Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 19, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Blocking of Electronic Credit Ledger without hearing and reasons violates natural justice principles.
The court held that blocking of the Electronic Credit Ledger without providing a pre-decisional hearing to the petitioner and without containing cogent reasons to believe in the impugned order violated the principles of natural justice. Relying on the precedent of K-9-ENTERPRISES, KWALITY METALS, K-9-INDUSTRIES VERSUS THE STATE OF KARNATAKA, THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, BELAGAVI, the court ruled that the mandatory requirements and parameters for invoking Rule 86A were not fulfilled by the respondents-revenue. The respondents were not entitled to rely upon the satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the petitioner's Electronic Credit Ledger. Consequently, the impugned order was quashed, and the petition was allowed.
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Mastermind nabbed for Rs. 175 cr GST fraud via fake invoices; bail nixed due to economic offence & flight risk.
Bail cancellation case involving fraudulent input tax credit and creation of fake invoices under GST Act. Court found no procedural lapses by authorities in arrest as summons were issued, reasons recorded, and arrest memo provided. Accused was mastermind causing Rs. 175.88 crore tax evasion. Risk of fleeing abroad and tampering evidence if granted bail. Bail cancelled due to grave economic offence and flight risk.
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Petitioner's tax recovery during investigation before notice illegal; refund ordered.
The High Court held that the petitioner's contention of not having the power to recover amounts during the pendency of an investigation that commenced prior to the issuance of a show cause notice u/ss 67 and 70 is valid. The payments made by the petitioner cannot be considered self-ascertainment u/s 74(5) of the CGST Act, as the element of voluntariness is absent. Since the adjudication is still to conclude and a notice u/s 74(1) has already been issued, the question of going back to the stage of Section 74(5) does not arise. The petition is allowed in part, declaring the recovery of tax from the petitioner as illegal and directing a refund within four weeks, along with applicable interest.
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Authority can issue second notice for additional GST discrepancies after initial explanation.
The High Court held that the respondent-authority had jurisdiction u/s 61 of the Jharkhand Goods and Services Tax Act, 2017 to issue a second show-cause notice seeking further explanation regarding discrepancies pointed out after the petitioner's response to the first show-cause notice. The Court opined that since the petitioner had furnished an explanation to the first notice, no prejudice would be caused by responding to the second notice highlighting additional discrepancies. The petitioner was directed to explain the alleged discrepancies mentioned in the second show-cause notice dated 05.07.2024 for the authority to proceed in accordance with law u/s 61 of the JGST Act. Consequently, the writ petition was disposed of.
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Classifying supply as works contract. Eligibility for input tax credit on materials, labor, installation, overheads under contract execution modes.
Supply classified as works contract u/s 2(119) of CGST Act. Applicant executes deposit works on behalf of consumers/agencies under two modes. In second mode, applicant eligible for input tax credit on materials, labor, installation, and overheads as per Section 16, not blocked u/s 17(5). Ownership vests with applicant after construction, but work done on behalf of customers, not on applicant's own account. Hence, input tax credit available despite applicant being custodian of constructed lines credited in books.
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Vanilla Ice Cream Mix Classified for Tax Duty Under Food Preparations, Not Dairy Produce.
The authority classified the product "Vanilla Mix" - dried softy ice cream mix (low fat) in vanilla flavour under Heading 2106 90 99 of the First Schedule to the Tariff Act, attracting tax at 9% CGST and 9% SGST. It held that the product, comprising several ingredients intended for making soft serves, does not fall under Heading 0404 as a dairy produce. As per Chapter Note 5, food preparations subjected to further processing for human consumption are covered under Heading 2106, which includes powders for ice-creams, preparations consisting of milk powder, sugar and other added ingredients, and powders for table cream, jellies, ice-cream and similar preparations.
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Sewerage System Works to Local Authority Attracts GST Despite Entry 3B Exemption.
Composite supply involving works contract services provided to local authority not exempt under GST. Entry 3B of Notification No. 13/2017-CT(Rate) exempting services to government authority not applicable as applicant providing works contract services with supply of goods exceeding 25% value. Entries 3, 3A and 3B interlinked, exemption limited to pure services or composite supply with goods value not exceeding 25%. Applicant providing sewerage system works to Municipal Corporation, a local authority, attracts GST as per entries 3 and 3A covering services to local authorities. Entry 3B inapplicable as works contract with predominant supply of goods.
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Waiver of interest/penalty u/s 128A: Eligibility, process, payment of full tax, erroneous demands, transitional credits.
Various aspects related to the waiver of interest or penalty or both u/s 128A of the CGST Act. It clarifies eligibility criteria, application process, payment requirements, processing of applications, issuance of orders, and appeals. Key points include the time period covered, payment of full tax amount (excluding certain amounts), treatment of erroneous refund demands, demands spanning multiple periods, and applicability to IGST and Compensation Cess. It also addresses issues like retrospective ITC availability, adjustment of transitional credit demands, utilization of ITC for payment, and applicability to import IGST under Customs Act. The summary provides comprehensive guidance on availing the waiver benefit u/s 128A.
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Amendment extends input tax credit availment period for 2017-21; allows rectification of wrongly restricted ITC demands.
Sub-section (5) and sub-section (6) inserted in section 16 of CGST Act retrospectively extend the time limit to avail input tax credit in certain specified cases pertaining to financial years 2017-18 to 2020-21. No refund of tax paid or input tax credit reversed is available where now eligible under sub-section (5) or (6). A special procedure notified allows rectification of orders u/ss 73, 74, 107 or 108 confirming demand for wrong availment of input tax credit due to contravention of sub-section (4), now permissible under sub-section (5) or (6). Application for rectification to be filed electronically within 6 months, uploading prescribed details. Proper officer to decide within 3 months, following principles of natural justice if adversely affecting the person. Appeal lies against rectified order. The special procedure applies only where demand confirmed involves issue of wrong input tax credit availment due to sub-section (4) contravention, now rectifiable under sub-section (5) or (6).
Income Tax
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Banks' broken period interest deduction hinges on securities' intent - stock trading or investment.
Banks are required to maintain a Statutory Liquidity Ratio (SLR) by purchasing government securities. RBI guidelines categorize securities as Held-to-Maturity (HTM), Available-for-Sale (AFS), and Held-for-Trading (HFT). For AFS and HFT securities, the broken period interest paid during acquisition is allowed as a deduction, as these are treated as stock-in-trade. However, for HTM securities, the treatment depends on whether they are held as investments or stock-in-trade, based on the facts of each case. If held as investments, the broken period interest is capitalized; if held as stock-in-trade, it is allowed as a deduction. The Supreme Court upheld the Tribunal's decision that when securities are treated as stock-in-trade, the broken period interest cannot be considered capital expenditure and must be allowed as a deduction. The court clarified that the benefit of deduction is available for securities held as trading assets but not for those held as investments.
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Tax dispute: Royalties to AEs justified, stock valuation method upheld, warranty claims addition deleted, CSR expenses allowed.
The High Court's decision addressed several key issues regarding the assessee's tax assessment. Firstly, it upheld the Tribunal's finding that the royalty paid by the assessee to its Associated Enterprises (AEs) was justified as the AEs were manufacturing sub-contractors, and the assessee had been granted licenses for patents, know-how, and trademarks. Secondly, it affirmed the assessee's valuation of closing stock based on cost or net realizable value, whichever is lower, as a consistently followed and accepted method. Thirdly, it upheld the Tribunal's deletion of the Assessing Officer's (AO) addition related to excess provision for claims against warranties, as the AO failed to adequately justify the addition. Fourthly, it rejected the Revenue's contention to exclude Corporate Social Responsibility (CSR) expenses from book profits u/s 115JB, finding no statutory basis for such exclusion. The High Court concluded that no substantial questions of law arose from the Tribunal's decision on these issues.
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Unsecured loan duly disclosed can't justify tax reassessment, court rules.
The High Court held that the reopening of assessment u/s 147 was not justified. The mere existence of an outstanding unsecured loan in the assessee's balance sheet did not provide a 'reason to believe' that the income had escaped assessment. There was no material to indicate that the Assessing Officer had any ground to believe that the loan availed by the assessee was chargeable to tax under the Act. The assessee had explained the source of the unsecured loan from its then director, which was duly disclosed in the notes to accounts. The Assessing Officer erroneously proceeded on the premise that the unsecured loan was unexplained and chargeable to tax u/s 68, without any basis. As per the Supreme Court's ruling in Lakhmani Mewal Das, reassessment can be initiated only on 'reason to believe' and not merely 'reason to suspect'. In the present case, there was no reason even to suspect that the balance sheet did not correctly reflect the assessee's state of affairs. The necessary condition for initiating reassessment u/s 147 was not satisfied, and therefore, the assessee's appeal was allowed.
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Plastic division's loss deduction upheld; Followed accrual accounting & settlement.
In a case concerning disallowance of loss incurred in a plastic division, the assessee followed the mercantile system of accounting, and contracts were accounted for on an accrual basis. The Income Tax Appellate Tribunal (ITAT) dismissed the revenue appeal, holding that tax is levied on real income with aspects of certainty. The High Court upheld the ITAT's decision, considering the Supreme Court's ruling in Commissioner of Income Tax v. Excel Industries Ltd., which emphasized levying tax on real income rather than hypothetical income. The settlement agreement acknowledged the contract's partial disintegration, causing the assessee to lose the right to receive the full transaction value. Accounting Standards (AS) 4 and 9 were considered for contingencies occurring after the balance sheet date. The High Court found no manifest error in the ITAT's judgment favoring the assessee.
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Accounts accepted; profit not estimated due to improved gross margins despite fall in export incentives. Lower authorities' order set aside.
Books of accounts accepted as maintained properly. Net profit not estimated by authorities as gross profit rate improved compared to previous year. Fall in net profit ratio attributed to decline in duty drawback and export incentives. Order of lower authorities set aside, directing acceptance of book results and deleting addition made. Assessee's appeal allowed by Appellate Tribunal.
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Contested TDS and disallowance on sales commission; aligned with previous rulings.
TDS u/s 195 and disallowance u/s 40(a)(ia) towards sales commission paid were challenged. Since the services rendered did not fall within fees for technical services or Article 12 of the tax treaty, the assessee contended no TDS obligation existed. Following the coordinate bench's decision in the assessee's own case for prior years, it was held that no infirmity existed in the CIT(A)'s order, and no disallowance u/s 40(a)(i) was warranted. Regarding ESOP expenses, the issue's allowability is well-settled. Consistently, the coordinate bench in the assessee's case for prior years allowed ESOP expenses as a deduction. Hence, the CIT(A)'s decision allowing the ESOP expenses claim was upheld. The matter was decided in favor of the assessee.
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Employer's NPS contributions permissible despite delay, no due date under PFRDA Act.
National Pension Scheme (NPS) contributions made by an employer were disallowed by the Assessing Officer on the grounds that the remittances were made beyond the prescribed date under the Pension Fund Regulatory and Development Authority Act, 2013. The ITAT, relying on the case of Adani Petronet (Dahej) Port (P.) Ltd., observed that there was no due date prescribed in the PFRDA Act for making payments to the NPS account. Further, all payments were made before filing the return of income u/s 139(1). The ITAT held that the adjustment made on NPS payments was unjustified, and the amount should be treated as allowable u/s 43B(b). Additionally, a notification issued by the Department of Pension and Pensioners' Welfare clarified that the National Pension System Rules, 2021 apply only to government servants and not the general public. Consequently, the assessee's appeal was allowed.
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Movie theater chain's revenue-sharing model with franchisees upheld; no TDS on franchisee's cut.
Assessee followed joint venture model for sharing revenue with collaborators as per franchise agreement. Assessee recorded all revenues, incurred expenditure, and shared surplus with collaborators after adjusting expenses. Tribunal held that sharing surplus is merely sharing revenue, not claiming expenditure, as collaborators did not render services to assessee. Provisions for tax deduction at source not applicable since collaborators did not provide services. Tribunal upheld assessee's claim of expenditure for sharing surplus, which was essentially sharing revenue as per agreement. Decision favored assessee against revenue authorities.
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Tribunal overturns cancellation of NGO's tax exemption registration, directs re-evaluation solely on charitable objects.
The ITAT held that the CIT(E) erred in prematurely invoking Section 13(1)(c) and cancelling the provisional registration u/s 12AB without duly considering the charitable objects of the assessee. Relying on judicial precedents, the ITAT clarified that the applicability of Section 13 should only be examined during assessment and not at the registration stage u/s 12A. The CIT(E)'s order was flawed in its interpretation of the assessee's objects and premature invocation of Section 13(1)(c) and 13(3). The ITAT set aside the CIT(E)'s order and restored the matter for de novo consideration, directing the CIT(E) to evaluate the application for registration afresh, focusing solely on the charitable nature of the assessee's objects, without invoking Section 13(1)(c) or Section 13(3) at this stage, and providing the assessee a reasonable opportunity of being heard.
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Infrastructure sub-contracts: Developing or just contracting?
The assessee invested its own funds, provided bank guarantees, engaged skilled staff and laborers, brought necessary machinery, adhered to timelines, bore consequences for delays, and complied with quality standards for infrastructure projects undertaken on a sub-contract basis from private parties. The AO failed to examine the terms and CBDT circular clarifying the scope of "developing" infrastructure facilities. The Bombay High Court's decision in CIT vs. ABG Heavy Industries Ltd. favored the assessee's eligibility for deduction u/s 80IA(4). Considering the totality of facts, the matter was restored to the AO to re-examine whether the assessee qualifies as a developer or works contractor for each project, in light of the High Court ruling, CBDT circular, and project terms.
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Tax scrutiny time limit dispute: Court remands case for verification of assessment date.
The Appellate Tribunal (ITAT) addressed the validity of an assessment order passed u/s 153C, considering the issue of limitation. The assessee raised the plea that the assessment year 2004-05 was beyond the six-year block period for assessment u/s 153C. Although the order bore the date 30.12.2011, it was issued and dispatched on 02.01.2012 as per the post office report. Since the assessee raised this plea for the first time during the appeal hearing, the ITAT remanded the issue to the Assessing Officer for proper verification and adjudication, along with other set-aside issues. The appeal was allowed for statistical purposes.
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Jeweller's excess stock not treated as undisclosed income due to corroborative evidence.
The assessee was found with excess stock of jewellery during a search operation. The Assessing Officer (AO) invoked provisions of Sections 69A and 69B, treating the excess stock as undisclosed income. The assessee explained that the difference between physical and recorded stock was due to goods received on approval but not entered in books, or bills pending from suppliers. The CIT(A) upheld the AO's action. The ITAT observed that as per CBDT circular, preference should be given to corroborative evidence over oral statements during searches. The assessee substantiated the transactions with evidence like supplier confirmations and GST returns, which the revenue could not dislodge. The retraction by the assessee was supported by evidence and cannot be rejected. The ITAT held that the excess stock pertained to the assessee's business, and the difference was duly explained and reconciled with evidence. The assessee had offered the unaccounted stock within 7 days of search, but it was not disposed of, violating principles of natural justice. The ITAT set aside the CIT(A)'s order sustaining the additions u/ss 69A and 69B. Since the excess stock pertained to business, provisions of Section 115BBE (deeming it as undisclosed income) cannot be invoked. The.
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Director's share capital & loan receipts verified, additions deleted on proven identity/ creditworthiness/ genuineness.
The assessee successfully discharged the onus u/s 68 regarding share capital introduced by the company director, a major shareholder, proving identity, creditworthiness, and genuineness. The addition u/s 68 was rightly deleted by the CIT(A). The Tribunal admitted additional evidence u/r 46A, considering the assessee's office was in a COVID-19 containment zone. The CIT(A) correctly deleted the addition u/s 68 for a loan received, as the assessing officer accepted the transaction's genuineness based on overwhelming evidence provided by the assessee. The Tribunal upheld the CIT(A)'s order, finding no infirmity in deleting the additions where the assessee proved the identity, creditworthiness, and genuineness of the transactions.
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Demystifying the Tax Dispute Resolution Scheme: Eligibility, Rates, Forms & Timelines Explained.
This guidance note provides clarifications on various provisions of the Direct Tax Vivad se Vishwas Scheme, 2024 (DTVSV Scheme). It covers eligibility criteria for appeals, non-eligible cases, rates payable on tax arrears, types of forms and timelines, treatment of search assessments, rollback years for Advance Pricing Agreements, handling of disposed appeals, partial settlement of issues, penalty appeals, protective/substantive additions, disputes related to other taxes, withdrawal requests, interest waiver applications, enhancement notices, refund issues, TDS/TCS matters, consequential relief u/s 40(a)(i)/(ia), registration u/s 12AA, set-aside matters, multiple appeals for one assessment year, writs against reopening notices, admission status of appeals before High Courts/Supreme Court, cross objections, miscellaneous applications, stayed assessment orders, and other miscellaneous issues like immunity from prosecution.
Customs
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Jeweler granted bail in gold smuggling case; genuine business documents, local ties, no criminal record.
Gold smuggling case - applicant granted regular bail. Key points: DRI failed to dispute genuineness of applicant's documents showing lawful gold jewelry business. Applicant not a flight risk, has residence and family ties. No criminal history except present case. Already in jail for over 3 months, DRI unable to justify further custody. Offense u/s 135 of Customs Act triable by Magistrate, maximum 7 years imprisonment. Applicant's liberty balanced against potential punishment. Bail granted on executing bond with conditions, without expressing opinion on merits. Bail application allowed.
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Absconder can't claim violation of rights: Court upholds detention order despite non-service at foreign address.
Detention order at pre-execution stage was challenged on grounds of non-service at Nepal address, despite knowledge of address. Court relied on Supreme Court's ruling in Subhash Popatlal Dave, holding that those evading law cannot claim violation of fundamental rights. Petitioner was not available at any address in India for execution, and stand of service at Nepal address was untenable. Court opined that procedure under COFEPOSA Act for serving detention order is by detaining the person, failing which proceedings u/s 7 are initiated if detenue has absconded. Inference drawn that petitioner deliberately evaded service. Representation to detenue available post-execution under Article 22(5). No ground to interfere with detention order at pre-execution stage. Petition dismissed.
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Customs broker case: Alleged export fraud but insufficient evidence to prove violations.
Customs broker's license revocation and security deposit forfeiture were challenged due to alleged involvement in fraudulent export activities. The allegations included failure to verify documents and identities, misuse of factory stuffing permission, document forgery to avail drawback and incentives fraudulently, and value inflation through document manipulation. The Tribunal held that there was no evidence of the broker's prior knowledge of non-existent exporters or being a beneficiary of wrongly received drawbacks. The modus operandi involved forged factory stuffing permissions and export invoices signed by Central Excise Officers. However, the Department failed to prove violations under relevant Customs Broker Licensing Regulations. Consequently, the Tribunal set aside the order confirming the violations and allowed the appeal.
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License transfer fraud: Importer duped by exporter, denied liability.
Duty demand u/s 28(1) of Customs Act, 1962, upon importer and transferee of license issued by DGFT - Liability of transferee for fraudulently obtained license - Levy of penalties u/s 114A - Extended period of limitation. License issued and made transferable by DGFT, valid and subsisting at the time of imports and clearance by importer. Customs verified license before clearance. Importer took precautions before purchasing license from broker. Alleged fictitious exports and fraud committed by exporter/original license holder, no allegation or evidence of importer's awareness. Duty forgone should be recovered from exporter/original license holder, not importer. Show cause notice dated 28.1.2015 raised demand for imports in April 2010, invoking extended period of limitation under proviso to Section 28(1). However, importer is bonafide transferee, larger period cannot be applied. Demand of duty under proviso to Section 28(1) and penalty u/s 114A against importer set aside on ground of time bar. Appeal allowed.
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Importers denied fair hearing on product classification, CESTAT orders remand for cross-examination & test report access.
Imported goods classified under incorrect tariff heading, appellants denied opportunity for cross-examination and access to test reports, violation of natural justice principles. CESTAT remanded matter to original adjudicating authority with directions to provide test report copies, allow cross-examination of CEPCI representatives. Appellants' submissions regarding roasting method, buyer specifications, third-party certifications not adequately examined. Onus on revenue to establish claimed classification in case of divergent interpretations. Appeal allowed for remand to address procedural lapses.
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Paint brush filaments not yarn, 18% IGST rate applicable.
Imported polyester filament in cut lengths intended for making paint brushes cannot be classified as synthetic or artificial filament yarn under CTH 54041990 eligible for 12% IGST rate. The key distinction is that filaments tend to break when exposed to high heat or pressure, while yarns, being multi-ply constructions, are more resistant. The imported goods, being monofilaments in cut lengths meant for paint brushes, do not qualify as yarn and are rightly denied the 12% IGST rate benefit under Notification No. 35/2017. They are liable for 18% IGST rate as other goods under CTH 5402-5406. The appeal against denying the 12% IGST rate is dismissed.
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Duty refund granted for short-landed imports, no unjust enrichment; interest payable after 3 months.
Refund claim of duty paid on short landing of imported goods. Unjust enrichment principle inapplicable as duty amount shown as receivable in books of accounts, certified by Chartered Accountant, indicating no passing of incidence. Tribunal's earlier decision in appellant's own case upheld, finding no unjust enrichment. Interest on refund payable from date after three months of filing refund application, following Supreme Court's landmark judgments. Impugned orders set aside, appeal allowed by Appellate Tribunal.
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Incorrect tariff classification of imported goods due to flawed 'common parlance' approach.
Classification of imported goods requires following settled law and General Rules for Interpretation of Import Tariff. The finding of goods being separately identifiable should have led to determining corresponding description in First Schedule of Customs Tariff Act, 1975 instead of treating it as a composite good. Reliance on purported 'common parlance' derived from consumer behavior is incorrect as it is neither true 'common parlance' nor derived from acceptable market study. 'Common parlance' resolves ambiguity in description for tariff fitment, not a substitute for determining appropriate tariff item. The exercise of classification was incorrectly carried out. The matter is remitted to the original authority for a fresh decision in accordance with law.
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Smooth food trade between India & Bhutan: BFDA Health Cert replaces FSSAI compliance for approved exporters.
This instruction from the Central Board of Indirect Taxes & Customs (CBIC) pertains to the implementation of an agreement signed between the Food Safety and Standards Authority of India (FSSAI) and the Bhutan Food and Drug Authority (BFDA). The key points are: BFDA will issue Health Certificates for food exports to India as proof of FSSAI compliance. For approved Bhutanese manufacturers, their consignments accompanied by a BFDA-issued Health Certificate can be granted NOC based on the certificate. The importer must upload the Health Certificate on e-sanchit for Customs verification. Customs officers functioning as FSSAI officers must ensure proper documentation before granting NOC. Specimen signatures of BFDA signatories and the list of approved Bhutanese establishments are provided.
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UAE-India trade pact clarifies retrospective issuance of Certificates of Origin to avail duty benefits.
This instruction clarifies the retrospective issuance of Certificates of Origin (COOs) under the India-UAE Comprehensive Economic Partnership Agreement (CEPA). Rule 15(11) permits retrospective issuance of COOs in exceptional cases within 12 months of shipment, with reasons recorded by the issuing authority. Rule 21(3) allows importers to claim refund of excess duties if preferential treatment was not initially extended despite the product qualifying as originating. Minor discrepancies like typing errors should not invalidate COOs if authenticity and accuracy are not affected. The intent is to extend substantive trade agreement benefits without nullifying legal entitlements due to procedural discrepancies, unless originating status is doubtful. Customs formations are instructed to sensitize accordingly.
DGFT
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Mandatory testing waived for cough syrup exports to select nations or from facilities approved by their regulators.
This notification amends the export policy condition for cough syrup under Chapter 30 of Schedule-II (Export Policy) of ITC (HS) 2022. The existing policy mandated testing and obtaining a Certificate of Analysis from specified laboratories for exporting cough syrup. The revised policy introduces exemptions from this testing requirement in certain situations: (i) If the cough syrup is exported to USA, UK, Canada, EU, Japan, Australia, Singapore, South Korea, and Switzerland, and the manufacturing plant/section is approved by the regulatory agencies of these countries, testing is not required. (ii) If the cough syrup is manufactured in a plant/section approved by the regulatory agencies of the above-mentioned countries for any product, it can be exported to any country without testing. The effect is to waive mandatory testing for cough syrup exports in line with required GMP standards when exported to or manufactured in facilities approved by specified countries' regulatory agencies.
Corporate Law
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Printing firm penalized for rigging tender, violating competition law norms.
The appellant was found guilty of bid rigging and cartelization in a tender process initiated by SBIIMS, contravening Sections 3(3)(c), 3(3)(d), and 3(1) of the Competition Act, 2002. The issue pertained to whether the penalty imposed on the appellant was proportionate to the offense, considering the criteria laid down in Excel Crop Care Ltd. vs CCI. The CCI differentiated the present case from Excel Crop Care, stating that the appellants were engaged in the supply of printed advertising/marketing materials, including signages, which constituted different varieties of the same product rather than multiple products. The CCI imposed a lenient penalty of 1% of the average relevant turnover for three financial years, despite the Act allowing up to 10%. The order was upheld by the Tribunal and the Supreme Court, attaining finality. The appeal was dismissed as lacking merit.
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Dry cell battery market oligopoly penalized; Small player's fine reduced due to losses, low market share.
Penalty imposed on a small player in dry cell battery market reduced from 4% to 2% of relevant turnover due to mitigating factors like insignificant market share, lack of bargaining power, losses suffered in the relevant market. However, interest on penalty not waived despite appeal pendency. Tribunal relied on Supreme Court's Excel Crop Care judgment, holding penalty must relate only to relevant market turnover and percentage determined based on aggravating/mitigating factors. Dry cell battery market an oligopoly dominated by three major players with 88% combined share. Appellant suffered losses while co-contravener made profits in later years, justifying lesser penalty percentage. Officials' penalty upheld. Reduced penalty considering peculiar facts, not to be treated as precedent.
IBC
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RP suspended for IBC violations, negligence in claim verification & Resolution Plan approval.
Disciplinary action against a Resolution Professional (RP) for contravention of provisions of the Insolvency and Bankruptcy Code (IBC) and lack of due diligence. RP failed to verify the Resolution Plan, intimate claims, and address specific queries, violating Sections 30(2)(b) and (e), 208(2)(a) and (e) of IBC. RP did not object to the proposal by the Successful Resolution Applicant (SRA) which included comments and legal analysis terming an arbitration award in favor of a claimant as void. Despite legal opinion advising against such comments, RP failed to take cognizance. RP's inaction on indicating precise admitted claim amount violated Regulations 13(2)(a) and (d). The Disciplinary Committee found sufficient basis for issuing show cause notice and suspending RP's registration for one year based on NCLAT's observations of RP's failure in duty. Suspension period within Disciplinary Committee's jurisdiction u/s 220 of IBC. No interference warranted in writ jurisdiction. Writ Petition dismissed.
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Lender's right to initiate insolvency proceedings upheld despite debtor's dispute over debt amount.
Maintainability of Section 7 application under Insolvency and Bankruptcy Code (IBC) for non-payment of debt analyzed. Financial contract not mandatory for establishing financial debt. Relevant documents proving disbursal of funds by creditor to corporate debtor and partial repayment by debtor acknowledged existence of debt. Minimum outstanding debt above IBC threshold requirement fulfilled. Memorandum of Understanding between debtor and third party not binding on creditor. Once debt due and default occurs above threshold, IBC proceedings can be triggered irrespective of disputed quantum. Adjudicating Authority rightly admitted Section 7 application based on evidence of debt, default, and threshold met. Appeal against admission dismissed by Appellate Tribunal.
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Supreme Court limits lookback period for related party transactions under IBC to 2 years, non-related parties 1 year.
The Supreme Court held that the lookback period for related party transactions u/s 43 of the Insolvency and Bankruptcy Code (IBC) is two years before the insolvency commencement date, while for non-related parties, it is one year. If the outstanding amount pertains to a period beyond two years prior to the CIRP commencement date for a related party transaction, relief u/s 43 of the IBC would not be available. However, alternative actions, including u/s 66 of the IBC, may be pursued. The NCLAT order was set aside, and the appeal was disposed of accordingly.
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Appellate tribunal upholds creditors' recommendation for liquidation over adjudicator's overreach.
The NCLAT set aside the Adjudicating Authority's order rejecting the liquidation application filed by the Resolution Professional as recommended by the Committee of Creditors (CoC). The Adjudicating Authority erred in discarding the CoC's commercial wisdom and providing its own directives overriding the CoC's recommendation. The NCLAT reiterated that the Adjudicating Authority has limited scope for judicial interference and cannot disregard the CoC's commercial wisdom unless the Resolution Plan violates the Code or regulations. The Adjudicating Authority's reasoning for rejecting the liquidation recommendation was unfounded and perverse, and the NCLAT allowed the appeal, upholding the primacy of the CoC's commercial wisdom in line with Supreme Court judgments.
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Unsecured related party creditor challenges approved resolution plan, alleging discrimination. Court upholds CoC's differential treatment.
The Appellant, a related party unsecured financial creditor, challenged the resolution plan approved by the Committee of Creditors (CoC) and the Adjudicating Authority, claiming discrimination against other financial creditors. The court held that the Appellant was aware of being treated as a related party and removed from the CoC, but never challenged this treatment during the insolvency proceedings. Among financial creditors, only secured non-related creditors are being paid, while the Appellant, an unsecured related party creditor, is not entitled to payment under the IBC. Relying on the Supreme Court's judgment in M.K. Rajagopalan, the court ruled that the CoC and Adjudicating Authority rightly differentiated between related and non-related parties, and there was no infirmity in the approved resolution plan. Consequently, the Appellant's appeal was dismissed.
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Corporate insolvency proceedings upheld due to fair opportunity given to appellants.
Principles of natural justice not violated. Transaction audit report shared with appellants, no objections raised. Resolution professional filed application detailing preferential, undervalued, and fraudulent transactions leading to unrecoverable admitted claims. Appellants given opportunity to file reply but failed to do so. Cannot complain of non-hearing after their own lapse and negligence. Application filed with separate heads of impugned transactions as per applicable precedent. Appeal dismissed for lack of merit.
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Revival of insolvency process ordered due to resolution officer's failure to disclose creditor claims.
The Appellate Tribunal allowed the appeal, setting aside the order dismissing the application for revival of the Corporate Insolvency Resolution Process (CIRP). The Interim Resolution Professional (IRP) failed to disclose claims, misleading the Adjudicating Authority. Despite the Appellant submitting a claim before the deadline, the IRP misrepresented that no claims were outstanding, leading to the premature termination of CIRP. The Appellate Tribunal held that the Adjudicating Authority cannot condone the IRP's lapses by relegating the Financial Creditor to alternative remedies, as it would reward the statutory authority's unprofessional conduct. Consequently, the appeal was allowed to rectify the injustice caused by the IRP's misrepresentation and concealment of facts.
Indian Laws
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Banking official cleared of conspiracy charges over expedited loan approval.
The court held that mere suspicion against the respondent, a bank official, is not enough to frame charges in a case involving alleged conspiracy and misconduct in sanctioning credit facilities to a company. The proposal went through various committees, including the Loan Advisory Committee, and was approved by higher authorities like the Chief General Manager (Credit) and Executive Director. The respondent's role was limited to signing the memorandum after it was approved by others. The fact that the proposal was processed quickly does not constitute an offense. No material evidence showed any accused other than bank officials met the respondent before sanction. Based on the charge sheet material, the respondent's complicity was not established, and the court dismissed the appeal against the impugned order.
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Shareholder alleges fraud in bank loan sanction; Courts restore suit against secured creditors' actions.
The court examined whether the suit is barred u/s 34 of the SARFAESI Act. The petitioner, being a shareholder, lacks locus standi to challenge the secured creditor's actions. However, the pleadings allege fraud and collusion between the respondents, including the bank, in sanctioning the loan without due process. The court held that averments of fraud and collusion cannot be rejected outright, and the relief sought for declaring the loan facility and mortgage as null is not within DRT's jurisdiction under SARFAESI Act but permissible under Specific Relief Act. The lower courts erred in considering documents contrary to pleadings. The petitioner cannot be denied remedy against secured creditors' actions. Consequently, the High Court quashed the lower court orders, restoring the plaint to the Commercial Court for adjudication in accordance with law.
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Law to penalize cheque dishonor & maintain faith in banking operations.
The Negotiable Instruments Act, 1881 was enacted to define and amend laws relating to promissory notes, bills of exchange, and cheques. Section 138, introduced through the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, provides penalties for dishonor of cheques due to insufficient funds. Subsequent amendments aimed to expedite cases through summary trials and make offenses compoundable. The Supreme Court highlighted the objective of instilling faith in banking operations and preventing dishonesty in drawing cheques without sufficient funds. The Bengal Money Lenders Act, 1940 and Chapter XVII of the Negotiable Instruments Act operate independently with distinct objectives. There is no conflict between provisions, and civil remedies for unlicensed money lenders are not barred by criminal penalties u/s 138. The High Court dismissed the revision application, finding no merit in claims of abuse of process.
SEBI
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Introducing Liquidity Window facility for debt securities listings.
This circular introduces a Liquidity Window facility framework for investors in debt securities through the stock exchange mechanism. Key points: Issuers listing debt securities may provide a Liquidity Window facility allowing eligible investors to exercise put options on pre-specified dates. The facility aims to enhance liquidity for investors, especially retail investors. Eligibility criteria, limits, valuation methodology, disclosure requirements, and operational guidelines are outlined. Issuers must obtain board approval, ensure transparency, monitor implementation, and comply with risk management norms. The facility is applicable for prospective debt security issuances from November 1, 2024. Detailed provisions govern aggregate limits, sub-limits per window, liquidity window periods, modes of exercising put options, valuation, settlement, reporting, and disclosures on issuer and exchange websites. The circular enables a uniform framework for issuers to adopt the Liquidity Window facility, enhancing investor participation in the corporate bond market.
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Higher trading limits for equity derivatives: Brokers' overall position cap raised to max Rs. 7,500cr or 15% of market open interest.
This circular revises position limits for trading members (TMs) in equity derivatives segment. Overall position limit for TMs (proprietary + client) is increased to higher of INR 7,500 crore or 15% of total open interest in market for index futures and options contracts. Position limits will continue to be applicable separately for index futures and options. To provide clarity, positions will be monitored based on previous day's total open interest. If market open interest drops, passive breaches beyond specified limits won't be penalized or require unwinding. The revised limits are effective immediately, while monitoring based on previous day's open interest will be implemented from April 1, 2025. Exchanges and clearing corporations must amend relevant bylaws/regulations accordingly and disseminate the circular.
VAT
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Delhi Court Orders Refund of Excess Tax Deposit with Interest.
The court held that the assessee was entitled to refund of Rs. 3,50,00,000/- deposited with the department, along with statutory interest and interest on refunds. The amount deposited was not tax but an excess amount, and the assessee was not obligated to file a revised return u/s 28 of the DVAT Act. The respondent could not retain the refund claim on grounds of limitation or voluntary deposit. The court observed that the state, having received and retained the money without right, was bound to refund it with interest. u/s 42, the assessee was entitled to interest from the date the refund became due u/s 38(3)(a)(ii). The impugned Refund Rejection Order was quashed, and the respondent was directed to refund the amount along with statutory interest and interest on refunds for the relevant quarters.
Service Tax
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Satellite Capacity Supply - Telecommunication Service or Business Support? Tribunal Rules for Telecom Exemption.
The case pertains to the classification of services provided by M/s Intelsat to the respondent as either 'Telecommunication Services' or 'Support Services for Business or Commerce'. The respondent claimed the services fell under 'Telecommunication Services' exempted from service tax before June 2012, while the department alleged they were operational/infrastructural support services taxable as 'Support Services for Business or Commerce'. The Tribunal held that the transponder service involving supply of satellite capacity to be managed by the customer qualifies as 'Telecommunication Services' based on detailed reasoning, finding no infirmity in the Commissioner's order. Regarding the extended period of limitation, the Tribunal ruled it cannot be invoked as the department failed to establish fraud, collusion, willful mis-statement, suppression of facts, or contravention with intent to evade tax. Even if taxable, the respondent could have availed input tax credit, rendering the situation revenue neutral, negating any mala fide intention. Consequently, the Tribunal dismissed the Revenue's appeal.
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Diagnostic Service Providers' Revenue Sharing Arrangement Exempted from Service Tax.
The case pertains to the levy of service tax, interest, and penalty on business support services involving revenue sharing between the appellant and diagnostic service providers (DSPs). The key points are: The agreements between the appellant and DSPs were principal-to-principal in nature for revenue sharing, not for rendering taxable services by the appellant. The appellant provided infrastructure, and DSPs installed equipment; revenue from patients was shared without any service charges paid by DSPs. The transactions were recognized as principal-to-principal by a circular, and providing basic amenities cannot be considered support services. Healthcare services were exempted from service tax during the relevant period. The appellant did not suppress material facts or evade tax, as earnings were recorded, and the issue involved interpretation. Hence, the extended period of limitation cannot be invoked. The demand for service tax, interest, and penalty was set aside by the appellate tribunal.
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Overseas manpower supply: Service tax applicable under reverse charge on salary reimbursement.
Levy of service tax under the reverse charge mechanism for manpower services imported from an overseas group company. The agreement involved secondment of employees from the overseas company to the Indian company, with the Indian company reimbursing the salary costs of the expatriates, which constituted consideration for receipt of manpower supply services. The Tribunal, relying on the Supreme Court's decision in Northern Operating Systems, held that the overseas company provided manpower services to the Indian company, and the reimbursement of salary costs by the Indian company was the consideration for such services. Consequently, the Tribunal dismissed the appeal and upheld the Commissioner's decision to levy service tax under the reverse charge mechanism.
Central Excise
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Manufacturer's Knitted Fabric Exempted from Excise Duty on Fulfilling Notification Conditions.
Notification No. 30/2004-CE exempts filament yarn procured from outside and subjected to any process by a manufacturer without facilities for manufacturing filament yarns of Chapter 54 from central excise duty. The benefit extends to Chapters 54 and 60 if no CENVAT credit is taken on inputs or capital goods under CENVAT Credit Rules 2002/2004. The appellant claimed separate entities for manufacturing areas, supported by Central Excise Registration and factory plan. For knitted fabric under Chapter 60, though CENVAT credit was availed on initial input, excise duty was paid on intermediate product (POY) used for manufacturing final product without availing CENVAT credit, fulfilling notification conditions. Therefore, knitted fabric is exempted. Claiming exemption known to Revenue cannot be construed as suppression or mala fide intention, making extended period of limitation inapplicable. The demand is set aside on merits and limitation grounds. The appellant's appeals are allowed.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (10) TMI 880
Validity of SCN - Jurisdiction of the Respondent-authority under Section 61 of the Jharkhand Goods and Services Tax Act, 2017 - HELD THAT:- This Court on comparative assessment of the same and taking into consideration the discrepancy pointed out in the first show-cause notice, the second show-cause notice has been issued pointing out further discrepancy and, as such, further explanation has been sought. This Court is of the view that since in response to the 1st show-cause notice dated 02.04.2024 explanation has been furnished, as such, at the moment, no prejudice is being caused to the petitioner in responding to the second show- cause notice - this Court is of the view that the petitioner needs to explain the alleged discrepancy which has been furnished in the second show-cause notice dated 05.07.2024 for its consideration to proceed with in accordance with law as per the mandate of Section 61 of the JGST Act. This writ petition is disposed of.
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2024 (10) TMI 879
Challenge to order passed by the appellate authority on 31st May 2023 passed under Section 107 of the WBGST / CGST Act, 2017 - HELD THAT:- The petitioner, though has a statutory remedy in the form of an appeal, since the appellate tribunal is yet to be constituted, the present writ petition has been filed. The present writ petition should be heard. Taking note of the provisions of Section 112(8) of the said Act and the prima facie case made out by the petitioner, the petitioner should be directed to make payment of 10 per cent of the balance amount of the remaining amount of tax in dispute, in addition to the amount already deposited by the petitioner under Section 107(6) of the said Act with the respondents within two weeks from date. Let affidavit in opposition to the present writ petition be filed within a period of 6 weeks from date. Reply, thereto, if any be filed within 4 weeks thereafter.
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2024 (10) TMI 878
Classification of supply - undertaking of deposit works under both modes - value of supply under the First mode and under the Second mode - When deposit work is executed Second method, whether DISCOM is eligible to avail ITC of GST on Material, labour, installation and other overhead? - HELD THAT:- The entire material and installation work is arranged by the applicant on behalf/ instance of consumers/ intending agencies and work is done in the supervision of the Applicant. The work done by applicant falls under Works Contract as per section 2 (119) of the CGST Act, 2017. It is pertinent to note that the ownership of the property is vested with the PVVNL, after construction of lines the property will be kept by the applicant as custodian of these lines and it is credited in the applicant s books of account. However the construction of lines is being done on behalf of the customers of applicant, the applicant is not doing it on his own account, thus the ITC on the material. labour, installation and other overhead does not falls under block credit under section 17 (5) of the CGST Act, 2017. Hence, applicant is eligible for Input Tax Credit as per Section 16 of the CGST Act, 2017.
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2024 (10) TMI 877
Classification of goods - rate of tax - dried softy ice cream mix (low fat) in vanilla flavour - N/N. 1/2017-Central Tax (Rate) dated 28.6.2017 - HELD THAT:- The product in question i.e. Vanilla Mix - dried softy ice cream mix (low fat) in vanilla flavour comprise of several ingredients and each ingredient play a role in the product. Since this product is intended to use for making of soft serves, each Ingredient has a specific role to make the soft serve smooth and creamy in texture. Further. it is also conclusive that not only the contents of the product in question but the processing done in the soft serve machine also play a vital role in giving the smooth and creamy texture characteristic of soft serves. The submissions made by the applicant are not enable and the product in question does not fall under the Heading 0404. Perusal of the Chapter Note 5 reveals that food preparations subjected to further processing for human consumption are covered under Heading 2106. It is also apparent that powders for ice-creams and similar preparations are also covered under Heading 2106. Further. preparations consisting of milk powder, sugar and any other added ingredients are also included under Heading 2106. Powder for table cream, jellies, ice-cream and similar preparations, whether or not sweetened are also included in Heading 2106. It is also evident that the product in question cannot be termed as a dairy produce. The product i.e. Vanilla Mix - dried softy ice cream mix (low fat) in vanilla flavour is classifiable under Heading 2106 90 99 of the First Schedule to Tariff Act attracting tax at the rate of 9% of CGST and 9% of SGST.
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2024 (10) TMI 876
Exemption under GST - Composite supply - scope of Local Authority - Whether the activity of providing, laying, jointing, testing and commissioning of sewer system and all ancillary works is exempt under entry 3B of the NN 13/2017-CT (Rate) dated 28.06.2017? - HELD THAT:- In the instant case the applicant is engaged in providing works contract services . The applicant also admits the fact that they are engaged in supply of goods along with services for an immovable property. Thus, the services provided by the applicant are found to be works contract services, where goods along with services are supplied. KOTA NAGAR NIGAM is covered under the definition of Local Authority. In the instant case, the applicant is providing services to KOTA NAGAR NIGAM which is a local authority. Vide Notification No. 16/2021-Central Tax (Rate) dtd 18.11.2021 w.e.f. 01.01.2022, a Government Authority or a Government Entity words are omitted from SR No. 3 and 3A of the Notification No. 12/2017-CTR dtd 28.06.2017. From the para 5.52, it is clear that the Sr No. 3B was inserted to provide the exemptions on supply of certain services supplied to Government Authority, which was previously curtailed by the above referred Notification dtd 18.112021 w.e.f. 01,01.2022. Thus, entry Sr No. 3B is not a new entry, rather it is extension of existing entries of Sr No. 3 and 3A. The Sr No. 3 and 3A of the Notification No.12/2017-CTR dtd 28.06.2017 are applicable only in the case of pure services or composite supply having value of supply of goods not more than 25 percent. Since, Sr No 3B is also extension of Sr No 3 and 3A and all these entries are inter-related and it won t be appropriate to read all these entries in isolation or individually. Therefore, Sr No. 3B will also be applicable in case of pure services or composite supply, where value of the goods is not more than 25 percent. The applicant provides services to Nagar Nigam, Kota, which is a local authority and all the three entries Sr No 3, 3A and 3B of the Notification No. 12/2017-CTR dtd 28.06.2017 are consistent and should not be read individually, the rate of tax on services provided by the applicant should be decided in terms of Sr No. 3 and 3A, since the said entries cover services provided to local authority , there is no need to go to Sr No. 3B. The applicant is providing its services to NAGAR NIGAM, KOTA (local authority) of laying, jointing, testing and commissioning of Sewerage System and all ancillary works along with Design, construction, supply, installation, testing and commissioning (Civil, Mechanical, electrical, instrumentation other necessary works) of Sewage Pumping Stations, Upgradation of effluent of existing Sewage Treatment Plant with provision for treated waste water reuse including I year defect liability with 10 years O M for towns under package AMRUT-2.O/RAJ/SEWERAGF-21 for Kota North, Rajasthan. So, exemption entry No. 3B is not applicable to the applicant. The activity of providing, laying, jointing, testing and commissioning of sewer system and all ancillary works by the applicant to Nagar Nigam Kota, being a local authority is not exempted under entry 3B of the NN 13/2017-CT (Rate) dated 28.06.2017.
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2024 (10) TMI 790
Seeking refund of amount paid - legal contention raised on behalf of the petitioner is that the respondents do not have power to recover amounts during the pendency of investigation that has commenced even prior to issuance of show cause notice at the stage of Sections 67 and 70 and hence have sought for refund of amount paid - HELD THAT:- In terms of the Scheme of the CGST Act, it must be noticed that the assessee has an opportunity even before the service of notice under Section 74 (1) on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer , make payment and inform the proper officer in writing regarding such payment as envisaged under Section 74 (5). It must be noted that the payments made by the petitioner of Rs. 1.00 crore on 31.07.2021 and further amount of Rs. 1.50 crores on 03.08.2021 and even if DRC-03 declaration is taken note of, it cannot be stated that in the present case, there is self-ascertainment. For the purpose of self-ascertainment, it is clear that it amounts to a voluntary determination by the assessee himself as regards the liability of tax. In light of the stand taken in the Affidavit dated 10.08.2021 and the averments made in the writ petition filed on 16.09.2021, this element of voluntariness is absent and accordingly, the sine qua non of self-ascertainment is not fulfilled. Though the declaration in Form DRC-03 contains a declaration that the filing is voluntary, the facts as noticed above are sufficient to construe that such declaration was in fact not voluntary. In light of adjudication still to conclude and notice under Section 74 (1) of the CGST Act is already issued, the question of going back to the stage of 74 (5) does not arise, as in terms of Section 74 (5), the self-ascertainment process is to be completed prior to the issuance of notice under Section 74 (1), subject to issuance of notice under Section 74 (7) as regards shortfall. The petition is allowed in part and while declaring that the recovery of tax made from the petitioner which though Revenue contends is deposit made by way of self-ascertainment under Section 74 (5) of the CGST Act, is declared to be illegal and directed to be refunded within a period of four weeks from the date of receipt of certified copy of the order, with interest as is applicable.
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2024 (10) TMI 789
Blocking of Electronic Credit Ledger - pre-decisional hearing was not provided to the petitioner nor does the impugned order contain any reason to believe as to why it was necessary to block the Electronic credit ledger - violation of principles of natural justice - HELD THAT:- In K-9-ENTERPRISES, KWALITY METALS, K-9-INDUSTRIES VERSUS THE STATE OF KARNATAKA, THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, BELAGAVI. [ 2024 (10) TMI 491 - KARNATAKA HIGH COURT] it was held that ' in the absence of valid nor sufficient material which constituted reasons to believe which was available with respondents, the mandatory requirements/pre-requisites/ingredients/parameters contained in Rule 86A had not been fulfilled/satisfied by the respondents-revenue who were clearly not entitled to place reliance upon borrowed satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only contrary to law but also the material on record and consequently, the impugned orders deserve to be quashed.' Thus, in the instant case, since no pre-decisional hearing was provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Hon ble Division Bench of this Court, the impugned order deserves to be quashed. The impugned orders are set aside - petition allowed.
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2024 (10) TMI 788
Grant of bail - passing on fraudulent input tax credit - creation of fake invoices - non-compliance with Section 41A of Cr.P.C and Section 70 of GST Act - HELD THAT:- It reveals that during the course of the search proceedings '' the reason to believe'' was formed based on the material evidence. Therefore, the commissioner authorized the CGST authorities to arrest the accused/respondent which reduced into wittings by the commissioner in the case investigation file. Accordingly, arrest was made by the authorities/petitioner by following due process of law. During the arrest copy of the memorandum of arrest was given to the accused. Further, while remanding the accused/respondent copy of the arrest memo was submitted before the Court, the grounds for arrest also explained to the accused/respondent and also mentioned about the tax evaded by the accused/respondent in the remand report. In the report, it is clearly mentioned as the accused is the master mind in creating non existing fictious firms and caused tax loss to the Government to the tune of Rs. 175.88 crores and also submitted the voluntary statement made by the respondent along with remand report. Based on the aforesaid material and evidence the Additional Director authorized the officers to arrest the respondent. As per Section 70 of CGST Act, the summon was issued to the respondent/accused calling upon him to appear for enquiry and also to return the statement on 24.06.2023 and the same was received by his wife/Meerakumari on 23.06.2023 but he was not appeared. Again another summon was issued to the respondent/accused for appearance but he was not appeared. Therefore, the search was made in his premise in the presence of his wife on 21.03.2023 along with other individual witnesses. As per Section 70 of CGST Act, the summons issued to the respondent to appear before the appropriate officer but he was not appeared. So also Section 41A of Cr.P.C indicated that issue a notice directing the person against whom reasonable complaint has been made. Therefore summons issued to the accused /respondent in relation to cognizable offence is equivalent to the duty cast upon the police officer under Section 41A of Cr.P.C. In the present case, authorization of arrest was issued under Section 69 of CGST Act with reasons and they complied with the other procedures before arrest under Section 69(ii) of the CGST Act and in fact grounds of arrest informed to the accused/respondent which is also a equivalent procedural safeguards mentioned in Cr.P.C. Moreover, the amount of tax evaded also recorded in the memo of arrest which enclosed with arrest memo and that copy also provided to the accused at the time of the arrest all these procedural formalities not been denied by the respondent, so there is no procedural default on the side of the investigating agency. Therefore, the reason assigned by the Court for granting bail that the investigating agency had committed default in following the procedures as contemplated under Section 41 A is erroneous. Further, the respondent attempted to flee from the country after he came to know about his accomplice's arrest. Therefore, if the bail is granted to him, he may flee to foreign countries or may tamper the evidence. The prime facie investigation shows that accused/respondent caused loss to the Government exchequer to the tune of Rs. 173.88 crores. Hence this court is inclined to cancel the bail. Petition allowed.
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2024 (10) TMI 787
Validity of ITC - Compliance with conditions under Section 16 of the U.P. GST Act - double taxation - burden to prove - it was held by High Court that 'in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established and in such circumstances, further no proof of filing of GSTR 2 A has been brought on record, the proceeding has rightly been initiated against the petitioner.' - HELD THAT:- This Special Leave Petition is disposed off by reserving liberty to the petitioner herein to file a review petition before the High Court bringing to the notice of the High Court, the documents which were filed and on record before the High Court and also by bringing on record additional documents. Till such time, the review petition is not disposed of by the High Court, the impugned judgment shall not be cited as a precedent.
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Income Tax
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2024 (10) TMI 882
Reopening of assessment - reason to believe or change of opinion - interest income should be assessed as income from other sources and taxed separately without setting off against the current year s business loss of the club - HELD THAT:- Assessee is running race club and having income from business and other sources, filed its return of income by claiming a current loss for the impugned Assessment year. Which was selected for scrutiny and completed the assessment order u/s.143(3) and the same was partly allowed by the CIT(A). The very same issue has been raised in the notice issued by the AO u/s. 148 for reopening the original assessment and passed an order u/s. 143(3) r.w.s 147 - On appeal, CIT(A) was pleased to confirm the same. Reasons for reopening was questioned by the assessee stating that the very same issues have already been subject matter of original assessment and have been drawn from the existing materials of the assessment records hence the reopening of assessment is bad in law, however the AO was not convinced and continued to proceed with the reassessment. The reason to believe was judicially interpreted to mean an independent belief of the AO not based on borrowed satisfaction or opinion of another authority . Such reason to believe was to be based on new tangible material and not on material already available on record . The Hon ble Supreme Court in Calcutta Discount Co. Ltd.[ 1960 (11) TMI 8 - SUPREME COURT] held that even if the conclusion drawn by the AO from the facts disclosed by the assessee during the course of original assessment is erroneous, the AO cannot reopen the assessment to change that erroneous conclusion once reached at. Also in CIT v. Kelvinator of India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT] held that mere change of opinion cannot per se be a reason to reopen the concluded assessment. The Court highlighted the conceptual difference between power to review and power to reassess and that review cannot be done in the garb of reopening the assessment. The concept of change of opinion must be treated as an in-built test to check abuse of power by the AO. CBDT in Circular No. 549 dated 31 October 1989 provided that it was to allay the fears that the AO shall reopen past assessments on mere change of opinion that the expression has reason to believe was reintroduced in place of the words for reasons to be recorded by him in writing, is of the opinion (by the Amending Act, 1989) in the then existing Section 147 of the Act. The Circular itself indicates that Legislature has never been the intention to permit the Assessing Officer to reopen an assessment on the basis of change of opinion . Therefore, in the cases where an original assessment had taken place and the Assessing Officer had formed a particular view based on the available material, the Assessing Officer could not have validly reopened an assessment. In the present case, the AO has reopened the original assessment with no fresh tangible material but based on the material available in the assessment records which was also taken upto the CIT(A). Therefore, the action of the AO/CIT(A) cannot be countenanced. Assessee appeal allowed.
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2024 (10) TMI 881
Unexplained income - Addition made on the basis of a seized document, which is in the form of ledger account copy containing debit and credit entries - submission of the assessee that the same represented cash/cheque given to the Director in the earlier years in connection with incurring business expenses and also for other purposes. HELD THAT:- The assessee chose to identify the portion of undisclosed income and accordingly offered a sum which means that the assessee has made sincere attempt to identify the accounted portion and unaccounted portion of income. In support of its claim of labour payments, the assessee has also furnished affidavits obtained from site supervisors. The very same fact has been mentioned by both directors in their respective statements. In view of the unanimous view expressed by both the Directors coupled with the affidavits given by the site supervisors, we are of the view that the claim of labour payments may be allowed. Accordingly, we set aside the order passed by the CIT(A) on this issue and direct the AO to allow deduction. Treatment to undisclosed income as surrendered - business income or unexplained cash credit u/s. 68 - HELD THAT:- We notice that the assessee's business consisted of mining, manufacturing, trading and transportation of boulders and stone grit materials. No other activities of the assessee have been noted by the tax authorities. Hence, the assessee could have generated the undisclosed income from out of the above said business activities only. Hence, the nature of the undisclosed income could be business receipts only and it source could be the business carried on by the assessee. It appears that the tax authorities have assessed the undisclosed income as unexplained cash credits in order to levy higher rate of tax u/s. 115BBE. The same is totally unjustified in the facts of the present case. The tax authorities are expected to assess the income under the correct head of income only. Accordingly, we are of the view that the tax authorities are not justified in treating the surrendered income as unexplained cash credit. Addition of interest income in respect of loan given to person - seized records showed that a credit balance as shown against the name - HELD THAT:- When the assessee has voluntarily agreed to surrender interest income in the earlier years, the explanation of the assessee with regard to the subsequent years could be rejected, only if there is any material found to contradict the explanation of the assessee. AO did not conduct any enquiry with Shri Ishwarchand Garg to examine the veracity of the explanation so given by the assessee. Obviously, the above said party will not give any letter to the assessee admitting that he has refused to pay principal and interest. The concept of accrual can be applied only when there is reasonable certainty of realization of income. AO was not justified in assessing interest income in AYs.2015-16 to 2019-20. Accordingly, direct the AO to delete the above said addition. Unaccounted rental income - AO assessed the above said income as unexplained cash credit u/s. 68 - HELD THAT:- There is no dispute with regard to the fact that the above said receipts are in the nature of rental income and the source is the property from which the rental income was derived. It appears that the tax authorities have assessed the rental income as unexplained cash credits in order to levy higher rate of tax u/s. 115BBE of the Act. In our view, the same is totally unjustified in the facts of the present case. The tax authorities are expected to assess the income under the correct head of income only. Accordingly, we are of the view that the tax authorities are not justified in treating the rental income as unexplained cash credit. All the appeals of the assessee are allowed.
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2024 (10) TMI 875
Treatment to be given to broken period interest - securities were treated as stock-in-trade - whether a deduction of the broken period interest can be claimed? - HELD THAT:- Initially, CBDT issued Circular No. 599 of 1991 and observed that the securities held by Banks must be recorded as their stock-in-trade. The circular was withdrawn in view of the decision of this Court in the case of Vijaya Bank Ltd1. In the year 1998, RBI issued a circular dated 21st April 1998, stating that the Bank should not capitalise broken period interest paid to the seller as a part of cost but treat it as an item of expenditure under the profit and loss account. A similar circular was issued on 21st April 2001, stating that the Bank should not capitalise the broken period interest paid to the seller as a cost but treated it as an item of expenditure under the profit and loss account. In 2007, the CBDT issued Circular No. 4 of 2007, observing that a taxpayer can have two portfolios. The first can be an investment portfolio comprising securities, which are to be treated as capital assets, and the other can be a trading portfolio comprising stock-in-trade, which are to be treated as trading assets. Banks are required to purchase Government securities to maintain the SLR. As per RBI s guideline dated 16th October 2000, there are three categories of securities: HTM, AFS and HFT. As far as AFS and HFT are concerned, there is no difficulty. When these two categories of securities are purchased, obviously, the same are not investments but are always held by Banks as stock-in-trade. Therefore, the interest accrued on the said two categories of securities will have to be treated as income from the business of the Bank. Thus, after the deduction of broken period interest is allowed, the entire interest earned or accrued during the particular year is put to tax. Thus, what is taxed is the real income earned on the securities. By selling the securities, Banks will earn profits. Even that will be the income considered under Section 28 after deducting the purchase price. Therefore, in these two categories of securities, the benefit of deduction of interest for the broken period will be available to Banks. If deduction on account of broken period interest is not allowed, the broken period interest as capital expense will have to be added to the acquisition cost of the securities, which will then be deducted from the sale proceeds when such securities are sold in the subsequent years. Therefore, the profit earned from the sale would be reduced by the amount of broken period interest. Therefore, the exercise sought to be done by the Department is academic. The securities of the HTM category are usually held for a long term till their maturity. Therefore, such securities usually are valued at cost price or face value. In many cases, Banks hold the same as investments. Whether the Bank has held HMT security as investment or stock-in-trade will depend on the facts of each case. HTM Securities can be said to be held as an investment (i) if the securities are actually held till maturity and are not transferred before and (ii) if they are purchased at their cost price or face value. We may refer to a decision of this Court in Associated Industrial Development Company (P) Ltd., Calcutta [ 1971 (9) TMI 3 - SUPREME COURT] In the said decision, this Court held that whether a particular holding of shares is by way of investments or forms part of the STOCK-IN-TRADE is a matter which is within the knowledge of the assessee. Therefore, on facts, if it is found that HMT Security is held as an investment, the benefit of broken period interest will not be available. The position will be otherwise if it is held as a trading asset. In the facts of the case, as the securities were treated as stock-in-trade, the interest on the broken period cannot be considered as capital expenditure and will have to be treated as revenue expenditure, which can be allowed as a deduction. The impugned judgment is based on the decision in the case of Vijaya Bank Ltd [ 1990 (9) TMI 5 - SUPREME COURT] It also refers to the decision of the Bombay High Court in the case of American Express International Banking Corporation2 and holds that the same was not correct. As noted earlier, the view taken in the American Express International Banking Corporation case has been expressly upheld by this Court in the case of Citi Bank NA3. Therefore, the impugned judgment cannot be sustained, and the view taken by the Tribunal will have to be restored. AO held that the respondent Bank was liable to pay the broken period of interest as part of the price paid for the securities. hence, a deduction on the said amount was disallowed - The assessee could not succeed before the CIT (A). Before the Appellate Tribunal, reliance was placed on the decision of this Court in the case of Vijaya Bank Ltd [ 1990 (9) TMI 5 - SUPREME COURT] Tribunal observed that the assessing officer had treated the interest income earned by the respondent Bank on securities as income from other sources. The Tribunal observed that the investments in securities are in stock-in-trade, and this fact has been accepted in the past by the Income Tax department. It was held that the securities in the category of HTM were also held as stock-in-trade, and income/loss arising out of such securities, including HTM securities, has been treated as business income/loss. The Appellate Tribunal held that the interest for the broken period would be admissible as a deduction, and the High Court confirmed the same. We may note here that the Tribunal followed the decision of HDFC Bank Ltd [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] We find no error in the view taken in this case.
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2024 (10) TMI 874
Unexplained investments/ amounts deposited in the foreign bank account - addition made as no concrete evidence to establish either the ownership of the alleged bank account or the alleged disputed deposits in those accounts to be belonging to the assessee - delay filling SLP - As decided by HC [ 2023 (11) TMI 759 - PUNJAB AND HARYANA HIGH COURT] assessee being an agriculturist and only having a small holding of land apparently could not be in possession of such huge amounts, which were also in foreign currency. Nothing as such was produced on record that the same was transferred from India where he was doing some business. It is neither the case of the revenue that the amounts were credited from his income while doing business at abroad and neither he was based abroad for such long periods to generate that kind of income, appeal decided against revenue. HELD THAT:- As there is gross delay of 210 days in filing this Special Leave Petition. The reasons assigned for seeking condonation of delay are neither satisfactory nor sufficient in law to be condoned. Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition also stands dismissed. Even otherwise, we find that the High Court has noted that no substantial question of law arose in the case.
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2024 (10) TMI 873
Validity of reassessment proceedings - Period of limitation - As decided by HC[ 2024 (8) TMI 1462 - DELHI HIGH COURT] the notice u/s 148 was issued as far back as on 28 February 2023. We, consequently, find no justification to entertain this belated challenge. Writ petition consequently stands dismissed with costs quantified at INR 20,000/-. Petitioner submitted that the petitioner would approach the High Court once again and therefore, liberty may be reserved to the petitioner herein to take all contentions available in law. HELD THAT:- Special Leave Petition is disposed of by reserving liberty to the petitioner herein to approach the High Court, if so advised and to take all contentions available under law. The imposition of cost of Rs.20,000/- in the impugned order is set aside. Special Leave Petition is disposed of accordingly.
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2024 (10) TMI 872
Disallowance on account of royalty paid by the assessee to the AEs - these companies are the ultimate users of the intangibles in the form of licensed patents and know-how provided for manufacturing of licensed products - HELD THAT:- Tribunal concluded that MBIL and CTTL were manufacturing sub-contractors and the assessee had been granted the license for use of the license patents, license know-how, and license trademarks. The assessee was also entitled to get the products manufactured through sub-contractors. The Tribunal also observed that it was not the Revenue s case that MBIL and CTTL had paid royalty to Sony Corporation, Japan for manufacturing their products and using the licensed patents, know-how and trademarks. The said finding of fact is not controverted. We are unable to accept that any question of law arises regarding disallowance on account of royalty paid by the assessee to the AEs. It is not disputed that the learned TPO is not required to examine the efficacy of commercial transactions and its role is confined to determining the price or value of the transactions on an arm s length basis. We find no infirmity with the conclusion of the Tribunal. Valuation of closing stock - assessee had valued its opening stock and closing stock on the basis of cost or net realisable value, whichever is low - AO had faulted the assessee from valuing the stock at a value lower than the cost - HELD THAT:- There is no dispute that the assessee had been consistently valuing its stock both opening stock and closing stock on the basis of cost or realisable value, whichever is lower. The aforesaid basis is well accepted for valuation of stock. The said basis was also noted in Woodword Governor India (P.) Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] Revenue also does not dispute that if the aforesaid basis is followed consistently, the assessee s income for the year would be fully captured as the element of profit would also not be included in the opening stock. The finding of the Tribunal cannot be faulted. Clearly, no substantial question of law arises from the decision of the Tribunal to delete the addition made on account of the valuation of closing stock. Excess provision for claims against warranties - HELD THAT:-Although, the AO had attempted to distinguish the facts obtaining in earlier years, it is apparent that the AO had failed to do so. As noted the method adopted by the assessee to make a provision for warranties was examined in any detail and therefore, the AO s premise that it was unscientific one is clearly not sustainable. In our view, no substantial question of law arises with regard to the decision of the learned Tribunal in directing deletion of the addition made by the AO on account of the provision for warranties. Expenses on CSR for the purposes of calculating book profits and determining the tax payable under Section 115JB - Tribunal had found that there was no provision u/s 115 JB of the Act, which required the expenditure on CSR to be adjusted for arriving at book profits - HELD THAT:- We find no reason why expenditure incurred on CSR be excluded from the final accounts. Revenue has also not provided any basis for excluding the expenditure on CSR for determining book profits. We find no infirmity with the decision of the Tribunal in rejecting the AO s adjustment of expenditure on CSR for determining the book profits under Section 115JB of the Act. Clearly, no substantial question of law arises in this regard as well.
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2024 (10) TMI 871
Delayed employees contribution to Provident Fund and ESI - HELD THAT:- Issue covered by the decision of the Supreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] as held that share of the employee in the provident fund deducted by the employer, has to be deposited as per the due date fixed by the EPF Act and ESI Act concerned and not as per Section 43B of the Act. There is no leeway with the assessee in depositing of amount of employees contribution under EPF Act and ESI Act, beyond the due date as prescribed by the respective Act. It is only on the deposit in compliance with the provisions of the EPF Act and ESI Act, the retained amount is treated for deduction. Decided against assessee. Disallowance made on account of advance against depreciation deferred - whether same is a head created as an internal arrangement and does not affect the nature of receipts as revenue receipts? - HELD THAT:- As decided in National Hydro Electric Power Corporation Ltd. [ 2010 (1) TMI 281 - SUPREME COURT ] Advance Against Depreciation was not income received for the relevant accounting year and cannot be carried forward through the Profit and Loss account. The question was answered in favour of the assessee. Department is not in a position to distinguish the decision relied upon - Decided against revenue.
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2024 (10) TMI 870
Reopening of assessment u/s 147 - petitioner s balance sheet recorded an outstanding unsecured loan - reason to believe OR reason to suspect - HELD THAT:- There is no material to indicate that the AO had any ground to believe that the loan availed by the assessee (as reflected in the books of accounts) was chargeable to tax under the Act. There is neither any allegation nor any material to even remotely suggest that the assessee had earned income chargeable to tax, which was camouflaged as an unsecured loan and reflected in its books of accounts. AO had clearly no material on record to form any belief that the income of the assessee had escaped assessment. The impugned order does not reflect any ground for believing that the income of the assessee had escaped assessment in the relevant financial year. AO had rightly rejected the contention that this is not a case of any change of opinion as an assessment had not been framed u/s 143 (3) - the impugned order throws no light as to how an unsecured loan reflected in the assessee s book was reason enough to believe that the income of the assessee had escaped assessment. Assessee had, in its letter explained that it had availed of the unsecured loan from its the then director Sh. Ashok Kumar Jain. It had also pointed out that the notes to the accounts for the financial year ended on 31.03.2012 and also disclosed that loan Rs. 5,00,000/- was received from Sh Ashok Kumar Jain, who was the Key Management Personnel. Notwithstanding the note, the AO has proceeded on the unfounded premise that the amount shown outstanding as unsecured loan in the balance sheet is unexplained and, thus chargeable to tax u/s 68 of the Act. As explained in Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT ] the assessment can be reopened only on account of reason to believe and not reason to suspect . In the present case, a fortiori, there is no reason to even suspect that the balance sheet of the assessee did not correctly reflect its state of affairs. Necessary condition for initiating re-assessment u/s 147 of the Act is not satisfied - Assessee appeal allowed.
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2024 (10) TMI 869
TP Adjustment - AMP expenditure incurred during the year by the assessee constitute an 'International Transaction' or not? - HELD THAT:- Issue pertain to Advertisement, Marketing and Promotion [AMP] expenditure, the same would merit being answered against the appellant bearing in mind the decision rendered [ 2024 (8) TMI 1461 - DELHI HIGH COURT] ITAT was justified in its decision in holding that AMP (advertisement, market promotion) expenditure incurred during the year by the Assessee does not constitute an 'International Transaction' rested its view on Sony Ericsson Mobile Communications India Pvt. Ltd. [ 2015 (3) TMI 580 - DELHI HIGH COURT ] Foreign exchange gain/loss - to be considered as an item of operating revenue/cost - Those questions too stand answered against the appellant in light of the judgment rendered in ITA 206/2016 [ 2016 (3) TMI 1272 - DELHI HIGH COURT ] ITAT has in the impugned order noted the fact that the foreign exchange gain earned by the Assessee is in relation to the trading items emanating from the international transactions. Since the foreign exchange loss directly resulted from trading items, it could not be considered as a non-operating loss. As noted by the Dispute Resolution Panel that the service agreement between the Associated Enterprise (AE) and the Assessee stated that for the specified products and services provided by the Assessee, it shall raise invoices on Ameriprise USA on the basis of a cost plus pricing methodology. ITAT was therefore right in holding that the AO was not justified in considering the foreign exchange loss as a non-operating cost.
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2024 (10) TMI 868
Disallowance of Loss incurred in plastic division - Assessee has no actual business in the nature of purchase, manufacturing/ processing as there is no stock of finished goods at the end of each month available in the monthly summary - as argued assessee followed the mercantile system of accounting, the contracts were liable to be accounted for on an accrual basis and are thus required to be taken into consideration in the same year itself - ITAT dismissed revenue appeal - HELD THAT:- Levy of tax is primarily concerned with real income and income which has the capability of being characterized as having aspects of certainty attached to it. Of equal significance is the decision of the Supreme Court in Commissioner of Income Tax v. Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] Laying emphasis on income tax being levied on real income as opposed to hypothetical income, the Supreme Court explained when income could be said to have accrued We note that undisputedly, the settlement agreement came to be executed after the drawing up of the balance sheet. It was the aforenoted agreement which had acknowledged the substance of the contract having disintegrated in part and as a consequence of which the assessee had lost the right to receive the full transaction value. To deal with contingencies which occur after the balance sheet date, we take into consideration the following relevant provisions which are made in Accounting Standard (AS) 4 and Accounting Standard (AS) 9. We find that the ITAT has committed no manifest error in holding in favour of the assessee. Consequently, we see no reason to interfere with the ITAT s impugned judgment
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2024 (10) TMI 867
Disallowance of interest to MSME and prior period expenditure u/s 37 - HELD THAT:- While giving the break up, the assessee has wrongly mentioned disallowance of MSME interest and prior period expenses in Column-I i.e. amount of any liability of a contingent nature, it is an apparent mistake which was brought to the notice of ld. CIT (A). CIT (A) rejected the same disbelieving the assessee that assessee has not disallowed the present amount. After considering the relevant facts on record, in our considered view, since there is no specific column for disallowance of MSME interest and prior period expenses in Part-A of return of income, the assessee has wrongly included the same in Column (i) which is meant for disallowance of contingent liability. Since the mistake is apparent on record we are inclined to allow the claim of the assessee. Otherwise it will amount to double disallowance. Accordingly, grounds raised by the assessee are allowed.
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2024 (10) TMI 866
Reopening of assessment u/s 147 - mandation to dispose off the objection put by assessee - HELD THAT:- Assessee has filed objections for reopening of the assessment before the AOand AO has disposed off the objections on 24.12.2019. However, assessee filed further objections vide letter dated 26.12.2019. As far as procedure laid down by the Hon ble Apex Court in GKN Drive Shafts India Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] AO has to dispose off the objections raised by the assessee. In our view, it may or may not satisfy the assessee fully. In this case, the AO has disposed off the objections vide letter dated 24.12.2019. Therefore, the AO has followed the procedure laid down in GKN Drive Shafts India Ltd. (supra) decision. Hence, we do not see any reason to disturb the findings of CIT(A). Addition of deemed rental income on inhabitable property - as argued as deduction u/s 35(1)(i) has been allowed on the same property, it cannot be held that the same property was not used for the business purposes - HELD THAT:- AO made addition without bringing on record whether assets under consideration is habitable or not. From the facts available on record, we observed that the relevant property was repaired and made habitable only in the subsequent assessment year. However, as per the decision of ld. DRP, the property was not habitable in AY 2016-17 and merely because assessee has disclosed deemed rental income in AY 2014-15, it does not prove or show that the relevant property was habitable in AY 2012-13. Therefore, an inhabitable property cannot be brought to tax applying deemed rental income. Accordingly, the addition made by the Assessing Officer is directed to be deleted and ground no.3 is allowed.
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2024 (10) TMI 865
Excess deduction claimed u/s. 54EC - capital gain arising on the sale of the property was invested in Bonds of REC NHAI - as argued investment in each financial year does not exceed the prescribed threshold limit - HELD THAT:- This cap of total investment of Rs. 50 Lakhs was not applicable in the current year and as per the scheme of the Act the assessee was entitled to make investment of Rs. 50 lakh each in two financial years, within the outer limit of six months from the date of transfer of the asset. The second proviso was introduced precisely to eliminate the differential treatment on the basis of date of transfer and to eliminate the ambiguity in the provision of section 54EC. This amendment was effective only from 01.04.2015 for the assessment year 2015-16 and subsequent years and can t be extended to the current year as the legislature had not provided for retrospective application to the second proviso of section 54EC. AR has relied upon the decision of Coromandel Industries Ltd. [ 2014 (12) TMI 852 - MADRAS HIGH COURT] wherein held that exemption of Rs. 50 Lakhs each claimed in two financial years, within six months period from the date of transfer of capital asset, was eligible for exemption u/s 54EC of the Act. In the case of C. Jaichander [ 2014 (11) TMI 54 - MADRAS HIGH COURT] had held that in the absence of any cap of investment in bonds, the investment of Rs. 50 Lakhs each made in two financial years, within period of six months from the date of transfer could not have been disallowed. The Hon ble Court further held that the amendment made w.e.f. 01.04.2015 was prospective in nature and applicable to A.Y. 2015-16 and subsequent years. We are of the considered opinion that CIT(A) was not correct in holding that the assessee was eligible for deduction of Rs. 50 Lakhs only u/s. 54EC of the Act. As the assessee had fulfilled all the necessary conditions as stipulated in Section 54EC of the Act at the relevant point of time, he was eligible for deduction of Rs. 1 Crore as claimed u/s. 54EC of the Act. Accordingly, the addition of Rs. 50 Lakhs on account of excess deduction u/s. 54EC of the Act is deleted. Appeal of the assessee is allowed.
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2024 (10) TMI 864
Rejection of books of accounts - Estimation of Net profit - HELD THAT:- We noticed that the reasons cited by the AO for rejecting the books of accounts are not applicable to the assessee, since it is stated that the assessee is accounting for various expenses directly from out of job sheets, i.e., according to Ld A.R, those subsidiary registers are not maintained by the assessee. Hence it appears that the AO has misdirected himself in making certain observations, which are not applicable to the facts of the present case. Accordingly, we are of the view that there was no valid reason for the AO in rejecting the book results. Referring to comparative chart for five years we notice that the gross profit rate has actually improved in this year vis- -vis the immediately preceding year. As rightly pointed out by Ld A.R, there was sharp fall in the Duty draw back and export incentives in this year and the same is the main reason for the fall in the net profit ratio. Hence, we are of the view that, in the facts and circumstances of the case, there is no reason to estimate the profit of the year. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to accept the book results, i.e., the addition made by the AO should be deleted. Appeal filed by the assessee is allowed.
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2024 (10) TMI 863
TDS u/s 195 - Disallowance u/s. 40(a)(ia) towards sales commission paid - case made by the assessee is this that since the services rendered to the appellant by the said Manthan Systems Inc. have been held not falling within the ambit of FTS or under Article 12 of the DTAA, the appellant is also not liable to deduct TDS on the payment made - HELD THAT:- As in assessee s own case for AYs 2012-13 to 2015-16 [ 2024 (2) TMI 784 - ITAT BANGALORE] consideration being similar wherein the sales commission paid under the same agreement, we are of the view that the above decision of the coordinate bench is squarely applicable to the impugned issue for the year under consideration also. Therefore, respectfully following the above decision we hold that there is no infirmity in the order passed by the CIT(A) in holding that there is no liability to deduct tax towards sales commission paid by the assessee to Manthan System Inc and accordingly no disallowance is warranted u/s. 40(a)(i). Disallowance of ESOP expenses - Issue of allowability of ESOP expenses is well settled and the coordinate bench in assessee s own case for AYs 2012-13 to 2015-16 [ 2024 (2) TMI 784 - ITAT BANGALORE] has been consistently holding that the ESOP expenses are to be allowed as a deduction. Thus, we are not inclined to interfere with the decision of the CIT(A) in allowing the claim of the assessee towards ESOP expenses. Decided in favour of assessee.
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2024 (10) TMI 862
Computation of capital gain - exemption u/s 54F - appellant has transferred immovable property in pursuant to JDA - assessee claims that he is entitled for 54F exemption in respect of 3 flats received from the builder for surrendering 65% undivided share in land - AO denied the exemption u/s 54F on the ground that the assessee has not made any claim in respect of 54F exemption in the original return of income filed u/s 139 HELD THAT:- If an assessee transfers any property other than residential house property, then exemption is available u/s 54F of the Act, in respect of reinvestment of sale consideration received as a result of transfer of original asset, but said exemption u/s 54F of the Act, is available subject to fulfilment of conditions prescribed therein. In the present case, the appellant derived Long-Term Capital Gain and Short-Term Capital Gain for surrendering 65% undivided land. The appellant received 3 flats from the builder. There is no details as to whether all 3 flats are accrued or received by the appellant in respect of transfer of capital asset which is held for more than 36 months or it also pertains to a capital asset which was transferred within 3 years from the date of purchase. There is no discussion as to fulfilment of various other conditions prescribed u/s 54F including re-investment of sale consideration within the prescribed time limit. These facts needs to be verified. There is no dispute with regard to the fact that the appellant is eligible for exemption in respect of one flat received from the builder in pursuant to JDA, provided all other conditions are satisfied. These facts are not forthcoming from the assessment order. Therefore, to verify the facts in its entirety on eligibility of the assessee for claiming exemption u/s 54F the issue needs to be set aside to the file of the AO - Thus, restore the issue back to the file of the Assessing Officer and also direct the AO to reconsider the issue of exemption claimed u/s 54F - Appeal filed by the assessee is allowed for statistical purposes.
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2024 (10) TMI 861
TP Adjustment - Comparable selection - Applicability of the turnover filter - HELD THAT:- As referring to the decision of Obopay Mobile Technology India Private Ltd. [ 2018 (7) TMI 2129 - KARNATAKA HIGH COURT] we hold that the turnover is a relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases. Choice of Appropriate turnover filter - We direct the learned Assessing Officer to adopt the same for a fresh search. With this view of the matter, we direct the AO/TPO to take the range of turnover filter at ten times on both the ends and conduct search afresh to take a plausible view. This finding is equally applicable for software development service as well as the IT enabled services. Comparability of InfoBean Technologies India Limited - Software as a service or software is a product has to be looked into before reaching a final conclusion. Since the learned DRP recorded that though the assessee claimed to have given certain information in CD about this company, on verification learned DRP did not find any such information was furnished in CD. Such information must be considered for reaching a conclusion as to comparability of this entity. We, therefore, restore this issue to the file of the learned Assessing Officer/learned TPO to verify whether the software services and software is a product or integral part of the same service and also consider the information to be furnished by the assessee on this aspect and take a plausible view. Exclude MPS Ltd in the ITeS segment - Both the authorities have carefully gone through the financials of this company, combat the same with the functional profile of the assessee and reached a right conclusion that MPS Ltd. is functionally comparable to the assessee and there are no reasons to exclude the same. We do not find any material to come to a different conclusion. MPS Ltd. is not a publisher on its own. MPS Ltd. only provides outsourced publishing services by providing typesetting and digitization services. For these reasons, we do not find anything contrary to the finding of the authorities. We accordingly uphold the same. Notional interest on the trade receivables is not covered in the definition of international transaction as defined u/s 92B - HELD THAT:- High Court and in the case of Bhatia Airtel services Ltd [ 2020 (10) TMI 294 - ITAT DELHI] Co-ordinate Bench of the Delhi Tribunal it was held that with the introduction of the explanation to section 92B of the Act by Finance Act, 2012 it is a determinable that if there is any delay in the realization of credit arising from the sale of goods or services rendered in the course of carrying on the business, it is liable to be visited with the transfer pricing adjustment on account of interest income short charged/uncharged. It is, therefore, not open for the assessee to agitate this question as to whether or not the interest on outstanding receivables is an international transaction requiring separate benchmarking. Determination of credit period - TPO allowed only 30 days as reasonable credit period - It is widely accepted that the normal credit period would be 60 days, and it is only when the assessee establishes any peculiar reasons concerned to the industry, in a further period is acceptable. Since there are no such peculiar circumstances connected to the activity of the assessee, we direct the learned Assessing Officer to allow 60 days as the credit period and to levy interest only in respect of the period beyond such 60 days. Rate of interest - Ends of justice would be met by accepting the interest rate on similar foreign currency receivables/advances as LIBOR+200 points. We direct the AO/ TPO to adopt the same. Grounds are partly allowed accordingly.
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2024 (10) TMI 860
Expenditure for sharing the surplus - assessee has paid to the collaborators for expenses on services/ premises - assessee has shared the surplus with the collaborator - whether it not fall under any expenditure covered u/s 30 to 37 or section 40(a)(ia)? - HELD THAT:- We observed that the assessee is sharing the revenue based on the franchise agreement and as far as claiming the expenditure or sharing of surplus depends upon the method adopted by the assessee. It follows two method i.e. (a) franchise method; and (b) JV method. In franchise model, the revenue and expenses are under control of collaborator. The assessee only shares the income/loss. Whereas in JV model, all the revenues are recorded by the assessee and shares the surplus/loss which are recorded by the assessee and shares the surplus/loss with the collaborator. We observed that the assessee has claimed the sharing of surplus, which is under dispute. In our view, the Assessing Officer has mixed up with the methods adopted by the assessee. Whatever expenses claimed as share of surplus with the collaborator, it is only sharing of revenue and not the claim of expenditure, as per the terms of agreement, the collaborator does not render any service to the assessee. As sharing of revenue and its impact of taxability vis- -vis application of TDS provision depends upon the method of accounting adopted by the respective assessee s. In this case, the franchise agreement and method of sharing the revenue based on computation sheet clearly shows that assessee records all the revenue and share the surplus with the franchisee/ collaborator after adjusting the expenditure. In this case, the assessee follows the JV model and incurs all the expenditure and shares only the surplus with the franchisee that means it is clearly shares the surplus and all the facilities are operated and controlled by the assessee. The issue is whether the provisions of TDS will apply in this case. In our considered view, as per the facts on record, merely shares the revenue and the collaborator does not render any service to the assessee, hence the provisions of TDS has no application. In the given case, the assessee is claiming expenditure for sharing the surplus which is nothing but sharing of revenue as per the agreement with the parties. Therefore, we do not see any reason to disturb the findings of ld. CIT (A). Decided against revenue.
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2024 (10) TMI 859
Delayed employees contribution towards PFI/ESI - HELD THAT:- Issue involved under consideration is against the assessee on the basis of decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] - Accordingly, we dismiss the above ground of appeal raised by the assessee. Disallowance of Mark to Market (M to M) losses on foreign exchange open (unsettled) contracts - AO was of the opinion that assessee is not eligible to claim the losses either under normal provisions of the Act or under 115JB - HELD THAT:- We observed that assessee is having exposure of foreign exchange and in order to mitigate the same, assessee has booked forward contracts against the foreign currency fluctuations. Similar issue was considered in the case of PCIT vs. Simon India Ltd.[ 2022 (12) TMI 358 - DELHI HIGH COURT] wherein Assessing Officer has considered the loss on forward contract as speculative loss and similar issue was considered by the Hon ble Court and held that Forward Contracts were entered into by the assessee to hedge against foreign exchange fluctuations resulting from inflows/outflows in respect of the underlying contracts for provisions of consultancy and project management. Concededly, the assessee is not dealing in foreign exchange. Clearly, the said transactions were to hedge against the risk of foreign exchange fluctuations and thus, fall within the exceptions of proviso (a) to section 43(5) of the Act. The Forward Contracts were to guard against any loss on account of future exchange fluctuations in respect of inflows and outflows relating to contracts for execution of the works entered into by the assessee - Decided in favour of assessee. Addition u/s 68 - cash deposits during the demonetization period - HELD THAT:- Assessee has submitted the source of cash deposits from the sale of scrap sales and also filed the details of the parties along with confirmations. Assessing Officer rejected the same without making further enquiries. As the assessee has precisely explained the source of cash and also filed the confirmations as submitted the party-wise details of such scrap sales and also submitted confirmations from these parties. Assessing Officer merely observed the information submitted by the assessee and proceeded to make the addition without cross-verifying from the other parties - See Genesis [ 2006 (8) TMI 591 - DELHI HIGH COURT] Deduction u/s 35(2AB) - claim denied due to the late receipt of DSIR approval - HELD THAT:- We observed that the assessee has claimed the deduction u/s 35(2AB) of the Act first time before the Assessing Officer since the assessee has received the DSIR approval after filing the return of income. This being a deduction which is lawfully available to the assessee, we are inclined to remit this issue back to the file of Assessing Officer to verify the same and allow as per law. Accordingly, this ground is allowed for statistical purposes.
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2024 (10) TMI 858
Estimation of business income - Treatment to cash deposit in bank account - Assessee explained that the deposits made in the said bank account belong to his owner and proprietor who requested the assessee to use his account for certain months as the owner s bank account has become inoperative and all the cash deposits were used for purchase of liquor - AO rejected contention of the assessee as the assessee failed to furnish confirmation letter from his owner, thus treated the entire cash deposit as business receipt of the assessee and made addition @8% of the total business turnover HELD THAT:- As observed by the Hon'ble High Court, the profit percentage to be adopted differs from case to case. Apart from that fact, subsequently the privilege fee is introduced and according to the learned AR it reduced the profit margin. Coordinate Bench of the Tribunal in the case of Venkateshwar Nemuri [ 2024 (6) TMI 1409 - ITAT HYDERABAD] after considering the facts and circumstances held that the estimate of net profit of the assessee at 3% of the turnover would meet the ends of justice. Thus, we direct AO to recompute the income of the assessee at 3% of the turnover. Appeal of the assessee is allowed in part.
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2024 (10) TMI 857
Validity of the reopening of the assessment u/s 147 - reason to believe v/s reason to suspect - assessee has booked bogus loss or bogus profit - HELD THAT:- In this case, a perusal of the assessment order would reveal that the AO has not discussed a word about the bogus accommodation entries in the assessment order, therefore, it is apparent that the information of the Investigation Wing in relation to the accommodation entries received by the AO was not correct, so far as the case of the assessee was concerned. As observed above, the information that the assessee had booked loss/profit by misusing the platform of NMCE is concerned, the said information, in itself, is a vague information. Even, the said information does not suggest as to whether the assessee has booked bogus loss or bogus profit, what to say of the quantum of such loss or profit booked by the assessee. There is no mention of the name of the parties, no details of the transactions etc. in the reasons recorded and no amount has been mentioned. The reopening on the basis of such a vague information and even without knowing whether the assessee has booked bogus loss or bogus profit, cannot be said to be an information for forming the belief that the income of the assessee has escaped assessment. Therefore, the reasons pointed out by the Assessing Officer cannot be said to be the reasons to form the belief that income of the assessee had escaped assessment. In the case Meenakshi Overseas (P.) Ltd [ 2017 (5) TMI 1428 - DELHI HIGH COURT] has held that where reassessment was resorted to on basis of information from DIT(Investigation) that assessee had received accommodation entry but and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. Similarly G G Pharma India Ltd. [ 2015 (10) TMI 754 - DELHI HIGH COURT] has held that where the Assessing Officer after receiving of information from the Investigation Wing that the assessee has received accommodation entries and the AO without describing those materials and without applying his mind to the alleged materials and therefore, without forming a prima facie opinion, reopens the assessment, the same was not sustainable. Reopening in this case is held as bad in law and, therefore, the consequential assessment framed u/s 147 is not sustainable and the same is hereby quashed. Bogus commodity loss and accommodation entries from shell companies - Even, on merits, a perusal of the assessment order would reveal that the AO has simply relying to the modus operandi adopted by certain entry providers and without pointing out any defect or infirmity in the transactions done by the assessee, has made the impugned additions, which, otherwise are not sustainable on merits also. Assessee appeal allowed.
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2024 (10) TMI 856
Rejecting application for registration u/s 12A(1)(ac)(iii) and cancelling the provisional registration u/s 12AB - charitable activity or not? - HELD THAT:- In the present case, CIT(E) prematurely invoked the provisions of Section 13(1)(c) without giving due consideration to the charitable objects of the assessee. This mirrors the errors in the decisions seen in the aforementioned cases. As in CIT(E) vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT] further confirmed this principle, holding that Section 13 would only be applicable at the time of assessment, not during the registration stage. CIT(E) s order is flawed both in its interpretation of the assessee s objects and in the premature invocation of Section 13(1)(c) and 13(3) of the Act. Judicial precedents clearly establish that the applicability of Section 13 should only be examined during assessment and not at the registration stage u/s 12A of the Act. We set aside the order of the CIT(E) and restore the matter to his file for de novo consideration. CIT(E) is directed to evaluate the application for registration afresh, focusing solely on the charitable nature of the assessee s objects, without invoking the provisions of Section 13(1)(c) or Section 13(3) at this stage. CIT(E) shall provide the assessee with a reasonable opportunity of being heard before passing the order. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (10) TMI 855
Deduction u/s 80IA(4) - usage of word developing in juxtaposition to infrastructure facility - profits derived from projects which were received on sub-contract basis from independent private parties and not from the Central Government / State Government / Local authority HELD THAT:- The assessee has invested its own funds, has given bank guarantee, has engaged requisite qualified / skilled / semi-skilled staff and the labourers and brought plant machineries to be utilized in the project. He has also adhered to the timelines for completing the project and tasks comprised therein, has also undertaken to bear the consequences for delay in completion of the project and tasks comprised therein. There is defect liability period and there is retention money / security deposit for due compliances including of quality works. It is also his submission that the various decisions relied on by the AO as well as the CIT(A) are distinguishable and not applicable to the facts of the present case. The Hon ble jurisdictional High Court has also taken a view in favour of the assessee in the case of CIT vs. ABG Heavy Industries Ltd. [ 2010 (2) TMI 108 - BOMBAY HIGH COURT] We find the AO in the instant case has not gone through the terms and conditions of each and every project undertaken by the assessee during the year. He has not discussed anything about the clarification given by the CBDT vide Circular No.3/2008, dated 12.03.2008 which is binding on the Revenue. In the case of CIT vs. ABG Heavy Industries Ltd. while discussing an identical issue as to whether the assessee is a developer or merely a works contractor. We find the AO in the instant case without going through the terms and conditions of each of the project that has been undertaken by the assessee during the year has come to the conclusion that the assessee is a works contractor and not a developer. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to decide the issue afresh in light of the decision of ABG Heavy Industries Ltd [ 2010 (2) TMI 108 - BOMBAY HIGH COURT] CBDT Circular No.3/2008, dated 12.03.2008 and the terms and conditions of each of the project that has been undertaken by the assessee to ascertain as to whether the assessee is a works contractor or a developer - The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2024 (10) TMI 854
Rectification u/s 154 - considering the income tax rate at 25% as per turnover of the assessee instead of tax rate charged @ 30% - HELD THAT:- As perused the Guidance note of the Institute of Chartered Accountants of India on tax audit under section 44AB of the Income-tax Act, 1961 filed before us wherein it is mentioned that if, however, the excise duty and /or sales tax recovered are credited separately to excise duty or sales tax account (being separate accounts) and payments to the authority are debited in the same account, they would not be included in the turnover. However, sales of scrap shown separately under the heading miscellaneous income will have to be included in turnover. Assessee has also filed copy of central excise duty payable and service tax payable ledger account for the period 01.04.2015 to 31.03.2016 demonstrating that it had credited the excise duty and service tax recovered separately to the respective account separately maintained and the payment made to the tax authorities were debited in the same account therefore, the same would not be included in the turnover. We direct the AO to consider the income tax rate @ 25% instead of 30% since the turnover for the F.Y. 2015-16 in the case of assessee was below Rs. 50 crores, since it had maintained separate account for payment of both the taxes in which the taxes recovered were credited before making payment to the respective tax authorities as prescribed in the guidance notes on tax audit u/s 44AB - Assessee appeal allowed.
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2024 (10) TMI 853
Addition of cash deposit during demonetization period u/s 68 - assessee has not explained the holding of cash receipt in hand instead of depositing the same in bank as was done in A.Y 2016-17 - assessee submitted that having accepted the books of accounts by both the authorities, book results could not be disturbed once it is admitted that cash sales are recorded in books and forming part of turnover of the business HELD THAT:- We find that the AO has not questioned the cash sales and has also not rejected the books of account. The AO has accepted the sales made during the year and the books of accounts of the assessee. We find considerable force in the ld AR argument that when the AO has not questioned the audited books of account and the cash flow statement and cash book, he cannot draw an adverse view without bringing any contrary cogent material. AO has also not pointed out any element of undisclosed income in the form of cash sales and has also not substantiated as to how the cash deposits relates to the assessee s unaccounted income. When the AO draws the conclusion that the cash in hand definitely bears some unaccounted income of the assessee , we find that the AO has travelled in the realm of conjectures. We also note that the Assessing Officer s conclusion that 60% of the cash deposited constitute unaccounted deposits to be added u/s 68 is not supported by any cogent and material evidence. Thus we hold that the addition made by the AO is based on suspicions, conjectures and surmises. Addition is not legally permissible and the CIT(A) fell in error in sustaining the addition. Decided in favour of assessee.
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2024 (10) TMI 852
Denial of exemption under section 10(38) - Addition u/s 68 - Bogus LTCG - long-term capital gains and short term capital gains accruing to the appellant as non-genuine only on the basis of general finding of Directorate of Investigation and various statements recorded by it - HELD THAT:- We find that the assessee, herself never involved in price rigging of the scrips. AO has not conducted independent investigation and fully relied on the observation of the investigating authority of Kolkata. But no separate verification was conducted. The assessee has discharged her onus by submitting documents before the revenue authorities. There is no information of entry/exit provider in appeal and assessment stage. The share was duly opened by the SEBI but later on the same was revoked. The co-ordinate bench in the case of assessee s husband Shri Abhishek Tejraj Doshi [ 2023 (6) TMI 87 - ITAT MUMBAI] Shri Abhishek Doshi [ 2023 (6) TMI 87 - ITAT MUMBAI ] has taken a view in favour of the assessee and against the revenue. There was no specific mention of the assessee in any of the recorded statements which would establish her nexus with the whole arrangement of providing and accepting accommodation entries. The assessee had carried out the transaction through recognised stock exchange and thus operated in a regulatory environment and hence the allegation that he was hand in glove with some people who operated the scheme has no evidence. The documents submitted are contract notes, demat accounts and bank accounts before the revenue authorities which are issued by unrelated third parties, cannot be treated as sham self-serving. Decided in favour of assessee.
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2024 (10) TMI 851
Validity of assessment order passed u/s 153C as barred by limitation - order bears the date as 30.12.2011 however, the same was issued and dispatched on 02.01.2012 as per the report of the post office - AR has submitted that the assessment year 2004-05 is beyond the block period of six years for the assessment u/s 153C - HELD THAT:- We find that the assessee has raised this plea first time during the course of hearing of the appeal. Accordingly in the facts and circumstances of the case we are of the considered opinion that this plea of the assessee be considered by the AO along with other issues set aside by us for fresh adjudication. Accordingly this issue is remanded to the record of the AO for proper verification and adjudication. Appeal allowed for statistical purposes.
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2024 (10) TMI 850
Addition u/s 69B u/s 69A - excess stock of jewellery found during search - action of AO in invoking provisions of sec.115BBE - difference in physical and recorded stock of the assessee - main reason for difference in physical and stock as per books as explained by the assessee was that the quantity of goods received on approval but not entered in the books and the quantities received but bills are pending or the bills are yet to be received from the supplier therefore, entries of such stock was pending on the date of search HELD THAT:- The revenue authorities are under abounded obligation by virtue of CBDT s circular to focus on gathering evidence during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. Such instructions from CBDT shows that corroborative evidence should be given preference over the oral statements of assessee or preferably the statement should be correlated with the material evidence to reach at a true and correct conclusion. In the present case all the evidence may be after the search but are substantiated and could not be dislodged by the revenue. Even when the proceedings u/s 133(6) have been initiated all the concern parties have submitted their response and confirmed the transactions recorded in the seized documents. Such facts and circumstantial evidence favours the submissions of the assessee, at the same time the presumptive thoughts of the revenue authorities dehors any cogent support that the transactions in the seized documents which on the contrary were supported by the assessee by submitting evidence in the form of bills of the supplier parties considering the same as just a concocted story, after thought, colourable device cannot be concurred with. \The observation of the department regarding the high ratio of purchase transactions and return of goods by the assessee should be considered as nothing but managed for making the unaccounted stock to accounted, cannot be subscribed to for the reason that such transactions have been duly found in the GST return of the counter parties and the said parties have also submitted relevant documents and confirmed such transactions while the enquiry was made under the provisions of Section 133(6) of the Act, none of such evidences could be dislodged by the revenue, neither any evidence or material could be brought on record by the revenue to rescue their findings Regarding retraction by the assessee, Ld CIT(A) observed that the appellant has admitted and surrendered the entire excess stock during the search, also the stock found at residence of the assessee was not stated by the assessee as business stock during the course of search when the statement of the assessee were recorded. The retraction was only a concocted story and after thought. The appellant has failed to discharge his onus regarding substantiating the retraction. On this issue, after thoughtfully deliberating upon the submission of the assessee and various evidence, we are of the considered view that the supporting evidence like confirmation from the supplier parties, quantity tally between the seized documents and the final bills from the suppliers and similar quantity of stock in aggregate from the shop and the residence establishes that the onus cast upon the assessee to support the retraction has been duly discharged, therefore, the contention raised through retraction substantiated with corroborative evidence cannot be rejected at threshold, therefore, we do not found any substance in finding of Ld. CIT(A), which are totally on the foundation of assumptions, therefore, on this count also the decision of Ld. CIT(A) is liable to be struck down. We find force in the submissions and contentions raised by the assessee that the excess stock pertains to the business of the assessee, difference in such stock which is physically found at the time of search with the recorded stock in the books of the assessee was duly explained by way of reconciliation of the same supported with corroborative evidence like bills from the suppliers, much less the same has been fortified when the parties were put to notice u/s 133(6) and they have submitted the requisite documents a/w their confirmation, validating the contentions of the assessee. Assessee has submitted a letter to the ADIT (Inv.)-II, Raipur within seven days of the conclusion of the search offering unaccounted stock but the same was never disposed off by the authority concern, this is against the mandate of law and in violation of principle of natural justice, as decided by the ITAT, Raipur in the case of DCIT vs. Rajendra Sharma [ 2019 (7) TMI 2040 - ITAT RAIPUR] - Under such facts and circumstances, we do not find any substance in the decision of the Ld. CIT(A) to approve the same. We set aside the order of Ld. CIT(A) to the extent the addition made by the Ld. AO has been sustained and direct to vacate the entire addition made u/s 69A 69B. Confirmation of action of Ld. AO in invoking provisions of section 115BBE - In terms of our observations and decision in qua ground No. 1 of the present appeal, since it is concluded that the excess physical stock found at the business premises and residence of the assessee and the same pertains to business of the assessee, accordingly, provisions of Section 115BBE cannot be triggered in the present case. Resultantly, ground no. 2 of the assessee is also decided affirmative in favour of the assessee .
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2024 (10) TMI 849
Addition u/s 68 - Bogus share capital - addition u/s 115BE - share capital introduced by the director of the company - onus to prove - HELD THAT:- In the remand proceedings the assessee has discharged its onus in accordance with provisions of section 68 of the act. With respect to the genuineness, it is the director of the company who is also the major shareholder, has been allotted the shares, therefore, the genuineness of the transaction cannot be doubted. It is not the case where a stranger is depositing money with the company as a shareholder. In the remand report also the learned assessing officer has not drawn any adverse inference with respect to the evidences submitted by the assessee, by the depositor, by the persons who deposited money with the depositor to prove the source of source. Therefore, we do not find any infirmity in the order of the CIT A in deleting the above addition for the reason that identity, creditworthiness of the person and genuineness of the transaction is established. DR also did not show us any evidence about any of the three ingredients adversely. Accordingly we do not find that CIT A has erred in deleting the addition u/s 68 with respect to the share capital in the name of diector. Decided in favour of assessee. Admission of additional evidence under Rule 46A - assessee submitted that it was a Covid period and assessee could not submit the details because the office of the assessee was situated in a containment zone declared by the government of Maharashtra - HELD THAT:- We find that when the assessee was prevented by sufficient cause to produce necessary details before the assessing officer, the appellate authorities are empowered to admit such additional evidence in the proper administration of justice. Claim of the assessee is not disputed that office of the assessee was situated in containment zone declared by the government of Maharashtra. Therefore we do not find any infirmity in the order of the CIT A in admitting the additional evidences. It is also not the case of the revenue that after admitting the additional evidence the assessing officer was not given any opportunity to rebut the same - Therefore, ground number 1 of the appeal is dismissed. Addition u/s 68 on account of loan received from NVPL - CIT(A) deleted addition - HELD THAT:- CIT-A on consideration of the remand report wherein the assessing officer himself has accepted the fact of the transaction because of overwhelming evidences produced by the assessee - CIT-A has correctly deleted the addition where the assessee has proved with respect to the sum credited as a loan such as identity and creditworthiness of the depositor as well as the genuineness of the transaction. No such evidences are produced before us by the learned departmental representative to show that the view taken by CIT-A and the assessing officer in the remand report are incorrect or even remotely suggest the addition. Decided in favour of assessee.
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2024 (10) TMI 848
Validity of order passed u/s 143(3) - notice u/s 143(2) was not issued by jurisdictional AO within prescribed time - Whether Case of the assessee falls within the jurisdiction of ACIT/DCIT-4(1), Raipur, having pecuniary jurisdiction over the case of the assessee, therefore, the issuance of notice by ITO itself makes the first notice, invalid? - HELD THAT:- Admittedly, in the present case the mandatory notice u/s 143(2) for initiating the assessment proceedings was issue by ITO Ward 1(1) vide notice dated 13.04.2016, who at relevant point of time was not vested with valid jurisdiction over the case of the assessee, since the cases having declared income above Rs. 15,00,000/- in the case of corporate assessee s are under the jurisdiction of ACIT/DCIT, whereas the assessee s returned income was a loss which as discussed hereinabove is more than Rs.15 Lac, since the income includes losses or the losses are at par with income. In view of aforesaid CBDT s instructions followed by communication by the Ld. CCIT, Raipur, it is held that the first notice u/s 143(2) issued by the ITO Ward- 1(1), Raipur, was clearly against the mandate of instructions issued. Regarding, the subsequent notice u/s 143(2) issued by the jurisdictional AO i.e., ACIT-4(1), Raipur on 28.07.2017, the same cannot be considered as a valid notice, which was issued beyond the specified date under the provisions of Sec. 143(2), which was expired on 30.09.2016. Regarding the objection raised by Ld. CIT DR that the assessee has not objected to the jurisdiction of the ITO-1(1) within the stipulated time period of one month from the date on which the notice was served on the assessee. The issue has been duly considered in the case of Durga Manikanta 2023 (1) TMI 1099 - ITAT RAIPUR] as held the assessee s objection to the validity of the jurisdiction assumed by the Income- Tax Officer, Ward-2(2), Bhilai is by no means an objection to his territorial jurisdiction, but in fact an objection to the assumption of jurisdiction by him in contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, therefore, the provisions of sub- section (3) of Section 124 would not assist the case of the revenue. In terms of foregoing observations of the tribunal, wherein the objection raised by the revenue are specifically dealt with, therefore, in the present case the same contention raised by the revenue cannot be decided differently. We, therefore, in absence of any cogent material brought on record by the revenue w.r.t. facts in the present case to dislodge the aforesaid conviction are unable to convince ourselves with the objections raised, accordingly the objections are disposed-off against the revenue. Respectfully following the decision of M/s Durga Manikanta Trader [ 2023 (1) TMI 1099 - ITAT RAIPUR] adverting to the facts of the present case, wherein admittedly, the first notice u/s 143(2) was issued by ITO Ward-1(1), Raipur, on 13.04.2016, who was not vested with valid jurisdiction over the case of the assessee, therefore, the assessment framed on the foundation of such invalid notice is liable to be struck down. Even the subsequent notice issued u/s 143(2) of the Act, by the ACIT 4(1), Raipur after the lapse of stipulated time period i.e., beyond the specified date i.e., 30.09.2016, has to be treated as an invalid notice as issued against the mandate of law, therefore, the assessment order framed u/s 143(3) cannot survive on the basis of subsequent notice u/s 143(2), also. We, therefore, are of the considered view that assessment order passed u/s 143(3) dated 20.12.2017 by ACIT, Circile-4(1), Raipur, on the basis of proceedings initiated vide notice u/s 143(2) dated 13.04.2016 by ITO,W-1(1),Raipur, who at the relevant point of time was not vested with valid jurisdiction over the case of the assessee, cannot be sustained - Assessee appeal allowed.
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2024 (10) TMI 801
Adjustment on account of payment of employees contribution to National Pension Scheme (NPS) u/s 36(1)(va) made while passing intimation order u/s 143(1) - AO disallowed the said amount on ground that such remittances were made beyond date as prescribed in respective Pension Fund Regulatory and Development Authority Act, 2013 and the said amount was added to income of assessee and tax demanded thereon. HELD THAT:- We observe that in the case of Adani Petronet (Dahej) Port (P.) Ltd. [ 2024 (8) TMI 357 - ITAT AHMEDABAD ] the assessee company which was engaged in port activities, filed its return of income claiming employees contribution under any other welfare fund namely National Pension System (NPS) as business expenditure. ITAT noted that there was no due date prescribed in respective PFRDA Act, 2013 as to when payment was required to be made to NPS account. Further, all payments were duly made before filing of return of income as per section 139(1) - ITAT held that the impugned adjustment made on payment under NPS was not justified and amount in question was to be treated as allowable under Section 43B(b). It would also be useful to reproduce the Notification dated 31.03.2021 issued by the Department of Pension and Pensioners Welfare which specifies that the National Pension System Rules, 2021 shall apply only to Government servant and not to public at large. In view of the above notification, we note applies specifically to Government Servants including Civilian Government Servant in Defence Services. Appeal of the assessee is allowed.
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Customs
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2024 (10) TMI 847
Grant of regular bail - smuggling - gold of foreign origin - material brought on record by the DRI to indicate that the gold jewellery was made from gold of foreign origin or not - burden of proof - applicability of Section 135 of the Customs Act - HELD THAT:- It could not be disputed at this stage by the DRI that the documents which have been submitted by the applicant are not genuine. The applicant has his own residence, his firm is duly registered and its business relates to dealing with gold jewellery. Bank statements, GST returns, Income-tax Returns, all reflect that the applicant is not at flight risk. The family of the applicant comprising of his wife and children are also residing in Thane, Maharashtra and it shows that the applicant has roots in the society - It is also not disputed that the applicant does not have any other criminal history except for the case at hand. The applicant has been in jail since more than 3 months and apparently the DRI has not demonstrated any reason or purpose for which the custody of the applicant is required any more. It is also not disputed that the maximum sentence as prescribed under Section 135 of the Customs Act is upto 7 years and is triable by Magistrate and the complaint has already been filed. Considering the nature of allegations and accusation against the applicant, the severity of the punishment if convicted including the fact that the applicant is not at flight risk nor it has been apprehended by the DRI that the applicant is in a position to tamper with evidence or influence any witness and that the charge under Section 135 of the Customs Act is yet to be established in trial also noticing the period of incarceration as well as the fact that the personal liberty of the applicant is a precious fundamental right which has to be balanced in the context with the punishment which may finally be awarded upon conclusion of trial, hence, at this stage, without expressing any opinion on the merits of the case, this Court is of the view that the applicant is entitled to be released on bail. Let the applicant Ramkrishna Jaladhar Parai involved in Complaint Case/DRI Case No.6/2024 under Section 135 of the Customs Act, 1962, Police Station DRI, District Lucknow be released on bail on his furnishing a personal bond with two reliable sureties each in the like amount to the satisfaction of the court concerned, subject to fulfilment of conditions imposed - bail application allowed.
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2024 (10) TMI 846
Seeking quashing of detention order at pre-execution stage - involvement with a syndicate in illegal storage and illegal exports of Red Sanders Woods, a prohibited item for export under Foreign Trade Policy read with CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora), in the guise of genuine exports - primary contention of the Petitioner is that despite Nepal s address being in knowledge of the Respondents, the detention order was not served upon him at the said address - HELD THAT:- The Hon ble Supreme Court in Subhash Popatlal Dave [ 2013 (8) TMI 8 - SUPREME COURT] while examining the issue whether the detention order can be quashed merely on the ground that there was a long delay in execution of the same at the pre-execution stage by way of the majority decision has observed and held ' those who have evaded the process of law shall not be heard by this Court to say that their fundamental rights are in jeopardy. At least, in all those cases, where proceedings such as the one contemplated under Section 7 of the Cofeposa Act were initiated consequent upon absconding of the proposed detenu, the challenge to the detention orders on the live nexus theory is impermissible. Permitting such an argument would amount to enabling the law-breaker to take advantage of his own conduct which is contrary to law.' In the present case the Petitioner was not available at any given address for its execution in India. The Petitioner s stand is that the detention order has to be executed on his Nepal address which was not done by the Respondents herein. The said stand is not tenable - It has already come on record that the Respondents had taken all the possible steps as provided for in the COFEPOSA Act to ensure the presence of the Petitioner, however the latter did not surrender before any authority and continues to evade the process of law. This Court is of the considered opinion that the only procedure for serving the detention order on the Petitioner, is in the manner provided under the Section 4 of the COFEPOSA Act, i.e., by detaining the person on whom the order is served, in the absence of the same, the proceedings as contemplated under Section 7 of the COFEPOSA Act are required to be initiated in case the proposed detenue has absconded - the Court has no option but to draw an inference that the said passport may have in fact established that the Petitioner has evaded the service of the Detention Order. Presence of Petitioner s wife during the search conducted at his alleged residence in South Extension may have a role in his disappearance from India. The Petitioner for the present purposes, due to the non-production of the relevant passport document, would have to be treated as a person who has absconded deliberately. Nothing has been shown to prove otherwise or to establish the bona fide of the Petitioner. The prayer of the Petitioner with respect to non-consideration of the representation dated 3rd July, 2017 is also not maintainable as the right of representation to the detenu is available post execution of the said detention order in terms of Article 22(5) of the Constitution of India. Thus, in the facts and circumstances of the case, the Court finds no ground to interfere with the detention order dated 27th April, 2015 bearing F. NO. 673 /13/2015-CUS.VIII issued against Sh. Pawan Gupta under section 3 (1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities (COFEPOSA) Act, 1974 by the Respondent No. 2 at this stage. Petition dismissed.
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2024 (10) TMI 845
Charge of interest on finalization of provisional assessments initiated before 2006 - Section 130 of the Customs Act, 1962 - HELD THAT:- The present appeal is not a fit case for admission and since no substantial question of law would arise for consideration. The contentions and the question of law raised by the appellant revenue is answered in favour of the assessee by the Gujarat High Court in the case of COMMISSIONER OF CUSTOM VERSUS GOYAL TRADERS [ 2011 (8) TMI 720 - GUJARAT HIGH COURT] where it was held that ' In absence of any indication in the statute itself either specifically or by necessary implication giving retrospective effect to such a statutory provision, we are of the opinion that the same cannot be applied to cases of provisional assessment which took place prior to the said date. Any such application would in our view amount to retrospective operation of the law.' Further, in the case of RELIANCE INDUSTRIES LIMITED VERSUS UNION OF INDIA [ 2015 (11) TMI 138 - GUJARAT HIGH COURT] , it is specifically held that Section 28 of the Customs Act only provides procedural aspects for recovery of duty and is not a substantive provision for levy of duty under the Act. The show cause notice also, accordingly, reveals that the interest on the differential amount is sought to be recovered under Section 18 (3) of the Act. That the provisions of Section 28 are resorted to only for the purpose of making such recovery. Therefore, the charge is under sub-section (3) of Section 18 of the Act and not under Section 28 of the Act. There are no merit in the appeal - appeal dismissed.
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2024 (10) TMI 844
Revocation of Customs Broker License - forfeiture of its security deposit - imposition of penalty - involvement of customs brokers in aiding and abetting fraudulent export activities by failing to verify documents and identities - misuse of factory stuffing permission - forgery of customs documents with the intention of availing drawback and other incentives fraudulently - inflation of value by manipulation of documents - HELD THAT:- In the present case, there is nothing or record to show that the appellant/CHA had a prior knowledge about the exporters mentioned in the IE code to be non-existing person. It is apparent from record that one M/s. Lokesh Bansal, the partner of Aadinath Industries, he only used to manage bank account of M/s. Neminath Industries. The factory stuffing permission is also alleged to have been forged in the name of M/s. Neminath Industries. Though the factory stuffing permission in name of M/s. Aadinath Industries i.e. the exporter of the present appellant is also found forged but It is also an apparent fact mentioned in the show cause notice itself that the export invoice for the containers was signed by the Central Excise Officer which later got forged. Similar had been the modus operandi in case of M/s. Arihant Industries but apparently there is no such allegation vis- -vis M/s. Arihant Industries. In the present case, there is no evidence for the appellant to be the beneficiary of any drawbacks as alleged to have been wrongly received by the exporters. There was no need for any proceedings under CBLR to have been initiated against appellant. Department could not produce any evidence proving violation of 11(d) and 11(n) of CBLR, 2013. Accordingly, the order under challenge confirming said violation is hereby set aside - Appeal allowed.
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2024 (10) TMI 843
Confirmation of duty demand under Proviso to Section 28(1) of CA, 1962, upon the appellant who is importer and transferee of license issued by DGFT - Liability of the appellant as a bona fide transferee of a fraudulently obtained license - Levy of penalties under Section 114A of the Customs Act - extended period of limitation - HELD THAT:- It is observed from the records of the case that the said license was issued and made transferable by the DGFT, and the same was valid and subsisting on the dates of imports and clearance of the consignments by the appellant. Further, customs have duly verified the said license before clearance of the consignments imported by the appellant. It is further noticed that in their statements recorded under section 108 of the Customs Act, Shri Sanjay Raturi, Manager (Taxation) and Shri Chandresh Shah, Manager (Logistics) of the Appellant inter alia stated that they had purchased the said license from broker M/s. Milan Overseas and they had taken the requisite precautions before buying the said license from the open market i.e. the IEC verification from DGFT website, particulars of license details from DGFT website, checking of license, registration and balance from the Customs Department, all the payments were made through Bank and relevant invoices of Milan Overseas, bank statements, bills of entry and copy of license were also submitted. Admittedly and undisputedly the alleged fictitious exports and fraud have been allegedly committed by the exporter/original license holder and its proprietor, and there is no allegation or evidence that the appellant was aware about the alleged fraud perpetrated by the exporter, in the circumstances, duty forgone on the said license should be recovered only from the exporter/original license holder, however, duty demand has been confirmed against the appellant. It is observed that show cause notice is dated 28.1.2015 raised demand of duty for the goods imported during April 2010; the notice is thus issued invoking extended period of limitation provided under proviso to section 28 (1) of the Act, however appellant is bonafide transferee of license for a valuable consideration. Consequently, larger period of limitation cannot be made applicable to demand duty as against the appellant. The impugned Order by which demand of duty under proviso to section 28(1) and penalty under section 114A of the Act has been confirmed as against the appellant is liable to be set aside on the ground of time bar alone - the impugned order is set aside - appeal allowed.
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2024 (10) TMI 842
Violation of principles of natural justice - denial of an opportunity of personal hearing - levy of penalty - HELD THAT:- There is gross violation of principle of natural justice in passing the impugned order. It is found that despite the request made by the appellant, the relied documents have not been supplied to the appellants along with the show cause notice and only inspection was allowed which is not sufficient to enable the party to present their case effectively. The appellants vide their letter dated 20.10.2021 requested for relied upon documents however, no documents were supplied to them and without giving the documents the hearing was fixed and the impugned order was passed on 29.11.2021. This amounts to denial of opportunity of personal hearing. The adjudicating authority has rejected the request for cross- examination on a flimsy ground whereas Section 138B mandates that if the statements to be admitted as evidence cross-examination of the witnesses is must. Therefore, no discretion is provided under Section 138B for the adjudicating authority to use his whims to allow or to disallow the cross-examination. Therefore, the rejection of cross- examination by the adjudicating authority is absolutely contrary to the mandate given in Section 138B. The adjudicating authority has grossly violated the principles of natural justice by not providing the data/ relied upon documents and by not allowing the cross- examination of the witnesses as requested by the appellants - the impugned order will not sustain to the extent of the present appellants. The impugned order is set aside - appeal allowed by way of remand.
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2024 (10) TMI 841
Classification of imported goods - Roasted Cashew Kernel - to be classified under Customs Tariff Item 20081910 or under Customs Tariff item 08013210? - entitlement for benefit of exemption under Customs Notification No. 96/2008-CUS dated 13.08.2008 - lack of cross-examination and provision of test reports - violation of principles of natural justice - HELD THAT:- It is noted that there is no reference to the letter dated 24.07.2019 in the Order-in-Original of the Original Authority though there is a reference to letter dated 04.09.2019 whereby the appellant had asked for copies of the test report in respect of 11 consignments. No observations have been made by the Adjudicating Authority as to whether it was provided or not required to be provided. What is also observed that while the appellants have given various submissions for negating the parameters adopted by CEPCI, as also relevant documents like certification by M/s Intertek, a global and reputed quality assurance certification agency etc., the procedure for mild dry roasting adopted by appellant and certified by M/s Intertek has not been examined in detail. Adjudicating Authority has also not examined whether dry roasting method of roasting is same as moderate heat treatment or otherwise in view of appellant s submissions in this regard. Further, specifications given by their buyer, which clearly places order for Roasted Cashew , nuts with moisture content of Max 5% and of plain ivory white colors has not been duly examined and considered. Original Authority has dealt with these defence in para 5.1 to 5.3 of Order-in-Original but it has not been effectively dealt with in the absence of any opportunity to the appellant to cross examine the authorised representative of CEPCI as also the fact that appellant never got chance to ask for Re-Test or question the method or parameters adopted by CEPCI. It is also interesting to note that as per scope of accredition for CEPCI, different test methods and parameters and specifications are available for dried roasted cashew, deep roasted cashew etc. Also Purchase Order of Unilever provides for tolerance of moisture in respect of dark roast (5%), deep roast (2%) etc. Thus, it is obvious that they would have rejected if the roasted cashew did not confirm to such tolerance. Admittedly, no such rejection has been brought on record. It is also an admitted position that impugned nuts were not subjected to any further processes by the appellant before supplying to their buyer. Thus, what was desirable for the sake of natural justice was that request for copies of all test reports should have been provided and cross examination of CEPCI should have been allowed, more so, when that is the main basis for denying the classification clause by the appellant. Similarly, in view of some of the documents like certificate of origin, Test Report of reputed testing organisation for impugned goods, purchaser s specifications, etc., the onus is on Revenue to establish claimed classification if there is any grey area open to divergent interpretation. The matter is remanded back to Original Adjudicating Authority with the direction to give them opportunity for cross examination of CEPCI representatives as also provide copies of documents not already provided - Appeal allowed by way of remand.
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2024 (10) TMI 840
Valuaton of imported goods - rejection of declared value - huge variation between the declared value and the value of the similar goods as per NIDB database - redetermination of value in terms of Rule 5 of Customs Valuation (Determination of value of Imported Go ods) Rules, 2007 - no import data available for the import of identical goods to decide the value under Rule 4 - HELD THAT:- There are no disputes as regards the relationship between the appellant and the supplier abroad; they are independent entities. It is the well settled position of law that the transaction value cannot be thrown out unless proved incorrect; such assertion has to be made not on assumptions or surmises, but based on evidences. In case, mere reliance on NIDB data alone to reject the declared value is insufficient, it is held by various Benches of CESTAT that mere adoption of NIDB data without there being any other evidence in support to reject the transaction/declared value as unacceptable, is not justified. The rejection of declared value based on NIDB data by the AA which was upheld by the FAA vide impugned order is unsustainable and is set aside - appeal allowed.
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2024 (10) TMI 839
Classification of imported goods - Polyester Filament, in Cut Length - to be classified under CTH 54041990 or not - Whether appellant is entitled to pay IGST at the rate of 12% as is mentioned in Notification No. 35/2017 dated 13.10.2017? - HELD THAT:- Perusal reveals that IGST at the rate of 12% is to be paid when imported good is synthetic or artificial filament yarn. Rest all other imported goods of CTH 5402-5406 are liable for IGST @ 18%. Admittedly appellant is importing polyester filament for paint brush in cut lengths declaring those under CTH 54041990. Goods classified under CTH 5404 are allowed IGST @ 12% only when the goods are Artificial or Synthetic Yarn. The most important distinction between a filament and a yarn is the way each material behaves when subjected to different forces and temperatures: whereas filament tend to break when exposed to high heat of pressure, yarns are much more resistant due to their composition (Multiple levels) and therefore less likely to break under such conditions. Therefore, it makes sense why many products rely heavily as yarn constructions rather than using only filaments because having multiple plies gives these items extra strength which increases is durability over time! Thus, in view of the admitted fact that imported goods are in cut pieces and are meant for making paint brushes, we hold that imported goods are not synthetic artificial filament yarn. Appellant is held to have wrongly declare the imported goods under CTH 5404. The goods in question as long monofilaments Synthetic in cut length hence, as rightly denied to be yarn. Thus, appellant is rightly denied the benefit of entry no 132 of notification no. 35/2017 dated 13.10.2017 (as amended). Thus there is no infirmity found in the order under challenge. The question Framed above stands decided against the importer- appellant. Appeal dismissed.
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2024 (10) TMI 838
Refund claim of duty paid on short landing of goods - mischief of unjust enrichment - date of calculation of interest on refund claim. Unjust Enrichment in respect of the refund of duty paid on short landing of imported goods - HELD THAT:- There is no dispute that the appellant have shown the refund amount as receivable in their books of accounts and a Chartered Accountant s certificate was issued to this effect. Therefore, firstly the duty paid in respect of goods which have not arrived in India therefore, question of passing ofthe incidence of duty does not arise. Secondly, the amount of duty so paid on the short landing of the goods was shown as receivable in the books of accounts which has been certified by a Chartered Accountant. On this issue, the Tribunal in the decision in the appellant s own case reported at M/S PETRONET LNG LTD. VERSUS CC AHMEDABAD [ 2011 (9) TMI 515 - CESTAT, AHMEDABAD] already considered the issue of Unjust Enrichment and held that in thisfact Unjust Enrichment is not applicable. In view of the fact that the amount of refund has been shown as receivable which is supported by Chartered Accountant s certificate there is absolutely no doubt that the incidence of duty paid on short landing of goods has not been passed on to any other person. Therefore, there is no case of Unjust Enrichment against the assessee. Accordingly, the impugned order passed by the Learned Commissioner (Appeals) is absolutely legal and in order which does not require any interference and hence, the same is upheld, revenue s appeal is dismissed. From which date the interest on refund is applicable? - HELD THAT:- From the judgment in MANISHA PHARMO PLAST PVT. LTD. VERSUS UNION OF INDIA [ 2020 (11) TMI 726 - SUPREME COURT] , it can be seen that Landmark judgment of the Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] was followed and held that the interest on refund is payable from 3 months of date of filing refund application. Therefore, the appellant are entitled for the interest on refund from the date after 3 months of filing a refund application. The impugned orders are set aside - Appeal allowed.
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2024 (10) TMI 837
Classification of imported goods - propriety of the revision of the classification in accordance with settled law and procedure and the General Rules for Interpretation of the Import Tariff - HELD THAT:- The finding in the impugned order of the goods being separately identifiable should have been followed by determination of the corresponding description in the First Schedule the Customs Tariff Act, 1975 instead of treating it as one article of a composite good. Overlooking this, the lower authorities have relied upon purported common parlance derived from purported consumer behaviour which is neither common parlance nor derived from any acceptable study of the marketplace. Common parlance is, at best, a mechanism for resolving ambiguity of description that impedes fitment within the tariff lines in the First Schedule to the Customs Tariff Act, 1975. It is not a substitute for determination of the appropriate tariff item which, however, does not appear to have weighed with the first appellate authority. As the exercise in classification has not been correctly carried out, we have no hesitation in holding that the impugned order is not consistent with law - as enacted and judicially determined. It would, therefore, be appropriate for the matter to be remitted to the original authority for a fresh decision - Appeal allowed by way of remand.
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Corporate Laws
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2024 (10) TMI 836
Contravention of Sections 3(3)(c) and 3(3)(d) r/w Section 3 (1) of the Competition Act, 2002 - guilty of bid rigging and cartelisation in a Tender process initiated by SBI Infra Managemnt Solutions Pvt. Ltd. (SBIIMS) - whether the penalty imposed on Appellant No.1 is proportionate to the offence and whether it meets the criteria laid down in Excel Crop Care Ltd. vs CCI [ 2017 (5) TMI 542 - SUPREME COURT ]? HELD THAT:- The CCI has made the reference to the Excel Crop Care Ltd. vs CCI in its order and mentions that the principle of proportionality as laid down by Hon ble SC was in the context of multi- product companies only. The CCI noted that in the present matter the OPs are engaged in the business of supply of printed advertising/ marketing material which includes signages. It is not possible to classify different types of signages in multiple products in terms of Hon ble SC s Judgmemnt in Excel Crop rather the signages constitute different varieties of the same product. The CCI also differentiated that the contention of the OPs that turn over derived from impugned tender alone should be considered is in the teeth of Excel Crop Care. In the present case the appellant is main business is that of signage and the other items of turn over relates to the same business activity. Such artificial distinction in segmental turn over cannot be accepted. It is also seen that CCI has taken a very lenient view while levying Monetary Penalties upon the OPs most of whom are MSMEs. The Section 27 of the Act provides for Penalty upto 10% of the average of the turnover or income, as the case may be, for the last 3 preceedings financial years, but the CCI taking a lenient view has only imposed penalty of 1% of the average and average of their relavant turnover for the 3 financial years i.e. 2015-16 to 2017-18. The CCI has passed a well considered order in the instant case which has been upheld in two separate appeals by this Tribunal. In one of the matter Hon ble Supreme Court has dismissed the appeal and in another matter no appeal was preferred so the order has attained finality. There are no merit in the present appeal and the same is hereby dismissed.
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2024 (10) TMI 835
Seeking waiver of interest amount payable on monetary penalty - It is submitted since the instant Appeal is pending consideration since 2019, the interest is mounting, hence the appellant thought it appropriate it should pay the penalty and get a waiver of interest - power to waive interest under Regulation 5 of CCI (Manner of Recovery of Monetary Penalty) Regulations, 2011 - HELD THAT:- Admittedly Godrej was a small player in the field of dry cell market and had an insignificant market share like Geep. Godrej, admittedly, was not in a bargaining/negotiating position as compared to Panasonic. Further, Godrej suffered losses in the market for dry cell batteries and though Geep had also suffered losses for the years 2010-13 but made small profits in later years. Both the present appellant and M/s Geep were found in contravention of the Act by the Ld. CCI on the basis of the Product Supply Agreement(s) and e- mail correspondences between them and Panasonic - The impugned order notes that Godrej had also filed a complaint dated 25.11.2015 before the Director General of Anti-Dumping and Allied Duties on the possibility of cartelisation in the dry cell batteries market. In Excel Crop Care Ltd V CCI Anr [ 2017 (5) TMI 542 - SUPREME COURT ], the Hon ble Supreme Court of India held that the penalty imposed by the CCI must (a) relate to the relevant turnover of the relevant business in the relevant market alone, and (b) determination of percentage of penalty should be based on aggravating and mitigating factors. Thus the observation in impugned order where it notes that the losses suffered by the appellant on account of sale of dry cell batteries may have been compensated by the profits made by the appellant in another produces, is wrong, per Excel Crop s case. There would be no relevance of considering the overall turn over of Godrej from any businesses other than the dry cell battery business. The dry cell battery market is an oligopoly with three predominant players i.e. Eveready Industries India Ltd, Indo National Ltd and Panasonic which form a primary cartel members, controlling the market with combined market share of 88% as against miniscule 2% market share of appellant. Admittedly, the turnover of the appellant qua dry cell battery was lesser than M/s Geep and rather it suffered losses in this business, though Geep was in profits in later years. Both the appellant company and M/s Geep were in similar position and asking M/s Geep to pay 1% of the turn over as a penalty and the present appellant to pay 4% to our mind did not synchronize - the penalty imposed upon the appellant reduced to 2% of the turn-over, while maintaining the penalty imposed upon its officials. However, we are not inclined to waive interest as pendency in appeal and continuation of stay would not be a ground for waiver. The penalty reduced is considering the peculiar facts of this case and be not treated as a precedent. Appeal disposed off.
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Insolvency & Bankruptcy
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2024 (10) TMI 834
Legality of the suspension of the petitioner's registration as a Resolution Professional (RP) - contravention of the provisions of Section 30 (2) (b) and (e), 208 (2) (a) and (e) of IBC - lack of due diligence by the petitioner in verifying the Resolution Plan - non-intimation of the claim of KCIL by failing to reply to the specific queries made by it to the RP - HELD THAT:- There was sufficient basis for the IBBI to issue the show cause notice to the petitioner. Its adjudication thereafter by the Disciplinary Committee is principally based on the findings recorded by NCLAT. While adjudicating the show cause notice, the Disciplinary Committee found that there were various lapses on the part of the petitioner as RP by failing to object to the proposal submitted by the SRA on the ground that it included comments as well as legal analysis of the arbitration process wherein an award was passed in favour of KCIL. It found that it was not open for the SRA to term the award as void ab initio or unlawful. In spite of receiving the legal opinion dated 13th July 2020 wherein it was stated that such comments by the SRA ought not to have been made, the petitioner as RP failed to take cognizance of the same. This conduct of the RP has thus been found to be in contravention of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. As regards inaction on the part of the petitioner as RP to indicate the precise amount of claim admitted by him, the observations of the NCLAT in paragraph 20 form the basis for holding that the petitioner failed to act in accordance with Regulation 13 (2) (a) and (d) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - the Disciplinary Committee has proceeded to take necessary action based on the observations of the NCLAT, which the petitioner did not challenge. The finding recorded by the NCLAT was that the petitioner had failed in his duty as RP and hence there was substantial material to proceed against the petitioner. The Disciplinary Committee had failed to indicate the reasons for suspending the petitioner s registration for a period of one year. The material on the basis of which the Disciplinary Committee proceeded to suspend the petitioner being unquestionable, the period for which such suspension should operate is a matter within the realm of the Disciplinary Committee. The Disciplinary Committee in the light of the jurisdiction conferred upon it by Section 220 of the Code is empowered to take into consideration all relevant aspects including the conduct of RP. The petitioner s suspension for a period of one year cannot be said to be highly disproportionate that would shock the conscience of the Court for it to interfere in exercise of writ jurisdiction. No case made out to interfere in exercise of writ jurisdiction. The Writ Petition stands dismissed.
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2024 (10) TMI 833
Maintainability of Section 7 application - non-payment of debt - debt due and payable - whether in the given facts of the case the application under Section 7 of IBC filed by the Appellant was maintainable against the Corporate Debtor? - HELD THAT:- This issue of financial contract being a sine qua non for establishing a financial debt has been well settled in a judgement of this Tribunal in Agarwal Polysacks Ltd. vs K. K. Agro Foods Storage [ 2023 (11) TMI 832 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] wherein after going into Regulation 8(2) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Rule 3(1)(d) and Rule 4(1) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which regulates filing of application by the Financial Creditors, it has been held that written financial contract is not a pre-condition or an exclusive requirement for proving existence of debt. It has been further amplified therein that the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and CIRP Regulations makes it clear that financial debt can be proven from other relevant documents and it is not mandatory that written financial contract can be the only basis for proving the financial debt. Though the name of the Respondent No. 1 is not specifically mentioned as a creditor, there is sufficient material on record to prove that there was disbursal of funds by Respondent No.1 to the Corporate Debtor in their account. The transaction details as culled out from the Ledger Account of the Corporate Debtor, which are quite clearly multiple in nature, are a part of record as placed on affidavit by the Respondent No.1 as may be seen at pages 172-174 of Appeal Paper Book (APB). That this monies were received by the Corporate Debtor has also not been denied by the Corporate Debtor - That the Corporate Debtor repaid certain amount of the outstanding debt between September 2016 till May 2019 also evidences acknowledgement of debt. Since no claim been made that entire sum was repaid by the Corporate Debtor, it can safely be inferred that the debt remained unpaid. No reasons to disagree with the findings of the Adjudicating Authority that it has concluded the existence of debt on the basis of documents/records like the balance confirmation statement in the balance sheet of the Corporate Debtor to establish existence of debt - It is not for the Adjudicating Authority to decide on the quantum of debt but the only requirement for admission of Section 7 petition is to see that the minimum outstanding amount should be more than the threshold amount under the IBC which clearly stands fulfilled in this case. There is nothing to evidence that the same was signed, executed or acted upon by Respondent No.1. When there is nothing to show that the Respondent No. 1 was a party or signatory to the said MoU and also keeping in mind that the Respondent No. 1 and Centrio are clearly separate legal entities, the terms of such MoU purportedly signed between Centrio and Corporate Debtor cannot be held to be binding in any manner on Respondent No. 1. Hence, to answer the third question raised by the Appellant, the submission advanced of adjustment of loan by virtue of the terms contained in the MoU and consequential non-requirement for the Corporate Debtor to repay the Respondent No.1 does not inspire our confidence. It is trite law that under the IBC once a debt which becomes due or payable, in law and in fact, and if there is incidence of non-payment of the said debt in full or even part thereof, CIRP may be triggered by the financial creditor as long as the amount in default is above the threshold limit. It is also well accepted that debt means a liability in respect of a claim and claim means a right to payment even if it is disputed - as long as the financial debt is more than the threshold limit, quantum of debt cannot be used as a ground of defence to assail the admission of Section 7 application. On the question as to whether debt and default was adequately demonstrated before the Adjudicating Authority, basis the records made available before it, the Adjudicating Authority has rightly concluded that it was satisfied with the evidence and material produced before it by the Respondent No.1 to prove that a debt had arisen; that a default has occurred and the default is above the prescribed threshold. This is a case where all the pre-requisites for filing a Section 7 stands fulfilled and the Adjudicating Authority cannot be held to have committed an error in admitting the Corporate Debtor into CIRP for having defaulted in repaying a financial debt which was above the threshold limit. The decision of the Adjudicating Authority admitting the Section 7 application is affirmed - appeal dismissed.
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2024 (10) TMI 832
Commencement of look back period beyond two years u/s 43 of IBC - related party transaction - HELD THAT:- In Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd Vs Axis Bank Ltd and Others, [ 2020 (2) TMI 1259 - SUPREME COURT ], the Hon ble Supreme Court held ' The extent of relevant time is different with reference to the relationship of the beneficiary with the corporate debtor inasmuch as, for the persons falling within the expression related party within the meaning of Section 5 (24) of the Code, such period is of two years before the insolvency commencement date whereas it is one year in relation to the person other than a related party. The conceptions of, and rationale behind, such provisions could be noticed in the excerpts from the interim report of Law Reforms Committee, as referred on behalf of the appellants.' The outstanding being of more than 2 years prior to CIRP commencement date, the relief under Section 43 of the Code would not be available. The respondent, however, shall be at liberty to take alternative action(s) as may be allowed under the Law (inclusive of Section 66 of the Code). The impugned order passed by Ld. NCLT is set aside - appeal disposed off.
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2024 (10) TMI 831
Rejection of liquidation application filed by the Resolution Professional for liquidation of the Corporate Debtor as recommended by the Committee of Creditors - wrong action of the Appellant in advising wrong insurance policy which was for a completed project against the policy required by the Corporate Debtor for a project which was under implementation. Whether the Adjudicating Authority can discard the recommendation of the CoC and rather give its own directives overriding the commercial wisdom of the CoC? HELD THAT:- The Adjudicating Authority was lured by the fact that the Resolution Plan submitted by the Respondents was more than 20 times of the liquidation value of the unit and also that amount of EMD was more than the liquidation value. The Impugned Order relied on the doctrine of prudence to justify that resolution of the Corporate debtor is preferred option over the liquidation of the Corporate Debtor. It is worth noting that according to the Adjudicating Authority the other issues like pending writ before the Hon ble High Courts suits file by the Corporate Debtor, FIR filed by the investigation agencies (perhaps referred to CBI) report submitted to RBI for declaring the Corporate Debtor and the promoter directors as wilful defaulter are not related to the matter and cannot be grounds or factors relevant to decide about rejection of the Resolution Plan - From reasoning recorded by the Adjudicating Authority, it is seen the Adjudicating Authority was not impressed by the commercial wisdom of the CoC and sought it fit to start fresh process for the resolution of the Corporate Debtor. In catena of judgements by the Hon ble Supreme Court of India including K. Sashidhar [ 2019 (2) TMI 1043 - SUPREME COURT ] and Kalpraj Dharamshi [ 2021 (3) TMI 496 - SUPREME COURT ] , it has been stipulated that there is hardly any scope for judicial interference on the part of the Adjudicating Authority or the Appellate Tribunal except ensuring that the Resolution Plan meets the requirements of the Code and the related regulations. There are no violation in the present case and therefore there were no occasion for judicial interference by the Adjudicating Authority. Thus, the Impugned Order is not in consonance of law or in spirit of the Hon ble Supreme Court of India judgements. It is beyond doubt that the commercial wisdom of the CoC is required to be honoured in letter and spirit. There is no role for Adjudicating Authority to interfere on such unfounded reasoning as recorded in the Impugned Order. The Impugned Order is found to be perverse and illegal. The Impugned Order deserves to be set aside - Appeal allowed.
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2024 (10) TMI 830
Rejection of claim of the Appellant to be treated on par with other Financial Creditors and to make the Appellant eligible for distribution of claims as per Resolution Plan - requirement to treat the appellant as equity shareholder by the Adjudicating Authority while approving the resolution plan - discrimination of appellant vis- -vis other Financial Creditors. Whether the appellant has been treated as an equity shareholder by the Adjudicating Authority while approving the resolution plan? - HELD THAT:- Both the CoC and Adjudicating Authority has treated the appellant as unsecured Financial Creditor. There are two entries in the category of unsecured financial creditors, in the resolution plan, one being West Coast Papers and second one is Gloster cables Ltd. In both these cases full amount of claim filed by them has been admitted by the RP. They were admitted as part of CoC. Later on, after their being identified as related parties, the RP informed the concerned parties that they could not attend the CoC meetings henceforth. The SRA has proposed NIL amount to the claimants under this head on account of them being related parties. Appellant in its submission has also accepted that he is a related party unsecured creditor. The resolution plan reflecting the status of Appellant as related party unsecured financial creditor has been approved by the CoC and Adjudicating Authority - the appellant has not been treated as equivalent to equity shareholder and such contention of Appellant is devoid of any merit. Whether the appellant has been discriminated against vis-`a-vis other Financial Creditors? - HELD THAT:- It is seen from the records that the Appellant was aware of the fact, that it was being treated as a related party and was accordingly removed from the Committee of Creditors. The same is evident from emails dated 25.01.2019 and 16.02.2019 sent by the RP to the appellant. However, the Appellant never challenged its treatment as a related party at any stage of the insolvency resolution proceedings, despite have complete knowledge of its status as that of a related party. In this case, the Appellant was held to be a related party of the Corporate Debtor. This has been admitted by the Appellant in his submission also. In the instant case, among the financial creditors, only secured financial creditors (not related to Corporate Debtor) are being paid Rs. 64.20 crores against their admitted claims of Rs. 619.24 crores. The appellant who is an unsecured financial creditor and related party to Corporate Debtor does not fall in that category as per IBC. The Court observed in Para 203 of the Judgment of M.K. Rajagopalan [ 2023 (5) TMI 344 - SUPREME COURT ] that in the case under reference, promoter and erstwhile director who was also a contesting respondent in the matter, was also holding the post of Chairman of the said related party. It held that the Appellate Tribunal has erred in applying the principles on non-discrimination between related and non-related parties and held back the resolution plan - the Judgment of M.K. Rajagopalan squarely applies to the facts of the present case. The CoC and Adjudicating Authority were well within their rights not to treat a related party unsecured creditor on par with secured financial creditors - there are no infirmity in the order of Adjudicating Authority in this regard. There are no merit in the present appeal and the same is hereby dismissed.
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2024 (10) TMI 829
Admission of section 7 application - Appellant has submitted that the Adjudicating Authority has still not dealt with the objections/contentions raised by it before it on the issue that there is no default on the part of the Appellant for which the application under Section 7 could have been admitted - HELD THAT:- Once the Adjudicating Authority has taken into consideration the pleadings and evidence and the contentions raised by both the parties recording the finding only that it has looked into the documents, therefore, it has come to the conclusion that the default has been committed is not sufficient. This case requires a relook by the Adjudicating Authority on the evidence which has been brought on record to judge about two basic issues i.e. debt and default having been committed by the Appellant for the purpose of attracting Section 7 of the Code. The matter is remanded back to the Adjudicating Authority to redecide the issue after taking into consideration the contentions of both the parties by recording categoric finding on the issue which has been raised so that it may facilitate a judicial review by the Appellate Tribunal if any - Appeal allowed by way of remand.
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2024 (10) TMI 828
Rejection of Resolution Plan acceptance by Adjudicating Authority - Appellant submits that there was no time prescribed for submission and Resolution Professional could have submitted before 12:00 PM - HELD THAT:- There are no substance in his submission as time mentioned for submission of plan in RFRP was 17:00 Hrs. When the time was extended from 27.05.2023 to 03.06.2023, the time for submission of plan shall remain the same. Admittedly, the Appellant attempted to submit the plan after 17:00 Hrs. 03.06.2023. When the time was extended, the Appellant took risk in submitting the plan at last hours that too after 17:00 Hrs. There are no reason for consideration of Resolution Plan at this stage. Resolution Plan having not been submitted by the Appellant within time prescribed and the CoC having considered the Resolution Plan which was received in time and has decided to reject the plan and given approval for liquidation. No relief can be granted to the Appellant as prayed in the appeal. There are no merit in the appeal - Appeal is dismissed.
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2024 (10) TMI 827
Violation of principles of natural justice - it is argued that the impugned order is non- speaking and arbitrary as the Appellants have not been given fair opportunity to present their case - maintainability of combined application under Sections 43, 45, 66 of IBC - transaction audit report was not made available to the Appellant - HELD THAT:- It is not in dispute that total claim admitted in the resolution plan was Rs. 2351.97 Lakhs including claim of the financial creditors of Rs. 2277.80 Lakh and claim of the Operational Creditor of Rs.74.17 Lakhs. It is also not in dispute that the CoC in its second meeting held on 14.02.2020 appointed AKG Associates for carrying out the transaction audit for the period from 01.04.2017 to 04.12.2019 (CIRP Commencement date) and it is not in dispute either that the transaction auditor presented their final report in the 3rd CoC meeting held on 15.05.2020 and report was shared with the present Appellants. There is no objection raised to the final report by the Appellants submitted to the CoC. The RP then filed the application under Sections 25(2)(j), 43, 45, 66 and 235A of the Code in which the details of the preferential, undervalued and fraudulent transactions were given under separate heads. The application had to be filed because of the aforesaid transactions the total admitted claim of Rs. 2351.97 Lakh of the creditors became unrecoverable. The RP also gave the summary of avoidance transactions in which preferential was of Rs.502.46 Lakh, undervalued was of Rs. 1721.19 Lakh and Fraudulent was of Rs. 2384.32 Lakh. The present Appellants, who are arrayed as Respondent No.1 and 2 in the application bearing 2445 of 2020, did not choose to appear at the first instance despite service but later on they were allowed to appear by the Court and also allowed to file their reply to the application but they did not choose to file the reply either and as a result thereof, their right to file reply after giving appropriate opportunities was closed and the said order remained unchallenged at the instance of the Respondents (Appellants herein). In such circumstances at this stage, it does not lie in the mouth of the Appellants to make a complaint that they have not been heard or take the shelter of the principle of natural justice when they themselves are to be blamed for the lapse and negligence on their part in not even filing the reply. The decision in the case of GVR Consulting Services Pvt. Ltd. [ 2023 (4) TMI 1137 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] is very much applicable to the present facts and circumstances of the case because the application has been filed giving details under separate heads of the preferential, undervalued and fraudulent transactions determined by the Appellants. There are no merit in the present appeal and the same is hereby dismissed.
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2024 (10) TMI 826
Dismissal of application filed by the Appellant, under Rule 11 of the NCLT Rules, 2016 for revival of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - seeking revival on the ground that Corporate Debtor has failed to abide by the terms of the settlement - failure of the Interim Resolution Professional (IRP) to disclose claims - HELD THAT:- The admitted facts of this case are that the application under Section 12A was filed by the IRP at the instance of the OC. It is also an admitted fact that the Adjudicating Authority allowed the application bearing 6271 of 2022 after confirming from the IRP that he has not received any claim from any claimant and no claim is outstanding. The IRP has also confirmed that he has not constituted the CoC till date whereas it is also a fact that the last date for the submission of claim was 23.12.2022 and the claim was submitted by the Appellant on 21.12.2022 and the order was passed on 22.12.2022 on the application bearing 6271 of 2022. There is not even an iota of a doubt that the Adjudicating Authority has been grossly misled by the IRP at the time when the order was passed on 22.12.2022 but instead of rectifying its mistake and or to undo the injustice caused to the Appellant, the Adjudicating Authority has dismissed the application bearing 226 of 2023 holding that it could not find any justifiable reason to allow the prayer made in the application and rather in the entire impugned order expressed its anguish and dissatisfaction about the working of the IRP and repeatedly cautioned him to be careful while exercise of his functions and discharging his duties. The filing of application under Section 7 by the Appellant is in no way causes any hindrance in maintaining the present application by the Appellant because the said application has been filed in terms of the order passed in the application bearing 6271 of 2022. If the misrepresentation/concealment of any fact by the IRP to the Adjudicating Authority is considered lightly by relegating the Financial Creditor to any other remedy as it happened in the present case, to take his other remedy in accordance with law then it would be giving a premium to the statutory authority for his lapses and unprofessional act and conduct. Thus, it is a fit case for interference by this Court in this appeal and thus, the appeal is allowed.
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Service Tax
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2024 (10) TMI 825
Classification of service - Telecommunication Services or Support Services for Business or Commerce - providing transporter service - short payment of service tax - recovery of service tax with interest and penalty - Extended period of limitation. Whether the services provided by M/s Intelsat to the respondent fall under the category of Telecommunication Services as claimed by the respondent and which were exempted before June 2012; or the services are operational/infrastructural support for their output service which fall under the category of Support Services for Business or Commerce as alleged by the department? HELD THAT:- The transponder service means the supply of satellite capacity to be managed by the customer i.e. the respondent in the present case. M/s Intelsat on some satellite in the space having a certain capacity i.e. transponder capacity and out of the said transponder capacity available on the said satellite, they allocate some capacity to their customers for a consideration. The ld. Commissioner in the impugned order has also examined all the submissions made herein before us by the ld. Counsel for the respondent and after examining all the submissions, the ld. Commissioner has held that the services provided by M/s Intelsat are Telecommunication Services which are not taxable during the relevant period. The decision of the Tribunal in the case of Ushodaya Enterprises Pvt Ltd [ 2020 (3) TMI 457 - CESTAT HYDERABAD] , relied upon by the ld. AR, is not applicable in the present case as in that case the main issue involved was whether the hiring/leasing space in a satellite amounts to sale or deemed sale and is subject to service tax under Support Services of Business or Commerce ; whereas, in the present case the issue is whether the services rendered by the respondent fall under the category of Telecommunication Services or not. Thus, the ld. Commissioner has given detailed reasoning to hold that the impugned services fall under the definition of Telecommunication Services and not under Support Services of Business or Commerce and we do not find any infirmity in that. Extended period of limitation - HELD THAT:- The extended period under proviso to Section 73(1) of the Act can be invoked only if the service tax was not paid or levied by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or Rules with intent to evade payment of service tax. The department has not established any ingredients which are required to invoke the extended period. It is noted that even if assuming that the respondent was liable to pay the service tax on transponder services under Business Support Services , they would still be eligible to take the credit of the same as theses services being input services were utilized by respondent to provide output services i.e. teleport services. Hence, mala fide intention to evade the tax cannot be attributed to the respondent. Therefore, extended period of limitation cannot be invoked as the situation would have been revenue neutral. There is no infirmity in the impugned order - Appeal of Revenue dismissed.
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2024 (10) TMI 824
Levy of service tax with interest and penalty - Business Support Services - sharing of Revenue - providing infrastructural support services to DSPs - It is alleged that the revenue retained by the appellant is against the BSS rendered by the appellant to Diagnostic Service Providers (DSPs) - extended period of limitation - HELD THAT:- Perusal of the agreements between the parties clearly shows that the contracts between the appellant and various DSPs are on principal-to-principal basis and are in the nature of sharing-revenue. As per the contracts, the appellant is required to provide infrastructure and DSPs are required to install their equipments; and the revenue earned from the patients is shared between the appellant and the DSPs and no taxable service is being provided by the appellant to DSPs. Here, it is pertinent to extract the relevant clauses of such agreements with regard to sharing of revenue - there is absolutely no stipulation of payment of any service charges by the DSPs to the appellant and the contract is purely for sharing of revenue. Circular No. 109/03/2009-ST dated 23.02.2009 relied upon by the appellant also recognizes that the transactions between two contracted parties on principal-to-principal basis are not to be treated as service. Though the circular was issued in context of levy of service tax on movie theaters, but the context is applicable in the present case also, because in the present case, the appellant and the DSPs are dealing with each other on principal-to-principal basis. Mere providing of a building alongwith some basic amenities like electricity, water, sewage etc cannot be qualified as support service for running a business. These facilities are provided to the DSPs to enable them to provide the services to the appellant; and without these facilities, DSPs would not be in the position to provide the service to the appellant - Healthcare services are fully exempted from the tax w.e.f. 25.04.2011 vide Notification No. 30/2011-ST dated 25.04.2011. This notification was rescinded w.e.f. 01.07.2012, but healthcare services are not liable to service tax in the negative list regime also. Thus, in the present case the service, if any, rendered by the appellant are not BSS and rather qualifies as Healthcare Service which is exempted from service tax. Extended period of limitation - HELD THAT:- The appellant has not suppressed any material facts with intent to evade payment of tax and the entire earning of the appellant from the revenue-sharing modal was recorded in the balance-sheet, which is a public document. Moreover, the appellant was under a bona fide belief that healthcare services are not liable to service tax and the issue involved is that of interpretation; hence, extended period of limitation cannot be invoked. Therefore, substantial demand raised for the period 2008-09 to September 2011 is barred by limitation. Since the demand itself is not sustainable, therefore, the question of interest and penalty also does not arise. The impugned order is not sustainable in law and is therefore, set aside - appeal allowed.
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2024 (10) TMI 823
Refund of input service credit in cash - denial on the ground that CENVAT rules ceased to be in force and their claim cannot be considered under CGST Act, 2017 in as much as the Service Tax was paid on 08.12.2017 after the CGST Act came into force - whether the Appellant is eligible for refund of CENVAT credit in terms of Sec. 142(3) of CGST Act, 2017 which could not be claimed under the erstwhile laws due to implementation of GST laws with effect from 01.07.2017? HELD THAT:- The Order-in-Original dated 24.04.2019 had invoked Section 142(7) of the CGST Act, however the Impugned order has attempted to reject refund by invoking provisions of Section 142(8) of the CGST Act. A standalone perusal of the Impugned Order reveals that there is no ground whatsoever raised under the existing law, under which the refund has been denied. Invocation of Section 142(8) in the present case, for the purpose of denying refund is not warranted as none of the circumstances under Section 142(8) are attracted in the instant case. Section 142(8) invocation is warranted in a situation where amounts become recoverable from an assessee in pursuance of an assessment or adjudication proceedings initiated before, on or after the appointed date. The payment of service tax in the instant case is not pursuant to the circumstances set out in Section 142(8) but merely pursuant to audit undertaken of the accounts / records of the appellant. The rejection of the refund claim cannot be justified - the impugned order dated 21.09.2019 is set aside - appeal allowed.
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2024 (10) TMI 822
Levy of service tax - business auxiliary service - activities carried out by the Appellant by supplying linen/bed rolls to the passengers in AC Coaches of India railway - extended period of limitation - HELD THAT:- The activities carried out by the Appellant is falling under the category of Business Auxiliary Service and Appellant is liable to pay service tax. However, as regards invoking of extended period of limitation, on perusal of the Order-in-Original dated 11.07.2011 relied by the Appellant, on very same issue of supplying bedsheets to passengers of Railway, proceedings demanding service tax under Business Auxiliary Services was dropped by the Adjudication Authority in the matter of M/s. Poorvanchal Caterers, Patna. Moreover, as submitted by the Appellant, there is no dispute that no amount towards service tax was received by the Appellant from IRCTC for supply of bed rolls and they have not received any payment from the train passengers to whom such services is provided. Moreover, during investigation, when statement was recorded, the partner of the Appellant categorically stated that they were paying service tax for the other activities and having service Tax registration. However, they have not paid service tax for the amount received from the Railway on the presumption that no Service Tax is liable to be paid by them. Longer period cannot be invoked, when issue involved is interpretation of the complex provision of law and where there is no deliberate attempt to escape from payment of duty. The demand of Service Tax for the extended period and penalty imposed as per impugned orders are set-aside. Matter is remanded to Adjudication Authority to assess the demand of duty for the normal period of dispute prior to date of Show Cause Notice on 04.01.2010 - Appeal allowed in part.
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2024 (10) TMI 821
Levy of service tax under the reverse charge mechanism for the manpower services imported from Mitsui Japan - secondment of employees - Mitsui Japan deputed its employees to Mitsui India and the reimbursements of salary costs of the expats by Mitsui India to Mitsui Japan is the consideration for receipt of manpower supply services - HELD THAT:- A perusal of the Agreement indicates that; (i) Mitsui Japan shall assign certain of its employees to Mitsui India as officers or employees of Mitsui India and Mitsui India shall accept such employees who shall continue to be employee of Mitsui Japan; (ii) Rules of Mitsui India shall, in principle, apply to matters relating to the services of the seconded employees; (iii) Salary and bonuses payable to the seconded employees shall be paid by Mitsui Japan in accordance with their rules; and (iv) Mitsui Japan shall send to Mitsui India an invoice for the amount of the expenses incurred by Mitsui Japan in a month under the Agreement and Mitsui India shall be pay the invoice amount. The Supreme Court in C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] examined almost a similar Agreement as has been executed in this appeal and ultimately held that the overseas group company provided manpower supply service to the Indian company - It transpire from paragraph 32 of the judgment of the Supreme Court in Northern Operating Systems that the Indian company would request the UK company to provide employees for the expertise required by the Indian company and the UK company would thereafter select the employees and second them to the Indian company. The employees seconded shall continue to be remunerated by the UK company. However, during the secondment period, the Indian company shall reimburse the UK company of all the remuneration of the employees, including but not limited to salary incentives and employment benefit. Thus, the basic agreement between Mitsui India and Mitsui Japan in the present matter and the UK company and the Indian company in Northern Operating Systems are almost similar. Thus, in view of the reasons given by the Supreme Court in the aforesaid judgment in Northern Operating Systems, it has to be held that Mitsui Japan provided manpower services to Mitsui India. The contentions raised by Mitsui Japan run contrary to the aforesaid judgment to the Supreme Court - the decision of the Commissioner holding that Mitsui Japan provided manpower services to Mitsui India, therefore, does not call for any interference in this appeal. Appeal dismissed.
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2024 (10) TMI 820
Demand of service tax by denying the benefit of N/N. 40/2012-ST dated 20.06.2012 N/N. 12/2013-ST dated 01.07.13 - Appellant provided services to M/s Samsung Engineering Co Ltd, Dahej, SEZ without proper authorization from competent authority in Form No.A-1/A-2 - HELD THAT:- During the reply to show cause notice the appellant have submitted form No. A-1 and A-2, despite that the adjudicating authority has confirmed the demand denying the exemption. Even though, the appellant have not submitted the form No.A-1 and A-2 at the relevant time but at later date the exemption cannot be denied. Moreover, this Tribunal has taken a view in various judgments cited by the appellant that so long provision of service in SEZ unit is not disputed the substantial benefit of exemption cannot be denied merely fornon submission of form A-1 and A-2. This Tribunal has taken a view that in such situation form A-1 and A-2 is procedural requirement and for which the exemption cannot be denied. This Tribunal has also taken a view since, as per the SEZ Act the supply of service to SEZ is otherwise not taxable and the provision of SEZ Act override any other Act, the denial of exemption in the present case is not justified. The appellant are not required to pay service tax in respect of service admittedly, provided to SEZ unit. Therefore, the demand is not sustainable. Hence, the impugned order is set aside - appeal allowed.
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2024 (10) TMI 819
Dismissal of appeal on the ground of limitation contemplated under section 85 of the Finance Act, 1994 - order sought to be impugned was received by the appellant on 04.04.2018, but the appeal was filed on 06.06.2018 without a delay condonation application - HELD THAT:- The appellant does not dispute that the appeal was filed in the office of the Commissioner (Appeals) on 06.06.2018. The appellant also does not dispute that the order against which the appeal was filed was received by the appellant on 04.04.2018. The period of two months would expire on 03.06.2018 but the appeal, as noted above, was filed on 06.06.2018. However, what needs to be noted is that the office of the Commissioner (Appeals) allotted a regular number to the appeal and information was also sent to the appellant for final hearing of the appeal without informing the appellant that the appeal was defective as there was a delay of 3 days in filing the appeal. The order passed by the Commissioner (Appeals) also does not mention that during the course of the hearing of the appeal, learned counsel for the appellant was apprised that there was a delay and the appeal was not accompanied by a delay condonation application. It will, therefore, not be possible to sustain the order dated 28.09.2018 passed by the Commissioner (Appeals) - Appeal allowed.
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2024 (10) TMI 818
Failure to pay tax - construction of 'Residential Complex' - service provided by any seller in connection with the residential complexes till execution of such sale deed would be in the nature of self-service - HELD THAT:- The facts were verified by the Tribunal and thereafter it was held that in the instant case their exists an agreement for sale of land to the client and thereby making the client the owner of the land. This Tribunal also considered Board's Circular No.108/02/2009-ST dated 29.01.2009 and directed adjudication authority to consider the matter in view of the above Circular. Thereafter on remand, Commissioner has rightly followed the direction issued by this Tribunal and dropped the proceedings against the respondent. However, respondent proceeded with review and as per the Review Order, no reference is made to Board's Circular No.108/02/2009-ST dated 29.01.2009 as directed by this Tribunal. Moreover, the issue on merit is also squarely covered by large number of decisions including the decisions in M/S GARDENCITY REALTY PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [ 2024 (7) TMI 477 - CESTAT BANGALORE] . Hence demand of service tax with interest and imposition of penalty on respondent is unsustainable. The Appeal filed by the Revenue is dismissed.
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2024 (10) TMI 817
Wrongful availment of CENVAT Credit - CENVAT Credit on Service Tax paid under Reverse Charge Mechanism before 18.04.2006. Payment of service tax made after 18.04.2006 - HELD THAT:- A specific provision has been inserted in Rule 3 of the CENVAT Credit Rules, 2004, allowing CENVAT Credit of service tax paid under Section 66A of the Finance Act, 1994. Hence, it is observed that the CENVAT Credit availed by the Respondent for the period after 18.04.2006 is legal and proper. Credit availed on the payment of service tax made for the period prior to 18.04.2006 - HELD THAT:- The law relating to taxability of import services was not settled during that period. However, the Respondent decided to pay service tax to avoid any disputes. Once, service tax is paid by the Respondent on the import of services and the same is accepted by the Department, then the credit of the same cannot be denied. The Respondent is eligible to avail the credit of service tax paid under Section 66A during the period from 2004-05 to 2007-08 - the impugned order is upheld - appeal filed by Revenue is rejected.
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Central Excise
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2024 (10) TMI 816
SSI Exemption - clubbing of the value of clearances of PP/HM Sheets and Bags - cross-examination not allowed - violation of principles of natural justice - whether the decision of the Hon'ble Supreme Court in ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [ 2015 (10) TMI 442 - SUPREME COURT ], can be applied to the facts of the present case, particularly regarding remitting back the case to the respondents? HELD THAT:- In the present case, not only the statement of accountant itself is clear but also of the respective petitioners. The necessity for cross-examining the customer of the respective petitioner is not required as in a quasi judicial proceedings before the respondents, the respondents are merely governed only by the principles of preponderance of probability and are not governed by strict rules of evidence. Unless, the statements of the persons who have given statements against the petitioners are solely relied for confirming the demand, question of cross-examination of any of the persons who have given statements against the petitioners does not arises only where demand is solely based on such statement, the Department has to allow cross-examination or in the alternative eschew such statements. The impugned orders prima facie indicate that the respondents have merely relied on the statement of buyers of the respective petitioners. They have merely corroborated the records maintained by the respective petitioners that the buyers have purchased PP bags from the respective petitioners. Therefore, there is no merits in the challenge to the impugned orders on the ground that no cross-examination was allowed in terms of the decision of the Hon'ble Supreme Court in Andaman Timber Industries case. Petition dismissed.
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2024 (10) TMI 815
Process amounting to manufacture or not - Recovery of CENVAT Credit with interest allegedly taken erroneously without undertaking any manufacturing process alongwith direction for payment of equal penalty under Rule 14 15(2) of the CENVAT Credit Rules, 2004 read with Section 11A(5), 11AA and 11AC of the Central Excise Act, 1944 - HELD THAT:- It has to be taken on record that w.e.f. 01.03.2003 certain goods undergoing packing, repacking, labelling, relabeling were to be considered as manufacture, even if it is not brought on record as to if the alleged product is goods specified in third schedule of the Central Excise Tariff Act and even if it is accepted that the process undertaken by the Appellant before submitting the products to clearance was not to be considered as manufacture, still Appellant had taken the stand even before the Adjudicating Authority that in such an event duty was refundable to it, which is admittedly much higher than the CENVAT Credit availed during the said period that was held by the Respondent-Department as inadmissible. Without going into the intricacy of the process of manufacture or the interpretation of provision of law dealing with such manufacturing process, in view of the settled position of law that has been reiterated by the Hon'ble Bombay High Court in the case of Ajinkya Enterprise [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] that when duty is accepted by the Department against clearance of a manufactured product, CENVAT Credit availed by the manufacturer can t be denied to it. The order passed by the Commissioner of Central Excise (Appeals), Mumbai-II is hereby set aside with consequential relief of refund of credit, that was reversed by the Appellant, with applicable interest as per law and the Respondent-Department is directed to pay the same within two months of receipt of this order - Appeal allowed.
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2024 (10) TMI 814
Valuation of Centray Excise duty - whether the trade discount of Rs.01.7 per kg. or Rs.0.26 per kg. offered by the appellant to Navi Mumbai Municipal Transport qualifies to be additional consideration flowing from purchaser to the appellant in view of the fact that the appellant has established their dispensing unit in the land belonging to the said purchaser? - HELD THAT:- Hon ble Supreme Court in COMMISSIONER VERSUS MAHANAGAR GAS LTD. [ 2017 (11) TMI 1813 - SC ORDER] that when there is no evidence of flow of additional consideration, the assessable value arrived at after allowing trade discount is as per the provisions of Section 4(1)(a) of Central Excise Act, 1944. In the present case, for use of land appellant is separately paying lease rent. Therefore, there is no additional consideration flowing to the appellant from the purchaser of the goods. Following the ruling by Hon ble Supreme Court in the case of Commissioner vs. Mahanagar Gas Ltd. it is held that the discount offered by the appellant to Navi Mumbai Municipal Transport cannot be treated as additional consideration and cannot be added to arrive at assessable value. The impugned order is set aside - appeal allowed.
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2024 (10) TMI 813
CENVAT Credit - invoice though addressed to them but the address of job work is given and the goods were used at the job worker premises for the manufacture of goods to be used by the principal manufacturer - only allegation is that the inputs used in the job worker premises and the address of job worker is mentioned in the invoices - HELD THAT:- It is found that only because the invoices bear the address of the job worker where the name of the appellant is correctly mentioned, Cenvat credit cannot be denied. Since goods have to be processed by the job worker obviously the address of the job worker has to be there on the invoice as consignee, despite this the job worker admittedly carries out the job work for the principal only, therefore, there is absolutely nothing wrong in the invoice and the appellant are eligible for the Cenvat credit. It is found that in some of the invoice even the name of the job worker is appearing but even if in such cases job worker is not the buyer of the goods but only consignee to process the inputs on behalf of the principal manufacturer i.e. the appellant. Therefore, in such case also Cenvat credit is admissible to the appellant. However, the factual aspect of receipt of inputs at the job worker premises and use thereof needs to be verified by the adjudicating authority. Cenvat credit on courier service is admissible to the appellant - the appeal is partly allowed in respect of courier service and in other services the appeal is party remanded to the adjudicating authority.
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2024 (10) TMI 812
Interpretation of statute - Rule 6 (3) and Rule 6 (3A) of Cenvat Credit Rules, 2004 - computation of reversal on total Cenvat credit or only on common credit - HELD THAT:- The issue in hand is no more res-integra as for the purpose of the correct calculation of the proportionate Cenvat credit for reversal under Rule 6 (3) in terms of Rule 6 (3A) of Cenvat Credit Rules, 2004 the total Cenvat credit means only the total Cenvat credit of common input and input service which is used for dutiable as well as exempted goods. As per the submission of the appellant they have correctly calculated and reversed the credit. However, the revenue is at liberty to verify the correctness of the credit reversed by the appellant. The impugned order is set aside - Appeal allowed.
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2024 (10) TMI 811
Recovery of short paid central excise duty - non-inclusion in the assessable value by the appellant - recovery with interest and penalty - HELD THAT:- Both the authorities below assumed in respect of some invoices of services that the same are attributed to the manufacturing of the excisable goods. Hence, included the same in the value and on which the duty was demanded. It is prima facie found that there are some of invoices which are even not connected with the supply of manufactured goods whereas those activities are independent service simpliciter. Therefore, at least in respect of those invoices no inclusion can be made in the assessable value of the goods manufactured and cleared on payment of duty. Similarly, there are certain invoices which relates to post-manufacturing and clearance of the goods i.e. related to overall assembly and installation of the plant at site which is not connected with the manufacturing of the appellant. Therefore, the same is also not includable in the assessable value. However, the adjudicating authority has not verified these vital facts before passing a de-novo order. The impugned order is set aside - matter remanded to the adjudicating authority for passing a fresh order, after compliance of principles of natural justice - appeal allowed by way of remand.
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2024 (10) TMI 810
Refund of excise duty - duty paid over and above 6% on the product All Star Pen cleared as free of cost physician sample - duty paid at the rate of 6% on the product All Star Pen cleared as free of cost physician sample - principles of natural justice - HELD THAT:- Firstly, the appellant have not sold the physician sample, as the same was cleared free of cost so not only the duty even the principle amount towards the cost of physician sample has not been passed on to any other persons Moreover, the appellant have shown the amount of duty as receivable in their books of account and also submitted CA certificate to this effect. Therefore, taking a stock of all these undisputed fact, it can be conveniently concluded that the appellant have not passed on the incidence of duty paid in access for which the refund is sought for by the appellant. Accordingly, the refund of Rs.58,59,456/- is not hit by the mischief of unjust enrichment. Initially the appellant have filed a refund claim of duty paid at the rate of 6% on the ground that the physician sample is eligible for exemption from whole of the duty. However, as of now the issue of rate of duty i.e. 6% in terms of Notification No. 12/2012-CE dated 17.03.2012 has been finally decided by this Tribunal in the appellant s own case SANOFI INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, BHARUCH [ 2024 (3) TMI 978 - CESTAT AHMEDABAD] and also by the revisionary authority order No.40-41/2023-CX(WZ)/ASRA/MUMBAI dated 07.02.2023. Therefore, now as regard the issue of rate of duty is settled at 6% and attained finality. Therefore, the appellant is not eligible for refund as they have correctly paid the duty @ 6%. Appeal disposed off.
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2024 (10) TMI 809
CENVAT Credit - Crude Mentha Oil - denial of request for cross examination - SCN adjudicated only on the basis of assumptions and presumptions or not - extended period of limitation - HELD THAT:- Since the departmental officers had verified the facts which had been declared by the appellant in the statutory records and the test reports also indicated that the goods would be Crude Mint Oils, the genuineness of test report conducted after receipt of the goods from Amarnath Industries, cannot be doubted and so the request for cross examination of departmental officers and other persons should not be granted. The Commissioner also observed that the case against the appellant is not only on the basis of statements of employees of Amarnath Industries, but also on circumstantial test reports and, therefore, denying the right of cross examination would not be violative of principle of natural justice. In the first instance, under section 9D of the Central Excise Act it is clear that a statement made during investigation/enquiry before a central excise officer cannot be relied upon unless it is first admitted and for this the person who made the statement has to be summoned and examined as a witness in adjudication proceedings. Failure to do so would mean that the adjudicating authority has relied upon an irrelevant material and, therefore, the order would be vitiated. The question of cross examination would arise only after examination of the person who makes statement before the central excise officer. The Commissioner has placed reliance upon the statements without following the procedure prescribed under section 9D of the Central Excise Act. The order passed by the Commissioner deserves to be set aside for this reason also - The penalties imposed upon the Managing Director of the appellant cannot also, for the same reasons, be sustained. The impugned order dated 17.05.2010 passed by the Commissioner so far as it concerns the appellant deserves to be set aside and is set aside - Appeal allowed.
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2024 (10) TMI 808
Denial of CENVAT Credit - non-manufacture of goods by Amarnath Industries - appellant cleared the raw material i.e., Crude Mentha Oil, Crude Piperita Oils, Crude Spearmint Oils as it is without subjecting the same to any manufacturing process - irregular availment of benefit of Notification dated 14.11.2002 during the period 29.04.2005 to 04.06.2002 - Whether the final products stated to be supplied to the appellant and to various other buyers were raw-material supplied to them as such under the guise of final products during the above period - denial of cross-examination - violation of priciples of natural justice? HELD THAT:- The Commissioner found that since the departmental officers had verified the facts which had been declared by the appellant in the statutory records and the test reports also indicated that the goods would be Crude Mint Oils, the genuineness of test report conducted after receipt of the goods from Amarnath Industries, cannot be doubted and so the request for cross examination of departmental officers and other persons should not be granted. The Commissioner also observed that the case against the appellant is not only on the basis of statements of employees of Amarnath Industries, but also on circumstantial test reports and, therefore, denying the right of cross examination would not be violative of principle of natural justice. In the first instance, under section 9D of the Central Excise Act it is clear that a statement made during investigation/enquiry before a central excise officer cannot be relied upon unless it is first admitted and for this the person who made the statement has to be summoned and examined as a witness in adjudication proceedings. Failure to do so would mean that the adjudicating authority has relied upon an irrelevant material and, therefore, the order would be vitiated. The question of cross examination would arise only after examination of the person who makes statement before the central excise officer. The Commissioner has placed reliance upon the statements without following the procedure prescribed under section 9D of the Central Excise Act. The order passed by the Commissioner deserves to be set aside for this reason also - The penalties imposed upon the Managing Director of the appellant cannot also, for the same reasons, be sustained. The impugned order dated 17.05.2010 passed by the Commissioner so far as it concerns the two appellants deserves to be set aside and is set aside - appeal allowed.
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2024 (10) TMI 807
CENVAT Credit - input services - outward Goods Transport Agency Services - place of removal - HELD THAT:- The issue is no more res integra as the same has been finally decided by the Larger Bench vide M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE, TRICHY [ 2024 (7) TMI 680 - CESTAT CHENNAI] wherein it was held ' in a case where clearances of goods are against FOR contract basis, the authority needs to ascertain the place of removal by applying the judgments of the Supreme Court in Emco and Roofit Industries, the decision of the Karnataka High Court in Bharat Fritz Werner, and the Circular dated 08.06.2018 of the Board to determine the admissibility of CENVAT credit on the GTA Service upto the place of removal.' From the appeal records, it is evident that in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] , the Hon ble Apex Court had held that credit of service tax paid for outward transportation of goods is not eligible. These appeals are allowed by way of remand to the Lower Adjudicating Authority who is directed to verify the documents and ascertain the place of removal. The appellant would be eligible for the CENVAT credit, in case, the Buyer s premises is the place of removal.
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2024 (10) TMI 806
Wrongful availment of CENVAT credit on input services relating to construction of co-generative power plant in their factory during period from September 2010 to March 2012 - HELD THAT:- The learned Commissioner had not considered the documents placed before him in support of their claim that civil construction work had been completed prior to 31.03.2011. These documents and are required to be specifically scrutinised by the learned Commissioner and also the objection raised by the learned AR for the Revenue about the admissibility of cenvat credit on the invoices raised after 01.04.2011 in view of Point of Taxation Rules, also needs to be examined. Thus, the matter is remanded to the adjudicating authority to address all the issues raised at the time of de novo adjudication. Appeal allowed by way of remand.
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2024 (10) TMI 805
Eligibility for exemption under N/N. 30/2004-CE - Clearing Texturized Yarn under chapter 54 of CETA - Knitted Fabrics under chapter 60 of the CETA - assesse s contention is that they are exempted from payment of duty under Notification No.30/2004-CE dated 09.07.2004 on the clearances of texturised yarn and knitted fabrics manufactured out of POY, which was not procured from outside, does not fall under the ambit of the said notification - Extended period of limitation. HELD THAT:- N/N. 30/2004-CE dated 09.07.2004 as amended vide N/N. 10/2005 dated 01.03.2005 exempts all filament yarn procured from outside and subjected to any process by a manufacturer who does not have the facilities in his factory (including plant and equipment) for manufacture of filament yarns of chapter 54, from payment of whole of Central Excise Duty. Further, benefit of Notification is available to goods of Chapter 54 and 60 of Central Excise Tariff if credit of duty on inputs or capital goods has not been taken under the provisions of the Cenvat Credit Rules, 2002/2004. In the present matter Appellant claimed the all the manufacturing areas are to be treated as separate entity and we find support in claim of the Appellant. M/s. SPPL obtained Central Excise Registration dated 14.05.2004 for manufacture of POY falling under Chapter sub-heading No. 5402 42 and texturized yarn under chapter heading No. 540232. It is noticed that appellant vide their letter dated 21.02.2014 filed the application for amendment in their Central Excise Registration certificate they had submitted the new factory ground plan, in addition they had also filed online Application in Form A-1 on 21.02.2004. The Knitted Fabric falls under Chapter 60 and as per above entry it does not have any other condition except that the assessee should not avail the Cenvat credit on the input. In the case of knitted fabric, even though the unit No.1 availed the Cenvat credit but the excise duty on the POY was paid and such duty paid goods was subsequently used by unit No.2 3 but no Cenvat credit was availed on the POY - Accordingly, in the present case knitted fabric is clearly exempted as no Cenvat credit was availed on its inputs in terms of notification No. 30/2004-C.E. dated 09.07.2004 (Sl.15). Therefore on this alternate finding the knitted fabric is undisputedly exempted. It is clear that even in the same factory if the Cenvat credit is availed on the initial input and used in the manufacture of intermediate product on which excise duty is paid and subsequently no Cenvat credit is availed on the said intermediate goods, the final product manufactured out of the said duty paid intermediate product shall be eligible for exemption carrying condition of non availment of Cenvat credit on input. This view is based on the fact that the final product manufactured is not out of cenvatted input, hence the condition of the notification clearly stands fulfilled. Therefore in the present case knitted fabric is eligible for exemption. Accordingly the duty demand on knitted fabric is not sustainable on this ground also. Extended period of limitation - HELD THAT:- Claiming the exemption notification which was in the knowledge of the Revenue, the suppression of fact or mala fide on the part of the appellant cannot be attributed. Further the issue involved is clearly an interpretational issue of exemption notification. Therefore, in the peculiar facts as noted above there is no suppression of fact or mala fide intention on part of the appellant, therefore, the invocation of extended period is illegal and incorrect. Accordingly, the demand for the longer period is not sustainable on the ground of time bar also. The demand is set aside on merit as well as on limitation. The appeals filed by the assesse-appellants are allowed.
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2024 (10) TMI 804
Rectification of mistake - error apparent on the face of record - time limitation - Interpretation of exempted goods under Notification No. 12/2012-CE for the purpose of Rule 6(3A) calculations - HELD THAT:- It is found that when section 11A was amended, it was not specified that it will apply to only cases where the cause of action arises thereafter. It also did not say that the new limitation will have retrospective effect. In this case, the cause of action arose before the amendment, but the show cause notice was issued after the amendment. It is found that limitation is part of the procedural law and it will apply to those cases where the suit or proceedings have yet to be instituted, regardless of the period of the cause of action. If the cause of action arose before the amendment but the proceedings were initiated thereafter, the amended limitation will apply. However, if the period of limitation had already lapsed under the old law before initiating the proceedings, the amendment will not revive the lapsed period. In this case, although the cause of action arose prior to the amendment, the show cause notice was issued after the amendment. The cause of action, viz., the alleged short reversal of an amount under Rule 6(3A) occurred during April 2012 to March 2016 and the limitation was increased to two years on 14 May 2016. The show cause was issued on 6 June 2017. Therefore, the period from May 2015 to March 2016 was within the normal period of limitation of two years on the date of issue of show cause notice. The appellant itself had chosen the option of following Rule 6(3A) and the department had not forced it upon the appellant. Having chosen an option, the appellant calculated the amount to be paid in a particular manner which, according to the Revenue, was incorrect. Only the calculation of the amount is in dispute. Specifically, the dispute was whether the goods exempted by notification no. 12/2012-CE should be considered as exempted goods or not exempted goods for the purpose of calculation of an amount to be paid under Rule 6 (3A) of CCR, 2004. Once the assessee has chosen an option and the dispute is only regarding the recovery of the amount short paid as per Rule 6(3A), Rule 6 itself provides for recovery of such amount in the manner provided in Rule 14 of CCR. While Rule 14 itself does not provide for recovery of an amount not paid or short paid under Rule 6(3A), Explanation III to Rule 6 provides for such recovery. It is under this provision that the demand was made and confirmed. In fact, the learned counsel for the appellant himself admitted in his response to the department s Miscellaneous Application that this Explanation does provide for recovery of an amount but asserted that it does not provide for recovery of interest or imposition of penalty. Application filed by the Revenue is partly allowed and the demand of an amount under Rule 6(3A) within the normal period of limitation is upheld but not interest thereon or penalty.
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2024 (10) TMI 803
Utilization of Edu Cess credit and SHE cess lying in balance 01-03-2015 towards payment of Central Excise Duty for the month of June 2017 - recovery with penalty u/s 11AC of the Central Excise Act, 1944 - HELD THAT:- The N/N. 12/2015-CE(NT) dated 30.04.2015 amended the Rule 3 (7) (b) of Cenvat Credit Rules. By insertion and following provisos, the notification does not provide that Cenvat credit of Education- cess/ Secondary and Higher Education-cess available with the Appellants as on 28.02.2015 stands lapsed. The said credit is available with the Appellant for utilization of the same for payment of due Central Excise duty as the the rates of Central Excise duty were made inclusive of the leviable Education cess and Secondary and Higher Education cess. The Notification No.12/2015-CE(NT) has been issued amending the Cenvat Credit Rules as to implement the above proposed amendment in the rate of duty as per the Hon ble Finance Minister s Speech - the notification number 12/2015-CE (NT) is totally silent on the issue of accumulated credit of the education cess and higher education cess available with the Appellants as on 01.03.2015, It do not provide that this credit shall lapse, or cannot be used for payment of the excise duty in which these cesses have been subsumed. Appeal allowed.
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CST, VAT & Sales Tax
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2024 (10) TMI 802
Challenge to assessment order - impugned order was made without service of any notice on the Petitioners, without giving the Petitioners an opportunity to be heard - violation of principles of natural justice - HELD THAT:- The impugned order was made without service of any notice on the Petitioners, without giving the Petitioners an opportunity to be heard, and by erroneously recording that the Petitioners representative was heard on 23 May 2023, when the impugned order was made on 20 March 2023. Even in this case, the impugned order, though allegedly made on 20 March 2023, was served upon Petitioner No.3 only on 1 July 2023, after four months. This Petition is accordingly disposed of by quashing and setting aside the impugned order dated 20 March 2023 and the corresponding demand notice dated 20 March 2023. The request for remand is not acceded to, again, for the reasons set out in the judgment and order disposing of Writ Petition No.11929 of 2023, which apply in the facts and circumstances of this case.
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2024 (10) TMI 800
Challenge to assessment order - impugned order was made without service of any notice on the Petitioners, without giving the Petitioners an opportunity to be heard - violation of principles of natural justice - HELD THAT:- The impugned order was made without service of any notice on the Petitioners, without giving the Petitioners an opportunity to be heard, and by erroneously recording that the Petitioners representative was heard on 23 May 2023, when the impugned order was made on 20 March 2023. Even in this case, the impugned order, though allegedly made on 20 March 2023, was served upon Petitioner No.3 only on 1 July 2023, after four months. This Petition is accordingly disposed of by quashing and setting aside the impugned order dated 20 March 2023 and the corresponding demand notice dated 20 March 2023. The request for remand is not acceded to, again, for the reasons set out in the judgment and order disposing of Writ Petition No.11929 of 2023, which apply in the facts and circumstances of this case.
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2024 (10) TMI 799
Challenge to assessment order - non-application of mind - violation of principles of natural justice - HELD THAT:- Though the impugned assessment order dated 24 May 2023 may be vitiated by non-application of mind, failure of natural justice, and even breach of Section 23 (4) of the MVAT Act, which statutorily incorporates the requirement of personal hearing, we cannot infer any manipulation, backdating, or subterfuge. Besides, there was no unreasonable delay in communicating the impugned assessment order dated 24 May 2023. The issue of this order being made beyond the statutorily prescribed limitation period also does not arise in this matter. The facts and circumstances that persuaded not to accede to the prayer for remand in Writ Petition Nos. 11929 of 2023 and 11915 of 2023 are not the facts involved in the present Petition. Therefore, by balancing the interest of the Revenue and the Petitioners entitlement to fair treatment, it is satisfied that a remand would be in order after quashing the impugned assessment order. The impugned assessment order dated 24 May 2023 is quashed and set aside - the matter is remanded to the assessing officer to make a fresh assessment order for FY 2015-2016 after giving the Petitioners reasonable opportunity of being heard - petition disposed off by way of remand.
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2024 (10) TMI 798
Seeking refund alongwith interest in terms of Section 38 and 42 of the Delhi Value Added Tax Act, 2004 - non-furnishing of declaration forms - compliance with timelines or not - HELD THAT:- Admittedly, the refund was not released within the stipulated period of two months from the date of submitting the Form DVAT 2 in terms of Section 38 (3) (a) (ii) of the DVAT Act. The State having received the money without rights and having retained and used it, is bound to make the party good, just as an individual would be under the circumstances. The obligation to refund the money received and retained without right implies and carries with it the right to interest. Interest is the return or compensation for use or retention of another s money. Section 42 of the DVAT Act deals with payment of interest. There is no material on record to indicate that the petitioner was in any manner responsible for delay in processing of the refund. There is not even any such allegation in the counter affidavit filed by the respondent. In terms of statutory time frame which stands constructed by Section 38 (3) (a) (ii) of DVAT Act, the refund had become payable on 26.12.2021. It is a clear case of illegal retention of money of the petitioner. The petitioner cannot be denied interest on the amount of interest withheld unjustifiably. The petitioner is entitled for interest on refund. Admittedly, statutory rate of interest is 6% by virtue of notification dated 30.11.2005. Petitioner shall be therefore entitled to simple interest @ 6% per annum from the date it became due - Petition allowed.
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2024 (10) TMI 797
Interest alongwith interest on refunds of excess amount deposited - non-furnishing of declaration forms - said amount not reflected in the returns filed for the relevant period, nor adjusted against the demands - no revised return filed within one year to claim the refund as envisaged under Section 28 of the DVAT Act - refund has been claimed after a gap of more than five years - HELD THAT:- It is clear from the language of Section 28 of the DVAT Act that if there is any discrepancy in the return furnished for the tax period, the assessee is liable to furnish a revised return. It is not the case of the respondent that there was any discrepancy in the return furnished by the petitioner and therefore the petitioner was not under any obligation to file the revised return under Section 28 of the DVAT Act, inasmuch as, the amount of Rs. 3,50,00,000/- deposited by the petitioner was not a tax but an amount deposited with the department, out of which, tax amount, if any, was to be deducted. As is manifest on a conjoint reading of Section 35 (2) and 38 (2) of the DVAT Act, as long as objections remained pending with OHA, any amount claimed by the respondent would clearly not answer the description of an amount due or payable as contemplated under Section 38 (2). Respondent, therefore, cannot possibly seek to justify the retention of the refund claim on account of being barred by limitation. The delay in processing the refund is endemic to the DVAT authorities and if the same is considered, the delay, even if any, on the part of the petitioner approaching the authorities is not long. Respondent cannot possibly seek to justify the retention of refund claim on account of its having been deposited voluntarily or being barred by limitation. It is a clear case of unjust retention of the money of petitioner. Respondent clearly appeared to have acted arbitrarily in illegally depriving the petition of the refund as claimed, in flagrant violation of the mandate of Section 38 of the DVAT Act. Grant of interest on refund - HELD THAT:- Interest is the return or compensation for use or retention of another s money. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under the circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Section 42 of the DVAT Act deals with the payment of interest - In terms of Section 42 of the DVAT Act, a person is entitled to interest from the date the refund was due to be paid or the date when the amount was over paid by the person, whichever is later - A harmonious reading of Section 38 and 42 makes it clear that the interest is payable to the petitioner from the date when it accrued in terms of Section 38 (3) (a) (ii) of 2004 Act - petitioner would also entitled to interest along with refund of Rs. 3,50,00,000/- in terms of Section 42 (1) of the DVAT Act. The impugned Refund Rejection Order dated 31.10.2023 is hereby quashed. Respondent is consequently directed to refund the amount of Rs. 3,50,00,000/- along with statutory interest as also the interest on refunds for the 1st, 2nd, 3rd and 4th quarters of AY 2012-13 from the date it fell due - Petition allowed.
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2024 (10) TMI 796
Levy of Penalty in terms of Section 16(2)(d) of Tamil Nadu General Sales Tax Act, 1959 - sales/purchase suppression - addition on account of purchase suppression towards Aluminium winding wires, freight and Gross Profit - HELD THAT:- The trading account, if at all such document existed, ought to have been produced before the authorities at the time of inspection or at least before the assessing officer. No reason has been assigned for such nonproduction at the relevant point in time and neither has the Appellate Assistant Commissioner assigned any reason for permitting the admission of the document, belatedly. There is thus no evidence whatsoever to prove the assessee's argument that the stock relating to the turnover added as suppression of purchase/sales, formed part of the closing stock for the previous period. This argument of the petitioner is rejected and the conclusion of the Tribunal in this regard is confirmed. Two equal time additions towards purchase suppression is unwarranted. The business premises of the petitioner has been subjected to inspection and the authorities had full access to the documents and books of accounts. They were thus in full possession of all particulars to enable a proper quantification of turnover. The books of accounts maintained by the petitioner have been accepted and the assessing authority has not rejected the same. The authority however found some material/evidences indicating purchase suppression and have made additions on this account, which is confirmed. In the absence of any other material/evidence over and above what was found to lead to the addition made to turnover, there is no justification in estimating any further addition. The double equal estimates made amount to pure speculation as they are admittedly not based on any adverse material. The two equal time additions deleted - the additions towards the purchase/sale suppression as well as the penalty sustained - petition disposed off.
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Indian Laws
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2024 (10) TMI 795
Conspiracy and misconduct in sanctioning credit facilities - HELD THAT:- Perhaps the only material that creates suspicion is the speed with which the proposal of the Company was sanctioned. As far as the respondent is concerned, considering his position and the role ascribed to him in the grant of sanction to the loan proposal of the Company, mere suspicion against him is not enough to frame a charge against him. The proposal had passed through the Loan Advisory Committee which recommended the same. The proposal was placed before the respondent on 10th August 2010. As the credit proposal was beyond the sanctioning authority of the respondent, it was directed to be placed before the Management Committee. Apart from the Loan Clearance Committee, the proposal was approved by the Bank's Chief General Manager (Credit). The respondent's role started with signing the Memorandum after it was approved by the Chief General Manager (Credit) and the Executive Director. A perusal of the Memorandum placed before the respondent for sanction showed that as many as 14 Public Sector Banks were lending to the Company apart from an international private sector bank - No material is placed on record to show that any of the accused other than bank officials ever met the respondent before the sanction of the proposal by the Management Committee. Only because the entire proposal was processed and cleared within a short span of time, no offence is made out against the respondent. Taking the material in the charge sheet as it is, complicity of the respondent is not made out. There are no scope to interfere with the impugned order - appeal dismissed.
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2024 (10) TMI 794
Default in depositing amount - respondents had not deposited the balance sale consideration within the mandatory period of 90 days - whether there was any default on part of the respondents in depositing the balance amount within the time prescribed pursuant to the auction sale dated 10.04.2018 so as to attract Rule 9(4) of the Rules and allow the appellant-Bank to cancel the auction which had already been confirmed? - HELD THAT:- In the case at hand, the correspondence between the parties reveals that the respondents only sought extension of time for the reason that the appellant-Bank itself was not in a position to accept the amount as there was a complaint to the CBI, an advisory of the ED and a stay from the High Court. The silence on part of the appellant-Bank in either immediately revoking the sale confirmation or refusing to extend the time, impliedly amounted to extension of time in writing with consent. Secondly, the non-deposit of the balance sale consideration within the time limit prescribed under Rule 9(4) was not attributable to the respondents so as to call them defaulters within the meaning of the provisions of Rule 9 (4) and (5) of the Rules. The reason for the nonissuance of the sale certificate is solely attributable to the appellant-Bank and that there were no latches, negligence or default on part of the respondents in offering to deposit the balance auction amount. Since there is no default on their part, non-deposit of the said amount within the stipulated period would not be fatal within the meaning of sub-Rules (4) and (5) of Rule 9 of the Rules. The High Court has not committed any error of law in the peculiar facts and circumstances of the case in holding that the appellant- Bank manifestly erred in cancelling the auction sale dated 10.04.2018 and in directing to issue sale certificate/register the sale deed in favour of the respondents after getting the balance auction amount deposited within a period of four weeks. Appeal dismissed.
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2024 (10) TMI 793
Suit is barred by law u/s 34 of SARFAESI Act or not - petitioner is not having locus to file such proceedings since the petitioner is merely a shareholder - fraud and collusion between respondent no. 1, 3 and 4 - locus standi to challenge the actions of secured creditors - HELD THAT:- The contention of the learned counsel for the respondent that pleadings regarding fraud are inter se only between plaintiff and defendant nos. 3 and 4, cannot be accepted for simple reason that there are specific instances and allegations of collusion and fraud even played by bank/defendant no. 1 while sanctioning the loan and that too without any proper resolution passed by the Board of Directors of the company. Therefore, averments in the plaint are supported by document i.e order passed by NCLT would clearly go to show that prima facie there was mismanagement of the affairs of the defendant no. 2 and also obtaining of a loan thereby securing assets in favour of the bank, without following due process of law. With these averments in the plaint, contentions raised by the respondents needs to be rejected outright - it is clear from the record and more specifically the prayer, the suit is clearly maintainable as far as relief is concerned and that too when there are specific pleadings with regard to fraud and collusion between the bank and defendant nos. 3 and 4. The question of fraud and collusion and the relief claimed in the suit of declaration that the loan facility and the mortgage created in favour of defendant no. 1 is a nullity, is certainly not coming within the jurisdiction of DRT or under the SARFAESI Act. Such declaration is only permissible under the Specific Relief Act. The Court is duty bound to consider only the plaint and the documents relied therein. No document relied upon by the defendant could be looked into. The contention of Mr Kantak that the First Appellate Court in paragraph 25 relied upon the document produced by the defendants appears to be correct. A careful reading of the plaint and list of documents would go to show that such documents cannot be considered as contrary to the pleadings. Plaintiff/petitioner was thrown out as having no locus to challenge the action of the secured creditors under Section 17 of the SARFAESI Act. Now by the impugned order plaintiff/petitioner is thrown out at the initial stage by a Civil Court thereby practically preventing the plaintiff from having any remedy available to him against the action of the secured creditors. Having concluded that the plaint cannot be rejected and bar created under Section 34 of the SARFAESI Act cannot be applied to the averments in the plaint, option available to this Court is to quash and set aside both the orders of the trial Court thereby restoring the plaint to the file of Commercial Court to be decided in accordance with law. Both the impugned orders are hereby quashed and set aside, plaint in Commercial Suit is restored.
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2024 (10) TMI 792
Dishonour of cheque - no specific overt act has been alleged or attributed against the petitioner for the commission of alleged offence - HELD THAT:- The Negotiable Instruments Act, 1881 was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 has inserted new Chapter XVII comprising sections 138 to 142 with effect from 01.04.1989 in the Act. Section 138 of the Act provides the penalties in case of dishonour of cheques due to insufficiency of funds etc. in the account of the drawer of the cheque. However, sections 138 to 142 of the Act were found deficient in dealing with dishonour of cheques. The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 amended sections 138, 141 and 142 and inserted new sections 143 to 147 in the Act aimed at speedy disposal of cases relating to dishonour of cheque through their summary trial as well as making them compoundable. The Hon ble Supreme Court in the case Electronics Trade Technology Development Corporation Ltd., Secunderabad v. Indian Technologists Engineers (Electronics) (P) Ltd. [ 1996 (1) TMI 398 - SUPREME COURT ], observed that the object of bringing section 138 on statute appears to inculcate the faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments and section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. The Bengal Money Lenders Act, 1940 and Chapter XVII of the Negotiable Instruments Act, 1881 which was incorporated by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 for providing penalties in case of dishonour of cheques with an objective to encourage the culture of use of cheques and enhancing the credibility of the instrument. Both statutory provisions were enacted with different objectives and intent and are operational in independent and separate legal spheres. There is no apparent conflict between provisions of the Bengal Money Lenders Act, 1940 which is not apparently bars civil remedy for a money lender who is not having valid licence or certificate for doing business of money lending and Chapter XVII of the Act which provides criminal remedies and penalties in case of dishonour of a cheque due to reasons as mentioned in section 138 of the Act. There are insufficient reasons placed before this court that no proceedings can be initiated or continued and it would be gross abuse of process of law. The revisional application filed by the Petitioner has devoid of merits - revision dismissed.
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2024 (10) TMI 791
Extension of benefit of NFU Scheme to Group-B Officers of the petitioner-association - HELD THAT:- The learned Tribunal has not properly appreciated the contentions advanced in the OA. While no merits expressed on the entitlement of the petitioners to the relief sought by them, it was incumbent on the learned Tribunal to examine the petitioners prayer for extension of the benefit of NFU Scheme to Group-B Officers of the petitioner-association on merits, and return a finding of the prayer, one way or the other. That has not been done. The impugned order cannot be sustained, and is accordingly quashed and set aside - Application stands remitted to the learned Tribunal for decision afresh in accordance with law, after extending an opportunity to all parties concerned.
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2024 (10) TMI 786
Extension of benefit of NFU Scheme to Group-B Officers of the petitioner-association - HELD THAT:- The learned Tribunal has not properly appreciated the contentions advanced in the OA. While no merits expressed on the entitlement of the petitioners to the relief sought by them, it was incumbent on the learned Tribunal to examine the petitioners prayer for extension of the benefit of NFU Scheme to Group-B Officers of the petitioner-association on merits, and return a finding of the prayer, one way or the other. That has not been done. The impugned order cannot be sustained, and is accordingly quashed and set aside - Application stands remitted to the learned Tribunal for decision afresh in accordance with law, after extending an opportunity to all parties concerned.
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2024 (10) TMI 785
Extension of benefit of NFU Scheme to Group-B Officers of the petitioner-association - HELD THAT:- The learned Tribunal has not properly appreciated the contentions advanced in the OA. While no merits expressed on the entitlement of the petitioners to the relief sought by them, it was incumbent on the learned Tribunal to examine the petitioners prayer for extension of the benefit of NFU Scheme to Group-B Officers of the petitioner-association on merits, and return a finding of the prayer, one way or the other. That has not been done. The impugned order cannot be sustained, and is accordingly quashed and set aside - Application stands remitted to the learned Tribunal for decision afresh in accordance with law, after extending an opportunity to all parties concerned.
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2024 (10) TMI 784
Extension of benefit of NFU Scheme to Group-B Officers of the petitioner-association - HELD THAT:- The learned Tribunal has not properly appreciated the contentions advanced in the OA. While no merits expressed on the entitlement of the petitioners to the relief sought by them, it was incumbent on the learned Tribunal to examine the petitioners prayer for extension of the benefit of NFU Scheme to Group-B Officers of the petitioner-association on merits, and return a finding of the prayer, one way or the other. That has not been done. The impugned order cannot be sustained, and is accordingly quashed and set aside - Application stands remitted to the learned Tribunal for decision afresh in accordance with law, after extending an opportunity to all parties concerned.
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