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Case Laws
Showing 281 to 300 of 1430 Records
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2023 (12) TMI 1150
Violation of principles of natural justice - observations against the erstwhile Liquidator / the Appellant - Impugned Order was passed in the absence of appellant - whether the Adjudicating Authority was justified in making some observations against the erstwhile Liquidator / the Appellant herein, and directing the Registry to forward a copy of the Compliance Affidavit and report of the Court Commissioner to IBBI? - HELD THAT:- The chronology of dates and events establishes that the Appellant was present and heard on several dates specifically regarding the issue on hand. It is pertinent to mention that when the Advocate Commissioner was appointed to facilitate the handover of the documents and implement the Order of the Adjudicating Authority regarding the transition of the control and custody of the statements, records and assets of the Corporate Debtor Company, there was no whisper of protest by the Appellant herein or any bonafide submission before the Adjudicating Authority that the transition would be done within the time frame given by the Adjudicating Authority. The fact that one weeks’ time was given and thereafter, the Adjudicating Authority had directed both the parties to meet, cooperate and implement the Order is not denied - the Appellant was very much present for all previous hearings, relevant to the matter on hand, the Advocate Commissioner was appointed only on account of the situation which has arisen based on the non-handing over of the said documents to the new Liquidator / First Respondent, and therefore, his contention that Principles of Natural Justice was not adhered to, is untenable.
There are no illegality or infirmity in the Impugned Order - appeal dismissed.
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2023 (12) TMI 1149
Withdrawal of the application for approval of the Resolution Plan - breach of addendum dated 18.06.2021 and the conditions of LoI - Issuance of fresh Form G - forfeiture of performance guarantee - exclusion of the period in the CIRP.
Whether after approval of the Resolution Plan by the CoC, the Appellant- Successful Resolution Applicant has committed breach of addendum dated 18.06.2021 and the conditions of LoI? - HELD THAT:- The Resolution Applicant who was permitted to participate in the Resolution Process was on account of its net worth, its background and experience. It is on record that while examining the eligibility of the Resolution Applicant, its net worth was examined with reference to ‘Shoora Capital’ and in the net worth of Resolution Applicant’s, group was claimed in the Resolution Plan - it is clear that the Resolution Applicant has undertaken in the addendum to the Resolution Plan dated 18.06.2021 as well as by LoI dated 28.07.2021 that it shall not change its shareholding in directorship and constitutional pattern of the Resolution Applicant for a period of 5 years from the effective date and for changes if any. Approval of two leading Financial Creditors shall be obtained. Replies to emails received from the Resolution Applicant indicate that no approval was taken from the Financial Creditor for effecting any change in constitutional pattern of the Resolution Applicant and directorship - Adjudicating Authority after considering the submissions has rightly come to the conclusion that the breach was committed by the Resolution Applicant of the addendum dated 18.06.2021 and the conditions as included in the LoI dated 28.07.2021.
Whether in the facts of the present case, CoC was precluded from taking any decision to issue fresh Form G and to withdraw the Resolution Plan which was earlier approved? - HELD THAT:- Present is a case where in essence we may say it is a case of sale of Resolution Plan approved by the CoC to third party. CoC approves the Resolution Plan looking to the credentials of the Resolution Applicant and its credibility and finances. When very basis of Resolution Applicant is knocked out and it changes its constitution substantially the CoC cannot be faulted in view of breach of the conditions by the Resolution Applicant, application for approval of the Resolution Plan be withdrawn - it is concluded that the Resolution Applicant has violated the addendum of the Resolution Plan as well as undertaking as given in the LoI and the Adjudicating Authority has rightly returned the finding.
Whether the decision of the CoC dated 21.12.2022 forfeiting the performance guarantee of Rs.20 Crores given by the Appellant is not in accordance with law? - HELD THAT:- Regulation 36B (4A) provides that performance security shall stand forfeited if the Resolution Applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan. Regulation (4-A) comes in operation after approval of the Resolution Plan and it provides that ‘performance security shall stand forfeited’ - Present is not a case where CoC has passed Resolution dated 21.12.2022 in reference to Regulation 36B (4-A). The minutes of the meeting specifically refers to clause 13.2 of the RFRP. The action of the CoC is fully covered by clause 13.2 of the RFRP and there is no occasion to resort to Regulation 36B (4-A) of the Regulation. Regulation 36B (4F) only contemplate one contingency that where performance security shall stand forfeited but the said provision does not exclude forfeiture of performance security in other conditions as contemplated in RFRP. We, thus, are of the view that the decision of the CoC for forfeiting the performance security is in accordance with RFRP. It is to be noted that at no point of time, any provision of the RFRP was challenged and Resolution Applicant has undertaken to abide by all terms and conditions of the RFRP.
Whether the Adjudicating Authority was not entitled to grant exclusion of the period in the CIRP? - HELD THAT:- The exclusion of the time granted by the Adjudicating Authority was consequent to decision taken to allow the application for withdrawal of the Resolution Plan. The order passed by the Adjudicating Authority granting exclusion of time is consequential to the order passed in IA No.985 of 2023. The Adjudicating Authority in its impugned order has made observations in paragraph 32(ix) and (x) as extracted above that the Corporate Debtor Company is a going concern and there is buoyancy in the market for its products of non-ferrous metals. It is well settled that the object and purpose of the IBC is to revive the Corporate Debtor and when the Adjudicating Authority has taken decision to issue fresh Form G by excluded the period from 05.02.2021 till passing of the order, no exception can be taken to said direction - there are no error in the order of the Adjudicating Authority excluding the period from 05.02.2021 till passing of the order in the CIRP and issuing direction to issue fresh Form-G.
Appeal dismissed.
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2023 (12) TMI 1148
Challenge to direction to Resolution Professional and CoC to move an application before the Hon’ble Supreme Court for seeking clarification in context of the order dated 21.11.2013 passed by Hon’ble Supreme Court - HELD THAT:- There is no dispute that resolution plan has been approved with 100% CoC and the same has also received approval by the Adjudicating Authority by the impugned order.
On looking into the order dated 21.11.2013 a direction was to Sahara Group of Companies not to part with any movable and immovable properties until further orders. Direction to Sahara group of companies not to part with movable and immovable properties can have no bearing with resolution plan submitted by Successful Resolution Applicant for consideration by the Adjudicating Authority. The order dated 21.11.2013 cannot be read as any kind of restraint order in the CIRP process of the Corporate Debtor Baghauli Sugar & Distillery Ltd. & Anr. which is also a Sahara group of company.
The clarification which was given by the Hon’ble Supreme Court by the aforesaid order clearly indicate that Hon’ble Supreme Court was of the view that on the strength of the order dated 21.11.2013 no proceedings before National Consumer Dispute Resolution Commission can be stopped. Hon’ble Supreme Court categorically made it clear that order dated 21.11.2013 shall not prevent the National Consumer Dispute Redressal Commission from proceeding and passing order in accordance with law. The aforesaid clarification is also relevant with regard to CIRP Process of the Corporate Debtor and the intent and purpose of the order dated 21.11.2013 is very clear as clarified in order dated 27.04.2016.
The order dated 21.11.2013 passed by the Hon’ble Supreme Court has no fetter in the CIRP process of the Corporate Debtor nor it can fetter the approval of the resolution plan by the Adjudicating Authority which has been approved by 100% CoC - Adjudicating Authority committed error in putting a condition in the order approving the resolution plan that Resolution Professional and CoC to obtain a clarification from the Hon’ble Supreme Court with regard to order dated 21.11.2013.
Appeal allowed.
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2023 (12) TMI 1147
CIRP - Termination of Development Agreement and Supplemental Agreement and Power of Attorney executed between Kolkata Municipal Corporation and ‘Bengal Shelter Housing Development Limited’- Respondent No.1 - The Respondent No.1 engaged Respondent No.2- ‘Barnaparichay Book Mall Pvt. Ltd.’, a wholly owned subsidiary of Respondent No.1 for implementing the said Development Agreement. An Application under Section 7 was filed by ‘Asset Reconstruction Company India Ltd.’ against Respondent No.2 (herein after referred to as Corporate Debtor) on which application by an order dated 09.08.2019 CIRP commenced under the order of the Adjudicating Authority.
HELD THAT:- From the materials on record, it is clear that the Appellant who was owner of the premises and only right for development of the premises was given to Respondent No.1. Respondent No.1 having failed to carry out the development as per the terms and conditions, Kolkata Municipal Corporation has every jurisdiction to cancel the agreement. The cancellation of the agreement being outside the insolvency process, Respondent No.3 could not have brought issue of cancellation of the agreement before the Adjudicating Authority by filing the application IA No.138 of 2022. Respondent No.1 whose Development Agreement was cancelled was free to take such legal proceeding against the Appellant as may be permissible. It is relevant to notice that no proceedings were initiated by Respondent No.1 questioning the termination of agreement dated 17.01.2022.
The Kolkata Municipal Corporation who is owner of the premises by Development Agreement gave right of development of the premises to the Respondent No.1 and Respondent No.1 has unauthorisedly without prior approval of the Appellant as alleged Assignment Agreement dated 06.03.2008 has given to the Corporate Debtor. The possession of the premises has to be of Respondent No.1 who was given possession by the Appellant. In event, the Respondent No.1 illegally transferred the possession to Respondent No.2 contrary to the Development Agreement for protection of such possession, Section 14(1)(d) cannot be relied on.
The Adjudicating Authority has come to a wrong conclusion that the Assignment Agreement dated 06.03.2008 is lawful and valid without looking to the terms and conditions of the Development Agreement which was made by the Kolkata Municipal Corporation in favour of the Respondent No.1 dated 24.02.2006. No valid right could flow to Respondent No.2 in pursuance of the Arrangement Agreement dated 06.03.2008, hence, no right or interest created by Corporate Debtor by virtue of Arrangement Agreement dated 06.03.2008 which was neither obtained with the consent of the Appellant nor the said Arrangement Agreement even communicated to the Appellant by Respondent No.1. The Corporate Debtor had no right to be in possession of the premises nor its possession was lawful.
The Respondent No.1 has brought its 100% subsidiary, Respondent No.2 without there being any consent or permission of the Appellant and in the CIRP of the Respondent No.2, the assets are sought to be included whereas the assets premises are not the assets of the Corporate Debtor - The premises, in question, cannot be subject matter of the CIRP of the Corporate Debtor. Adjudicating Authority committed error in directing the Appellant to handover the possession of the premises to the Resolution Professional. The order passed by the Adjudicating Authority setting aside the order dated 17.01.2022 terminating Development Agreement, Supplemental Agreement and Power of Attorney cannot be sustained.
The order dated 17.11.2022 passed by the Adjudicating Authority is set aside - appeal allowed.
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2023 (12) TMI 1146
CIRP - Direction to pay the interest due and payable from the date of termination of the electricity i.e. March 01, 2016 connection in the name of the Corporate Debtor, till the date of adjudication of the present application - the grievance of the applicant is that the interest of the security deposits is not being paid which according to the regulation the respondent was entitled.
HELD THAT:- The issues which are sought to be raised in this application were not before the Adjudicating Authority in this appeal.
Recording the statement of counsel for the respondent (who is applicant here) that the appellant may consider in accordance with the application rules and regulations the appeal was disposed of. In event, the said consideration is not favourable to the applicant it is always open to the applicant to file appropriate application before the Adjudicating Authority for relief, if any.
The said issues cannot be entertained in this application nor adjudicated by this Tribunal in this appeal - application disposed off.
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2023 (12) TMI 1145
Jurisdiction of CESTAT under GST Act, 2017 - Refund order passed u/s 142 of the Central Goods and Services Tax Act, 2017 - appealable before the Customs, Excise and Service Tax Appellate Tribunal or not - the issue that has been referred to the Larger Bench of the Tribunal is as to whether the order passed under section 142 of the CGST Act is appealable before the Tribunal.
HELD THAT:- Section 142 deals with Miscellaneous Transitional Provisions. Sub-section (3) provides that every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act. However, no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under the CGST Act - appellant had deposited the short payment of service tax under Chapter V of the Finance Act in respect of import of service on 08.12.2017. Refund of CENVAT credit could have been claimed under rule 4(7) of the CENVAT Rules, which had been framed under section 37 of the Excise Act and section 94 of the Finance Act.
Section 173 of the CGST Act provides that save as otherwise provided in the CGST Act, Chapter V of the Finance Act, shall be omitted. Section 174(1) of the CGST Act provides that save as otherwise provided in the CGST Act, on or from the date of commencement of the CGST Act i.e. 01.07.2017, the Excise Act shall stand repealed. Upon repeal of the Excise Act, the CENVAT Rules automatically stood repealed. The appellant, therefore, could not have claimed refund under rule 4(7) of the CENVAT Rules.
Before examining whether an appeal would lie to the Tribunal against an order passed under section 142 of the CGST Act, it would be appropriate to examine whether an appeal would lie to the Appellate Tribunal constituted under the CGST Act.
Whether the Tribunal would have the jurisdiction to entertain an appeal filed against an order passed under sub-section (3) of section 142 of the CGST Act? - HELD THAT:- There is, therefore, no manner of doubt that an appeal against an order passed under section 142 of the CGST Act would lie to the Tribunal - This view also gains support from the fact the legislative intent could not have been to deprive either an assessee or the Revenue from the right of an appeal since an appeal against an order passed under section 142 of the CGST Act would not lie to the Appellate Tribunal constituted under the CGST Act.
In the present case, the service tax was paid under the provisions of Chapter V of the Finance Act and refund was claimed under sub-section (3) of section 142 of the CGST Act, under which the claim was required to be disposed of in accordance with the provisions of the existing law. Therefore, even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under sub- section (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal.
Thus reference answered as:- An appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under section 142 of the Central Goods and Services Tax Act, 2017.
The papers may now be placed before the Division Bench of the Tribunal for deciding the appeal.
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2023 (12) TMI 1144
Levy of service tax - Site Formation & Clearance, Excavation & Earth Moving & Demolition Services - difference between Balance Sheet & Service Tax Return figures.
In respect of dropping of demand of Rs.11,64,74,435/- - HELD THAT:- The services rendered by the assessee both in terms of the scope of the relevant statute as well as judicial pronouncements cannot be considered as Site Formation and Clearance, Excavtion and Earth Moving and Demolition Services for the period from 16.6.05 to 31.5.07. According to me the valuation against Site formation etc. arrived at by ICWAI does not affect this inference because determination of value of a part of a service in no way affects the character of the service as given under agreements. The agreements do not mention any separate consideration for overburden removal or site formation.
In respect of dropping of demand of Rs.2,09,43,980/- - HELD THAT:- Due cognizance given to the certificate issued by the statutory auditor of the company C.Ghatak & Co which in effect had completely reconciled the difference of Rs.19,32,74,085/- by which the balance sheet figure exceeds the figure covered under bills raised on mining clients, and on which service tax demand of Rs.2,09,43,980/-has been raised in the impugned SCN.
Dropping of penalties under Section 78 - HELD THAT:- In consonance with the Board’s Circular No.137/167/2006/CX-4 dated 03/10/2007 read with provisions of Section 73(3) of the said Act, it is found the issues of the instant case are squarely covered by such provisions and clarifications in so far as the demand of Rs.26,01,36,069/- is concerned. As a sequel to the above reasons, it is opined that for conclusion of all proceeding in respect of the demand for the aforesaid period against the assessee in terms of Section 73(3) of the Act read with Board’s Circular. In the circumstances, there are no justification for imposing penalties against this amount.
The Adjudicating authority has considered all the factual details and statutory provisions and case law for coming to his considered decision - there are no reasons to differ with his findings - appeal of Revenue dismissed.
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2023 (12) TMI 1143
Service of SCN - Whether the provision of rule 776 of the Manual was adhered to and any notice under section 74-A(1) was given before passing the order? - HELD THAT:- Once the initiation of the proceedings itself is bad, the consequential proceedings automatically fails in the eyes of law. Matter requires consideration.
Learned ACSC may file counter affidavit within a period of four weeks from today. Rejoinder affidavit, if any, may also be filed one week thereafter - List immediately thereafter.
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2023 (12) TMI 1142
Seeking rectification of alleged mistakes - No finding has been recorded on the appellant’s submission contesting imposition of 100% penalty under section 11AC read with Rule 25 of Central Excise Rules, 2002 - interpretation of Exemption NN 12/2012 dated 17.3.2012 - Extended period of limitation - HELD THAT:- The appellant contested the impugned order on three grounds- (a) that it was eligible to the benefit of the exemption notification; (b) extended period of limitation was wrongly invoked in the confirming the demands; and (c) if the matter is decided against it, CENVAT credit on inputs may be allowed. Insofar as the extended period of limitation is concerned, the appellant listed the findings of the Commissioner and contested them.
In the final order, the confirmation of demands by the Commissioner were upheld. The question of the CENVAT credit was addressed in the Miscellaneous order dated 30.9.2022. Since the confirmation of the demands by the Commissioner were upheld, it was stated in the miscellaneous order dated 30.9.2022 that penalty under section 11AC also needs to be upheld. The ground which is now sought to be raised that since the demands which were confirmed were within the normal periods of limitation, despite the finding of the Commissioner that there was wilful suppression of facts, penalty under section 11AC cannot be invoked was not part of the appeal. The appellant cannot, in the second application for rectification of mistake, now raise a new ground which was not part of the appeal.
Extended period of limitation - HELD THAT:- It needs to be pointed out that while demands for extended period of limitation cannot be confirmed where there is no fraud, collusion, wilful misstatement or suppression of fact, demand for a short period of say, one year, can be confirmed even when these elements of fraud, collusion, wilful misstatement or suppression of facts, etc., are present Nothing prevents confirmation of demands for shorter period even if these elements are present. Having found that these elements were present in the case (as recorded by the Commissioner and reproduced in the appeal), if demands are raised or confirmed for a shorter period, it does not mean that these elements are not established.
There are no error apparent on record - this application for rectification of mistakes is rejected.
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2023 (12) TMI 1141
Maintainability of appeal - non-prosecution of the case - Matter has been listed quite a number of times in the past and appellant has been abstaining from attending the hearing or seeking adjournment - HELD THAT:- Today the matter on request has been listed for E-hearing as per the request made by the appellants on 06.11.2023. Appellants has abstained without any request for adjournment.
There are no justification for adjourning the matter any further as these appeals have been adjourned more than the prescribed maximum number statutorily provided.
The Appeals are dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.
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2023 (12) TMI 1140
Maintainability of appeal - availability of alternative remedy - Recovery of the Drawback sanctioned u/r 18 of Duty Drawback Rules, 2017 - levy of penalty u/s 17 of the Customs Act, 1962 - HELD THAT:- Undisputedly, the issue involved in the present case is in relation to the goods imported as baggage - From the Section 129A(1) of the Customs Act, 1962 it is evident that the appeal in the present case against the order of Commissioner (Appeals) would not lie before this Tribunal. Accordingly, this appeal is not maintainable before this Tribunal.
Appeal is dismissed as non maintainable - Appellant may pursue the appellate remedy as provided in law.
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2023 (12) TMI 1139
CENVAT Credit - input services - Catering Service, House Keeping services, Interior Decoration services and Garden Maintenance services used in the manufacturing plant - services such as Catering Service, House Keeping services, Interior decoration services and Garden maintenance service, Construction Service, Repair and maintenance service etc used in guest house and Employee Township - HELD THAT:- The definition of “input service” read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which are integrally connected with the business of the manufacturer. Thus, the definition of 'input service' has a wide ambit and extends to all services used in relation to the business / activities relating to business.
In the instant case, the housekeeping services, catering services and interior decoration services are availed at the plant/factory and hence denial of the credit in respect of the said services is not justified.
Housekeeping services - HELD THAT:- These services are very necessary and vital for keeping the factory in good condition. Hence the expenses incurred towards housekeeping services qualify as ‘input service’ under CENVAT credit Rules, 2004 - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS M/S PRICOL LTD. [2015 (12) TMI 1486 - CESTAT NEW DELHI] and BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD [2010 (3) TMI 375 - CESTAT, MUMBAI].
Catering services - HELD THAT:- The factory of the Appellant is in the remote area and thus the Appellant had to supply food to the workers. Therefore, the service of catering as availed by Appellant is in relation to manufacturing activity, since without food it will not be possible for the employees to work in the factory - reliance can be placed in CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [2010 (10) TMI 13 - BOMBAY HIGH COURT].
Interior decoration services - HELD THAT:- The appellant has incurred expense towards interior decoration of various office buildings & canteen within the factory premise which is essential for smooth carrying of day to day business activities. Thus, such expenses incurred by the company also qualify as ‘input service’ under CENVAT credit Rules, 2004.
Garden maintenance services - HELD THAT:- In the instant case the Appellant had availed services for maintenance of garden which is essential for the proper functioning and efficiency of a factory, and hence they are eligible for credit as input services - reliance can be placed in BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., AURANGABAD [2010 (3) TMI 375 - CESTAT, MUMBAI].
Manpower services - HELD THAT:- In the instant case the Appellant had availed services for manpower service which is essential for the cleaning, organizing canteen of workers, work related to dispensary within the factory to provide instant medical treatment to the worker when required etc. Thus, these activities certainly have nexus with the business of manufacture - reliance can be placed in M/S. JAYPEE SIDHI CEMENT PLANT VERSUS CCE, BHOPAL [2014 (10) TMI 90 - CESTAT NEW DELHI].
Thus, the impugned order denying the Cenvat credit availed on the 'input services' Catering Service, House Keeping services, Interior Decoration services and Garden Maintenance services used in the manufacturing plant, is not sustainable.
Cenvat credit availed on the input services used in relation to the guest house and township situated within the factory premises - HELD THAT:- The Appellant incurred the expenses on account of construction of guest house and township for their employees within the premise of the plant. Due to location of the plant, they are under statutory obligation to provide a colony to the workers of the factory, to maintain the continuity of activity of manufacturing. Thus, having colony within the factory premise became indispensable. Similarly, to accommodate business delegates, consultants who used to visit time to time for verification and inspection of the plant, the guest house facility became necessary - the Cenvat availed by the Appellant were not related to any services acquired for its employees’ personal use, instead those were availed by the Appellant for proper functioning of the factory.
Reliance can be placed in the case of COMMISSIONER OF CUS. & C. EX., HYDERABAD-III VERSUS ITC LIMITED [2011 (11) TMI 516 - ANDHRA PRADESH HIGH COURT] - The Appellant is eligible for the Cenvat credit availed on the input services such as Catering Service, House Keeping services, Interior decoration services and Garden maintenance service, Construction Service, Repair and maintenance service etc used in guest house and Employee Township situated within the factory premises. Accordingly, the impugned order denying such credit to the Appellant is not sustainable.
The Appellant is eligible for the Cenvat credit availed on the 'input services' which are disputed in this appeal - the demand confirmed in the impugned order is set aside. Since the demand itself is not sustainable, the question of charging interest and imposing penalty does not arise - Appeal allowed.
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2023 (12) TMI 1138
Maintainability of petition - availability of efficacious and alternative remedy of appeal - Services of storage and warehousing of food grain - Exemption from levy of tax as per Notification No. 12/2017 – Central Tax (Rate), dated 28.06.2017 - agreement with APSCSCL for providing storage, warehousing services involving loading, unloading, stacking, packing, care, custody and security etc., of food grains - HELD THAT:- Admittedly, the petitioner has an efficacious and alternative remedy to file appeal. The said fact is also mentioned in the impugned order to the effect that an appeal lies against the impugned order before the Appellate Joint Commissioner (ST), Tirupathi.
In view of the decision in ASSISTANT COMMISSIONER (CT) LTU, KAKINADA & ORS. VERSUS M/S. GLAXO SMITH KLINE CONSUMER HEALTH CARE LIMITED [2020 (5) TMI 149 - SUPREME COURT] wherein the Hon’ble Apex Court held that the High Court ought not to have entertained the writ petition when an efficacious and alternative remedy of appeal is available to the petitioner, without expressing our opinion on the merits of the petitioner’s case, it is deemed apposite to give liberty to the petitioner to file an appeal against the impugned order.
The writ petition is disposed of giving liberty to the petitioner to file an appeal against the impugned order dated 10.07.2023 passed by the 2nd respondent before the concerned Appellate Authority within four (4) weeks from the date of receipt of a copy of this order, in which case, the Appellate Authority shall admit the appeal and after affording an opportunity of hearing to both parties, pass an appropriate order on merits in accordance with governing law and rules expeditiously.
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2023 (12) TMI 1137
Seeking release of vehicle and the goods - invoice showing different detail - petitioner was ready to pay the penalty and fine - HELD THAT:- The exigency of the situation regarding the vehicle and the goods is over and the petitioner who is a consigner will necessarily have to reply to the show cause notice whether the circumstances spelled out in the show cause notice had any substance. The show cause notice shows the reference to invoice no. 201 dated 16.08.2023 in favour of Durga Multimetals Pvt. Ltd. for a sum of Rs. 12,75,885/- had a grand total of Rs. 15,05,545/- dated 16.08.2023, the date when the vehicle was detained. The invoice which has been placed on record as Annexure P-1 would go on to show that the goods had been consigned by Rajan Trading Corporation at Rajkot to the petitioner and carries a separate detail.
The genuineness of the facts and transit would require further verification and it has specifically been mentioned that it was entrusted from M/s Rajan Trading Corporation at Rajkot and Section 16(2)(c) of the Act needs verification from the books of account. The Apex Court in THE STATE OF PUNJAB VERSUS M/S SHIV ENTERPRISES & ORS. [2023 (1) TMI 842 - SUPREME COURT] has held that it is not for this Court to entertain the writ petition against the show cause notices and has set aside the order of this Court while not interfering in the order whereby the goods had been released.
Keeping in view the settled position and the fact that the matter has to be gone into by the competent authority, the present writ petition is disposed off with liberty to the petitioner to file his response to the said notice. It is open to the authorities to take action in accordance with law.
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2023 (12) TMI 1136
Validity of recovery notice - Denial of benefit of exemption - - refund claim - petitioner has discharged tax under wrong head - importing “Bulk Simulator Training Services” to the Helicopter pilots from Indian Air Force, Indian Army, Indian Navy and other defence establishments including some of the departments of the State Government - Absebnce of GSTIN and PAN - HELD THAT:- The second and the third respondents’ impugned orders are perused. These authorities have elaborately referred to the provisions of IGST Act as also the CGST/KGST Act and they have also referred to the details of the recipient establishments. There is obvious reference in the impugned orders to the details furnished by the petitioner after being served with the notice in GST DRC-02, but the proceedings are concluded in the premise that the petitioner has raised Invoices without mentioning the necessary details.
This Court must opine that this consideration in the peculiarities of the case will not suffice, and if it is undisputed that the recipient establishments are based in Delhi, Jharkhand and Uttar Pradesh and the petitioner’s supply [imparting of training] is exempt, significance of the same should also have been considered. This Court is of the considered opinion that, especially in the peculiarities of this case, the third respondent, to sustain the proposed demand, had to examine whether failure to furnish the details of the GSTIN, notwithstanding the other circumstances, could justify denial of exemption.
The proceedings are restored to the third respondent to reconsider the merits of the petitioner’s response in the light of this Court’s observation - the recovery notice dated 17.10.2023 is also quashed - Petition allowed in part.
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2023 (12) TMI 1135
Validity of reopening of assessment u/s 147 - reasons to believe - change in opinion - Whether the petitioner assessee has failed to “disclose fully and truly all material facts necessary for assessment”? - admissibility of deduction under Section 10A - Whether the petitioner assessee has failed to “disclose fully and truly all material facts necessary for assessment? - HELD THAT:- There has been declaration including of expenditure relating to providing technical services. Once such primary facts have been declared and the assessee had made the declaration and claimed deduction under Section 10A of the I.T. Act, there was no further obligation on the assessee. If the Assessing Officer was of the view that details furnished would fall within Section 80HHE and not under Section 10A of the I.T. Act and accordingly, assessee was not entitled to claim such expenditure under Section 10A of the I.T. Act, the non-drawing of such legal inference by the assessing officer at the relevant point of time cannot result in holding that there is no true and full disclosure of primary facts.
Whether the re-assessment notice u/s 147 r/w Section 148 of the I.T. Act is merely a product of change in opinion and accordingly is impermissible in law? - A perusal of Section 148 of I.T. Act, the notice along with the reasons for reopening make it clear that the tangible material relied upon are the MSA’s, Works contracts/SCW’s, Invoices and other details relating to the deduction claimed under Section 10A of the I.T. Act. All of which is stated to have come to the notice of the Department relating to the Assessment Year 2008-2009.
However, even on a perusal of para-2.10 of the Assessment Order relating to the Assessment Year 2008- 2009, “ the assessee as has been asked on innumerable occasions to submit MSAs and SOWs that it had with its clients the assessee has only been able to provide some of the sample MSAs and SOWs…”. Similar observation is made at para-2.12, which reads as follows, ”the assessee has not been able to submit all the SOWs and MSAs entered for software contract services…”. The finding by the Assessing Authority is by placing the burden on the assessee regarding correlation between the MSA, SOW/ work order vis-a-vis work carried out by STP/SCZ unit.
Thus the tangible material sought to be relied upon itself not being complete, it cannot be held that the MSAs and SCWs would demonstrate that the declaration made by the assessee leads to a conclusion that there has been escapement of income. It is also a settled position that reassessment proceedings cannot be in the nature of review and accordingly, the material as has come to light in the assessment proceedings for the Assessment Year 2008- 2009 cannot be a sufficient ground to resort to reassessment proceedings.
Whether the re-assessment notice u/s 147 r/w Section 148 amounts to borrowed satisfaction as it places reliance on findings recorded in the assessment proceedings recorded in the Assessment Year 2008-2009? - The jurisdictional requirement under Section 147 of the I.T. Act for re-assessment requires “the assessing officer to entertain reasons to believe that income chargeable to tax has escaped assessment”. It is clear that the reason to believe has to be entertained by the Assessing Officer by forming an opinion himself.
Clearly, reasons for reopening rests on the satisfaction of the Assessing Officer who has passed an Assessment Order for the Assessment Year 2008-09 which would amount to substitution of the assessment orders of reasons to believe by borrowed satisfaction of the Assessing Officer who has passed an order for the year 2008-09 which is impermissible in law.
Whether the bar under third Proviso to Section 147 of the I.T. Act is a legal impediment insofar as the present re-assessment notice is concerned? - In the above context and looking into the bar under the third proviso to Section 147, the object being to prohibit proceedings u/s 148, when appeal/revision/reference is pending, in the present case, taking note of the details in the Table above, more particularly, noticing pendency of appeals in Column No.(4) as on the date of Section 148 notice, clearly, notice under Section 148 was hit by the bar under third proviso to Section 147 of I.T. Act.
Computation of deduction u/s 10A - Assessment Year 2006-2007 - HELD THAT:- The nexus between the technical services rendered and the STP which is necessary for an allowable deduction u/s 10A is a legal requirement and existence of such nexus is a conclusion to be arrived at by the AO. Once the primary facts regarding providing of technical services outside India is made out, there would end the duty of the assessee and the question of nexus is a matter that the Assessing Officer ought to have clarified by further investigation.
The reliance on documents that has come out as regards the proceedings for the Assessment Year 2008-2009 by way of MSAs, Work Contracts, SCWs and Invoices cannot be sufficient by itself to initiate proceedings for deduction under Section 10A of the I.T. Act in light of absence of nexus. If that were to be so, as the reliance on such documents for the purpose of reducing Section 10A of I.T. Act, the deduction for Assessment Year 2008-2009, itself has not attained finality and is subject to appeal as averred by the petitioner in the pleadings which remains uncontroverted. If that were to be so, the material relied upon in assessment proceedings for the Assessment Year 2008-2009 not having been finally adjudicated so as to indicate requirement to reduce Section 10A deduction, the same cannot be made use of for reassessment proceedings. The requirement that there must be true and full disclosure cannot be stated to have been breached by taking recourse to the material produced during the Assessment Year 2008-2009 as such conclusion for the Assessment Year 2008-2009 leading to reduction in Section 10A deduction itself is a subject matter of further adjudication.
Implication of Circular No. 1/2013 [F.No.178/84/2012 - ITA.I - Government of India, Ministry of Finance, Department of Revenue, CBDT dated 17.01.2013.] - It is clear that the clarification stipulates that the benefits under Section 10A deductions can be availed of, if there exists a direct and intimate nexus or connection between the development of software abroad with the eligible units setup in India. Though the clarification is issued on 17.01.2013, whereas the said circular is only clarificatory and does not confer any new benefit and hence can be made use of to interpret the scope of deduction under Section 10A of the I.T.
The conclusion arrived at by the Assessing Officer for the Assessment Years 2005-2006, 2006-2007 and 2007-2008, when examined from the point of view of the Circular would strengthen the case of upholding deduction under Section 10A of the I.T. Act and would indicate that the resort to a review by recourse to Section 148 of the I.T. Act in the guise of reassessment would be a futile exercise.
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2023 (12) TMI 1134
Reopening of assessment u/s 147 - constitutional validity of Section 115BBE questioned - HELD THAT:- It is settled law that Statutory Acts and their provisions are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is an apprehension of misuse of Statutory Provision or possibility of abuse of power. It must be presumed, unless the contrary is proved, that administration and application of a particular law would be done “not with an evil eye and unequal hand”.
Consequently, at this stage, Section 115BBE of the Act cannot be held unconstitutional on the ground that there is an apprehension of misuse of the said provision.
Further, it is settled law that the Act provides a complete machinery for assessment/re-assessment of tax and the assessee is not permitted to abandon that machinery to invoke jurisdiction of the High Court under Article 226 of the Constitution [See Commissioner of Income Tax & Ors. vs. Chhabil Dass Agarwal,[2013 (8) TMI 458 - SUPREME COURT].
Consequently, the present writ petitions and pending applications are dismissed.
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2023 (12) TMI 1133
TP Adjustment - comparable selection - HELD THAT:- Rejection of comparables as functional dissimilar as covered against the appellant/revenue by the decision rendered by this Court in the matter of Principal Commissioner of Income Tax vs. ST Microelectronics Private Limited [2017 (11) TMI 266 - DELHI HIGH COURT]
Nature of expenses - purchasing software licenses - revenue or capital expenditure - HELD THAT:- There is no dispute that the respondent/assessee had purchased licensed software, of which, it did not have ownership or title. It is also not in dispute that the license had a duration that did not exceed one (1) year.
Assessee’s stand that the licensed software was used for business operations was also not disputed by the appellant/revenue. That said, the test employed by the AO and the DRP, that is “enduring benefit” is not, in our view, a conclusive test to determine the nature of the expense [See Empire Jute Company Limited vs. Commissioner of Income Tax 1980 (5) TMI 1 - SUPREME COURT].
The ratio of the judgment rendered in the Asahi India Safety Glass Ltd. [2011 (11) TMI 2 - DELHI HIGH COURT] as held that the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would in our view be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would in our view be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or added to the fixed capital of the assessee
In our view, would apply to the facts of this case, and therefore, no substantial question of law arises with regard to the said issue.
Amount expended on training its employees - capital or revenue expenses - ITAT Ruled in favour of the respondent/assessee - HELD THAT:- In our view, qua this issue as well, the test employed, i.e., the advantage of “enduring nature” is not the correct one. Training accorded to employees, which may have a lasting impact, is not determinative of the fact that the expenditure should be treated as one incurred on the ‘capital’ account.
In determining the treatment to be given to expenses, it has to be seen whether the profit structure of the assessee is altered. It is well established that if the profit structure is left undisturbed, such an expense is to be treated as one incurred on the revenue account. The mere fact that employees' efficiency improves with learnings acquired through seminars, conferences, and other forms of training, cannot be the reason to treat such expenses as ‘capital’ expenditure.
As noted by the Tribunal, it is not as if the employees stay with the employer (in this case, the respondent/assessee) for all times to come. It is quite possible that the employees may shift to another employer.no substantial question of law arises.
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2023 (12) TMI 1132
Exemption u/s 11 denied - sum offered for tax and Form No. 10 was filed during the reassessment proceedings as conditions provided in Section 11(2) of the Act, for accumulation of income, had not been fulfilled - as stated that due to an inadvertent error, the respondent/assessee had failed to show this in its original ROI - CIT(A) also held that the AO had not returned a finding that the conditions provided in Section 11(2) of the Act, for accumulation of income, had not been fulfilled - whether a revised Form No. 10 could have been filed by the respondent/assessee during the reassessment proceedings? - HELD THAT:- To claim the benefit of the provisions of sub-Section (2) of Section 11, the respondent/assessee had to file a statement in the prescribed form, i.e., Form No. 10. The Tribunal has noted that there is no adverse finding by the AO concerning the fulfillment of conditions subject to which the accumulation of income was allowed under Section 11(2).
Insofar as the issue concerning the timing of the filing of Form No. 10 is concerned, i.e., in the course of reassessment proceedings, this stands covered by a decision of a coordinate Bench of this court rendered in Association of Corporation & Apex Societies of Handlooms case [2013 (1) TMI 317 - DELHI HIGH COURT] Clearly, the respondent/assessee is not precluded from filing a revised Form No. 10 during reassessment proceedings.
The record also shows that the appellant/revenue had carried the judgment rendered in Association of Corporation & Apex Societies of Handlooms in appeal to the Supreme Court. The appeal preferred by the appellant/revenue, i.e., Civil Appeal 2020 (1) TMI 1664 - SUPREME COURT] was dismissed as withdrawn, on account of low tax effect.
Given this position, according to us, no substantial question of law arises for our consideration.
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2023 (12) TMI 1131
Validity of reopening of assessment - denial of natural justice - order passed on last date for exercising power of reassessment without supplying the reasons pursuant to notice u/s 148 despite request by the petitioner to furnish reasons for reopening - HELD THAT:- Division Bench of this Court in SHRI JANAK SHANTILAL MEHTA [2020 (12) TMI 991 - MADRAS HIGH COURT] wherein while examining as to whether failure to furnish the reasons for reopening on a request made would vitiate the assessment proceedings, it was held that it was mandatory for the Assessing Authority to furnish reasons and if the Assessing Authority fails to do so, the re-assessment proceedings is liable to be set aside. Further, after referring to the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT] it was held that non-furnishing of reasons would cause serious prejudice and would vitiate the proceedings, resultantly the impugned proceeding was quashed
The impugned order under Section 147 of the Act is made contrary to and in gross disregard/ non-compliance with the procedure laid down for reassessment by the Hon'ble Supreme Court inasmuch as the assessment order is passed without furnishing the reason for reassessment despite a specific request. The impugned order stands vitiated and is thus set aside. Decided in favour of assessee.
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