TMI Tax Updates - e-Newsletter
October 4, 2022

Case Laws in this Newsletter:

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

Articles

1. SUMMARY OF SHOW CAUSE NOTICE IN FORM DRC-01 CANNOT BE A SUBSTITUTE OF SHOW CAUSE NOTICE UNDER SECTION 74(1) OF CENTRAL GOODS AND SERVICES TAX ACT, 2017

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Advisory on Filing TRAN-1/2 Forms to claim Transitional Credit

2. Auction for Sale (re-issue) of (i) ‘7.38% GS 2027’, (ii) ‘7.26% GS 2032’, (iii) ‘7.36% GS 2052’

3. Three important road connectivity projects recommended by Network Planning Group (NPG)

Notifications

Central Excise

1. 33/2022 - dated 1-10-2022 - CE

Special Additional Excise Duty for exports of petrol and diesel - Change in rate of High speed diesel oil - Seeks to amend Notification No. 04/2022-Central Excise, dated the 30th June, 2022.

2. 32/2022 - dated 1-10-2022 - CE

Special Additional Excise Duty on production of Petroleum Crude and export of Aviation Turbine Fuel - Change in rates - Seeks to amend Notification No. 18/2022-Central Excise, dated the 19th July, 2022.

Customs

3. 53/2022 - dated 3-10-2022 - Cus

Effective rate of Agriculture Infrastructure and Development Cess for specified goods - change in basic customs duty on imports of platinum - Amendment in Notif. No. 11/2021- Customs, dated the 1st February, 2021.

4. 52/2022 - dated 3-10-2022 - Cus

Seeks to increase basic customs duty on imports of platinum - Amendment in Notification No. 50/2017-Customs, dated the 30th June, 2017

Circulars / Instructions / Orders

GST - States

1. TRADE CIRCULAR No. 11/2022 - dated 29-9-2022

GST applicability on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law

2. TRADE CIRCULAR No. 10/2022 - dated 29-9-2022

Clarifications regarding applicable GST rates & exemptions on certain services

3. TRADE CIRCULAR No. 12/2022 - dated 29-9-2022

Guidelines for filing/revising TRAN-1/TRAN-2 in terms of order dated 22.07.2022 & 02.09.2022 of Hon’ble Supreme Court in the case of Union of India vs. Filco Trade Centre Pvt. Ltd.

GST

4. S-31011/12/2021-DIR(NC)-DOR - dated 22-9-2022

Constitution of Group of Ministers (GoM) on GST System Reforms

Highlights / Catch Notes

GST

• Higher Court Overturns Lower Courts' Orders: Bail Canceled for Violating Conditions; Failure to Appear and Share Location Pin.

  Case-Laws - HC : Cancellation of bail order - Violation of bail conditions - failure to appear before the Investigation officer - Google pin could not be dropped to the Investigating Officer - Taking into consideration the overall facts and circumstances of the case - order of courts below set aside - HC
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Income Tax

• PCIT Can Revise Erroneous Assessment Orders u/s 263 of Income Tax Act, Ensuring Fairness and Transparency.

  Case-Laws - HC : Revision u/s 263 - In terms of Section 263 of the Act, the PCIT is empowered to invoke the power if, in his opinion, the assessment order is erroneous in so far as it is prejudicial to the interest of revenue. However, before doing so he is required to give the assessee an opportunity of being heard and after making enquiry or causing to be made such enquiry as he deems necessary, pass an order under the said provision. - HC
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• Court Invalidates Tax Reassessment Notice Due to Non-Compliance with Sections 147 and 148A of Income Tax Act.

  Case-Laws - HC : Reopening of assessment u/s 147 - In the instant case, the validity of notice has to be adjudged on the basis of law as existing on the date of notice. The mandatory conditions specified in Section 148A of the Act have not been complied with before issuance of impugned notice and the same has been issued in violation of mandate contained in Section 148 and 148-A of the Act. Therefore the issue with regard to validity of notice has to be answered in the negative. The impugned notice dated 30.06.2021 is invalid and has to be struck down. - HC
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• Exemption Denied: Section 11 and 2(15) Receipts from Non-Sporting Activities Not Aligned with Memorandum of Association.

  Case-Laws - AT : Denial of exemption u/s 11 r.w.s. 2 (15) - It is no doubt true that the receipts from non-sporting activities earned by the assessee are covered under the proviso to section 2(15) of the Act and the same are also not covered under its objects as mentioned in the Memorandum of Association. Therefore, in view of the above, we deem it appropriate to remand the issue of determination of income eligible for exemption under section 11 of the Act to the file of AO for de novo adjudication. - AT
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• Undisclosed Income Taxed u/s 115BBE; Business-Related Income Exempt; Excess Cash Taxed as Undisclosed Income.

  Case-Laws - AT : Undisclosed income u/s 68 and 69 - Tax liability u/s 115BBE - section 115BBE does not apply to the income, the source of which is business. - the undisclosed income attributable to excess cash shall attract section 115BBE - AT
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• Assessee Claims Excess TDS on Unpaid Client Amounts Included in Taxable Income; Deductions May Apply.

  Case-Laws - AT : TDS Claimed but not reflected in 26AS - Assessee’s excess claim of TDS assuming that the less payment made by the clients are towards TDS may not be acceptable, however, if the amounts in dispute were not actually paid by the clients but were offered to tax by including it in the income, the same has to be reduced, as, assessee never received such income. - AT
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• Assessee's Bad Debt Write-Off Deemed Invalid for Tax Benefits; Deliberate Misrepresentation Detected by Authorities.

  Case-Laws - AT : Disallowance of bad debt written off - assessee knowing to fact that its business going to discontinue from immediate subsequent year deliberately written off good debtor as bad debt in the books to reduce the tax liability - If the assessee was to avail the benefit of the provisions of law by using the colorable device, the same cannot be allowed to the assessee. - AT
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• Income from Share Sales: Capital or Business? Depends on Intent and Transaction Nature, Not Just Resale Plans.

  Case-Laws - HC : Correct head of income - gain on sale and purchase of shares - a transaction is not necessarily in the nature of trade because the purchase was made with the intention of resale - as pointed out where the purchase of any article or of any capital investment, for instance shares is made without the intention to resell it at a profit, the resale under such changed circumstances would only be realization of capital and would not stamp the transaction with a business character. - HC
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Customs

• Colchicum Import Exemption Can't Be Denied Due to Bill of Lading; Notification Allows Different Transporters.

  Case-Laws - AT : Benefit of exemption - import of Colchicum (Saanjan) Grade 3 - origin of goods - The Bill of Lading cannot mention Afghanistan as the Port of Loading because that is not where the goods were received by the Shipping Line. We do not find anything in the exemption notification requiring that the same transporter has to transport the goods from the place of export upto the final destination. Therefore, denial of the benefit of the exemption on this basis is not correct. - AT
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• Twin-Engine Aircraft BRT Import Exempt from Duty for Non-Scheduled Services, Used as Per DGCA Permit Rules.

  Case-Laws - AT : Import of twine engine light weight Aircraft (Aircraft BRT) - Benefit of the exemption - nil rate of duty on import of aircraft for non-scheduled (passenger) services as well as non-scheduled (charter) services - It is clear that the Aircraft BRT has been strictly used in terms of the permit granted by the DGCA and the said Aircraft was used for remuneration purposes only. - Demand set aside - AT
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• Jewelry Re-imported for Exhibition Exempt from IGST: No Sale, No IGST Paid or Refunded, Claim Valid Under Notification.

  Case-Laws - AT : Re-import of jewellery exported for exhibition - Benefit of exemption - The admitted fact is that there being no sale in the transaction, neither the IGST is paid by the appellant nor they had claimed refund for it. These facts are not in dispute. Thus, the appellant has rightly filed the bill of entry claiming the exemption under Sl.No.5 of the Table to the said notification. - AT
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Corporate Law

• High Court Upholds Registrar's Decision to Strike Off Defunct Company; Appellant's Restoration Request Denied Due to Unreliable Evidence.

  Case-Laws - SC : Struck off name of the Company - defunct company. - HC upheld the order of RoC - Locus of the appellant seeking restoration of struck off name of the Company from the register of RoC - it is difficult to place reliance on the documents placed by the appellant to claim himself to be one of the Directors of the Company. - SC
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Indian Laws

• Court Upholds Accused's Right to Bail, Rejects CBI's Attempt to Circumvent Section 167(2) with Incomplete Charge Sheet.

  Case-Laws - HC : Seeking grant of Regular Bail - failure to Final Report u/s 173 of the Code within sixty days - The respondent/CBI cannot take shelter of filing charge sheet in respect of offences pertaining to alleged illegal appointment of Anand Subramanian by giving nomenclature of complete charge sheet or final report as per section 173(2) of the Code to defeat the right of statutory bail under Section 167(2) of the Code. - HC
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IBC

• IBC Section 5(8) Allows Surety to Claim as Creditor Before Liquidator, Overrides Indian Contract Act Provisions.

  Case-Laws - AT : The provisions of IBC will prevail over the provision of Indian Contract Act, thereby surety may take appropriate steps to claim as creditor to recover the amount he discharged to the Creditor under the agreement of guarantee of Section 5(8) of IBC, but not as secured creditor, before the liquidator if the 2nd Respondent did not finalise the list of Creditor, subject to permissibility under Section 38, Chapter III of IBC and limitation. - AT
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• NCLT Rules Exclude CIRP Costs; IRP/RP Fees Defined in Section 5(13) and CIRP Regulations 31, 33, 34.

  Case-Laws - AT : Scope of NCLT Rules - fees mentioned in Rule 112 read with the definition clause 2(12) does not mention either CIRP costs or the fees to be paid to the IRP or RP. The aforesaid NCLT Rules are confined to fees payable on account of petition or appeal or application filed or references made for documents/orders before the NCLT. This is clearly distinguishable from the expenses which constitute insolvency resolution process costs; costs of the IRP or the Resolution Professional cost which are defined in Section 5(13) read with CIRP Regulation 31, 33 and 34 respectively. - AT
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Service Tax

• Appellant Concealed Taxable Amount to Evade Service Tax; Demand for Unpaid Tax Confirmed by Authorities.

  Case-Laws - AT : Extended period of limitation - The Appellant concealed the correct taxable amount with the service tax department, until the Departmental officers initiated an inquiry in this regard. These facts were suppressed with intent to evade the payment of service tax due on various taxable services provided by them thereby facilitating the evasion of service tax payable on the said services so rendered by them. - Demand confirmed - AT
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Central Excise

• CENVAT Credit Allowed for Inputs in Coal Gas Manufacturing; Crude Coke Oven Gas Not an Exempted Final Product.

  Case-Laws - HC : CENVAT Credit - inputs - Wash Oil and Sulphuric Acid which were used directly or indirectly, in or in relation to the manufacture of coal Gas - The manufacturing process adopted by the assessee and the emergence of crude coke oven gas is technological necessity and in evitable by-product and it is not exempted final product and it is neither the case of the department that it is the final product - no part of input credit availed was to be disallowed. - HC
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• Demand Quashed if Assessee Not Notified of Reasons in Show Cause Notice: Central Excise Legal Principle.

  Case-Laws - AT : Scope of SCN - time limitation - It is a settled legal position that when the assessee was not put to notice with regard to the reasons basis which the demand is being sought to be made, the proceedings cannot be legally sustained. Hence, the demand is liable to be quashed on this ground alone. - AT
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Case Laws:

• GST

• 2022 (10) TMI 86
  Seeking grant of bail - inadvertent mistake - Violation of bail conditions - failure to appear before the Investigation officer - Google pin could not be dropped to the Investigating Officer - HELD THAT:- Taking into consideration the overall facts and circumstances of the case and the fact that the petitioner was granted regular bail vide order dated 17.02.2022 and the impugned order relates to certain non-compliances of the terms and conditions to which the petitioner has given sufficient explanation. In addition, since the petitioner has already undertaken that he would appear before the Investigating Officer as and when he is called for and explain the reason if, at all, any document or information is not available to him, it would be up to the Investigating Officer after perusal or consideration of the explanation by the petitioner to form an opinion as to the whether the applicant is at all not cooperating with the investigation. This court does not find it appropriate to sustain the impugned order and, therefore, the same is set aside - Petition disposed off.

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• 2022 (10) TMI 85
  Seeking grant of Regular Bail - played role of middle man - offence punishable under Sections 132(1)(b) of the Gujarat Goods and Service Tax Act, 2017 and the Central Goods and Service Tax Act, 2017 read with Section-120(B) of the Indian Penal Code - HELD THAT:- In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the First Information Report, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail registered with the Office of the Chief Commissioner of State Tax, Enforcement, Gujarat State, Ahmedabad on executing a personal bond of Rs.10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - application allowed.

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• Income Tax

• 2022 (10) TMI 84
  Revision u/s 263 - failure to give any opportunity of hearing to the assessee - HELD THAT:- Though the assessee submitted explanation in response to the proceeding initiated u/s 263 PCIT without affording an opportunity of hearing to the assessee on the alleged ground that no enquiry was conducted by the assessing officer had rejected the contentions and confirmed the proposal in the show cause notice holding that the assessment order was erroneous in so far as it is prejudicial to the interest of revenue. Tribunal considered the contentions advanced by the assessee before it and pointed out that the PCIT did not specifically mention any error in the contentions advanced by the assessee in reply to the show cause notice and held that the assessment order was erroneous in so far as it is prejudicial to the interest of revenue solely on the ground that the assessing officer failed to verify necessary facts. There was no such allegations made in the show cause notice u/s 263 and, therefore, no opportunity was afforded on the said issue. Thus, the learned Tribunal taking note of the decision in the case of CIT vs. Amitabh Bachchan [ 2016 (5) TMI 493 - SUPREME COURT] held that failure to give any opportunity would render the revisional order under Section 263 of the Act legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Tribunal rightly went into the matter and held in favour of the assessee. Furthermore, we note that in terms of Section 263 of the Act, the PCIT is empowered to invoke the power if, in his opinion, the assessment order is erroneous in so far as it is prejudicial to the interest of revenue. However, before doing so he is required to give the assessee an opportunity of being heard and after making enquiry or causing to be made such enquiry as he deems necessary, pass an order under the said provision. The learned Tribunal has found that opportunity was not granted to the assessee. That apart no enquiry was conducted by the PCIT before passing the order. - Decided against revenue.

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• 2022 (10) TMI 83
  Reopening of assessment u/s 147 - Eligibility of notice u/s 148 - mandatory conditions specified in Section 148A or not? - Scope of amended provisions of Section 147 to 151 - whether a notice issued on or after 01.04.2021 under Section 148, without complying with provisions of Section 148 and Section 148A of the Act is valid? - HELD THAT:- On commencement of Finance Act, 2021 w.e.f. 01.04.2021, the 2020 Act was already in force. Even then, Parliament made the amended provisions of Section 147 to 151 of the Act effective from 01.04.2021. The said provisions have been substituted. It is well settled in law that substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. From perusal of 2020 Act, it is evident that Central Government has been empowered to notify the period in which the actions are to be taken and to extend the time limit within which the said actions are to be taken. The conditions prescribed for issue of notice under Section 48 of the 1961 Act cannot be waived. The explanation below clause (A) in the notifications dated 30.03.2021 and 27.04.2021, is clearly beyond the authority delegated to the Central Government under the 2020 Act to issue notifications extending time limit for various actions and compliances. By means of aforesaid explanation, the Central Government has extended the operation of Section 148, 149 and 151 prior to its amendment by Finance Act, 2021 and has sought to revive the non-existent provisions which is clearly beyond its authority. Therefore, the explanation contained in notification dated 30.03.2021 and 27.04.2021 is liable to be struck down as ultra vires 2020 Act. In the instant case, the validity of notice has to be adjudged on the basis of law as existing on the date of notice. The mandatory conditions specified in Section 148A of the Act have not been complied with before issuance of impugned notice and the same has been issued in violation of mandate contained in Section 148 and 148-A of the Act. Therefore the issue with regard to validity of notice has to be answered in the negative. The impugned notice dated 30.06.2021 is invalid and has to be struck down. Submission made by learned counsel for the revenue that the 2020 Act creates a legal fiction and therefore, it pre supposes existence of erstwhile Section of 148 even though it has been repealed with effect from 01.04.2021 is concerned, suffice it to say that legal fiction cannot operate in contravention of a legal provision. The validity of the notice has to be adjudged on the basis of the law in existence at the time of issue of notice. Therefore, the aforesaid contention deserves to be repelled. We are in respectful agreement with the reasons recorded and views expressed by Allahabad, Bombay, Delhi, Madras and Rajasthan High Courts. Therefore, the explanations to notification No.20/2021 dated 31.03.2021 and notification No.38/2021 dated 27.04.2021 are declared ultra vires the provisions of 1961 Act and 2020 Act. The impugned notice dated 30.06.2021 issued under Section 148 of the Act is quashed.

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• 2022 (10) TMI 82
  Denial of deduction u/s 80IAB - income received in the nature of car parking rental - as submitted provision of car parking services is essential part of carrying out the business of development, operation and maintenance of SEZ - HELD THAT:- As carefully examined the issue and perused the orders of the lower authorities. In the light of documentary evidences placed by way of notifications and instructions from competent authorities, it is manifest that car parking rentals have been reckoned as authorized operation in SEZ. In the light of express guidelines issued by the Government as referred to and relied upon, we are of the view that the income from car parking rental would squarely qualify for deduction under Section 80IAB of the Act. Ground of the appeal of the assessee is allowed. Deduction u/s 80IAB on sale of garbage and oil waste - HELD THAT:- We take note of the similar contentions on behalf of the assessee that generation of waste oil and garbage are inextricably connected to the maintenance and running of a SEZ and thus any profit derived from sale of such scrap will be eligible for deduction under Section 80IAB of the Act. A reference made in this regard in the case of ACIT vs. Zydus Infrastructure [ 2016 (8) TMI 696 - ITAT AHMEDABAD] has been taken note of. We thus agree with the plea of the assessee on this score too. Ground No.2 of the Assessee is thus allowed. Disallowance u/s 14A - suo motu disallowance made by assessee - HELD THAT:- We find merit in the plea of the assessee that the disallowance cannot exceed the actual expenditure incurred in relation to the earning of the exempt income. In the instant case, no direct expenses has been incurred and the disallowance has been carried out under Rule 8D(2)(iii) of the Rules in respect of indirect expenses. The disallowance has been carried out at Rs.22,99,529/- (being 0.5% of the average value of investments) in place of the disallowance offered amounting to Rs.5,45,306/-. The action of the Assessing Officer is apparently without application of mind inasmuch as the actual indirect expenditure available for allocation is Rs.5,45,306/- only. Other expenses incurred are stated to be directly attributable to SEZ operation and thus cannot be subjected to estimated disallowance qua be exempt income. We thus find merit in the plea of the assessee. The Assessing Officer is directed to restore the position claimed by the assessee in this regard. Assessee ground allowed.

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• 2022 (10) TMI 81
  Disallowance of 20% on travelling expenses - HELD THAT:- As considering the order of the revenue authorities the related to disallowance of the travelling expenses the disallowance of 20% of total expenses not supported any such documentary evidence. The assessee submitted the advisory of the CBDT to AO F. No. 225/303/2014/IT not to make high pitched scrutiny assessment in Jammu Kashmir due to destruction of record, Books of Accounts during flood. The assessee was unable to submit the documentary evidence before the revenue authorities to substantiate his claim. Assesssee s claim was that during original assessment U/s 143(3) dated 27/03/2015 the disallowance of expenses under same head was made by the ld. AO @10%. There is no such any proper finding of lacuna for disallowance of the expenses @ 20%. Considering this there is no such any specific finding for addition, the same addition amount of Rs.953,484/- is liable to be deleted. Reopening of assessment u/s 147 - We find there is no infirmity in the order of the ld. CIT(A). The reopening of assessment u/s 148 is proper and as per the law. In the result the appeal of the assessee is dismissed.

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• 2022 (10) TMI 80
  Disallowing the claim of deduction u/s.80IA - Form No.10CCB has not been filed along with the original return of income within the due date of filing of return of income - HELD THAT:- As the revised return of income filed by the assessee on 28.05.2018 and consequent processing of return by the Department by issuing intimation u/s.143(1) of the Act dated 25.03.2019, the impugned order, the assessee has revised the return validly and within the time available u/s.139(5) of the Act and has also accompanied by the audit report in Form no.10CCB of the Act. Hence, we are of the view that the authorities below have wrongly disallowed the claim of deduction. In the case of Shanthi Gears Ltd [ 2022 (3) TMI 960 - ITAT CHENNAI] we allow the claim of assessee and direct the AO accordingly. Appeal filed by the assessee is allowed.

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• 2022 (10) TMI 79
  Denial of exemption u/s 11 r.w.s. 2 (15) - CIT(A) held that the assessee earns revenue from activities, which are in the nature of trade, commerce or business and therefore proviso to section 2(15) of the Act is applicable to the assessee s case - HELD THAT:- In the present case, there is no dispute regarding the object of the assessee club, as noted above from the Memorandum of Association. Only basis on which exemption under section 11 of the Act has been denied is that assessee has undertaken certain activities, different from its object, which are in nature of trade, commerce or business. Further, in the present case, assessee has also agreed to the fact that certain income has been earned by it from non-sporting activities. All the details pertaining to same are not available on record. It is also not evident that whether the receipts which are held to be eligible for exemption under section 11 of the Act, in assessee s own case for preceding assessment years, are similar to the receipts earned by the assessee in the assessment years under consideration and whether those receipts were also from non-sporting activities. It is no doubt true that the receipts from non-sporting activities earned by the assessee are covered under the proviso to section 2(15) of the Act and the same are also not covered under its objects as mentioned in the Memorandum of Association. Therefore, in view of the above, we deem it appropriate to remand the issue of determination of income eligible for exemption under section 11 of the Act to the file of AO for de novo adjudication. We also direct the assessee to provide the clear breakup of the revenue which it has earned in relation to sporting activities and the revenue which has no relation whatsoever to the sporting activities undertaken at assessee s premises. Since, in preceding assessment years, assessee was held to be eligible for exemption under section 11, therefore, the aforesaid adjudication be made in light of decisions in the case of the assessee, after determining which receipts are similar in nature to the receipts held to be eligible for exemption under section 11 of the Act in preceding years and relief be granted to the assessee to that extent. With the above directions, we remand the issue to the file of AO for consideration afresh. Needless to mention that no order shall be passed without affording opportunity of hearing to the assessee. Accordingly, grounds no. 1 and 2 raised in assessee s appeal are allowed for statistical purpose. Carry forward and set off of deficit of earlier years - We find that Hon ble Supreme Court in CIT v/s Subros Educational Society, [ 2018 (4) TMI 1622 - SC ORDER] held that any excess expenditure incurred by the trust / charitable institution in earlier assessment year would be allowed to be set off against income of the subsequent years by invoking the provisions of section 11 of the Act. Since, the issue of exemption under section 11 of the Act has been remanded to the AO for de novo adjudication, therefore, we direct the AO to allow carry forward and set off of deficit of earlier years after determination of income eligible for exemption under section 11 of the Act. Accordingly, ground No. 3 raised in assessee s appeal is allowed for statistical purpose.

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• 2022 (10) TMI 78
  Income accrued in India - royalty receipt - taxability of subscription charges received by the assessee as Royalty under the provisions of Article 12(3) of India USA Double Taxation Avoidance Agreement ( DTAA ) and under section 9(1)(vi) - HELD THAT:- We find that the Co ordinate Bench of the Tribunal in assessee s own case in American Chemical Society 2019 (4) TMI 1818 - ITAT MUMBAI] for the assessment year 2014 15 held that subscription revenue received by the assessee in Chemical Extract Service and Publication division does not qualify as Royalty in terms of section 9(1)(vi) of the Act as well as Article 12(3) of the India USA DTAA. The issue arising in the present appeal is recurring in nature and has been decided by the Co ordinate Bench of the Tribunal in preceding assessment years. Respectfully following the orders passed by the Co ordinate Bench of the Tribunal in assessee s own case (Supra) we uphold the plea of the assessee and delete the impugned addition in respect of subscription fee received by the assessee under Chemical Abstract Service and Publications division. As a result, ground raised by the assessee is allowed.

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• 2022 (10) TMI 77
  Income from house property - warehouse hire income - income under which the rental from his house property let by the assessee to M.P. Warehousing and Logistics Ltd. for storage purposes is assessable to tax under the Act - HELD THAT:- We, have little hesitation in upholding the claim of the Revenue of the warehouse hire income as assessable as income from house property in the instant case. Though the assessee has placed certain orders by the Tribunal in his paper-book, the same were not referred to during hearing, to form part of the record nor any other argument made. The matter is principally factual, i.e., given the law in the matter, and has accordingly been decided issuing findings of fact. The issue arising is rather covered by the decisions in Indian Warehousing Industries [ 2002 (9) TMI 90 - MADRAS HIGH COURT] and Nutan Housing Society [ 2006 (8) TMI 286 - ITAT PUNE-A] which were not distinguished before us, as indeed the decisions in Sultan Bros[ 1963 (12) TMI 4 - SUPREME COURT] , East India Housing and Development Trust [ 1960 (11) TMI 7 - SUPREME COURT] and Raj Dadarkar Ass [ 2017 (5) TMI 586 - SUPREME COURT] all of which find place in the assessee s paper-book. Decided against assessee.

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• 2022 (10) TMI 76
  Undisclosed income u/s 68 and 69 - survey u/s 133A(1) was carried out on the business premises of the appellant - appellant submitted that statement recorded during survey has no evidentiary value and further contended that the diary found from the business premises is a dumb document - HELD THAT:- As statement which has already been claimed to have been retracted by the assessee though the same has not been taken into consideration by the Revenue, even otherwise cannot be relied upon since the same was recorded u/s 133A having no evidentiary value in the eye of law. We are enlightened and inspired by several judgments passed by different judicial forums including that of the judgments cited hereinabove. Moreso, we find no enquiry was conducted by the AO from even a single person named in the so called diary, if at all, to strengthen the finding of Revenue culminating with addition. It is the duty of Revenue to collect necessary evidence which may provide an acceptable narration to various entries relied upon, in the absence of which, merely on the basis of piece of paper, without having any details thereof in regard to the transaction as we have already discussed, hereinabove, the addition is not found to be sustainable. The impugned addition on account of loans/advances is, hereby, deleted. Addition of excess stock - assessee surrendered on account of excess stock found during the course of survey - The assessee submitted that the audited books of accounts are correct and submitted that addition has been made only on the basis of the statement recorded during survey. No unaccounted cells/purchase invoices were found during the survey. No unaccounted lorry receipt, no unaccounted party Ledger found during the said survey. It was further contended by the Ld. AR that the survey team could not have counted and physically could have verified the stock within a limited time period of certain hours of survey. Even the colour pertaining to number of item(pieces/box/pockets/bori) and column of quantity per item(length/area/volume/weight is not mentioned. Such case made out by the assessee has not been able to be controverted by the Ld.DR. Hence, in the absence of any valid documents, the addition made in regard to excess stock found to be not sustainable. Thus, the same is thus quashed. The third component being excess cash found during survey could not be explained by the assessee. The same is, therefore, confirmed. Applicability of Section 115BBE - We find that the assessee is a partnership firm and other than individual. The only source of income of the assessee is the business income; unlike an individual partnership firm cannot have several source of income. It is further observed that the assesee had disclosed income of Rs 1 crore to buy mental peace. Business transaction, thus, in such circumstances, in our considered opinion the income cannot be said to be from undisclosed sources attracting section 115BBE. Hon ble ITAT, Guwahati in Abdul Hamid [ 2020 (8) TMI 141 - ITAT GAUHATI] held that section 115BBE is not applicable to the undisclosed income embedded in undisclosed business receipts / turnover. In these decisions and many other, the judicial view is that section 115BBE does not apply to the income, the source of which is business. Thus in conclusion, it is held the income of Rs. 1 Crore shall not attract section 115BBE but the undisclosed income attributable to excess cash shall attract section 115BBE. This Ground is therefore, partly, allowed. This identical ground partly allowed in view of no change in circumstances. Addition on account of fringe benefit tax u/s 40(a)(ic) - HELD THAT:- As the assessee had repeatedly asked the Ld. AO to provide the source of FBT expenditure as alleged. But the Ld. AO has not communicated to the assessee. However, the assessee has made working from P L A/c and somehow calculated that the sum is on account of total of certain expenses which are allowable under the act. We are satisfied with the submission of assessee. Accordingly, we delete the addition made by Ld. AO. This Ground is accordingly allowed. Disallowance of interest, business expenses and towards excessive purchases - HELD THAT:- We find that the assessee in spite of given several opportunities not filed any written submission before the authorities below. Hence these three additions are found to be sustainable in the absence of any written/oral submission filed before us. These three additions are, therefore, confirmed.

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• 2022 (10) TMI 75
  Addition u/s 14A - assessee company offered suo motu disallowance under the provisions of section 14A - HELD THAT:- The provisions of sub-section (2) of section 14A provides that resort to disallowance u/s 14A can be made only if the AO is not satisfied with the correctness of the claim of assessee in respect of expenditure incurred to earn the exempt income. Therefore, it is incumbent upon the AO to record satisfaction as to the correctness or otherwise of the assessee company that only an expenditure was incurred to earn the exempt income. Necessity of recording satisfaction - It is a settled position of law that the satisfaction recorded by the AO should be based on the objective material and cannot be subjective. From mere reading it is clear that the AO has not recorded satisfaction regarding the correctness of suo motu disallowance offered by the assessee u/s 14A and mere rejection of the explanation of the assessee per se, cannot be said to be a satisfaction as envisaged u/s 14A(2). The ratio laid down by the Hon ble Delhi High Court in the case of PCIT vs. Moonstar Securities Trading and Finance Co. (P) Ltd [ 2018 (8) TMI 1151 - DELHI HIGH COURT] and PCIT vs. Keshav Power Ltd. [ 2018 (11) TMI 645 - DELHI HIGH COURT] as well as the Hon ble Bombay High Court in the case of Pr.CIT vs. Reliance Capital Asset Management Ltd [ 2017 (10) TMI 177 - BOMBAY HIGH COURT] is squarely applicable. Therefore, we hold that the disallowance of Rs.1,20,60,460/- as made by the AO as confirmed by the CIT(A) is incorrect in law, as the AO had failed to record the satisfaction as envisaged u/s 14A(2). Thus, the grounds of appeal no.1 and 4 stand allowed. Deduction u/s 10B - decision of CIT(A) in holding that the assessee company is not entitled to deduction u/s 10B for want of Board s approval as envisaged under Explanation to sub-section (2) of section 10B - HELD THAT:- This issue was decided by this Tribunal in assessee s own case for assessment year 2010-11 [ 2022 (10) TMI 1 - ITAT PUNE] in favour of assessee company. The ld. CIT-DR had not made out case before us to take different view. Respectfully, following the decision of the Tribunal in assessee s own case (supra), we hold that the assessee company is entitled for deduction u/s 10B of the Act.

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• 2022 (10) TMI 74
  TDS Claimed but not reflected in 26AS - AO Asked the assessee to provide reconciliation regarding the difference in the above TDS figures - assessee explained that the difference is because some of the clients have made less payment and the difference was treated by him as TDS deducted - absence of the any TDS being deposited to the Government s account the Assessing Officer could not give credit to the assessee of the same amount - HELD THAT:- Short payment made by the client cannot be assumed as TDS, unless, the clients have actually deducted the amount and remitted to the government s account. The aforesaid observation of Commissioner (Appeals) assume importance in the context of the alternative claim made by assessee before the departmental authorities to the effect that, in case, the claim of TDS is not allowed, the amount included in the income should be reduced. In our view, the aforesaid alternative claim of the assessee, though, merits consideration, however, have not been properly addressed by the departmental authorities. Assessee s excess claim of TDS assuming that the less payment made by the clients are towards TDS may not be acceptable, however, if the amounts in dispute were not actually paid by the clients but were offered to tax by including it in the income, the same has to be reduced, as, assessee never received such income. We direct the assessing officer to reduce the amount from the income of the assessee and compute the tax liability accordingly.

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• 2022 (10) TMI 73
  Disallowance of bad debt written off - AO in view of the above finding was of the opinion that assessee knowing to fact that its business going to discontinue from immediate subsequent year deliberately written off good debtor as bad debt in the books to reduce the tax liability which is nothing but a colourable device - HELD THAT:- The provisions of section 36(1)(vii) read with section 36(2) of the Act deals with the deduction of the bad debts. As per the provisions Section 36(1)(vii) any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year, is deductible subject to the condition prescribed under subsection 2 to section 36. The provision of section 36(2) prescribe that, no deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee in the year of write off or in an earlier previous year. And it must represent the amount due from the party for supplies made (goods or services) or represents money lent in the ordinary course of the business of banking or money lending carried on by the assessee. As the facts of the present case are peculiar in the sense that it was alleged by the authorities below that the assessee has adopted colorable device to escape the tax liability by manipulating the provisions of law. The Hon ble Supreme Court in the case of McDowell Co. Ltd. [ 1985 (4) TMI 64 - SUPREME COURT] has held that the colorable device adopted by the assessee in order to avoid the payment of tax is not permissible. If the assessee was to avail the benefit of the provisions of law by using the colorable device, the same cannot be allowed to the assessee. In the given facts of the case, admittedly the assessee has closed down the business and there was no information available on record what treatment has been given by the assessee with respect to the subsequent recovery of the bad debts, if any. In the absence of any contrary information available on record, we do not find any defect in the order of the learned CIT-A. Accordingly, the ground of appeal of the assessee is hereby dismissed.

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• 2022 (10) TMI 72
  Revision u/s 263 by CIT - entitlement for indexation of the cost of acquisition qua the property in question, for the reason that the property transferred was a building, i.e a depreciable asset, on which depreciation @5% of WDV had been claimed by the assessee - HELD THAT:- On a perusal of the assessment order, we find that there is nothing discernible therefrom which would reveal that the cost of acquisition of land as on 01.04.1981 that was adopted by the assessee as per Explanation (b)(i) to Sec. 55(2) pf the Act was verified by the AO before summarily accepting the same as such. As per Explanation 2(a) of Sec. 263(1), if the order is passed by the AO without making inquiries or verification which should have been made by him, then, the same is to be deemed to be erroneous in so far it is prejudicial to the interests of the revenue. As the AO while passing the order under Sec. 143(3), dated 24.12.2018 had failed to make any inquiries or verification as regards the F.M.V of land in question on 01.04.1981 that was taken by the assessee therefore, the order so passed by him as per Explanation 2(a) of Sec. 263(1) of the Act is to be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue. We, thus, in terms of our aforesaid observations uphold the order passed by the Pr. CIT u/s.263 of the Act qua the aforesaid issue. Whether Pr. CIT had erred in setting aside the order passed by the AO u/s. 143(3), dated 24.12.2018, for the reason that he had wrongly allowed the assessees s claim of deduction u/s.54G? - As the assessee had failed to place on record any material which would irrefutably substantiate its claim that the capital gain on the transfer of land in question, i.e, land at Wani had arisen on transfer of land (that was used for the purposes of its business of an industrial undertaking situate in an urban area) in the course of, or in consequence of, the shifting of the said industrial undertaking to a non-urban area, therefore, the Pr. CIT had rightly observed that the summarily allowing of the assessee s claim for deduction under Sec. 54G by the AO had rendered the order passed by him under Sec. 143(3), dated 24.12.2018 as erroneous in so far it is prejudicial to the interest of the revenue under Sec. 263 of the Act. Although we principally concur with the aforesaid observation of the Pr. CIT, but are of the considered view that the issue in hand, i.e, entitlement of the assessee towards claim of deduction u/s 54G in the absence of the requisite details requires to be revisited by the AO for de novo examination. We, thus, in terms of our aforesaid observations modify the order passed by the Pr. CIT on the aforesaid issue under consideration and, direct the AO to re-examine the assessee s claim for deduction u/s 54G after calling for the necessary details and affording a reasonable opportunity of being heard to him. Accordingly, the order passed by the Pr. CIT as regards the aforesaid issue is modified in terms of our aforesaid observations. We are of the considered view, that the summarily acceptance of the sale consideration as was shown by the assessee in its return of income, and not taking cognizance on the aforesaid impounded document which referred to a receipt of an amount from the aforesaid purchaser, viz. Shri. Srikant Swaikar had rendered the order passed by the AO u/s. 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interest of the revenue u/s.263 - We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the CIT who had rightly observed that the failure on the part of the Assessing Officer to consider the aforesaid amount as was discernible from the impugned document impounded notepad had rendered his order as erroneous in so far as it is prejudicial to the interests of the revenue u/s. 263 uphold the same. ORDER:- We herein, viz. (i). set-aside the order of the Pr. CIT u/s. 263, to the extent he had concluded that the assessee had wrongly sought indexation of cost of acquisition; (ii). uphold the order of the Pr. CIT, on the ground, that the summarily acceptance by the AO of the F.M.V of land as on 01.04.1981 at Rs. 36,65,327/-, i.e, as adopted by the assessee for computing the LTCG on transfer of the same had rendered the order passed by him u/s 143(3), dated 24.12.2018 as erroneous in so far as it was prejudicial to the interests of the revenue u/s 263; (iii). though principally concur with the Pr. CIT that as the assessee had failed to establish its entitlement for claim of deduction u/s 54G of the Act, therefore, the summarily allowing of its claim of deduction by the AO had rendered the order passed by him u/s 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interests of the revenue u/s 263 of the Act, but at the same time have modified the order of the Pr. CIT by directing the AO to re-examine the assessee s claim for deduction u/s 54G, i.e, after calling for the requisite details and affording a reasonable opportunity of being heard to the assessee; and (iv). uphold the order of the Pr. CIT, on the ground, that the failure on the part of the AO in not considering the contents of an impounded document, i.e, a notepad which referred to receipt of on money of Rs.11 lacs by the assessee on sale of flat from the purchaser, viz. Shri Srikant Swaikar had rendered the order passed by the AO u/s 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interests of the revenue u/s 263 of the Act.

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• 2022 (10) TMI 47
  Correct head of income - gain on sale and purchase of shares - normal business profit or short term capital gain - whether the tribunal was right in reversing the order passed by the CIT(A) holding that the gain made by the assessee on sell and purchase of shares was business profit and not short term capital gains? - HELD THAT:- In Union of India Versus Azadi Bachao Andolan [ 2003 (10) TMI 5 - SUPREME COURT] it was pointed out that to decide as to whether the sale of shares amounted to capital gains or business income would require examination of facts - capital investment and resale do not lose their capital nature merely because the resale was foreseen and contemplated when the investment was made and the possibility of enhanced value motivated the investment - a transaction is not necessarily in the nature of trade because the purchase was made with the intention of resale - as pointed out where the purchase of any article or of any capital investment, for instance shares is made without the intention to resell it at a profit, the resale under such changed circumstances would only be realization of capital and would not stamp the transaction with a business character. If the above legal principles are applied to the facts of the case on hand, the only irresistible conclusion is to approve the view of the CIT(A) who had considered all the relevant materials and details which were placed by the assessee. The learned tribunal had failed to note that the assessee had maintained a separate account for investment, which fact was very material to consider the nature of transactions effected by the assessee during the relevant period. Thus, for the above reasons, we are of the considered view that the learned tribunal erred in reversing the order passed by the CIT(A) - substantial questions of law are answered in favour of the assessee.

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• Customs

• 2022 (10) TMI 71
  Benefit of Notification No. 99/2011-Cus denied - import of Colchicum (Saanjan) Grade 3 - imported goods of Afghanistan origin imported from Afghanistan to India transiting through Pakistan - chargeable to NIL rate of duty OR chargeable to 200% duty? - HELD THAT:- The Bill of Lading is the document of title. It is issued by the Master of the Vessel or his agent, say, the Shipping Agent, acknowledging receipt of the goods. It indicates what has been received (say, container number so and so) and what it is said to contain, how it is sealed (seal number, etc.). If there are any remarks about the condition of the goods (say, leaking or damaged), it is called a dirty bill of lading and otherwise, called a clean bill of lading . The responsibility of the shipping line is to deliver to the consignee the container (or other form of goods) in the form in which it has been received on production of the Bill of Lading. Since the Master of the Vessel cannot wait for the consignee importer, the goods, in the manner in which they have been received are handed over to the Custodian (say, Port Trust or CFS, ICD, etc.) which, in turn, hands over the goods to the importer on production of the Bill of Lading, clearance from the Customs (in the form of Bill of Entry) and a delivery order issued by the Shipping Line (confirming clearance of its dues). The Bill of Lading cannot mention Afghanistan as the Port of Loading because that is not where the goods were received by the Shipping Line. We do not find anything in the exemption notification requiring that the same transporter has to transport the goods from the place of export upto the final destination. Therefore, denial of the benefit of the exemption on this basis is not correct. The Principal Commissioner also doubted the documents which were submitted for the reason that the Invoice, Country of Origin Certificate and Transit Certificate were all issued on the same date 16.02.2022 and since these were to be issued by different authorities requiring inspections, he held that it would have been impossible to do so. We find that since the invoice was issued by the exporter itself and not by any authority it would not take much time to issue it. The Country of Origin Certificate was issued by the Afghanistan Chamber of Commerce and Industries cross referencing the invoice and also endorsing the invoice on the same day - there are no good reason as to why one department of the Government and the Chamber of Commerce and Industries and the exporter itself cannot issue documents on the same date. There is no basis for formation of such a suspicion by the Principal Commissioner on this ground. As far as the Bill of Lading is concerned, it is true that it does not indicate the place of receipt of the goods and only mentions the Port of Loading as Karachi. Ideally, the Shipping Line should have mentioned that it received the goods in Karachi port itself but any doubt as to which goods were shipped by the Shipping Line to India and for which the Bill of Lading was issued will be put to rest if the Goods Declaration GD-1 Form filed with the Pakistan Customs is perused as the Examination Report by the officers clearly links the goods which were transported by road in a truck upto Karachi Port with the goods which were stuffed in the Container and shipped to India. The impugned order cannot be sustained - Appeal allowed.

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• 2022 (10) TMI 70
  Import of twine engine light weight Aircraft (Aircraft BRT) - Benefit of the exemption - nil rate of duty on import of aircraft for non-scheduled (passenger) services as well as non-scheduled (charter) services - whether there has been any violation of Condition No. 104 of the exemption notification? - HELD THAT:- It is clear that the Aircraft BRT has been strictly used in terms of the permit granted by the DGCA and the said Aircraft was used for remuneration purposes only. The confirmation of demand by the Commissioner against the appellant for confiscation of the Aircraft BRT with an option to redeem the same on payment of Rs. 6.5 crores under section 125 of the Customs Act cannot be sustained and is set aside - Appeal allowed.

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• 2022 (10) TMI 69
  Re-import of jewellery exported for exhibition - Benefit of exemption - sale or transfer of property was involved in the goods or not - jewellery - exemption under Sl.No.5 of the Table in Notification No.45/2017-Cus - demand alongwith interest and penalty - HELD THAT:- It is admitted fact that there was error in mentioning in the shipping bill at the time of export, that the same is filed under claim of refund of IGST. The admitted fact is that there being no sale in the transaction, neither the IGST is paid by the appellant nor they had claimed refund for it. These facts are not in dispute. Thus, the appellant has rightly filed the bill of entry claiming the exemption under Sl.No.5 of the Table to the said notification. Further it is found that the whole exercise is academic as no Revenue loss has occurred. In this view of the matter, the appeal is allowed.

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• 2022 (10) TMI 68
  Levy of penalty under Section 114 of the Customs Act - smuggling - mobile phone (Samsung A3) - Foreign and Indian currency - used clothes - rusk (toast) - wafer (papad) packets - baggage rules - reliance based on statement of Shri Anil Jain - third party evidences - corroborative evidences or not - HELD THAT:- The whole case of Revenue is based on the statement of Shri Anil Jain. It is further found that the statement of Shri Anil Jain is third party evidence, which is unsubstantiated. Further, Shri Anil Jain has not been examined in the adjudication proceedings, as required under Section 138 B of the Act and hence, the same is not reliable. There is absence of any other evidences to corroborate the statement of Anil Jain against this appellant. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2022 (10) TMI 67
  Struck off name of the Company - defunct company. - HC upheld the order of RoC - Locus of the appellant seeking restoration of struck off name of the Company from the register of RoC - RoC asserted that the company was not functioning and not carrying out any business and the last annual return was filed of the year 2002-03 - Section 560(5) of the Companies Act, 1956 - HELD THAT:- the document produced by the appellant including the DIN forms obtained in September/October 2008, much after name of the Company was struck off in the year 2006 and even Form 32 which has now been placed on record by the appellant has been seriously disputed by the respondents. The Division Bench of the High Court under the impugned judgment has proceeded on the basis of the facts referred to in the affidavit in opposition filed by the RoC while recording a finding regarding the locus of the appellant in assailing the order of the Registrar striking of the name of the Company under Section 560(5) of the Act, 2003 and, at this stage, it is difficult to place reliance on the documents placed by the appellant to claim himself to be one of the Directors of the Company. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 66
  Seeking direction to respondent No.1 to abstain from proceeding with the public auction of properties belonging to the appellant on 11.11.2021 under Section 60 (5) of IBC read with Rule 11 of the NCLT Rules, 2016 in view of the liquidation order - forum shopping - Whether Section 60 (5) of IBC permits 3rd party to file an application and redress the grievance in the present appeal? - HELD THAT:- Section 60(5)(c) of I.B.C permits all the Tribunals to decide any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person. The language employed in Clause (c) of Section 60(5) made it abundantly clear that the jurisdiction is conferred on the Tribunals or adjudicating authority only to decide the question of fact or law arising out or in relation to the insolvency resolution or liquidation proceedings. But, the proceedings under SARFAESI Act are independent against the personal guarantor of corporate debtor and they are purely recovery proceedings. Therefore, it is difficult to conclude that the dispute raised by the appellant would fall within the ambit of Section 60(5)(c) of I.B.C. The adjudicating authority rightly held that the application under Section 60(5) is not maintainable and even after re-appreciating the law laid down by the Courts and upon consideration of argument, there are no ground found to interfere with the finding recorded by the adjudicating authority about maintainability of the application under Section 60(5) of I.B.C. Thus, there are no ground, warranting interference with the finding recorded by the adjudicating authority as to the maintainability of the application under Section 60(5) of I.B.C. Accordingly, the finding recorded by the adjudicating authority is hereby confirmed, holding this point in favour of the respondents and against the appellant. Whether the Moratorium imposed under the provisions of IBC during liquidation process is a bar to proceed against the personal guarantor under the SARFAESI Act to recover the debt due by the Corporate Debtor? - HELD THAT:- Both the provisions under Section 14 and Section 33(5) that the proceedings against corporate debtor alone are to be interdicted. There is subtle distinction between Section 14 and Section 33(5) - It is clear from Sub-section (3) of Section 14 that the Moratorium imposed under Section 14 will have no application to enforce the liability against a surety in a contract of guarantee to a corporate debtor. The exemption contained under Sub-section (3) is squarely applicable to the present facts of the case. However, Section 33(5) of I.B.C restricts filing of suit or other legal proceeding by or against the corporate debtor . But, the rider attached to it permits the liquidator to institute a suit or other legal proceeding on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. Thus, it restricts only filing of suits or other proceedings, but did not impose any restriction on the pending proceedings against corporate debtor. Moratorium under Section 14 or restriction under Section 33(5) of I.B.C is not a bar to proceed against this appellant herein under SARFAESI Act for recovery of debt based on mortgage created in favour of 1st Respondent executing agreement of guarantee. The imposition of Moratorium either in corporate insolvency process or liquidation process interdicts only the proceedings against corporate debtor, but not against third party like the appellant herein who is a personal guarantor of a corporate debtor. Therefore, the finding recorded by the adjudicating authority cannot be interfered by this Tribunal, while exercising jurisdiction under Section 61 of I.B.C. Accordingly, the point is answered against the appellant and in favour of the respondents. Whether respondent No.2 is under obligation to include the personal guarantor as a secured creditor in terms of Section 36 (4) of IBC? - Whether the provisions of IBC overrides the provisions of Indian Contract Act, more particularly, Section 140 of Contract Act? If not, whether the appellant is entitled to include himself as secured creditor in the list of creditors prepared under Section 36 of IBC by respondent No.2 herein so as to recover the amount he paid to the corporate debtor due to non-payment of debt due to respondent No.1 by the corporate debtor? - HELD THAT:- The appellant being a Personal Guarantor discharged part of the loan payable by the Corporate Debtor, he is entitled to recover the amount under Section 140 of the Indian Contract Act, as if he is a creditor, but not a Secured Creditor as defined under Section 3(30) of the I.B.C, since no security interest was created in favour of the creditor - No doubt, when the assets of the corporate debtor is sold, he may not have any chance of recovery of amount proceeding against the Corporate Debtor , but, there are different modes of recovery of the debt due by the Corporate Debtor under the general law. Therefore, the appellant who stepped into the shoes of creditor in terms of Section 140 of the Indian Contract Act, is entitled to recover the debt irrespective of sale of assets of corporate debtor in liquidation process in any of the recognized modes. Therefore, he cannot be included in the list of secured creditors, as no security interest was created in favour of the guarantor and he would not fall within the definition of Secured Debtor as defined under Section 3(31) of I.B.C consequently, cannot be included in the list of secured creditors in the liquidation process, so as to claim share. There are no hesitation to hold that the provisions of IBC will prevail over the provision of Indian Contract Act, thereby surety may take appropriate steps to claim as creditor to recover the amount he discharged to the Creditor under the agreement of guarantee of Section 5(8) of IBC, but not as secured creditor, before the liquidator if the 2nd Respondent did not finalise the list of Creditor, subject to permissibility under Section 38, Chapter III of IBC and limitation. Accordingly, the point is held against the Appellant and in favour of Respondents. The Appeal fails as it is devoid of any merit and liable to be dismissed - Appeal dismissed.

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• 2022 (10) TMI 65
  Rejection of claims of appellant - enough documents to establish the claim, is present or not - Verification and settlement of unresolved claim under the caption under verification - seeking direction to Respondent No. 2 to consequently pass appropriate direction on the claim of the Appellant - payment towards claim from the contingency fund admissible. HELD THAT:- In the instant Appeal, before this Tribunal, the Adjudicating Authority approved the Resolution Plan on 20.01.2020, and has taken umbrage of the ratio laid down by the Hon ble Supreme Court of India in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT] . The Hon ble Supreme Court of India had made the observations on the Clean Slate Theory and stated that if additional liabilities are allowed to be imposed on the Successful Resolution Applicant after the approval of the plan, the entire plan would become unworkable . The Hon ble Supreme Court had mentioned that such surprise Debts cannot be put upon the Resolution Applicant, which were not laid down in its Resolution Plan. If that is allowed, the very calculations on which the Resolution Applicants rely to submit their Resolution Plans, would go awry. This Tribunal also notices that the amended provision as contained in Section 31 of I B Code, 2016 makes the Successful Resolution Plan binding on all concerned, including the Government . It is held in the judicial pronouncement that this particular Amendment to be clarificatory in nature and hence, retroactive / retrospective in operation. Therefore, any Claim, even if it pertains to a date, prior to the effective date of this Amendment, would not be entertained after the Resolution Plan is so approved. This Tribunal upholds the decision of the Resolution Professional adjudicated by the Adjudicating Authority to reject the Claims of the Appellant on the basis that claims are unsupported and documentary evidence furnished by the Appellant were not proper - there are no error in the impugned order. Whether the relief sought by the Appellant for the payment of Rs. 18,30,894/- towards claim from the Contingency Fund admissible? - HELD THAT:- This Tribunal pertinently points out that the Contingency Fund is for the specific purpose to cater for Claims which were not Determined and settled finally, at the time of the Resolution Plan. There is a stipulated time frame as provided in the Resolution Plan and the Fund after meeting out the requirements of the Claims, ceased to exist. By no stretch of imagination, it can be inferred that any Claim can be entertained after the Resolution Plan, was fully implemented and the new management of the Successful Resolution Applicant had taken over. On a qualitative and quantitative rumination of the entire conspectus of the instant Appeal, this Tribunal is in agreement with the decision arrived at by the Adjudicating Authority, (National Company Law Tribunal, Chennai Bench-II), and the Impugned Order is sustained - Appeal dismissed.

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• 2022 (10) TMI 64
  Direction to present Appellant to take part in the Corporate Insolvency Resolution Process (CIRP) and pay CIRP costs as per voting share - Applicability of CBIC Master Circular No. 1081/02/2022-CX dated 19.01.2022 on Recovery and Write-off of Arrears of Revenue in IBC matters - Section 60(5) read with Section 19 of the Insolvency and Bankruptcy Code - HELD THAT:- The definitions clause of NCLT Rules, 2016 at Rule 2 (12), states that unless the context otherwise requires, fee is the amount payable in pursuance of the provisions of the Act and these rules for any petition or application or interlocutory application or a document or for certified copy of document or order of the Tribunal or such other paper as may be specified in Schedule of Fees to these rules and includes any modifications as may be made thereto or any fee as prescribed for filing of documents to the Tribunal by these rules. From a bare reading of the above NCLT Rules, it is quite clear that fees mentioned in Rule 112 read with the definition clause 2(12) does not mention either CIRP costs or the fees to be paid to the IRP or RP. The aforesaid NCLT Rules are confined to fees payable on account of petition or appeal or application filed or references made for documents/orders before the NCLT. This is clearly distinguishable from the expenses which constitute insolvency resolution process costs; costs of the IRP or the Resolution Professional cost which are defined in Section 5(13) read with CIRP Regulation 31, 33 and 34 respectively. Applicability of CBIC Master Circular No. 1081/02/2022-CX dated 19.01.2022 on Recovery and Write-off of Arrears of Revenue in IBC matters - HELD THAT:- It is beyond any pale of doubt that IBC is a complete code in itself and that being the case, in the present matter, in respect of payment of fees of Resolution Professional and CIRP cost, the norms as laid down in the IBC and relevant CIRP Regulations will prevail over the Master Circular and will be squarely applicable on the Appellant - the Appellants cannot find any succour in the Master Circular issued by CBIC in support of their contention. Whether the Adjudicating Authority had erred in directing the Resolution Professional to proceed with the CIRP and further directing the Appellant having 88% voting share to take active part in CIRP? - HELD THAT:- From the material on record, it is borne out that the Adjudicating Authority having admitted the CIRP proceedings on 23.11.2021 and appointed the IRP, the latter had started discharging his duties and responsibilities diligently in terms of IBC Code and Rules/ Regulations framed thereunder. There are no convincing reasons to interfere with the Impugned Order - Appeal dismissed.

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• 2022 (10) TMI 63
  Seeking issuance of direction to the Respondents, to make payment towards the Applicant s Claim from the Contingency Fund - documents enough to establish their claim or not - Section 60(5) of the I B Code, 2016 read with Rule 11 of the NCLT Rules, 2016. Whether the Resolution Professional was right in rejecting claims of Appellants with reasoning that the documents were not enough to establish their claim? - HELD THAT:- This Tribunal has noted that during the pleadings and averments made by the Rs. 2nd Respondent that he had no access to the Corporate Debtor s books of accounts and records, and he had no access to the SAP portal to verify the Appellant s claim. This proved to be a handicap for the Resolution Professional for verifying the Claims, especially, when the Appellant had failed to furnish / supply the required documents, to establish his claims, as requested by the 2nd Respondent through email. The approval of a Resolution Plan gives the Corporate Debtor a fresh start and resolves, once and for all, the financial position of the Corporate Debtor as it stood on the day of approval of the Resolution Plan, in order to allow it to have a clean slate for the future. This Tribunal also notices that amended provision as contained in Section 31 of I B Code, 2016 makes the Successful Resolution Plan binding on all concerned including the Government. It is held in the judicial pronouncement that this particular Amendment to be clarificatory in nature and hence, retroactive / retrospective in operation. Therefore, any Claim, even if it pertains to a date, prior to the effective date of this Amendment, would not be entertained after the Resolution Plan is so approved. Thus, the provisions in the I B Code, 2016 this Tribunal upholds the decision of the Resolution Professional adjudicated by the Adjudicating Authority to reject the Claims of the Appellant on the basis that claims are unsupported and documentary evidence furnished by the Appellant were not proper. Whether the relief sought by the Appellant for payment of Rs. 62,31,242/- towards claim from contingency fund admissible? - HELD THAT:- The Contingency Fund is for the specific purpose to cater for Claims which were not Determined and settled finally, at the time of the Resolution Plan. There is a stipulated time frame as provided in the Resolution Plan and the Fund after meeting out the requirements of the Claims, ceased to exist. By no stretch of imagination, it can be inferred that any Claim can be entertained after the Resolution Plan, was fully implemented and the new management of the Successful Resolution Applicant had taken over - this Tribunal upholds the decision of the Adjudicating Authority to be a correct and proper one, on this issue. Appeal dismissed.

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• 2022 (10) TMI 62
  Rejection of Resolution Plan - dues of the respondent in books of account of the corporate debtor or not - Section 30(6) of I B Code - HELD THAT:- There is direct violation of Section 14(1)(b) which creates a bar prohibiting encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein. Besides, there is violation of the order of moratorium passed by this Adjudicating Authority on 07.02.2022. Application allowed.

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• 2022 (10) TMI 61
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - existence of debta nd dispute or not - time limitation - service of demand notice - whether the demand notice dated 24.04.2019 was properly served? - HELD THAT:- The demand notice sent at registered address of the respondent/corporate debtor as available on the master data of the corporate debtor was not served and was returned with the remarks insufficient address . Thus, vide order dated 04.10.2019 passed by this Bench, it was observed that since the petitioner sent the demand notice to the address of the corporate debtor as available in the master data, the same is treated as a proper service on the respondent-corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The petitioner/operational creditor has filed an affidavit under Section 9(3)(b) of the Code, wherein it has been deposed that it has not received any reply to the demand notice dated 24.04.2019 and that it has not been served upon with any notice by the corporate debtor about any dispute in terms of Section 8(2) of the Code. Whether this application was filed within limitation? - HELD THAT:- A perusal of the case file shows that the application was filed vide Diary No.3619 dated 24.07.2019, whereas the date of default is 11.02.2017, therefore, this Adjudicating Authority finds that this application has been filed within limitation. The material on record clearly goes to show that the respondent committed default in payment of the claimed operational debt even after demand made by the petitioner. In view of the satisfaction of the conditions provided for in Section 9(5)(i) of the Code, the petition is admitted - moratorium declared.

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• 2022 (10) TMI 48
  Seeking leave to withdraw the appeal - appellant contends that the NCLAT does not have jurisdiction to keep the appeal pending at this stage when the main proceedings before the NCLT from which appeal arose before NCLAT has been set aside by this Court - HELD THAT:- There are no reason to entertain the applications filed by the intervenors before this Court since in any event they have filed applications before the NCLAT and if the prayer of the appellant to withdraw his appeal is allowed, the said intervenors in any event will have to avail their remedies in accordance with law. Considering the fact that the last order in the appeal before NCLAT is 15.04.2019 and sufficient time has elapsed, the NCLAT is requested to dispose of the application pending before it seeking withdrawal of the appeal, as expeditiously as possible within a period of six weeks from this date. Appeal disposed off.

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• Service Tax

• 2022 (10) TMI 60
  Non-payment of service tax - it is alleged that noticee is charging and collecting service tax from their clients on the taxable service provided but not depositing the same with the Government exchequer - failure to submit returns in the form ST 3 to the service tax department on due date as per the section 70 ibid read with rule 7 ibid - failure to maintain proper records under rule 5 ibid - abatement as per the Notification No 15/2004-ST dated 10.09.2004 - time limitation. HELD THAT:- It is evident from the facts of the case that the appellant are merely providing the taxable services simplicitor without any element of transfer of the material along with the service. The contracts for provision of services wherein not transfer in property occurs, qualify as service contracts simplicitor. In case of service contracts simplicitor there can be no question of abatement. In light of above observation reference made to the Notification No 15/2004-ST dated 10.09.2004. Notification No 15/2004-Service Tax, dated the 10th September, 2004 was rescinded vide n Notification No 2/2006-ST dated 01.03.2006. Hence this claim made by the appellant is under a notification which was not available after 01.03.2006. Hence the claim made under this notification is denied. Time Limitation - Suppression of facts or not - HELD THAT:- The Appellant concealed the correct taxable amount with the service tax department, until the Departmental officers initiated an inquiry in this regard. These facts were suppressed with intent to evade the payment of service tax due on various taxable services provided by them thereby facilitating the evasion of service tax payable on the said services so rendered by them. Thus it the extended period, as provided for under the proviso to sub-section (1) of section 73 ibid for recovery of such service tax not paid and/or short paid by Appellant has been correctly invoked by the revenue authorities. Penalties - HELD THAT:- When the ingredients for invocation of the extended period of limitation were present, the penalties imposed on the appellant under Section 78 of Finance Act, 1994 are upheld - As appellant had not taken registration and had not filed ST-3 returns within the prescribed time, penalty imposed under Section 77 is justified. Interest - HELD THAT:- The demand for service tax, demand for interest follows, and needs to be upheld. It is now settled law that once the tax is demandable the interest as prescribed by law will automatically follow. Appeal dismissed.

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• 2022 (10) TMI 59
  Levy of service tax - life insurance service - non-compete fees - exclusivity bonus - It is the contention of the tax authorities that non-compete fee and exclusivity bonus paid to agents from 2007 to 2011 was not consideration for such forbearance as the agents were not working exclusively for them and, hence, was commission, and liable to tax - reverse charge mechanism. HELD THAT:- The right of a disputant to carry decisions of the Tribunal to the next level in the appellate hierarchy embodied in the tax statute is not to be detracted from but the mere filing of an appeal does not alter the authority of the order so impugned unless it be stayed or until it be overruled. As an adjudicating authority, expected to be compliant with judicial discipline, the correct approach on his part cannot be faulted. Nor has Learned Authorized Representative been able to adduce any decision to the contrary. Demands under section 73(1) of Finance Act, 1994 - HELD THAT:- The recovery has been fastened on appellant-assessee on the premise that these are, in reality, commission for executing sales of policy and, with subterfuge, transferred to provider of service to overcome the regulatory stipulations on payment to their agents. Effectively, it is averred that this is commission paid outside the pale of law but, notwithstanding the egregiousness, discharge of tax liability by the assessee in accordance with reverse charge mechanism would suffice for tax authorities to turn a Nelson s eye to this breach; in other words, compliance with the law of the land is not mandatory as long as the exchequer s pound of flesh is parted with - The proper course of action available to tax authorities was to bring this alleged breach to the attention of the regulator but with that tax kitty may have been that much poorer. Levy of service tax - payments admittedly made to M/s ICICI Bank and M/s ICICI Securities towards display of publicity materials, enhancing customer awareness and obtaining customer feedback - period from July 2012 to March 2014 - HELD THAT:- It is on record that the assessee had produced evidence of tax payment by M/s ICICI Bank and M/s ICICI Securities for the various activities undertaken by them at their behest. The said invoices were not discarded but the tax discharge indicated therein were found to be incompatible for not having been discharged by the assessee - the attempt to foist levy afresh on the assessee-appellant does meet the test of law and must be set aside. The appeal of Revenue fails and the dropping of demand in the impugned order is upheld. The recoveries confirmed under section 73 of Finance Act, 1994 and demand on payments made to M/s India Infoline Insurance Services Ltd towards rewards and recognition and towards market support/administration support are set aside and the dispute remanded to enable the adjudicating authority to decide afresh after considering the submissions of the assessee-appellant - Appeal disposed off.

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• 2022 (10) TMI 58
  CENVAT Credit - input services - GTA Service - merged entity - Special Purpose Vehicle (SPV) namely JK Environ-tech LTD (JKETL) received the GTA services - HELD THAT:- The appellant and JK Environ-tech LTD (JKETL) have merged w.e.f 01.04.2013 is not in dispute. It is also not in dispute the services were received by the JK Environ-tech LTD (JKETL) for the period 01.04.2013 to 30.09.2015, i.e. after 01.04.2013, the appointed date from which the two are entities have merged. It is seen that the Tribunal in the case of COMMISSIONER OF SERVICE TAX, DELHI I VERSUS ITC HOTELS LTD [ 2011 (9) TMI 837 - CESTAT, NEWDELHI] , have held that any business conducted by the respondents is to be held as having been conducted on behalf of the transferee company. As such, the service tax provided to the ITC Ltd. and Ansal Hotels Ltd. have to be considered as having been provided on behalf of the transferee company viz. ITC. Ltd., in which case, no service tax liability would arise against the service provider. In view of the above observations of Tribunal, it can be concluded that the two entities namely JK Environ-tech LTD (JKETL) and the appellants are to be treated as one w.e.f 01.04.2013. It is not in dispute that the appellant themselves were manufacturer of excisable goods at the material time and therefore would have been entitled to availed Cenvat Credit of GTA services. In this background the services received by JK Environ-tech LTD (JKETL) after the appointed dated, i.e. 01.04.2013, are to be treated as services received by the appellants. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (10) TMI 57
  CENVAT Credit - inputs - Wash Oil and Sulphuric Acid which were used directly or indirectly, in or in relation to the manufacture of coal Gas - manufacture of Coke Oven Gas can be said to be final and complete unless it is made usable and/or marketable, or not - whether Wash Oil and Sulphuric Acid have no role to pay in the production of coke oven gas and these are merely used in the production of the by- products or not - scope of the Rule 57C(2) read with Rule 57CC of the Central Excise Rules, 1944 and/or Rule 57AD of the Central Excise Rules, 1944 and/or Rule 6(3)(b) of Cenvat Credit Rules, 2002 - suppression of facts or not - extended period of limitation. HELD THAT:- The undisputed facts are that the assessee is an integrated steel plant and in their factory they manufacture and clear excisable goods falling under Chapters 26 to 29, 72, 73 and 84 of the Schedule to the Central Excise Tariff Act, 1945 (the Tariff Act). In the show-cause notice it has been stated that initially coke and crude coke oven gas were manufactured by destructive distillation process and through high temperature carbonization of Bituminous Coal in a separate unit called coke oven battery. The crude coke oven gas containing by-products comes out as exhaust gases from the coke oven unit. The crude gas cannot be used as fuel as it contains coal tar and other organic compounds as by-products which on natural condensation would jam the pipeline thereby disrupting the supply system. The crude coke oven gas is therefore taken to another unit called by-product recovery plant where this crude gas is cleansed from the major by-products namely, Naphthalene, Ammonia, Motor Spirit, light oil etc. and waste (Coal tar) by using MODVAT inputs namely, Sulphuric Acid and Wash Oil - it was stated that the assessee has taken credit of duty on those inputs, utilized those inputs in the manufacture of dutiable as well as Nil rate of duty final products without debiting an amount equal to 20% or 8% of the price of the said final products at the time of their clearance during the period from 1st September, 1996 to 31st March, 2000 in terms of Rule 57CC(1) of the Rules. The manufacturing process adopted by the assessee and the emergence of crude coke oven gas is technological necessity and in evitable by-product and it is not exempted final product and it is neither the case of the department that it is the final product - The decision in Hi-Tech Carbon [ 2018 (2) TMI 819 - ALLAHABAD HIGH COURT] is closest to the facts of the case on hand. The tribunal in the said case held for reversal of input credit utilization to Rule 57C or Rule 57CC of the rules it was pre-requisite that the input on which the input credit has arisen should have been used to manufacture of exempted product along with dutiable product. The Tribunal further held that by insertion of Rule 57CC, there was no intention to deprive the assessee of the benefit available under rules 57D(1) of the rules to a by-product, waste, or refuse. Thus, it was held that no part of input credit availed was to be disallowed. Extended period of limitation - show-cause notice dated 2.05.2001 for the period from 01.07.1996 to 31.03.1997 and 01.04.1997 to 30.03.2003 - HELD THAT:- The ingredients of the relevant statutory provisions have not been made to invoke this extended period of limitation. Section 11A of the Central Excise Act states that when any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty, such person is levied to pay duty in full or any part accepted by him and interest payable under Section 11AB and penalty equal to 15% of the duties specified in the inputs or the duty was accepted by such person within 30 days of the receipt of the inputs. Section 11AC of the Act deals with penalty for short-levy or non-levy of duty in certain cases. The provision states that where any duty of excise has not been levied or paid or has been short- levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under Section 11A (2) was also liable to pay penalty equal to the duty do determined. Nowhere in the order of adjudication, the authority has recorded a finding that the respondent assessee is guilty of willful mis- statement, suppression of facts with an intent to evade payment of Central Excise Duty. Therefore, the invocation of the extended period of limitation to initiate action is vitiated. The appeal filed by the revenue is dismissed and substantial questions of law are answered against the revenue.

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• 2022 (10) TMI 56
  Scope of SCN - time limitation - Disallowance of transitional Modvat credit - Levy of penalty upheld - invocation of extended period of limitation to deny Modvat credit for contravention of provisions of Rules 57H(1)(b), 57G, 173G and 173B of the Central Excise Rules, 1944 - suppression of facts or not - HELD THAT:- The Ld. Joint Commissioner has observed that the assessee has suppressed the fact of availing the benefit of SSI exemption under Notification No. 1/93-CE by not paying the duty on finished goods during the period in dispute i.e. 1994-95, which allegation was not made in the SCN dated 02.04.1996 and, therefore, the proceedings have travelled clearly beyond the scope of allegations made in the SCN which cannot be legally sustained. The main reason that has been assigned to disallow the credit in the impugned order is that the Appellant has availed the aforesaid SSI exemption which was never alleged in the SCN. The Department was aware of the fact with regard to the availment of above exemption since that has been duly disclosed in the quarterly excise returns, though belatedly filed, and hence the same was within the knowledge of the Department at the time of issuance of the SCN. It is a settled legal position that when the assessee was not put to notice with regard to the reasons basis which the demand is being sought to be made, the proceedings cannot be legally sustained. Hence, the demand is liable to be quashed on this ground alone. Time Limitation - HELD THAT:- The very basis of invocation of extended period of limitation is the alleged wrong availment of exemption notification, which also cannot be sustained when no such allegation was ever made in the SCN - the only allegation in the SCN was with regard to availment of transitional credit of Modvat in terms of Rules 57G and 57H. Both the Authorities below have duly noted that the required declaration under Rule 57G was duly filed by the assessee on 20.12.1994 wherein the assessee communicated its intention to avail the said credit which facts are not in dispute. Moreover, declaration under Rule 57H has also admittedly been submitted on 19.09.1995 which is on record - the authorities below have erred in invoking the extended period of limitation. The duty demand cannot be legally sustained, the same is set aside - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (10) TMI 55
  Enhancement of sale turnover as well as purchase turnover - books of accounts rejected on framing of assessment - adjustment of admissible input tax credit - HELD THAT:- It is not in dispute that a survey was conducted on the premises of the assessee firm on 24.04.2014. Six loose papers were found during the survey. Paper No. 1 relates to 660 piece 8 mm tube bag which was purchased by the assessee firm from unregistered dealer and transaction of paper no. 3 which was sale of battery to one Manendra Goswami for Rs.19,000/- was subsequently entered into the books of account which was produced at the time of assessment. From the perusal of the order of the Tribunal, it is clear that it has not recorded any finding as to how it has arrived at only reducing the quantum to such extent when it has recorded that entries in the books of account for two loose papers, paper no. 1 and 3 were made subsequently, and solely on the basis of estimate had refused the quantum without any material on record - The Tribunal is the last fact finding authority and before arriving at any finding in case of either increasing or decreasing the quantum it has to record a specific finding as to how it has arrived at the figure. The tax authorities or the tax Tribunal are not justified in increasing or decreasing the quantum at their whims without any rationale or justification. Increasing or decreasing of the quantum either creates or reduces tax liability which either affects the assessee or the revenue. Thus, the taxing authorities should be very careful and watchful in passing orders holding liability upon any assessee for the payment of tax or reducing the quantum. The exercise should not be at the whims and fancies of the tax authorities and the Tribunal, because such exercises have great fiscal impact both on the assessee and the revenue - The Tribunal which is the last fact finding authority should not pass an order in such a casual manner and before arriving at finding should record specific reason as to how it has arrived at such finding either in extending the benefit or denying the benefit. The order of the Tribunal dated 20.06.2022 is unsustainable in the eyes of law and the same is hereby set aside and the matter is remanded back to the Tribunal to consider the matter afresh on merits and record specific finding to each of the grounds so raised in the revision by the assessee - Revision allowed in part.

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• 2022 (10) TMI 54
  Levy of purchase tax - Section 12(1)(c) of the TNVAT Act, 2006 - right of the dealer to seek exemption if the dealer is able to establish that its turn over for the relevant years is less than Rs.300 Crores - principles of natural justice - HELD THAT:- The learned Special Government Pleader also fairly submitted about the legal position, wherein under Section 15 of the TNVAT Act, there has been a total exemption provided for certain items, where Schedule IV states about various items wherein Entry 68 speaks about pulses and other items which have been dealt with by the petitioner/dealer herein. But the only catch is that the total turn over shall not be more than Rs.300 Crores. The ground on which the revisional authority remanded the matter to the assessing authority to reconsider the issue by giving an opportunity to the petitioner to produce the documents to substantiate their claim that their turn over is less than Rs.300 Crores is based on the legal position and not based on the judgment in M/s.Sunrise Foods Private Limited s case [ 2020 (5) TMI 494 - MADRAS HIGH COURT] and therefore the findings or reasons given in the impugned notice itself by the assessing authority that in view of the Division Bench judgment against M/s.Sunrise Foods Private Limited , the only reason under which the revisional authority has remanded the matter to the assessing authority is no more available and therefore it has become infructuous, is against the legal position and therefore, based on such findings indicated in the impugned notice, the assessing authority cannot proceed to finalize the issue. The matters can be remanded back to the assessing authority - assessing authority shall provide four weeks time from the date of receipt of a copy of this order to the petitioner/assessee by fixing a date within the said four weeks by way of personal hearing to provide the documents and other inputs in support of the claim of the petitioner that their turn over is not more than Rs.300 Crores and on that date to be fixed in this regard, the petitioner shall appear and produce the documents - Petition disposed off.

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• Indian Laws

• 2022 (10) TMI 53
  Validity of decision to carry out region-wise sub-categorisation of the 49 airports falling under Group D-1 - validity of the stipulation that only previous work experience in respect of providing GHS to scheduled aircrafts shall be considered acceptable for the purpose of the impugned tender/RFP - whether the revised minimum Annual Turnover criteria of INR 18 crores as discriminatory and arbitrary? - HELD THAT:- The respondent No.1 claiming to be a non-profit organisation carrying out research, advisory and advocacy in the field of civil aviation had filed a writ petition challenging the tender conditions in the respective RFPs. It is required to be noted that none of the GHAs who participated in the tender process and/or could have participated in the tender process have challenged the tender conditions. It is required to be noted that the writ petition before the High Court was not in the nature of Public Interest Litigation. In that view of the matter, it is not appreciable how respondent No.1 original writ petitioner being an NGO would have any locus standi to maintain the writ petition challenging the tender conditions in the respective RFPs. Respondent No.1 cannot be said to be an aggrieved party . Therefore, in the present case, the High Court has erred in entertaining the writ petition at the instance of respondent No.1, challenging the eligibility criteria/tender conditions mentioned in the respective RFPs. The High Court ought to have dismissed the writ petition on the ground of locus standi of respondent No.1 original writ petitioner to maintain the writ petition - Even otherwise, even on merits also, the High Court has erred in quashing and setting aside the eligibility criteria/tender conditions mentioned in the respective RFPs, while exercising the powers under Article 226 of the Constitution of India. The impugned judgment and order(s) passed by the High Court are unsustainable and the same deserve to be quashed and set aside and are accordingly hereby quashed and set aside - Appeal allowed.

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• 2022 (10) TMI 52
  Award of interest - it is alleged that learned Arbitrator has grossly erred in awarding interest for the period from 1977 to 1989 inasmuch as the respondent was in deep slumber for a period of twelve years and did not take any step for raising his claim - HELD THAT:- The undisputed position is that though final measurement was done on 30st August 1977, for a period of twelve years, i.e., till 25th July 1989, the respondent did not take any step to raise his claim. It is only on that date, i.e., 25th July 1989, the respondent issued a notice to the appellants regarding his claim. As such, the very conduct of the respondent for remaining silent for such a long period would disentitle him for the interest during the said period. Similarly, though a decree was passed on 14th February 1990 and the respondent was directed to file the original agreement, he took no step till 4th February 2000. In the meantime, the 1996 Act came into force. Thereafter, the respondent filed an application in the disposed of suit which came to be dismissed on 4th February 2000. Thereafter, he moved an application being MJC No. 36 of 2000 before the High Court for appointment of arbitrator under Section 11 of the 1996 Act which came to be allowed on 15th October 2001. It could thus be seen that for a period of almost ten years, the respondent was again in silent mode - the learned Arbitrator was not justified in awarding interest for the period from 14th February 1990 to 4th February 2000. A party cannot be permitted to derive benefits from its own lapses. The present case is a fit case wherein this Court needs to exercise its powers under Article 142 of the Constitution of India to reduce the rate of interest. Taking into consideration the conduct of the respondent in delaying the proceedings at every stage which led to a long pendency of the dispute, it is opined that, though it will not be in the interest of justice to interfere with the principal award, this is a fit case wherein the interest at all the three stages, that is prereference period, pendente lite and postaward period, requires to be reduced. The respondent would not be entitled to any interest for the period between 30th August 1977 and 25th July 1989 and for the period between 14th February 2000 and 15th October 2001 - In respect of the remaining period at all the three stages, that is prereference period, pendente lite and postaward period, the respondent would be entitled to interest at the rate of 9% per annum. Application disposed off.

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• 2022 (10) TMI 51
  Detention of detenue - Delay in passing the order of detention from the date of proposal - snapping the live and proximate link between the prejudicial activities - failure on the part of the detaining authority in explaining such delay - suppression of facts - vital fact of the appellant detenu being released on bail in both the cases was suppressed or rather not brought to the notice of the detaining authority by the sponsoring authority at the time of forwarding the proposal to pass the appropriate order of preventive detention. Delay in passing the order of detention - HELD THAT:- It becomes very imperative on the part of the detaining authority as well as the executing authorities to remain vigilant and keep their eyes skinned but not to turn a blind eye in passing the detention order at the earliest from the date of the proposal and executing the detention order because any indifferent attitude on the part of the detaining authority or executing authority would defeat the very purpose of the preventive action and turn the detention order as a dead letter and frustrate the entire proceedings - The adverse effect of delay in arresting a detenu has been examined by this Court in a series of decisions and this Court has laid down the rule in clear terms that an unreasonable and unexplained delay in securing a detenu and detaining him vitiates the detention order. In the present case, the circumstances indicate that the detaining authority after the receipt of the proposal from the sponsoring authority was indifferent in passing the order of detention with greater promptitude. The live and proximate link between the grounds of detention and the purpose of detention stood snapped in arresting the detenu. More importantly the delay has not been explained in any manner though this point of delay was specifically raised argued before the High Court, yet the High Court has not recorded any finding on the same. Material or vital fact withheld and not placed by the sponsoring authority before the detaining authority - HELD THAT:- The accused arrested under the NDPS Act, 1985 can be ordered to be released on bail only if the Court is satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail. If the appellant herein was ordered to be released on bail despite the rigours of Section 37 of the NDPS Act, 1985, then the same is suggestive that the Court concerned might not have found any prima facie case against him. Had this fact been brought to the notice of the detaining authority, then it would have influenced the mind of the detaining authority one way or the other on the question whether or not to make an order of detention. The State never thought to even challenge the bail orders passed by the special court releasing the appellant on bail. The requisite subjective satisfaction, the formation of which is a condition precedent to passing of a detention order will get vitiated if material or vital facts which would have bearing on the issue and weighed the satisfaction of the detaining authority one way or the other and influence his mind are either withheld or suppressed by the sponsoring authority or ignored and not considered by the detaining authority before issuing the detention order - The preventive detention is a serious invasion of personal liberty and the normal methods open to a person charged with commission of any offence to disprove the charge or to prove his innocence at the trial are not available to the person preventively detained and, therefore, in prevention detention jurisprudence whatever little safeguards the Constitution and the enactments authorizing such detention provide assume utmost importance and must be strictly adhered to. The impugned judgment and order passed by the High Court of Tripura is set aside. The order of preventive detention passed by the State of Tripura dated 12.11.2021 is hereby quashed and set aside - Appeal allowed.

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• 2022 (10) TMI 50
  Direction to deposit the amount of performance bank guarantees pertaining to purchase order Nos. 01, 02 and 03 - Section 9 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- When the bank guarantees were already invoked and the amounts under the respective bank guarantees were already paid by the bank much prior to the Commercial Court passed the order under Section 9 of the Arbitration Act, 1996 and looking to the tenor of the order passed by the Commercial Court, it appears that the Commercial Court had passed the order under Section 9(ii)(e) of the Arbitration Act, 1996 to secure the amount in dispute, it is opined that unless and until the preconditions under Order XXXVIII Rule 5 of the CPC are satisfied and unless there are specific allegations with cogent material and unless primafacie the Court is satisfied that the appellant is likely to defeat the decree/award that may be passed by the arbitrator by disposing of the properties and/or in any other manner, the Commercial Court could not have passed such an order in exercise of powers under Section 9 of the Arbitration Act, 1996. The order(s) which may be passed by the Commercial Court in an application under Section 9 of the Arbitration Act, 1996 is basically and mainly by way of interim measure. It may be true that in a given case if all the conditions of Order XXXVIII Rule 5 of the CPC are satisfied and the Commercial Court is satisfied on the conduct of opposite/opponent party that the opponent party is trying to sell its properties to defeat the award that may be passed and/or any other conduct on the part of the opposite/opponent party which may tantamount to any attempt on the part of the opponent/opposite party to defeat the award that may be passed in the arbitral proceedings, the Commercial Court may pass an appropriate order including the restrain order and/or any other appropriate order to secure the interest of the parties. The impugned judgment and order passed by the High Court and that of the order dated 13.10.2021 passed by the Commercial Court in an application under Section 9(ii)(e) of the Arbitration Act, 1996 directing appellant to deposit the amount of performance bank guarantees pertaining to purchase order Nos. 01, 02 and 03 already invoked by the appellant herein, are hereby quashed and set aside - appeal allowed.

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• 2022 (10) TMI 49
  Seeking grant of Regular Bail - criminal conspiracy with unknown officials of NSE - exchange of bribe money - it is alleged that NSE and its employees had committed fraudulent and unfair trade practices and violated SECC Regulations - offences punishable under sections 120-B and 204 IPC; under section 7, 12 13(2) read with section 13(1)(d) of PC Act, 1988 and under section 66 of I.T. Act, 2000. Whether filing of charge sheet by the respondent/CBI before concerned court on 21.04.2022 pertaining to offences punishable under sections 13 (1)(d) and 13(2) of the PC Act and section 120 B IPC is sufficient compliance of section 167 (2) of the Code to deny statutory bail or default bail to the applicant/accused as argued by the respondent/CBI or said charge sheet is incomplete or piece meal charge sheet and does not fall within ambit of section 167(2) of the Code as argued by the learned Senior Counsel for the applicant/accused? HELD THAT:- In view of the legal position pertaining to section 167(2) of the Code as discussed hereinabove, section 173 of the Code only permits filing of a final report after completion of the entire investigation in respect of all offences and does not permit a piece-meal investigation and filing of incomplete charge sheet before Court. The charge sheet filed by the respondent/CBI is a piece meal charge sheet and is not filed in respect all offences subject matter of present FIR. The respondent/CBI is not legally permitted to pick one portion of investigation and to complete it and thereafter file piece meal charge sheet in respect of few offences subject matter of FIR and to left open investigation in respect of other offences and subsequent filing of charge sheet in respect of left over offences. This would be complete negation of section 167(2) of the Code. The investigating agency cannot be permitted to fragment or break FIR for the purpose of different charge sheets and this will tantamount to negation of section 167(2) and would against mandate of Article of 21 of the Constitution - The practice of filing such types of charge sheets to seek extension of remand beyond the statutory period was deprecated by the Superior Courts in past. The investigating agency is required to form opinion regarding all offences subject matter of FIR after completion of entire investigation. There is no force in the arguments advanced by the Special Public Prosecutor for the respondent/CBI that the right of the applicant/accused under section 167(2) of the Code has come to an end immediately after filing of charge sheet on 21.04.2022 and said right under section 167(2) cannot be revived due to reason that further investigation is pending within the meaning of sub-section 8 of Section 173 of the Code - there is a distinction between completion of investigation and further investigation. The respondent/CBI has conducted and concluded part investigation pertaining to alleged illegalities committed by the applicant/accused in initial appointment of Anand Subramanian and subsequent re-designation and other related issues but investigation pertaining to allegations made in FIR is still pending which cannot be termed as further investigation within ambit of section 173 (8) of the Code. The further investigation can be resorted to only after the completion of investigation and filing of complete charge sheet. There cannot be any dispute to the legal proposition that the purpose of police report under section 173(2) of the Code is to enable the Magistrate to satisfy himself on issue of taking cognizance or not. The concerned Special Court can take cognisance only in respect of some of offences for which charge sheet was filed on 21.04.22 but cannot take cognizance in respect of offence for which investigation is still pending and charge sheet is not filed. It is not permissible within mandate of legal provisions as contained in sections 173(2) and 167(2) to take cognizance in piece meal or in parts - The investigating agency cannot circumvent section 167(2) of the Code by filing incomplete charge sheet and cannot be filed within the meaning of section 173 (2) till the investigation is completed and any report sent before the investigation is completed will not be a police report within the meaning of section 173 (2) of the Code. The respondent/CBI cannot take shelter of filing charge sheet in respect of offences pertaining to alleged illegal appointment of Anand Subramanian by giving nomenclature of complete charge sheet or final report as per section 173(2) of the Code to defeat the right of statutory bail under Section 167(2) of the Code. There is legal force and supported by judicial decisions as mentioned that the respondent/CBI has failed to complete investigation in respect of all the offences as mentioned in FIR and to file a Final Report under section 173 of the Code within stipulated time i.e. sixty days from the date of the arrest of the applicant/accused and filed an incomplete/piece-meal charge sheet before the concerned court on 21.04.2022 i.e. 46th day from the date of arrest. The application is allowed and the applicant is admitted to bail as per section 167(2) of the Code on furnishing a personal bond in the sum of Rs.5,00,000/- with one surety of the like amount to the satisfaction of the concerned trial Court subject to the conditions imposed.

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