TaxTMI Updates e-Newsletter
Jul 19,2025

Challenge to penalty order - officer concerned refused to accept the explanation afforded - contravention of Section 129 of GST Act, 2017 or not - Unloaded of goods on other place which was not a registered place - HELD THAT:- From perusal of Section 129 of the Act, it is clear that it starts with a non obstante clause meaning thereby that the provisions of Section 129 has to be complied in true letter and spirit and has overriding effect over other provisions.

It is an admitted case that the goods were detained by taxing authorities on 06.03.2020. The goods were coming from Gorakhpur and were to be unloaded at Ansari Road, Muzaffarnagar that is principal place of business of the firm. After the detention of goods and notices having been issued to petitioner, it appears that an application was moved for amending and adding additional place of business of the petitioner firm on the basis of an affidavit to have been signed between the proprietor of the firm and his wife on 29.02.2020 - It is not a case where the firm had already moved an application when the goods were in transit and the order of amendment of registration was passed subsequent to the detention of the goods. It is a case where after the detention of the goods, the application has been moved for adding the additional place of business so as to escape the wrath of the consequence of Section 129 of the Act of 2017 which has a strict rigor and starts with a non obstante clause.

Petition dismissed.

Maintainability of petition - availability of alternative remedy - appealable order or not - Denial of ITC wrongly availed and utilized by the taxpayer - recovery with interest and penalty - Petitioner firm was found to be non-existent - no operations were being undertaken at the registered premises - HELD THAT:- This Court is not inclined to entertain the present writ petition in view of the decision in Mukesh Kumar Garg vs. Union of India & Ors. [2025 (5) TMI 922 - DELHI HIGH COURT] where it was held that 'The Court, in exercise of its writ jurisdiction, cannot adjudicate upon or ascertain the factual aspects pertaining to what was the role played by the Petitioner, whether the penalty imposed is justified or not, whether the same requires to be reduced proportionately in terms of the invoices raised by the Petitioner under his firm or whether penalty is liable to be imposed under Section 122(1) and Section 122(3) of the CGST Act.'

The Petitioner firm may avail of its appellate remedy in accordance with law by filing an appeal before the appellate authority under Section 107 of the Central Goods and Services Act, 2017 by 14th August, 2025. The appeal shall be filed along with the requisite pre-deposit - petition disposed off.

Utilization of ITC for making pre-depsoit - Dismissal of Petitioner’s appeal on the basis of using Input Tax Credit (ITC) to pay the 10% pre-deposit was not permitted and does not satisfy the requirements of Section 107(6) of the Central Goods and Services Tax Act, 2017 - neither was any notice given nor was the Petitioner heard on the issue of alleged non-compliance with the requirement of pre-deposit - violation of principles of natural justice - HELD THAT:- The Appellate Authority made the impugned order without giving any notice to the Petitioner about the proposal to non-suit the Petitioner on the ground of alleged non-compliance with the provisions of Section 107(6) of the CGST Act concerning pre-deposit. Since the jurisdictional High Court in Oasis Realty [2022 (10) TMI 42 - BOMBAY HIGH COURT] had already taken the view that ITC can be utilised for making such a pre-deposit, the least that was expected of the Appellate Authority was to put the Petitioner on notice. Since this was not done, it is satisfied that there was a breach of principles of natural justice, and on this ground, the impugned order deserves to be set aside.

If the Appellate Authority had read the decision of the Patna High Court in its entirety, surely, the Appellate Authority would have realised that its jurisdictional High Court had taken a view contrary to that of the Patna High Court. The Appellate Authority was not at all justified in ignoring the decision of its jurisdictional High Court and following the decision of the Patna High Court in Flipkart Internet Pvt. Ltd. [2023 (12) TMI 419 - PATNA HIGH COURT] - The observations in the Patna High Court’s decision on the issue with which we are concerned have been stayed by the Hon’ble Supreme Court. The fact that such a stay was granted ex-parte does not diminish its binding authority. This Court cannot ignore this stay order, though the Appellate Authority in this Court has chosen to ignore the same.

The impugned order dated 18 March 2025 set aside and the Petitioner’s appeal restored to the file of the Appellate Authority - appeal disposed off.

Maintainability of petition - availability of alternative remedy - petitioner has not participated in the proceedings and has taken time by stating that the Chartered Accountant engaged by the petitioner was not available for appearing before the respondent - rejection of rectification order - HELD THAT:- Considering the fact that the petitioner had not cooperated with the respondent by coming forward for the personal hearing, which has resulted in the impugned order dated 19.03.2025, this Court is of the view that the interest of the petitioner and the respondent can be balanced by taking note of the amount involved and considering the fact that the petitioner has an avenue to file an appeal even as on date against the assessment order dated 22.11.2024, if the provisions of Section 14 of the Limitation Act, 1963 are applied. Considering the same, there shall be a direction to the petitioner to deposit a sum of Rs. 15,00,000/-, which is approximately 5% of the disputed tax, since the petitioner is otherwise required to deposit 10% under Section 107 of the TNGST/CGST Act. This amount shall be deposited by the petitioner, within a period of fifteen (15) days from the date of receipt of a copy of this order, in cash from its Electronic Cash Register.

In case the petitioner fails to comply with the same, the respondent is at liberty to proceed against the petitioner as if the present Writ Petition was dismissed. If the petitioner complies with the above stipulation, the respondent shall endeavour to pass a final order on merits within a period of three (3) months from today. The petitioner shall cooperate with the respondent by furnishing all the records that are required for consideration of the application under Section 161 of the TNGST Act.

Petition disposed off.

Correctness of amount levied as tax due - addition of a numerical figure - arithmetical miscalculation - tax demand is more than the taxable value of the turnover / transactions undertaken by the petitioner - HELD THAT:- It is opined that the error being pointed out by the petitioner, being mere arithmetical error, the provisions of Section 161 can be invoked by the petitioner.

The petition is disposed of by granting liberty to the petitioner to prefer an application under the second proviso to Section 161 of the Act, 2017 and, if such an application is made, the same shall be considered without reference to the limitation imposed under the first proviso and the same shall be considered and disposed of on merits by the A.O. - petition allowed in part.

Final order passed beyond time limitation - Section 73(2) and (10) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The show cause notice was issued on 02.06.2022, whereas the final order was passed on 01.05.2024. Thus, it is passed beyond the period of limitation as per Section 73(2) and (10) of the Central Goods and Services Tax Act, 2017.

In view of the aforesaid, the final order dated 01.05.2024 is set aside and the writ petition is allowed.

Addition u/s 68 - Share premium - Transaction in the nature of Capital Account - violation of the provision of Section 78(2) of the Companies Act, 1956 with respect to the utilization of the share premium account- addition of entire share premium received as unexplained cash credit as there was no justification for charging share premium and there was violation of the provisions of Section 78(2) of the Companies Act, 1956 - delay filling SLP

Whether the money received as premium of share issued on account of a capital account transaction can give rise to income?

As decided by HC [2024 (2) TMI 891 - BOMBAY HIGH COURT] Share premium received by issuance of shares is on capital account and gives rise to no income.We are satisfied that the closing balance and the opening balance of the share premium money only indicates that there is an increase in the share premium account by way of infusion of funds and not depletion. There is nothing to indicate that the assessee has used the share premium money to invest in shares. The Assessing Officers have failed to understand the difference between utilization of funds and creation of share premium account in the books of accounts for the share premium receipt

HELD THAT:- There is a gross delay of 271 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner.

Even otherwise, we find no good reason to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed on the ground of delay as well as merits.

Reopening of assessment u/s 147 - merely because the income u/s 115JB is more than that of the proposed addition qua the income escaping the assessment - delayed filling of SLP

As decided by HC[2024 (10) TMI 95 - GUJRAT HIGH COURT] assessee had indulged in generating non-genuine gain by trading in Kusha Script on BSE during the year under consideration, except such information, no other information relating to the assessee or in connection with the transaction carried out by the assessee was recorded in the reasons by the AO.

As apparent that the even if the addition is made as proposed by the AO in the reasons recorded, being the income escaped from the assessment, as the income which is taxed u/s 115JB is concerned, there would not be any taxable income after proposed addition.

Petition succeeds as no fruitful purpose would be served to continue the re-assessment proceedings.

HELD THAT:- There are no justifiable grounds for condoning the delay of 196 days. The special leave petition is dismissed on the ground of delay.

Disclosure of information respecting assessees u/s 138(1)(b) of the Income Tax Act - Seeking information obtained during search and seizure operations for use in private arbitration proceedings -Inaction on the part of the DCIT in not considering the application that the petitioner had made seeking for certain information pertaining to respondent No.7 firm and that of respondent Nos.8 to 10 - petitioner claims himself to be a sleeping partner holding 20% of shares in respondent No.7 firm known - petitioner contended that the petitioner cannot be considered to be a third party, as admittedly he is a partner, though a sleeping partner of respondent No.7 firm.

HELD THAT:- Petitioner, wants the information to be used as a defence in the arbitration dispute pending between the petitioner and private respondent Nos.7 to 10. Petitioner requires the information as an effective defence before the Arbitrator for his personal gains, which would also show that the information sought for, is not relating to any public cause or public interest at large.

The information sought for can only be given to the person who is bonafidely entitled for the same, unlike the petitioner, who in his affidavit itself has stated that the information is required as an effective defence before the Arbitrator.

This in the opinion of this Bench would not be a justifiable ground for allowing of a writ petition for the relief sought for. In nutshell, the information sought for by the petitioner cannot be permitted to be used for vested interest, more particularly to settle scores with private respondents.

Also Act and the rules framed therein are totally silent in respect of the relief sought for, so far as whether the information can be provided to any person seeking third party information. In the absence of any such clear mandate, there cannot be a Writ of Mandamus that could be issued directing the official respondents to provide for the information sought for or any other information as sought for by the petitioner.

This Bench is of the firm view that such information, more particularly when they are collected in the course of search and seizure proceedings cannot be released to the petitioner herein or one of the sleeping partners of respondent No.7 firm. However, it is made clear that in the event if the Deputy Commissioner of Income Tax or for that matter any other agency uses the information which the petitioner is now seeking, in any manner for prosecuting the petitioner, in the said circumstances the petitioner shall be entitled for such information / documents. In the instant case, such a situation or occasion has not arisen and, therefore, there is no need for any observation or a direction in that regard at this juncture. WP Dismissed.

Income deemed to accrue or arise in India - FTS under Article 13(4)(c) of the India-UK DTAA -receipts under the provisions of the Act or the India - UK DTAA - make available clause - Whether the Tribunal erred in law in re-characterising business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India – UK DTAA? - HELD THAT:- Undisputedly, for the receipts in question to be construed as FTS under Article 13 of the India-UK DTAA, the services must be such that “make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design.”

Whether the services rendered by the Assessee ‘make available’ any technical knowledge, experience, skill or know-how to GIPL and / or its customers? - The expression ‘make available’ entails service recipient acquiring technical knowledge, expertise, skills, know how or the process as involved in rendering the services. It must entitle the service recipient to use the technology, technical skills or experience as involved in rendering of the technical services on its own. The ability of the service recipient to perform the services or use the technical knowledge as involved in rendering of the services on its own in future, is vital and the ‘make available’ condition is sine qua non for FTS under the India-UK DTAA. The consideration paid for development and transfer of technical plan or technical design should also transfer the right to use the technical plans or design, which is provided by service provider, to the recipient.

The meaning of the expression ‘make available’ as used in Clause (b) of Paragraph 4 of Article 12 of the India-US DTAA was also considered in US Technology Resources (Pvt.) Limited [2018 (8) TMI 1264 - KERALA HIGH COURT] The Kerala High Court concurred with the view of the Karnataka High Court in CIT v. De Beers India Minerals (P.) Limited [2012 (5) TMI 191 - KARNATAKA HIGH COURT] and found that the subject payments could not be considered as fees for included services as there was no transfer of technical knowhow.

In the present case, the Assessee is the proprietor of an e-invoicing software and provides the services of generating electronic invoices compliant with local laws through its secure platform. The services entail automatically generating the e-invoices instead of creating and printing the same manually. The Assessee has provided the license for using its e-portal to GIPL in connection with the services rendered to GSK, which is a non-resident company. The invoices generated pertained to GSK’s European operations. The license granted to GIPL is a non-exclusive license for the use of the e-portal/software.

Merely because the training is imparted by the service provider does not necessarily satisfy the ‘make available’ condition. It is important to bear in mind the purpose for which the training is imparted to the employees and the resource so developed. Undisputedly, if the training imparted results in the service recipient absorbing technology that enables the trainees to use the technical knowhow and the skill, which is central to the technical services that are rendered, on their own; the ‘make available’ condition would stand satisfied. This is because such training would result in the transfer of the technical skill, knowhow and the technical knowledge. However, if the training does not entail transfer of the technology or the technical skill or knowhow involved in rendering the services, the same would not qualify the ‘make available’ condition, which as noted above, is essential for the consideration to be construed as FTS under Clause (c) of Paragraph 4 of Article 13of the India-UK DTAA.

In the facts of the present case, the training imparted to GIPL’s employees for using the software or e-platform, does not transmit the technical knowhow or the process for rendering the services of generating electronic invoicing. The said service is performed by the Assessee by the use of its proprietary software and the e-platform operated by it. The training to use the said platform does not transfer the knowledge or transfer the technology, which would enable GIPL to absorb the technology to generate e-invoices and render the subject services on its own. GIPL does not acquire any rights in the Assessee’s proprietary software.

Thus, question whether the payments received by the Assessee for rendering the services constitute FTS within the meaning of Paragraph 4 of Article 13 of the India-UK DTAA, is answered in the negative. Thus, the said receipts are not chargeable to tax under the Act. In this view, it is not necessary to examine whether such receipts constitute FTS within the meaning of Explanation 2 to Section 9(1)(vii) of the Act.

Application for compounding of offences - limitation period for filing an application - effect of pending criminal prosecution

HELD THAT:- The offence is compoundable in nature and pending criminal case cannot taken away the right of compounding the offence by way of fixing time limit for the filing the compounding application by virtue of the guidelines. As far as the said guideline is concerned, this Court has struck down Clause 7(ii) of the guideline stating that the said clause travels beyond the scope of the Act in the case of Jayashree vs. CBDT & Ors [2023 (11) TMI 1110 - MADRAS HIGH COURT] and the hence, the entire issue is covered by the decision of this Court in the Jayashree case (cited supra).

Following the aforesaid order rejection order passed by the 2nd respondent is set aside and the matter is remanded back to the 2nd respondent. The 2nd respondent shall take the compounding application filed by the petitioner on 15.09.2023 on record and decided the same on merits and in accordance with law.

Denial of benefit of Foreign Tax Credit for TDS - assessee who is Non- Resident filed return of income for A.Y.2019-20 and the same was processed u/s.143(1)(a) - HELD THAT:- As total tax of Rs. 3,23,380/- has been deducted and deposited by the Emerson Electric Company (India) Private Limited on the total amount of Rs. 20,43,043/- paid/credited to the account of the assessee.

In the return of income in Schedule EI Assessee has claimed exemption under Article 15(1) of the Act of the India-United Arab Emirates Double Taxation Avoidance Agreement (DTAA) Treaty for the exemption of income at Rs. 13,38,426/-.

All these details failed to be examined by the CPC before processing the return and therefore CIT(A) has rightly restored the matter to the file of ld. Jurisdictional Assessing Officer (JAO) before whom assessee shall furnish all the requisite details of income which is taxable in India as well as the income which is exempt as per DTAA between India and UAE and also consider the tax deducted at source appearing in Form 26AS and then give due credit of TDS. Appeal of the assessee is allowed for statistical purposes

Deduction u/s 80P(2)(a)(i) - AO/CIT(A) has disallowed the entire deduction claimed by the assessee u/s 80P which was bifurcated by the assessee u/s 80P(2)(a), 80P(2)(c) & 80P(2)(d) - HELD THAT:- Deduction claimed by the assessee u/s 80P(2)(a)(i)/ 80P(2)(d) of the Act in respect of profits from provisions of credit facility to the members of the assessee society and the interest earned from deposits from Co-operative banks/scheduled banks are concerned, we find some force in the submission of assessee find that this issue is no more res-integra and has been decided in favour of the assessee by various decision(s) of the Co-ordinate Bench(es) of the Tribunal including the Pune Tribunal wherein it has been consistently held that the assessee society is eligible for deduction u/s 80P(2)(a)(i)/80P(2)(d) of the Act as the same is attributable to the business of the assessee society.

Assessee has claimed maximum of Rs. 50,000/- and on the balance amount of Rs. 24,672, the applicable taxes have already been paid by the assesseeassessee has submitted that the said deduction of Rs. 50,000/- has been claimed in respect of profits from resale of gas cylinders to the employees of Reliance Industries Ltd. at its Nagothane township, who are the members of the assessee society and hall rent, xerox and lamination charges and hence it is eligible for deduction u/s 80P(2)(c)(ii) of the Act.

Ld. CIT(A) completely brushed off the above submissions of the assessee and confirmed the addition made by the Ld. AO. In our considered view, the said claim of the assessee finds due support from the decision of Banganga Nagri Sah. Patsanstha Ltd. [2016 (3) TMI 1434 - ITAT PUNE] wherein the Tribunal under the similar set of facts as that of the assessee in the present case has allowed the deduction claimed u/s 80P(2)(c)(ii) of the Act in respect of incomes earned from certain allied activities viz. locker rent, ambulance rent, commission on collection of MSEB bills and health club carried out by the co-operative society.

Addition treating the same as a kind of donation. It has been brought to our notice by the Ld. AR that the said amount of Rs. 90,000/- pertains to "Sanugraha Anudan" which means "bonus" in Marathi and therefore it is in the nature of expense debited to profit and loss account forming part of the business income of the assessee which is further eligible for deduction u/s 80P(2)(a)(i) of the Act as enhanced eligibility. In this view of the factual finding, in our opinion, CIT(A) has erred in confirming the addition of Rs. 90,000/- to the income of the assessee.

The claim of the assessee also finds support from the decision of the Bangalore Tribunal in the case of Sharavathi Pathina Sahakara Sangha Niyamitha [2022 (8) TMI 292 - ITAT BANGALORE] wherein it has been held that where disallowance for non-deduction of TDS liability would increase business income of assessee-society which was eligible for deduction under section 80P(2)(a)(i), deduction under section 80P(2)(a)(i) to be allowed on profit as enhanced by sum disallowed under section 40(a)(ia) of the Act.

Deduction u/s 80P(2)(e) v/s 14A - rental income earned by the assessee from letting of godowns - AO was of the view that the assessee had claimed a full deduction without offering any proportionate disallowance towards expenditure relatable to such income

AO invoked section 14A and computed a notional disallowance by proportionately allocating total indivisible expenditure across all heads of income, and thereby concluded that the net income attributable to the exempt dividend and interest became negative, effectively nullifying the claim u/s 80P(2)(d).

Whether the rental income earned by the assessee from letting of godowns is eligible for deduction u/s 80P(2)(e), and whether dividend income qualifies for deduction u/s 80P(2)(d) or is hit by section 14A?

HELD THAT:- It is a settled position in law that deduction u/s 80P(2)(e) is available only in respect of income derived from letting of godowns or warehouses for storage, processing, or facilitating the marketing of commodities belonging to others. If the assessee is found to have used its own warehouses for storing goods procured in the course of its business, which were subsequently sold to FCI, KRIBHCO, CWC, or any other agency, such activity shall be construed as part of its trading operations and shall not qualify for exemption u/s 80P(2)(e) of the Act.

AO is, therefore, directed to conduct a factual verification exercise based on the books of accounts and other documentary evidence that the assessee may furnish in support of its claim. The assessee is equally directed to produce cogent material to establish that the godowns let out to FCI, KRIBHCO, and CWC were on a rental basis alone, and that such letting was wholly unconnected with the assessee’s trading or business activity involving procurement and resale of goods to these entities.

It is clarified that only such rental income which arises from passive letting of godowns, without any link to the assessee’s trading operations, shall be eligible for deduction u/s 80P(2)(e). However, in cases where the rental activity is intertwined or incidental to the business of trading in goods, the same shall not be eligible for such deduction. AO shall carry out the aforesaid verification after affording due opportunity of hearing to the assessee and in accordance with law.

Dividend income, it is an admitted position that the assessee has earned dividend and interest income from investments in co-operative institutions which are prima facie eligible for deduction u/s 80P(2)(d). It is further not in dispute that the assessee has made a voluntary disallowance of Rs. 42,56,730/- under section 14A r.w. Rule 8D and restricted the deduction to Rs. 7,11,15,902/-.

Thus, the invocation of the provisions of Section 14A read with Rule 8D of the Income Tax Rules, 1962, by the AO in principle, cannot be faulted.

AO was justified in disallowing expenditure attributable to the earning of exempt income. However, once the provisions of Section 14A r.w. Rule 8D(2) are invoked, it is imperative that the disallowance be computed strictly in accordance with the formula prescribed under the Rule. At the same time, it is equally necessary to acknowledge that the assessee had suo motu disallowed a sum of Rs. 42,56,730/- in its computation of income, towards expenditure relatable to exempt income. This voluntary disallowance ought to have been duly considered and adjusted by the Assessing Officer while computing the final disallowance under Rule 8D.

Deduction u/s 80P(2)(d) of the Income Tax Act, 1961, we observe that the dividend income received by the assessee from other co-operative institutions is, in principle, eligible for deduction under the said provision. The assessee has contended, and it is borne out from the record, that a proportionate disallowance was already offered voluntarily in respect of such exempt income, following the mandate of section 14A.

AO proceeded to make an additional disallowance by invoking Rule 8D, without factoring in the suo motu disallowance already made by the assessee. Upon perusal of the assessment records and the computations furnished, it is evident that the disallowance made by the Assessing Officer has led to a duplication—once by the assessee and again by the AO which, in our considered opinion, is contrary to law. Such double disallowance in respect of the same exempt dividend income is unsustainable and, therefore, cannot be upheld.

We set aside the order of the CIT(A) and restore the matter to the file of the AO with the following directions:

(i) The AO shall verify, based on lease deeds, TDS certificates, rental agreements, and other supporting documents, the portion of income that arises from letting of godowns for third-party storage. Deduction under section 80P(2)(e) shall be allowed only on such income, in accordance with the binding decision of the Hon’ble Punjab & Haryana High Court.

(ii) Income attributable to use of godowns for own trading business shall not qualify under section 80P(2)(e).

(iii) The AO shall verify the amount of dividend received and the expenditure disallowed by the assessee suo motu. If the AO proposes to make any further disallowance under Rule 8D, he must do so after reducing the amount already disallowed by the assessee to avoid duplication.

(iv) The AO shall grant adequate opportunity of being heard to the assessee before finalizing the order.

Revenue is allowed for statistical purposes.

Delay of 1007 days in filing of appeal before the CIT(A) - HELD THAT:- Assessee had indeed sufficient cause for the delay as it was pursuing alternative remedy before the ld CPC as the claim of deduction u/s 80IC of the Act was denied to the assessee without assigning any reason thereon by the ld CPC.

We direct the ld CIT(A) to condone the delay in filing of appeal, admit the appeal of the assessee and adjudicate the grounds raised by the assessee on merits and pass a speaking order thereon. The assessee is also entitled to file additional grounds, if any, in support of its contentions - grounds raised by the assessee are allowed for statistical purposes.

Reopening of assessment - Validity of approval granted by the PCIT u/s 151 for reopening of assessment - HELD THAT:- Upon perusal of the proforma under Section 151 of the Act dated 28.03.2019 particularly the last page of the said proforma wherein the noting made by the PCIT to this effect “Yes I am satisfied on the reasons recorded by the AO that it is a fit case for issue notice under Section 148 of the Act”; admittedly appears to be mechanical. It does not reveal as to which material, information, documents and other aspects has been gone through and examined by the said authority for reach to the satisfaction for granting approval u/s151 of the Act giving license to the AO to reopen the assessment u/s 148.

In that view of the matter in our considered opinion the reopening in the case of the assessee before us in dispute is palpably bad in law and, therefore, liable to be quashed. Assessee appeal allowed.

Reopening of assessment u/s 147 against dead person - statutory requirement imposing an obligation to legal heir to intimate the death of the assessee - HELD THAT:- In the case of Alamelu Veerappan Vs. ITO [2018 (6) TMI 760 - MADRAS HIGH COURT] as held that in the absence of statutory mandate no responsibility could be cast upon the survivor of the assessee to intimate the fact of his/her demise to the tax department. It was held that there is no statutory requirement imposing an obligation to legal heir to intimate the death of the assessee.

In order to undertake the proceeding in respect of a deceased person the legal heir needs to be identified and notices are required to be served upon such legal heirs being deemed assessee, in their names and in the capacity as legal heirs of the deceased and that particular notices are required to be served within the statutory time limit prescribed, in the absence of which the proceeding particularly when the notices for assumption of jurisdiction issued u/s 148 of the Act admittedly being issued in the name of the deceased person the entire proceeding is vitiated and thus, liable to be quashed. The requirement of issuance of notice to correct person and not to a dead person is not merely a procedural requirement but a condition precedent to the impugned notice being valid in law.

Thus, under the present facts and circumstances of the matter the notice u/s 148 of the Act having been issued admittedly in the name of the dead person, the entire proceeding is void-ab-initio and therefore, quashed. Appeals of the assessee are allowed.

Disallowance on account of payment made to the transporters u/s 37(1) -Addition deleted by CIT(A) - HELD THAT:- CIT(A) categorically gave findings that expenses claimed to have been incurred by the assessee were actually incurred by the assessee for the purpose of business. The assessee had proved the genuineness of expenses by furnishing the payment details, copy of invoices, bank statement, PAN of the transporters, name and address of the transporters and conformation of the parties. CIT(A) also noted that the payments were made through regular banking channels. Hence we hold that the disallowances made by the ld AO u/s 37 with regard to payment made to the transporters have been rightly deleted by the ld CIT(A). Decided against revenue.

Addition of interest - assessee had indeed advanced interest free loans and advanced to certain parties - as contended that these advances were made out of interest free funds available with the assessee - AO did not heed to the contentions of the assessee and proceeded to make proportionate disallowance of Rs. 53,86,044/- in the assessment by assuming market rate of interest @12% - HELD THAT:- Sizable amount of interest payments made by the assessee were for term loan taken for purchase plant and machinery, equipment and vehicles which could not have been utilized for the purpose of advancing interest free loans and advances. The remaining loans are business loans which were taken for the purpose of business. Hence, it could be conclusively proved that the interest fee loans and advances were funded out of own funds of the assessee.

It is not in dispute that the assessee has sufficient interest free funds in its kitty to make interest free loans and advances. The Hon'ble Supreme Court in the case of South Indian bank Ltd [2021 (9) TMI 566 - SUPREME COURT] had held that when sufficient interest free funds were available with the assessee, no proportionate disallowance of interest could be made. CIT(A) had applied this case among others and had deleted the disallowance of interest, on which we do not find any infirmity. Decided against revenue.

Validity of assessment u/s 153A - approval u/s 153D was given for 123 cases through a single letter - HELD THAT:- Hon’ble jurisdictional High Court in the case of PCIT vs. Shiv Kumar Nayyar [2024 (6) TMI 29 - DELHI HIGH COURT] has decided the similar legal issue in favour of the assessee and against the Revenue as held Grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it must reflect an appropriate application of mind.

We quash the entire proceedings initiated under section 153C r.w.s. 153A of the Act in the absence of a valid approval granted by the Ld. Joint CIT, Central Range 4, Delhi. Decided in favour of assessee.

Adhoc disallowance made on account of repairs and maintenance expenditure on estimated basis - enhancement made by the ld CIT(A) by further disallowanceon account of repairs and maintenance - HELD THAT:- Admittedly the books of account of the assessee company have not been rejected by the lower authorities. The assessee had only furnished sample invoices before the ld CIT(A).

CIT(A) simply considered the value of such sample invoices submitted by the assessee and proceeded to hold that the assessee had got no documentary evidences to prove with regard to other expenses incurred by the assessee under the head ‘repairs and maintenance’ and ‘miscellaneous expenses’.

We find that assessee had only returned a loss of Rs. 9.43 crores in the return and even after making all the disallowances, assessment was determined at a loss of Rs. 8.52 crores. There could not be any logical reasons for the assessee to unnecessarily incur non business expenses in its books and claim the same as deduction.

Considering the fact of non- verifiable nature of certain expenditure, we hold that disallowance of 10% of overall repairs and maintenance and miscellaneous expenditure would meet the ends of justice. Accordingly, Ground are partly allowed.

Travelling and conveyance expenditure - AO had made an estimated disallowance of 10% of total expenses by stating that the personal element of directors travelling could not be ruled out - HELD THAT:- We find that the manner in which bills were maintained reflecting the meticulous manner of preparation of employee wise details by the assessee, though on sample basis, indicate the conduct of the assessee. CIT(A) merely summed up the value of those sample invoices and proceeded to hold that the assessee has got no other documentary evidences to prove the remaining travelling and conveyance expenses. This in our considered opinion is grossly illegal.

AO himself records in his order that in the immediately preceding year, the assessee had debited travelling and convenience expenditure of Rs. 6,51,180/- which has been increased to Rs. 12,99,869/- during the year without significant increase in revenue from operations as compared to last year. This is the only reasoning of the ld AO. The personal element of directors travelling could not be simply guessed or assumed by the lower authorities without bringing cogent evidence on record.

It is even more pertinent to note that the assessee itself had debited only a sum of Rs. 7,48,290/- on account of traveling and conveyance expenses. It is not known from where the ld AO had taken up the figure of Rs. 12,99,869/-. Even this had not been explained by the lower authorities by facts and figures. However, considering the fact of unverifiable nature of travelling and conveyance to some extent and in order to make out the deficiencies thereon, in our considered opinion, an adhoc disallowance of 10% total actual travelling and conveyance expenses in the sum of Rs. 74,829/- (10% of 7,48,290/-) would meet the ends of justice.

Addition made on account of sundry creditors outstanding for more than 3 years u/s 41(1) - HELD THAT:- These sundry creditors were shown as sundry creditors in the balance sheet of the assessee under the liabilities as on 31.03.2014. Hence, the debts due and payable to these 21 parties were duly acknowledged by the assessee as amount payable to them and consequentially there is no cessation of liability as on 31.03.2014 in order to invoke the provisions of Section 41(1) - lower authorities have grossly erred in applying the provisions of Section 41(1) wherein, there is a prerequisite by bringing on record that whether the assessee had claimed deduction in earlier years in respect of such liabilities and those liabilities had seized to exist. No finding has been given by the lower authorities in this regard. On this account itself, the addition made u/s 41(1) of the act deserves to be deleted.

Disallowance of sum claimed by the appellant company based upon MOU other company - addition on the ground that sharing of such profit was a device adopted to evade proper payment of due tax - HELD THAT:- On the basis of foregoing factual matrix, we find material substance in the submissions on behalf of the assessee that there was no any cogent material before both lower authorities to reach the conclusion that MOU in question was only a device adopted to reduce its tax liability, whereas other sufficient material was available on record to strengthen the plea of the assessee. In totality of facts this ground of appeal deserves to be allowed by deleting the addition in question.

Addition being income tax u/s 40(a)(ii) and Addition of deferred tax liability - HELD THAT:- CIT(A) observed that these additions has been made on account of income tax paid and deferred tax liability and the assessee has himself added back the same in the return filed and the Learned AO was required to correct the computation to this extent as the amounts have not been claimed in the P&L account for the purpose of computing taxable income. Hence, this ground is dismissed as infructuous.

Partial cancellation of Merchandise Exports Incentive Scheme (MEIS) scrip to the extent of excess amount availed by the licensee - cancellation of MEIS scrips by exercising jurisdiction under Section 9(4) of FTDR Act r/2 Rule 10 of the Foreign Trade (Regulation) Rules 1993 - fulfillment of the requirements of the relevant provisions before the retrospective cancellation of the scrips - proper application of mind on the grounds raised by the petitioners while rendering the findings by assigning proper reasons - violation of principles of natural justice.

HELD THAT:- It will be relevant to take note of Section 9(4) of the FTDR Act, which deals with suspension or cancellation of scrip by the Director General or the Officer authorised, subject to such conditions as may be prescribed for good and sufficient reasons to be recorded in writing. The "conditions as may be prescribed" is traceable to Rule 10 of the Foreign Trade [Regulations] Rules 1993. If at all any scrip is sought to be cancelled in exercise of Section 9(4) of the FTDR Act, it can only be done if the case falls within any of the requirements under Rule 10 - There is total lack of reasoning on the part of the Appellate Authority and the findings of the Appellate Authority does not reflect any application of mind. The Appellate Authority does not even render a finding as to which requirement under Rule 10 has been satisfied.

It is an admitted case that the first scrip was issued on 28.02.2016 and the last scrip was issued on 02.06.2021 for exports made upto October 2019. These scrips are valid for a period of 24 months and the same is evident from para 3.13 of the handbook of procedures. Even the last scrip issued during the relevant period had expired on 01.06.2023. However, the action for cancellation of scrips was initiated by the Deputy Director General of Foreign Trade only on 25.08.2023 when the show cause notice was issued. Hence, an attempt was made to retrospectively cancel the scrips.

The alleged contravention against the petitioners does not pertain to the law relating to customs or foreign exchange or the rules and regulations made thereto. It is a clear case of contravention of a foreign trade policy. The question is whether it will come within the scope of Rule 10 (d). This is in view of the fact that this Court has already concluded that Rule 10(a)/(b)/(c) has not been satisfied in this case. This Court has also extracted the findings of the Appellate Authority, which is bereft of reasons and clearly reflects non-application of mind.

Since the Appellate Authority has not applied its mind and stated the reasons as to how the order is sought to be justified in line with Section 9(4) of the FTDR Act r/w Rule 10 of the Foreign Trade (Regulation) Rules, 1993, this Court does not want to substitute its mind and assign reasons in the place of the Appellate Authority. Hence, this Court is inclined to remand the matter back to the file of the 1st respondent, to enable the authority to apply its mind, based on the findings/observations.

The impugned order passed by the Appellate Authority viz., the 1st respondent in all these writ petitions is hereby quashed and the matter is remanded back to the file of the 1st respondent to deal with the appeal on its own merits and in accordance with law - Petition allowed by way of remand.

Bunker fuel - Levy of Customs duty as per Section 87 of the Customs Act, 1962/ demand of differential duty - penalty imposed u/s 114A of the Customs Act, 1962 - consumption of fuel oil (Bunker) and provisions (Consumable Stores) during its costal run from Cochin to Alang - Nature of vessel MV TABA - foreign going vessel or coastal vessel - HELD THAT:- The nature of the voyage whether it was ‘foreign run’ or it was reverted to coastal run, should not depend upon the filing of Bill of Entry as it was allegedly presented on direction of the Customs officers. The appellant claims that they went ahead with the process of Bill of Entry and payment of Customs duty in order to speed up the process of import of vessel which was legally not payable - the goods which are consumed by the vessel in question, MV TABA, was a ‘foreign going vessel’ and it was not on ‘coastal run’ during its voyage between two Indian ports i.e. Cochin to Alang and therefore, the goods consumed by it are excluded from the levy of Customs duty as per Section 87 of the Customs Act, 1962. The learned Commissioner erred in holding that the appellant is liable to pay differential duty alongwith applicable interest since the nature of the vessel is the ‘coastal run’ from Cochin to Alang. It appears that the Commissioner (Appeals) has only relied on the fact that the appellant filed Bill of Entry and paid the Customs duty and the Commissioner failed to take into consideration other relevant facts.

There are sufficient force in the arguments of the learned Counsel for the appellant that the vessel in question MV TABA, was a foreign ‘going vessel’ and goods consumed during its voyage from Cochin to Alang should have been exempted from Customs duty. Therefore, there is no question of demanding differential Customs duty as the entire payment of Customs duty was not legally necessary. Therefore, the demand of differential duty cannot be sustained and should be set-aside.

The law laid down in the judgment in the case of Lotus Danship Pvt. Limited vs. C.C. Jamnaga (Prev.) [2024 (6) TMI 1015 - CESTAT AHMEDABAD], agreed upon,that the vessel in question M.V. Anupama functioned as a daughter vessel to lighten the mother vessels (super-tankers) which had brought cargo from abroad and which, because of their big size, were unable to come alongside of Indian ports. The vessel functioned only to continue and complete the task of the mother vessels that of bringing cargo from abroad and unloading them at Indian Ports. There is no evidence that during this period, the vessel picked up any Indian cargo from one Indian port to unload it at another Indian port.

The demand of differential duty of Customs amounting to Rs. 96,136/- is not tenable. The learned Commissioner erred in holding that appellant is liable to pay differential duty alongwith applicable interest since the nature of voyage is ‘coastal run’ from Cochin to Alang and the learned Commissioner has ignored other facts and just relied on the appellant’s submission of Bill of Entry and payment of Customs duty and wrongly came to the conclusion that it ceased to be in the nature of ‘foreign going vessel’ and can be considered in the nature of ‘coastal run’ - there seems to be no intention of the appellant to evade payment of Customs duty. Therefore, penalty imposed on the appellant under Section 114A of the Customs Act, 1962 is not sustainable and is liable to be set-aside.

The demand of differential Customs duty amounting to Rs. 96,136/- alongwith interest is set-aside. Penalty of Rs. 96,136/-imposed under Section 114A of the Customs Act, 1962 is also set-aside - appeal allowed.

Smuggling - goods of Nepalese origin - corroborative evidence to substantiate the allegation that the said goods were smuggled into the country or not - notified goods under Section 123 of the Customs Act, 1962 - goods were accompanied with G.S.T. Invoice and e-way bills, which have not been found to be forged during the investigation - HELD THAT:- In the present case, the goods viz. Zinc Ash have been seized from the Truck bearing Registration No. UP-78DN / 3179, within the territory of India. The primary allegation of the Revenue is that the goods were of Nepalese origin, which were smuggled into India without payment of appropriate duties of Customs. However, there are no corroborative evidence brought on record by the Revenue to substantiate the allegation that the said goods were smuggled into the country. It is a fact on record that the officers of the DRI, Muzzafarpur intercepted the said vehicle near C.R.P.F. Camp, Muzaffarpur in Sitamarhi-Muzaffarpur road.

The appellant no. 1 has enclosed copies of the relevant purchase receipts and ledger containing the entries in respect of the goods purchased/accumulated, which evidences that the goods have been purchased locally. It is also observed that the invoices and e-way bills issued by the consignor / appellant no. 1 in this case were in terms of the G.S.T. law. I find that no investigation has been carried out to this effect to counter the claim made by the appellant that the goods were domestically procured, consolidated by them and sold locally, to the consignee in Kanpur. The documents submitted by the appellant were not found to be fake or forged. Thus, the evidences available on record clearly indicate that the impugned goods are of domestic origin and sold by the appellant no. 1 / consignor through valid documents and hence, the said goods are not liable for confiscation.

It is also pertinent to note that the impugned goods are not notified items under Section 123 of the Customs Act, 1962. Thus, the onus is cast on the Revenue to establish the smuggled nature of the goods in question, which has not been done in the instant case. Thus, even on this count, the order of confiscation of the impugned goods is not sustainable - the investigation has not established that the goods were of smuggled in nature and hence the order of confiscation of the goods set aside. Since the goods are not liable for confiscation, the vehicle carrying the goods is also not liable for confiscation - there is no violation warranting imposition of penalties under Section 112(a)/(b) of the Customs Act, 1962 on the appellants. Accordingly, the penalties imposed on the appellants herein are also set aside.

The order of confiscation of the seized 18880 kgs. of Zinc Ash valued at Rs.26,43,200/- under the provisions of Sections 111(b),(d),(e),(f),(g),(h),(i) & (p) of the Customs Act, 1962 is set aside. Accordingly, the redemption fine imposed in lieu of such confiscation also stands set aside - The order of confiscation of the Truck bearing Registration No. UP-78DN / 3179 under the provisions of Section 115(2) of the said Act is also set aside. Accordingly, the redemption fine imposed in lieu of such confiscation also stands set aside - The penalties imposed on Shri Nawal Kishore and Shri Bal Govind ( the appellants herein ) under Section 112(a)/(b) of the Act are set aside.

Appeal disposed off.

Eligibility of benefit of N/N. 12/2012 (Sl. No. 54) dated 17.03.2012 to the goods imported - Travertine Slabs - denial of exemption on the ground that the benefit of the said Notification is available only to ‘marble slabs and tiles’ whereas the imported item is ‘Travertine’ which is different from marble and hence, not eligible for exemption from duty - HELD THAT:- The benefit of concessional rate of duty is made available to polished marble slabs of Tariff heading 68022190 not extended in the earlier Notification No. 4/2006- CE dated 01.03.2006. Thus, w.e.f. 17.03.2012 goods falling under Chapter sub- heading 68022190 made eligible to the benefit of the said Notification. In the present case, the Revenue even though does not dispute the fact that the imported goods are classifiable under CTH 68022190 but not eligible to the benefit of Notification No. 12/2012 since Sl. No. 54 of the said notification describes the goods as “marble slabs and tiles” therefore Honed/Semi Polished Marble - Travertino Titanium – Silver Beige Colour etc. since do not match with the said description of the goods mentioned in the notification, accordingly, inadmissible to the benefit of concessional rate of additional duty of customs i.e. CVD.

There are merit in the contention of the learned Advocate for the appellant when the Notifications No. 04/2006-CE and 12/2012-CE are read in juxtaposition. Earlier, the entry 68022190 was conspicuously absent under Notification No. 04/2006-CE, whereas it has been inserted under Notification No. 12/2012-CE on representation from the trade as mentioned in the TRU letter dated 16.03.2012.

‘Travertines’ are varieties of calcareous stone like marble. Further, reading the Chapter sub heading 6802, it can be noticed that sub-heading 6802.21 is applicable to Marble, Travertine and Alabaster; the classification of Marble Blocks or Tiles be under 6802 2110; other Marble Monumental Stones under 68022120; and all others would fall under sub- heading 68022190. Thus, Travertine since not specifically mentioned either under sub-heading 68022110 or 68022120, hence, it is ought to be classifiable under sub-heading 68022190 and the said entry is specifically included in the Notification No. 12/2012-CE dated 17.03.2012 - there are no merit in the observation of the learned Commissioner, when the Department has not disputed the classification of ‘Travertine’ under CTH 68022190 in denying the benefit of the Notification No. 12/2012-CE to the imported goods viz. ‘Marble Slabs (Honed/Semi Polished) Travertine Ext Beige Colour’.

Also, reading the definitions, it is clear that marble is the genus and ‘Travertine’ is species, a kind of marble.

There are no merit in the impugned orders, the same are set aside - appeal allowed.

Entitlement for the alternate benefit of N/N.1/2011-CE dated 01.03.2011 - loading the excess freight amount - wrongful availment of benefit of 4% SAD under N/N. 21/2012 dated 17.03.2012 since the imported goods were not exempted from CVD - demand of differential duty - levy of penalty - HELD THAT:- The appellant claimed an alternate benefit of notification seeking amendment to the Bill of Entry by invoking Section 149 read with Section 154 of the Customs Act, 1962. In the order of the adjudicating authority, the said request was considered to be not relevant being an afterthought is not sustainable. We do not find merit in the observation of the adjudicating authority which upheld by the Ld. Commissioner(Appeals) the same without responding to the request for amendment to the Bill of Entry under Section 149 of Customs Act, 1962 and considering the admissibility of alternate Notification No.01/2012. In the facts and circumstances, the demands of Rs.19,86,628/- and Rs.17,46,877/- cannot be sustained and the matter needs to be remanded to the adjudicating authority to recalculate the demand only after disposing the applications seeking amendment to the Bill of Entry under Section 149 read with Section 154 of the Customs Act, 1962; thereafter decide the duty liability accordingly.

The appellant has paid an amount of AED 95000 valued to Rs.13,87,000/- towards freight but declared to the Department only Rs.8,34,270/-. The differential amount has been claimed by the appellant as expenses towards the crew members who towed the boats from Dubai to Mangalore. However, they did not submit any evidence in support of their claim before the lower authorities nor before this Tribunal. In absence of any such evidence, there are no infirmity in ascertaining the correct amount of freight as Rs.13,87,000/- which is equivocally admitted by Shri Jagadish Boloor and Shri Taranath Vasu Kotian in their respective statements. Therefore, the learned Commissioner(Appeals) has rightly upheld the demand of Rs.53,128/- with interest and penalty under Section 114A of the Customs Act, 1962 - The demand of Rs.53,128/- and penalty on the company upheld.

There are no infirmity in imposing penalty u/s 114AA of the Customs Act, 1962 on them; however, the quantum of penalty imposed on them seems to be too harsh in the facts of the present case. Consequently, the penalty imposed on each of them is reduced to Rs.5,000/-.

Appeal filed by the appellant company is remanded to the adjudicating authority to decide the issue afresh in view of observation that the appellant is eligible for the benefit of alternate N/N. 01/2011-CE dated 01.03.2011 - Demand of Rs.53,128/- is confirmed with penalty - Appeal disposed off by way of remand.

Rejection of request for conversion of free shipping bills to drawback shipping bills - rejection of request solely on the ground that the appellant did not file drawback shipping bills at the time of export and the reasons cited for non-filing was not beyond their control, hence, the proviso to Rule 12 (1) (a) of the Customs, Central Excise and Service Tax Drawback Rules, 1995 could not be complied - period 25.07.2017 to 04.08.2017 - HELD THAT:- By Circular No. 22/2017-Cus., dated 30-6-2017, the exporters were permitted for smooth transition from the existing GST to the new GST regime from 01.07.2017 to 30.09.2017.

There are no deficiency on the part of the appellant for not claiming the All Industry Rate of Duty Drawback while filing 11 (eleven) shipping bills between 25.07.2017 to 04.08.2017 when the GST regime was introduced for the first time from 01.07.2017. Further, the Circular No.36/2010-Cus dated 23.09.2010 on the issue of conversion of free shipping bills into drawback shipping bills, it is clarified that there is no need for allowing conversion, however, the Commissioner should examine and consider individual request on merits and the said relaxation held to be applicable in respect of drawback claims pertaining to All Industry Rate of Duty Drawback.

In the present case, the appellant claimed the benefit of All Industry Rate of Duty Drawback; hence, covered by the Circular No. 36/2010-Cus dated 23.09.2010, which has been endorsed by the Hon’ble Supreme Court in the case of Cargill India Pvt. Ltd. [2015 (11) TMI 378 - SUPREME COURT].

The impugned order is set aside - appeal allowed.

Levy of penalties u/s 114(i) and 114AA of the Customs Act, 1962 - smuggling of 'Red Sanders' - contents of the DVD seized from the premises of M/s. Spak Enterprise Pvt. Ltd. can be treated as admissible evidence to implicate the appellant in the alleged offence or not - absence of a certificate as required under Section 138C of the Customs Act, 1962 - statements recorded in this case without complying with the provisions contained in Section 138B of the Customs Act, 1962, which is in pari materia with Section 9D of the Central Excise Act, 1944 - statements recorded from co-accused can be relied upon to implicate the appellant in this case or not - CDR analysis can be treated as admissible evidence for penalizing the appellant - allegation of receipt of pecuniary benefits by the appellant is substantiated with evidence or not.

Whether the contents of the DVD seized from the premises of M/s. Spak Enterprise Pvt. Ltd. can be treated as admissible evidence to implicate the appellant in the alleged offence? - HELD THAT:- From a perusal of the records, it is observed that the DRI has seized the DVD on 29.07.2016, which is much before the issuance of the Show Cause Notice dated 26.08.2016. However, it is pertinent to note that the evidence available in the said DVD was not incorporated in the Notice dated 26.08.2016. Subsequently, searches were conducted and statements were recorded from various persons, after recovery of the DVD in question, which is said to contain 45 files in its master folder (DOC). A forensic copy of the said DVD has been prepared by the DRI on 18.01.2017, under Panchanama dated 18.01.2017. As already observed above, it is on record that the original DVD is not available. There is no evidence brought on record to show as to how the said DVD was destroyed or tampered with. Since the original DVD seized from the premises of M/s. Spak Enterprise Pvt. Ltd. is unavailable, which is the main source of information based on which the Supplementary Show Cause Notice has been issued, it is opined that without verifying the original DVD, the information available in the re-constructed DVD cannot be relied upon to implicate the appellant in the alleged offence - the DVD and the documents contained therein cannot be relied upon as admissible evidence in this proceedings - the issue is answered in negative.

In the absence of a certificate as required under Section 138C of the Customs Act, 1962, whether the documents contained in the DVD can be considered as admissible evidence? - HELD THAT:- From the Section 138 C, it is observed that computer print outs can be relied upon as evidence in any proceedings only when the Certificate as mentioned in subsection (4) of Section 135C is obtained. Admittedly, no such Certificate has been obtained in this case. Hence, the contents of the said DVD cannot be relied upon in this proceedings - the provisions of Section 138C have not been complied with in this case and accordingly, the information available in the said DVD cannot be relied upon as evidence against the appellant in the impugned proceedings - the issue is answered in negative,

Whether the statements recorded in this case without complying with the provisions contained in Section 138B of the Customs Act, 1962, which is in pari materia with Section 9D of the Central Excise Act, 1944, can be relied upon against the appellant to implicate the appellant in this case? - HELD THAT:- As per Section 138B, it is mandatory for the adjudicating authority to follow the procedure set out therein for the purpose of relying upon statements in proceedings - It is well settled that statements of witnesses cannot be relied upon for imposition of penalty upon any person unless such witness is produced for cross-examination. Since cross-examination of witnesses has never happened in the present case, as such, the statements thereof cannot be used against the appellant herein for any penal action, as has been held by the Hon'ble High Court, Calcutta in case of Ajay Saraogi v. Union of India [2023 (9) TMI 733 - CALCUTTA HIGH COURT] - the statements relied upon by the ld. adjudicating authority in the impugned order are not admissible evidences in the current proceedings against the appellant, in view of non-compliance of the provisions as mandated under Section 138B of the Customs Act, 1962, which is in pari materia with Section 9D of the Central Excise Act, 1944 - the issue is answered in negative.

Whether statements recorded from co-accused can be relied upon to implicate the appellant in this case? - HELD THAT:- The statements of Shri Sudhir Jha and retracted statements of Shri Jyoti Biswas, both co-accused, and evidence from another case of duty drawback, cannot be the sole basis of imposition of any penalty under the Customs Act, 1962. It is observed that there has been no corroboration of statements of Shri Sudhir Jha, Shri Jyoti Biswas, Shri Rudra Prasad Mondal or Shri Dibakar Dey through independent evidence such as call detail records or financial transactions, etc., which, on the contrary, have been claimed by the appellant to be contradictory to the call detail records - the statements of the co-accused cannot be construed as reliable evidence against the appellant in this case - the issue is answered in negative.

Whether the statement recorded from Shri Sudhir Jha can be relied upon to implicate the appellant in this case or not? - HELD THAT:- It is found that Shri Sudhir Jha claiming the appellant to be a key person in the smuggling syndicate is an afterthought, which was only done by his statements recorded subsequent to recovery of the DVD. Hence, there is no merit in the statement of Shri Sudhir Jha implicating the appellant in the alleged offence - it is observed that all these documents, which had been filed in the name of M/s. Srijita Export and other earlier exports have been fabricated. Most of the statements recorded during the course of investigation indicate Shri Sudhir Jha as the person who has handled all the documents related to the alleged exports involving Red sanders. The name of the appellant was not indicated by any of the persons associated with the export of the current consignment or any of the past consignments. In view of the foregoing, the statement of Shri Sudhir Jha cannot be treated as admissible evidence in the current proceedings against the appellant. Accordingly, the issue is answered in the negative.

Whether the retracted statement of Shri Jyoti Biswas can be relied upon to implicate the appellant in this case? - HELD THAT:- The investigation failed to corroborate the retracted statement(s) of Jyoti Biswas with independent documentary evidences. In this regard the fact is noted that during the course of appellant’s posting as Intelligence Officer at DRI, Kolkata during the period 11.01.2012 to 29.02.2016, he was investigating officer of a case mentioned in Paragraph 9.2.1 of said Supplementary SCN, wherein, said Jyoti Biswas was the prime accused and the appellant was instrumental in issuance of 10 SCNs to said Jyoti Biswas proposing penalty and other penal actions under Customs Act, 1962. It is also observed that the statements of Shri. Jyoti Biswas were recorded in line with the documents derived from a DVD. We have also observed that the said DVD itself has been treated as inadmissible by the ld. adjudicating authority, as could be seen from paragraphs 5.6.1 to 5.6.6 of the impugned order. It is also found that Shri. Jyoti Biswas has later retracted his statements. Thus, there are merit in the submission of the appellant that the statements of Jyoti Biswas relied upon in the instant case are motivated statements given by him with a view to implicate the appellant as a retaliatory action - the Statement recorded from Shri Jyoti Biswas, which has been retracted before a court of law, cannot be relied in the instant proceedings against the appellant - the issue is answered in negative.

Whether the CDR analysis can be treated as admissible evidence for penalizing the appellant in this case? - HELD THAT:- The analysis of CDR in this case does not establish that the phone numbers had been used by the appellant or that the appellant had made calls to the other persons accused in the notice in regard to the alleged offence - the issue is answered in negative.

Whether the allegation of receipt of pecuniary benefits by the appellant is substantiated with evidence? - HELD THAT:- It is evident that the involvement of the appellant in past illegal exports, has been sought to be substantiated only through the said DVD and statements as mentioned above. As already observed by us, the DVD in question and the statements do not qualify as valid evidence in this matter being non-compliant with the mandatory provisions laid down under Sections 138C and 138B of the Customs Act respectively. There is no other corroborative evidence available on record to justify the allegations against the appellant. Hence, the allegations to implicate the appellant in the past offence are unsubstantiated and uncorroborated.

Section 114AA envisages that a person who knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, shall be penalized under the said Section. In the present case, the evidences available on record do not indicate that the elements required for imposition of penalty under Section 114(i) of the Act are available. Hence, the imposition of penalty under Section 114(i) of the Customs Act on the appellant is unwarranted and the same is hereby dropped - Further, Section 114AA mandates penalization of a person for “use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business”. It is found that the above ingredients which are essential for inviting penalty under Section 114AA of the Act are absent in the case - there are no justification for imposition of penalty under Section 114AA of the Customs Act on the appellant and accordingly, set aside the penalties under the said Section.

The penalties imposed on the appellant in the impugned order, under Sections 114(i) and 114AA of the Customs Act, 1962 are set aside - appeal allowed.

Challenge to SCN issued by the first respondent alleging violation of certain provisions of the Companies Act, 2013 - sale of company as a going concern - principles of clean slate - applicability of Section 32A of the IBC fortiori to liquidation - HELD THAT:- It will be relevant for this Court to take note of Regulations 32 and 32A of the Regulations. Under Regulation 32, the liquidator can sell the corporate debtor as a going concern or the business of a corporate debtor as a going concern - In the case in hand, there is no dispute with regard to the fact that the petitioner company was sold by the liquidator as a going concern. Thus, the life of the existing company comes to an end by virtue of liquidation and what was resurrected is only the corporate identity, which enables the new management to buy it as a going concern.

The scope of Regulation 32A of the Regulations was dealt with by a learned Single Judge of this Court in the case of M/s.Agniti Industrial Parks Private Limited Vs. Superintendent of CGST & Central Excise, Thiruvallur-I Range [2024 (1) TMI 829 - MADRAS HIGH COURT]. In that case, the issue pertained to the Revenue attempting to enforce the claims against a successful auction purchaser for the service tax dues from the company, which was under liquidation. Fortunately, it was the very same new management namely M/s.Agniti Industrial Parks Private Limited, which bought the petitioner company, had to defend itself by way of filing a writ petition - This Court must also take note of the scope of Section 32 of the IBC. In so far as any criminal prosecution is concerned, the criminal liability of the corporate debtor gets completely wiped off when the new management is allowed to take over the corporate debtor on a clean slate. The only caveat that was issued by the Hon'ble Apex Court is that persons, who were involved in the day-to-day affairs of the corporate debtor and were indulged and responsible for running of the corporate debtor, will be liable to face the prosecution for the offences committed prior to the commencement of the CIRP and that there is no escape for those persons from criminal liability even though the corporate debtor is given a clean slate and is handed over to the new management.

It is true that even after a reply is given to the show cause notices, if the first respondent is not satisfied with the reply given by the petitioner company, at the best, the first respondent can only file a private complaint under Section 439 of the Act and it is for the concerned Judicial Magistrate Court to apply its mind on the allegations made and the reply given by the petitioner company and decide with respect to taking cognizance of the complaint filed by the first respondent. The question that arises for consideration is as to whether the petitioner company has to undergo even this rigmarole on the given facts of the case - The petitioner company underwent a liquidation process under the Regulations and the liquidator decided to sell the petitioner company as a going concern to the new management. Thus, in the eye of law, the liquidation process operates as a civil death of the petitioner company and it was resurrected only with respect to its corporate identity when it was sold as a going concern to the new management.

If criminal prosecutions are going to be permitted for those events, which took place prior to the approval granted by the NCLT, Chennai and after those consequences, which fell out of such purchase of the going concern, it will go against the very object of providing protection to the new management, which takes over charge after the purchase of the corporate debtor - In the case in hand, there is yet another fact, which has to be taken into consideration by this Court. It is seen that the petitioner company started receiving notices right from August 2022 onwards and at least, on three occasions, similar notices were sent and the petitioner company gave separate detailed reply for the same. In spite of giving such a reply, the impugned show cause notices came to be issued by the first respondent. Those show cause notices are more in the nature of completing the formalities with the only intention to proceed further with the prosecution of the petitioner company and its new management.

Just because there is a possibility of compounding the offences under Section 441 of the Act, that does not mean that the petitioner company has to compound the offences when they strongly feel that they have not committed any offence.

The impugned show cause notices issued by the first respondent in all the writ petitions are liable to be interfered by this Court - the impugned show cause notices dated 11.11.2024 are quashed - Petition allowed.

Maintainability of appeal against the order passed by the President in exercise of jurisdiction under Rule 16(d) of the NCLT Rules, 2016 - HELD THAT:- Section 61 of the IBC as noticed above provides for an appeal against order passed by adjudicating authority under Part II of the IBC. Order passed by President under Rule 16(d) cannot be said to be an order passed under Part II of the IBC, however, in view of the provisions of Section 421 as noticed above the appeal against an order passed by President under 16(d) is fully maintainable under Section 421 of the Companies Act, 2013. The submission of the Respondent No. 1 that appeal against an order of the Tribunal is not maintainable under Section 61 is accepted. However, appeal being maintainable under Section 421 of the Act and the present appeal has also been filed within the time as allowed under Section 421 of the Act, it is proceeded to consider the submission of the parties on merits.

The order dated 09.05.2025 cannot be faulted on the ground that appellant was not given any hearing by the President while passing the order. Insofar as the applicants who had initiated Section 7 proceeding, the appeal is not filed by any applicant who was applicant in Section 7 application.

Thus, no grounds have been made out in this appeal to interfere with the order dated 09.05.2025 and the company appeal deserves to be dismissed - appeal dismissed.

Validity of fresh claim after Completion of all proceedings for Liquidation of Corporate Debtor - Section 59 of IBC - claim barred by time limitation or not -Voluntary liquidation of corporate persons - HELD THAT:- It is needless to mention that limitation for an application which is not prescribed in the limitation act would fall within the purview of Article 137 of the Act which prescribe a period of three years.

There is no dispute that the Liquidator invited the claims in terms of Regulation 14 by making publication in two newspapers on 07.02.2018. The last date for submission of claim was 07.03.2018. The Respondent was supposed to file the claim, if any, on the basis of the invoice dated 18.09.2015 up to 07.03.2018 but no such claim was filed - It is also pertinent to mention that the Respondent earlier had issued twice notice under Section 8 of the code raising the same claim and the last notice was issued in that regard was on 30.05.2017 which was duly replied by the Corporate Person but no proceedings were initiated by the Respondent under Section 9 of the code.

The Appellant / Liquidator completed the proceedings in terms of provisions of Section 59 r/w Regulations and not only remitted the entire balance amount of the liquidation proceedings to the accounts of the stakeholders on 10.04.2019 but also closed the liquidation bank account on 04.05.2019, thereafter, he prepared his final report on 10.05.2019 and informed the RoC and IBBI accordingly on 23.05.2019 and on 28.05.2019 filed the application under Section 59(7) of the Code before the Tribunal for seeking an order of dissolution of the corporate person. The Respondent alleged to have sent an email on 28.05.2019 and mentioned that it is in the process of filing the proof of claim but no claim was filed by the respondent before the liquidator nor proof of claim was filed to the Tribunal rather the application for intervention for the purpose of raising the claim was filed for the first time on 28.08.2019 bearing CA No. 672 of 2019.

Thus, if the limitation is counted from 18.09.2015 when the invoice was raised it would expire on 18.09.2018 and if it is to be counted from 18.07.2016 even then the same expired on 17.07.2019 whereas the application bearing CA No. 672 of 2019 raising the claim by way of invoice was filed on 28.08.2019 precisely after the expiry of period of limitation of three years.

Therefore, the Tribunal has committed an error in entertaining the application for intervention filed by the Respondent despite the fact that it was beyond the period of limitation of three years.

The impugned order is set aside - appeal allowed.

Preferential transactions - Applicability of moratorium u/s 14 of the IBC - Section 19(2) read with Sections 14, 43 & 74(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- It is well settled that after enforcement of moratorium financial creditors cannot enforce any security or realise any amount from the corporate debtor. The amount of Rs.8,92,980/- which was paid to the ICICI Bank in loan account was not paid from the account of the corporate debtor or by the corporate debtor. Amount was paid on behalf of the co-applicant from different account details of which are mentioned in paragraph 4 of the reply of bank.

The pre-condition for applicability of Section 43 is that corporate debtor has at relevant time given preference in such transaction in a transaction to any person. Present is not a case where transaction has been made of depositing of the amount by the corporate debtor rather the amount has been deposited by co-applicant from a different account. This is not a case u/s 43 to which suggestion is being made by the adjudicating authority.

The direction of the reversal issued by the adjudicating authority is neither supported by Section 14 of the IBC nor by Section 43 of the IBC.

There is no prohibition from taking steps to take possession of the assets of the corporate debtor by authorised persons - the direction of the adjudicating authority directing the appellant to reverse the aforesaid amount of Rs.8,92,980/- cannot be sustained.

Appeal allowed.

Money Laundering - challenge to provisional attachment order - discounting of forged cheques, discounting of forged inland bills and availing overdraft facility against non- existent LIC policies caused huge loss to the bank with dishonest intention - reliance placed upon statement of the witnesses recorded under Section 50(2) of PMLA 2002 and two settlement deeds - HELD THAT:- The counsel for the respondents could not clarify how reliance on a settlement deed not executed by the consenting parties could have been made. If there would have been settlement between the two parties, there was no reason that the deed would contain signature only of one party leaving other. It is further found that contradictions in the statement of the witnesses which has been largely reflected by the counsel for the appellants because if the statement of all the witnesses is taken together, not only contradiction is revealed but even witnesses have not been endorsed presence of others at the time of alleged settlement and vice versa. The aforesaid is not end of the issue in reference to the settlement deed, rather based on the settlement deed, an FIR was lodged by the relative of main accused Shankar Lal Khandelwal, namely, Tikkam Khandelwal. Therein, statements of Shankar Lal Khandelwal and Tikkam Khandelwal were recorded by the police during the course of investigation. The police after its investigation filed the closure report finding no substance in the allegation - It is quite surprising that the respondents have relied on the document based on the statement of the witnesses. Even if the settlement is taken into consideration, Shri Khandelwal had taken loan from Navrattan Lal Agarwal and in settlement agreed to return the amount which cannot be said to be a crime.

As against the documentary evidence, the respondents failed to produce any evidence to show that Shankar Lal Khandelwal had passed on cash amount to Navrattan Lal Agarwal thus attachment of the property in reference to purchase of Flat No. 302, III Floor, Guman Heights Complex, Jaipur could not be substantiated by the respondents.

It was also alleged that accused Shankar Lal Khandelwal made payment of Rs. 1.85 Crores to Navrattan Lal Agarwal for purchase of agriculture land in Village Machwa, Kalwar Road, Jaipur from Rajpal Yadav and Shyam Lal Yadav. The allegation was made in ignorance of the value of the property. It was having value of Rs. 39.11 Lakhs and for purchase of which, transaction was entered with Shyam Lal Yadav and Mukesh Agarwal where advance payment of Rs. 7.11 Lakhs was made in April, 2005 - It may be true that accused has to defend his case and produce the evidence but the appellants are not accused in the case but Section 24 of the Act of 2002 would apply to them also. However, allegation for payment of Rs. 1.85 Crores for a land valued at Rs. 39.11 Lakhs becomes erroneous on the face of record. It is further a fact that the main accused Shankar Lal Khandelwal alleged to have passed on Rs. 7.5 Crores and Rs. 7.75 Crores to Navrattan Lal Agarwal in pursuance to the settlement to repay the loan amount taken by Shankar Lal Khandelwal. The cash and jewellery out of it was taken out of the proceeds of crime without realizing that settlement deeds were not found enforceable and, therefore, FIR in reference to it resulted in closure of the case yet against judicial propriety, the respondents have relied on the deeds which cannot be accepted to be just and proper.

There are reason to cause interference in the impugned orders - appeal allowed.

Money Laundering - proceeds of crime - Seizure and retention of cash / documents / digital devices / Indian currencies / gold jewelleries - predicate/scheduled offence - appellant was not served with the reasons to believe despite mandated under Section 8(1) of PMLA, 2002 - offence under Sections 3 and 25 of Arms Act read with Section 5(2) of Prevention of Corruption Act Samvat, 2006 (pari-materia to Section 13(2) of the Prevention of Corruption Act, 1988) - HELD THAT:- The appellant has failed to submit the bank statement to show the withdrawal of the amount from time to time to justify the amount of Rs. 65 lakhs in the hands of the appellant. The ledger and the balance-sheet remain with the appellant and can be prepared any time whereas the bank statement is an independent document and could have fortified the case of the appellant but no bank statement has been enclosed along with the appeal to justify Rs. 65 lakhs in the hands of the appellant at the time of search. It is necessary to add that even the Income Tax Return does not justify or fortify existence of Rs. 65 lakhs with the appellant and therefore appellant has failed to disclose the true source of Rs.65 lakhs in his hands. Therefore, the Adjudicating Authority has rightly allowed retention of the said amount till conclusion of the trial.

It is further found that the appellant has taken a plea about savings in the hands of the appellant’s wife, who was running business independently. The appellant has again failed to place on record the bank statement to disclose the withdrawal of the equivalent amount so as to justify cash in hand of the appellant’s wife. Mere submission of the cash ledger and even Income Tax Return would not justify existence of Rs. 65 lakhs in the hands of the appellant and out of which Rs.6-7 lakhs alleged to be from wife’s savings. It is necessary to add that while appellant is trying to show and disclose the source, his statement under Section 50 of the Act of 2002 has fortified the case of the respondent. The appellant admitted that for the sale of the arms, he was instrument in getting the illegal licence because arms cannot be sold without an Arm License.

The FIR was lodged in the year 2018 while ECIR was recorded on 13.03.2020. The respondent have referred the Notification dated 31.10.2019 in regard to the Article 370 of the Constitution of India for special status of Jammu and Kashmir and submitted that once the notification was issued on 31.10.2019 the provisions of the Prevention of Corruption Act, 1988 and the Indian Penal Code, 1860 became applicable to Jammu and Kashmir and otherwise an offence under Section 25 of the Arms Act is a predicate offence which is in reference to sells, transfers, converts, repairs, test any arms or ammunition in contravention of Section 5 of the Arms Act. It is necessary to add that with the withdrawal of the special status of Jammu and Kashmir, all the laws became applicable which include the Prevention of Corruption Act, 1988 and the Indian Penal Code, 1860 as on the date of registration of ECIR i.e. 13.03.2022. Thus, the case of predicate offence had been disclosed. The appellant was in the trade of arms and to promote it, he involved in getting arms licenses and as per the admission made by the appellant, he was the recipient of the money from the ex-army personnel for illegal arm licenses. It has already observed that the involvement of the appellant was to obtain or support the person in need of illegal arm license was to advance his trade of arms licenses.

This is not a case to cause for interference in the impugned order. The appeal accordingly fails and is dismissed.

Refund claim on ocean freight - non taxability of service of ocean freight covered by judgment of SAL Steel Limited [2019 (9) TMI 1315 - GUJARAT HIGH COURT] on the ground that the matter is pending before the Supreme Court - HELD THAT:- Issue notice to the respondents.

The petitioner herein is expected to comply with the impugned order subject to the decision of this court in the aforesaid Diary No (s). 2723 of 2020.

Seeking appropriate direction to issue Form SVLDRS-4 (discharge certificate) to discharge the liability of the petitioner - non-application of mind while passing impugned order - violation of principles of natural justice - HELD THAT:- In the present case, there is no dispute with regard to the payment of Rs.16,70,022.40/- made by the petitioner. The last date which was specified in the notice for making the above payment under SVLDRS scheme is on or before 30.06.2020. The SVLDRS scheme was subsequently extended upto 29.09.2020 to avail the benefit under the scheme. The petitioner paid the entire arrears amount on 30.06.2020. The 3rd respondent, without taking into consideration the extension of above scheme, passed the impugned order dated 14.07.2022 demanding a sum of Rs.25,05,034/-. Therefore, this Court is of the view that, the impugned order was passed, without any application of mind and hence, it is liable to be set aside.

The impugned order dated 14.07.2022 passed by the 3rd respondent is set aside. Consequently, the respondents are directed to issue Form SVLDRS-4 to discharge the tax liability of the petitioner for the period from 2014-15 to 2017-18 (Up to June 2017) in terms of the provisions of the scheme, within a period of four weeks from the date of receipt of a copy of this order - Petition allowed.

Levy of service tax - Business Auxiliary Service - funds shared for appellant/SPA by the Developer and RDA both of whom agreed for the Special Purpose Vehicle (SPV) to be constituted at a later stage, in terms of the agreement, for carrying out O&M functions but on behalf of the developer, can be called as consideration for rendering a taxable service - Time limitation - Penalty - HELD THAT:- For any activity to be called as taxable service there should be an element of contractual relationship between the service provider and service recipient with the specified activity / service to be rendered.

The present case admittedly has arisen out of agreement dated11.11.2005 between RDA, the owner of a land and GIPL the developer of a project/Mall Complex, on the said land. Since there is no contractual relationship neither express nor even implied between RDA and SPV the very basis of the impugned activity to be called as service under section 66B(49) of the Finance Act is not existing. Further any activity to be a taxable service it should be an activity for a consideration, the quid pro quo amount between promiser and promisee which should emerge from contractual relationship (expressed or implied).

There is no evidence on record to show that the invoice was ever issued by the Appellant to RDA, though the invoices were issued to the commercial users of the Mall and the service tax on the amount received from them already stands discharged by the developer. Nor there is any evidence that the amount in question was ever received by the appellant. On the contrary appellant has placed on the record, the chartered accountant certificate to certify that the annual amount of 66,63,329/- for the financial year from 2011-12 to 2015-16 (Rs. 3316645) though was receivable from RDA but was never paid and finally got written of in financial year 2021-22. The SCN is held to have wrongly recorded that the amount was received by the appellants from RDA. The SCN is liable to be rejected on this ground alone. The adjudicating authority is held to have wrongly ignored the relevant submissions.

Though after introduction of concept of negative list w.e.f. 01.07.2012 in the Finance Act, the concept of classification of service has got redundant but for the purpose of arriving at the assessable value or as to whether any exemption is available to the activity, the true nature of the activity has to be looked into. Since the department has wrongly mentioned the nature of impugned activities of operations and Management which are purely in nature of repairs and maintenance as BSS, the SCN itself is not sustainable. Confirmation of the proposal of such SCN is liable to be set aside.

Time limitation - penalty - HELD THAT:- The show cause notice dated 11.04.2017 covers period 2011-12 to 2015-16. Entire period is beyond the normal period of limitation. Appellants was admittedly disclosing all facts in financials records. The service tax with reference to the commercial uses of specific area for maintenance thereof was regularly been paid. No amount of consideration was received from RDA despite the agreement to contribute and the amount agreed between RDA and developer was duly show as receivables in appellant ‘s record. There seems no act of alleged suppression on part of appellant were repeatedly been followed. The appellant rather was under bonafide belief (as submitted) that since no service is being render to RDA nor any money is received from RDA, there is no service tax liability of appellants vis-à-vis RDA. The department has failed to produce any evidence proving that appellant had intentionally evaded payment of service tax. The above discussion has already held that appellant was not liable to pay service tax on the amount mentioned in para 6 of the agreement dated 11.11.2025 - The extended period under Section 73(1) was not invocable, nor penalty was imposable. The SCN gets barred by time and the order under challenge is liable to be set aside.

The order under challenge is hereby set aside - Appeal allowed.

Rejection of appeal on the ground of time limitation - appellant is liable to pay service tax but is not paying the same - Manpower Recruitment Agency services - service of order - no proof of actual receipt - HELD THAT:- It is found that the adjudicating authority passed the Order-in-Original on 25.01.2022 which was never received by the appellant as no proof of receipt of the order has been brought on record rather the appellant came to know about the Order-in-Original when they got a call from the office of CGST Division, Yamunanagar regarding the passing of the Order-in- Original.

It is also found that on being asked, the appellant got the copy of the Order-in-Original on 07.11.2023 through email and thereafter, filed the appeal on 24.11.2023 before the learned Commissioner (Appeals) which is within the period of limitation as prescribed under law. Further, it is found that the learned (Commissioner) has only presumed on the basis of dispatch of the Order-in-Original but the actual date of receipt has not been proved by the department on record and therefore, in the absence of actual proof of delivery, it cannot be presumed that the Order-in-Original was served on the appellant.

The impugned order is liable to be set aside - matter is remanded back to the Commissioner (Appeals) with a direction to decide the case on merits after affording an opportunity of hearing to the appellant and thereafter, pass a reasoned order in accordance with law within the period of two months from the date of receipt of the certified copy of this order - appeal allowed by way of remand.

Rejection of appeal - appeal dismissed being non-maintainable on the ground of limitation - no proof on record to show that the Order-in-Original was delivered to the appellant - HELD THAT:- It is found that the learned Commissioner (Appeals) after hearing the appeal on merits, sought the report from the jurisdictional division office regarding the delivery of the Order-in-Original and on the basis of the report of the jurisdictional division office stating that the Order-in-Original was sent to the appellant on 04.10.2023 through speed post, the learned Commissioner (Appeals) came to the conclusion that the appeal, which was filed before him on 16.01.2024, is after the delay of more than three months, and therefore, it is time barred.

Further, it is found that there is no proof on record produced by the department to show that the Order-in-Original was delivered to the appellant on 04.10.2024. It is also found that the learned Commissioner (Appeals) has not given any opportunity to the appellant to prove that they have not received the Order-in-Original within time. The learned Commissioner (Appeals) has wrongly assumed the date of dispatch as the date of communication of the order and thus, has wrongly dismissed the appeal of the appellant.

The impugned order is liable to be set aside - the matter is remanded back to the Commissioner (Appeals) with a direction to decide the case on merits after affording an opportunity of hearing to the appellant and thereafter, pass a reasoned order in accordance with law within the period of two months from the date of receipt of the certified copy of this order - appeal allowed by way of remand.

Classification of services - Goods transport agency - transportation service providers where consignment note is not issued - reverse charge mechanism - HELD THAT:- In this case, the appellant, which is a sole proprietorship concern, has engaged in the activity of transportation of various materials to various destinations by road using its own truck. Further, it is also a fact borne on record that no consignment notes were issued by the appellant in relation to the above activity undertaken by them. Therefore, it is clear that the appellant falls outside the purview of “Goods Transport Agency”. Accordingly, the argument advanced by the appellant agreed upon that they are not liable to pay Service Tax on the said activity, being covered under the Negative List in terms of Section 66D of the Finance Act, 1994.

It is observed that service tax is liable to be paid for transportation service, only when such service is rendered by a 'Goods Transport Agency' which issues 'Consignment Note'. In this case, it is a fact on record that the appellant was not issuing 'Consignment Note'. Accordingly, the activity undertaken by them are covered within the ambit of Negative List in terms of Section 66D of the Finance Act, 1994 and hence, the appellant is not liable to pay Service Tax on the services rendered by them to M/s. Coalsale Company Ltd.

The demand of Service Tax confirmed against the appellant is not sustainable. Consequently, the demand of interest and imposition of penalties also do not survive.

The impugned order is set aside - appeal allowed.

Levy of penalty u/r 26 of Central Excise Rules, 2002 on GPA Holder - no general power of attorney available in record at any given time from the stage of carrying out the investigation commencing upto the stage of passing and issuing the order-in-original - locus standi of appellant in terms of the provisions contained under Rule 2 (c) of the Central Excise Rules, 2002 - issuance of SCN - direct involvement of appellant in evasion of Customs and Central Excise duty or not - memorandum of understanding was a valid legal document to attract imposition of penalty or not.

Service of SCN - impugned SCN was issued on 31.10.2006 whereas the Order-in-Original was issued on 27.07.2016 and it was communicated to the appellant on 31.08.2016 - HELD THAT:- After taking into consideration the peculiar facts of this case and the nature of the evidence collected by the department, it does not seem proper to set-aside the impugned Order-in-Original merely on the ground of delay. Further, the appellant and the other Managers of the unit were provided opportunity of personal hearing by the Department several times but they did not respond. At page 19, para-3 of the Order-in-Original, the Commissioner has stated that in the interest of natural justice, the noticee and the co-noticees were asked to file their submission and attend personal hearing in the matter fixed on 08.04.2015 but no one appeared for personal hearing on the given date. Subsequently, the personal hearing was fixed on 07.07.2015, 25.08.2015 and 27.11.2015. The personal hearing letters sent to the noticees were returned undelivered. The personal hearing letter dated 13.01.2016 was forwarded to the JAC, Central Excise Division- Umbergaon to deliver the same to the noticee and co-noticee. The JRO vide letter dated 22.01.2016 informed that since the premises were closed, the personal hearing notices of the noticee and co-noticee have been pasted at the given address under Panchnama dated 21.02.2016. Another personal hearing letter dated 16.02.2016 was issued to the noticee and co-noticees but neither any response received from their side nor any one appeared.

Involvement of appellant in evasion of Customs and Central Excise duty - Commissioner has stated that regarding imposition of personal penalty on Shri Surendra B. Verma, General Power of Attorney holder of the noticee and Shri Shyamlal T Bihani, proprietor of M/s. Systematic Corporation and M/s. Styale Corporation, it is established that both of them were instrumental in execution of the plan to defraud the government - HELD THAT:- It is found that both of them were having knowledge about the provisions of 100%EOU and even then had misused the concession given by the government with intent to evade payment of duty by creating a paper trail for the movement of finished goods. It is also found that Shri Surendra B. Verma, General Power of Attorney holder of the noticee and Shri Shyamlal T Bihani, proprietor of M/s Systematic Corporation and M/s Styale Corporation actively participated to abuse the law of the land and continued to partake in execution of offence, commissioned in collusion with Shri Kirtikumar Chhotelal Modi, Proprietor of the noticee and Shri Sitaram Sharma, over all in charge cum Authorised Signatory of the noticee. It is found that Shri Mahendra B. Verma was also beneficiary in form of remuneration from the noticee as is evident from the Memorandum of Understanding dated 22.11.2001 submitted by Shri Surendra B. Verma vide letter dated 09.10.2006. Accordingly, Shri Kirtikumar Chhotelal Modi, Proprietor, Shri Sitaram Sharma, over all in-charge cum Authorised Signatory, Shri Surendra B. Verma, power of attorney holder for the noticee, Shri Mahendra B. Verma and Shri Shyamlal T. Bihani, Proprietor of M/s Styale Corporation & Systematic Corporation, all are responsible for diversion of finished goods illicitly into the Domestic Tariff Area in violation of Exim Policy, Customs Act, 1962 and Central Excise Act, 1944 without payment of appropriate Central Excise duty and production of forged documents as proof of exports and warehousing and thereby all of them had committed an offence of the nature as described in Rule 26 of Central Excise Rules, 2002 rendering themselves liable for penal action under said Rule 26 of Central Excise Rules, 2002.

Memorandum of Understanding dated 22.11.2001 was a valid legal document to attract penal action on the appellant under Rule 26 of Central Excise Rules, 2002 or not - HELD THAT:- The Memorandum of Understanding was given to the department by the appellant only on 09.10.2006. I do not agree with the above submissions made by the appellant. Merely because the Memorandum of Understanding was not submitted earlier before any Court of law, Bank or Customs and Central Excise authorities, inference cannot be drawn that Memorandum of Understanding is a private document or non-operative or a void document. The Memorandum of Understanding was submitted by the appellant Shri Surendra B Verma vide letter dated 09.10.2006 therefore, the learned Commissioner has rightly taken it into consideration as a valid legal document and the submission of the appellant cannot be accepted that Memorandum of Understanding cannot be relied upon while fixing liability on the appellant.

Responsibility of appellant for evasion of duty on the finished goods not exported but cleared and sold in the home/ domestic market without payment of duty clandestinely by the unit and the provisions contained under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- On the basis of evidence collected by the department, the Commissioner came to the conclusion that in view of the statement dated 20.02.2003 and 03.10.2006 of Shri Surendra B. Verma and Memorandum of Understanding produced by Shri Surendra B. Verma, it appears that Shri Shyamlal T. Bihani alongwith Shri Surendra B. Verma were not only handling the affairs of the appellant firm but M/s. Karnavati Garments and Matresses, Umbergaon was in fact owned by them and Shri Kiritkumar Chhotelal Modi was a dummy proprietor created by them - The Memorandum of Understanding produced by Shri Surendra B. Verma also shows that Shri Mahendra B. Verma was also a beneficiary in form of remuneration from the noticee. All these persons alongwith Shri Kiritkumar Chhotelal Modi being Proprietor, are responsible for diversion of finished goods illicitly into the Domestic Tariff Area in violation of Exim Policy, Customs Act, 1962 and Central Excise Act, 1944 without payment of appropriate Central Excise duty and they produced forged documents as proof of exports and warehousing.

The impugned Order-in-Original has been passed in accordance with relevant provisions of Central Excise Act, 1944 and Central Excise Rules, 2002 and no illegality or irregularity has been committed by the Commissioner in passing the impugned order. The order is reasonable and has been passed after correct appreciation of evidence collected by the Revenue against the appellant - Appeal dismissed.

Denial of refund claim in cash of unutilized cenvat credit accumulated on account of Education Cess, Secondary & Higher Education Cess - period of limitation stipulated in the 11B of the Central Excise Act - Post GST Era - HELD THAT:- At the outset, it is to be placed on record, as also been noted in the written submissions filed on behalf of appellant, that education Cess, Secondary & Higher Education Cesses which were discontinued w.e.f. 2015 had a reference in Finance Bill 2015 by clause No. 114 wherein Hon’ble Finance Minister had clearly mentioned that he had proposed to subsume Education Cess, Secondary & Higher Educating Cess in the Central Excise Act and through notification No. 12 of 2015, those Cesses on inputs or capital goods received after 01-03-2015 would be allowed to be utilized for payment of normal Central Excise duty and not alone Cess component of the said duty. This means that whatever balance was available upto 30.04.2015 got subsumed with Central Excise duty and credits accumulated on its accounts should be treated as Cenvat Credits on Central Excise duty. This being the position prevailing then, appellant had the option to transit those to GST regime through Trans-I Register but as because there was an F.A.Q. issued by the Department that those Cesses can not be transitioned on 31.06.2017, it was lying balance as accumulated credit in the Appellant’s account.

Now the question comes as to if seeking refund of the amount would be governed by the period of limitation stipulated in the 11B of the Central Excise Act. The answer is obvious No, for the reason that section 142(3) clearly states that notwithstanding anything containing in section 11B except 11B(2), refund shall be granted in cash.

Therefore, going by the definition as available in the CGST Act, existing law as defined in Section 2(48) of CGST Act 27, means it is the Excise Duty and other laws, Rules etc. existing before GST came into force which provisions except Section 11B sub-section 2, would be in-applicable to grant refund in cash and therefore, the contention of the Ld. Commissioner (Appeals) that limitation period of one year as available in section 11B sub-section(1) or refund provision not being available in the existing law, as held in Rungta Mines Ltd. [2022 (2) TMI 934 - JHARKHAND HIGH COURT], would have no application in this case wherein refund is sought in cash u/s. 142(3) of the CGST Act.

The impugned order is set aside - appeal allowed.

Challenge to order passed by a Learned Arbitral Tribunal to deposit Rs. 10.40 crores in a fixed deposit in a nationalised bank and requiring expansive disclosures in the course of conduct of the arbitral proceedings - Adoption of reasonable and plausible view or not - HELD THAT:- The Learned Arbitral Tribunal has taken note of the Confirmation Letter as being the linchpin of Endemol’s arguments, and indeed also noted that Innovative has not denied having issued the Confirmation Letter. Whether the Confirmation Letter was something consciously issued or routinely issued in the course of audit confirmations sought by auditors of Endemol, the reasons for which there is no Confirmation Letter after 2022, and the implications of accounts reconciliation exercises that the parties had engaged in, are all matters that would be dealt with by the Learned Arbitral Tribunal in the course of the conduct of the arbitration.

The Impugned Order contains no analysis as to why Prasad should be roped into this mix by directing him to make a deposit and to give disclosure of his personal assets and liabilities despite Innovative being a limited liability OPC. The Impugned Order is vulnerable on two counts – first, it does not provide reasons as to why it would treat Innovative and Prasad as one and the same in terms of liability owed; and second, it is directly contrary to Innovative being a limited liability company, which implies that no final relief of liability is possible against Prasad for no reason other than being the sole shareholder of Innovative. Innovative being a limited liability company totally undermines the ability to direct Prasad to meet obligations by way of interim relief since there cannot arise final relief that fastens Innovative’s liabilities on to Prasad. Therefore, the Impugned Order cannot be sustained in relation to the directions issued against Prasad – of making a deposit and providing disclosures.

There is also no analysis of any contemporaneous evidence that would make Prasad contractually liable without being a party to the Agreement. If such a factual matrix had been in existence and dealt with, one could have considered that despite being ring-fenced from Innovative’s liability as its shareholder, Prasad may have some obligation to meet.

Since Prasad’s liability is limited by the Companies Act, no direction against Prasad to make a deposit or make any disclosure is legally sustainable or tenable – such a direction is in direct conflict with the fundamental policy of Indian law governing OPCs, as enshrined in the Companies Act - Even a final relief against Prasad looks, prima facie, unlikely – it is left open to the course of arbitration to see if there is any other basis at all for any claim to be made against Prasad, but at this stage there is not even a prima facie case for issuing any directions involving personal liability on Prasad. Therefore, directing him to make a deposit or to make disclosures of his personal assets and liabilities (which can only be in aid of a potential future personal liability) is untenable and liable to be set aside.

The Impugned Order, insofar as it directs imposition of any personal obligations on Prasad, is hereby set aside - The Impugned Order, insofar as it imposes obligations on Innovative – whether in the nature of maintaining a fixed deposit in a bank, or disclosing assets, liabilities and ownership interests of Innovative – cannot be faulted with.

The captioned appeals are partially allowed.