Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 5, 2024
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
FEMA
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Goods & Service Tax: Adjudication Order Upheld Despite Procedural Lapses in Uploading Summary.
Petitioner challenged determination made by respondents on 30th December 2023 u/s 73(9) of CGST/WBGST Act 2017, alleging violation of principles of natural justice without issuance of show cause notice in Form GST DRC-01 and without uploading on portal. Court observed petitioner was duly served show cause notice prior to adjudication order for tax period 2017-18 to 2022-23 through email as permitted u/s 169. However, summary of order was not uploaded on portal and Form GST DRC-07 uploaded belatedly on 14th June 2024 was defective. Court permitted respondents to upload summary of order along with Form GST DRC-07 on portal and disposed petition.
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Disputed GST liability from govt contracts: Fresh chance to prove non-liability.
In a case concerning liability for Goods and Services Tax (GST) arising from civil contracts with government departments, the petitioner sought another opportunity to establish non-liability. The petitioner expressed willingness to remit 10% of the disputed tax demand as a condition for remand. The High Court, with a view to provide an opportunity to the petitioner, set aside the impugned order and remanded the matter for reconsideration, subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks and submits a reply to the show cause within the same period. The petition was disposed of by way of remand.
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Cancellation order quashed; authorities denied hearing despite medical emergency, lacked reasoning.
The High Court quashed the order of cancellation of registration passed by the respondent authorities without providing an opportunity of hearing to the petitioner, despite a request for adjournment due to a medical emergency. The court observed that the impugned order lacked proper reasoning and supporting documentary evidence, and the authorities showed undue haste and an inhuman approach by not granting sufficient time. The matter was remanded to the respondent to provide an opportunity of hearing to the petitioner and pass a fresh order in accordance with law within twelve weeks. The petition was disposed of by way of remand, upholding the principles of natural justice.
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Unfair GST registration cancellation order quashed, remanded for reasoned decision. Show-cause notice stage revisited.
Order of cancellation of registration passed without giving reasons, appeals dismissed u/s 107 of GST Act. Appellate Authority's dismissal prevents revisional powers u/s 108. Impugned orders quashed, matter remanded to Assessing Officer at show-cause notice stage. Registration remains suspended till show-cause notice decided as per directions. Petition partly allowed, quashing orders, remanding to Assessing Officer, registration suspended till show-cause notice disposed.
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Preliminary GST notice issued for discrepancy, assessee can raise objections if proceedings not concluded.
Non-compliance with provisions of the Goods and Services Tax Act, specifically Section 74(1) of the Central/Bihar Goods and Services Tax Act, 2017, was raised regarding the illegality in issuance of notice. The court held that there were no grounds to entertain the writ petition on the stated illegality, as an explanation was sought for the discrepancy, and the assessee's reply was found unsatisfactory. However, this was only a preliminary step leading to the demand cum show-cause notice. The assessee is entitled to appear and raise objections against Annexure-1, if proceedings are not concluded. Consequently, the writ petition was dismissed.
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Unadjusted TDS can't be transitioned as unutilized input tax credit under Kerala GST Act.
Transitioning unutilized input tax credit under the Kerala Goods and Services Tax Act, 2017 - error in claiming input tax credit of unadjusted TDS. The High Court held that unadjusted TDS, being a component of output tax payable, cannot be transitioned as unutilized input tax credit. While the appellant had utilized Rs.37,24,463/- for paying output tax due under CGST/SGST Act, it was technically entitled to claim a refund of Rs.59,05,352/- representing unadjusted TDS or output tax paid in excess. To serve the ends of justice, the Court modified the orders to consider subsequent events since filing the writ petition. The disallowance of transition of TDS to the extent of Rs.21,80,889/- was upheld, and the appellant was allowed to seek a refund of this amount from the State Government towards unadjusted TDS. The penalties of Rs.3,72,446/- and Rs.25,000/- imposed were sustained, considering the irregularity by the appellant. The Writ Appeal was disposed of accordingly.
Income Tax
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Tax authorities ordered garnish for income tax dues, Court directs urgent hearing on waiver request within 1 month.
This case involves a challenge to a garnish order issued by tax authorities for recovering income tax and penalties. The High Court, considering the Supreme Court's order, disposed of the petition with directions to the revenue authorities. They must decide the application for waiver of pre-deposit and urgent hearing within one month, passing a reasoned order. Until then, no coercive action can be taken against the petitioner. Additionally, since the appeal is pending for over a year, the authorities must decide it expeditiously, preferably within three months, without further delay.
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Tax notices invalid if faceless procedure ignored.
Notices issued u/s 148 of the Income Tax Act for reassessment proceedings related to international tax charges must comply with the mandatory faceless procedure prescribed in the scheme dated 29.03.2022. The exemption from following the faceless procedure u/s 144B and the CBDT order dated 06.09.2021 is limited to passing assessment orders in cases of central charges and international tax charges, and does not extend to issuing notices u/s 148. The plain and unambiguous language of the scheme, Section 144B(2), and the order does not provide for any such exemption for issuing notices u/s 148. The argument distinguishing between NRIs and Indian citizens is rejected, as the requirement for a faceless procedure applies equally. The principle of interpreting taxing statutes based on the natural meaning of the language, as established by judicial precedents, is upheld. Consequently, the notices issued u/s 148 without following the faceless procedure, and all consequential assessment orders based on them, are set aside in favor of the assessee.
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Tax department's failure to follow due process u/s 144C renders final assessment order invalid.
The High Court held that the Assessing Officer's failure to frame a draft assessment order and directly passing a final order was violative of the mandatory provisions of Section 144C, rendering the final order a nullity. The court emphasized that it was imperative for the Assessing Officer to frame an order in draft before issuing the final assessment order. Regarding the limitation period u/s 153, the court clarified that it cannot enlarge or expand the statutorily prescribed period for completing the assessment. The court found it unnecessary to examine additional challenges raised against the final assessment orders since the assessment period had expired. Consequently, the writ petitions were allowed.
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Lack of tangible evidence leads to invalid income tax reassessment proceedings, protecting assessee's rights.
Formation of belief by the Assessing Officer that income has escaped assessment is the crux of the reopening provision. The reasons recorded must be based on tangible material, evident from the reading of the reasons, constituting the mandatory requirement of Section 147. Assessments cannot be reopened merely on suspicion; the Assessing Officer must have "reason to believe" that income has escaped assessment, different from merely having a reason to suspect. In this case, there is no "close nexus" or "live link" between tangible material and the reason to believe income has escaped assessment. Information received from the Investigating Unit cannot be the sole basis; the Assessing Officer must take further steps, make inquiries, and gather material indicating income has escaped assessment before forming the belief. The Assessing Officer has not acquired any material to form such belief, lacking even a line of reason justifying the belief's formation. Consequently, the reopening does not satisfy the legal requirements of Sections 147 & 148. Thus, the reassessment proceedings are set aside, decided in favor of the assessee.
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Deductibility of depreciation on glow sign boards and oxygen cylinders - Tribunal erred in taxing sale proceeds as short-term capital gain.
Depreciation on glow sign boards and oxygen gas cylinders was rejected by the Assessing Officer, holding that the transaction on the last day of the accounting year cannot constitute business, and glow sign boards were advertising material, not plant. The ITAT held that sale proceeds of an asset on which deduction u/s 32(1)(ii) was claimed and allowed are required to be taxed as short-term capital gain u/s 50. The Supreme Court decision in Nectar Beverages case clarified that bottles and crates purchased before 31.03.1995 did not form part of the block of assets, and profits on their sale were not taxable as balancing charge u/s 41(1) or Section 50. However, for bottles and crates purchased after 01.04.1995, due to deletion of proviso to Section 31(1)(ii), such assets formed part of the block of assets and were exigible to capital gains tax u/s 50. The question of law was answered in favor of the assessee, holding that the Tribunal was incorrect in ruling that sale proceeds of an asset on which deduction u/s 32(1)(ii) was claimed and allowed are required to be taxed as short-term capital gain u/s 50.
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Reassessment notice issued beyond limitation period invalid, rendering assessment order void.
The High Court held that the reassessment notice issued beyond the period of limitation was invalid and without jurisdiction. The impugned notice itself was illegal, and there was no foundation for an assessment order based on a time-barred notice u/s 148. The assessment order passed u/s 148A(d) was also barred by limitation as per the first proviso to Section 149. The inherent illegality of the time-barred notice u/s 148 percolated into the assessment order, rendering it an incurable defect. The Assessing Officer proceeded without jurisdiction, possibly applying the amended provisions of Section 149 erroneously. An order that is void ab initio cannot be saved, and acquiescence to an illegal order cannot render it legal. The Court allowed the assessee's appeal, holding that giving effect to an illegal and void order cannot be permitted.
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NRI's Fixed Deposits from Foreign Remittances Exempted, AO's Jurisdiction Questioned.
A Non-Resident Indian residing in Saudi Arabia made fixed deposits from remittances received in Dubai and maturity proceeds of existing term deposits, interest on NRE account, and inter-se transfer of funds between various bank accounts. The Assessing Officer (AO) at Vapi issued a notice u/s 148A(a) or 148A(b) of the Income Tax Act based on information available on the insight portal. However, the petitioner's address shown in the impugned order and notice was Vijayanagaram, Andhra Pradesh. The petitioner provided details of term deposits placed in two HDFC Bank accounts, bank statements, and an explanation that the remittances were made from Saudi Arabia out of salary credited and received outside India and from maturity of FDRs. The interest accrued on term deposits was exempted u/s 10(4) of the Act. The High Court held that the AO at Vapi lacked jurisdiction to issue the notice as the petitioner's local address was under the jurisdiction of the Commissioner of Income Tax (International Taxation) at Vijayanagaram. The reassessment proceedings were set aside in favor of the assessee due to the AO's lack of jurisdiction and the petitioner's explanation that there was no taxable income during the year.
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Transfer Pricing Adjustment Dispute: Court Favors Assessee Over Mere Audit Objection.
The case pertains to the reopening of assessment u/s 147, where the reasons recorded were based on audit objections raised by the internal audit party regarding underassessment of income and default determination of Transfer Pricing (TP) Adjustment. The Transfer Pricing Officer (TPO) made a markup of 12% on direct costs, but the audit objection suggested reducing it to 9.17% after accounting for foreign exchange risk of 1%. The court held that the TPO's order was detailed, considering all aspects, and the audit objection amounted to a mere change of opinion without any failure on the part of the petitioner to disclose material facts. Since the impugned notice was issued beyond four years, the respondent could not have assumed jurisdiction based on audit objections. Regarding the reduced exchange gain on sale of shares, the assessee made full disclosure, and there was no failure to disclose material facts, preventing the respondent from reopening the assessment u/s 147's proviso. The decision was in favor of the assessee.
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Business deductions allowed for know-how, interest, rent & misc. income; turnover recomputed after SC ruling.
Deduction u/s 35AB allowed for acquiring technical know-how for business use, even if manufacturing facility not commenced during the year. Net incomes not derived from industrial undertaking excluded while computing deductions u/ss 80HH and 80I. Interest on insurance claims, truck hiring charges, and rent treated as derived from industrial undertaking for Section 80I deduction. Miscellaneous income like commission, discounts, wastage sales, and diesel sales considered as derived from industrial undertaking for Section 80I deduction. Technical know-how fees deduction u/s 35AB confirmed. Deduction u/s 80HHC to be recomputed after excluding sales tax and excise duty from turnover, following Supreme Court decision in Lakshmi Machine Works case.
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Education Grants to Indian Students Abroad Exempted from Tax.
Charitable trust provided educational grants to Indian students for pursuing higher education abroad. The issue pertained to whether such grants constituted "application of income" within Indian territories as required for tax exemption u/s 11. It was held that the application of income was complete when the trust disbursed grants in India to Indian students, despite their subsequent utilization for education outside India. The grants facilitated education of Indian persons, fulfilling the charitable purpose within India itself. The revenue's reliance on contrary precedents was incorrect as the application occurred in India for Indian beneficiaries. The Tribunal upheld the exemption, dismissing the revenue's appeal as no new material warranted interference with the findings that disbursal of scholarships in India for overseas study amounted to application of income for charitable purposes in India.
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Cooperative Society Wins Deduction Battle for Interest from Cooperative Bank Deposits.
Allowability of deduction u/s 80P(2)(d) for interest income from deposits/investments in a cooperative bank by a cooperative society. The assessee, a cooperative society registered in Rajasthan, claimed deduction on interest received from another cooperative society operating as a cooperative bank. The ITAT held that the assessee is entitled to the deduction, relying on Section 22 of the Regional Rural Bank Act, 1976, which deems Regional Rural Banks as cooperative societies for income tax purposes. Despite a CBDT circular restricting deduction for Regional Rural Banks, the ITAT ruled that it cannot override the statutory provision. As the assessee is a cooperative society and not a Regional Rural Bank, it is eligible for deduction on interest earned from deposits in the cooperative bank u/s 80P(2)(d).
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Tax Implications for AOPs: Determinate vs Indeterminate Shares & Varying Members' Tax Rates.
From the plain reading of section 167B, the taxability of an AOP is based on whether the members' shares are determinate or indeterminate. When indeterminate, tax is charged at the Maximum Marginal Rate (MMR) or higher if a member's income is taxable at a higher rate than MMR. MMR is the highest income tax rate applicable to individuals, AOPs or BOIs. In this case, the AOP stated members' shares as determinate (TPL 99.99%, Chint 0.01%) in its ITR. TPL is a domestic company taxable at MMR (30%), while Chint, a foreign company, is taxable at a higher rate (40%). The Tribunal opined that Chint's share (0.01%) should be taxed at 40% plus surcharges/cesses, and TPL's share (99.99%) at 30% plus surcharges/cesses. The interest levied u/ss 234A, 234B and 234C was upheld. The Tribunal's decision was based on the precedent of Herve Pomerleau International CCCL Joint Venture.
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Major tax disputes: R&D expenses, interest deductibility, capital loss, commission to non-residents, bad debt provision.
Deduction u/s 35(2AB) for in-house Research and Development (R&D) expenses was disallowed as the assessee failed to properly explain the basis of claim and reconcile the difference between the amount claimed and the expenditure approved by the Department of Scientific and Industrial Research (DSIR). The matter was remitted to the Assessing Officer to correctly verify the eligible expenditure without considering the DSIR-approved amount. The disallowance of interest expenses u/s 36(1)(iii) was deleted as the assessee had sufficient interest-free funds available from reserves and share premium, contrary to the Assessing Officer's presumption that only interest-bearing funds were utilized towards capital work-in-progress (CWIP). The disallowance of capital loss was upheld as the assessee failed to reconcile the difference in CWIP additions, which cannot be considered an actual capital loss eligible for deduction. The disallowance u/s 40(a)(ia) for commission paid to non-residents was set aside for the Commissioner of Income Tax (Appeals) to examine the merits, considering the assessee's contention that the non-residents rendered services outside India. The disallowance of provision for bad debts was upheld as the deduction u/s 36(1)(vii) requires the bad debt to be written off as.
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Taxpayer's revised return to correctly claim interest deduction under 'Business Income' should be considered.
The assessee filed an original return u/s 139(4) and later discovered an omission, wrongly claiming deduction u/s 57 for interest paid on borrowed capital under 'Income from Other Sources' instead of 'Business Income'. As per Section 139(5), a revised return can be filed within one year from the end of the relevant assessment year or before completion of assessment, whichever is earlier. The assessee filed a revised return within the stipulated timeframe, correctly claiming the deduction under 'Business Income'. The CIT(A) decided the matter without affording an opportunity to the assessee. The ITAT set aside the matter to the CIT(A) to decide afresh after providing reasonable opportunity to the assessee, allowing the appeal for statistical purposes. The revised return needs to be considered to examine the claim of deduction.
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Income tax: Resolving issues on car depreciation, interest cost, rental income, and capital loss.
Allowance of depreciation on cars given on hire, treatment of interest paid on loans for purchase of plot as part of cost of acquisition for computing capital gains, recalculation of income from house property, and allowance of long-term capital loss on sale of land. The Income Tax Appellate Tribunal (ITAT) provided directions to the Assessing Officer regarding the appropriate treatment of these issues, such as allowing higher depreciation rate on hired cars, including interest as part of cost of acquisition, deleting additions made for rental income under house property, and allowing the claimed long-term capital loss on sale of land. The summary outlines the ITAT's rulings on these matters, providing clarity on the correct application of tax provisions.
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Taxpayer wins case on utilization of excess Minimum Alternate Tax credit, surcharge & education cess.
The issue pertains to the disallowance of excess Minimum Alternate Tax (MAT) credit u/s 115JAA and whether the amount of surcharge and education cess should be reduced from the tax determined on total income while considering the MAT credit available from earlier years. The Tribunal found that the assessee had furnished details of MAT credit available and utilized in different assessment years. It noted that the assessee had utilized the total MAT credit. The Tribunal followed the decision in Consolidated Securities Ltd., wherein it was held that the amount of MAT credit available from earlier years, inclusive of surcharge and education cess, should be reduced from the tax determined on total income of the current year after adding surcharge and education cess. Consequently, the Tribunal affirmed the order of the Commissioner of Income Tax (Appeals) and dismissed the revenue's appeal.
Customs
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Customs authorities liable to pay interest on delayed refunds.
The High Court held that the respondents are liable to pay interest on the delayed disbursal of refund u/s 27A of the Customs Act, 1962. The Court clarified that the observation of the amount not being duty was misinterpreted and should be understood in the context that the amount mistakenly deposited could never have been retained by the Customs authorities. The restitutory element of interest was acknowledged as a normal relief in restitution, not controlled by the Interest Acts. The respondents are liable to pay interest from the date of the original application on 24 June 2016 until 29 November 2018 when refunds were ultimately effected. The petition was allowed.
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Customs Duty Fiasco Unravels: Court Strikes Down Baseless Allegations, Upholds Fair Play.
The High Court quashed the show cause notices and the impugned order, holding that the adjudicating authority lacked jurisdiction to issue notices u/s 28(4) of the Customs Act. The Court observed that there were no allegations of willful misstatement, collusion or suppression of facts by the petitioner. The respondents failed to establish any suppression of material facts before issuing the show cause notices. The petitioner had submitted all relevant documents during the inquiry, and the inability to reconcile LNG quantities in the Bills of Entry with regasified natural gas supplied through pipelines was due to technical reasons. Consequently, the extended period of limitation u/s 28(4) could not be invoked, vitiating the entire proceedings pursuant to the show cause notices.
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Rejecting lower declared value of imported goods if admittedly under-valued, sans need for reasons.
Customs Valuation Rules 2007 - Rule 12 allows rejection of declared transaction value and re-determination u/r 9 if identical/similar goods imported at comparable time/quantities/commercial transactions at higher value. JSB Aluminium admitted declared value lower, accepted re-determination at higher price. Assessing Officer not required to give reasons for rejection when value admitted lower. Supreme Court precedents - admitted facts need not be proved, transaction value rejectable without cogent evidence if value admitted lower. Commissioner (Appeals) order allowing appeals set aside, appeal by department allowed.
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Customs duty dispute: Imported calcium carbonate or calcite powder? Proper testing facility lacking.
The dispute centered around the classification of imported goods, calcium carbonate, under the appropriate Customs Tariff Heading (CTH). The revenue classified it as calcium carbonate under CTH 28365000, while the appellant declared it as calcite powder falling under CTH 25369030. The case hinged on the observation of the Chemical Examiner at the Customs Laboratory, Kandla, who opined that the imported goods were calcium carbonate. However, several factors undermined the revenue's claim. Firstly, to classify under CTH 28365000, the goods must conform to Indian Standard specifications, which was not tested. Secondly, Board Circulars 43/2017-Cus. and 15/2009-Cus. acknowledged that the Kandla laboratory lacked the facility to test the imported goods accurately. Furthermore, a CESTAT precedent held that laboratory test reports cannot be accepted when the facility lacks requisite testing capabilities. Consequently, the revenue's claim based solely on the Kandla laboratory report, which lacked proper testing facilities, was deemed untenable. The impugned orders were set aside, and the appeal was allowed.
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Misdeclared zinc ash import: Hazardous waste re-export ordered, not confiscation.
The case pertains to the alleged misdeclaration of value of zinc ash, a restricted item under the Foreign Trade Policy, requiring an import license. The goods were classified as hazardous waste and subject to re-export u/r 17(2) of the Hazardous Waste Rules, 2008. The authorities imposed a fine u/s 125 of the Customs Act, 1962, in lieu of confiscation u/ss 111(d) and 111(m), and a penalty u/s 112. The Tribunal held that invoking Section 111(m) for enhanced value due to non-compliance with the Customs Valuation Rules was not justified. The misdescription did not warrant Section 111(m) as the goods had not cleared for home consumption, and no conspiracy was established. Re-export was ordered under the Hazardous Waste Rules, not as an alternative clearance option under the Customs Act. Citing a precedent, the Tribunal stated that importers have a statutory right to re-export prohibited goods, which cannot be overlooked by authorities. The issue of undervaluation arises after determining the goods' prohibited status. Consequently, the redemption fine u/s 125 and penalty u/s 112 were set aside, and the appeal was allowed.
FEMA
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High-value export scam through over-invoicing to illegally obtain foreign exchange.
Contravention of Sections 8(1), 8(3), 8(4) read with Section 64(2) of the Foreign Exchange Regulations Act, 1973 involving export of consignment from India to Singapore and its re-export at a significantly higher value. The mastermind arranged for import and export of the same machinery through financial institutions by over-invoicing, resulting in substantial release of foreign exchange in contravention of the Act. Despite allegations against financial institutions, their involvement was not proven. The Appellate Tribunal found gross violation of the provisions and dismissed the appeals, holding the mastermind responsible for obtaining foreign exchange through over-invoicing and engaging financial institutions.
Benami Property
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Cash & gold found during IT search claimed as held for safe custody, not benami transaction. Adjudicating Authority refused attachment.
Benami transaction case involving cash and gold found during Income Tax search u/s 132. Statements recorded, including alleged beneficial owner Nagarajan. Adjudicating Authority refused to confirm provisional attachment order u/s 24(4)(a)(i) of 1988 Act. Exception u/s 2(9)(A) of 1988 Act applied as property held for safe custody, not benami transaction. Appellate Tribunal disagreed with Adjudicating Authority's reasoning but rejected reference and attachment, as transaction fell under exception to definition of "benami transaction." Property belonged to Nagarajan as per Income Tax assessment order. Appeal by Deputy Commissioner dismissed.
Indian Laws
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Cheque bounced due to lack of funds - Presumed liability unless proven otherwise. Issuing security cheque also invites penalty.
Dishonor of cheque due to insufficient funds - failure to rebut presumption u/s 139 of Negotiable Instruments Act. Court must presume cheque issued in discharge of legal liability, burden on accused to prove contrary. Issuing cheque as security attracts liability u/s 138 as per Supreme Court precedents. Accused admitted receiving notice, cheque dishonored for insufficient funds despite notice of demand. All ingredients of Section 138 satisfied. Compensation of Rs. 2,40,000 not excessive. Revision dismissed.
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SC: Appellant to pay deficit stamp duty and penalty for admitting agreement as evidence, not ten times penalty.
The High Court correctly distinguished between the jurisdiction vested in every person or public office and the District Registrar in determining penalty on insufficiently stamped instruments. The appellant must pay deficit stamp duty and penalty to produce the agreement of sale as evidence. The scheme allows invoking the District Registrar's jurisdiction directly and presenting the instrument before Court after complying with duty and penalty requirements. The respondent raised an objection on deficit stamp duty before admission of the instrument as evidence, requiring impounding and sending it to the District Registrar u/s 39. Imposing ten times penalty at this stage is illegal. The District Registrar should decide the quantum of stamp duty and penalty payable u/s 39. The direction to pay ten times penalty is set aside. The trial court is directed to send the agreement to the District Registrar to determine deficit stamp duty and penalty payable.
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Small arbitration award upheld by invoking Art 142 for complete justice despite initial approach under old 1983 Act.
The Supreme Court held that the Arbitration Act would apply in the case, even though the appellant initially approached the Arbitration Tribunal u/s 7 of the 1983 Act after the contract was rescinded. The State government did not object to the applicability of the 1983 Act during the Section 11(6) petition under the Arbitration Act. The award amount was relatively small at Rs. 6,52,235/- with interest, and setting it aside solely on the ground of failure to invoke the 1983 Act would be unjust. The appellant had initially approached the 1983 Act before seeking arbitrator appointment. The Court exercised jurisdiction under Article 142 to ensure complete justice, setting aside the impugned judgment and restoring the Section 37 appeal to the High Court for deciding on merits.
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Dishonored cheque case: Accused's failure to prove no debt led to reversal of burden.
Burden of proof in a dishonored cheque case under the Negotiable Instruments Act and the legality of the sentence imposed. The court held that the accused failed to discharge the reverse burden of proving the cheque was not issued against an existing debt, as the accused did not appear as a witness or produce relevant evidence. The appellate court erred in placing the burden on the complainant. Additionally, the sentence imposed by the trial court was illegal as it did not meet the minimum punishment requirement u/s 138. The High Court allowed the revision petition, set aside the dismissal of the earlier revision, and remanded the matter to the appellate court for passing an order consistent with the law regarding the propriety of the sentence.
PMLA
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Tribunal Sets Aside Seizure in Money Laundering Case, Citing Lack of Evidence Linking Funds to Alleged Crime.
The Appellate Tribunal examined the issue of retention of seized documents/properties u/s 17(4) of the Prevention of Money Laundering Act (PMLA) in a case involving the misuse of loans. The case arose from investigations into investments made from provident funds maintained by UPPCL Trusts as fixed deposits with DHFL, contrary to standing instructions. The Directorate, based on statements from DHFL's Rajendra Mirashie, examined loans disbursed by DHFL and identified the appellant companies of the SGS Group as beneficiaries of loans suspected to have been siphoned off. The seizure of Rs. 33,00,000/- was made from the residential premises of the Gulati family on 13.08.2021. The source of the seized amount was explained as withdrawals from personal accounts for medical exigencies, supported by bank certificates. The Tribunal observed that the rejection of the explanation on the grounds of online banking cannot be accepted, as cash transactions during emergencies cannot be ruled out. The respondent failed to demonstrate the link between the seized amount and the suspected proceeds of crime. Consequently, the Impugned Order was set aside concerning the appellant, and the appeal was allowed.
Service Tax
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SVLDRS: Ineligible for tax amnesty scheme; refund adjustment sans notice quashed.
Eligibility of the petitioner to make a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2015 (SVLDRS) and the appropriation of the amount quantified in the audit report from the eligible refund claimed by the petitioner. The court held that the petitioner was ineligible to make a declaration under SVLDRS as the audit was initiated before 30.06.2019, and the amount of duty involved was not quantified on or before that date, as per Section 125(1)(e) of the Scheme. Regarding the appropriation of the refund, the court ruled that the respondent authority was not justified in adjusting the outstanding dues quantified in the audit report from the refund claim without issuing a show-cause notice or providing an opportunity for hearing, as required u/s 73 of the Finance Act, 1994. Consequently, the court quashed the orders and remanded the matter for fresh adjudication after issuing a show-cause notice and providing an opportunity for hearing to the petitioner regarding the refund claim.
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Builder wrongly took service tax credit on unsold flats after completion, evading tax liability.
The appellant wrongly availed Cenvat credit on input services for unsold flats after issuance of completion certificate, contravening Rules 6(3) and 6(3A) of the Cenvat Credit Rules, 2004. Section 73(2) of the Finance Act, 1994, read with Rule 14 of the Cenvat Credit Rules, 2004, was invoked for extended period of limitation, interest, and penalty. The appellant admitted that after receiving the completion certificate, the building became immovable property, and booking receipts were for sale of property, not service. The appellant had the option to take proportionate credit for sold flats and reverse the balance for unsold flats. Cenvat credit eligibility has a direct nexus with tax payment liability. Since the appellant had no service tax liability for unsold flats, they were ineligible to retain the availed Cenvat credit. The Tribunal affirmed the invocation of extended period, penalty, and interest, as the appellant suppressed material facts with intent to evade service tax liability. The appeal was dismissed.
Central Excise
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Job Work Units get CENVAT Credit on Manpower & Housekeeping despite late availing.
CENVAT Credit availed on manpower supply and housekeeping services received at unregistered job working units. Credit availed beyond six months from document date. Extended period invoked for demand, interest and penalty. Held: Input service definition construed widely, credit allowed on services consumed in unregistered premises as per jurisdictional High Court. Time limit u/r 4 not retrospective, credit allowed on invoices prior to September 2014 based on Delhi High Court ruling. No evidence of suppression, issues interpretational, extended period invoked incorrectly. Impugned orders set aside, appeal allowed.
Case Laws:
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GST
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2024 (9) TMI 169
Territorial Jurisdiction - Search and seizure - multiple agencies have carried out search operations - centralisation of investigation with DGGI, AZU - it was held by High Court that ' Section 6(2)(b) of the CGST Act has limited application and therefore, is not applicable to the facts of the present petitions. Similarly, the Circular dated 05.10.2018 also has no application to the facts of the present petitions.' HELD THAT:- Delay condoned. Issue notice to the respondents.
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2024 (9) TMI 168
Levy of GST - Mining royalty - HELD THAT:- Upon hearing learned counsel appearing on behalf of the parties, it appears that at the matter requires consideration and the affidavits are required to be exchanged between the parties. The demand of GST on the royalty payable by the petitioners shall remain stayed.
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2024 (9) TMI 167
Dismissal of appeal - no notice or intimation, whatsoever, was given to the petitioner before creation of demand - violation of principles of natural justice - HELD THAT:- Let the respondent no. 2, i.e, the Deputy Commissioner, State/Commercial Tax, Sector - 26, Kanpur, file his personal affidavit within a period of three weeks from today as to why for recovery of equal amount, notices were sent to all the concerned Banks. He shall further clarify as to why lain/DRC - 13 was not withdrawn or modified after recovering the amount of Rs. 33 lacs from the HDFC Bank of the petitioner. List thereafter as fresh. Since the GST Tribunal is not functioning and the amount of Rs. 33 lacs has already been recovered from the HDFC Bank account of the petitioner, as stated by the petitioner in the writ petition, the petitioner shall not be insisted to deposit any further amount and no coercive action shall be taken against the petitioner pursuant to the impugned orders.
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2024 (9) TMI 166
Order returned for non-compliance of mandatory pre-deposit - HELD THAT:- On perusal of Section 35(F) of the Central Excise Act, 1944, there is no provision for waiver of pre-deposit as amended with effect from 06.08.2014, therefore, the respondents authorities have rightly returned the appeal in absence of mandatory pre-deposit. At this stage, learned counsel for the petitioner seeks leave of this Court to withdraw this petition with the liberty to approach the Appellate Authority under Section 35(F) of the Act by filing an appeal. This petition cannot be entertained and the same is hereby disposed of with the liberty to approach the Appellate Authority in accordance with law - Petition disposed off.
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2024 (9) TMI 165
Violation of principles of natural justice - impugned order of cancellation of registration passed without giving any opportunity of hearing though prayed for by the petitioner - HELD THAT:- Inspite of Petitioner seeking some time to respond to the said reasoned show-cause notice letter dated 01st June, 2024 due to medical emergency in Petitioner's family, the respondent, without considering the said request, passed two orders for Cancellation of Registration of the Petitioner in two different formats viz. (i) a non-speaking order of Cancellation in Form GST REG 19 dated 21st June, 2024 and (ii) a speaking order of Cancellation of Registration dated 20th June, 2024 by way of uploading the same on the GSTIN Portal maintained by the Respondent Department. It is evident from the said order dated 21st June, 2024 that only one line reasoning has been given without substantiating the same with supporting documentary evidences and no appropriate justification whatsoever has been stated in the impugned order which supports and corroborates the reason in the form of invoking the provision of Section 29 (2) (e) of the CGST which has been merely mentioned in the impugned show-cause notice proposing to cancel the registration of the Petitioner. The respondent authorities though have granted time of few days, has shown undue haste in passing the impugned order of cancellation and without giving any opportunity of hearing and without considering the reason for adjournment to the effect that mother of the petitioner was suffering from cancer - It also appears from the record that the respondent authorities have shown total inhumane approach to the facts of the case by not granting sufficient time and thereafter passing the impugned order. The impugned order of cancellation of registration dated 20th June, 2024 is hereby quashed and set aside. The matter is remanded back to the respondent No.3 to provide an opportunity of hearing to the petitioner and thereafter pass a fresh de novo order in accordance with law. Such exercise shall be completed within a period of twelve weeks from the date of receipt of copy of this order. Petition disposed off by way of remand.
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2024 (9) TMI 164
Denial of Input Tax Credit (ITC) - difference in GSTR-3B and GSTR-2A/GSTR-2B - failure to submit required documents - petitioner had paid the entire tax and also filed monthly returns and claimed ITC in GSTR-3B - HELD THAT:- Owing to the failure on the part of the petitioner to produce required documents before the Adjudicating Authority concerned, has resulted in the impugned order. However, considering the fact that petitioner is in possession of required documents, particularly, the copy of invoices, and is ready to produce the same, if an opportunity is granted, this Court has to consider the request of the petitioner, since, only in the absence of documents, the Adjudicating Authority has passed the order dated 28.12.2023, based on which, the impugned order came to be passed against the petitioner, and in order to render justice, this Court is inclined to consider the request of the petitioner, since justice has to be meted out, and failure to do so, would amount to denial of justice. Further, considering the fact that the petitioner is now in possession of supportive documents, and is ready to produce the same, if an opportunity is granted, this Court is of the view that the petitioner cannot be mulcted with any liability for the mistake committed at the supplier end. The impugned order dated 30.12.2023, which was passed by the first respondent based on the proceedings of the second respondent dated 28.12.2023 is set aside and the matter is remanded to the Authority concerned for fresh consideration, who shall, upon the petitioner filing their additional reply along with all supportive documents, as that are required by the Authority within a period of two weeks, shall issue a notice of personal hearing to the petitioner granting 14 days' time and after hearing the petitioner, in full, shall pass final orders in accordance with law. Petition allowed by way of remand.
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2024 (9) TMI 163
Violation of principles of natural justice - without issuance of show cause in Form GST DRC-01 and without uploading the same on the portal, a determination had been made by the respondents on 30th December, 2023 u/s 73(9) of CGST/WBGST Act 2017 - HELD THAT:- It is noticed that the petitioner was duly served with the show cause notice prior to passing of the adjudication order dated 30th December, 2023, by the proper officer for the tax period 2017-18 to 2022-23. It is true that the Form GST DRC-01 had not been uploaded on the portal, however, since Section 169 of the CGST/WBGST Act, 2017 contemplates service of notice by e-mail communication, there is no irregularity on the part of the respondents in serving show cause notice in Form GST DRC-01 on the petitioner through e-mail communication. In the instant case, it, however, appears that the summary of the order has not been uploaded in the portal. The Form GST DRC-07 has been uploaded belatedly on 14th June, 2024 is also defective. In absence of service of the Form GST DRC-07 on the petitioner, the same could not have been enforced, likewise a defective Form DRC-07 cannot be enforced. The respondents are permitted to upload a summary of the order along with Form GST DRC-07 on the portal - petition disposed off.
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2024 (9) TMI 162
Revocation of GSTIN cancellation - whether the respondent authorities were justified in cancelling GST or not? - HELD THAT:- The petitioner had applied for cancellation of GST No. 24ADHPC7739C3ZT and not GST No. 24ADHPC7739C1ZU. Therefore, the first affidavit dated 08th August, 2022 filed on behalf of the Respondent Department and Order-in-Original dated 10th May, 2024 appears to be correct one as the Department, due to some technical error/glitch, cancelled the GST No. 24ADHPC7739C1ZU instead of GST No. 24ADHPC7739C2ZT. From the details of GST Returns in Form GSTR-1 and GSTR-3B filed by the petitioner in the month of August, 2019 after revival of GST No. 24ADHPC7739C1ZU and the details of filing of the Returns by the petitioner under GST No. 24ADHPC7739C1ZU, it appears that the said GST number is confirmed by the respondent on 08th February, 2019 and could not have been cancelled - it is apparent from the record that the petitioner has never filed an application for cancellation of GST No. 24ADHPC7739C1ZU. The impugned action of the respondent authorities cancelling GST No. 24ADHPC7739C1ZU is hereby quashed and set aside. The cancellation order passed by the respondent authorities pertains to cancellation of GST No.24ADHPC7739C3ZT - Petition allowed.
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2024 (9) TMI 161
Violation of principles of natural justice - challenge to order of cancellation of registration on the ground of not providing an opportunity of hearing as well as such order was passed without assigning any reason for cancellation of the registration of the petitioner - HELD THAT:- In the present matter, order of cancellation of registration is passed without giving any reason by the respondent authorities, and appeals filed by the petitioners under Section 107 of the GST Act are also dismissed. As the Appellate Authority has dismissed the appeals of the petitioner, the respondent authorities will not be able to exercise the revisional power under section 108 of the GST Act. Therefore, the impugned order passed by the Appellate Authority as well as the order of cancellation of registration are required to be quashed and set aside. Accordingly, the matter is remanded back to the Assessing Officer at the show cause notice stage. However, the registration of the petitioner shall remain suspended till the show-cause notice is decided by the Assessing Officer as per the directions imposed. This petition is partly allowed by quashing and setting aside the impugned order passed by the Appellate Authority as well as order of cancellation of registration and the matter is remanded to the Assessing Officer at show-cause notice stage, however, the registration number of the petitioner shall remain suspended till such show cause notice is disposed of as per the directions given.
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2024 (9) TMI 160
Illegality in the issuance of the notice - non-compliance of the provisions of the Goods and Services Tax Act - Section 74(1) of the Central/Bihar Goods and Services Tax Act, 2017 - HELD THAT:- There are no reason to entertain the writ petition on the grounds stated of the illegality, in an explanation as against the discrepancy, not having been sought for. There was a communication issued informing the discrepancy and seeking an explanation, to which the assessee also filed a reply, which was found to be unsatisfactory. However, this would not result in an assessment as such since this is only the preliminary step to be taken, which would lead to and has led to the demand cum show-cause notice. The assessee would be entitled to appear and raise objections as against Annexure-1, if the proceedings are not already concluded. The writ petition stands dismissed.
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2024 (9) TMI 159
Transition of unutilized input tax credit under the Kerala Goods and Service Tax Act, 2017 - error in taking input tax credit of un-adjusted TDS - HELD THAT:- The learned Single Judge is correct in his finding that un-adjusted TDS, which is essentially a component of output tax payable by the appellant, cannot be transitioned as un-utilised input tax credit. It cannot find fault with the learned Single Judge for having dismissed the writ petition of the appellant, in its challenge to Ext.P6 order. However, it is found that, at this distance of time, when the appellant has already utilised an amount of Rs.37,24,463/- for paying the output tax due under the CGST/SGST Act, and technically it would be entitled to claim a refund of an amount of Rs.59,05,352/-, which represented un-adjusted TDS or output tax paid in excess by it, the ends of justice could be served by modifying Annexure A1 order and Ext.P6 order so as to take into account the subsequent events that have come about since the filing of the writ petition. It would be a meaningless exercise to require the appellant to reverse the amount of Rs.37,24,463/- utilised as input tax credit and pay the said amount to the respondents, when the respondents are obliged to refund the said amount to the appellant towards un-adjusted TDS. However, the penalties of Rs.3,72,446/- and Rs.25,000/- imposed in Annexure A1 order can be sustained, taking note of the irregularity occasioned by the appellant. The disallowance of the transition of TDS, to the extent of Rs.21,80,889/- alone [Rs.59,05,352 Rs.37,24,463] in Ext.P6 order, is upheld and Ext.P6 order modified to that extent. It will be open to the appellant to seek a refund of the said amount of Rs.21,80,889/- by way of refund from the State Government towards un-adjusted TDS. Thus, solely with a view to confer finality to this litigation by taking note of the revenue neutral situation that would result from the aforesaid arrangement, the writ appeal is disposed off by modifying the directions in the judgment of the learned Single Judge, Ext.P6 order that was impugned in the writ petition and Annexure A1 order that was produced in the writ appeal. The Writ Appeal is disposed off.
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2024 (9) TMI 158
Liability of GST - executing civil contracts in various government departments - petitioner seeks another opportunity to establish that he is not liable - petitioner is ready and willing to remit 10% of the disputed tax demand as a condition for remand - HELD THAT:- Solely with a view to provide an opportunity to the petitioner, the impugned order calls for interference, albeit by putting the petitioner on terms. The impugned order dated 30.12.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is also permitted to submit a reply to the show cause. Petition disposed off by way of remand.
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Income Tax
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2024 (9) TMI 157
Validity of final assessment order passed without passing a draft assessment order - mandation to Reference to Dispute Resolution Panel ignored - HELD THAT:- It becomes pertinent to note that the issue of whether the AO could ignore the requirement of drawing up a draft assessment order and pass a final order and the same being in violation of the procedure contemplated u/s 144C appears to have arisen before our Court on previous occasions also. The consistent view which this Court appears to have taken in that respect was that a failure to frame an assessment order in draft would clearly be violative of the mandatory prescriptions of Section 144C and the final order of assessment framed in violation thereof liable to be viewed as a nullity. Validity of final assessment order passed after the expiration of the limitation period prescribed u/s 153 - As we have arrived at is that it was imperative for the AO to frame an order in draft as opposed to a final order of assessment. Any consequential direction that could be framed would have to be in consonance with the aforesaid finding. That direction would additionally and necessarily have to be in accordance with the scheme of the Act and the statutory prescriptions comprised therein. The same would clearly not warrant or justify the Court enlarging the period of limitation as statutorily prescribed. As is well settled, while courts may, where legally permissible, consider condonation of delay, they are not entitled to expand or enlarge a period of limitation as statutorily prescribed. It becomes relevant to note that Grindlays Bank [ 1980 (1) TMI 2 - SUPREME COURT] was a decision where the Explanation to Section 153 applied and the court was mandated to exclude the period during which a stay order operated. That is not the position which obtains in these matters since the only injunction which operated was with respect to the consequential demands which stood created. There was no interim order which restrained the AO from proceeding with assessment. We thus find ourselves unable to accede to the submission addressed by the respondents on this score. Once it is conceded that the period for completion of the assessment exercise in terms of sub-sections (3) and (4) of Section 153 has expired, it would be wholly impermissible for us to expand or enlarge the period prescribed for completion of assessment. Concededly, these are also not cases where the Explanation to Section 153 was asserted to be applicable. Thus, we find it unnecessary and inexpedient to either examine or rule upon the additional challenges which were raised to the final orders of assessment including that of those orders as framed not being compliant with the time frames created by Section 153 of the Act - WP allowed.
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2024 (9) TMI 156
Reopening of assessment - reason to believe or suspect - reason recorded was solely based on DDIT s letter - independent application of mind v/s borrowed satisfaction - HELD THAT:- Formation of belief by the AO that income has escaped assessment is the heart of the provision. The reasons recorded must be based on some tangible material and the same should be evident from the reading of the reasons and this constitutes the mandatory requirement of Section 147 of the Act. As well settled through number of decisions that concluded assessments cannot be reopened merely on suspicion and the Assessing Officer must have reason to believe that income has escaped assessment and this is quite different from merely having a reason to suspect. In the present case, as may be seen, there is no close nexus or live link between tangible material and the reason to believe that income has escaped assessment. The information received from the Investigating Unit of the Revenue cannot be the sole basis for forming a belief that income of the assessee has escaped assessment. Having received information from the Investigating Wing, it was incumbent upon the Assessing Officer to take further steps, make further enquiries and garner further material and if such material indicate that the income of the assessee has escaped assessment and then form a belief that the income of the assessee has escaped assessment. Clearly, in this case, the AO has not acquired any material to form such belief. There is not even a line of reason which may justify the formation of the belief. Consequently, we are satisfied that reopening of assessment for the assessment year in question by the AO does not satisfy the requirement of law in terms of Section 147 148 - Thus reassessment proceddings set aside - Decided in favour of assessee.
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2024 (9) TMI 155
Depreciation on Glow Sign Boards and Oxygen Gas Cylinders - AO rejected the claim of the depreciation of the appellant holding that the transaction entered into assessee being the last day of the accounting year cannot constitute business and the Glow Sign Boards were nothing but advertising material and cannot be treated as plant as it was not a basic apparatus, fulfilling the definition of plant for the business of the assessee - ITAT holding that the sale proceeds of an asset, up on which deduction u/s 32 (1) (ii) has been claimed and allowed, is required to be taxed as short term capital gain u/s 50 of the Act HELD THAT:- As decided in case of Nectar Beverages [ 2009 (7) TMI 5 - SUPREME COURT ] bottles and crates purchased prior to 31.3.1995 did not form part of the block of assets, hence, profits on sale of such assets were not taxable as a balancing charge, neither under Section 41(1) nor under Section 50. In respect of bottles and crates purchased after 1.4.1995, on account of deletion of proviso to Section 31(1)(ii) (vide Finance Act, 1995) such bottles and crates formed part of block of assets and consequently such assets purchased after 1.4.1995, in this case, became exigible to capital gains tax under Section 50 We answer the question of law in negative i.e. in favour of the assessee and against the Revenue holding that the Tribunal was not right in holding that the sale proceeds of an asset on which the deduction under Section 32 (1) (ii) of the Act has been claimed and allowed, is required to be taxed as Short Term Capital Gain under Section 50 of the Act. Both the appeals accordingly stand disposed of.
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2024 (9) TMI 154
Challenge to garnish order for withdrawing the sum towards recovery of Income Tax and penalty - HELD THAT:- Taking into consideration the order passed by the Apex Court [ 2023 (7) TMI 412 - SC ORDER] this petition is disposed of with a direction to the Revenue Authorities to decide the application for waiver of pre-deposit as well as application for urgent hearing as expeditiously as possible preferably within a period of one month from the date of receipt of certified copy of this order and pass a reasoned and speaking order. Till then, no coercive action be taken against the petitioner. In view of the fact that the appeal is pending for last one and half year, the Revenue Authorities are directed to decide the appeal, without wasting any further time, as expeditiously as possible preferably within a period of three months from the date of receipt of certified copy of this Court.
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2024 (9) TMI 153
Reopening of assessment - notice being issued beyond four years - assessee has failed to disclose any break up of work in progress or direct construction cost and therefore, there is a failure on the part of the petitioner to fully and truly disclose the material facts - HELD THAT:- As it is not in dispute that during the regular course of assessment, the AO has sought for the details of the land cost which was furnished by the petitioner in reply and after considering the same, assessment order dated 01.09.2024 was passed u/s 143 (3) of the Act. In view of the above undisputed facts on both counts of change of opinion as well as the impugned notice being issued beyond four years from the end of the relevant assessment year, AO could not have assumed the jurisdiction to have reason to believe that the income has escaped assessment as there is no failure on the part of the petitioner to disclose truly and fully all material facts for the assessment. Decided in favour of assessee.
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2024 (9) TMI 152
Validity of reassessment notice issued beyond period of limitation - Reopening of assessment under old regime - scope of new regime - scope of TOLA - HELD THAT:- As considering the observations as made by the Division Bench in Hexaware [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] we find that the impugned notice itself was illegal and without jurisdiction. There was no foundation on jurisdiction for an assessment order to be passed on the basis of a notice under section 148 which itself was time barred. Thus there is no basis on which we can hold the impugned assessment order to be legal and valid as not only the impugned notice under Section 148 of the Act but also the order passed under Section 148A (d) of the Act were barred by limitation as per the first proviso to Section 149 as held in Hexaware. For such reason, we are of the clear opinion that no useful purpose would serve relegating the petitioner to avail an alternate remedy of an appeal, as filing of such appeal itself would be an empty formality. In the aforesaid circumstances, the inherent illegality of the impugned notice under Section 148 of the Act being time-barred, which percolates into the assessment order passed thereunder is an incurable defect, regardless of the forum before which the same is agitated. In these circumstances, it cannot be said that it was not appropriate for the Petitioner to invoke the jurisdiction of this Court under Article 226 when the assessing officer has acted without jurisdiction. The notice dated 25 July, 2022 u/s 148 of the Act could not have been issued for the assessment year 2013-14. It is on such notice, the assessment order dated 26 May, 2023 has been passed. This is clearly a case where the Assessing Officer has proceeded without jurisdiction and possibly applying the amended provisions of Section 149 as incorporated by the Finance Act to the case in hand when he issued notice dated 25 July, 2022 overlooking the fact that in the present case as the law would stand, the limitation had already expired and within the extended period of limitation as noted by us herein. Thus, once the notice itself was inherently without jurisdiction, the order passed on such notice although was passed without granting hearing to the petitioner, would obviously be rendered illegal. An order which is ab initio void cannot be saved in any circumstances or labeled to be not illegal and void, merely because the petitioner belatedly approached this Court and more so when such order was sought to be effected/implemented in a recent notice issued to the petitioner u/s 271. Any acquiescence to an illegal order can never bring about a situation where the illegality attributed to such an order would stand extinguished and the order can be termed to be legal. The law cannot be read in such manner. Thus, in the present case, an order which is illegal and void ab initio is sought to be given effect to, which cannot be permitted to be done. Assessee appeal allowed.
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2024 (9) TMI 151
AO Jurisdiction to issue notice u/s 148 to a Non-resident Indian - fixed deposits were made out of remittances from Dubai and maturity of existing term deposits, interest on NRE account and inter se transfer of funds between various bank accounts of the petitioner - HELD THAT:- It is not in dispute that the petitioner is a Non-resident Indian residing at Saudi Arabia. Moreover, the address of the petitioner shown in the impugned order and notice is Vijayanagaram, Andhra Pradesh. Therefore, AO at Vapi, has no jurisdiction to issue the notice u/s 148A (a) or 148A (b) of the Act only on the basis of the information available on the insight portal. The petitioner has provided the details with regard to term deposits placed in two accounts with the HDFC Bank and has also provided bank statement with the reply. The petitioner has submitted the entire bank statement and the explanation that being NRE remittance in the account was made by the petitioner from Saudi Arabia out of salary credited and received outside India and out of maturity of the FDR. The petitioner has also provided the date wise details of all credit in the bank account with the HDFC bank during the year. Notice of reopening under section 148A of the Act could be issued only by an Officer who has jurisdiction over the petitioner and only the Commissioner of Income Tax (International Taxation) and from the communication placed on record at Annexure J, ITO, Ward 1, Vijayanagaram, Andhra Pradesh, has the jurisdiction considering the local address of the petitioner. Therefore, notice issued by the respondent, who did not have jurisdiction over the assessee, would be invalid. Moreover, in view of the explanation tendered by the petitioner that he has no taxable income during the year, there was no question of filing any income tax return as the interest accrued on the term deposit is exempted u/s 10 (4) of the Act. Reassessment proceddings set aside - Decided in favour of assessee.
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2024 (9) TMI 150
Validity of Reopening of assessment - sale of land as income from business and profession - notice u/s 148 is issued beyond the period of four years from the end of the AY on previously concluded scrutiny assessment u/s 143 (3) - HELD THAT:- From the facts, it can be seen that the petitioner assessee had offered the entire sale consideration under the head income from business and profession which was subjected to detailed scrutiny by the AO in the original scrutiny assessment. AO raised various questions which were answered in detail with documents by the petitioner in the several replies during the original scrutiny assessment.AO has framed the assessment after considering such replies and documents furnished by the petitioner. Therefore it cannot be said that the AO failed to consider the provision of Section 50C in the original assessment as the same would not apply when the AO accepted the transaction of sale of land being stock in trade and assessing the income therefrom under the head income from business and profession . On perusal of the reasons recorded by the respondent Assessing Officer, it is clear that the provision of Section 50C is admittedly not applicable to sale of stock in trade as the same is not a capital asset and reopening the assessment based on such opinion is nothing but a mere change of opinion and as such, the impugned notice u/s 148 for reopening of the assessment for the year under consideration is not tenable. Decided in favour of assessee.
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2024 (9) TMI 149
Reopening of assessment u/s 147 - reasons to believe - eligibility of deduction u/s 80P - effect of change of opinion - HELD THAT:- As during the course of original assessment proceedings, the AO has scrutinized the issue of deduction u/s 80P by raising specific query in the notice issued u/s 142(1) which was replied by assessee and thereafter the assessment order under Section 143 (3) of the Act was passed. Therefore, there is no failure on the part of the petitioner to disclose fully and truly all the material facts relevant for the assessment for the year under consideration. Thus, AO could not have assumed the jurisdiction to issue the impugned notice beyond four years from the end of the Assessment Year under Section 148 of the Act in view of the proviso to Section 147 - there is no new tangible material available with the Assessing Officer as the information of claim u/s 80P (2) (d) was deduced from the records available along with material and as such, it cannot be said that there is escapement of income which was claimed by the petitioner assessee under Section 85 (2) (d) of the Act Reliance placed by the learned advocate for the respondent on the decision of Totgars Co-operative Sales Society Ltd. [ 2010 (2) TMI 3 - SU PREME COURT] would not be applicable in the facts of the case as the petitioner has claimed deduction under Section 80P(2) (d) of the Act from the interest earned from the Co-operative Bank which are infact Co-operative Societies and as such, there is a mere change of opinion on the part of the Assessing Officer while issuing impugned notice u/s148 of the Act. It is well settled by the decision of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein it is held that even after the amendment under Section 147, the concept of AO having tangible material to form a belief that the income chargeable to tax has escaped assessment is not done away with and in this context, the principle of change of opinion would squarely apply. Decided in favour of assessee.
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2024 (9) TMI 148
Validity of reassessment proceedings - reasons to believe - Unexplained share transactions - petitioner did not furnish the Sales and Purchase Register - HELD THAT:- AO has failed to justify any of the reasons assigned to come to the conclusion that it is a fit case to reopen the assessment for the year under consideration. On perusal of the impugned order passed u/s 148A (d) of the Act, it is clear that the AO has arrived at conclusion to hold that it is a fit case to reopen only on the ground that the petitioner did not furnish the Sales and Purchase Register. AO by considering the total of party-wise purchases and party-wise sales as stated in Form GSTR-I has come to the conclusion that there is escapement of income without there being any material/information on record. Thus the AO has passed the impugned order with total non application of mind to hold that the assessee has failed to explain six transactions and the same has remained unexplained and the assessee has failed to prove the genuineness of this transaction and also the source of income. AO however, has accepted the explanation tendered by the petitioner in respect of all the six transactions except observing that the assessee did not furnish the Sales and Purchase Register and therefore, the source for sales and purchase is not known ignoring the fact that the petitioner has filed the return of income for the year under consideration along with audit report and audited balance sheet and Profit and Loss Account. Petition is allowed.
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2024 (9) TMI 147
Reopening of assessment u/s 147 - reasons recorded were based upon the audit objections raised by the internal audit party of the respondent department - underassessment of income - default determination of TP Adjustment - mark up on direct cost of MUK to be made at 9.17% after accounting for foreign exchange risk of 1% instead of 12% mark up was made by the Transfer Pricing Officer (TPO) - HELD THAT:- TPO, while determining the ALP and making upward adjustment, has passed a detailed order wherein all aspects are taken into consideration for rendering the services by the MUK to the petitioner and thereafter, the mark up of 12% is determined. The audit objection, which has been raised with regard to foreign exchange risk by adding 1% and reducing mark up to 9.27% resulting into the upward escapement of income of more than Rs.1.60 Crore, is nothing, but a mere change of opinion as there is no failure on the part of the petitioner to make full and true disclosure of all the material facts. As the impugned notice is issued beyond the period of four years, the respondent could not have assumed the jurisdiction on the basis of the audit objections. Reduced exchange gain on sale of shares of MAP - The assessee has made full disclosure in computation of income as well as in the revised return of income during the course of regular assessment. The petitioner has explained in detail in the objections with regard to issue of transaction with MAP which has been allowed to have not been disclosed but the respondent failed to consider the same while disposing of such objection. On perusal of the material available on record, we are of the opinion that there is no failure on the part of the petitioner to disclose fully and truly all material facts at the time of original assessment and therefore, as per proviso to Section 147 of the Act, the respondent could not have assumed the jurisdiction for reopening the assessment. Decided in favour of assessee.
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2024 (9) TMI 146
Deduction u/s 35AB - business of the concerned unit had not commenced during the year under consideration - HELD THAT:- Tribunal has followed its decision in assessee s own case for the AY 1999-2000 [ 2017 (5) TMI 1514 - ITAT AHEMDABAD] wherein the decision of ITAT Hyderabad in the case of VBC Industries ltd [ 1993 (8) TMI 126 - ITAT HYDERABAD-A] followed setting up of the manufacturing facility of soda ash was by way of an extension of the existing business of the assessee of manufacturing soap. That being the situation, deduction u/s 35AB cannot be denied. In plain terms, sub section (1) of section 35AB grants exemption to the extent of 1/6th of the expenditure incurred by the assessee by way of lumpsum payment towards consideration for acquiring technical knowhow for the use for the purpose of the business. These conditions are satisfied. The question is, therefore, answered in the negative against the Revenue. Exclude only the net income from FDR interest while computing deduction u/s 80HH and section 80I - HELD THAT:- Issue squarely covered by the decision [ 2016 (6) TMI 1485 - GUJARAT HIGH COURT] in the case of the assessee held that in computing the special deductions under sections 80-I, 80-IA and 80HH net incomes not derived from industrial undertaking should be excluded and that the Tribunal was right in granting benefit of deduction under section 80-I of the Act on various incomes such as job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste. Therefore we are of the opinion that the Tribunal is justified in directing to exclude the net income from FDR interest, interest on loans, discounting income and transport income. we answer the question No. (b) in affirmative in favour of the assessee and against the Revenue adopting the same reasoning given by this Court in the case of the assessee for the Assessment Year 1996-97 to the effect that in computing the special deductions under Sections 80-I, 80-IA and 80HH, net incomes not derived from industrial undertaking should be excluded and the Tribunal was right in holding the net income from FDR interest, etc. Interest on income from insurance claim, truck hiring charges and truck rent is derived from industrial undertaking - Issue answered in favour of the assessee and against the Revenue as the Tribunal was right in granting deduction under Section 80-I by holding that interest on income from insurance claim, truck hiring charges and truck rent is derived from industrial undertaking. Deduction u/s 80-I - Treating the miscellaneous income being commission, discount charges, sale of wastages and diesel sales as income derived from industrial undertaking - This issue is also decided by this Court in assessee s own case by following the decision of this Court in the case of Dy. CI.T. vs. Harjivandas Juthabhai Zaveri [ 1999 (12) TMI 5 - GUJARAT HIGH COURT] in which the Court upheld the decision of the Tribunal granting benefit of deduction under Section 80-I of the Act on various incomes such as job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste. In view of such findings, question is answered in favour of the assessee and against the Revenue holding that the Tribunal was justified in law in treating the miscellaneous income being commission, discount charges, sale of wastages and diesel sales as income derived from industrial undertaking. Entitlement to deduction of technical know-how fees u/s 35AB confirmed. Re-compute the deduction u/s 80-HHC after excluding the amount of sales tax and excise duty from the quantum of turnover - See Lakshmi Machine Works [ 2007 (4) TMI 202 - SUPREME COURT] .
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2024 (9) TMI 145
Order passed u/s 92CA (3) as beyond the time prescribed - HELD THAT:- While considering the said contention the Tribunal referred to Section 92CA (3A) and noticed that the period of limitation was 60 days prior to the expiry of limitation as per Section 153 (1) - Tribunal noticed the time limit as prescribed u/s 153 (1) of the Act for passing an order u/s 143 (3) of the Act and held that the order under Section 143 (3) for the AY 2011-12 should have been passed by 31.3.2015. Hence, the date on which the order u/s 92CA (3) of the Act was to be passed was on or before 28.1.2015. Hence, the order Section 92CA (3) having been passed on 30.1.2015, the Tribunal accepted the contention put forth by the assessee and passed the impugned order. As further forthcoming that before the Tribunal the contention of the revenue was that the delay was a curable defect and that although the order was passed on 28.1.2015, the same was dated as 30.1.2015. While noticing the said contention the Tribunal by relying on the judgment in the case of M/s. Pfizer Healthcare India Private Ltd. [ 2022 (4) TMI 808 - MADRAS HIGH COURT ] and also by noticing that the contention put forth by the revenue that the order was passed on 28.1.2015, but dated 30.1.2015 is not an irregularity of procedure rejected the said contention. As relevant to note that the learned Single Judge of the Madras High Court in the case of M/s. Pfizer Healthcare India Private Ltd., has held that the period of 60 days stipulated for passing an order of Transfer Pricing is mandatory. The said judgment has been upheld by the Division Bench of the Madras High Court in the case of Saint Gobain India Private Ltd. [ 2022 (4) TMI 808 - MADRAS HIGH COURT ] wherein it has been held that the time schedule is mandatory in nature. It is clear from the aforementioned that the question that arose for consideration before the Tribunal was a factual one as to whether the order u/s 92CA (3) was passed beyond the prescribed time limit and the Tribunal having recorded a finding of fact that the order passed u/s 92CA (3) of the Act ought to have been passed on or before 28.1.2015 and the same having been passed on 30.1.2015, is barred by limitation, no substantial question of law arises for consideration in the present appeals and the said appeals are dismissed at the stage of admission itself as being devoid of merit.
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2024 (9) TMI 144
Exemption u/sec 11 - application of fund utilized for grants/scholarships used for overseas education - application of income for charitable purposes within Indian territories OR abroad - HELD THAT:- Education grant given to the Indian students in India for education/higher education abroad fulfills the conditions of application of money for such purpose in India. As decided in own case [ 2024 (9) TMI 55 - ITAT MUMBAI] assessee has given grant to 97 scholars studying in various institutions and universities outside Indian. The assessee paid the grant in India and for the purpose of education of Indian students/persons, thus the charitable purpose of the grant is education of indian persons. The application of income of the assessee completes at the point when the assessee released the grant which took place in India. The decision relied upon by the revenue is not applicable in the facts of the present case as the application of income took place in India and for the purpose of education of Indian students/persons. Therefore, for taking education by beneficiary from abroad would not amount to application of income of the assessee outside India. DR could not controvert the findings of the CIT(A) with any new cogent material or information on the disputed issues to take different view as held disbursal of loan scholarship to students in India for study overseas as application of income for charitable purposes in India. Appeal filed by the revenue is dismissed.
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2024 (9) TMI 143
Allowability of deduction u/s. 80P(2)(d) - Interest Income deposits/investments in a Co-operative Bank - assessee is a co-operative Society registered with the Registrar of Cooperative Societies for Rajasthan having its primary object to carry on the business of providing credit facilities to its members - Whether the assessee being co-operative society be denied benefit of section 80P(2)(d) of the Act on interest received from another cooperative Societies [ Running as co-operative bank as per banking regulations ].? - HELD THAT:- The similar issue has been decided by the Hon ble Rajasthan High court, Jodhpur while dealing with the Revenue s appeal filed for the assessment year 2014-15 in the case of PCIT, Ajmer vs M/s Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd. [ 2019 (8) TMI 1131 - RAJASTHAN HIGH COURT] as held revenue's contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act, In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it. For the above reasons, this court is of the opinion that there is no substantial question of law involved in the present appeal. As perused the various provisions of Regiona Rural Bank Act 1976. Baroda Rajasthan Kshetriya Gramina Bank was set up under the provisions of under the provisions of Regional Rural Bank Act. Section 22 of the Regional Rural Bank Act provides that Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961. In our considered view the the Circular of CBDT cannot override the provisions of the Act of Parliament. Even the careful reading of the Circular No. 6 of CBDT make it clear that exemption is withdrawn with respect to Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards, and not the co-operative societies. The assessee before us is the cooperative society and not the Regional Rural Bank. Therefore, considering the provisions of section 22 of Regional Rural Bank Act, wherein the status of the banks established are of the co-operative society the assessee is entitled for the exemption on the interest earned on the deposits. In the result the ground of the appeal are allowed.
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2024 (9) TMI 142
Denial of exemption u/s 11 - delay in filing Form 10B i.e. Audit Report - HELD THAT:- CIT(A) dismissed the appeal simply due to want of jurisdiction by stating that both he and the AO not empowered to condone the delay in question. It is established by law that the requirement of filing Audit Report in Form 10B is procedural in nature and therefore exemption claimed by u/s 11 of the Act may be given in certain circumstances. Not filing of Audit Report alongwith the return of income is a procedural omission only and cannot be impediment in law in claiming the exemption. So far the reason for condonation of delay is concerned, AR submitted that the Auditors who conducted the audit of the society, bonafidely believed that society was not required to obtain and file the audit report in form 10B as the total income being NIL was less than Rs. 2,50,000/- and due to confusion in interpretation of law, filed audit report in form 10B dated 08.10.2022. We inclined to allow this appeal for condoning the delay in filing the Audit Report in Form 10B and restore the matter to the file of the CIT(A) to allow exemption u/s 11 of the Act to assessee and pass order in accordance with law. Assessee appeal allowed.
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2024 (9) TMI 141
Assessment of assessee/AOP - Applicability of tax @ 40% along with surcharge cess on its total income alongwith the levy of consequential interest under section 234A, 234B and 234C - HELD THAT:- From the plain reading of the section 167B of the Act, it is evident that the taxability of an AOP is based on whether the share of its members is determinate or not. When the share of members of the AOP is indeterminate, then tax is charged at a Maximum Marginal Rate (In short, the 'MMR') or at a rate higher than MMR in case one of the member s income is chargeable to tax at a rate higher than MMR. MMR is defined under the Act as the rate of income-tax (including surcharge cess on income-tax, if any) applicable to the highest income slab for an individual, AOP or Body of Individuals. In this case the appellant/assessee AOP has clearly mentioned in its ITR that the members share in the AOP s profit is determinate (TPL 99.99% and Chint 0.01%) and both members income without including their income from AOP are chargeable to tax. The ITR also reveals that the TPL is the domestic company and Chint is a Chinese company. It emerges that the income of TPL is chargeable to tax @ MMR (30%) and that of Chint at the rate higher than MMR (@ 40%) as it is a foreign company. By placing reliance on the order in the case of Herve Pomerleau International CCCL Joint Venture [ 2019 (10) TMI 1167 - ITAT CHENNAI] DR has raised the issue that whether the members share in the AOP s profit is determinate and the Long-term Agreement, MOU, Consortium Agreements, Profit sharing Agreement, etc. between the member of AOP contain the clause relating to profit sharing of the members of AOP. We are of the considered opinion that the total income of Chint, without including the income from the appellant/ assessee AOP, is chargeable to tax @ 40% plus surcharge, plus Education Cess plus Secondary and Higher Education Cess as applicable on its total income; therefore, the tax shall be charged on that portion or on the part of income of AOP which is relatable to the share of Chintat such a higher rate (40%) plus surcharge, plus Education Cess plus Secondary and Higher Education Cess as the case may be and the remaining/balance of income @ MMR plus surcharge, plus Education Cess plus Secondary and Higher Education Cess as the case may be. Accordingly, we order so. Resultantly, 99.99% of the income of the appellant/assessee AOP has to be taxed @ 30% plus surcharge, plus Education Cess plus Secondary and Higher Education Cess as the case may be and 0.01% @ 40% plus surcharge, plus Education Cess plus Secondary and Higher Education Cess as the case may be. We do not find any merit in the Ld. AR s contention that the interest under the Act has not been charged as per law; therefore, we decline to interfere with the finding of the JCIT(A) on this score.
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2024 (9) TMI 140
Denial of exemption u/s 11 - JCIT invoked proviso to section 2(15) in respect of certain income which in her view were in the nature of trade and commerce and by denying the exemption - HELD THAT:- We have heard the rival submissions and perused the records of the appeal files, written notes filed by assessee, orders of the lower authorities and judgment in the case of Ahemdabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] . We find that the ld.CIT(A) has proceeded ex-parte against the assessee considering for the first time the judgment in the case of Ahemdabad Urban Development Authority (supra). in appellate proceedings which is in complete violation of the principles of natural justice. CIT(A) could have remanded the appeals to AO for fresh adjudication in the light of Hon ble Supreme Court judgment referred supra. We accept the prayer the assessee that the AO should consider the claim of exemption u/s 11 of the Act in the light of the Judgment of the Hon ble Supreme Court in the case of Ahemdabad Urban Development Authority (supra). Hence, accordingly we set aside the all these four appeals to the file of AO to do denovo assessment with respect to the claim of exemption u/s 11 of the Act as per ratio laid down by the Hon ble Supreme Court in the case of Ahemdabad Urban Development Authority (supra). Consequently, we also set aside the other issues raised viz; issue of TDS, sundry creditors, depreciation, interest u/s 244A and issue of 234B arising in respective appeals to the file of AO to look into a fresh as per law.
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2024 (9) TMI 139
Reopening of assessment - Reasons to believe - while the 148 proceedings were initiated on the ground that assessee was engaged in purchase and sale of shares of Nyssa Corporation, however, at the time of passing of the final assessment order, the assessing officer made addition on a totally different basis - HELD THAT:- The case of the assessee was reopened on the basis that the assessee was engaged in purchase/sale of shares of Nyssa Corporation. During the course of assessment proceedings, the assessing officer formed the view, on the basis of certain facts which were brought on record, that the assessee had not actually carried out purchase/sale of shares Nyssa Corporation, but the assessee has lent his PAN to the concerned broker, in exchange of certain unaccounted payment of approximately 2% on the total value of such transactions (which is common in such line of business, as found in certain cases by the Ld. AO). Therefore, on going through the instant facts, we observe that it is not a case where no additions were made in the hands of the assessee in respect of purchase/sale of shares of Nyssa Corporation, but the assessing officer, on consideration of the facts of the case, had come to the conclusion that though the assessee had not taken actual delivery of such shares of Nyssa Corporation, however the assessee s role was that of providing its PAN for transactions involving purchase and sale of shares of Nyssa, in exchange of certain payments, computed at 2% of the transaction value. Accordingly, in our considered view, this is not a case where no addition had been made in the hands of the assessee in respect of purchase/sale of shares of Nyssa Corporation, in which case, we could have considered the applicability of judicial precedents cited by the assessee. However, from the contents of the assessment order, which were also later confirmed by Ld. CIT(Appeals), it is observed that with respect to the very same script i.e. Nyssa Corporation, the assessing officer had in fact made certain additions in the hands of the assessee. Therefore, we are unable to accept the contention of the counsel for the assessee on this issue. In the result, the assessee s challenge to reopening of assessment under section 147 of the Act, is dismissed.
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2024 (9) TMI 138
Eligibility of exemption u/s 11 - Charitable activity u/s 2(15) - HELD THAT:- As perused the materials available on record and the judgments passed by the Hon ble Supreme Court and the High Court of Gujarat respectfully following the same, we hold that the activities of the assessee for advancement of any other object of General Public Utility for charitable purpose and therefore the assessee corporation shall be entitled to exemption u/s. 11 of the Act. As clarified by the Hon ble Supreme Court in the very same case of ACIT vs. AUDA [ 2022 (11) TMI 255 - SUPREME COURT] wherein it has been clearly held that the Revenues Appeals are dismissed as far as statutory Corporations/Boards. However for the future assessments, Hon ble Supreme Court has clarified that the reference to future application has to be understood in this context, which is that for the assessment years which this court was not called upon to decide, the concerned authorities will apply the law declared in the judgment, having regard to the facts of each such assessment year. Since Revenue s appeals [in the case of AUDA, SUDA, etc] are dismissed by the Hon ble Supreme Court for the earlier asst. years, they are to be treated as Final. However for the present AY 2016-17 2017-18, we set aside the issue file of AO to consider the same in accordance with law as enumerated by the Hon ble Supreme Court. Appeals filed by the Revenue are hereby allowed for statistical purpose.
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2024 (9) TMI 137
Deduction u/s 35(2AB) - in-house Research and Development (R D) expenses and further R D expenses towards building - Disallowance of deduction/expenses not approved by the DSIR - HELD THAT:- Merely because DSIR had quantified the total R D expenditure in the current year, which is prior to 01.04.2016, the same was not binding on the revenue authorities. Therefore, the Revenue was not correct in restricting the deduction u/s. 35(2AB) of the Act on the basis of the amount quantified by the DSIR in their approval. Rather, the AO should have examined the correctness of the R D expense of the assessee than merely relying on the expenditure approved by DSIR. As found that the exact basis of claim of deduction u/s 35(2AB) was not properly explained by the assessee in the case of assessment proceedings. The assessee had filed the details of the R D expenses in the course of assessment, as per which the total expenses was to the extent of Rs. 3,39,16,441/-. If this figure is taken as correct, then the assessee should have claimed deduction of Rs. 6,78,32,882/- @ 200% of the expenditure and not Rs. 6,66,06,663/- as actually claimed. This indicates that the details of R D expenditure as furnished was not correct. Further, the difference of Rs. 25,07,151/- being expenditure not approved by the DSIR was also not properly explained by the assessee. Therefore, the matter is set aside to the file of the AO to correctly verify the expenditure incurred by the assessee on in-house R D center and, thereafter, allow the deduction at the eligible rate, without taking into account the expenditure as certified by the DSIR. The ground taken by the assessee is allowed for statistical purposes. Disallowance of interest expenses u/s 36(1)(iii) - assessee had made huge addition to the fixed assets/CWIP during the year - AO considered the borrowed funds of the assessee vis- -vis CWIP and proportionate interest disallowance on CWIP - HELD THAT:- From the Schedule-B of balance sheet it is seen that the assessee had surplus reserve of Rs. 3,392,038,627/- which also would have been deployed towards CWIP. In fact fresh share premium of Rs. 2,356,380,318/- was received during the current year only. Considering this huge interest free funds available with the assessee the presumption of the AO that only the interest bearing funds were utilized towards CWIP, was not correct. Therefore, the disallowance as made by the AO which was based on wrong presumption, can t be held as correct. The disallowance of interest As made by the AO is deleted. The ground taken by the assessee is allowed. Disallowance of capital loss - assessee was unable to establish or reconcile the difference of an amount on account of addition to CWIP. The same was treated as asset written off by the AO and disallowed as capital loss - HELD THAT:- The fact remains that the amount in respect of CWIP additions remained unreconciled. As this claim was not on revenue account, but in respect of CWIP which was to be allocated to fixed assets, the claim was certainly not on revenue account and ineligible for deduction u/s 37 - As regards the claim of capital loss, in order to claim the carry forward of the loss, the same has to be first established. This is not the case where the assessee had incurred any capital loss. Rather the addition to CWIP was not fully justified by the assessee and the amount remained unreconciled which cannot be considered as actual capital loss. Therefore, we do not find anything wrong with the treatment as given by the AO. The decision of Ld. CIT(A) on this issue is, therefore, upheld and the ground taken by the assessee is dismissed. Disallowance u/s 40(a)(ia) - commission paid to non-residents - as contended by the assessee that non-residents to whom the commission was paid had rendered services outside India and that their income was not taxable in India - HELD THAT:-It is found from the copy of the Form No.35 filed by the assessee that no specific ground was taken before the Ld. CIT(A) in respect of addition of Rs. 11,47,701/- under Section 40(a)(ia) of the Act. Therefore, the Ld. CIT(A) cannot be faulted for not giving any finding on this issue, when the matter was not specifically raised before him. However, considering the fact that this issue was also involved in assessee s own case in A.Y. 2013-14 where the issue was decided in the favour of the assessee, we deem it proper to set aside the matter to the file of the Ld. CIT(A) to examine the matter on the merits of the case. The assessee is also directed to raise a specific ground in this regard before the Ld. CIT(A) in order to enable him to examine the matter on the merits, within a reasonable period of time. The ground of assessee is allowed for statistical purposes. Disallowance of provision of bad debt - AO noticed that the assessee had debited an amount on account of provision of bad debts in its P L account - Claim disallowed by the AO for the reason that the bad debt was not actually written off by the assessee during the year under consideration and the addition as made by the AO was upheld by the CIT(A) - HELD THAT:- The deduction in respect of provision for bad and doubtful debt is admissible u/s 36(1)(viia) which is applicable to banking companies, financial institutions, non-banking financial company etc. and the said provision is not applicable in the case of present assessee. Therefore, we have to examine the claim for deduction of the assessee in accordance with the provision of Section 36(1)(vii) of the Act. The basic requirement for claiming deduction under Section 36(1)(vii) of the Act is that the bad debt should be written off as irrecoverable in the accounts of the assessee for the previous year, in which the deduction is claimed. Further that, such claim should not be on account of any provision for bad and doubtful debts . As evident from the above reply of the assessee that the provision for bad debt as debited to the accounts of the current year was not actually written off in the current year. The assessee had itself submitted that these debts were actually written off in the next year and had accordingly requested the AO to allow the deduction for the bad debt in the A.Y. 2012-13. In view of these facts, we do not find anything wrong with the orders of the AO and the CIT(A) on this issue. Decided against assessee.
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2024 (9) TMI 136
Unexplained foreign inward remittance u/s 68 - assessee submitted that foreign remittance constitutes earning from abroad which could not be subject to tax in India as the source of the earnings was not from India - CIT(A) deleted addition - HELD THAT:- As the assessee has earned sufficient income from outside India which has been brought in India by way of credit to NRE account and part of earnings have been used to make gifts to two brothers. In such a case, it could be concluded that the assessee duly explained the source of credit in the bank accounts. Under these circumstances, we would hold that the impugned order, for both the years, do not require any interference on our part. We therefore confirm the same. Decided in favour of assessee.
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2024 (9) TMI 135
Treatment to revised return - Disallowance of expenditure on interest paid on borrowed capital u/s 57 - claim has been wrongly made u/s 57 while computing the income under the head income from other sources instead of claiming the same under the head Business income HELD THAT:- In the present case, the assessee has filed the original return of income under sub-section (4) of section 139 of the Act and in terms of sub- section (5) of section 139 as amended by the Finance Act, 2016 relevant for the impugned assessment year 2017-18, it provides that if any person, having furnished a return under sub-section (1) or sub-section (4) of section 139 discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Therefore, the return of income filed u/s 139(4) can be revised in the instant case and as such there is no bar in revising the return of income. It is an admitted position that claim has been wrongly made u/s 57 while computing the income under the head income from other sources instead of claiming the same under the head Business income , the return of income originally filed can be revised and has in fact been duly revised by the assessee within the stipulated time frame. The revised return of income so filed therefore needs to be considered to examine the claim of deduction so made by the assessee. Given that the CIT(A) has decided the matter on merits of the case without affording an opportunity to the assessee and even during the course of hearing, we felt that all facts necessary for examining the claim of deduction need to be thrashed out, we deem it appropriate to set-aside the matter to the file of the CIT(A) to decide the same afresh as per law after providing reasonable opportunity to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2024 (9) TMI 134
Belated payment of Employees contribution to PF Fund - assessee replied that it paid the employees contribution to National Pension Scheme before the due date of filing of the Return of Income u/s. 139(1) - HELD THAT:- As seen from the Return of Income, the assessee made deposit being Employees contribution under any other welfare fund namely National Pension System (NPS). On perusal of the Tax audit report, it is seen that the contribution is made under NPS before due date of filing Return of Income. NPS is regulated by Pension Fund Regulatory and Development Authority and PFRDA Act, 2013. There is no due date prescribed by the PFRDA as to when the payment is required to be made to the NPS account. Further section 12[3][iii] of the PFRDA Act, 2013 clearly prohibits the provisions of this Act shall not apply to the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Thus the impugned adjustment made on the payment under NPS by CPC is not justified as there is no due date prescribed in the respective PFRDA Act, 2013 and all the payment has been duly made before filing of the Return of Income as per section 139[1] of the Act. Therefore the amount is treated to be allowable u/s.43B[b] of the Act and therefore the addition made by CPC is liable to be deleted. As the assessee had replied to the communication to the CPC and explaining the above facts, CPC is not correct in ignoring the reply and making the disallowance in the 143[1] proceedings. Decided in favour of assessee.
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2024 (9) TMI 133
Denial of exemption claimed u/s.11 - assessee is engaged in promoting the game of cricket in the State of Gujarat and registered u/s.12AA - Charitable activity u/s 2(15) or not? - as per AO assessee earns income out of sale of tickets, sale of space, conduct Indian Premier League [IPL] matches which is a commercial venture of BCCI, TV rights and which is mixture of Sports, entertainment and business, thus involved in carrying on the activity of advancement of any other object of general public utility and such as in the nature of trade, commerce or business. HELD THAT:- Recording the above submissions of rival parties and respectfully following Apex Court Judgement in the case of AUDA [ 2022 (10) TMI 948 - SUPREME COURT] the orders passed by the Lower Authorities are hereby set aside to the file of Ld. Assessing Officer and direct the AO to pass fresh orders in line of the directions given by Hon ble Supreme Court wherein held so far as the state cricket associations are concerned (Saurashtra, Gujarat, Rajasthan, Baroda and Rajkot), this Court is of the opinion that the matter requires further scrutiny. In light of the discussion in paragraphs 228-238 of the judgment. Accordingly, a direction is issued that the AO shall adjudicate the matter afresh after issuing notice to the concerned assessees and examining the relevant material indicated in the previous paragraphs of this judgment. Thus adjudicate the matter afresh by giving proper opportunity of hearings to the assessee - Appeals filed by the Assessee and Revenue are allowed for statistical purposes.
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2024 (9) TMI 132
Disallowance restricting the depreciation to 15% as against 40% claimed by the assessee on cars - assessee gave two cars on hire and earned income and this was offered to income under the head income from other sources - HELD THAT:- The assessee provided copies of agreements, entered into for lease of the vehicles, however, we noticed that the AO restricted the depreciation to 15% only. The appendix where the rate of depreciation to be allowed on vehicles given on hire suggests that motor lorries and motor taxies used in a business of running them on hire are eligible for depreciation @ 30%. In this case, since in this case, the assessee has given his vehicles on lease basis on hire, the AO should have allowed depreciation @30% instead of 15%. Thus, we direct the AO to allow depreciation @ 30% against 40% claimed by the assessee and allowed by the AO at 15%. Interest paid on loan borrowed for purchase of plot as part of cost of acquisition - HELD THAT:- We direct the AO to allow the interest on borrowed capital as part of cost of acquisition for the purpose of computing capital gains. Ground no.3 of grounds of appeal of the assessee is allowed. Recalculation of income from house property - HELD THAT:- On perusal of the computation of income filed we observe that the assessee has declared income from house property at Rs. 1,80,000 and also declared lease rent from cars under the head income from other sources . On perusal of the assessment order, we notice that the AO misdirected himself in considering the rental income from property and in recomputing the income under the head income from house property Thus, we direct the Assessing Officer to delete the addition made in the assessment order. Loss on sale of land - HELD THAT:- CIT (A) was under the view that this capital loss allowed by the Assessing Officer is not correct. We observe that the cost of acquisition arrived at by the assessee at Rs. 49,56,133/- includes interest of Rs. 19,22,524/- on borrowed loan for purchase of property which was treated as cost of acquisition. We also notice that the purchase cost of the property to the assessee s share of 50% is Rs. 29,91,391/- and after indexation, the cost of acquisition stood at Rs. 76,63,568/-. In the circumstances, the apprehension of CIT (Appeals) that the AO allowed Long Term Capital Gain loss appears to be not correct. Thus, there is no ground for any disallowance of capital loss as directed by the learned CIT (Appeals). This ground of appeal of the assessee is allowed.
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2024 (9) TMI 131
MAT - Disallowance of excess MAT credit u/s 115JAA - surcharge and education cess - whether the amount of surcharge and education cess and secondary higher education cess should be reduced from the tax determined on total income of current year while considering the amount of MAT credit available from earlier years? - HELD THAT:- We find that the assessee has furnished the details of MAT credit available and utilized in different assessment years which we have recorded in para 3 of this order. From the details of MAT credit utilized during the year, we find that the assessee has utilized total MAT credit which is clearly discernible from the details in table in para 3 of this order. We find that the ld. CIT(A) while granting relief to the assessee has followed in Consolidated Securities Ltd. [ 2018 (7) TMI 1722 - ITAT DELHI ] On careful perusal of said decision, we find that the issue in the present appeal is directly covered by the said decision wherein it was held that the amount of MAT credit available from earlier year inclusive of surcharge and education cess etc. should be reduced from the amount of tax determined on total income of current year after adding surcharge and education cess. Thus, respectfully following the decision of Consolidated Securities Ltd. [ 2018 (7) TMI 1722 - ITAT DELHI ] no merits in the grounds of appeal raised by the revenue, thus we affirm the order of ld. CIT(A). Revenue appeal dismissed.
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2024 (9) TMI 101
Ceasure of income tax settlement commission - restriction to the filing of the application before the Interim Board for Settlement - by Finance Act, 2021, which was notified on 01.04.2021, the ITSC was abolished and an Interim Board was constituted only to deal with applications pending as of 01.02.2023 - revenue restricted the filing of the application before the Interim Board for Settlement only by the assesses who were eligible to file the application for settlement on 31.01.2021 - case of the Writ Petitioners that their statutory remedy of approaching the ITSC, cannot be taken away retrospectively - As decided by HC [ 2023 (11) TMI 1111 - MADRAS HIGH COURT] Section 245C(5) of the Income Tax Act, 1961 (as amended by the Finance Act, 2021) is read down by removing the retrospective last date of 1st date of February, 2021 as 31st day of March, 2021. Consequently the last date of eligibility mentioned paragraph 4(i) of the impugned circular dated 28.09.2021 shall also be read as 31.03.2021 - All the applications in respect of the petitioners even in respect of the cases arising between 01.02.2021 to 31.03.2021 shall be deemed be pending applications and shall be deemed to be pending applications for the purposes of consideration by the Interim Board. Wherever they are rejected on the ground that they did not have a case pending as on 31.01.2021, such orders shall stand set aside and the applications shall be deemed to be pending applications for the consideration by the Interim Board, if otherwise in order and eligible, and shall be dealt with in accordance with law on merits in accordance with the scheme that may be framed by the Central Government as in respect of the other cases which arose prior to 31.01.2021. HELD THAT:- We have heard learned Additional Solicitor General for the petitioners and learned senior counsel for the respondent(s)- caveator at length. We are not inclined to interfere in the matters. However, the question of law, if any, shall remain open.The special leave petitions are dismissed. Pending application(s), if any, shall also stand disposed of.
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2024 (9) TMI 100
Validity of reassessment proceedings - show cause notices issued u/s 148 in matters relating to international tax charges as exempted to follow the statutory faceless procedure - scope of National Faceless Assessment Centre u/s 144B - HELD THAT:- There is no cavil of doubt that Section 144B of the Act and order of CBDT dated 06.09.2021 give exemption from following the mandatory faceless procedure only in relation to passing of assessment orders in cases of central charges and international tax charges. Any other interpretation would amount to doing violence with the language employed in the scheme/notification dated 29.03.2022, Section 144B(2) of the Act and order dated 06.09.2021. Since in our view, the plain and unambiguous language used in the scheme and order dated 06.09.2021 shows that the notice u/s 148 does not fall within the exception , the judgments cited by the learned Senior Standing Counsel for Income Tax Department are of no assistance. Taxpayer is nowhere distinguished between NRIs and Indian Citizens. The notice issued under Section 148 must comply with the requirement of the Scheme whether or not the Taxpayer is NRI/Indian Citizen. Thus, the second limb of argument of the learned Senior Standing Counsel for Income Tax Department deserves to be rejected. In interpreting a section in a taxing statute, according to LORD SIMONDS, the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning fairly and squarely hits. LORD SIMONDS call this the one and only proper test . This principle is followed by the Indian Supreme Court in catena of judgments. Thus, in our view, no such exemption from faceless procedure can be read by combined reading of aforesaid provisions for the purpose of issuance of notice u/s 148 of the Act. Thus, it is clear that the respondents have erred in not following the mandatory faceless procedure as prescribed in the scheme dated 29.03.2022. Since notices under Section 148 of the Act were not issued in a faceless manner, the entire further proceeding founded upon it and assessment orders stand vitiated. Thus, the impugned notices u/s 148 and all consequential assessment orders based thereupon are set aside. Decided in favour of assessee.
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Benami Property
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2024 (9) TMI 130
Benami transaction - Adjudicating Authority refused to confirm the provisional attachment order passed u/s 24(4)(a)(i) of the Act of 1988 - on a search conducted by the Income Tax Department u/s 132 of the Income Tax Act, cash and gold was found with the non-appellants and accordingly their statements apart from the statement of Sh. Nagarajan were recorded HELD THAT:- On a search conducted by the Income Tax Department under section 132 of the Income Tax Act, cash and gold was found with the non- appellants and accordingly their statements apart from the statement of Sh. Nagarajan were recorded. The exception in the definition of benami transaction given under section 2(9)(A) would exclude it from benami transaction. It is on the peculiarity of the facts available on record. At this stage, it needs to be clarified that holding of the property may be as trustee, executor, partner etc. referred under sub-clause (ii) but it is not inclusive definition rather illustrative in nature. In this case, property was held for safe custody and thus would fall in the exception to the definition of benami transaction. The transaction in question would fall under one of the exception to section 2(9)(A) of the Act of 1988. However, we cannot endorse the finding of the Adjudicating Authority for denial of confirmation to the reference. In fact we have not taken this a case to be of benami transaction in reference to one of the exception given under sub-clause (ii) of section 2(9)(A) of the Act of 1988, otherwise the transaction involves not only transfer and holding of the property but also the consideration of it was paid by other person. Even after the aforesaid, the property was kept by the alleged benamidar for safe custody and as per their statement, they did not claim ownership of the property, rather it was shown to be of the alleged beneficial owner, i.e. Sh. Nagarajan. Thus, while not agreeing with the reasons given by the Adjudicating Authority, we have recorded our own reasoning for not endorsing the reference for the attachment of the properties rather the references are rejected for the reason recorded by us. Thus, while disagreeing with the reasoning given by the Adjudicating Authority, we do not find reference can be answered favourable to the appellant, rather it is rejected and accordingly attachment of the properties cannot be confirmed which was otherwise assessed by the Income Tax Department and passed an order in favour of non- appellant, Sh. Nagarajan, though it is subsequent to the search and attachment. However, reference of the assessment order has been made to show that cash and gold belonging to Sh. Nagarajan and has been assessed by the Income Tax Department followed by an Assessment Order - The appeal preferred by the Deputy Commissioner, Income Tax is accordingly dismissed.
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Customs
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2024 (9) TMI 129
Interest on the delayed disbursal of refund flows - whether the respondents are justified in denying the writ petitioner interest in terms as contemplated under Section 27A of Customs Act 1962? - HELD THAT:- The observation of the amount claimed not being duty is clearly being misinterpreted and construed dehors the context in which it appears. All that the Court intended to convey was that the amount which the petitioner had mistakenly deposited, could never have been recovered or retained by the Customs authorities. This is in light of the legal position which stood duly enunciated by the Supreme Court in SRF Ltd. [ 2015 (4) TMI 561 - SUPREME COURT ] itself. Therefore, the observation of the amount not being duty is liable to be understood in the aforesaid context - the contention of inapplicability of Section 27A can neither be countenanced nor sustained. The restitutory element of interest is yet another aspect which assumes significance in the facts of the present case and which was succinctly explained and acknowledged by the Supreme Court in SOUTH EASTERN COALFIELDS LTD. VERSUS STATE OF M.P. ORS. [ 2003 (10) TMI 638 - SUPREME COURT ] where it was held that ' Once the doctrine of restitution is attracted, the interest is often a normal relief given in restitution. Such interest is not controlled by the provisions of the Interest Act of 1839 or 1978.' The respondents is liable to pay interest from the date of the moving of the original application on 24 June 2016. The said interest would flow up to 29 November 2018 when refunds were ultimately effected - petition allowed.
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2024 (9) TMI 128
Seeking quashing of Complaint u/s 482 of Cr.P.C. - framing of charges without properly assessing the material on record - HELD THAT:- Undoubtedly, this Court is vested with extraordinary powers under Section 482 Cr.P.C./528 BNSS. However, these powers must be exercised with the utmost caution and circumspection. When dealing with a petition under Section 482 Cr.P.C./528 BNSS, the Court s focus should be limited to determining whether the complaints/FIR discloses the commission of a cognizable offence. At this stage, the Court cannot go beyond the allegations made in the complaint by examining the defence presented by the accused/petitioner, nor can it consider the material relied upon by the petitioner. In the present case, as per allegations levelled in the complaint, the petitioner deliberately provided incorrect information about the country of origin of the goods in question, stating it as Iraq, in order to evade customs duty and taxes. Although the petitioner has directed the attention of this Court to various documents, bills and other annexures attached with the instant petition, once the complaint prima facie reveals the commission of cognizable offences, the Court cannot investigate the veracity of the allegations by considering the documents submitted by the petitioner while deciding a petition under Section 482 Cr.P.C./528 BNSS. Instead, the petitioner in the present case has raised several disputed questions of fact, which can only be examined during the trial, where both the parties will present their evidence and such evidence will then be tested on the touchstone of cross examination. The instant petition stands dismissed.
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2024 (9) TMI 127
Jurisdiction to issue SCN - Maintainability of show-cause notices under Section 28 (4) of Customs Act - no satisfaction of the respondents before the issuance of such show-cause notices about any willful mis-statement or collusion or suppression of fact by the petitioner - suppression of material facts on part of the petitioner - HELD THAT:- Considering the contents of the show-cause notice, there is no allegation made against the petitioner for suppression of facts. The show-cause notice and the impugned Order-in-Original is passed only based on alleged breach of conditions of the exemption notification by the petitioner for not submitting utilisation certificate within the prescribed time limit or non-production of such certificates from the power generating companies or the certificates produced were not proper certificates in respect of the quantity supplied to the generating companies during the relevant period. Considering the documents made available on record and statements recorded during inquiry, it was prima facie observed in the impugned order that the petitioner failed to comply with the conditions stipulated under the Exemption N/N. 12/2012-Cus dated 17th March, 2012 - From the above alleged failure on part of the petitioner, it was concluded that petitioner was not eligible for exemption from custom duty under the Exemption Notification more particularly to reconcile conditions of Exemption Notification as the invoices issued by the petitioner to the power generating companies towards sell of RLNG and utilisation certificate issued by the generating companies did not contain any reference to the corresponding entry to the Bills of Entry. The Respondent-Department therefore invoked provision of Section 28 (4) of the Act on the alleged breach of the conditions by the petitioner on the ground that the utilisation certificate was not produced within the time limit of three months and twelve months and the transit loss of LNG not supplied to the power generating companies during the gasification during the relevant period - thus, in view of the alleged allegation levelled against the petitioner, it is clear that there is no suppression or failure to disclose of the material facts on part of the petitioner because the petitioner has submitted all the documents during the course of the inquiry along with reconciliation statement and it was also made clear that it is technically impossible for the petitioner to reconcile the LNG as shown in the Bills of Entry with the quantity of regasification Natural Gas supplied to the generating companies through pipeline in a continuous manner. Thus, it is apparent that the allegation levelled against the petitioner for suppression of material facts are not born out from in findings arrived at in the impugned Order-in-Original to invoke provision of section 28 (4) of the Act for extended period of limitation to assume jurisdiction by the respondent authorities to issue show cause notices and pass the impugned order. The Adjudicating Authority could not have assumed the jurisdiction to issue show-cause notice under Section 28 (4) of the Act and the entire proceedings pursuant to such show-cause notice are vitiated. As the show-cause notices are held to be without jurisdiction, no further analysis on merits of the case is required. Both the show-cause notices as well as the impugned Order-in-Original are hereby quashed and set aside - Petition allowed.
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2024 (9) TMI 126
Challenge to enhancement of the value - imported aluminum scrap of various grades - rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- In the present case, JSB Aluminium had made a categorical statement in the letters that it was accepting that the value declared by it in the Bills of Entry was lower than the value at which identical/similar goods had been imported at or about the same time in comparable quantities and in comparable commercial transactions and so the value declared by it in the Bills of Entry should be rejected under rule 12 of the 2007 Valuation Rules and re-determined under rule 9 on the price made known to it by the Assessing Officer, which price was acceptable to JSB Aluminium - The Assessing Officer was, therefore, not required to give reasons for rejection of the transaction value and determination of the assessable value. 10. It is well settled that what is admitted is not required to be proved by the department. This issue has been settled by the Supreme Court in Systems Components [ 2004 (2) TMI 65 - SUPREME COURT ] where it was held that ' Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved.' The decision of the Supreme Court in Eicher Tractors [ 2000 (11) TMI 139 - SUPREME COURT ] on which reliance has been placed by the Commissioner (Appeals) to hold that the transaction value cannot be rejected without clear and cogent evidence, would not be applicable to the facts of the case. Thus, for the reasons recorded in this order, and the reasons recorded by the Bench in Century Metal for setting aside the order passed by the Commissioner (Appeals), the present impugned order dated 26.11.2020 passed by the Commissioner (Appeals) allowing the 17 appeals deserves to be set aside and is set aside. Appeal allowed.
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2024 (9) TMI 125
Classification of imported goods calcium Carbonate - classifiable under CTH 28365000 as claimed by the revenue or as calcite powder falling under CTH 25369030 as declared by the appellant - entire case was made out on the observation of the Chemical examiner, Customs Laboratory, Kandla wherein he had opined that the goods imported by the appellant is Calcium Carbonate - applicability of Board Circular No. 43/2017-Cus., dated 16.11.2017 and also Board Circular No. 15/2009-Cus. dated 07.06.2009 - HELD THAT:- It is found that the department s claim of classification of the imported goods i.e. calcite powder as calcium carbonate under CTH 28365000 is based on Customs Laboratory report of Kandla which only opined that the goods is calcium carbonate. Firstly even if goods are calcium carbonate only because of this it is not classifiable under CTH 28365000. In order to classify under the said tariff item, the goods should be in confirmation to IS standard and must meet with the parameters provided in the IS specification. However, in the present case no such test was done. Secondly, as per Board Circular No. 03/2007-Cus dated 16.11.2017 and Board Circular No. 15/2019-Cus dated 07.06.2019. The board itself has endorsed that the Customs Laboratory, Kandla did not have the facility to test the imported goods in question. Therefore, in such case any report given by the said laboratory which is not equipped with the facility of testing such product, the test report cannot be accepted as correct and on that basis classification cannot be decided. In the case of ASIAN GRANITO INDIA LTD [ 2020 (8) TMI 615 - CESTAT AHMEDABAD ], it can be seen that since laboratory were not equipped at the relevant time, it was held that the test report of such laboratory cannot be accepted. The department s claim of change of classification also will not sustain. Thus, finding the claim of the revenue to classify the calcite powder imported by the appellant being based only on Chemical Examiner Report of Customs Laboratory, Kandla which is not equipped for testing the goods in question has no legs to stand. The impugned orders are set aside - Appeal allowed.
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2024 (9) TMI 124
Alleged misdeclaration of value of zinc ash - restricted in the Foreign Trade Policy (FTP), required licence for import - hazardous waste, liable to be returned to country of despatch in terms of rule 17(2) of Hazardous Waste (Management, Handling Transboundary Movement) Rules, 2008 - Imposition of fine u/s 125 of Customs Act, 1962, in lieu of confiscation ordered u/s 111(d) and section 111(m) of Customs Act, 1962, and imposition of penalty of ₹ 1,50,000 u/s 112 of Customs Act, 1962 - HELD THAT:- There is no ground to sustain recourse to section 111(m) of Customs Act, 1962 on account of value enhanced by recourse to computation that is not in conformity with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. As far as description is concerned, the goods had not yet undergone clearance for home consumption and the impugned order has not made out a case that the mistake which occurred at end of the supplier was the outcome of a conspiracy between the two. Hence, that, too, is no ground for invoking of section 111(m) of Customs Act, 1962. It would appear that the re-export of goods had not been ordered either as alternative to clearance for home consumption or in exercise of discretion under any provision of Customs Act, 1962. Instead the mandate of rule 17 of Hazardous Waste (Management, Handling Transboundary Movement) Rules, 2008 is held as the final word in that particular enforcement of law. In similar circumstances of mandate to prevent entry contrary to restrictions on drugs and cosmetics into India, it was held in re Siddiq Yusuf Merchant [ 2022 (5) TMI 1318 - CESTAT MUMBAI ] that ' it is a statutory right available to an importer which cannot be overlooked by the department; the importer should have been allowed to exercise the option to re-export the goods, as prayed for. It would sound more logical and legal to follow the said procedure prescribed under Rule 131(3) of the Drugs and Cosmetics Rules,1945, in absence of any contrary provisions under the Customs Act, 1962, which has not been cited before us. At the cost of repetition, it appears that the imported cosmetics are considered as prohibited at the threshold of its import, being not supported by the Registration Certificate issued under Drugs and Cosmetics Act, 1940 and the rules made thereunder. Therefore, the issue of under valuation of the goods and contravention of other provision of Customs Act,1962 would arise thereafter, to dispose the goods accordingly.' There are no reason to sustain redemption fine under section 125 of Customs Act, 1962 and of imposition of penalty under section 112 of Customs Act, 1962. Accordingly, the impugned order is set aside - appeal allowed.
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2024 (9) TMI 123
Levy of differential duty arising from adoption of US$ 2.83/kg as value of knitted polyester fabrics after rejection of declaration of US$ 1.60/kg, US$ 1.58/kg and US$ 1.60/kg respectively - speaking order or not - non-conformity with section 17(5) of Customs Act, 1962 - HELD THAT:- There is no doubt that, in Sodagar Knitwear [ 2018 (5) TMI 686 - CESTAT NEW DELHI ], the Tribunal did reiterate that admissions do not have to be proved but the crucial question of such admittance having been made in the present dispute is not apparent. It is quite possible that acceptance, as noted in bill of entry, may be construed as sufficing agreement with the revision in value but it appears to us that this conclusion therein, as well as in Sumridhi Aluminium (P) Ltd [ 2023 (9) TMI 1402 - CESTAT DELHI ], in re Namo Alloys Pvt Ltd [ 2023 (12) TMI 15 - CESTAT CHANDIGARH ] and in re Hanuman Prasad Sons [ 2020 (12) TMI 1092 - CESTAT NEW DELHI ], had, as its basis, conformation of acceptance of assessment and, thereby, holding that right of appeal was not in concatenation with the disputation of revision even though the former has no support without the latter. It is found that the circumstances of non-conformity with section 17(5) of Customs Act, 1962 have not been examined by the first appellate authority. Nor did the authority have the benefit of the decision of the Tribunal re Sumridhi Aluminium (P) Ltd, in Namo Alloys Pvt Ltd and in re Hanuman Prasad Sons setting out the legal prescription in the stated circumstances. We find these decisions are categorical in setting out the provisions of section 17(5) of Customs Act, 1962 which is relevant inasmuch as it is common ground that no speaking order has been passed. The impugned order is set aside - the dispute remanded back to the first appellate authority for fresh determination - appeal disposed off by way of remand.
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FEMA
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2024 (9) TMI 122
Powers of investigation in relation to the contraventions of the FEMA - Power to compound contravention - Power of Reserve Bank to compound contravention - as decided by HC [ 2018 (6) TMI 1492 - BOMBAY HIGH COURT] while upholding the constitutional validity and legality of the proviso, particularly by reading it in the manner noted above, we are in agreement that in the facts of this case, the RBI was not bound to put an end to the compounding proceedings. We are of the opinion that the compounding proceedings initiated vide the compounding applications of the petitioner and pending before the RBI should proceed, but strictly in accordance with law. Thus, the above discussion concludes this judgment. Rule is made absolute by quashing and setting aside the communication dated 1st December, 2017 and further directing the RBI to consider the compounding applications in accordance with law uninfluenced by the communication of the Enforcement Directorate dated 1st December, 2017 or any prior letters/communications, which are quashed and set aside by this judgment - We also proceed to direct the RBI to render the necessary guidance to the petitioner in the matter of compounding of the contraventions under the FEMA. HELD THAT:- After having heard learned counsel appearing for the parties, we find no error with the effective order passed by the High Court which is in paragraph 109 of the impugned judgment. Paragraph 109 itself records that the applications for compounding shall be decided in accordance with law. Hence, no case for interference under Article 136 of the Constitution of India is made out. The Special Leave Petition is accordingly, dismissed.
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2024 (9) TMI 121
Validity of order passed - violation of principles of natural justice - prayer for cross-examination was not granted - scope of retracted statement of the noticee - Adjudicating Authority failed to consider the opinion of the handwriting expert with respect to the matter written on the diaries and certain loose sheets recovered during the search. The statements which were recorded by the Appellants were retracted as during the custody they were tortured and beaten HELD THAT:- We find that the contentions which have been reiterated during the present proceedings had been meticulously dealt with by the Ld. Adjudicating Authority. The relied upon documents were provided to the Appellants. It does not appear to be convincing that merely because hearing was not held just before the passing of the impugned Order, in-spite of a number of opportunities given to the Appellants earlier that the impugned Order is vitiated by the violation of the principles of natural justice. The retractions have been dealt with by the Respondent Directorate from time to time as mentioned in the afore cited paragraphs. Since, the statements were explanatory in nature, providing explanation of the documents recovered during the search, the denial of cross-examination does not cause pre-judice to the interest of the Appellants. It is to be noted that since Sh. Samsul Huda was resident of Dhaka, the demand to cross-examine him was ab initio infructuous. The Appellant Sh. Liakat Ali failed to cooperate during the investigation and the adjudication proceedings. His belated participation through his Appeal at this stage cannot come to his rescue as to deny his involvement by raising the bogey of the alleged person being someone else other than him, without any corroboration. After having served the SCN and having furnished the relied upon documents, even so during the proceedings of adjudication, there does not appear to be any prejudice caused to the interest of the Appellants by the denial of cross examination, which in any case may not have been necessary in the present proceedings. A number of hearings were given to the Appellants during the course of the Adjudication proceedings. No reason to cause intervention in the impugned Order. We accordingly dismiss the Appeals.
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2024 (9) TMI 120
Contravention of Section 8(1), 8(3), 8(4) read with Section 64(2) of the Foreign Exchange Regulations Act, 1973 - consignment exported from India to Singapore was re-exported under the Bill of Entry on a higher value - Restrictions on dealing in foreign exchange - re-shipment of the same machinery was on a higher value with the multiplication of amount to 40 times - HELD THAT:-The mastermind behind the transaction was Dr. N.M. Parthasarthy who played a key role with M/s ETKIF America and was having significant role to arrange for the import and export of the same machinery. It was not even worth manufacturing of electronic grade iron oxide of 5000 tons rather in one factory at Puddukotai, there was no electricity supply available and at the factory of M/s ORJ Electronic Oxides, the machines were capable of only producing 20 Kg. iron oxide. The purpose was to get release of foreign exchange. The difference between the two amounts i.e. the first invoice for export from India to Singapore at the value of USD $ 1.71 lakh in two different consignments and reexport of the same machineries at the value of around 72 lakhs USD and 71,64,993USD totaling to an amount equivalent to USD 1,43,64,993 US Dopened that opportunity. With the support of the financial institutions, the appellants remained successful to get heavy foreign exchange released in contravention of the provisions of the Act of 1973 which was nothing but substantial loss to the country in terms of the foreign exchange. The role of the Bank of Madura and M/s Sundaram Finance Ltd was such to support the misdeeds though allegations have been made that financial institutions had made import directly and they processed the documents. However, none of the financial institution has supported the aforesaid and even other appellants have failed to prove the aforesaid allegations. The provisions quoted above are to indicate as to whether the facts disclosed above make out a case for contravention of the provisions referred above. We find that there is gross contravention of Section 8(1) read with section 48, 8(3) and 8(4) read with Section 64(2) of the Act of 1973. Shri N.M. Parthasarthy died during the pendency of the appeal and his legal heirs were brought on record but his role has been discussed in the order and is sufficient to show that he was the kingpin and mastermind for getting foreign exchange through the financial institutions by over invoicing the same consignment. In the light of the discussion made above, we find no merit in the appeals and they are accordingly dismissed.
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PMLA
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2024 (9) TMI 119
Money Laundering - scheduled offences - proceeds of crime - large scale illegal mining - HELD THAT:- It is found that the connection between these First Information Reports pleaded in paragraph 1 of the first and the second complaints and the alleged proceeds of crime has not been pleaded. In the first complaint, in paragraph 3.4 there is a reference to several offences registered at different places. However, there is no prima facie material to show that the offences pleaded, directly or indirectly, generated proceeds of crime in the form of money or illegally mined minerals. There are, no doubt, allegations of large scale illegal mining against the accused, but that is not sufficient. Prima facie, there must be factual assertions in the complaints to show that the offences which are named as scheduled offences on the basis of which complaints are filed, directly or indirectly, generated proceeds of crime. It is also noted that the first offence mentioned in both the complaints is not a predicate offence at all, as apart from Section 120B of the Indian Penal Code, 1860, no other scheduled offence is mentioned in the First Information Report. There are reasonable grounds for believing that the complaints do not indicate that the appellants are guilty of offence of money-laundering. It is noted here that nothing is pleaded to show that the appellants are involved in any other offence of money-laundering under the PMLA. Allegation of tampering with the evidence have not been made. Both the appellants have undergone incarceration for a period of about 01 year approximately. Therefore, a case is made out for enlarging the appellants on bail - appeal allowed.
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2024 (9) TMI 118
Retention of seized documents/properties in terms of Section 17(4) of PMLA - Misuse of loans - seizure has arisen in the present case out of the investigations, which were initiated against the investments made from the provident funds maintained by UPPCL Trusts,as Fixed Deposits with DHFL,contrary to the standing instructions and decisions - HELD THAT:- The Respondent Directorate largely on the basis of the statements of Shri RajendraMirashie of DHFL examined the loans disbursed by DHFL out of the common pool of funds. Shri Mirashie during tendering of his statements furnished list of borrowers, who were either controlled by DHFL/Wadhawan family or where the loans had turned into NPA leading to inference that these were siphoned off. In the course of such investigation the Appellant Companies of SGS Group were identified as beneficiary of loan disbursed by DHFL and suspected to have siphoned off such loans. The seizure of Rs.33,00,000/- has been made from the search conducted of the residential premises of Gulati family on 13.08.2021. The source of the seized amount has been explained as withdrawals from the personal accounts of S/Shri Subhash Gulati Sankalp Gulati on 28.09.2020 for medical exigencies. The account numbers from which the cash withdrawals of Rs.20,00,000/- was made by each of the two persons has been specified. The Branch and the Bank where these accounts were held have also been stated. It cannot be denied that the date of withdrawal was during the COVID-19 period. The concerned bank viz. the Indian Overseas Bank has issued Certificates certifying the veracity of such withdrawals - The argument of the respondent is that in the modern era of online banking the explanation of withdrawal for medical exigency seems far-fetched. It is observed that the rejection of the explanation on this ground cannot be accepted because the possibility of cash transactions during emergency situations cannot be ruled out. The respondent has failed to demonstrate either from the documents or from the digital record seized by them on 13.08.2021 the link with the suspected Proceeds of Crime. Since admittedly these have been recovered from the premises of the appellant whose nexus with respect to receipt of Proceeds of Crime has not been established as is obvious from the analysis of evidence arising from the records before us, there does not appear to be any basis for sustaining the seizure. The Impugned Order is set aside qua the Appellant and therefore, the Appeal is accordingly, allowed.
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Service Tax
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2024 (9) TMI 117
Eligibility to make a declaration to get benefit under the provisions of SVLDRS - appropriation of amount quantified in audit report from the eligible refund to the petitioner under Section 16 of the IGST Act read with Section 54 of the CGST Act read with Rule 89 of the CGST Rules 2017 - Rejection of the 27 Forms of SVLDRS 1 filed by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2015 - sanction/ rejection of refund of the petitioner by adjusting outstanding arrears of service tax from the eligible refund to the petitioner - petitioner did not discharge the service tax liability either in full or in part. It is the case of the petitioner that after filing the returns, the petitioner voluntarily discharged some tax liability through various challans. Whether the petitioner is eligible to make a declaration to get benefit under the provisions of SVLDRS or not? - HELD THAT:- On perusal of the provisions of the scheme, it is clear that the petitioner would not be eligible to make a declaration as per Section 125 (1) (e) as the audit in case of the petitioner was initiated prior to 30.06.2019 and the amount of duty involved in the audit was not quantified on 30.06.2019. The question of applicability of Section 123 determining the Tax Dues for the purpose of the Scheme would arise only if the petitioner was eligible to make declaration under the Scheme, however the petitioner falls in exception in clause (e) of section 125 (1) of the Act as the petitioner was subjected to audit and amount of duty involved in audit was not quantified on or before 30.06.2019. Therefore, the respondent authorities have rightly rejected 27 declarations filed by the petitioner at the threshold relying upon the final audit report issued after 30.06.2019. Reliance placed by the petitioner on the decision of Honorable Kerala High Court in case of Hi-Lite Projects Private Limited Vs. The Joint Commissioner, Central Tax and Central Excise [ 2020 (9) TMI 1069 - KERALA HIGH COURT] would not be applicable as the petitioner is found to be ineligible to make a declaration as per the provision of Section 125 (1) (e) of the Scheme. The attempt made by the learned advocate for the petitioner to draw parity between the facts of the case before the Honorable Kerala High Court and the facts of the present case, it is pertinent note that in the facts of the case, admittedly the audit was in process on 30.06.2019 and no show-cause notice was issued as was the case before the Kerala High Court and the amount was quantified by audit after 30.06.2019 and therefore as per the provisions of Section 125 (1) (e) of the Scheme, the petitioner would fall within the exception and would be ineligible to get benefit of the Scheme. Whether the respondent authorities were justified in appropriating the amount quantified in audit report from the refund claim of the petitioner? - HELD THAT:- The petitioner had paid an amount of Rs. 5,13,279/- during the course of audit voluntarily and out of the total dues of Rs. 60,40,619/- and accordingly there was outstanding amount quantified in audit report was Rs. 55,27,341/- after considering the payment made by the petitioner. Therefore, as per the proviso to Section 73 of the Finance Act, 1994, the differential amount of Rs. 55,27,341/- could not have been adjusted/ appropriated out of the refund amount of the petitioner without issuing any show-cause notice or giving opportunity of hearing to the petitioner by the respondent authority while adjudicating the refund claim of the petitioner. The respondent authority while adjudicating refund claim was not justified in appropriating the same as outstanding dues as there was no quantified or outstanding service tax dues till that date and as such the rejection of the refund claim on such ground by making appropriation of the alleged outstanding dues is without any basis and contrary to the provisions of the Finance Act, 1994. The order-in-original dated 23.09.2019 and the Appellate order are hereby quashed and set aside and the matter is remanded back to the adjudicating authority to issue fresh show-cause notice to the petitioner and to provide an opportunity of hearing with regard to the refund claim made by the petitioner under Section 16 of the IGST Act read with Section 54 of the CGST Act and Rule 89 of the CGST Rules, 2017. Petition disposed off by way of remand.
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2024 (9) TMI 116
Interpretation of exemption notification dated 01.03.2006 - service tax on taxable services in commercial or industrial construction services - petitioner submits that in view of settled law, the show cause notice issued by the respondents deserved to be quashed and the condition laid down in notification dated 01.03.2006 also should be treated as deleted in terms of the judgment of Hon ble the Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] and COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] . HELD THAT:- Having noticed the judgments passed by the Hon ble Apex Court, it is satisfied that so far as the contractor engages in commercial or industrial construction service, would not be required to include the gross amount charged relating to goods and material supplied for providing such services and, therefore, the explanation mentioned in notification dated 01.03.2006, would stand deleted and accordingly the show cause notice issued to the petitioner dated 03.11.2008, could not be substantiated in law. The writ petition deserves to be allowed and is accordingly allowed.
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2024 (9) TMI 115
Recovery of Cenvat credit wrongly availed on input services - unsold flats after the issuance of completion certificate - contravention of provisions of rule 6(3) and 6(3A) of the Cenvat Credit Rules, 2004 - Section 73(2) of the Finance Act, 1994 read with Rule 14 of the Cenvat Credit Rules, 2004 - extended period of limitation - interest - penalty. HELD THAT:- The appellant has on their own admitted that on perusal of the definition of service as provided in section 65B (44) it is clear that activity of transfer of title in immovable property by way of sale is not a service at all. Since on receipt of completion certificate, the building becomes an immovable property and any booking receipt in respect of same is a booking in respect of sale of property only - The appellant had the option to take proportionate amount of credit in respect of the input services pertaining to the eight flats sold earlier and reverse the balance amount towards the unsold four flats. As per rule 3 of the CCR 2004, Cenvat credit of service tax is paid on input services used to provide output service is eligible. A service provider is entitled to credit of excise duty paid on inputs and capital goods and service tax paid on input services used by him for providing the output service. Thus availment of cenvat credit has direct nexus to the payment of taxes. The very fact that the appellant has no liability to discharge the service tax they are not eligible to retain the amount availed by them towards the Cenvat credit. The Chandigarh Bench of the Tribunal in M/s Woodward Governor India Ltd [ 2023 (5) TMI 564 - CESTAT CHANDIGARH ], where the appellant was engaged in manufacture and trading of goods and was availing credit of the duties and taxes paid on the inputs and input services, following the decision of the Tribunal in Lally Automobiles Ltd. [ 2018 (7) TMI 1679 - DELHI HIGH COURT ] held that the appellants have no reason to avail credit on services which they were fully aware were exempted services and that the provisions of Rule 6(3) will not apply, held that appellants ought to have availed credit correctly. Extended period of limitation - Penalty - interest - HELD THAT:- Both the authorities below have rightly arrived at the conclusion that the appellant had suppressed the material facts with intent to evade the liability of service tax and therefore the extended period of 5 years is invocable in terms of the proviso to Section 73(1) of the Act. The appellant has admitted that they were not liable to pay service tax on the unsold four flats in view of the specific provisions of Section 66E read with Section 65B(44) of the Act - The appellant having adopted the self assessment procedure was required to disclose to the department that they were providing such services. Thus, the extended period has been rightly invoked and for the said reason the appellant is liable to penal action under the provisions of Section 78 - the levy of interest under Section 75 of the Act, is upheld, as once the duty liability arises, the liability to pay interest is automatic. There are no infirmity in the impugned order and therefore the findings arrived at are affirmed - appeal dismissed.
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Central Excise
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2024 (9) TMI 114
Time Limitation - appellant are manufacturer of goods or not - Department has arrived at the conclusion that the appellant is the manufacturer because they have claimed to be so while accepting the bid and tender supplied by the Electricity Boards - HELD THAT:- From the records, there is no other evidence culled out by the department to suggest that the appellant were in effect manufacturers of such electrical items and the same was produced by them in the factory. Admittedly, the Electricity Boards were treating the appellant as manufacturers based on the terms of the contract and tender. It is evident from records that manufacture of the goods had taken place at premises other than that of the appellant, largely at the job workers premises. Under the circumstances when manufacture takes place at a premises of a job worker, then he stepps into the shoes of the manufacturer in terms of section 2 (f) of the Central Excise Act, 1944. The very issue had come up for consideration in the case of Comet Technocom Pvt.Ltd. Ors. v. CCE ST, Kolkata-II [ 2018 (12) TMI 1771 - CESTAT KOLKATA ], wherein the Bench held ' it would be evident that in the present case, the job workers of the assessee company were independent contractors/manufacturers and hence, the assessee company and/or its directors cannot be saddled with any liability of payment of excise duty and/or consequential penalty with respect to the goods so manufactured by the said job workers.' It is therefore evident from the factual position in the present matter that the appellant noticee cannot be taken to be manufacturers, merely for so stating to their suppliers, without in effect being able to establish any manufacturing activity at their end. Certainly no claim for duty can thus be fastened onto them. The order of the lower authority is set aside and the appeal filed is allowed both on merits and on limitation.
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2024 (9) TMI 113
Reversal of CENVAT Credit - capital goods - removal of goods as such - removal of Plant Machinery without reversal of corresponding credit - Rule 3(5) of the CCR, 2004 - HELD THAT:- The facts of the present case are squarely covered by the judgement of the Hon ble High Court of Delhi in the case of HARSH INTERNATIONAL (KHAINI) PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2012 (6) TMI 340 - DELHI HIGH COURT ] where it was held that ' In the present case the appellant purchased the capital goods in the period between 2003 and 2005 and used them in its factory till they were sold to M/s. Harsh International (Khaini) Pvt. Ltd. in June and July, 2007. Thus the capital goods were used for a period of 2 to 4 years. They cannot therefore be stated to be sold as such capital goods.' - the Hon ble High Court held that the capital goods cannot be stated to be sold as such . They were sold as used capital goods. Further Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS VERSUS AUTO IGNITION LTD. [ 2008 (4) TMI 43 - SUPREME COURT ] held that the onus to prove that the Assessee had availed the Modvat credit was on the Revenue. During the period in dispute, Rule 3(5) of CCR, 2004 does not provide any mechanism for recovering the Cenvat credit in case the manufacturer has failed to pay an amount equal to the Cenvat credit as required by the Rules. Where the Rules do not provide for recovery mechanism during the impugned period, demand of the same under any other provision is not sustainable and is accordingly set aside. The impugned order is set aside and the appeal filed by the Appellant is allowed.
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2024 (9) TMI 112
Claim for statutory interest on refund granted in terms of Section 35FF of the Central Excise Act, 1944 - HELD THAT:- A bare perusal of Section 35FF mandates that when the Appellant is refunded the amount of pre-deposit earlier paid in terms of Section 35F consequent upon the order from the Appellate Authority, interest shall also be paid to the Appellant from the date of payment of pre-deposit amount till the refund of such amount. Thus, the payment of interest along with refund under Section 35FF of the Excise Act, is not dependent on whether the same has been claimed by the Assessee or not. The same is axiomatic. In the present case, once the Ld. Adjudicating Authority committed a legal error in not granting interest on refund of pre-deposit while passing the Order-in-Original and appeal against the Order-in-Original is filed, then the Ld. Appellate Authority is bound to correct the error. The finding given by the Ld. Commissioner (Appeals) in the impugned order that question of interest does not arise at this stage, is not legally sustainable. In the case of M/S CADILA PHARMACEUTICALS LTD VERSUS COMMISSIONER OF SERVICE TAX-SERVICE TAX - AHMEDABAD [ 2018 (1) TMI 424 - CESTAT AHMEDABAD] , the Tribunal categorically held that Section 35FF itself provides for payment of interest on refund of pre-deposit amount and the same does not differentiate between the payment of pre-deposit made in cash or by debit in the Cenvat credit account. Thus, merely because Section 35F restricts the pre-deposit amount as Rs.10 crore, does not mean that Assessee will not be entitled for interest on refund of pre-deposit amount under Section 35FF even if it paid the pre-deposit amount more than Rs.10 crore. The interest has to be paid to the Appellant as per Section 35FF of the Central Excise Act, 1944. The impugned order is set aside - appeal allowed.
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2024 (9) TMI 111
Clandestine removal - shortage found in the raw material and the finished goods under Section 11A/11A(4) read with Section 174 of the CGST Act, 2017 - retraction of statements - mandatory penalty - HELD THAT:- The Adjudicating Authority has categorically concluded that the appellant had contravened the provisions of Rule 4, 6, 8,10, 11 and 12 of Central Excise Rules, 2002 by not recording its production of finished goods found short during the physical verification and not determining the central excise duty on the goods found short. Had the investigation not been taken up by the Department, the shortage in the stocks would not have come to light causing loss to the Government exchequer. In the circumstances, the imposition of mandatory penalty on the shortage detected, the appellant has been rightly held liable for penal action under Section 11 AC(1)(a) of the Act. Reliance has been placed on the decision of the Apex Court in the case of Punjab Tractors Ltd. Vs. CCE, Chandigarh [ 2005 (2) TMI 141 - SUPREME COURT] , where the Court has held that for violation of the Rules, the appellant is undoubtedly liable to pay the penalty as prescribed under the said Rules. The Tribunal also in the case of Amtek Auto Ltd. Vs. CCE, New Delhi [ 2000 (11) TMI 177 - CEGAT, NEW DELHI] has also held that the penalty is warranted for contravention of the Rules. Hence, no interference is called for in the imposition of penalty on the appellant. Thus no interference is called for in the impugned decision and hence the same is affirmed - appeal dismissed.
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2024 (9) TMI 110
CENVAT Credit - input services - Manpower supply service and House Keeping service received by the appellant at their un-registered job working units - Availment of cenvat credit beyond six months from the date of the document - Invocation of extended period of demand - Interest and penalty. Credit availed on man power supply services and house-keeping services - Availment of cenvat credit in respect of input services consumed in the unregistered job working premises and not consumed in the registered premises - HELD THAT:- The Hon ble Jurisdiction High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S. ASHOK LEYLAND LTD. [ 2019 (1) TMI 430 - MADRAS HIGH COURT ] held that the definition of input service has to be widely construed, and in terms of Rule 3, which allows the manufacturer of final products to take Credit, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of final products. It was held that the decision of the Hon ble Supreme Court in the case of Maruti Suzuki Ltd Versus CCE, Delhi-III [ 2009 (8) TMI 14 - SUPREME COURT] is not applicable in the case of input services - the disallowance of Credit alleging that the Credit has been availed in unregistered premises requires to be set aside. Availment of cenvat credit beyond six months from the date of the document - HELD THAT:- It has to be noted that when duty is paid on inputs and service tax paid on input services a right accrues for availing Credit. All the invoices have been issued prior to September 2014. This means that invoices on which Credit has been availed have been issued before the introduction of the restriction limiting the time for availing the Credit. Nothing in the provision says that the 3 proviso to Rule 4 would have retrospective effect. The very same issue was considered by the Hon ble High Court of Delhi in the case of GLOBAL CERAMICS PVT. LTD., M/S. B.R. CERAMICS (P) LTD. VERSUS THE PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, DELHI-1 [ 2019 (5) TMI 1432 - DELHI HIGH COURT ]. While analyzing the issue as to whether the Credit can be availed on Countervailing Duty (CVD) paid by the appellant for imports that took place prior to the amendment to Rule 4 (1) of Cenvat Credit Rules prescribing the time limit, the Hon ble High Court held that the said provision cannot be made applicable retrospectively and that the importer would be eligible to avail Credit for the imports prior to the date of introducing the time limit - there are no hesitation to conclude that the demand raised alleging that the appellant has availed Cenvat Credit on invoices issued prior to September 2014 contravening Rule 4 of CCR, 2004 cannot sustain and requires to be set aside. Invocation of extended period of demand - HELD THAT:- Though it is alleged that the appellant has suppressed facts, there is no evidence adduced by the department to establish any positive act of suppression on the part of the appellant. The issues are purely interpretational in nature. In regard to the issue whether Credit can be taken on input services received in unregistered premises, the litigation has travelled upto Hon ble High Court. In regard to the second issue whether the time limit introduced by Rule (2) would apply to invoices issued prior to the date was considered by various forums. All these would show that both these issues were debatable. For these reasons, the invocation of extended period cannot sustain. The impugned orders are set aside - Appeal allowed.
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2024 (9) TMI 109
CENVAT Credit - outward transportation in respect of sale of goods - sale of goods is on FOR basis - inclusion of transportation charges in the assessable value of excisable goods on which excise duty was discharged - HELD THAT:- The lower authorities have confirmed the demand only on the basis of Kolkata High Court judgment in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. VESUVIOUS INDIA LTD. [ 2013 (12) TMI 1025 - CALCUTTA HIGH COURT] . It was also observed by the Learned Commissioner adjudication that the judgment in the case of Commissioner of Central Excise in COMMISSIONER OF C. EX. CUSTOMS VERSUS PARTH POLY WOOVEN PVT. LTD. [ 2011 (4) TMI 975 - GUJARAT HIGH COURT] is not relevant to the present case. However much water has flown on this issue as subsequent to the decision referred by the learned Commissioner the Hon ble Supreme Court in the case of M/s. Ultratech Cement Ltd. [ 2018 (2) TMI 117 - SUPREME COURT ] has decided the issue against the assessee, however on the basis of said judgment, the board has issued a circular wherein certain parameter was fixed to allow the cenvat credit in respect of outward transportation. Thereafter, this Tribunal in case of M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1487 - CESTAT AHMEDABAD] and M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [ 2019 (2) TMI 1488 - CESTAT AHMEDABAD] held that where the freight is included in the assessable value, on which excise duty was discharged, fright was born by the supplier of the goods, the Cenvat credit on such output transportation is admissible. The entire matter needs to be re-considered in the light of the fact of the present case and on the basis of various judgments delivered by the different forum subsequent to passing of the impugned orders - the appeals are allowed by way of remand to the adjudicating authority.
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2024 (9) TMI 108
Wrongful availment of common credit on input services used for trading and manufacture - period December 2008 to September 2013 - Time limitation - HELD THAT:- In the present case, the appellant has reversed the proportionate credit attributable to trading form 1.4.2011 onwards. The Annexure I of the SCN would show that the appellant has reversed the credit w.e.f. 1.4.2011. The department has not disputed the quantification of the amount that has been reversed by the appellant for the period after 1.4.2011. There is no case for department that the amount reversed is not in accordance with the formula prescribed under Rule 6 (3A) (b) of CCR, 2004. The adjudicating authority has confirmed the total common input credit. There is no provision to deny the credit of input services used for manufacturing activity. Hence the demand raised in SCN and confirmed by adjudicating authority is erroneous. The reason given by adjudicating authority for confirming the entire common input credit is that appellant has availed credit on input services exclusively used for trading. On perusal of the SCN, it is found that these are merely assumptions made on the basis of invoices. It has not been established that the appellant has availed credit exclusively for trading. In the reply to SCN the appellant has stated that they have not availed credit on any input services exclusively used for trading. The confirmation of the entire common input service credit on such allegation is baseless. Time Limitation - HELD THAT:- The issue as to whether trading can be considered as an exempted service was a debated issue prior to 1.4.2011. There were views expressed by various forums which held in favour of assesse. The issue is purely interpretational in nature. Further, w.e.f. 1.4.2011, the appellant has started reversing the proportionate credit which is clear from the Annexure to the SCN. Taking these aspects into consideration the appellant cannot be saddled with the guilt of suppression of facts with intent to evade payment of duty. There are no ingredients for invoking the extended period. The demand raised beyond the normal period is set aside as time barred. The appellant succeeds on the issue of limitation. The impugned order is modified to the extent of setting aside the demand, interest and penalties for the extended period. The appellant is liable to reverse the proportionate as under Rule 6 (3A) for the normal period. The amount already reversed can be adjusted and applied to the normal period (If not already reversed). The penalties imposed for the normal period are set aside for the same reasons applicable to the issue of limitation. Appeal allowed in part.
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2024 (9) TMI 107
Denial of CENVAT Credit on components, spares and accessories of capital goods, along with interest - Denial of CENVAT credit on welding electrodes which had been used by the appellant for manufacture of their final product and maintenance thereof - demand of interest on suo motu reversal by the appellant of CENVAT Credit when they were having sufficient balance in their CENVAT Credit Account - imposition of penalty. Denial of CENVAT Credit on components, spares and accessories of capital goods, along with interest - HELD THAT:- Admittedly, the clarification issued vide Circular No. 276/110/96-TRU dated 02.12.1996 is self-explanatory, which clarifies that ' As such, scope of this entry is not restricted only to the components, spares and accessories falling under Chapters 82, 84, 85 or 90 but covers all components, spares and accessories of the specified goods irrespective of their classification.' - Therefore, all the components and parts mentioned hereinabove fall under the category of capital goods in terms of Rule 2(a) of the CENVAT Credit Rules, 2004. Thus, the appellant is entitled to take CENVAT Credit thereon. Denial of CENVAT credit on welding electrodes which had been used by the appellant for manufacture of their final product and maintenance thereof - HELD THAT:- The welding electrodes are the inputs which were used in manufacturing the final products by the appellant. Therefore, in terms of Rule 2(k) of the CENVAT Credit Rules, 2004, the appellant is entitled to take CENVAT Credit. Interest - HELD THAT:- The appellant was maintaining sufficient balance in their CENVAT Credit Account during the intervening period and therefore, no interest is payable by the appellant, as held by the Hon ble High Court of Karnataka in the case of Bill Forge Pvt. Ltd. [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT ]. Penalty - HELD THAT:- As the appellant is neither required to reverse CENVAT Credit nor liable to pay interest, therefore, no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.
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Indian Laws
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2024 (9) TMI 106
Scope of Sections 33, 34, 37, and 39 of the Karnataka Stamp Act, 1957 - interpretation of statute - definition of conveyance - agreement of sale - perpetual injunction restraining the respondent from interfering with the appellant s peaceful possession and enjoyment of the plaint schedule property. Whether the agreement of sale dated 29.06.1999, with a recital on delivery of possession to the appellant, conforms to the definition of conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Act or not? - HELD THAT:- The High Court has correctly distinguished the jurisdiction vested in every person or a person in the public office on the one hand and on the other hand the District Registrar in determining the penalty payable on insufficiently stamped instrument. The ratio in all fours is applicable to the circumstances of the case - the appellant, with a view to produce in evidence the agreement of sale in the suit, must pay the deficit stamp duty and penalty. Whether, in the facts and circumstances of the case, the order dated 23.01.2019 of trial court, as confirmed by the impugned orders dated 23.08.2019 and 14.09.2021, are legal and valid or call for interference by this Court under Article 136 of the Constitution of India? - HELD THAT:- The scheme does not prohibit a party to a document to first invoke directly the jurisdiction of the District Registrar and present the instrument before Court/Every Person after complying with the requirement of duty and penalty. In such an event, the available objection under Sections 33 or 34 of the Act is erased beforehand. The quantum of penalty is primarily between the authority/court and the opposing party has little role to discharge. Before the stage of admission of the instrument in evidence, the respondent raised an objection on the deficit stamp duty. Therefore, it was the respondent who required the suit agreement to be impounded and then sent to the District Registrar to be dealt with under Section 39 of the Act. In this case, the respondent desired the impounding of the suit agreement and collect the deficit stamp duty and penalty. The trial court is yet to exercise its jurisdiction under Section 34 of the Act - The imposition of penalty of ten times at this juncture in the facts and circumstances of this case is illegal. The instrument is sent to the District Registrar, thereafter the District Registrar in exercise of his jurisdiction under Section 39 of the Act, decides the quantum of stamp duty and penalty payable on the instrument. The appellant is denied this option by the impugned orders. It is trite law that the appellant must pay what is due, but as is decided by the District Registrar and not the Court under Section 34 of the Act. The direction to pay ten times the penalty of the deficit stamp duty merits interference and accordingly is set aside. The trial court is directed to send the agreement of sale dated 29.06.1999 to the District Registrar to determine the deficit stamp duty and penalty payable - Appeal allowed in part.
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2024 (9) TMI 105
Applicaility of arbitration clause in the contract - After the contract granted to the appellant was rescinded, the appellant invoked Section 7 of the 1983 Act by approaching the Arbitration Tribunal - HELD THAT:- The order of the Arbitration Tribunal, holding that the Arbitration Act will apply, led the appellant to file a petition under Section 11(6) of the Arbitration Act, which was not objected to on the grounds of the applicability of the 1983 Act. The objection of the State government was confined to the merits of the claim. The award is only in the sum of Rs. 6,52,235/- with interest. The award was made on 25th April 2014. Therefore, in the facts of the case, it will be unjust to set aside the award only on the ground of the failure of the appellant to take recourse to the 1983 Act. In fact, the appellant had taken recourse to the 1983 Act before seeking the appointment of an Arbitrator. In this case, as can be seen from the impugned judgment, the award has been set aside only on the ground that the appellant ought to have invoked the provisions of the 1983 Act. Even assuming that the observations in paragraph 17 of the decision in the case of MADHYA PRADESH RURAL ROAD DEVELOPMENT AUTHORITY ANR. VERSUS M/S. L.G. CHAUDHARY ENGINEERS AND CONTRACTORS [ 2018 (3) TMI 2044 - SUPREME COURT] , are not applicable, this is a fit case to exercise jurisdiction under Article 142 of the Constitution of India to ensure that complete justice is done. Therefore, by setting aside the impugned judgment, the appeal under Section 37 of the Arbitration Act will have to be restored with a request to the High Court to decide the same on merits. The impugned judgment and the order passed in the Arbitration Appeal are set aside - Appeal allowed.
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2024 (9) TMI 104
Dishonour of Cheque - burden of proof of outstanding due on the complainant - failure to consider in the Criminal Revision filed by the petitioner that the sentence awarded is illegal. Whether the appellate court has acted with material irregularity and illegality in assuming burden of proof of outstanding due on the complainant in the facts and circumstances of this case? - HELD THAT:- The respondent-accused admitted her signature on the cheque but did not appear in the witness-box to discharge the reverse burden. Her husband DW-1 claims to have been looking after the business of Sushila Co., but failed to discharge this burden by producing books of accounts etc. or folio of cheque-book as to against which head the cheque was issued or in fact there is entry of purchase of 100 Tins of Oil in the books of accounts or not, rather simply conveyed evasive reply that he is not aware of the fact that whether Sushila Co., had purchased 100 Tins of Oil from the petitioner, therefore, the accused evidently failed to discharge the burden to prove that the cheque was not issued against existing debt. The learned appellate court has mis-construed the law that burden of proof was on the complainant. Further, the appellate court has travelled beyond the scope of proof of charge under Section 138 of the Negotiable Instruments Act by finding fault that the residential address of accused is different than her business premises. The accused not has denied that she has business at the referred premises. Whether the appellate court failed to consider in the Criminal Revision filed by the petitioner that the sentence awarded is illegal inasmuch as it is not consistent with the requirement of minimum punishment under Section 138 of the Negotiable Instruments Act? - HELD THAT:- A bare perusal of provisions of Section 138 of the Negotiable Instruments Act makes it crystal clear that for the offence under the said provision, the punishment would be imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the cheque, or with both. In the case on hand, the trial Judge has awarded sentence only but the sentence cannot be less than the cheque amount. It may extend to twice the cheque amount. Since the trial Judge has not passed minimum sentence consistent with the law, the same is revisable one, hence, dismissal of Criminal Revision No.24/1999 stands set aside and it is restored before the appellate court, who shall pass order according to law considering propriety of sentence. Technically the petitioner should have challenged the common impugned order separately as the said order was passed in above referred criminal appeal as well as criminal revision petition. The court can pass a common order in two matters connected with each other but it should be challenged by filing separate petitions. However, the aforesaid technicality would not fetter the powers of this Court under Section 397 Cr. P.C., to suo moto take cognizance and revise, if any illegality or correctness in the proceedings before the inferior criminal court, comes to the notice of Court. This criminal revision is allowed.
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2024 (9) TMI 103
Dishonour of Cheque - discharge of legal laibility - quashing of complaint under section 138 of Negotiable Instruments Act, 1881 and summoning order - prosecution under section 141 of the Negotiable Instruments Act, 1881 arraigning of a company as an accused - HELD THAT:- The present case in hand pertains to quashing of complaint under section 138 of Negotiable Instruments Act, 1881 wherein the petitioner has been alleged to have defraud the respondent-company whereas it has been alleged by the respondent-company that the petitioner has clearly admitted the cheques in question to have been signed by him in discharge of his legal liability. The present petitioner had signed the cheque in question bearing no. 113603 (Annexure P-3) as an authorized signatory of M.R.Trading co. Indeed it is not the case of the respondent that he was not aware of the said fact. Moreover, even the statutory notice, before filing the complaint was issued only to the present petitioner and not to the company wherein M.R.Trading Co was required to be arrayed as an accused and in view of the settled law in the case of Aneeta Hada Vs. M/s Godfather Travels and Tours Pvt Ltd. [ 2012 (5) TMI 83 - SUPREME COURT ] wherein it has been held that for maintaining the prosecution under section 141 of the Negotiable Instruments Act, 1881 arraigning of a company as an accused is imperative. A company being an artificial person acting through its management has a separate legal entity wherein it owns its assets and is liable for debts. To attract section 138 of NI Act, it is necessary to understand the essence of the section 141 of NI Act in true sense which unmistakably on a plain reading itself makes clear the importance of impleading the company in cases involving cheques issued on its behalf. This court while finding merit in this case strongly holds that the petitioner in his official capacity cannot be prosecuted in the absence of the company. Even otherwise, it is crystal clear that the petitioner had signed the cheque in his capacity of an authorized signatory however, the trial court while passing summoning order had not looked into this legal aspect. The complaint dated 04.02.2021 and the summoning order dated 10.03.2021 passed by the trial court, Chandigarh suffer from serious legal infirmity and are ordered to be quashed.
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2024 (9) TMI 102
Dishonour of cheque - insufficient funds - failure to rebut the presumption contained in Section 139 of the NI Act - HELD THAT:- It was laid down by the Hon ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, [ 2022 (7) TMI 1455 - SUPREME COURT ] that the revisional court is not an appellate jurisdiction and it can only rectify the patent defect, errors of jurisdiction or the law. The Court has to start with the presumption that the cheque was issued in discharge of legal liability and the burden is upon the accused to prove the contrary. It was laid down by the Hon'ble Supreme Court in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. [ 2016 (9) TMI 867 - SUPREME COURT ] that issuing a cheque toward security will also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. This position was reiterated in Sripati Singh v. State of Jharkhand, [ 2021 (11) TMI 66 - SUPREME COURT ] it was held that a cheque issued as security is not a waste paper and complaint under Section 138 of the N.I. Act can be filed on its dishonour. The accused admitted that she had received a notice and claimed that she came to know about the dishonour after the receipt of the notice. Therefore, the receipt of the notice is not disputed - it was duly proved on record that the accused had issued a cheque in discharge of her legal liability and the cheque was dishonoured due to insufficient funds and the accused failed to repay the amount despite the receipt of valid notice of demand. Therefore, all the ingredients of Section 138 of the NI Act were duly satisfied. The amount of compensation of ₹2,40,000/- is not excessive and no interference is required with the same. The present revision fails and the same is dismissed.
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