TMI Tax Updates - e-Newsletter
October 12, 2019

Case Laws in this Newsletter:

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

Articles

1. GST Applicability on Collaboration Agreement (JDA)

   By: deepak gulati

2. MANNER OF DEPRECIATION FOR NEW CLASSES OF COMPANY ASSESSEE – S.115BA, 115BAA AND 115BAB- casual approach in drafting provisions is not good.

   By: DEVKUMAR KOTHARI

3. ONLINE REFUND PROCESSING

   By: Ronak Khandelwal

News

1. Release of Direct Tax Statistics

2. GeM signs MOU with Union Bank of India

Notifications

Customs

1. 55/2019-Customs (N.T./CAA/DRI) - dated 9-10-2019 - Cus (NT)

Appointment of CAA by DGRI

2. 54/2019-Customs (N.T./CAA/DRI) - dated 9-10-2019 - Cus (NT)

Amendment in Notification No. 42/2019-Customs (N.T./CAA/DRI) dated 06.09.2019

3. 53/2019-Customs (N.T./CAA/DRI) - dated 9-10-2019 - Cus (NT)

Amendment in Notification No. 50/2019-Customs (N.T./CAA/EXTENSION/DRI) dated 26.09.2019

GST - States

4. 49/2019-State Tax - dated 10-10-2019 - Gujarat SGST

The Gujarat Goods and Services Tax (Sixth Amendment) Rules, 2019.

5. 47/2019-State Tax - dated 10-10-2019 - Gujarat SGST

Filing of annual return for F.Y. 2017-18 and 2018-19 optional for taxpayers having aggregate turnover less than ₹ 2 crores and not filed the said return before due date.

6. 45/2019-State Tax - dated 10-10-2019 - Gujarat SGST

Due date for GSTR-1 for registered persons having aggregate turnover up to 1point 5 crore for the quarters October 2019 to March 2020.

7. 42/2019-State Tax - dated 30-9-2019 - Gujarat SGST

Seeks to bring rules 10, 11, 12 and 26 of the GGST (Fourth Amendment) Rules, 2019 in to force

8. 23/2019-State Tax (Rate) - dated 30-9-2019 - Gujarat SGST

Amendments in the Government Notification, Finance Department No.(GHN-16)GST-2018/S.148(5)-TH dated the 25th January, 2018, Notification No.4/2018-State Tax (Rate).

9. 22/2019-State Tax (Rate) - dated 30-9-2019 - Gujarat SGST

Amendments in the Government Notification, Finance Department No.(GHN-34)GST-2017/S.9(3)(2)-TH dated the 30th June, 2017, Notification No.13/2017-State Tax (Rate).

10. 21/2019-State Tax (Rate) - dated 30-9-2019 - Gujarat SGST

Amendments in the Government Notification, Finance Department No.(GHN-41)GST-2017/S.11(1)(7)-TH dated the 30th June, 2017, Notification No.12/2017-State Tax (Rate).

11. 16/2019-State Tax (Rate) - dated 30-9-2019 - Gujarat SGST

Amendments in the Government Notification, Finance Department No.(GHN-37)GST-2017/S.11(1)(2)-TH dated the 30th June, 2017, Notification No.3/2017-State Tax (Rate) - Concessional rate of petroleum operations for supply of goods under section 11(1).

12. (GHN-94)GSTR-2019/S.164(47)-TH - dated 30-9-2019 - Gujarat SGST

Corrigendum to Notification No. 31/2019-State Tax.

13. 43/2019-State Tax - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.14/2019-State Tax, dated the 28th March, 2019.

14. 42/2019-State Tax - dated 1-10-2019 - Himachal Pradesh SGST

Seeks to bring rules 10, 11, 12 and 26 of the HPGST (Fourth Amendment) Rules, 2019 in to force

15. 25/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Service by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or application fee.

16. 24/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.7/2019- State Tax (Rate), dated the 6th May, 2019.

17. 23/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.4/2018- State Tax (Rate), dated the 24th January, 2019.

18. 22/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the notification of the Government of Himachal Pradesh, No.13/2017- State Tax (Rate), dated the 30th June, 2017.

19. 21/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.12/2017- State Tax (Rate), dated the 30th June, 2017.

20. 20/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh No.11/2017- State Tax (Rate), dated the 30th June, 2017.

21. 19/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Seeks to exempt supply of goods for specified projects under FAO.

22. 18/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh No.02/2019-State Tax (Rate), dated the 7th March, 2019.

23. 17/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.26/2018-State Tax (Rate), dated the 31st December, 2018.

24. 16/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No. 3/2017-State Tax (Rate), dated the 30th June, 2017.

25. 15/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.2/2017-State Tax (Rate), dated the 30th June, 2017.

26. 14/2019-State Tax (Rate) - dated 1-10-2019 - Himachal Pradesh SGST

Amendments in the Notification of the Government of Himachal Pradesh, No.1/2017-State Tax (Rate), dated the 30th June, 2017, - EXN-F(10)-14/2017-Loose.

27. 24/2019-State Tax (Rate) - dated 30-9-2019 - West Bengal SGST

Seeks to amend notification No 556-FT dated 29.03.2019 regarding tax payable of reverse charge mechanism under section 9(4)

28. 23/2019-State Tax (Rate) - dated 30-9-2019 - West Bengal SGST

Seeks to amend notification No 132-F.T regarding TDR dated 25.01.2018

29. 22/2019-State Tax (Rate) - dated 30-9-2019 - West Bengal SGST

Seeks to amend notification No 1137-F.T. dated 28.6.2017 regarding tax payable of reverse charge mechanism in case of certain services

30. 21/2019-State Tax (Rate) - dated 30-9-2019 - West Bengal SGST

Seeks to amend notification No 1136-F.T. dated 28.6.2017 regarding NIL rated services

Income Tax

31. 78/2019 - dated 9-10-2019 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Kerala Bamboo, Kattuvalli and Pandanus Leaf Workers’ Welfare Fund Board’ a Board constituted by the Government of Kerala in respect of the specified income arising to that Board

Indian Laws

32. F. No. 9/1/2013-ECB(Pt-2) - dated 7-10-2019 - Indian Law

Depository Receipts (Amendment) Scheme, 2019.

SEZ

33. S.O. 3634(E) - dated 3-10-2019 - SEZ

Seeks to rescinds Notification Number S.O. 754(E) dated 14th May, 2007

Circulars / Instructions / Orders

GST - States

1. 110/29/2019-GST - dated 10-10-2019

Eligibility to file a refund application in FORM GST RFD-01 for a period and category under which a NIL refund application has already been filed.

2. 111/30/2019-GST - dated 10-10-2019

Procedure to claim refund in FORM GST RFD-01 subsequent to favourable order in appeal or any other forum.

3. 112/31/2019-GST - dated 10-10-2019

Withdrawal of Circular No. 105/24/2019-GST dated 28.06.2019.

Customs

4. Instruction No. 04/2019 - dated 11-10-2019

Clarification regarding inclusion of cesses, surcharge, duties, etc. levied and collected under legislations other than Customs Act, 1962, Customs Tariff Act, 1975 or Central Excise Act, 1944 in Brand Rate of duty drawback

Highlights / Catch Notes

Income Tax

• Department Must Resolve Tech Issues for Tax Refunds; Manual Processing Required if System Fails, with Interest Issued.

  Case-Laws - HC : Refund orders with interest - Whatever the technical difficulties in releasing the refund, the department must sort it out. If for some reason of technical glitch the system in the present case fails to permit the payment of refund, the concerned authorized officer must manually do so.
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• Timely IT Return Filing Validates Late Employee Fund Contributions u/ss 43B & 36(1)(va.

  Case-Laws - AT : Employee’s contribution towards GPF, CPF and ESI deposited by the assessee on or before the due date of filing the return u/s 139, though beyond the due dates as given under the respective Acts, cannot be disallowed u/s 43B or 36(1)(va).
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• Challenged: Legality of Assessment Order Issued Without Draft u/s 144C; Show-Cause Notice Not a Substitute.

  Case-Laws - AT : Legality of the assessment order passed by the AO without providing the draft of the proposed order of an assessment - the issuance of a show-cause notice cannot be equated and treated as a draft assessment order as the same would make the provisions of section 144C redundant.
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• Court Rules Trading Advances Aren't Deemed Dividends u/s 2(22)(e) in Sister Concern Transactions.

  Case-Laws - AT : Deemed dividend addition u/s.2(22)(e) - advances given to sister concern without interest - Transactions were purely out of trading transactions between the two concerns the assessee and the sister concern are entered into in the ordinary business operations and therefore does not fall within the ambit of section 2(22)(e)
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Customs

• Appellant's Late Evidence Fails to Overturn Smuggling Allegations; Decision Favors Revenue Authorities.

  Case-Laws - HC : Smuggling - Gold Jewellery - Proof of purchase of gold submitted first time during the appellate proceedings only - There is no explanation forthcoming as to why, if, in fact, the gold had been purchased by the appellant within India, the aforesaid invoices were not available with the respondent till the stage of appeal - Decided in favor of revenue.
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• Show Cause Notice for Misdeclaration of Imported Goods Issued Within Limitation Period Under Customs Act Section 28.

  Case-Laws - AT : Exemption from CVD - Misdeclaration of imported goods - SCN issued within one year from the date of filing of Bill of Entry, is definitely within the normal period of limitation and demand made therein cannot be held to be hit by limitation under Section 28 of the Customs Act, 1962.
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Corporate Law

• Directors Without DIN Cannot Legally Participate in Board Meetings; Resolutions and Proceedings Considered Invalid.

  Case-Laws - HC : Director who does not possess DIN would not be legally entitled to participate in the proceedings of the meeting of Board of Directors. Consequently, a resolution passed by a Board of Directors of which no Director possesses a DIN would be no resolution in the eyes of law, therefore, any proceedings instituted by the company pursuant to such a Board resolution would be a nullity in the eyes of law.
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Indian Laws

• Cheque Dishonor Case: Account Closed Before Cheque Issuance; Trial Required to Determine Facts Under Indian Law.

  Case-Laws - HC : Dishonor of Cheque - Non-existence of bank account - The aspect of the closure of the bank account of the petitioner prior to the issuance of the cheque, is a matter which cannot be determined without trial.
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Case Laws:

• GST

• 2019 (10) TMI 405
  Abeyance of Recovery proceedings - stay of encashment of the bank guarantee furnished by him as security before the respondents - HELD THAT:- On the petitioner paying 10% of the disputed tax as a condition for maintaining Ext.P8 appeal before the 5th respondent, within two weeks from today, the 5th respondent shall proceed to consider and pass orders on the said application preferred by the petitioner within a month from the date of receipt of a copy of this judgment, after hearing the petitioner - To enable the petitioner to thereafter pursue his appellate remedy before the 5th respondent, the recovery of amounts confirmed against the petitioner by Ext.P7 order, including steps to encash Ext.P6 bank guarantee, shall be kept in abeyance till such time as orders are passed by the 5th respondent as directed and the orders are communicated to the petitioner. Petition disposed off.

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• 2019 (10) TMI 404
  Detention of goods with vehicle - E-way bill not issued - further liability of petitioner to pay IGST - Confiscation of goods - levy of penalty - HELD THAT:- The petitioner had paid the integrated goods and services tax on the goods in question at the time of import thereof as well as the fact that after the conveyance came to be intercepted, the petitioner has paid the tax and penalty on such goods as computed by the respondent authorities, by way of ad-interim relief the respondents are directed to forthwith release the conveyance being truck number GJ-12- AZ-5184 along with the goods contained therein, subject to the final outcome of the petition. Issue notice, returnable on 14.11.2019.

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• 2019 (10) TMI 403
  Statutory scope of Amended rule 3(a) in Central Goods and Services Tax Rules, 2017 - charges on commission for services rendered - HELD THAT:- Copy of affidavits-in-opposition to be used must be served on petitioners by three weeks hence. Petitioner will be entitled to use affidavit-in-reply on copies served. Affidavits will be accepted on adjourned date. List on 13th September, 2019.

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• Income Tax

• 2019 (10) TMI 402
  Extraordinary and discretionary jurisdiction of High Court - maintainability of appeal - Single Judge directing the appellant to exhaust the statutory remedy - whether the appeal requires to be decided on merit or not? - Section 115-O invoked unilaterally and without adjudication by treating the transactions as that of dividend, which would not come within the purview of Section 2(22)(d) - HELD THAT:- Mr. Gopal Subramaniam, learned Senior Advocate submitted an Affidavit-cum-Undertaking. It is taken on record. Issue notice, returnable on 14.10.2019. Dasti in addition. Liberty to serve the learned Standing Counsel for the Department, additionally. A copy shall also be served to Mr. Zoheb Hossain, learned standing counsel for the Department. In the order presently under challenge, the Division Bench of the High Court had, inter alia, observed; As granted by the learned single Judge, we are inclined to grant a period of four weeks from the date of receipt of a copy of this order to file an appeal before the Appellate Authority Pending further consideration, we suspend the time frame as indicated in the aforesaid part of the order of the High Court.

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• 2019 (10) TMI 401
  Disallowance of expenses on consumption and replacement of stores and spares - capital expenditure OR revenue expenditure - HELD THAT:- Issue notice, returnable on 25.11.2019. Mr. Manish J. Shah, learned Advocate accepts notice on behalf of the respondent and, as such, no notice need be served on the respondent. He prays for and is granted two weeks time to file affidavit in reply. Rejoinder, if any, be filed within a week thereafter. List this matter for disposal on 25.11.2019

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• 2019 (10) TMI 400
  Refund orders with interest - HELD THAT:- The department does not dispute that the demands for other assessment years of the petitioner are presently not enforceable. That being the position, the refund of the petitioner arising out of the order of assessment for the said assessment year 2014-15, cannot be withheld, that too on the ground of technical difficulty of the system not accepting such a declaration of stay of the demands and giving effect to such position . The computer system and auto generation or any difficulty in doing so in a particular case, cannot override the correct legal position. In the present case, the correct legal position is that the petitioner must receive the refund. Whatever the technical difficulties in releasing the refund, the department must sort it out. If for some reason of technical glitch the system in the present case fails to permit the payment of refund, the concerned authorized officer must manually do so. We, therefore, direct the respondents to release the petitioner s refund amount of Rs. 224,28,74,090/- with statutory interest, which shall be done within a period of two weeks from the date of receipt of this order.

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• 2019 (10) TMI 399
  Revision petition u/s 264 which is pending against the order u/s 197 for the financial year 2019-20 is not yet been decided and the pendency of that revision petition is causing prejudice to the Petitioner on a day to day basis - we direct Respondent No. 1 to decide the Petitioner s aforesaid pending revision petition within next six weeks by giving a reasoned order. Petitioner shall appear before Respondent No. 1 on 01.10.2019 at 11:00 AM for directions. We have not made any observations on merits and in case the Petitioner is aggrieved by any order passed by Respondent No. 1, the remedies of the Petitioner are preserved.

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• 2019 (10) TMI 398
  Validity of proceedings u/s. 147 - basis of report of the investigation wing of the department, reopened the assessment - Addition on account of client code modification through broker which has been upheld by the CIT(A) - HELD THAT:- A perusal of the proforma for approval to issue of notice u/s. 148, copy of which is placed at page 12 of the paper book shows that as per clause 12 of the proforma, the PCIT while giving approval has simply mentioned satisfied . Similarly as per clause 11, the Addl. CIT has simply mentioned Yes , it is a fit case to issue notice u/s. 148 of the IT Act, 1961. As decided in M/S N.C. CABLES LTD. [ 2017 (1) TMI 1036 - DELHI HIGH COURT] mere appending of the expression approved says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case as both the approving authorities have given the approval in a mechanical manner, the reassessment proceedings are not in accordance with law Addition on account of client code modification to be deleted as relying on PAT COMMODITY SERVICES PVT. LTD. [ 2019 (2) TMI 720 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2019 (10) TMI 397
  Denial of claim of deduction u/s 80P(2)(b) on milk sold by the assessee to other than federal society - HELD THAT:- Issue in the preset case is with respect to denial of claim of deduction u/s. 80P(2)(b) of the Act on milk sold by the assessee to other than federal society. Identical issue arose before the Co-ordinate Bench of Tribunal in the case of Fattesinghrao Naik (Appa) Sahakari Dudh Utpadak Sangh Limited Vs. ITO [ 2019 (10) TMI 316 - ITAT PUNE] wherein the Co-ordinate Bench of Tribunal decided the issue in favour of assessee but however for quantification of deduction, remitted the issue back to the file of Assessing Officer.

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• 2019 (10) TMI 396
  Assessment u/s 153A - Addition u/s 69C on account of bogus purchases - AO also taxed such disallowances u/s 115BBE - HELD THAT:- Addition made by the AO in the assessment without any reference to incriminating seized material was considered by the Hon ble Rajasthan High Court in the case of Jai Steel Ltd. vs ACIT [ 2013 (6) TMI 161 - RAJASTHAN HIGH COURT] wherein held in case of completed assessment, no addition can be made if no incriminating seized material is found during the course of search. CIT(A) has also considered the judgement of Hon ble Delhi High Court in the case of Kabul Chawala vs ACIT [ 2015 (9) TMI 80 - DELHI HIGH COURT] and other related judgements which are specifically mentioned in his order and he had rightly concluded that the addition made by the AO without any reference to the seized material is not legally sustainable. Thus this issue was rightly decided by the ld. CIT(A) in favour of the assessee. AO had made addition by merely relying on the statement of one Shri Rajendra Jain which cannot be termed as an incriminating material as said statement should have related to incriminating material found during the course of search or statement must be made relatable to material by subsequent enquiry/ investigation. Addition @ 25% of alleged bogus purchases - In the present case, no opportunity to cross examine said Shri Rajendra Jain was provided by the Revenue authorities. Thus it was rightly held that not providing cross examination tantamount to denial of natural justice and does vitiate the assessment. CIT(A) has also considered that the AO himself had recorded in the assessment order that letter was issued to Custom Authorities SEZ-II, Sitapura Industrial Area, Jaipur to verify the said purchases and the AO has recorded a finding that SEZ authorities have confirmed that said purchases are genuine as duly recorded in their records. This itself cast a doubt on AO s conclusion that purchases made by the assessee were bogus. More particularly, when it is certificate from another Govt. Agency by certifying the genuineness of the purchases and it tilts preponderance of probability in favour of the assessee. It is pertinent to mention that the ld. CIT(A) has explicitly dealt with the issue and deleted the addition made by the AO giving full justification to the issue in question and we find no reason to interfere with the order of the ld. CIT(A) on the issue raised by the Revenue Delayed employees s contribution towards PF and ESIC - HELD THAT:- Employee s contribution towards GPF, CPF and ESI deposited by the assessee on or before the due date of filing the return u/s 139, though beyond the due dates as given under the respective Acts, cannot be disallowed u/s 43B or 36(1)(va). SEE CIT Vs. Jaipur Vidyut Vitran Nigam Ltd. [ 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT]

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• 2019 (10) TMI 395
  Penalty u/s 271AAB - assessee has surrendered the undisclosed income - HELD THAT:- We find that under identical set of facts and circumstances of the case, in case of other Group cases where the search was conducted, matter relating to levy of penalty was examined at length by the Coordinate Bench in cases of Surajmal Bansal HUF, Jaipur vs. DCIT, Jaipur [ 2019 (4) TMI 1113 - ITAT JAIPUR] wherein, the penalty was deleted by the Tribunal We delete the penalty levied under section 271AAB on cash advances towards purchase of land. The levy of penalty @ 10% on the excess silver found during the course of search and valued at Rs. 575,000 is however confirmed. Since the issue of levy of penalty u/s 271AAB of the Act has been decided on merits, therefore, the issue of validity of initiation of the penalty proceeding due to defective show cause notice become academic in nature and we do not propose to adjudicate the same. - Appeal of the assessee is partly allowed.

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• 2019 (10) TMI 394
  Legality of the assessment order passed by the AO without providing the draft of the proposed order of an assessment in terms of section 144C - HELD THAT:- In the instant case, since the AO has failed to follow the mandate of the provisions of section 144C whereby he was required to pass a draft assessment order which is mandatory and is prescribed by the statute, the final assessment order passed by the Assessing Officer u/s 143(3) r/w 144C is without jurisdiction. Further, the issuance of a show-cause notice cannot be equated and treated as a draft assessment order as the same would make the provisions of section 144C redundant. Accordingly, we quash and set aside the impugned assessment order. The ground no. 1 of assessee s appeal is thus allowed.

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• 2019 (10) TMI 393
  Disallowance of interest expenses u/s 57(iii) - HELD THAT:- Section 57(iii) provides for deduction only of expenditure incurred wholly and exclusively for the purpose of making or earning such income . In order that expenditure may be admissible under section 57(iii), it is necessary that the primary motive of incurring it is directly to earn income falling under the head income from other sources . The plain natural construction of the language of section 57(iii) of the Act, irresistibly leads to the conclusions that to bring a case within that section it is not necessary that any income should in fact have been earned as a result of the expenditure. What section 57(iii) requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income. The section does not require that this purpose must be fulfilled in order to qualify, the expenditure for deduction it does not say that the expenditure shall be deductible only if any income is made or earned The expression commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency. In the present case M/s Finesse jewels is engaged in the business of manufacturing of gems and jewellery. The assessee is a director and shareholder in such company and derives salary and commission income from such company. It has made investment in the company for the purpose of earning the income from the investment either in the form of interest or in the form of dividend or capital gain. Therefore such an advance was clearly given by the assessee for the purpose of commercial expediency. It is to be noted that any advance made to the related/sister concern out of commercial expediency is allowable under the income tax return and any expenses claimed in respect of such advance given can be claimed as deduction u/s 57(iii) /37 of the income tax act, 1961. We allow the claim of the assessee and delete the additions made by the AO and upheld by the ld. CIT(A). In the result, this ground raised by the assessee is allowed.

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• 2019 (10) TMI 392
  Allowable revenue expenditure - customs duty paid towards Countervailing Duty (CVD) subsequently claimed by the assessee refund from the Customs Department but the said claim was declined even upto the stage of first appellate authority - HELD THAT:- At the time of passing the assessment order dated 27.12.2008 it was rather certain that the claim of refund made by the assessee was denied by the Customs Authorities including the first appellate authority and consequently it cannot be said that income has accrued or arise to the assessee during the year under consideration or till the assessment order was passed. The entries and treatment in the books of account is not a conclusive basis for holding the income arises and liable to tax. AO is under duty and obligation to assess the actual and correct income as per provisions of the Act while acting as a quasi judicial authority and not to take advantage of any mistake or the entries made in the books of account. CIT (A) has confirmed the addition by citing the provisions of section 41(1) which in our view not applicable in this case as discussed in earlier part of this order. Accordingly, we hold that the addition made by the AO on account of claim of refund of Countervailing Duty without appreciating the fact that the said claim was already rejected and the chances of refund are very bleak is not justified, therefore, the addition made by the AO and confirmed by the ld. CIT (A) is deleted. - Decided in favour of assessee.

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• 2019 (10) TMI 391
  Disallowance of interest expenditure on unsecured loan borrowed and invested in the capital of two proprietary concerns as not allowable business expenditure - HELD THAT:- From the perusal of the Balance Sheet itself it is noted that the borrowed funds which is to the tune of Rs. 92 lakhs which fund was thus utilized in the proprietorship concern and, therefore, the CIT(A) s contention that utilisation of loan can only be proven through a cash flow statement cannot be countenanced in the facts of the case as discussed. CIT(A) erred in not appreciating the claim of the assessee in the right perspective and, therefore, since the amount which the assessee has borrowed has been utilized and invested by the assessee in the two concerns, the interest is an allowable expenditure. Moreover, it has also been brought to our notice that in the subsequent two assessment years i.e. for AY 2013-14 and 2014-15 the interest paid on the very same loan borrowed by the assessee which is carried forwarded from earlier years was allowed as business expenditure in the hands of the assessee. Thus, it is seen that AO has accepted the allowability of the said interest expenditure in subsequent years and, therefore, a consistent stand needs to have been taken and taking into consideration the facts noted supra, we allow the claim of the assessee. - Decided in favour of assessee.

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• 2019 (10) TMI 390
  Reopening of assessment - assessment was completed without issuing notice the u/sec. 143(2) - HELD THAT:- In the instant case though notice was stated to have been issued there was no entry in the order sheet for issue of notice and there is no evidence for dispatch of notice provided by the department. Hence, we hold that no notice was issued in this case u/sec. 143(2) before the due date i.e 30/09/2011 and the assessee s case is squarely covered by the decision of Hon ble Madras High Court in the case of Gitsons Engineering Company [ 2014 (11) TMI 59 - MADRAS HIGH COURT] In the instant case there is no evidence of issue of notice u/s 143(2) we hold that the assessment made u/sec. 143(3) r.w.s. 147 is unsustainable and void ab initio and accordingly we, annul the assessment made under section 143(3) r.w.s 147 of the act. - Decided in favour of assessee.

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• 2019 (10) TMI 389
  Reopening of assessment u/s 147 - non disclosure of full and true facts - HELD THAT:- As during the course of scrutiny assessment proceedings the books of account were examined and test checked. In light of these facts, coming back to the reasons recorded for reopening of the assessment as mentioned elsewhere, it can be seen that the AO has borrowed the information received from the Director [INV] and on the basis of this information, he had reason to belief that income has escaped assessment and it is a fit case for reopening. Considering the facts of the case in totality, in light of the judicial decisions discussed hereinabove and keeping in mind the first proviso to section 147 of the Act, we are of the considered view that the notice issued u/s 148 of the Act is without jurisdiction and deserves to be set aside.

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• 2019 (10) TMI 388
  Disallowance of foreign travel and legal expenditure - Allowable revenue expenditure - HELD THAT:- Assessee has not appeared at the time of verification of the vouchers, however, accountant of the assessee was present. AO observed that whether these expenditures are related to the business or not is not known, since the assessee could not explain before him. In this regard, assessee has submitted detailed payment vouchers and relevant invoices before us in the form of paper book. On verification of these vouchers and bills, we notice that assessee has incurred travel expenditure, which includes travel by train and domestic air fares. All these expenditures are incurred for the purpose of domestic travel and entertainment for the visitors. Legal and professional expenditure - assessee has incurred for legal purpose and fees to lawyers and also paid as retainer fees to the different professionals. These are relevant expenditure for the purpose of business and it is the assessee, who will determine what is the relevant legal assistance and it may incur depending upon the nature of legal advice they may require. Therefore, in our considered view, all these expenditures are relevant for the purpose of business. Therefore, we are in agreement with the findings of CIT(A) and accordingly, ground raised by the revenue on this count is dismissed. Maintenance expenditure - In this AY, as per the concession agreement entered by the assessee, with the MP Govt., assessee has to maintain roads on periodical basis and at least it has to carry out relaying of roads as per the agreement on regular basis. Assessee has incurred expenditure on maintenance over the years and the department has always accepted the same as revenue expenditure and only in this AY, AO has taken it as capital expenditure considering the quantum of expenditure without any basis. Since the assessee is maintaining roads in order to collect tollway fees, it is the responsibility of the assessee to maintain the roads as per the concession agreement. Therefore, this is the regular business expenditure, we are inclined to accept the findings of CIT(A) in this regard. - Appeal of revenue disallowed.

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• 2019 (10) TMI 387
  Disallowance of provision for warranty - HELD THAT:- CIT(Appeals) on the issue has provided relief to the assessee since on the identical issue in assessee s own case for assessment year 2010-11 was decided in favour of the assessee.

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• 2019 (10) TMI 386
  Bogus LTCG - issue of shares in pursuant to scheme of arrangement. HELD THAT:- The assessee furnished before us the letter received from Kailash Auto Finance Ltd. intimating about the issue of shares in pursuant to scheme of arrangement. The order passed by the Hon ble Allahabad High Court approving amalgamation of Kailash Auto Finance Ltd. with Careful Projects Advisory Ltd. and Panchsul Marketing Ltd. The assessee submitted contract note evidencing sale of shares Kailash Auto Finance Ltd.. Evidence of receipts of sale proceeds of shares from the broker by way of bank. The assessee also submitted the broker s ledger account and demat account statement issued by the broker viz. JRK Stock Broking Pvt. Ltd.. By submitting these plethora documents and evidences, the ld. Counsel for the assessee submitted before us that the assessee has proved the genuineness of the long term capital gain. The ld. Counsel for the assessee has submitted that where the transaction is done within the four corners of the law then it should not be disallowed. The ld. Counsel submitted that the bank statement, brokers note, contract note, demat statement submitted by the assessee before the Assessing Officer were not found by the Assessing Officer as false / untrue. Assessing Officer failed to find any defect in the main documents submitted by the assessee(i.e the bank statement, contract notes, demat account, bills / invoices of the shares) therefore, the transaction done by the assessee is genuine, hence the addition should be deleted. - Decided in favour of assessee.

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• 2019 (10) TMI 385
  Deemed dividend addition u/s.2(22)(e) - advances given to sister concern without interest - HELD THAT:- Perusal of the order of CIT(A) and documents on record reveal that both the entities have been engaged in trading operations with each other. We also note that the substantial payment is coming over from the earlier year as opening and no disallowance was made by the Revenue qua the opening balance as deemed dividend in the earlier year. It was also stated before us that in the earlier year, the amount coming over from the earlier years was on account of trading operation only. Similarly, in the current year, we observe that major payments were made towards opening balances balance and thereafter against the various expenses and JV amounts payable. Under these circumstances, we are of the view that to hold the transactions of trading in nature entered into in the ordinary course of business as deemed dividend would be against the spirit of law as all these transactions seems to be necessitated by the business relationship between the two entities though the shareholder is common on both the entities. Transactions were purely out of trading transactions between the two concerns the assessee and the sister concern are entered into in the ordinary business operations and therefore does not fall within the ambit of section 2(22)(e) - Decided in favour of assessee.

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• 2019 (10) TMI 384
  Bogus purchases - rotating funds - CIT-A restricted the disallowance to the peak of purchases HELD THAT:- In the instant case the notices issued by the AO u/s 133(6) were returned un-served by the postal authorities with the remarks not known . The assessee failed to produce the parties before the AO for examination. Though the assessee was not able to produce the above parties before the AO for examination, it is a fact on record that the AO has not doubted the sales. Thus it is logical that without corresponding purchases, the assessee could not have made the sales. Such being the facts, the case of the present assessee is distinguishable from the case laws relied on by the Ld. DR. Considering the entirety of facts and circumstances of the case, we find that the Ld. CIT(A) has rightly restricted the disallowance to the peak of purchases of Rs. 31,50,000/- taken as an alternate ground by the assessee. Thus we confirm the order of the Ld. CIT(A). - Decided against revenue

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• 2019 (10) TMI 383
  Disallowance u/s 14A r.w.r 8D - whether satisfaction as per the provisions of Section 14A has been recorded or not by the AO? - HELD THAT:- Section 14A (2) reads as under 14A(2) - AO shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. In the instant case, we find that there is no tangible material on record, there is no record of examination of accounts as stipulated under section 14A(2), there is no satisfaction recorded by the Assessing Officer in terms of the expenditure claimed by the assessee, and hence keeping in view the provisions of the Act, the process embarked upon by the assessee and the judicial pronouncements, it is hereby held that the re-computation done by the Assessing Officer in the absence of recording of the satisfaction is liable to be set aside. - Decided in favour of assessee. Disallowance of 1/5th of the expenses of Telephone, Mobile and Car expenses - HELD THAT:- CIT (A) after careful consideration of the facts of the case and the case laws cited by the Ld. AR before him during the hearings held that the personal use of Car and Telephone cannot be ruled out in the case of the assessee in the absence of day to day details with regard to use of telephone and car and held that the disallowance made by the Assessing Officer are very reasonable and cannot be said to be excessive under any circumstances. AR has taken the arguments that have been taken before the Ld. CIT(A) which the Ld. CIT(A) has duly considered and distinguished the case laws. Having gone through the issue in detail, in the peculiar facts and circumstances of the instant case, we hereby decline to interfere with the order of the Ld. CIT(A) on this issue. - Decided against assessee

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• Customs

• 2019 (10) TMI 382
  Smuggling - Gold Jewellery - reliance on the un-retracted statement - burden to prove the fact that the goods are not smuggled - section 123 of CA - HELD THAT:- Being a notified item, the burden to prove that the gold jewellery was not smuggled, was on the respondent. Though the appellant maintained that he had purchased the gold within India, the identity of the purchaser remain undisclosed during investigation as well as during adjudication, and it was only at the stage of appeal, before the Commissioner (Appeals) that the appellant belatedly produced documents, purportedly invoices whereunder he had purchased the gold - There is no explanation forthcoming as to why, if, in fact, the gold had been purchased by the appellant within India, the aforesaid invoices were not available with the respondent till the stage of appeal. The belated explanation of the respondent, at the stage of appeal, that the gold had been sold to him in India, and was intended to be given to some undisclosed person in Mumbai, is too facile to merit acceptance - We are, therefore, persuaded to believe the un-retracted confessional statement of the respondent under Section 108 of the Act that, in fact, he had smuggled the gold from Dubai. The seized goods are smuggled goods - the substantial questions of law are, therefore, answered in favor of the Revenue and, against the respondent.

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• 2019 (10) TMI 381
  Defreezing of Bank account of petitioner - HELD THAT:- Now an NOC has been issued by the respondents, from DRI, Indore for defreezing the Bank account of this petitioner - To that effect, communication has been moved from the respondents to the Branch Manager, ICICI Bank, dated 23rd August, 2019. Non-availability of the goods detained by the respondents - HELD THAT:- The goods has been seized vide order dated 31st August, 2019 by the respondents. A photocopy of the said seizure memo is tendered to this Court, which is taken on record. Copy thereof has also been given to learned counsel for the petitioner - Now, the only course left for the petitioner is to apply for the provisional release of the goods under Section 110 (a) of the Customs Act, 1962. As and when such an application is preferred by the petitioner, the same will be decided by the respondents as early as possible and practicable, preferably within a period of three weeks from the date of receipt of a copy of such type of provisional release application of the goods. Petition disposed off.

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• 2019 (10) TMI 380
  100% EOU - non-implementation of the Letter of Permission - HELD THAT:- The learned Single Judge was of the considered opinion that there was no error or perversity in the reasonings assigned by the Original Authority vide Annexure-7D to the writ petition or the Appellate Authority vide Annexure-A while arriving at the conclusion rendered by them. It was also held by the learned Single Judge that no material either produced or demonstrated before the learned Single Judge to conclude contrary to the finding of fact rendered by the Original Authority as well as the Appellate Authority which confirmed the same. This court find that no grounds are made out to interfere with the order of the learned Single Judge which has confirmed the concurrent finding rendered by the 2nd respondent-Original Authority and as well as the 1st respondent-Appellate Authority in deciding that the withdrawal of Letter of Permission issued in favour of petitioner on 08.10.2007 which appears to be just and proper in the facts and circumstances of the case - this intra-court appeal is dismissed.

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• 2019 (10) TMI 379
  Exemption from CVD - Misdeclaration of imported goods - Appellants had imported Molybdenum Ore Concentrate declaring the same as Molybdenum Ore - benefit of N/N. 04/2006-CE dated 01.03.2006 - Time limitation - HELD THAT:- Section 28 of the Customs Act, 1962 was amended by the Finance Act, 2011 to prescribe normal period of limitation as one year from the relevant date - SCN issued within one year from the date of filing of Bill of Entry, is definitely within the normal period of limitation and demand made therein cannot be held to be hit by limitation under Section 28 of the Customs Act, 1962. It is a fact that the goods imported are nothing but Molybdenum Concentrate and appellants have declare the same as Molybdenum Ore on the Bill of Entries and the documents relating to import clearance. In view of the mis-declaration made the goods have been held liable for confiscation under Section 111(m) of the Customs Act, 1962, but not confiscated as they were not available for confiscation. Commissioner has also not imposed any redemption fine on the appellant hence we do not discuss this aspect any further as this issue of confiscation has become irrelevant. Penalties - HELD THAT:- However for the acts of omission and commission leading to misdeclaration of the goods for which they had become liable for confiscation under Section 111, Commissioner has imposed penalty under Section 112(a) and we uphold the same. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2019 (10) TMI 378
  Winding up petition - appointment of Official Liquidator as the provisional Liquidator - Sections 433(e) and 433(f) of the Companies Act, 1956 - HELD THAT:- The proceedings under IBC are independent and have an object different from the one envisaged under the scheme of liquidation provided in the Company Law. The former aims resolution by way of revival in a manner that benefits all stakeholders, the creditors as well as the company. Thus, the scope of the proceedings before the NCLT is wider with the object of preserving the company and its business/ commercial activities. When transfer of winding up petition can aid in achieving the aforementioned objective, it ought to be allowed in the interest of justice. Merely because the learned Company Judge had ordered the winding up of the appellant company on 03.08.2004, it does not follow that the appellant company should necessarily be liquidated and dissolved. The other options available, namely to resolve/ revive the appellant company can and should always be explored for which purpose the NCLT is invested with jurisdiction, unless irrevocable steps towards liquidation have already been undertaken. There is no merit in the submission of the appellant that respondent No.2 not being a party to the winding up petition could not have moved the application for transfer of the proceedings to the NCLT. Firstly, the SBI- Respondent No.2 had moved an application for impleadment. Entertainment of the application of SBI to transfer the proceedings to the NCLT itself shows that the Learned Company Judge impliedly allowed the impleadment application. Appeal dismissed.

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• 2019 (10) TMI 377
  Resolution passed by the Board of Directors consisting of director not having DIN - Attachment of decretal amount - release of the amount deposited in the treasury to the respondent/decree-holder - Section 266 A of the Companies Act, 2006 - HELD THAT:- A perusal of Section 266 A of the Companies Act, 2006 reveals that every person intending to be appointed as a Director of a company or a Director of Company appointed before commencement of the Companies Amendment Act, 2006 was required to make an application for allotment of Director Identification Number to the Central Government and that every director appointed before the commencement of the Companies Amendment Act, 2006 was required to make the application within 60 days of the commencement of the said Act to the Central Government - Further Rule 2(1)(d) of the aforementioned Rules stipulates Director Identification Number as a requirement not only for any person to be appointed as Director but also for an existing Director of a company for the purpose of his identification as a Director of a company . A person not possessing a DIN under Section 154 of the Act is not eligible to be appointed as a Director or to continue as a Director of a Company as he incurs a disqualification for appointment as a Director in terms of Section 164(1)(h) of the Act and in terms of Section 167 of the Act, the office of such a Director becomes vacant as he incurs the disqualification specified under Section 164 which inter alia includes ineligibility for appointment as a Director of a Company in the absence of allotment of DIN read with Rule 2(1)(d) of the Rules, which defines DIN as an identification number allotted to an individual intending to be appointed as director or to any existing director of a company for the purpose of his identification as a director of a company. Order set aside - the execution application is held to be non maintainable - M/s H.S. Tuli Sons Builders Pvt. Ltd. (decree holder) shall be at liberty to recover the amount owed to it by the petitioner in accordance with law.

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• Insolvency & Bankruptcy

• 2019 (10) TMI 376
  Maintainability of application - jurisdiction/appropriate forum - Initiation of CIRP against Corporate debtor - Provisional attachment order - Section 60(5) of Insolvency Bankruptcy Code, 2016 - whether the properties sought to attached were acquired from proceeds of crime? - priority to secured creditors - Section 31B of Recovery of Debts due to Banks and Financial Institutions Act, 1993 - appellant contended that the properties of Corporate Debtor cannot be attached on the ground that it is equivalent to the value of money involved in the money laundering. HELD THAT:- This Application filed under Section 60(5) of IBC, questioning the attachment in respect of assets held by Corporate Debtor. The NCLT alone has jurisdiction to decide the same. Thus, attachment is liable to be raised since the properties attached were not acquired with tainted money and that they were acquired long prior to the alleged offence and there is already security created in favour of the Banks in respect of the assets attached. Hon ble Apex Court also held in the decision of ARCELORMITTAL INDIA PRIVATE LIMITED VERSUS SATISH KUMAR GUPTA ORS. [ 2018 (10) TMI 312 - SUPREME COURT ] wherein Hon ble Apex Court held by virtue of Section 60(5) of IBC, the NCLT is having jurisdiction to entertain or dispose of any Application by or against Corporate Debtor. Hon ble Apex Court further held that NCLT alone has jurisdiction to decide the application or proceedings by or against Corporate Debtor. The Provisional Attachment Order is raised - application allowed.

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• 2019 (10) TMI 375
  Maintainability of application - initiation of CIRP - reason of rejection as shown by the Liquidator is that the amount claimed is barred by limitation, as the same is due more than three years - HELD THAT:- The provisions of Section 42 of the IBC, 2016, stipulate that a Creditor may appeal to the Adjudicating Authority against the decision of the Liquidator either accepting or rejecting the claim within 14 days of receipt of the decision. The time period fixed appears to be mandatory for filing the appeal, and therefore the delay of 175 days cannot be condoned. Even otherwise, the cause shown in filing the appeal with the delay of 175 days does not appear to be a sufficient for seeking condonation of delay, as no medical certificate of any ailment is placed on record. The reasons given are general in nature and not supported with any documentary evidence. Therefore, no case is made out for condonation of delay of 175 days in filing the appeal under the Provisions of Section 42 of the I B Code, 2016. The rejection of claim stand dismissed.

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• 2019 (10) TMI 374
  Maintainability of petition - prayer for dissolution of petitioner company - voluntary liquidation of company - HELD THAT:- All requirements under Section 59 of the Insolvency Bankruptcy Code, 2016 and the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 have been complied with and consequently, the Liquidator has moved the present application under Section 59(7) of the Code. The application is allowed by dissolving the Petitioner Company, M/s. BHOOVAHANA TECHNOLOGIES PRIVATE LIMITED with effect from 28.06.2019.

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• 2019 (10) TMI 373
  Maintainability of application - initiation of CIRP - Failure to make repayment of loans - overdue instalments - existence of debt and dispute or not? - HELD THAT:- In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant. As can be seen from the Written Communication of the proposed Insolvency Resolution Process, no disciplinary proceedings are pending against him. In the instant case, the documents produced by the Financial Creditor clearly establish the debt and there is a default on the part of the Corporate Debtor in payment of the financial debt . Application admitted - moratorium declared.

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• 2019 (10) TMI 372
  Maintainability of application - initiation of CIRP - time limitation - impugned order has been assailed on the grounds that claim in the application filed by the Financial Creditor was grossly exaggerated and barred by limitation - HELD THAT:- Admittedly, the debt in respect of default allegedly exceeded the prescribed amount of Rupees One Lakh. Admission of a claim pursuant to collation and verification of claims by the Resolution Professional is a matter to be dealt with when the Corporate Insolvency Resolution Process is underway. Same is irrelevant at the stage of admission of application under Section 7 of the I B Code. The challenge on this score is also without substance. The impugned order does not suffer from any legal infirmity - Appeal dismissed.

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• PMLA

• 2019 (10) TMI 371
  Whether the learned Single Judge while passing the judgment and order dated 29th August 2019 exercised the power only under Articles 226 and 227 of the Constitution of India or under Articles 226 and 227 as well as under Section 482 of Cr.P.C.? HELD THAT:- Section 362 of Cr.P.C could not have come in the way of the learned Single Judge in considering the prayer made by the writ petitioners for continuation of the interim relief which was operating in the writ petitions. Even assuming that the learned Single Judge had exercised the power under Section 482 of Cr.P.C as well, what Section 362 of Cr.P.C prohibits is that the alteration of order except to the extent of correcting clerical and arithmetical errors. What was prayed for by the petitioners was the continuation of interim relief which was operative till the disposal of the writ petitions. There was no warrant for the learned Single Judge to have taken recourse to Section 362 of Cr.P.C and even to refuse to consider the prayer for continuation of interim relief. There cannot be any dispute that if an order which is sought to be challenged by way of an appeal under Section 4 of the High Court Act is made in exercise of power under Section 482 of Cr.P.C, an appeal under Section 4 of the High Court Act will not be maintainable as the order cannot be said to have been passed in exercise of the original jurisdiction. In a given case, in one petition, the powers of the learned Single Judge both in Article 226 of the Constitution of India and in Section 482 of Cr.P.C can be invoked depending upon the facts of the case and prayers made in the case. It is quite possible that in a given case, the learned Single Judge exercises the powers both under Article 226 of the Constitution of India and under Section 482 of Cr.P.C. In such a case, an appeal under Section 4 of the High Court Act will not be maintainable because the exercise of powers under Section 482 of Cr.P.C and under Article 226 of the Constitution of India cannot be separated - In the present appeals, the entire emphasis of the appellants is on the fact that the judgment delivered in the writ petitions dated 29th August 2019 shows that the learned Single Judge exercised the power under Articles 226 and 227 of the Constitution of India. While deciding the issue which power was exercised by the learned Single Judge while passing the judgment and order dated 29th August 2019, what the learned Single Judge has observed cannot be ignored altogether, especially when the writ petitions filed by the appellants indicate that the jurisdiction of the Court was invoked under all the three provisions and the prayer clause (e) also indicates that apart from invoking jurisdiction under Article 226 of the Constitution of India, even the prayer for quashing of the proceedings arising out of the offence registered under the said Act of 2002 was made. In the order dated 30th August 2019 impugned in these three appeals, the learned Single Judge has himself stated that while passing the judgment and order dated 29th August 2019, he also exercised the power under Section 482 of Cr.P.C as well. There is no reason to discard or disbelieve what he has said - Thus, while passing the order dated 29th August 2019, he has also exercised the power under Section 482 of Cr.P.C. Appeal dismissed.

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• Service Tax

• 2019 (10) TMI 370
  Recovery of CENVAT credit with equal penalty u/r 15(3) of CENVAT Credit Rules - various input services - time limitation - HELD THAT:- The original authority has allowed the CENVAT credit on the impugned services and on appeal by the Department, the Commissioner(Appeals) has reversed the decision of the original authority and has also held that the appellant has suppressed the material fact from the Department and has not disclosed the same in their ST3 return. The finding of the Commissioner(Appeals) that the appellants have not disclosed these facts and have not filed the ST3 returns is factually incorrect. Extended period of limitation - HELD THAT:- Once the appellant has disclosed all the facts in the ST3 returns and has not suppressed any facts from the Department, then the Department cannot invoke the extended period of limitation and confirmed the demand - In the present case, the period of dispute is January 2012 to March 2012 whereas the show-cause notice has been issued on 07/10/2014 which is beyond the period of limitation as prescribed under the law. Appeal allowed on the ground of limitation.

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• Central Excise

• 2019 (10) TMI 369
  Principles of natural justice - opportunity of personal hearing not provided - maintainability of petition - availability of alternative remedy - liability of Job-worker to pay Central Excise Duty - manufacture taking place or not? - HELD THAT:- There is no dispute to the fact that before passing the impugned order, the show cause notice was issued to the petitioner and that the petitioner has not chosen to file any reply. No doubt, the learned counsel for the petitioner contended that in view of the earlier reply submitted by the petitioner dated 29.05.2014, there is no need for the petitioner to file a reply to the show cause notice - I am unable to agree with the above submissions for the simple reason that the issuance of show cause notice has emerged only after receiving the letter submitted by the petitioner on 29.05.2014. Therefore, if the Adjudicating Authority has chosen to issue the show cause notice even after receipt of such reply and make some allegations therein against the petitioner, it is for the petitioner to file a suitable reply to the said notice and agitate the matter before the Adjudicating Authority. In this case, the petitioner has not chosen to file any reply. A person to whom a show cause notice is issued, if chooses not to respond to the same, is to be construed as a person not denying the allegation so long as the said show cause notice itself is not put to challenge by him on any other ground/ reason legally sustainable. Therefore, failure to file reply and participate in the adjudication process would certainly lead to draw an adverse inference against such person. As this Writ Petition is sought to be maintained only on the ground of the alleged violation of principles of natural justice and in view of the findings rendered supra that no such violation is found in this case, I am of the view that this is a matter to be further agitated only before the Appellate Authority by filing regular appeal. The Writ Petition is disposed of by granting liberty to the petitioner to file regular appeal within a period of four weeks from the date of receipt of a copy of this order.

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• 2019 (10) TMI 368
  Principles of natural justice - When the Tribunal arrived at the conclusion that the Respondent had been granted hearing before passing the Order by the Commissioner, whether any direction for remand could have been made? - HELD THAT:- The issue is covered in the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE GOA AND UNION OF INDIA, AND ORS. VERSUS M/S. TWENTY FIRST CENTURY WIRE RODS LTD., [ 2019 (8) TMI 1366 - BOMBAY HIGH COURT] where it was held that Setting aside the orders of the Adjudicating Authority and consequent remand on the first ground that in one of the matters, on one of the dates, no adjournment was granted to one of the parties, is in our opinion, is not at all a good ground to set aside the orders of the Adjudicating Authority and to remand the matter for fresh consideration. The common Judgment and Order made by the Tribunal is set aside and the Appeals instituted by the Assessees before the Tribunal are restored for fresh consideration, in accordance with law and on their own merits.

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• 2019 (10) TMI 367
  Validity of SCN - Reversal of CENVAT credit - removal of inputs as such - reversal of credit demanded on the inputs lying in stock, treating it at par with the goods removed as such, at the time of closure of their unit - applicability of provisions of sub-rule 3(5) of CCR Rules, 2004 - HELD THAT:- It is an admitted fact that the appellants have not removed any inputs as such. Rule 3(5) applies or provides for reversal of duty on inputs, which are removed as such. Thus, the show cause notice is mis-conceived as the same is issued alleging that Rule 3(5) of CCR is applicable. Further, the SION norms are not applicable in the facts and circumstances - It is not the case of the Revenue that the appellants have not maintained proper records of receipt of inputs and its utilization. Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 366
  CENVAT Credit - input services - Civil Works - Rule 2(l) of CCR, 2004 - HELD THAT:- The original authority has analyzed each and every input service and has passed a reasoned order by holding that all the services availed by the appellant fall in the definition of input service and none of them are in the nature of civil construction only. Further, without giving any reasons, the Commissioner (A) has wrongly come to the conclusion that all the services availed by the appellant are in the nature of civil construction only. Further, all the services fall in the definition of input service as contained in Rule 2(l) of CCR, 2004 and do not fall in the services which have been specifically excluded. Further, the invoices for the impugned services referred to maintenance and repair of the plant and do not refer to construction of a building or a civil structure or laying of foundation etc. which are specifically excluded from the definition of input service . The order passed by the original authority is restored by allowing the appeal of the appellant with consequential relief, if any - appeal allowed.

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• CST, VAT & Sales Tax

• 2019 (10) TMI 365
  Principles of natural justice - non-speaking order - validity of assessment order - subsection (2) of section 34 of the Gujarat Value Added Tax Act, 2003 - HELD THAT:- A perusal of the impugned order reveals that the second respondent has merely recorded that pursuant to the notice issued in Form No.302, the dealer had remained present with the relevant documents. He, thereafter, has merely computed the tax payable by the petitioner and has ordered that a demand notice be issued accordingly. On a plain reading of the impugned order, it is apparent that the same is totally non-speaking order and does not record the reasons for the conclusions arrived by the assessing authority. It is the case of the petitioner that no opportunity of hearing was given to him, inasmuch as, the petitioner had remained present pursuant to the notice issued to it, however, on that date, no hearing had taken place and certain documents were submitted by the petitioner. Thereafter, without giving any notice for hearing to the petitioner, the second respondent has passed the impugned order, which therefore is clearly in breach of the principles of natural justice - Not only that, on a plain reading of the impugned order it is manifest that the same is totally bereft of any reasons. In the absence of any reasons for arriving at his conclusions, it is not possible for an appellate court to ascertain as to what weighed with the second respondent while arriving at his decision. The impugned order being violative of the principles of natural justice as well as being a non-speaking order, cannot be sustained -the matter is restored to the file of the second respondent, who shall decide the same afresh in accordance with law, after affording a reasonable opportunity of hearing to the petitioner and pass a reasoned order thereon - petition allowed -

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• 2019 (10) TMI 364
  Non-application of mind - levy of Entry tax - Whether the Tribunal is correct in upholding the orders of the authorities below by not applying its mind regarding the plea of the liability of entry tax on the value of goods when it enters into the local area or on the market value on which the goods are sold? HELD THAT:- The relevant criteria to determine the value of goods had to be the wholesale value within the local area Ghaziabad. Inasmuch as the revenue and the appeal authorities have not made any effort to determine that value, the assessment order, as sustained by the Tribunal, is wholly erroneous - Further, in absence of any discussion as to the wholesale value of similar goods sold, inside the local area Ghaziabad, the matter has to be remitted back to the assessing authority. Thus, in view of the admitted fact that the goods had been brought into the local area by way of stock transfer, for the purposes of imposition of entry tax, the assessing authority should only take into account the wholesale value of similar goods/cement sold inside the local area Ghaziabad, at the relevant time. The actual sale value of the goods recorded by the assessee in its books of accounts had no relevance for that computation. The proceedings are remitted to the Tribunal to pass a fresh order in accordance with law - revision allowed by way of remand.

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• 2019 (10) TMI 363
  Concessional rate of tax - default on the part of purchasing dealer - various goods including Low Sulphur Heavy Stock, but barring Motor Spirit, High Speed Diesel Oil and Light Diesel Oil - denial of concessional rate on the ground that no Register of Declarations maintained in the prescribed manner, has been filed in support of the petitioners claim - TNGST Act - principles of natural justice. HELD THAT:- Section 3(3) of the TNGST Act stipulates only two conditions. The first, in regard to the nature of the goods, meaning thereby, that the benefit is available in respect of sale of any goods including consumables, packing material and labels but excluding capital goods such as plant and machinery, and secondly the use of the goods in manufacture, assembling, packing or labelling of any goods other than alcohol and spirits. Admittedly these two conditions are satisfied in the present case and there is no dispute raised by the Revenue in this regard. The proviso restricts such benefit to the sale of specified commodities, that is, High Speed Diesel Oil, Light Diesel Oil and Molasses, in respect of which, admittedly exemption has not been sought for by the petitioner. Thus there is no dispute on the factual position that all conditions as laid down by section 3(4) and the proviso thereunder have been complied with in this case. This issue has been considered and decided in a slew of decisions rendered by various Benches of this Court culminating in a decision of the First Bench of this Court in the case of M/S. SREE MURUGAN ENGINEERING PRODUCTS VERSUS THE COMMERCIAL TAX OFFICER [ 2006 (10) TMI 384 - MADRAS HIGH COURT] , wherein this Court has categorically held that the manner in which a purchasing dealer deals with the goods is not the concern of the seller and if they are violations/misuse of the Form that come to the notice of the Department, liability in such case can be fastened only upon the purchasing dealer and not the seller. The petitioner is entitled to the benefit of concessional rate of tax in terms of Section 3(3) of the Act - Petition allowed.

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• Indian Laws

• 2019 (10) TMI 362
  Dishonor of Cheque - Non-existence of bank account - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - petitioners submit that in the instant case their bank account had closed in the year 2017 and they had informed the respondent of the same and in as much as there was no cheque drawn by the petitioner on an account maintained by them, the complaint of the respondent is not maintainable. HELD THAT:- The aspect of the closure of the bank account of the petitioner prior to the issuance of the cheque, is a matter which cannot be determined without trial and thus, it is held that there is no infirmity in the impugned order dated 01.05.2019 of the learned MM-04, (NI Act) NDD/PHC, New Delhi District in CC No.6337/2019, whereby the cognizance of the alleged commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 has been taken only against the petitioner no.2 herein. Petition dismissed.

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• 2019 (10) TMI 361
  Dishonor of Cheques - offence punishable under Section 138 of the said Act - bailable warrant against the applicant - applicant has signed the cheques and he is working in the capacity of managing director - liability against the company - HELD THAT:- In the present case, the applicant tried to place reliance on the ratio laid down by the Delhi High Court in the case of DSC Ltd. (supra) however, in that case the company was arraigned as party Respondent and Managing Director was not made separate party. In the fact of that case the Delhi High Court held that, on said technical defect complaint cannot be quashed. It is true that in the present case the subject cheque is signed by the applicant, however in the capacity of a Managing Director of the NHA Investment Consultancy Pvt. Ltd. Therefore, it is imperative on the part of the complainant to implead the Company as party Respondent. T Once the company is held to be essential party, and that arraigning of a company as an accused is imperative for prosecution under Section 141 of the NI Act. Unless the company is arraigned as an accused the order of issuance of process against the applicant cannot legally sustain in view of the requirement of Section 138 of the NI Act. Considering that by allowing the present application, this Court is quashing the process issued against the present applicant for not joining the company, the interests of justice require that liberty be given to the first Respondent to move before the Court of competent jurisdiction for appropriate relief with a application under Section 14 of the Limitation Act seeking exclusion of the period during which he was prosecuting this case - Application allowed.

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