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Showing 461 to 480 of 1430 Records
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2023 (12) TMI 970
Eligibility for deduction u/s 80P(2)(a)(i)/80P(2)(d) - interest income received - income of cooperative society engaged in carrying on the business of banking and providing credit facilities to its members - assessee is primary agricultural cooperative society - CIT(A) allowed deduction u/s 80P(2)(a)(i) and no deduction has been allowed u/s 80P(2)(d) on the interest/dividend income earned by the assessee on the investments made with the cooperative banks/scheduled banks - HELD THAT:- Assessee has received interest/dividend from cooperative societies and interest and dividend from cooperative banks - As per sec. 80P(2)(d) if the assessee has received interest/dividends from the cooperative society from its investments with any other cooperative society, the assessee is eligible for deduction, since, in this case the assessee had submitted statement of facts before the CIT(A) but the interest/dividend from cooperative society received by the assessee was not considered and examined.
During the course of assessment proceedings, the assessee has also not brought into notice of the AO, therefore, for the limited purpose for determining the source issue is remitted back to the AO and if it is found that these income satisfies the requirement of sec. 80P(2)(d) of the Act, then it has to be allowed. Accordingly, this issue is remitted back for the verification to the AO and the assessee has to show the necessary proof of evidence for substantiating its case. We further note from the statement of facts that the assessee has received interest and dividend, from the cooperative banks.
If the AO finds otherwise, the AO shall follow the judgment of Totgars Co-operative Sales Society[2017 (7) TMI 1049 - KARNATAKA HIGH COURT] accordingly the assessee will not be eligible for deduction u/s 80P(2)(d) on such interest income received after giving necessary cost for earning interest income. The AO is directed to give reasonable opportunity of being heard to the assessee. The assessee is also directed to produce necessary documents for sustaining its case and avoid to unnecessary adjournments for early disposal of the case.
Deduction u/s 80P(2)(a)(i) - deposits in the bank account in view of the interest received on deposits - As assessee has submitted detailed written submissions vide letter dated 25/11/2019, which has been incorporated by the AO at para No.7.4, in which it has been stated that as per Karnataka Cooperative Society Rules 1960 and the orders passed by the Registrar of Co-operative Society it is mandatory for cooperative societies to maintain as specified percentage of deposits received from the members in savings bank account and also to maintain specified percentage of such deposits as investments/deposits in banks and he has also relied on other rules, therefore, the amount has been deposited in the bank account in view of the interest received on such deposits should be treated as attributable to the business income of the assessee and allowed deduction on such interest u/s 80P(2)(a)(i). This argument of the ld. AR of the assessee is not acceptable because the interest income received by the assessee is not from the activity of carrying on the business of banking or providing credit facilities to its members as per section 80P(2)(a)(i)
Disallowance under various heads towards provisions made in the profit and loss account - Since, we have noted that the assessee has been allowed deduction by the CIT(A) u/s 80P(2)(a)(i) of the Act on the profits earned from the business of the assessee. The ld.AR of the assessee relied on Circular/notification No.37/2016 dated 02/11/2016 for any disallowance made under the profit and loss account of business or profession and if the assessee is eligible for deduction under Chapter IVA, then the deduction should be allowable as per the eligibility of the Chapter VIA of the I. T. Act. However, the ld.AR of the assessee could not establish before us that these provisions made were out of the business profit earned by the assessee during the year, therefore, this issue is also remitted back to the AO for verification that the provisions made by the assessee are part of the business profit of the current year or not. If it is found in order then the assessee is to be given benefit of the Circular cited supra. Accordingly this issue is allowed for statistical purpose.
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2023 (12) TMI 969
Computation of deduction u/s 80IB/80IC - allocation of advertisement expenses to the eligible units in the ratio of turnover of eligible units to the total turnover of the assessee - HELD THAT:- The assessee has relied on the word ‘derived from’ as per the provision which according to the assessee relates to the expenses which have direct nexus pertaining to the eligible units for claiming deduction u/s. 80IB/80IC of the Act. The Revenue, on the other hand, has contradicted the same by stating that this interpretation of the assessee is not to be considered and only the allocation in proportion to the turnover of the eligible units to the proportion of the total turnover of the assessee company should be allocated for determining the profit eligible for deduction u/s. 80IB/80IC - Assessee has relied on the decision of the coordinate bench for A.Y. 2001-02 which has held that the assessee has itself allocated 50% corporate expenses including advertisement expenses of head office as per the rate of turnover of the eligible unit to the turnover of the assessee company which was duly certified by a Chartered Accountant. The co-ordinate bench has accepted the allocation made by the assessee and directed the ld. A.O. not to make any further allocation for computation of deduction u/s. 80IB of the Act. Decided in favour of assessee.
Nature of expenses - advertisement expenses incurred on brand building - revenue or capital expenditure - HELD THAT:- As decided in Asian Pains (India) Ltd. [2016 (11) TMI 258 - BOMBAY HIGH COURT] wherein it was held that the expenditure incurred for advertisement in respect of a brand is to be seen whether the same was for a business which is to be commenced or which is for an ongoing business. Further, it held that the expenditure for advertisement of a brand of an existing ongoing business is in the nature of maintaining the brand and not for creation of a brand
We hold that the expenditure incurred towards Brand Building is for the maintenance of the existing business and not for commencement of a new business and the same is held to be revenue expenditure in nature. Hence, ground raised by the assessee is allowed.
Addition offered by the assessee in respect of impact of section 145A of the Act on inventories - assessee has offered tax as per the tax audit report clause 12B which is the difference between cenvat credit on closing inventories and cenvat credit on opening credit - assessee has contended that the tax auditor has inadvertently failed to consider the fact that while computing adjustment u/s. 145A the purchase and sales which also have to be adjusted as it was recorded in the note and mere adjustment in the value of opening and closing stock in isolation is contrary to the provision of section 145A of the Act as per the revised guidance note - HELD THAT:- As this additional ground raised by the assessee requires factual verification, we deem it fit to remand this issue back to the file of the ld. A.O. for verification of the facts. Hence, the additional ground raised by the assessee is allowed for statistical purpose.
Accrual of income - exclusion of the amount of retention money included in sales, since the same has not accrued during the year, in computing total income under the normal provisions of the Act - HELD THAT:- We direct the ld. A.O. to decide this ground after verification of the facts as when the retention money has accured based on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Associated Cables Pvt. Ltd. [2006 (8) TMI 135 - BOMBAY HIGH COURT]. The ground raised by the assessee is allowed for statistical purpose.
Disallowance u/s. 14A read with Rule 8D - HELD THAT:- It is admitted fact that the assessee has offered the dividend income received out of the investment made in foreign company and the interest income out of the investment in Unit Trust of India and Krishna Bhagya Jala Nigam Ltd. The ld. CIT(A) has rightly directed the ld. A.O. to recompute the disallowance u/s. 14A of the Act on the basis of the decision of Godrej Boyce and Manufacturing Co.Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] where the assessee has mixed fund consisting of own fund and borrowed funds. We do not find any infirmity in the order of the ld. CIT(A) in directing the ld. A.O. to recompute the disallowance u/s. 14A of the Act. We, therefore, dismiss ground raised by the Revenue.
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2023 (12) TMI 968
Applicability of Section 115JB on the assessee Govt. company - scope of amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 - HELD THAT:- We observe that the assessee company is a Government undertaking owned by Central Government and the State of Bihar & West Bengal and the activities are governed by Damodar Valley Corporation Act, 1948, Central Legislation. Section 115JB(1) of the Act which provides special provisions for payment of tax by certain companies.
We notice that prior to the amendment brought in by 01.04.2013 Section 115JB(2) of the Act read as “Every assessee being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Part 2nd & 3rd of Schedule VI to the Companies Act, 1956 (1 of 1956)”.
Considering amendments and the provisions existing prior to 01.04.2013, we notice that prior to 01.04.2013 the type of companies other than those which are required to prepare their financial statements in accordance with provisions of Part ‘2’ & ‘3’ of Schedule VI of Companies Act were not brought into the ambit and there was no clarification in the said provision. However, subsequent to the amendment by 01.04.2013 onwards, the remaining companies have also been brought into the ambit of Section 115JB of the Act.
Hon'ble Jurisdictional High Court while dealing similar question of law in the case of the assessee for AY 2010-11 [2021 (12) TMI 1475 - CALCUTTA HIGH COURT] held that prior to the amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 Section 115JB of the Act was not applicable on the categories of companies like that of the assessee but post-amendment it is applicable by virtue of the amendment effective from 01.04.2013 providing that certain companies such as Insurance, Banking, Electricity which are allowed to prepare the profit and loss account in accordance with the Sections specified in their regulatory Acts, post 01.04.2013, are required to prepare profit and loss account in accordance with Schedule VI of the Companies Act for the purpose of computation of book profit under Section 115JB of the Act. Hon'ble Court has further, held that the said amendment effective from 01.04.2013 in Section 115JB of the Act is neither declaratory nor classificatory but are substantive and significant legislative changes applicable prospectively.
As the years under consideration are AY 2012-13, AY 2016-17, AY 2017-18 & AY 2018-19 and therefore, we are of the considered view that post-amendment with effect from 01.04.2013, the assessee company falls under the provisions of Section 115JB of the Act. Thus, the Revenue fails to succeed in its appeal for AY 2012-13 but for the remaining appeals for assessment years AY 2016-17, AY 2017-18 & AY 2018-19, finding of ld. CIT(A) is set aside and the issue is decided in favour of the Revenue.
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2023 (12) TMI 967
Seizure of petitioners’ gold jewellery and its disposal - Violation of Customs Act and the rights guaranteed to the petitioners under Article 300A read with Article 14 of the Constitution of India - legality of action of the respondents to sell / dispose of the gold jewellery of the ownership of the petitioners, as seized from them, without notice to the petitioners, and before an order of confiscation under Section 111 of the Customs Act, 1962 - HELD THAT:- It is not in dispute that on 14 January 2018 the petitioners arrived in India and were apprehended at the Mumbai Airport. The jewellery belonging to the petitioners which were gold bangles came to be seized by the Customs officials - The power of the Customs Authorities to seize the goods is conferred by Section 110 of the Customs Act and its application was subject matter of debate in the present proceedings - On a plain reading of Section 110 of the Customs Act, it is quite clear that it is a provision in relation to seizure of goods, documents and things. It provides that if the proper officer has a reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods.
What manner Section 110 of the Customs Act would be applicable to the seizure of the petitioners’ gold jewellery as seized on 14 January 2018? - HELD THAT:- There is something more fundamental in the present proceedings inasmuch as on 14 January, 2018 the gold jewellery in question was seized from the petitioners. Sub-section (2) of Section 110 provides that where any goods are seized under sub-section (1) and no notice in respect thereof is issued under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. Thus, the seizure having taken place on 14 January, 2018, six months period was to end on 14 July, 2018, however, what is significant is that a show cause notice for confiscation of such gold came to be issued to the petitioners on 6 July, 2018, however, the same was never served on the petitioners in a manner known to law - On a plain reading of Section 124 what would be implicit is that an order confiscating any goods or imposing any penalty can be passed only after the owner of the goods is issued a notice in terms of the said provisions interalia informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty and an opportunity of making a representation in writing is given to him within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty and a reaonsable opportunity of being heard.
Sub-section (1A) of Section 110 cannot be read as absolute entitlement or authority with the proper officer to dispose of the items like gold in the absence of any cogent reasons, which would attract the ingredients of sub-section (1A) of Section 110. Such reasons as falling under sub-section (1A) are required to be intimated to the owner of the goods for the reason that ultimately the disposal of the goods would entail serious consequences of affecting the constitutional rights of the owner of the goods guaranteed under Article 300A of the Constitution, as the owner would be deprived of his property. This would be the basic requirement of law the proper officer dealing with any goods, which are merely seized and not confiscated would be required to be followed.
It is well settled that the provisions of Article 300A of the Constitution are available to any person including a juristic person and not confine to only citizen and that the illegal seizure would amount to the owner being deprived of his right of property as contained under Article 300A of the Constitution of India.
In the present case the gold jewellery belonging to the petitioners has been dealt, disposed of and sold in patent disregard to the basic principles of law as Articles 14 and 300A of the Constitution would ordain. This apart, even the provisions of the Customs Act stand violated not only in taking away the substantial statutory rights as the law would guarantee to the petitioners, on seizure of the petitioners gold jewellery but also in the manner in which the gold jewellery has been disposed of.
In the present case, it is difficult to imagine as to what could be the reason for the Customs Officers to dispose of the goods hurriedly and with such lightening speed and by throwing to the wind the norms of fairness and reasonableness. This is not acceptable even from the reading of the provisions of Section 110. Any reading of Section 110 otherwise than what has been discussed, would amount to foisting draconian, reckless and/or unfettered authority on the Customs Officers conferring a licence to commit illegality - such substantive provisions of the Customs Act cannot be rendered nugatory, by recognizing unguided and unfettered powers being conferred under Section 110 on the Customs Officers, to dispose of the seized property, till the orders of any confiscation attains finality, unless there are strong reasons which would justify any such action when tested on such constitutional and legal parameters, and that too on the satisfaction of the officers to be reached only after hearing the owner of the property.
There are no manner of doubt that the petition needs to succeed. The question, however, is as to what can be the relief which can be granted to the petitioners in these circumstances, when there is no iota of doubt, in regard to illegality which has been committed by the respondents in depriving the petitioners of their valuable rights to property - the principles of law which would be required to be applied, is that once the action of the respondents is held to be void, ab initio, illegal and unconstitutional, there can be no second opinion that the rights of the petitioners in regard to illegal seizure would be required to be restituted.
It is declared that the action on the part of the Assistant Commissioner of Customs in disposing of / selling the gold jewellery belonging to the petitioners subject matter of the present proceedings, is illegal and unconstitutional - The respondents are directed, to restore to the petitioners, equivalent amount of gold namely 1028 gms. and / or to compensate the petitioners by making payment of amounts equivalent to the market value of the said gold, as on date.
Petition disposed off.
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2023 (12) TMI 966
Contempt of court - Continuous, repeated, deliberate and wilful disobedience by the respondents (DRI officials) - violation of stay order granted by this Court against launching of any kind of civil as well criminal prosecution with respect to the subject matter - possession of unsold gold jewellery brought back from a Trade Exhibition in a foreign country weighing about 51172 grams - prohibited goods or not - HELD THAT:-The manner in which the proceedings after proceedings are being foisted upon the petitioner and others besides the company in question, leave a lasting impression that there is a repeated, deliberate and contumacious attempt by the respondents officers to corner them from all angles, evidently to harass and prosecute the petitioner by whatever means in terms of purported action by intentionally over-reaching the directions of this Court.
It goes without saying that the sanction accorded under Section 137 of the Act appears to be hit by the dictum propounded by the Supreme Court in the case of Canon India Pvt. Ltd. v. Commissioner of Customs [2021 (3) TMI 384 - SUPREME COURT] in which it was held that “the DRI officers are not customs officers, and therefore, not proper authority in law to initiate proceedings under the Act.” In the process, evidently again, the respondents appear to have been instrumental in the initiation of proceedings against the petitioner and others connected with the company besides the company itself by other agencies including the DGFT as well as the Central Bureau of Investigation [CBI].
There was a categorical direction by this Court vide order dated 12.04.2021 that no coercive process shall be initiated pursuant to SCN and the main file in question bearing No. F.No. DRI/HQ-G/338/VI/ENG-2/INT-NIL/2019 dated 26.09.2019. The filing of the complaint before the Court of learned CMM for initiating action under different provisions of the Act is based on sanction accorded by respondent No.1 arising from the same main file and by deliberately suppressing the directions and orders passed in favour of the petitioner. Evidently, the SCN arising out of the main file is under a cloud and once the very foundation is on a sticky wicket, the purported prosecution is not fathomable. The purported prosecution entails a heavy burden on the entire justice delivery system at a huge cost, time and efforts on the part of the Court after Court.
This Court finds the respondents guilty of committing patent breach of the directions passed by this Court and holds them guilty for committing a civil contempt under Section 2(b) read with Section 11 and 12 of the CC Act.
Let notice be issued to the respondent officials for the next date of hearing i.e., 14.02.2024 to show cause as to why they should not be punished under Section 2 (b) read with Section 11 and 12 of the CC Act for being in gross violation of the directions of this Court dated 12.04.2021.
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2023 (12) TMI 965
Levy of penalties under section 112 of the Customs Act, 1962 - possession of contraband or not - HELD THAT:- On going through the statements of the appellants which were recorded during the course of investigation, the appellants themselves have admitted that one Ayub Bhai has told them that the vehicle is carrying 120 pieces of gold which were kept in fuel chamber secretly concealed in the said vehicle. The said fact was in the knowledge of the appellants and at the time of interception of the vehicle, the appellants have made statement that they were not carrying any contraband goods with them, which shows that the mala fides of the appellants, in that circumstances, the penalty is rightly imposed by the adjudicating authority to meet the ends of justice and to teach a lesson to the appellants not to involve in such activities in future.
There are no infirmity in the impugned order for imposing penalty on the appellants.
The impugned order qua imposing penalties on the appellants of Rs.10.00 Lakhs and Rs.1.00 Lakh respectively, is upheld - Appeal dismissed.
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2023 (12) TMI 964
Recovery of amount refunded erroneously - export of goods - IGST paid at the time of export and the goods have been exported on payment of Customs duty - applicability of CBEC Circular F.No.390/Misc./30/2023-JC dated 02.11.2023 - HELD THAT:- It is not disputed by both sides that it is a case of refund of IGST and the appeal is filed under the Customs Act,1962 for erroneously refund of duty paid to the respondent. Admittedly, there is no refund of Customs duty involved in this case, it is a refund of IGST, which is not governed by the Customs Act, 1962. Therefore, this appeal is not maintainable under the Customs Act, 1962.
The Revenue has filed this appeal in terms of Section 54 (3) of the CGST Act, 2017. Section 54 (3) of the CGST Act, 2017 is not applicable to the facts and circumstances of the case as it is a case of refund of input tax credit. Further, there is no other case is pending with regard to the respondent in litigation, therefore, on litigation seeking also, the respondent succeeds.
There are no merit in the appeal filed by the Revenue, accordingly, the same is dismissed.
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2023 (12) TMI 963
Valuation of iron ore fines - ‘Fe’ content - Value of iron ore fines was to be determined on the basis of Certificate of Inspection and Quality (CIQ) analysis - ‘Fe’ content in iron ore fines exported - consequent determination of value for purposes of levy of export duty - whether the CRCL report can be accepted and the assessment of the export goods carried out based thereon? - HELD THAT:- In the present case, it nowhere comes on record that the sample of Customs House Laboratory were drawn in strict adherence to the BIS Standards, as also contained in the Board’s Circular. Moreover, the sample is alleged to be drawn by the Customs Officer at the back of the appellant and without the knowledge of the exporter, which is against the statutory mandates provided under Section 144 of the Customs Act, 1962 - Since the report of the Customs Lab is cryptic and incomplete without showing the BIS Standard and protocol and method of testing, it is noticed that the appellant sought to cross examine the Customs Officer who had drawn the sample and the Chemical Examiner who had tested the sample.
It is thus evident that the CRCL test report is not only cryptic, but it is also not clear whether the same was in accordance with the prescribed standards. The fact that the sample was tested nearly two months after its drawal and had not been stored in accordance with the prescribed conditions, the reliability of the test result, therefore is not only doubtful but also unreliable - It is also noted that the Board’s Circular- 12/2014-Cus clearly states that the sample is to be drawn in accordance with the BIS standards.
The coordinate bench of the Tribunal in M/s. Vedanta Ltd. Vs. Commissioner of Customs (Preventive) Bhubeneshwar [2023 (8) TMI 947 - CESTAT KOLKATA] had held in that case that the samples were required to be tested as early as possible and had held the inordinate delay of over a hundred days as unforgivable.
There are no legal substance in the order of the learned Commissioner (Appeals), and are of the view that the learned Commissioner was in error of law in passing the impugned judgement - appeal allowed.
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2023 (12) TMI 962
Revocation of licensed courier - no documents pertaining to KYCs (Know Your Customers) and POD (proof of delivery) were found - violation of Rule 12 (iv) of Regulation of CIER, 2010 - Adherence to the provisions laid in the Notification No.07/98-Customs (NT) dated 9.11.1998 or not - HELD THAT:- The respondent has failed to verify the correctness of IEC code and even identity of its clients. The respondent was aware of the use of same Aadhaar Number for all BOEs still the Authorized Courier nor to verify the said Aadhaar Number or did not verify the antecedent, correctness of Import Export Code (IEC) number, identity of its client. Further, the respondent during the time of uploading of the Bill of Entry failed to take note that the data entered was not correct - The respondent did not even bother to inform the said mistake to the Customs department, despite that KYC details filed by him in the Bills of Entry was not the same as was reflected in those Bills of Entry. Accordingly, the respondent has contravened the provisions of Regulation 12(1) (v) of CIER.2010.
It is also observed that to ascertain as to whether the imported goods indeed reached the declared importers, a verification of genuineness of the PODs (Proof of Deliveries), submitted by the authorized courier and KYC was carried out by the Commissioner of Customs, ACC (Export), New Delhi through the jurisdictional Commissionerate(s) - Failure of delivery of the consignment to the consignee or denial of receipt of the consignment by the consignee that the addresses were found bogus during verification of genuineness of the PODs, proves that the imported goods were never destined to the consignees named in the BOEs and have been intentionally diverted.
Respondent gave no information about the said mistake to the department nor ever took the plea that it was happening due to software error. From said statements above, it becomes clear that software was so designed under the instructions of respondent. GSTIN field showing Aadhaar number was directed by the respondent himself to be kept constant while software was developed. The edit option was with the respondent. He has failed to upload the correct edited information. Thus respondent cannot be allowed to take shelter of plea of “software error”. Thus, the alleged/impugned act was not merely lack of due diligence but was intentional misconduct.
The verification report sufficiently established the fact that the respondent has imported consignments in the name of consignees who were not even aware of the fact that their identity has been misused by the respondent i.e. courier company for import purpose. The report is held cogent evidence to show that authorized courier has failed to verify the correctness of IEC code and even identity of its clients. As observed above, it was done intentionally by the respondent, hence is wrongly held to be the mere act of negligence.
There is sufficient evidence on record to hold that the above said Regulations have been violated by the respondent. The violation invite revocation of courier licence as per Regulation 11. But the original adjudicating authority despite acknowledging the alleged violations has merely imposed penalty. Since the alleged act is proved to be intentional act of the respondent, mere imposition of penalty of Rs.50,000/- (fifty thousand) is disproportionate punishment - the prayer made by the appellant-department is accepted for revocation of courier registration of the respondent for committing intentional fraud while importing several goods in the name of those being gifts from Non Resident Indian (NRI) to their family member residing in India, which otherwise were not imported by them nor were meant for them.
The findings under challenge are hereby set aside and the appeal of Department is hereby allowed.
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2023 (12) TMI 961
Auction sale under the SARFAESI Act, 2002 - legitimacy of the transaction resulting from sale of the subject property through auction - Sale concluded while commencing the resolution process - HELD THAT:- The Liquidator (now representing the Corporate Debtor in liquidation), the erstwhile Director/Promoter of the Corporate Debtor as also the Bank does not dispute the factual position that the sale stood concluded before declaration of moratorium. No reason was cited to demonstrate as to why the sale certificate would be held illegal. No case has been made out on behalf of the respondents about any defect or default in forwarding the sale certificate in terms of Section 89(4) of the Registration Act, 1908. On the other hand, all the three respondents have concurred at the time of hearing on the point that the sale stood concluded.
The present appeal shall stand allowed to the extent the properties in question are concerned. These properties cannot be treated to be liquidation assets of the Corporate Debtor for the purpose of further steps to be taken in the liquidation proceeding. The impugned order is set aside.
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2023 (12) TMI 960
Validity of Direction to the Resolution Professional to immediately handover the management of the Corporate Debtor to the CEO/Management of the Corporate Debtor - Power of NCLT where CIRP has been stayed - HELD THAT:- It is noticed that the Appeal filed by Mr. Navin Kumar Upadhyay- Respondent No.1 before the Hon’ble Supreme Court challenging the order dated 16.12.2021 of this Tribunal is already pending. It is open for the Respondent No.1 herein who is Appellant before the Hon’ble Supreme Court to pray such order as may be advised - it is also noticed that after the order of the Hon’ble Supreme Court dated 25.02.2022 staying the CIRP, Resolution Professional has also filed an application before the Hon’ble Supreme Court seeking certain directions and clarifications which application was directed by the Hon’ble Supreme Court to be heard along with the hearing of the appeal which application is still pending and no order has been passed by the Hon’ble Supreme Court. When the Appeal before the Hon’ble Supreme Court filed by the Respondent No.1 is still pending, the Adjudicating Authority ought to have stayed his hands to issue any direction to hand over the management of the Corporate Debtor to the ex-management and the Adjudicating Authority ought to have relegated to parties to approach the Hon’ble Supreme Court for any further order or direction.
It is for the Resolution Professional to take decision in its wisdom as to how the Corporate Debtor should be allowed to continue as a going concern without taking any steps in the CIRP, in view of the interim order passed by the Hon’ble Supreme Court dated 25.02.2022. Respondent No.1 virtually seeks his reinstatement of the post which is clear from the prayer made in IA No.4138-4139 of 2023 which has not been entertained in this Appeal and the Adjudicating Authority also ought to have stayed his hands from passing any order on the application filed by the parties which relates to CIRP of the Corporate Debtor.
The Adjudicating Authority committed error in passing the order dated 30.05.2023. Application IA No.2403 of 2023 filed by Respondent No.1 as well as Application IA No.964 of 2023 filed by Resolution Professional before the Adjudicating Authority ought not to have entertained due to pendency of the Civil Appeal No.2662 of 2022 filed by the Respondent No.1 before the Hon’ble Supreme Court.
The order dated 30.05.2023 passed in IA No.2403 of 2023 and IA No.964 of 2023 set aside - appeal allowed.
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2023 (12) TMI 959
Validity of Resolution Plan - classification as made in Resolution Plan between payment to employees, is discriminatory and violative of provisions of Section 30, sub- section (2) of the Code or not - issuance of directions for redetermination of the CIRP cost by the CoC - withholding payment of CIRP cost to the Appellant, which payment was directed subject to appropriation towards amount found recoverable from such promoters/ KMPs in avoidance application, violative of Section 30, sub-section (2) of the Code or not - issuance of direction to CoC to pursue the avoidance application pending for adjudication before the Adjudicating Authority.
Whether there is any discrimination in Resolution Plan in making payments to employees of the Corporate Debtor differently from those whose dues are upto Rs.10 lakhs and those whose dues are more than Rs.10 lakhs? - HELD THAT:- It is not the case of the Appellant that amount proposed to the Operational Creditor in the category of employees is less than the amount, which they would have received in event of liquidation of the Corporate Debtor. Hence, there are no error in the distinction of payment as contained in paragraph 3.3.2 of the Resolution Plan. The distribution to the employees, whose liquidation value was ‘NIL’ falls within the commercial wisdom of the CoC and the said clause of Resolution Plan cannot be impugned on the said ground, nor the said proposal for payment is violative of Section 30, sub-section (2) (b) of the Code.
Whether the Adjudicating Authority erred in issuing directions for redetermination of the CIRP cost by the CoC? - HELD THAT:- In the present case, it has not been shown that CIRP cost, which has been determined by the Resolution Professional for running the business of the Corporate Debtor was required approval of CoC under Section 28 of the Code. The Adjudicating Authority by the impugned order in paragraph 6.2 has held that CoC shall be competent to determine the quantum of CIRP cost payable under the Plan. When the Plan has been approved by the CoC, which included payment of the CIRP cost and it is not shown that CIRP cost determined by the Resolution Professional required any approval under Section 28, there are no reason for redetermination of the CIRP cost by the CoC. The direction to CoC to redetermine the CIRP cost after approval of the Resolution Plan by the CoC is unsustainable - The audited Report was obtained by Resolution Professional to satisfy himself and to obtain a confirmation of his determination of the CIRP cost by an Auditor, which having been done, no further approval of the CoC was required for payment of CIRP Cost - the directions issued by the Adjudicating Authority empowering the CoC to redetermine CIRP cost deserves to be set aside and is hereby set aside.
Whether the direction of Adjudicating Authority to withhold the payment of CIRP cost to the Appellant, which payment was directed subject to appropriation towards amount found recoverable from such promoters/ KMPs in avoidance application, is violative of Section 30, sub-section (2) of the Code and unsustainable? - HELD THAT:- The determination of CIRP cost and payment of CIRP cost to those who found entitled to receive the payments is an independent process from any recovery from Promoters/ KMPs, consequent to avoidance application filed by Resolution Professional under the provisions of the Code, including Section 66 of the Code. The directions, which were issued by the Adjudicating Authority in paragraph 6.5 was to withhold the claim of Promoters/ KMPs, falling for adjudication and before releasing the amount payable to such Promoters/ KMPs amount was directed to be detained and was made subject to appropriation towards amount found recoverable from such Promoters/ KMPs towards CIRP cost - The avoidance applications, which are pending before the Adjudicating Authority may also be expeditiously considered and decided, so as to not withhold the receipt of the payment by such Promoters/ KMPs for a long period.
Whether the Adjudicating Authority erred in issuing direction to CoC to pursue the avoidance application pending for adjudication before the Adjudicating Authority? - HELD THAT:- After approval of the Resolution Plan, the Adjudicating Authority is fully empowered to issue any direction, as to how the avoidance applications has to be pursued and direction to pursue the avoidance applications by the CoC as issued therein is fully justifiable and does not warrant any interference at the instance of the Appellant.
Appeal allowed in part.
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2023 (12) TMI 958
Approval of Resolution Plan - Scope of the remand back proceedings - The Adjudicating Authority on 06.09.2022 while disposing off application u/s 30(6) allowed the Resolution Professional to accept new Resolution Plans from unsuccessful Resolution Applicants and even previously non-participating entities who may want to submit a Resolution Plan for the Corporate Debtor. - HELD THAT:- The opinion of all member of the CoC as were represented in meeting dated 13.12.2023 in the minutes of meeting was also noticed, no useful purpose shall be served in issuing notice to other members of the CoC for the purposes of this appeal - liberty reserved to any of the member of CoC who may feel necessity to file an application, if so advised.
The order of this Tribunal dated 09.02.2023 noticed, where this Court has disapproved the request to send matter again to CoC to reconsider the Resolution Plans. This Tribunal has directed the Adjudicating Authority to consider the plan approval application and decide the same within a period of three months. The impugned order has directed the matter to be taken before the CoC, which was not approved by this Tribunal in order dated 09.02.2023. Insofar as merits of the plan, it was to be examined by the Adjudicating Authority and take a decision in accordance with law. It is further observed that no purpose shall be served in prolonging the matter by the Adjudicating Authority by sending the matter to CoC and obtain opinion of CoC.
The order impugned is unsustainable and is set aside. In result of setting aside the impugned order all consequential actions are also unsustainable. Subsequent actions including meeting of CoC conducted in consequence to the impugned are set aside - appeal allowed.
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2023 (12) TMI 957
Money Laundering - illegal transfer of funds out of India as import payments using forged Bill of Entries, Invoices, etc. - Disallowance of prayer of the applicant for an order under Section 267 of the Code of Criminal Procedure, 1973 for the production of respondent No. 1/original accused in a case being investigated by the applicant - HELD THAT:- It is apparent that the Division Bench of this Court granted bail to the respondent/accused in Criminal Writ Petition No. 1153 of 2023 on 5.12.2023. However, the bail bond has not been executed to date. According to Sections 441 to 444 CrPC, the accused cannot be released on bail unless a valid bond of the accused and surety are obtained in terms of the bail order. When the impugned order was passed, the bail order in favour of the respondent/accused did not exist. However, the Division Bench of this Court has now granted bail to the respondent/accused. In these circumstances, the trial Court shall determine the consequences of bail order, including the effect of non-execution of bail bond.
The criminal application stands disposed off.
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2023 (12) TMI 956
Money Laundering - grant of bail - whether the period of house arrest cannot be taken into consideration for computing the total period of custody of the Petitioner and it needs to be excluded? - HELD THAT:- It is by now well settled and recognized principle of law that, prolonged custody amounts to infringement or violation of Article 21 of the Constitution of India of an accused. There is no debate that, incarceration in custody for long period without trial or completion of trial affects personal liberty guaranteed under Article 21 of the Constitution of India of an accused.
In the present case, as per the submissions of the learned senior counsel for the Petitioner, admittedly the Petitioner is in custody for more than five years and eight months. The trial Court has not yet framed charge in the case and the likelihood of completion of trial of the Petitioner in the present case within reasonable time is very bleak
The maximum sentence prescribed under Section 3 of the PMLA is 7 years. The period of incarceration undergone by the Petitioner has exceeded the substantial part of the prescribed sentence. It appears that, the Petitioner has already completed 3/4 of his sentence, if convicted and sentenced for minimum punishment of 7 years. The fact on record remains that, the Petitioner is in custody/house arrest for last more than five years and eight months for an offence wherein the maximum punishment prescribed is seven years.
The Petitioner is released on bail during the pendency of the present Petition on fulfilment of conditions imposed - bail application allowed.
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2023 (12) TMI 955
Levy of service tax - rental income, compensation amounts received and the legal expenditure displayed on the official Website of Telangana Waqf Board - petitioner-Waqf Board claimed that it has no property nor given any property for lease/rent for commercial purpose - jurisdiction of respondent No. 3 to pass impugned order - time barred by the period prescribed in Section 73(1) of the Act or not - HELD THAT:- The relevant assessment years in the impugned proceedings are between 2014-15 to 2017-18. Indisputably, from April, 2014 to 02.06.2014 as the State was united the jurisdiction was with the Principal Commissioner, Visakhapatnam. The petitioner is not disputing that after 02.06.2014 the respondent No. 3 is having jurisdiction to conduct proceedings over the disputed issue. It is not the case of the petitioner that the properties referred to in the impugned proceedings and the order are not within the territorial limits of the State of Telangana and within jurisdiction of the respondent No. 3 - the location of the tax payer is crucial to determine the jurisdiction. As the petitioner and the related properties are situated within the jurisdiction of the respondent No. 3 by the date of institution of proceedings we find no discrepancy of jurisdiction of the respondent No. 3 in the proceedings.
The other essential contention put-forth is that, as part of cause of action is time barred, the entire proceedings shall fail is also not found acceptable, since the tax liability and its effect is distinct for every assessment period and each lapse would give rise to separate cause of action - Further as the limitation is a mixed question of fact and law, to arrive at just conclusion fact finding is essential, therefore appropriate jurisdiction for scrutinizing the relevant material, would be the appeal. In addition, though the petitioner has asserted that a part of time barred cause of action would effect rest of the period has remained unsubstantiated with any legal position.
The petitioner is statutory body. As per the Wakf Act, 1955 the petitioner has to maintain the finances of the wakf institutions by exercising superintendence over the manager of the wakf/mutawalli and even in audit of the accounts of wakf properties. Further, Section 58 of the Wakf Act contemplates that the petitioner is liable in case of default by mutawalli who refuses or fails to pay any revenue, cess, or tax due to the Government or any local authority. In this statutory prescription, the petitioner’s claim that it has no concern is found untenable. That apart though the petitioner asserted that the services are exempted from the tax no such material has been placed for consideration. Be that as it may, it is open for the petitioner to place the relevant material before the appellate authority and claim.
The contention of the petitioner as to the jurisdiction has no merit and in absence of tenable grounds for judicial review under Writ Jurisdiction, the extraordinary jurisdiction cannot be exercised - petition dismissed.
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2023 (12) TMI 954
Recovery of service tax alongwith interest - sale and renting of space for advertising purposes from 01.05.2006 onwards - invocation of extended period of limitation.
Liability of appellant to pay service tax - HELD THAT:- The appellant is a statutory corporation formed under Road Transport Corporation Act, 1950 and is an instrumentality of the State Government and is operating its buses for the convenience of travelling public within and outside the state of Himachal Pradesh. Further, the corporation is not directly engaged in advertising business and does not possess expertise as an advertisement consultant - In order to prove the payment of service tax, the appellant has also placed on record the affidavit of one Mr. Parveen Bansal, Director of M/s Pisces Communications Pvt. Ltd. alongwith the copies of Challan in order to establish the payment of service tax of Rs. 16,19,883/- in the Government Treasury. They have also placed on record the copies of various challans evidencing the payment of service tax by M/s Pisces Communications Pvt. Ltd. Since, the service tax of Rs. 16,19,883/- stands deposited by the agent of the appellant, the same cannot be demanded again from the appellant - the demand of service tax alongwith interest and penalty is not sustainable in law and therefore the same is set aside.
Extended period of limitation - HELD THAT:- Since the appellant is a State Government Undertaking it cannot be inferred that they had an intention to evade payment of tax - the coordinate bench of the Tribunal in the case of M/S GD GOENKA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, DELHI SOUTH [2023 (8) TMI 995 - CESTAT NEW DELHI] has considered in detail the issue of limitation and what is required to be proved by the Revenue in order to invoke the extended period of limitation to confirm the demand - extended period of limitation cannot be invoked.
The impugned order is not sustainable in law on merit as well as on limitation and therefore, the same is set-aside - appeal of the appellant allowed.
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2023 (12) TMI 953
Levy of service tax - amount retained by the appellant from fees of the Doctor on account of infrastructure support to the doctor - non compliance of the procedure of Rule 6(3A) can lead to a demand under Rule 6(3) despite the fact the appellant have reversed the amount in terms of Rule 6(3A) of Cenvat Credit Rules or not - extended period of limitation.
Whether the appellant is liable to pay service tax on the amount retained from the fees received on behalf of the doctors for treatment of patient? - HELD THAT:- This issue is no longer res-integra as in the various judgments, it has been held that the part of the amount of doctor’s fees retained by the respondent towards infrastructure support is not liable to payment of service tax - reliance can be placed in M/S SIR GANGA RAM HOSPITAL VERSUS COMMISSIONER OF SERVICE TAX, NEW DELHI [2020 (11) TMI 536 - CESTAT NEW DELHI] and M/S SIR GANGA RAM HOSPITAL, BOMBAY HOSPITAL & MEDICAL RESEARCH CENTRE, APPOLLO HOSPITALS, M/S MAX HEALTH CARE INSTITUTE LTD VERSUS CCE DELHI-I, CCE&ST INDORE, CCE&ST RAIPUR, CST NEW DELHI AND CST DELHI VERSUS M/S INDRAPRASTHA MEDICAL CORPORATION LTD [2017 (12) TMI 509 - CESTAT NEW DELHI] - thus, the issue is settled in favour of the assessee, therefore, demand on this count is not sustainable.
Whether demand of cenvat credit is sustainable under Rule 6(3) on the ground that the appellant have not followed the procedure such as intimation to opt for Rule 6(3A) was not given? - HELD THAT:- There is no dispute that the appellant have correctly paid the amount as required under Rule 6(3A) of Cenvat Credit Rules, 2004. The only lapse on the part of the appellant is that they have not given intimation to the department for opting of this option - merely for a procedural lapse when the amount was correctly paid under Rule 6(3A), no demand is sustainable - reliance can be placed in M/S. CRANES & STRUCTURAL ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE [2016 (8) TMI 387 - CESTAT BANGALORE] - it is settled that once the amount prescribed under Rule 6(3A) was paid by the appellant, no further demand is sustainable. Hence, the demand on this count is also not sustainable.
As regard the issue raised on limitation, since the entire case has been decided on its merit, the aspect of limitation not taken up and the same is left open.
The demand is not sustainable, hence, the impugned order is set aside - Appeal allowed.
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2023 (12) TMI 952
Issuance of second SCN invoking extended period of limitation - Recovery of service tax alongwith interest and penalty - Manpower Recruitment or Supply Agency Service - HELD THAT:- The present SCN dt. 22.4.2013 has been issued for the very same period. The work sheet enclosed along with SCN in page 51 of the paper book shows that the figures for the present demand under MRSA service have also been obtained from ST-3 returns of the very same period filed by the appellant. It is brought out from these returns, that in the returns the appellant had declared exempted services for certain amounts. The present demand is raised under MRSA services and not WCS on the basis that these amounts shown as exempted are taxable under MRSA services as it involves supply of labour. The work orders issued by M/s.Comtech, M/s.Espee Tech & M/s.D.R Associates show that the work orders are for executing welding, fabrication works at site - the department would have come across the figures declared as ‘exempted services’, while perusing the ST-3 returns for issuing earlier SCN by invoking extended period. Therefore all information when available before the department a second show cause notice alleging suppression of facts cannot sustain. The department when equipped with all facts as declared in the ST-3 returns ought to have initiated proceedings on all grounds in the first SCN itself.
In regard to work order issued by M/s.Comtech to the appellant for whom welding, fabrication for ship building works were carried out a letter dt. 03.07.2008 is issued by M/s.L&T Ltd. (customer) stating that the activity does not involve rendering of services and would fall under ‘manufacture’ as under Section 2(f) of Central Excise Act, 1994. So also, on perusal of the work orders, the activity rendered by the appellant for the other two customers appears to be identical - The appellant is a sub-contractor of M/s.Comtech, M/s.DR Associates and M/s.Espee Tech. The issue as to whether sub-contractor is liable to discharge service tax was under litigation. During the relevant period, The Board vide its Circular No.23/3/97-ST dt. 13.10.1997, TRU letter F.No.341/18/2004-(pt) dt. 17.12.2004 had clarified that sub contractor is not required to pay service tax.
The second show cause notice issued invoking extended period on the basis of very same ST-3 returns filed by appellant cannot sustain and requires to be set aside - the SCN is time barred. The impugned order is set aside - Appeal allowed.
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2023 (12) TMI 951
Refund of service tax paid - appellant was not able to furnish lorry receipts giving the details of Invoice/Shipping bill issued by the transporters - non-compliance with the condition in Notification No.17/2009-ST dt. 7.7.2009 - HELD THAT:- The department has given the details of the transportation charges in the SCN itself. The appellant has also furnished a Chartered Accountant certificate certifying the correlation with the transportation charges as well as the shipping bills. There is no dispute that these charges were paid by the appellant for export of goods. The non-production of lorry receipts is only a procedural infraction for which the substantive right of refund claim cannot be rejected.
In the appellant's own case, the Commissioner (Appeals) for a different period has allowed the refund claim observing that the non-production of lorry receipt is a procedural infraction and that when the appellant as furnished Charted Accountant certificate, the same has to be accepted. The department cannot take a different view in similar situation of the same appellant for a different period.
The rejection of refund claim on procedural grounds cannot be justified - the appellant is eligible for refund - the impugned order is set aside - appeal allowed.
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