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2023 (11) TMI 485 - CESTAT KOLKATA Customs

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Issues: (i) Whether clear float glass imported by the appellant was correctly classifiable under Heading 7005 10 90 as glass having an absorbent layer, or under Heading 7005 29 90 as other non-wired glass; (ii) whether the appellant was entitled to the benefit of Serial No. 934(I) of Notification No. 046/2011-CUS dated 01.06.2011.

Issue (i): Whether clear float glass imported by the appellant was correctly classifiable under Heading 7005 10 90 as glass having an absorbent layer, or under Heading 7005 29 90 as other non-wired glass.

Analysis: The tariff scheme for Heading 7005 distinguishes non-wired glass having an absorbent, reflecting or non-reflecting layer from other non-wired glass. Chapter Note 2(c) of Chapter 70 defines such layer as a microscopically thin coating of metal or chemical compound which affects light transmission or reflection. On the facts, the glass was clear float glass manufactured through a float process in which tin is inherently present on one side. The material on record, including the test reports and the manufacturing process, showed a microscopic tin layer on one side of the glass, which satisfied the statutory description of an absorbent layer. The record did not establish that the goods were tinted, wired, or otherwise falling in Heading 7005 29 90.

Conclusion: The clear float glass was correctly classifiable under Heading 7005 10 90 and not under Heading 7005 29 90.

Issue (ii): Whether the appellant was entitled to the benefit of Serial No. 934(I) of Notification No. 046/2011-CUS dated 01.06.2011.

Analysis: The exemption under the notification was linked to the proper classification of the imported goods. Once the goods were held to fall under Heading 7005 10 90, the statutory condition for claiming the exemption stood satisfied. The materials on record also supported acceptance of the benefit in the facts of the case.

Conclusion: The appellant was entitled to the benefit of Serial No. 934(I) of Notification No. 046/2011-CUS dated 01.06.2011.

Final Conclusion: The classification adopted by the department was unsustainable, the appellant's declared classification was accepted, and the consequential exemption benefit followed.

Ratio Decidendi: Where the tariff entry and chapter note recognize a microscopically thin metallic layer as an absorbent layer, clear float glass with an inherent tin layer on one side falls under the specific heading for non-wired glass having such a layer.

Clear float glass classification turns on microscopic tin layer treatment as absorbent-layer glass, supporting exemption eligibility.
Clear float glass with an inherent microscopic tin layer on one side is treated as non-wired glass having an absorbent layer under Heading 7005 10 90, because Chapter Note 2(c) recognises a microscopically thin metal or chemical coating that affects light transmission or reflection. The material and test reports were said to support that characterisation, and the goods were not shown to be tinted, wired, or otherwise classifiable under Heading 7005 29 90. Once that classification was accepted, the exemption linked to Serial No. 934(I) of Notification No. 046/2011-CUS dated 01.06.2011 became available on the same factual basis.

Classification of clear float glass - absorbent, reflecting or non-reflecting layer (Chapter Note 2(c) of Chapter 70) - manufacturing process of float glass and presence of tin side - entitlement to benefit under Notification No.046/2011-CUS (Sr. No.934(I)) - burden of proof in classification Classification of clear float glass - absorbent, reflecting or non-reflecting layer (Chapter Note 2(c) of Chapter 70) - manufacturing process of float glass and presence of tin side - Clear Float Glass imported is classifiable under CTH 7005 10 90 (other non-wired glass having an absorbent, reflecting or non-reflecting layer) and not under CTH 7005 29 90. - HELD THAT: - The Tribunal examined the manufacturing process of float glass and accepted that the float process results in a microscopically thin metal layer (tin) on one side (the tin side). Chapter Note 2(c) defines an "absorbent, reflecting or non-reflecting layer" as a microscopically thin coating of metal or chemical compound which, inter alia, absorbs infra-red light or improves reflecting qualities while retaining transparency. Applying that definition to the manufacturing facts, the Tribunal concluded that the tin layer produced by the float process falls within the scope of Chapter Note 2(c). The Tribunal rejected the adjudicating authority's approach that the mere presence of tin excludes classification under 7005 10 90, noting that the chapter note and tariff heading read together support classification under 7005 10 90 where an absorbent layer is present. The Tribunal also relied on advance rulings and appellate decisions treating identical goods as having an absorbent layer and classifiable under 7005 10 90, and observed that some test reports and an RTI reply supported the view that the layer is absorbent (UV). On this basis the Tribunal held that the impugned Clear Float Glass merits classification under sub-heading 7005 10 90. [Paras 16, 20, 24] Correct classification of the imported Clear Float Glass is under CTH 7005 10 90. Entitlement to benefit under Notification No.046/2011-CUS (Sr. No.934(I)) - burden of proof in classification - Consequent to classification under CTH 7005 10 90, the appellant is entitled to the benefit of Serial No.934(I) of Notification No.046/2011-CUS dated 01.06.2011; the adjudication changing classification on audit basis was set aside. - HELD THAT: - Having held that the imported goods fall within sub-heading 7005 10 90 as non-wired float glass with an absorbent layer, the Tribunal determined that the appellant qualifies for the exemption benefit at Sr. No.934(I) of Notification No.046/2011-CUS, subject to any conditions in the notification. The Tribunal noted that classification changes premised on audit objections were incorrect in law where the chapter note and test reports support the declared classification. The decision also reflects the settled proposition that the burden of proof on classification lies on the department, a principle invoked in the proceedings and considered in the appellate material reviewed by the Tribunal. [Paras 16, 24, 25] Impugned orders are set aside; appeals allowed and the appellant is granted consequential relief, including entitlement to the Notification benefit. Final Conclusion: The Tribunal held that the Clear Float Glass imported by the appellant contains an absorbent (tin) layer within the meaning of Chapter Note 2(c) and is therefore classifiable under CTH 7005 10 90; the impugned orders classifying the goods otherwise are set aside and the appellant is entitled to the benefit of Sr. No.934(I) of Notification No.046/2011-CUS dated 01.06.2011, with consequential relief.

2023 (11) TMI 479 - SC Order Service Tax

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India's Supreme Court Upholds Decision, Dismisses Appeal in Tax Case Due to Lack of Merit, Reinforces Precedent Use.
The SC of India dismissed the Civil Appeal due to lack of merit, affirming a prior order in the case involving the Commissioner of Central Tax and M/s. Shelf Drilling F G Mcclintock Ltd. The decision underscores the SC's reliance on precedent in evaluating the merits of the appeal.

2023 (11) TMI 464 - CESTAT BANGALORE Central Excise

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Tribunal Overturns Duty Payment Demand, Citing Rule 8(3A) as Unsustainable; Appeal Allowed with Relief.
The Tribunal set aside the demand of Rs.74,26,040/- along with interest and penalties against the appellant for default in duty payment under Rule 8 of the Central Excise Rules, 2002. The Tribunal found Rule 8(3A) to be unsustainable, as it had been struck down by various HCs as ultra vires. Consequently, the appeal was allowed with any consequential relief as per law, aligning with established legal precedents and pending appeals before the SC.

2023 (11) TMI 459 - HIMACHAL PRADESH HIGH COURT Indian Laws

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Arbitrator appointment under Section 11(6) upheld where an arbitration clause and live GST dispute were admitted.
An arbitration clause in the contract and a live dispute over a GST claim justified constitution of an arbitral tribunal under Section 11(6) of the Arbitration and Conciliation Act, 1996. The respondents contested the claim on merits but raised no objection to appointment of an arbitrator, and the pleadings disclosed no procedural impediment to arbitration. In these circumstances, the Court held that appointment was warranted, subject to the mandatory written disclosure required under Section 11(8). The matter therefore proceeded to arbitration for adjudication of the contractual dispute.

Appointment of Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Arbitration clause - Existence of dispute - Section 11(8) - disclosure by arbitrator - Arbitrator entitled to fee as per Fourth ScheduleAppointment of Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Arbitration clause - Existence of dispute - Section 11(8) - disclosure by arbitrator - Arbitrator entitled to fee as per Fourth Schedule - Appointment of an arbitrator to adjudicate the claim in respect of GST and related disputes between the parties - HELD THAT: - The agreement between the parties contains an arbitration clause (Clause 25) and a dispute exists between the parties concerning entitlement to GST and related final bill claims, as evidenced by the legal notice dated 9th December, 2021. The respondents in their reply contested the merits of the GST claim but did not object to the appointment of an arbitrator. In the absence of any objection to the appointment, and having regard to the existence of an arbitration agreement and the invocation of the arbitration clause, the court exercised its power under Section 11(6) to appoint an arbitrator. The appointment is made subject to the arbitrator providing the disclosure required by Section 11(8) and taking consent to act; the appointment shall come into force only after receipt of that disclosure and consent. Upon giving consent, the arbitrator shall enter into the reference and decide the dispute in accordance with law. The arbitrator will be entitled to fees as per the Fourth Schedule to the Act. [Paras 5, 6, 7, 8]Application under Section 11(6) is allowed; Mr. L.N. Sharma (Retd. District & Sessions Judge) is appointed as Arbitrator subject to his written disclosure under Section 11(8) and his consent; arbitrator to enter reference and pass award and is entitled to fees as per the Fourth Schedule.Final Conclusion: The petition for appointment of an arbitrator is allowed; Mr. L.N. Sharma is appointed as arbitrator subject to statutory disclosure and consent, and the arbitrator shall adjudicate the parties' dispute and is entitled to fees under the Fourth Schedule. The application is disposed of.

2023 (11) TMI 454 - ALLAHABAD HIGH COURT GST

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GST Registration Restored: Taxpayer Wins Petition After Clearing Dues, Court Orders Immediate Renewal and Communication
HC allowed the writ petition challenging GST registration cancellation. After petitioner paid tax and interest, court directed respondent to renew GST registration within ten days and communicate any additional dues within seven days. The order provides an opportunity for tax compliance and registration restoration.

Cancellation of GST registration for non-payment of tax - rejection of appeal on ground of delay - renewal of GST registration upon payment of tax and interest - direction to communicate outstanding dues and opportunity to payCancellation of GST registration for non-payment of tax - renewal of GST registration upon payment of tax and interest - Direction to renew the petitioner's GST registration in view of payment of tax and interest and subject to payment of any other outstanding amounts communicated to the petitioner. - HELD THAT: - The Assistant Commissioner cancelled the petitioner's GST registration on the ground of non-payment of tax and the Appellate Authority rejected the appeal for delay. The petitioner thereafter filed returns and paid the tax and interest. Having considered the petitioner's payment and the counsel's submissions, the court directed the respondent authority to take steps to renew the GST registration within ten days of communication of the order. The court also required that if any other amount is found due, the authority shall communicate such outstanding dues to the petitioner, who is to pay them within seven days of such communication. The relief granted is procedural and contingent upon satisfaction of any remaining dues communicated to the petitioner.The respondent authority is directed to renew the petitioner's GST registration within ten days and to communicate any other dues which the petitioner shall pay within seven days.Rejection of appeal on ground of delay - direction to communicate outstanding dues and opportunity to pay - Effect of appellate rejection for delay on relief sought and the court's conditional remedy. - HELD THAT: - Although the appellate authority rejected the petitioner's appeal as barred by delay, the court exercised its supervisory jurisdiction under Article 226 to grant a limited, conditional remedy because the petitioner had submitted returns and paid tax and interest after the impugned orders. Rather than adjudicating the delay issue on merits, the court provided a practical direction to restore registration subject to payment of any further dues, thus balancing procedural infirmity at the appellate stage with the statutory purpose of registration continuity where tax liability has been discharged.The court did not set aside the appellate order on delay but directed renewal of registration on the basis of subsequent payment and any further communicated dues.Final Conclusion: Writ petition disposed by directing respondent authority to renew the petitioner's GST registration within ten days of communication of this order, with any other outstanding amounts to be communicated to and paid by the petitioner within seven days.

2023 (11) TMI 448 - MADHYA PRADESH HIGH COURT Income Tax

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Issues involved:
The judgment addresses the challenge to notices and orders issued under the Income Tax Act, 1961 against an entity that had been amalgamated with another entity, leading to the cessation of its existence.

Details of the Judgment:

Issue 1: Jurisdiction of initiating re-assessment proceedings against an amalgamated entity
The petitioner challenged the notices and orders issued against the amalgamated entity, arguing that they were void ab initio and contrary to established legal principles. The petitioner contended that assessment proceedings cannot be initiated against amalgamated entities as they cease to exist post-amalgamation. The petitioner relied on legal precedents, including the judgment in Saraswati Industrial Syndicate Ltd. vs. CIT, to support their argument.

Issue 2: Availability of alternative remedy and maintainability of the petition
The respondents argued that the petitioner had the option to challenge the notices through the appeal process under Section 246 of the Income Tax Act, making the present petition not maintainable. However, the petitioner asserted that no notice can be issued against a non-existent entity, rendering the notice invalid from the beginning. The court overruled the objection regarding the availability of an alternative remedy, emphasizing that when an order is passed without jurisdiction, the question of alternative remedy does not apply.

Issue 3: Legal implications of amalgamation on assessment proceedings
The court observed that the reassessment proceedings were initiated against an entity that had ceased to exist post-amalgamation, as per the approved scheme. Citing the judgment in Principal Commissioner of Income Tax, New Delhi vs. Maruti Suzuki, the court held that jurisdictional notices issued against a non-existent amalgamated entity are fundamentally illegal and without jurisdiction. The court reiterated that participation in proceedings by the amalgamated company does not create an estoppel against the law.

Conclusion:
The court declared the impugned notices, orders, and consequential proceedings against the amalgamated entity as null and void. The court quashed and set aside the notices and orders issued in the respective writ petitions, emphasizing that actions against a non-existent entity are prohibited. Consequently, the petitions were allowed, and the court disposed of the matter, directing a copy of the order to be kept in the record of all connected writ petitions.

Reassessment notices against amalgamated company quashed as entity ceased to exist post-amalgamation under Section 2(31)
The HC quashed reassessment proceedings initiated against an amalgamated company that ceased to exist from 01.04.2017 following an approved amalgamation scheme. The court held that notices issued against a non-existent entity are fundamentally illegal and without jurisdiction, citing SC precedent in Maruti Suzuki case. The court ruled that an amalgamated company cannot be considered a "person" under Section 2(31) of the Income Tax Act for assessment proceedings. Despite PAN activation, authorities cannot issue notices to non-existent entities post-amalgamation. The petition was allowed, and reassessment notices were quashed in favor of the assessee.

Legality of reassessment proceedings against an amalgamated / non existent entity - amalgamating company ceases to exist and cannot be regarded as a person under Section 2(31) of the Income tax Act - reopening under Section 147 read with Section 148/148A - orders passed without jurisdiction - writ jurisdiction under Article 226/227 and no estoppel against law - availability of alternative remedy not a bar where order is without jurisdictionLegality of reassessment proceedings against an amalgamated / non existent entity - amalgamating company ceases to exist and cannot be regarded as a person under Section 2(31) of the Income tax Act - reopening under Section 147 read with Section 148/148A - Impugned notices and orders under Sections 148A/148 read with Section 147 issued in the name of the amalgamated company for AY 2018-19 were without jurisdiction and void. - HELD THAT: - The court found that Jhansi Baran Pathways Pvt. Ltd. had ceased to exist with effect from 01.04.2017 pursuant to an approved scheme of amalgamation and corresponding ROC certification. Relying on settled law, including the principle that an amalgamating company loses its separate existence and cannot be treated as a person for assessment proceedings, the High Court held that issuance of jurisdictional notices and an order under Section 148A(d) in the name of the transferor/amalgamated company was fundamentally at odds with that legal position. Mere activation or use of the PAN of the transferor after the appointed date did not confer jurisdiction to issue notices to a non existent entity. In view of those conclusions, the reassessment notices and consequential orders issued in the name of the amalgamated entity were held to be null and void. [Paras 13, 14, 15, 16, 17]Notices and orders issued against the amalgamated/non existent company for AY 2018-19 are quashed and set aside; all actions in furtherance thereof are prohibited.Availability of alternative remedy not a bar where order is without jurisdiction - orders passed without jurisdiction - writ jurisdiction under Article 226/227 and no estoppel against law - Writ jurisdiction was rightly exercised notwithstanding existence of statutory appellate remedy, because the impugned proceedings were without jurisdiction. - HELD THAT: - The court applied the established principle that when an order is wholly without jurisdiction or contrary to natural justice, the availability of an alternative statutory remedy does not preclude exercise of constitutional writ jurisdiction. Given that the notices and order impugned were issued against a non existent/amalgamated entity and thus devoid of jurisdiction, the objection as to the availability of remedy under Section 246 was overruled and the writ petitions were entertained. [Paras 12]Objection based on existence of alternative statutory remedy rejected; writ petitions maintainable and decided on merits.Final Conclusion: The writ petitions are allowed. The notices dated 15.03.2022 (and consequential notices/orders in the connected petitions), the orders under Section 148A(d) and the Section 148 notices issued in the name of the amalgamated company for AY 2018-19 are quashed and set aside; all further proceedings in reliance thereon are prohibited.

2023 (11) TMI 424 - CESTAT KOLKATA Customs

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Issues Involved:
1. Confiscation of the dumb barge Century Star-3002.
2. Imposition of redemption fine and penalties.
3. Applicability of various sections of the Customs Act, 1962.

Summary of Judgment:

Issue 1: Confiscation of the dumb barge Century Star-3002
The Tribunal examined the facts and found that the dumb barge Century Star-3002 was imported and converted for coastal run in 2006. The barge was towed by the tug Century Star-1 and tied at Sagar Virtual Jetty with proper permissions. The barge was seized in June 2009. The Tribunal noted that the barge was neither prohibited nor dutiable goods, and there was no evidence of unloading at a non-Customs port. The Tribunal concluded that the barge could not be confiscated under Section 111(a), (d), (f), (g), or (h) of the Customs Act, 1962, as there was no violation of import policy or demand for duty.

Issue 2: Imposition of redemption fine and penalties
The Tribunal found that the imposition of penalties under Section 112 of the Customs Act on various parties, including the Master of the tug, M/s. Century Star Shipping Pvt. Ltd., M/s. Atlantic Shipping Pvt. Ltd., M/s. B. Ghose & Co. Pvt. Ltd., and M/s. Babaji Shivram Clearing & Carriers Pvt. Ltd., was not justified. The Tribunal emphasized that there was no evidence of fraudulent intent or knowledge of any contravention of the Customs Act. The Tribunal referred to the case of Essar Oil Ltd. Vs. Commissioner of Customs, Mumbai, and concluded that penalties could not be imposed for mere negligence or inadvertent omissions.

Issue 3: Applicability of various sections of the Customs Act, 1962
The Tribunal analyzed the applicability of Sections 111, 112, and 115 of the Customs Act. It was noted that the dumb barge Century Star-3002 was classified as an "ocean-going vessel" and exempted from duty under Notification No. 165-CUS. The Tribunal referred to the case of Nobel Asset Co. Pvt. Ltd. Vs. Commissioner of Customs (Preventive), Mumbai, and concluded that once a vessel is assessed to duty and cleared for home consumption, it ceases to be imported goods and becomes a conveyance. Therefore, no duty could be demanded on subsequent movements in and out of India. The Tribunal also found that the tug Century Star-1 could not be confiscated under Section 115(2) as there was no evidence of its use in smuggling goods with the knowledge or connivance of the owner or captain.

Conclusion:
The Tribunal set aside the order of confiscation and penalties imposed by the adjudicating authority, allowing the appeals with consequential reliefs as per law. The judgment emphasized the importance of proper jurisdiction and the absence of malicious intent in determining penal liabilities under the Customs Act, 1962.

Confiscation of converted dumb barge and tug vessel set aside due to lack of territorial jurisdiction and evidence
CESTAT Kolkata allowed appeals against confiscation of dumb barge and tug vessel, setting aside penalties imposed by lower authority. The tribunal held that barge was already converted from foreign to coastal run with duty paid on bunkers, making confiscation under section 115(2) of Customs Act unjustified. Authority lacked territorial jurisdiction as conversion was handled by Paradip Customs. No evidence existed of smuggling or fraudulent intent in non-filing of IGM, which was deemed inadvertent omission. Confiscation and penalties were unsustainable, with lower authority's order suffering from inherent legal weaknesses.

Confiscation of conveyances under Section 115 of the Customs Act, 1962 - liability for confiscation under Section 111 of the Customs Act, 1962 - penalty for improper importation under Section 112 of the Customs Act, 1962 - import manifest (IGM) filing obligations and consequences - characterisation of a barge as a vessel/foreign-going vessel and effect on duty liability - conversion of a vessel for coastal run and territorial jurisdiction for collection of dutyCharacterisation of a barge as a vessel/foreign-going vessel and effect on duty liability - conversion of a vessel for coastal run and territorial jurisdiction for collection of duty - Whether the dumb barge Century Star-3002 could be treated as imported goods liable to confiscation or duty on its subsequent movements after conversion for coastal run and payment at time of conversion. - HELD THAT: - The Tribunal held that the barge had been permitted entry, assessed and converted for coastal run pursuant to approvals (including DG Shipping and Deputy Commissioner, Paradip) and payment made at the time of conversion. Once such a vessel has been assessed and cleared, it ceases to be "imported goods" and acquires the character of a vessel; subsequent movements do not render it liable to duty as if newly imported. The decision in Nobel Asset (as explained) supports that vessels, once cleared and operating as foreign going/coastal vessels, are not to be treated as imported goods for later movements. Any question of duty at conversion or of jurisdiction to collect such duty rests with the authority that permitted conversion (Paradip) and cannot be agitated by assuming territorial jurisdiction later. Applying these principles, the barge could not be treated as liable to confiscation on the ground of being improperly imported or dutiable during the subsequent movements.The barge Century Star-3002 is not to be treated as imported goods for the purpose of confiscation or fresh duty liability on its subsequent movements after conversion; confiscation on that basis is unsustainable.Confiscation of conveyances under Section 115 of the Customs Act, 1962 - liability for confiscation under Section 111 of the Customs Act, 1962 - Whether confiscation of the dumb barge Century Star-3002 and the tug Century Star-1 under Sections 111/115 of the Customs Act, 1962 was sustainable. - HELD THAT: - Applying precedent (including Nobel Asset and A.P. Moller), the Tribunal found no material to justify confiscation. For the barge, clauses of Section 111 relied upon were not shown to be attracted (no evidence of unloading at a non customs place, prohibition, or dutiability). For the tug, Section 115(2) requires that the conveyance be used in smuggling or carriage of smuggled goods and, after the 1988 amendment, cannot be confiscated merely for failure to take precautionary steps absent knowledge or connivance; there was no finding of knowledge or connivance by owner/agent/captain. Permissions from port and marine authorities were on record and no nexus to smuggling was established. The non-filing of IGM was found to be an inadvertent omission without fraudulent intent and cannot be stretched to justify confiscation.Confiscation of both the barge and the tug under Sections 111/115 is not sustainable and is set aside.Penalty for improper importation under Section 112 of the Customs Act, 1962 - import manifest (IGM) filing obligations and consequences - Whether penalties under Section 112 could be imposed on the owners, charterers, protecting agents and customs house agents for the non-filing of IGM or related omissions. - HELD THAT: - The Tribunal held that penalties under Section 112 require culpability such as knowledge, connivance or being 'in any way concerned' with improper importation. Precedents (Essar Oil, Shahi Containers, Ramesh Amritlal Shah) require a clear nexus of role and malicious intent or knowledge for imposition of penalty. Here, the IGM was filed based on information provided by the CHA/agents, there was no Bill of Lading produced, permissions from statutory authorities were in place, and omissions were found to be inadvertent or due to communication gaps. Further, Section 2(31) places the primary responsibility for manifest on the master of the vessel; other parties cannot be substituted into the master's role for penal purposes. In absence of evidence of malicious intent or knowledge, Section 112 penalties could not be sustained.Penalties imposed under Section 112 on the appellants are unsustainable and are set aside.Import manifest (IGM) filing obligations and consequences - liability for confiscation under Section 111 of the Customs Act, 1962 - Whether non-filing or incomplete filing of IGM in the circumstances rendered the barge or tug liable to confiscation or the other parties liable to penal consequences. - HELD THAT: - The Tribunal examined the scope of Section 30 and manifest obligations and rejected an expansive construction that non-filing of IGM converts a vessel or barge into prohibited or smuggled goods attracting confiscation. The law does not support treating non-filing as a basis for confiscation absent dutiable cargo or evidence of smuggling. Given the factual matrix - statutory permissions, prior conversion and payment, lack of Bill of Lading, and the nature of omission - the failure to file a manifest was at best inadvertent and does not merit confiscation or penalties against the parties who were not the master or proved to have acted with fraudulent intent.Non filing or incomplete filing of IGM in the given facts does not justify confiscation or imposition of penalties on the appellants.Final Conclusion: The Tribunal allowed the appeals, set aside the confiscation orders and penalties imposed on the barge Century Star-3002, the tug Century Star-1 and the associated appellants, and granted consequential relief in accordance with law.

2023 (11) TMI 423 - CESTAT KOLKATA Customs

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Revenue fails to prove gold smuggling despite foreign origin markings and Swastika symbols
CESTAT Kolkata dismissed revenue appeals in gold seizure cases. The Tribunal held that customs authorities failed to establish reasonable belief that seized gold bars with Swastika symbols were smuggled goods. Despite foreign origin markings, revenue could not provide corroborative evidence proving smuggling from Bangladesh. The gold's 99.5% purity and absence of foreign embossing marks, combined with lack of concrete evidence, meant seizure under Section 110 of Customs Act 1962 was unjustified. Confiscation and penalties were set aside due to insufficient proof of smuggling.

Reasonable belief - town seizure - seizure under Section 110 of the Customs Act, 1962 - presumption under Section 123 of the Customs Act, 1962 - burden of proof where claim of ownership is made - confiscation and penalty for smuggling - admissibility and effect of retracted statementReasonable belief - town seizure - seizure under Section 110 of the Customs Act, 1962 - presumption under Section 123 of the Customs Act, 1962 - Whether the officers had a reasonable belief at the time of seizure that the seized gold bar was smuggled and liable to seizure/confiscation - HELD THAT: - The Tribunal examined the material available at the time of town seizure and applied the established principle that reasonable belief must exist at the time of seizure and cannot rest on later presumption or conjecture. The seized bar bore no foreign embossing and purity testing showed 99.5% purity; there was no contemporaneous corroborative evidence that the gold was of foreign origin or illegally imported. The Tribunal relied on the reasoning in earlier town-seizure authorities that mere absence of accounting does not itself establish smuggling and that reasonable belief requires external indicia or reliable information indicating illicit import. On the facts, the revenue failed to establish such reasonable belief anterior to seizure and therefore the presumption under Section 123 could not be invoked. [Paras 17, 18, 19]No reasonable belief existed at the time of seizure that the gold was smuggled; therefore seizure/confiscation under Section 110/123 cannot be sustained.Confiscation and penalty for smuggling - burden of proof where claim of ownership is made - admissibility and effect of retracted statement - Whether confiscation and penalties imposed on the respondents were sustainable in absence of proof of smuggling and in view of claim of ownership and retracted statements - HELD THAT: - Having held that reasonable belief of smuggling was not established, the Tribunal addressed the consequential measures. The claim of ownership supported by invoices, item register entries and investigation into suppliers was considered against the revenue's case; retracted custodial statement of the person from whose possession the article was seized could not supply the missing foundation of reasonable belief. Because the foundational requirement for confiscation was absent, the order of confiscation and imposition of penalties could not stand. The Tribunal therefore found no infirmity in the appellate authority's exoneration and setting aside of penalties. [Paras 19]Confiscation and penalties are unsustainable and were rightly set aside by the Commissioner (Appeals).Final Conclusion: On the facts of a town seizure where the barred gold bore no foreign marking and the evidence did not establish a reasonable belief of illicit import, the Tribunal upheld the appellate authority's finding that the gold was not liable to confiscation and that penalties could not be imposed; the revenue's appeals are dismissed.

2023 (11) TMI 422 - CESTAT AHMEDABAD Customs

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1. ISSUES PRESENTED AND CONSIDERED

Whether penalties under Section 114(i) and Section 114AA of the Customs Act, 1962 can be imposed on a customs broker and its employee where prohibited goods (Red Sanders) were clandestinely substituted enroute in containers declared as export of other goods (wash basins), but the broker/employee had no direct involvement in stuffing or knowledge of the smuggling prior to interception.

Whether failure of the customs broker or its employee to inform customs authorities immediately upon learning (even if that learning occurred after dispatch and prior to interception) constitutes a culpable omission attracting penal consequences under Section 114(i) and Section 114AA.

Whether a decision in an identical factual matrix by the Tribunal setting aside penalties is binding/controlling for similarly placed appellants such that those penalties must be set aside.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability under Section 114(i) and Section 114AA where broker/employee had no direct involvement in concealment of prohibited goods

Legal framework: Sections 114(i) and 114AA impose penalties on persons responsible for acts or omissions rendering goods liable to confiscation or facilitating illegal export; statutory scheme contemplates mens rea/knowledge or culpable omission where appropriate.

Precedent Treatment: The Commissioner (Appeals) accepted absence of direct involvement yet maintained reduced penalties on ground of failure to inform authorities; the Tribunal in a prior, factually identical matter set aside penalties where no ulterior motive or knowledge was found.

Interpretation and reasoning: The Court examined the documentary record and statements showing that export shipping bills and KYC documents were provided by the exporter and that the customs broker/employee performed the role of providing empty containers and processing export documentation. The adjudicating finding of no direct involvement or malafide conduct was expressly accepted by the Commissioner (Appeals). Given that the broker/employee did not participate in stuffing or concealment and had received legitimate export documents (IEC, PAN, GST, factory stuffing permission), the Court reasoned that penal provisions premised on culpable conduct could not properly be sustained against them.

Ratio vs. Obiter: Ratio - where there is no evidence of direct involvement, knowledge, or malafide conduct in substitution/illegal stuffing of containers, imposition of penalties under Section 114(i) and Section 114AA is not sustainable. Obiter - comments regarding the sufficiency of KYC and documentary diligence by the broker as indicia of non-involvement.

Conclusions: Penalties under Section 114(i) and Section 114AA cannot be sustained against a customs broker and its employee who had no direct involvement or established knowledge of the concealment; such penalties were set aside.

Issue 2: Liability for delay/non-immediate communication to customs upon learning of concealment

Legal framework: Statutory and penal regime contemplates duty to inform authorities if a person is aware of prohibited goods being exported; culpable omission may attract penalty depending on timing, knowledge, and surrounding circumstances.

Precedent Treatment: The Commissioner (Appeals) reduced penalties on finding no malafide but retained reduced penalties for failure to inform; Tribunal precedent in identical facts held that where interception by customs had already occurred or the person became aware only after containers were under check, there was no obligation rendering the person liable to penalty.

Interpretation and reasoning: The Court considered the temporal facts: the appellant learned of the stuffing in the evening while away in Mumbai and informed an associate, and formal notification to customs occurred the next day. The Commissioner (Appeals) did not find mala fide intent in the delayed communication. The Tribunal found that when customs had already intercepted/put containers on check packages or where the person was unaware of the offence at the time of dispatch, mere delay in informing did not constitute a culpable omission justifying penalty.

Ratio vs. Obiter: Ratio - where knowledge is acquired after dispatch and customs has already intercepted or taken steps, mere non-immediate reporting (where no malafide is shown) does not sustain penalties under the cited provisions. Obiter - normative observations on when immediate communication would be expected under different factual permutations.

Conclusions: Absent evidence of malafide or effective opportunity to prevent export, failure to immediately inform customs (where the person learned post-dispatch and customs had intervened) does not by itself attract penalties under Section 114(i) and Section 114AA.

Issue 3: Effect of prior Tribunal decision in identical factual matrix on present appeals

Legal framework: Principle of consistency and applicability of Tribunal's own earlier decisions to factually identical cases; persuasive/controlling weight of earlier orders on similarly placed appellants.

Precedent Treatment: The Tribunal relied on a prior order in which penalties were set aside for an identically placed person, noting that the earlier order held absence of knowledge/malafide and that imposition of penalty despite that finding was unsustainable.

Interpretation and reasoning: The Court examined factual parity - same allegation, identical role (provision of empty container and processing of export documentation), and identical finding of no direct involvement. Given this equivalence, the Tribunal treated the prior order as determinative and applied the same outcome, reasoning that penal consequences should not differ among identically situated persons.

Ratio vs. Obiter: Ratio - where parties are identically placed and prior Tribunal adjudication on identical facts has set aside penalties for absence of knowledge/malafide, similar penalties in subsequent appeals are not sustainable. Obiter - remarks on judicial economy and fairness in treating like cases alike.

Conclusions: The prior Tribunal decision setting aside penalties in identical circumstances was applied to the present appellants; penalties were set aside accordingly.

Overall Disposition

The Tribunal modified the impugned order by setting aside penalties under Section 114(i) and Section 114AA against the customs broker and its G-Card holding employee, holding that (i) there was no direct involvement or malafide, (ii) the limited delay in informing customs did not, on the facts, constitute a culpable omission attracting penalty, and (iii) a prior Tribunal decision in identical facts supported setting aside the penalties.

Penalties under sections 114(i) and 114(AA) set aside for delayed reporting of red sanders smuggling without direct involvement
The CESTAT Ahmedabad set aside penalties imposed under sections 114(i) and 114(AA) of the Customs Act for alleged smuggling of red sanders. The appellant was penalized solely for not immediately informing customs authorities about red sanders being stuffed in their container, reporting it the next day instead. The Commissioner (Appeals) had already reduced the penalty, finding no direct involvement or malafide intent by the appellant. Following precedent in a similar case with identical facts, the Tribunal held that without direct involvement in illegal export, no penalty was sustainable and allowed the appeal.

Liability of Customs Broker and G-Card holder for smuggling - Mens rea and knowledge requirement for imposition of penalty - Penal liability for failure to inform authorities - Penalties under Section 114(i) and Section 114AA of the Customs Act - Consistency in treatment of identically placed personsLiability of Customs Broker and G-Card holder for smuggling - Mens rea and knowledge requirement for imposition of penalty - Penal liability for failure to inform authorities - Penalties under Section 114(i) and Section 114AA of the Customs Act - Consistency in treatment of identically placed persons - Sustainability of penalties imposed under Section 114(i) and Section 114AA on the customs broker and its G-Card holder where there was no direct involvement in smuggling and the appellants informed the authorities only after becoming aware. - HELD THAT: - The Tribunal examined the findings of the Commissioner (Appeals) that the appellants had no direct involvement or malafide in the attempt to export prohibited red sander, and that the appellants had stated they became aware of the stuffing in the evening while away and informed customs the next day. The Commissioner (Appeals) had reduced the penalties because there was no evidence of direct involvement, although he maintained reduced penalties on the ground that the appellants failed to promptly inform authorities. The Tribunal noted an earlier order of this Tribunal in respect of an identically placed person where penalties were set aside because that appellant was unaware of the concealment and had no ulterior motive; the Tribunal found the present appellants to be identically placed. Applying the principle of consistent treatment of identically placed persons and holding that penal provisions requiring knowledge or involvement cannot be sustained where the adjudicating findings are that there was no direct involvement or malafide, the Tribunal concluded that the reduced penalties were not maintainable and therefore must be set aside. The determinative reasoning is that absence of knowledge or direct involvement defeats the basis for penal liability under the impugned provisions, and consistency requires the same result be applied to appellants in materially identical circumstances. [Paras 4, 5]Penalties imposed under Section 114(i) and Section 114AA on M/s MSK Shipping & Logistics Pvt Ltd and Shri Rajesh Khimani set aside; appeals allowed.Final Conclusion: Where the adjudicatory findings establish no direct involvement or malafide on the part of a customs broker and its G Card holder, and the appellants acted as found (became aware while away and informed authorities thereafter), penalties under Section 114(i) and Section 114AA are not sustainable; applying consistent treatment with an identically placed person, the Tribunal set aside the penalties and allowed the appeals.

2023 (11) TMI 393 - ITAT PUNE Income Tax

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Penalty Proceedings Not Initiable Against Deceased's Legal Representatives, Tribunal Rules in Favor of Assessee.
The Tribunal held that penalty proceedings under sec. 271(1)(c) of the Income Tax Act, 1961, cannot be initiated against an assessee's legal representatives after the assessee's demise. The Tribunal rejected the Revenue's argument that legal representatives are liable for such penalties under sec. 159 of the Act. Citing precedent, the Tribunal ruled in favor of the assessee, setting aside the penalty amount of Rs. 24,07,354/-. Consequently, the appeal was allowed, and all other arguments were deemed academic. The decision was announced on 03.11.2023.

2023 (11) TMI 362 - HIMACHAL PRADESH HIGH COURT Indian Laws

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Issues: (i) Whether the conviction under Section 138 of the Negotiable Instruments Act could be sustained when the accused denied issuance of the cheque but adduced no evidence and did not enter the witness box. (ii) Whether the sentence required modification in view of deposit of the compensation amount and compounding fee.

Issue (i): Whether the conviction under Section 138 of the Negotiable Instruments Act could be sustained when the accused denied issuance of the cheque but adduced no evidence and did not enter the witness box.

Analysis: The cheque was proved to have been issued, presented and returned unpaid for insufficiency of funds, and statutory notice was also shown to have been served. Once the accused denied the transaction, the statutory presumption operating in favour of the holder of the cheque remained unrebutted because the accused did not step into the witness box and led no defence evidence. A statement under Section 313 of the Code of Criminal Procedure, 1973, by itself, was not treated as evidence. In these circumstances, the challenge to the finding of guilt failed.

Conclusion: The conviction under Section 138 of the Negotiable Instruments Act was upheld and the challenge on merits failed.

Issue (ii): Whether the sentence required modification in view of deposit of the compensation amount and compounding fee.

Analysis: The record showed that the entire compensation amount and the compounding fee had been deposited. The compensation awarded by the trial court had not been separately challenged by the complainant, and the circumstances justified interference only with the substantive custodial sentence. The Court exercised sentencing discretion and considered the limited purpose of punishment in the facts of the case.

Conclusion: The substantive sentence was reduced from 12 months' simple imprisonment to imprisonment till rising of Court.

Final Conclusion: The conviction was maintained, but the custodial sentence was substantially reduced, leaving the revision only partially successful.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, an accused who merely denies issuance of the cheque but does not enter the witness box or lead evidence fails to rebut the statutory presumption, and the conviction can be sustained; where the compensation amount and compounding fee stand deposited, the substantive sentence may be moderated in the exercise of sentencing discretion.

Statutory presumption under cheque dishonour law remains unrebutted where the accused leads no defence evidence, while sentence may be moderated.
In a prosecution under Section 138 of the Negotiable Instruments Act, the statutory presumption in favour of the cheque holder was treated as unrebutted because the accused denied issuance of the cheque but led no defence evidence and did not enter the witness box; a Section 313 CrPC statement alone was not treated as evidence, so the conviction was sustained. Since the compensation amount and compounding fee had been deposited, the Court exercised sentencing discretion and reduced the substantive custodial sentence from 12 months' simple imprisonment to imprisonment till rising of Court.

Offence under Section 138 of the Negotiable Instruments Act - Presumption as per Section 118 of the Negotiable Instruments Act - Statement recorded under Section 313 Cr.P.C. not amounting to evidence - Compounding of offence - Sentence modification in view of deposit of compensation and compounding fee - Finality of unappealed sentencing/compensation orderOffence under Section 138 of the Negotiable Instruments Act - Presumption as per Section 118 of the Negotiable Instruments Act - Statement recorded under Section 313 Cr.P.C. not amounting to evidence - Validity of conviction under Section 138 of the N.I. Act when accused denied issuance of cheque but did not adduce evidence - HELD THAT: - The trial Court found a prima-facie case and, after trial, convicted the accused under Section 138 of the N.I. Act. The accused denied issuing the cheque in his Section 313 Cr.P.C. statement but did not enter the witness box or lead any evidence to substantiate that denial. The High Court treated the Section 313 statement as not amounting to evidence and held that, in the absence of any affirmative evidence to rebut the statutory presumption in favour of the cheque-holder, the trial Court was justified in discarding the accused's standalone denial and in upholding the conviction. [Paras 12, 31]Conviction under Section 138 of the N.I. Act sustained.Compounding of offence - Sentence modification in view of deposit of compensation and compounding fee - Whether sentence should be modified in view of deposit of compensation and compounding fee and pending compounding application - HELD THAT: - The accused deposited the compensation amount and the compounding fee in compliance with Court directions and sought compounding of the offence. Considering the absence of any prescribed sentencing policy and the equities of the case - particularly the deposit of the entire compensation and compounding fee - the High Court exercised its discretion to modify the quantum of substantive sentence. While the conviction was maintained, the substantive sentence of twelve months' imprisonment was reduced to imprisonment only till the rising of the Court. [Paras 33, 36]Sentence reduced from substantive imprisonment of 12 months to imprisonment till rising of Court; conviction upheld.Finality of unappealed sentencing/compensation order - Whether the compensation awarded by the trial Court could be questioned in revision when not appealed against - HELD THAT: - The compensation awarded by the trial Court was not challenged before the Appellate Court or this Court. The High Court noted that an unappealed order on quantum has attained finality and therefore the complainant could not seek to question the quantum at the stage of the present revision. Consequently, a decision cited by the complainant was held not to assist her case on this point. [Paras 34, 35]Order of compensation left undisturbed as it was not assailed on appeal.Final Conclusion: Revision petition dismissed; conviction under Section 138 N.I. Act upheld, but substantive sentence reduced from twelve months to imprisonment till rising of Court in view of deposit of compensation and compounding fee; record to be sent back.

2023 (11) TMI 358 - UTTARAKHAND HIGH COURT GST

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GST Registration Revocation: Petitioner Granted Two Weeks to Submit Representation, Respondent Given Four Weeks to Review
HC directed petitioner to submit representation for GST registration revocation under Section 30 of CGST Act within two weeks. Respondent granted four weeks to review and decide on representation. Court did not express opinion on case merits but facilitated potential resolution through procedural guidance, allowing petitioner opportunity to address outstanding tax obligations.

Revocation of cancellation of GST registration - representation under Section 30 of the Central Goods and Services Tax Act, 2017 - consideration of representation within fixed time - submission of returns and payment of outstanding tax, interest and late fee as condition for consideration - no expression on meritsRepresentation under Section 30 of the Central Goods and Services Tax Act, 2017 - revocation of cancellation of GST registration - consideration of representation within fixed time - submission of returns and payment of outstanding tax, interest and late fee as condition for consideration - Petitioner permitted to file representation for revocation of cancellation of GST registration and Competent Authority directed to consider it within a stipulated time on submission of returns and dues. - HELD THAT: - By consent of the parties and on the petitioner's undertaking to submit all GST returns and to pay outstanding tax, interest and late fee if any, the High Court directed that if the petitioner files a representation under Section 30 of the Central Goods and Services Tax Act, 2017 within two weeks, the Competent Authority shall consider the representation and pass an appropriate order in accordance with law within four weeks thereafter. The Court recorded that the request was unopposed and framed the timeline for filing and disposal to secure expeditious adjudication. The Court expressly refrained from expressing any opinion on the merits of the revocation request. [Paras 5, 6]If the petitioner files the representation under Section 30 within two weeks with all GST returns and payment of outstanding dues, the Competent Authority shall consider and decide the representation in accordance with law within four weeks; no opinion expressed on merits.Final Conclusion: Writ petition disposed by directing the petitioner to file representation for revocation under Section 30 within two weeks with all returns and payment of outstanding dues, and directing the Competent Authority to decide the representation within four weeks; Court did not adjudicate the merits.

2023 (11) TMI 357 - GUJARAT HIGH COURT GST

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Online Gaming Dispute: Ad-Interim Relief Granted, Challenging Show Cause Notices and GST Rules Pending Judicial Review
HC granted ad-interim relief in two special civil applications challenging show cause notices related to online gaming. The court restrained further action on notices and allowed petitioners to respond. Key legal issues include determining whether online gaming constitutes betting/gambling and challenging the validity of GST rules. Matters adjourned to 17.01.2024 for detailed examination of the legal questions raised.

Actionable claims - Betting and gambling - Activities or transactions excluded from supply under Schedule III - Adjudication of show cause notices - Vires of Rule 31A of the Central Goods and Services Tax Rules, 2017Actionable claims - Betting and gambling - Activities or transactions excluded from supply under Schedule III - Adjudication of show cause notices - Whether the petitioners' online gaming platform amounts to betting/gambling or is an "actionable claim" excluded from supply under Schedule III, and whether the show cause notice requires adjudication. - HELD THAT: - The Court recorded that the show cause notice prima facie treats the services rendered by the petitioner as "actionable claims" and observed that the central question - whether the petitioners' online gaming activity tantamounts to betting/gambling - requires extended consideration. The petitioners relied on Schedule III exclusion and on earlier High Court decisions on similar questions. The Court did not decide the question on merits but directed issuance of notice and refrained from permitting further adjudicatory steps in the interim, while permitting the petitioner to file a response to the show cause notice. [Paras 3, 4, 6, 7, 8]Notice issued returnable 17.01.2024; matter to be considered on merits later; respondents restrained from taking further adjudicatory steps on the show cause notice pending the petition, with liberty to the petitioner to file a response.Vires of Rule 31A of the Central Goods and Services Tax Rules, 2017 - Adjudication of show cause notices - Challenge to the show cause notice dated 17.10.2023 and the vires of Rule 31A of the CGST Rules, 2017. - HELD THAT: - The petition raised the vires of Rule 31A in addition to the contention that the activity does not constitute betting/gambling. The Court noted reliance on an order of the Bombay High Court and observed that the challenge to Rule 31A and the related show cause notice require consideration. No final adjudication on the vires was undertaken; the Court issued notice and granted ad-interim protection against further adjudicatory steps, permitting the petitioner to file a response. [Paras 2, 3, 4, 5]Notice issued returnable 17.01.2024; respondents restrained from taking further steps in the adjudication of the show cause notice pending the petition, with liberty to the petitioner to file a response.Final Conclusion: Notices issued returnable 17.01.2024 in both petitions; the core questions (whether the online platform constitutes betting/gambling or an actionable claim excluded under Schedule III, and the vires of Rule 31A) are reserved for full consideration; ad interim relief granted restraining respondents from further adjudicatory steps while permitting the petitioners to file responses.

2023 (11) TMI 348 - ANDHRA PRADESH HIGH COURT Income Tax

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Issues involved:
The issues involved in this case include the legality of the proceedings/order issued by the 1st respondent under the Income Tax Act without providing a reasonable opportunity, violation of principles of natural justice, and the subsequent assessment order passed by the respondent.

Details of the Judgment:

Issue 1: Lack of Opportunity and Violation of Natural Justice
The petitioner, engaged in excavator business, did not file returns for AY 2015-16 due to income below the exemption limit. The respondent reopened the case based on flagged information about property purchase and machinery rent. The petitioner filed ITR and responded to subsequent notices. However, the respondent issued a show cause notice proposing significant additions without considering the petitioner's request for extension due to illness. The petitioner's requests for extension and video conference were ignored, leading to the assessment order allegedly violating natural justice.

Issue 2: Respondent's Counter and Assessment Process
The respondent contended that the petitioner had alternative appeal remedies and failed to file returns initially. The respondent claimed to have followed due procedure in issuing notices and providing opportunities for the petitioner to respond. The respondent argued that ample opportunities were given, but the petitioner failed to provide explanations, thus justifying the assessment order.

Issue 3: Examination of Natural Justice Violation
The court scrutinized whether the assessment order violated natural justice principles. The petitioner presented evidence of requests for adjournment and video conference due to medical reasons, which were not adequately addressed by the respondent. The court found that the respondent's silence and passing of the order without fair opportunity breached natural justice, leading to the order being set aside.

Conclusion
The court allowed the writ petition, setting aside the assessment order and directing the respondents to grant the petitioner sufficient time for explanations and relevant document submission. The court emphasized the importance of natural justice and the need for fair opportunities in assessment proceedings, ordering a new assessment process with proper adherence to the law and rules.

This summary provides a detailed breakdown of the judgment, highlighting the key issues, arguments presented by both parties, and the court's decision regarding the violation of natural justice in the assessment process.

Assessment order under Section 144B set aside for ignoring petitioner's adjournment requests and denying fair hearing opportunity
AP HC set aside assessment order u/s 144B for violating natural justice principles. Petitioner's email requests for adjournment and video conference through official portal were ignored by respondents without any refusal communication. Court found respondents failed to provide reasonable opportunity for petitioner to present case despite valid medical grounds for adjournment. Assessment order passed in conspicuous silence violated fair hearing principles. WP allowed directing respondents to grant sufficient time for detailed explanation, conduct VC hearing, and pass fresh order in accordance with law.

Violation of principles of natural justice - reopening of assessment and procedural safeguards under Section 148/148A read with Section 144B - availability of alternative remedy not a bar where principles of natural justice are breached - evidence of adjournment request communicated via e filing deemed received - direction for fresh hearing including video conferenceViolation of principles of natural justice - evidence of adjournment request communicated via e filing deemed received - direction for fresh hearing including video conference - Impugned assessment order passed without affording fair opportunity and thereby violating principles of natural justice - HELD THAT: - The Court examined the e filing screen shots uploaded by the petitioner which showed adjournment requests on medical grounds and requests for video conference; the respondent did not cogently deny receipt and produced no material to show the requests were not made. The Assessing Officer passed the assessment order without granting the requested extension or communicating a refusal, and without affording the petitioner an opportunity to respond to additional points raised. Given the respondents' conspicuous silence and the record of requests on the department's portal, the Court concluded that the assessment was passed in disregard of fair hearing requirements and set aside the order. The Court directed the respondents to grant sufficient time to submit detailed explanations and documents, to afford hearing via video conference, and to pass a fresh order in accordance with law. [Paras 11, 13]Impugned assessment order dated 21.03.2023 set aside; matter remitted for fresh consideration after giving opportunity to the petitioner including VC and time to file explanations and documents.Availability of alternative remedy not a bar where principles of natural justice are breached - reopening of assessment and procedural safeguards under Section 148/148A read with Section 144B - Maintainability of writ petition despite existence of alternative remedy by way of appeal - HELD THAT: - The Court applied the settled principle that an efficacious alternative remedy does not normally bar constitutional jurisdiction under Article 226 where there has been a violation of natural justice. Relying on this principle, the Court held that the existence of an appellate remedy did not preclude entertaining the writ petition because the impugned order was passed in utter disregard of the rules of fair hearing. The Court therefore proceeded to decide the complaint of denial of opportunity rather than relegating the petitioner to the appellate forum. [Paras 12, 13]Writ petition entertained and allowed notwithstanding availability of alternative appellate remedy; order set aside on natural justice grounds.Final Conclusion: Writ petition allowed. Assessment order dated 21.03.2023 set aside for violation of natural justice; respondents directed to grant adequate time for submission of explanations and documents, to afford hearing by video conference, and to pass a fresh order in accordance with law expeditiously.

2023 (11) TMI 303 - CESTAT AHMEDABAD Central Excise

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Tribunal Rules Out Revenue's Appeal on Duty Rebate for Exports; Upholds Partial Rebate and Dismisses Cross-Objection.
The Tribunal dismissed the revenue's appeal as non-maintainable under Section 35 B of the Central Excise Act, 1944, stating that appeals concerning rebate of duty on exported goods are not permissible before the Tribunal. The Adjudicating Authority's partial rebate sanction was upheld, and the Commissioner's power to remand was not found to be exceeded. The cross-objection filed by the respondent was disposed of, affirming the rebate sanction and concluding that the Tribunal lacked jurisdiction in this matter.

2023 (11) TMI 293 - SC Order Income Tax

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Special leave petition dismissed after the Supreme Court declined to interfere in the income-tax dispute
In this income-tax matter, the Supreme Court was not inclined to interfere with the impugned judgment and order, and the special leave petition was dismissed. Pending applications, if any, were also disposed of. The order records no further substantive determination on the merits.

2023 (11) TMI 292 - SC Order Income Tax

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SC Dismisses Petition After Delay, Upholds HC Judgment, Disposes Pending Applications.
The SC dismissed the special leave petition after condoning the delay in its filing. The SC decided not to interfere with the HC's impugned judgment and order. Any pending applications were also disposed of.

2023 (11) TMI 291 - SC Order Income Tax

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Supreme Court Dismisses Appeal: Notice Under IT Act Section 148 for Reopening Assessment Deemed Improper.
The SC dismissed the SLP, ruling that the notice under Section 148 of the IT Act was improperly issued for reopening the assessment. The delay in filing was condoned, and all pending applications were disposed of, effectively concluding the matter in favor of the respondent taxpayer.

2023 (11) TMI 285 - ITAT RAJKOT Income Tax

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Issues Involved:
1. Disallowance of bogus purchase.
2. Estimation of profit derived from bogus purchase.
3. Reliance on judicial precedents and relevant case laws.

Summary:

1. Disallowance of Bogus Purchase:
The Revenue filed appeals against the orders by the Commissioner of Income Tax (Appeals) concerning the disallowance of bogus purchases for the Assessment Years 2014-15 and 2015-16. The assessee, a Private Limited Company engaged in manufacturing Craft Papers, had its assessment reopened based on information from DGCEI about bogus suppliers. The Assessing Officer (A.O.) added the purchase from M/s. Chauhan Suppliers as bogus and included it as the income of the assessee.

2. Estimation of Profit Derived from Bogus Purchase:
The Commissioner (Appeals) considered various submissions and financial ratios of the assessee, estimating the profit at 7.5% on the bogus purchase, reducing the addition to Rs. 7,90,739/- from Rs. 97,52,444/-. The Commissioner noted discrepancies in purchases but did not doubt the production, sales, yield ratio, or other financial ratios. The Commissioner concluded that the appellant might have purchased raw materials from sources other than the impugned vendor, benefiting from non-payment of VAT and other savings.

3. Reliance on Judicial Precedents and Relevant Case Laws:
The Commissioner relied on the Gujarat High Court judgment in PCIT Vs. Sandeep Kumar Chandak, which dealt with similar issues. The Tribunal noted that the assessee made sales against the purchases, and there was no defect in the books of accounts. The Tribunal held that only the profit element embedded in such purchases should be added to the income. The Revenue's appeal argued that the entire bogus purchase should be disallowed, citing the Gujarat High Court decision in N.K. Industries vs. DCIT. However, the Tribunal found that the case law cited by the Revenue was distinguishable and upheld the Commissioner's decision.

Conclusion:
The Tribunal confirmed the Commissioner's order, emphasizing that only the profit element from the bogus purchases should be added to the income. The grounds raised by the Revenue were dismissed, and both appeals filed by the Revenue were dismissed. The order was pronounced in open court on 03-11-2023.

Profit estimated at 7.5% of bogus purchases instead of treating entire purchase value as taxable addition
ITAT Rajkot upheld CIT(A)'s decision to estimate profit at 7.5% of bogus purchases instead of treating entire purchase value as addition. CIT(A) considered assessee's gross profit rate of 9.52% and net profit of 2.09%, factoring probable VAT savings of 5% in grey market transactions. The estimation methodology followed established precedents from Sandeep Kumar Chandak and Sun Steel cases, later confirmed by Gujarat HC. Revenue failed to provide supporting documents for sustaining AO's complete addition. Appeal decided against revenue.

Bogus purchases - profit element embedded in purchases - estimation of ad hoc addition - grey market and accommodation entries - input tax credit inadmissibility - reassessment under section 143 r.w.s. 147Bogus purchases - profit element embedded in purchases - grey market and accommodation entries - input tax credit inadmissibility - estimation of ad hoc addition - Whether the purchases shown from M/s. Chauhan Supplier being held bogus warranted addition of the entire purchase amount to the assessee's income or only the profit element embedded in such purchases, and whether the ad hoc estimation of profit at 7.5% by the CIT(A) was sustainable. - HELD THAT: - The Tribunal held that although the supplier's VAT registration was cancelled and material suggested the supplier was not in genuine business, the material on record showed that the assessee had actually used raw material (waste paper) and recorded corresponding sales; the Assessing Officer did not reject the assessee's books nor point to defects in stocks. The assessee paid tax and interest to the Commercial Tax Department when input tax credit was disallowed, and the excise/spot verification recorded no adverse remarks on stock. Applying the consistent approach of the Gujarat High Court and Tribunal decisions, the Court accepted that purchases may have been effected from the grey market and accommodation bills procured, but that where material has been received and sales recorded, the correct treatment is to tax only the profit margin embedded in such purchases rather than disallow the entire purchase cost. Considering the assessee's gross and net profit ratios and probable savings from non-payment of VAT, the CIT(A)'s estimate of 7.5% as the ad hoc profit element derived from the impugned purchases was reasonable; in the absence of any documentary material produced by the Revenue to sustain an addition of the entire purchases, the Tribunal confirmed the restricted addition. [Paras 7, 8, 9]CIT(A)'s restriction of addition to the profit element at 7.5% of the purchases from M/s. Chauhan Supplier is confirmed and the Assessing Officer's addition of the entire purchases is deleted.Final Conclusion: Revenue appeals dismissed; the Tribunal confirms the Commissioner (Appeals)'s ad hoc estimation taxing only the profit element embedded in the impugned purchases and declines to uphold addition of the entire purchase amount.

2023 (11) TMI 274 - SC Order Customs

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Low tax effect principle leads to dismissal of civil appeals without examination of the underlying tax dispute.
Civil appeals were dismissed on the basis of the low tax effect principle, with the Court recording counsel's submission that the disputes fell within that threshold. No merits of the underlying tax controversies were adjudicated, and the order reflects disposal solely on the ground of low tax effect. Pending applications were also disposed of.

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