TMI Tax Updates - e-Newsletter
October 21, 2021

Case Laws in this Newsletter:

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

Articles

1. Analysis of WB AAR Ruling in Masterly Kolkata Maintenance on Composite Supply

   By: Dinesh Singhal

2. INTERIM COMPENSATION UNDER SECTION 143A OF NEGOTIABLE INSTRUMENTS ACT, 1881 – WHETHER MANDATORY OR DISCRETIONARY?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. India is exporting strictly Non GMO rice to World

2. Shri Piyush Goyal inaugurates 250mm Seer Water supply scheme in Kashmir

Notifications

GST - States

1. G.O. Ms. No. 9/2021-Puducherry GST (Rate) - dated 30-9-2021 - Puducherry SGST

Amendment in Notification No. 2/2017- Puducherry GST (Rate), dated 29” June, 2017

2. G.O. Ms. No. 8/2021-Puducherry GST (Rate) - dated 30-9-2021 - Puducherry SGST

Amendment in Notification No. 1/2017 -Puducherry GST (Rate), dated 29th June, 2017

3. G.O. Ms. No. 12/2021-Puducherry GST (Rate) - dated 30-9-2021 - Puducherry SGST

Seeks to exempt PGST on specified medicines used in COVID-19, up to 31st December, 2021

4. G.O. Ms. No. 11/2021-Puducherry GST (Rate) - dated 30-9-2021 - Puducherry SGST

Amendment in Notification No. 39/2017- Puducherry GST (Rate), dated 25th October, 2017

5. G.O. Ms. No. 10/2021-Puducherry GST (Rate) - dated 30-9-2021 - Puducherry SGST

Amendment in Notification No. 4/2017- Puducherry GST (Rate), dated 29 June, 2017

6. 1043/ XI-2-9(47)/17-U.P.Act-1-2017-Order-(204)-2021 - dated 1-10-2021 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-851/XI-9(47)/17-U.P.Act- 1-2017 -Order-(18)-2017 Dated 30.06.2017

7. 1042/ XI-2-9(47)/17-U.P.Act-1-2017-Order-(203)-2021 - dated 1-10-2021 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-837/XI-9(47)/17-U.P.Act- 1-2017 -Order-(07)-20 17 Dated 30.06.2017

8. 1041/ XI-2-9(47)/17-U.P.Act-1-2017-Order-(202)-2021 - dated 1-10-2021 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI-2-836/XI-9(47)/17-U.P.Act-1-2017-Order-(06)-2017 dated 30.06.2017

9. 1040/ XI-2-9(47)/17-U.P.Act-1-2017-Order-(201)-2021 - dated 1-10-2021 - Uttar Pradesh SGST

Amendment in Notification No.-KA.NI.-2-843/XI-9(47)17-U.P.Act-1-2017-Order (10)-2017 dated 30.06.2017

10. 1039/ XI-2-9(47)/17-U.P.Act- 1-2017-Order-(200)-2021 - dated 1-10-2021 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI-2-842/XI-9(47)/17-U.P.Act-I-2017-Order.(09)-2017 dated 30.06.2017

Circulars / Instructions / Orders

SEZ

1. Instruction No.109 - dated 18-10-2021

Guidelines regarding reorganization including change of name, change of shareholding pattern, business transfer arrangements, court approved mergers and demergers, change of constitution, change of Directors, etc. of SEZ Developers / Co-developers as well as SEZ Units

GST - States

2. TRADE CIRCULAR No. 19/2021 - dated 30-9-2021

Clarification on doubts related to scope of “Intermediary”

3. TRADE CIRCULAR No. 20/2021 - dated 30-9-2021

Clarification in respect of certain GST related issues.

4. TRADE CIRCULAR No. 21/2021 - dated 30-9-2021

Clarification relating to export of services-condition (v) of section 2(6) of the IGST Act 2017

Highlights / Catch Notes

GST

• Court Urges GST Tribunal Access for Refund Appeals; Warns of Summoning Authorities if Issues Persist.

  Case-Laws - HC : Rejection of application of the petitioner for refund - Writ petition filed instead of appeal before GST Tribunal - It needs no iteration that the Appellate Tribunal is the last fact finding authority and the aggrieved persons are deprived of their valuable statutory right due to non-availability of that forum. It is being made clear that if no satisfactory reply/compliance to the aforesaid directions is reflected in the counter affidavit, this Court may be constrained to summon the authorities concerned. - HC
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• Court Quashes GST Demand: Rule 142(1) Breach as Notice and Order Issued on Same Day Denied Fair Response.

  Case-Laws - HC : Validity of demand of GST - summary of show cause in Form GST-DRC-01 under Rule 142(1) - The uploading or serving of summary of show cause in Form GST-DRC-01 under Rule 142(1) is not a mere formality, but it is mandated under the Rule, so that, the Assessee would have a chance of getting summary of show cause and to respond the same and without giving such a breathing time, on the very same day, that is, the date on which GST-DRC-01 notice, that is, summary of notice was uploaded, the impugned order was passed. - Orders quashed - HC
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• Court Grants Bail in Input Tax Credit Fraud Case; Petitioner Not Named in FIR, Debatable Issues Present.

  Case-Laws - HC : Seeking grant of regular bail - registration on the basis of fake and forged documents - irregular availment and utilization of ITC - since the petitioner was not named in the FIR and also since there are several debatable issues/arguments in the present case which have been elaborated hereinabove, and although the same would be finally adjudicated upon in the trial, this Court considers it fit to allow the present petition and grant regular bail to the petitioner. - HC
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• Section 130: Goods Must Be Released to Invoice Holder Upon Payment of Penalty, Fine, and Tax.

  Case-Laws - HC : Detention of goods - adjudication of ownership of goods - The mandate of Section 130 will be defeated if the goods are not released to the person who holds the invoice at the time of interception when the entire penalty, fine and tax are tendered - HC
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• High Court Restores Case for Re-adjudication After Miscommunication in Response to Show Cause Notice for Works Contractor.

  Case-Laws - HC : Validity of Assessment order - works contractor - Direct respond to SCN not given, instead writing was sent to the Executive Engineer of Public Works Department and marking a copy to the fourth respondent - matter restored for re-adjudication - HC
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• Court Grants Bail to Accused in Forged Documents Case for Input Tax Credit During Covid-19 Delays.

  Case-Laws - HC : Seeking grant of Regular Bail - allegation is that firm got registered on the basis of forged and fabricated documents to avail of input tax credit - The offences being bailable triable by the Magistrate and in view of Covid 19 pandemic, the trial is not likely to be concluded in near future and in view of the period of incarceration impels this Court to allow the bail. - HC
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Income Tax

• High Court Invalidates Reassessment u/s 153C Due to Expired Limitation Period in Section 153(2.

  Case-Laws - HC : Reopening of assessment post annulling proceeding u/s 153C - The proceeding for re assessment were completed beyond the period of limitation as prescribed under Section 153(2) of the Act. Admittedly, the first notice which was served on the business premises of the assessee was existing and was not withdrawn. Therefore, the same continued to subsist and the finding of the tribunal that Assessing Officer could issue two notices is perverse. - HC
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• Income Tax Assessment u/s 147 Invalid Due to Missing Section 143(2) Notice; Section 292BB Offers No Relief.

  Case-Laws - AT : Validity of the assessment framed u/s 147 - As the mandatory notice was not available in the records of the Revenue. Thus it can be inferred that the notice under section 143(2) of the Act was not issued by the Revenue. Thus in the absence of such mandatory notice, the proceedings initiated under section 147 of the Act are not maintainable and liable to be quashed. Provisions of section 292BB cannot extend any benefit to the revenue. - AT
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• Case Reopening u/ss 147/148 Ruled Invalid; Capital Gain Claims Deemed Academically Relevant Only.

  Case-Laws - AT : Validity of assessment initiated u/s.147/148 - Upon careful consideration we are of the opinion that we have already held that reopening in this case is not justified on several counts. Hence, this aspect of departmental claim of capital gain and the counter claim made by assessee that in fact assessee has suffered a loss are only of academic interest. - AT
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• No Penalty Imposed u/s 271(1)(c) Due to Lack of Evidence on Income Concealment in Estimated Profit Case.

  Case-Laws - AT : Penalty levied u/s. 271(1)(c) - estimated rate of profit applied on the turnover of the assessee - in the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. - No penalty - AT
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Customs

• Court Overturns Enhanced Valuation of Imported Tin Free Sheets Due to Lack of Legal Justification in Show-Cause Notice.

  Case-Laws - AT : Valuation of imported goods - Tin Free Sheets (Secondary/Defective TFSSD) - The enhancement of value of goods merely on the basis of figures given in the table of the Show-cause notice has no legal basis - the enhancement of value of the goods as well as re-determination of duty/differential duty cannot sustain and requires to be set aside - as the enhancement of value, duty demand is set aside, the order of confiscation of goods as well as imposition of redemption fine and penalties cannot then sustain. - AT
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VAT

• High Court Grants Stay on Tax Collection After Petitioner Shows Strong Arguable Case in Second Appeal.

  Case-Laws - HC : Refusal to direct stay - When a litigant has a right to prefer a second appeal against an order passed by the first appellate authority, it would be wholly unjust to say that he would have no right to seek suspension of collection of the remaining tax in dispute pending such appeal in appropriate cases where a strong arguable case is made out in his favour. - The petitioner has made out a strong arguable case in appeal - Stay granted from the collection of the remainder of the disputed tax - HC
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• High Court recommends reducing VAT pre-deposit from 20% to 5% due to genuine transaction and document verification issues.

  Case-Laws - HC : Quantum of pre-deposit - Considering the justifiable grounds and the bona fide nature of the transaction, the First Appellate Authority when has already ordered the reverification of the document, which had not been complied with by the Assessing Authority, the VAT Tribunal could have considered this aspect, which instead has ordered the 20% of the pre-deposit. 5% of the amount by way of the pre-deposit would suffice & the insistence of requirement of pre-deposit of to the tune of 20% would need indulgence. - HC
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• Court Denies Concessional Tax Rate for Lakshadweep Sales, Citing Rule 12C Non-Compliance and Legislative Intent Clarity.

  Case-Laws - HC : Rejection of concessional rate of tax applicable to sales made in favour of Lakshadweep Administration - In the process of interpretation or application, relevant expression chosen by the legislature or the executive ought not to be ignored or diluted. The case of dealer if accepted, the same would result in overlooking the clear expression of the rule making authority. The claim of dealer for concessional rate without placing on record all the requirements of Rule 12C is misconceived and liable to be rejected - The misuse of concessional rate of tax cannot be overlooked while accepting a purposive interpretation - HC
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Case Laws:

• GST

• 2021 (10) TMI 841
  Rejection of application of the petitioner for refund - contention of petitioner is that no Tribunal has been constituted by the Central Government as envisaged under Section 109 of the U.P.G.S.T. Act, and therefore, this writ petition is being filed - HELD THAT:- In their counter affidavit, the respondents shall specifically state what action has been taken by them in compliance of the directions aforesaid. It needs no iteration that the Appellate Tribunal is the last fact finding authority and the aggrieved persons are deprived of their valuable statutory right due to non-availability of that forum. It is being made clear that if no satisfactory reply/compliance to the aforesaid directions is reflected in the counter affidavit, this Court may be constrained to summon the authorities concerned. List after three weeks.

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• 2021 (10) TMI 840
  Levy of GST or not - royalty paid for grant of mining lease - HELD THAT:- Though, the learned Standing Counsel for the respondents has urged that in the matters before the Supreme Court, an issue regarding constitutionality of Section 174 of the Central Goods and Services Tax Act, 2017 has been raised, but no such pleading has been raised by the petitioner in this petition. The matter requires consideration - List this matter after two months.

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• 2021 (10) TMI 839
  Maintainability of review application - review applications came to be dismissed for non prosecution - non-compliance with the directions issued - HELD THAT:- We fail to understand that what is now left to be pointed out. We are disturbed by the fact that its been more than two years but our directions have not been complied with. All that is required to be done is to open the portal and allow the original writ applicants to file declaration in Form GST TRAN-1 and GST TRAN-2 so as to enable them to claim the transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act. The Nodal Officer, D/5, E-Governance Branch, Rajyakar Bhavan, Ashram Road, Ahmedbad is directed to personally remain present before this Court on 27.10.2021 at 11:00 a.m. - Post these matters on 27.10.2021.

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• 2021 (10) TMI 838
  Refund of taxes paid under Central Goods and Services Tax as well as State Goods and Services Tax - evidence to prove the payment of tax by the petitioner, present or not - HELD THAT:- The conduct of respondents is not appreciable, still taking into consideration the transition phase of the new statute and the temporary glitches that are occurring as well as the fair submission made by the learned Government Pleader that, the amount shall be refunded, the respondents 2 and 3 are directed to refund the amount of Rs. 12,26,064/-, due to the petitioner as refund, within a period of 30 days from the date of receipt of a copy of this judgment. Petition allowed.

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• 2021 (10) TMI 837
  Validity of demand of GST - summary of show cause in Form GST-DRC-01 under Rule 142(1) - Violation of principles of natural justice - opportunity of personal hearing provided or not - Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- The uploading or serving of summary of show cause in Form GST-DRC-01 under Rule 142(1) is not a mere formality, but it is mandated under the Rule, so that, the Assessee would have a chance of getting summary of show cause and to respond the same and without giving such a breathing time, on the very same day, that is, the date on which GST-DRC-01 notice, that is, summary of notice was uploaded, the impugned order was passed. This Court feel that the impugned order can not be sustained, accordingly, it is liable to be quashed - the matter is remitted back to the respondent for reconsideration - Petition allowed by way of remand.

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• 2021 (10) TMI 836
  Seeking grant of regular bail - registration on the basis of fake and forged documents - irregular availment and utilization of ITC - HELD THAT:- Keeping in view the facts and circumstances moreso, the fact that the Petitioner has been in custody since 27.11.2020 and there are as many as 23 witnesses, out of which none have been examined and the trial is likely to take time and the amount of GST said to have been evaded has already been recovered from Susheel Garg and Amit Garg and no amount of input tax credit has been credited in the account of the present petitioner and also since the petitioner was not named in the FIR and also since there are several debatable issues/arguments in the present case which have been elaborated hereinabove, and although the same would be finally adjudicated upon in the trial, this Court considers it fit to allow the present petition and grant regular bail to the petitioner. The present petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail/surety bonds to the satisfaction of the concerned trial Court/Duty Magistrate and subject to him not being required in any other cases.

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• 2021 (10) TMI 835
  Detention of goods - adjudication of ownership of goods - Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The department can claim at the most that there was a hidden transaction between the 5th respondent and the petitioner due to which the State lost the tax due to it. The transaction during which interception of the goods were carried out was between the petitioner and the consignee in Ext.P2. If the department s assumption is acceptable, it could be assumed that there was an evasion of tax in the transaction between the 5th respondent and petitioner. However that transaction could be only prior to Ext.P2 invoice. No doubt it is for that alleged hidden transaction that evasion of tax was suspected. Be that as it may after Ext.P2 invoice was generated, there is no case that there is any suspected evasion of tax since IGST is already reflected in Ext.P2. Thus from the time of generation of Ext.P2, petitioner is the owner of the goods as he is the consignor in Ext.P2. The mandate of Section 130 will be defeated if the goods are not released to the person who holds the invoice at the time of interception when the entire penalty, fine and tax are tendered - Since on 17.08.2021, petitioner had tendered, by Ext.P16, the entire fine, penalty and tax in lieu of confiscation, there is no justification for the 4th respondent to retain or detain goods and the vehicle any further. For filing counter affidavit in the writ petition, post on 20.09.2021.

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• 2021 (10) TMI 834
  Validity of Assessment order - works contractor - Direct respond to SCN not given, instead writing was sent to the Executive Engineer of Public Works Department and marking a copy to the fourth respondent - HELD THAT:- This Court is of the considered view that a quietus can be given to the writ petition by setting aside the impugned order and ensuring that an opportunity of hearing in person is given to the writ petitioner as the SCN vide paragraph 8 clearly mentions that the writ petitioner should appear in person and explain. In other words, without going into the question as to whether all the assessees would be entitled to a personal hearing, i.e., leaving that question open, in the case on hand, as the fourth respondent in the SCN has opted to give a personal hearing to the writ petitioner, it is only appropriate that the writ petitioner is heard in person. The impugned order made by the fourth respondent, is set aside - Petition allowed.

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• 2021 (10) TMI 833
  Seeking grant of Regular Bail - allegation is that firm got registered on the basis of forged and fabricated documents to avail of input tax credit - HELD THAT:- Admittedly, the petitioner is mere an accountant in one of the firms being run by Jarnail Singh accused. The reply of the State clearly illustrates that no specific role is attributed to the petitioner in the commission of the offence who merely was doing his duty as an accountant. Moreover, all the accused have been allowed regular bails by the different Courts. The offences being bailable triable by the Magistrate and in view of Covid 19 pandemic, the trial is not likely to be concluded in near future and in view of the period of incarceration impels this Court to allow the bail. The petitioner is ordered to be released on regular bail to the satisfaction of Chief Judicial Magistrate/Duty Magistrate, concerned - application disposed off.

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• Income Tax

• 2021 (10) TMI 832
  Reopening of assessment post annulling proceeding under Section 153C - time limit for completion of the assessment - finding of Tribunal that an AO could issue two notices - as per assessee tribunal failed to appreciate that until and unless one set of proceeding is disposed of, the Assessing Officer was precluded in law from initiating another proceeding under Section 148 of the Act and it ought to have been appreciated that the proceeding initiated pursuant to notice which was served on the assessee on 25.03.2011 continued - HELD THAT:- Section 153(2) of the Act provides that no order of assessment, re-assessment or re-computation shall be made under Section 147 after expiry of nine months where the notice under Section 148 of the Act was served on the assessee on or after 1st day of April, 2005 but before 1st day of April, 2011. Admittedly the notice was served on the assessee on 25.03.2011 and therefore, the time for completion of assessment proceeding in respect of Assessment Year 2004-05 and 2005-06 is 31.12.2011 i.e., nine months from the date of financial year in which notice under Section 148 of the Act was served. However, the order of assessment has been passed beyond the aforesaid period i.e., on 28.03.2013. Therefore, the proceeding for re assessment were completed beyond the period of limitation as prescribed under Section 153(2) of the Act. Admittedly, the first notice which was served on the business premises of the assessee was existing and was not withdrawn. Therefore, the same continued to subsist and the finding of the tribunal that Assessing Officer could issue two notices is perverse. Decided in favour of the assessee

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• 2021 (10) TMI 831
  TP Adjustment - Selection of MAM - CUP v/s TNMM - most appropriate method for determining the arm s-length price of the export of rice made by the assessee - Assessee has adopted CUP as the most appropriate method, whereas the learned transfer pricing officer and DRP has held that transactional net margin method is the most appropriate method - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee s own case [ 2014 (3) TMI 63 - ITAT DELHI ] thus we hold that CUP method is the most appropriate method for benchmarking the international transactions of the assessee. Accordingly on this issue we reverse the orders of the learned transfer pricing officer as well as the direction of the learned dispute resolution panel. Accordingly, ground numbers 2 4 of the appeal are allowed. Benefit of set of where the assessee is has transacted at a price lower than and arm s-length price - HELD THAT:- As we have upheld that the cup method is the most appropriate method for determination of the arm s-length price, and the whole issue set-aside to the file of the learned assessing officer, the assessee may raise this issue before the learned transfer pricing officer at the time of three determination of the arm s-length price. Therefore this ground of appeal is also set-aside to the file of the learned assessing officer/transfer pricing officer where the assessee is at liberty to raise the above issue. The learned transfer pricing officer may examine the claim of the assessee after giving a proper opportunity of hearing. In the result additional ground raised by the assessee is allowed for statistical purposes.

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• 2021 (10) TMI 830
  Assessment of trust - Exemption u/s 11 - Development fund receipts were directly taken to the balance sheet as liability and the same were added back - HELD THAT:- As per the direction of the Directorate of Education, the school is entitled to collect development fee up to 10 to 15% of tuition fee. The issue is squarely covered in assessee s own case for AY 2012-13 by the Hon ble High Court s decision [ 2015 (4) TMI 1066 - DELHI HIGH COURT] . Hence, Ground No. 1 to 3 are dismissed. Depreciation in the case of charitable or religious institutions - CIT(A) has relied upon the decision of the Hon ble Delhi High Court in case of DIT (Exemption) Vs. Indraprastha Cancer Society [ 2014 (11) TMI 733 - DELHI HIGH COURT] wherein it has been held that the assessee is eligible for depreciation in the case of charitable or religious institutions also. As regards the amendment to Section 11 which is effective from AY 2015-16 and subsequent years, the depreciation has to be allowed in relation to income from property which are in respect of charitable purposes. As in case of CIT vs. Rajasthani Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] held that the depreciation in respect of cost of the assets allowed to the assessee as expenditure is allowable. The issue contested by the Revenue is squarely covered against the Revenue in light of the Hon ble Supreme Court decision in case of Rajasthani Gujarati Charitable Foundation Poona (supra). Appeal of the Revenue is dismissed.

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• 2021 (10) TMI 829
  Validity of the assessment framed u/s 147 - there was no notice issued u/s 143(2) of the Act which was mandatory under the provisions of law - Curable defect u/s 292BB or not? - HELD THAT:- Once a return is filed by the assessee in response to the notice issued under section 148 of the Act, the same is treated as if such return was furnished under the provisions of section 139(1) of the Act. Accordingly, all other provisions as prescribed under the Act shall apply to the return filed in response to the notice under section 148 of the Act. Thus it is implied that the revenue was under the obligation to serve the notice upon the assessee under section 143(2) of the Act. In holding so, we draw support and guidance from the judgment of Alpine Electronics Asia Pte. Ltd. [ 2012 (1) TMI 100 - DELHI HIGH COURT] . As the mandatory notice was not available in the records of the Revenue. Thus it can be inferred that the notice under section 143(2) of the Act was not issued by the Revenue. Thus in the absence of such mandatory notice, the proceedings initiated under section 147 of the Act are not maintainable and liable to be quashed. Provisions of section 292BB cannot extend any benefit to the revenue. Revenue cannot be absolved from its duty for issuing notice under the provisions of section 143(2) of the Act in the given facts and circumstances for initiating the proceedings under section 147 - Decided in favour of assessee.

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• 2021 (10) TMI 828
  Estimation of income - bogus Purchases - CIT-A sustaining addition @12% of the alleged non-genuine purchases - HELD THAT:- As there should be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them. Average Gross Profit ratio to sales of the assessee for the last three preceding Assessment Years i.e. A.Y. 2006-07 to A.Y. 2008-09 it is arrived at 9.19% and the Gross Profit margin of the assessee for the current assessment year i.e. A.Y. 2009-10 is 9.17%. In view the nature of business of the assessee i.e. trader in manufacturer and dealer in watches, and the Gross Profit ratio to sales for the last three preceding assessment years and also current assessment year it would be justified if the profit element embedded in those purchases are estimated at 9.5% Thus we restrict the disallowance of purchases to 9.5% and compute the income accordingly - Appeal of the assessee is partly allowed.

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• 2021 (10) TMI 827
  Disallowances u/s 14A r.w.r.8D - HELD THAT:- Upon perusal of assessee s financial statements, it could be gathered that assessee s own funds in the shape of share capital and free reserves far exceeds the investment made by the assessee and therefore, a presumption would run in assessee s favor that the investments were funded out of own funds. Secondly, the assessee has not earned any exempt income during the year. Therefore, the additional interest disallowance is not sustainable in law as per the cited judicial pronouncements. Therefore, by deleting the disallowance we allow this ground of appeal. Adhoc 10% disallowance of labour / assortment charges - HELD THAT:- Except for general observations, no specific defects have been pointed out by Ld. AO in sample documents produced by the assessee. Similar expenditure incurred by the assessee in AYs 2012-13 2014-15 has been accepted. The complete details of the expenditure along with relevant ledgers were furnished by the assessee during assessment proceedings - There is no dispute about genuineness and admissibility of claim of expenses. Regarding the observation of Ld. AO that there was drastic increase in such expenses during the year, the same stood explained by assessee s reply dated 19/01/2016 wherein it was submitted that the expenditure increased due to change in manufacturing pattern of the assessee which was necessitated due to customers requirements since the assessee diversified into small pieces for which higher labour charges were paid by the assessee. The net profit reflected by the assessee is 2.43% which is quite similar to net profit of 2.48% reflected in the earlier year. Thus, in terms of the cited decision R.G. BUILDWELL ENGINEERS LTD. [ 2017 (12) TMI 1614 - DELHI HIGH COURT] and considering the facts of the case, we are inclined to delete the adhoc disallowance as made by Ld. AO. This ground stand allowed.

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• 2021 (10) TMI 826
  Validity of assessment initiated u/s.147/148 - interest on income tax refund received by the assessee cannot be taxed in the current year as the assessee follows mercantile system of accounting - HELD THAT:- On a perusal of the reasons for reopening, it emerges that the Assessing Officer has gathered the information from the financial statement of the assessee and undisputedly the financial statement of the assessee was very much before the AO at the time of original assessment and more so he had also inquired on this issue and assessee had replied to the same. Thus, no tangible material has come in position of the AO which can lead to the inference that there is escapement of income due to the fault of the assessee. The action of the AO, thus, clearly amounts to forming of new opinion on the very same set of facts which was already available on records, which is not permissible in law. The change of opinion is not allowed. It is well settled law that the Assessing Officer cannot review his own order under the garb of reassessment. As date of grant of interest and non-receipt of interest is relevant to determine the year of taxability of the same. Undisputedly, the interest has been granted in Assessment Year 2007-08 and, therefore, the interest was not chargeable to tax in the current year, and thus, the Assessing Officer cannot have a reason to believe that in the current year, any income has escaped assessment. Qua the issue in assessee s appeal following the ratio laid down by the Special Bench of this Tribunal in case of Avada Trading Co. (P) Ltd v ACIT [ 2006 (1) TMI 465 - ITAT MUMBAI] and followed in the case of Hindustan Unilever Ltd . [ 2012 (12) TMI 458 - ITAT MUMBAI] , we find that interest on income tax cannot be said to be chargeable to tax in current year as the same was granted in Assessment Year 2007-08 and thus, the reopening initiated by the Assessing Officer was bad in law. Claim of demerger expenditure u/s 35DD - Demerger of the assessee company s investment business to M/s. CHI Investments Ltd. does not fall under the definition of demerger specified in Section 2(19AA) - As assessee had claimed demerger expenditure u/s 35DD of the Act and the said fact was mentioned in the Tax Audit report that was available with the AO It was further submitted that during the course of original assessment proceedings, the assessee vide letter dated 15.12.2010 furnished details to the Assessing Officer regarding allowability of claim of expenses relating to demerger. Hence, the Assessing Officer was aware about the fact that demerger had taken place during the year at the time of original assessment proceedings. The decision of the Hon ble Bombay High Court approving the scheme of demerger of investment undertaking of the assessee was available with the Assessing Officer. Thus, no new material came to the knowledge of the Assessing Officer subsequent to the order passed u/s 143(3) of the Act dated 28.12.2010. In the absence of any new tangible material, reopening on the same set of facts is not permissible. Assessing Officer cannot have reason to believe that income has escaped assessment, which in fact is amounting to challenge the finding of the Hon ble Bombay High Court. The transaction of demerger cannot be said to be for the purpose of evasion of tax. The objection, if any, could have been raised by the Assessing Officer at the time when the Scheme was pending with the Hon ble Bombay High Court. No such objection was raised by the Department, and nor the decision of Hon ble Bombay High Court approving the Scheme of Demerger was challenged before the Hon ble Supreme Court. The Assessing Officer cannot now form an opinion to the contrary and object to the scheme of demerger. Assessing Officer cannot have a reason to believe that the investment undertaking was not a separate undertaking of assessee, especially when no objection has been taken by the Assessing Officer before the Hon ble High Court. Hence, reopening is invalid on this account also. Upon careful consideration we are of the opinion that we have already held that reopening in this case is not justified on several counts. Hence, this aspect of departmental claim of capital gain and the counter claim made by assessee that in fact assessee has suffered a loss are only of academic interest. Moreover, the claim of the assessee regarding loss would also need reference to various factual details which are not available on record. Adjudication of this aspect would call for a remand also from the Assessing Officer. When we have already held that reopening is invalid for a plethora of reasons, we are of the opinion that there is no need to initiate multiplicity of proceedings.

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• 2021 (10) TMI 825
  Penalty levied u/s. 271(1)(c) - estimated rate of profit applied on the turnover of the assessee - HELD THAT:- Similar view has been taken in the case of CIT v. Aero Traders Pvt. Ltd. [ 2010 (1) TMI 32 - DELHI HIGH COURT] wherein the Hon ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. In the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the CIT(A) in deleting the penalty u/s.271(1)(c) of the Act levied by the AO for the Assessment Year under consideration. Grounds raised by the revenue are rejected. Appeal of the revenue is dismissed.

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• 2021 (10) TMI 824
  Penalty u/s 271(1)(c) - defective notice u/s 274 - allegation of non specification of charge or non striking off irrelevant portion - HELD THAT:- DR fairly accepted the Jurisdictional High Court decision in Mr. Mohd. Farhan A. Shaikh Vs DCIT [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] and the fact that Assessing Officer has not applied his mind on the issue of penalty notice in non striking of charge, whether the penalty is levied for furnishing in accurate particulars of income or concealment of income which is clearly evident on record. Accordingly, we quash the penalty notice and allow the ground of cross objections in favour of the assessee.

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• 2021 (10) TMI 823
  Disallowance u/s 14A r.w Rule 8D - profit earned by an assessee from a partnership concern - HELD THAT:- Expenditure incurred for earning of share of profit in a partnership firm, being exempt u/s 10(2A) of the Act, would be liable for disallowance u/s 14A - In fact, we find that a similar view had been taken in the case of Shri Vishnu Anant Mahajan [ 2012 (6) TMI 297 - ITAT, AHMEDABAD ] - as observed by the Tribunal that the provisions of Sec. 14A applies to the share of profit earned by an assessee from the partnership firm. Also, the ITAT, Mumbai in the case of Minal Industries Ltd. [ 2019 (9) TMI 759 - ITAT MUMBAI ] following the view taken by the Special bench of the ITAT, Ahmedabad in the case of Shri. Vishnu Anant Mahajan [ 2012 (6) TMI 297 - ITAT, AHMEDABAD ] had concluded, that the claim of the assessee that the provisions of Sec. 14A would not be applicable to the share of profit earned by the assessee from a partnership firm does not merit acceptance. Accordingly, in the backdrop of our aforesaid observations, we herein conclude that the claim of the ld. A.R that no disallowance u/s 14A could be made qua the profit earned by an assessee from a partnership concern cannot be accepted and is accordingly rejected. AO without recoding his objective satisfaction had wrongly assumed jurisdiction and dislodged the disallowance that was on a suo motto basis offered by the assessee u/s 14A - A.O had given cogent reason as to why the disallowance offered by the assessee u/s 14A was not to be accepted, therefore, we do not find any merit in the claim of the ld. A.R that there was a failure on the part of the A.O to record an objective satisfaction that as to why the disallowance offered by the assessee was not to be accepted. Accordingly, not finding favour with the aforesaid contention of the assessee, we reject the same. Disallowance u/s 14A r.w.Rule 8D(2)(iii) was liable to be restricted only qua the investments that had yielded exempt income to the assessee during the year under consideration - HELD THAT:- We find no infirmity in the view taken by the CIT(A) that the disallowance u/s 14A cannot exceed the amount of the exempt income received by the assessee during the year under consideration.

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• 2021 (10) TMI 822
  TP adjustment - adjustment of corporate guarantee commission - HELD THAT:- Co-ordinate bench in assessee s own case while commenting on adequacy of ALP of the corporate guarantee fees determined by the assessee after examining various decisions rendered by the Tribunal and decision in the case of CIT v/s. Everest Kanto Cylinder Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] concluded, that corporate guarantee as determined by the assessee at 0.43% requires no interference. In assessment year under appeal, the assessee has worked out corporate guarantee commission at 0.41% by adopting internal CUP. Thus, in light of the decision of co-ordinate bench in assessee s own case [ 2021 (4) TMI 254 - ITAT MUMBAI] and parity of facts, we see no reason to take a different view. Following the above decision, we hold that corporate guarantee commission determined by the assessee is at arms length, requires no adjustment. Consequently, the findings of the AO in the impugned order on this issue are set-aside and ground no.1 to 7 of the appeal are allowed. Disallowance u/s 14A read with Rule 8D - Assessee argued as no satisfaction has been recorded by the AO before rejecting assessee s computation of suo-moto disallowance - HELD THAT:- The provisions of section 14A(2) of the Act mandates that having regard to the accounts of assessee, if the AO is not satisfied with correctness of the claim of the assessee in respect of expenditure incurred in relation to earning of exempt income, the AO shall determine the expenditure to be disallowed for earning exempt income in accordance with Rule 8D. Thus, the AO is under obligation to record his dissatisfaction before rejecting assessee s computation of suo-moto disallowance under section 14A. Such satisfaction has to be recorded in objective manner having regard to the accounts of the assessee. A perusal of the draft assessment order reveals that the AO has rejected the computation of assessee without even examining the computation furnished by the assessee. The AO in the draft assessment order has discussed general principles for making disallowance under section 14A read with Rule 8D and has also referred to a case laws. However, there is no observation/comments whatsoever by the AO on the computation made by the AO. Thus, the satisfaction recorded by the AO in rejecting assessee s computation is not in accordance with the mandate envisaged under section 14A(2) - We find merit in the contentions of the assessee and direct the AO to delete the additional disallowance. Addition made on account of mismatch in books of the assessee and tax statement in Form-26AS - HELD THAT:- In proceedings before the DRP, the assessee furnished additional evidence. Remand report was sought from the AO on additional evidences filed by the assessee. After reconciliation the difference was reduced to Rs. 30,29,102/-. - The assessee in order to reconcile the difference furnished statements giving party-wise details of receipts on which tax was deducted. The statements were further classified into tonnage non-tonnage receipts. Since, the assessee has been able to reconcile substantial entries and there was discrepancy only in respect of minuscule part of entries in Form 26AS, it would not be justified to make addition merely on the basis of AIR information keeping in view the fact that the assessee is in shipping business having tonnage non tonnage receipts, there would always be some possibility of mismatch in Form 26AS vis a vis books of assessee. We find that in the case of A.F. Ferguson Co. Vs. JCIT [ 2015 (1) TMI 306 - ITAT MUMBAI] Tribunal held that the Revenue cannot made addition solely on the basis of AIR information. The assessee cannot be asked to prove in negative, the onus is on the AO to prove that the assessee has received the income - no reason to sustain addition made in respect of mismatch in Form-26AS.

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• 2021 (10) TMI 821
  Disallowance of depreciation relatable exchange fluctuations - assets acquired in India from the funds raised through foreign currency convertible bonds following its own order of earlier assessment years - HELD THAT:- As decided in own case [ 2021 (6) TMI 609 - ITAT DELHI] although assessee has a good case to argue that exchange fluctuation loss attributable to depreciable assets acquired in India is an allowable revenue expenditure, however, it would require tedious exercise of modifying assessments for number of year. Therefore, we hold that the assessee is entitled to depreciation on exchange loss. - Decided in favour of assessee.

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• Customs

• 2021 (10) TMI 820
  Valuation of imported goods - Tin Free Sheets (Secondary/Defective TFSSD) - enhancement of declared value - it is alleged that the entire consignment was Tin Sheets of width of 500 mm, whereas, the goods were declared by the importer as Tin Free Sheets - contemporaneous imports of identical goods were not available - applicability of Rule 5 of Customs Valuation Rules, 1998 - HELD THAT:- The Tribunal vide its earlier Final Order, dated 11.12.2006 [ 2006 (12) TMI 575 - CESTAT CHENNAI ] had remanded the matter with specific direction to supply copies of the details regarding the contemporaneous imports of similar goods which has been made the basis for enhancing the value of the imported goods and for re-determining the duty. In spite of such specific direction, the department has not provided the evidence regarding contemporaneous imports. Undisputedly, the department admits that there are no details of identical imports available for re-determination of the duty. They proceeded to enhance the value on the basis of contemporaneous price of similar goods imported. A table is also seen furnished with regard to the details of the bills of entry of the similar goods imported. Apart from this table, even after remand and repeated requests by the party, the department has not been able to furnish the details with regard to these bills of entry which according to them are contemporaneous imports of similar goods. It is not explained by the department how these goods are similar or akin to the goods imported by the appellant - The department should at least be able to explain from which source they have obtained the figures in the above table. Even after several stages of litigation, the department has not been able to throw any light on these aspects. It is also pertinent to note that appellant has raised this contention in the very first stage itself. The enhancement of value of goods merely on the basis of figures given in the table of the Show-cause notice has no legal basis - the enhancement of value of the goods as well as re-determination of duty/differential duty cannot sustain and requires to be set aside - as the enhancement of value, duty demand is set aside, the order of confiscation of goods as well as imposition of redemption fine and penalties cannot then sustain. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (10) TMI 819
  Seeking exemption to Applicant from servicing any loans to IL FS in terms of the Corporate Debtor Restructuring dated 02.12.2011, pending disposal of application on the file of this Hon ble Tribunal - HELD THAT:- It is a fact borne on record that the Appeal against the order passed by this Tribunal is pending adjudication before Hon ble Supreme Court of India. Hence the prayer as sought for by the Applicant for early disposal of CA/32/2010 is premature, since the Hon ble Supreme Court Is seized of the said matter and yet to pass a final order in CA/47/2011 and CA/101/2011 which is interconnected with CA/32/2010. Hence the prayer as sought for in (b) stands rejected. The Applicant ought not to have filed the present Application before this Tribunal seeking similar relief. It seems like the Applicant is indulging in forum shopping and also filing multiple applications before different fora seeking similar relief and such a practice is required to be deprecated. Further, the moratorium imposed by the NCLAT vide its order dated 15.10.2018 is still in vogue and the Applicant who is well aware of the said order passed by the Hon ble NCLAT has preferred to file application seeking relief as against the 5th Respondent. In all respects the Application filed by the Applicant deserves to be dismissed on the issue of maintainability, without going into the merits of the case - application dismissed.

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• Securities / SEBI

• 2021 (10) TMI 818
  Simulatnaous Adjudication proceedings and criminal Prosecution - exoneration in adjudication proceedings is on technical ground and not on merit - Applicants have been exonerated in the adjudication proceedings on the allegations for which, they have been prosecuted by the SEBI - HELD THAT:- In the case of K.C. Builders ( 2004 (1) TMI 7 - SUPREME COURT )the Hon ble Apex Court had taken a view that when there is categorical finding in the adjudication proceedings exonerating the person, it is binding and conclusive and thus, the Prosecution cannot be allowed to stand. In case in hand, the Applicants have been exonerated in the adjudication proceedings on merits and not on technical ground, and therefore the Prosecution for identical violation shall continue, if the order passed by Securities Appellate Tribunal is quashed and set aside by the Hon ble Supreme Court in Civil Appeal, preferred by the SEBI against the decision of Securities Appellate Tribunal, Mumbai. [ 2008 (10) TMI 628 - SECURITIES APPELLATE TRIBUNAL MUMBAI ] Thus, for the reasons stated above, the proceedings in the complaint pending on the file of Additional Chief Metropolitan Magistrate, 9th Court, Bandra, Mumbai, against the Applicants, shall remain stayed till the decision of the Hon ble Apex Court in the Civil Appeal s instituted by the SEBI against the decision of the Securities Appellate Tribunal [ 2008 (10) TMI 628 - SECURITIES APPELLATE TRIBUNAL MUMBAI ]

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• Insolvency & Bankruptcy

• 2021 (10) TMI 817
  Dissolution of the Corporate Person - voluntary liquidation - Section 59(7) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- There are no assets in the Corporate Person, which is shown in the bank statement of the Corporate Person. On the Petition filed by the Liquidator under sub-section 7 of Section 59 of the Code for dissolution of this Corporate Person, it is noticed that the affairs of the Corporate Person have been completely wound up and its assets are liquidated. This Corporate Person, through its Liquidator, voluntarily liquidated itself so as to get dissolved, therefore, this Corporate Person is dissolved directing the Liquidator to file this order with concerned Registrar of Companies and IBBI within 14 days thereof. Petition allowed.

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• 2021 (10) TMI 816
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - deduction of TDS also made - HELD THAT:- It is evident from the conduct of the Corporate Debtor that twenty (20) cheques of Rs. 5,00,000/- (Rupees Five Lakh only) each were given to the Operational Creditor by the Corporate Debtor. Ten (10) cheques were cleared by the Corporate Debtor. Two (2) cheques were dishonoured and Eight (8) cheques were returned by the Operational Creditor to the Corporate Debtor in good faith that the payment will be made by the Corporate Debtor to the Operational Creditor through RTGS - Further deducting TDS on all the invoices raised by the Operational Creditor on Corporate Debtor including unpaid invoices proves that the debt is due and payable by the Corporate Debtor to the Operational Creditor. As per provisions of the Income Tax Act, TDS is to be deducted on payment to the payee or crediting the amount, whichever is earlier. Here, TDS has been deducted on all invoices including unpaid invoices. Pre-existing dispute or not - HELD THAT:- In the present case, the existence of pre-existing dispute by the Corporate Debtor is not tenable as there is no correspondence on record where any dispute with respect to quantity or quality was raised by the Corporate Debtor on receipt of even a single unpaid invoice by the Corporate Debtor. The Corporate Debtor has not raised any occurrence of pre-existing dispute even in the reply of Demand Notice dated 12.06.2021. The Corporate Debtor has admitted the existence of debt and default through various confirmation letters sent by the Operational Creditor and countersigned by the Corporate Debtor. In view of the above correspondences, the debt and default in this case is established and the above company petition is liable to be admitted - Application admitted - moratorium declared.

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• 2021 (10) TMI 815
  Seeking to condone the delay of 18 days in preferring the Appeal - Section 42 of IBC, 2016 - HELD THAT:- As against the rejection of the claim, Section 42 of I B Code, 2016 provides for a time window of 14 days upon receipt of such decision to the creditor to file an appeal to the Adjudicating Authority against the said decision of the Liquidator - Filing of the claim with the Liquidator during the Liquidation process within the time period stipulated thereunder is a mandatory requirement under the IBC, 2016 and also it must be noted here that the mere entry of debt in the books of accounts of the Corporate Debtor is also not evidential enough for the claims to be admitted and considered by the Liquidator. The Liquidation is a time bound process and the Liquidator is being made accountable and required to explain, if there is any delay caused in the liquidation process - the Hon ble Supreme Court in Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (I) Ltd. Another [ 2019 (9) TMI 1019 - SUPREME COURT] , in relation to the aspect of limitation has restated the well established and well settled principle that there is no equity about limitation , we are unable to entertain this Application. In view of the IBC, 2016 being a time bound process as well as the Learned Liquidator being under a compulsion to complete the liquidation process within a period of one year from the date of commencement of liquidation, the application stands dismissed.

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• 2021 (10) TMI 814
  Seeking exclusion of time period from CIRP - section 12(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the facts of the present case, it is to be noted that this Tribunal already vide its order dated 16.04.2021, has granted exclusion of lockdown period starting from 25.03.2020 to 31.12.2020. However, the present application has been moved by the Applicant seeking further exclusion of the lockdown period from 10.05.2021 to 14.06.2021 - From the facts narrated, it is seen that the Resolution Plan is under consideration before the CoC members and as such it becomes necessary to extend the period of CIRP in order for the CoC to consider the Resolution Plan. It is also seen that the CoC is pondering on the Resolution submitted by the prospective Resolution Applicant as early as on 03.03.2021 and is yet to take a final call in relation to the same. Keeping in mind the facts of the present case and further in view of Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, we hereby grant exclusion of CIRP period from 10.05.2021 till 14.06.2021 and also extend the CIRP period by 60 days from 17.06.2021 (total of 95 days). Therefore, the CIRP period in relation to the Corporate Debtor will come to an end on 20.09.2021. Application allowed.

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• 2021 (10) TMI 813
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existene of debt and dispute or not - Time Limitation - HELD THAT:- It is established that the outstanding was acknowledged and accepted by the Corporate Debtor and this itself shows that the Petition is filed well within the period of limitation. It is also observed by the Bench that on 24.09.2019, 15.10.2019, 06.11.2019 and 28.11.2019 the Corporate Debtor appeared but failed to file reply in the matter. On 28.11.2019, the Corporate Debtor filed Affidavit whereby it was submitted that the settlement talks were going on and time was sought to file consent terms. Despite several opportunities being granted, the Corporate Debtor neither appeared nor filed reply/consent terms in rebuttal. Therefore, there is no reason to disbelieve the contentions raised by the Operational Creditor and hence, the matter was proceeded ex-parte. The Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of rupees one lakh stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2021 (10) TMI 812
  Seeking an exclusion of 197 days on account of, inter-alia, delays caused as a result of restrictions and lockdowns imposed because of Covid-19 and time taken in replacement of the interim resolution professional - HELD THAT:- It is stated by the Applicant that homebuyers constitute 50.38% of the CoC, on account of being dissatisfied with the IRP, voted against his confirmation as RP during the 1st CoC meeting held on 02.12.2020. Only a minority of 45.35% of the CoC voted in favour of appointing the IRP as the RP of the Corporate Debtor, falling short of the 66% threshold. Subsequently, the confirmation of the Applicant as the RP was put for vote during the 5th CoC meeting held on 04.05.2021, which was duly approved by 68.87% of the CoC. The appointment of the Applicant as the RP was eventually confirmed by this Hon ble Adjudicating Authority vide its order dated 09.06.2021. This bench, after taking into consideration the facts and circumstances of the present case, is satisfied that the exclusion being sought by RP is bona fide and the same needs to be granted. Hence, the period between 06.12.2020 to 02.01.2021 (27 days), 17.03.2021 to 30.04.2021 (44 days), 01.05.2021 to 31.05.2021 (30 days), 01.05.2021 to 05.07.2021 (5 days excluding the overlap period), on account of restrictions imposed by the Noida police, Government of Uttar Pradesh and the Government of Delhi, stands excluded from the CIRP of the Corporate Debtor - Further, the exclusion being sought for the intervening time period for confirmation replacement of RP and on account of extension of time for Form G, such exclusion cannot be granted as that period is to be calculated in the CIRP period of the corporate debtor. Application disposed off.

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• Service Tax

• 2021 (10) TMI 811
  CENVAT Credit - providing of taxable as well as exempt service - exempted service/ job work - non-maintenance of separate record - Rule 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT:- N/N. 214/86-CE (NT) though was effective from April 1996 has been amended extensively vide N/N. 49/2002 dated 16.09.2002 so as to make the manufacturer accountable for discharging his obligation in respect of goods under Rule 6 of the Cenvat Credit Rules, 2002. As such when the notification was made service was not treated as an taxable incident in India and the said notification has clearly excluded job workers from the purview of payment of excise duty if ultimate manufacturer was to pay the duty at the time of clearance. Therefore, this amendment of 2005 since has only fixed manufacturer liable to comply with Rule 6 of Cenvat Credit Rules, 2004, to my considered view, job worker cannot be asked to comply the same again on the ground that he is also a part of the manufacturing process. There is no need to further dwell into the issue with reference to S.No. 30 of the Notification No. 22/2012-ST to interpret the nature of work undertaken by the appellant job worker. When such a finding of the adjudication authority is not appealed against by the respondent department, the work undertaken by the appellant was part of the process of manufacturing and not a services rendered by it to the ultimate manufacturer and in due regard to the judicial precedent set by this Tribunal including that of Shree Organo Chemicals Ahmedabad P. Ltd. [ 2019 (2) TMI 852 - CESTAT AHMEDABAD] . Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (10) TMI 810
  Refund claim against reversal of CENVAT Credit - input services or not - sales commission - refund rejected on the ground that sales commission is not input service and also on the ground that the appellant have admittedly reversed the amount without under protest - HELD THAT:- It is found that the reversal was made on the objection of the audit party. Though the reversal was not made under protest but the appellant has right to claim refund within one year as mandated under section 11B of Central Excise Act,1944., therefore only on the ground that the appellant has not filed under protest letter while reversing the credit refund cannot be rejected on this ground. As regard the merit that whether the sales commission is admissible input service or otherwise the issue is subjudice before the Hon ble High Court of Gujarat in the case of Essar steel India Ltd. [ 2016 (4) TMI 232 - CESTAT AHMEDABAD] and Cadila Health Care Ltd. [ 2013 (1) TMI 304 - GUJARAT HIGH COURT] . Therefore, at this stage the merit cannot be decided. Appeal remanded to the Adjudicating Authority for passing a fresh order after the legal issue is settled on the admissibility of the Cenvat Credit on sales commission by the Hon ble Apex Court in the case of M/s. Cadila HealthCare Ltd. and also by the Hon ble High Court in the case of Essar Steel India Ltd. - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2021 (10) TMI 809
  Recovery of sales tax dues under The Gujarat Value Added Tax Act and Gujarat Sales Tax Act - Attachment of personal property - outstanding dues of the Company - section 135D of the Bombay Land Revenue Code - whether for the purpose of recovery of sales tax dues under The Gujarat Value Added Tax Act and Gujarat Sales Tax Act against Gujarat against a private limited company, the personal property belonging to the Managing Director of such company can be attached? - HELD THAT:- The Co-ordinate Bench while considering the similar issue, relying upon the decision of Division Bench of this Court rendered in Special Civil Application No.243 of 1991 with Special Civil Application No.3103 of 1991 and Special Civil Application No.7578 of 1991 in the case of Mr.Choksi Vs. State of Gujarat , [ 2012 (3) TMI 392 - GUJARAT HIGH COURT ] has allowed the said petition and quashed and set aside the impugned notification by holding that the auction of the residential property in question as illegal and bad in law and restrained the respondents from attaching or selling any private property of the Managing Director of the Company for realization of the aforesaid dues. Petition allowed.

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• 2021 (10) TMI 808
  Revision/reassessment order - escaped turnover / wrong availment of Input Tax Credit (ITC) - Hans Chap Khaini - exempt from tax or not - Alternate remedy rule - HELD THAT:- The matter turns on facts and Hans Chap Khaini is only a brand and it is not a product. Whether the product would qualify as Tobacco is a matter which turns on facts and in the considered view of this Court, the reasoned impugned order does consider the principles qua earlier orders and the same stand distinguished. Alternate remedy rule - HELD THAT:- In the case on hand, there is no disputation or disagreement that the impugned order is appealable. In other words, statutory appeal qua impugned order is available to the writ petitioner, which will be under Section 51 of TNVAT Act - the law is well settled that it is not an absolute rule and it is a discretionary rule. While holding it is not an absolute rule i.e., a discretionary rule and a self-imposed restraint qua writ jurisdiction. In the considered view of this Court, this is a case which has to be dealt with by Appellate Authority if the writ petitioner / dealer chooses to prefer an appeal as it turns heavily on facts. As already alluded to supra, Hans Chap Khaini is a brand name and though the written submission talks about packets, it is understood that it is effectively sachets. The contents of sachets have to be necessarily gone into. One of the extracts from the impugned order makes it clear that the respondent in the impugned order has clearly gone into the ingredients and has even gone into process and making of nice tobacco . Respondent has gone into and examined that products such as menthol, geru, lime an spices etc., are homogeneously mixed with the same either by a electric machine or by a manually operated machine. As all these details turn on facts, it would be appropriate that the Appellate Authority examines this if the writ petitioner chooses to file an appeal and therefore, this Court refrains itself from expressing any opinion on these aspects of the matter in this order. The writ petition is therefore dismissed albeit leaving a window open to the writ petitioner / dealer to file an appeal under Section of 51 of TNVAT Act if the writ petitioner chooses to do so.

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• 2021 (10) TMI 807
  Refusal to direct stay of collection of remainder of disputed tax - jurisdiction to entertain the stay application pending hearing of appeal before the Tribunal - Section 33 of the Andhra Pradesh Value Added Tax Act, 2005 - HELD THAT:- A plain reading of Section 33(6) of the Act would show that such power would be exercised by the 2nd respondent only when an appeal is preferred against an order or proceedings recorded by the Deputy Commissioner under Section 21 or 32 of the Act and not otherwise - In the present case, a second appeal has been preferred against an order passed by the first appellate authority under Section 31 of the Act and therefore, the 2nd respondent did not have jurisdiction to entertain an application for stay of collection of tax pending such appeal. When a litigant has a right to prefer a second appeal against an order passed by the first appellate authority, it would be wholly unjust to say that he would have no right to seek suspension of collection of the remaining tax in dispute pending such appeal in appropriate cases where a strong arguable case is made out in his favour. If so, the second appeal would be rendered infructuous and extreme prejudice would be caused to the appellant - where no order of stay of collection of remaining tax was passed in favour of the appellant under Sub-Section (3)(a) or (3)(b) of Section 31 of the Act and the appellant makes out a strong arguable case in second appeal, this Court in exercise of its extraordinary writ jurisdiction may direct suspension of collection of remaining of the tax in dispute pending disposal of the appeal subject to such terms and conditions as this Court may consider fit and proper. The petitioner has made out a strong arguable case in appeal - in order to balance the equities between the parties, in exercise of our power under Article 226 of the Constitution of India we are inclined to direct that there shall be stay of collection of the remainder of the disputed tax to the tune of Rs. 4,79,010/- till the disposal of the appeal - Petition disposed off.

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• 2021 (10) TMI 806
  Quantum of pre-deposit - Seeking admission of Second Appeal and stay against the recovery of dues - Exemption for high seas sale transaction - HELD THAT:- The demand of the pre-deposit is to the tune of 20% of the tax liability for admission of the appeal vide impugned order dated 11.02.2020. As could be noticed from the pleadings for the other assessment year, the petitioner has been able to duly furnish the evidence for high seas sale transactions, which have been accepted also by the different assessment orders. Considering the justifiable grounds and the bona fide nature of the transaction, the First Appellate Authority when has already ordered the reverification of the document, which had not been complied with by the Assessing Authority, the VAT Tribunal could have considered this aspect, which instead has ordered the 20% of the pre-deposit. 5% of the amount by way of the pre-deposit would suffice the insistence of requirement of pre-deposit of to the tune of 20% would need indulgence. The petitioner is directed to deposit 5% of the amount which shall include the amount of Rs. 5,18,935/- within a period of two weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2021 (10) TMI 805
  Rejection of concessional rate of tax applicable to sales made in favour of Lakshadweep Administration - Seeking declaration that Rule 12C(1) of the Rules as invalid - proviso to Section 6(1) of the Act, read with Rule 12C of Kerala Value Added Tax Rules, 2005 - rejection for want of proof of other requirements prescribed in Rule 12C, namely, shipping bill or similar document duly attested by the port authorities - HELD THAT:- The Courts strongly lean against any construction which tends to reduce a statutory requirement to futility. The requirement in legislation or subordinate legislation must be read/construed so as to make it effective, albeit such construction is not possible because of vagueness of language, the language is wholly interactable. The State legislature and the delegatee are having jurisdiction to make law/rules in regard to Value Added Tax. We refuse to sit as a super legislature to weigh the wisdom of requirements in proviso to Section 6(1) or Rule 12C. Courts normally refuse to examine the wisdom of expression of legislature/executive in tax, categories of taxes, rate of taxes, person who are brought under the tax purview etc. As it is said, words are the framework of concept or policy of Legislature/Government and the fact is that the concept or policy could change more quickly than the words. The dealer had a choice whether to sell at the regular/applicable rate or claim a concessional rate of tax. The dealer chooses to sell the goods at concessional tariff and collects tax as applicable to the sale, therefore, the dealer is expected to comply with other requirements prescribed under the Rule for claiming concessional rate of tax. The dealer having sold the goods at concessional rate of tax, cannot be heard to challenge the very prescription as impossible of performance, ineffective in practice etc. In the process of interpretation or application, relevant expression chosen by the legislature or the executive ought not to be ignored or diluted. The case of dealer if accepted, the same would result in overlooking the clear expression of the rule making authority. The claim of dealer for concessional rate without placing on record all the requirements of Rule 12C is misconceived and liable to be rejected. The rule making authority, both from the wisdom and experience gained over years, has stipulated the prescription to give concessional rate of tax to such transactions which reach the Union Territory. The misuse of concessional rate of tax cannot be overlooked while accepting a purposive interpretation, hence the rule insists production of shipping bill or similar document attested by the port authorities. Appeal allowed.

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• 2021 (10) TMI 804
  Maintainability of petition - availability of alternative efficacious remedy of appeal - petitioner contends that it filed Xerox copy of Form VAT 250 along with other records but the 1st respondent without considering the same, passed the impugned Assessment order - HELD THAT:- Whether the copy of Form VAT 250 produced by the petitioner is a genuine one or a fake one is a question of fact to be decided taking into consideration other relevant facts. Since the exercise is not possible in writ petition and as the provision for appeal is available to the petitioner and also considering that valuable contention of the petitioner is at stake, we deem it appropriate to direct the petitioner to file appeal before the appellate Deputy Commissioner within specified time and direct the said authority to admit the appeal and pass appropriate order. The impugned assessment order and penalty order are set aside with a direction that the petitioner shall within four (4) weeks from the date of this order file appeal before the concerned appellate authority, in which case, the said appellate authority shall admit the appeal and afford an opportunity to the petitioner to establish the genuinity of Form VAT 250 produced by it - petition allowed.

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