TMI Tax Updates - e-Newsletter
January 16, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Central Excise CST, VAT & Sales Tax

TMI SMS

• Levy of CST - once goods are released against bill of entry for home consumption, the import stream dried up & goods got mixed in the local goods -SC

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• Detention of goods - mis- classification - proper officer does not have discretion to condone the procedural lapse or relax its rigour in a case - HC

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• The payment of property tax / house tax cannot be deducted from the monthly rental income for arriving at the value of supply for levy of GST - AAAR

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Articles

1. Concept of Tax Information Exchange Agreement in India with Tax Havens and Secrecy Jurisdictions.

   By: CAPushpkumar Sahu

News

1. One held by CGST Delhi officials for fraudulently passing on fake ITC of ₹ 14.30 crore

2. Income Tax Department conducts searches in Kolkata

3. INDIA’S FOREIGN TRADE DATA: DECEMBER 2020

4. Shri Piyush Goyal inaugurates the ‘Prarambh: Startup India International Summit’

5. Tamil Nadu becomes the 11th State to complete One Nation One Ration Card system reform

Notifications

Customs

1. 04/2021 - dated 15-1-2021 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver

2. 06/2021-Customs (N.T./CAA/DRI) - dated 14-1-2021 - Cus (NT)

Appointment of CAA by DGRI

3. 05/2021-Customs (N.T./CAA/DRI) - dated 14-1-2021 - Cus (NT)

Appointment of CAA by DGRI

4. 04/2021-Customs (N.T./CAA/DRI) - dated 14-1-2021 - Cus (NT)

Amendment in Notification No. 28/2019-Customs (N.T./CAA/DRI) dated 09.07.2019

GST - States

5. S.O. 75 - dated 14-1-2021 - Bihar SGST

Bihar Goods and Services Tax (Fourteenth Amendment) Rules, 2020

6. S.O. 74 - dated 14-1-2021 - Bihar SGST

Appoints the 1st day of January, 2021, as the date on which the provisions of sections 3, 4, 5, 6, 7, 8, 9, 10 and 13 of the Bihar Goods and Services Tax (Second Amendment) Act, 2020 shall come into force

IBC

7. IBBI/2020-2021/GN/REG068 - dated 14-1-2021 - IBC

Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2021

Circulars / Instructions / Orders

Income Tax

1. 01 of 2021 - dated 15-1-2021

Amount of remuneration prescribed under section 9A(3)(m) of the Income-tax Act, 1961

GST - States

2. Trade Circular No. 03 T of 2021 - dated 12-1-2021

Quarterly Return Monthly Payment Scheme

DGFT

3. Trade Notice No. 38/2020-21 - dated 15-1-2021

Introduction of online e-PRC System for Application seeking Policy/Procedure relaxation in terms of Para 2.58 of FTP 2015-20.

Highlights / Catch Notes

GST

• Misclassification of Goods Justifies Detention Under GST Act Section 129; Officers Must Follow Rules Strictly to Prevent Evasion.

  Case-Laws - HC : Whether a mis- classification of the goods can be the basis for a detention under Section 129 of the GST Act? - Section 129 of the Act, if a proper officer who is entrusted with the task of detaining goods, finds that they have been transported in contravention of the rules, he does not have the discretion to condone the procedural lapse or relax its rigour in particular cases. He must interpret the Rule strictly keeping in mind the statutory scheme that aims to curb tax evasion. - HC
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• Rental Income for GST: Property Tax Non-Deductible, Excludes Notional Interest on Deposits.

  Case-Laws - AAAR : Valuation of Rental Income - GST - Deduction of property taxes and other statutory levies - treatment of notional interest on the security deposit - All taxes levied under any law in force are to be included in the value of the renting of immovable property service supplied by the Appellant. Therefore, the property tax paid to the Municipal Authority (BBMP) cannot be deducted from the monthly rental income for arriving at the value of supply. - However, for the purpose of arriving at the total rental income, the notional interest earned on the security deposit is not to be taken into consideration. - AAAR
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• Water Chiller Plants for Naval Use Classified Under Chapter 8418: GST Rate Dropped from 28% to 18% in 2018.

  Case-Laws - AAR : Classification of goods - GST rate - water chillar plants supplied by the applicant for use in the warships, vessel and submarines to be deployed by the Indian Navy - The “Supply, Testing and Commissioning of 160 TR Chilled Water Plant” to Naval Dockyard (Vishakhapatnam), is a composite supply with supply of goods being the principal supply i.e. ‘Chilled Water Plant’/ ‘Chiller’ falling under Chapter sub-heading No. 8418 10 10 and the GST rate applicable to the principal supply levies to the complete supply of goods and services. Accordingly, the applicant is liable to pay GST @28% till 26.07.2018 and @18% from 27.07.2018 on said complete supply of goods and services. - AAR
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• SPG Prints Austria GMBH's Services to Indian Customers Ruled as Composite Supply Under GST Regulations.

  Case-Laws - AAR : Classification of supply - contract with SPG Prints Austria GMBH (SPA) to provide particular services to customers of SPA in India, as per SPA’s instruction - individual supply or composite supply of service? - The applicant satisfies all the three conditions, of Composite supply hence the applicant services get covered under the definition of “composite supply”. - AAR
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• Mining Lease for "BLACKTRAP" Subject to 18% GST Under Service Code 997337 Since July 2017 for Rent/Royalty Payments.

  Case-Laws - AAR : Classification - Grant of mining lease for extracting Mineral called “BLACKTRAP” - payment of rent/royalty is for license given to extract minerals and the amount of rent/royalty paid is based on the quantum of mineral extracted. Hence it is covered under Service Accounting Code 997337 - Licensing services for the right to use minerals including its exploration and evaluation, as it is a license to extract mineral ore and also the right to use such minerals extracted. - It would attract GST rate 18% from the period of July, 2017 onwards. - AAR
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• "Un-fried Fryums" Classified as Tariff Item 2106 90 99, Subject to 18% GST Rate, Confirms AAR Decision.

  Case-Laws - AAR : Classification of goods - rate of GST - “Papad” of different shapes and sizes - The product ‘Un-fried Fryums’ manufactured and supplied by applicant is classifiable under Tariff Item 2106 90 99 of the First Schedule to the Customs Tariff Act, 1975. Goods and Services Tax rate of 18% (CGST 9% + GGST 9% or IGST 18%) is applicable to the product ‘Un-fried Fryums’ - AAR
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• GST Applies to Long-term Lease Premium Paid by Jinmangal Corp to Ahmedabad Urban Development Authority, Says AAR u/s 7(1) CGST Act.

  Case-Laws - AAR : Levy of tax (GST) on one time long term lease premium payable/paid by the Jinmangal Corporation to Ahmedabad Urban Development Authority - supply or not - long term lease for a period exceeding 30 years - this activity i.e. lease of plot and payment of one time lease premium / salami and annual premium paid by the applicant for lease of commercial plot/land is a ‘supply’ and covered u/s 7(1) of CGST Act, 2017 - AAR
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• Non-Woven Bags Made from Polypropylene Classified as Plastic Bags Under HS Code 3923, Attract 18% GST.

  Case-Laws - AAR : Classification of goods - Non Woven Bags manufactured through the intermediate product Non Woven fabric - Polypropylene Woven and Non-Woven Bags would be classified as plastic bags under HS code 3923 and would attract 18% GST - Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923 - AAR
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• Chocolate Milk Powder Reclassified: Not Milk Powder, Now Under Food Preparation Heading 1806 Due to Cocoa Blend.

  Case-Laws - AAR : Classification of goods - Chocolate Milk Powder - it is an admitted / undisputed fact that the product in question does not have the characteristics, required under FSSAI and BIS, to be considered as Milk Powder. Thus the instant product does not cover under the heading 0401 or 0402. - The instant product being a food preparation made out of blending of white milk powder with cocoa. Thus the instant product merits classification under heading 1806. - AAR
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Income Tax

• Assessing Officer Ordered to Remove Disallowed CSR Expense Additions Due to Lack of Examination and Rule Consistency Violation.

  Case-Laws - AT : Addition of expenditure made towards Corporate Social Responsibility (CSR) and sustainable development - AO, without examining the nature of the expenses, disallowed the claim mechanically even by ignoring the rule of consistency. - Moreover, CSR expenses have been incurred by the assessee on the direction of the Government of India - AO directed to delete the additions - AT
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• Penalty for Concealed Income u/s 271AAA for Excess Depreciation Claim Removed by Tribunal.

  Case-Laws - AT : Levy of penalty u/s 271AAA - concealed income on account of excess claim of depreciation - A.O has merely mentioned one line imported from section 271(1)(c) of the Act which in the instant case is not applicable on the assessee. On going through the above reproduced defective notice we find that similar notice was issued to another group concern of the assessee wherein penalty u/s 271AAA of the Act was deleted by this Tribunal. - Penalty deleted - AT
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• Tax Authorities Cannot Disallow Loan Interest u/s 37(1) After Previous Acceptance, Says Assessee.

  Case-Laws - AT : Addition u/s 37(1) - disallowing interest provided on loan - loan was used to purchase shares - Assessee received loan in earlier years on which interest is also paid which have not been disputed by the Income tax authorities, therefore, Income tax authorities cannot depart from the fact that assessee received loan in earlier years and as such, on outstanding loan amount, no disallowance of interest could be made. The Income tax authorities shall have to follow rule of consistency and definiteness of approach in dealing with the matter - AT
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Customs

• Court Rules Trade Notifications Can't Be Amended by Simple Notice; Requires Full Legal Procedure for Changes.

  Case-Laws - HC : Interpretation of Statute - whether a Trade Notification can be amended by a Trade Notice - it cannot be stated that it is a mere elaboration, information or clarification to the Regional Authorities of the Directorate, as claimed by the respondents. Hence, the said clarification or modification to the original Notification cannot be made in terms of a mere notice without following the statutory procedure, in the given case. - HC
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• High Court Dismisses Petitioners' Challenge on Interest Recovery Under Customs Act for Non-Payment Since 2018.

  Case-Laws - HC : Recovery of Interest - attachment order - Upon petitioners' failure to pay the applicable interest in subsequent notice dated 05.11.2018, the respondents have taken recourse to the provisions of the Customs Act and the Rules framed thereunder, that too for the purpose of ensuring recovery - Writ petition dismissed - HC
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IBC

• Referral Bench Warned Against Re-evaluating Judgments; Should Focus on Oversights and Errors, Respect Judicial Precedents.

  Case-Laws - AT : Referring matter to larger bench - It is not open to the Referral Bench to appreciate the judgment rendered by the earlier Bench as if sitting in appeal to hold that the view is erroneous. Escaping of attention of the earlier Bench as regards a binding judicial precedent or a patent error is of relevance but not evaluation of earlier judgment as if sitting in appeal - We are sad to note that the Referral Bench has overlooked all legal considerations. Such misadventures weaken the authority of law, dignity of institution as also shake people’s faith in rule of law. We hope and trust that the Hon’ble Members of the Referral Bench would exhibit more serious attitude towards adherence of the binding judicial precedents and not venture to cross the red line. - AT
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• CIRP Initiation Requires Establishing 'Debt' and 'Default' for Application u/ss 7, 9, or 10 of I&B Code.

  Case-Laws - AT : Initiation of CIRP - since the I&B Code is not a complete Code, provisions of Limitation Act are attracted to proceedings under it before NCLT and NCLAT as far as applicable i.e. in regard to matters not specifically provided for in I&B Code. The whole mechanism of triggering of Corporate Insolvency Resolution Process revolves round the concept of ‘debt’ and ‘default’. Once debt and default are established, the Financial Creditor, the Operational Creditor or the Corporate Person can initiate the CIRP by filing application respectively under Section 7, 9 or 10 of I&B Code in prescribed format before the Adjudicating Authority. - AT
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VAT

• High Court Rules Goods Become Local Once Released; Subsequent Movement is Inter-State Sale Under CST Act Section 3(a.

  Case-Laws - SC : Levy of CST - sales in the course of import or inter-State sales - The High Court was right in observing that once the appellant got released the goods after filing the bill of entry for home consumption, the import stream dried up and the goods got mixed in the local goods. Any movement of the goods thereafter was bound to be a sale under Section 3(a) of the CST Act; and such movement being from the State of Andhra Pradesh to other State, it had been a matter of inter-State sale. The principle that actual sale may not necessarily precede the movement of goods, in its true effect, operates rather against the appellant in relation to the sale to end-buyers after the goods were cleared for home consumption. - SC
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Case Laws:

• GST

• 2021 (1) TMI 554
  Valuation of Rental Income - Deduction of property taxes and other statutory levies - treatment of notional interest on the security deposit - exemption of tax under the general exemption of Rs. 20 lakhs - challenge to AAR decision. Whether the property tax paid by the Appellant to the Municipal Authority can be deducted from the monthly rental income received? - HELD THAT:- In this case, the fact that the supplier and the recipient of the service (i.e lessee) are not related and that the rent is the sole consideration for the service of renting of immovable property, are not in dispute. It is seen from the draft rental agreement that the lessee is required to pay monthly rental of Rs. 1,50,000/- plus applicable taxes, subject to deduction of tax as may be applicable. Therefore, the amount received from the lessee towards the monthly rent as per the invoice that will be raised by the Appellant, will be the transaction value and it is on this value that GST has to be paid - Section 15(2) of the CGST Act, provides for certain inclusions to the value of supply. One such inclusion is that all taxes levied under any law in force will be included in the value. The only taxes which qualify for exclusion from the value are the CGST, SGST, IGST, UTGST and Compensation Cess which are levied under the respective Acts. Even in respect of these taxes, they can be permissible deductions subject to the condition that the supplier charges them separately in the invoice. Other than the above levies, no other statutory levy can be deducted from the value of supply. All taxes levied under any law in force are to be included in the value of the renting of immovable property service supplied by the Appellant. Therefore, the property tax paid to the Municipal Authority (BBMP) cannot be deducted from the monthly rental income for arriving at the value of supply. Whether the notional interest on the security deposit is to be included for the purpose of calculating the total rental income? - HELD THAT:- This is a concept which has been deliberated at length by many Courts with respect to the Income Tax Act. As far as GST law is concerned, the issue is to be examined in the context of supply and the consideration received for the supply. What constitutes a supply in GST has been provided in Section 7 of the CGST Act and it includes all forms of supply (such as rental) made or agreed to be made for a consideration. In this case, the monthly rental received from the lessee is a consideration for the supply of the renting service. The terms of the rental agreement also state that the lessee shall pay an interest free refundable security deposit of Rs. 5 crore which will be returned to lessee upon vacation of the scheduled property - The interest is paid by the person with who the amount is invested. The interest earned by the supplier from a third person, on account of investing the security deposit amount is not a payment made by the third person in respect of, in response to, or for the inducement of the supply of the renting service. There is no connection between the payment of interest by the third person and the renting service supplied by the supplier to the lessee. The phrase in respect of, in response to, or for the inducement of used in the above definition of consideration as given in Section 2(31)(a) of the CGST Act, means there must be a direct link between the supply of the service and the consideration received in the form of interest on the security deposit. Such a connection is absent in this case. The decision of AAR modified.

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• 2021 (1) TMI 553
  Maintainability of SLP - Condonation of delay in filing SLP - HELD THAT:- There is delay of 238 days in filing the Special Leave Petition which has not been satisfactorily explained - also there are no merits in the petition. The Special Leave Petition is, therefore, dismissed on the ground of delay as well as on merits.

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• 2021 (1) TMI 552
  Legality of orders of detention passed by the respondents - detention of goods and vehicles - scope and ambit of the orders passed by the proper officer in Form GST MOV-6 and Form GST MOV-9 respectively - HELD THAT:- The procedure to be sequentially followed from the stage of recording the statement of the driver in Form GST MOV-1 to the stage of issuing an order in Form GST MOV-6 detaining the goods, is for the purpose of determining whether the goods were being transported, or stored during transit, in contravention of the provisions of the Act and Rules. The proper officer is required to apply his mind to the statement given by the driver of the vehicle, as also other documents produced by or on behalf of the owner of the goods or conveyance, to determine whether a contravention of the statutory provisions has indeed been occasioned. It is only if he is satisfied of such contravention, based on the material before him, that he must proceed to pass the order of detention in Form GST MOV-6. If there is no material to come to such a conclusion, he has to issue a release order in Form GST MOV-5 and permit an unconditional clearance of the goods and vehicle. At all the above stages, the proper officer is also required to strictly adhere to the time limits prescribed in the circulars issued from time to time so that the goods are not detained for a period longer than that permitted under the statute - Since the statutory provisions and the circulars envisage the service of a notice in Form GST MOV-7, simultaneous with the issuance of a detention order in Form GST MOV-6, the non-finality of the latter order is statutorily recognised and hence, it will not be open to the person concerned to prefer any statutory appeal or writ petition against the said order in Form GST MOV-6. The person served with an order in Form GST MOV-6, together with a notice in Form GST MOV-7, has the option of either paying the amounts demanded in the notice and clearing the goods or contesting the matter by preferring his objections to the proposals contained in the notice. In the former event, on receipt of the payment from the person concerned, the proper officer has merely to regularize the payment by passing an order in Form GST MOV-9 confirming the proposal in the notice. The proper officer shall bear in mind the statutory provisions that provide for an appeal against an order passed under Section 129 (3) of the Act and accordingly, refrain from invoking the bank guarantee furnished by the person concerned for a period of three months from the date of service of the order in Form GST MOV-9, so that the appellate remedy available to the person concerned is not rendered illusory. Whether a mis- classification of the goods can be the basis for a detention under Section 129 of the GST Act? - HELD THAT:- A mere suspicion of mis-classification of goods cannot be the basis for a detention under Section 129 of the Act. It has to be borne in mind that Section 129 forms part of the machinery provisions under the Act to check evasion of tax and a detention can be justified only if there is a contravention of the provisions of the Act in relation to transportation of goods or their storage while in transit. No doubt, it may be open to an inspecting authority to detain goods if there is a patent mis-description of the goods in the transportation documents, to such an extent that it can only be seen as referring to an entirely different commodity. Such instances, however, must necessarily be confined to glaring mis-descriptions such as Apples being described as Oranges or Coconuts being described as Betel Nuts , where the two goods can never be perceived as the same by ordinary persons endowed with reasonable skills of cognition and comprehension. Section 129 of the Act, if a proper officer who is entrusted with the task of detaining goods, finds that they have been transported in contravention of the rules, he does not have the discretion to condone the procedural lapse or relax its rigour in particular cases. He must interpret the Rule strictly keeping in mind the statutory scheme that aims to curb tax evasion. In as much as the adjudication that is expected of him is a summary one, he can do no more than determine whether or not on a literal reading of the statutory provisions, together with the circulars issued from time to time, there has been a breach occasioned thereof. Any person aggrieved by the order of the proper officer must necessarily approach the appellate authority before which an appeal against the adjudication order under Section 129 (3) of the Act is maintainable. In the instant case too, the remedy of the petitioner is to approach the appellate authority under the Act against the finding of the proper officer. The petitioner is relegated to his alternate remedy of preferring appeals against the said adjudication orders before the appellate authority under the Act - there are no reason to interfere with the adjudication orders in Form GST MOV-9 impugned in the writ petition - petition disposed off.

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• 2021 (1) TMI 551
  Classification of goods - Chocolate Milk Powder - to be classified under HSN 0402 or under 1806 or under any other Chapter? - HELD THAT:- Milk and Milk products are classified in Chapter 4 and the headings 0401 86 0402 are relevant to Milk / Milk in the form of powder or granules and cr me. The product in the instant case is neither milk nor milk powder but Chocolate Milk Powder , which is admittedly obtained on blending of Whole Milk Powder with Chacolate Flavoured Powder in the ratio of 97.5 to 2.5. Further it is an admitted / undisputed fact that the product in question also does not have the characteristics, required under FSSAI and BIS, to be considered as Milk Powder. Thus the instant product does not cover under the heading 0401 or 0402. The other remaining headings of Chapter 4 are not relevant to the instant product. Scope of alternate / competing entry under Chapter 18 - HELD THAT:- The entry covers cocoa (including cocoa beans) in all forms, cocoa butter, fat and oil preparations containing cocoa. Explanatory Notes of World Customs Organisation to heading 1805 clearly specify that cocoa powder to which milk powder or peptones have been added fall under tariff heading 1806. Heading 1806 covers Chacolate and other food preparations containing cocoa and World Customs Organisation explanatory notes to the said heading clearly specify that the heading 1806 includes all food preparations containing cocoa. The instant product being a food preparation made out of blending of white milk powder with cocoa. Thus the instant product merits classification under heading 1806.

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• 2021 (1) TMI 550
  Classification of goods - Non Woven Bags manufactured through the intermediate product Non Woven fabric - classifiable under Heading No. 5603 are properly classifiable under Heading o. 6305 or under Heading No. 3923 - benefit of N/N. 01/2017-CT (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017 as amended - HELD THAT:- Fabric made of other than the yarn of cotton, silk, rayon or nylon and similar type of material is not a textile. The word used in the sentence is similar type of material and the meaning of said word can only be drawn in reference of the words used before the above word. The fabric made of Fiber grade Poly Propylene granules is not a similar type of material of cotton, silk, rayon or nylon. Hence fabric made of Fiber grade Poly Propylene granules cannot be considered as textile. Hence, ratio of above case law is not squarely applicable to the present case - Reference is also invited to CBIC (TRU) Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018, clarifying GST rates classification in respect of various goods. Para 7 of subject Circular has clarified that the goods viz. polypropylene woven and non-woven bags are classifiable under HS code 3923 and attracts GST @ 18%. Polypropylene Woven and Non-Woven Bags would be classified as plastic bags under HS code 3923 and would attract 18% GST - Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923, as also clarified by the CBIC in the Board Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018. Applicable rate of GST on product in hand - HELD THAT:- The rates of GST applicable on said products during different periods. Period 01.07.2017 to 30.09.2019 - rate of CGST and SGST @ 9% each totalling 18%. Period 01.10.2019 to 31.12.2019 - rate of CGST and SGST @ 6% each totalling 12%. 01.01.2020 to till date - rate of CGST and SGST @ 9% each totalling 18%.

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• 2021 (1) TMI 549
  Levy of tax on one time long term lease premium payable/paid by the Jinmangal Corporation to Ahmedabad Urban Development Authority - supply or not - long term lease for a period exceeding 30 years - applicant is of the view that a long term lease for a period exceeding 30 years tantamount to Sale of the immovable property since the lessor is deprived of the right to use, enjoy and possess the property once the said lease has been granted - reverse charge mechanism - annual lease premium payable/paid by the applicant, supply or not - Whether Jinmangal Corporation is required to discharge/tax under Reverse Charge Mechanism in accordance to Section 9(3) on one time lease premium payable to AUDA in light of Notification No. 13/2017 as amended by Not. No. 05/2019? HELD THAT:- The agreement made between the applicant and the lessee for long term of 99 years is for lease with many restrictions and has right to further sell/convey/transfer to the unit holder(s)/occupant(s) along with sub-lease/ assignment of undivided leasehold rights in the land for residue period of lease only ; the lessee cannot mortgage or transfer or sublet the premises or apportion there or without the permission of AUDA; that in case there is violation of any condition by lessee the lease deed will automatically be treated as cancelled. Whereas, when person purchase the commercial plot/land purchaser becomes the absolute owner of the plot and there is sale deed between seller and purchaser. On purchase of land, there is no requirement of renewal or extension of the sale period. The owner of the commercial plot/land is not required to pay any type of salami or annual lease premium for the plot/land. Also purchaser/owner of the land can sell the land to any body and no permission is required from seller as such purchaser have an absolute right of possession on land - the lease of plot for the 99 years by the applicant is not sale of land but is a lease of plot/land and therefore, does not get covered under clause 5 of Schedule III of CGST Act, 2017. Hence, it is concluded that this activity i.e. lease of plot and payment of one time lease premium / salami and annual premium paid by the applicant for lease of commercial plot/land is a supply and covered under Section 7(1) of CGST Act, 2017, which defines supply as all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business read with clause 2 of Schedule II of CGST Act, 2017, which specifies that lease of a land or building is a supply. The Onetime premium/salami and annual lease premium paid by the applicant to the AUDA for leasing of commercial plot/land is covered under supply of service in terms of Section 7 (1) of CGST Act, 2017 - the said Onetime premium/salami and annual lease premium paid by the applicant to the Ahmedabad Urban Developmet Authority (AUDA) are taxable under GST in terms of the Notification No. 11/2017-CT (Rate) dated 28.06.2017. Liability of GST under Reverse Charge Mechanism under Section 9(3) of CGST Act, 2017 - HELD THAT:- In view of the Notification No.05/2019-CT (Rate) dated 29.03.2019, applicant is liable to pay GST under reverse charge mechanism on the Onetime premium/salami and annual lease premium paid by the applicant to the AUDA.

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• 2021 (1) TMI 548
  Classification of goods - rate of GST - Papad of different shapes and sizes - applicant in his submission has tried to equate un-fried Fryums with Papad under Tariff Item as 1905 90 40 - HELD THAT:- What is Papad has not been defined or clarified under Customs Tariff Act, 1975, the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), the Gujarat Goods and Services Tax Act, 2017 (GGST Act, 2017), Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act, 2017 or the Notifications issued under the CGST Act, 2017/GGST Act, 2017/IGST Act, 2017 - It is now well settled principle of interpretation of statute that the word not defined in the statute must be construed in its popular sense, meaning that sense which people conversant with the subject matter with which the statute is dealing would attribute to it . It is to be construed as understood in common language. The issue of proper classification of the product Fry Snack Foods called Fryums and admissibility of exemption notification under Central Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal in the case of T.T.K. Pharma Ltd. v. Collector of Central Excise [ 1992 (8) TMI 183 - CEGAT, NEW DELHI] where it was held that the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . From the photos produced, it can be seen that PAPAD is a thing entirely different and distinct from FRYUMS. Therefore, in common parlance or in market, Fryums are not sold as PAPAD instead of PAPAD sold as papad and Fryums are sold as Fryums. Both the products are different and have their individual identity. Accordingly, in common parlance test, the applicant s product i.e. different shapes and sizes of Papad is not Papad but is Un-fried Fryums - the applicant himself has mentioned the fact in their application that in common parlance their product is popularly known as Fryums in the market - This fact indicates that applicant himself knows that in the market their product is called Fryums and not Papad as such the fact is that in the market Papad is known as Papad and not Fryums . Therefore, the Un-fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of Unfried Fryums - HELD THAT:- In the instant case the most appropriate rule of interpretation which is to be used while interpreting the phrase by whatever name it is known is the legal principle of Ejusdem Generis. The application of this Rule is necessitated because of the use of a general phrase preceded by specific words. The words ejusdem generis mean of the same kind or nature . Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals - phrase by any other name and by whatever name it is known have a proximate purpose in a statute and hence the principle laid down by the P H High Court supra will apply on all squares. Therefore, in the instant Case the goods Papad cannot be termed as Fryums hence applicant goods is to be classified under CTH No. 2106 and not under CTH No. 1905 of Custom tariff Act, 1975 - the product different shapes and sizes un-fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product Un-fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. Thus, it can be concluded that applicant s product of different shape and sizes is un-fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• 2021 (1) TMI 547
  Classification of goods - PAPAD of different shapes and sizes manufactured/ supplied by the applicant - whether the product would attract CGST and SGST? - HELD THAT:- The issue of proper classification of the product Fry Snack Foods called Fryums and admissibility of exemption notification under Central Excise regime was examined by the Hon ble Customs, Excise and Gold Appellate Tribunal (CEGAT, as it was known then) in the case of TTK. PHARMA LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1992 (8) TMI 183 - CEGAT, NEW DELHI] where it was held that the product Fry Snack Foods called Fryums have been considered as Namkeen and not as Papad . It can be seen that PAPAD is a thing entirely different and distinct from FRYUMS. Therefore, in common parlance or in market, Fryums are not sold as PAPAD instead of PAPAD sold as papad and Fryums are sold as Fryums. Both the products are different and have their individual identity. Accordingly, in common parlance test, the applicant s product i.e. different shapes and sizes of Papad is not Papad but is Un-fried Fryums - the Un-fried Fryums are not classifiable as Papad under Tariff Item 1905 90 40. Appropriate classification of Unfried Fryums - HELD THAT:- Heading 2106 is an omnibus heading covering all kind of edible preparations, not elsewhere specified or included. Chapter Note 5 provides an inclusive definition of this heading and covers preparations for use either directly or after processing, for human consumption. Chapter Note 6 pertaining to Tariff Item 2106 90 99 also provides inclusive definition and products mentioned therein are illustrative only - Ejusdem generis is a rule of interpretation that where a class of things is followed by general wording that is not itself expansive, the general wording is usually restricted things of the same type as the listed items. The principle of ejusdem generis is applicable in interpreting the CTH No. 1905 whereby the phrase by whatever name it is known , should be read in conjunction with the terms Papad and hence the scope of the term Papad would get limited to only such word which is similar to Papad or such class of individuals. In the instant case the applicant goods un-cooked Fryums is not similar to Papad or such class of Individuals. The phrase by any other name and by whatever name it is known have a proximate purpose in a statute and hence the principle laid down by the P H High Court supra will apply on all squares. Therefore, in the instant Case the goods Papad cannot be termed as Fryums hence applicant goods is to be classified under CTH No. 2106 and not under CTH No. 1905 of Custom tariff Act, 1975 - the product different shapes and sizes un-fried Fryums is appropriately classifiable under Tariff Item 2106 90 99. Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended vide Notification No. 41/2017-Central Tax (Rate), dated 14-11-2017 issued under the CGST Act, 2017 and corresponding Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 covers Food preparations not elsewhere specified or included [other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods] falling under Heading 2106. Therefore, Goods and Services Tax rate of 18% is applicable to the product Un-fried Fryums as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended, issued under the CGST Act, 2017 and Notification No. 1/2017-State Tax (Rate), dated 30-6-2017, as amended, issued under the GGST Act, 2017 or IGST Act, 2017. The applicant s product of different shape and sizes is un-fried Fryums and it cannot be called as Papad as claimed in the application and therefore merits classifiable under Tariff Heading 21069099 of the Custom Tariff Act, 1975.

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• 2021 (1) TMI 546
  Grant of mining lease for extracting Mineral called BLACKTRAP - classified under Tariff Heading 9973 as item No. (iii) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash deferred payment or other valuable consideration. Or item No. (viia) Leasing or renting of goods as any other service under the said chapter? - rate of GST on given services provided by State of Gujarat to applicant for which royalty is being paid. HELD THAT:- The nature of service received by the application is covered under the Service Accounting Code 9973 37 - Licensing services for the right to use minerals including its exploration and evaluation. The Government has been providing the service of licensing services for the right to use minerals after its exploration and evaluation to the applicant and applicant has to pay a consideration in the form of rent/ royalty to the Government for the same - The Sectoral FAQ published by the C.B.E. C. {https://cbic-gst.gov.in/sectoral-faq.html } in reply of Q. No. 30 of Government Services it is categorically state that royalty payment made towards Licensing services for exploration of natural resources is treated as supply of services. Therefore, payment of rent/royalty is for license given to extract minerals and the amount of rent/royalty paid is based on the quantum of mineral extracted. Hence it is covered under Service Accounting Code 997337 - Licensing services for the right to use minerals including its exploration and evaluation, as it is a license to extract mineral ore and also the right to use such minerals extracted. Applicability of GST rate - HELD THAT:- In the present case, the mining rights so granted are covered under the sub-heading 9973 37 that specifies - Licensing services for the right to use minerals including its exploration and evaluation . Whether the license to extract mineral and also the right to use such minerals extracted is a leasing or rental service? - HELD THAT:- What is supplied by the Government is the lease of the right to extract and use mineral and that is not covered by any specific entries in the Serial No. 17 of the Notification and hence falls under the residual entry. We find that the applicant in its application has submitted that their service may cover either in Sl. No. (iii) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration - in which rate of GST applicable as Same rate of Central as on supply of like goods involving transfer of title in goods OR Sl. No. (viia) Leasing or renting of goods - in which rate of GST applicable as Same rate of central tax as on supply of like goods involving transfer of title in goods. Since, the service received by the applicant is not at all leasing of goods but rather Licensing services for the right to use minerals including its exploration and evaluation , the transaction is appropriately covered under the residual entry of Sl. No. 17 of the aforesaid notification and not under Sl. No. (iii) or Sl. No. (viia) as claimed by the applicant - the GST rate so prescribed at Sl. No. 17(vi) or at clause (vii) or (viii) after amendment is not implementable due to the absence of any underlying goods. The rate of GST applicable on lease of goods may have been prescribed as the rate of GST applicable to supply of like goods involving transfer of title over the goods but the rate of GST prescribed for lease of goods can t be made applicable for leasing of mining area conferring the right to extract and appropriate the minerals. The lease by Government not being a lease of any goods, the conditional rate of tax applicable to sale of like goods cannot be imported for prescribing the rate of GST applicable to leasing of mining area. Therefore, it is clear that amendments have been carried out vide the aforesaid notification No. 27/2018- CT (Rate) Dated 31.12.2018 to clarify the legislative intent as well as to resolve the unintended interpretations. It is well settled that the legislative intent cannot be defeated by adopting interpretations which is clearly against such interpretations. Since the insertion of entry (viia) and (viii) vide said amendment Notification was being nature of clarification of the GST rate in respect of right to use Intellectual Property and similar products other than IPR , the applicability of said residual entry (viii) would be from the date of Not. No. 11/2017-(Rate) Central Tax dated 28.06.2017 as the same view is held by Hon ble Supreme Court of India. Accordingly, impugned service Licensing services for the right to use minerals including its exploration and evaluation which is classifiable under SAC 9973 37 will be covered under residual entry No. (viii) of the Notification No. 11/2017-(Rate) Central Tax dated 28.06.2017 and would attract GST rate 18% from the period of July, 2017 onwards.

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• 2021 (1) TMI 545
  Levy of GST - Healthcare services or not - pathology or diagnostic services supply to the client who is researcher - particular thing done by the applicant with respect to services - pathology or diagnostic services supplied to clinical research organization including govt. body for their business activities (including survey of particular thing pertaining to health care service) - taxable supply of services or not. Whether pathology or diagnostic services provided to the client researcher is liable to pay GST or otherwise? - HELD THAT:- The applicant is clinical establishment engaged in diagnostic services such as clinical biochemistry, micro biology, Hematology, clinical pathology etc.; rendering services through qualified Pathologist, qualified laboratory technician, paramedical technician and Doctors; that they are solely responsible for supply of pathology or diagnostic services to the client researcher and non-researcher both for their research purpose; that they have entered into Memorandum of Understanding (MOU) with M/s. Inforetell Techsolutions and Service Pvt. Ltd. and Dr. Deepak Saxena, signatory on behalf of Ms. Krupali Patel PHD student of the University of Bonn, Germany. Exemption from payment of GST under Sr. No. 74 of Notification No. 12/2017-CT(Rate) dated 28.06.2017 - HELD THAT:- There is nothing on record that applicant is providing service transportation of the patient to and from a clinical establishment - the MRSA PCR testing with MECC MECA are done by applicant for purely academic and research purpose are not covered under Sr. No. 74 of Notification No. 12/2017-CT (Rate) date 28.06.2017. Hence, the applicant is liable to pay GST on the services provided to the client. Whether any particular thing done by the applicant with respect to services amounts to or results in a taxable supply of services within the meaning of them? - HELD THAT:- The said question is very vague and no facts are on record in respect of the said question. Therefore, the Members of the authority are not in position to give Ruling. Whether any pathology or diagnostic services supplied to clinical research organization including govt. body for their business activities (including survey of particular thing pertaining to health care service) amount to or results in taxable supply of services? - HELD THAT:- The applicant has nothing submitted in their application about the type and nature of the said Service. It appears that the applicant has just posed a hypothetical question without any facts on records. Hence, the Members of the authority restrict themselves for Ruling on the said question.

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• 2021 (1) TMI 544
  Classification of supply - contract with SPG Prints Austria GMBH (SPA) to provide particular services to customers of SPA in India, as per SPA s instruction - individual supply or composite supply of service? - whether the specified transaction of the Applicant is to be reckoned as being provided to SPA or to the customers of SPA located in India? - whether the specified transaction of the Applicant could be categorized as that of an intermediary as per Section 2(13) of The Integrated Goods and Service Tax Act, 2017? - Export of service as per Section 2(6) of The Integrated Goods and Services Tax Act, 2017. Whether, in the facts and circumstances, the specified transaction of the Applicant should be categorized as individual supply or composite supply of service as per the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017? - HELD THAT:- It was observed by Authority for Advance Ruling that no remuneration / consideration is received by the applicant from Indian Customers. Applicant would only receive from WWD US, a fee equal to the operating cost incurred by the applicant plus mark up of 13% on such costs for payment processing services. It is noticed that applicant would receive said fees from WWD US, even in respect of Indian Customers, who directly remit service charges to WWD US through International Credit Card, wherein applicant is not in the picture. In view the above it was observed that by providing the payment processing services to WWD, the applicant is not providing any service to the customers of WWD in India - The applicant satisfies all the three conditions, of Composite supply hence the applicant services get covered under the definition of composite supply . Whether, in the facts and circumstances, the specified transaction of the Applicant is to be reckoned as being provided to SPA or to the customers of SPA located in India? - HELD THAT:- It is an exhaustive definition, implying it can neither be expanded nor reduced. In the context of a supply involving payment of consideration, a recipient of supply of goods or services means the person who is liable to pay the consideration and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied. The recipient is, therefore, so defined as to make separation impossible between the person to whom the supply is made and the one liable to pay the consideration. Of course, when no consideration is involved, as under clause (c) of the above section, the recipient can only be the person to whom the service is rendered. The person who receives the supply in India should, therefore, be considered as the recipient, being inseparable from the foreign buyer as far as the Applicant s supply is concerned - thus, the Applicant supplies the composite service to the recipient located in India. Whether, in the facts and circumstances, the specified transaction of the Applicant could be categorized as that of an intermediary as per Section 2(13) of The Integrated Goods and Service Tax Act, 2017? - HELD THAT:- The applicant specified transactions are squarely covers under the definition of intermediary as defined under Section 2(13) of the IGST Act, 2017 - the applicant s activity falls within the ambit of intermediary as defined under Section 2(13) of IGST Act, 2017. Whether, in the facts and circumstances, the specified transaction qualifies to be Export of service as per Section 2(6) of The Integrated Goods and Services Tax Act, 2017? - HELD THAT:- The specified transaction do not qualifies the export of service because all the conditions which are stipulated under Section 2(6) of IGST Act, 2017 are not satisfied which is the foremost requirement for any transaction to be qualified Export of Service .

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• 2021 (1) TMI 543
  Classification of goods - HSN Code - Organic Manure - Bio-fertilizers - Granulated Nutrient Mixture - Phosphatic Rich Fertilizers - whether these products are correctly classifiable under Sub-heading nos. 3101, 3101, 3102 3105, respectively? - Benefit of N/N. 01/2017-Central Tax (Rate) dated 28.06.2017. Organic Manure - HELD THAT:- The ingredients viz. Sulphur Powder, Rock Phosphate and Bentonite, Gypsum, Potassium Humate and Bio-Fulvic are certainly not covered under the Animal or Vegetable products. For the product to be covered under Chapter head 3101 it is of vital importance that the product should necessarily be either direct animal or vegetable fertilisers such as manure whether mixed together and chemically treated or otherwise and those obtained by mixing or chemical treatment of animal or vegetable products - composition of the product contains Amino Acids (Bio-culture amino acids). The key elements of an amino acid are carbon (C), hydrogen (H), oxygen (O), and nitrogen (N), although other elements are found in the side chains of certain amino acids. Thus, the presence of nitrogen in the product is visible. Further, it contains Potassium Humate and as such the presence of potassium is also visible. Rock Phosphate which is also one of the components of the product is a non-detrital sedimentary rock that contains high amounts of phosphate minerals. Thus, the product also contains phosphate elements. In addition, the product contains minerals viz. Sulphur Powder and Bentonite. Thus, it is seen that the product is a mixture of animal or vegetable products, minerals, nitrogen, phosphate and potassium - the product merits classification under Tariff Item No. 31059090-Other , of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers , it will be covered under Entry at Sl. No.182D of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5%. Bio-fertilizers - HELD THAT:- The entire portion of the description of goods except cultures of micro-organisms (excluding yeasts) pertains to the medical field. On going through the said Sub-heading 3002, it is seen that cultures of micro-organisms (excluding yeasts) appears at Tariff Entry No.30029030 of the First Schedule of the Customs Tariff Act, 1975 (51 of 1975). Further, as per Vikaspedia, bio-fertilizers are produced by culturing of microorganisms and that such cultured microorganisms packed in some carrier material for easy application in the field are called bio fertilisers. Thus, it can be seen that bio-fertilizers are produced by culturing of micro-organisms which is covered by the Entry cultures of micro-organisms(excluding yeast) which falls under Sub-heading No.30029030 - the product, Bio-fertilizers manufactured and supplied by the applicant are classifiable under Tariff item No.30029030 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) and covered under Entry at Sl. No.61 of Schedule-II of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable is 12%. Nitrogenous Mixture Fertilizers - HELD THAT:- The product, Nitrogenous Mixture Fertilizers manufactured and supplied by the applicant consisting of Ammonium Sulphate and Urea mixed with Gypsum, Bentonite, Amino Acids and Bio-fulvic Potassium Humate and, hence, are classifiable under Tariff Item No.31029090- Other, of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers , it will be covered under Entry at Sl. No.182A of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5%. Mixture of Fertilizer - fall under the Sub-heading 31059090 as claimed by the applicant or otherwise - HELD THAT:- The product, Mixture of Fertilizers manufactured and supplied by the applicant consisting of Nitrogen, Phosphorus, Potassium and Organic Content in the form of Urea, DAP, MOP, Gypsum, Rock Phosphate, Ammonium Sulphate, Bentonite, Dolomite, Amino Acids, Bio-Fulvic, Potassium Humate, Poultry and Organic Ash. Hence, the said product merits classification under Tariff Item No. 31059090-Other , of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). If said products are clearly used as fertilizers, it will be covered under Entry at Sl. No.182D of Schedule-I of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which total rate of GST chargeable will be 5%.

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• 2021 (1) TMI 542
  Classification of goods - GST rate - water chillar plants supplied by the applicant for use in the warships, vessel and submarines to be deployed by the Indian Navy - benefit of Notification No. 01/2017-IT (Rate), S. No. 252 - Composite supply or not - HELD THAT:- In the proposed activity, the major part is supply of goods viz. Compressor, Fan Condenser, Evaporator, Centrifugal Pump with motor, Electrical Panel, Chilled Water piping/Hoses and mobile trolley etc. These goods are to be delivered to the applicant to provide services of installation, testing commissioning of the Trailer Mounted 160TR Chilled Water Plant at the Naval Dockyard (Vishakhapatnam). Without these goods, the services cannot be supplied by the applicant and, therefore, we find that the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods. Thus, we find that there is a composite supply with supply of goods being the principal supply i.e. Chilled Water Plant / Chiller in the subject case. The principal supply in this case is a supply of goods and, therefore, the GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading. The principal goods in the subject case is a Chilled Water Plant , which are most important for the applicant to render supply as per the Tender/ Purchase Order - the final deliverable is nothing but ready to operate Chilled Water Plant / Chiller , which supply chilled water through flexible insulated hoses to Ships under refit i.e. ships under repair whose main engine, AC plant are non-operational or cannot be used. The chilled water is further circulated on-board ship to provide control temperature for electronics and human comfort. Thus, the said Chilled Water Plant shall be mobile and movable since it will be installed on a Trailer lying at Naval Dockyard to enable movement of same from one ship to another depending on the requirement - the supply involved in present case is a composite supply with principal supply of goods i.e. supply of the Chilled Water Plant (Chiller). The chiller is mainly consisting of compressor (used to increase the pressure temperature of the refrigerant vapour), evaporators (where cool liquid refrigerant absorbs heat from the chilled water circuit), expansive valve (used to maintain the pressure difference between the high pressure low pressure sides of the chiller system) and condensers (where the refrigerant vapour is converted to liquid as it rejects heat) - This continuous, uses of refrigeration cycle by chiller for compression, evaporation and condensation of refrigerant is used to chill water. It does not perform any function other than chilling/refrigerating water. Thus, Chiller is a refrigeration unit. On application of General Rules for the Interpretation (GIR) of the First Schedule to Customs Tariff GIR-1 read with Chapter Note 2 (b) and Note 4 to Section XVI, the Chilled Water Plant ( Chiller ) falls under Chapter heading 8418. Also, as per GIR-6 read with HSN Explanatory Note to tariff heading 8415 8418, the Chilled Water Plant ( Chiller ) is correctly classifiable under tariff heading 8418 10 10 - GST rate on Composite Supply will be equal to the GST rate applicable on the principal supply of such goods and services, included in the composite supply. In such cases, the GST rate applicable to the principal supply levies to the complete supply of goods or services. The Supply, Testing and Commissioning of 160 TR Chilled Water Plant to Naval Dockyard (Vishakhapatnam), is a composite supply with supply of goods being the principal supply i.e. Chilled Water Plant / Chiller falling under Chapter sub-heading No. 8418 10 10 and the GST rate applicable to the principal supply levies to the complete supply of goods and services. Accordingly, the applicant is liable to pay GST @28% till 26.07.2018 and @18% from 27.07.2018 on said complete supply of goods and services. Applicability of the Notification No.01/2017-IT (Rate), S. No. 252 - HELD THAT:- Said Chilled Water Plant is used for supplying chilled water through flexible insulated hoses to Ships under refit i.e. ships under repair whose main engine, AC plant are non-operational or cannot be used. The chilled water is further circulated on-board ship to provide control temperature for electronics and human comfort. The said plant is, thus, primarily used in the Naval Dockyard meant to maintain and control the temperature and humidity in the Naval Ships stationed in the Dockyard. Since, said Chilled Water Plant is not installed in the Warships, Vessels and Submarines meant for Indian Navy but same is installed at Naval Dockyard, we hold that the same cannot be categorised as Any Parts of Vessels under HSN 8906 and consequently, same is not subjected to GST @ 5% under HSN 8906 as per Sr. No. 252 (Any Chapter) of the Notification No. 01/2017-IT (Rate), as we already hold that the said supply to Naval Dockyard (Vishakhapatnam), is a composite supply with principal supply of goods i.e. the Chilled Water Plant / Chiller falling under Chapter sub-heading No. 8418 10. Since the supplies effected by the applicant are meant for Indian Navy and Government of India is the end user of the said supplies for smooth operations of the priority sector being National Defence, GST rate applicable for essential sector-5% is in consonance with the intention of law; that the Chilled Water Plant/ Chiller supplied by the applicant for use in the warships, vessel and submarines to be deployed by the Indian Navy, attracts 5% IGST in terms of Sl. No. 252 of Schedule I of Notification No.1/2017-Central Tax (Rate)/ Integrated Tax (Rate)/ SGST. The said plant is, thus, primarily used in the Naval Dockyard meant for repairing to maintain and control the temperature and humidity in the Naval Ships stationed in the Dockyard. Since, said Chilled Water Plant is not at all installed in any vessels, Submarines including Warship and Life Boats meant for Indian Navy, it cannot be categorised as Any Parts of goods of headings 8901, 8902, 8904, 8905, 8906 8907. Consequently, said supply of the Chilled Water Plant will be out of ambit of the Entry at Sl. No. 252 of the Notification No. 01/2017-IT (Rate) dated 28.06.2017. Further, there is no exemption Notification issued under GST, which provides GST exemption in respect of Supply of 160TR Chilled Water Plant in question to the Naval Dockyard, Visakhapatnam, an Indian Naval Ship Repair Organisation of Indian Navy.

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• 2021 (1) TMI 541
  Classification of goods - HSN Code - product Non-Woven Bags manufactured through the intermediate product, Non-Woven Fabrics - classifiable under Heading No. 6305 or under Heading 3923 or otherwise? - exemption under Notification No.1/2017-C.T. (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017, as amended - HELD THAT:- The applicant is engaged in manufacturing of Polypropylene Non-Woven Bags through the intermediate product, i.e. Non-Woven Fabrics manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology. In this technology, poly propylene granules are fed to the hopper and passed through extruder at certain temperature. The melted material after filtering passed through the spinning unit to obtain a continuous single filament. The said filaments are then subject to lying on the continuous web and under control pressure thermal bonding. The resultant product is Non-Woven fabric, which is called Polypropylene Non-Woven fabrics. The issue of classification of PP/HDPE Bags or sacks, made of HDPE tapes and fabrics, has been dealt with at length by the Hon ble High Court of Madhya Pradesh in case of RAJ PACK WELL LTD. VERSUS UNION OF INDIA [ 1989 (9) TMI 120 - MADHYA PRADESH HIGH COURT] where Hon ble High Court of Madhya Pradesh has discuss what is textile according to the Section 2(g) of Textiles Committee Act, 1963 (Act 41 of 63) and according to the above definition, any fabric or cloth or yarn or garment if made wholly or in part of cotton, wool, silk, artificial silk or other fibre shall be called textiles, Nowhere in the aforesaid definition of fibre or textiles plastic has been mentioned as a commodity to be included in the definition of fibre or textiles . Therefore, it can be concluded that intermediate Fabrics manufactured from Fibre grade poly propylene granules cannot be considered as textile material. Under CTH No. 63 of Custom Tariff Act, 1975 only covers textile sacks and bags of a kind normally used for the packing of goods whereas applicant goods, Non-Woven Bags is not manufactured from textile material as discussed above. Hence, applicant s claim that their product covers under Chapter Heading No. 6305 of the Custom Tariff Act, 1975 is not correct. The applicant product, Non-Woven Bags is manufactured from Fibre grade poly propylene granules, which falls under the definition of plastic material, therefore, goods, Non-Woven Bags is classifiable under CTH No. 3923 of the Custom Tariff Act, 1975. Thus, Non-Woven Bags manufactured through the intermediate product, i.e. Non-Woven fabric manufactured from Fiber grade poly propylene granules by adopting the Spun Bond technology, merits classification under HS code 3923, as also clarified by the CBIC in the Board Circular No.80/54/2018-GST issued from F. No. 354/432/2018-TRU dated 31st December, 2018. Applicable rate of GST - HELD THAT:- The rates of GST leviable on product in hand is changed from time to time, as discussed below: (a). Period 01.07.2017 to 30.09.2019 : rate of CGST and SGST @ 9% each, totalling 18%. (b). Period 01.10.2017 to 30.12.2019 : rate of CGST and SGST @ 6% each, totalling 12%. (c). Period 01.01.2020 to till date : rate of CGST and SGST @ 9% each, totalling 18%. The product Non-Woven Bags would not be eligible for exemption under Notification No.1/2017-C.T. (Rate) and 01/2017-I.T. (Rate) dated 28.06.2017, as amended.

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• 2021 (1) TMI 540
  Classification of supply - Composite supply or not - EPC contract for complete design, engineering, manufacture, procurement, testing, inspection and complete erection and commissioning of solar power generating system (SPGS) - supply of PV Modules/Inverters or any supply covered under Chapter Heading 84, 85 or 94 of the Central Tax Notification, principal supply or not - In case, the Principal Supply be treated as supply of PV Modules/Inverters or any other supply covered under Chapter Heading 84, 85 or 94 of Central Tax Notification, whether the concessional rate of 5% be applicable on the entire value of the contract i.e. supply of SPGS? HELD THAT:- The applicant Hero Solar Energy Pvt. Ltd. is engaged in the business of setting up of Solar Power Generating System (SPGS) on turnkey basis. Turnkey project is a project whereby the contractor agrees to fully design, construct and equip a facility ready to be used by the contractee. The applicant supplies, designs, installs, erect and commission SPGS for its customers. The SPGS installed by the applicant are in the form of Solar Rooftop Plant and Ground Mounted Solar Power Plant. The applicant had earlier filed an application for Advance Ruling dated 29.05.2018. But the issue on which ruling was sought was different from the issue at hand in this application. (i) The supply of Solar Power Generating System along with other goods and service of designing, erection, commissioning installation of the same is classified under SI no. 234 of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 24/2018-Central Tax (Rate) dated 31.12.2018 and Si no. 38 inserted in Notification no. 11/2017-Central Tax (Rate) dated 28.6.2017 vide Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018. (ii) The supply of goods along with service of designing, erection, commissioning installation of Solar Power Generating System along with other goods is covered under SI No. 234 of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification No. 24/2018-Central Tax (Rate) dated 31.12.2018 and SI No. 38 inserted in Notification No. 11/2017- Central Tax (Rate) dated 28.6.2017 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018.

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• 2021 (1) TMI 539
  Works Contract - Composite supply or not - works contract involving pre dominantly earth work i.e. constituting more than 75% of the value of work in contract provided to Central Government, State Government, Union Territory, Local authority, a government authority or a Government Entity having GST rate of 5% applicable to the applicant - Serial No. 3 of N/N. 31/2017-Central Tax (Rate) dated 13th October, 2017? HELD THAT:- The applicability of the notification no. 31/2017 on the present contract of the applicant, the nature of work needs to be examined. The term Earth Work has not been defined under any GST provisions. The Webster Dictionary defines Earth Work as an embankment or construction made of earth specially one used as a field fortification. The Collins dictionary defines Earth Work as excavation of earth as in engineering construction; a fortification made of earth. The Wikipedia defines Earth Work as Earth Work are engineering works through the processing of parts of earth surface involving quantities of soil or unformed rocks. After going through different definitions of earth work, we find bulk earthworks include removal, moving or adding of large quantities of soil or rock from a particular area to another. They are done in order to make an area of suitable height and level for a specific purpose. It is evident that the said work order is in the nature of composite supply of work contract involving predominantly earthwork. It has also been detailed in PART III of the allotted tender (as annexed with the application by the applicant) that the nature of work is production of stones, supply of skilled unskilled manpower, supply of special purpose vehicles other mining equipments also involving construction services and supply of goods wherein transfer of property in goods is involved. The major part of the contract involves earth work i.e. more than 75% of the work involves earth work. Comments of the Officer under Section 98(1) of the CGST, HGST Act 2017 As per the nature of work assessed by the proper officer pertaining to work contract as awarded by Haryana State Industrial Infrastructure Development Corporation (HSIIDC) to the applicant, it involves predominantly earthwork the same is in the nature of composite supply of work contract as defined in clause 119 of section 2 of CGST/HGST Act,2017. Also HSIIDC is undertaking a government entity as 100% equity shares of company are held by the state government and as per clause 53, Section 2 of HGST Act, government entity was Government of Haryana. Also as per section 617 of Companies Act,1956, HSIIDC is registered as a government company - the proper officer assessed that notification 31/2017 is applicable to the contract of the dealer - since the major part of the work order, i.e. more than 75% is Earth Work , we find that the said work order qualifies for the benefit of Serial No. 3 of Notification 31/2017 dated 13.10.2017 issued under GST Act, being composite supply of works contract as defined in clause 119 of sec-2 of the CGST Act,2017, involving pre dominantly earth work i.e. constituting more than 75% of the value of work in contract provided to Central Government, State Government, Union Territory, Local authority, a government authority or a Government Entity. Therefore, GST will be applicable at the rate of 5%. As per Serial No. 3, Heading 9954 of the Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017 under the CGST Act, 2017 and as per Notification No. 31/2017-Central Tax (Rate), dated 13.10.2017 under the CGST Act, 2017 and the corresponding State Tax notification under HGST Act, 2017, The work carried by the applicant is a Composite supply of work contract involving pre dominantly earth work provided to a Government Entity and thus attract 5% GST (2.5% CGST 2.5% HGST). Thus, the Serial No. 3 of Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 under the CGST Act, 2017 is applicable to the applicant.

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• 2021 (1) TMI 538
  Composite supply of goods and services - Work Contract allotted by Public Health Department, Government of Haryana - Operation maintenance of structures/components, Staff Quarters, Pump Chamber, Boundary Wall, Distribution System, Tube wells, Pumping Machinery, OHSR etc under Water Supply Scheme, Samalkha Town, Haryana - Operation maintenance of various sizes of sewer lines, repair of civil structures, supply of consumables etc., qualify to be a composite supply of goods and services - applicability of Sl. No. 3A of Notification No. 12/2017-CT (Rate), dated 28.06.2017 as amended by Notification No. 2/2018-CT, dated 25.01.2018 - deduction of TDS - whether service recipient, Public Health Department, State of Haryana, is required to deduct TDS under Section 51 of the CGST Act, 2017 given the fact that as per applicant s version his aforementioned services are exempt from GST under Notification No. 12/2017-CT(R), dated 28.06.2017 as amended Notification No. 2/2018-CT(R), dated 25.01.2018? HELD THAT:- The applicant has entered into a contract agreement with Public Health Department, Government of Haryana for Water Supply Scheme and Sewarage Scheme at Samalkha Town, Distt. Panipat (Haryana) - The Public Health Department is under the Ministry of Health of the Government of Haryana and hence, it is a State Government within the meaning of and for the purpose of Entry No. 3A of Notification No. 12/2017-CT(Rate), dated 28.06.2017 as amended by Notification No. 2/2018-CT, dated 25.01.2018 [Corresponding State Notification No. 47/ST-2, dated 30.06.2017 as amended by Notification No. 22/ST-2, dt. 25-01-2018]. It is evident that the said work order is in the nature of composite supply of work contract providing both goods and services. Supply of goods includes consumables such as diesel, petrol, grease, transformer oil, copper wires, nut bolts, rubber sheets etc. for repair/maintenance of water supply system. For sewerage system, consumables are kits and masks for sever men, diesel Mobil oil used in engines for cleaning of sever lines, appliances for cleaning of blocked sever lines, dewatering pumps etc. These goods are primarily for upkeep, repair and maintenance of the civil structures already in existence such as tube wells, pump chambers, boundary walls, repair and reconstruction of manholes on severe lines, replacement and repair of defective sever lines etc. The Service portion includes deployment of manpower such as tubewell operators, fitters, electricians, helpers, key men, valve operators, supervisors, bill clerks, bill distributors, bill collectors etc. for water supply system, and sever men, daily wagers, machine operators, supervisors, tractor drivers, electricians, fitters, fitter- helpers for operating sewerage system - the major part of the contract involves services i.e. more than 75% of the work involves services which is required for fulfilment of this notification, we hold the same. Since the major part of the contract, i.e. more than 75% is Services , we find that the said contract qualifies for the benefit of Serial No. 3A of Notification 12/2017-CT(R), dated 28.06.2017 as amended by Notification No. 2/2018-CT(R), dated 25.01.2018issued under GST Act, being Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Therefore, the above supply is exempt from GST. As per Section 51 of the CGST Act, 2017, a government entity is entitled to deduct tax at source under GST at the rate of 1% on payments made to the supplier of taxable goods and/or services or both, under a contract if it exceeds Rs. 2,50,000 - In the present case, Public Health Department being a government entity and applicant being a contractor in terms of work contract allotted to them, TDS in terms of Goods service tax is liable to be deducted but as the services are exempt from GST, hence there is no requirement to deduct tax at source in this case.

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• Income Tax

• 2021 (1) TMI 537
  TP Adjustment - comparable selection - HELD THAT:- Infosys Technology Limited and Persistent Systems Limited - ITAT observed that while the profit of the aforesaid three comparables is derived from both software development services as well as software products, however there is no precise information about the contribution made from the income derived from the sale of software to the total income of the companies. Thus, in the absence of segmental information provided by the companies in respect of the software services, the aforesaid companies have been excluded from the list of the comparables. We do not find any perversity in the approach adopted by the learned ITAT which would call for our inference. Wipro Technology Services Limited has been held to be disqualified under Rule 10B(1)(e)(ii), to become a comparable for uncontrolled transaction for the purposes of inclusion in the final list of comparables. The rationale for exclusion has been upheld by this court in Principal Commissioner of Income Tax-7 v. Open Solutions Software Services Pvt. Ltd . [2020 (5) TMI 440 - DELHI HIGH COURT] As non-availability of segmental data, is a finding of fact, which is not disputed by the Revenue. Therefore, in our opinion, no question of law, much less a substantial question of law, arises in Revenue s appeal.

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• 2021 (1) TMI 536
  Reopening of assessment - addition u/s 40(a)(ia) for non deduction of TDS - HELD THAT:- Assessee disclosed all the primary facts with regard to deduction claimed on account of interest paid on loans at the original assessment stage and is considered by the AO also at original assessment stage, therefore, there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment. Assessee also filed return of income originally on dated 30.09.2008 u/s 139 of the Act and four years have expired from the relevant assessment order, therefore, first proviso to section 147 would apply in favour of the assessee and no assessment could have been reopened in such circumstances against the assessee. Reasons recorded u/s 148 clearly show that assessment already framed u/s 143(3) has been reopened because of omission on the part of the AO to make addition in the original assessment order. Hon ble Delhi High Court in the case of Techman Buildwell [ 2014 (2) TMI 1169 - DELHI HIGH COURT] held that AO s omission sole basis of initiating proceedings u/s 148 of the Act, notice not valid. At the original assessment stage AO considered the issue of claim of deduction on account of interest to the banks and others and as such, on mere change of opinion AO could not have reopened the assessment. Thus, the omission of the AO to make disallowance of the full interest now is not permissible in law. Appeal of assessee is allowed.

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• 2021 (1) TMI 535
  Addition u/s 37(1) - disallowing interest provided on loan - outstanding loan was coming up from the earlier year - unsecured loan was used to purchase shares - CIT(A) did not accept the contention of the assessee because assessee failed to establish the identity, creditworthiness and genuineness of the transaction with regard to these loans and, accordingly, dismissed the appeal of the assessee - CIT(A) also directed the AO u/s 150 of the Act to take necessary remedial action for obtaining the loans from the above two parties - Whether CIT(A) has exceeded his jurisdiction even in giving directions u/s 150 - HELD THAT:- AO did not accept explanation of the assessee because in earlier years no scrutiny assessments have been made u/s 143(3) of the IT Act. But it is a fact that impugned loan amounts were taken in earlier years on which interest is also paid in earlier years. The assessee is following mercantile system of accounting. Therefore, whether assessee actually paid interest to the loaner company or not is not relevant. Such a treatment is permissible under mercantile system of accounting regularly followed by assessee. Therefore, there is no question to consider genuineness of the loan outstanding in assessment year under appeal coming up from the earlier years in assessment year under appeal. Assessee received loan in earlier years on which interest is also paid which have not been disputed by the Income tax authorities, therefore, Income tax authorities cannot depart from the fact that assessee received loan in earlier years and as such, on outstanding loan amount, no disallowance of interest could be made. The Income tax authorities shall have to follow rule of consistency and definiteness of approach in dealing with the matter. When loans have not been disputed as loan genuine in earlier year, same could not be considered as bad loan in assessment year under appeal in which the loan was merely coming up as outstanding from the previous years. In the present case, assessee company borrowed funds from these two companies in earlier years and invested in shares of other company for business purposes, therefore, provisions of section 36(1)(iii) are satisfied in the present case. The authorities below have however, applied general provisions of section 37(1) of the IT Act for the purpose of making disallowance as against specific provision provided for deduction of interest u/s 36(1)(iii) of the IT Act, therefore, the entire approach of the authorities below is wholly unjustified for the purpose of disallowing the interest on irrelevant consideration. The assessee is not required to prove genuineness of the outstanding balance of the loans coming up from the earlier years. Therefore, there was no justification for the authorities below to disallow the interest. When outstanding loan was coming up from the earlier year, there was no justification for the authorities below to disallow interest in assessment year under appeal considering loans as non-genuine .- Decided in favour of assessee.

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• 2021 (1) TMI 534
  Disallowance of statutory expenses claimed - HELD THAT:- Such expenditure has to be allowed as deduction. The finding of the AO that this expenditure is levied on house property income is factually incorrect. Thus we allow this ground of the assessee and direct the AO to allow this deduction. Interest paid on income tax refund - assessee submits that he had not received any such interest and in support produced Form-26AS - Revenue submits that as per its record, interest has been paid by the Department to the assessee on the amount of income tax refund - HELD THAT:- As agreed to by both the parties, this issue is remanded back to the file of the AO for fresh adjudication in accordance with law. We direct the AO to serve on the assessee the document based on which, he comes to a conclusion that interest has been paid to the assessee on income tax refund. If such evidence is not handed over to the assessee, no addition can be made.

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• 2021 (1) TMI 533
  Addition u/s 40(a)(ia) - Disallowance in respect of education cess while computing total income under the normal provisions of the Act - HELD THAT:- Parliament has used the word cess specifically in certain provisions of the Act (refer inter alia Section 43B of the Act). Therefore, when Section 40(a)(ii) of the Act, does not spell out cess which is paid by the assessee as not allowable as deduction and the definition of Tax does not specify cess as Tax, we are of the opinion that cess cannot be treated as Tax for the purpose of Section 40(a)(ii) of the Act. And in this context, the legal maxim Expressio Unius Est Exclusio Alterius comes into play which means Express mention of one implies the exclusion of another. We find substance in the ground raised by the assessee in respect of its claim for allowing the education cess. Therefore, we following the decision in M/s. Chambal Fertilizers Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] and Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] direct the AO to allow deduction in respect of amount paid by the assessee as education cess while computing total income under the normal provisions of the Act.- Decided in favour of assessee.

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• 2021 (1) TMI 532
  Levy of penalty u/s 271AAA - concealed income on account of excess claim of depreciation - withdrawal of excess claim of depreciation during assessment proceeding post to search on 05.05.2011 carried out u/s 132 - HELD THAT:- We find that the Ld. A.O has not mentioned specific charge in the notice as provided u/s 271AAA r.w.s. 274 of the Act. Rather Ld. A.O has merely mentioned one line imported from section 271(1)(c) of the Act which in the instant case is not applicable on the assessee. On going through the above reproduced defective notice we find that similar notice was issued to another group concern of the assessee M/s Keti Toll Infrastructure Ltd wherein penalty u/s 271AAA of the Act was deleted by this Tribunal. So is the notice being defective and not in accordance with law has been issued in the case of assessee for Assessment Year 2011-12 and 2012-13 the penalty proceedings u/s 271AAA are held to be void ab initio. We accordingly delete the penalty levied u/s 271AAA. Excess claim of depreciation - Firstly the excess depreciation claimed pertains to the specified year under consideration, secondly the alleged undisclosed income in the form of excess depreciation was admitted during the course of search, thirdly assessee has substantiated the manner in which income has been derived and lastly as regards the demand of tax the same is not applicable since there was no tax on surrender of depreciation claim withdrawn during the assessment proceedings since there were losses. We are of the view that on merit also the assessee deserves the relief and we accordingly allow the grounds raised on merits by the assessee and delete the penalty u/s 271AAA - Decided in favour of assessee.

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• 2021 (1) TMI 531
  Addition u/s 68 - Assessee shown earnest money with an opening balance as brought forward from the preceding year - AO made addition for want of any explanation about the nature and source of the said credit entry - assessee has contended that the amount was received through banking channel and under the contract as security deposit for the contract work to be carried out by the contractor however, the contract work was not carried by the contractor and the amount was refunded by the assessee in the subsequent year - HELD THAT:- When the amount was claimed to have been received by the assessee through banking channel and under the agreement, which was claimed to be repaid by the assessee in subsequent year then the relevant documentary evidence is required to be verified before deciding the issue of unexplained cash credit. Hence, this issue is set aside to the record of the Assessing Officer to properly verify, examination and consider the evidence produced by the assessee. Addition towards the alleged booking amount received in cas h - Since the other issue is remanded to Assessing Officer for verification and for adjudication this issue also remanded to the Assessing Officer with similar directions. Validity of assessment proceedings for want of the valid notice u/s. 143(2) - HELD THAT:- Though the Assessing Officer has stated in the assessment order that the notice u/s. 143(2) issued and served on the assessee by speed post on 29.09.2011 however, it is not clear, what is the date of the notice u/s. 143(2) and when it was dispatched - in the absence of the relevant record, this issue cannot be decided conclusively. The assessee though applied for certified copy of the assessment proceedings however, the same has not been supplied to the assessee till date. Therefore we set aside this issue to the record of the Assessing Officer to decide the same considering the objections of the assessee. Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (1) TMI 530
  Disallowance u/s 14A - Assessee has come up with specific plea that for earning exempt dividend income, it has not incurred any expenditure, hence no suo motu disallowance has been made - HELD THAT:- When we examine the order passed by the AO we find that he has proceeded on the premise that since the assessee has earned huge dividend income, some expenditure would have been incurred for earning the same. AO has accepted the audited books of account maintained by the assessee company which is a Government undertaking. When it is undisputed fact on record that assessee company being a Government undertaking has made investment in specific Government securities and moreover substantial portion of investments is coming from earlier years, no question arises to incur separate expenses. In order to invoke the provisions contained u/s 14A read with Rule 8D(2)(iii), the AO is mandatorily required to record his dissatisfaction that claim of the assessee as to not incurring any expenses is not correct. So, without recording proper satisfaction, disallowance under Rule 8D is not sustainable. AO without bringing on record an iota of evidence if assessee has incurred expenses to earn the dividend income proceeded to invoke the provisions contained under section14A r/w Rule 8D(2)(iii) mechanically which is not permissible. Addition of expenditure made towards Corporate Social Responsibility (CSR) and sustainable development - HELD THAT:- Expenses claimed by the assessee company have been incurred as per guidelines of the Ministry concerned with approval of the Board to the best business interest of the assessee company. So AO, without examining the nature of the expenses, disallowed the claim mechanically even by ignoring the rule of consistency. Moreover, CSR expenses have been incurred by the assessee on the direction of the Government of India and identical issue has been decided by the coordinate Bench of the Tribunal in case of M/s. HLL Lifecare Ltd. [ 2018 (6) TMI 552 - ITAT COCHIN] - no illegality or perversity in the findings returned by the ld. CIT (A) in deleting the addition made by the AO on account of disallowance of CSR expenditure - Decided in favour of assessee.

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• 2021 (1) TMI 529
  Bogus purchases - CIT-A sustaining an addition by estimating 12.5% of the alleged purchases on the ground that the parties were not produced and grossly ignoring the explanations, submissions and material placed on record - HELD THAT:- As evident that the assessee remained unsuccessful in discharging the burden of establishing the genuineness of the purchases. Notices issued u/s 133(6) elicited no response and the assessee failed to produce even a single supplier to confirm the transactions. Therefore, the lower authorities had no option but to make estimated additions against these suspicious purchases. No new material has been adduced by the assessee before us that would warrant us to deviate from the findings of lower authorities. We confirm the estimation of 12.5% as made by Ld. AO. The grounds thus raised stands dismissed. The assessee, in one of the ground, has asserted that no opportunity of cross-examine the suppliers was provided to the assessee. However, we find that the initial onus was on assessee to produce the suppliers and therefore, this plea cannot be given much weight.- Decided against assessee.

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• 2021 (1) TMI 528
  Penalty u/s 271(1)(c) - eligible for deduction u/s 80P(2) (d) of the Act on the interest income earned from the deposit with the Co-operative Societies - due to bonafide mistake, the interest income from other commercial banks was also taken for deduction u/s 80P(2) (d) - similarly deduction u/s 80(P) was claimed in respect of the amount earned from sale of cement, hardware, CFL and school fee etc. under bonafide belief that the assessee was eligible for claiming the deduction, the same being business income of the assessee - HELD THAT:- Assessee in this case has put a bonafide claim under a mistaken belief that the assessee was entitled to claim deduction on the aforesaid income - there was not effort by the assessee to conceal any income or to furnish any inaccurate particulars of income - assessee has also relied in this respect on the decision of the Tribunal in the case of ACIT Vs Punjab State Fed of Coop House Building Society Ltd. [ 2012 (12) TMI 1208 - ITAT CHANDIGARH] wherein in somewhat similar circumstances, Tribunal noticed in the case of other Cooperative Society that there seemed no intention to evade any tax, rather the deduction was claimed in a mistaken belief by the Co-operative Society. Not a fit case for levy of penalty u/s 271(1) (c) - Decided in favour of assessee.

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• 2021 (1) TMI 527
  Denial of exemption u/s 11 - AO concluded that the assessee merely is a mutual concern having no charitable object - assessee is a company with charitable object formed under section 26 of the Companies Act, 1956 and has also been granted registration under section 12A - HELD THAT:- If the objects on the basis of which the assessee was granted registration under section 12A of the Act by considering them to be of charitable nature, then, in absence of any change in such objects of the assessee, it is not understood how it can lose its identity of a charitable institution in the impugned assessment year, that too, when the registration granted under section 12A of the Act is still in vogue. Undisputedly, the departmental authorities have disallowed assessee s claim of exemption under section 11 of the Act on the reasoning that it provides services only to its members Before us, referring to the objects learned counsel for the assessee has submitted that services are provided to others as well. This claim has not been factually verified by the departmental authorities - assessee s claim of exemption under section 11 has to be considered properly having due regard to the relevant facts and more particularly after examining whether the objects of the assessee on the basis of which registration was granted under section 12A of the Act remains the same or has undergone any change in the meanwhile. Thus restore the issue to the Assessing Officer for fresh adjudication after providing reasonable opportunity of being heard to the assessee. - Assessee appeal allowed for statistical purposes.

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• 2021 (1) TMI 526
  Denial of natural justice - Assessment of loss - CIT (A) dismissed the appeal of the assessee - whether CIT-A rejecting the appeal filed by the assessee without going through the facts? - HELD THAT:- It is pertinent to note that the CIT (Appeals) has not given any categorical finding on merits of the case and also did not give sufficient opportunity of hearing to the assessee. Therefore, the CIT (Appeals) was not right in dismissing the appeal of the assessee without giving proper opportunity of hearing. Hence, we are remanding back the entire issue to the file of the CIT (Appeals) to be decided on merits. Appeal of the assessee is partly allowed, for statistical purpose.

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• 2021 (1) TMI 500
  Exemption u/s 11 - denial of registration u/s 12AA - CIT-E held that the assessee had failed to file evidence in support of the expenditure incurred on the charitable objects during the financial year 2018-19 and held that the genuineness of activities of the trust cannot be examined - HELD THAT:- Exercise undertaken by the ld. Commissioner of Income Tax, Exemption, Pune by calling for the evidence in support of the expenditure is beyond scope of his powers vested with him u/s 12AA of the Act and furthermore the proof of the expenditure is an item of assessment. The grant of registration and the assessment of income the trust are two different distinct procedure prescribed under the Act. Commissioner of Income Tax, Exemption, Pune had lost sight distinction between the process of registration and the exemption or assessment of income u/s 11 - reasoning given by the ld. Commissioner of Income Tax, Exemption, Pune cannot be sustained in law and, accordingly, we set-aside the order of the ld. Commissioner of Income Tax, Exemption, Pune dated 18.09.2020 passed u/s 12AA of the Act and direct the ld. Commissioner of Income Tax, Exemption, Pune to grant the registration u/s 12AA - Decided in favour of assessee.

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• Customs

• 2021 (1) TMI 525
  Recovery of Interest - attachment order - basic grievance raised in the present writ petition is in relation to interest only. May be, on different ground viz. the provisions of Customs Act cannot be invoked for the purpose of calculation of interest - HELD THAT:- Since the petitioners have withdrawn the writ petition filed by them, a fresh writ petition for the same cause, may be with different legal grounds cannot be maintained and the same is barred by principles of res-judicata. Upon petitioners failure to pay the applicable interest in subsequent notice dated 05.11.2018, the respondents have taken recourse to the provisions of the Customs Act and the Rules framed thereunder, that too for the purpose of ensuring recovery - As a matter of fact, determination of interest has been made in light of the judgment of Hon ble the Supreme Court dated 22.11.2017 and provisions of Customs Act and Rules framed thereunder have been invoked only for the purpose of incidental power to adopt manner and mode of recovery. The writ petition is liable to be dismissed not only on the ground of principles of res-judicata but also on merit.

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• 2021 (1) TMI 524
  Interpretation of Statute - whether a Trade Notification can be amended by a Trade Notice in terms of Section 3 of the Foreign Trade (Development and Regulation) Act, 1992? - contention of the learned counsel for the petitioner is that the Trade Notice is not issued under any particular provisions of the FTDR Act - HELD THAT:- There is no source of power for issuing a Trade Notice. As stated in the counter-affidavit, a Trade Notice is procedurally issued for clarifying certain doubts that may arise among the traders. The Notification No.8/2015-20, dated 12.06.2019 is silent about the applicability of restriction imposed on import of cashew kernels broken or whole to the units in SEZs and 100% EOUs. When such is the position, by placing reliance on the Section 3 and 5 of the FTDR Act, it is stated that the Trade Notice is issued stating that MIP on cashes is not applicable for imports by 100% EOU and units in SEZs. A reading of the proviso to Section 5 stipulates the issuance of a separate notification for the applicability of the Trade Notification or in any exemption, modifications and adaptations by a specific notification in the official Gazette. Notification No.8/2015-20, dated 12.06.2019, which was issued in exercise of power conferred by Section 3 of the FTDR Act read with paragraph 1.02 and 2.01 of the FTP 2015-2020, which, in the considered opinion of this Court, is an amendment in import policy conditions of cashew kernels both broken and whole. This Court is also of the view that any further amendment or clarification of this nature should also be made only as per Section 3 and not by a mere notice, which is not in accordance with the Statute. A reading of the Notification and subsequent Trade Notice makes it clear that Notification No.8/2015-20, dated 12.06.2019, enhancing the MIP of the broken and whole cashew kernels, wherein, the Trade Notice No.50/2019-20, dated 14.02.2020 states that the same is not made applicable to the EOUs and SEZs, which is certainly an amendment to the Trade Notification and it is cannot be stated that it is a mere elaboration, information or clarification to the Regional Authorities of the Directorate, as claimed by the respondents. Hence, the said clarification or modification to the original Notification cannot be made in terms of a mere notice without following the statutory procedure, in the given case. The allegation of the petitioner that the cashews imported from African countries are exported to foreign countries branding them as Indian cashews, which fact is not denied by the respondents in the counter-affidavit, cannot be brushed aside lightly. It is duty of the respondents to ensure maintenance of standards for the classification, grading or marketing of Indian goods in international grade, even from EOUs and SEZs and there should not be any space for compromise for the Indian brand name for any short gain by the Traders - the impugned Trade Notice is liable to be set aside. Petition allowed.

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• 2021 (1) TMI 523
  Absolute Confiscation - subject exotic birds and animals owned by the appellant - town seizure of the birds /animals - prohibited and smuggled or not - burden to prove the allegation of smuggling - HELD THAT:- It is a case of town seizure and not interception at the point of entry in India. Admittedly, the appellant have purchased the exotic birds/ animals in domestic area within India, which has been corroborated by the two suppliers based at Indore namely Golu and Monu who are also the co-noticees. Further, there is no evidence on record that the said Golu and Monu have smuggled the exotic birds/animals in India. Further, I find that the Revenue has failed to establish the allegation of smuggling with any cogent evidence, either by the appellant or the other two co-noticees. The burden of proof lies on Revenue to support its allegation of smuggling. The Hon ble Allahabad High Court in the case of DINESH CHANDRA VERSUS U.O.I. THRU. ADDL. PRIN. CHIEF. CONSERVATOR OF FOREST OTHERS [ 2020 (7) TMI 750 - ALLAHABAD HIGH COURT] have held that CITES do not govern the domestic trade, possession or breeding by any person including aviaries, but only international trade. It was further observed that internal trade i.e. domestic trade within India, of exotic species is not found in any schedule of the Wildlife (Protection) Act, 1972 and was never prohibited. Only external trade i.e. international trade is governed by the conditions of Foreign Trade Policy. The Hon ble Allahabad High Court further held that domestic trade in exotic birds/ animals is not prohibited and substantial export of the exotic birds from India is seen since several years in view of large scale breeding of exotic species in India. It is further held that no documents are specified and no permission is required as per Customs Act for keeping, breeding, buying, selling and exhibiting of such exotic birds/ animals within the country. It is further held that the exotic birds/animals are not notified under Section 123 of the Customs Act. Thus, there is no presumption of smuggling on the person who is in possession of such exotic birds/ animals, also do not attract the provisions of Chapter IV-A of the Customs Act. The Wildlife Department headed by the. Chief Wildlife Warden have got no jurisdiction in the matter of possession, breeding, domestic trade and transportation of exotic life specifies, since the same is not covered by the Wildlife Protection Act, 1972. The appellant will be entitled to consequential benefits including return of the seized exotic birds/ animals forthwith. The respondent is directed to return the seized birds/ animals etc. within a period of seven (7) days from the date of receipt or service of copy of this order - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (1) TMI 522
  Disqualification of Directors - Seeking to direct the respondents to permit the petitioners to get re-appointed as Directors of any Company or appointed in any other Company without any hindrance - HELD THAT:- The issue involved in these writ petitions is no more a res integra. It is to be stated that the Registrar of Companies (RoC) has been disqualifying the Directors under Section 164(2)(a) of the Companies Act, 2013 by order dated 08.09.2017. Another list was published in the website of the first respondent on 01.11.2017 disqualifying the Directors. Yet another list of Directors were disqualified on 17.12.2018 by the RoC. The Hon ble Division Bench in MEETHELAVEETIL KAITHERI MURALIDHARAN, KAMAL ANEESMOHAMED, SATHISH KUMAR GOPAL, GOVINDASAMY BALASUBRAMANIAM, PAARI SENTHIL KUMAR, PAARI DHANALAKSHMI, VERSUS UNION OF INDIA, THE REGISTRAR OF COMPANIES TAMIL NADU, CHENNAI, [ 2020 (10) TMI 595 - MADRAS HIGH COURT] has dealt with the powers of the RoC in the light of Sections 164 and 167(1) of the Companies Act, 2013 and Rule 14 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and also has elaborately considered as to whether the RoC is entitled to deactivate the Director Identification Number (DIN) by referring to the Rules 19, 10 and 11 of the said 2014 Rules and it was held that it follows that if a person is a director of five companies, which may be referred to as companies A to E, if the default is committed by company A by not filing financial statements or annual returns, the said director of company A would incur disqualification and would vacate office as director of companies B to E. However, the said person would not vacate office as director of company A. If such person does not vacate office and continues to be a director of company A, it is necessary that such person continues to retain the DIN. Petition allowed.

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• 2021 (1) TMI 521
  Approval of scheme of Amalgamation - seeking orders dispensing with the meetings of its Shareholders, Secured Creditors in respect of 1st Petitioner Company only as 2nd Petitioner Company did not have any Secured Creditors and also Meetings of Unsecured Creditors of both Companies - HELD THAT:- As required under Rule 16 of the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 has been affected in two Newspapers, i.e., the Indian Express (English) dated 08.12.2020 and Mathrubhumi (Malayalam) dated 10.12.2020 and no one has filed objection against the Scheme of Amalgamation of the Petitioner Companies. This Bench is of the view that the Scheme placed before this Bench on 16.10.2020 can be sanctioned. Hence, this Tribunal Sanction the Scheme of Amalgamation of M/s. Kunnath Paper Mills Private Limited with M/s. Mundassery Board and Paper Mills Private Limited and the Appointed Date of the Scheme is fixed as opening hours of 01stApril, 2020 - The Petitioner Companies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically in E-Form INC-28, in addition to producing physical copy within 30 (thirty) days from the date of issuance of the order by the Registry - Transferee Company is directed to comply with the provisions of Section 232 (3) (i) of the Companies Act, 2013 by making an application with Registrar of Companies, Kerala for payment of the balance fee as applicable under the provisions of Acts and Rules framed thereunder.

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• 2021 (1) TMI 520
  Restoration of name of the company from the register of companies - section 252(3) of the Companies Act, 2013 Read with Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT:- Having satisfied with the reasons as mentioned in the Application, and the evidence in support of the contentions that the RI Company is holding certain assets and liabilities in the form of Land and Advances, this Tribunal is of the opinion that it would be just and proper to order restoration of name of the Company in the Register of Companies. In view of the averments made and evidence placed, refusal to restore will be an excessive penalty for the over-sight on the part of the R1 Company. The Applicant shall file all the pending Financial Statements and Annual Returns with R2 (RoC) as per the Act and Rules made thereunder. It shall also comply with the provisions of the Companies Act, 2013 without any delay in future. Form INC 28 shall also be filed as per procedure - Application disposed off.

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• 2021 (1) TMI 519
  Seeking to amend/modify the order to the effect and extent of directing that the requisite meeting of the Secured Creditor of the Applicant No. 1 / Transferor Company shall he convened and held on 22.02.2020 or any such date with adequate opportunity for the Applicant Companies to adhere to the statutory timelines prescribed for sending as well as advertising notice of the said meeting - Section 230-232 420 of the Companies Act, 2013 r/ w Rules 11 154 of the NCLT Rules, 2016 - HELD THAT:- Application is disposed of with following directions by modifying order dated 03.12.2020 passed in the case: (1) A Meeting of Secured Creditor of the Applicant Company No. 1/ Transferor Company is directed to be convened and held on 22nd February 2021, for the purpose of considering the proposed Scheme of Amalgamation. (2) The Quorum for the meeting of the Secured Creditor of the Applicant No. 1 /Transferor Company shall be 1 (one). (3) The Order dated 03.12.2020 passed in CA (CAA) No.44/BB/2020 stands modified to the extent above and other directions given in the said order shall remain unchanged. This order will form part and parcel of the order dated 03.12.2020 passed in CA (CAA) No.44/BB/2020.

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• 2021 (1) TMI 518
  Restoration of name of the company in the Register maintained by the Respondent - Section 252(3) of the Companies Act, 2013 - HELD THAT:- It is evident from the plea of the Applicant that the Applicant Company seeking for restoration of its name in the register as maintained by RoC is not seriously pressing the validity of the process undertaken by the RoC in striking off the name of the Applicant Company as envisaged under Section 248 of the Companies Act, 2013 read with attendant Rules. However, the Applicant is seeking restoration of its name in the register as maintained by RoC by relying up on the ground that the Applicant Company as of date is carrying on the business for which it was incorporated and it is in operation and in the circumstances, it is just that the name of the Company should be restored on the Register of Companies as maintained by the Respondent. From the report filed by the Respondent, it is evident that the Applicant Company was struck off on 25.10.2019 and for the two years immediately preceding 25.10.2019, the Applicant company has placed sufficient documents to show that they were carrying business - Applicant Company has filed sufficient documents in order to demonstrate that the Company is active and carrying on the business and also in view of the fact that there is no significant objections raised by the Respondent ROC, in relation to the restoration of the name of the Company, this Tribunal is of the view that the name of the Applicant Company is required to the restored in the Register maintained by the Respondent RoC. Thus, taking into consideration the provisions of Section 252 of the Companies Act, 2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the register and in the interest of all the stakeholders including members of the Company, its employees as well as the revenue and the Applicant itself who seeks restoration of the name of the Company in the register being maintained by ROC and in the above said circumstances the Application is allowed subject to the directions imposed. Within a period of 15 days from the restoration of the Applicant Company s name in the register being maintained by the RoC, the Applicant/ petitioner will file inter alia its annual returns and balance sheets as well other compliances statutorily required to be made under the Companies Act, 2013 for the period from which there has been default with requisite charges/fees as well as additional fee/late charges - application allowed.

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• 2021 (1) TMI 517
  Reduction of Share Capital - section 66 of the Companies Act, 2013 read with the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016 - HELD THAT:- The petitioner-company is directed to publish the notices about registration of order and minutes of reduction by the concerned Registrar of Companies, Ahmedabad, Gujarat in two newspapers, namely, i. e., Business Standard in English language and translation thereof in Sandesh in Gujarati language both having circulation in the State of Gujarat within 30 days of registration. The petition for the reduction of share capital of the company is allowed subject to the directions given hereinabove. All concerned regulatory authorities to act on production of certified copy of this order to be issued on demand by the Deputy Registrar/Assistant Registrar, National Company Law Tribunal, Ahmedabad Bench.

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• 2021 (1) TMI 516
  Seeking restoration of name of the Company on the Register of Companies maintained by the Registrar of Companies - section 252(3) of the Companies Act, 2013, R/w Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioners seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue - It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition; and left the issue to Tribunal to consider the case subject terms and conditions. The Registrar of Companies, Karnataka, the Respondent herein, is ordered to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register of Registrar of Company, by restoring all consequential action taken by Registrar of Companies, in pursuance to the impugned, which includes restoration of DINs of its Directors if any - petition allowed.

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• 2021 (1) TMI 515
  Seeking restoration of name of the Company in the Register of Companies - section 252 of the Companies Act, 2013 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(3) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though, the impugned order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bona fide contentions of Petitioner seeking to restore the name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition and has left the issue to the Tribunal to consider the case subject to certain terms and conditions - The Members of the Company have undertaken that post restoration of the Company in the Register of the Registrar of Companies, Bangalore, the Company will complete the Annual filings due for the past years and carry on the business in its ordinary course. Therefore, the interest of justice would be met if the name of Company is restored as prayed for, subject to conditions mentioned below. The Registrar of Companies, Karnataka, the Respondent herein, is directed to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register, with restoration of all consequential action taken by Registrar of Companies, which includes restoration of DINs of its Directors - Application allowed.

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• 2021 (1) TMI 514
  Oppression and mismanagement - Section 241 and 242 of the Companies Act, 2013 - prayer for appointment of a Special Officer to take control of the affairs of the Company and handle the books of accounts - HELD THAT:- Considering the objection to sell out or buy out the shares of shareholders who are willing to exist form R1 or takes over R1 company without the other rival shareholders, it appears to me that the objections of the respondents in arriving at a competitive price higher than the price fixed by the valuer is unsustainable under law and devoid of any merits. Highlighting the Hon ble NCLAT order dated 12.03.2020 that the Tribunal is expected to decide the CP on merits instead of adjourning the matter based on IA s, the Ld. Pr. CS has submitted that this Tribunal is prevented from conducting bidding to enable the parties to sell or buyout the shares of the R1. However, what he pressed before me is to hear the applications already pending for consideration and that he is filing another application for early hearing. Altogether six (6) application filed is pending for consideration. To have a better understanding of those IA s pending for consideration, and for an eye view to understand the litigation instinct in the respondents not to exist from the R1 company by selling out their shares, or they themselves will not takes over the R1 buying the shares from the petitioners, even if a competitive price is arrived at upon conducting bidding between the parties, it is good to read some of the IA s. What is under challenge is that valuer has not given an opportunity to suggest the name of the valuer at their instances and appointing the valuer by the special officer is against the direction and hence the report of valuation is not binding on them. There are no averments in the application as to why the valuation done by the independent valuer is faulty. In fact, the valuer s report is unchallenged on merits and the only ground for challenging the valuation is that the respondents did not get adequate opportunity to give names of valuers. This objection is also found devoid of any merits. The reserve price of share value of one equity share is fixed at Rs. 277.00 based on the valuation report - Petitioners group and respondents group each shall quote respective price for buyout/sell out which shall be higher than Rs. 277.00 per shares of R1, in a sealed cover with in one week from the date of this order before the Tribunal, with due intimation to the registrar, NCLT, Kolkata, preferably on or before 3 pm on 12.8.2020 - Petition allowed in part.

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• 2021 (1) TMI 513
  Restoration of name of the Petitioner Company on the Register maintained by the Registrar of Companies - direction to ROC to remove disqualification of the Directors of the Company - Section 252 (3) of the Companies Act, 2013, R/w Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though, the impugned order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bona fide contentions of Petitioner seeking to restore the name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition; and left the issue to the Tribunal to consider the case subject terms and conditions. The Company is a going concern and striking of its name would affect the business as well as various stakeholders and employees. The Member of the Company has undertaken that post restoration of the Company in the books of Registrar of Companies, Bangalore, the Company will complete the Annual filings due for the past years and carry on the business in its ordinary course - the interest of justice would be met if the name of Company is restored as prayed for. The Registrar of Companies, Karnataka, the Respondent herein, is ordered to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register, with restoration of all consequential action taken by Registrar of Companies, which includes restoration of DINs of its Directors - application allowed.

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• Insolvency & Bankruptcy

• 2021 (1) TMI 512
  Maintainability of application - initiation of CIRP - alleged default on part of the Respondent in settling an amount - Operational debt - existence of debt and dispute or not - HELD THAT:- The Respondent has sent an email on 02.06.2018, complaining about the quality of the goods supplied by the Operational Creditor. That on perusal of the e-mails sent by the Respondent to the Operational Creditor on 02.06.2018 and 19.06.2018 before the issuance of demand notice, it can be seen there is a preexisting dispute between the parties with respect to quality of material supplied by the Applicant. It is evident that the Respondent had meetings with the Operational Creditor in Mumbai and Banswara, where the complaints regarding the quality of the goods supplied by the operational creditor were made by the Respondent. Also arrangement regarding payment of outstanding debt was made where the Applicant would waive the amount of Rs. 33,00,000/- out of the total of Rs. 83,00,000/- and it was also discussed that the balance overdue amount of Rs. 50,00,000/- would be settled. It is evident from the WhatsApp Communications between the Applicant and the Corporate Debtor held on date 31.07.2018 and 27.08.2018 that above arrangement was made between the parties in relation to clearance of outstanding debt. The Applicant in the WhatsApp communication between the parties duly admitted the arrangement proposal and specifically stated that it will supply best quality in future. The documentary evidences submitted by both the parties clearly establishes the preexistence of dispute between the parties prior to the issuing of notice by the Applicant. Application dismissed.

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• 2021 (1) TMI 511
  Referring matter to larger bench - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - demand notice was not served before passing of the admission order - time limitation - order of reference - relevancy of binding judicial precedent or a patent error - HELD THAT:- Application under Section 7 of I B Code filed by M/s Stressed Assets Stabilization Fund (SASF) Financial Creditor came to be admitted by the Adjudicating Authority (National Company Law Tribunal), Single Bench Chennai in terms of order dated 21st November, 2019 which was assailed in Company Appeal (AT) (Insolvency) No. 57 of 2020 primarily on the ground that demand notice was not served before passing of the admission order otherwise the Appellant would have shown that the application was barred by limitation as the account of Corporate Debtor had been declared as NPA in the year 2009 and decree came to be passed in the year 2013. In V. PADMAKUMAR VERSUS STRESSED ASSETS STABILISATION FUND (SASF) ANR. [ 2020 (3) TMI 1244 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] IDBI had advanced financial assistance of Rs. 600 Lakhs by way of Term Loan Agreement dated 2nd March, 2000 to the Corporate Debtor and the loan was duly secured. The account of Corporate Debtor was classified as NPA on 29th May, 2002. IDBI Bank initiated recovery proceedings by filing OA No. 289 of 2003, later renumber as OA No.413 of 2007. It was decreed on 19th June, 2009 leading to issuance of Recovery Certification on 31st August, 2009 which was reflected in the Balance Sheet dated 31st March, 2012 - The Appellant, basing its plea on the aforestated facts, raised the contention that the application filed under Section 7 of I B Code in the year 2019 was barred by limitation. This Appellate Tribunal noticing the judgments delivered by Hon ble Apex Court in JIGNESH SHAH ANOTHER VERSUS UNION OF INDIA ANOTHER [ 2019 (9) TMI 1121 - SUPREME COURT] , GAURAV HARGOVINDBHAI DAVE VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LTD. AND ANR. [ 2019 (9) TMI 1019 - SUPREME COURT] , VASHDEO R BHOJWANI VERSUS ABHYUDAYA CO-OPERATIVE BANK LTD AND ANR. [ 2019 (9) TMI 711 - SUPREME COURT] , and decision of this Appellate Tribunal in V HOTELS LIMITED, TULIP STAR HOTELS LTD. ANR. VERSUS ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED [ 2019 (12) TMI 1273 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] , was of the view that for the purpose of computing the period of limitation for application under Section 7 the date of default is NPA and hence a crucial date. It is manifest that the findings arrived at by the five Member Bench were based on consideration of the latest judgments of the Hon ble Apex Court wherein the remedy available across the ambit of I B Code was recognized as distinct from the recovery mechanism in civil jurisdiction. It is not in controversy that the I B Code was enacted to achieve the objective of resolving insolvency and bankruptcy issues for which timelines were laid down. It is now well settled that the remedy available under the I B Code is a remedy distinct from remedy available in civil jurisdiction/ recovery mechanism and since the I B Code is not a complete Code, provisions of Limitation Act are attracted to proceedings under it before NCLT and NCLAT as far as applicable i.e. in regard to matters not specifically provided for in I B Code. The whole mechanism of triggering of Corporate Insolvency Resolution Process revolves round the concept of debt and default . Once debt and default are established, the Financial Creditor, the Operational Creditor or the Corporate Person can initiate the CIRP by filing application respectively under Section 7, 9 or 10 of I B Code in prescribed format before the Adjudicating Authority. It is well settled now that proceedings under I B Code are not in the nature of recovery proceedings and being an independent remedy same can be had recourse to by the aggrieved person seeking triggering of CIRP by establishing debt and default and complying with the procedural requirements laid down under the Code. Thus, the order of reference which, in letter and spirit, is more akin to a judgment of an Appellate Court appreciating the findings and judgment in V. Padmakumar s Case is incompetent and deserves to be rejected. Following of the judicial precedent of a Bench of equal strength and of a Larger Bench as in the instant case, is a matter of judicial discipline. The Referral Bench, where such reference is competent, can make a reference for matter being placed before a Larger Bench for reconsideration in the circumstances indicated in the aforesaid judgments after recording its opinion. It is not open to the Referral Bench to appreciate the judgment rendered by the earlier Bench as if sitting in appeal to hold that the view is erroneous. Escaping of attention of the earlier Bench as regards a binding judicial precedent or a patent error is of relevance but not evaluation of earlier judgment as if sitting in appeal - We are sad to note that the Referral Bench has overlooked all legal considerations. Such misadventures weaken the authority of law, dignity of institution as also shake people s faith in rule of law. We hope and trust that the Hon ble Members of the Referral Bench would exhibit more serious attitude towards adherence of the binding judicial precedents and not venture to cross the red line. As a sequel to the rejection of order of reference as being incompetent, let the Company Appeal (AT) (Insolvency) No. 385 of 2020 be listed for regular hearing before Court No. IV on 11th January, 2021.

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• 2021 (1) TMI 510
  Liquidation of the corporate debtor - liquidation sought on the ground that there is no possibility for resolution of the corporate debtor - HELD THAT:- Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the corporate debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating authority of the decision of the CoC approved by not less than sixty-six per cent. of the voting share, to liquidate the corporate debtor. In the present case, the CoC has resolved by 100 per cent. voting share to liquidate the corporate debtor. Application is allowed and the corporate debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof.

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• 2021 (1) TMI 509
  Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repayment of outstanding dues - existence of debt and dispute or not - HELD THAT:- In view of the categorical admission made by the corporate debtor as regards to the debt and the default and further proposal that he made with the petitioner, the petition can be admitted if they do not settle the matter with the bank amicably, time is granted for a period of 3 weeks to afford a last chance to the corporate debtor. It is made very very clear to the corporate debtor that no further adjournments will be granted and if the petitioner does not report to the court that the matter has been amicably settled between the parties, the orders will be pronounced in the open court on the very same day forthwith. List this matter on July 16, 2019. A categorical statement made by the corporate debtor that an investor, i. e. Prudent ARC Ltd., is prepared to invest Rs. 100 crores and prepared to settle the dues - HELD THAT:- In view of the failure on the part of the corporate debtor to make payment the investment of Rs. 5 crores made by the said Prudent ARC Ltd., has to be repaid by the applicant-bank. Counsel representing the applicant-bank submits that in the event the petition is admitted they shall refund the said amount of Rs. 5 crores forthwith to the said Prudent ARC Ltd. - In view of the clear admission made by the corporate debtor towards debt and default, the petition requires to be admitted. The matter is reserved for further detailed order. The corporate debtor despite availing number of adjournments has neither filed reply nor advanced any arguments. Therefore, it is very clear from the conduct of the corporate debtor that the corporate debtor has no arguable case in the above company petition. Therefore the main company petition is reserved for orders - It is very clear from the above orders and the conduct of the corporate debtor that the corporate debtor is clearly admitting the debt and default in the above company petition and has no arguable defence. Even otherwise the financial creditor produced all the documents establishing the debt and default. The financial creditor also furnished the name of Mr. Sunil Kumar Chaudhari as the proposed interim resolution professional along with his letter of consent and also his undertaking that there are no disciplinary proceedings pending against him. This Tribunal has no hesitation in holding that the financial creditor has proved all the necessary legal ingredients for admitting the above company petition and the above company petition is liable to be admitted. Initiation of CIRP ordered - petition allowed.

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• 2021 (1) TMI 508
  Seeking to participate in the CIR process of the corporate debtor - section 60(5) of the Insolvency and Bankruptcy Code, 2016 Read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- It is interesting to note that original date fixed for submission of EOI was on 01.01.2020 and later it was extended from time to time and last date for submission of EOI was 06.03.2020. The last date for submission of Resolution Plan was 06.04.2020 which was extended till 20.05.2020. It is interesting to note that applicant has not submitted any EOI though the period was extended till 06.03.2020. Even the time for filing resolution plan was extended from time to time and last date was 20.05.2020 for filing resolution plan - The applicant has not submitted either EOI or resolution plan in the extended period. The applicant claimed to have submitted the EOI long after the date fixed for EOI. Regulation 36(A)(6) provides if EOI received after due date shall be rejected. No resolution plan to be received by RP after the due date. Hon ble NCLAT has held in the decision reported in KOTAK INVESTMENT ADVISORS LIMITED VERSUS MR KRISHNA CHAMADIA (RESOLUTION PROFESSIONAL IN THE MATTER OF RICOH INDIA LIMITED) MR KALPRAJ DHARAMSHI, MS REKHA JHUNJHUNWALA [ 2020 (8) TMI 389 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] that Resolution Plans received after due date can t be placed before COC by the RP and COC can t consider the same. The applicant is simply asking for direction for participation of applicant in the CIRP and to submit resolution plan. Such a request can t be granted in favour of applicant because the time line prescribed for EOI and for receiving resolution plan was expired. Application dismissed.

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• 2021 (1) TMI 507
  Seeking a direction to the Committee of Creditors represented by 100% voting power by Petitioner - M/s. Suryawanshi Garments LLP to appoint Resolution Professional replacing the IRP at the earliest or withdraw the application and pay the Professional charges for IRP - Rule 11 of the NCLT Rules, 2016 r/w Sec. 60(5)(c) of the I B Code, 2016 - HELD THAT:- The CoC, comprised of only the Petitioner has not carried out its duties as required by the I B Code, 2016. When the IRP s resignation has been accepted in the first CoC meeting, it was duty bound to replace the IRP by filing an application before this Adjudicating Authority for appointment of the RP, in terms of Section 22(3)(b) of the Code. This has not been done. The CIRP cannot move forward unless this step is taken, as all such duties as are listed in section 25 of the Code are required to be carried out by the RP. The CoC is directed to immediately, and not later than 30 days from the date of this Order, convene a meeting and pass a resolution for appointing a Resolution Professional, and file an application before this Adjudicating Authority for the appointment of the proposed RP in terms of section 22(3)(b) of the Code - All fees due and payable to the IRP, as agreed to in the CoC, shall be paid forthwith.

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• 2021 (1) TMI 506
  Seeking to condone the delay in filing claim before the Resolution Professional - seeking direction to Resolution Professional to admit the claim of the Applicant - Section 60(5) of IBC, 2016, R/w Rule 11 of the NCLT Rules, 2016 - HELD THAT:- It is settled position of laws that Court/Tribunal cannot reject a meritorious claim at the threshold, on the ground of delay and laches, provided a litigant has substantiated reasons for delay. In the instant case, the Applicant is an Operational Creditor, and the record shows that admitted claims made by the Financial Creditors of CD were amounting to hundreds of Crores. In terms of Code and the Rules made thereunder, the Secured Financial Creditors are entitled for prior consideration in the matter of settlement of their claims in Resolution Plan as well as in the Liquidation Proceedings. And the Operational Creditors hardly have any say on the question of settlement of their claims. As per the report submitted by the RP, Prospective Resolution Applicant submits Resolution Plan for mere Rs. 71 Crores, whereas the claims of secured Creditors run hundreds of Corers - It is also relevant to point out here that the claim in question start from the year 2014. It is settled position of law that proceedings under provisions of Code should be concluded in a time bound manner and allowing the instant claim would not serve any purpose, rather it would unnecessarily delay the process. Moreover, the Resolution Plan is already in the final stage, and is going to be decided very soon by the COC as per the submissions made on behalf of Respondents. Application disposed off.

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• 2021 (1) TMI 505
  Approval of the resolution plan - section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- By virtue of mandatory contents of resolution plan, the same is in accordance with sections 30 and 31 of the Code, and also complies with the requirement of regulations 38 and 39 of the CIRP Regulations. The resolution applicant has sought certain reliefs and concessions in the resolution plan. This Bench is not inclined to allow any of the said reliefs and concessions prayed by the resolution applicant. Therefore, the resolution applicant may apply to the relevant regulatory authorities for said reliefs and concessions and the relevant authorities may consider it as per relevant applicable laws - The resolution applicant, on taking control of the corporate debtor, shall ensure compliance under all applicable laws for the time being in force. It is made clear that the resolution applicant shall take over the corporate debtor with all its assets and liabilities as per terms of the approved resolution plan. The resolution plan shall be approved with modifications, which shall be binding on the corporate debtor and its employees, members, creditors, guarantors, resolution applicant and other stakeholders involved in the resolution plan. Resolution plan is approved - application allowed.

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• Central Excise

• 2021 (1) TMI 504
  100% EOU - Clandestine/illicit removal - Polyster Twister Yarn and Polyster Grey Fabrics - recovery of Central Excise duty equal to aggregate to custom duties - HELD THAT:- Issue Notice and Notice as to the interim relief, returnable on 27.01.2021. Service of Notice through regular mode as well as through e-mode is permitted.

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• 2021 (1) TMI 503
  SSE Exemption - Clubbing of clearance - use of brand name of others - Job work - the case of the department is that the electrodes manufactured by M/S Orion Wire Manufacturing Company bear the brand name of the appellant s company - inclusion of such welding electrodes have to be included in the aggregate clearances of the appellant for the purpose of N/N. 8/2003 CE - HELD THAT:- The appellant is the owner of the brand name Sun Arc . They are getting electrodes manufactured by the M/s Orion Wire Manufacturing Company on job work basis by supplying materials to them. The electrodes manufactured by the job worker are cleared from the job worker premises directly. Raw materials for the manufacture of the electrodes are supplied by the appellant. The duty on the electrodes is paid by the job worker on the price at which the goods are sold by the appellant to the buyers. The Value Added Tax is paid by the appellant. Retail invoices are also issued by the appellant in respect of this clearance from the Job premises. The notification prescribes that for the purpose of claiming exemption of this notification aggregate value of clearances of all excisable good for home consumption by the manufacturer from one or more factories or from a factory by one or more manufacturer does not exceed Rs. Four hundred Lakhs in the preceding financial years. For the purpose of calculating the aggregate value, the value of clearances bearing brand name or trade name of another person, which are ineligible for the brand of this exemption, are not to be included in the aggregate value. The notification further prescribed that where the specified goods manufactured by the manufacturer bear the brand name or trade name, whether registered or not, of another manufacturer or trader, such specified goods shall not, merely by reasons of the fact to be deemed to have been manufactured by such other manufacturer or trader. The appellant cannot be held to be manufacturer of goods and the job worker is the manufacturer in the facts of this case. The liability to pay duty arises at the end of the job worker and not at the end of the appellant although appellant is the supplier of the raw materials - in the facts of this case none of the provisions of notification 8/2003-CE are attracted which can enable revenue to include the value of clearances of goods manufactured by the job worker in the aggregate value of the clearances of the appellant. Thus, there is no substance in the argument of the revenue to hold that appellant are the manufacturer and the benefit of the Notification 8/2003-CE can be denied by including the value of clearances of goods manufactured by the job worker in the aggregate clearances of the appellant - appeal allowed - decided in favor of appellant.

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• 2021 (1) TMI 502
  Rectification of Mistake - mistake apparent on the face of record - Section 35FF of Central Excise Act, 1944 - HELD THAT:- The Revenue wants to challenge the merits of the order by way of rectification of mistake. The said act of the Revenue is not appreciable as the same shall amounts the review of own order which is not permissible in law. The issue whether the application of rectification of mistake is maintainable or not has been discussed by this Tribunal in the case of JK CARD BOARD INDUSTRY, JAMMU KASHMIR VERSUS COMMISSIONER OF CE, JAMMU KASHMIR JAMMU KASHMIR [ 2021 (1) TMI 337 - CESTAT CHANDIGARH] where it was held that the distinction between the appeal and application for rectification of mistake is quite obvious and even a wrong finding of fact or in law needs to be challenged in an appeal before the appellate authority and cannot be rectified by recall of order in terms of Section 35 C (2). There are no merit in the applications of rectification of mistake - application dismissed.

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• CST, VAT & Sales Tax

• 2021 (1) TMI 501
  Levy of CST - Benefit of Concessional rate of tax - sales in the course of import or inter-State sales - grant of time to the appellant to produce the prescribed C-Forms to the assessing authority - whether the sales in question took place in the course of the import of the goods into the territory of India and qualify for exemption under Section 5(2) of the CST Act? HELD THAT:- The basic principles for determining as to when a sale or purchase of goods takes place in the course of import or export are contained in Section 5 of the CST Act. As per sub-section (1) of Section 5, a sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. Under sub-section (2), a sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. Having expounded on the legal position, the Court examined the facts of the case and held that the case fell under the fourth principle aforesaid when the petitioner, pursuant to the earlier contract with the Government, delivered the shipping documents including the bill of lading to the Government against payment when the goods were on high seas. Hence, it was held that the sales in question took place in the course of imports of goods into India. The Court also scrutinized the terms of contract to ascertain whether they disclosed any intention of the parties that notwithstanding the delivery of bills of lading against payment, the property in the goods should not pass to the Government and held, after scrutiny of all the terms of contract that they did not indicate any such intention. Though the scrutiny and analysis of the terms of contract relates to the facts of that case only but worthwhile it would be to reproduce the same to indicate that ultimately, on the facts, the Court found that the sale took place in the course of import. It is but apparent that that while bringing anything into India from a place outside India is generally regarded as import and the imported goods are those goods which are brought into India from a place outside but, when the goods are cleared for home consumption, they are no longer imported goods for the purpose of the Customs Act. Significantly, in the process of importation, the importer, in relation to any goods, includes any owner or any other person holding himself to be the importer but, only between the time of their importation and their clearance for home consumption - the High Court has rightly said that this definition of importer cannot be used to usurp the identity of an importer from the person who filed the bill of entry. In other words, the person in whose name the bill of entry is filed does not cease to be an importer and, if that person claims to be not the owner or importer, the ouns would be heavy on him to establish that someone else is the owner or importer of goods. The fact of the matter remains that even though the appellant has suggested that the bills of lading were endorsed in favour of Radha (and other end-buyers) when goods were on high seas but this bald assertion is not corroborated by any of the official documents which form the part of the process of importation, warehousing and clearance of goods. On the contrary, the High Court has pointed out as illustration the details of one of the bills of entry, which distinctively gave out all the particulars of IGM, the invoice, the value of cargo, etc. and the High Court has found that in the bill of entry, the name of appellant alone was shown as the importer who cleared the goods from customs with the assistance of the Customs House Agent. In the given set of facts, if the goods were at all sold to Radha (and other end-buyers) on high seas, the name of such end-buyer would have appeared as importer and not that of the appellant - The same considerations operate against the assertion that the appellant was only acting as an agent of the end-buyers. The High Court has rightly pointed out that the Customs House Agent is an entirely different person who acts only to present papers for clearance of the imported goods under a bill of entry. Of course, under Section 147 of the Customs Act, a person could act on behalf of importer or owner but such a person cannot be treated as owner of the goods nor could be made liable for customs duty. If the appellant was merely acting as an agent, then bill of entry would have reflected the name of end-buyer as the importer and the appellant as an agent of the importer; and further to that, the said end-buyer would have been assessed for customs duty. It were not so. Though the definition of importer includes owner or any person holding out himself as the importer; and this definition of importer is not really relevant to the question of title but, that does not mean that a person who holds out himself to be the importer; and who files the bill of entry for home consumption; and who is assessed for customs duty; and whose suggestion about transfer of title to a third person is not established by any reference to any official record, the transfer on high seas may be presumed on mere suggestion about the alleged endorsement of bill of lading. The High Court was right in observing that once the appellant got released the goods after filing the bill of entry for home consumption, the import stream dried up and the goods got mixed in the local goods. Any movement of the goods thereafter was bound to be a sale under Section 3(a) of the CST Act; and such movement being from the State of Andhra Pradesh to other State, it had been a matter of inter-State sale. The principle that actual sale may not necessarily precede the movement of goods, in its true effect, operates rather against the appellant in relation to the sale to end-buyers after the goods were cleared for home consumption. The claimed exemption under Section 5(2) of the CST Act has rightly been denied to the appellant and the High Court has been justified in dismissing the writ petitions filed by the appellant. The High Court has yet been considerate and gave time to the appellant to submit C-Forms for availing the benefit of concessional rate of tax. No case for interference is made out - we may observe that in terms of the orders passed in these appeals, the appellant has deposited an amount of Rs. 7,07,325/- with the respondent. As these appeals are being dismissed, the respondent shall be entitled to adjust the same against the dues of the appellant. Appeal dismissed.

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