Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 28, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Revocation of the cancellation of his GST registration - The impugned show notice dated 5.12.2021 fails to disclose the reason for proposing cancellation of the petitioner’s GST registration and therefore, the impugned order cancelling the petitioner’s registration falls foul of the principles of natural justice. - HC
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Cancellation of GST registration of petitioner with retrospective effect - it is deemed apposite to direct that the cancellation of petitioner’s GST registration shall take effect from 31.03.2022 (i.e. with Prospective Effect). - However, this would not preclude the concerned authorities from instituting any proceeding if it is found that the petitioner has violated any provisions of the Statute or is liable to pay any tax, interest or liability. - HC
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Recovery of GST - Validity of garnishee proceeding - violation of principles of natural justice - the respondent authorities have not issued any notice in terms of Section 79(1) of CGST Act, 2017 to the assessee to submit his reply/explanation to the demand notice for delay payments. Instead, the respondent Authorities have straight away issued garnishee proceedings under Section 79 of CGST Act, 2017, by which the petitioner’s bankers were directed to debit the alleged tax dues, which is referred to 73 of the CGST Act, 2017. - garnishee proceedings quashed - HC
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Refund of amount deposited under a mistake - the period of limitation for applying for a refund as prescribed u/s 54 of the CGST Act, would not apply where GST is not chargeable and it is established an amount has been deposited under a mistake of law. - HC
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Cancellation of GST registration of petitioner - The impugned order is being passed mechanically and without application of mind - In the present case, the manner in which the show cause notice is issued and the impugned order is passed, would only assist the petitioner as it appears that the respondents had materials which could have formed the basis of the show cause notice, but the same was not informed to the petitioner and / or no attempt was made to remove the defect in the show cause notice, for reasons best known to the designated officer. - order of cancellation set aside - HC
Income Tax
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Assessment u/s 153A - profit from the sale of the plot - additions in the hands of broker / commission agent - unexplained and undisclosed income of the appellant - In the absence of any material forthcoming on record to show that any addition was made by the revenue in the hands of the vendor-Company or its Managing Director for receiving any unaccounted for cash amount of money in respect of the transaction of sale of Plot, no addition can be made in the hands of Broker - HC
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Estimation of income - bogus purchases - When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. - HC
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Income accrued in India - royalty receipts - what is sold is the copyrighted software which is shrink-wrapped - the consideration received on the sale of off-the-shelf, shrink-wrapped software to Indian distributors and resellers would not constitute royalty in terms of the India-UK Double Taxation Avoidance Agreement. - no substantial question of law arises - HC
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Additions towards unexplained liability as loan taken from Reliance Capital Ltd. - The loan from Reliance Capital was taken against property belonging to the party other than the assessee company but that does not make the transaction tainted. - the increase in outstanding balance of short term borrowings was merely due to reclassification of part of loan from long term liability to short term liability. - No additions - AT
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Validity of reassessment against representative assessee - representative assessee/agent in relation to a Non-resident u/s 163 - The notice u/s. 143(2) of the Act in the name of a non-existing entity itself makes the assessment null and void. Further, the assessment made in the name of KRPL as representative assessee of MVL without a separate order u/s. 163 of the Act, makes the assessment null and void. - AT
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Additions u/s 43CA - Consideration for immovable property less than the stamp duty value - Large number of allottees shows the bona fide of the modus operandi of the assessee. When tested on the touchstone of preponderance of probabilities, the bona fide transaction and contractual commitment with Hemlata way back in FY 2006-07 cannot be doubted merely to invoke and apply a prospective law of S. 43CA. - Additions deleted - AT
Customs
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Revocation of Customs Broker License - failure to collect the KYC forms - In the facts of this case, the revocation of the license came into effect on 04.02.2019 and a period of more than 4 ½ years has already lapsed. The revocation of the license which is in operation since 2019 i.e., almost 4 ½ years is itself a severe punishment and will serve as a reprimand to the Appellant to conduct its affairs with more alacrity. - CHA/CB permitted to apply for new license - HC
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Demand of duty with interest - Valuation - Having accepted the enhanced value and paid duty on the same and not having re-exported the goods as was ascertained from the Advocate during the course of the hearing, there are no reason to disagree with the findings as far as valuation is concerned - while confirming the demand of duty and interest, levy of penalty and confiscation set aside - AT
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Levy of penalty u/s 114(iii) and 114AA against Customs Broker (CB) - the department has failed to establish that the appellants have connived or abetted in the overvaluation of goods and attempted export of the same. There is no iota of evidence to establish that appellants had falsified any documents. - No penalty - AT
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Seeking provisional release of seized goods - non-paper materials in waste paper consignments being imported from other countries - review of the policy by issuance of new Office Memorandum (O.M.) - Since new OM would be the governing law which provides for re- export and quantified penalty for local disposal, the Department shall be free to take legal undertaking from the importer to comply with conditions of disposal of the goods under new OM. - AT
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Classification of goods proposed to be imported - due to the exclusion clause the said label or similar articles in strip would not be covered under Heading 58.06 - Rolls made of Polyester, Taffeta, Satin etc. - The products as detailed in Table-A merit classification as articles similar to label of textile material in strips under Heading 58.07 - AAR
Indian Laws
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Validity of Arbitral Award - determination of loss / award - Hudson’s formula like other formulae, which are only rough approximations of the cost impact of unabsorbed overhead, should be applied with great care and caution to ensure fair and just computation. - Arbitral tribunal in the present case has given complete go by to these principles well in place, overlooked care and caution required and taken a one-sided view grossly and abnormally inflated the damages. - SC
Service Tax
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Abatement of appeal upon death of appellant - Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - on the death of the appellant, the proceedings will be abated unless an application is made for continuance of such proceedings. In this case, no such application is made. As the Death has occurred on 12.05.2019, nearly four years passed already. - the appeal stands abated - AT
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Classification of services - the job performed by the appellant is loading, unloading of goods at port, cutting of bags, spreading of zola, cleaning of jetty etc. at Kandla port to various clients. - the service which the appellant had provided is particularly work at port and not Manpower Recruitment or Supply Agency Service to the client. - the appellant’s service is correctly classifiable under cargo handling service as claimed by the appellant and not under manpower recruitment or supply agency service as alleged by the Revenue. - AT
Central Excise
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Condonation of delay in filing revision application - Exclusion time spend for pursuing the appeal before CESTAT (wrong forum) - The entire issue from the angle that the petitioner had not only bonafidely file its appeal before the forum which lacked jurisdiction but pursued the same under a bonafide belief, the order dated 23.09.2004 as passed by respondent No. 1 is quashed being not sustainable - Matter restored back - HC
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CENVAT Credit - imported scrap - Since, the DRI has withdrawn all the records, the Appellants cannot be expected to produce documents showing transport of the imported scrap to the Appellants’ factory - revenue could not establish that the appellant have not received the input in their factory, hence the demand of Cenvat credit in the present case is not sustainable. - AT
Case Laws:
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GST
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2023 (9) TMI 1185
Cancellation of GST registration with retrospective effect - cancellation for the sole reason that the petitioner had not responded to the Show Cause Notice - HELD THAT:- Undisputedly, the said Show Cause Notice is vague and does not clearly set out the reasons for proposing to cancel the petitioner s GST registration. The said Show Cause Notice was incapable of eliciting any meaningful response as it does not provide any clue to the petitioner as to why the GST registration was proposed to be cancelled - It is apparent that the reasons for cancellation of GST registrations are being selected mechanically from a set of predetermined options, without offering any further explanation as to the grounds on which such adverse action for cancellation is proposed. It is relevant to note that the Show Cause Notice also did not indicate that the petitioner s registration was proposed to be cancelled with retrospective effect from the date it was granted. However, the impugned order has cancelled the petitioner s registration ab-initio. The impugned order is also silent as to why the proper officer has considered it fit to cancel the GST registration with retrospective effect. Considering that the Show Cause Notice is bereft of any specific particulars and the impugned order is not informed by reason, the same are set aside - respondents are directed to restore the petitioner s GST registration forthwith - petition disposed off.
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2023 (9) TMI 1184
Petitioner s application for revocation of the cancellation of his GST registration, was rejected - SCN did not provide any clue as to the reason for proposing cancellation of the petitioner s GST registration - violation of principles of natural justice - HELD THAT:- This Court has in a number of decisions, held that such show cause notices, which do not specifically state the reason for proposing adverse actions cannot be sustained. The purpose of the show cause notice is to enable the noticee to respond to the allegations. Since the said show cause notice is incapable of eliciting any meaningful response, it does not meet the standards required for a show cause notice. Any order passed pursuant to such a show cause notice would fall foul of the principles of natural justice. The reasons for proposing to reject the petitioner s application are vague and unintelligible. This Court is at loss to understand the reason for proposing to reject the petitioner s application as articulated by the Proper Officer. The impugned order dated 23.05.2023 is equally cryptic and vague. It is evident from the reasons for rejection of the petitioner s appeal as stated in the impugned order dated 23.05.2023, that the said order has been passed without application of mind. The impugned show notice dated 5.12.2021 fails to disclose the reason for proposing cancellation of the petitioner s GST registration and therefore, the impugned order cancelling the petitioner s registration falls foul of the principles of natural justice. It is accordingly set aside - Petition allowed.
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2023 (9) TMI 1183
Cancellation of GST registration of petitioner with retrospective effect - It is the petitioners case that the second respondent authority is neither restoring the registered certificate nor revoking attachment of the bank account of the petitioners, hence this petition - HELD THAT:- On perusal of the show cause notice for cancellation of registration as well as the order of cancellation, it appears that the respondent authorities have not followed the decision of this Court in the case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] where it was held that The assignment of reasons is imperative in nature and the speaking order doctrine mandates assigning the reason which is the heart and soul of the decision and said reasons must be the result of independent re-appreciation of evidence adduced and documents produced in the case. The impugned order of cancellation of registration is quashed and set aside with a liberty to the respondent to issue a fresh notice with detailed reasons for cancellation, if any recorded by the respondent authorities. Petition disposed off.
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2023 (9) TMI 1182
Release of seized property - non-payment of GST - HELD THAT:- The petitioners shall deposit an amount of Rs.23,82,620/- in a separate bank account of any Nationalized Bank which in turn shall be invested in a fixed deposit in the name of the petitioners, initially for a period of one year and which shall be renewed from time to time - The original receipt of the fixed deposit shall be handed over to respondent no. 3. Petition disposed off.
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2023 (9) TMI 1181
Cancellation of GST registration of petitioner with retrospective effect - failure to file tax returns for a continuous period of six months - Closure of business - HELD THAT:- Since it is the petitioner s case that he had closed the business in Delhi with effect from 31.03.2022, the petitioner could not be expected to file any returns thereafter. Undisputedly, a tax payer is entitled to close his business and seek cancellation of the GST registration. The cancellation of the GST registration is not an issue, the issue relates to cancellation of the GST registration with retrospective effect - it is deemed apposite to direct that the cancellation of petitioner s GST registration shall take effect from 31.03.2022. However, this would not preclude the concerned authorities from instituting any proceeding if it is found that the petitioner has violated any provisions of the Statute or is liable to pay any tax, interest or liability. Petition disposed off.
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2023 (9) TMI 1180
Cancellation of GST registration of petitioner - vague reason stated in SCN - respondent never verified registered premises of the petitioner - 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 show cause notice, the reasons for cancellation are not decipherable therefrom. SCN set aside - The petition is allowed solely on the ground of violation of principles of natural justice.
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2023 (9) TMI 1179
Validity of garnishee proceeding - delay on the part of petitioner in payment of GST dues - no notice for demand of tax issued - violation of principles of natural justice - HELD THAT:- Admittedly there is a delay on the part of petitioner in payment of GST dues. It is also not in dispute that, the petitioner paid the GST dues belatedly, however along with interest as per it s own calculation. It is noteworthy to mention that the petitioner had addressed letter dated 28.06.2023 to the respondent authorities requesting three months time for payment of interest owing to financial crisis and acute shortage of working capital. The petitioner addressed another letter dated 25.07.2023 disputing the interest liability arrived at by the respondents and further requested the authority to demand interest from due date of filing of GSTR 3B Return till the date of deposit of GST to Electronic Cash Ledger till the issue is decided by Hon ble High Court. A perusal of Sections 73, 74 and 79 of CGST Act and Rules, 2017 indicate that before issuing garnishee proceedings under Section 79, the authorities shall issue notice to the assessee in terms of Section 73(1) and provide an opportunity to the assessee to submit his reply to the notice and only thereafter, the authorities shall proceed further by taking into consideration the reply / explanation provided by the assessee. In the case of VISION DISTRIBUTION PVT. LTD. VERSUS COMMISSIONER, STATE GOODS SERVICES TAX ORS. [ 2019 (12) TMI 1048 - DELHI HIGH COURT] , Hon ble Delhi High Court held that the taxpayer cannot be made to suffer for no fault of his own, on account of failure of the Government in devising smooth GST systems providing of debiting the Electronic Cash Ledger without filing of GSTR 3B Return. In the present case, admittedly, the respondent authorities have not issued any notice in terms of Section 79(1) of CGST Act, 2017 to the assessee to submit his reply/explanation to the demand notice for delay payments. Instead, the respondent Authorities have straight away issued garnishee proceedings under Section 79 of CGST Act, 2017, by which the petitioner s bankers were directed to debit the alleged tax dues, which is referred to 73 of the CGST Act, 2017. There is considerable amount of force in the contention of the petitioner that without providing an opportunity of clarifying / explaining, the respondents authorities have calculated that the petitioner is liable to pay a sum of Rs. 1,28,97,355/- on account of late filing of GSTR 3B Return for the period July, 2017 to January, 2023 and had issued the impugned garnishee notices under Section 47(2) of the CGST Act, 2017 - respondent authorities are required to issue notice to the assessee seeking their response, clarifications for non-payment of tax, interest on late payment prior to passing garnishee proceedings under Section 79(1) of the CGST Act, 2017. Therefore, the action of respondent authorities in issuing the proceedings under section 73(1) of CGST Act, 2017 are in clear violation of principles of natural justice. Petition allowed.
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2023 (9) TMI 1178
Legality of Search Authorisation - it is alleged that the same was issued without the proper officer having any reason to believe that the conditions as specified under Section 67(1) of the Central Goods Services Tax Act, 2017 were complied with - HELD THAT:- There are serious reservations whether any such roving and fishing inquiry under the Central Goods and Services Act, 2017 could have been directed to be conducted by the Special Judge. Further, the proper officer can authorise the search only if the conditions specified in Section 67 of the Act are fulfilled. Issue notice - List on 17.10.2023.
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2023 (9) TMI 1177
Refund of amount deposited under a mistake - rejection on the ground that the application for refund was filed beyond the period of two years as stipulated under Section 54(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Article 265 of the Constitution of India proscribes any levy or collection of tax except by authority of law. Concededly, GST is not payable by the DMRC in respect of the service of preparation of Detailed Project Report for respondent no. 3. Thus, the amount of ₹2,90,520/- deposited by the DMRC on an erroneous belief that payment for services rendered by it were chargeable to tax, cannot be retained by the respondents. It is well settled that GST is an indirect tax. The burden of such tax is inevitably borne by the final recipient. In the present case, respondent no. 3 would be liable to reimburse the GST chargeable on services availed by it. But since GST is not payable in respect of such services, respondent no. 3 has not paid the said amount - the period of limitation for applying for a refund as prescribed under Section 54 of the CGST Act, would not apply where GST is not chargeable and it is established an amount has been deposited under a mistake of law. The impugned order set aside - petition allowed.
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2023 (9) TMI 1176
Cancellation of GST registration of petitioner - impugned order does not furnish any reason whatsoever to cancel the registration of the petitioner - suppression of facts or not - violation of principles of natural justice - HELD THAT:- There appears to be much substance in the submissions as urged on behalf of the petitioner, that the show cause notice dated 27th July 2022 issued to the petitioner itself was defective, inasmuch as, there was no material whatsoever referred in the show cause notice as to why the petitioner was being labelled of having obtained registration by means of fraud, wilful misstatement or suppression of facts. If the designated officer was to proceed against the petitioner on such material, details in that regard ought to have been furnished to the petitioner so as to invite the petitioner s reply on such serious allegation of fraud being committed by the petitioner. The petitioner certainly was kept in total darkness on the allegations which were sought to be raised against him so as to meet a case being put up by the department and which was in fact was not informed to the petitioner and/or concealed from the petitioner. The impugned order dated 11th November 2022 cancelling the registration of the petitioner further compounds the illegality as the impugned order also does not furnish any reason whatsoever in cancelling the registration of the petitioner. The impugned order is required to be held to be illegal not only on the ground of the same being in breach of the principles of natural justice but also on the ground of total non-application of mind, as the same is bereft of any reasons whatsoever which the law would recognize to justify cancellation of the registration of the petitioner. The impugned order is being passed mechanically and without application of mind - In the present case, the manner in which the show cause notice is issued and the impugned order is passed, would only assist the petitioner as it appears that the respondents had materials which could have formed the basis of the show cause notice, but the same was not informed to the petitioner and / or no attempt was made to remove the defect in the show cause notice, for reasons best known to the designated officer. The show cause notice cannot be an empty formality. These are serious issues which are to be noticed at the highest level in the department. We direct the respondents at the appropriate level of the Customs to consider the issues as highlighted, and a report be placed on record of the present proceedings, setting out the precautions to identify such cases of faulty adjudication of show cause notices, and the actions which can be taken on such issues. This be done within a period of four weeks from today. Petition disposed off.
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Income Tax
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2023 (9) TMI 1207
Revision u/s 263 - non-verification of loans taken from four directors - HELD THAT:- We find that the loans from four directors were verified during the assessment proceedings by the AO by calling for information/details from the assessee. We note that the opening balance coming from the earlier years from these directors was Rs. 4,81,81,000/- whereas a sum of Rs. 3,17,00,000/- was taken from the four directors during the year. The assessee has filed before the AO all the evidences such as copy of financial statements, ITRs, bank statements and confirmations from the directors which were examined by the AO and these loans were accepted. We have also perused the copies/evidences filed before us and based on our examination and analysis, we are of the considered view that the revisionary jurisdiction and order passed u/s 263 of the Act in respect of this is not correct and can not be sustained. Whereas in respect of remaining item no. (ii) loans from M/s Original Dealcom were taken and from M/s Kalyan Securities Pvt. Ltd. and qua non-deduction of TDS on the difference of expenses we find this issue is not verified by the AO and the assessment order can be said to be erroneous and prejudicial to the interest of the revenue to this extent only. Accordingly we are inclined to modify the revisionary order passed u/s 263 of the Act by relying on the decision of Hon ble Calcutta High Court in the case of Commissioner of Income-tax v. Polar Fan Industries Ltd. [ 1991 (5) TMI 24 - CALCUTTA HIGH COURT] Accordingly the revisionary order u/s 263 is modified and only treated as valid in respect of item no. (ii), (iii) (viii). Appeal of the assessee is partly allowed.
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2023 (9) TMI 1206
TP adjustments made in respect of Marketing Distribution Services and Backend Processing Services - Comparable selection - HELD THAT:- As gone through the financial statements of M/s Birla Global Finance Co Ltd and we notice that this company has started financing activities during the year under consideration. We noticed that the assessee is engaged in providing marketing support services only. Hence a company which is engaged in financing activities, in our view, cannot be said to be comparable with the assessee. Accordingly, we direct exclusion of this company. The alternative submission on the error in computation of margin need not be adjudicated, since the company itself is directed to be excluded. The assessee also sought exclusion of M/s CRISIL Ltd and M/s ING Vysya Financial Services Ltd on account of high RPT. However, it was stated earlier that the exclusion of M/s Birla Global Finance Co Ltd would make its transactions at arms length. Hence we do not find it necessary to adjudicate upon above said two companies. TP adjustment made in respect of Backend processing support services - We notice that the co-ordinate bench in the case of WTW Global Delivery and Solutions India P Ltd [ 2022 (8) TMI 1435 - ITAT MUMBAI] has directed exclusion of seven companies Mold-Tek Technologies Ltd (Seg.), E-clerx Services Ltd, Accentia Technologies Ltd, Vishal Information Technologies Ltd, Infosys BPO Ltd, Wipro Ltd, HCL Comnet Systems Services Ltd. The company M/s I services India P Ltd was excluded by the coordinate bench in the case of DBOI Global Services P Ltd [ 2021 (8) TMI 1272 - ITAT MUMBAI] due to non availability of contemporaneous data in public domain. Accordingly, we direct AO/TPO to re-compute arms length price of international transactions in both the segments under consideration.
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2023 (9) TMI 1205
Validity of reassessment against representative assessee - provisions qua treating any person in India as representative assessee/agent in relation to a Non-resident u/s 163 - AO had issued notice u/s. 163 to the assessee/respondent and assessee failed to respond to the notice issued u/s. 163 - Whether AO without passing order u/s. 163 can treat KRPL/respondent as representative assessee of MVL while completing assessment? - HELD THAT:- As from conjoint reading of section 163 and section 246(1)(d) of the Act, it is unambiguously clear that before treating any person as agent a separate order has to be passed u/s. 163 of the Act, after affording opportunity of hearing to such a person on whom a liability in respect of a Non-resident is to be fastened. In the instance case, we find that though the AO has issued show cause notice u/s. 163 of the Act to KRPL to treat it as representative assessee of MVL for the AYs 2011-12, 2012-13 and 2013-14, but no order u/s. 163 of the Act has been passed by the AO holding KRPL as representative assessee of MVL. The assessment order passed in the name of KRPL treating it as representative of MVL without passing order u/s. 163 of the Act lacks jurisdiction and hence, suffers from incurable legal infirmity. In the instant case though at the time of issuance of notice u/s. 148 of the Act, MVL was very much in existence. Notice u/s. 148 of the Act was rightly issued in the name of MVL. Thereafter, MVL was dissolved on 23/05/2018. The information regarding dissolution of MVL was conveyed to the Assessing Officer on 18/10/2018, yet the Assessing Officer issued notice u/s. 143(2) of the Act in the name of MVL, a non-existing entity. No notice u/s. 143(2) of the Act was served in the name of KRPL. The notice u/s. 143(2) of the Act in the name of a non-existing entity itself makes the assessment null and void. Further, the assessment made in the name of KRPL as representative assessee of MVL without a separate order u/s. 163 of the Act, makes the assessment null and void. Decided against revenue.
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2023 (9) TMI 1204
Additions u/s 43CA - consideration for the transfer of an asset (other than a capital asset), being land or building or both, is less than the value adopted for stamp duty purposes - DR submitted that where the circle rate is in excess of the actual sale consideration, the actual sale consideration is required to be substituted by the deeming provisions of S. 43CA in force and the no fault could be found with the action of AO - HELD THAT:- The application of Section 43CA in the facts of the case of AY 2015-16 is in question. Section 43CA has been inserted by Finance Act, 2013 and is applicable from Assessment Year 2014-15 onwards corresponding to previous year 2013-14. On a broader reckoning, section 43CA [w.e.f. 1-4-2014] of the Income-tax Act create deeming fiction as regards full value of consideration received on transfer of asset, being immovable property. Consequently, where the consideration for the transfer of an asset (other than a capital asset), being land or building or both, is less than the value adopted for stamp duty purposes, the value so adopted or assessed shall be deemed to be the full value of consideration f or the purposes of computing income under the head profits and gains of business or profession. In the present case, the undisputed facts are that the assessee, engaged in real estate business, has received a part consideration of certain mutually agreed sale price and issued allotment letters in lieu thereof towards sale of plots to various allottees. Assessee has received majority payment through banking channel in the earlier years much prior to the insertion of Section 43CA of the Act w.e.f 1-4-2014 i.e AY 2014-15. AO however, applied the provisions of section 43CA and substituted the sale consideration determined at the time of allotment of plots to various customers with the corresponding stamp duty valuation applicable for this year where agreement for sale of plot was executed for the purposes of transfer of plots. Assessee contends that where allotment were issued much prior to the financial year relevant to assessment year 2014-15 when the provisions of Section 43CA have become effective, there is no way an assessee could have foreseen these provisions at the time of allotment - The issue is squarely covered in favour of the assessee by hosts of the judgments including Index One Trade Con P. Ltd. [ 2018 (9) TMI 1231 - ITAT JAIPUR ] On appraisal of the factual analysis carried out by the CIT(A) and applicable legal position thereon, we see no perceptible error in the findings rendered by the CIT(A) on first principles that the circle rate on the date of agreement can not be substituted for agreed and actual sale consideration determined in terms of allotment letter whereby the contractual obligations to transfer the plots had already been fastened on the assessee in the earlier years, much prior to insertion of s. 43CA. The relief thus granted by the CIT(A) is in tune with the schematic interpretation of S. 43CA and thus deserves to hold the field. Hence, We decline to interfere. The appeal of the revenue thus fails. Assessee seeking to challenge the denial of relief granted in the case of one allottee namely, Hemlata on the ground that allotment letter for transfer of plot has been issued for consideration received in cash albeit in FY 2006-07 - CIT(A) denied relief and sustained application of S. 43CA to transaction carried out in cash in the earlier year taking shelter of sub-section (4) of Section 43CA of the Act. The action of the CIT(A) is squarely opposed to the decision of the co-ordinate bench in Indexone (supra). We see no justifiable reason to deny the benefit of agreement value instead of circle rate in the case of Hemlata where the condition of receipt in cheque has been unjustly read into the provisions in contradiction to the judgment of the Co-ordinate Bench in Index One Trade Con P. Ltd. The transaction in cash occurred in AY 2007-08 when the provisions of Section 43CA was not at all existing in statute book. Significantly, the assessee is in the business of real estate and has issued allotment letters for sale of plot to large number of parties and sold about 70 plots. Thus, the assessee has not entered into an isolated instance of allotment of plot with Hemlata alone. Large number of allottees shows the bona fide of the modus operandi of the assessee. When tested on the touchstone of preponderance of probabilities, the bona fide transaction and contractual commitment with Hemlata way back in FY 2006-07 cannot be doubted merely to invoke and apply a prospective law of S. 43CA. Hence, in respect to appeal of the assessee, we find justifiable reason to reverse the action of the CIT(A) to the extent of additions confirmed for transaction with Hemlata - The action of the CIT(A) to this extent is thus set aside and reversed. Decided against revenue.
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2023 (9) TMI 1175
Assessment u/s 153A - profit from the sale of the plot - additions in the hands of broker / commission agent - unexplained and undisclosed income of the appellant - No addition was made by the revenue in the hands of the vendor-Company or its Managing Director for receiving any unaccounted for cash amount of money in respect of the transaction of sale of Plot - HELD THAT:- Addition was made in the income of the buyer, but a perusal of orders passed by CIT (A) as well as by the Tribunal reveals that the said addition had been ordered to be deleted. No material had been placed on record by the revenue to show that the said deletion was on any technical ground and as to what was that technical ground. Revenue also failed to produce any material on record to show that any addition of income at all qua the same transaction had been made in the income of the vendor of Plot No. 42 who was obviously the main person who could have derived profits from the same. The burden of proving all this lied heavily on the revenue, but nothing could be brought on record to prove the allegation that there was concealment in the consideration amount as reflected in the sale deeds of the Plot No. 42 and, therefore, in our considered opinion, on the basis of these documents which are part of Annexure A-1 and are rather loose rough papers only, no reasonable conclusion could be drawn that any amount of money what to say had been received by the appellant. Also in the absence of any material forthcoming on record to show that any addition was made by the revenue in the hands of the vendor-Company or its Managing Director for receiving any unaccounted for cash amount of money in respect of the transaction of sale of Plot No. 42, in our opinion, the appellant who was only a broker could not be saddled with any addition of money - Decided against revenue.
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2023 (9) TMI 1174
Estimation of income - bogus purchases - ITAT reduced the disallowance from 12.5% to 6% - Tribunal noted that the issue under consideration was squarely covered by the judgement of the coordinate bench in the case of Pankaj A Chaudhary [ 2023 (3) TMI 1402 - GUJARAT HIGH COURT] wherein the coordinate bench at Surat had sustained the addition at the rate of 6% of bogus purchases - HELD THAT:- The view taken and the conclusion arrived at by the appellant Tribunal in case supra are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. No substantial question of law arises
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2023 (9) TMI 1173
Income accrued in India - royalty receipts - payments received by the assessee for supply of software - India - USA DTAA - HELD THAT:- As decided by Engineering Analysis [ 2021 (3) TMI 138 - SUPREME COURT] a non-exclusive, non-transferable license, merely enabling the use of a copyrighted product, is in the nature of restrictive conditions which are ancillary to such use, and cannot be construed as a licence to enjoy all or any of the enumerated rights mentioned in section 14 of the Copyright Act, or create any interest in any such rights so as to attract section 30 of the Copyright Act. Thus decided the issue in favour of the taxpayer and laid down that the payments made by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers as consideration for use/resale of shrink-wrapped software does not amount to payment for royalty for the use of copyright in the computer software considering the definition of royalty under the DTAAs. In the present case what is sold is the copyrighted software which is shrink-wrapped.To our minds, the consideration received on the sale of off-the-shelf, shrink-wrapped software to Indian distributors and resellers would not constitute royalty in terms of the India-UK Double Taxation Avoidance Agreement. Thus, in our opinion, no substantial question of law arises for our consideration.
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2023 (9) TMI 1172
Additions towards unexplained liability as loan taken from Reliance Capital Ltd. - increase in outstanding liability - assessee has failed to produce any concrete and also additional evidences in support of its contention - CIT(A) deleted the addition - HELD THAT:- As observed that before Ld. CIT(A) additional evidences were filed on behalf of assessee in the form of repayment schedules of Reliance Capital Ltd. and the accounts statement. CIT(A) mentions the after considering the remand report that if the source of loan being established, the question of disputing identity and creditworthiness of the same can obviously not be raised. The loan from Reliance Capital was taken against property belonging to the party other than the assessee company but that does not make the transaction tainted. CIT(A) has duly taken into consideration the explanation of the assessee that the alleged addition that the increase in outstanding balance of short term borrowings was merely due to reclassification of part of loan from long term liability to short term liability. The findings of ld. CIT(A) requires no interference. Unexplained current liability - CIT(A) deleted the addition - HELD THAT:- As observed that before Ld. CIT(A) it was duly explained by the assessee as to what were the heads under which other current liability had increased. The increased were due to VAT payable, TDS payable, advance from individual and bank overdraft. As with regard to 1st three there can be no dispute and only with regard to advances from individual 1,20,00,000/- there could have been suspicion which has been taken care of by the assessee by putting explanation by furnishing of sale deeds of property sold to Jasmine Sapra and Sanjeev - In fact in the remand report genuineness of this advances has been accepted, thus, the findings of Ld. CIT(A) require no interference. Enhancement of income by CIT(A) u/s 251(1) - addition u/s 40 (a)(ia) for non-deposit of TDS within the prescribed period - HELD THAT:- As decided in Toffee Agricultural Farms Pvt. Ltd. [ 2022 (4) TMI 869 - ITAT DELHI] and Hari Mohan Sharma [ 2019 (2) TMI 113 - ITAT DELHI] in support of the contention that the Ld. CIT(A) cannot change the provisions of law qua the item of which assessment was made. Since in the case in hand , the Appellate Authority has made enhancement in the assessment by discovering a new source of income, not considered by the Assessing Officer in the order appealed against the ground as raised deserves to be allowed.
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Customs
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2023 (9) TMI 1203
Invocation of extraordinary jurisdiction conferred upon the Court by Article 226 of the Constitution - framing directions for waiver of the pre- deposit requirement as placed in terms of Section 129E of the Customs Act, 1962 - HELD THAT:- From the material gathered in the course of investigation, the statements attributed to the persons involved including the petitioner as well as the conclusions drawn and recorded in the Order-in- Original it is manifest that the respondents had found that the petitioner was complicit and actively involved in the evasion of duty and the intent of these parties to mis-declare imports while acting in concert. Bearing in mind the material which has been relied upon and the nature of the allegations levelled against the petitioner, we find ourselves unable to hold that his case would fall in the category of rare and exceptional cases. Prima facie, and solely for the purposes of examining whether waiver is merited, we have delved through the relevant record and find that the conclusions drawn by the respondents insofar as the petitioner is concerned can neither be said to be wholly perverse or unsustainable. The circumstances do not warrant the invocation of the extraordinary power conferred by Article 226 of the Constitution. Petition dismissed.
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2023 (9) TMI 1202
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - appellant liable for reporting an offence committed in relation to goods stored in the bonded warehouse, after the same have been imported and the professional role of the Customs Broker in clearance of the goods had ended - HELD THAT:- In the facts of this case, there is no allegation of impersonation in the name of importer firms. The finding of DRI is that these importer firms were not being run and operated by the persons in whose name the importer firms were incorporated. The allegation is not that these firms are fictitious and do not exist. The finding is that these firms are being run and remotely controlled by Mr. Sanjeev Maggu and Mr. Ramesh Wadhera. The Regulation requires the Customs Broker to verify the identity of the client (i.e., importer firms) and in the facts of this case since the clients (i.e., importer firms) exist as is evident from the functionality of the IEC (as discussed above), it is not possible to hold that there has been a blatant violation of this Regulation, which would justify the revocation of CB license. There is an attempt to embellish the allegations against the Appellant. It has been stated that the Appellant had knowledge before hand that the importer firms were dummy firms and was aware of this fact even prior to removal of the goods from custom bonded warehouses. This Court finds that there is no such finding against the Appellant in the orders of the Commissioner or the learned Tribunal and the same is also not evident from the statement dated 14.07.2017, which is the sole document relied against the Appellant; and therefore, this submission of the Respondent is not borne out from the record. Proportionality of the punishment handed down to the Petitioner - HELD THAT:- This Court however takes note that the Appellant was unable to provide the KYC records of the importer firms to DRI and Customs authorities despite undertaking to do so in reply to question in its statement dated 14.07.2017 and thereby raising an inference of lapse in collecting the KYC documents. This fact has also been highlighted by the Respondent in the written submissions dated 11.09.2023. In the opinion of this Court in view of the judgment of KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2017 (3) TMI 1494 - DELHI HIGH COURT] , the said inaction of the Appellant cannot justify the imposition of the maximum punishment of revocation of the license. There is no finding against the Appellant that he in any manner connived with the importer firms or abetted the said firms in their wrongful actions in diverting the goods to the domestic market without payment of customs duty, which led to the loss to the revenue. There is no finding that the Appellant earned extra commission for the assignment for clearance of imported goods from the Customs Station or has partaken in the illegitimate gains made by the importer firms. In the facts of this case, the revocation of the license came into effect on 04.02.2019 and a period of more than 4 years has already lapsed. The revocation of the license which is in operation since 2019 i.e., almost 4 years is itself a severe punishment and will serve as a reprimand to the Appellant to conduct its affairs with more alacrity. A penalty of revocation of license for failing to collect the KYC forms unjustly restricts the Appellant s ability to undertake the business CHA for the entire life - keeping in view the proportionality doctrine and keeping in view that the Appellant has already been unable to work for 4 years, this Court is therefore of the opinion that the impugned order of the learned Tribunal as well as the order-in-original dated 04.02.2019 to the extent that it revokes the Appellant s license and forfeits the security deposit is liable to be set aside. Since the tenure of the license expired on 09.03.2019, the Appellant will be at liberty to apply for the grant of a new license and if such an application is made, the same will be considered under the extant regulations. Appeal allowed.
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2023 (9) TMI 1201
Delay of 10 years in approaching this court - Time Limitation - SCN issued in 2001 but the order itself has been passed only in 2007 - jurisdiction of officer passing the impugned order - Imposition of dual penalties - rectifiable error or not - HELD THAT:- Section 11(2) of Customs Act in terms of which this penalty has been imposed, prescribes a range between Rs. 10,000/- to five times the value of the goods. The CIF value in this case is Rs. 85,65,953/- and hence, going by the book, the office could have imposed penalty of five times of the aforesaid sum. He has however, restricted himself to less than twice the value of the goods. There is thus no apparent rectifiable error. Petition dismissed.
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2023 (9) TMI 1200
Smuggling - Gold Jewellery - baggage rules - non-application of mind - penalty in respect of the earlier travel by the petitioner in the year 2018 which is reflected under the impugned detention receipt - HELD THAT:- Any normal women passenger ordinarily will wear jewels over her body. The 44 grams of jewellery seized from the petitioner and her daughter by the respondents cannot be treated as excessive. Therefore, erroneously on the ground that the petitioner is liable to pay the penalty in respect of her earlier travel in the year 2018, the impugned detention receipt dated 16-1-2023 has been issued. The penalty amount of Rs. 10,000/- in respect of the earlier travel by the petitioner in the year 2018 which is reflected under the impugned detention receipt dated 16-1-2023 is also the subject matter of a Statutory Appeal. This Court is of the considered view that by total non-application of mind to the fact that the petitioner and her daughter had worn over their bodies only jewellery weighing a meagre 44 grams which cannot be treated to be excessive, as any woman passenger would normally wear jewellery weighing that extent, the impugned detention receipt dated 16-1-2023 has been issued. Since the petitioner has admittedly not paid the penalty amount in respect of her earlier travel which is reflected in the impugned detention receipt dated 16-1-2023, the petitioner shall deposit the said amount with the third respondent within a period of one week from the date of receipt of a copy of this order - Petition allowed.
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2023 (9) TMI 1199
Classification of imported goods - Injection Moulding machine - enhancement of value - old and used goods or not - mis-declaring and -under valuing the imported goods - evasion of Customs Duty - HELD THAT:- The matter pertains to injection moulding machine, which was described old and used by the party, and it was meant to be re- exported. However, the same it appears from the records and as confirmed by Advocate was never re-exported. During the course of investigation, party with consent had accepted enhanced value and discharged the duty, which was arrived at through the experts and by a Constituted Committee. Having accepted the enhanced value and paid duty on the same and not having re-exported the goods as was ascertained from the Advocate during the course of the hearing, there are no reason to disagree with the findings as far as valuation is concerned, as the same was based on an expert opinion after seeing the usage or otherwise of the machine and the value enhanced was accepted for release of the goods by the appellant themselves. The duty and interest therefore have been correctly paid. Mis-description - confiscation - penalty - HELD THAT:- The goods even as per the party were used only to some extent, stated to be in some trial runs. The examination reports relied upon by the department, atleast some of them do mention possibility of such use. The authorities below have ousted the description of the party as given in the bill of entry on the ground that use in trial run cannot be equated with commercial use - the goods were not liable for confiscation on account of description, and also the valuation since same depended upon usage, which was arrived only through various expert opinions. And the party having willingly accepted the value once the condition and extent of usage became known to them cannot be subjected to penalty - the goods are not liable for confiscation in the specific facts of the case and penalty imposed cannot be sustained. The post importation conduct of the party of voluntarily accepting enhanced value, when extent of usage became known to them, while not imposing any penalty or upholding confiscation, sustain the order of the department as far as valuation and demand of duty and interest is concerned. Appeal partly allowed.
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2023 (9) TMI 1198
Levy of penalty u/s 114(iii) and 114AA of the Customs Act, 1962 against Customs Broker (CB) - overvaluation of goods - appellants have acted as agent of exporter and is therefore deemed to be the exporter of the goods or not - HELD THAT:- The department has obtained details as to the price at which the exporter purchased the goods from the supplier viz., M/s. Moonlight Industries. This invoice and other KYC documents were submitted by the appellant before the officers. The appellant being a Customs Broker is duty bound to exercise diligence while performing the duties. In the present case, the appellant has obtained authorization from exporter and all KYC documents. The IEC, PAN details, GST registration etc. have been obtained. In such circumstances, it cannot be said that the appellant has not acted diligently. In the present case, the main argument put forward by the AR is that the letter dated 14.06.2019 issued to the exporter was replied by the Trichy office of the appellant. This is too flimsy evidence to allege that appellant had connived in the overvaluation of the goods. Merely because a letter by exporter at Delhi is seen dispatched from Trichy postal circle, it cannot be presumed that the appellant has sent it or that appellant has connived with exporter. The allegation against a Customs Broker in involvement of import/export fraud is serious as it affects their livelihood - there are no material sufficient to establish guilt on the part of the appellants. After appreciating the facts and evidence, we hold that the department has failed to establish that the appellants have connived or abetted in the overvaluation of goods and attempted export of the same. There is no iota of evidence to establish that appellants had falsified any documents. The ingredients of section 114A stands un established. Moreover, the invocation of sub-section (3) of section 147 against these appellant is totally erroneous. The impugned order against the appellants are set aside. The appeals are allowed.
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2023 (9) TMI 1197
Seeking provisional release of seized goods - non-paper materials in waste paper consignments being imported from other countries - review of the policy by issuance of new Office Memorandum (O.M.) - submission of the Appellant that since the new OM has been issued in the midst of the proceedings, application for provisional release and adjudication of show cause notice need to be adjudicated under new OM dated 10-01-2023 - HELD THAT:- The Learned Commissioner (Appeals) dismissed the appeal without dealing with the contentions raised by the Appellant. The judgement of Hon ble Gujarat High court in the case of SATGURU POLYFAB PVT. LTD. VERSUS UNION OF INDIA [ 2021 (3) TMI 1376 - GUJARAT HIGH COURT] covers the field and in view of the proposition of law set out in the two constitution bench judgments discussed in prepares viz., COMMISSIONER OF INCOME TAX (CENTRAL) -I, NEW DELHI VERSUS VATIKA TOWNSHIP PRIVATE LIMITED [ 2014 (9) TMI 576 - SUPREME COURT] and KOLHAPUR CANESUGAR WORKS LTD. VERSUS UNION OF INDIA [ 2000 (2) TMI 823 - SUPREME COURT] , the issue is no longer res integra that new OM would be applicable for adjudicating the imported goods which provides for examination and release of the goods container wise, within the overall limits, specified in the said OM in percentage terms, of non paper materials/contaminants and other conditions set out in the said OM dated 10.01.2023. The Department is directed to examine the goods as per terms of the revised OM (F. No. 23/107/2022HSMD dated 10.01.2023) containerwise and to be so done in presence of the importer. The containers of paper waste where the goods are found in conformity with OM dated 10-01-2023, may be provisionally released on Bond/Undertaking. Where paper waste is found to be contaminated in a container, it would be dealt with under the new OM dated 10-01-2023 and such goods would be either re- exported or allowed to be disposed of in terms of the said OM dated 10- 01-2023. The adjudicating authority shall adjudicate the show cause notice after the exercise of provisional release is undertaken, which would be subject to final adjudication. Since new OM would be the governing law which provides for re- export and quantified penalty for local disposal, the Department shall be free to take legal undertaking from the importer to comply with conditions of disposal of the goods under new OM. Needless to mention the Department would be at liberty to supervise such disposal of the goods locally/re export of contaminated container if so found. Appeal allowed.
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2023 (9) TMI 1196
Classification of goods proposed to be imported - Rolls made of Polyester, Taffeta, Satin etc. which are available with width ranging from 10 millimetre to 810 millimetre - to be classified under HSN Code 5807 or not - products are covered by Entry No. 147 of Notification No. 82/2017-Cus., dated 27-10-2017 and Entry No. 153 of Schedule II of Notification No. 1/2017-IGST (Rate), dated 28 June, 2017 or not - what is the basic Customs duty under First schedule of the Customs Tariff Act, 1975 and IGST rate under sub-section (7) of Section 3 of the said Customs Tariff Act read with Notifications issued on import of the products? HELD THAT:- From the descriptions of the products, it is found the same are of various type having sizes ranging from 10 mm to 305 mm, whereas in the CAAR-I application the applicant had mentioned sizes ranging from 10 mm to 810 mm. However, there is only one item in the list of products having width exceeding 300 mm, namely Iron on Taffeta Roll - 305 mm . It is submitted by applicant that the CTH 5807 10 does not require a label to be printed for classification under the heading. Further, there is no such requirement in the chapter and section notes. In support of this argument the applicant has further submitted that the Hon ble Calcutta High Court in the case of BIJAY KUMAR PODDAR VERSUS UNION OF INDIA [ 1999 (9) TMI 106 - HIGH COURT AT CALCUTTA] has held the plain label strips as labels considering that it is meant for printing and there is no alternate use of the same. The related sub-heading 5807 provides and covers labels and similar articles - Honourable High Court has further opined that the CTH 5807 10 provides and covers labels and similar articles. Notwithstanding whether the imported goods came with printing on it or not then also, the Court held that, if it is not label in strict sense then also the material imported can be said similar to label - Applying the same ratio, the product commonly identified by the section of people dealing in or using the same would be known as Label due to its functional character. Further, due to the exclusion clause the said label or similar articles in strip would not be covered under Heading 58.06. Various Courts in a plethora of cases have held that HSN explanatory notes have a persuasive effect in deciding the matters of classification. Keeping in view the observation of Apex Court in various decisions referred in forgoing paras as well as the decision of High Court decision in case of M/s. Bijay Kumar Poddar v. Union of India, it is found that the said products have to be considered as articles similar to labels of textile materials in strips and accordingly are classifiable under heading CTH 58.07. The products as detailed in Table-A merit classification as articles similar to label of textile material in strips under Heading 58.07 and specifically under sub-heading 5807 10 20 of the First Schedule to the Customs Tariff Act, 1975.
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Service Tax
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2023 (9) TMI 1195
Non-payment of service tax - Transport of Goods by Road (GTA) Service under RCM - Manpower Recruitment and Supply Service (MRA) - service of Erection, Commissioning and Installation Service - Rent 2 A-Cab Services under RCM - Director s Sitting Fee - short payment of service tax due to wrong classification of service under Works Contract Service (WCS) instead of Erection, Commissioning and Installation Service - Commercial or Industrial Construction Services - Legal Consultancy Service under RCM. HELD THAT:- As seen from the sanction order, there is no sanction which is granted in favour of the petitioner for which reason the proceedings against the petitioners are void ab initio. Sanction is sine qua non for prosecution in the present case. Special counsel also conceded to the fact. The proceedings against petitioner/A2 on the file of Special Judge for Economic Offences, City Criminal Courts, Hyderabad are hereby quashed - Petition allowed.
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2023 (9) TMI 1194
Principles of natural justice - non-consideration by the Original Authority of Audited Final Accounts in arriving at the final tax liability - HELD THAT:- Reliance placed in the judgement of a Coordinate Bench of this Tribunal in the case of M/S. CANARA BANK VERSUS CST, BANGALORE [ 2012 (6) TMI 274 - CESTAT, AHMEDABAD] which came to be delivered after the issue of the impugned order - it is deemed proper to remand the matter back to the Original Authority to examine all the issues involved on facts and law and pass a speaking order afresh. The learned Commissioner shall follow the principles of natural justice and afford a reasonable and time bound opportunity to the appellant to state their case both orally and in writing if they so wish, before issuing a speaking order in the matter - the appeal is restored before the learned Commissioner for a decision on merits - appeal disposed off.
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2023 (9) TMI 1193
Abatement of appeal upon death of appellant - Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - principles of natural justice - HELD THAT:- After perusing the material on record, it is found that the Respondent has died on 12.05.2019 during the pendency of the present appeal - it is also found that in terms of Rule 22 of Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, on the death of the appellant, the proceedings will be abated unless an application is made for continuance of such proceedings. In this case, no such application is made. As the Death has occurred on 12.05.2019, nearly four years passed already. In view of the judgement of the Hon ble Supreme Court in the case of SHABINA ABRAHAM AND OTHERS VERSUS COLLECTOR OF CENTRAL EXCISE CUSTOMS [ 2015 (7) TMI 1036 - SUPREME COURT] , wherein it has been held that no proceedings can be initiated or continued against a dead person as it amounts to violation of natural justice in as much as the dead person, who is proceeded against is not alive to defend himself. On the death of the appellant, the appeal stands abated - Appeal disposed off.
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2023 (9) TMI 1192
Commercial and Industrial Construction service - benefit of the composition scheme denied solely on the ground that all the ongoing projects entered into before June 2007, for which the composition scheme was not available with the introduction of works contract service effect from 01.06.2007, was not justified - Time Limitation - HELD THAT:- Admittedly, the appellant had undertaken construction of residential complex service on the strength of composite contracts entered into with its customers, which involved sale of goods i.e., construction materials, and also the service of construction. The Hon ble Apex Court in the case of Larsen Toubro Ltd. [ 2015 (8) TMI 749 - SUPREME COURT] has in clear terms held that wherever works contract service is undertaken prior to 01.06.2007, involving contracts of composite nature, no demand under CICS or CRCS could survive, prior to 01.06.2007. Service Tax, admittedly, is a tax on the service part and definitely not on the entire value declared / collected and hence, at the outset, we do not appreciate the demand of Service tax on the gross value declared in the S.T.-3 return, which is also done rejecting the appellant s claim under works contract service, but not specifying as to under which service is the amount being charged to Service Tax. Time Limitation - HELD THAT:- Though the appellant has also taken a ground as regards the demands in both the above Show Cause Notices being hit by the period of limitation, since the demands cannot be sustained the issue of limitation not discussed here. Appeal allowed.
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2023 (9) TMI 1191
Classification of services - cargo handling services or Manpower Recruitment or Supply Agency Service? - service includes loading, unloading of goods at port, cutting of bags, spreading of zola, cleaning of jetty - time limitation - suppression of facts or not - HELD THAT:- The appellant have been charging their service charges on the basis of metric tons of the goods handled by them and not on the basis of wages of laborers deployed for the job. The above invoices supported the claim of the appellant that the service was correctly classifiable under cargo handling service and not under Manpower Recruitment or Supply Agency Service. The appellant have admittedly paid service tax on cargo handling services except in case of export of cargo which is not taxable. The identical issue has been considered in various judgments wherein it was viewed that in case the contract is for a job and not for supply of manpower their services cannot be classifiable under manpower recruitment or supply agency service - the appellant s service is correctly classifiable under cargo handling service as claimed by the appellant and not under manpower recruitment or supply agency service as alleged by the Revenue. Time Limitation - HELD THAT:- The appellant have been paying service tax on the same service under cargo handling service and discharged the service tax. The details of nature of service, payment of service tax etc. was declared in their ST-3 return. Nothing prevents the department from taking action against the appellant on the basis of the details provided in ST-3 returns, therefore, there is absolutely no suppression of fact on the part of the appellant. Hence, the demand is also hit by limitation for the extended period. The demand of differential service tax confirmed by the lower authorities is not sustainable - Appeal allowed.
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Central Excise
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2023 (9) TMI 1190
Condonation of delay in filing revision application - Exclusion time spend for pursuing the appeal before CESTAT (wrong forum) - Time limitation - time barred order as filed beyond period prescribed under the statute - convincing reason or not - HELD THAT:- Undisputedly, a revision application against an order passed under the provisions of the Act, 1944, by the appellate authority can be filed within 3 months from the date of communication of the order to the applicant and as per proviso to Section 35EE (2), if the Central Government is satisfied that the applicant was prevented by any sufficient cause for presenting the revision application within the period of 3 months, it may allow the same to be presented within a further period of 3 months. Meaning thereby that as per provision of Section 35EE, a revision application could not be entertained beyond the maximum period of 6 months from the date of communication to the applicant of the order challenged. However, it may be mentioned that the well settled proposition of law that even if a statute imposes embargo upon power of an authority to condone the delay by providing a specific period up to which such delay can be condoned, nonetheless, the time spent by the applicant in prosecuting wrong proceedings which are bonafide with due diligence can be excluded while computing the period of limitation, cannot be ignored. The High Court of Bombay while discussing MP. STEEL CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (4) TMI 849 - SUPREME COURT] had observed that the principles of Section 14 of the Limitation Act, which were based on advancing the cause of justice would apply to exclude time taken in prosecuting proceedings which were bonafide and with due diligence pursued, which ultimately ended without a decision on the merits of the case. It is not in dispute that against the order dated 14.02.2003, the petitioner had filed appeal before the Tribunal within time. This appeal remained pending till 08.03.2004 and it was only then on that day that it was held to be not maintainable. No decision had been taken on merits by the Tribunal. The Tribunal had specifically observed that the period which was spent by the petitioner in pursuing the appeal may not be counted for the purpose of delay in filing the revision petition. Along with the revision application, the petitioner had filed an application for condoning the delay in filing the said application before respondent No. 1. The respondent No. 1 however, dismissed the revision application without passing any order on application for condonation of delay and by holding that the revision was time barred and that no convincing reason had been given by the petitioner for pursuing the matter before the Tribunal. The respondent No. 1 revisional authority completely ignored the time spent by the petitioner before the Tribunal. The entire issue from the angle that the petitioner had not only bonafidely file its appeal before the forum which lacked jurisdiction but pursued the same under a bonafide belief, the order dated 23.09.2004 as passed by respondent No. 1 is quashed being not sustainable and the file of the revision application restored to respondent No. 1-Joint Secretary (Revision) Government of India, (revisional authority), New Delhi for deciding the application for condonation of delay as well as the revision in accordance with law. Petition allowed.
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2023 (9) TMI 1189
CENVAT Credit - imported scrap - denial of inputs on the ground that the destination mentioned in the DLRs was Bhiwandi, the said imported inputs were diverted to local markets and sold in cash and that the imported inputs so diverted were substituted with bazaar (local) non-duty paid scrap - penalty - HELD THAT:- This Tribunal in various cases has held that since there is not even an iota of evidence of disposal of the goods at Bhiwandi/ Navi Mumbai, there being not even a single buyer of the goods who is identified and there being no evidence of receipt of any cash against such alleged disposal, the Cenvat Credit cannot be denied merely on the ground that the destination mentioned in the DLRs/ MLRs of the transporter, Pankaj Shipping and Transport Co was Bhiwandi/ Navi Mumbai. This Tribunal has further held that in the absence of any evidence of procurement of the scrap from alternate source/ bazaar scrap, it cannot be assumed that the imported duty paid scrap was substituted with local non-duty paid bazaar Scrap and the Cenvat Credit of the duty paid on the imported scrap cannot be denied. Reliance can be placed in M/S SUNLAND ALLOYS, PRAVIN KUMAR A RANKA, SHIVRAJ SINGHAL VERSUS C.C.E. S.T. -VAPI [ 2015 (10) TMI 1104 - CESTAT AHMEDABAD] and M/S SUNLAND METAL RECYCLING INDUSTRIES, SHRI SURENDRA P. KACHHARA VERSUS COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VAPI [ 2016 (2) TMI 534 - CESTAT AHMEDABAD] . In the instant case, it can be observed that at the time of search of the factory on 1-12-2006 no bazaar scrap was found in the factory, there is absolutely no evidence of procurement of local non-duty paid bazaar scrap for substitution of the imported duty paid scrap. In fact, Rajeshwar R. Dubey has in his Statement dated 29-11-2007 stated that the Appellants were not purchasing any Scrap from the local market. There is not a single buyer identified to whom the imported duty paid scrap was allegedly sold and there is no evidence whatever of any cash received by the Appellant for such alleged sale. In that view, it is impossible to hold that there is diversion of 842 M.Tons worth Rs. 5 crores without even a single buyer being identified and without any evidence of receipt of cash payment by the Appellant of such a large amount; all the imported duty paid inputs have been duly accounted for in RG 23 A Register and the final products have been manufactured and cleared on payment of duty. Since, the DRI has withdrawn all the records, the Appellants cannot be expected to produce documents showing transport of the imported scrap to the Appellants factory - On identical facts in the case of Sunland Metal Recycling Industries and Ors v CCE, Vapi, this Tribunal has held that where DRI had just prior to investigations by DGCEI taken away all records pertaining to the import of scrap, the manufacturer cannot be expected to produce documents showing transport and receipt of the goods in the factory. Further, since none of the deponents of the Statements recorded by DGCEI have been examined in the adjudication proceedings, as required by Section 9D of the Central Excise Act 1944, the same cannot be considered as evidence. Thus, the revenue could not establish that the appellant have not received the input in their factory, hence the demand of Cenvat credit in the present case is not sustainable. Consequently the penalties are also not sustainable. Appeal allowed.
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2023 (9) TMI 1188
Reversal of proportionate Cenvat credit - inputs used and attributed to Sulphuric Acid cleared under exemption Notification No. 4/2006-CE dated 01.03.2006 (Sr. No. 32) on nil rate of duty - HELD THAT:- As per the definition of exempted goods in Rule 2(D)(d)of Cenvat Credit Rules, 2004, the exempted goods is not only the exempted by notification but also the goods bear a nil rate of duty also. Therefore, in our prima facie view the Rule 6(3) is applicable, even in a case of kind of this case. However, in one of the judgments in the case of DHARAMSI MORARJI CHEMICAL CO. LTD. VERSUS COMMR. OF C. EX., RAIGAD [ 2010 (3) TMI 561 - CESTAT MUMBAI] the revenue s appeal is pending before the Hon ble Supreme Court. Therefore, it will be in the interest of justice that this matter maybe finally decided only after the Hon ble Apex Court delivers its judgment in Dharamsi Morarji chemical Co. Ltd. Accordingly, the impugned order set aside and the matter remanded to the Adjudicating Authority for passing a fresh order after the decision of the Hon ble Supreme Court in the case Dharamsi Morarji chemical Co. Ltd. Appeal is disposed of by way of remand to the Adjudicating Authority.
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CST, VAT & Sales Tax
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2023 (9) TMI 1187
Recovery of penal interest - Violation of principles of natural justice - impugned order of recovery of interest has been passed without hearing the petitioner - non-renewal of license of Excise vends - HELD THAT:- It is not the respondents case that the licence gets automatically renewed without its cancellation or suspension, therefore, for the period of three financial years from 1995-1998, the petitioner having no licence to run the business of liquor, it was not liable to pay the licence fee for that period. It seems that the petitioner under the hope and expectations that his application for shifting of his business from Link Road to Bus Stand, Jammu shall be considered which was ultimately allowed by the respondents had paid an amount of ₹8.50 lacs as licence fee for that period besides an amount of ₹6.00 lacs deposited earlier in terms of Court s order. The petitioner, has thus, deposited the amount of ₹14.50 lacs on account of licence fee and on withdrawal of his petition and till then interim order passed by this Court was operating which had conditioned that the petitioner shall pay an amount of ₹6.00 lacs and remaining amount shall be payable after the disposal of the writ petition. The impugned communication requiring the petitioner to remit penal interest of ₹14.49 lacs in terms of Section 24-A of the J K Liquor Licence and Sales Rules, 1984 can be ordered to be deposited only on non-payment of the licence fee. Since the licence fee had been deposited by the petitioner in terms of the Court order, the same cannot be said to be a delayed payment so as to incur the penal consequences of paying interest in terms of Section 24-A of the J K Excise Act. Rule 20 of the J K Liquor Licence and Sales Rules, 1984 provided that licence unless renewed is determined on 31st March at the end of the financial year. Petition allowed.
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Indian Laws
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2023 (9) TMI 1186
Validity of Arbitral Award - High Court had set aside the arbitration award - inordinate delay that had occurred by not taking proper and timely action in removal of various impediments and obstacles that stood in the way of completing the project within the stipulated period of 18 months - computation and award of 10% of the contract value towards loss of overheads and another 10% towards loss of profits/profitability - HELD THAT:- Ordinarily, when the completion of a contract is delayed and the contractor claims that s/he has suffered a loss arising from depletion of her/his income from the job and hence turnover of her/his business, and also for the overheads in the form of workforce expenses which could have been deployed in other contracts, the claims to bear any persuasion before the arbitrator or a court of law, the builder/contractor has to prove that there was other work available that he would have secured if not for the delay, by producing invitations to tender which was declined due to insufficient capacity to undertake other work. Hudson s formula might result in double recovery as the profit being added to the profit is already subsumed within the contract sum . To avert this double-recovery, it has been suggested that the formula should be modified to contract sum less overhead and profit Ibid . Any increase in the value of the final account for extra works such as variations contain their own element of overheads and profits. Therefore, Hudson s formula like other formulae, which are only rough approximations of the cost impact of unabsorbed overhead, should be applied with great care and caution to ensure fair and just computation. Arbitral tribunal in the present case has given complete go by to these principles well in place, overlooked care and caution required and taken a one-sided view grossly and abnormally inflated the damages. The arbitral tribunal has accepted that principle of mitigation is applicable but observes that the only way BEEL could have abased the loss, was to work on Sundays or holidays. This reasoning is again ex facie fallacious and wrong. The principle of mitigation with regard to overhead expenses does not mandate working on Sundays or holidays. The scope and ambit of the court s power to review the awards under Section 34 of the A C Act has been contentious viz., on the interpretation to the expression in conflict with the public policy of India . There have been legislative interventions as well as judicial pronouncements. In the context of the present case, we are required to interpret the provisions as they existed on the date on which the objections to the award were filed i.e., on 21.06.1999. Accordingly, the amendment introduced to Section 34 of the A C Act vide Act No. 3 of 2016 with retrospective effect from 23.10.2015 and the judgments of this Court examining the amended Section 34 of the A C Act need not be examined. Post award interference and the extent of the second look by the courts under Section 34 of the A C Act has been a subject matter of perennial parley. The foundation of arbitration is party autonomy. Parties have the freedom to enter into an agreement to settle their disputes/claims by an arbitral tribunal, whose decision is binding on the parties - While arbitration is a private form of dispute resolution, the conduct of arbitral proceedings must meet the juristic requirements of due process and procedural fairness and reasonableness, to achieve a judicially sound and objective outcome. If these requirements, which are equally fundamental to all forms of adjudication including arbitration, are not sufficiently accommodated in the arbitral proceedings and the outcome is marred, then the award should invite intervention by the court. The calculation of amounts awarded, which, in fact, amount to double or part-double payments, besides being contradictory etc. - the award has been rightly held to be unsustainable and set aside by the division bench of the High Court exercising power and jurisdiction under Section 37 read with Section 34 of the A C Act. Appeal dismissed.
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9911796707
