Customs, Excise and Service Tax Appellate Tribunal

Neo Structo Constuction Private Ltd. Vs. Commissioner of Central Excise, Customs and Service Tax

MANU/CS/0262/2024

05.07.2024

Service Tax

Advances are adjusted against the bills received on completion of stages of contract and therefore, same are in the nature of earnest money and not liable to tax at the time of receipt

In present case, the Appellant are engaged in providing taxable services in the category of (i) erection, Commissioning or installation (ii) maintenance and repair service (iii) good transportation by road service (iv) man-power recruitment supply agency service etc. During the course of audit, by the department of the appellant's financial records, it was noticed by the department that appellant had received certain advanced payments from their prospective clients.

The department was of the view that as per the explanation 3 provided under Section 67 of the Finance Act, 1994, the appellant should have discharged the service tax on gross amount charge for taxable service which as per the explanation 3 included amount received in advance towards taxable services before, during or after provision of such service. A show cause notice came to be issued demanding service tax of Rs. 2,81,05,210 under Section 73 (1) of the Finance Act, 1994 by invoking the extended time proviso, the provision interest under Section 75 and penalty under Section 76 and 78 of the Finance Act, 1994 have also been invoked. The matter had been adjudicating by the impugned order in origin whereunder all the charges as invoked in the show cause notice has been confirmed by the learned adjudicating authority.

Only issue which is to be decided is whether of an advance payment received by execution a particular contract can be considered as an advance payment towards rendering the service by the appellant.

In this case, the entire amount of advance was received by the appellant in the nature of a loan for purchasing of necessary capital goods, which were required for execution of the service contract obtaining such advance/loan. Same was backed by the appellant by providing bank guarantee of equal amount to the provider of such advance. i.e. service recipient.

Subsequently, as per the contract between the appellants and its customers, the advances so received were adjusted towards supply of service charges. Present Tribunal agree with the submissions of the appellant that the advances are adjusted against the bills received on completion of stages of the contract and therefore same are in the nature of earnest money and not liable to tax at the time of receipt. If contract does not materialize the advance has to be returned back to the customer. Advances were received prior to rendition of service and without specifying a particular stage of service. No event of rendition of service took place and therefore no service tax can be levied on such amount of advance. Appeal allowed.

Tags : Demand Confirmation Legality

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High Court of Bombay

Jinendra Jagdish Upadhyay and Ors. vs. The State Of Maharashtra and Anr. (Neutral Citation: 2024:BHC-AS:26040-DB)

MANU/MH/3990/2024

03.07.2024

Criminal

In frivolous proceedings, Court owes a duty to look into many other attending circumstances emerging from record of the case over and above the averments

Petitioners seek quashing of criminal proceedings qua them in Regular Criminal Case pending on the file of the Judicial Magistrate First Class, arising out of First Information Report ("F.I.R.") registered with the Tarapur Police Station, for the offense punishable under Sections 498-A, 323, 504, 506 and 342 read with 34 of the Indian Penal Code, 1860 ("I.P.C.").

In a series of earlier decisions, the Supreme Court has discussed the legal position and provided guidance in matters where vague and general allegations are made against the Accused and a bunch of relatives of the husband are sought to be roped in criminal proceedings. In its decision in the matter of Mahmood Ali v. State of U.P. while considering the principles applicable to the exercise of jurisdiction under Section 482 of the Criminal Procedure Code, 1973 ("Cr.P.C."), observed that, in frivolous or vexatious proceedings, the Court owes a duty to look into many other attending circumstances emerging from the record of the case over and above the averments and, if need be, with due care and circumspection try to read in between the lines. The Court while exercising its jurisdiction under Section 482 of the Cr.P.C. or Article 226 of the Constitution need not restrict itself only to the stage of a case but is empowered to take into account the overall circumstances leading to the initiation/registration of the case as well as the materials collected in the course of investigation.

There is no allegation against these Petitioners. The F.I.R. therefore appears to have been made against these Petitioners only with a view to harass them and settle some personal grudge. We do find specific allegations against the husband but there are no allegations against the Petitioners No. 1 and 2 and extremely vague allegations against the Petitioners No. 3 and 4. The F.I.R. and the charge- sheet prima-facie do not disclose commission of any offense by these Petitioners.

The material on record is wholly insufficient to proceed against the Petitioners. Continuing the criminal proceedings against these Petitioners will be an abuse of the process of law.Accordingly, Regular Criminal Case pending on the file of the Judicial Magistrate First Classare quashed and set aside.

Tags : FIR Vague allegation Quashing of

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High Court of Delhi

J.C. Flowers Asset Reconstructions Pvt. Ltd. Vs. Union of India & Ors. (Neutral Citation: 2024:DHC:4951)

MANU/DE/4396/2024

02.07.2024

Electricity

Alignments of transmission lines are decided by experts in the field and Court cannot sit over the decision taken by the experts as an Appellate Authority

The Petitioner, an asset reconstruction company, has approached this Court for a direction to Respondent No.2 for changing the alignment/path and position of the electrical pole and high tension transmission line which is being built over the Subject Property.

It is the case of the Petitioner that, if the transmission lines are drawn over the subject property which is in possession of the Petitioner, the value which the subject property could yield in an auction will be diminished which will be detrimental to the Petitioner. It is the case of the Petitioner that the alignment can be changed in order to minimize the damage that can be caused to the Petitioner.

Section 164 of the Electricity Act, 2003 provides that the Appropriate Government may, by order in writing, for the placing of electric lines for the transmission of electricity confer upon any officer, licensee or any other person engaged in the business of supplying electricity under this Act any of the powers which the telegraph authority possesses under the Telegraph Act with respect to the placing of telegraph lines.

The Works of Licensees Rules, 2006 which has been framed in exercise of the powers conferred under the Electricity Act, 2003 provides for procedure for licensees to carryout works. It is undisputed that the Respondent No.2/PGCI is a licensee under the Electricity Act.

The Apex Court in Century Rayon Limited vs. IVP Limited and Others, has held that as per the provisions of the Telegraph Act, 1885, unobstructed access to lay down telegraph and/or electricity transmission lines is an imperative in the larger public interest and that the powers conferred under Section 164 of the Electricity Act, 2003 would overrule any right over any procedure that laid down under Rule 3 of the Works of Licensees Rules, 2006.

In any event, material on record as placed by Respondent No.2/PGCI shows that the general public was informed about the proposed route of transmission lines by bringing out advertisements in the Indian Express and Dainik Bhaskar inviting objections from the general public. Neither the Petitioner nor the owner nor the Yes Bank from whom the debts were assigned to the Petitioner had raised any objections to the public notice.

It has been stated by the learned Counsel for the Respondents that the alignment for the transmission line was approved by the Competent Authority after conducting Techno-Economic Feasibility Study. As rightly contended by the learned Counsel for the Respondents that the alignments are decided by experts in the field and, therefore, this Court cannot sit over the decision taken by the experts as an Appellate Authority.

In view of the settled law as per the Electricity Act and Telegraph Act that, unobstructed access to lay down electricity transmission lines is an imperative in the larger public interest and also in view of the fact that notices have been issued by the Respondent No.2/PGCI inviting objections from the public, this Court is not inclined to pass any directions as prayed for in the writ petition. Petition dismissed.

Tags : Electric pole transmission lines Direction

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High Court of Delhi

Dell International Services Private Limited vs. Adeel Feroze and Ors. (Neutral Citation: 2024:DHC:4954)

MANU/DE/4392/2024

02.07.2024

Consumer

Whatsapp conversations cannot be read as evidence without there being a proper certificate as mandated under the Evidence Act

Petitioner has approached this Court under Article 226 and 227 of the Constitution of India challenging the Order passed by the Delhi State Consumer Dispute Redressal Commission (State Commission) in Revision Petition by which the State Commission has upheld the Order passed by the Consumer Dispute Redressal Commission (District Commission). Vide Order the District Commission has refused to take on record the written statement filed by the Petitioner herein on the ground that the same was filed beyond the period of limitation.

The District Commission analysed the weight of the documents sent along with the summons and the postal charges and came to the conclusion that complete set of documents was sent along with the summons and the same was received by the Petitioner on 23rd December, 2022. The District Commission, therefore, held that the application of the Petitioner herein for condonation of delay of seven days in filing the Written Statement is not bona fide.

The screen shot of whatsapp conversations cannot be taken into account by this Court while dealing with a Writ Petition under Article 226 of the Constitution of India, more so, when there is nothing to show that the conversations were produced before the State Commission as this Court does not find any reference of the same in the present Writ Petition. Further, there is no discussion of the same in the Order of the State Commission. In any event, the Whatsapp conversations cannot be read as evidence without there being a proper certificate as mandated under the Evidence Act, 1872.

The State Commission, in exercise of its revisional jurisdiction, has come to the conclusion that no valid reason has been given by the Petitioner herein for condonation of delay in filing the written statement.

A reading of the abovementioned Section would show that the period of filing a written statement after receiving the copy of the complaint is 30 days and the same can be extended up to fifteen days if the District Commission deems it fit to do so. In the present case, the summons was issued on 17th December, 2022 and it was received by the Petitioner herein on 23rd December, 2022 and the period of 30 days got over on 21st January, 2023. The Petitioner filed its Written Statement only on 31st January, 2023 and raised a plea that it has not received a complete set of documents along with the summons when, in fact, a complete set of documents has been served to the Petitioner with the summons as is evident from the weight of the documents sent along with the summons and the postal charges.

Present Court does not find any reason to hold that the reason given by the District Commission in refusing to condone the delay in filing the written submission is erroneous. Petition dismissed.

Tags : Delay Condonation Discretion

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Customs, Excise and Service Tax Appellate Tribunal

Indian Additives Ltd. vs. Commissioner of GST & Central Excise

MANU/CC/0224/2024

02.07.2024

Service Tax

Service tax is not payable on the TDS paid by the Appellant on behalf of the foreign service provider

The Appellant are service providers under the category of Intellectual Property Right Service, Scientific and Technical Consultancy Service etc. and were discharging service tax. They entered into an agreement with Chevron Oronite Company LLC, USA and were paying royalty to the foreign company on the net sales of their products. During the scrutiny of details furnished by the appellant regarding the TDS portion of the royalty payment made for the period April 2010 to September 2010 and October 2011 to March 2012, it revealed that while paying service tax on the royalty payments made to the foreign company, the Appellant had not paid service tax on TDS portion of the royalty amount retained by them.

As it appeared to the department that TDS portion retained by them was also taxable, Show Cause Notices were issued for recovery of the dues. After due process of law, the original authority confirmed the demand proposed in the Show Cause Notices along with interest and also imposed penalties. Aggrieved against the said order, the Appellant preferred appeals before the Commissioner (Appeals) who vide the order impugned herein has rejected the appeals.

Prima facie there does not appear to be a bar on tax being a part of assessable value. The TDS paid/ deposited to the government exchequer by the appellant arises out of a statutory liability. In the normal course, TDS cannot be held to be a 'consideration' for the service unless specifically mandated/ deemed by law. The amount would not be part of the consideration for the taxable services received by them as per Section 67(1)(a) of the Finance Act, 1994 in the absence of the legislature itself sanctioning such a provision, mandating double taxation, in the Act. Accordingly, service tax is not payable on the TDS paid by the appellant on behalf of the foreign service provider.

The issue is no longer 'res integra' as it has already been decided by the Tribunal in the appellants own case and in the case of Adani Bunkering Pvt. Ltd. Vs. CCE, wherein the Tribunal has held that TDS deposited to the Income Tax Department in relation to the payment made to the foreign service provider over and above the invoice value of the services, is not liable to service tax.

The appellant is not liable to pay service tax on the TDS paid by them on behalf of the foreign service provider. Accordingly, the demand confirmed in the impugned order is not sustainable. The impugned order is set aside. Appeal allowed.

Tags : Demand Confirmation Legality

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Income Tax Appellate Tribunal

National Real Estate Development Council vs. The Commissioner of Income Tax

MANU/IB/0275/2024

02.07.2024

Direct Taxation

Provisions of Section 13 of IT Act would be attracted only at the time of assessment and not at the time of grant of registration

Present is an appeal filed by the assessee against the order of the learned Commissioner of Income-tax (Exemption), rejecting application for registration of the Trust under Section 12AB of the Income Tax Act, 1961.

In the case of Jamiatul Banaat Tankaria, the ITAT held that where objects of assessee-trust were primarily charitable rather than favouring any specific religious community, CIT(E) was not justified in denying registration under Section 12A, by invoking Section 13(1)(b) as said provisions would be attracted only at time of assessment and not at time of grant of registration. In the case of Malik Hasmullah Islamic Educational and Welfare Society, the ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of jurisdiction by an Assessing Officer in an assessment proceedings, Commissioner is not competent to invoke such provisions for purpose of declining registration under Section 12AA.

The provisions of Section 13 of the Act can be invoked only at the time of assessment while considering the applicability of section 11/12 with respect to assessee's set of facts and not at the time of grant of registration under Section 12A of the Act. Present Tribunal’s view is further supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan (Gujarat) wherein on the issue of denial of grant of registration under Section 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration.

The matter is restored to the file of CIT (exemptions), for de novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order passed for rejecting the application filed by the assessee trust for grant of registration under Section 12A of the Act. Appeal of the assessee is allowed.

Tags : Registration Denial Validity

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