Author: Amit Sharma

The Customs, Excise And Service Tax Appellate Tribunal Chennai ruled in favor of Taneja Aerospace and Aviation Limited, granting duty exemption benefit for helicopter production.

Facts 

M/s. Taneja Aerospace and Aviation Limited (the appellant herein) has challenged the Order-in-Original No. 4/2014 (CE) dated 25.03.2014 issued by the Commissioner of Central Excise, Chennai confirming a demand of duty of Rs.80,24,009/- under Section 11A(4) of the Central Excise Act, 1944 along with interest and also for imposing penalty under Section 11AC (a) of the Central Excise Act, 1944.

Submissions 

Advocate S. Durairaj representing the appellant has submitted that the order of the Tribunal Delhi in the case of National Engineering Industries Ltd. was reversed by the Hon’ble Rajasthan High Court wherein the Hon’ble High Court has interpreted the Circular dated 23.06.2006 in favor of the assessee and held that the assessee is eligible for the benefit of the exemption.

Authorised Representative M. Ambe representing the Department submitted that the Board’s Circular referred to by the Rajasthan High Court is not applicable in the instant case as one of the units mentioned in the list of the Notification instead of supplying goods directly to the Ministry of Defence made their supplies to another unit mentioned in the said list. 

Decision 

The division bench of Vasa Seshagiri Rao Member (Technical) And Sulekha Beevi C.S. Member (Judicial) noted that the appellants have cleared Armour Panels and Stretcher Assembly which are parts of helicopter to M/s. Hindustan Aeronautics Ltd., based on the duty exemption certificates provided by M/s. HAL availing exemption benefit. 

The tribunal further noted that, M/s. HAL, Bangalore, one of the specified units is to manufacture Advanced Light Helicopter (ALH) and supply to the Ministry of Defence for their official use. As various components or parts are required to be procured from other manufacturers / vendors, the DGM (Deputy General Manager) in charge of Helicopter Division had issued the above excise duty exemption certificate to the appellant wherein it was certified that the items being procured are required for the production of ALH and so are exempted from payment of excise duty leviable thereon under the impugned Notification.

“It has to be observed that the Notification is silent regarding legality or otherwise and the basis for issuance of this kind of excise duty exemption certificates by M/s. HAL as there is no specific mention about the authority, who has to issue this duty exemption certificate”, the bench said. 

The tribunal found the interpretation purposeful and constructive that the words “if manufactured by the following units’ are to be construed to include the manufacture of goods by the vendors or job worker or contractors and if supplied to the specified unit for utilization for ALH Project.

After appreciating the facts, as well as taking note of the Circular dated 23.06.2006 and following the decisions, the bench held the issue on merits in favour of assessee.  

Case title: M/s. Taneja Aerospace and Aviation Limited v/s Commissioner of GST and Central Excise

Citation: Excise Appeal No. 41553 of 2014

The Customs, Excise & Service Tax Appellate Tribunal New Delhi ruled that mere acceptance of reassessed value and payment thereof will not be sufficient to confirm allegations Of under valuation.

Facts 

The appellant filed Bill of Entry No. 8051193 dated 02.01.2017 through their CHA M/s Prompt Air and Sea Cargo Pvt. Ltd. for clearance of the imported goods called Brass Ceramic Cartridge (L) size ½” Parts for use in Sanitary ware. 

However, the goods covered under the said Bill of Entry were examined and the container was also weighed. The net weight was found as 21120 kg., however, the weight as per packaging list was 20160 kg. whereas the weight declared in the Bill of Entry was 18144 kg. 

Thus 2976 kg weight of the consignment was found in excess than the declared weight. The value declared in said Bill of Entry was also observed to be low. Accordingly, goods were seized under section 110 of the Customs Act, 1962.

Submissions 

L.B. Yadav, Consultant for the Appellant, submitted that there is neither the mis-declaration nor the under valuation in the impugned Bills of Entry. The allegations are vehemently denied with mention that the brass ceramic cartridges have been imported into pieces and the value is per piece based value. The weight has no consequence nor any connection with the value. Otherwise also the container as such including the packaging materials was got weighed. Hence, the same has wrongly been held to be a case of mis-declaration.  

Rakesh Kumar, departmental representative for the Revenue, submitted that on examination there was found excess weight of 2976 kg. in the consignment imported by the appellant. This was a reasonable ground to doubt the declaration as far as the quantity and also as far as the value of consignment is concerned. 

Decision 

The division bench of Rachna Gupta Member (Judicial) and Hemambika R. Priya Member (Technical) observed that the Adjudicating Authority has mentioned the market survey report to be based on contemporaneous import data, but no such data has been mentioned in the order. 

The tribunal said that it is rather coming as an admitted fact that few shops in the wholesale market were visited and the samples which was drawn at the time of examination of impugned imported goods were shown to the different vendors.

“It is only one shop keeper who has similar items, as were imported vide the impugned Bill of Entry. But there is no evidence brought on record by the department that the said shop keeper also had imported the goods. These observations of the Adjudicating Authority are sufficient for us to hold that the Department has not followed the statutory procedure nor has produced the cogent evidence while confirming the allegations of under valuation and while confirming the differential duty”, the bench said.

The bench observed that in the original submissions made on behalf of the appellant, it is mentioned that to avoid any delay and the demurrage charges, in case the consignment is held by the Customs Authority, that the appellant opted to pay the differential amount demanded by them. The voluntary payment hence cannot be called as admission of the appellant towards alleged mis-declaration for value from the above discussion. 

Case title: M/s River Side Impex v/s Commissioner (Preventive)

Citation: Customs Appeal No. 52057 Of 2019

The Income Tax Appellate Tribunal ruled in favor of the assessee and quashed the reassessment proceedings and granted the Tax Exemption.

The appeal by assessee for Assessment Year (AY) 2015-16 arises out of final assessment order passed by Assessing Officer, [AO] u/s.143(3) r.w.s 147 r.w.s 144C(13) of the Act on 27-01-2023 pursuant to the directions of Ld. Dispute Resolution Panel-2, Bengaluru u/s 144C(5) dated 14-11-2022. The appeal is accompanied by stay application wherein the assessee is seeking stay of recovery of outstanding demand by the revenue. 

The division bench of Mahavir Singh, Vice President And Manoj Kumar Aggarwal, Accountant Member noted that the undisputed position that emerges is that the assessee assailed the final assessment order for AYs 2012-13, 2013-14, 2016-17 & 2017- 18 before this Tribunal wherein the appeals have been allowed by the Tribunal on legal grounds as well as on merits. 

Upon perusal of case records and after considering the cited decision of Tribunal, the bench concurred with the submission of AR that the issue on legal grounds as well as on merits is covered in assessee’s favor and there is no change in material facts. The bench, in paras 11 to 16 of the order, has held that the reassessment proceedings as well as consequential assessment framed therein are unsustainable in law and accordingly, liable to be quashed. The issue, on merits, has been dealt with by the bench in paras 17 to 28 of the order. It has finally been held that the assessee would be entitled for the benefit of Article-8 of the treaty and the impugned charges would not be taxable in India in the hands of the assessee. 

Therefore, facts and circumstances being the same, taking the same view, the Tribunal allowed the legal grounds as well as grounds on merits. 

The tribunal directed the AO to re-compute the income of the assessee and allow credit of taxes in accordance with law. 

Case title: M/s. Bengal Tiger Line Pte.Ltd. v/s DCIT 

Citation: ITA No.316/Chny/2023

In a case involving a senior citizen and the income tax division, the Mumbai bench of the tax tribunal ruled that the fine imposed for failing to disclose the interest received on the elderly citizen’s tax return was invalid.

The ITAT bench, made up of judges Sandeep Singh Karhail and Amarjit Singh, stressed in their ruling that the interest component of the refund cannot be assessed until it is received.

Therefore, failure to disclose information on the I-T return cannot be viewed as an instance of “underreporting” of income. Section 270A of the Internal Revenue Code imposes severe fines on negligent taxpayers in situations where income is both underreported and misreported.

The taxpayer in this case, K Singh, submitted her I-T return for the fiscal year 2016–17, and she reported taxable income of almost Rs 1.9 crore. Her income was estimated to be around Rs 2 crore when her I.T. return was chosen for scrutiny. The interest she received on her income-tax refund, which she had not reported when filing her I-T return, made up the deficit of Rs 9.7 lakh.

The tax department is required to pay 0.5% interest of the refund amount every month or portion of a month under Section 244A of the I-T Act. This interest is subject to taxation under the “income from other sources” heading.

The I-T officer issued a show cause notice for the imposition of a penalty under Section 270A in Singh’s case. Singh retorted that she had voluntarily offered the interest on her I-T refund during the scrutiny assessment, well in advance of receiving the letter. As a result, it cannot be said to be an instance of “underreporting” revenue. Furthermore, she hadn’t received a refund by check or electronic bank transfer at the time she filed her I-T return, nor had she been threatened with one. 

She appealed to the ITAT, which ruled in her favor, after the lower tax authorities rejected her pleas.

The Income Tax Appellate Tribunal directed the reassessment in the deemed dividend Case involving Mayflower Enterprises Pvt Ltd.

Facts 

The appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax, Chennai, and pertains to assessment year 2011-12. 

The assessee filed his return of income for the assessment year 2011-12 on 22.08.2011, admitting a total income of Rs. 95,05,280/-. 

The case was selected for scrutiny and during the course of assessment proceedings, on examination of books of accounts of the assessee and his ledger account with M/s. Mayflower Enterprises Pvt Ltd., it was found that the assessee has a running account with the company. 

The details of the shareholding pattern of M/s. Mayflower Enterprises Pvt Ltd., was also called for and found that the assessee is holding 24% share capital in the company. 

As per ledger account submitted by the assessee on three occasions i.e., 25.05.2010, 08.12.2010 & 05.01.2011, there was a debit balance in the books of accounts of the company. 

The Assessing Officer, further noted that on 31.12.2010, the assessee has received a sum of Rs. 12,50,000/- from the company and this payment is not reflected in the current account of the assessee with the company. 

Submissions 

Counsel for the assessee, submitted that the CIT(A) erred in sustaining additions made by the Assessing Officer towards deemed dividend u/s. 2(22)(e) of the Act, towards debit balance in the current account of the assessee maintained with M/s. Mayflower Enterprises Pvt Ltd., without appreciating fact that the transactions between the appellant and company is in the nature of current account, in the normal course of business of the assessee, but not a loan or deposit as per section 2(22)(e) of the Act. 

AR, AR V Sreenivasan, Addl. CIT, supporting the order of the CIT(A) submitted that, the withdrawal by the shareholder who had substantial interest amounted to loan or advance by the company to shareholder, but fact that the loan or advance was ultimately adjusted at the end of the year will not alter the position and in this regard he relied upon the decision of Hon’ble Supreme Court in the case of P. Sarada vs CIT.

Decision 

The division bench of Mahavir Singh, Vice President and Manjunatha. G, Accountant Member  found that, it is not a solitary transaction of loan or advance to the assessee. In fact, there are a number of transactions between the assessee and the company, where various payments are routed through the current account of the assessee, including remuneration and other expenses reimbursed to the appellant. 

The bench said that the transactions need to be examined in light of the peculiar nature of transactions of the assessee with the company. 

The bench directed the Assessing Officer to verify the claim of the assessee in light of various evidences and also decide the issue in light of its findings given.

In case, the Assessing Officer found that the claim of the assessee is correct, then the Assessing Officer is directed to delete additions made towards deemed dividend u/s. 2(22)(e) of the Act. 

Case title: Venkatachalam Mohan v/s The Joint Commissioner of Income Tax

Citation: ITA No.: 35/Chny/2022

The Allahabad High Court ruled that GST authorities cannot blindly follow directions of TTZ Authorities.

Facts 

The instant Writ Tax is being entertained by the Court in view of the fact that G.S.T. Tribunal is not functional in the State of Uttar Pradesh pursuant to the Gazette notification of the Central Government.

Smt. Vidya Devi is the proprietor of the petitioner firm carrying the business of purchase and sale of coal on retail basis for which the GSTIN was granted. 

Since the petitioner’s turnover was below Rs. 50 lacs, it opted for compounding scheme under Section 9(1) of U.P.G.S.T Act as provided under Section 10 of the said Act. 

On 24.09.2022, a show cause notice was issued by the respondent no.2 to the petitioner proposing to cancel the registration of the petitioner for the reason assigned therein with the direction of the TTZ authority and written direction by JC (SIB) B Agra for cancellation of registration of all coal depot. 

Being dissatisfied with the reply of the petitioner, the registration of the petitioner was cancelled vide impugned order dated 14.10.2022 with effect from 18.8.2022. 

Submissions 

Senior Counsel for the petitioner submitted that the petitioner has not violated any provision of GST Act; more precisely, contained in Section 29 read with Rule 21 of UPGST Act and Rules framed therein. 

ACSC supported the impugned order and submitted that the petitioner is not entitled for any relief from the Court as the petitioner did not adhere to the directions issued from time to time under the Environment (Protection) Act as well as TTZ authorities constituted in pursuance of the N.C. Mehta case.

Decision 

The single judge bench of Justice Piyush Agrawal noted that it is not in dispute that the TTZ authorities have been constituted by Ministry of Environment and Forest, Government of India in exercise of power conferred by sub-clause 1 & 3 of Section 3 of Environment (Protection) Act, 1986, which is known as the Taj Trapaezium Zone Pollution (Prevention and Control) Authority. In exercise of power under Sections 5 & 24 of the said Act, the direction can be issued in the interest of protecting the environment.

The court said that for the protection of the environment, a direction can be issued to officer or any authority and they shall be bound by the said direction in respect of industry only.

The court observed that the petitioner is the coal trader and from his business activities does not emanate any hazardous thing which is bad for the environment.

The bench further observed that any direction given by the TTZ Authorities for cancellation of registration has to be in accordance with Section 29 read with rule 21 of GST Act and Rules therein. The GST authorities cannot blindly follow the said direction of TTZ Authorities.

“It is a matter of common knowledge that under the GST Act, A/c book are to be maintained by every person. There is no finding at any stage to show that A/c book were not maintained by the petitioner. In absence of such finding, no violation of section/rule of UPGST Act/UPGST Rule can be made out against the petitioner”, the Court Said. 

Case title: M/S Vidya Coal Depot Versus Additional Commissioner Grade (Appeal) Ii And Another

Citation: Writ Tax No. – 394 of 2023

Facts 

On 23-11-2007, simultaneous search was conducted by the DGCEI Officers at the factory and office premises of the Appellant company. 

In the course of search at Office, one USB Drive (Pen Drive) was recovered from one of the “Computer Table Drawer”, which was being used by Shri Ajay Kumar Behera, Computer Operator. 

The said pen drive contained a Tally package, which was in locked condition with a Username and Password. 

The Tally package was opened with the User ID and Password revealed by Shri. Ajay Behera. 

The Data available in the pen drive were for the period from June 2005 to March 2007. From the data available in the pen drive, Print outs of Sales Registers and Purchase Registers were obtained in the presence of Shri. Ajay Behera and Shri. Ajay Kumar Kadmawala, Director. 

Submission  

The Appellants submitted that the dispute in the instant case relates to the period from 2005-06 to 2007-08 (upto November’2007) and search was conducted on 23-11-2007 while the Show Cause Notice was issued on 08-04-2010 i.e. after expiry of more than 29 months, hence, the demand is barred by normal period of limitation of one year.

A.R. submitted that the data relating to sale and purchase of goods maintained under the ‘Tally Package’ was de-coded with the user ID as ‘bajaj’ and Password No. 0292 which was revealed by the computer operator Shri Ajay Kr. Behara. 

Decision 

The division bench of Ashok Jindal Member (Judicial) and K. Anpazhakan Member (Technical)  found that the investigation has not brought in any corroborative evidence to substantiate the allegation of clandestine removal. In view of the above findings, we hold that the investigation has failed to establish the alleged clandestine clearance of goods by the Appellants and hence the demands confirmed in the impugned order are not sustainable.

The bench observed that the allegation of the department is that most of the unaccounted clearances of Silico Manganese were sold in cash. As per the cash register, Rs.7crores were received as cash during the relevant period.

The Tribunal further observed that the revenue has failed to corroborate unaccounted clearance available in the data retrieved from the pen drive by verification at the customer’s end. Since we have already held that the data recovered from the pen drive does not have any evidentiary value, the conclusion arrived at by the investigation with one verification cannot be considered as corroborative evidence for the clandestine clearance of entire 3474.950 MT of Silico Manganese alleged to have been cleared through cash transaction. 

The bench set aside the demands of duty confirmed in the impugned order.

Case title: Attitude Alloys (P) Ltd. v/s Commissioner of Central Excise, Bhubaneswar

Citation: Excise Appeal Nos. 517-519 of 2011 

The Madras High Court directed the Petitioner to deposit INR 10 Lakhs instead of 20% of Tax Demand.

Facts 

The second respondent, Income Tax Officer passed an assessment order, under the provisions of Income Tax Act, 1961 whereby, a tax liability of Rs.1,48,54,156/- was determined for the assessment year 2018-19 under best judgment assessment on the ground that the petitioner has failed to file returns and apart from demand of tax liability, penalty proceedings were also initiated under Sections 270A, 271 AAC and 272 A(1) (d) of the Income Tax Act, 1961 and a total demand of Rs.2,44,47,282/- was determined against the petitioner.

Submissions 

T.Ramesh, counsel appearing for the petitioner submitted that the petitioner is engaged in the business of manufacturing handloom sarees and the total turnover of the petitioner’s business itself is only Rupees One Crore and by virtue of the impugned order, the petitioner was directed to 20% of tax, which comes to Rs.47,89,456.  

R.S.Balaji, Senior Standing Counsel, appearing for the respondents, submitted that since the petitioner failed to file returns, the second respondent passed the assessment order, dated 21.03.2023 and though the petitioner filed Appeal against the said order, since a sum of Rs.1,36,79,856/- is in cash rotation on the petitioner’s bank account, the Appellate Authority imposed the condition of pre depositing 20% of the tax and same is only reasonable and not onerous as contended by the petitioner.

Decision 

The single judge bench of Justice Krishnan Ramasamy observed that the grievance of the petitioner is only with regard to conditional stay order passed by the Appellate Authority, whereby, the petitioner is directed to pre-deposit 20% of the demanded tax, which comes around Rs.47,89,456/- for entertaining the Appeal.

The court viewed that the order passed by the first respondent/Appellate Authority requiring the petitioner to pay 20% of the tax demand is on the higher side. 

Therefore, the Court directed the petitioner to deposit Rs.10,00,000/- instead of 20% (which come around Rs.47,89,456/-) of the impugned demand ordered by the Appellate Authority within a period of eight weeks.

Facts 

The case of the Petitioner Company is that the Respondents forcefully realised Rs. 7,86,33,649/- from the Petitioner in the guise of Tax Collected as Source for the period FY 2012-2013 to the First Quarter of FY 2017-2018. 

Submissions 

Counsel for the Petitioner contended that the benefit of Section 206C(1A) of the Income Tax Act, 1961 ought to have been granted to the Petitioner once Form 27C has been submitted by the Petitioner and there exists no material to conclude that the declaration forming part of such Form is false. 

Decision 

The division bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan observed that it was clarified by the Respondent-CCL that the interest component of Rs. 1,60,75,330/- was not lying with the said Respondents but is lying with Respondents No. 3 to 5 (Revenue). It was further stated that the said Respondents had no objection if this Court directs Respondents No. 3 to 5 (Revenue) to directly refund the interest component to the Petitioner.

The bench noted that the root cause of the present Lis lies in the illegality committed by the Revenue in compelling Respondent No. 1 and 2 (CCL) in effecting TCS qua the transactions of purchase of coal which according to the Petitioner was genuinely used in generation of power. Such TCS was affected by Respondent No. 1 and 2 (CCL) even though appropriate Form 27C was issued by the Petitioner with a verification that the goods so purchased would be used for the purposes of generation of power. 

The bench directed that the entire sums of money collected as TCS from the Petitioner along with interest thereon, i.e., Rs. 6,25,58,318.89/- (towards TCS) plus Rs. 1,60,75,329.93/- (towards interest), amounting in toto to Rs. 7,86,33,649/-, be refunded by Respondents 3 to 5 (Revenue) to Respondents No. 1 and 2 (CCL) who should thereafter forthwith refund the same to the Petitioner in a time-bound manner. 

It was clarified by the court that Appeal under 260A is a statutory right and it cannot prevent anyone, either Assessee or Revenue from availing such right. As such the said plea of Respondent CCL is misconceived and hence rejected. 

Case title: Adhunik Power & Natural Resources Ltd v/s Central Coalfields Limited

Citation: W.P. (T) No. 2023 of 2021

The Karnataka High Court held that entertaining of Writ Petition involves discretion of the Court and there being no inflexible rule acting as a bar to entertaining of Writ Petition even where alternative remedy is available. 

Facts 

The petitioner is stated to have taken term loans and working capital loans from Banks and had entered into an One Time Settlement (OTS) with the Banks, whereby portion of the interest charged by the Bank and also part of the principal amount stood waived. While petitioner had offered the waiver of interest to assessment, however, the waiver of the principal amount of term loans and working capital loans was treated to be a capital receipt and was not subjected to tax. The subject matter of dispute relates to the Assessment Year 2006-2007. 

Submissions 

 Sri E.I.Sanmathi, learned counsel appearing for the Revenue has objected to the maintainability of the Writ Petition contending that the effect of rectification of the order would result in a fresh original order as against which there is a remedy available under Section 260A of the I.T. Act to the High Court against the order passed by the Appellate Tribunal. 

Issues for Consideration

1. Whether as against the order passed in Miscellaneous Petition under Section 254(2) of I.T. Act in light of the remedy of appeal being available under Section 260A of I.T. Act, the Writ Petition could be entertained? 
2. Whether the law laid down in Mahindra and Mahindra (supra) if taken note of, would result in benefit in the form of waiver of loan being construed as monetary benefit and not covered by Section 28(iv) of the I.T. Act? 

Decision 

The single judge bench of Justice S. Sunil Dutt Yadav observed that under section 260A of the I.T. Act, an appeal lies to the High Court from “every order passed in appeal by the Appellate Tribunal”, if the High Court is satisfied that the case involves a substantial question of law. 

The bench noted that the petitioner contended that the rectification application was filed under Section 254(2) of the I.T. Act ought to have been allowed in its entirety in light of the law laid down by the Apex Court in Mahindra and Mahindra, wherein the Apex Court has held that waiver of loan constituted a benefit in the shape of money which was outside the purview of Section 28(iv) of I.T. Act. 

The court said that the conclusion cannot be relied upon as laying down the rule of non-maintainability of Writ Petition where an alternative remedy of appeal is provided under a statute. The observations reproduced above would clearly indicate that the entertaining of Writ Petition is a matter of discretion and appropriateness. 

It was further stated that the entertaining of a Writ Petition in the presence of a statutory alternative remedy is a matter of appropriateness indicating existence of discretion in the Court while recognizing the exceptions for entertaining such Writ Petitions even where an alternative remedy exists. 

The court held that entertaining of Writ Petition involves discretion of the Court and there being no inflexible rule acting as a bar to entertaining of Writ Petition even where alternative remedy is available. 

“The recent amendment to Section 28 of I.T. Act vide Finance Bill 202317, wherein the legislature has included ‘benefit’ even in form of ‘cash’ arising from business or profession as being chargeable to income tax. Such amendment substantiates the interpretation of the Apex Court in Mahindra and Mahindra, wherein it was concluded that the ‘benefit’ not being “other than in the shape of money” i.e., ‘benefit’ in form of ‘cash‘ would fall outside the ambit of Section 28(iv) of the I.T. Act by proposing the present amendment”, the court observed.  

Case title: M/s. I.G. Petrochemicals Ltd. v/s The Income-tax Appellate Tribunal

Citation: WRIT PETITION No.20579 OF 2022 (T-IT)

The Income Tax Appellate Tribunal Delhi ruled that the satellite telecommunication services are not considered as royalty.

Facts 

The appeal is filed by the assessee against the order of the Assessing Officer passed under section 143(3) read with section 144C(13) read with the directions of the DRP under section 144C of the Income Tax Act for assessment year 2018-19. 

Submissions 

Senior Advocate for the assessee, submitted that the issue in appeal is squarely covered by the decision of the Tribunal in assessee’s group cases in the case of Inmarsat Global Limited Vs. CIT for various assessment years right from 2001- 02 to 2018-19 wherein the Tribunal following the decisions of the Delhi High Court in the case of DIT Vs. New Skies Satellite and Asia Satellite Communication Co. Ltd. held that the amounts received by the assessee company from providing satellite telecommunication services are not in the nature of royalty as per India UK DTAA.

Decision 

The division bench of G. S. Pannu, President and Challa Nagendra Prasad, Judicial Member noticed that the assessee derived income from transmitting of satellite signals from ship to the customers and vice versa. Equipment is located on a ship which captures the satellite signals. For provision of such services the assessee purchased airtime on the satellite from Inmarsat Global Ltd., which is the group concern of the assessee and owns the satellite and is based in the UK.

The tribunal held that the amounts received by the assessee for the use of transponder of tele-communication service charges are not royalty under section 9(1)(vi) of the Act and also under Article 12(8) of Indo Netherland DTAA.  

Case title: Inmarsat Solutions BV v/s ACIT

Citation: I.T.A No. 1717/Del/2022

The Income Tax Appellate Tribunal, Ahmedabad ordered the reconsideration of the exemption claim.

Facts 

The assessee is a charitable trust engaged in the activity of running a school for children of poor and needy class of the society in Ahmedabad. In the return of income filed by the assessee, the assessee claimed its entire income exempt from tax in terms of section 11 of the Act which was denied in the intimation made by CPC u/s 143(1) of the Act. 

Submissions 

Counsel for the assessee submitted that its income from charitable activities was inadvertently reflected in the return filed on-line, as income from other sources, amounting to Rs.51,59,168/-.

DR stated that in view of the fact that, the assessee has also sought alternative remedy by filing rectification application before the AO, the appeal be also restored back to the AO to be considered along with rectification application. 

Decision 

The division bench of Annapurna Gupta, Accountant Member and Madhumita Roy, Judicial Member, Judicial Member considered it fit to restore the issue back to the file of the AO to consider the claim of the assessee to exempt its entire income earned from the charitable activities under section 11 of the Act after taking note of all the evidences filed by the assessee. The issue is to be considered along with 154-applications filed by the assessee, since both relate to the same aspect. 

Case title: Shree Vasan Sheri Kelavani Samiti Trust v/s ITO

Citation: ITA No.437/Ahd/2022 

The Customs, Excise And Service Tax Appellate Tribunal Chennai ordered the expeditious sanctioning of refund claim filed in wrong jurisdiction.

Facts

The importer viz. M/s. ECI Telecom India Private Limited, New Delhi had filed refund claims originally before the Commissioner of Customs, Import & General, New Delhi. 

Entertaining the view that the said claims pertain to Air Customs, Chennai, the same was forwarded to the Deputy Commissioner of Customs (Refunds), New Custom House, Chennai on 16.03.2012. 

Subsequently, the refund claims in question (pertaining to 10 Bills of Entry) came to be rejected by the Assistant Commissioner of Customs (Refunds) vide letter of communication on the ground that the same were received after the expiry of one year and in contravention of the provisions of Notification, as amended by Notification. 

Aggrieved by the aforesaid letter of communication dated 30.03.2012, the claimant filed an appeal before the lower appellate authority, who vide order impugned herein, has directed the respondent to re-submit the claim before the lower authority, thereby directing the adjudicating authority to process the claim without insisting on the aspect of limitation/pass a suitable order on the merits of the claim. Being aggrieved by the above, the Revenue has filed the present appeal before this forum.

Submissions 

Harendra Singh Pal, Authorized Representative (Assistant Commissioner) appearing for the appellant Revenue submitted that the respondent was not represented, either in person or by counsel. However, since several adjournments had already been granted to the respondent arising out of his absence, the matter has been taken up for disposal on merits after hearing the Departmental Representative. 

Departmental Representative, has submitted on behalf of Revenue that as per paragraph 2(c) of Notification No. 102/2007, a refund claim should be filed within one year from the date of payment of duty.

Decision 

The single member bench of M. Ajit Kumar, Member (Technical) said that it is not disputed by Revenue that the respondent has filed the refund claim before the Commissioner of Customs, Import & General, New Delhi within one year from the date of payment of duty. However, it is their case that the same cannot be taken as the date of filing before the actual jurisdictional Commissionerate viz. Deputy Commissioner of Customs (Refunds), Air Commissionerate, Chennai. It is Revenue’s contention that filing of a refund claim in a wrong jurisdiction cannot be taken lightly and cannot be condoned. This is perhaps a very narrow view and does not fit into the role of the department as a facilitator nor does it have the express sanction of law.

The tribunal observed that rejecting the refund claim simply on the ground of delay in filing the claim before the proper authority while admitting that the appellant had filed the claim before the department on time, albeit at a wrong jurisdiction cannot be approved. 

In the facts and circumstances of this issue the bench agreed with the decision of the Commissioner (Appeals) who based on the ratio of the judgments cited by the respondents before him had accepted the appeal. 

The bench ordered that since no other issue has been raised and considerable time has elapsed, the refund may be sanctioned expeditiously as per law. 

Case title: Commissioner of Customs (Air) v/s M/s. ECI Telecom India Private Limited

Citation: Customs Appeal No. 41432 of 2013 

Facts 

The assessee is mainly engaged in development, operation and maintenance of Ports & Economic Zone at Mundra, Gujarat. For the Assessment Year 2011-12, the assessee filed its Return of Income declaring total income of Rs. 30,81,75,558/-. Regular scrutiny assessment was completed u/s. 143(3) of the Act on 01-03-2014 determining the total income as Rs. 1,41,39,57,721/- after making various additions/disallowances The A.O. initiated penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income against the various disallowances. However on appeal against the assessment order, the Ld. CIT(A) vide its order dated 13-11-2014 confirmed the additions made on account of Amortized value of Leasehold Land of Rs. 5,16,28,097/- and Depreciation claimed on “Right to use” Leasehold Land of Rs. 1,54,11,254/-. Accordingly fresh penalty notice was issued to the assessee, as why not to levy penalty u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income. 

Submissions 

The Counsel for the assessee submitted that even on merits, the additions made by the Assessing officer were deleted in the quantum appeal. Hence, there is no question of levying penalty in the cases for furnishing inaccurate particulars of income. 

CIT-DR Akhilendra Pratap Yadav appearing for the Revenue supported the order passed by the Assessing Officer and thereby pleaded to sustain the levy of penalty and allow the Revenue appeal. 

Decision 

The division bench of Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that apart in the quantum appeal of the assessee before the Tribunal, the addition made by the Assessing Officer was also deleted. Further, the Jurisdictional High Court in case of Sun Pharmaceuticals Ind. Ltd. V DCIT have held that such expenditure on right to use leasehold land is allowable as revenue expenditure, which means such issue is also highly debatable and therefore no penalty under Section 271(1)(c) can be levied on it. 

The bench held that the grounds raised by the Revenue is devoid of merits and the same is dismissed. 

Case title: The DCIT v/s Adani Port & SEZ Ltd. 

Citation: ITA No. 541/Ahd/2018

The Customs, Excise & Service Tax Appellate Tribunal New Delhi ordered re-examination of dumping duty on Mono Ethylene Glycol imports.

Facts 

M/s. Reliance Industries Limited, a domestic producer of Mono Ethylene Glycol in India, has filed the appeal to assail the Notification notifying that since the domestic industry had not suffered material injury in terms of the provisions contained in the Customs Tariff (Identification, Assessment and Collection of AntiDumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 it would not be appropriate to recommend levy of anti dumping duty on the import of MEG. Accordingly, the designated authority terminated the investigation which was initiated by a Notification.

Submissions 

Counsel for the appellant submitted that even otherwise, since there is positive price undercutting in the present facts, even assuming there is no price depression/suppression, price injury on account of dumped imports cannot be negated.

Decision 

The three member bench of Justice Dilip Gupta, President, Binu Tamta, Member (Judicial) And Hemambika R. Priya Member (Technical) observed that evidently all price parameters have been evaluated only with reference to the preceding year. In other words, whereas the designated authority considers that the comparison cannot be limited only between the base year and period of investigation, the comparison has been limited between the period of investigation and the preceding year. The base year has been completely ignored. 

The bench said that it is seen that with respect to the factors relevant for assessing the price injury of the domestic industry, the designated authority has relied only on the increase in profit and return on investment in the period of investigation as compared to 2019-20, and has ignored the fact that the profit and return on investment has remained significantly below 2017-18 and 2018-19 level.

“The designated authority, in the present case, has exclusively relied upon the marginal improvement in the period of investigation as compared to 2019-20 and has ignored the trends over the years before that. Such selective examination, particularly in the present facts where the domestic industry itself has claimed injury since 2019- 20, may defeat the entire purpose of injury assessment”, the tribunal added.

The tribunal concluded that the designated authority would have to re-examine the matter in the light of the observations made above. For this purpose, the designated authority shall give an opportunity to both the appellant and the respondents for submitting their written submissions and after examination of the submissions and after considering the observations made hereinabove, give its final findings. 

Case title: M/s. Reliance Industries Limited v/s Designated Authority, Directorate General of Trade Remedies

Citation: Anti Dumping Appeal No. 52460 Of 2022 

The Indian Farmer got penalized for carrying smuggled gold worth over Rs. 1.6 Crores.

Facts 

When the Appellant was going towards Machalandapur Station, he was intercepted by Customs officers and 60 pieces of gold biscuits and cut pieces of gold were recovered from him. After due process, the gold with the value of Rs.1,61,77,675/- was absolutely confiscated and sale proceeds of Rs.1,62,43,453/- were appropriated to the Government exchequer. The Appellant was imposed with penalty of Rs. 25 lakhs. Being aggrieved, the Appellant is before the Tribunal. 

Submissions 

The Appellant submitted that he is a small time farmer with monthly income of Rs. Approx. 3,500/- per month. He was given the packet by one Mr. Nasir of Bangladesh and was told that Rs. 1,000/- would be given to him, if the packet was delivered in India to one Mr. Partha. He did not know that he was carrying gold in the packet.  

Decision 

The division bench of R. Muralidhar Member (Judicial) and Rajeev Tandon Member (Technical) said that admittedly, the gold was of foreign origin and was recovered from the person of the Appellant. No one has claimed the ownership of the gold which has been auctioned and Rs.1,62,43,453/- has been realized by the Government. It is seen from the record that the Appellant was only a carrier who got lured by some extra amount which could be made by him by taking the packet and delivering it to a person in India.  

The Tribunal observed that there is nothing to suggest that he was actually involved in the smuggling of the gold. However, definitely, it is the case of gross negligence and carelessness on his part to have accepted the parcel from foreign national to deliver within India. Therefore, it held that the penalty is imposable on him in terms of Section 112 (b). 

It was stated by the Tribunal that considering all the factual details, and the role and financial condition of the Appellant, it reduced the penalty to Rs. 1,87,500/-, which already stood to be paid by him by way of pre-deposit.

Case title: Shri Ramkrishna Gain v/s Commissioner of Customs (Preventive), Kolkata

Citation: Customs Appeal No.76060 of 2016

The Customs, Excise and Service Tax Appellate Tribunal Chennai, ruled that transporters are not considered goods transport agency therefore the service tax demand is unjustified. 

Facts 

It is the case of the Revenue, through the Show Cause Notice, that during the course of audit of accounts, the assessee appeared to have engaged the services of various contractors for transportation of limestone from the mines to their factory which was covered under the category of Goods Transport Agency (GTA) under Section 65(105)(zzp) of the Finance Act, 1994 read with Section 65(50b). 

It is also their case that as per sub-rule 2(1)(d)(v) of the Service Tax Rules, 1994, the person liable for paying Service Tax on the transportation service provided by a GTA in cases where the consignor or consignee of goods falls under any of the seven subclauses under the said sub-rule, is the person who pays or is liable to pay freight for the transportation of such goods, which in the instant case having been made by the assessee, therefore, the assessee was liable to pay Service Tax. 

Submission 

R. Parthasarathy, Consultant, appeared for the appellant, submitted, that the transportation of limestone was undertaken by transport operators who were actually the owners of such trucks, with whom the appellant had directly entered into contract for transportation, such transport operators were not covered by the definition of GTA and hence, the appellant entertained a bona fide doubt that there was no liability to pay Service tax on the freights that were paid directly to such transport operators / truck owners. 

Decision 

The division bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) found that the other orders relied upon by the Consultant clearly confirmed the view that the essential requirement is the issuance of consignment note in order to be covered under the definition of GTA and in the absence of the same, the transporters/contractors rendering transport services in mines cannot be said to be GTA and therefore, their service cannot be made amenable to the levy of Service Tax under the category of ‘transportation of goods by road’ service.

The bench observed the consistent view expressed by various co-ordinate benches of the CESTAT, judicial discipline demands to follow the said view of the co-ordinate Benches. This is also for the reason that in one of the cases, even the jurisdictional High Court has upheld the order of this Bench. 

Following the same view, the Tribunal held that the demand of Service Tax confirmed in the impugned order cannot sustain.

Case title: M/s. The Ramco Cements Limited v/s Commissioner of Central Excise

Citation: Service Tax Appeal No. 40585 of 2014

The Income Tax Appellate Tribunal, Pune denied the Assessee’s Exemption Claim under Section 80G due to lack of supporting evidence.

Facts 

The solitary grievance of the assessee in this appeal is the denial of exemption u/sec. 80G of the Income Tax Act, 1961.

Decision 

The division bench of R.S. Syal, Vice President And Partha Sarathi Chaudhury, Judicial Member noted that in order to identify the genuineness of the activities and how the fund of the applicant-trust is being utilized, various details were called for from the assessee by the office of CIT(E).  

The Tribunal observed that while granting exemption u/sec. 80G of the Act, it is incumbent upon the competent authority i.e. ld. CIT(E) to draw a satisfactory conclusion about the genuineness of the activities of the assessee and fulfillment of conditions laid down in clauses (i) to (v) of sec. 80G(5) of the Act. Since the assessee did not respond to the notice and since those discrepancies as pointed out by the Department were not resolved by the assessee, therefore, exemption application was rejected. 

“The law is very clear that only when the ld. CIT(E) is satisfied that the applicant trust is legally eligible to be granted exemption u/sec. 80G of the Act, only then, such exemption can be granted and for this, the assessee has to establish that its activities are genuine and the funds utilized are in accordance with the provisions of the said section and as per the object of the trust”, the Tribunal said.

The bench observed that the Revenue always has the power to deny the exemption under the relevant provision if the assessee does not fulfill/satisfy with the requirements of the provision, however, reasonable opportunity has to be accorded to the assessee in order to furnish all the details and suppose if assessee has not complied with the notices before the CIT(E), then it has to be seen whether the assessee has failed the test of reasonableness in not complying with the notice of the Department.

It was stated by the Tribunal that the fact of the matter is that the necessary details required especially with regard to the discrepancies pointed out by the Department have not been clarified through supporting evidences by the assessee and in effect only two opportunities were given to the assessee. 

The bench viewed that it is prudent and judicious to remand the matter to the file of CIT(E) for denovo adjudication as per law complying with the principles of natural justice.

Case title: CPRS Rugnalay Denagi Samiti, CPR College v/s CIT (Exemption)

Citation: ITA No.715/PUN/2023

The Panchayat’s Rental Service Tax liability waived after timely payment and registration by the Customs, Excise & Service Tax Appellate Tribunal, Chennai.

Facts 

The appellant is providing ‘Renting of Immovable Property Service’ as defined in section 65(105)(zzzz) of the Finance Act, 1994 during the period 1.4.2011 to 31.3.2012.. The appellant has failed to pay service tax of Rs.2,62,124/- on the gross amounts collected from the clients for rendering the above service on the due date specified in Rule 6 of the Service Tax Rules, 1994 r/w sec. 68 of the Finance Act, 1994 and have failed to file ST-3 returns. Show Cause Notice dated 16.10.2012 was issued proposing demand of service tax of Rs.2,62,124/- with interest and imposition of penalties under the Finance Act, 1994 and recovery of late fee under Rule 7C of the Service Tax Rules, 1994 r/w sec. 70 of the Finance Act, 1994. After due process of law, the original authority confirmed the demand along with interest and imposed penalties. On appeal, Commissioner (Appeals) upheld the same.

Submissions 

Anandalakshmi Ganeshram, Superintendent (AR) has stated that renting of immovable properties by the Panchayat falls under the definition of Renting of Immovable Property for use in the course of furtherance of business of commerce as defined under sec. 65(90a) of the Finance Act, 1994.

Decision 

The division bench of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) found from the appeal filed by the appellant that the service tax amount which is due is already remitted and appropriated to the Government. 

The bench noted that they have stated that since the appellant is a statutory body they were of the opinion that the amount collected by the Panchayats from such immovable properties, will not attract service tax. Once their liability to pay taxes was explained by the service tax authorities, they immediately applied for the registration and got their panchayat registered with the service tax authorities. Non-filing of returns is a technical lapse, hence they prayed that further proceedings be dropped and the lapse be condoned. 

It was found by the court that the appellant has paid the service tax involved and the same has been appropriated to the Government by the impugned order. Further interest is necessarily linked to the duty payable, and such liability arises automatically by operation of law. 

The Tribunal held that there exists sufficient cause for the appellant not to have paid the tax due on time and there does not appear to have been any intention on their part to evade payment of duty. Hence, they are eligible for a waiver of penalties as per section 80 of the Finance Act 1994.

Case title: Executive Officer v/s Commissioner of GST & Central Excise

Citation: Service Tax Appeal No.40948 of 2014