TMI Tax Updates - e-Newsletter
January 1, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Demand Order issued before expiry of period of filing reply not valid; violates principles of natural justice

   By: Bimal jain

2. Importance of GSTR 2A in Claiming Input Tax Credit

   By: Ishita Ramani

3. COMPANY LEGISLATION IN INDIA

   By: DR.MARIAPPAN GOVINDARAJAN

4. LEGAL TERMINOLOGY IN GST LAW (PART -3)

   By: Dr. Sanjiv Agarwal

5. MSME Benefits for Digital Transformation in Small Businesses

   By: Ishita Ramani

News

1. Goa sees remarkable revenue growth in December 2024: CM

2. Repayment of ‘7.95% OIL MKTG COS GOI SB 2025’

3. Calendar for Auction of Government of India Treasury Bills (For the Quarter ending March 2025)

4. Auction for Sale (issue/re-issue) of (i) ‘6.79% GS 2034’ and (ii) ‘7.09% GS 2074’

5. Repayment of ‘6.89% GS 2025’

6. Customs Brokers Licensing Examination, 2025 is scheduled to be held on 18.03.2025

7. Gross NPAs of banks decline to 12-year low of 2.6 pc: RBI report

Notifications

Customs

1. 50/2024 - dated 30-12-2024 - Cus

Seeks to give effect to the fourth tranche of tariff concessions under India-Australia ECTA.

Income Tax

2. 131/2024 - dated 30-12-2024 - IT

Central Government approves ‘Sri Paripoorna Sanathana Charitable Trust’, Bengaluru for its college unit, 'Sri Paripoorna Sanathana Ayurveda Medical College, Hospital and Research Centre’ under the category of ‘University, College or Other Institution’ for the purposes of clause (ii) of sub-section (1) of section 35

SEZ

3. G.S.R. 786 (E) - dated 26-12-2024 - SEZ

Special Economic Zones (Fifth Amendment) Rules, 2024 - Hybrid working Permissions

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/PoD2/P/CIR/2024/183 - dated 31-12-2024

Introduction of a Mutual Funds Lite (MF Lite) framework for passively managed schemes of Mutual Funds

2. SEBI/HO/ ITD-1/ITD_CSC_EXT/P/CIR/2024/184 - dated 31-12-2024

Clarifications to Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs)

Income Tax

3. 21/2024 - dated 31-12-2024

Extension of due date for furnishing belated/revised return of income for the Assessment Year 2024-25 in certain cases

GST - States

4. TRADE CIRCULAR No. 29/2024 - dated 16-12-2024

Clarification regarding the scope of “as is / as is, where is basis” mentioned in the GST Circulars issued on the basis of recommendation of the GST Council in its meetings

Highlights / Catch Notes

GST

• Unsigned Orders under GST Acts Quashed, Fresh Orders with Valid Signatures Directed.

  Case-Laws - HC : The HC quashed the impugned unsigned orders u/s 73 of CGST/SGST Acts, holding an unsigned order invalid. It allowed the writ petitions, directing the competent authorities to issue fresh orders with digital or manual signatures. The HC relied on the Division Bench judgment in Silver Oak Villas LLP, which provided an opportunity to file a reply against unsigned show cause notices.
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• Improper GST Officer's Probe Renders Show Cause Notice Invalid, Court Directs Refund.

  Case-Laws - HC : Respondent no. 2, an improper officer, substantially conducted investigation, inspection, search, seizure, and recorded statements against the petitioner. Respondent no. 1, the proper officer, issued a show cause notice u/s 74 of the CGST Act based on the investigation by respondent no. 2. The HC held that only a proper officer can investigate evasion of GST, conduct inspection, search, seizure, and arrest, failing which it is invalid. Respondent no. 1 cannot issue a notice based on the 'borrowed satisfaction' of respondent no. 2. The impugned show cause notice issued by respondent no. 1 was set aside, and respondent no. 1 was directed to refund Rs. 50,00,000/- to the petitioner within eight weeks.
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• Taxpayer wins input tax credit case as High Court orders fresh decision considering notification.

  Case-Laws - HC : CGST/SGST Acts' Sec 16(4) denied petitioner's input tax credit. HC set aside order denying credit, directing competent authority to pass fresh orders considering Sec 16(5) provisions after hearing petitioner within 3 months, allowing input tax credit entitlement due to Sec 16(5) notification.
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• Tax registration cancellation upheld for failing to appeal within time limit and not using amnesty scheme.

  Case-Laws - HC : The HC dismissed the petition challenging cancellation of petitioner's registration under BGST Act due to non-availing of statutory appeal remedy within limitation period of 3 months plus 1 month for condonation. After cancellation, petitioner was unregistered with no departmental monitoring, and failed to avail appellate remedy or Amnesty Scheme.
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• Improper Notice Service Leads to ITC Disallowance Order Being Set Aside, Pending Fresh Consideration and 10% Tax Payment.

  Case-Laws - HC : The HC set aside the assessment order disallowing ITC and consequential order, remanding the matter for fresh consideration after finding violation of principles of natural justice as the impugned show cause notice was not properly served. The HC directed the petitioner to pay 10% of disputed tax within four weeks for the set aside order to take effect.
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• High Court Quashes Tax Order for Denial of Fair Hearing, Directs Fresh Consideration After Personal Hearing.

  Case-Laws - HC : Impugned order set aside for violation of principles of natural justice and Section 75(4) CGST Act. Petitioner not provided opportunity of personal hearing before passing order directing payment of tax, interest and penalty. Matter remanded to respondent for fresh consideration after granting personal hearing to petitioner. HC allows petition.
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• Court Quashes Tax Order for Violation of Natural Justice, Directs Refund of Recovered Amount.

  Case-Laws - HC : The HC quashed the impugned adjudication order u/s 73 dated 28.12.2023 issued by respondent No.1 for violating principles of natural justice. No personal hearing was granted to the petitioner and the Show Cause Notice dated 13.12.2023 was not served properly. The matter was remitted back to respondent No.1 for reconsideration afresh in accordance with law. The respondents were directed to refund the amount recovered from the petitioner on 11.03.2024 prior to 27.03.2024, being contrary to Section 78 of the KGST Act. The petition was allowed by way of remand.
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Income Tax

• Statutory Dues Like PF, ESIC Not Eligible for Rectification u/s 254(2).

  Case-Laws - HC : The HC held that the Tribunal erred in exercising jurisdiction u/s 254(2) to set aside the additions made by the AO regarding delayed payment of statutory dues like PF and ESIC amounts. This view was contrary to the SC's decision in Checkmate Services Pvt Ltd, which was rendered after the Tribunal's order. The HC agreed with the Tribunal's decision in ANI Integrated Services Ltd, which rejected the Revenue's application seeking rectification in light of Checkmate Services Pvt Ltd, considering the limited jurisdiction u/s 254(2) and Beghar Foundation.
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• Dismissal of Appeal Overturned, Petitioner Given One Week to Cure Defects for Case Revival.

  Case-Laws - HC : Petitioner's writ petition allowed, setting aside FAA's order dismissing appeal. If petitioner cures defects pointed out by Appellate Authority within one week from receipt of HC judgment, appeal shall be restored and disposed on merits by Appellate Authority. Failure to cure defects within one week will result in appeal's dismissal as per Appellate Authority's earlier order.
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• Government Firm's Plea Against Mandatory Tax Scrutiny Rejected; No Violation of Natural Justice Found.

  Case-Laws - HC : The HC dismissed the petition filed by the petitioner, a government company, against compulsory selection of its return for scrutiny by the Assessing Officer. The HC held that the CBDT guidelines for compulsory scrutiny did not preclude random selection by the AO. It rejected the contention of violation of natural justice, as the petitioner did not seek personal hearing while filing online reply. The HC found no reason to interfere under Article 226.
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• US tech firm's cloud analytics solution income in India not taxable as Fees for Technical Services.

  Case-Laws - AT : The ITAT held that the income received by the assessee from Indian customers for providing a cloud-native machine data analytics solution did not qualify as "Fees for Technical Services" (FTS) under the Income Tax Act, 1961 and the India-US DTAA. The assessee had submitted a Tax Residency Certificate (TRC) and offered the income generated in India as business income in the resident country, as required by law. Consequently, the grounds of appeal nos. 1 to 6 filed by the assessee were allowed. Regarding TDS credit, the ITAT directed the Assessing Officer to verify and allow the same as per law.
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• Taxman's Order for Special Audit Quashed for Lack of Recorded Reasons; Extension to Auditor Instead of Assessee Held Invalid.

  Case-Laws - AT : AO's order for special audit u/s 142(2A) quashed as satisfaction not recorded as mandated; extension for furnishing special audit report granted to auditor instead of assessee held invalid as beyond AO's jurisdiction; CIT(A)'s findings upholding invalidity of assessment affirmed by ITAT.
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• Investing companies' identity can't be presumed non-existent for share capital addition.

  Case-Laws - AT : The ITAT held that the AO failed to conclusively establish that the investing companies were non-existent to invoke Section 68 for addition of share capital. Regarding Section 56(2)(viib) addition for share premium, the ITAT ruled that when an unquoted company opts for the Discounted Cash Flow valuation method u/r 11UA(2)(b), the AO cannot disregard it and substitute with another method, even if discrepancies exist in the assessee's workings. The assessee's appeal was allowed.
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• Trust's Credit Guarantees to Small Businesses Allowed as Exempt Charitable Activity; Provisions Treated as Allowable Expense.

  Case-Laws - AT : The assessee, a trust governed by the Government of India, was held eligible for exemption u/s 11 of the Act for arranging credit guarantees to small ventures and supporting business/livelihood development. The ITAT allowed the ground taken by the assessee, following its previous order. The provision for guarantee claims created against outstanding guarantees was treated as an allowable expense, being necessary for providing effective credit guarantees to small and medium enterprises without collateral security through eligible banks as per the scheme.
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Customs

• Corporate Executive Cleared of Personal Liability for Company's Export Violations by High Court.

  Case-Laws - HC : The HC set aside the impugned penalty order against the petitioner, an Executive Director in a public limited company, finding no merit in the respondents' contentions. The orders failed to establish the petitioner's personal liability for the company's defaults under the FTDR Act regarding non-fulfilment of export obligations. The HC held that the show-cause notice and OIO did not provide reasoning for fastening liability on the petitioner, violating principles of natural justice. The petitioner's involvement was limited to signing a power-of-attorney on behalf of the company pursuant to a board resolution.
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• Validity of Show Cause Notices under GST Law: Section 18 Notice Upheld, Section 28(4) Notice Quashed.

  Case-Laws - HC : The HC held that the show cause notice u/s 18 was valid, but set aside the notice u/s 28(4) as authorities failed to conduct provisional assessment before issuance. The petitioner was granted six weeks to reply to the Section 18 notice.
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• An unpaid seller's application for re-exporting goods was allowed, no customs violation found.

  Case-Laws - AT : The unpaid seller's application for re-exporting goods was accepted; no contravention under the Customs Act, 1962 was committed. While redemption fine is not payable for re-exported goods as per Supreme Court's judgment, considering the facts, redemption fine is reduced to Rs. 5,00,000/-. However, the penalty is upheld. Appeal partly allowed by CESTAT.
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• Customs Duty Exemption Denied: Iron Ore Exports Before Notification Issuance Not Eligible.

  Case-Laws - AT : The appellant filed a shipping bill and paid export duty on iron ore fines on 05.12.2008, before the issuance of Notification No. 129/2008-Cus dated 07.12.2008 granting exemption. As per Section 51 read with Section 16(1)(a) of the Customs Act, 1962 and the Bombay HC judgment in Narayan Bandekar & Sons Pvt. Ltd., the relevant date for duty determination is the date of order u/s 51, i.e., 05.12.2008. Since the notification came later, the appellant is not entitled to the exemption benefit. The CESTAT dismissed the appeal.
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• Areca Nuts Post-Processing Determines Customs Classification, Not Origin: Roasted Nuts Under 2008, Not Chapter 8.

  Case-Laws - AAR : The AAR held that provisionally preserved areca nut (whole) and provisionally preserved areca nut (split) are to be classified under CTH 2008 19 20 'Other roasted nuts & seeds' of Chapter 20, and not under Chapter 8 covering dried fruits and nuts. As per HSN Explanatory Notes, heading 2008 covers nuts dry-roasted, oil-roasted or fat-roasted, whether or not containing additives. The process of roasting is not covered under Chapter Note 3 to Chapter 8. Following the Supreme Court's judgment in Commissioner of Customs & Central Excise v. Phil Corporation Ltd., the AAR concluded that roasted areca nuts are classifiable under heading 2008.
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IBC

• Validity of SARFAESI, RDB, IBC Provisions Upheld; Petitioners Penalized for Repetitive Litigation.

  Case-Laws - HC : The HC dismissed the petitions filed by the petitioners challenging the constitutional validity of Sections 13 of SARFAESI Act, 19 of RDB Act, 7, 9, 10, 95 of IBC, and seeking benefits under MSMED Act. The HC imposed a cost of Rs.1 lakh on petitioners for filing repeated petitions with identical prayers before different HCs, despite disclosing such facts, attracting the principle of estoppel. The cost is to be deposited with Registrar General within a month for transmission to HC Legal Services Committee.
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Indian Laws

• Trail Court Acquittal Upheld: Lack of Proof on Cheque Consideration Raises Reasonable Doubt.

  Case-Laws - HC : The accused successfully rebutted the mandatory presumption u/s 139 of the Negotiable Instruments Act by raising a probable defence and bringing in suspicious circumstances regarding the consideration of the cheque. The complainant failed to remove such suspicion by tendering a satisfactory explanation. The HC upheld the accused's acquittal by the trial court, affirming the presumption of innocence, as the complainant failed to prove the consideration as a matter of fact after the onus shifted.
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PMLA

• Bona fide property purchase before crime not covered under PMLA sans evidence of involvement.

  Case-Laws - HC : The HC held that the petitioner is a bona fide purchaser who acquired the property before the predicate offence was registered. A bona fide purchaser who acquires property prior to any predicate offence cannot be subjected to proceedings under the PMLA without evidence of conspiracy or direct involvement. The impugned proceedings against the petitioner were held unsustainable in the peculiar facts of the case. The petition was allowed.
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• Company Directors Cannot Escape Money Laundering Probe Despite Quashing of FIR, Rules HC.

  Case-Laws - HC : The HC held that quashing of FIR does not automatically lead to quashing of ECIR under PMLA. PMLA is a sui generis legislation with section 3 being a standalone provision. ECIR cannot be equated with FIR as ECIR becomes independent once initiated. Quashing of FIR on technical grounds does not exonerate accused from predicate offence u/s 447 of Companies Act which is a scheduled offence. ECIR was not liable to be quashed as the predicate offence was still pending. Petition dismissed with the direction that trial court shall proceed uninfluenced by observations on factual aspects.
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SEBI

• Upholding SEBI's power, AT backs 15% interest on outstanding broker registration fees for brief period.

  Case-Laws - AT : The AT upheld SEBI's discretion to levy interest on outstanding registration fees as per Regulation 5 of Schedule-III of Stockbrokers Regulations, 2002, which mandatorily provides for charging 15% interest. The AT ruled that SEBI had no discretion in charging interest, which is compensatory in nature. It directed SEBI to credit interest at 15% p.a. for the brief period from September 6, 2003 to October 1, 2003 when the appellant had a credit balance, but dismissed other claims regarding interest calculation since the appellant had already received credit for interest from 2006 to 2019.
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• FMC's inquiry into embezzlement, illegal share allotment, misappropriation of funds by NMCE upheld by AT.

  Case-Laws - AT : The AT upheld FMC's jurisdiction to conduct inquiry into affairs of NMCE and its key management personnel to protect investors' interests. It found payment of Rs. 28.8 crore by NMCE to ATSPL for software development bogus, amounting to embezzlement. Allotment of NMCE shares to appellant No. 2 without following due process was held illegal. Appointment of 144 consultants without due diligence and misappropriation of NMCE funds of over Rs. 60 lakh for personal expenses by appellant No. 1 and family were also upheld as irregularities. The appeals were dismissed.
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• IL&FS failed to report more than 49 investors in company's non-convertible debentures despite receiving list, violating SEBI regulations.

  Case-Laws - AT : IL&FS, the debenture trustee, failed to report to SEBI that there were more than 49 investors in the non-convertible debentures issued by Vaishnodevi Dairy Products Ltd., despite receiving communication from Karvy on April 1, 2014, listing 154 investors. This violated Regulation 15(1)(i) of the SEBI (Debenture Trustees) Regulations, 1993. The AT upheld the penalty of Rs. 5 lakhs imposed u/s 15HB of the SEBI Act, 1992, for the first charge but set aside the second charge of suppressing the BENPOS report.
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Service Tax

• Cleaning, Manpower Supply Services for Railways/PSUs Taxable; Secondary Packaging not Manufacturing.

  Case-Laws - AT : Appellant liable to pay service tax on 'Cleaning activity' services provided to Indian Railways and public sector undertakings as per Madras HC's decision in Premier Garment Process case. Service tax payable on gross amount including employee wages, unless appellant is pure agent as per Supreme Court's Intercontinental Consultants judgment. Secondary packaging activity not manufacturing, hence not under service tax. Transportation of documents and goods not 'Manpower Recruitment or Supply Agency' service but 'Transportation of Goods' under reverse charge. Appellant eligible for Notification No. 30/2012-ST benefit and cum-tax benefit u/s 67(2). Matter remanded to adjudication authority to quantify service tax liability on cleaning and manpower supply services for normal period, considering pure agent contracts, and allowing notification benefit. Appeal partly allowed.
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Central Excise

• Central Excise Act Amendment Disallows CENVAT Credit for Manufacturers of Exempted Goods Despite Duty Payment.

  Case-Laws - HC : The HC allowed the appeal, holding that the insertion of Section 5A(1A) in the Central Excise Act, 1944 is prospective, not clarificatory. Prior to the amendment, the appellant had the option to forego the exemption on final products and pay duty to claim CENVAT credit on inputs. However, post-amendment, manufacturers of exempted excisable goods are prohibited from paying duty, precluding them from claiming CENVAT credit. The Tribunal erred in upholding the demand of CENVAT credit where the appellant had paid duty on final products and utilized input credits.
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• Fertilizer Classification Upheld Over Plant Growth Regulator: Siapton 10L and Isabion Rightly Classified Under CETA 3101 00 99.

  Case-Laws - AT : Appellant's goods "Siapton 10L and Isabion" correctly classifiable as fertilizer under CETA 3101 00 99, not as Plant Growth Regulator under CETA 3808 93 40 as claimed by Department. Larger Bench of CESTAT held plant growth promoters cannot be equated with plant growth regulators which inhibit, promote or alter physiological processes. Impugned orders set aside. Appeals allowed.
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• Delayed Excise Refunds: Interest Payable from Deposit Date as per Supreme Court's Ranbaxy Ruling.

  Case-Laws - AT : The CESTAT held that for refunds filed under the Central Excise Act, 1944, interest on delayed refunds is governed by Section 11BB and would be payable from the date of deposit made by the assessee, as per the Supreme Court's decision in Ranbaxy case. The appeal filed by the assessee against the adjudicating authority's order, which had calculated interest from the deposit date, was dismissed.
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Case Laws:

• GST

• 2024 (12) TMI 1518
  Cancellation of client s registration under Odisha Goods and Services Tax Act, 2017 - time limitation - petitioner is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form of his client to be accepted by the department - HELD THAT:- Reliance placed in the case of M/s. Mohanty Enterprises [ 2022 (11) TMI 1521 - ORISSA HIGH COURT] where it was held that ' the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law.' The writ petition is disposed of.

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• 2024 (12) TMI 1517
  Cancellation of client s registration under Odisha Goods and Services Tax Act, 2017 - client is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form of his client to be accepted by the department - HELD THAT:- Reliance placed in the case of M/s. Mohanty Enterprises [ 2022 (11) TMI 1521 - ORISSA HIGH COURT] where it was held that ' the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law.' Petition disposed off.

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• 2024 (12) TMI 1516
  Appeal to the Tribunal, which had not yet been constituted - HELD THAT:- The submission made on behalf of petitioner regarding corresponding notification reducing requirement of the deposit to 10% of disputed tax for impugned first appellate order to remain stayed, is accepted. The deposit be made accordingly. Petition disposed off.

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• 2024 (12) TMI 1515
  Challenge to impugned order passed by the respondent - difference between the ITC available as per GSTR-2A and ITC availed as per GSTR-3B - HELD THAT:- The impugned order passed by the respondent dated 27.04.2024 is hereby set aside. The petitioner shall deposit 25% of the disputed tax within a period of two weeks from the date of receipt of a copy of this order - the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. Petition disposed off.

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• 2024 (12) TMI 1514
  Cancellation of registration of the petitioner - non filing of the GST return for a continuous period of six months - petitioner contends that now the petitioner is ready to make the payment towards GST return for a period of six months as well as the penalty and interest, if any, im posed by the respondent-department - HELD THAT:- An identical controversy has been decided by this Court in SUNIL SAH VERSUS UNION OF INDIA [ 2024 (9) TMI 904 - UTTARAKHAND HIGH COURT] where it was held that ' The petitioner shall be at liberty to move an application for revocation or cancellation of the order under Section 30 (2) of the CGST Act, 2017, within two weeks.' In view of the consensus between the parties, the matter is covered by the order in SUNIL SAH, the present writ petition is also decided in terms of the said order. The petitioner shall be at liberty to move an application for revocation or cancellation of the order under Section 30(2) of the CGST Act, 2017, within two weeks. Petition disposed off.

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• 2024 (12) TMI 1513
  Negative blocking of the Electronic Credit Ledger - conditions and limitations under Rule 86A of the CGST Rules - HELD THAT:- Reliance upon the judgment rendered in Best Crop Science Pvt. Ltd. [ 2024 (9) TMI 1543 - DELHI HIGH COURT] . Dealing with an identical question, the Court in Best Crop had held 'Rule 86A(1) of the Rules does not contemplate an order, the effect of which is to require a taxpayer to replenish his ECL with valid availment of ITC, to the extent of ITC used in the past, which the Commissioner or an officer authorized by him has reasons to believe, was fraudulently availed or was ineligible. Such an interpretation would in effect amount to construe an Order under Rule 86A(1) of the Rules as an order for recovery of tax. This is obvious because the taxpayer would now have to incur a larger cash outflow for payment of taxes as he would be denied utilization of validly availed ITC, which he would require to accumulate to compensate for the ITC availed and utilized which the Commissioner or an officer authorized by him, has reasons to believe was fraudulently availed or was ineligible.' The negative blocking cannot be sustained - petition allowed in part.

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• 2024 (12) TMI 1512
  Validity of unsigned order u/s 73 of the CGST/SGST Acts - whether orders issued under Section 73 of the CGST/SGST Acts must carry the digital or manual signature of the officer passing the order in order to treat the order to be a valid order for the purposes of the CGST/SGST Acts? - HELD THAT:- The issue appears to be covered in favour of the petitioners in these writ petitions by the recent Division Bench judgment of the Telangana High Court in Silver Oak Villas LLP V. Assistant Commissioner (ST), Begunpet Division Hyderabad [ 2024 (4) TMI 367 - TELANGANA HIGH COURT] , where the Court held that ' Since it is stated that the show cause notice dated 06.02.2021 should be confirmed to the discrepancies as pointed out in the notice dated 01.01.2021, this Court does not consider it apposite to set aside the said show cause notice but to provide an opportunity to the petitioner to file a reply to the notice dated 01.01.2021 and 06.02.2021.' Conclusion - An unsigned order is no order in the eyes of law. These writ petitions are allowed by quashing the impugned orders and making it clear that it will be open to the competent among the respondents in all these cases to upload fresh orders by affixing digital signatures or by serving a copy of the order after affixing manual signature.

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• 2024 (12) TMI 1511
  Challenge to SCN issued by Proper Officer - When the investigation, inspection, search and seizure is substantially completed by an improper Officer, is the show cause notice issued by a proper Officer under Section 74 of the CGST Act and KGST Act liable to be set aside? HELD THAT:- In the instant case, it is not in dispute that respondent no. 1 is the proper officer for inspection, search and seizure and also issuance of show cause notice and not respondent no. 2. Reading of Section 74 of the CGST Act shows that it is only a proper Officer who can investigate into evasion of GST and inspection, search and seizure and arrest can be done only by the proper Officer failing which the same will have to be held invalid and based upon the inspection, search and seizure if the proper Officer comes to the conclusion that there is mens rea involved as contemplated under Section 74 of the CGST Act, he can issue a notice under Section 74 and not otherwise - In the instant case, admittedly, substantial part of the investigation including search and seizure of the materials has been done by respondent no. 2 who is not the proper Officer and under the circumstances, the said investigation, inspection, search and seizure in respect of the petitioner herein has to be considered ab initio void. When the same is considered as ab initio void, notice issued under Section 74 of the CGST Act based upon search, seizure and the statements recorded from the petitioner which has been relied upon, has to be considered illegal and that there is no satisfaction on part of the proper Officer for issuance of the notice under Section 74 of the CGST Act. If respondent no. 2 after investigation has transferred the case to respondent no.3, for issuance of notice under Section 74, respondent no.3 was required to redo the investigation and come to an independent conclusion as contemplated under Section 74 of the CGST Act and only thereafter a fresh notice requires to be issued. Respondent no. 1 cannot issue a notice under Section 74 on the 'borrowed satisfaction'. Conclusion - It is only a proper Officer who can investigate into evasion of GST and inspection, search and seizure and arrest can be done only by the proper Officer failing which the same will have to be held invalid. The impugned show cause notice dated 11.04.2023 issued by respondent no. 1 (vide Annexure-G to the writ petition) is hereby set aside insofar as it relates to the petitioner - respondent no. 1 is directed to refund a sum of Rs. 50,00,000/- to the petitioner within eight weeks from the date of receipt of a certified copy of this order - petition disposed off.

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• 2024 (12) TMI 1510
  Refund of IGST - direction to process refund applications, which remained unaddressed despite multiple correspondences - HELD THAT:- The respondents 2 and 3 are directed to dispose of the petitioners applications in accordance with law and on their own merits within 4 weeks in terms of the statement made on their behalf. If respondents 2 and 3 are of the opinion that GST Authorities are the appropriate authorities after hearing the petitioners and considering the circular relied upon by the petitioners, respondents 2 and 3 shall transfer such applications to the appropriate GST Authorities. Petition disposed off.

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• 2024 (12) TMI 1509
  Validity of a Show Cause Notice - SCN relies on various material gathered in the course of a search including data alleged to have been extracted from electronic devices without complying with the procedure contemplated under Section 145 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Since it would be open for the writ petitioner to assert that the evidence which is relied upon is inadmissible, there exists no cause to entertain the challenge or interdict the SCN proceedings. Petition dismissed.

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• 2024 (12) TMI 1508
  Cancellation of the Goods and Services Tax GST registration of the writ petitioner on the ground of violation of Rule 21(A) of Central Goods and Services Tax Rules 2017 - Principles of natural justice - HELD THAT:- The record reveals that prior to the issuance of that SCN, the writ petitioner had filed an application for appropriate amendments being made in its GST registration consequent to the principal place of business being changed. While considering the said application, the respondents had issued a notice dated 04 September 2024 requiring the writ petitioner to furnish additional documents. In terms of that notice, a reply was to be submitted by the writ petitioner by 13 September 2024. However, prior thereto and more particularly on 12 September 2024, the respondents proceeded to reject the application for amendment. The order cannot be sustained since the same admittedly came to be passed even before the petitioner could respond. This has clearly led to a violation of the principles of natural justice. This factor alone merits the order dated 12 September 2024 being quashed and set aside. The order dated 12 September 2024 quashed subject to the petitioner furnishing all documentation as required pursuant to the notice of 04 September 2024 - petition allowed.

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• 2024 (12) TMI 1507
  Denial of benefit of input tax credit on account of the provisions contained in Sub Section (4) of Section 16 of the CGST/SGST Acts - HELD THAT:- On account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by Ext.P1 order, the writ petition will stand disposed of, setting aside Ext.P1 to the extent that it denied input tax credit to the petitioner on account of the provisions of Sub Section (4) of Section 16 of the CGST/SGST Acts and directing the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment. Petition disposed off.

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• 2024 (12) TMI 1506
  Maintainability of petition - availability of alternative remedy - Seeking for restoration of registration under Odisha Goods and Services Tax Act, 2017 - HELD THAT:- It is true that petitioner availed statutory remedy against cancellation order dated 10th March, 2023, also mentioned in the prayer. As such it is a case of petitioner giving up its main prayer and asking for order on the supplementary, regarding the cancellation order. Petitioner will be entitled to revocation of cancellation order dated 10th march, 2023 on fulfilment of direction for payment of all taxes, interest, late fee, penalty etc. The writ petition is disposed of.

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• 2024 (12) TMI 1505
  Cancellation of GST Registration held by the petitioner - HELD THAT:- Aggrieved by the order passed by the respondents cancelling the GST Registration held by the petitioner, it is stated to have moved an application for revocation of that order on 14 October 2014 - Since that application is presently pending consideration of the respondents, there are no ground to entertain the writ petition. Application disposed off.

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• 2024 (12) TMI 1504
  Challenge to adjudication order rejecting his client s claim of Input Tax Credit (ITC) as barred by limitation - HELD THAT:- In view of aforesaid impugned order dated 22nd April, 2024 is set aside and quashed. Petitioner has moved Court invoking writ jurisdiction on not having filed appeal. In the circumstances, circular dated 15th October, 2024 by Central Board of Indirect Taxes and Customs, requiring petitioner to apply for rectification is to be complied with. Petition disposed off.

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• 2024 (12) TMI 1503
  Challenge to impugned order on the premise that the same is made in violation of principles of natural justice - petitioner was unaware of the initiated proceedings - neither the show cause notice nor the impugned order of assessment has been served on the petitioner - violation of principles of natural justice - HELD THAT:- Taking into account the peculiar facts of the case, where in, the petitioner has already remitted more than 25% (almost 70%) of the disputed taxes, this Court is of the view that the petitioner may be granted one final opportunity to put forth his objections, which was not objected to by the learned Special Government Pleader for the respondent. Since, the above order is made on the basis of the statement made by the learned counsel for the petitioner that a sum of Rs. 35,95,104/- has been remitted already, the respondent may verify the same. If the statement made by the learned counsel for the petitioner regarding the payment of tax of more than 25% is incorrect, the respondent authority shall intimate the same to the petitioner who shall within 2 weeks from the date of such intimation deposit 25% of disputed taxes. Subject to verification of payment of 25% of disputed taxes or on payment of 25% of disputed taxes, attachments if any, would be lifted. Conclusion - The petitioner may be granted one final opportunity to put forth his objections, which was not objected to by the learned Special Government Pleader for the respondent. The impugned order, dated 26.04.2024 is set aside. The impugned order shall be treated as a show cause notice and the petitioner shall file their objections within a period of two (2) weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (12) TMI 1502
  Denial of benefit of input tax credit on account of the provisions contained in sub-section (4) of Section 16 of the CGST/SGST Acts - HELD THAT:- Having regard to the assertion of the learned counsel appearing for the petitioner that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by Ext. P1 order, the writ petition will stand disposed of, setting aside Ext. P1 to the extent that it denied input tax credit to the petitioner on account of the provisions of Sub Section (4) of Section 16 of the CGST/SGST Acts and directing the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16 (5) of the CGST/SGST Acts and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment. Petition disposed off.

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• 2024 (12) TMI 1501
  Petitioner seeks further opportunity to upload Ext.P2 FORM and claim ITC in respect of the closing stock as on 09.04.2024 - switching over from the Composition Scheme under Section 10 of the CGST/SGST Acts to Regular Scheme of tax payment under Section 9 of the CGST/SGST Acts - principles of natural justice - HELD THAT:- The petitioner is to be given one more opportunity to upload Ext.P2 FORM and claim ITC in respect of the closing stock, as on 09.04.2024. It is clear from Ext.P3 that, after several attempts to upload Ext.P2 FORM, the petitioner raised a complaint with the GST Help Desk. It is also not disputed that, 08.05.2024 was the last day for the petitioner to upload Ext.P2 FORM and Ext.P3 shows that a complaint had been raised by the petitioner on 08.05.2024. That complaint of the petitioner has now been closed by Ext.P6 communication. Though it is the case of the learned Standing Counsel appearing for the GST Network that the complaint raised was closed because the petitioner did not respond, the fact remains that even on the last day for uploading Ext.P2 FORM, the petitioner did not get a response regarding the technical glitches that he faced in uploading Ext.P2 FORM. Conclusion - The petitioner should be given another opportunity to upload the form, keeping in view the petitioner's efforts and the unresolved technical issues. The writ petition will stand disposed of, directing that the petitioner shall be given one more opportunity to upload Ext.P2 FORM, if necessary, by enabling the Portal.

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• 2024 (12) TMI 1500
  Challenge to provisional attachment order - Revenue submitted that the provisional attachment order has not been continued after 17.10.2024 - HELD THAT:- In view of such statement made at bar by Revenue, the petition has become infructuous and the consequences would follow. The petition is accordingly disposed of.

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• 2024 (12) TMI 1499
  Amendment made to Section 112 of the Central Goods and Services Tax Act, 2017 substituting twenty per cent pre deposit to ten per cent for maintaining an appeal before the Goods and Services Tax Tribunal - non-constitution of Tribunal - HELD THAT:- As of now pre-deposit has been reduced to ten per cent but however, the same is made effective only from 01.11.2024. It is an admitted position that the GST Tribunals have not been constituted as yet and there is no possibility of an appeal being filed prior to 01.11.2024. In such circumstance, we direct that the assessee on payment of ten per cent of the tax amounts in dispute shall be entitled to stay of recovery till the Tribunal is constituted and an appeal is filed within such term as provided therein. Subject to deposit of a sum equal to 10 percent of the amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.

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• 2024 (12) TMI 1498
  Maintainability of petition - availability of alternative remedy - Cancellation of registration of petitioner - time limitation - HELD THAT:- Section 107 of the Bihar Goods and Services Tax Act, 2017 (BGST Act) permits an appeal to be filed within three months and also apply for delay condonation with satisfactory reasons within a further period of one month. An appeal was to be filed on or before 30.03.2023 and if necessary with a delay condonation application within one month thereafter, i.e. on or before 29.04.2023. Hence, an appeal could have been filed on or before 29.04.2023, which provision was not availed by the petitioner herein - The petitioner has not availed such remedy and at this point of time, cannot seek to avail the appellate remedy for reason of the limitation period having expired long prior. The petitioner was not a registered dealer after cancellation and there was no monitoring of his activities by the Department in the intervening period. There is no way to ascertain as to whether there was any transaction carried out during the said period. There is also the fact that the petitioner has not availed of the appellate remedy nor the Amnesty Scheme which was made applicable. Petition dismissed.

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• 2024 (12) TMI 1497
  Challnege to SCN - petitioners submitted that the impugned show cause notice is issued without following the provisions of Sub-section (5) of Section 74 of the Central Goods Services Tax Act, 2017 - HELD THAT:- Issue Notice, returnable on 20th November, 2024. By way of ad-interim relief, the proceedings pursuant to the impugned show cause notice dated 10th July, 2024 may continue, however, no final order shall be passed without permission of this Court during the pendency of this petition.

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• 2024 (12) TMI 1496
  Blocking of ITC without giving any opportunity of hearing - HELD THAT:- Taking into consideration that though the petitioner had responded to notice dated 18.07.2024 proposing to block his input tax credit and also submitted his reply on 24.07.2024 followed by additional submissions but without passing any order on the same, another authority has blocked ITC without giving any opportunity of hearing, the effect and operation of Annexure-P/8 where by the respondents have blocked the ITC of Rs. 6,62,776/- as uploaded in GSTIN:08AAFCL1811Q1Z8 in the name of M/s Lipika Tech Private Limited for the period 01.08.2024 to 31.08.2024, shall remain stayed. List after four weeks.

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• 2024 (12) TMI 1495
  Re-opening of the case - It is the contention of the petitioner that the subject matter of the impugned SCN had previously been adjudicated by an appellate authority under the JGST Act, 2017 and that it was, therefore, not open to the respondent no.3 to re-open the said issue without any valid ground - HELD THAT:- The notice in this writ petition had been received by the respondents on 18.09.2024. Till date, it appears that no instructions have been issued by the respondents to the counsel for the respondent nos. 1 to 3. There are force in the contention of the counsel for the petitioner. Therefore, there shall be interim stay of all further proceedings pursuant to Annexure-4 dated 29.07.2024. Application disposed off.

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• 2024 (12) TMI 1494
  Challenge to assessment order - disallowance of ITC - non-filing of Annual returns in Form GSTR-9 and GSTR-9C for the assessment year 2018-19 - without application of mind the final order was passed by the Assessing Officer - violation of principles of natural justice - HELD THAT:- It is evident that the impugned show cause notice was uploaded on the GST Portal Tab. According to the petitioner, the petitioner was unaware of the issuance of the show cause notice through the GST Portal and the original of the said show cause notice was not furnished to them. In such circumstances, this Court is of the view that the impugned order came to be passed without affording any opportunity of personal hearing to the petitioner to establish its case, thereby violating the principles of natural justice and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law. The impugned order dated 08.03.2024 and the consequential order dated 11.03.2024 are set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent within a period of four weeks from today (15.10.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount. Petition disposed off.

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• 2024 (12) TMI 1493
  Violation of principles of natural justice - opportunity of personal hearing not provided - direction to petitioner to pay tax, interest, and penalty - HELD THAT:- Considering the nature of relief to the granted, this Court is of the view that notice to the respondent-Bank is not necessary and the same is dispensed with. This Court is of the view that if the respondent Department is not convinced with the reply filed by the petitioner and is in need of any documents, they ought to have called upon the petitioner to produce those relevant documents, by providing an opportunity of personal hearing, without doing so, they cannot straight away slap the petitioner with the impugned order. It is sheer clear that the impugned order not only suffers from violation of principles of natural justice but also against the provisions contemplated under Section 75 (4) of the CGST Act, inasmuch as, in terms of Section 75(4), an opportunity of hearing ought to have been granted, where any adverse decision is contemplated against taxpayer (petitioner in this case). Therefore, this Court is inclined to set aside the impugned order. The impugned order dated 29.04.2024 is set aside and the matter is remanded back to the respondent for fresh consideration - Petition allowed.

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• 2024 (12) TMI 1492
  Maintainability of petition - availability of alternative remedy - Challenge to order issued u/s 73 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 - HELD THAT:- The petitioner is entitled to succeed. A perusal of Ext.P7 show cause notice will indicate that the only issue on which the show cause notice was issued was a mismatch between GSTR-1 and GSTR-3B for the period in question. However, Ext.P1 order proceeds to record findings on other issues as well. That apart, a reading of Ext.P1 does not indicate that the replies submitted by the petitioner have been duly considered by the authority. After extracting the details of the notice issued to the petitioner, the officer proceeds to extract the provisions of Section 16 of the CGST/SGST Acts and holds that as per Section 16(2)(a) of the CGST/SGST Acts, the petitioner shall be entitled to input tax credit only if he is in possession of a tax invoice or debit note issued by the supplier registered under the CGSG/SGST Acts and that the burden of proving the claim for input tax credit will always lie on the person claiming the input tax credit. Conclusion - Ext.P1 is quashed due to its procedural deficiencies. The writ petition is allowed.

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• 2024 (12) TMI 1491
  Challenge to order issued under the provisions of Section 74 of the CGST/SGST Acts - certain amounts of input tax credit, which was availed by the petitioner in respect of supplies where the tax has already been discharged by the respective suppliers, has not been considered by the 1st respondent while passing Ext.P3 order - violation of principles of natural justice - HELD THAT:- The petitioner has not made out any case for interference with Ext.P3 order in exercise of writ jurisdiction under Article 226 of the Constitution of India. If the petitioner has a case that there has been some mistake in Ext.P3 order and as a result of which certain eligible input tax credit with reference to the invoices mentioned in the reply submitted by the petitioner had not been given to him, it is open to the petitioner to file an application for rectification under Section 161 of the CGST/SGST Acts. Petition dismissed.

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• 2024 (12) TMI 1490
  Challenge to adjudication order - respondent has illegally proceeded to recover the amount from the petitioner even before the expiry of three months as mentioned in the notice as contemplated under Section 78 of the KGST Act - no personal hearing was granted in favour of the petitioner - violation of principles of natural justice - HELD THAT:- In the Show Cause Notice dated 13.12.2023, the respondents have clearly stated that date of personal hearing, time of personal hearing and venue for personal hearing would be inapplicable, which is sufficient to come to conclusion that no personal hearing was granted to the petitioner before passing adjudication order. Further, the aforesaid Show Cause Notice dated 13.12.2023 was not received by the petitioner as can be seen from the material on record including the impugned order, which merely states that the said Show Cause Notice was issued to the petitioner through BOWEB and not to the registered e-mail ID of the petitioner or physically to the petitioner. Thus, non serving of the Show Cause Notice upon the petitioner and non-providing/non-granting of personal hearing and passing the impugned adjudication order, is violative of principle of natural justice warranting interference of this Court and consequently, the impugned adjudication order deserves to be quashed and the matter is remitted back to the respondent for reconsideration afresh in accordance with law. Conclusion - The respondents were not entitled to initiate recovery proceedings much less recover the determined amount from the petitioner prior to 27.03.2024 and consequently, the amount recovered by the respondent from the petitioner on 11.03.2024 is clearly without jurisdiction or authority of law and contrary to the facts as well as Section 78 of the KGST Act and necessary directions are to be issued to the respondents to refund the said amount back to the petitioner. Impugned adjudication order at Annexure-B3 under Section 73 dated 28.12.2023 issued by respondent No.1 is quashed - The matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law - petition allowed by way of remand.

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• 2024 (12) TMI 1489
  Maintainability of petition - availability of alternative remedy - non-constitution of the Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. Petition disposed off.

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• Income Tax

• 2024 (12) TMI 1488
  Rectification u/s 254 - jurisdiction of the Tribunal as conferred under sub-Section (2) of Section 254 - delayed payment of the statutory dues like the Provident Fund and Employees State Insurance Corporation amounts - view taken by the Tribunal qua setting aside of the additions as made by the assessing officer, cannot be accepted to be a correct view, in view of the decision of the Supreme Court in Checkmate Services Private Limited [ 2022 (10) TMI 617 - SUPREME COURT] which was rendered subsequent to the orders passed by the Tribunal. Whether there was any mistake apparent on the face of the record and/or whether a decision which was rendered by the Supreme Court subsequent to the Tribunal s decision of which rectification is sought, could be relevant to come to a conclusion on the ground that there was a mistake apparent on the face of the order, the Tribunal could substitute its original order? - HELD THAT:- As recently a bench of the Tribunal in the case of ANI Integrated Services Ltd [ 2024 (7) TMI 881 - ITAT MUMBAI] had the occasion to consider the very issue as raised by the Revenue in light of the decision rendered by the Supreme Court in Checkmate Services Private Limited (Supra). In such case similar applications were filed by the Revenue praying that the Tribunal set aside its orders in relation to Employees State Insurance Corporation ( ESIC for short) (for the Assessment Year 2019-20) considering the changed position in law in Checkmate Services Private Limited (Supra). Tribunal by its decision in ANI Integrated Services Limited [ 2024 (7) TMI 881 - ITAT MUMBAI] did not accept the contentions as urged on behalf of the Revenue and rejected the Miscellaneous Applications filed by the Revenue, also considering the decision in Beghar Foundation [ 2021 (2) TMI 504 - SUPREME COURT] and the scope of its limited jurisdiction under Section 254 (2) of the IT Act. We are in complete agreement with the view taken by the Tribunal in ANI Integrated Services Ltd (Supra) and which is on the very issue as urged by the petitioner. We are of the clear opinion that the Tribunal was in a patent error in exercising jurisdiction under Section 254 (2) in passing the impugned order.

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• 2024 (12) TMI 1487
  Challenge to Order of the FAA dismissing the appeal filed by the petitioner owing to the fact that the petitioner had not cured certain defects pointed out by the Appellate Authority - HELD THAT:- Since the petitioner before this court is seeking a limited relief, this writ petition can be disposed of setting aside Ext. P7 and directing that if the petitioner cures the defects pointed out by the Appellate Authority within a period of one week from the date of receipt of a certified copy of this judgment, appeal will stand restored to the file and shall be disposed of on merits by the Appellate Authority. If the petitioner does not cure the defects within one week (as above) the appeal will stand dismissed as already directed by the Appellate Authority.

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• 2024 (12) TMI 1486
  Shorter period to respond to notices issued u/s 142(1) - HELD THAT:- This Court finds that a notice u/s 143(2) of the Act was issued to the petitioner on 31.03.2021 and another notice u/s 142 (1) dated 16.09.2021 along with a questionnaire. He has filed his reply to the same, whereafter subsequently another notice was issued to him on 24.09.2021 under section 142 (1) of the Act whereby he was asked to provide copy of declaration under FEMA/AMLA, contract/agreement for procurement of goods/services along with invoices/bills, evidence to show that TDS has been deducted, ledger account of trade payables, details of imports in prescribed format, copy of certificate of chartered engineer for recognizing income and expenditure for each of the project as on 31.03.2019. The notice was issued on 24.09.2021 with direction to provide the aforesaid information on or before 26.09.2021 at 3:00 PM. Thus, we find that the time provided was too short. While initially the petitioner was asked to provide certain details along with questionnaire, the notices which have been issued on 24.09.2021 and 27.09.2021 deal with a different information altogether, and the time provided under these notices was not even of seven days, which is the minimum required time for furnishing of information. Decision taken without giving opportunity of filing reply and details would therefore stand vitiated in law. The draft assessment order passed on the said basis as above, was also objected to as per section 144C (2) of the Act before the DRP, but the DRP has not decided the same. The Assessing Officer has also not delved with the objections. In view thereto, the final assessment order dated 30.11.2021 would not be sustainable in law

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• 2024 (12) TMI 1485
  Compulsory selection of returns for scrutiny against government company - contention of petitioner is that no scrutiny could have been carried out, as per the guidelines issued by the Central Board of Direct Taxes and petitioner is a completely owned government company depending only on the government funds to carry out the development activities with its seat at Patna; totally funded by the Government - HELD THAT:- The guidelines, as placed is one for compulsory selection for returns of complete scrutiny during the financial year 2021-22 and the conduct of the assessment proceedings in such cases. Petitioner asserted that the petitioner does not come under any of the categories prescribed. However, we are of the opinion that the guidelines are only for compulsory selection of returns for scrutiny and it does not preclude random selection for scrutiny by the Assessing Officers. The categories coming under the guidelines are those which are to be taken up mandatorily for scrutiny and this does not create any restriction of any other category being taken up for scrutiny. Violation of principles of natural justice, insofar as no hearing having been granted to the assessee - Admittedly, the petitioner while uploading the application did not seek for an opportunity for personal hearing. The petitioner s contention is that the reply filed specifically sought for such personal hearing. As per the system generated notices and uploading of on-line replies in specified forms; there is a specific column provided for requesting personal hearing. Unless the personal hearing is sought for, there would be no requirement to issue such personal hearing. Admittedly, in the present case, the column for personal hearing was not ticked as Yes . The reply was filed and it was duly considered in the order passed. We find absolutely no reason to interfere with the order also on the ground of violation of principles of natural justice. On the above reasoning, we find absolutely no reason to invoke the extra ordinary remedy under Article 226.

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• 2024 (12) TMI 1484
  Disallowance u/s. 14A r.w.r. 8D - expenditure incurred on earning exempt income - HELD THAT:- Where interest free funds are in excess of investments, no disallowance u/s. 14A of the Act could be made. CIT(A) placing reliance on various decisions including the decision in the case of Hero Cycle Ltd. [ 2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT ] deleted the addition. It is no more res intigra that where the assessee is having mixed bag of own interest free funds and interest bearing funds and own funds of the assessee are much more then the investments made, it shall be presumed that the investments are made from assessee s own interest free funds. Thus, in light of settled legal position, we find no infirmity in findings of the CIT(A) on this issue, hence, ground no. 1 to 3 of appeal are dismissed. Amortization of Premium Paid on Securities - AO disallowed assessee s claim of amortization on securities held to maturity and made addition - HELD THAT:- The issue is now well settled that amount paid towards amortization of premium on securities held to maturity is an allowable deduction. We see no infirmity in the findings of the CIT(A) deleted addition as relying on HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] and in the case of ACIT vs. The Bank of Rajasthan Ltd. [ 2010 (12) TMI 894 - ITAT, MUMBAI ] Revision for Standard Assets - HELD THAT:- Revenue has not been able to controvert the statement of ld. Counsel for the assessee that in preceding and succeeding assessment years where assessments were completed u/s.143(3) of the Act, the claim of the assessee has been accepted by the AO. The rule of consistency demands that where the assessee has claimed an expenditure following the same accounting policy in preceding and succeeding assessment years and the same has been accepted, no disallowance should be made in one of intervening assessment years. Provision for Fraud - HELD THAT:- In preceding assessment year, the CIT(A) decided this issue in favour of the assessee by placing reliance on various case laws and CBDT Circular no. 35DXLVII-20 dated 24.04.1965. We find no infirmity in the order of CIT(A) on this issue, hence, we see no reasons to interfere with the same. The ld. DR has anxiously raised a concern that the assessee has not explained the treatment given on subsequent recovery of the amount involved in fraud. Though, no such objection was raised by the AO during assessment proceedings, the ld. Counsel for the assessee made a statement at Bar that as and when any amount is recovered, the same is offered to tax in the year of recovery. In view of above, we find no reason to give any further direction on this issue. The ground of appeal is dismissed for the reasons stated above. Deduction u/s. 80P(2)(a)(i) - The provision of section 80P of the Act will also be applicable to Regional Rural Banks. Hence, deduction u/s. 80P(2)(a)(i) of the Act is allowable in respect of the RRB's. Disallowance of expenses claimed under Estab-PNB - assessee has claimed establishment expenses towards staff deputed from sponsor bank i.e. PNB - HELD THAT:- Expenditure is claimed under the sub-heads like EPF, Medical Aid, LFC, Gratuity, etc. The AO has disallowed the claim as the assessee has failed to submit any clarification or nature of payment under the aforesaid sub-heads and no bills or vouchers were submitted before the AO to prove nature of expenditure and the genuineness of the expenditure claimed. In first appeal, the CIT(A) has allowed assessee's claim in a cryptic manner. In our considered view neither the nature of expenditure has not been properly explained by the assessee nor it is substantiated with documentary evidence, we deem it appropriate to restore this issue to the jurisdictional AO for verification. Disallowance of Establishment expenses - increase in establishment expenses is not commensurate to other expenses claimed by the assessee on account of setting up of new branches - HELD THAT:- We find that the AO has made addition merely based on surmises and conjectures, without examining material available on record. The addition cannot be made merely on assumptions and suspicion. We are in agreement with the reasons given by the CIT(A) to delete the addition.

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• 2024 (12) TMI 1483
  Income deemed to accrue or arise in India - income received by the assessee from Indian customers for providing a cloud-native machine data analytics solution qualifies - Fees for Technical Services (FTS) under the Income Tax Act, 1961 and the India-US Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- We observe that the assessee has submitted TRC and also offered income generated in India in the resident country and offered the same as income and it does not make any difference whether the global income assessed to tax are income or loss, as long as, the income generated are offered in the resident country as business income which is the requirement of law. In view of the above discussions we hold that receipt did not qualify as FTS under Article 12(4) of the India-US tax treaty. Thus, grounds of appeal nos. 1 to 6 filed by the assessee are allowed. TDS credit - We observe that TDS granted by the Assessing Officer and claimed by the assessee are different. We direct the Assessing Officer to verify the same and allow the same as per law.

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• 2024 (12) TMI 1482
  Special Audit passed u/s 142(2A) - mandation to record satisfaction required for ordering a special audit - Extension of time for furnishing the special audit report - HELD THAT:- As in the present case, the satisfaction/opinion was initially recorded by the AO and then subsequently by the CIT as well. Subsequently on 28-03-2013 CIT himself is according approval to such satisfaction. Such action is not mandated in terms of Sec. 142(2A). Further in terms of Section 142(2C) the initial period for furnishing the Special Audit Report has to be specified by the AO and not by the CIT, as has happened in the instant case. Thus the findings of ld. CIT(A) are quite in accordance with law. Since due procedure as mandated under the provisions of Sec. 142(2A) Sec. 142(2C) has not been followed in this case, the order is rightly held to be void ab-initio on this account. Extension of further time period of furnishing the Special Audit Report u/s 142(2A) - The extension of time period for furnishing the Special Audit Report u/s 142(2A) has been provided by the Assessing Officer on an application made by the Special Auditor in this regard. The extension has not been granted in terms of provisions of Sec. 142(2C) and therefore the extension so granted is beyond jurisdiction and is time barred. We are of considered view that there is no error in the findings of ld. CIT(A) that the statute demands that the extension can be granted either by the AO suo-moto or on an application made in this behalf by the assessee. Admittedly, in the present case, the AO has granted extension for conducting Special Audit vide his letter dated 27-03-2019 addressed to the Special Auditor, M/s Sanjay Satpal Associates. Such an action by the AO is certainly in disregard of the provisions of proviso to Section 142(2C) of the Act, and CIT(A) has committed no error in holding that this extension is vitiated and impugned assessment liable to be quashed.

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• 2024 (12) TMI 1481
  Addition u/s 68 - Bogus share capital - HELD THAT:- It is the submission of the assessee that even in case there is some doubt about the source of money in giving into coffers of the share applicants which they invested with the assessee, it would not automatically follow that the said money belongs to the assessee and becomes unaccounted money. According to us, the assessee appears to be correct on this aspect. We feel that something more which was necessary and required to be done by the AO was not done. AO failed to carry his suspicions to a logical conclusion by further investigation. After the registered letters sent to the investing company had been received back undelivered, the AO presumed that these companies did not exist at the given address. No doubt, if the companies are not existing, i.e., they have only paper existence, one can draw the conclusion that the assessee had not been able to disclose the source of amount received and presumption u/s 68 of the Act for the purpose of addition of amount at the hands of the assessee. But, it has to be conclusively established that the company is non-existence. Enhancing of income u/s 56(2)(viib) - protective addition for share premium charged by rejecting the valuation report furnished under Rule 11UA(2)(b) i.e. Discounted Cash Flow Method - The assessee has calculated and estimated the projected figures at the lowest and even then, the value arrived at Rs. 7.25 lacs. After reducing from the present value factor at the rate of 14% year wise because of diminishing value of the money, the value of the enterprise value arrived at Rs. 7.25 lacs and value per share arrived at Rs. 80 per share. This clearly justified the value of premium received by the assessee from the investors of Rs. 70 per share. The ld. Tax authorities have discredited the valuation report without any independent exercise of their own. We are of considered view that in case of fresh issue of shares made by unquoted company, the AO is not authorized to pick and choose method of valuation of shares since that option is given to the Assessee. Where the Assessee exercises its option to value its shares as per DCF method, the AO cannot completely disregard such method and replace it his method even if specific discrepancies are found by the AO in Appellant's working of DCF based FMV. Assessee appeal allowed.

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• 2024 (12) TMI 1480
  Reopening of assessment - information received from DG GSTI, Delhi - gross turnover declared by the assessee in its return of income and the turnover declared for the purpose of service tax are different - assessee has not submitted any supporting evidences relating to reconciliation of gross turnover - HELD THAT:- Turnover declared on the Service Tax Act which is based on receipt of advances not based on completion of project. The determination of gross revenue is different from the actual turnover. On the basis of reconciliation, there will be difference between turnover declared for the purpose of service tax and the return of income. From the records submitted before us shows that assessee has submitted relevant reconciliation statement before the lower authorities along with relevant documents. The lower authorities failed to consider the same. Therefore, we do not see any reason to sustain the additions made by the AO. Accordingly, the estimated profit on the undisclosed turnover is deleted. Decided in favour of assessee.

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• 2024 (12) TMI 1479
  Reopening of assessment - credit entries escaped assessment - AO disallowed 10% of purchases as an expenditure - HELD THAT:- As per Explanation 3 of the section 147 of the Act, if during the course of assessment proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings, hence, the notice, he would be competent to make assessment to those items. The Hon ble Delhi High Court has interpreted this that the legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction u/s 147 of the Act regarding reassessment of escaped income, he would keep on making roving enquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. As in the present case, the issue is exactly identical what was in Ranbaxy Laboratories Ltd. [ 2011 (6) TMI 4 - DELHI HIGH COURT] and of Jet Airways (I) Ltd. of Bombay High Court [ 2010 (4) TMI 431 - BOMBAY HIGH COURT] Since the issue, is in favour of the assessee, we quash the reassessment framed by AO as bad in law.

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• 2024 (12) TMI 1478
  Validity of assessment u/s 153C as barred by limitation - HELD THAT:- We are of the considered opinion, that the AO had no jurisdiction to initiate proceeding u/s 153C of the Act for the A.Y. 2011-12. Search was conducted before the amendment and also the satisfaction note for the assessee, being a non-searched party in AY 2018-19. Accordingly, the order of the AO passed u/s 153C r.w.s. 143(3) of the Act was beyond the permissible period of six years. Therefore, the assessment order passed u/s 153C/143(3) of the Act for the AY 2011-12 is quashed.

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• 2024 (12) TMI 1477
  Exemption u/s 11 - arranging the guarantee to the credit for loans and advances - HELD THAT:- We find that the assessee is ameliorating the credit guarantee to the small venture and supporting for development of business/ livelihood. Considering the activities, we note that it is not contravening the provisions of section 2(15) of the Act and liable for exemption under section 11 of the Act. The trust is fully governed by Government of India for development of the first-generation entrepreneurs in small-scale industries. We respectfully follow the order of [ 2023 (11) TMI 1107 - ITAT MUMBAI] . We set aside the impugned appeal order in this issue. In our considered view, the ground taken by the assessee is allowed. Rejection of provision of guarantee claims - AO had treated this provision as Provision of Expenses which not allowable as per the statue - We note that the nature of settlement of claim and the payment made by assessee is only to support the small and medium businesses. The entire activities for the purpose of providing effective credit guarantee for SSI loans extended by eligible scheduled commercial bank and rural bank to the eligible borrowers without collateral security. As per the scheme, a lending institution has to enter into an agreement with the assessee for covering by way of guarantee. Against the outstanding guarantee the assessee creates a provision for guarantee claims as required to be maintained under the conservatism principle required to be adhered under mercantile system of accounts. We find that the deduction claimed by the assessee under provision of guarantee claims is allowable expenses.

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• Customs

• 2024 (12) TMI 1476
  Validity of SCN issued to the deceased respondent - penalties on the deceased respondent - proper officers under Section 28 of the Customs Act - HELD THAT:- Liberty granted to the respondents - the LR s of the deceased respondent to file an appeal before the CESTAT under Section 129-A(1) of the Customs Act within two weeks from the date of receipt of copy of this order. On such filing, the CESTAT shall decide the appeal to the extent of the grounds urged, and not considered by the authorities below in accordance with law. Appeal disposed off.

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• 2024 (12) TMI 1475
  Levy of penalty on petitioner, an Executive Director in a public limited company - non-fulfilment of its export obligations under the FTDR Act - territorial jurisdiction/forum non conveniens - Petitioner has contended that neither the show-cause notice nor the OIO gave any reasoning for fastening the liability on the Petitioner - violation of principles of natural justice. Whether the Petitioner as a Director of a Company that is in violation of an export obligation, could have been personally penalized therefor? - HELD THAT:- Section 11 (2) of the FTDR Act, sets out that where a person makes or abets in the making of export or import in contravention of the provisions of FTDR Act, he shall be liable to a penalty which will not be less than Rs. 10,000/- and shall not exceed five times the value of the goods in respect of which the contravention has been made. Thus, for the provision to be applicable, the person should either have been in contravention of the FTDR Act or abetted in the same. It is not disputed that the Company had 14 directors and the Petitioner was only one of them - the Petitioner s involvement in the license procurement was restricted to signing on a power-of-attorney person on behalf of the company, pursuant to a board resolution passed by the Company. Territorial jurisdiction/forum non conveniens - HELD THAT:- The Respondents have relied on the judgment of the Supreme Court in Kusum Ingots [ 2004 (4) TMI 342 - SUPREME COURT] to submit that this Court cannot entertain the present Petition. This submission of the Respondents is misconceived. The Petitioner had previously challenged an order passed by Respondent No. 2 which challenge was allowed by a Coordinate Bench of this Court by its order dated 06.09.2012. The Respondents participated in these proceedings, thus submitting to the jurisdiction of this Court. The Supreme Court in Kusum Ingots [ 2004 (4) TMI 342 - SUPREME COURT] has held that where an order is passed by a Tribunal in one place and an Appellate Authority is constituted at a different place, a Writ Petition would be maintainable at both places. In addition, it has been held that even if a small part of the cause of action arises within the jurisdiction of the High Court, the Court can entertain the Petition. A Coordinate Bench of this Court in Krishna Kumar Bangur [ 2006 (4) TMI 256 - HIGH COURT OF DELHI] , dealt with a similar issue where a show-cause notice was issued under Sections 8 and 11 of the FTDR Act to a company and all its directors, and reasons for arriving at the conclusion that a Director is personally liable, had not been adumbrated therein. It was held that where the authority had not specifically considered the role to be played by the Petitioner therein in the export performance and was reticent on the reasons for personal culpability of any of the directors, it could not be sustained. It was further held that if the show-cause notice or the orders in original and the appellate order did not disclose any reasons, the order would be set aside. Violation of principles of natural justice - HELD THAT:- No reference is made in the OIO as to how the directors are personally liable. Given the fact that the Respondent was unable to get the required information, it is unclear as to how the Respondent was able to ascertain and impose fiscal penalty, especially on the Petitioner. The provision of the statute provides for a decision based on an examination of the facts and documents before it and not otherwise - The Impugned Order is passed more than 9 years after the OIO and premises itself on the fact that the firm (read Company) had not fulfilled its export obligations, and since it could not produce any document in its support, it was liable for the obligation. It further goes on to hold that the ground of liquidation of the Company could not be a ground for non-submission of export documents or non-payment of custom duty could not be taken as a ground for non-submission by the Petitioner. The discussion on this aspect is limited. Conclusion - The impugned penalty order against the petitioneris set aside, finding no merit in the respondents' contentions and it is concluded that the orders failed to establish the petitioner's personal liability for the company's defaults. Petition disposed off.

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• 2024 (12) TMI 1474
  Simultaneous issuance of SCN under two provisions - Whether the authorities concerned, can issue show cause notice under Section 18 as well as Section 28 (4) of the Act simultaneously? - HELD THAT:- Annexure-M is a show cause notice issued under Section 18 of the Act and the petitioner is required to reply for the said notice. It is not the case of the petitioner that the said notice has been issued by an Authority / Officer, who has no jurisdiction to issue the said notice. Under the said circumstances, interfering with issuance of the said notice by this Court does not arise. However, in respect of the notice issued under Section 28 (4) of the Act, under the given facts and circumstances of the case, there has to be assessment of the value of the goods and the duty payable by the Authorities concerned before issuance of such notice. Admittedly, the same has not happened insofar as it relates to certain goods mentioned in the said notice. Petitioner requests six weeks time to issue a reply to the show cause notice at Annexure-M to the writ petition. Conclusion - The notice under Section 28(4) was set aside, with the possibility of reissuance following the completion of the provisional assessment. The court granted the petitioner six weeks to respond to the show cause notice under Section 18. The petitioner is granted six weeks time from today for issuing a reply to the show cause notice dated 14.08.2024 issued by respondent No.2 - petition disposed off.

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• 2024 (12) TMI 1473
  Entitlement to claim interest under section 27A of the Customs Act, 1962 from the date of sanction of the refund or from the date of actual refund - HELD THAT:- Section 27A of the Customs Act clearly provides for payment interest up to the date of refund. The order of the Commissioner (Appeals) granting refund has, therefore, to be read in the light of the provisions of section 27A of the Customs Act. What has also to be noted is that the Commissioner (Appeals), in the operative part of the order, also directed that the payable interest should be granted to the appellant. Conclusion - There is, therefore, no reason as to why the appellant would not be entitled to claim interest up to the date of refund of the amount. The matters are remanded to adjudicating authority to calculate and make the payment of the additional amount of interest in accordance with the observations made above within a period of two months from the date a copy of this order is produced before the adjudicating authority - Appeal allowed.

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• 2024 (12) TMI 1472
  Valuation of imported goods - Enhancement of value of imported glass beads (rockiles) on the basis of assessable value of contemporaneous imports of similar goods - rejection of the declared value - HELD THAT:- Without access to the relied upon bills of entry, the importer are without wherewithal to subject determination by the original authority to be in conformity with the law. Consequently, and in the light of the decision of the Tribunal in re Dujodwala Products Ltd [ 2008 (10) TMI 421 - CESTAT, MUMBAI] , the impugned orders is set aside and the matter remanded back to the original authority with the direction that relied upon bills of entry be made available to the appellant herein before subjecting the imports to re-assessment and opportunity of hearing be afforded without fail. The appeals are allowed by way of remand.

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• 2024 (12) TMI 1471
  Recovery of redemption fine from an unpaid seller, for re-exporting the goods, without any contravention having been committed by them under the Act of 1962 - excessive and arbitrary fine imposed - recovery of the penalty amount from the unpaid seller - HELD THAT:- It is an admitted fact that the unpaid seller s application dated 16.08.2021 for re-export of goods was accepted by the adjudicating authority as he was considered as the owner of goods. Irrespective of the above, it is not disputed by the department as well that the importer M/s. Agricas LLP vide letter dated 30.08.2021 had abandoned the goods and gave their no objection to the unpaid seller to seek reexport of the goods from the Customs department. It is clear from the observations of the original authority that the unpaid seller s application for re-export has been allowed by him and the said fact has been accepted by the department, which is evident that no appeal against such order has been filed by the department. The said fact has not been disputed by the learned AR for Revenue as well. The payment of redemption fine and penalty were made under protest and as such, the right of the appellants to file the present appeal cannot be disputed or questioned by the department. Imposition of redemption fine - HELD THAT:- The issue regarding imposition of redemption fine on re-exportation of the goods is settled by the judgement of Hon ble Supreme Court in the case of Siemens Ltd Vs. Collector of Customs [ 1999 (8) TMI 84 - SUPREME COURT ], wherein the imposition of redemption fine by the department was set aside, holding that in case of re-exportation of goods, neither the redemption fine nor the duty is required to be paid and accordingly, ordered for refunding the redemption fine paid by the importer-appellants therein - the Hon ble Supreme Court have dealt with the issue relating to the same notification and similar set of facts, as involved in the present appeal. However, the only difference being that while we appreciate the submissions of the appellants that the said findings are importer specific, it cannot be lost sight of the fact that the redemption fine has been imposed on redeeming the offending goods under Section 125 of the Act of 1962. Section 125 of Act of 1962 provides discretion to an adjudicating authority to levy a redemption fine keeping the facts of each case in mind. It is expected of the adjudicating authority to use the said discretion judiciously by levying appropriate fine in deserving cases like the one under consideration. Thus, considering the overall facts and circumstances of the case in hand, the quantum of redemption fine can be reduced in the interest of justice. Therefore, the impugned order is modified, to the extent of reducing the redemption fine to Rs. 5,00,000/-. Conclusion - The unpaid seller has not contravened any provisions of the Act of 1962, which have rendered the goods liable for confiscation. The quantum of Redemption fine reduced to Rs. 5,00,000/-. The penalty is upheld. Appeal allowed in part.

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• 2024 (12) TMI 1470
  Seeking refund of the amount deposited - refund claim sanctioned but instead of crediting into account of the respondent transferred to the Consumer Welfare Fund in accordance with the provisions of Section 27(2) of the Act - principles of unjust enrichment - HELD THAT:- The original authority has sanctioned the refund but credited the same to the Consumer Welfare Fund by invoking the principle of unjust enrichment whereas the learned Commissioner has considered this issue of unjust enrichment along with other issues and has given detailed findings on each issue. Since the Commissioner (Appeals) has given reasoned findings as per law and there are no infirmity in the impugned order passed by the Commissioner (Appeals) therefore the impugned order is upheld by dismissing the appeal of the Revenue. Appeal of Revenue dismissed.

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• 2024 (12) TMI 1469
  Benefit of exemption Notification issued vide N/N. 129/2008 dated 07.12.2008 to the export of Iron Ore Fines made by the Appellant - shipping bill was filed, and duty was paid before the issuance of the notification - HELD THAT:- As per the decisions relied by Learned Authorised Representative, including the judgement of the Hon ble High Court of Bombay in the matter of Narayan Bandekar Sons Pvt. Ltd. Vs. Commr. of. Cus C.Ex., Goa [ 2010 (8) TMI 234 - BOMBAY HIGH COURT] , is held that on a plain reading of Section 51 read with clause (a) of sub section (1) of Section 16 of the Customs Act, 1962, the date for determination of duty is the date on which an order was passed under Section 51 by the proper officer and date on which the actual loading of Iron Ore was started is totally irrelevant. Even if the date of Notification and the date on which actual loading of Iron Ore Fines was carried out are on 07.12.2008, or date of Notification was prior to 10.12.2008, the date on which vessel left territorial water of India, the benefit of Notification cannot be extended to the appellant, since the shipping bill was filed on 05.12.2008, it was assessed on the same day and the appellant paid export duty amounting to Rs. 73,32,383/- on the very same day. Following the ratio of the judgment in Narayan Bandekar Sons Pvt. Ltd, relevant date for considering the rate of duty in the present case is 05.12.2008 and appellant is not eligible for the benefit of N/N. 129/2008-Cus dated 7.12.2008. Conclusion - The appellant is not entitled to the exemption benefit under Notification No. 129/2008-Cus, as the relevant date for duty determination was 05.12.2008, prior to the notification date. Appeal dismissed.

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• 2024 (12) TMI 1468
  Refund claim of excess CVD paid in respect of 133 Bills of Entry - payment was initially made under protest - principles of unjust enrichment - HELD THAT:- In support of the refund claim, appellant have furnished a certificate dated 13.02.2017 issued by M/s. Prakash Thiagarajan (CA) showing the due amount in the Company s Balance sheet as Customs Duty Deposit Receivable under Long Term Loans . Further, appellant also furnished copy of the balance sheet for financial year 2015-16, where they have accounted the said amount under Long Term Loans and Advances under Assets . As per the Final Order of the Tribunal in the matter of M/s. Micromax Informatics Limited [ 2023 (9) TMI 1267 - CESTAT NEW DELHI] , once the certificate is produced from Chartered Accountant with Balance sheet, onus stands shifted upon the department to falsify those documents before concluding a presumptive finding. Similarly, Hon ble High Court of Karnataka in the matter of Commissioner of Customs Vs. Apple India Ltd [ 2015 (1) TMI 573 - KARNATAKA HIGH COURT] also held that once assessee has produced certificate from Chartered Accountant stating that the assessee has not passed the burden directly or indirectly, it is sufficient to rebut the presumption of unjust enrichment. Conclusion - Production of a Chartered Accountant's certificate and relevant financial documentation are sufficient to rebut the presumption of unjust enrichment under the Customs Act, 1962. The appellant is entitled to a refund of the excess CVD paid. Considering the decisions of the Hon ble High Court and Tribunal the appeal is sustainable - appeal allowed.

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• 2024 (12) TMI 1467
  Classification of goods - Provisionally preserved Areca nut (whole) and Provisionally preserved Areca nut (split) - to be classified under heading 2008 19 20, which pertains to Other Roasted Nuts and Seeds, or under Chapter 8, which covers dried fruits and nuts? - HELD THAT:- As per HSN Explanatory Notes, Heading 2008 covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. Specifying what is included in this heading, the explanatory note states that almonds, ground nuts, areca (or betel) nuts and other nuts, dry-roasted, oil-roasted or fat-roasted, whether or not containing or coated with vegetable oil, salt, flavours, spices or other additives. Dry-roasting, oil-roasting fat-roasting, as a process, are very much a part of Chapter Heading 2008 by virtue of HSN Explanatory Notes. It is also pertinent to observe that none of these processes are mentioned in the Chapter Note 3 to Chapter 8 of the Customs Tariff Act, 1975 as well as HSN Explanatory Notes to Chapter Heading 0802. It is an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs Central Excise v. Phil Corporation Ltd. [ 2008 (2) TMI 3 - SUPREME COURT ] is directly relevant and applicable in the instant case of the applicant. In the judgment of the said case Honourable Supreme Court has held a number of cases, this Court has clearly enunciated that HSN is a safe guide for the purpose of deciding issues of classification. In the present case, the HSN Explanatory Notes to Chapter 20 categorically state that the products in question are so included in Chapter 20. The HSN Explanatory Notes to Chapter 20 also categorically state that It s products are excluded from Chapter 8 as they fail in Chapter 20. From the Apex Court s foregoing judgments, it is observed that the roasted nuts find specific mention in the then Chapter 20 of the then Central Excise Tariff Act and the Chapter 20 of the Schedule I of the Customs Tariff Act, 1975 as well as corresponding HSN Explanatory Note. It is important to pay attention to the fact that, in the above referred HSN explanatory note, a process of roasting is not specifically mentioned as a process of preservation or stabilization or a process to improve or maintain the appearance - Hon ble Apex Court s conclusions corroborate the finding that the process of roasting is not covered by Note 3 to Chapter 8 and hence these products, roasted betel nuts are not classifiable under Chapter 8 of the Tariff. Conclusion - The Roasted areca/betel nuts fall under Custom Tariff Heading 2008, specifically under CTI 2008 19 20 Other roasted nuts seeds of Chapter 20 of the First Schedule of the Customs Tariff Act, 1975.

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• Corporate Laws

• 2024 (12) TMI 1466
  Oppression and mismanagement - allowing the Annual General Meeting (AGM) to proceed, keeping the outcome of Agenda No.1 in abeyance - appealable order under Section 421 of the Companies Act, 2013 or not - HELD THAT:- Looking at the nature of the order, which has been subjected to challenge by invoking Section 421 of the Companies Act, 2013, it takes the shape of an Interlocutory Order, where the right of the Appellant in the context of provisions contained under Section 134 of the Companies Act, 2013, which though being procedural in nature and it s not being a substantive provision, has been left open to be considered and thus the Impugned Order permitting holding of the AGM as scheduled would be an Interlocutory Order. Since no material right of the Appellant has been addressed or effected on the merits and all objections of the Appellant have been left open to be considered at the stage of the AGM, it will not fall to be an appealable order under Section 421 of the Companies Act, 2013, as it has been left open for him to agitate all his grievances, when the Company Petition itself is taken up on merits qua the decision taken on the AGM as directed to be held in pursuance to the Impugned Order. Thus, the appeal since being premature as it arises out of an Interlocutory order, it will not amount to be an adjudication of a right to sustain the appeal. Conclusion - Interlocutory orders that do not affect substantive rights are not appealable under Section 421 of the Companies Act, 2013. The appeal since being premature as it arises out of an Interlocutory order, it will not amount to be an adjudication of a right to sustain the appeal. Appeal dismissed.

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• Securities / SEBI

• 2024 (12) TMI 1465
  Unlawful gains by fraudulent and manipulative strategy made by Reliance Company - responsibility of noticee no. 2 i.e. the Managing Director - violating Section 12A of the SEBI Act r/w Regulations 3 and 4 of the SEBI PFUTP Regulations - vicarious liability on both criminal and civil liability for contravention of the SEBI Act, Rules and Regulations - Liability against violations committed by the company As decided in RELIANCE INDUSTRIES LIMITED, MR. MUKESH D. AMBANI, NAVI MUMBAI SEZ PVT. LTD., MUMBAI SEZ LTD. VERSUS SECURITIES AND EXCHANGE BOARD OF INDIA, [ 2023 (12) TMI 260 - SECURITIES APPELLATE TRIBUNAL MUMBAI] the word complicit means involvement with others in an activity which is unlawful. On the other hand, the word implicit is suggestive though not directly expressed.Thus, in the absence of any specific finding by the AO on noticee no. 2 complicit involvement in the execution of the implementation plan or in the execution of the trades, the AO cannot dwell into surmises and conjectures and base its findings on presumption to hold that the noticee no. 2 was implicitly involved in the transactions on the ground of being a Managing Director and which implies a high level of accountability of knowledge of overall functioning of the Company. The burden under Section 27 was discharged by noticee no. 2 and the AO has miserably failed to prove that noticee no. 2 was involved in the execution of the trades carried out by two senior executives. HELD THAT:- As no question of law involved in these Appeals warranting our interference in exercise of our jurisdiction under Section 15Z of the Securities and Exchange Board of India Act, 1992. Appeals are accordingly dismissed.

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• 2024 (12) TMI 1464
  Interest levied by the SEBI on the appellant - SEBI discretion to decide interest charged on outstanding registration fees - expert committee was constituted under Shri R. S. Bhatt (Bhatt Committee) recommended turnover as a fair basis of determination of the registration fee and recommended differential rates of fee for different types of transactions. HELD THAT:- It cannot be held that this Tribunal had given any discretion to the SEBI for calculating interest deviating from the existing Regulations, which provides for mandatory charging of interest Respondent is right in his submission that in the given set of facts of this case, the word shall cannot be interpreted as may as held in the case of Anjum M. H. Ghaswala ORs [ 2001 (10) TMI 4 - SUPREME COURT ] We find that the Regulation 5 of the Schedule-III of the Stockbroker s regulations mandatorily provide for charging of interest at the rate of 15%. There exists no discretion in the hands of the SEBI in the matter. Further, charging of interest is in the nature of compensation for accretion to capital and cannot be compared with penalty which involves discretion based on facts and circumstances and underlying intention. Respondent should have given credit for the interest accrued from the date of this Tribunal s order dated December 6, 2006 till the order of the Hon ble Supreme Court s order dated November 24, 2015 - We find that vide the aforesaid order, the Hon ble Supreme Court has upheld the calculation of annual turnover fee made by the SEBI, which is in accordance with the applicable Stockbrokers Regulations, 2002. In view thereof, interest is rightly charged on the appellant on the outstanding dues of annual turnover fee . There is no merit in the claim of interest thereon, since the appellant has already got the credit for interest on the principal amount of Rs. 2.92 Crore for the entire period from 2006 till 2019, since no interest has been charged thereon. A brief period of September 6, 2003 till October 1, 2003, the appellant was having a credit balance of Rs. 74,55,793/-. No interest has been credited to the appellant for this period. In our view, appellant is entitled for the credit of 15% interest p. a. (simple) for the period from September 6, 2003 to October 1, 2003 on this amount lying in appellant s credit.

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• 2024 (12) TMI 1463
  Forward Market Commission (FMC) powers to conduct audit/inspection and exercise its jurisdiction on the shareholders of the associates - Fraudulent acts and passing on illegal monetary benefits to the entities controlled/connected - abuse of position and commission of irregularities in the affairs of NMCE by the appellant No. 1, through certain employees of the NMCE, to pass on unlawful benefits to the appellant No. 2. Forward Market Commission (FMC) - FMC was vested with wide powers by FCRA for observing Forward Market and taking such action in relation to them, as it may consider necessary , and allows it to make an inquiry in relation to the affairs of any association or the affairs of any of its members Since the Central Government s powers had been delegated to the FMC, it had all the powers with regard to taking action with regard to the forward market, as it deems necessary. The mechanism of inquiry was only for gathering facts for which it was vested with quasi-judicial powers. Section 8 of the FCRA allowed it to take necessary actions for enabling functioning of the Forward market. In view of this, we do not find any infirmity in the authority of the FMC in initiating inquiry into the management of the NMCE and the manner in which its key management persons performed their duties. With regard to scope of the inquiry, it is evident that Section 4 of the FCRA Act is pari materia to the Section 11 of the SEBI Act and keeping in view the decision of the Hon ble Supreme Court in the case of Sahara India Real Estate Corporation (supra) and Karnavati Fincap Ltd. (supra), an inquiry which is intended to protect the interest of the investors is wide in its scope. The findings of the inquiry suggest that there was indeed unauthorized use of significant amount of funds belonging to the investors (margin money) of the NMCE (Rs 29 Cr.) without due process claimed to be for software development, which could not be substantiated and for market-making activity, (which was not allowed at the relevant time). Therefore, the inquiry for protecting the interests of the investors, is well within the scope of Section 4 of FCRA. Other jurisdictional challenge which questions the authority of the Director FMC to direct inquiry, in view of the notification dated March 12, 1964, it is evident that the Central Government had delegated the powers u/s 8(1) and 8(2) of the FCRA upon the director also and hence the plea of the appellant to treat the enquiry as ab initio void, is unsustainable. In view of this, we do not find any merit on the challenge on the grounds of jurisdiction in the matter. Thus, ground Nos. 1 and 2 have no merit. Legitimacy of Payment made to ATSPL - Undoubtedly, the payment of Rs. 28.80 crore towards software development is a bogus payment made to the related parties. In effect, it is in the nature of embezzlement of funds by manipulation of the financial accounts. This is the finding recorded by the Income Tax Settlement Commission set up under Chapter XIX of the Income Tax Act, 1961, which is the final fact finding Alternative Dispute Resolution Authority in the scheme of direct tax dispute while deciding application of NMCE. In any case, facts reveal that ATSPL did not have VAT service tax No. nor had adequate manpower and the on-site inspection revealed that it did not exist at the registered address. In its accounts, ATSPL showed receipt from NMCE as loans and advances . The evidence also shows that payments to ATSPL were sought to be justified through back-dated agreements with retrospective effect and the respondent also brought on record evidence of use of stamp paper from a member, who had ceased to supply stamp papers much earlier to the date of purchase of stamp papers. The directors-shareholders of the ATSPL clearly stated that the family member of appellants were running the company for all practical purposes. Keeping in view these incontroverted facts, we find no merit in the appellant s plea and hold that payment to ATSPL was bogus and made as per the directions of the appellant No. 1 at the cost of NMCE s investors Irregularity in issuance of shares of NMCE to appellant No. 2 (NOL) - The funds of the Exchange were used for allotment of NMCE shares to the Appellant No. 2 at the instance of Appellant No. 1, who was the MD and Vice-Chairman of NMCE. The investigation has revealed that the allotment was made without approval and in violation of provisions of Companies Act, 1956 and without payment of application money at the time of allotment. The allotment was also made without receiving money and out of the running account. On consideration of these facts, we hold that the allotment of shares of NMCE to the appellant No. 1 is bogus. Hence, this ground is also liable to be rejected. Appointment of various consultants on behalf of NMCE was done validly - Appointment of 144 consultants by the appellant no. 1 for NMCE was made without following any due process or documentation. In view of this, this ground is also liable to be rejected. Misappropriation of money belonging to NMCE for personal and family expenses - As seen that the in show cause notice, allegations have been made in respect of misuse of NMCE funds amounting to Rs. 19.20 lakh for Ms. Anjana Gupta on foreign travel and for purchase of phone / appliances at her flat at Paldi Ahmedabad. An amount of Rs. 3.88 lakh is alleged on account of foreign travel, phone purchased for Mr. Nanak Gupta and amount of Rs. 2.03 lakhs was incurred for foreign travel, mobile phone purchased for Ms. Pooja Gupta and an amount of Rs. 1.38 lakh was spent on foreign travel of Amit Gupta. Further, it was alleged that appellant had purchased three cars out of Exchange funds in his own name for an amount of Rs. 20.93 lakhs and also purchased car for his wife Poonam Gupta for Rs. 11.45 lakhs and, another car for Rs. 14.40 lakh for Shri Nanak Gupta from the funds of the NMCE. Appellant had denied the charges levelled without providing any cogent explanation. Thus, there is no explanation forthcoming on behalf of the appellants to show that these expenses were made for legitimate purposes. Therefore, we find no merit in this ground also.

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• 2024 (12) TMI 1462
  Failure to comply with the provisions of Regulations 15(1)(i) of Debenture Trustees Regulations SEBI (Debenture Trustees) Regulations, 1993 - penalty of Rs. 10 lakhs u/s 15HB of the SEBI Act, 1992 imposed - default of Code of Conduct under the Debenture Trustee Regulations Appellant has not reported that there were more than 49 investors in the NCDs, though it had received the relevant communication from Karvy on April 1, 2014 along with list of investors. Secondly, that appellant had sought to suppress the receipt of the BENPOS report from Karvy and did not furnish the same till two reminders were sent and finally forwarded the report on August 4, 2020. HELD THAT:- Undisputed facts of the case are Vaishnodevi Dairy Products Ltd. had proposed to issue Non-convertible Debentures and appointed appelant/IL FS as the debenture trustee. The said Company was taken over the appellant. Karvy was the sole subscriber of the debentures and it had further sold the debentures to 185 investors. As per the extant Regulations there could not have been more than 49 investors in debentures. On April 1, 2014, Karvy had sent an e-mail to IL FS containing a list of 154 investors. This e-mail is produced at page 299 to 303 of the appeal paper book. It is clearly mentioned on the top that it was the BENPOS report as on March 24, 2014. Appellant has fairly conceded that even on receipt of the list of investors from Karvy on April 1, 2014, appellant did not report the same to SEBI. Thus the first charge has been admitted. Second charge of suppression of the BENPOS report - The total time taken by the appellant in furnishing the BENPOS report is about 13 days. In the meanwhile, two e-mails were exchanged between the parties. It is not SEBI s case that correct BENPOS report was not submitted at all, but the allegation is that appellant had initially attempted to suppress the correct report. Appellant has conceded that appellant did not report to the SEBI about the number of investors. Therefore, in our view, appellant is liable to be penalized for not reporting the matter to SEBI. So far as the second charge with regard to suppression of material is concerned, we are of the opinion that the same is not tenable in view of the facts recorded hereinabove. Ends of justice would be met by reducing the penalty from Rs. 10 lakhs to Rs. 5 lakhs towards the first charge and holding that second charge is not proved.

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• Insolvency & Bankruptcy

• 2024 (12) TMI 1461
  Maintainability of petition - applicability of principle of estoppel - Constitutinal validity - Sections 13 of the SARFAESI Act, 19 of the RDB Act, and Sections 7, 9, 10, and 95 of the IBC - jurisdictional bars under Section 34 of the RDB Act, Section 34 of the SARFAESI Act, and Section 63 of the IBC - benefits of Sections 7 and 8 of the MSMED Act of 2006 - HELD THAT:- All the petitions have been filed by the same counsel and, therefore, the petitioners have full knowledge that such repeated petitions have been filed before different High Courts, with identical prayers. It is further found that although in paragraph nos.77 and 78 of the present petition, such facts have been disclosed, still it can be said that the petitioners are trying to somehow get an order in their favour by filing different petitions, with same prayers before the different High Courts. The present petition is dismissed, with a cost of Rs.1 lac (Rupees One Lac) upon the petitioners, which the petitioners shall deposit with the Registrar General of this Court within a period of one month from today. On deposit of such cost, it shall be transmitted to the account of the High Court Legal Services Committee, Allahabad.

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• 2024 (12) TMI 1460
  Institution of a civil suit claiming a relief by way of a title over the 100 equity shares of the MRF - simultaneous pursuit of a civil suit and a company petition by the Appellant was permissible under the Companies Act, particularly in light of Section 430 of Companies Act or not - HELD THAT:- The dismissal of the Company Petition on 10.08.2022, cannot be legally faulted, because admittedly on that date the Appellant was pursuing two simultaneous remedies, one by way of the Company Petition and the other, by way of a civil suit, which was pending despite of the undertaking given by the Appellant to withdraw the same. Though the withdrawal memo was filed, but no orders were passed till the Company Petition was taken up by the Ld. Tribunal on 10.08.2022 and orders were passed dismissing the company petition, on the ground that civil suit is being simultaneously pursued. It is a settled preposition of law constitutionally mandated, that a right to judicial remedies is a right which is safeguarded by Article 21 of the Constitution of India, and under this right, nobody could be deprived of availing the judicial remedies before the competent Court of Law for redressal of his grievances, which in the instant case falls to be within an ambit of Section 59 of the Companies Act. But the same was denied by the Ld. Adjudicating Authority on account of the pendency of the civil suit, but we cannot ignore the fact which has been brought on record, that when this company appeal was being considered, it is a fact which is not denied, that on the withdrawal memo was filed in the civil suit except that the Lok Adalat dismissed the suit as withdrawn only on 13.08.2022 after the Company Petition got dismissed. Owing to the implications of the order passed on 13.08.2022, since in the light of the undertaking given by the Appellant before the Ld. Adjudicating Authority to withdraw the suit, the same has been withdrawn though marginally at a later stage, in that eventuality, minor procedural technicalities should not create any hurdle as such against the Appellant for, depriving him for all times to come, from resorting to his judicial remedies. Therefore, as the suit has been withdrawn on 13.08.2022, the Company Petition No. 106(CHE)/2021, as preferred by the Appellant under Section 59 of the Companies Act, ought to have been considered on its merit. Conclusion - A right to judicial remedy, is a right envisaged under the Constitution, which cannot be deprived of, merely because of a minor procedural error or procedural technicalities. Petition allowed.

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• PMLA

• 2024 (12) TMI 1459
  Seeking grant of bail - appellants are in custody for about one year and one month but charge has not been framed in a complaint filed under the Prevention of Money-Laundering Act, 2002 - delayed trials - role of the Public Prosecutor in opposing bail applications - HELD THAT:- It is well settled that a Public Prosecutor has to be fair. If a case is covered by a binding precedent, it is his duty to point out the said aspect to the Court. Perhaps what the learned Judge intended to was that when the Public Prosecutor is satisfied that the trial has been delayed on account of default or conduct on the part of Enforcement Directorate, the Public Prosecutor should take a fair stand. However, the aforesaid observations will not prevent Public Prosecutors from opposing a bail petition on the ground that act or omissions on the part of Enforcement Directorate are not responsible for the delay of trial. Therefore, this order cannot be read to mean that the Public Prosecutors are not entitled to oppose the bail petitions. Conclusion - Undue delay in trial proceedings, particularly without charges being framed, can justify granting bail. Application disposed off.

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• 2024 (12) TMI 1458
  Money Laundering - predicate offence - proceeds of crime - petitioner is a bona fide purchaser or not - petitioner can be subjected to proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) based on the alleged predicate offences committed by the vendor or not - HELD THAT:- The link in the chain of events and undisputed dates are taken note of, what could be unmistakably gathered is, that the petitioner is a bona fide purchaser. Having purchased the property long before the crime even being initiated against the vendors of the petitioner would not mean that the axe should fall on the petitioner, that too for attachment of properties which have changed hands after they are purchased by the petitioner. The proceedings instituted by the Enforcement Directorate, though civil in nature or the petitioner is having alternate remedy to challenge the orders of attachment would not mean that this Court could permit such an action to be taken against the petitioner, without him being involved in any manner. If that would be permitted, every purchaser who has purchased the property from a person who gets indicted in the crime at a later stage would have to face the proceedings for no fault of him. In somewhat identical circumstances, the Apex Court in the case of Pavana Dibbur v. Directorate of Enforcement [ 2023 (12) TMI 49 - SUPREME COURT ] upturning the order passed by this Court holds that unless conspiracy is alleged, all and sundry cannot be drawn into the web of proceedings under the Act. Though in the case at hand, in one of the crimes so registered there is offence punishable under Section 120B of the IPC, but that cannot drag the petitioner into the web of those proceedings, as all the transactions that the petitioner is projecting have happened long before initiation of predicate offence even. Therefore, there are no hesitation to hold that the impugned proceedings are unsustainable, in the peculiar facts of this case. Conclusion - A bona fide purchaser who acquires property before any predicate offence is registered cannot be subjected to proceedings under the PMLA without evidence of conspiracy or direct involvement. Petition allowed.

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• 2024 (12) TMI 1457
  Money laundering - scheduled offence - loan borrowed by the companies have facilitated mis-appropriation, manipulation of books of accounts through fictitious accounts and conversion of property of SIL by way of No. (1) Capital advances to potentially related party, (2) Sales and purchase with potentially related properties (3) bilateral transactions with properties related amongst themselves - petitioner mainly contended that the respondent cannot proceed under PMLA in view of the quashment of predicate offence - legal grounds on which FIR pertaining to the scheduled offence was quashed - scheduled offence of section 447 of the Act is still pending against the petitioner - PMLA is a sui-generis legislation - section 3 of PMLA is a standalone provision - ECIR cannot be equated with FIR - deliberations on the principle of automatic quashing of ECIR once FIR stands quashed. Legal grounds on which FIR pertaining to the scheduled offence was quashed - HELD THAT:- It is not in dispute that complaint under Sections 44 and 45 of PMLA has been filed. Thereafter, supplementary complaint was also filed invoking Section 447 of the Companies Act, 2013 on 12.06.2024. The FIR was challenged before the High Court of Karnataka. The High Court quashed the FIR on the ground that the investigation pertaining to the same allegation against the petitioner and other accused was entrusted to the Serious Fraud Investigation Office (SFIO), and the SFIO after investigation submitted a report and thereafter filed a chargesheet / complaint before the Special Court and the same is pending before XV Additional City Civil Court, Chennai. Therefore, the Court quashed the FIR No. 11/2019 dated 01.11.2019 on the ground that SFIO alone has jurisdiction to try the said offences. Scheduled offence of section 447 of the Act is still pending against the petitioner - HELD THAT:- The proceedings under section 447 of the Companies Act, 2013 is a scheduled offence under PMLA, 2002. It is not disputed that already chargesheet / complaint has been filed under Section 447 of the Companies Act, 2013 on 09.09.2022 and the same is pending before the XV Additional City Civil Court, Chennai. Further, it is submitted that the Petitioner was arrested by SFIO and is under judicial custody from 02.08.2022 - the action of Respondent Department does not stand vitiated as the predicate offence under Section 447 of the Companies Act, 2013 is still pending and not quashed. Therefore the prayer of quashing of the ECIR and all subsequent proceedings appears to be misplaced one. PMLA is a sui-generis legislation - HELD THAT:- After investigation of the crime, the Respondent Department has to investigate into whether the offence, as enunciated under Section 3 of PMLA has been committed or not, and the adjudication, prosecution and trial under PMLA is independent of the scheduled offence. The Respondent is the notified Investigative Authority for PMLA only and not for the scheduled offence - In a case where based on the scheduled offence Enforcement Directorate initiated PMLA proceedings, conducted investigation, identified proceeds of crime and filed statutory complaint under Sections 44 and 45, then it is to be construed as Standalone Process within the parameters laid down by the Hon'ble Apex Court in the case of Vijay Madanlal [ 2022 (7) TMI 1316 - SUPREME COURT (LB) ]. Section 3 of PMLA is a standalone provision - HELD THAT:- The authority under PMLA, is to prosecute a person for offence of money laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of Proceeds of Crime . Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. Therefore, the live link between the scheduled offence and PMLA proceedings would be relevant for initiation of proceedings under PMLA. The Hon'ble Supreme Court elaborately considered initiation of PMLA proceedings, for which it is a pre-condition that a scheduled offence is to be registered. ECIR cannot be equated with FIR - HELD THAT:- ECIR is born from FIR, but once the ECIR is born, the umbilical cord that connects the ECIR with FIR losses its relevance and the ECIR becomes an independent document in itself. Consequently, a new life in the form of ECIR emerges, which can breath on its own without the support of FIR. So, the FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other. Deliberations on the principle of automatic quashing of ECIR once FIR stands quashed - HELD THAT:- It shocks the conscience of the Court that in recent cases involving money laundering, a certain pattern has emerged, whereby, the FIR quashed through minor technical glitches or procedural irregularities and with that as a ground they seek for quashing of ECIR also - Any application of principle, even if in its literal form paves way for injustice, then the Court is allowed to take a detour to expound the law in such a way which serves the cause of justice. If the principles of automatic quashment of ECIR is adopted arithmetically, the very purpose and objective of PMLA is defeated. This Court is not venturing into the grounds of quashing an FIR as the principles pertaining to the same has already been laid down elaborately by the Hon ble Supreme Court. But the rationale here is to cull out the level of bearing that a quashed FIR has on an proceedings challenging the ECIR. This Court feels that all cases where FIR is quashed shall not automatically become a ground for quashing an ECIR. Instead a case to case analysis is a pre requisite for deciding on the sustenance of an ECIR - keeping in line with the explanation to Section 44 of the PMLA, 2002, this Court comes to the irresistible conclusion that cases where FIR pertaining to the scheduled offence is quashed it does not automate the exoneration of the accused from the predicate offence. Rather FIR quashes on grounds of mere technicalities or procedural irregularities in the FIR, cannot by itself form a basis to grant an automatic quash of ECIR. Also in the aforementioned instance, there needs to be a case to case examination of the offence registered under the PMLA before the offence is rendered ineffectual. Implications of automatic quashing of ECIR based on FIR quash - HELD THAT:- Since the SFIO was already entrusted with the investigation by the Central Government vide order dated 09.04.2019 on the same set of allegations, the present FIR registered by the CBI was quashed by the High Court citing the aforementioned reason. Hence, it is amply clear that the High Court has quashed the FIR only on the ground that another Investigating Agency is seized off the matter. The Court has not dealt with the allegations nor tested the merits of the offences charged in the FIR. The Court restricted itself only to the ground of want of jurisdiction. Hence the FIR was quashed purely on this technical or procedural issue and not on substantive grounds and has not made any findings as to the offences or the prima facie allegations in the FIR. Therefore, the quashing of the FIR shall not warrant an automatic quashing of ECIR. All the more, the predicate offence under Section 447 of the Companies Act, 2013, which is also a scheduled offence under the PMLA still stands good and requires further investigation. Therefore, in view of the above ECIR is not liable to be quashed. Conclusion - i) The Court quashed the FIR No. 11/2019 dated 01.11.2019 on the ground that SFIO alone has jurisdiction to try the said offences. ii) The action of Respondent Department does not stand vitiated as the predicate offence under Section 447 of the Companies Act, 2013 is still pending and not quashed. Therefore the prayer of quashing of the ECIR and all subsequent proceedings appears to be misplaced one. iii) The Respondent is the notified Investigative Authority for PMLA only and not for the scheduled offence. The live link between the scheduled offence and PMLA proceedings would be relevant for initiation of proceedings under PMLA. iv) If the principles of automatic quashment of ECIR is adopted arithmetically, the very purpose and objective of PMLA is defeated. The FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other. v) keeping in line with the explanation to Section 44 of the PMLA, 2002, this Court comes to the irresistible conclusion that cases where FIR pertaining to the scheduled offence is quashed it does not automate the exoneration of the accused from the predicate offence. vi) The quashing of the FIR shall not warrant an automatic quashing of ECIR. All the more, the predicate offence under Section 447 of the Companies Act, 2013, which is also a scheduled offence under the PMLA still stands good and requires further investigation. Therefore, in view of the above ECIR is not liable to be quashed. Thus, the petitioners have not made out any case for quashing of ECIR filed by Enforcement Directorate. However, the Trial Court shall proceed uninfluenced by the observations if any made on factual aspects and decide the issues based on documents and evidence available on record and by following the due process - petition dismissed.

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• Service Tax

• 2024 (12) TMI 1456
  Maintainability of the present appeal before the Court - appropriate forum - taxability - appeal ought to be preferred before the Supreme Court or not - HELD THAT:- Since the issue is one of taxability, the decision of CESTAT would have to be assailed before the Supreme Court in view of Section 35L of the Central Excise Tax as the question of law involved is regarding the taxability of the said service. This is the settled position in law as per a series of decisions including a recent order of this bench in Commissioner of CGST and Central Excise, Delhi v. M/s Spicejet Ltd. [ 2024 (12) TMI 1408 - DELHI HIGH COURT] . This Court dismissing a similar appeal preferred under Section 35G, from the decision of CESTAT observed ' In view of Sections 35G and 35L of the Central Excise Act, 1944 which applies in respect of Service Tax, whenever issues of determining taxability are involved, the appeal would lie to the Supreme Court.' The present appeal is rejected with liberty to avail remedies under Section 35L of the Central Excise Act, 1944 in accordance with law. Needless to state that the Appellant is free to claim benefit under Section 14 of the Limitation Act, 1963 for the period during which the present appeal was pending before this court - Appeal disposed off.

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• 2024 (12) TMI 1455
  Cash refund of accumulated cenvat credit on input services used in providing output service - export of services - appellant is an intermediary or not - refund claims rejected solely on the ground that the services rendered by the appellant to Microsoft Corp, USA is not an Export of Service , which are in the nature of intermediary service - HELD THAT:- The appellants had entered into an agreement with Microsoft Corp. for providing various services viz., online technical support service to the customers of Microsoft Corp. through mail, over phone, etc. In other words, they rendered services in the nature of after sales support or product warranty support services by an agreement with MS Corp. Thus, there is an agreement between the appellant and MS Corp and nowhere, they are connected with the customers of the Microsoft Corp in rendering such services. This issue has been considered by this Tribunal more or less in a similar circumstances in the case of CCT vs. M/s. Informatica Business Solutions Pvt. Ltd. [ 2024 (11) TMI 922 - CESTAT BANGALORE ], where it was held that ' The basic requirement to be an intermediary is that there should be at least three parties; an intermediary is someone who arranges or facilitates the supply of goods or services or securities between two or more persons. There is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply.'. The refund cannot be denied - the impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 1454
  Liability of appellant to pay service tax - Cleaning activity services provided to Indian Railway and other public sector undertaking - service tax is payable on the gross amount which includes the wages, etc., paid to the employees or not - secondary packaging activity is falling under the category of manufacturing or not - transportation of documents and goods and other liaison works - Manpower Recruitment or Supply agency service or not - eligibility for benefit of N/N. 30/2012-ST dated 20.06.2012 - Suppression of facts or not - Extended period of limitation. Extended period of limitation - HELD THAT:- There is no allegation that the appellant is involved in suppression of facts in any manner with an intention to evade payment of service tax. Moreover, for the very same service, demand was made for different periods by issuing different show-cause notices by invoking extended period of limitation. Similar demand was made for the period from 2012-13 to 2015-16 and after considering the submissions, adjudication authority vide Order-in-Original No. 38/2021 dated 30.07.2021 dropped the demand. As held by Hon ble Supreme Court in the matter of Pushpam Pharmaceuticals Company Vs. CCE, Bombay [ 1995 (3) TMI 100 - SUPREME COURT] , wilful suppression does not mean any omission and that the act must be deliberate - thus, demand by invoking the extended period of limitation is unsustainable. Whether the Appellant is liable to pay service tax on 'Cleaning activity' services provided to Indian Railway and other public sector undertaking? - HELD THAT:- The issue is no more res integra. As per the decision of the Hon ble Madras High Court in the matter of M/s. Premier Garment Process Vs. CCE ST, Chennai [ 2022 (10) TMI 881 - MADRAS HIGH COURT] , the issue is settled and the activities of the Appellant are subject to service tax. Similar view was taken in the matter of HAKAMICHAND D SONS VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (5) TMI 481 - CESTAT AHMEDABAD ]. Thus, even if the appellant failed to collect service tax, service tax liability for providing such services is well settled and the impugned order is sustainable. Hence, demand for the normal period against the show-cause notices issued to the appellant is confirmed - Since the appellant has not collected the same from the service recipient, Appellant is entitled for cum-tax benefit as held by adjudication authority as per Section 67(2) of the Finance Act, 1994. Whether service tax is payable on the gross amount which includes the wages, etc., paid to the employees? - HELD THAT:- Though the Hon ble High Court of Kerala in the matter of M/s. Security Agencies Association [ 2013 (2) TMI 356 - KERALA HIGH COURT] held that salary and statutory payment of security personal can be included as consideration, only by following the ratio of the judgment of the Hon ble Supreme Court in the matter of Intercontinental consultants and Technocrats Pvt., Ltd., [ 2018 (3) TMI 357 - SUPREME COURT] and considering the nature of contract to find out whether appellant had received the consideration as pure agent, service tax can be quantified. Whether providing secondary packaging activity is falling under the category of manufacturing? - HELD THAT:- Considering the definition of Packaging Activity under Section 65(7B) and Clause (f) of Section 2 of the Central Excise Act, 1944, and considering the Circular dated 01.07.2002, such activity can be considered as manufacture, and it is beyond the scope of service tax. Hence, entire demand under the category of Manpower Recruitment and Supply Agency' Services or under 'Packaging activity' services on the consideration received from M/s. HLL Life Care is set aside. Whether transportation of documents and goods and other liaison works amounts to service under the category of 'Manpower Recruitment or Supply agency services? - HELD THAT:- As regarding demand of service tax for providing transportation of document, the activity cannot be considered as 'Manpower, recruitment or Supply' services, since the consideration was determined on the basis of distance for carrying the document belonging to M/s. HLL Lifecare and it is falling under the category of Transportation of Goods . As per the relevant provisions of law, the service tax is payable by the service recipient under reverse charge. Whether the appellant is eligible for the benefit of Notification No. 30/2012-ST dated 20.06.2012? - HELD THAT:- The appellant is eligible for the benefit of N/N. 30/2012-ST dated 20.06.2012 and cum-tax benefit as held by adjudication authority as per Section 67(2) of the Finance Act, 1994. Adjudication Authority is directed to complete the De-novo Adjudication within 3(three) months after the receipt of this order by extending a reasonable opportunity for personal hearing to the appellant. Conclusion - The matter remanded to the Adjudication Authority to quantify the service tax liability against 'cleaning activity' services, Manpower Recruitment or Supply Agency' Services for the normal period considering the date of issue of each show cause notice - As regards gross amount as consideration, the adjudication authority shall consider the contract against each service to ascertain whether the contract entered between Appellant and recipient of service are falling under the category of pure agent and if falling under the category of pure agent, said consideration should be excluded from the consideration - the appellant is eligible for the benefit of N/N. 30/2012-ST dated 20.06.2012 and cum-tax benefit as held by adjudication authority as per Section 67(2) of the Finance Act, 1994. Appeal allowed in part.

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• Central Excise

• 2024 (12) TMI 1453
  Cenvat Credit of duty of inputs which were not used to manufacture a new excisable goods - correctness of disallowing the demand of the Department for Cenvat Credit duty wrongly availed of by the assessee Under Rule 14 of the Cenvat Credit Rules, 2004, on the ground that it is against the tenets of Equity and Justice - HELD THAT:- It appears that the process undertaken by the assessee was cutting/slitting of imported CRGO coils of width more than 600mm to the width of less than 600mm. It also emerges from the record that the petitioner has paid more excise duty while clearing the final products under Chapter Heading No. 7226 1100 than the amount of Cenvat Credit availed on the duty paid on import of CRGO coils under Chapter Heading N. 7225 1100. This Court in case of Creative Enterprise [ 2008 (7) TMI 311 - GUJARAT HIGH COURT] has held that ' it is apparent that the respondent has been held to be a manufacturer as defined in section 2 (f) of the Central Excise Act, 1944. The appellate authority has taken into consideration the activities carried on by the respondent assessee. The Tribunal is justified in holding that if the activity of the respondent assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, modvat credit cannot be denied by holding that there is no manufacture.' Conclusion - The assessee is entitled to Cenvat Credit in view of the fact that the Revenue has accepted the excise duty paid by the assessee on the clearance of final products, irrespective of the fact, whether it amounts to manufacture or not. The issues decided in favour of the assessee and against the Revenue - appeal dismissed.

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• 2024 (12) TMI 1452
  Option to forego unconditional exemption to final products by virtue of N/Ns. 6/2002 dated 1.3.2002 and 6/2003 dated 1.3.2003 at the relevant time and pay duty at the Tariff rate and claim for Modvat/Cenvat credit on inputs used in the manufacture of final products - demand of Cenvat credit in a situation where the assessee has paid the duty on the final products and utilized the credit on inputs for payment of final products - amendment provided in Section 5A by inserting sub-section 1A as is clarificatory nature or in prospective. Whether the appellant could have exercised option with regard to payment of duty or to avail the exemption Notification as per Section 5A of the Central Excise Act, 1944? - HELD THAT:- Once, the final product is exempted, if the appellant would not have paid any duty, there was no question of claiming any Modvat/Cenvat credit. However, in the facts of the case, the appellant has paid duty on the final products inspite of the exemption Notification being issued by the Central Government, the same was claimed as Modvat/Cenvat credit resulting into revenue neutralization - the appellant once having paid the duty is bound to get the Modvat/Cenvat credit but, for the insertion of Clause 1A by the Finance Act, 2005 which specifically declares that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods. Thus, after the insertion the appellant-assessee was prohibited from payment of excise duty on the exempted excisable goods and therefore, there is no question of getting any Modvat/Cenvat credit in view of such prohibition. Whether the amendment to Section 5A by inserting sub-section 1A is clarificatory or prospective in nature? - HELD THAT:- The insertion of Section 1A cannot be said to be clarificatory but, it is substantive in nature as it prohibits the assesseee from payment of duty on the exempted excisable goods. The Hon ble Apex Court in case of Commissioner of Central Excise, Pune Versus Pudumjee Pulp Paper Mills Ltd. [ 2006 (4) TMI 132 - SUPREME COURT ] observed ' it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.' The insertion of Clause 1A in Section 5A of the Central Excise Act is not clarificatory in nature but, it is substantive in nature and therefore, it would be optional for the appellant to avail the exemption of the excisable goods or to pay duty on such exempted excisable goods and therefore, the tribunal was not right in upholding the order passed by the respondents demanding for Cenvat credit where, the appellant had paid the duty on the final products and utilized the credit on inputs for payment of the final products. Conclusion - It would be optional for the appellant to avail the exemption of the excisable goods or to pay duty on such exempted excisable goods and therefore, the tribunal was not right in upholding the order passed by the respondents demanding for Cenvat credit where, the appellant had paid the duty on the final products and utilized the credit on inputs for payment of the final products - the amendment provided in Section 5A by inserting Clause 1A is prospective in nature. Appeal allowed.

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• 2024 (12) TMI 1451
  Classification of goods - Siapton 10L and Isabion - classifiable as fertilizer under Central Excise Tariff Item No. 3101 00 99 of the first schedule of Central Excise Tariff Act, 1985 as declared by the appellant or Plant Growth Regulator falling under Central Excise Tariff Item No. 3808 93 40 as claimed by the Department? - HELD THAT:- Since the larger bench of this tribunal has finally decided the question in dispute in these appeals in [ 2024 (9) TMI 1655 - CESTAT AHMEDABAD (LB) ], these appeals can be disposed of in accordance with the decision given by the larger bench. It was held by Larger Bench that ' (i) A plant growth promoter cannot be equated with a plant growth regulator. A plant growth promoter only promotes the growth of the plant and does not inhibit it. On the other hand, a plant growth regulator inhibits, promotes or otherwise alters the physiological processes in a plant. The view to the contrary taken by the Division Bench in the referral order is not correct; and (ii) Siapton 10L and Isabion merit classification as fertilizers under ETI 3101 00 99 and not as a plant growth regulator under ETI 3808 93 40.' Conclusion - The goods in question namely Siapton 10L and Isabion are correctly classifiable under Central Excise Tariff Item No. 31010099 and the same is not falling under Central Excise Tariff Item No. 38089340. The impugned orders are set aside - Appeals are allowed

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• 2024 (12) TMI 1450
  Levy of central excise duty - clinker used for captive consumption by availing exemption under N/N. 67/95-CE dated 16.3.1995 for manufacturing of cement that was cleared against International competitive bidding by claiming exemption under Sr No. 336 of N/N. 12/2012-CE dated 17.03.2012 - HELD THAT:- The identical issue in the appellant s own case has been decided by this Tribunal consistently in two decision of this Tribunal reported as Shree Digvijay Cement Co Ltd [ 2018 (11) TMI 300 - CESTAT AHMEDABAD] . The only difference is that the said decisions were given with reference to the exemption Notification No. 06/2006-CE dated 01.03.2006 Sr. No. 19 which is pari materia to the exemption entry No. 336 Notification 12/2012-CE dated 17.03.2012. Therefore, the issue is no longer res-integra. Conclusion - The appellant is entitled to the exemption under Notification No. 67/95-CE for clinker used in the manufacture of cement cleared against international competitive bidding. The impugned order is set aside - appeal allowed.

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• 2024 (12) TMI 1449
  Benefit of SSI exemption under N/N. 8/2003 dated 01.03.2003 - exceeding the threshold turnover Rs. 400 lakhs in the preceding Financial Year - whether the appellant is eligible for the benefit of N/Ns. 89/95-CE dated 18.05.2005 in respect of other products viz., Acid oil, Fatty acid, Waxes and Gums, which are generated during the course of manufacture of refined oil and if they were held eligible, whether they are eligible for the benefit of SSI N/N. 8/2003-CE dated 01.03.2003 as amended? HELD THAT:- The issue of products viz., acid oil, fatty acid, gums and waxes, which are generated during the process of refining of crude edible oil to produce refined edible oil has been the subject matter in the case of M/s. Ricela Health Foods [ 2018 (2) TMI 1395 - CESTAT NEW DELHI] , Vinayak Agrotech [ 2017 (11) TMI 598 - CESTAT NEW DELHI] , Arihant Solvex [ 2019 (1) TMI 235 - CESTAT NEW DELHI] and it has been decided that these products can be treated as waste during the manufacture of refined edible oil, which is an exempt product and they are entitled for the benefit of exemption Notification No. 89/95-CE dated 18.05.1995. Further, it is found that this Tribunal in the case of M/s. Habib Agro Industries and in the case of the appellant s own case [ 2023 (8) TMI 654 - CESTAT BANGALORE] has decided that the Acid oil, Fatty acid, Gums and Waxes generated during the process of refining of oil are eligible for the benefit of Notification 89/95-CE dated 18.05.1995, considering them as waste. Conclusion - By-products generated as incidental to the manufacture of exempt goods can qualify as waste - appellant's eligibility for the exemption under Notification No. 89/95-CE affirmed - SSI exemption denied due to exceeding the turnover threshold.

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• 2024 (12) TMI 1448
  Interest on delayed refunds - to be calculated from the date of deposit or from the date of filing the refund application - applicable rate of interest on the delayed refund - HELD THAT:- In the present case impugned order clearly observes that the amount that was deposited by the appellant at the time of visit of officers to their premises was appropriated by the original authority while adjudicating the case of shortages against the appellant. The amount so appropriated acquired the character of duty, the moment it is appropriated against the demand made. In case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ], Hon ble Supreme Court has observed 'Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court.' Thus all the refunds which are filed under the Central Excise Act, 1944 in terms of the decision of hon ble Supreme Court in case of Mafatalal Industries and the above provisions whether of the duty, interest or any deposit made are governed by the provision of Section 11B of the Act. The interest thus gets governed by the provisions of Section 11BB as has been held by Hon ble Supreme Court in case of Ranbaxy, referred in the impugned order. There has been exception carved out only for determination of relevant date for determining the period for which interest is to be paid in respect of deposit made as per Section 35F for filing the appeal before an appellate authority. Section 35FF provides that interest would be paid from the date of deposit made under Section 35F. Conclusion - Interest would be paid from the date of deposit made. There are no merits in the appeal - appeal dismissed.

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• CST, VAT & Sales Tax

• 2024 (12) TMI 1447
  Refusal of doctrine of mutuality on the ground that majority of the members of the different categories other than the permanent members were persons with no voting right or any right to participate in the affairs of the management of the club - HELD THAT:- The order of the Tribunal confirming the assessment made and the law on the point, as prima facie occurs, it is opined that the following questions of law arise: - (i) Whether the Tribunal was correct in having declined the application of doctrine of mutuality on the transactions entered into by the appellant? (ii) Whether the appreciation of facts by the Tribunal was correct and was it not perverse since the findings were on mere surmises and conjectures? (iii) Whether the Tribunal was correct in having determined a proportion of members to decline application of the doctrine of mutuality with respect to certain transactions, on the finding that certain category of members did not have any control over the affairs of the club and thus could not be included within the ambit of doctrine of mutuality ? The Tribunal is directed to state the case and make a reference to this Court on the above noted questions of law arising from the order of the Tribunal under Section 48 (3) of the Bihar Finance Act.

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• Indian Laws

• 2024 (12) TMI 1446
  Dishonour of Cheque - mandatory presumption as provided under Section 139 of the Negotiable Instruments Act drawn in favour of the complainant - whether the accused has succeeded in rebutting the presumption drawn in favour of the complainant? - HELD THAT:- A presumption is an inference to the existence of a fact not actually known arising from its connection with another which is known. A presumption is a conclusion drawn from the proof of facts or circumstances and stands as establishing facts until overcome by contrary proof. Analysing the terms proved and disproved as provided in Section 3 of the Evidence Act, a court shall presume a Negotiable Instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. The necessary conclusion is that for rebutting such a presumption, what is needed is to raise a probable defence. All the circumstances, including the evidence adduced on behalf of the complainant, could be relied upon. The rebuttal does not have to be conclusively established, but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of responsibility being that of the prudent man. The admitted case of the complainant is that his wife and the accused had a financial transaction in respect of an immovable property. But, his wife came to the box and denied the entire transactions. She even denied to have acquaintance with the accused - The accused has brought in throwing circumstances that make the case of the complainant suspicious. Unless the holder of the instrument removes such suspicion by tendering a satisfactory explanation, no conviction is legally permissible by invoking the statutory presumption. The accused has successfully discharged his initial onus of proof showing that the existence of consideration was doubtful. The onus now shifted to the complainant who is obliged to prove it as a matter of fact. In the present case, the complainant failed to prove the same. The accused having been acquitted by the trail Court is entitled to the presumption of innocence. The presumption of innocence is further reaffirmed and strengthened by the trial Court. If reasonable conclusions are possible based on the evidence on record, the appellate court should not disturb the finding of fact recorded by the trial Court. In the instant case, the complainant failed to give a satisfactory explanation for the suspicious circumstances brought on record regarding the consideration of Ext.P1 cheque. The view taken by the trial Court cannot be held to be illegal, improper or contrary to law. Therefore, the reasoning recorded by the trial Court for acquitting the accused was possible and plausible and no interference is required. Conclusion - The accused having been acquitted by the trail Court is entitled to the presumption of innocence. The presumption of innocence is further reaffirmed and strengthened by the trial Court. The complainant failed to give a satisfactory explanation for the suspicious circumstances brought on record regarding the consideration of Ext.P1 cheque. Appeal dismissed.

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• 2024 (12) TMI 1445
  Seeking appointment of a sole Arbitrator for resolution of its claims qua non-applicant Company - resistance for appointment of an Arbitrator in respect of the claim put forth by applicant-Company, has been made fundamentally in view of certain subsequent events, transpired after filing of the instant arbitration application - Time limitation. Seeking appointment of a sole Arbitrator for resolution of its claims qua non-applicant Company - HELD THAT:- This Court finds that as far as execution of purchase agreement dated 28.07.2014, whereunder the copper was agreed to be supplied by non-applicant-Company to the applicant-company and supply of copper in pursuance thereof, is an undisputed fact. The arbitration agreement, contained in such purchase agreement in Clause 16(B) is also not in dispute. A seven judges Bench of the Hon ble Supreme Court in Re: Interplay Between Arbitration Agreements Under The Arbitration and Conciliation Act 1996 And the Indian Stamp Act, 1989 [ 2023 (12) TMI 897 - SUPREME COURT (LB) ], has observed in Para Nos.152 154 that the omission of Section 11(6A), through Arbitration and Conciliation (Amendment) Act, 2019 (Act 33 of the 2019), has not been notified in the official gazette and therefore, the said provision continues to remain in full force. It is hereby observed that undeniably the dispute between the parties has not been resolved amicably and the arbitration clause contained in Clause 16(B) of the purchase agreement comes in play. Before filing the arbitration application, the applicant had issued legal notices dated 08.12.2021 and 12.01.2022, of which though, reply of one notice dated 12.01.2022 has been filed by the non-applicant Company on 03.09.2022, but admittedly the Arbitrator has not been appointed. Time limitation - HELD THAT:- The arbitration application is well within limitation. Conclusion - The existence of an arbitration agreement between the parties is confirmed and a sole arbitrator is appoined. The arbitration application is well within limitation. The Arbitration Application stands disposed of accordingly.

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