TMI Tax Updates - e-Newsletter dated: May 31, 2024 (2024)

Case Laws in this Newsletter:

GSTIncomeTaxCustomsPMLAServiceTaxCentralExciseIndianLaws

Highlights / Catch Notes

GST

• Amendment to Notification No. 02/2017-Central Tax changes jurisdiction of Central Tax Officers in Rajasthan districts.

  The Ministry of Finance, Department of Revenue, issued Notification No. 10/2024-Central Tax amending Notification No. 02/2017-Central Tax. The amendment pertains to the jurisdiction of Central Tax Officers. The notification, u/s 3 and 5 of the Central Goods and Services Tax Act, 2017, and u/s 3 of the Integrated Goods and Services Tax Act, 2017, substitutes jurisdictional details for various districts in the state of Rajasthan. The changes are effective from 5th August 2023. The notification reassigns jurisdiction for districts including Alwar, Jaipur, Jodhpur, and Udaipur. This amendment is made in exercise of statutory powers conferred upon the Central Government. The notification was issued by the Central Board of Indirect Taxes and Customs.

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• Cancellation of registration: Petition dismissed due to gross delay in availing appellate remedy. Law favors diligence over indolence.

  The High Court rejected an appellate order due to gross delay in filing, citing Section 107 of the Bihar Goods and Services Tax Act, 2017 involving the issue of cancellation of registration. The Act allows appeals within three months, with a one-month extension for delay condonation with valid reasons. The Supreme Court's order on limitation during the pandemic was considered, setting a deadline for filing appeals. The court emphasized that Article 226 jurisdiction should not be used when alternate remedies are available and the party failed to act diligently within the prescribed time. The principle of favoring diligence over indolence was highlighted, leading to the dismissal of the petition.

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• Transporter not required to carry original tax invoice, only duplicate copy as per Rule 48(1)(b) of CGST. Petition allowed.

  The Karnataka High Court determined tax and penalty in a case where the original tax invoice was not carried during goods transportation. The court relied on a previous decision involving Rule 138-A of the SGST, Section 68 of the CGST, and Rule 48 of the CGST. It was held that as per Rule 48(1)(b) of the CGST, the transporter is only required to carry the duplicate copy, not the original tax invoice. The court rejected the contention that the petitioner should pay tax and penalty for not carrying the original invoice. The petitioner's claim for refund of double tax paid was accepted, and the petition was allowed.

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• Challenge to adjudication order u/s 73 of GST. Reply was not considered. Order to be treated as corrigendum to the SCN.

  The Madras High Court reviewed a challenge to an adjudication order issued u/s 73 of the TN-GST Act. The court found that despite the petitioner submitting a detailed reply to the notice preceding the order, the order was passed without considering it. Consequently, the court held the order to be unsustainable and set it aside. The case was remitted back to the respondents to issue a fresh order within 8 weeks, following due process. The quashed order was to be treated as a corrigendum to the show cause notice. The Writ Petition was disposed of by the court.

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• GST levy for ocean freight, ITC eligibility, and penalty u/s 122(2)(a) of CGST Act. The court partially allowed the Writ Petition.

  The Madras High Court addressed a case involving the levy of GST on ocean freight and the availability of Input Tax Credit (ITC) for inward supplies. The court found that the taxpayer failed to produce tax invoices for verification, rendering them ineligible for ITC. Additionally, three invoices for which ITC was claimed were not reflected in GSTR-2A, indicating non-payment of GST. The court dismissed the argument that credit was auto-populated in GSTR-2A. The court allowed the petition in part and dismissed it in part, citing relevant legal provisions such as u/s 122(2)(a) of the CGST Act and Section 16(2) of the CGST Act. The court also referenced a Supreme Court decision in a similar matter.

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Income Tax

• Exemption: U/s 10(46) of IT Act 1961, 'Mathura Vrindavan Development Authority' notified by Central Govt.

  The Central Government, u/s 10(46) of IT Act 1961, has notified 'Mathura Vrindavan Development Authority' as an assessee for tax purposes. The Authority is constituted u/r the Uttar Pradesh Urban Planning Development Act, 1973. Effective from assessment year 2024-25, subject to the condition that it continues to operate u/r the said Act with specified purposes. This notification, issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, is signed by Under Secy. (TPL).

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• Best Judgment assessment u/s 144 without notice u/s 143(2) is invalid. Addition u/s 69A as unexplained money deleted.

  The ITAT Ahmedabad held that a best judgment assessment u/s 144 without issuing notice u/s 143(2) is invalid if the assessee has filed a return and responded to AO's notice. Courts emphasize Section 144 is for non-compliance cases. Assessee provided details of cash deposits, supported by affidavits from relatives. Deposits were found to be from maturity proceeds, not unexplained money u/s 69A. Addition in brother's hands linked to joint account. CIT(A) erred in upholding half of assessment u/s 69A. Affidavits, if credible, can explain cash source. Lack of concrete reasons to reject explanations. Entire u/s 69A addition deleted, penalty proceedings u/s 271AAC(1) & 271F dropped. Assessee's appeal allowed.

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• Tax exemption granted to APSCHE as an 'instrument of state' under Article 12 of the Constitution. Autonomous bodies controlled by the government qualify.

  The ITAT Visakhapatnam considered whether the appellant, an entity established under the APSCHE Act, qualifies as an 'instrument of state' u/s Article 12 of the Constitution for tax exemption. The tribunal found that the appellant, under full control of the State Government, meets the criteria of an instrumentality of the government. The concept of 'other authorities' in Article 12 was analyzed, referencing the Supreme Court's tests from the Som Prakash Rekhi case. The tribunal concluded that the appellant, being under the superintendence and control of the State Government, falls within the definition of 'State' u/s Article 12, entitling it to immunity from taxation. The appellant's appeal was allowed, emphasizing full tax exemption for its income and receipts.

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• Penalty u/s 271(1)(c) for bogus LTCG confirmed. Revised income declaration not voluntary. No exemption u/s 10(38).

  The ITAT Mumbai upheld the levy of penalty u/s 271(1)(c) for bogus LTCG. Exemption u/s 10(38) denied as revised income declaration was not voluntary but in response to u/s 148 notice. Citing MAK Data case, voluntary disclosure doesn't prevent penal proceedings. Assessee failed to provide evidence for share transaction genuineness. Additional income declared only after u/s 148 notice, not voluntarily. No merit in argument that penalty cannot be imposed as returned and assessed income are same. Penalty upheld as bogus LTCG was claimed exempt initially. Assessee's appeal dismissed.

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• Unexplained cash investment for property purchase. Addition without cross-examination deemed unjustified. Burden on AO to prove.

  The ITAT Indore addressed unexplained cash investment for property purchase post search operation. Addition without cross-examination was challenged. The Tribunal emphasized burden of proof on AO to allow cross-examination of third party whose documents led to addition. Failure to provide cross-examination opportunity led to deletion of alleged cash investment addition. Lack of additional evidence by Revenue and similarity to precedent case resulted in relief for the assessee. The Tribunal ruled in favor of the assessee due to insufficient evidence and failure to adhere to principles of natural justice.

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• Non admission of appeal before the CIT(A) for non-payment of advance tax: Assessee not liable for advance tax u/s 208. Appeal restored.

  The ITAT Amritsar considered an appeal before CIT(A) u/s 249 regarding non-admission of appeal due to non-payment of advance tax u/s 249(4)(b). The assessee claimed no taxable income, citing agricultural income and non-taxable gifts. Documentary evidence was submitted. The Tribunal found the assessee's stance consistent and declared NIL taxable income, indicating no obligation to pay advance tax u/s 207 and sec 209. The CIT(A) was directed to admit the appeal, considering advance tax as NIL. The order was set aside for further verification of evidence and proper opportunity for the assessee. Appeal allowed for statistical purposes.

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• Valuation of closing stock: Retrospective amendment in Section 145A would not apply if FIFO not adopted for valuing stock in AY 2017-18

  The case involves a challenge to the amendment in Section 145A, making it mandatory to adopt FIFO or weighted average cost method for valuing closing and opening stock. The court held that prior to the amendment, there was no mandatory provision for a specific valuation method. The Parliament made Clause 16 of ICDS (II) mandatory for all assesses, ensuring uniformity in accounting. The court emphasized that the method used for valuing opening and closing stock must be consistent. The retrospective amendment in Section 145A aims to provide relief to assesses who adopted FIFO in the Assessment Year 2017-18. Assessors following LIFO consistently are not required to switch to FIFO for that year. The court partly allowed the writ petitions, quashing the notices and allowing assesses to value stocks using LIFO or FIFO methods for the relevant assessment year.

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• Penalty u/s 271D for cash receipt in case of immovable property transfer not applicable as cash was deposited in bank.

  The ITAT Visakhapatnam dealt with a case involving penalty u/s. 271D for receiving cash in relation to the transfer of immovable property, which falls under section 269SS. The case was scrutinized under CASS to verify the source of cash deposits. Section 269SS prohibits receiving cash for immovable property transfers to curb black money. However, since the cash received was deposited into the bank account and capital gains were declared, it was deemed genuine. The explanation provided by the assessee constituted a "reasonable cause" u/s 273B, as the cash was accepted under unavoidable circ*mstances. The penalty imposed by the AO and upheld by the CIT(A) was deemed unsustainable in law, leading to the penalty being deleted. The assessee's appeal was allowed.

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• CIT has erred while invoking the powers of revision u/s. 263 - Issues involved: Sale of Residential Property, Capital Gains Computation, JDA, Land & Building Appropriation.

  The ITAT Visakhapatnam dealt with a revision u/s 263 regarding the treatment of a residential property sale as short-term or long-term capital asset. The dispute centered on the appropriation between land and building for capital gains computation under a Joint Development Agreement (JDA). The CIT considered the asset as short-term, disallowing deduction u/s 54EC. The ITAT held that the property was incomplete until possession in Feb 2011, emphasizing the necessity of owning both land and building components in such transactions. It highlighted the importance of bifurcating undivided share of land and built-up area for capital gains computation. The ITAT stressed the need for appropriate documentation to claim indexed cost of improvement and discussed the method of appropriating sale consideration for land and building under section 50C. The ITAT concluded that the CIT erred in not considering the appropriation between land and building, directing the AO to re-examine the issue.

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• Addition u/s 69 or 56(2)(vii)(b) based on stamp valuation vs. actual purchase. No undisclosed investment found.

  The ITAT Raipur considered the addition u/s 69 or 56(2)(vii)(b) concerning the variance between guideline rates and actual purchase prices of immovable property. The tribunal analyzed the applicability of the 1st and 2nd provisos to Section 56(2)(vii)(b) of the Act, finding pre-conditions satisfied in the case. The purchase deed details confirmed the consideration paid for the property, aligning with the agreement executed in 1991. The tribunal upheld the CIT(A)'s decision that no undisclosed investment was evident, dismissing the AO's addition u/s 69. The difference between stamp value and actual consideration was deemed notional income, not unexplained investment. The tribunal rejected the revenue's appeal on these grounds. Additionally, the tribunal dismissed the revenue's challenge regarding the admission of additional evidence by the CIT(A), noting that the documents were previously submitted to the AO.

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• Income tax proceedings against dissolved/insolvent companies cannot be continued. Liabilities for periods pre-resolution plan approval extinguished.

  The ITAT Chandigarh addressed the validity of income tax proceedings against a dissolved/insolvent company. The tribunal held that under Section 31 of the Insolvency and Bankruptcy Code, 2016, liabilities for periods pre-resolution plan approval can only be paid as per the plan terms. Section 238 of the Code mandates its provisions prevail over inconsistent laws like the Income Tax Act, ensuring the resolution plan's integrity. In Garden Silk Mills P. Ltd. case, the IBC's supremacy over the Income Tax Act was affirmed, with Section 14 of the IBC halting proceedings if an Interim Resolution Professional isn't involved.

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• Failure to get accounts audited u/s 44AB: penalty u/s 271B not applicable as assessee didn't maintain books of accounts.

  The ITAT Dehradun held that penalty u/s 271B was not applicable as the assessee failed to upload the Audit Report as required u/s 44AB and did not maintain books of accounts. The assessee argued that penalty u/s 271A should apply instead of u/s 271B. Citing the case of Bisauli Tractor, the tribunal ruled in favor of the assessee, stating that u/s 271B is not applicable when books of account are not maintained, and upheld the appeal, deleting the penalty imposed u/s 271B in all three appeals.

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  See Also

  BOARD OF DIRECTORS CLARK COUNTY REGIONAL FLOOD …gustfront.ccrfcd.org/pdf_arch1/agendas/1992/Board-December92.pdfa*genda clark county regional flood control district board of directors - [PDF Document]JUVENILE JUSTICE COUNSELOR 2, ON CALL (PCN 06N09053)The Courtland Company, Inc. v. Union Carbide Corporation (Courtland II) | S.D. West Virginia | 09-28-2023 | www.anylaw.comBU-304c: Battery Safety in Public

• Best judgment assessment u/s. 144 sustained due to late filing of return. Cash deposit during demonetization period deemed unexplained. Profit rate determined at 8%.

  The ITAT Chennai considered a case involving a Best Judgment Assessment conducted u/s. 144 due to the assessee's failure to file a return within the specified time u/s. 142(1). The AO treated the return as 'invalid' and proceeded with the assessment. The intimation u/s. 143(1) by CPC, Bangalore did not regularize the return, as the AO explicitly deemed it invalid. The assessment without a notice u/s. 143(2) was upheld as valid. Regarding cash deposits during demonetization, the assessee failed to provide sufficient explanation, leading to confirmation of the addition. Profit rate determination at 8% on total turnover was upheld due to lack of evidence or explanation. The appeal on these issues was dismissed.

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• Interest on GST is allowable business expenditure. Interest on TDS is not allowable as business expenditure since akin to income tax liabilities

  The ITAT Indore addressed various issues in the case. Firstly, it ruled that interest on outstanding GST is allowable as a business expenditure, not a penalty, and cannot be disallowed u/s 37(1). Secondly, interest on belated TDS deposit is not an allowable business deduction, akin to income tax liabilities, and was rightly disallowed. Thirdly, adhoc disallowance of traveling expenses by AO was unfounded as no personal element was proven, leading to deletion of the disallowance by CIT(A). The appeal was partly allowed in favor of the assessee.

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Customs

• Effective June 5, 2024, exporters' Duty Drawback amounts will be disbursed via PFMS, streamlining the process.

  Instruction No. 15/2024-Customs, issued by the Central Board of Indirect Taxes and Customs, mandates the transition of Duty Drawback payment process to the Public Finance Management System (PFMS) from 5th June, 2024. The new procedure eliminates printing of Drawback scrolls and issuing cheques, streamlining the process. Customs officers will process Duty Drawback scrolls, which will be automatically transmitted to the Central Nodal eDDO and then to the nodal ePAO for approval. Subsequently, Duty Drawback amounts will be credited directly into exporters' bank accounts linked with PFMS. Prior to the implementation date, all pending Drawback scrolls must be processed, and cheques issued. Jurisdictional authorities must inform the PAO and banks about the last cheque issued and return unused cheque books. A Trade Notice should be issued for awareness, and any implementation challenges should be reported to the Board.

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• Smuggling of Gold of foreign origin: Applicant's request for anticipatory bail u/s 438 CrPC denied due to lack of evidence in smuggling case.

  The High Court dismissed an anticipatory bail application u/s 438 CrPC in a smuggling case involving seizure of foreign-origin gold and cash. The applicant, claiming ownership of a gold business, failed to prove legitimacy of seized items. Lack of cooperation with DRI, non-response to summons, and absence of satisfactory explanations regarding cash and sales transactions led to rejection of bail. The economic nature of the offence, potential 7-year sentence, and insufficient evidence resulted in denial of anticipatory bail. Merely the submission that the seized items belong to the applicant and his firm and he is ready to pay the penalties and fee does not absolve the applicant from explaining with particularity regarding the huge quantum of cash, gold and ornaments record.

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• Rejection of benefit of Export Incentive Scheme. Following the precedence, DGFT directed to allow the claim under the FPS and MEIS Scheme

  The Madras High Court reviewed a case involving the rejection of export incentives under the Focus Product Scheme (FPS) and the Merchandise Export from India Scheme (MEIS). The court referenced previous decisions from other high courts and ruled in favor of the petitioner. The impugned order was quashed, and the third respondent was directed to approve the petitioner's claim under the FPS and MEIS Scheme within four weeks. The Writ Petition was allowed by the court.

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• The order from not imposing penalty u/s 114 on Respondents for smuggling undeclared cigarettes, confirmed. Penalty imposed on others u/s 112(a).

  CESTAT Chennai held that penalty u/s 114 Customs Act was not imposed on Respondents for smuggling undeclared cigarettes concealed with gypsum plaster. Penalty was imposed on Shri Anil Gupta, but dropped against Shri Jaffer. Tribunal found no evidence of false documents by Respondents, citing M/s. Artisan Welfare Society case. As no intentional false declaration was proven, penalty u/s 114 AA was unwarranted. Adjudicating authority's decision not to impose penalty upheld, department's appeal dismissed.

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• Levy of penalty for misclassification of imported products for chewing gum; confirmed. Mis-declaration led to extended period for duty payment.

  CESTAT Bangalore upheld the imposition of penalty for misclassification of imported products under CTH 2938 instead of CTH 2106. The appellant mis-declared goods as 'Big Fib, Mast free comen' to avoid correct classification. Samples tested by CFTRI confirmed they were food ingredients. Appellant's supplier also classified items under CTH 2106. Intentional mis-declaration led to invoking extended period for duty payment. Commissioner (A) rightly imposed penalty. Appeal dismissed.

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• Classification of 'enterogermina' imports clarified, emphasizing adherence to General Rules for Interpretation.

  CESTAT Mumbai reviewed the legality of classification by the Commissioner of Customs on 'enterogermina (bacillus clausal spores)' under notification no. 12/2012-Cus. The tribunal emphasized adherence to General Rules for Interpretation of Import Tariff for hierarchical elimination in classification. It noted the onus on the proper officer for re-classification and cited Hindustan Ferodo Ltd v. Collector of Central Excise for dispute resolution. The tribunal found the impugned order lacking proper legal application and remanded the matter for fresh decision in compliance with the Import Tariff rules. The appeal of the assessee was allowed for remand, while the Commissioner's appeal was dismissed.

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DGFT

• Amendment to SION E-125 for Shea Stearine export by DGFT India. Import entitlements revised.

  The Directorate General of Foreign Trade, u/s 1.03 of Foreign Trade Policy, 2023, amended SION E-125 for Shea Stearine export. The amendment increased the import entitlement for Shea Nuts based on oil content variations. Customs must test oil content for each consignment, with Regional Authority redeeming authorizations based on weighted average. Clearance not to be delayed for test results. The revised SION is valid until 31.03.2027, subject to industry pricing changes. This update enhances the export norms for Shea Stearine.

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Indian Laws

• Petitioner allowed to register the property purchased in auction sale case u/s SARFAESI Act. Precedence of SARFAESI Act over Income Tax dues confirmed.

  The Karnataka High Court addressed the issue of a Sub-Registrar refusing registration of a sale certificate due to pending Income Tax dues against the borrowers. The court held that the SARFAESI Act takes precedence over other statutory dues, including those of the Income Tax Department. Citing a Supreme Court case, it was established that the dues of secured creditors have priority over other dues. The Sub-Registrar's refusal based on Income Tax dues was deemed invalid as it exceeded the authority granted by the Registration Act and Rules. The court emphasized that Sub-Registrars must adhere strictly to the law and cannot refuse registration without valid reasons. It was recommended that the State issue necessary guidelines to prevent arbitrary refusals. The writ petition was allowed in favor of the petitioner.

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• Period of limitation: Agreement to sell land case. Plaintiff failed to appear as witness, agreement not signed by all co-owners.

  The Supreme Court examined the validity of an Agreement to Sell for land, where the plaintiff entered into the agreement with a Power of Attorney holder for the defendants. The Court found that the agreement lacked signatures of all co-owners, and the power of attorney was not proven during trial. The plaintiff failed to appear as a witness, relying on the Power of Attorney holder instead. The Court noted the delay in filing the suit, which was done on the last day of the extended limitation period. As the plaintiff only engaged with one co-owner and delayed legal action despite knowledge of subsequent transactions, specific performance relief was denied due to the delay and failure to meet legal requirements.

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• Enhancement of compensation: substantial justice in condoning appeal delays. Liberal interpretation of Limitation Act's Section 5 but strict on Section 3.

  The Supreme Court considered the Condonation of Delay in filing an appeal for compensation enhancement, analyzing the applicability of Limitation Act provisions. The Court emphasized the discretionary power of courts in condoning delay, stating that while Section 5 of the Limitation Act should be construed liberally, Section 3 must be strictly interpreted. The Court highlighted that the right of a decree-holder becomes substantive after the limitation period expires, and this right should not be lightly disturbed. The Court declined to exercise its discretionary power to condone the delay, noting the negligence of the claimants in pursuing the appeal and the lack of due diligence. The High Court's decision not to condone the delay was upheld, and the Special Leave Petition was dismissed for lacking merit.

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• Proceedings u/s 138 NI Act quashed for failure to implead company as accused. Compliance of CrPC provision not applicable.

  The case involves a petition to quash proceedings u/s 138 of the Negotiable Instruments Act due to failure to implead the company as an accused. The petitioner, a Managing Director, was accused of issuing a cheque on behalf of the company. The court found non-maintainability of the complaint against the petitioner as the company was not made an accused despite the cheque being issued on its behalf. Citing the Himanshu vs. B. Shivamurthy case, the court allowed the petition, quashing the proceedings against the petitioner. The court emphasized the importance of impleading the company in cases involving cheques issued on its behalf. Following the Five Judge Bench of the Supreme Court in expeditious trial of cases, the High Court held that, it is clear that Section 202(2) CrPC is not applicable in the present proceedings which is u/s 138 N.I. Act.

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IBC

• Liquidator's special powers in liquidation process clarified. Adjudicating Authority upholds refund of BG amount.

  The case involves liquidation of a corporate debtor where a creditor sought refund of an amount with interest paid to prevent invocation of their Bank Guarantee. The liquidator, u/s 36 of IBC, manages the liquidation estate for creditors' benefit and verifies claims u/s 35. Liquidator must issue public announcement for claims submission. Creditor can appeal rejected claims to Adjudicating Authority. Liquidator determines claim value for asset distribution. Corporate debtor's wrongful invocation of BG led to creditor's claim. Adjudicating Authority, u/s 42, upheld creditor's right to refund and directed liquidator to accept claims. Decision affirmed, appeal dismissed.

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• Application for CIRP initiation was rightly dismissed due to absence of operational debt. Pre-existing dispute found.

  The National Company Law Appellate Tribunal, New Delhi, dismissed an appeal regarding the initiation of Corporate Insolvency Resolution Process (CIRP) as the debt in question did not qualify as "operational debt" under Section 5(21) of the IBC. The Tribunal found that the security deposit in question was not directly linked to any goods or services provided, thus falling outside the scope of operational debt. Additionally, the presence of a pre-existing dispute between the parties rendered the application under Section 9 of the IBC not maintainable, in line with legal precedents such as Consolidated Construction Consortium Limited v. Hitro Energy Solutions Pvt. Ltd. and Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. The appeal was ultimately dismissed.

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PMLA

• PIL alleging money laundering and tax evasion dismissed, citing IT Department's examination. No further directions needed.

  The Delhi High Court dismissed a Public Interest Litigation alleging money laundering and tax evasion through undervalued share transfer. The Petitioner sought investigation into share sale valuation, but as the IT Department had examined it during Respondent No. 7's block assessment without adverse findings, no further directions were deemed necessary. The Court noted a previous petition by the same Petitioner against a common Respondent was dismissed as motivated, leading to the opinion that entertaining the present PIL did not serve the cause of justice or PIL objectives. The petition was dismissed.

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• Court dismisses bail application citing delay in trial, no entitlement solely on that ground.

  The Delhi High Court considered a bail application in a money laundering case involving a predicate offence. The delay in trial was a key issue. The court emphasized that bail decisions should be based on the merits of the case, independently of previous orders. The accused's right to fair trial, including access to legal remedies, was highlighted. The court noted that filing applications for legal rights is not a delay tactic. The accused's individual rights and legal strategies were recognized, and delays were not attributed to the prosecution or the trial court. Economic offences were deemed serious, impacting bail decisions. The applicant's alleged role in policy modifications benefiting co-accused was discussed, along with actions to influence public opinion and evidence tampering. The court found no grounds for bail solely based on trial delay, considering the gravity of the offence and legal requirements. The bail applications were ultimately dismissed.

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Service Tax

• Refund claim for Service Tax paid under reverse charge mechanism. Claim was Time-barred, revenue succeeds.

  The case before CESTAT Bangalore involved a refund claim for Service Tax paid under protest for Consultancy Services received from abroad under reverse charge mechanism. The respondent deposited the tax, interest, and penalty within the prescribed time period. The absence of evidence showing payments made under protest led to the claim being considered time-barred. The respondent had paid the tax based on an audit letter and had informed the authorities accordingly. As the tax was paid under the relevant provisions without any mistake of law. The decision upheld the provisions of u/s 11B of the Central Excise Act, 1944. The appeal by the Revenue was allowed.

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• Demand of service tax for Extended Warranty Scheme (EWS) is sustainable post 01.07.2012.

  CESTAT Chennai addressed the demand of service tax on upfront charges for Extended Warranty Scheme (EWS) and used car scheme. Pre-01.07.2012, the tribunal held that demand u/s 65(105)(zo) for repair services cannot sustain as repair involves materials and service. Post-01.07.2012, EWS falls u/s 65B(44) & Section 66E(e) as creating an obligation, not actual repair. It's not Works Contract Service (WCS) but a declared service. Appellant acted in good faith, so penalties were set aside. The demand for the extended period was also set aside. Impugned order modified, appeals partly allowed.

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Central Excise

• Mens rea is proven in case of refund granted twice. Levy of penalty u/s 11AC sustained.

  The Punjab and Haryana High Court addressed a case involving the recovery of a refund granted twice, leading to the grant of refund again by suppressing the fact of suo moto availment of credit. The issue revolved around the levy of penalty u/s 11AC of the Act, 1944, which requires the presence of mens rea. The court held that under Section 11AC, penalty is imposed when there is an intention to evade duty payment, such as through fraud, collusion, willful misstatement, or suppression of facts. In this case, the appellant's mens rea was established by their conduct of obtaining the refund twice while concealing the credit availment. The court found no errors or perversity in the impugned order, leading to the dismissal of the appeal.

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• Colour Television Sets in SKD condition not classifiable as CTVs. Parts must have critical components for classification.

  The CESTAT ALLAHABAD ruled on the classification of Colour Television Sets in SKD condition, holding that incomplete parts cannot be classified as CTVs. The decision was based on the Tribunal's precedent and interpretation of Tariff Rules. The Tribunal's decision was challenged in the Supreme Court, which dismissed the appeal, emphasizing that the goods were not mere parts but complete Television Receivers assembled and tested before disassembly. The Commissioner's order was overturned, and the appeal was allowed.

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• Appeal dismissed due to excessive adjournments. Courts condemn mechanical adjournments. Follow rules to avoid dismissal.

  CESTAT ALLAHABAD dismissed an appeal due to abatement for adjourning the matter beyond three times, citing Rule 20 of CESTAT Procedure Rules, 1982. Referring to ISHWARLAL MALI RATHOD case, the Tribunal emphasized the Supreme Court's disapproval of mechanical adjournments, highlighting the need to avoid excessive delays in proceedings. The decision underscores the importance of adhering to statutory limits on adjournments to prevent non-prosecution of appeals.

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• Attachment of property invalid, partners not liable for firm's dues. Interest not applicable pre-1996.

  The case involves attachment of immovable property jointly owned by appellant and brothers for government dues recovery. The attachment was done u/r 2(vi) of Rules of 1995 u/s 156 r/w. 142 of Customs Act, 1962. The property share is 20% appellant's and 80% brothers'. As partnership firm liability is joint u/s 25 of Indian Partnership Act, attaching entire property for firm's dues is improper. Interest u/s 11AB of Central Excise Act, 1944 not applicable pre-enactment. As dues paid, property attachment set aside, appeal allowed.

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VAT

• Scope of review jurisdiction. Review power distinct from appellate power. It corrects errors, not grievances.

  The High Court considered the scope of review jurisdiction regarding the inclusion of purchase price of plant and machinery in 'Fixed Capital Investment'. Review power is distinct from appellate power. Recent Supreme Court rulings emphasize strict adherence to Order 47 Rule 1 of CPC. Review jurisdiction safeguards judicial integrity, not for re-argument. It corrects errors, not grievances. Failure to submit judgments does not constitute an error apparent on the face of the record. Mere failure to cite a judgment does not invalidate the original decision. The review application was dismissed for lack of merit.

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• Refund of excess tax paid allowed. Alternative Tax Compliance Scheme for Contractors, 2016 found unconstitutional.

  The Punjab and Haryana High Court addressed the denial of refund of excess tax paid by contractors under the Haryana Alternative Tax Compliance Scheme for Contractors, 2016. The court examined the Constitutional Validity of Clause 4(2) of the scheme and found that it created unjust enrichment in favor of the Revenue, disadvantaging contractors who had been regularly paying taxes. Referring to CORPORATION BANK VERSUS SARASWATI ABHARANSALA, the court emphasized that excess tax must be refunded unless it involves unjust enrichment. The court quashed the orders denying refund, ruling in favor of the petitioners and directing payment of refund with interest within four weeks, with additional interest at 9% if delayed. Petition allowed.

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• Entry Tax: The constitutional validity of Section 2A (8-a) of KTEG Act, emphasizing primacy of charging provision over definition provision.

  The case before Karnataka High Court involved the constitutional validity of Section 2A (8-a) of Karnataka Tax on Entry of Goods Act, 1979. The issue was the inclusion of "prevailing market price" in the definition of "value of goods" and if reassessment notices after a significant time lapse are valid u/s 6(2) of KTEG Act. The Court held that the charging provision u/s 3(1) is fundamental for levying entry tax, and any conflict with the definition clause must be resolved in favor of the charging provision. Reassessment based on a mere change of opinion is not valid u/s 6(2). The Court allowed the writ petition, stating that the petitioner need not seek an alternate remedy due to the significant legal and constitutional implications involved. The assessment orders and reassessment notices were found to lack jurisdiction and were quashed.

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TMI Short Notes

• Income Tax:

  Principal-Agent Relationship in Telecom Sector and TDS u/s 194H: A Supreme Court Verdict

• Income Tax:

  Procedural Compliance vs. Substantive Justice: Balancing Procedural Rigidity and Transitional Hardships in Section 80G Approvals

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• Know How to Surrender or Cancel Your TAN Number
• LITIGATION MANAGEMENT IN GST REGIME (PART -1)
• Ancillary services provided along with GTA services are not taxed separately
• Interest and penalty not leviable when there is no fault of Assessee in depositing GST

Notifications

• GST

• 10/2024 - dated 29-5-2024 - CGST
  Seeks to Amend in the Notification No. 02/2017-Central Tax, dated the 19th June, 2017 - Jurisdiction of Central Tax Officers.

Case Laws:

• GST

• 2024 (5) TMI 1399

  Challenge to penalty order passed u/s 129(3) of the UPGST Act, 2017 - expiry of e-way bill - engine of the vehicle got failed and after being repaired, it was moved for its onward journey - intent to evade tax, present or not - HELD THAT:- One may take reference to the judgment of this Court in M/s Globe Panel Industries India Pvt. Ltd. v. State of U.P. and others [ 2024 (2) TMI 363 - ALLAHABAD HIGH COURT] passed by this Court, wherein this Court had dealt with the similar issue and held ' Indubitably, there is a technical violation that has been committed by the petitioner. However, the authorities have not been able to indicate in any manner that the E-Way Bill had been used repeatedly nor have they made out any case with regard to an intention to evade tax by the petitioner.' In light of the same, this Court is unable to agree with the findings of the authorities, and accordingly, the impugned orders dated December 9, 2017 and May 8, 2019 are quashed and set aside - petition allowed.

• 2024 (5) TMI 1387

  Violation of principles of Natural Justice - impugned order does not take into consideration the reply submitted by the Petitioner - cryptic order - demand including penalty u/s 73 of CGST Act - HELD THAT:- The observation in the impugned order dated 24.04.2024 is not sustainable for the reasons that the reply dated 12.01.2024 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory and taxpayer has not attached sufficient documents in support of his reply which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details - the impugned order dated 24.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication. Petition disposed off by way of remand.

• 2024 (5) TMI 1386

  Demand with penalty u/s 73 of the Central Goods and Services Tax Act, 2017 - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - violation of principles of natural justice - HELD THAT:- The principal grounds for creating the demand is that taxpayer has not uploaded supporting documents in respect of cancelled dealer despite sufficient opportunity being given. However, it may be noticed that petitioner had uploaded several documents as well as details of transactions done with the cancelled dealer - As per the petitioner the transactions were bona fide and genuine and were carried out when the registration was valid. The registration of the dealer has been cancelled subsequently retrospectively. The observation in the impugned order dated 24.04.2024 is not sustainable for the reasons that the reply dated 04.04.2024 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the taxpayer has not uploaded supporting documents in respect of cancelled dealer which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. The impugned order dated 24.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

• 2024 (5) TMI 1385

  Violation of principles of natural justice - SCN does not specify any cogent reason - Retrospective cancellation of GST registration of the petitioner - HELD THAT:- The SCN and the impugned order are bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. In terms of Section 29 (2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circ*mstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The order dated 23.07.2022 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored - petition disposed off.

• 2024 (5) TMI 1384

  Violation of principles of natural justice - SCN does not specify any cogent reason - Retrospective cancellation of GST registration of the petitioner - HELD THAT:- The SCN and the impugned order are bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. In terms of Section 29 (2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circ*mstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The order dated 05.08.2022 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored - petition disposed off.

• 2024 (5) TMI 1383

  Order u/s 73 of the Central Goods and Services Tax Act, 2017 - petitioner submits that the impugned order was passed even prior to the stipulated date of filing the response to the show cause notice - HELD THAT:- Perusal of the details of personal hearing and due dates for filing of replies, as contained in the show cause notice dated 05.12.2023 shows that reply was to be submitted by 05.01.2024. Even before the due date for filing reply, the impugned order dated 29.12.2023 has been passed creating a demand against the petitioner - Clearly, the proper officer could not have adjudicated the show cause notice even prior to the stipulated date for filing response. The matter is remitted to the proper officer for re-adjudication of the show cause notice. Petitioner shall file response to the said Show Cause Notice within 30 days. Thereafter, the proper officer shall adjudicate the show cause notice in accordance with law after giving an opportunity of personal hearing to the petitioner. The Show Cause Notice be disposed of within three months of filing of response by the petitioner. Petition disposed off by way of remand.

• 2024 (5) TMI 1382

  Order passed u/s 73 of the Central Goods and Services Tax Act, 2017 - failure to filed response to SCN - HELD THAT:- The impugned order, however, after recording the narration records that demand as ex-parte is created - As per the petitioner, he was not aware of the proceedings as the GST registration stood cancelled w.e.f. 18.06.2021 and all communication for the said proceedings were uploaded on the GST portal. Since the only reason for passing the impugned order is that the petitioner had not filed any reply/explanation, one opportunity needs to be granted to the petitioner to respond to the Show Cause Notice. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 08.12.2023 is set aside. Petition disposed off by way of remand.

• 2024 (5) TMI 1381

  Violation of principles of natural justice - the impugned order does not take into consideration the replies submitted by the Petitioner - cryptic order - demand including penalty u/s 73 of CGST Act - HELD THAT:- The observation in the impugned order dated 29.04.2024 is not sustainable for the reasons that the replies dated 17.01.2024 and 27.02.2024 filed by the Petitioner are detailed replies with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not properly replied/filed without any justification which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 29.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

• 2024 (5) TMI 1380

  Violation of principles of natural justice - petitioner had no opportunity to object - Retrospective cancellation of GST registration of the petitioner - HELD THAT:- The Show Cause Notice and the impugned order are also bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. Accordingly, the same cannot be sustained. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circ*mstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not considered apposite to examine this aspect but assuming that the respondent s contention is required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The Petitioner does not seek to carry on business or continue the registration, the impugned order dated 27.01.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 06.05.2019 i.e., the date when petitioner filed an application seeking cancellation of GST registration and the registration was suspended - Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.

• 2024 (5) TMI 1379

  Order passed u/s 73 of the Central Goods and Services Tax Act, 2017 - petitioner was unaware of the proceedings and was unable to furnish a reply to the impugned Show Cause Notice, due to maternity leave - HELD THAT:- The petitioner was not aware of the proceedings due to his accountant being on maternity leave. Keeping in view the peculiar facts of the present case and since the only reason for passing the impugned order is that petitioner had not filed any reply/explanation, one opportunity needs to be granted to the petitioner to respond to the Show Cause Notice. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 17.04.2024 is set aside. Petition is disposed of by way of remand.

• 2024 (5) TMI 1378

  Violation of statutory law and guidelines - forced to make excessive deposit - threat of arrest - HELD THAT:- The petitioner prays for and is granted six weeks' time to file counter affidavit. Petitioner shall have a week thereafter for filing rejoinder affidavit. List in the week commencing 12th August, 2024.

• 2024 (5) TMI 1377

  Violation of principles of natural justice - SCN and impugned order are bereft of any details - Maintainability of appeal - appeal dismissed solely on the ground that the same is barred by limitation - retrospective cancellation of GST registration of the Petitioner - HELD THAT:- It is noticed that the Show Cause Notice and the impugned order are bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. Accordingly, the same cannot be sustained. In terms of Section 29 (2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circ*mstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - it is not deemed apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that the Petitioner does not wish to carry on business or continue with the registration, impugned order dated 04.10.2019 is modified to the limited extent that registration shall now be treated as cancelled with effect from 19.09.2019 i.e., the date when Show Cause Notice seeking cancellation of GST registration was issued. Petition disposed off.

• 2024 (5) TMI 1376

  Extension of time limitation - Validity of SCN issued u/s 73(1) of the WBGST CGST Act, 2017 - seeking stay of SCN - HELD THAT:- Taking into consideration the fact that a jurisdictional issue has been raised and a prima facie case has been made out by the petitioner, however, considering the fact that fiscal policy of the State is involved, it is not proposed to stay the impugned show cause notice. The respondents shall continue with the impugned proceeding but the final order, if passed shall not be given effect to nor the same shall be uploaded in the portal, without the leave of this Court. Further taking into consideration the fact that by reason of challenge thrown by the petitioner to the show cause notice since no response had been filed by the petitioner, time to file the response by the petitioner is extended by a period of four weeks from date. If the petitioner files its response within the afforded extended period, the same shall be taken into consideration by the proper officer - The proper officer being otherwise obliged to, shall afford an opportunity of hearing to the petitioner in connection with the response filed by the petitioner. List this matter under the heading hearing in the combined monthly list of August 2024.

• 2024 (5) TMI 1375

  Challenge to order u/s 73 of the Central Goods and Services Tax Act, 2017 - ex-parte demand is created - violation of principles of natural justice - HELD THAT:- The only reason for passing the impugned order is that petitioner had not filed any reply to the Show Cause Notice. Considering the Petitioner did not have access to the portal due to the GST registration being cancelled, one more opportunity needs to be granted to the Petitioner to respond to the Show Cause Notice. The impugned order dated 28.12.2023 is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - petition is disposed off by way of remand.

• 2024 (5) TMI 1374

  Rejection of appellate order on the ground of delay - cancellation of registration - HELD THAT:- Admittedly, the appellate remedy was availed with gross delay. Section 107 of the Bihar Goods and Services Tax Act, 2017 (BGST Act) permits an appeal to be filed within three months and also apply for delay condonation with satisfactory reasons within a further period of one month - taking into account the saving of limitation granted by the Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER] , therein, due to the pandemic situation limitation was saved between 15.03.2020 till 28.02.2022. It was also directed that an appeal could be filed within ninety days from 01.03.2022. There are no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. The law favours the diligent and not the indolent. Petition dismissed.

• 2024 (5) TMI 1373

  Violation of principles of natural justice - Non-speaking order - Jurisdiction of respondent No. 3 for passing the impugned order - - Maintainability of petition - availability of alternative remedy - Invocation of Section 107 of KGST Act - Exemption from payment of tax. Violation of principles of natural justice - HELD THAT:- Admittedly, a show cause notice as required under law was issued before passing the impugned order and the petitioner has submitted his reply to the said show cause notice. The impugned order was came to be passed considering the reply given by the petitioner - The contention of the petitioner that it is not a speaking order also cannot be accepted as respondent No. 3 has discussed at length about the facts of the case, defence taken by the petitioner and also the reasons are assigned to arrive at a conclusion that the petitioner is liable to pay tax - Therefore, the contention of the petitioner that the order is not a speaking order that there is violation of principles of natural justice, cannot be accepted. Jurisdiction of respondent No. 3 for passing the impugned order - HELD THAT:- It is respondent No. 3-the Assistant Commissioner of Commercial Taxes who is authority to pass the impugned order under KGST Act. Therefore, the contention taken by the petitioner that, respondent No. 3 had no jurisdiction to pass order also cannot be accepted. Maintainability of petition - availability of alternative remedy - Invocation of Section 107 of KGST Act - HELD THAT:- There are no justification for this Court to invoke the writ jurisdiction. Even though an attempt is made to contend that there is violation of principles of natural justice and the order is passed without jurisdiction - Unfortunately, in each and every case, such grounds are urged but it can be a ground to invoke the writ jurisdiction of this Court by bypassing the statutory remedy which is available for the petitioner. When the legislature in their wisdom make provisions to challenge the order passed under the enactment, simply because Section 107 of the Act compels the petitioner to deposit 10% of the disputed amount of tax as referred to under Section 107 (6) (b) of the KGST Act, such effective remedy cannot be bypassed. If this Court starts entertaining the writ petition on such flimsy ground, it will definitely have an effect of bypassing the statutory authorities to assume jurisdiction. The petition is dismissed.

• 2024 (5) TMI 1372

  Determination of tax and penalty - original tax invoice not carried while transporting goods - Rule 138-A of the SGST and Section 68 of the CGST - HELD THAT:- Reliance placed on the decision of this Court in M/S. DIVYA JYOTHI PETROCHEMICALS CO., VERSUS THE JOINT COMMISSIONER OF COMMERCIAL TAXES APPEALS, DHARWAD, THE COMMERCIAL TAX OFFICER (ENFORCEMENT) , MADHUGIRI, THE REGISTRAR, KARNATAKA APPELLATE TRIBUNAL BENGALURU [ 2024 (3) TMI 549 - KARNATAKA HIGH COURT] . In support of his contention that the petition is liable to be allowed. In M/s Divya Jyothi Petrochemicals Co. a similar contention was raised by the petitioner therein. The same was considered in the light of the Rule 138-A of the SGST and Section 68 of the CGST and Rule 48 of the CGST and an opinion was formed that as per Rule 48(1)(b) of the CGST, it is only the duplicate copy which is meant for transporter and the triplicate copy is meant for supplier as per clause (c). It is therefore, held that the transporter is not required to carry the original tax invoice, but the law mandates him to carry the duplicate copy. There are no reason to form a different opinion. Under such circ*mstances, it is the contention taken by respondents that the petitioner is liable to pay tax and penalty, as the transporter had not carried the original tax invoice cannot be accepted. It is stated that petitioner is levied with the double tax as he is already paid tax as required to be paid and once again he was compelled to pay tax with penalty and therefore, the same is liable to be refunded. Petition allowed.

• 2024 (5) TMI 1371

  Confirmation of demand inclusive of the penalty and interest - failure to reply to notices - HELD THAT:- The impugned order has been quashed. The case is remanded back to the fifth respondent to pass a fresh order on merits subject to the petitioner depositing 10% of the disputed tax with the fifth respondent. On such deposit being made and the reply being filed to the notices mentioned above by the petitioner within a period of 30 days from the date of receipt of a copy of this order, the fifth respondent shall pass a fresh order on merits and in accordance with law within a period of 30 days thereafter after hearing the petitioner. Petition allowed.

• 2024 (5) TMI 1370

  Challenge to adjudication order passed u/s 73 of TN-GST Act - HELD THAT:- It is noticed that the petitioner has filed a detailed reply to the notice preceded the impugned order. Despite the same, the impugned order has been passed without adverting to the same. Hence, the impugned order is unsustainable and therefore liable to be set aside and the case is remitted back to the respondents to pass fresh order on merits and in accordance with law within a period of 8 weeks from the date of receipt of a copy of this order. The impugned order which stands quashed shall be treated as corrigendum to show cause notice in DRC-01 dated 30.09.2023. Writ Petition is disposed of.

• 2024 (5) TMI 1369

  Levy of GST on ocean freight - ITC for inward supplies - possession of the tax invoices - details of supplies not reflected in corresponding GSTR-2A - levy of penalty u/s 122(2)(a) of the CGST Act, read with Section 73(9) ibid. Non-possession of invoices - HELD THAT:- The basic condition of eligibility to avail ITC is that the taxpayer should be in possession of a tax invoice or debit note issued by the supplier under the CGST Act or such other tax paying documents as may be prescribed. In this case, the taxpayer was not able to produce the impugned tax invoices to the audit officers for verification, during audit. Even along with their reply to the show cause notice, they enclosed only highly illegible copies of the invoices, with which their genuineness could not be ascertained - it is clear that the taxpayer was not in possession of the five invoices pointed out by the audit officers. The taxpayer's argument in this regard in their written reply and during the personal hearing was not relevant and does not hold good. Three invoices in respect of which the taxpayer had availed ITC, were not reflected in GSTR-2A - HELD THAT:- The three invoices pointed out by audit were not reflected in GSTR-2A, during the time of audit. Even in their reply to the show cause notice, the taxpayer has not stated categorically that the invoices have populated in the GSTR-2A. During the personal bearing also, they were not able to prove that the concerned invoices had appeared in the GSTR-2A Hence, it is obvious that the concerned invoices have not been uploaded in their GSTR-1, by the respective suppliers, which means that GST has not been paid on the same. Therefore, as per Section 16(2) of the CGST Act, the taxpayer is not eligible for ITC in respect of the concerned three invoices. The submission of the learned counsel for the petitioner that credit was auto-populated in GSTR-2A also, is incorrect in view - Insofar as the demand in paragraph 13(a) (b) for a sum of Rs. 1,50,402/- towards IGST and interest thereon under Section 50(1) of the CGST Act, 2017 read with Section 73(1) of the CGST Act, 2017 and Section 20 of the IGST Act, 2017 is concerned, the issue is squarely covered in favour of the petitioner in terms of decision of the Hon'ble Supreme Court in UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [ 2022 (5) TMI 968 - SUPREME COURT] . This Writ Petition is partly allowed and partly dismissed.

• Income Tax

• 2024 (5) TMI 1398

  Territorial jurisdiction of the court in a Writ Petition - Kerala HC or Madras HC - seeking a direction to lift the Attachment of a bank account by the assessing authority under the Income Tax Act - Single Judge found that the attachment of the bank account of the appellant in Wayanad was consequent to the exercise of power by the assessing authority under the Income Tax Act who was situated in Ooty, in Nilgiris District, which comes within the jurisdiction of the Madras High Court and could not be maintained before this Court[Kerala High Court] for lack of territorial jurisdiction HELD THAT:- On a consideration of the rival submissions, we are of the view that the impugned judgment of the learned Single Judge requires no interference. It is well settled through the decision of the Supreme Court in M/S. Ambica Industries v. Commissioner Of Central Excise 2007 (5) TMI 21 - SUPREME COURT] and the later decisions including the decision of this Court in Aparna Balan and Another v. Union of India and Others [ 2018 (7) TMI 2347 - KERALA HIGH COURT] as also V. Viswanathan v. State of Kerala [ 2014 (10) TMI 1074 - KERALA HIGH COURT] and the judgment in K S Jamestin v. The Ministry of Petroleum and Natural Gas Shastri Bhavan, New Delhi and Another [ 2022 (11) TMI 1486 - KERALA HIGH COURT ], that merely because the appellant has a bank account within the State of Kerala, he cannot maintain a Writ Petition challenging the orders passed by an assessing authority who is situated in Tamilnadu, more so when the orders in question are issued in connection with the business carried out by the appellant in Tamilnadu. The Writ Appeal, therefore, fails and is accordingly dismissed.

• 2024 (5) TMI 1397

  Best judgment assessment - Validity of assessment order u/s 144 without issuing notice u/s 143(2) - HELD THAT:- When assessee has filed the return of income and responded to the notice of the AO, the conditions for invoking Section 144 are not met. Therefore, the assessment made by the AO u/s. 144, would not sustain. Various judicial decisions have held that invoking Section 144 is improper, if the assessee has filed a return of income and complied with the notices. The courts have quashed such assessments, emphasizing that best judgment assessments are intended only for cases where the assessee fails to file returns or comply with statutory notices. Addition u/s 69A as unexplained Money - In the present case, the assessee has furnished the details of cash deposits, during the course of the appellate proceedings. The Affidavits of relatives confirming that the cash deposited in the bank account of the assessee belongs to them were also produced before the CIT(A). Assessee also produced the return of income of the relatives. As observed that the deposits is not relating to cash deposit and it is related to the maturity proceeds of the fixed deposits. As noted that there is an addition on substantive basis in the hands of Shabbir Kantawala, brother of the assessee and the said Rs. 10,00,000/- is the same amount deposited in the joint bank account held by the assessee. CIT(A) was not correct in upholding the half of the assessment in the hands of assessee u/s. 69A Affidavits, if credible and corroborated by other evidences, can be sufficient to explain the source of cash deposits. Neither the AO nor the CIT(A) has provided concrete reasons or evidences to reject the Affidavits and the explanation provided by the assessee. Mere suspicion or conjecture is not sufficient to sustain an addition u/s 69A - We, therefore, set aside the order of CIT(A) and delete the entire addition made u/s. 69A r.w.s 115BBE in the hands of the assessee by the AO. Initiation of penalty proceedings u/s 271AAC(1) 271F - Proceedings for initiation of penalty proceedings u/s. 271AAC(1) 271F of the Act be dropped. Appeal of assessee is allowed.

• 2024 (5) TMI 1396

  Penalty levied u/s 271(1)(c) - addition made of bogus purchases - CIT (A) restricted addition to 12.5% of bogus purchase - Information received from Maharashtra Sales Tax Department by DGIT investigation Mumbai which was in turn forwarded to the AO wherein five parties were found to be hawala parties providing accommodation bills. HELD THAT:- As it is apparent that the addition made in the hands of the assessee remains on estimated basis. Though it cannot be the case that whenever addition is made on the estimate basis penalty cannot be levied. However, when the assessee has furnished all the relevant information, what is the information that the assessee has furnished inaccurately is the question. It cannot be said that assessee was in known of things at the time of recording of these purchase that same are bogus and furnished these information which was inaccurate to the AO - The several decision of the co-ordinate Bench in this case clearly shows that in such case the penalty u/s 271(1)(c) of the Act could not have been levied. Thus as relying on Krishi Tyre Retreading and Rubber Industries [ 2014 (2) TMI 21 - RAJASTHAN HIGH COURT] the appellate orders of the ld. CIT (A) deleting the penalty u/s 271 (1) (c) of The Act , are confirmed. - Decided in favour of assessee.

• 2024 (5) TMI 1395

  Exemption from tax as the appellant is an instrument of state as per Article 12 of the Constitution - as per assessee it is not liable to tax, as being a State under Article 289 of the Constitution of India engaged in public utility services - AO was of the view that the assessee is a partnership firm, having perpetual succession - HELD THAT:- We find that in the instant case, Assessee/APSCHE is incorporated under Special Legislation i.e. APSCHE Act, 1988. As per the said Act, the State Government is only having power to appoint Chairman and other members in the Government Council, i.e. full control of the State Government on the policy decisions as well as management. The Hon ble Supreme Court has therefore held that the autonomous bodies like State Transportation Corporation or Warehousing Corporation, where there is full control by the Government either State or Central, theseare instrumentalities of State only. Further perusal of Article 12 shows that the definition of the State given in Article is inclusive and not exhaustive. The expression other authorities used in Article 12 is neither defined in the Constitution of India nor in any other statute. Therefore, the Hon ble Supreme Court of India and the Hon ble High Court have interpreted this expression in various judgements. The Hon ble Supreme Court of India while interpreting the expression other authorities in the case of Som Prakash Rekhi v. Union of India [ 1980 (11) TMI 113 - SUPREME COURT] have culled out certain tests to determine as to when a Corporation should be said to be an instrumentality or Agency of the Government. If the body is found to be an instrumentality of the agency of the Government, it would be an authority included in term State under Article 12 of the Constitution of India. However, the tests indicated by the Hon ble Apex Court in the case of Som Prakash Rekhi [Supra] are merely indicative and not absolute and thus, have to be applied discretely. If any Body or organisation falls within the criteria as laid down by the Hon ble Apex Court it can be considered that it falls within the term State . we observe that the assessee has satisfied majority of the conditions. We also further note that the assessee s Govt. Counsel has made an application, both for cancellation of PAN, which was issued wrongly as a partnership firm and also an application under 10(46) of the Act for exemption of specified income to the assessee. Considering the arguments of the Ld.AR that the assessee is under bonafide mistaken belief as being instrument of state is exempt from filing the return of income, the assessee has not filed the return of income for the impugned year under consideration. Therefore, considering the facts and circ*mstances of the instant case that the assessee is completely under the superintendence and control of the State Government, financially and administratively, the assessee falls under the definition of State as per Article 12 of the Constitution of India and in our view, the assessee is entitled for immunity from taxation of it s income under the provisions of Income Tax Act., We are therefore, inclined to allow Ground raised by the assessee. Further, we are also of the opinion that since the assessee is fully exempt from tax, there cannot be taxation on the income of the assessee or the receipts collected by the assessee. Assessee appeal allowed.

• 2024 (5) TMI 1394

  Levy of penalty u/s 271(1)(c) - bogus LTCG - exemption of Long Term Capital Gain u/s 10(38) of the Act on sale of shares denied - revised income declaration was not voluntary but a response to the notice issued u/s 148 - HELD THAT:- We find that in MAK Data (P.) Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] held that voluntary disclosure does not release the assessee from the mischief of penal proceedings. Further, it is evident from the record that though the assessee claimed the transaction of shares of M/s. Action Financial Services (India) Ltd to be genuine, however, did not bring any material of record to support its contention and straight away upon receipt of notice u/s 148 offered to tax the LTCG on the sale of shares of M/s. Action Financial Services (India) Ltd. There is also no material on record to show that the assessee subsequently again claimed the Long Term Capital Gain to be exempt. Since the additional income on account of the aforesaid Long Term Capital Gain was offered to tax only in response to the notice issued u/s 148 we agree with the findings of the lower authorities that the same is not voluntary but is consequential to the issuance of notice u/s 148 of the Act. In view of the above, we also do not find any merits in the submissions of the assessee that no penalty can be levied in the present case since the returned income and assessed income are same, as the only basis of issuance of notice u/s 148 was the alleged bogus LTCG claimed as exempt by the assessee in the original return of income and which was subsequently offered to tax by the assessee in response to notice issued u/s 148 - we find no infirmity in the impugned order in upholding the levy of penalty u/s 271(1)(c) of the Act, and therefore, the same is upheld. As a result, the grounds raised by the assessee are dismissed.

• 2024 (5) TMI 1393

  Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - whether the assessee has concealed its particulars of income or furnished inaccurate particulars of such income? - HELD THAT:- AO has not struck off the inappropriate portion therein. The notice, so issued, does not mention the specific charge i.e. whether the assessee has concealed particulars of its income or furnished inaccurate particulars of such income. Hence, the show cause notice issued u/s 274 read with Section 271(1)(c) of the Act dated 08.03.2016 becomes defective and bad in law, therefore, no penalty u/s 271(1)(c) can be levied in such case. The issue is squarely covered by the ratio of decision of M/s Sahara India Life Insurance Company Ltd.. [ 2019 (8) TMI 409 - DELHI HIGH COURT] As Revenue could not bring any contrary material on record to demonstrate that the notice so issued contained specific charge, grounds raised by the Revenue are rejected.

• 2024 (5) TMI 1392

  Unexplained investment in the form of cash for the purpose of purchasing immovable property - Search and seizure operation carried upon - Confirmation of Addition Without Cross-Examination - Burden to prove - HELD THAT:- We fail to find any merit in such observation of the lower authorities for the reasons that the search and seizure action have been conducted by the Income Tax Department on person to whom cash was given [Mr. Nilesh Ajmera] and certain documents and diaries were seized. Based on such documents and also taking basis of statements given by Mr. Nilesh Ajmera, reassessment proceedings have been carried out in the case of the assessee. Admittedly, search action was conducted on the assessee and the alleged addition is merely on the basis of third parties information. So, when the additions have been made on the basis of documents found from the possession of Mr. Nilesh Ajmera and the search operations have been carried out in the case of Nilesh Ajmera, then as per the direction of this Tribunal, it was the responsibility and duty of the AO to bring Mr. Nilesh Ajmera for cross examination before the assessee and give him the opportunity to assessee to cross examine Mr. Nilesh Ajmera so as to adhere to the principles of natural justice, since the additions have been made based on third parties statement. The burden to discharge the onus as directed by this Tribunal was purely on the AO and he could not absolve from his duty by mentioning that summons were sent twice to Mr. Nilesh Ajmera. The action of the AO seems like that there is a witness from the side of the Revenue and on his statement, the addition has been made in the hands of the affected party but when the opportunity of giving cross examination is to be given, then rather than the Revenue to bring its witness for cross examination the affected party is held responsible for bringing such witness. Similar approach of the Ld. AO in the instant case cannot be held to be justified. For the inability of the AO to comply with the directions of this Tribunal by not providing the opportunity to the assessee to cross- examine to Mr. Nilesh Ajmera leaves us with no option except to delete alleged addition for unexplained investment of cash given by the assessee. Even DR could not place on record any other material in support of revenue to prove that any such investment was made in Dubai flat and also failed to controvert the findings of this Tribunal given in the case of Pukhraj Soni [ 2016 (9) TMI 1489 - ITAT INDORE ], wherein also under similar set of facts and circ*mstances, relief was given to the assessee, since no corroborative and concrete evidence was found, which could prove that Mr. Pukhraj Soni has advanced money to Mr. Nilesh Ajmera. Decided in favour of assessee.

• 2024 (5) TMI 1391

  Unexplained cash credit u/s 68 - Bogus share capital/share premium - HELD THAT:- AO issued notices u/s 133(6) of the Act to all the subscribers and were duly replied by furnishing all the details/evidences as called for. Besides the AO also issued summons u/s 131 of the Act to all the parties, which were duly replied by the share subscribers copies of which are filed in the paper book as stated above. In our opinion, the assessee has duly discharged its onus by filing evidences before the ld. AO and AO has acted on the ground that the subscribers have no creditworthiness to invest in the assessee company as they were not having sufficient income either in the current year or in the preceding years. AO ignored the fact that these subscribers were having huge networth and have made investments out of that. The ld. AR stated that where the AO has any doubt about the lenders where the assessee has furnished all the evidences before the AO, then the matter should be looked into the hands of the creditors and not the assessee when all the subscribers are duly assessed to tax and even the assessment orders u/s 143(3) of u/s 143()1) of the Act are placed on records. Thus as the share subscribers have even replied to the notices issued u/s. 133(6) of the Act and also to the summons issued u/s. 131, we are inclined to hold that assessee has proved all the ingredients of section 68 of the Act by filing all the evidences and the authorities have failed to any substantive evidence or material to the contrary .Accordingly, we set aside the order of ld. CIT(Appeals) and direct the ld. Assessing Officer to delete the addition - Decided in favour of assessee.

• 2024 (5) TMI 1390

  Levy of penalty u/s 271AAB - Defective Notice for Penalty Proceedings - show cause only mentioned the offence committed by the assessee by mentioning that assessee has concealed the particulars of income or furnished inaccurate particulars of income show cause notice is meant for initiating penalty proceedings u/s 271(1)(c) as AO has used the same show cause notice in the same format for initiating penalty proceedings u/s 271AA - whether the assessee has concealed the particulars of income or had furnished inaccurate particulars of income? HELD THAT:- There is a greater onus casted on the Revenue to specifically mention in the show cause notice itself as to what offence the assessee has committed and also to mention the rate of penalty that is sought to be levied by the AO on the assessee i.e., 10% or 20% or 30% or 60% of undisclosed income, as the case may be. If none of these preliminary informations are mentioned in the show cause notice, then the show cause notice issued by the Ld. AO becomes completely defective and consequentially fatal and would vitiate the entire penalty proceedings. This issue, in any case, is no longer res integra in view of the decision of Kolkata Tribunal in the case of Sushil Kumar Paul [ 2022 (12) TMI 1008 - ITAT KOLKATA ] wherein as held there is no mention about various conditions provided u/s 271AAB - AO has very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) of the Act for the concealment of income or furnishing of inaccurate particulars of income. Except mentioning the section 271AAB of the Act in the notice, it does not talk anything about the provisions of section 271AAB. Therefore, certainly such notice has a fatal error and technically is not a correct notice - Decided in favour of assessee.

• 2024 (5) TMI 1368

  Appeal before CIT(A) u/s 249 - Non admission of appeal for non-payment of advance tax as per provisions of section 249(4)(b) - obligation to make payment of advance tax u/s 208 or not? - determination of documentary evidences filed by the assessee HELD THAT:- We find that the assessee has taken a stance from the very first stage itself , before the AO that he has no taxable income for the year under appeal and his income is only agricultural income which is exempted income under the Act 61 and the gift received from relative ( within the meaning of explanation (e) of clause (vii) of sec 56 of the Act ) is also non-taxable, and has filed documentary evidence of the same before the AO , as evident from the assessment order, and in the computation of income filed by the assessee before the Tribunal, he has declared NIL taxable income , thereby indicating that he is not liable to pay any advance tax as per provisions of section 207 of the Act 61 because he has no total income which would be chargeable to tax and computation of advance tax , as per sec 209 of the Act is NIL, and according to the assessee the payment of advance tax u/s 210 of the Act , of his own accord , does not arise in this case. We also note that the assessee has filed a reply before the first appellate authority to the deficiency letter, dated 03/01/2024, stating that he has no taxable income. Thus we are of the opinion, that the assessee has presented a prima facie case, of no obligation, to make payment of advance tax u/s 208 of the Act 61, for the year under appeal, and we hold that the CIT(A) should have admitted the appeal for adjudication on merits, and the amount of advance tax payable by the assessee, for the purpose of presenting the appeal, as per provisions of section 249(4)(b), should be taken as NIL. We set aside the order of the CIT(A) and restore the same to his file for adjudication on merits, after causing all necessary verification of all documentary evidences he deems fit and proper, as per procedure of law, (un influenced by any observation we might have made in the above paragraphs), and after allowing proper opportunity to the assessee of being heard. Appeals of the assessee is allowed for statistical purposes.

• 2024 (5) TMI 1367

  Delayed payment of PF ESI before filing return of income as prescribed in law - Whether the Ld. ITAT is justified in law and fact and circ*mstances of the case in making disallowance of payment of ESI PF before filing Return which was duly covered u/s 43B of the Income Tax Act? HELD THAT:- Dealing with the impact of a delayed deposit and the ambit of Section 43B Supreme Court in Checkmate Services [ 2022 (10) TMI 617 - SUPREME COURT] held that non obstante clause has to be understood in the context of the entire provision of Section 43-B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory payout. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non obstante clause under Section 43-B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. Thus we find no justification to interfere with the view as expressed. Decided against assessee.

• 2024 (5) TMI 1366

  Method of valuation of closing stock - adoption of a uniform method of valuation of closing and opening stock - FIFO Method - valuation of inventories at lower of actual cost or net realisable value computed in accordance with the Income Computation and Disclosure Standards (ICDS) notified under sub-section (2) of Section 145 - arbitrariness in making it mandatory to value the stock by applying the FIFO or weighted average cost method - writ petition in challenging the amendment in Section 145A, making it mandatory for adoption of Clause 16 of ICDS (II) for applying FIFO or weighted average cost method across the Board for all assessee for valuing the closing and opening stock. HELD THAT:- It is no matter of doubt that an assessee is entitled to adopt one or the other method of computation of its income if a particular method has not been made mandatory. The petitioner was applying the LIFO method of accounting as the standard for valuing the closing and opening stock up to 01.04.2017. Before 01.04.2017, there was no mandatory provision for adopting one or another method of Accounting Standards. The Statute also did not mandate only one method of valuing the closing and opening stock. The petitioners were free to adopt any one of the Accounting Standards as notified by the ICAI. The Parliament, after a wide range of consultation from all stakeholders and based on the recommendations of the Committee to maintain uniformity in accounting the income and valuing the stock, has made Clause 16 of ICDS (II) mandatory for the adoption of FIFO or weighted average cost method. This mandatory provision applies to all assessees, and, therefore, find no substance in the submission of the learned Senior Counsel for the petitioners that making Clause 16 of ICDS (II) mandatory for adopting FIFO or weighted average cost method as the only method valuing the stock/inventory suffers from any vires of unreasonable classification or manifest arbitrariness as violative of Article 14 of the Constitution of India. In the present case, the petitioners had been following the LIFO method to value its closing and opening stock and the same had been accepted by the Revenue up to 01.04.2017. It is also a well-settled law that the closing and opening stock are to be valued by applying the same method of valuation. In the case of Ramswarup Bengalimal ( 1953 (9) TMI 22 - ALLAHABAD HIGH COURT] , K.G Khosla [ 1973 (11) TMI 37 - DELHI HIGH COURT] , Doom Dooma India Ltd [ 1992 (12) TMI 41 - GAUHATI HIGH COURT] , Mahavir Aluminum Ltd . [ 2007 (11) TMI 41 - HIGH COURT OF DELHI] held that opening and closing of stock of a year have to be necessarily valued on the same basis. The opening stock cannot be valued in a manner different from the valuation of closing stock. In Chainrup Sampathram [ 1953 (10) TMI 2 - SUPREME COURT] , P.M Mohd. Meerakhan [ 1969 (2) TMI 4 - SUPREME COURT] , Sanjeev Woolen Mills [ 2005 (11) TMI 26 - SUPREME COURT] , ALA firm [ 1991 (2) TMI 1 - SUPREME COURT] it has been held that the valuation of closing and unsold stock is not the source of income in the hands of the assessee. However, by applying the method of FIFO with effect from 01.04.2017, the income of the petitioner has increased to the tune of Rs.51.07 Crores without any real income. As substitution of Section 145A with retrospective effect from 01.04.2017 by the Finance Act, 2018 is to give relief to those assessees who had adopted the FIFO to value their stock in the Assessment Year 2017-18 and to save their returns from being declared as incorrect/invalid. This retrospective operation is with said purpose and objective. However, if an assessee did not apply the FIFO to value its opening and closing stock as it was not mandatory, requiring such an assesses to apply FIFO to value their stocks for the Assessment Year 2017-18 would result in an uncalled-for outcome. Therefore, retrospective amendment in substituting Section 145A would not apply to those assessees who had not applied FIFO for valuing their stock in the Assessment Year 2017-18, as these assesses have been following LIFO consistently and had filed their returns before the Finance Act 2018 was enacted. Therefore, in the case of the petitioners, the stipulation under Clause 16 of the ICDS (II) for the adoption of FIFO or weighted average cost for valuation of the stock/inventory cannot be applied in the Assessment Year 2017-2018 for the valuation of the opening stock, as the opening and closing stock of the year is to be valued by applying the same methodology. Thus all the writ petitions are partly allowed, and the impugned notices in all the writ petitions are quashed. The respondents are directed to either accept the valuation of both opening and closing stock, for the Assessment Year 2017-2018, based on the LIFO method or permit the petitioners to value their stocks by applying the FIFO or weighted average cost method.

• 2024 (5) TMI 1365

  Penalty u/s. 271D - receipt of cash in relation to transfer of immovable property by the assessee attracting the provisions of section 269SS - case was selected for scrutiny under CASS for the reason whether the cash deposits have been made from disclosed sources - HELD THAT:- The admitted facts are that the assessee has received cash for the sale of immovable property from the buyer to the extent of 15,41,000/-. Section 269SS of the Act as amended by Finance Act, 2015 w.e.f. 1/6/2015 stipulates that no person shall take or accept from any other person, any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. From the plain reading of the above section, it is noted that any person is barred from receiving from any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. Section 269SS of the Act prohibits receipt of any amount by way of cash in relation to the transfer of any immovable property. On this aspect the Memorandum explaining the provisions of Finance Bill 2015 with respect to amendment proposed w.e.f 1/6/2015 in section 269SS. The objective of the amendment proposed in 269SS of the Act is to curb generation of black money. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS of the Act since there is no suppression of cash receipts by the assessee. The assessee has also offered the capital gains to tax. The explanation given by the assessee for receipt of sale consideration constitutes a reasonable cause as contemplated in section 273B of the Act and the assessee has accepted the cash under inevitably unavoidable circ*mstances as explained by the Ld. AR in his arguments and immediately on receipt of the cash, the assessee deposited the same in the bank account which contemplates the genuineness of the transaction and moreover the assessee has paid the tax on capital gains thereon. We are of the considered view that the penalty levied by the Ld. AO-NFAC u/s. 271D and confirmed by Ld. CIT(A)-NFAC is unsustainable in law and accordingly the orders of the Ld. AO-NFAC and Ld. CIT(A)-NFAC are set aside and thereby we delete the penalty. Assessee appeal allowed.

• 2024 (5) TMI 1364

  Application of application u/s 80G - application u/s 80G(5) in form no. 10AB was rejected on the ground that the appellant selected a wrong section code (13-clause (ii) instead of 14 - clause (iii)) - HELD THAT:-During arguments the DR on behalf of the revenue did not oppose the application for withdrawal of the present appeal. We have considered the rival submissions and also gone through the contents of the withdrawal application. It is evident that the said withdrawal application has been filed on the basis of circular dated 25.04.2024 issued by the CBDT bearing circular no. 7/2024 extending the due date for filing of Form 10A/10AB under Income Tax Act, 1961. Withdrawal application, the application for withdrawal of the appeal is allowed and the present appeal is accordingly dismissed as withdrawn. Appeal filed by the assessee is dismissed.

• 2024 (5) TMI 1363

  Disallowance u/s 14A r.w.r 8D - Expenditure incurred on earning exempt income - HELD THAT:- Undisputed fact shows that assessee has earned exempt income of ₹3 lacs during the year. Assessee did not offer any disallowance and stated that it has not incurred any expenditure which earned the exempt income. AO invoked the provisions of Section Rule 8D of the Act and made disallowance to the extent of total expenditure incurred. Now it is a settled position of law that disallowance in excess of exempt income cannot be sustained u/s 14A of the Act. Hon'ble Karnataka High Court in Pragathi Krishna Gramin Bank [ 2018 (6) TMI 1283 - KARNATAKA HIGH COURT] and in CIT vs. M/S. Corrtech Energy Ltd [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] has clearly held so. In case of HSBC Invest Direct (India) Ltd [ 2019 (2) TMI 731 - BOMBAY HIGH COURT] has also held so that the disallowance u/s 14A of the Act cannot exceed the exempt income. In case of M/S Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] has clearly held so - Appeal of the assessee is allowed.

• 2024 (5) TMI 1362

  Unexplained deposits in joint bank account being maintained by the assessee and his wife and daughter - it is the case of the assessee that all the three persons including the assessee were using the said bank account for banking purpose - Detailed explanation provided on cash sources, including agricultural income, professional income, and sale proceeds - HELD THAT:- Assessee submitted details of agriculture land held by each one and also affidavit from the buyer of the agriculture produce. The assessee has also produced registered sale deed as regard the sale of land registered on 15/10/2010, one more sale deed in respect of the other land was also filed before the A.O. In so far as cash being kept with the assessee, the assessee submitted that since the wife of the assessee was suffered from dementia, for the purpose of medical treatment the cash was kept at home for the purpose of convenience. Further, the bank interest income added by the Assessing Officer is not the bank interest but the maturity of NSC. CIT (A) has not considered the above evidence in the right spirit, thereby restricted the relief to the tune of Rs. 2,00,000/- only and confirmed the rest of the addition. Though the Ld. CIT(A) has quoted the detailed submission made by the assesseeMwithout adjudicating and considering the explanations and without any basis, restricted the credit of Rs. 2,00,000/- only, though the assessee has provided proper explanation and the documentary evidence regarding agriculture income. Considering the land holdings of the assessee and his children, affidavit of the persons who have carried out the agriculture operation and the Affidavits of the persons purchased the agriculture produce, should have been considered and the CIT(A) and should have deleted the addition. In our considered opinion, A.O. and the Ld. CIT(A) have committed error in making and confirming the addition in the hands of the assessee. Thus, we find merit in the Grounds of appeal of the assessee, accordingly, the additions made by the A.O. which was confirmed by the Ld. CIT(A) is hereby deleted and the Grounds of Appeal of the assessee are allowed.

• 2024 (5) TMI 1361

  Revision u/s 263 - Treatment of Sale of Residential Property as Short-Term or Long-Term Capital Asset - Appropriation Between Land and Building for Capital Gains Computation - determination of share of property under a JDA - CIT considered the order as erroneous and prejudicial to the interest of the Revenue since the Ld. AO has erred in treating the asset as long term capital asset - CIT considered the sale as short term capital gains and consequently concluded that deduction claimed u/s. 54EC of the Act is not allowable - HELD THAT:- We do not agree that the residential flat was in existence at that time, since the completion and possession was granted during Feb 2011. In flats/multi-storied apartments/commercial complexes, the ownership consists of owning undivided share of land and built-up area and these together is the property. It has two components and ownership of both components of undivided share of land and ownership of building is necessary to complete title to a flat. Generally, when a JDA is entered into the owner of the land offers it to a developer with an understanding that he will retain undivided share of land proportionate to his share of built-up area and the undivided share of land proportionate to the built-up area which falls to the share of the developer is agreed to be sold. Therefore, the owner of the property retains undivided share of land proportionate to his share of built-up area. When the built-up area is delivered to the owner of the land and when he sells his share, he again transfers not only the built-up area but also proportionate undivided share of land. In such transaction, there will be no bifurcation of cost of land and building. AO has to call for details and arrive at the cost of undivided share of land and built-up area. When the owner sells his share of built-up area, the built-up area is acquired when the developer delivers possession of the built-up area to the owner but the undivided share of land is already owned by the owner. When an owner sells his share of property under a JDA he sells two components one is undivided share of land which he held for a longer period than the building and the building which he gets from the developer on completion of the building and the period of holding of the building is much shorter than the period of holding of the land. The concept of bifurcation of undivided share of land and built-up area is a well recognized concept. In practice, a building and the land appurtenant thereto held by an assessee, could be transferred together to a transferee through a single conveyance deed against a lumpsum monetary consideration. In such cases, the question on the method of computing the long term capital gains arises (i.e.) whether the long term capital gain/short term capital gain could be computed for land and building separately? This question assumes paramount importance since the period of holding will decide whether the capital gain is long term or shorter and the indexed cost of acquisition and improvement thereto in respect of these assets will vary depending upon the period of holding. Based on the holding period of these assets, the capital gain is long term or short term and the indexed cost of acquisition could be computed. Likewise in order to claim the indexed cost of improvement necessary documents in support of the improvements done and the expenditure incurred thereon have to be also maintained by the assessee. How to appropriate the sale consideration for the transfer of land and building if a lump-sum monetary consideration is received by the transferor from the transferee when the transfer is effected through a single conveyance deed. As per section 50C as amended by the Finance Act 2009, where the consideration received or accruing as a result of transfer of land and/ or building is less than the value adopted or assessed or assessable by an authority of the State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration received or accruing as a result of such transfer for computing capital gains. The market value of the immovable property transferred as indicated in the sale deed will be equivalent to the actual sale consideration received by the transferor from the transferee. If this value exceeds the value adopted or assessable by the Registration Authority for stamp duty purposes, the said sale consideration as appropriated to land and building as per Annexure or other documents attached with the registered sale deed could be adopted for the purpose of computing the capital gains. If the sale consideration is lesser than the value adopted or assessable by the Registration Authority for stamp duty purposes, then such value so adopted by the Registration Authority as appropriated between the land and building could be adopted as deemed sale consideration for the respective assets for the purpose of computing the capital gains. Thus we are of the view that the Ld. CIT has erred while invoking the powers u/s. 263 of the Act without considering the appropriation between land and building, and hence the order u/s. 263 deserves to be quashed. It would be just and appropriate to direct the AO to examine the issue afresh in the light of the directions as given above. We therefore allow the ground raised by the assessee for statistical purposes.

• 2024 (5) TMI 1360

  Addition u/s 69 or 56(2)(vii)(b) - Difference between the guideline rate as prescribed by Stamp Valuation authority and actual purchase/registered during the year - HELD THAT:- We find on a perusal of the 1st proviso to Section 56(2)(vii)(b) of the Act, that the same, therein, contemplates where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of the aforesaid statutory provision. At the same time, the applicability of the 1st proviso is subject to the satisfaction of a pre-condition that can be traced in the 2nd proviso . The 2nd proviso to Section 56(2)(vii)(b) of the Act, contemplates that the 1st proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property. Now testing the facts of the present case in the touchstone of the pre-conditions contemplated in the 1st proviso and 2nd proviso to Section 56(2)(vii)(b) of the Act, we find that the same are found to be duly satisfied. As is discernible from the records, we find that the assessee had vide a registered purchase deed acquired the title of a plot admeasuring 4000 sq. ft. in Danish Kunj Society from Danish Grih Nirman Sahkari Sanstha Maryadit, Bhopal for a consideration of Rs. 1,05,332/- on 02.03.2017. Originally an agreement to purchase the aforesaid plot was executed between the father of the assessee, viz. Late Shri Sundar Lal Gupta and Danish Grih Nirman Sahkari Sanstha Maryadit, Bhopal in the year 1991 for a consideration of Rs. 92,000/-(including development charges). The assessee was a nominee of the aforesaid purchase transaction. On a perusal of the purchase deed, it transpires that the same therein mentions that the subject plot No. DK-5/3 admeasuring 4000 sq. ft. (50 * 80) was allotted to a member having membership No.3128, which conforms with the details provided in the allotment certificate issued by the society to the assessee's father. Apart from that, the payment of the purchase consideration as stated in the aforesaid receipts dated 27.06.1991, 29.07.1992, and 12.09.1992 vide cheques/drafts are mentioned in the purchase deed. Also, payment of the balance development charges of Rs. 19,962/- that was paid by the assessee on 28.02.2017 is stated in the aforesaid purchase deed. Considering the aforesaid facts, we concur with the CIT(Appeals) that as the amount of purchase consideration for transferring the aforementioned immovable property, i.e. Plot No.DK-5/3 (admeasuring 4000 sq.ft) was fixed as per terms of the agreement to purchase executed between the assessee's father, viz. Late Shri Sundar Lal Gupta and Danish Grih Nirman Sanstha Maryadit, Bhopal in the year 1991 at Rs. 92,000/- (including development charges), which was paid vide cheques/drafts by the assessee's father over the period 27.06.1991 to 12.09.1992, therefore, the case of the assessee would fall within the exception carved out to the application of the aforesaid Section 56(2)(vii)(b) of the Act, i.e. as contemplated in the 1st proviso and 2nd proviso of the said statutory provision. We, thus, finding no infirmity in the view taken by the CIT(Appeals), uphold the same. Although the Ld. AR has raised an alternative contention, that as Section 56(2)(vii)(b) of the Act has been made available on the statute only vide the Finance Act, 2010 with retrospective effect from 01.10.2009 and thus, was not available on the statute when the agreement to purchase the subject property was executed between the assessee's father and the aforementioned society, i.e. in the year 1991, therefore, the said statutory provision on the said count itself could not have been triggered, but we refrain from dealing with the same. We say so, for the reason that as it is the appeal of the revenue before us, therefore, the aforesaid claim of the Ld. AR does not emanate from the order of the lower authorities and cannot be adjudicated in the course of the present proceedings. Addition made by the A.O u/s. 69 as unexplained investment, we concur with the CIT(Appeals) that as nothing is discernible from the record that would reveal any undisclosed investment made by the assessee towards the purchase of the subject property, therefore, no addition under the said statutory provision could have been validly made. CIT(Appeals) had observed that there is no evidence with the A.O. which would reveal that the investment made towards the purchase of the aforesaid plot was over and above the actual consideration that was paid by the assessee's father. Also, it is rightly observed by the CIT(Appeals) that as the difference between the stamp value of the subject property and the actual purchase consideration is only the deemed/notional income, therefore, the same could not have been brought with the meaning of unexplained investment u/s. 69 of the Act. Thus, the Ground of appeal No.1 raised by the revenue is dismissed in terms of our aforesaid observations. CIT(Appeals) had admitted additional evidence in violation of the procedure contemplated in Rule 46A(3) of the Appellate Tribunal Rules, 1963 - We are unable to find favor with the same. On a perusal of the order of the CIT(Appeals) read along with the documents that have been pressed into service by him for vacating the addition made by the A.O, we find that the said documents as had been stated by the assessee in his paper book filed before us, i.e. Sr. No.1 to 10 were filed before the A.O. Nothing to the contrary has been brought to our notice by the Ld. D.R. Thus, the Grounds of appeal No.2, 3 4 raised by the revenue are dismissed.

• 2024 (5) TMI 1359

  Validity of income tax proceedings against company dissolved/insolvent - claim or demand assessed/raised/ordered by Income-tax Department endeavoring to saddle the Company with a liability for a period prior to approval of the Resolution Plan - HELD THAT:- As decided in Tata Steel Ltd. [ 2023 (11) TMI 202 - DELHI HIGH COURT] dues payable to creditors in a Corporate Insolvency Resolution Proceedings, under the Insolvency and Bankruptcy Code, 2016 including statutory creditors for periods prior to the date when the Resolution Plan is approved, can only be paid in accordance with the terms contained in the Resolution Plan; that where no provision is made for claims lodged on behalf of the creditors, or there is failure to lodge a claim with the Resolution Professional, all such claims stand extinguished; that this position in law obtains because of the provisions of Section 31 of the Code, which inter-alia, stipulates that once the Resolution Plan is approved, it shall be binding on the Corporate Debtor and, inter-alia, its creditors, which include, inter-alia, the Central Government under any law for the time being in force and also on authorities to whom statutory dues are owed; that the provision also stipulates that the Approved Plan shall be binding on guarantors and other stakeholders involved in forging; that a successful applicant whose Resolution Plan has been approved should not be put in a position where it is called upon to liquidate dues of creditors, including statutory creditors which are not imbedded in the Resolution Plan. Section 238 of the Code squarely states that any ambiguity that the provisions of the Code shall have effect, not withstanding anything inconsistent contained in any other law for the time being enforce or any instrument having effect under any such law; that thus where matters covered by the Code are concerned, including Insolvency Resolution of Corporate persons, if the provisions contained therein are inconsistent with any other Statutes, including the Income Tax Act, 1961, they shall override such laws; and that if such an approach is not adopted, it will undermine the entire object and purpose of the enactment of the Code. See Ghanashyam Mishra Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd [ 2021 (4) TMI 613 - SUPREME COURT] Also decided in Garden Silk Mills P. Ltd. [ 2023 (6) TMI 806 - ITAT SURAT] the provisions of the IBC would prevail over those of the Income Tax Act; that where the petition had been admitted by the NCLT u/s 7 of the Code and moratorium model u/s 14 of the IBC had been declared and the NCLT had already appointed an Interim Resolution Professional, but the IRP had not impleaded himself to represent the assessee company in the appeal before the Income Tax Appellate Tribunal. In view of the provisions of Section 14 of the IBC, there could not be any continuation of any pending proceedings before the Income Tax Appellate Tribunal.

• 2024 (5) TMI 1358

  Penalty u/s 271B - assessee committed default and failed in uploading the Audit Report in the manner prescribed - non-audit of accounts when books of accounts are not maintained - Contention of assessee as the assessee is not maintaining the books of accounts then the Department can only charge penalty for the said default u/s 271A and Department cannot invoke and impose penalty u/s 271B which is meant for getting the account audited. HELD THAT:- By following the ratio laid down in the case of Bisauli Tractor [ 2007 (5) TMI 181 - ALLAHABAD HIGH COURT] we are of the considered opinion, that the Provisions of Section 271B of the Act is not attracted as the Assessee has not maintained books of account and the Assessee is liable to the recourse u/s 271A of the Act. We allow the Grounds of Appeal of the assessee and delete the order of the penalty imposed u/s 271B of the Act in all the three Appeals.

• 2024 (5) TMI 1357

  Unexplained cash deposits - Onus to prove the source - Revenue contended that assessee has failed to explain as to why he has deposited money into bank account and why Ravi Bansal has not given by cheque and therefore, when the other money received by the cheque - HELD THAT:- Considering the evidences placed on record in the form 1/3 parties evidence and registered copy of power of attorney we are of the view that the assessee is not the real owner of cash deposit in the bank account. CIT(a) has merely not considered the plea of the assessee on account of the fact that in the said Mukhtiyar nama the amount transferred or agreed by between the parties have not been mentioned and merely on these correct reason the explanation of the assessee are rejected. The contention of the CIT(A) has not correct when the assessee from the third party evidence proves that the money received in his bank account through RTGS and through deposit of cash has been given to Shir Vivik Oberoi and Shri Inder Pal Singh for which the power of attorney has been placed on record. Thus looking into bank all facts present by the assessee, we are of the considered view that the Revenue may taken necessary action against Ravi Bansal if deem it fit in accordance with law but in the case of the assessee ultimately income i.e. to be chargeable to tax is only the brokerage income and the AO. Considering the rate of brokerage privilege in the market the excess income of the assessee considering that the finding of the fact that ground of the assessee are allowed.

• 2024 (5) TMI 1356

  Best Judgement Assessment - Validity of assessment completed without issuance of notice u/s. 143(2) - assessment was completed ex-parte u/s. 144 and AO treated the return filed by the assessee as invalid because the assessee has not filed return of income within the time allowed in the notice u/s. 142(1) - HELD THAT:- The assessee has not filed any return of income u/s. 139(1) of the Act for the relevant assessment year 2017-18. Subsequently, the AO noticed that the assessee has deposited demonetized cash in its bank account and hence, to verify the genuineness of cash deposit, notice u/s. 142(1) of the Act dated 05.01.2018 calling the assessee to file return of income was issued. The time allowed vide this notice u/s. 142 of the Act by the Department was up to 31.03.2018 but assessee furnished the return of income on 15.02.2019 i.e., almost 10 months after the expiry of time allowed by the Department. Hence, the AO proceeded to frame the assessment u/s. 144 of the Act and finally assessment was framed as best judgment assessment u/s. 144 of the Act, as the assessee neither filed any reply nor furnished any details. CPC, Bangalore has issued this intimation u/s. 143(1) and regularized the return of income - Processing of return u/s. 143(1) of the Act is just a formality and not regularization of return of income because AO while framing assessment u/s. 144 of the Act dated 28.10.2019 has specifically treated the return as invalid return and framed assessment u/s. 144 of the Act. Hence, non-issuance of notice u/s. 143(2) of the Act is not fatal to this assessment and assessment is valid as per law. Hence, this issue of assessee s appeal is dismissed. Cash deposit made in Specified Bank Notes (SBNs) during demonetization period - Even now before us, the assessee apart from making bald statement that the deposit in SBNs during demonetization period from 09.11.2016 to 30.12.2016 is out of the turnover of the assessee and assessee has already declared the turnover at Rs. 75,52,940/-, no other source was explained. Even it was not explained that how this cash deposit in specified notes is included in the turnover by the assessee in its return of income. In the absence of any explanation or evidence, have no alternative except to confirm the addition. Determination of profit rate at the rate of 8% on the total business turnover taking the figure of total cash deposits (excluding the bank deposit in specified notes deposited during demonetization period) - The assessee has declared total turnover at Rs. 75,52,940/- whereas as per bank statement and admitted position, the total credit in assessee s bank account, excluding the demonetized cash, is Rs. 1,36,60,970/-. In the absence of any evidence or any explanation, have no alternative except to confirm the orders of the lower authorities. Therefore, this issue of assessee s appeal is dismissed.

• 2024 (5) TMI 1355

  Adjustment on account of allocation of Royalty earned - Scope of Mutual Agreement Procedure (MAP) application between Competent Authorities of India and the UK - HELD THAT:- As CBDT has conveyed to the assessee that in accordance to Rule 44G(6) of the Rules, the Competent Authorities of India and the UK have agreed to resolve the MAP application filed by assessee s UK AE i.e. M/s. Unilever Plc regarding TPA made in India pertaining to the international transaction of provision of R D services by India to the UK. Pursuant to the communication from CBDT, the assessee seeks withdrawal of the TP grounds i.e, Adjustment on account of allocation of Royalty earned by Unilever. DR does not object to the withdrawal of TP ground, and, therefore, we allow the request of the assessee in the light of the MAP order dated 11.10.2023. Therefore, ground nos. 2 to 6 stands dismissed. Disallowance u/s 14A read with Rule 8D - limited plea of the assessee is that the disallowance be restricted to the extent of exempt income earned by assessee - HELD THAT:- Hon ble Bombay High Court in the case of M/s. Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] held that the disallowance u/s 14A of the Act r.w.r. 8D of the Rules need not exceed assessee s exempt income - we direct the AO to restrict the disallowance u/s 14A of the Act read with Rules 8D of the Rules. Thus, the assessee s grounds of appeal is partly allowed.

• 2024 (5) TMI 1354

  Disallowance of of interest on GST/service tax u/s 37(1) - Allowable business expenditure or not? - as per DR interest was levied due to default on the part of the assessee in payment of the taxes under GST Act and Rules and therefore, in view of the explanation-1 to section 37(1) of the Act the deduction of such levy is not allowable - CIT(A) deleted addition - HELD THAT:- The interest on the outstanding GST is only compensatory in nature and is not a levy of penalty for infraction of law. The interest on delayed payment is otherwise does not fall in the ambit of any payment for offence and therefore, the said expenditure cannot be disallowed by invoking explanation-1 to section 37(1) of the Act. Hence, we do not find any error or illegality in the impugned order of the CIT(A) qua this issue of disallowance of interest on GST. Decided in favour of assessee. Disallowance of interest on TDS - DR has submitted that the CIT(A) has committed an error in considering the interest on TDS similar to the interest on GST or sales tax - CIT(A) deleted addition - HELD THAT:- TDS is tax liability of the assessee and in case there is a default or delay in deposit of TDS the assessee would be liable to pay the tax being assessee in default. Therefore, the payment of interest on delayed deposit of TDS would become part and parcel of tax liability of the assessee similar to the interest u/s 234A, 234B, 234C, 234D. Accordingly interest on belated deposit of TDS or non-deposit of TDS by the assessee would not be an allowable claim of expenditure. Though the same may not fall in the ambit of explanation-1 to section 37(1) of the Act but the said expenditure cannot be regarded as expenditure incurred wholly and exclusively for the purpose of business of the assessee. The income tax liability as well as interest as income tax liability cannot be allowed as expenditure incurred for the business of the assessee. As decided in M/s. Bhopal Dugdh Sangh Sahakari Maryadit, Bhopal 2022 (7) TMI 380 - ITAT INDORE] interest on late payment of TDS is not allowable as business deduction and the lower authorities have rightly disallowed the same. Decided in favour of revenue. Adhoc disallowance of traveling expenses - AO on examination of the ledger account and invoice furnished by the assessee found that the assessee failed to substantiate the fact that expenditure under the head of traveling expenses are wholly and exclusively incurred for the purpose of the business - CIT(A) deleted addition - HELD THAT:- It is manifest from the impugned order of the AO that a general remark has been made by the AO about the personal nature of the expenditure as the AO has stated that element of personal nature in these expenses cannot be ruled out. The AO has not asked the assessee to produce any further supporting evidence but proceeded to make adhoc disallowance of 5%. The assessee is a company and therefore, the question of personal elements in the expenses incurred on traveling without specifically pointing out the fact that certain travels were undertaken by management personals of the assessee company for their personal trip and not for the business trip does not arise. In absence of any such defect or incident brought on record by the AO an adhoc disallowance is not permissible. CIT(A) has deleted the disallowance made by the AO by considering the various binding legal precedence on this point. Accordingly in the facts and circ*mstances as discussed above we do not find any error or illegality in the impugned order of the CIT(A) qua this issue the same is upheld. Decided in favour of assessee. Appeal of assessee partly allowed.

• Customs

• 2024 (5) TMI 1353

  Seeking Grant of Anticipatory Bail u/s 438 CrPC - Smuggling - Seizure and Recovery of Gold of foreign origin and Cash - Non-cooperation and Summons by DRI - Applicant's Business and Legitimacy of Seized Items - Economic Offence and Quantum Involved - HELD THAT:- There is also no statement/documents brought on record to indicate that two other co-accused from whom the cash and jewellery/gold pieces were recovered are their regular employees. Mere random entries into the bank account statements does not prima-facie satisfy this Court. Under what circ*mstances, the goods were sold and cash has been received is also not mentioned except the bland submissions of the learned counsel for the applicant without any corresponding documents. The applicant claimed ownership of M/s. Ram Laxman Company , dealing in gold pieces and ornaments, and submitted GST invoices and stock reports. However, the Court found the documents insufficient to prove the legitimacy of the seized items and the applicant's proprietary rights over the firms. Merely the submission that the seized items belong to the applicant and his firm and he is ready to pay the penalties and fee does not absolve the applicant from explaining with particularity regarding the huge quantum of cash, gold and ornaments record and from which firm and to whom the sales have been made and from whom the money has been received. There is apparently no explanation. Moreover, the summons issued by the DRI have not been responded by the applicant and he has not cooperated nor he appeared to get his statement recorded. Offence is punishable with maximum sentence of seven years - It will be relevant to notice that this is an economic offence. Thus, in absence of any material brought on record by the applicant, the quantum involved is such that this Court is unable to persuade itself to grant the anticipatory bail. Accordingly, the anticipatory bail application is rejected.

• 2024 (5) TMI 1352

  Export Incentives - Rejection of Export Incentive Scheme, under Focus Product Scheme ('the FPS Scheme') and new export incentive scheme called Merchandise Export from India Scheme ('the MEIS Scheme') - rewards to exporters to offset infrastructural insufficiencies and associated costs - HELD THAT:- Following the decisions in the case of Horizon Aerospace (India) Pvt Ltd. -vs- Union of India [ 2023 (2) TMI 1101 - DELHI HIGH COURT] Jindal Drugs [ 2021 (7) TMI 1034 - MADRAS HIGH COURT] and M/s Ashwini Ashish Dighe [ 2019 (8) TMI 1006 - BOMBAY HIGH COURT] the impugned order dated 18.02.2021 passed by the second respondent is hereby quashed. The third respondent is directed to allow the claim made by the petitioner under the FPS and MEIS Scheme and pass appropriate orders within a period of four weeks from the date of receipt of a copy of this order. In the result, this Writ Petition is allowed.

• 2024 (5) TMI 1351

  Non imposition of Penalty u/s 114 on the Respondents - Smuggling - confiscation of the cigarettes - undeclared cigarettes found concealed behind gypsum plaster powder bags and also as the quantity of gypsum plaster was mis-declared - Import of Gypsum Plaster in Powder Form - Penalty imposed on Shri Anil Gupta - adjudicating authority imposed penalty on Shri. Yuvaraj Singh and on Shri D. Vignesh u/s 112 (a) of Customs Act. HELD THAT:- The main person who was entrusted to import the goods is Shri Jaffer of Malaysia. The said person had contacted Shri Vignesh to file the bill of entry under the IEC code of M/s. Ganga Enterprises. However, Shri Jaffer was not traceable. The adjudicating authority has dropped the entire proceedings against Shri Jaffer. The department has not able to establish that these Respondents made any document which is false or incorrect in any material particular. The exact nature of the document alleged to be fabricated by these Respondents is not brought out in the grounds of appeals filed by the department. In the absence of ingredients to attract Section 114 AA the penalty under the said Section cannot be imposed. The Tribunal in the case of M/s. Artisan Welfare Society [ 2023 (7) TMI 841 - CESTAT CHENNAI] had occasion to consider a similar situation. The facts in the said case was attempt to export red sanders. The Tribunal observed that as the investigation could not prove that the exporter therein knowingly or intentionally made any false declaration or statement could not be punished by penalty u/s 114 AA. Thus, we find that the order passed by the adjudicating authority in not imposing the penalty u/s 114 AA does not require any interference. The appeal filed by the department is devoid of merits. The appeals are dismissed.

• 2024 (5) TMI 1350

  Demand - Misclassification of imported product - invocation of extended period for duty payment - mis-declaration of facts - imposition of penalty - Imports Big Fib and Mast Free Comen (sweetner) for manufacture of chewing gum of various flavors - HELD THAT:- The goods were classified under CTH 2938 by the appellant and the same was reclassified by the department under CTH 2106 and this classification has been accepted by the appellant. As rightly observed by the revenue the appellant had deliberately avoided declaring the true organic description of the products and declared them as Big Fib, Mast free comen etc.; where it would be difficult to arrive at the correct classification. The fact that the above products were not organic or inorganic chemicals as claimed by the appellant but edible material having food ingredients came to be known only after the samples were tested and a certificate was issued by Central Food Technological Research Institute (CFTRI), Mysore certifying that the sample were found to be food ingredient. The supplier of the impugned goods who is the sister concern of the appellant had also classified the items under CTH 2106. Since, the appellant was aware of the fact that the goods were classified by their supplier under CTH 2106 and they are nothing but food edible ingredients to be used in the manufacture of chewing gums, there was intentional mis-declaration by classifying them under CTH 2938. Thus, the Commissioner (A) was justified in invoking the extended period of limitation and imposing equivalent penalty. Therefore, the impugned order is upheld and the appeal is dismissed.

• 2024 (5) TMI 1349

  Legality and propriety of the classification adopted by Commissioner of Customs (Import) - Imports enterogermina (bacillus clausal spores) - benefit of notification no. 12/2012-Cus - confiscation - Penalty - correctness of the appellant's claim for classification under declared heading - Appellant herein and proceeding straight thereafter to tariff item level by ignoring the General Rules for Interpretation of the Import Tariff which sets out the exercise as one of hierarchical elimination from heading onwards. HELD THAT:- The General Rules for Interpretation of the Import Tariff appended to Customs Tariff Act, 1975 is the foundation of both classification and re-classification with the latter devolving onus on the proper officer , without comparability as an option until after the appropriateness of the proposed tariff item has passed muster in accordance with rule 1 therein, with the terms of engagement in any dispute on classification settled by the Hon ble Supreme Court, in Hindustan Ferodo Ltd v. Collector of Central Excise [ 1996 (12) TMI 49 - SUPREME COURT] . It would, therefore, appear that the impugned order has revised the classification without proper application of law as enacted and judicially determined. Accordingly, it would be appropriate for revision of classification be set side and the matter remanded to the original authority for a fresh decision after consideration of the relevant facts and in strict compliance with the General Rules for Interpretation of Import Tariff. In conclusion, the appellate tribunal allowed the appeal of the assessee by way of remand, while dismissing the appeal of the jurisdictional Commissioner of Customs.

• Insolvency & Bankruptcy

• 2024 (5) TMI 1348

  CIRP - Liquidation of corporate debtor - Refund of an amount with interest paid to prevent invocation of their Bank Guarantee - Failure to comply with the terms of the contract - jurisdiction under Section 42 of IBC - HELD THAT:- For the purpose of liquidation, the liquidator has some special powers which are significantly different from those of the RP. Under Section 36 the liquidator forms a liquidation estate where liquidator holds all the properties of Corporate Debtor as a fiduciary, for the benefit of the creditors. Another major function of the liquidator is the consolidation and verification of the claims submitted to him as has been prescribed by Section 35 of the IBC. After their appointment, the liquidator has to issue a public announcement within 5 days from the appointment in Form B of Schedule II of the Liquidation Regulations. The purpose of the public announcement is to call upon the creditors and other such persons to submit their claims in relation to the corporate debtor. After the receipt of the claims, the liquidator shall verify those claims submitted by the creditors and may also ask the creditors to submit any evidence in relation to their claims for the purpose of verification. In the liquidation process, the liquidator has the power to reject claims raised and if a claim is rejected, a creditor can appeal against this decision to the Adjudicating Authority. After all the required claims have been admitted by the liquidator, he is required to determine the value of the claims for the purpose of distribution of the assets of the Corporate Debtor. This clearly entails the responsibility of more than merely collating claims but verification of claims and determination of their value. No material has been placed on record by the Appellant which shows that the Corporate Debtor had on any earlier occasion denied making payments against the invoices raised by the Respondent. This gives sufficient room to believe that the Corporate Debtor was satisfied with the level of services performed by TCEL. Coming to the issue of invocation of BG by the Corporate Debtor, it is the case of the Respondent that having duly performed their obligations arising out of their contract with the Corporate Debtor, and in the absence of any claim for defect or otherwise, action on the part of the RP to invoke the BG of Rs. 56.80 lakh was without any basis - The first chance that the Respondent got to recover the BG equivalent amount which was wrongfully retained by the Corporate Debtor was when the liquidation process commenced and the Respondent acted accordingly. The liquidator is required to admit or reject a claim, basis documentary evidence. The liquidator is required to independently assess the merits of such claims based on the documents/evidence adduced by each such creditor - the Liquidator has tried to justify the wrongful invocation of BG by raising the feeble defence that the BG equivalent had been paid without any demur or protest which seems to be more of an after-thought to cover the action of the RP. There are no hesitation in holding that the Respondent cannot be faulted in following the due process in filing its claim with the Liquidator. Furthermore, in the liquidation process, if a claim is rejected by the Liquidator, a creditor can appeal against this decision before the Adjudicating Authority. The Adjudicating Authority enjoys complete jurisdiction under Section 42 of the IBC to deal with the decision of the Liquidator rejecting the claim filed by the Respondent under Section 38 of IBC. This is in consonance with the statutory position set out under the IBC. The Adjudicating Authority after perusing all material on record has rightly come to the conclusion while passing the impugned order that the Respondent is entitled to refund of Rs. 56.80 lakh being the amount of BG paid by it, alongwith the payment of Rs. 16.73 lakh due in respect of invoice dated 22.11.2017 and accordingly directed the Liquidator to accept these claims. There are no reasons to interfere with the impugned order - appeal dismissed.

• 2024 (5) TMI 1347

  Initiation of CIRP - NCLT dismissed the section 9 application - Nature of debt - Operational debt under the IBC or not - existence of pre-existing dispute between the parties or not. Nature of debt - HELD THAT:- The definition of operational debt under Section 5(21) of the IBC is analysed. This definition specifies a claim arising from the provision of goods or services. We find that while the LOI contemplated a future license agreement, the security deposit itself was not directly linked to any service rendered by Seaview. The judicial precedent as cited by the Appellant in Consolidated Construction Consortium Limited v. Hitro Energy Solutions Pvt. Ltd. [ 2022 (2) TMI 254 - SUPREME COURT ] also looked into. This judgement is only an authority for the proposition that the words claim in respect of provision of goods or services includes not only those who supply goods or services to corporate debtor but those who receive goods or services from the corporate debtor and the words in respect of must therefore not received a narrow interpretation but the claim must bear some nexus with the provision of goods or services - In the present case the Appellant has neither supplied goods nor services to the Corporate Debtor nor received goods or services from the Corporate Debtor. The said judgement is therefore of no assistance to the Appellant. In the present case, no GST was payable or has been paid on the security deposit. In the present case, the security deposit was not an advance licence fee but deposit for ensuring that the Appellant entered into a license agreement. The same was not liable to be adjusted against any outstanding or future license fee. No services were rendered nor supplied either by the Appellant to the Respondent nor by the Respondent to the Appellant. On the contrary, the security deposit became liable to be forfeited on account of nonperformance of the obligation of the Appellant i.e. it's requirement to enter into a leave and licence agreement. Thus, this is not a case of supply of goods or services - the scope of operational debt under the IBC does not encompass situations like security deposits unrelated to any immediate service rendered. Existence of Pre-Existing Dispute - HELD THAT:- The IBC mandates that an application under Section 9 is not maintainable if a pre-existing dispute exists between the parties. The presence of such a dispute must be assessed to determine the maintainability of the application - Given the substantial and documented disputes, it is clear that a pre-existing dispute exists. This aligns with the Supreme Court's guidance in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ], where it was held that if a dispute exists and requires further investigation, the application under Section 9 cannot be maintained. Appeal dismissed.

• PMLA

• 2024 (5) TMI 1346

  Seeking grant of Regular bail - Money Laundering - scheduled offences/predicate offences - illegal extortion of coal transportation - HELD THAT:- As on date there is no predicate offence under Section 384 of IPC or any other provision of IPC against the petitoiner - The chargesheet has been filed only under Sections 204 and 353 of IPC, and both are not scheduled offences under PMLA - As regard to the observations made by the Karnataka Police in the chargesheet, reproduced above, Mr. Raju, learned ASG, fairly states that so far, the Chhattisgarh Police have not registered any offence under Section 384 of IPC, nor has any investigation conducted by them, has been brought to the notice of the Enforcement Directorate. Six weeks time granted to the Enforcement Directorate to find out the status of that investigation and place on record the additional affidavit along with the relevant material - he petitioner has already undergone incarceration for about one year and seven months - the petitioner has made out a prima facie strong case for his enlargement on interim bail. The petitioner is directed to be released on interim bail subject to his furnishing bail bonds to the satisfaction of the Special Court, Raipur, Chhattisgarh - Post the matter for further hearing on 07.08.2024.

• 2024 (5) TMI 1345

  Public Interest Litigation - allegations of money laundering and consequential loss to the public exchequer, by way of evasion of taxes - undervalued share transfer - HELD THAT:- The Petitioner is seeking directions for investigation into the valuation of the sale of the shareholding held by Respondent No. 7 issued by Respondent No. 8 and subsequently transferred to Respondent No. 9. However, in view of the fact that the said transaction has been examined by the IT Department during the block assessment of Respondent No. 7 shows that the matter is within the knowledge of the authorities and considering the fact that no adverse proceedings have been initiated by the IT Department, it is opined that no further directions are required in this petition. Further, in view of the fact that an earlier petition in SH ANKUR GUPTA VERSUS THE UNION OF INDIA AND ORS [ 2022 (3) TMI 1599 - DELHI HIGH COURT] and SLP ANKUR GUPTA VERSUS UNION OF INDIA ORS [ 2022 (8) TMI 1514 - SC ORDER] filed by the same Petitioner against common Respondent No. 16 has been dismissed on the finding that the same is motivated, it is opined that entertaining the present PIL at the behest of the Petitioner does not advance the cause of justice and the objective behind entertaining a PIL. Petition dismissed.

• 2024 (5) TMI 1344

  Seeking grant of Regular Bail - Money Laundering - predicate offence - delay of trial - policy worked to the benefit of select individuals and large businesses or not. Whether the applicant is entitled to bail on sole ground of deay in trial? - HELD THAT:- The Hon ble Supreme Court in MANISH SISODIA VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2023 (11) TMI 63 - SUPREME COURT] has also clearly mentioned that the Courts hearing application for bail will not be influenced by the observations made in the previous orders of rejection of bail of Sh. Manish Sisodia. This observation of the Hon ble Apex Court leads to only one conclusion that the learned Trial Court or this Court in event of the applicant moving fresh bail application can, independently apply its mind to the facts of the case and decide the bail application on merit - In the considered opinion of this Court, the directions of the Hon ble Supreme Court entitle the applicant Sh. Manish Sisodia to file a fresh bail application in case he feels that the trial has not expeditiously proceeded in this case. The adjudication of the bail application, therefore has to be on the basis of the merits of the case, with an additional consideration of delay in trial or the right of speedy trial. Whether the applicant or other accused persons can be held responsible for delay in initiation of trial due to their act of filing different applications before the learned Trial Court? - HELD THAT:- There is no dispute about the fact that the trial in this case is yet to commence, since the proceedings, which are to be mandatorily carried out under the law as per code of Criminal Procedure, are still underway as the accused persons have moved multiple individual applications related and unrelated to Sections 207/208 of Cr. P.C. i.e. for supply of relevant documents, which is continuing till today - In the case of P. GOPALKRISHNAN VERSUS STATE OF KERALA AND ORS. [ 2019 (11) TMI 1827 - SUPREME COURT] , the provision of Section 207 of Cr. P.C. was held to be a part of right to fair trial. This Court cannot ignore the valuable right of an accused to access justice, and avail legal remedies available to him within the framework of the law especially when he is in judicial custody or even otherwise when he is facing criminal trial. Thus, prima facie, the accused persons including the applicant herein have delayed the pre-charge proceedings under Section 207 of Cr. P.C. by taking three months time from 19.10.2023 to 19.01.2024 for inspection of un-relied documents despite repeated directions from learned Trial Court to conclude the same expeditiously. Applications unrelated to Section 207/208 of Cr. P.C. - HELD THAT:- In this Court s opinion, the mere act of filing an application seeking any relief cannot automatically be construed as a delay tactic since an accused, who is in judicial custody, cannot be stopped from moving applications for fulfilment and enforcement of their personal, legal and fundamental rights and their applications cannot be simply termed as frivolous. The duration of pre-trial proceedings, which includes the mandatory procedures and steps provided under Cr. P.C in criminal cases, necessarily adds to the overall pace and duration of trial of a case. Observations Regarding All Accused Persons Acting in Concert With Each Other To Delay Trial - Whether Reasonable and Justifiable? - HELD THAT:- In the opinion of this Court, while the accused persons may be perceived as acting collectively, it is essential to acknowledge their distinct roles and rights as individuals before the Court. In legal proceedings involving multiple accused persons, it is not uncommon for their legal strategies to align or for similar applications to be filed by their respective legal counsels. However, the mere similarity in legal approach adopted by different counsels for the accused persons may not be a concerted effort as each accused is entitled to pursue his defence independently. Delay in commencement of trial cannot be attributed to the ED or CBI or Ld. Trial Court - HELD THAT:- The prosecution did not take time or delay commencement of trial by not providing them copies or not complying with the orders of the Court. Further, most of the applications were decided on the same day by the learned Trial Court - This Court further holds that there has been no delay on the part of the learned Trial Court and that arguments on charge in the case filed by CBI have already been part-heard and further arguments were not addressed as co-accused namely Sh. Abhishek Boinpally, Sh. Arun R. Pillai, Sh. Sameer Mahendru, Sh. Amandeep Singh Dhall, Sh. Arjun Pandey, Sh. Rajesh Joshi and Sh. Chanpreet Singh Rai have filed an application and argued before the learned Trial Court that till the entire investigation is completed, the arguments on charge should not be heard. Have the proceedings before the learned Trial Court proceeded at Snail s pace? - HELD THAT:- No fault can be found with the Directorate of Enforcement or Central Bureau of Investigation that there was a voluminous record of investigation. It is also not the fault attributable to the prosecution or the learned Trial Court that some of the accused persons in the CBI case do not want to address arguments on charge till investigation is finally concluded. It is also not the fault of prosecution that multiple individual accused persons have multiple individual defence counsels who will argue individually before the learned Trial Court, both during the course of pre-trial proceedings and later during trial, which will take time - The practical realities of trial and pre-trial stages in the complex case as the present one involving extensive investigation may, at times, compromise with speed of the pre-trial duration. At times, justice hurried may lead to justice being buried either to the accused or to the prosecution which is not the intent of criminal jurisprudence of this country. Principles governing grant of regular bail u/s 439 of CRPC and in cases involving economic offences - HELD THAT:- In the case of Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 896 - SUPREME COURT] the Hon ble Supreme Court observed that economic offences constitute a class apart, and thus, gravity of such offences has to be kept in mind while considering a plea for grant of bail. The focus is on prima-facie assessing the evidence available at this stage, to decide if it justifies either the continuation of custody or the grant of bail, without delving into a detailed examination of the merits of the case or making definitive findings of fact. The case of CBI and the ED - role of applicant Shri Manish Sisodia - HELD THAT:- The Directorate of Enforcement alleges that Sh. Manish Sisodia was not only the head of the Group of Ministers (GoM) which was tasked by the Cabinet to examine all aspects of the erstwhile excise system, report of the expert committee and comments received from the stakeholders, but he was also the Excise Minister and had played a key role in modifying the terms of the Excise policy in a manner which would benefit the co-accused persons. It is alleged that Sh. Manish Sisodia had got the policy formulated and implemented in a way so as to allow illegal gains to certain persons/entities, against advance kickbacks of about Rs. 100 crores received from them, which were later utilised by the Aam Aadmi Party in the Goa Assembly Elections - Thus, it is alleged that Sh. Manish Sisodia was one of the key conspirators in formulating, conceptualizing and implementing the various processes and activities in dealing with the proceeds of crime including creating an entire ecosystem for generating, concealing, projecting as untainted, possessing and using the proceeds of crime. Association of the Applicant Sh. Manish Sisodia with co-accused Sh. Vijay Nair - HELD THAT:- A perusal of the statement of co-accused Sh. Arun R. Pillai also discloses that Sh. Vijay Nair had the support and sanction of Sh. Kejriwal and Sh. Manish Sisodia for all his activities related to the Excise Policy 2021-22. The statement of Sh. Butchi Babu also reveals that Sh. Vijay Nair was acting on behalf of Sh. Kejriwal and Sh. Manish Sisodia and was working on their behalf on the Excise policy. During the course of investigation, a few provisions of the liquor policy were also found in the WhatsApp chats of Butchi Babu, sent by Sh. Vijay Nair, before the policy was finalized by the Group of Ministers headed by Sh. Manish Sisodia - there is sufficient material on record, at this stage to prima facie show that Sh. Vijay Nair was acting on behalf of the applicant Sh. Manish Sisodia as well as Aam Aadmi Party in demanding and receiving the kickbacks from co-accused persons including members of South Group and ensuring that favourable clauses were inserted in the new Liquor Policy for their benefit. Orchestration of Pre-Decided Emails by Sh. Manish Sisodia and Creation of Fake Public Opinion - HELD THAT:- In order to overcome the hurdle posed by the Expert Committee Report, Sh. Manish Sisodia had called for public opinion, parts of which were also manufactured by him only, in order to show to the general public that it was the general public and other stakeholders, who were giving suggestions contrary to the Expert Committee report, and not the Government of Delhi, which were taken into consideration while formulating the new Excise Policy. Change of Draft Cabinet Note by Sh. Manish Sisodia to Hide Opinion of Legal Experts - HELD THAT:- The prosecution alleges that Sh. Manish Sisodia had deliberately altered a draft Cabinet note to exclude the opinions of three legal experts including one former Attorney General of India and two former Judges of the Hon ble Supreme Court, which was obtained by Delhi ALCOBEV Retailers Association and mailed to the email ID of Excise Department. These legal experts had recommended maintaining the existing excise policy, which would have hindered Sh. Manish Sisodia s desire to introduce a new policy, allegedly in conspiracy with the South Group. Role of Applicant in Ensuring Allotment of L-1 License to M/s Indo Spirits - HELD THAT:- The statement of Sh. C. Arvind also reveals that he was asked by Sh. Manish Sisodia to ensure that the issue regarding the file of M/s Indo Spirits is resolved. This is further corroborated by the statement of Sh. Narinder Singh, the then Assistant Commissioner (IMFL), who has disclosed that Sh. Arava Gopi Krishna had called him on 05.11.2021 and asked him to grant the license to M/s Indo Spirits on priority basis - As per prosecution, this allegation can also be materially corroborated with the way the file of M/s Indo Spirits was cleared on the same day and formal order of allocation of license was issued on 08.11.2021. Creation of Uneven Level Playing Field - HELD THAT:- The provisions of the Policy imposed prohibitive costs and stringent eligibility criteria that effectively excluded smaller retailers from the competition. The high non-refundable participation fee of Rs. 10 lakhs and substantial earnest money deposit requirements of Rs. 30 crores (in case of bidding for one retail zone) and Rs. 60 crores (in case of bidding for more than one retail zone), favored larger entities with significant financial resources, allowing them to dominate the bidding process for retail zones - Consequently, the policy prima facie facilitated the concentration of retail licenses in the hands of a few large players, as also argued by learned Special counsel for E.D. Destruction of Electronic Evidence by Sh. Manish Sisodia - HELD THAT:- This Court cannot rule out the potential of the applicant to destroy and tamper with the evidence, and influence witnesses in future, if released on bail, which is based on the reasonable apprehension of the prosecuting agency which is derived from the previous conduct of the accused available on record. Whether case for grant of bail is made out, on merits - HELD THAT:- There is no dispute about the fact that Sh. Manish Sisodia was the Minister concerned of Excise Department, who was responsible for formulation as well as implementation of Delhi Excise Policy 2021-22, and due to the irregularities committed in its formulation, such as increasing the margin of wholesale distributors from 5% to 12% without any reasonable justification, the wholesale distributors were able to earn an additional profit of 7% amounting to Rs. 338 crores. There is material on record to prima facie show that the members of South Group were involved in formulation of the Delhi Excise Policy and had met with co-accused Sh. Vijay Nair on several occasions, who was the In-charge of Media and Communication wing of Aam Aadmi Party and used to function from the office of Delhi s Chief Minister and at times, had represented himself as OSD to the Excise Department, whose Minister concerned was Sh. Manish Sisodia - It is again clarified and reiterated, at cost of repetition, that at the stage of grant of bail, this Court has to only prima facie go through the material and not conduct a mini-trial to reach a conclusion as to whether the accused is guilty beyond reasonable doubt or not. The stage of such assessment is the stage of trial and not hearing of a bail application. Whether the applicant can be granted bail on sole ground of delay in trial, even though he is not entitled to grant of bail on merits? - HELD THAT:- In case of SATYENDAR KUMAR JAIN VERSUS DIRECTORATE OF ENFORCEMENT, ANKUSH JAIN VERSUS DIRECTORATE OF ENFORCEMENT AND VAIBHAV JAIN VERSUS DIRECTORATE OF ENFORCEMENT [ 2024 (3) TMI 862 - SUPREME COURT] , the Hon ble Apex Court has observed that the provision for grant of bail, on the basis of delay in trial, is already imbibed in Section 436A of Cr. P.C. which provides that an undertrial, who has remained in custody for a period of one-half of the maximum punishment which can be awarded to him upon conviction, shall be released on bail, and that Section 436A also applies with full force to PMLA - this Court is of the opinion that the applicant herein cannot be entitled to bail solely on the ground of delay in trial, especially when he has failed to pass the triple test and other parameters including gravity of offence, for grant of bail under Section 439 of Cr. P.C. as well as the twin conditions under Section 45 of PMLA. The present applications seeking grant of regular bail are hereby dismissed.

• Service Tax

• 2024 (5) TMI 1343

  Eligibility for refund of service tax paid on transportation charges - Definition and applicability of Goods Transport Agency (GTA) - Issuance of consignment notes and its implications on service tax liability - Applicability of previous judgments and notifications - HELD THAT:- The Tribunal in the appellant s own case [ 2019 (1) TMI 1230 - CESTAT CHENNAI ] for the earlier period from June 2009 to May 2010 had considered the very same issue of refund of service tax for transport of their goods by road by M/s. Shiva Cargo Movers Ltd. The refund claim rejected by the department was upheld by the Tribunal. On perusal of the said Final order it is seen that the Tribunal had referred to the decision in the case of Chebrolu Agros Pvt. Ltd.[ 2017 (6) TMI 1248 - CESTAT HYDERABAD] . It was observed that the said decision was maintained by Hon ble Apex Court. It is now brought to our notice that the appeal that was filed before the Hon ble Apex Court was in regard to the demand under Business Auxiliary Services and not GTA services. On perusal of the records, it is seen that the appellant has now produced documents to show that M/s. Shiva Cargo Movers Ltd. has not issued any consignment note. The said transporter has issued only invoices periodically to collect transport charges. Thus, taking note of the decisions in the case of Lakshminarayana Mining Company [ 2019 (7) TMI 917 - CESTAT BANGALORE ] and Ramco Cements Ltd. [ 2023 (9) TMI 1257 - CESTAT CHENNAI ] we are of the considered view that the appellant has to be given an opportunity to furnish documents and evidence that M/s. Shiva Cargo Movers Ltd. is not a Goods Transport Agency and also that no consignment notes were issued. The matter therefore requires to be remanded to the adjudicating authority who is directed to consider afresh refund claim of the appellant. The adjudicating authority shall decide applicability of the above cited decisions of the Tribunal independent and uninfluenced by the decision of Tribunal in the appellant s own case for the earlier period. Thus, the impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority.

• 2024 (5) TMI 1342

  Work orders/contracts involved supply of materials - Benefit of abatement under Notification No. 1/2006 - Whether the contracts entered into were in the nature of works contracts and if they are divisible in nature - HELD THAT:- Works contract service was brought within the tax net w.e.f. 01.06.2007 with the insertion of Section 65 (105) (zzzza) to the Finance Act, 1994. The statute does not qualify the liability to tax or otherwise, on any conditions, in the case of composite contracts like the extent of supply portion or the service portion, which according to us is like attempting to vivisect/dissect the understanding of the parties to the contract, which is not permissible. This has been held so by the Apex court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India [ 2006 (3) TMI 1 - SUPREME COURT] . Looked from this perspective, we are of the view that since the period involved in this appeal is from October 2006 to September 2011 which is prior to 01.07.2012 which is the date of insertion of explanation to Section 65B, the composite contracts involved in the present appeal were not amenable to service tax, as per the law laid down by the Apex court in the case of CCE Vs. Larsen Toubro Ltd.[ 2015 (8) TMI 749 - SUPREME COURT] . We find that the dictum in the above decision has been consistently followed by all the CESTAT benches, in the orders relied upon by the appellant during the course arguments before us. Thus, we are of the view that the demand in the present appeal is clearly unsustainable and consequently, we set aside the impugned order and allow the appeal with consequential benefits if any, as per law.

• 2024 (5) TMI 1341

  Liability to pay service tax - labour charges (job work charges) for undertaking the activities like bending, cutting, shearing, and punching on goods fabricated for a power plant - Onus to pay excise duty - HELD THAT:- In the present case, the supply of raw materials as well as clearing of worked goods are undertaken by the appellant by giving declaration as per Notification No. 214/86-CE. Thus the onus to pay excise duty is on the principal manufacturer. The Tribunal in the case of Pioneer Engineering Industries [ 2018 (6) TMI 719 - CESTAT CHENNAI] had considered the very same issue and held that the activity undertaken by the assessee in the nature of cutting, punching, drilling, heat treatment on steel plates so as to send the products to M/s. BHEL would amount to manufacture. The Tribunal had relied upon the decision of the Hon ble Supreme Court in the case of Orissa Bridge Construction Corpn. Ltd. Vs. Commissioner of Central Excise, Bhubaneswar [ 2008 (8) TMI 585 - SUPREME COURT] to hold that such activity amounts to manufacture. Thus, we are of the considered opinion that the activity amounts to manufacture. The Commissioner (Appeals) for the subsequent period has set aside the demand of service tax observing that the activity amounts to manufacture of excisable goods. In view thereof, the demand cannot sustain. In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential reliefs as per law.

• 2024 (5) TMI 1340

  Non-payment of appropriate Service Tax - Club or Association Membership Services - Supply of Tangible Goods Services, Business Auxiliary Services and Renting of Immovable Property Services -No service provider and service recipient relationship between the association and its members. Club or Association Services - HELD THAT:- The said taxable service is defined u/s 65(105)(zzze) of the Finance Act, 1994 to read as any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount . The said definition was amended w.e.f. 16.05.2011 and reads as any service provided or to be provided to its members, or any other person, by any clubs or association membership service in relation to provision of services, facilities or advantages for a subscription of any other amount . The relationship of a member with its association and vice versa is hit by the doctrine of mutuality. There is no service provider and service recipient relationship . The issue as to whether the subscription / entrance fees collected by the association from its members can be subjected to levy of service tax under the said category was considered by the Tribunal in the case of M/s. Ranchi Club Ltd [ 2012 (6) TMI 636 - JHARKHAND HIGH COURT] The Apex Court in the case of State of West Bengal Vs. Calcutta Club Limited [ 2019 (10) TMI 160 - SUPREME COURT] has also held that the demand of service tax cannot sustain. Following these decisions, we are of the view that the demand under this heading cannot sustain and requires to be set aside. Ordered accordingly. Supply of Tangible Goods Services - Appellant has provided transportation of goods to the oil companies. It cannot be considered as Supply of Tangible Goods Services. Even in the books, they have accounted the amount received by them as lorry freight. This indicates that the appellant has received freight charges for transportation and not hire charges. Further, the freight charges have been subject to service tax under the category of GTA services at the hands of the service recipients / oil companies. The Tribunal in the case of M/s. Erode Lorry Owners Association [ 2019 (3) TMI 43 - CESTAT CHENNAI] had considered the very same issue and held that the demand under Supply of Tangible Goods Services cannot sustain. Thus, we are of the view that the demand under Supply of Tangible Goods Services cannot sustain and requires to be set aside. Ordered accordingly. Business Auxiliary Services - The appellant is merely engaged in providing transportation of goods for the oil companies. The Show Cause Notice is not clear as to how this amount is to be treated as commission. We find that the demand under BAS cannot sustain and requires to be set aside. Ordered accordingly. Renting of Immovable Property Services - For the reason of the taxable value under this category falls below the threshold limit is to be examined by the Adjudicating Authority. This issue is remanded to the Adjudicating Authority for the limited purpose of verification. In case, the amount is above the threshold limit, the appellant is liable to pay the service tax along with interest, and also the penalties in this regard for the respective period. Thus, the impugned order is modified to the extent of setting aside of the demand of service tax, interest and penalties under Club or Association Services, Supply of Tangible Goods Services and Business Auxiliary Services. The issue with respect to Renting of Immovable Property Services is remanded to the Adjudicating Authority for verification as discussed above. Appeal is partly allowed.

• 2024 (5) TMI 1339

  Demand of service tax - Upfront charges collected towards Extended Warranty Scheme (EWS) as well as for the amounts collected for used car scheme - Classification of services under Works Contract Service Or Not - Activity of issuing EWS would fall under Repair to Vehicle Services prior to 01.07.2012 - demand of service tax raised Period prior to 01.07.2012, u/s 65(105)(zo) and Period after 01.07.2012, u/s 65B(44) on the consideration received by the appellant for Extended Warranty Service (EWS ) sustainable or not. HELD THAT:- Period prior to 01.07.2012:- HELD THAT:- Definition of Repairs to Vehicle Services which was introduced as a taxable service with effect from 16.07.2001 was amended with effect from 01.05.2011 by substituting the words by an authorised service station with the words by any person . Consequent to the amendment, the Department entertained the view that the appellant having collected charges for EWS they are liable to pay service tax under Repair of Vehicle Services with effect from 01.05.2011 till 30.06.2012. Tribunal in the case of M/s. Ford India Pvt. Ltd. Vs. Commissioner of Customs, [ 2023 (8) TMI 409 - CESTAT CHENNAI] wherein it has been held by the Tribunal that prior to 01.07.2012, the demand cannot sustain u/s 65(105)(zo) for the reason that repair to vehicle services involve both use of materials and rendition of service. Following the same, we are of the considered opinion that for the period prior to 01.07.2012, the demand raised u/s 65(105)(zo) cannot sustain and requires to be set aside. Ordered accordingly. Period after 01.07.2012:- From the definition of service u/s 65B(44) of the Finance Act, 1994, it can be seen that post 01.07.2012, service includes declared services. Section 66E gives the list of declared services and clause (e) of Section 66E speaks about agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act . The main argument advanced by the appellant is that repair of vehicle involve replacement of spares / parts and as there is transfer of property in goods, such services are to be classified under Works Contract Services only. As per the EWS certificate, the appellant undertakes to carry out the necessary remedial work (including replacement of parts / spares) necessitated by any mechanical / or electrical break down under normal use and maintenance, subject to terms and conditions. In essence, EWS is only a creation of an obligation to do an act. The consideration is paid by customer for this undertaking and is not paid for having done or for doing any remedial work instantly. EWS is a service in the nature of creating an obligation to do an act and then would fall under sub clause (e) of Section 66E which gives the list of declared services. In the case of EWS, the appellant while receiving the consideration is for indemnifying risks for repair and replacement that may happen to the vehicle during the warranty period, subject to terms and conditions. The agreement is in the nature of a promise to do an act in the event of a contingency that may or may not happen in future and has to fall u/s 65E(e) as a declared service. The reimbursem*nt of service charges to the dealer by appellant arises out of the separate dealership agreement. The EWS agreement is independent and entered by appellant with customer. There is no cause for double taxation. The Ld. Counsel for the appellant has been at pains to argue that since the repair of a motor vehicle involves supply of parts / spares and is composite in nature, the same has to be classified only under WCS. We have no quarrel that when actual repair work is done, the activity would fall under WCS as defined u/s 65B(54). However, in the present case, it is only a promise to do the repair and the consideration is not for the actual repair. It has to be stated that in case there is an agreement to provide Works Contract Services (repair services), there is a specification as to what is the works that has to be executed and as well as the amount required for execution of such work. Both parties would be at consensus as to the nature of the work that has to be done as well as the consideration that has to be paid for the work. There is no element of risk involved to either parties. In other words, when there is a payment made agreeing to provide a service, both parties are well aware as to what is the service to be provided. In Extended Warranty Scheme, as already stated, the parties do not know whether the vehicle will require any repair or whether it will require only replacement of spares or whether it will require only services without replacement of spares or whether it will require both replacement and repair. We say that Sub-clause (h) of Section 66E covers actual Works Contract Services executed and does not cover the assurance to provide repair services. In actual repair services, there is an element of sale which involve transfer of property in goods and therefore for post 01.07.2012 would be a Works Contract Services. In EWS it s an assurance to provide repair service whereas, u/s 66E(h) it s the agreement to provide or to be provided which becomes taxable. In fact post 01.07.2012 any activity carried out by a person for another for consideration is a service. Thus, we hold that the issuing Extended Warranty Scheme is a service falling u/s 65B(44) read with Section 66E(e). The demand is therefore sustainable. We find that the appellant has adopted the classification under WCS for the period post 01.07.2012 and have discharged service tax by availing the abatement which is permissible if the activity is to be classified as WCS. This shows that appellant was under bonafide belief that the EWS falls under WCS and had no intention to suppress facts to evade payment of tax. There is no positive act of suppression of facts established against the appellant. Further the issue being classification of service is purely interpretational in nature. For these reasons, we hold that the demand raised invoking the extended period requires to be set aside. For these same reasons, the penalties for the period post 01.07.2012 also requires to be set aside. Ordered accordingly. In the result, the impugned order is modified - Appeals are partly allowed.

• 2024 (5) TMI 1338

  Refund claim - time-barred - tax paid under protest - liability to pay Service Tax under reverse charge mechanism for the Consultancy Services received from abroad - HELD THAT:- The respondent in his written submissions filed before the bench has submitted that the respondent had deposited the service tax, interest and penalty on 05.12.2016, 27.12.2016 and 02.01.2017 respectively. Thereafter, refund claim was filed on 06.10.2017 which is within one year time period from the date of deposit of tax and well within the time period prescribed u/s 11B of the Central Excise Act, 1944. He also observed that they have neither informed the audit Commissionerate nor the jurisdictional division/Range office that the payments were made under protest, and concludes that in the absence of any evidence to prove that payments were made under protest holds the claims were time bar. Therefore, there being no appeal against this finding of the Commissioner (A) by the respondent, the issue with regard to time bar stands settled and cannot be reopened. It is an admitted fact that the respondent had paid the service tax amount based on audit letter dated 16.11.2016 on consulting charges paid in foreign currency to M/s. Aluforms Korea Co. Ltd., Korea under reverse charge mechanism. The respondent vide their letter dated 03.04.2017 had intimated the Assistant Commissioner of Central Excise and Service Tax in terms of the provisions of Section 73(3) of Chapter V of the Finance Act, 1994, we request that the demand show-cause notice may not be issued to us since we have discharged the service tax liability along with the applicable interest and penalty at 15% on the service tax amount . Therefore, there is no question of duty being paid under mistake of law or to be held ultra vires. Thus, the tax being paid under service tax category under the relevant provisions and there is nothing declared unconstitutional or under mistake of law, the amount is necessarily to be considered as tax and refund has to be sanctioned as per the provisions specified u/s 11B of the Central Excise Act, 1944. The Appeal is allowed.

• Central Excise

• 2024 (5) TMI 1389

  Reversal of proportional credit on clearance of 27923531 kgs of medical grade oxygen - non-maintenance of separate records as prescribed in rule 6 of CENVAT Credit Rules, 2004 - HELD THAT:- In re Mercedes Benz India (P) Ltd [ 2015 (8) TMI 24 - CESTAT MUMBAI] pertaining to disputed credit to be reversed between April 2011 to February 2012, and intimated reversal in March 2012, the Tribunal had held that ' Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. ' There is no merit in the impugned order which is set aside - Appeal of assessee allowed.

• 2024 (5) TMI 1337

  Recovery of refund granted twice - grant of refund again by suppressing fact of suo moto availment of credit - Levy of penalty u/s 11AC - existence of mens rea or not - HELD THAT:- A bare reading of Section 11AC of the Act, 1944 shows that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, for any reasons other than the reason of fraud or collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or of Rules made thereunder with intention to evade payment of duty, he shall be liable to pay penalty. Meaning thereby that there should be an intention to evade the payment of duty and in the present case, the mens rea of the appellant is proved from his conduct since it took the benefit of refund twice by suppressing fact of suo moto availment of credit. There are no error much less perversity in the order impugned, warranting intervention by this Court - appeal dismissed.

• 2024 (5) TMI 1336

  Abatement of appeal - adjournment of matter beyond three times - HELD THAT:- In case of ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS. [ 2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal s Hon ble Supreme Court has observed that 'Considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner defendant never availed of the liberty and the grace shown.' There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided - The Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.

• 2024 (5) TMI 1335

  Levy of penalty on other co-noticee - Clandestine manufacture and clearance of the finished goods - whether after acceptance of application of the main applicant under SVLDRS, 2019 regarding the duty liability and penalty imposed, the personal penalty imposed on other notices can survive? - HELD THAT:- This issue has been dealt by the Tribunal in the case of M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2023 (12) TMI 304 - CESTAT CHANDIGARH] has held that ' the benefit of the Scheme cannot be denied to the appellants just because they did not file the declaration under SVLDR Scheme.' There are no reason not to follow the aforesaid precedent of this Tribunal. Consequently, the appeal filed by the appellant deserves to be allowed and accordingly the same is allowed.

• 2024 (5) TMI 1334

  Classification of Colour Television Sets in SKD condition - classifiable under sub-heading No.8528.00 of CETA or not - confirmation of demand with interest and penalty - HELD THAT:- The issue is no more res integra and is squarely covered by the decision of the Tribunal in the case of M/S. L.G. ELECTRONICS INDIA PVT. LTD., SHRI S.N. RAI AND SHRI ATUL TANDON VERSUS COMMISSIONER OF CENTRAL EXICSE, NOIDA-II [ 2022 (8) TMI 873 - CESTAT ALLAHABAD] . In the above matter the Tribunal has decided that the parts and Sub-assembling cleared without all the critical components cannot be classified as CTVs. The Tribunal further held that unless all the critical parts of CTVs i.e. CTPs and PCBs also, are removed together, till then Rule 1 of the Rules of Interpretation to the Tariff is applicable and Rule 2(a) of the same Rule has no application and accordingly, the classification of such parts/Sub-assemblies will fall under 85.29 of the Tariff. The Tribunal set aside the adjudication order which applied Rule 2(a) in similar case where also CTPs were not removed by the supplier with other parts/Sub-assemblies. The aforesaid order of the Tribunal was assailed by the Department before the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, NOIDA II VERSUS M/S. LG ELECTRONICS INDIA PRIVATE LIMITED ETC. [ 2023 (4) TMI 1326 - SC ORDER] and the Civil Appeal was dismissed holding that ' on closer scrutiny of the unique facts of this case, it is our view, the goods of the appellant may not be said to be parts as per Section Note 2 to Section XVI of the Tariff. The appellant not only used to assemble all parts of the Television Receivers and make complete television sets, but the said Television Receivers were also operated in the manufacturing unit of the appellant and thoroughly checked and only upon it being confirmed that the Television Receivers were complete in all respects, they were disassembled and along with relevant material and individual serial numbers, sent to the various satellite units.' The impugned order passed by the Commissioner is set aside - Appeal allowed.

• 2024 (5) TMI 1333

  Attachment of immoveable property owned by the appellant and his brothers jointly - recovery of dues, of which 80% share stands in the name of persons who have nothing to do with the government recovery - levy of interest and penalty - HELD THAT:- The order of attachment of immovable property has been done under the Rules of 1995, which were made in exercise of the powers conferred by Section 156 r/w. Section 142 of the Customs Act, 1962. Rule 2(vi) of the said Rules of 1995 defined defaulter as any person from whom Government dues are recoverable under the Act. Chapter II of the said Rules deals with the procedure for the attachment of property. The issuance of certificate under rule 3 of chapter II is for the dues not paid by the defaulter to the government and the amounts specified as the amounts due from such person . Such person can only be the defaulter as defined u/r. 2(vi) and no one else. Rule 10 is very relevant for the situation herein as it stipulates that where the property to be attached consists of the share or interest of the defaulter in property belonging to him and another as coowners, the attachment shall be made by a notice to the defaulter prohibiting him from transferring the share or interest or charging it in any way . Whether the duty amount with interest and penalty which has become due and payable by the defaulting firm, could be recovered by attaching the entire property in which the appellants personal share is on 20%? - HELD THAT:- The answer to this question should be in the negative. A partnership firm under the Indian Partnership Act, 1932 is not a separate legal entity and the liability of the partners is joint and several u/s 25 ibid - Here the share of the appellant in the attached personal property is merely 20% whereas 80% of the share therein is that of his brothers who have nothing to do with the defaulting firm or their activities - In the absence of any specific provision under the Rules for recovery of the dues by attaching the personal property of some other partnership in which the majority of the shareholders have nothing to do with the recovery of the government dues, the notice of attachment of said property is bad in law. Interest imposed u/s 11AB of Central Excise Act, 1944 is applicable when the duty became payable before the enactment of the said section - HELD THAT:- The interest has been imposed under section 11AB of Central Excise Act, 1944. Here it is interesting to note that duty demand has been made and confirmed for the goods cleared during the year 1993 and the show-cause notice was issued on 04.03.1994. Admittedly during the period Section 11AB ibid was not brought into force by the legislature as the same has been introduced w.e.f. 28.09.1996 - there is no whisper about charging of interest u/s 11AB ibid in the show-cause notice. Not only that, sub-section (2) of interest under Section 11AB stipulates that the provisions of sub-section (1), which provides for charging of interest on excise duty, shall not apply to cases where the duty became payable before the date on which the Finance (no.2) Bill, 1996 receives the assent of the President. As the duty and penalty on M/s Turbo Micro System has been satisfied by the appellant along with personal penalty, the attachment of the immovable property in issue herein is set aside. Accordingly, the impugned order is also set aside - Appeal allowed.

• 2024 (5) TMI 1332

  Recovery of CENVAT Credit with interest and penalty - reversal of cenvat credit of the service tax availed on any services in relation to inputs received in the factory and part quantity of which was cleared to another factory - no provision in the Credit Rules or any other statute, which provides for reversal of such cenvat credit - HELD THAT:- The issue is no more res integra and has been decided by the Tribunal in the appellant s own case for the subsequent period i.e. from July 2015 to February 2016 and September 2014 to June 2015. The Tribunal vide Final Order No. 71087-71088 of 2018 dated 03.05.2018 passed in Excise Appeal No.70301 and 70302 of 2018 allowed the appeals filed by the appellant by holding that ' I observe that no specific provision of Cenvat Credit Rules requiring reversal of proportionate input Service Tax credit involved in the inputs cleared as such has been invoked. In fact, there is no such provision in the law. The requirement under Cenvat Credit Rules 2004 is that when the inputs are cleared as such the Central Excise duty involved in the inputs which is availed as Cenvat credit needs to be reversed.' It has been the interpretation and understanding that such credit is already consumed till the inputs received and further there is no legal provision exists requiring the reversal of such credit, thus, the demand is not to be raised. The following allegation in the show cause notices based on which the demand was proposed has not legal backing. This court finds that the view as expressed by the Tribunal is strictly in conformity with the Rules. Rule 2(k) of the Rules defines input , whereas Rule 2(l) defines input service , meaning thereby both the terms have been defined independently. Rule 3 defines the term Cenvat credit , which includes duty paid under various enactments and also the service tax leviable under Section 66 of the Finance Act, 1994. Rule 3(5) of the Rules only talks about the Cenvat credit taken on inputs or capital goods - Once the rule-making authority has defined the terms specifically and used the same in different provisions consciously, the argument of learned counsel for the Revenue that merely by analogy even if in one provision both the terms have been used, the same should be read in the other provision as well, where it has not been specifically mentioned, has no legs to stand, as the tax cannot be levied merely by inference or presumption. It is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed.

• 2024 (5) TMI 1331

  CENVAT Credit - inputs used for fabrication of support structures - Explanation 2 to Rule 2(k) of the CENVAT Credit Rules, 2004 - period 2005-06 to August 2008 - extended period of limitation. Denial of credit on the grounds that the credit on inputs utilized for construction of support structures for plant and machinery is not admissible in terms of exclusion clause in Explanation 2 to Rule 2(k) of Cenvat Credit Rules. HELD THAT:- From the perusal of the circulars dated 2-4-2012 and 18-5-2012, it comes out that these circulars have been issued in the changed context of the definition of [Rule] 2(k) of Cenvat Credit Rules, 2004 and both circulars have no concern for the period in issue. Thus, the reliance placed by the Revenue in this regard has no substance. The Madras High Court in M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the Cenvat credit on MS Rod, sheets, MS Channel, MS Plate, etc., used for fabrication of structures to support various machines/capital goods. In M/S. THIRU AROORAN SUGARS, M/S. DALMIA CEMENTS (BHARAT) LTD. VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE [ 2017 (7) TMI 524 - MADRAS HIGH COURT] , a Division Bench of the Madras High Court held that irrespective of whether user test is applied, or the test that they are an integral part of the capital goods is applied, all such items fell within the scope and ambit of both Rule 2(a)(A) and 2(k) and, therefore, Cenvat credit was to be allowed on such goods. The impugned order cannot be sustained and is accordingly set aside. The appeal filed by the Appellant is allowed.

• 2024 (5) TMI 1330

  Determination of duty liability of the manufacturer with penalty - new retail sale price - manufacture of Pan Masala and Pan Masala containing Tobacco called Gutkha - Rule 17 of Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 - Applicability of retrospective amendments to Rule 8 of the PMPM Rules. HELD THAT:- As per the observations made by the Revenue in the said appeal to the effect that 1st proviso to Rule 8 of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 is applicable only w.e.f. 13.04.2010 whereas the show cause notice adjudicated and disposed by the Adjudicating authority relates to the period prior to 13.04.2010 is contrary to this - there are no merits in this contention made in this appeal. In the case of COMMISSIONER OF CENTRAL EXCISE KANPUR VERSUS M/S. TRIMURTY FRAGRANCES (P) LTD. [ 2015 (11) TMI 320 - ALLAHABAD HIGH COURT] it is held that ' in terms of this retrospective amendment effective from 13th April, 2010 made by Section 101 of the Finance Act, 2014, when a manufacturer in a particular month manufacturers Gutkha of different RSPs on the same machines, his duty liability in respect of that machine would be at the rate applicable to the highest RSP. In our view, this retrospective amendment is in accordance with the 6th proviso to Rule 9 and is also in accordance with the provisions of Rule 5 and this retrospective amendment to Rule 8 of PMPM Rules, shows that it was not the intention of the Government that in a case where in a month a particular machine is used to produce Gutkha pouches of more than one RSP, each RSP is to be treated as separate machine for the purpose of charging duty, but the intention was to charge duty in such a situation at the rate applicable to the highest RSP. ' Learned Commissioner has referred to the decision of the Tribunal in the case of M/S. KAY PAN SUNGANDH (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2017 (4) TMI 982 - CESTAT NEW DELHI] wherein the Tribunal relied on the decision in case of Trimurti Fragrances holding that the said amendment though made from 13.04.2010 but the same is applicable for the period prior to that, i.e. from the date of enforcement of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008. Tribunal in this case observed ' In the case in hand, it is not disputed that in mid of September 2008, under intimation to the department, the appellant had manufactured gutkha pouches with RSP Rs. 1.00 on the 12 machines which they were using for manufacture of gutkha with RSP Rs. 1.50. It is also not in dispute that they have discharged the duty liability on the production capacity of these 12 machines based on the calculation that they are going to manufacture gutkha with RSP Rs. 1.50.' There are no reasons to interfere with the impugned order and the same is sustained. The appeal filed by the Revenue is dismissed.

• 2024 (5) TMI 1329

  CENVAT Credit - sale of scrap generated from working capital goods, without paying an amount equal to the duty leviable on the said transaction value - non-maintenance of any record/ inventory in respect of production generation and clearance/ sale of waste scrap arisen out of Capital goods separately nor paid due duty thereon - contravention of the provisions of Rule 3 (5A) of the Cenvat Credit Rules, 2004 - suppression of facts or not - HELD THAT:- Revenue has not produce an iota of evidence to prove the contrary. Both the lower authorities have stated that the burden to prove is on the appellant. The said contention of the authorities is contrary to the law of evidence. The burden to prove the fact lies on the person who asserts the fact. Revenue asserts that the these waste and scrap has arisen from the Cenvated Capital Goods, then the burden is on revenue to establish the same. Only once it is established by the revenue then the burden to prove the contrary will shift on the appellant. Appellant has vide letter dated 11.01.2010 taken the stand that the waste and scrap sold by them has arisen out of the Capital Goods on which no Cenvat Credit was taken. Revenue authorities should have investigated the matter to establish to the contrary. Instead of doing so the show cause notice has been issued stating that it is immaterial whether the CENVAT Credit on the capital goods has been taken or not. Once Commissioner (Appeal) concluded that Rule 3 (5A) is applicable only to the Cenvated Capital goods, he should have dropped the proceedings initiated by this show cause notice. Delhi bench has in the case of KARNAL CO-OPERATIVE SUGAR MILLS LTD. VERSUS COMMR. OF C. EX., PANCHKULA [ 2010 (11) TMI 268 - CESTAT, NEW DELHI ] held that ' Admittedly the appellants were not able to produce documents on the ground that they relate to very old period. However, the submissions of the learned Advocate that prior to the amendment dated 16-5-05 to Rule 3 of Cenvat Credit Rules introducing sub-rule 5A no amount is payable on waste and scrap arising out of capital goods even if the credit had been taken requires to be accepted. ' The decision of Hon ble Supreme Court in the case of MYSORE METAL INDUSTRIES VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1988 (5) TMI 42 - SC ORDER] , relied in the impugned order is in respect of the claim to an exemption made by the party. It is settled position in law that any person who claims an exemption needs to establish that he is entitled to the said benefit. However in the present case we are not dealing with the claim of an exemption but with the contravention of provision of Rule 3 (5A) of the Cenvat Credit Rules, 2004. The burden to prove the contravention of the provisions of taxing statute is always on the revenue. This decision is distinguishable. There are no merits in the impugned order - appeal allowed.

• CST, VAT & Sales Tax

• 2024 (5) TMI 1328

  Scope of review jurisdiction - an error apparent on the face of the record - purchase price of purchase of plant and machinery, apparatus and equipment, to be included in the Fixed Capital Investment or not - the amount has been allowed as MODVAT under the Central Excise Act, 1944 - HELD THAT:- In its judgment in ARIBAM TULESHWAR SHARMA VERSUS ARIBAM PISHAK SHARMA [ 1979 (1) TMI 228 - SUPREME COURT ], the Hon ble Supreme Court propounded that review power and appellate power are inherently distinct. While the appellate power enables the courts to rectify all manners of errors in the judgment or order under challenge, review power does not - Recently, in ARUN DEV UPADHYAYA VERSUS INTEGRATED SALES SERVICE LTD. ANR. [ 2023 (7) TMI 1411 - SUPREME COURT] , the Hon ble Supreme Court reiterated that review power is to be exercised strictly within the confines of Order 47 Rule 1 of CPC, 1908. Review jurisdiction is not a tool for the litigious or the disgruntled, it is a mechanism for safeguarding the integrity of the judicial process, for ensuring that justice remains blind to all but the merits of the case. Wielding the power of review jurisdiction carries a weighty burden one that demands unyielding diligence and meticulousness. Courts must resist the siren call of extraneous influences or the temptation to revisit contentious issues - the review jurisdiction is not a weapon to be wielded recklessly but a shield to safeguard the sanctity of the legal process. The review jurisdiction is a solemn duty bestowed upon the High Courts to rectify errors that may have crept into their judgments. It is not an avenue for re-argument or a platform for dissatisfied litigants to reiterate their grievances. Instead, it serves as a bulwark against miscarriage of justice, providing a mechanism for the correction of judicial fallibility. Judges, like all human beings, are liable to err. Thus, review jurisdiction stands as a sentinel against the tyranny of erroneous judgments, upholding the integrity of the judicial process. Coming to the merits of the instant review, the ground taken by the Respondent that important judgments of the Hon ble Supreme could not be submitted before this Court, does not merit the exercise of the power of review since the Respondent failed to establish that despite exercise of proper due diligence, the aforesaid judgments could not be brought to light. In any case, as held by the Hon ble Supreme Court in Dokka Samuel [ 1997 (3) TMI 619 - SUPREME COURT ], failure to produce a judgment would not tantamount to an error apparent on the face of the record. Mere failure to cite a judgment does not, in and of itself, render the original judgment flawed. Review jurisdiction is not a panacea for addressing every perceived deficiency or oversight in the original judgment; rather it is a narrow avenue reserved for rectifying errors glaringly evident on the face of the record. Failure to cite a particular judgment does not automatically invalidate the reasoning or merit of the decision under question. This Court finds no merit in the instant review application preferred against the order - Accordingly, the same is dismissed.

• 2024 (5) TMI 1327

  Constitutional validity of Section 2A (8-a) of the Karnataka Tax on Entry of Goods Act, 1979 - inclusion of the term prevailing market price of such goods in the local area within the definition of value of the goods under clause 2A (8-a) - significant lapse of time from the original assessments are valid under Section 6 (2) of KTEG Act or not - differential tax amount determined by respondent No. 5 based on mere change of opinion in contravention of Section 6 (2) of the KTEG Act - Maintainability of petition - availability of alternate remedy. Whether the inclusion of the term prevailing market price of such goods in the local area within the definition of value of the goods under clause 2A (8-a), in instances where goods are not purchased, conflicts with the charging provision outlined in section 3 (1) of the Act? - HELD THAT:- The charging provision under Section 3 (1) of the KTEG Act serves as the foundational framework for levying entry tax. This provision mandates that the tax should be based on the value of goods entering the local area. However, the definition clause under Section 2A (8-a) introduces additional criteria, such as the 'prevailing market price,' which can potentially lead to conflicting interpretations, especially in cases involving stock transfers. In situations where there is a conflict between the charging provision and the definition clause, the Court's duty is to interpret these provisions in a manner that upholds the legislative intent behind the charging provision. The charging provision, being the substantive section imposing the tax, holds primacy over other provisions of the statute. The definition clause under Section 2A (8-a) of the KTEG Act must be construed harmoniously with the charging provision under Section 3 (1) of the KTEG Act. The charging provision, being the substantive section imposing the tax, should hold primacy in determining the taxable value of goods, especially in cases of stock transfers. In elucidating these provisions, it becomes apparent that the crux of Section 3 (1) lies in anchoring tax assessment to the value of goods at the time of their entry. Therefore, any reference to prevailing market price in Section 2A (8-a) should be construed as pertaining to the market value of goods contemporaneous with their entry into the local area. The term 'value of such goods' as mentioned in Section 2A (8-a) of the KTEG Act shall be interpreted to mean the value of goods at the time of their entry into the local area, consistent with the charging provision under Section 3 (1) of the KTEG Act. This interpretation ensures harmonization between the charging provision and the definition clause, eliminating any potential conflicts or inconsistencies. Whether re-assessment notices issued by respondent No. 5 after a significant lapse of time from the original assessments are valid under Section 6 (2) of KTEG Act and assessment orders for the assessment year 2009-10 passed by respondent No. 5 in terms of the wordings prevailing market price of such goods in local areas under clause 2A (8-a) of KTEG Act are valid? - Whether differential tax amount determined by respondent No. 5 based on mere change of opinion are in contravention of Section 6 (2) of the KTEG Act? - HELD THAT:- The respondent No. 5 being a new Officer has conducted reassessment as opposed to the original assessing Officer who had accepted the returns submitted by the petitioner s company indicating that there is entry tax compliance by the petitioner company strictly in terms of the charging Section 3 (1) of the KTEG Act. The power to reassess is vested with the original assessing officer. Therefore, reassessment done by respondent No. 5 merely on the ground of change of opinion does not adhere to the compliance of mandate contemplated under Section 6 (2) of the KTEG Act. The assessment orders and reassessment notices issued by respondent No. 5 are based on change of opinion and therefore, the impugned assessment orders and reassessment notices are not sustainable and would warrant interference at the hands of this Court. Initiating reassessment purely on the grounds of change of opinion without substantive new material is impermissible under the law and therefore, liable to be quashed. Whether petitioner/company needs to be relegated to avail remedy of appeal on the ground of alternate remedy? - HELD THAT:- In this case, the petitioner's challenge to the statutory provision goes beyond mere statutory interpretation and involves significant legal and constitutional implications, warranting this Court's intervention. Therefore, in light of the unique circ*mstances and the centrality of the disputed statutory provision to the petitioner's case, the writ petition represents not only the most efficacious but also the most equitable remedy available. By allowing the petitioner to directly address the substantive legal issues before this Court, justice can be served promptly and fairly, aligning with the overarching objectives of the legal system. This Court is inclined to hold that the petitioner at this stage cannot be relegated to avail the alternative remedy of an appeal, in light of law laid down by the Apex Court in DR BAL KRISHNA AGARWAL VERSUS STATE OF U.P. [ 1995 (1) TMI 393 - SUPREME COURT] , where the Apex Court was of the view that the Court was not right in dismissing the writ petition on the ground of alternate remedy having found that the writ petition is found pending since 1998, i.e. more than five years. In the present cases on hand, the petitions are pending for almost 14 years. The impugned assessment orders and reassessment notices issued by respondent No. 5 are one without jurisdiction. Therefore, this Court under writ jurisdiction has ample powers to examine the validity of assessment orders and also reassessment notices. The writ petitions are allowed in part.

• 2024 (5) TMI 1326

  Challenge to order of Reassessment - notice issued stating that the petitioner s turnover escaped assessment for the year 2010-2011 and accordingly, proposes to assess the petitioner s turnover for the period 2010-2011 to the best of assessing authority judgment under Section 40 of the Act. It is the specific case of the petitioner that though the re-assessment has been completed in the purported exercise of power under Section 40 of the Act of 2003 read with Section 174 of the Assam Goods and Service Tax Act, 2017, but Section 40 of the Act of 2003 could not have been invoked inasmuch as, the said powers can be invoked only when the dealer have been assessed under Sections 34, 35, 36 and 37 of the Act of 2003. HELD THAT:- No assessment whatsoever was completed by the assessing authority under Sections 34, 35, 36 and 37 of the Act of 2003 - there was no assessment. As such, the very initiation of proceeding under Section 40 of the Act of 2003 is absolutely illegal, without jurisdiction and not tenable in law. The present case is covered by the decision of this Court in Assam Gas Company Ltd Vs. State of Assam 2 Others [ 2024 (5) TMI 1173 - GAUHATI HIGH COURT ] where it was held that ' In the present case, there was no assessment under section 35 of the Act, 2003, made during the prescribed period. Therefore, no assessment can be deemed to have been made in law - the said order of re-assessment having been completed without any assessment made under section 35 of the Act, 2003, the order of reassessment dated 17.03.2018 is absolutely illegal and without jurisdiction.' The impugned Order of Re-assessment dated 29.03.2018 and the Notice of Demand alongwith the Recovery Notices dated 06.08.2018 and 28.09.2018 are set aside and quashed - petition allowed.

• 2024 (5) TMI 1325

  Denial of refund of excess tax paid by contractors - Haryana Alternative Tax Compliance Scheme for Contractors, 2016 - Constitutional Validity of Clause 4(2) of the scheme - HELD THAT:- The scheme has been made applicable to all contractors whether they have opted or not opted for the lump sum scheme under Rule 49 of the VAT Rules. Thus, those who had earlier opted for lump sum scheme under Rule 49 of the VAT Rules and were paying @ 4% of the aggregate amount, would be placed in a disadvantageous position vis- -vis those who did not even deposit the amount earlier and had not opted under Rule 49 of the VAT Rules. It is also noticed that the State has modified the rate of composition @ 1% with retrospective effect for all. In CORPORATION BANK VERSUS SARASWATI ABHARANSALA AND ANOTHER [ 2008 (11) TMI 387 - SUPREME COURT] Hon ble the Supreme Court has held ' If the substantive provision of a statute provides for refund, the State ordinarily by a subordinate legislation could not have laid down that the tax paid even by mistake would not be refunded. If a tax has been paid in excess of the tax specified, save and except the cases involving the principle of 'unjust enrichment', excess tax realized must be refunded. The State, furthermore is bound to act reasonably having regard to the equality clause contained in Article 14 of the Constitution of India.' Thus, from the reading of the aforesaid judgment, it could be concluded that the conditions laid down under Clause (4) of the 2016 Scheme seek to create unjust enrichment in favour of the Revenue and unjustifiable clause having no nexus. It seeks to create a distinction and also benefits those contractors who had not been honestly paying their taxes which is disadvantageous to those contractors who had been regularly paying @ 4% tax in terms of Rule 49 of the VAT Rules. The orders rejecting the claim of refund dated 20.01.2017 and supplementary order dated 27.01.2017 impugned in all the four writ petitions denying the refund of the excess tax amount paid earlier by them is quashed and set aside and it is held that the petitioners are entitled for the refund of the said amount. They would also be entitled to receive interest as per rules on the said refund. The exercise of payment of refund shall be done within a period of four weeks henceforth, failing which further interest @ 9% shall be payable on the refund amount in addition to the interest required to be paid to them. Petition allowed.

• Indian Laws

• 2024 (5) TMI 1388

  Jurisdiction of Sub-Registrar to refuse registration of a sale certificate due to pending Income Tax dues against the borrowers - Sale certificate - Whether the SARFAESI Act has precedence over other statutory dues, including those of the Income Tax Department - Petitioner purchased a property in a public auction conducted by Canara Bank (3rd respondent) under the SARFAESI Act - Sub-Registrar refused registration citing pending Income Tax dues against the borrowers. HELD THAT:- The Apex Court in the case of Punjab National Bank v. Union of India [ 2022 (2) TMI 1171 - SUPREME COURT] , considering the entire spectrum of law holds that dues of the secured creditor, the Bank or any other financial institution will have priority over the dues of the Central Excise Department under the Central Excise Act. The Apex Court holds the provisions of the SARFAESI Act, 2002 will have overriding effect on the provisions of the Central Excise Act. If the Central Excise Act found in the judgment of the Apex Court is paraphrased with that of the Income-Tax Department/dues under the Income-Tax Act, the reasons so rendered by the Apex Court would become applicable to the facts of the case at hand as well. The Sub-Registrar, though not in writing, orally refused to register the document on the score that dues of the Income-Tax Department are pending against the borrowers, is a reason which is unavailable to the Sub-Registrar, even if it were to be in writing. The Sub-Registrar can act only within the four corners of the Registration Act and the Registration Rules framed by the State. The Sub-Registrars refuse to register the documents - the documents could be sale certificates or documents creating charge over the property. The Sub-Registrars, on grounds that are not available to them, refuse to register the documents, sometimes on the score that the software in the Registration Department or the Sub-Registrar's office is not made to be in tune with the necessities of registration of documents of the Banks and therefore, it is not registered and in certain cases, it is the statutory dues by the borrower or the holder of the document, which are not cleared and therefore, would not be registered. All these are reasons beyond the statute. Unless the Sub-Registrar notices any violation as obtaining under Rule 171 of the Rules, the Sub-Registrar does not have jurisdiction to refuse registration of a document. Therefore, it is necessary for the State Government to issue necessary circular in terms of Rule 171 of the Rules and the law laid down by the Apex Court in the judgment supra, so that every person who goes for registration of documents should not be denied registration except in accordance with the observations supra as acts of Sub-Registrars are driving every person who is denied registration to the doors of this Court unnecessarily and if the Sub-Registrar would not register a document, if it is found to be in tune with law, the delay in registration would be attributable only to those Sub-Registrars, who will be saddled with exemplary costs when such cases are brought before this Court seeking a direction for registration of a document. Thus, writ petition is allowed.

• 2024 (5) TMI 1324

  Validity of the Agreement to Sell - Purchase of land - Non-Appearance of Plaintiff as a Witness - Discretionary Relief of Specific Performance - Limitation Period for Filing the Suit - Appellant/plaintiff entered into an agreement to sell land with respondent no. 4, acting as Power of Attorney holder for respondents/defendant nos. 2 to 11 - agreement extended multiple times. HELD THAT:- It is mentioned in the agreement that Gajay Bahadur Bakshi would be responsible for getting the sale deed executed and registered by all the coowners or co-khatedars at the time of registration. Neither the names of all the co-owners/coparceners/co-khatedars are mentioned in the agreement, thus, the High Court is right in finding that all the co-owners have not signed the agreement. The subsequent endorsem*nt of receipt of additional amount of Rs. 40,000/- is also not signed by all the co-parceners. The same is the condition with the 3rd agreement dated 26.12.1996 and the extension endorsem*nt dated 27.03.1997 and 23.04.1997. Significantly, the so-called power of attorney pleaded in the plaint through which the defendant nos. 2 to 11 authorised defendant no. 1 to execute the agreement, have not been produced and proved in the Trial Court. Thus, neither in the agreement nor in course of trial the power of attorney is proved by tendering the same in evidence. Hence, in the absence of evidence, the High Court rightly held that the agreement is not signed by all the co-owners. Undisputedly, in the present case, the plaintiff failed to appear in the witness box . Instead, his Power of Attorney Holder got himself examined as PW-1. This witness was examined on 05.09.2002 and the power of attorney was executed on 26.08.2002. It is not a case where the suit itself was filed by a Power of Attorney Holder. He appeared subsequently only for recording his evidence as the Special Power of Attorney Holder of the plaintiff. The legal position as to when the deposition of a Power of Attorney Holder can be read in evidence has been dealt with by this Court in several decisions. In the instant case, the plaintiff/appellant has failed to enter into the witness box and subject himself to cross-examination, he has not been able to prove the prerequisites of Section 12 of the Specific Relief Act,1963 and more so, when the original agreement contained a definite time for registration of sale deed which was later on extended but the suit was filed on the last date of limitation calculated on the basis of the last extended time. The plaintiff entered into an agreement with only one of the co-owners and thereafter sought extensions for execution of the sale deed but did not prefer any suit though he was aware of the sale deed dated 14.05.1997 executed in favour of defendant nos. 12 to 14 and sent a legal notice on 30.05.1997 and even objected to the subsequent purchasers application for mutation of their names in the revenue records on 20.08.1997 and refers to a meeting of the Gram Panchayat dated 06.12.1997, yet the suit was preferred, on 09.05.2000 on the last date of limitation . Thus, the suit having been preferred after a long delay, the plaintiff is not entitled for specific performance on this ground also.

• 2024 (5) TMI 1323

  Bank Loan - Proposal for declaring the company as Fraud - Violation of principles of natural justice - non-compliance with the agreed terms of the loan documents and various irregularities in the loan account - suspicion of fraudulent activities in the account - HELD THAT:- This Court passed various directions directing the petitioner to approach the respective banks with a list of documents that were required by the petitioner for the purpose of submitting a comprehensive reply to the said SCNs. Upon the petitioner approaching the said banks, certain documents were provided to the petitioner. However, it is the case of the petitioner that complete documents, on the basis of which SCNs have been issued to the petitioner, have not been provided. It is settled law that fair procedure and the Principles of Natural Justice require that the requisite documents, which form the basis of a SCN, ought to be provided to the concerned party in order to enable such party to submit a proper reply to answer all the allegations raised against it. If the relevant documents are not provided to a party, then, the whole procedure of issuance of a SCN and filing a reply thereto, would be reduced to an empty formality. No party can be expected to respond to a SCN in an effective manner, in the absence of the underlying documents, which form the basis of the said SCN. Similarly, in the case of T. TAKANO VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA ANR. [ 2022 (2) TMI 907 - SUPREME COURT] , the Supreme Court has held in categorical terms that it would be fundamentally contrary to the Principles of Natural Justice, if the relevant materials were not disclosed to the noticee. The relevant documents that form the basis of issuance of a SCN, ought to be provided to the concerned party in order to enable such a party to raise its defense effectively. Such fundamental right of a party cannot be taken away by denying a proper opportunity to submit an efficacious reply, which would not be feasible in the absence of requisite documents that form the core foundation of a SCN. This assumes all the more importance, as on the basis of the defense raised by such a party, proceedings thereto, against the said party, may be dropped in appropriate cases. The petitioner and/or his authorized representative shall be allowed inspection of the records of the company, as available with the lead bank, i.e., SBI - Since, record of the company is also stated to be in the possession of the RP, it is directed that the petitioner and/or his authorized representative shall also be allowed to inspect of the record of the company, as available with the RP. The writ petition is disposed off.

• 2024 (5) TMI 1322

  Challenged the order passed u/s 482 of CrPC - Cancellation of the Non Bailable Warrants [NBW s] - denial of bail - HELD THAT:- In peculiar facts of this case, while filing the application u/s 70(2) of the Code of Criminal Procedure, the specific stand was taken that the non appearance, was on account of the ailment of the petitioner-accused and once this fact has not been denied or controverted by the non-applicant/complainant, therefore, on this ground also, the Impugned Order dated 23.04.2024, by recording the findings that the Learned Trial Court was not satisfied with the grounds so taken, is vitiated by non-application of mind; when, the plea was not denied/or is admitted by the non-applicant - complainant also. Thus, the impugned order dated 23.04.2024, passed by the Learned Trial Court i.e. Learned Chief Judicial Magistrate, Bilaspur, is quashed and set aside. Since the petitioner-accused is in judicial custody , therefore, the Respondents/State Authorities are directed to release the petitioner-accused [Dipender Thakur] from custody, on furnishing a personal bond of Rs. 25,000/- with one surety in the like amount to the satisfaction of the Learned Trial Court. Thus, the instant petition as well as the pending miscellaneous application(s), if any, shall also stand disposed of , accordingly.

• 2024 (5) TMI 1321

  Seeking to Quash proceedings u/s 138 of the Negotiable Instruments Act - failure to implead the company as an accused - non-maintainability of the complaint against the petitioner - compliance of the provision u/s 202 CrPC - HELD THAT:- Admittedly the accused s only address is clearly is beyond the jurisdiction of the trial Court being the Court at District Malda. The proceedings in this case is u/s 138 of the Negotiable Instruments Act. Following the Five Judge Bench of the Supreme Court in expeditious trial of cases, it is clear that Section 202(2) CrPC is not applicable in the present proceedings which is u/s 138 N.I. Act. Document annexed to the supplementary affidavit filed by the petitioner shows that the complainant served Notice dated 30.11.2016 u/s 138 N.I. Act upon the Petitioner and also the Company Amrit Feeds Limited . Copy of the cheque dated 17.08.2016 shows that the said cheque was also issued by the petitioner on behalf of the company and not from his personal account. Thus not impleading the company in this case along with the petitioner, being the Managing Director of the complaint, makes the complaint in this case not maintainable. In the present case:- a) The company has not been made an accused nor was any notice served upon the company, though the cheque was issued on behalf of the company. b) The petitioner has been made an accused as the person, who signed and issued the cheque. Therefore, in the absence of the company being arraigned as an accused, a complaint against the petitioner is not maintainable Himanshu vs. B. Shivamurthy Anr. [ 2019 (3) TMI 294 - SUPREME COURT] . CRR is allowed - The proceedings in connection with Complaint Case u/s 138 of the Negotiable Instruments Act, pending before the Court of the Learned Judicial Magistrate, Malda and all orders passed therein in connection with the above mentioned complaint case, is hereby quashed in respect of the petitioner.

• 2024 (5) TMI 1320

  Dishonor of cheque - Challenged the acquittal of the respondent/accused u/s 138 of the Negotiable Instruments Act - cheque issued for repayment of borrowed hand loan - legal notice served, but no response received - Accused contested the case but failed to rebut the allegations - HELD THAT:-Admittedly, complainant has not produced any documents to show that the produce of previous year was kept in consignment and also it was sold immediately prior to the alleged lending of Rs.6 lakhs and complainant was in possession of the same. Thus, the complainant has failed to prove her financial capacity to lend Rs.6 lakhs to the accused. In the complaint the complainant has not stated the date on which the hand loan was advanced to the accused. It is only stated that towards repayment of the said amount, accused issued cheque dated 10.01.2013. However, during her cross-examination complainant has stated that accused requested hand loan in the month of November 2013 and she paid the amount on 15.12.2013. As noted earlier, the subject cheque i.e., Ex.P1 is dated 10.01.2013 which creates doubt as to whether Ex.P1 cheque was issued towards alleged transaction or it was already available with the complainant. This fact assumes importance as the accused has taken up a specific defence that complainant, Smt.Kalavathi - the wife of accused and other women were running chit fund and at that time complainant had taken a blank cheque belonging to the accused and though the wife of accused has paid the amount due under the chit transaction, the subject cheque belonging to the accused remained with the complainant and misusing the same, she has filed the complaint. Ex.D1 is the pass book of account maintained by Smt.Kalavathi in Syndicate Bank. It shows withdrawal of Rs.20,000/- on 27.08.2012 and Rs.45,000/- on 25.09.2012 by Smt.Geetha H.K i.e., the complainant. This supports the defence of the accused that there were some chit transaction between his wife Smt.Kalavathi and complainant Smt.Geetha H.K. The contents of Ex.P1 cheque also supports the defence of the accused that except his signature, the rest of the contents are not in his handwriting. From the manner in which the accused has affixed his signature in Kannada, indicates that except the signature, rest of the contents are not in his handwriting. In fact the remaining writing in the cheque tally with the handwriting/signature of the complainant. Thus, when the complainant has failed to prove her financial capacity, as held in APS Forex [ 2020 (2) TMI 629 - SUPREME COURT ], the burden would not shift on the accused to rebut the presumption. Despite the same, through his oral and documentary evidence placed on record and in the light of cross - examination of PW-1, the accused has probabilised his defence. Considering the oral and documentary evidence placed on record, the trial Court has come to a correct conclusion that allegations against accused are not proved and acquitted him. After re-appreciation of the entire material placed on record, this Court is of the considered opinion that it is not a fit case to interfere with the impugned judgment and order passed by the trial Court. In the result, the appeal fails and accordingly - Appeal filed by the complainant u/s 378(4) of CrPC is dismissed - The impugned judgment and order dated 30.07.2015 in C.C. on the file of II Addl.Civil Judge and JMFC, is hereby confirmed.

• 2024 (5) TMI 1319

  Condonation of Delay in filing the appeal for the enhancement of compensation - Applicability of Limitation Act provisions - Discretionary Power of Courts in condoning delay - HELD THAT:- It is very elementary and well understood that courts should not adopt an injustice-oriented approach in dealing with the applications for condonation of the delay in filing appeals and rather follow a pragmatic line to advance substantial justice. It may be important to point out that though on one hand, Section 5 of the Limitation Act is to be construed liberally, but on the other hand, Section 3 of the Limitation Act, being a substantive law of mandatory nature has to be interpreted in a strict sense. In Bhag Mal alias Ram Bux and Ors. vs. Munshi (Dead) by LRs. and Ors [ 2007 (1) TMI 544 - SUPREME COURT] , it has been observed that different provisions of Limitation Act may require different construction, as for example, the court exercises its power in a given case liberally in condoning the delay in filing the appeal u/s 5 of the Limitation Act, however, the same may not be true while construing Section 3 of the Limitation Act. It, therefore, follows that though liberal interpretation has to be given in construing Section 5 of the Limitation Act but not in applying Section 3 of the Limitation Act, which has to be construed strictly. It must always be borne in mind that while construing sufficient cause in deciding application u/s 5 of the Act, that on the expiry of the period of limitation prescribed for filing an appeal, substantive right in favour of a decree-holder accrues and this right ought not to be lightly disturbed. The decree-holder treats the decree to be binding with the lapse of time and may proceed on such assumption creating new rights. In the absence of the facts for getting the delay condoned in the referred cases, vis- -vis, the facts of this case, it cannot be said that the facts or the reasons of getting the delay condoned are identical or similar. Therefore, we are unable to exercise our discretionary power of condoning the delay in filing the appeal on parity with the above order(s). Moreover, the High Court, in the facts of this case, has not found it fit to exercise its discretionary jurisdiction of condoning the delay. There is no occasion for us to interfere with the discretion so exercised by the High Court for the reasons recorded. First, the claimants were negligent in pursuing the reference and then in filing the proposed appeal. Secondly, most of the claimants have accepted the decision of the reference court. Thirdly, in the event the petitioners have not been substituted and made party to the reference before its decision, they could have applied for procedural review which they never did. Thus, there is apparently no due diligence on their part in pursuing the matter. Accordingly, in our opinion, High Court is justified in refusing to condone the delay in filing the appeal. Thus, we do not deem it proper and necessary to interfere with the decision of the High Court refusing to condone the inordinate delay in filing the proposed appeal. The Special Leave Petition, as such, lacks merit and is dismissed.