hence we allow this ground of assessee. Claim of interest on TDS - We note that issue before us for interest component and not the TDS. We find merit in the submission of ld Counsel to the effect that the amount of TDS is not income tax for the assessee but it is the amount of income tax deducted and paid by the assessee on behalf of the third party. Thus, it is not a payment of income tax, the said expenditure incurred by the assessee is wholly and exclusively for the purpose of business and the delay in making payment of TDS late, is not like a penalty, and it does not amount to payment for breach of law or illegal act or prohibited act, therefore we allow this ground raised by the assessee. As in Malabar Industries Ltd. [2000 (2) TMI 10 - Supreme Court] wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the PCIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. The Hon ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the PCIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . Therefore, we note that order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue except to the ground relating to PF and ESI which we have dismissed. In case of other grounds of assessee, AO has taken a possible and reasonable view, therefore order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue (except PF and ESI), therefore we allow the appeal of the assessee partly. 2023 (9) TMI 1111 Addition on account of interest income - AO worked out interest income of the assessee by applying the rate of interest @12% for the whole year that came and held that the assessee has suppressed interest income - AO levied tax under the provisions of section 115BBE on the said undisclosed investment - HELD THAT:- From the ledger accounts reproduced in the assessment order, it is very clear that the assessee has lent the loan after October, 2017 on various dates and that interest is calculated considering the number of days for which the loan was advanced. Given this, we are unable to understand or appreciate why despite reproducing all the details the AO proceeded to calculate interest for the whole assessment year. Since it is evident from the details submitted by the lower authorities that the assessee has obtained the loan from DHFL only in October 2017 and has advanced the same to various parties out of the said loan, we see no logic in AO calculating interest for the whole year. Therefore we hold that there is no infirmity in the findings of the CIT(A) deleting the addition towards interest. This ground of the revenue is dismissed. Addition u/s 69B - advances outstanding include the interest accrued net of TDS - difference between advances outstanding as of 31/03/2018 and loan balance as on the said date - HELD THAT:- As also clear that the amount of outstanding advances includes the interest accrued on the advance net of TDS. In the order of assessment, we notice that the Assessing Officer has not considered any of the submissions but has simply calculated the difference between advances outstanding as of 31/03/2018 and loan balance as on the said date to make an addition under section 69B. We are unable to appreciate the action of the AO for the reason that assessee has clearly explained and provided a proper reconciliation for the amounts shown in the balance-sheet as on 31.03.2018 and the addition has been made without giving finding contrary on record. Accordingly, addition made u/s 69B by AO is not tenable. We, therefore, see no reason to interfere with the order of the CIT(A) in this regard. Accordingly, this ground of the revenue is dismissed. 2023 (9) TMI 1110 Addition as extra profit being 1% of the cash sales - assessee into the business of trading of Coal and Commission Agent of Uttar Pradesh Small Industries Corporation Ltd. (UPSIC) and Uttar Pradesh State Food and Essential Commodities Corporation Ltd. (UPSFECC). The assessee purchases coal from the said Government Agencies and sell them to various brick Kiln owners - HELD THAT:- In the present case, the A.O. had not doubted the genuineness of the documents produced by the Assessee to substantiate the source of cash deposit in the bank account and made the addition as extra profit being 1% of the cash sales without rejecting the books of accounts of the Assessee. The pre condition for estimating business income where the assessee maintaining books of account is that, the books of the Assessee should be found to be unreliable or otherwise not realistic and not capable of demonstrating the income of the Assessee. Applying the ratio laid down in the case of Salochana Bhatia [ 2011 (5) TMI 838 - PUNJAB AND HARYANA HIGH COURT] and also Sanjay Aggarwal [ 2021 (9) TMI 1515 - ITAT RAIPUR] we are of the opinion that the addition made by the A.O. without rejecting the books of accounts of the Assessee is erroneous. Accordingly, we allow the Grounds of appeal of the Assessee. 2023 (9) TMI 1109 Validity of order passed u/s 92CA(3) r.w.s. 153 - period of limitation - how the period of 60 days prior to the date of transfer pricing order i.e. 01.11.2019 is to be computed - HELD THAT:- As following the order passed in case of M/s. Pfizer Healthcare India Pvt. Ltd. [ 2022 (4) TMI 808 - MADRAS HIGH COURT] and ECL Finance Ltd. [ 2021 (9) TMI 1399 - ITAT MUMBAI] and Louis Dreyfus Commodities India Pvt. Ltd. [ 2021 (3) TMI 563 - ITAT DELHI] on the identical issue, we are of the considered view that as per limitation prescribed under section 153 of the Act that assessment order was required to be passed within a period of 21 months from the end of assessment year i.e. A.Y. 2016-17 and a further period of 12 months is to be added in case reference is made under section 92CA of the Act to the Ld. TPO, meaning thereby the period of 60 days expires to pass the transfer pricing order on 31.10.2019 whereas the transfer pricing order has been passed in this case on 01.11.2019 i.e. beyond the period of 60 days, hence barred by limitation. Since the order passed by the Ld. TPO is held to be barred by limitation the same is illegal, null and void ab-initio, hence quashed. 2023 (9) TMI 1108 Validity of assumption of jurisdiction u/s 147- Reason to believe - notice u/s 148 as issued beyond four year - transactions of commodity/derivatives trading - HELD THAT:- We find that the ld. AO in the reasons has made a very general observation in para-8 that assessee company had not declared its affairs correctly in the return filed by it. When the assessee had denied having any transactions with the Sub-brokers listed in the reasons and in view of the fact that assessee had already disclosed that profit earned from derivatives transactions carried out through M/s R.K. Commodities Pvt. Ltd. in the original return filed and assessed already u/s 143(3) of the Act, how can thereby any failure on the part of the assessee to disclose fully and truly all material facts that are relevant for the purposes of framing the assessment. How can the assessee be expected to prove the negative? The assessee could be expected to give explanation for the transactions carried out by it. It could not be expected to give explanation for the transactions not carried out by it, merely because some information had already been received by the Ld. AO from the Investigation Wing, Kolkata. We also find that the Ld. AO in the original scrutiny assessment proceedings had examined the entire transactions of commodity/derivatives trading during the course of original assessment proceedings itself which is evident from notice u/s 142(1) - Thus as sufficient enquiries were already made by the Ld. AO on the impugned transactions mentioned in the reasons. Hence, it also tantamount to change of opinion on the part of the Ld. AO for initiating the reassessment proceedings u/s 147 of the Act. Decided in favour of assessee. Customs 2023 (9) TMI 1107 Valuation of imported goods - PU belts on trans India basis - transaction value rejected by proceeding sequentially under Customs Valuation Rules and the value was determined as per best judgment assessment under Rule 9 adopting the value of similar goods imported within reasonable period of time - reliance based on contemporaneous imports - HELD THAT:- In the matter of M/S. SUMIT ENTERPRISES, M/S. LIBERTY ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, MUNDRA [ 2018 (12) TMI 447 - CESTAT AHMEDABAD] the period involved was contemporaneous and import was also of PU belts and the quantity was also of the same extent as in the instant case, where it was held that the enhancement of the value as held by the lower authorities, is not sustainable. There are no hesitation in following the above relevant decision of the same Bench (different constitution), which pertains to same product description, is of almost same quantity and of the same price range and of the same period to hold that the decision which were announced in the similar circumstances will substantively apply in the present matter also. Appeal allowed. 2023 (9) TMI 1106 Validity of certificates of exemption granted by the Ministry of Surface Transport - Department s plea is that an exemption benefit has to be strictly read into and its benefit is not accruable as Hydraulic Study Department was engaged in commercial activity and the imported goods were put to commercial use - whether Hydraulic Study Department were engaged in commercial activities? - HELD THAT:- It is an admitted position that the Commissioner of Customs, while re-adjudicating the matter in remand proceedings has not caused any enquiries with the Issuing Authority to validate and/or invalidate the correctness of exemption certificates so issued - While setting aside the order of the Commissioner of Custom (Port) it had specifically mentioned that if the authorities were having any doubt with regard to the correctness of the certificates so produced by the appellant, it was open to them to take up the matter with the Issuing Authority. The impugned order passed afresh does not reflect anywhere that the Issuing Authorities were referred to in the matter and enquiries caused about the veracity of the certificate, questioned by the Commissioner of Customs (Port), to substantiate its finding in the impugned order. On the question of engaging in commercial activity on part of the Hydraulic Study Department of Calcutta Port Trust, it was pointed out that Hydraulic Study Department is a separate unit/institution under the aegis of Calcutta Port Trust and carries out no commercial activities - There is no evidence of any further high sea sales of the said goods prior to their importation. Thus, the veracity of Hydraulic Study Department being the importer is not in doubt. There has been no evidence provided to substantiate the contention of the adjudicating authority that HSD was engaged in commercial activity and therefore the imported goods were not eligible to exemption benefit. The Hydraulic Study Department of Calcutta Port Trust were eligible for the benefit of Notification No. 70/80-Cus dated 26.03.1981 and Notification No. 152/94-Cus dated 13.07.1994 - the exemption benefit has been inappropriately denied to the appellants - appeal allowed. 2023 (9) TMI 1105 Recovery of Countervailing duty (CVD) - excess collection of CVD - HELD THAT:- This issue is no more res integra and the same has been settled by this Tribunal in their own case INDIAN OIL CORPORATION LTD. VERSUS COMMR. OF CUS., KANDLA [ 2008 (4) TMI 93 - CESTAT, AHMEDABAD ], wherein this Tribunal has observed We also find merit in the appellant s contention that as per the Administered Price Mechanism Scheme any excess recovery has to be deposited in the oil pool account and any deficiency is made good by oil pool account, and therefore, it cannot be said that there is excess collection of duty. It may not be exactly fit into the scheme of Section 28B of Customs Act, 1962 or Section 11D of the Central Excise Act, 1944 but it has to be accepted that the purpose of legislation of these sections is fulfilled by this provision in the Administered Price Mechanism Scheme. The Tribunal has observed that the price of the petroleum products was fixed under the Administered Price Mechanism (APM) and it has been explained by the appellant that whenever there is excess collection of duty, the same is surrendered to the oil pool account and consideration the same, the proceedings against the appellants were dropped - the demand confirmed against the appellant by way of impugned order, are not sustainable. Petition allowed. Corporate Laws 2023 (9) TMI 1104 Complaint against fraudulent and illegal siphoning of funds - running Ponzi Scheme in the name of illegal Assured Return - Validity of second complaint / FIR on the same issue which was already pending - Maintainability of impugned FIR and the proceedings emanating therefrom - pendency of earlier SFIO proceedings initiated pursuant to first complaint to the Central Government(MCA) on 14.10.2021 under Section 212 of Companies Act, 2013 - allegation made in first complaint and second complaint are same or not - effects of the provisions contained in Section 212 of the Act. HELD THAT:- In the opinion of this Court, it could not have been the intention of the legislature for allowing any parallel proceedings to be conducted by any other agency as it would not only be futile but also entail more confusion and trouble, particularly if there are diverse decisions/ outcome from two or more different sets of proceedings. The same would tantamount to sheer abuse of the process of law. Once an investigation has been initiated by the SFIO under Section 212 of the 2013 Act, a parallel investigation by a separate agency into the affairs of the Company, considering the bar under Section 212(2), is not permissible. As per the facts involved herein, admittedly, the SFIO had already filed numerous Interim Report(s) before this Court and before NCLT. The only difference between the first complaint resulting in the SFIO proceedings made by respondent no. 2 and the second complaint resulting in the registration of the impugned FIR also made by the respondent no. 2 is that the said respondent in the end of the complaint has instead of using the words cannot be done by any other agency except SFIO Department in the initial complaint made to the MCA cleverly replaced it with the words cannot be done by any other agency except EOW with a view to include Section(s) 406/ 420/ 120B IPC, since the offence of fraud per-se does not find mention in the IPC. The same, in the opinion of this Court, does not make an iota of difference as it seems to be a deliberate act. As such, the respondent no. 2 cannot be given any benefit of the same. It is trite law that subsistence of two FIRs is not maintainable as they can neither be filed nor allowed to co-exist or continue at the same time, particularly, whence they are arising out of the same set of facts and allegations, more so, whence the complainant happens to be the same in both the FIRs. Thus, in such an event, in the opinion of this Court and as laid down by the Hon ble Supreme Court, the subsequent FIR calls for quashing as the fundamental right of a citizen/ person as provided under Part III of The Constitution of India and the power of the Police under Cr.P.C. has to be balanced and a person cannot be subjected to fresh investigation(s) under the same set of allegations qua the same offence(s). Taking into the account the aforesaid, more particularly Section 212(2) read with Section 212(17)(a) of the Act, this Court is of the opinion that it would be in the interest of justice and benefit of the general public and the money and resources involved and also all the parties involved herein, if the impugned FIR is transferred to the SFIO, which shall take over the same along with the already pending proceedings before it arising out of the complaint dated 14.06.2021. There is no doubt about the fact that the SFIO proceedings can proceed with respect to the offences under the 2013 Act and also under the IPC. In fact, it is not the other way around as the EOW cannot take over the investigation qua the offence(s) under the 2013 Act which is the specific domain of the SFIO, is a matter of fact which needs not be gone into by this Court as the same is not involved herein. The second complaint dated 15.08.2021 to the EOW resulting in registration of the impugned FIR is not maintainable in the current form, moreover, whence the first complaint dated 14.06.2021 and the second complaint dated 15.08.2021 are verbatim and are involving the same set of facts and are against the very same individual(s) and are made by the same complainant i.e., respondent no. 2. Further, in view of Section 212(17)(a) read with Section 212(2) of the 2013 Act and based upon all the contentions raised by the learned (senior) counsels for the parties coupled with the documents on record, in the considered opinion of this Court, the impugned FIR is liable to be quashed and transferred to the SFIO as the proceedings thereunder are not maintainable in the eyes of law. Petition disposed off. Securities / SEBI 2023 (9) TMI 1103 Unregistered investment advisory activities - Investment advisory services with guaranteed assured returns causing monetary loss to the complainants - Challenging direction to Refund the monies received from the investors towards investment advisory services - HELD THAT:- We find that in the instant case the direction to refund the amount has been issued under Section 11 of the SEBI Act we are of the opinion that SEBI has a power to direct refund of amount in the interest of the investors or to promote development of the securities market. In any case, such power is also derived under Regulation 35 of the Intermediaries Regulations. In our opinion the direction to refund the amount is squarely covered under Regulation 35. The contention that Regulation 35 is only with regard to collection of money under any scheme is patently erroneous. The word scheme is wide enough to include a device which the appellant have carried out in the form of giving advisory services without obtaining registration. In view of the aforesaid, the contention raised by the appellant does not survive. As contended that the appellant at best can only be entitled to refund the amount till the date when the appellant was a partner in the firm but after the dissolution of the partnership the appellant is not entitled for the action of the respondent in carrying out advisory services. In our opinion the submission cannot be accepted as there is no clear cut evidence to show that the partnership had validly dissolved. In the absence of any cogent proof the submission cannot be accepted. We of the view that since appellants were carrying out advisory services without registration the direction to refund the amount by the WTM does not suffer from any error of law. FEMA 2023 (9) TMI 1102 Offences committed under the repealed FERA Act - prosecution for the offences punishable as committed prior to the repeal of FERA - purposes of the prosecution of offences punishable under Sections 56 and 57 of FERA - HELD THAT:- What is material here is sub-section (4) of Section 49 of FEMA, which provides that subject to the provisions of sub-section (3), all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. Sub-section (3) of Section 49 saves the prosecution for the offences punishable under Sections 56 and 57, which have been committed prior to the repeal of FERA, provided the competent Court takes its cognizance within two years from the date of coming into force of FEMA. In view of sub-section (4) of Section 49, for the purposes of the prosecution of offences punishable under Sections 56 and 57 of FERA, by a legal fiction, the provisions of the repealed Act will continue to apply. However, the same will continue to apply only for the purposes of prosecution of the offences which are saved by sub-section (3) of Section 49 of FEMA. That is how the complaint filed by the Enforcement Officer, duly authorised under clause (ii) of sub-section (2) of Section 61 of FEMA, will continue to be valid, inasmuch as by virtue of the legal fiction incorporated in sub-section (4) of Section 49, the prosecution will continue to be governed by the provisions of FERA as if the same had not been repealed. Therefore, during the sunset period, the authorisation of the Enforcement Officers to file the complaints continues to be valid for the limited purposes of sub-section (3) of Section 49 of FEMA. If the arguments of the appellants are accepted, the officer nominated under sub-clause (b) of clause (ii) of sub-section (2) of Section 61 of FERA will not be empowered to file complaints for the offences punishable under FERA even within the sunset period of two years. Such interpretation will prevent the Court from taking cognizance after the repeal of FERA on a complaint filed after the repeal of FERA by an officer authorised under sub-clause (b) of clause (ii) of sub-section (2) of Section 61 of FERA. Thus, no complaint can be filed during the sunset period of two years provided in sub-section (3) of Section 49 of FEMA. A Statute cannot be interpreted in such a manner that any provision thereof is rendered otiose. Therefore, we are unable to accept the submissions made by the learned senior counsel appearing for the appellants. Any construction which will defeat the plain intention of the legislature must be rejected. The Court must adopt the interpretation which makes the provisions of a Statute workable. By FERA, the Foreign Exchange Regulation Act, 1947 (for short, FERA, 1947 ) was repealed. The repealing provision is provided under sub-section (1) of Section 81 of FERA. This Court, in the case of M/s. P.V. Mohammad Barmay Sons v. Director of Enforcement [ 1992 (8) TMI 225 - SUPREME COURT] interpreted clause (a) of sub-section (2) of Section 81 of FERA as held despite repeal of Act 7 of 1947 by operation of Section 6 of the General Clauses Act read with Section 81(2), the penalty incurred by the appellant continued to subsist and the respondents are entitled to institute the proceedings, conduct investigation or enquiry and impose such penalty. The appeal fails, and the same is, accordingly, dismissed. As the complaint remained stayed from 7th January 2011, we direct the Trial Court to give necessary out of turn priority to the disposal of the complaint which is the subject matter of this appeal. PMLA 2023 (9) TMI 1101 Provisional order of attachment - seeking to quash the complaint lodged under Section 5 (5) of PMLA Act - Misappropriation of public money - Reasons to believe - HELD THAT:- In the instant case, an attempt has been made on behalf of the petitioners to submit that there were no materials which can form reasons to believe and in absence of such conditions precedent, the authorities do not assume the jurisdiction to proceed. However, a perusal of the materials would show that the impugned action is preceded by a subjective satisfaction arrived at by the competent authority based upon information received regarding commission of an offence. Running of the University without any authority, grant of degrees which appeared to be fake, withdrawal of endowment fund and closure of such account are few of the relevant factors which were available before the authorities to come to such satisfaction. This Court is of the view that the reliefs prayed for appear to be pre-emptive in nature whereby proceedings under the Act, which are yet to reach a final stage, has been sought to be interfered with. Under those circumstances, this Court is of the opinion that the burden on the part of the petitioners would be on a higher pedestal to make out a case that the proceedings under the Act as well as the provisional attachment order are prima facie bad in law. Such prima facie projection would necessarily require the party to show that either there is a jurisdictional error in the proceedings or that there is blatant violation of the provisions of the Act. This Court in exercise of the extra ordinary powers under Article 226 of the Constitution of India has to confine its scrutiny only to the decision making process. This Court is of the view that when the challenge to the action of the respondent authority in declaring the degrees awarded by the petitioner- University was negated, there may not remain much scope for the petitioners to make out a case for assailing the PMLA proceedings, the edifice of which is the action of grant of fake degrees by the petitioner-University. This Court is of the view that when the challenge to the action of the respondent authority in declaring the degrees awarded by the petitioner- University was negated, there may not remain much scope for the petitioners to make out a case for assailing the PMLA proceedings, the edifice of which is the action of grant of fake degrees by the petitioner-University. What intrigues this Court is that the RTI reply is given by the petitioner- University whose entire action is under cloud and is rather, part of criminal cases with allegations of huge misappropriation of public money leading to registration of PMLA proceedings - A writ court in exercise of powers under Article 226 of the Constitution of India cannot embark upon a matter involving disputed questions of fact and in this case, almost all the factual issues are disputed in nature. This Court is of the opinion that no case for interference, at this stage, has been able to be made out in these two writ petitions - Petition dismissed. Service Tax 2023 (9) TMI 1100 Refund of input service tax credit - export of services - rejection on the ground that the refund claim filed is beyond the time limit of one year as provided under Section 11B of Central Excise Act, 1944 read with Rule 5 of CENVAT Credit Rules, 2004 - error in computation of the total eligible credit - services have no nexus with the output services provided by the assessee - wrong application of formula for calculating the eligible refund. Rejection of refund alleging that the refund claim filed is beyond the period of one year - HELD THAT:- The authorities below have computed the period of one year form the date of invoice. The Larger Bench of the Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] has held that in the case of refund in respect of services exported, the relevant date for computation of the period of one year is the date of realization of the foreign exchange and not the date of invoice. Following the said decision, this issue answered in favour of the assessee and against the Department. Rejection on the ground that error in computation of the total eligible credit - HELD THAT:- It is seen that the assessee is discharging Service Tax under Manpower Recruitment and Supply Agency Services as the recipient of service under reverse charge mechanism. This cannot be considered as the domestic turnover. While applying the formula, the output service provided by the assessee in the domestic area has to be considered. The quantum of domestic turnover in regard to renting of immovable property would be only Rs.39,85,984/-. On the basis of records, this issue is found to be in favor of the assessee and against the Department. However, the same requires to be remanded to the original authority for recalculation by applying the correct domestic turnover. Rejection of refund in respect of various services alleging that these services have no nexus with the output services provided by the assessee - period prior to 01.04.2011 - HELD THAT:- The authorities below have relied upon the decision in the case of COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS MANIKGARH CEMENT WORKS [ 2009 (11) TMI 142 - CESTAT, MUMBAI] which has in turn relied upon the decision of the Hon ble Apex Court in the case of Maruti Suzuki Ltd. (supra), the decision rendered by the Hon ble Apex Court in the case of M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2009 (8) TMI 14 - SUPREME COURT] is with regard to inputs and not input services. The same is not applicable to the facts of the case. After considering the various services, we are of the view that the rejection of the refund claim alleging that these services have no nexus with the output service provided by the assessee is without legal or factual basis. The issue is held in favor of the assessee and against the Department. Wrong application of formula for calculating the eligible refund - HELD THAT:- While calculating the refund, the authorities below have deducted this amount of Rs.5,07,018/- instead of applying the total input credit availed by the assessee. It is found that the contention of the assessee is correct. The total input credit availed by the assessee which is Rs.5,82,75,522/- has to be taken for calculating the eligible refund. This issue is found in favour of the assessee and against the Department. However, the issue requires to be remanded to the adjudicating authority for calculating the correct eligible refund. The Department has filed an appeal against this issue alleging that the credit availed after the last date of export is not eligible for refund. It is noted that the export being a continuous process and when the refund claim is filed periodically for different quarters, there is no requirement of one to one co-relation. The credit availed for the exports have to be considered. The Commissioner (Appeals) has rightly granted refund in respect of Rs.7,19,638/-. This issue is found in favour of the assessee and against the Department. The matter remanded to the adjudicating authority to reconsider the issues with regard to calculation of eligible refund - appeal allowed by way of remand. 2023 (9) TMI 1099 Non-payment of service tax - gross amounts collected from the clients for rendering the service on the due date specified in Rule 6 of the Service Tax Rules, 1994 r/w sec. 68 of the Finance Act, 1994 - failure to file ST-3 returns - HELD THAT:- The appellant has paid the service tax involved and the same has been appropriated to Government by the impugned order. Further interest is necessarily linked to the duty payable, and such liability arises automatically by operation of law. As per the Hon ble Supreme Court's judgment in COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS M/S SKF INDIA LTD. [ 2009 (7) TMI 6 - SUPREME COURT] interest is to be paid on delayed or deferred payment of duty for whatever reasons. The status of payment of interest could not be ascertained as the appellant has not indicated the same and they were also not represented before us whenever the matter came up for hearing. One of the issues involved in the appeal is whether taxes on lands and buildings in Entry 49, List II of the Seventh Schedule to the Constitution contemplate a tax levied directly on the land as a unit having definite relationship with the land? In a case where the constitutional validity of the levy is yet to be decided the dispute is interpretational in nature. Hence there exists sufficient cause for the appellant not to have paid the tax due on time and there does not appear to have been any intention on their part to evade payment of duty. Hence, they are eligible for a waiver of penalties as per section 80 of the Finance Act 1994. Appeal allowed in part. 2023 (9) TMI 1098 Taxability - Advertising Agency Service - whether same was performed in India or outside and whether the same was received by the appellant in India? - HELD THAT:- It is found that merely because the recipient is located in India that is not the deciding factor that the service was received in India. As per the submission of the appellant the service of advertising agency service was provided by foreign based service provider in relation to the marketing and sales promotion of appellant s goods in foreign country only. However, this aspect was not properly considered by both the lower Authorities. As per the facts available in record, it is found that if the service so provided in foreign country admittedly is not received in India and not used in India, the appellant are primafacie not liable for Service Tax. However, whether the advertising agency service was received in India for use in relation to the marketing and sales promotion of goods in India, without ascertaining this fact cannot be concluded that the appellant is liable for payment of service tax. In this position the matter needs to be reconsidered in the light of the observation. Appeal allowed by way of remand. 2023 (9) TMI 1097 Recovery of Service tax - renting of immovable property service or port service - amounts from the various ship breakers to whom plots alloted at Alang for the purpose of ship breaking - period 2007-08, 2008-09 and 2009-10 - time limitation - suppression of facts or not - HELD THAT:- The appellant had a view that the collection made under the head of user development fee is not in respect of any service and the said amount collected by them is not liable to payment of service tax. Their views were clearly communicated to the office of DGCEI and no show cause notice under the said head was issued by the office of DGCEI to the appellant. In this background, issuance of show cause notice on 10.04.2013 demanding service tax on this very amount of user development fee is clearly barred by limitation. There was no suppression or intention to evade payment of duty as the appellant had clearly disclosed the fact regarding collection of said user development fee as well as their views about non-taxability of the same to the department way back in 29.12.2009. Similar view has been held by Tribunal in the appellant s own case PORT OFFICER, GUJARAT MARITIME BOARD, JAFRABAD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BHAVNAGAR [ 2014 (7) TMI 972 - CESTAT AHMEDABAD ], where it was held that The said Section 22A specifically states that any amount provided by Gujarat Maritime Board, the appellant herein, is a State levy and a statutory levy and proceeds of such levy are credited to the Consolidated Treasury Fund of State of Gujarat. If that be so, any amount collected after 1-4-2008 by Gujarat Maritime Board, can be considered as statutory levy only and Service Tax liability thereon may not arise. There are no merit in the impugned order - appeal allowed. 2023 (9) TMI 1096 CENVAT Credit - fabrication of ACN Reactor in the premises of M/s L T, Hazira (Principal manufacturer) - process amounting to manufacture or not - benefit of N/N. 214/86-CE dated 25.03.1986 - HELD THAT:- It is not in dispute that the entire activity has been carried out within the premises of M/s L T Limited, Hazira and that M/s L T Limited, Hazira has discharged the duty liability on the final product cleared by them from their factory premises. The process undertaken by the appellants is a process incidental or ancillary to the final manufacture of the finished goods cleared by M/s L T Limited, Hazira. In the above background, it cannot be denied that the activity undertaken by the appellants is an activity of manufacture. Notification 214/86-CE grants exemption from central excise duty on certain activities which are undertaken by a job worker and where the principal manufacturer undertakes to pay the central excise duty on the final products cleared by them. The notification 214/86-CE prescribes detailed procedure for movement of goods and for the principal manufacturer to discharge the duty liability on the final products. The entire procedure prescribed under Notification 214/86-CE is a procedure which takes care of situation where the job worker is located away from the principal manufacturer at a different location - the notification requires an undertaking by the principal manufacturer to ensure that the goods manufactured / processed by the job worker are not diverted and proper duty is paid thereon. In the instant case, the entire activity is undertaken within the premises of the principal manufacturer, therefore much of the procedure loose significance. The appellants have not specifically claimed the benefit of 214/86 and have not followed the procedure prescribed for availing the Notification. The procedure not followed by them relates to the making of challans for movement of goods and obtaining an undertaking from the principal manufacturer regarding payment of duty on the finished goods. In the instant case, since the goods remain within the premises of principal manufacturer the need of challans for movement loses its relevance. Similarly, since the entire raw material as well as finished goods remains within the premises of the principle manufacturer, the need to undertaking payment of duty on the intermediate goods used by principal manufacturer for manufacture of dutiable finished goods loses much of the relevance. In the case of STERLITE INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2004 (12) TMI 108 - CESTAT, MUMBAI] where it was held that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C - The said decision of Tribunal has been upheld by Hon ble High Court of Bombay in COMMISSIONER VERSUS STERLITE INDUSTRIES (I) LTD. [ 2008 (8) TMI 783 - BOMBAY HIGH COURT] . The decision of the Larger Bench in the case of Sterlite Industries Limited is equally applicable to the current situation - Appeal allowed. 2023 (9) TMI 1095 Non-payment of service tax - receipt of advance payment of rent - It is the submission of the appellant that as the appellant has paid the service tax while providing services to the service recipient, no differential service tax or interest is payable by the appellant - HELD THAT:- Prior to 01.06.2007, no service tax is payable under the category of Renting of Immovable Property Service , therefore, for rent received by the appellant for the period prior to 01.06.2007 in respect of all the three properties, the appellant is not liable to pay service tax. With regard to the property situated at 25A,Shakespeare Sarani, Kolkata-700017, it is found that although the appellant has received the rent in advance, but started paying service tax as and when they provided the services. Therefore, as they have paid the service tax thereon, the demand of service tax is not sustainable against the appellant, which is evident from the record placed - for the premises at 106, Diamond Harbour Road, Kolkata-700023 and 114/1A, Cotton Street, Kolkata-700020, the same parts of the premises were rented out for residential used for which, no service tax is payable for the amount received towards under the category of Renting of Immovable Property Service for residential purposes, therefore, no service tax is payable. Whatever property was rented out for business purposes, on which no service tax is paid by the appellant, the same is payable along with interest - the penalty imposed is waived - Appeal disposed off. 2023 (9) TMI 1094 Levy of Service tax - Maintenance and repair of roads - construction service rendered to HUDCO - hiring of machinery - renting of immovable property - penalty - HELD THAT:- Service Tax on the activity of management, maintenance and repairs of roads has been exempted retrospectively for the period 16.06.2005 to 26.07.2009, by insertion of Section 97 in the Finance Act, 1994 by the Finance Act, 2012 - the impugned order was passed by the Commissioner, Service Tax, Kolkata on 29.02.2012 and that the amendment was made on 28.05.2012, providing special exemption to the management, maintenance or repair of roads. Such exemption has been specifically provided to the service provided between 16th June, 2005 to 26th July, 2009. In view of the amended provision made applicable with retrospective effect, the demand of service tax of Rs. 2,17,05,694/-confirmed in the impugned order is not sustainable. Service tax on construction service rendered to HUDCO - HELD THAT:- The Appellant has constructed Office building for HUDCO at D.J. Block, Salt Lake, for their own use. During the relevant period, service tax was chargeable on construction services when the building is used for commercial and industrial purpose - HUDCO is a Government of India Enterprise incorporated with an intent to undertake housing and urban development of the country. HUDCO undertakes its activities for the upliftment of society and for urban development of the country. Hence the office building constructed for HUDCO cannot be considered for industrial or commercial purpose. As the building is used by HUDCO for official purpose it cannot be equated with a building for commercial, trade and industry. Accordingly, the demand of service tax of Rs. 14,86,562/-confirmed in the impugned order is not sustainable. Levy of service tax on hiring of machinery - HELD THAT:- The Appellant has claimed that the machinery was supplied with rights of possession and effective control thereof and hence it would not fall under the taxable service of Supply of tangible goods. However, it is observed that the claim of Appellant was not supported by any documentary evidence - the impugned order has confirmed the demand on this service only for the period 16.05.2008, ie, after introduction of supply of tangible goods service. Accordingly, the demand of service tax on this count, along with interest upheld. Service Tax on renting of immovable property - HELD THAT:- The rent was received in the name of the proprietory firm during the relevant period. After expiry of Mr. Uttam Chand Chethia, the wife of the Appellant has taken over the responsibility as the legal heir. Hence, she is liable to pay service tax on the rent received during the relevant period. Accordingly, the demand confirmed in the impugned order on this count, along with interest upheld. Penalty u/s 77 and 78 of the Finance Act, 1994 - HELD THAT:- There was no evidence brought on record to establish suppression of fact with an intention to evade payment of service tax. Accordingly, it is a fit case for invoking section 80 of the Finance Act, 1994 to waive the penalties imposed in the impugned order. The demand of service tax of Rs. 3,99,282/- on hiring charges and Rs.39, 601/-renting of immovable service along with interest upheld - demand on maintenance and repair of roads set aside - demand on construction service rendered to HUDCO confirmed - appeal allowed in part. 2023 (9) TMI 1093 Refund of Service Tax - time limitation - rejection on the ground that the refund claim was filed beyond the period of limitation of 60 days as provided under Para 2(e) of the said notification - HELD THAT:- From the N/N. 32/2008-ST dated 18-11-2008, it is observed that the notification has extended the time limit for filing of refund claims under Notification 41/2007 dated 06.10.2007, from 60 days to 6 months. Board Circular No.112/6/2009-ST dated 12-03-2009 has clarified the doubts with specific examples. The Circular categorically states that in view of the extended time limit, the refund claim for the quarter March-June 2008 can be filed till 31st December 2008 - In the present case, the Appellant has filed the refund for the quarter January 2008 to March 2008, within the stipulated period of 60 days. However, on verification of the documents, the adjudicating authority observed that a portion of the claim was relatable to goods exported during the quarter ending December 2007 and only for that portion, the claim was filed beyond 60 days from the end of the relevant quarter during which the said goods were exported. Accordingly, the adjudicating authority has rejected part of the refund claim amounting to Rs.56,71,926/- as time barred. In the present case, the refund claim filed by the respondent was not a dead claim. The claim was filed well within the time limit permitted in the Notification 41/2007-ST. Only a part of the claim was held as time barred by the adjudicating authority based on his findings that a portion of the claim was relatable to goods exported during the quarter ending December 2007 . It is observed that Notification No.32/2008-ST dated 18-11-2008 extended the time limit for filing the refund claim from 60 days to 6 months and validated that portion the refund claim which was filed beyond 60 days. Thus, there is no merit in the contention of the Ld.A.R that it was a dead claim that cannot be revived. Accordingly, there is no infirmity in the impugned order, which has rightly allowed the refund of Rs.56.71.926/-, as per the Notification No.32/2008-ST dated 18-11-2008 and the clarification issued by Board vide Circular No.112/6/2009-ST dated 12-03-2009. Appeal filed by Revenue dismissed. 2023 (9) TMI 1092 CENVAT Credit - services were provided to different service tax registered unit of the company - non-production of documents - improper input service documents - time limitation. Denial on the ground that the services were received at some other units/locations - HELD THAT:- It is an undisputed fact that these services were used for providing taxable repair and maintenance services and they have discharged service tax liability on such output services from all the locations. The entire expenditure of Security Manpower services was incurred in relation to provision of taxable service by the Head office in whose name the invoices were raised and hence the Appellant is eligible for CENVAT credit in accordance with the provisions of Rule 2(l) of CENVAT Credit Rules, 2004. Accordingly, we hold that the impugned order denying credit on this count is not sustainable. Denial on the ground that the documents could not be produced for verification - HELD HAT:- The Appellant has relied upon various decisions of the Tribunal, wherein it has been held that so far as the receipt and utilization of the input services is not in dispute, Cenvat credit cannot be denied - the contention of the Appellant agreed upon that substantial benefit cannot be denied merely on account of procedural infractions. In the absence of any allegation with respect to eligibility of service as an input service and when substantial compliance has been fulfilled, the credit denied on account of procedural infractions is not sustainable. Time Limitation - HELD THAT:- In this case, the demand has been raised in respect of the period from the 2nd Half of 2004-05 to 2007-08 vide SCN dated 30.03.2010, which is beyond the normal period of limitation of one year. As there was no suppression of fact with intention to evade the tax has been established in this case, the demand confirmed in the impugned order, except what is admitted and paid by the Appellant, is liable to be set aside on the ground of limitation also. Interest and penalty - HELD THAT:- As the denial of credit is not sustainable, the demand of interest and imposition of penalty under Rule 15(2) of Cenvat Credit rules, 2004 is also not sustainable. The Cenvat credit denied in the impugned order is not sustainable except to the extent of Rs.7,35,792/-, which has been admitted and paid by the Appellant. Interest and penalty demanded in the impugned order is also not sustainable and set aside - Appeal disposed off. 2023 (9) TMI 1091 Waiver of penalty imposed u/s 77 and 78 of FA - entire service tax along with interest was paid before adjudication of the case - Business Auxiliary Service (BAS) - adjustment of excess payment against the interest liability payable by the appellant - HELD THAT:- It is a fact on record that the Appellant has obtained service tax registration but did not file ST-3 returns in time. Later, after intervention of the officers of SIV unit and verification of their records on 23.02.2006, the Appellant has paid the Service Tax and Education Cess amounting to Rs.15,07,204/- on various date in 2007 and 2009. The available records also indicate that the Appellant have received commission amounting to Rs.9,69,558/- on 22.05.2003, which was not liable to Service Tax in as Business Auxiliary Service was introduced only w.e.f 01.07.2003 - Even though they paid service tax later, there was a delay in payment of service tax. Interest is liable to be paid for the delayed payment of service tax. Accordingly, the adjudicating authority has appropriated the excess paid amount against the interest liability. Thus, there is no infirmity in the impugned order adjusting the excess payment against the interest liability payable by the appellant. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994 - HELD THAT:- Regarding penalty imposed under Section 78 of the Finance Act, 1994, there were some confusion prevailed during the relevant period on the liability of payment of service tax as a Commission Agent . However, the Appellant agreed their liability and paid most of the service tax before issue of the Notice. In fact, they have paid excess service tax than the actual liability confirmed in the impugned order. This has been recorded in the order-in-original by the adjudicating authority - There is no other evidence brought on record to establish that the Appellant has intentionally evaded payment of service tax. Thus, there was no suppression of fact with an intention to evade payment of tax, established in this case. Since the Appellant has already paid the entire service tax payable and the interest liability has also been adjusted from the excess service tax paid, it is a fit case for invoking section 80 of the Finance Act, 1994, to waive the penalties imposed under section 77 and 78 of the Finance Act, 1994. Accordingly, the penalties imposed under section 77 and 78 of the Finance Act, 1994 set aside. The penalties imposed in the impugned order is set aside and the confirmation of service tax and adjustment of interest payable from the excess service tax paid upheld. The Appeal filed by the Appellant is disposed. Central Excise 2023 (9) TMI 1090 Time Limitation - Rejection of demand for duty raised by the appellant - rejection on the ground that the demand was made beyond the normal period of 6 (six) months from the date of issuance of the show-cause notice - HELD THAT:- It is seen that the appellant has not been able to demonstrate that they had made any provisional assessment in respect of the respondent. It is also seen that the appellant had not raised any demand upon the respondent for payment of Excise Duty for the period from 28.02.1986 to 25.07.1989 and from 26.07.1989 to 28.02.1993. The appellant has not been able to demonstrate that the respondent had not paid the appropriate Excise duty by reason of fraud, collusion or any willful mistake or suppression of facts or in contravention of the provisions of the said Act. Therefore, the appellant has failed to make out a case that the period of limitation should be extended from 6 (six) months to 5 (five) years as per proviso to Sub-Section (1) of Section 11-A of the Central Excise and Salt Act, 1944 - It is also not the case of the appellant that their demand against the respondent for payment of Excise Duty was stayed by any Court, Tribunal or Forum having jurisdiction. Moreover, there is also no material to show that the provisional assessment and/or demand, if any, had translated into the final assessment order against the respondent pursuant to the judgment of the Supreme Court of India in the case of COMMISSIONER OF C. EX., SHILLONG VERSUS WOODCRAFT PRODUCTS LTD. [ 2002 (4) TMI 76 - SUPREME COURT] . Thus, the alleged demand of the appellant for payment of Excise duty is not based on any provisional assessment. Moreover, it is not the case of the appellant that any Court, Tribunal or Forum having jurisdiction had stayed the demand for Excise Duty made against the respondent. Therefore, the Court is inclined to hold that the impugned decision of the CESTAT, thereby rejecting the contention of the appellant of the demand was barred by limitation is not liable to be interfered with. Appeal dismissed. 2023 (9) TMI 1089 Clandestine Removal - quotations - export of goods - Jangad (approval). Quotation - HELD THAT:- Firstly the appellant s representative have given statement which is exculpatory and have also explained that it is only quotation and no goods have been cleared under said quotation - From the perusal of quotation, it clearly shows that the aforesaid documents is only a quotation and does not indicate that any goods have been cleared under the quotation. Moreover, the appellant have not accepted the detail mentioning the above quotation as clandestine removal. The Revenue did not adduce any other evidence such as transportation of goods, buyer s statement etc., therefore, the demand on the basis of quotation is not sustainable. Demand of excise duty on the goods cleared for export - HELD THAT:- There is no dispute about the physical export of the goods. The only reason for demand of duty is that the appellant have not followed the procedure - so far as the form-H was submitted by the appellant, it is sufficient compliance as proof of export and on that basis no demand can be raised as held in various judgments, therefore, merely for a procedural lapse in respect of admitted export of goods, no duty can be demanded. Demand relates to Jangad (approval) - HELD THAT:- It is found learned counsel has not pressed this issue and accept the duty demand. Accordingly, the facts of this case are not entered into and the demand relates to Jangad (approval) is sustained. Penalty - HELD THAT:- The penalty is also not imposable, hence, the same is set aside. The duty needs to be re-quantified - matter remanded to the adjudicating authority for passing a fresh order considering the observation - appeal allowed by way of remand. 2023 (9) TMI 1088 Valuation of Excise Duty - manufacturing physician samples, which were supplied free of cost - requirement to pay duty in terms of Section 4A of the Central Excise Act, 1944 i.e. MRP less abatement - HELD THAT:- The said issue came before this Tribunal in the case of M/S MEDISPRAY LABORATORIES PVT. LTD., M/S MEDITAB SPECIALITIES PVT. LTD., AND M/S OKASA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [ 2017 (2) TMI 309 - CESTAT MUMBAI] , wherein this Tribunal has observed As regards the physician samples manufactured and sold by Okasa Pvt. Ltd. to their principal, the transaction is on principal to principal basis. Therefore, whatever goods were sold by the appellant to their principal is correct transaction value in terms of Section 4. In both type of clearances in any circumstances, Rule 4 valuation shall not apply. As the issue has already been settled, therefore, the appellant is liable to pay the duty on transaction value and not on the basis of MRP less abatement. Therefore, the appellant is correctly valued the impugned goods. Therefore, they are not liable to pay any differential duty - Appeal allowed. 2023 (9) TMI 1087 Rejection of the Refund claim - Scope and validity of the addendum issued to Show Cause Notice - Period of limitation - Retrospective exemption from levy of duty of excise - Henna Powder - Henna Paste - period from 01.10.2007 to 01.03.2013 - to be classified under Chapter 14 or Chapter 33 of the Central Excise Tariff Act, 1985? - HELD THAT:- There can be no manner of doubt that the application for refund, pursuant to a Notification issued under section 11C (1) has to be made within six months from the date of the issue of the Notification in the form referred to sub-section (1) of section 11B. In the present case, admittedly the application was not made within six months from the date of issue of the Notification. It is true that the two show cause notices that were issued to the respondent did not state that the refund applications were liable to be rejected for the reason that they were not filed within six months from the date of issue of the notification, but the Addendums that were subsequently issued did specifically allege that the refund applications were time barred because they were filed after the expiry of six months from the date of issue of the Notification. The Addendum, as noticed above, was issued to add something to the already issued show cause notices. The show cause notices did mention the issuance of the Notification and also the date on which the refund applications were filed. In the present case the factual position had not changed and the Addendums had called upon the respondent to explain why the refund application should not be rejected as being barred by time on the facts stated in the show cause notice. The aforesaid two decisions rendered in WIPRO INFORMATION TECHNOLOGY VERSUS COMMR. OF C. EX., BANGALORE [ 1998 (10) TMI 205 - CEGAT, MADRAS] and M/S. JMC PROJECTS (INDIA) LIMITED VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD [ 2014 (4) TMI 174 - CESTAT AHMEDABAD] would, therefore, not help the respondent. The refund applications filed by the respondent on 15.12.2017 pursuant to the issuance of the Notification dated 24.04.2017 was, therefore, liable to be rejected for the reason that it was not filed within the period of six months from the date of issue of the Notification as specified in the proviso to sub-section (2) of section 11C. The Commissioner (Appeals), therefore, committed an error in granting relief to the respondent. In this view of the matter, it would not be necessary to examine whether the refund application was also hit by the bar of unjust enrichment. The order dated 17.12.2018 passed by the Commissioner (Appeals) deserves to be set aside and is set aside - Appeal allowed. 2023 (9) TMI 1086 CENVAT Credit - inputs/capital goods - MS channel, MS Angles, MS drums, MS Pipe, HR Sheets, CR Sheets, MS Fabricated support etc. used in the manufacture of processed drums / reels, packing drums - MS Drums etc. which were used during the manufacturing process as well as packaging of the final product namely electric wires and cables - time limitation - HELD THAT:- As per the fact of the present case in view of the chartered engineer certificate submitted by the appellant, the use of the goods is not under dispute that the same were used in the manufacture of processed drums/ packing drums/ bobbin. These drums are used in relation to manufacture of final product as per the nature of the final product which is wire and cables. The wires and cables for purpose of processing in the manufacture are shifted from one process machine to other process machine which is possible only after winding of wires and cables on the drums and also for the purpose of packing by winding of final product. On the basis of this use the goods i.e. iron and steel material are clearly used in or in relation the manufacture, directly or indirectly, whether contained or not in the final product. It is settled that if any goods used in the manufacture/fabrication of capital goods and such manufactured/fabricated goods used within the factory of the assessee, cenvat credit is admissible. Accordingly, on merit the appellant have rightly availed cenvat credit on iron and steel materials used for manufacture of processed drums/reels/packing drums etc. which were further used in the factory of the appellant manufacturer. Time Limitation - HELD THAT:- When issue involve is of interpretation of cenvat credit rules, no mala fide can be attributed to the appellant. Further, the appellant have been declaring the availment of cenvat credit which is in dispute in their ER- 1 return, therefore, there is no suppression and wilful mis-statement with intent to evade duty on the part of the appellant. Accordingly, the demand for the extended period is not sustainable also on limitation. In the present case also the demand for the extended period is not sustainable on limitation also. The impugned order are not sustainable - Appeal allowed. 2023 (9) TMI 1085 Classification of goods - Chick drinker and Auto feeder manufactured by the appellant - classifiable under CETH 84361000 of Central Excise Tariff Act, 1985 as claimed by the appellant or whether to be classified under CETH 39269099 as held by the department? - Poultry cage - classifiable under CETH 84361000 as claimed by the appellant or whether to be classified under CETH 39231090 as held by the department? - demand alongwith interest and penalty - HELD THAT:- The impugned goods are indeed poultry keeping machinery and merits classification under 84361000. The adjudicating authority has held that the miscellaneous products namely, Hose--PVC, Flexible Blue, Tee joint Nipple etc. cleared along with the above goods are also to be classified under CETH 39269099 / 39231090 - As it is already held that the Chick drinker, Auto feeder, and Poultry cage are rightly classifiable under CETH 84361000, these miscellaneous products cleared along with and corresponding to the finished products are also to be classified under CETH 84361000. The appellant is eligible for the benefit of nil rate of duty. The Tribunal in the case of SHIVA POULTRY EQUIPMENTS VERSUS C.C.E.S.T., CHANDIGARH-II [ 2016 (9) TMI 572 - CESTAT CHANDIGARH] has discussed, the Board circular, the decision in the case of AZRA POULTRY EQUIPMENTS VERSUS UOI AND ORS. [ 2012 (3) TMI 326 - DELHI HIGH COURT] as well as the decision of the Tribunal in the case of WELD FUSE (P) LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD [ 2007 (12) TMI 339 - CESTAT, BANGALORE] . The Tribunal held that the welded wire mesh supplied to poultry farms merit classification under 84.36 as poultry keeping machinery. Thus, the impugned goods merit classification under CETH 84361000, as adopted by the appellant. Whether the demand of duty, interest and penalties are sustainable? - HELD THAT:- The duty demand, interest and penalty therefore cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed. Indian Laws 2023 (9) TMI 1084 Smuggling - Heroin - High Court opined that merely because Balwinder Singh3 had escaped from the car just before the point where the naka had been laid and could not be apprehended, would not be a ground to acquit him or exonerate him of the charge of conscious possession of heroin - Proof beyond reasonable doubt vis-a-vis preponderance of probability - Plea of failure to establish foundational facts - Plea of accused being in the custody of the NCB much before the naka was laid - Plea of unreliability of the testimony of the independent witness - Significance of decision in TOFAN SINGH VERSUS STATE OF TAMIL NADU [ 2020 (11) TMI 55 - SUPREME COURT] - HELD THAT:- The decision that declares that any confessional statement made by an accused to an officer invested with the powers under Section 53 of the NDPS Act, is barred for the reason that such officers are police officers within the meaning of Section 25 of the Evidence Act, a statement made by an accused and recorded under Section 67 of the NDPS Act cannot be used as a confessional statement in the trial of an offence under the NDPS Act. Effect of Tofan Singh's verdict on Balwinder Singh's case - HELD THAT:- Now that it has been declared in Tofan Singh s case36 (supra) that the judgements in the case of KANHAIYALAL VERSUS UNION OF INDIA [ 2008 (1) TMI 828 - SUPREME COURT] and RAJ KUMAR KARWAL VERSUS UNION OF INDIA [ 1990 (3) TMI 73 - SUPREME COURT] did not state the correct legal position and they stand overruled, the entire case set up by the prosecution against Balwinder Singh3, collapses like a House of cards. It is not in dispute that Balwinder Singh3 was not apprehended by the NCB officials from the spot where the naka was laid and that Satnam Singh5 alone was apprehended in the Indica car. The version of the prosecution is that after Satnam Singh5 was arrested, his statement13 was recorded under Section 67 of the NDPS Act wherein he ascribed a specific role to the co-accused - Balwinder Singh3 and the Sarpanch. Once the confessional statement13 of the co-accused, Satnam Singh5 recorded by the NCB officers under Section 67 of the NDPS Act, who had attributed a role to Balwinder Singh3 and the subsequently recorded statement22 of Balwinder Singh3 himself under Section 67 of the NDPS Act are rejected in the light of the law laid down in Tofan Singh, there is no other independent incriminating evidence that has been brought to the fore by the prosecution for convicting Balwinder Singh3 under the NDPS Act. On ignoring the said confessional statements13 22 recorded before the officers of the NCB in the course of the investigation, the vital link between Balwinder Singh3 and the offence for which he has been charged snaps conclusively and his conviction order cannot be sustained. Balwinder Singh3 deserves to be acquitted of the charge of being in conscious possession of commercial quantity of heroin under the NDPS Act. How is Satnam Singh's case placed on a different footing - HELD THAT:- Unlike the case of Balwinder Singh, the conviction of Satnam Singh does not hinge solely on his confessional statement13 made to the NCB officials. His case is on a different footing because it also rests on other relevant factors including the testimonies of three prime prosecution witnesses namely, Sonu [PW-1], P.K. Sharma [PW-3] and O.P. Sharma [PW-5] - It is proposed to discuss that their testimonies when examined carefully, show that they had remained consistent and unfailing. There appear no material contradictions or deviations in their depositions for this Court to extend any benefit to the appellant Satnam Singh5. Proof beyond reasonable doubt vis-a-vis preponderance of probability - legal position - HELD THAT:- The initial burden is cast on the prosecution to establish the essential factors on which its case is premised. After the prosecution discharges the said burden, the onus shifts to the accused to prove his innocence. However, the standard of proof required for the accused to prove his innocence, is not pegged as high as expected of the prosecution. Plea of failure to establish foundational facts - HELD THAT:- The argument advanced on behalf of the appellant Satnam Singh that both the courts below have erred in discarding the defence taken by him to the effect that it was Sonu who was the real culprit and was apprehended by the NCB officers with the contraband, but he was let off on bribing the NCB officers, does not meet the test of preponderance of probability and has rightly been disbelieved by both the courts in the absence of any corroboration through cogent evidence. Plea of accused being in the custody of the NCB much before the naka was laid - HELD THAT:- The records pertaining to the bill were not produced by the witness summoned and the bill did not bear the signature of any authority even to prove that the mobile phone number asserted by the appellant Satnam Singh5 as belonging to him, stood in his name - there are no reason to take a different view. Plea of unreliability of the testimony of the independent witness, Sonu - HELD THAT:- In the case at hand, the naka was laid by the officials of the NCB in an open area near the roundabout of Sectors 24/25, Chandigarh. Such was the location that there was no inhabitant in the vicinity and the time of the naka was an unearthly hour of 01.00 a.m. on 12th December, 2005. In this background, the two independent witnesses who were driving from Jalandhar towards Chandigarh, were flagged down by the NCB officers and joined in the investigation. Therefore, the shadow of doubt sought to be cast on the testimony of Sonu8 by claiming that he was the real culprit, is clearly a trumped up story that cannot be sustained. The other independent witness, Mukesh Kumar, had turned hostile and the prosecution did not examine him. As a consequence, the two defence witnesses, Parkash Ram and Ravi Kant Pawar produced by the appellant Satnam Singh5 to demonstrate that Mukesh Kumar was a stock witness, would hardly be of any assistance. The appellant Satnam Singh has failed to make out a case for acquittal. Therefore, the order of conviction and the sentence imposed on Satnam Singh is maintained - Application disposed off. 2023 (9) TMI 1083 Dishonour of Cheque - issuance of summons - vicarious liability of director of company - petitioner was a director or was handling the day to day affairs of the accused company at the relevant time when the cheques were issued? - HELD THAT:- Merely mentioning the designation of the accused person in the company or reproducing the phraseology of the section 141 NIA is not sufficient to attract the guilt under section 141 NIA. The law is no longer res integra that specific allegations/averments have to be made as to how and in what manner the accused alleged to have committed an offence under section 138 NIA, was responsible for, or had a role in the conduct of the business of the company, at the relevant time, when the offence is said to have been committed. Simply because the accused person was a Director or was holding some other office in the company, the vicarious liability cannot be extend to such persons. In SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT ], a Three Judge Bench of the Hon ble Apex Court held that to attract vicarious liability under section 141 NIA it is sine qua non that the person accused was in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed. In SUNITA PALITA OTHERS VERSUS M/S PANCHAMI STONE QUARRY [ 2022 (8) TMI 55 - SUPREME COURT ], wherein the Hon ble Apex Court set aside the order of the High Court rejecting the quashing petition and allowed the said appeal on the ground that the appellants therein were not the Managing Director or Joint managing Director of the accused company and nor were they signatories to the cheques in question. The Court held that the accused persons were merely independent, non-executive directors who had no role to play in the day to day affairs of the accused company. In the present case, the Ld.MM committed an error by summoning the petitioner, who was not even an Additional Director-Non Executive in the accused company at the time when the cheques were issued and thus was not handling the affairs or the conduct of business of the accused company at the relevant time. These facts were also mentioned in the reply on behalf of the petitioner to the legal notices of the complainants. However, Ld. MM ignoring such vital aspects, mechanically proceeded to issue summons to the present petitioner. The summoning orders qua petitioner are hereby set aside. The petitioner is acquitted for the offences alleged under section 138 NIA - Petition allowed. 2023 (9) TMI 1082 Constitutional validity of The Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 - Tax (Cess) versus Fee - Concurrent power of Central Government and State Government to legislate - whether the impugned Act, in pith and substance, relates to the fields enumerated in Entries 6, 14, 17, 18, 21 and 25 of List II, Seventh Schedule to the Constitution or whether the same relates to the field of environment or environmental pollution , which, according to the petitioners, is not covered by any of the fields in Lists II and III, Seventh Schedule to the Constitution but falls exclusively within the residuary Entry i.e. Entry 97 of List I of the Seventh Schedule to the Constitution? HELD THAT:- Since the levy and the object of the levy is to augment resources to reduce the carbon footprint generated by the petitioners involved in handling etc. specified products and substances, the impugned Act has a direct nexus with subjects like public health, sanitation, water, gas or land. Greater effective means to combat increased carbon footprint or even disincentivising increased carbon footprint would clearly promote public health. The entries in the State list cannot be narrowly or pedantically construed. They have to be liberally and generously construed. Upon their meaningful construction, it would be difficult to agree with the Petitioner s argument that in pith and substance, the impugned Act is an enactment not with respect to the entries in the State List. The Constitution Bench in State of West Bengal V/s. Kesoram Industries Ltd. Ors. [ 2004 (1) TMI 71 - SUPREME COURT] , held that ample authority is available for the concept that under Entry 49 in List II the land remains a land without regard to the use to which it is being subjected. It is open for the Legislature to ignore the nature of the user and tax the land. At the same time, it is also permissible to identify, for the purpose of classification, the land by reference to its user. In pith and substance, the impugned Act imposes a levy upon the handling or consumption or utilization or combustion or movement or transportation of certain products and substances, including hazardous substances, which upon their handling or consumption or utilization or combustion or movement or transportation causes pollution of the lithosphere, atmosphere, biosphere, hydrosphere and other environmental resources of the State of Goa. Environment of Environment Pollution - Fields relatable exclusively to Residuary Entry 97, Union List? - HELD THAT:- The Court held that in a Federal Constitution like ours where there is a division of legislative subjects, but the residuary power is vested in Parliament, such residuary power cannot be so expansively interpreted, as to whittle down the power of the State legislature. The Court held that that might affect and jeopardize the very federal principle. The federal nature of the Constitution demands that an interpretation which would allow the exercise of legislative power by Parliament pursuant to the residuary powers vested in it to trench upon State legislation and which would thereby destroy or belittle state autonomy must be rejected. Therefore, unless a clear case of the all-important field or subject of environment or environmental pollution being left out from the entries in the lists is made out, it would be quite unsafe to read this field or subject in the residuary entry. This would not be the appropriate manner of construing the legislative entries. Such a manner of interpretation would run counter to several decisions of the Hon ble Supreme Court on the question of interpretation of such entries. Is the impugned act a hybrid legislation? - HELD THAT:- There is no warrant for the broad proposition that all issues relatable to air pollution necessarily fall within the residuary Entry 97 of List I. In any case, since the impugned Act is aimed at augmenting the State s revenues for having programmes and schemes to reduce the carbon footprint or since the impugned Act imposes a levy on the handling or consumption or, utilization or combustion or, movement or transportation of products and substance, which upon their handling, etc. causes pollution of the lithosphere, atmosphere, biosphere, hydrosphere and other environmental resources of the State of Goa, the same legitimately relates to the domain covered by Entry 6, 14, 17, 18, 21 and 25, particularly since these entries have to be construed liberally and broadly and not pedantically. Once any legislation is found to substantially relate to the entries in the State or Concurrent lists, even some incidental or marginal overlap is of no consequence. In any case, once a field or subject is found to be reasonably related to the entries in the State or Concurrent lists, the Courts must be slow to place such fields or subjects in the residuary entry 97 of the Union list. Residuary typically means what is left out. Clean Energy Cess - HELD THAT:- The clean energy cess, which is nothing but an excise duty, was imposed by the Parliament because the subject of environment or environmental pollution relates to the residuary Entry 97 of List I. Instead, it is clear that the levy is an excise duty and in 2010, the Parliament had legislative competence to impose such excise duty or a cess which is nothing but an increment on the excise duty. Since the petitioners point out that such levy covered imported goods as well, the levy could also be said to relate to Entry 83 of List I dealing with duties of customs, including export duties. In any case, what is important is that the clean energy cess imposed by the Finance Act of 2010 can neither be cited as an instance where the Parliament legislated on the subject of environment or environmental pollution by relying on residuary Entry 97 in List I nor can it be said that the finance Act 2010 to the extent it imposes clean energy cess covers the field relating to the subject matter of the impugned Act. Double Taxation - HELD THAT:- In AVINDER SINGH VERSUS STATE OF PUNJAB [ 1978 (9) TMI 171 - SUPREME COURT ] the Hon ble Supreme Court rejected the feeble plea that the levy was bad because of the vice of the double taxation or that the impost was unreasonable because there were heavy prior levies. The Court held that some of these contentions hardly merit consideration but have been mentioned out of courtesy to the counsel. The Court pointed out that there was nothing in Article 265 of the Constitution from which one could spin out the constitutional vice called double taxation. Arguments based on Article 253, EPA, Air Pollution Act, NGT Act and Occupied Field - HELD THAT:- Several Constitution Bench of the Hon ble Supreme Court have held that where more than one interpretation is possible or plausible, the interpretation that favours federalism of power and the supremacy of the State within its own sphere must be preferred, and the one that derogates from the same must be eschewed. For all the above reasons, it is found difficult to agree with the Petitioner s arguments based upon Article 253 and the three Parliamentary legislations. The Tax versus Fee argument - HELD THAT:- The learned Advocate General did contend that the State is entitled to defend the impugned Act on the basis that the levy was a tax relatable to Entry 49 List Il, Seventh Schedule to the Constitution. He cited some decisions in support of this contention. However, now that it is concluded that the levy imposed by the impugned Act is a fee and that the State had sufficient legislative competence to enact the impugned Act, it is not proposed to examine the issue as to whether the impugned levy can be justified as a tax relatable to Entry 49 List Il, Seventh Schedule to the Constitution. Petition dismissed.
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