TMI Tax Updates - e-Newsletter
October 7, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy FEMA Service Tax Central Excise Indian Laws

Articles

1. Export Refunds and their dependence on the Export Proceeds under the GST Legislation vis-a-vis the Pre-GST position compared.

   By: Srinivasan Krishnamachari

2. NO TAXABLE SERVICE BY BRAND OWNER IN CONTRACT BOTTLING ARRANGEMENT

   By: Dr. Sanjiv Agarwal

3. REGISTRATION OF REAL ESTATE INVESTMENT TRUST

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Sovereign Gold Bond Scheme 2019-20 (Series V) – Issue Price

Notifications

Customs

1. 52/2019-Customs (N.T./CAA/EXTENSION/DRI) - dated 1-10-2019 - Cus (NT)

Appointment of CAA by DGRI

GST - States

2. 11/2018 - State Tax (Rate) - dated 27-9-2019 - Delhi SGST

Seeks to amend Notification No. 4/2017-State Tax (Rate), dated the 30th June, 2017

3. 93/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 31/GST-2, dated the 8th March, 2019

4. 92/GST-2 - dated 1-10-2019 - Haryana SGST

Notification under section 7(2) to notify the grant of alcoholic liquors licence neither a supply of goods nor a supply of service under the HGST Act, 2017

5. 91/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 49/GST-2, dated the 31st March, 2019

6. 90/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 24/ST-2, dated the 25th January, 2018

7. 89/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 48/ST-2, dated the 30th June, 2017,

8. 88/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 47/ST-2, dated the 30th June, 2017

9. 87/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 46/ST-2, dated the 30th June, 2017

10. 86/GST-2 - dated 1-10-2019 - Haryana SGST

Amendment under section 11 to exempt supply of goods for specified project under FAO under the HGST Act, 2017

11. 85/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 32/GST-2, dated the 8th March, 2019

12. 84/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 105/GST-2, dated the 31st December, 2018

13. 83/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend notification No. 37/ST-2, dated the 30th June, 2017

14. 82/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 36/ST-2, dated the 30th June, 2017

15. 81/GST-2 - dated 1-10-2019 - Haryana SGST

Seeks to amend Notification No. 35/ST-2, dated the 30th June, 2017

Indian Laws

16. RBI/2019-20/73 - IDMD.CDD.No.890/14.04.050/2019-20 - dated 30-9-2019 - Indian Law

Sovereign Gold Bond Scheme (SGB) 2019-20 Series V/VI/VII/VIII/IX/X

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/DF2/CIR/P/2019/104 - dated 1-10-2019

Review of investment norms for mutual funds for investment in Debt and Money Market Instruments

DGFT

2. Policy Circular No. 29/2015-20 - dated 4-10-2019

Clarification on Notification No.17 dated 05.09.2019

Highlights / Catch Notes

GST

• Higher Authority Expunges Lower Authority's Remarks on Kalva Raksha Sutra Classification for Fairness.

  Case-Laws - AAAR : Classification of goods - Kalva raksha sutra - the ruling do not delve on what makes a kalava and how the product is not a ‘kalava’. In as much as the issue raised before the lower authority do not involve the above and factually the lower authority has not dealt with the above, we find justice best served by expunging of the above remarks of the lower authority in the ruling.
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• Lodha Eternis Project accused of profiteering by denying ITC benefits to flat buyers, violating CGST Act Section 171(1).

  Case-Laws - NAPA : Profiteering - respondents have denied benefit of ITC to the buyers of the flats being constructed by them in their Lodha Eternis Project in contravention of the provisions of section 171(1) of CGST Act, 2017 and thus resorted to profiteering.
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Income Tax

• Taxpayer's Claimed Expenses Should Be 8-10% of Total, Not Inflated 30%, Despite Poor Recordkeeping.

  Case-Laws - AT : Claim of expenditure - even if there are lacunae in maintaining details at the end of the assessee, and he has claimed some inflated expenditure, that should be around 8% to 10% of the total and not 30%
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• Tax Exemption Denied: Individual Deemed Resident in India Under FEMA, Ineligible for Section 10(4)(ii) NRE Account Benefit.

  Case-Laws - AT : Exemption u/s 10(4)(ii) - interest income from NRE account - Since the assessee has come and stays in India during the financial year 2014-15 for 283 days, his residential status under FEMA is a ‘person resident in India’ only. Therefore, the assessee is not entitled for the deduction U/s.10(4)(ii).
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• Share Valuation in Closely Held Companies Must Include Multiple Factors Beyond Financials u/s 56(2)(viib.

  Case-Laws - AT : Addition u/s 56(2)(viib) - shares of closely held company - valuation of the shares should be made on the basis of various factors and not merely on the basis of financials and the substantiation of the fair market value on the basis of the valuation done by the assessee simply cannot be rejected.
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• Assessment Order Quashed: Addl. CIT Lacked Jurisdiction u/s 143(3) Due to Misassignment u/s 120.

  Case-Laws - AT : Jurisdiction of Addl. CIT to pass the assessment order u/s 143(3) - Jurisdiction was not assigned in the manner prescribed u/s 120 - order quashed.
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• Case Transfer Needs Written Agreement Between Commissioners u/s 127; Avoid Interference if Statutory Compliance is Clear.

  Case-Laws - HC : Transfer of case u/s 127 during investigation - need of agreement between the two Commissioners - requirement of recording of such agreement in writing specifically - when the compliance of statutory provision is evident on the face of the proceedings, it is better that such transfer proceedings are not interfered with at the very stage of investigation itself.
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FEMA

• Penalty Increased Unilaterally by Special Director, Order Void from Start Due to Lack of Department Appeal.

  Case-Laws - AT : The Special Director has enhanced the penalty arbitrarily without any Appeal filed by the Department, as if the Special Director is himself the aggrieved party, which renders the order void ab initio.
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Service Tax

• Residential Complex Construction Classified as Service for Tax Purposes, Buyer's Use Does Not Affect Tax Status.

  Case-Laws - AT : Construction of residential complex service or nor - personal use includes permitting the complex for use as residence by another person on rent or without consideration. - it does not matter whether the individual buyer uses the flat himself or rents it out.
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• Penalty Confirmed for Late ST-3 Filing; Section 80 Not Applicable Due to Presumed Lack of Bona Fides u/s 78.

  Case-Laws - HC : Imposition of penalty - Appellant did not file the ST-3 returns nor paid service tax within the stipulated time - The question of invoking of Section 80 of the Act in such cases would not arise because Section 78 itself supposes lack of bona-fides on the part of the assessee - Levy of penalty confirmed
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• Mutuality Doctrine: Club Services Exempt from Sales Tax; Service Tax Applies to Incorporated Clubs Since 2005.

  Case-Laws - SC : Club and association services - Doctrine of mutuality applies - Not liable to sales tax - from 2005 onwards there is levy service tax on members’ clubs in the incorporated form - the expression “body of persons” cannot possibly include within it bodies corporate.
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Central Excise

• CENVAT Credit Denied for MTOP Charges Due to Non-Receipt and Non-Use of Goods in Manufacturing or Services.

  Case-Laws - AT : CENVAT credit - input services or not - MTOP charges are for the purpose of non-lifting of the goods and it is a fact that the goods have not been lifted by the appellant and they have not been received and used in the manufacturing activity or output services - Credit not allowed.
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• Section 11D Demand on CENVAT Credit Reversal Deemed Unsustainable; Amount Not Retained by Appellant.

  Case-Laws - AT : Demand u/s 11D - collection of reversal of CENVAT Credit from the customers - the said amount is not retained by the appellant - invoking Section 11D to demand the amount is not sustainable in law.
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• Credit Notes Insufficient to Prove Duty Not Transferred; Refund Credited to Consumer Welfare Fund Valid Under Unjust Enrichment Rules.

  Case-Laws - AT : Refund - unjust enrichment - mere issuance of credit notes cannot be the sole basis for holding that the duty has been borne by the assessee and that it has not been passed on to another. - The credit of the sanctioned refund to the Consumer Welfare Fund is legal and proper
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Case Laws:

• GST

• 2019 (10) TMI 208
  Condonation of delay in filing appeal - Classification of goods - Kalva raksha sutra - present appeal is against the ruling in as much as the original authority has stated that the product manufactured by the appellant is not Kalava Raksha sutra but skeins of braided yarn of various compositions - appeal was filed beyond statutory limit - HELD THAT:- As per proviso to Section 100(2), the Appellate Authority if satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the appeal period of thirty days can allow it to be presented within a further period not exceeding thirty days. In the case at hand, the appeal is filed within the statutory period though incomplete which has been made good within the further period of thirty days provided in the said proviso. Hence the lacuna is condoned and the appeal is taken up on merits. Classification of goods - Kalva raksha sutra - HELD THAT:- In the case at hand the appellant is not aggrieved with the ruling of the Lower authority but aggrieved with the remarks of the lower authority in Para 4 of the Ruling of the authority, which according to them affect their entitlement to the exemption under Notification No. 2/2017-C.t.(Rate) dated 28.06.2017 as amended. We find that the lower authority has not observed/ruled on the eligibility of exemption to their product in the Ruling under appeal. We also find that the Lower Authority has ruled on the classification of the product manufactured by the appellant, which is not under dispute, therefore as per the provisions of Section 100(1) of the CGST/TNGST Act, 2017 no appeal, per se lies before this Authority. It is further clear that the issue dealt with was not whether the product manufactured by the appellant is Kalava or not or for that matter, the ruling do not delve on what makes a kalava and how the product is not a kalava . In as much as the issue raised before the lower authority do not involve the above and factually the lower authority has not dealt with the above, we find justice best served by expunging of the above remarks of the lower authority in the ruling. The remarks of the lower authority may be treated as expunged/deleted - The ruling of the Lower authority is maintained.

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• 2019 (10) TMI 207
  Input Tax Credit - Constitutional validity of the provisions of sections 17(5)(c) and 17(5)(d) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017. HELD THAT:- Issue Notice, returnable on 13.11.2019.

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• 2019 (10) TMI 206
  Detention Order - seizure of goods alongwith the conveyance - section 129 of the CGST Act - HELD THAT:- Having regard to the fact that the proceedings under section 130 of the CGST Act are still pending before the second respondent, this court is of the view that interest of justice would be served if the second respondent is directed to forthwith release the goods as well as the conveyance upon the petitioner paying the tax and penalty amounting to Rs. 39,672/- under protest which shall be subject to the final outcome of the proceedings under section 130 of the CGST Act without prejudice to the right of the petitioner to challenge the same in case the same is adverse to the petitioner. The petitioner shall deposit with the second respondent an amount of Rs. 39,672/- as computed by the said respondent in the impugned notice dated 15.9.2019 issued under section 130 of the CGST Act. Upon the petitioner depositing such amount, the 2nd respondent shall forthwith release the conveyance together with the goods of the petitioner. Petition allowed in part.

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• 2019 (10) TMI 205
  Validity of detention order - release of detained goods alongwith conveyance - section 130 of the CGST Act - HELD THAT:- Having regard to the fact that the proceedings under section 130 of the CGST Act are still pending before the second respondent, this court is of the view that interest of justice would be served if the second respondent is directed to forthwith release the goods as well as the conveyance upon the petitioner paying the tax and penalty amounting to Rs. 51,084/- under protest which shall be subject to the final outcome of the proceedings under section 130 of the CGST Act without prejudice to the right of the petitioner to challenge the same in case the same is adverse to the petitioner. The petitioner shall deposit with the second respondent an amount of Rs. 51,084/- as computed by the said respondent in the impugned notice dated 15.9.2019 issued under section 130 of the CGST Act. Upon the petitioner depositing such amount, the second respondent shall forthwith release the conveyance together with the goods of the petitioner - petition allowed in part.

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• 2019 (10) TMI 204
  Provisional attachment of Bank Accounts - copy of order not served to petitioner - principles of natural justice - HELD THAT:- On a plain reading of section 83 of the CGST/GGST Act, it is evident that the same contemplates provisional attachment of any property including bank account belonging to a person where during the pendency of any proceedings under sections 62, 63, 64, 67, 73 and 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to do so. In the present case, the requirements of section 83 of the Act are clearly not made out inasmuch as the concerned officer was not authorized or empowered to provisionally attach the property of the petitioner under section 83 of the CGST Act in respect of the proceedings under section 71(1) of the said Act. The impugned action of the respondent of provisionally attaching the bank account of the petitioner is without authority of law - since the impugned order passed by the second respondent was totally without any authority of law, the petition is disposed of with costs of Rs. 10,000/-.

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• 2019 (10) TMI 203
  Release of seized vehicle alongwith the goods - petitioner is ready and willing to deposit a sum of Rs. 4,00,000/under protest for the release of the vehicle in question - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- By way of interim relief, the respondents shall forthwith release the Truck belonging to the petitioner, upon the petitioner depositing a sum of Rs. 4,00,000/- with the concerned authority, which shall be under protest. Issue Rule, returnable on 17.10.2019.

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• 2019 (10) TMI 201
  Delay in filing monthly return - Input Tax Credit - GST Act - HELD THAT:- Hearing is interrupted since computation sheet of interest issued to petitioner has not been disclosed. Petitioner has leave to file supplementary affidavit, which will be accepted on adjourned date on advance copy served. List on 26th September, 2019 at 3 p.m.

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• 2019 (10) TMI 200
  Submission of GST TRAN-2 return electronically or manually - denial on the ground that the petitioner has not been able to show that there was genuine difficulty on the part of the petitioner to upload the form - HELD THAT:- This Court is of the view that if there is a provision made for filing returns electronically and if because of certain technical glitches uploading could not be done in time, on that ground the concerned individual or firm ought not to be put to a disadvantageous position. The case of the petitioner is that though the petitioner was ready to file TRAN-2 electronically, the same could not be done as the portal was not working, because of which he had approached the authorities for allowing him to submit the form manually also, which in fact was considered by this Court and directed the authorities to allow the petitioner to file the form, either electronically or manually, as the case may be.

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• 2019 (10) TMI 197
  Profiteering - Lodha Eternis project launched by the Respondents - benefit of Input Tax Credit (ITC) not passed - violation of provisions of Section 171 of the CGST Act, 2017 - imposition of penalty - HELD THAT:- The provisions of Section 171 of CGST Act, 2017 have been contravened by the respondents as they have profiteered an amount of Rs. 1,90,04,456/- inclusive of GST @ 12% on the base profiteered amount of Rs. 1,69,68,264/-. The respondents have also realised an additional amount to the tune of Rs. 37,065/- form the applicant no. 1 which includes both profiteered amount @ 2.62% of the taxable amount (base price) and the GST on the said profiteered amount. Accordingly the above amounts shall be paid to the above applicant and the other eligible house buyers by the respondents alongwith interest @ 18% from the date from which these amounts were realised from them till they are paid as per the provisions of Rule 133(3)(b) of CGST Rules, 2017. It is also evident that respondents have denied benefit of ITC to the buyers of the flats being constructed by them in their Lodha Eternis Project in contravention of the provisions of section 171(1) of CGST Act, 2017 and thus resorted to profiteering. Hence they have committed an offence u/s 171(3A) of CGST Act, 2017 and therefore they are apparently liable for imposition of penalty under the provisions of the above section - a SCN be issued to them directing them to explain why the penalty should not be imposed on them. A copy each of this order be supplied to both the Applicants, the Respondents, Commissioners CGST/SGST as well as the Principal Secretary (Town Planning), Government of Maharashtra for necessary action.

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• Income Tax

• 2019 (10) TMI 202
  TP Adjustment - comparable selection - DRP held that M/s Basiz Fund Services Private Limited was not appropriate for the purpose of comparison, on account of functional dissimilarity - HELD THAT:- Tribunal held the finding of the DRP that the company M/s Basiz Fund Services Private Limited is functionally dissimilar to the assessee, is founded on the circumstances that the said company is involved in fund accounting services; it possesses significant intangible assets, and; it had different employees profile, which resulted in significant growth at 57.61% and earning of profits at 46.75% at supernormal level. Even if the supernormal level of profit at 46.75% were not to be considered as a reason to treat the said enterprises as not comparable, the fact remains that the Tribunal concurred with the view of the DRP on functional dissimilarity. Aforesaid being the position, in our view, no question of law arises.

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• 2019 (10) TMI 199
  Reopening of assessment u/s 147 - validity of notice - unexplained cash deposited in the bank account - HELD THAT:- AO has issued the notice on the address on which the postal authorities were able to locate the assessee and on which the postal authorities have also served upon the assessee the notice issued by the AO. The notices issued by the AO was never returned by the postal authorities for being unserved and which is the standard procedure in case the postal authorities were unable to either locate the addressee or to serve upon the addressee if the addressee was located the packet handed over to the postal authorities and therefore the inherent presumption under Article 12 of the Constitution regarding the bonafide of the State action would apply as the postal authorities being the instrumentality of the State has no reason not to serve the notices as issued by the AO upon the assessee. The service of the notice as issued by the AO was rightly held to be complete. Once the notice u/s 148 is duly served upon the assessee in terms of the provisions of Section 282 AO was well within the jurisdiction conferred upon him to frame the reassessment under the provisions of Section 147 of I.T. Act, 1961. Once the notice issued by the AO u/s 144 of I.T. Act 1961 was also duly served upon the assessee in terms of the provisions of Section 282. AO was well within the jurisdiction conferred upon him to frame the reassessment to the best of his judgment. In view of the valid service of notice in terms of the provisions of Section 282 the impugned assessment order cannot be faulted with and upholding of this action by the AO is correct one. Hence, uphold the action of the revenue authorities on the issue of notice and reject the grounds raised by the assessee. As regards merit of the case is concerned, find that AO in his assessment order as well as in its remand report very specifically pointed out that the amount of Rs. 32,66,200/- was deposited by the assessee in its bank account during the previous year 2008-09 while the sale of immovable property which has been claimed by the assessee to be the source of cash deposit took place much earlier on 23.08.2006 which was separated from the period of cash deposit by almost 2 years. AO has brought on record that one of the properties sold fetched only Rs. 11,30,000/- of which only 1/6th was the share of the assessee being a co-owner of 1/6th of the said property and therefore, the assessee could have got only Rs. 1,88,330/- out of the said sale of the immovable property. The other transaction of sale of immovable property was by the wife of the assessee Smt. Bhavna Sharma and was for Rs. 6,46,000/- only. Even if it is assumed for the sake of argument but without conceding anything the maximum amount which was available with the assessee and his wife as per the explanation of the appellant was Rs. 8,34,330/- when the cash deposited by the assessee in its bank account was Rs. 32,66,200/-. Further, the receipt of cash from the transactions of sale of property and the deposit of cash in the bank account is separated in time by almost 2 years. The assessee has brought nothing on record to show that the cash which was received by the appellant and the wife of the appellant remained available with the appellant through the intervening period of 2 years and was utilized for depositing Rs. 32,66,200/- in its bank account. The assessee has also brought nothing on record to explain the source of remaining amount of cash or Rs. 24,31,870/- which was found by the AO to have been deposited in the bank account of the assessee. The grounds taken by the assessee regarding the source of cash deposited in the bank account of the assessee is neither tenable nor acceptable. Therefore the same was rightly rejected and action of the AO was confirmed by the CIT(A), which does not need any interference on my part, hence, uphold the action of the CIT(A) of affirming the addition in dispute and accordingly reject the grounds raised by the Assessee.

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• 2019 (10) TMI 198
  Disallowance of land development expenditure and out business promotion expenses - HELD THAT:- The assessee has explained this aspect also to our mind, a perusal of the fact observed by the assessee, on examination of the alleged contractor, who performed the work of the assessee coupled with the statement of the assessee, it is not clear that all these expenses were exclusively laid out for the purpose of business. Some element of incompleteness in the details submitted by the assessee is involved. CIT(A) estimated the expenditure incurred by the assessee at Rs. 3.00 lakhs per acre, but that estimation is also not supported with any surrounding circumstances. Photography taken during the course of search by the Revenue would indicate that grass was cut, trees were uprooted. All these evidences collected after one year of the transaction. The question is how to work out that the work which has been got done by the assessee, and accepted by the CIT(A) could be achieved in Rs. 3 lakhs and not Rs. 4,45,000/-. The disallowance at Rs. 1,44,000/- per acre out of expenditure claimed at Rs. 4,44,000/- is almost more than 30% of the expenditure claimed by the assessee. To our mind, even if there are lacunae in maintaining details at the end of the assessee, and he has claimed some inflated expenditure, that should be around 8% to 10% of the total and not 30%, because in this activity maximum profit even for the contract could be estimated at 8%. Therefore, in our opinion, ends of justice would meet if we scale down this disallowance of expenditure of Rs. 63,59,000/- to Rs. 30,00,000/-. We direct accordingly. Disallowance of business promotion expenses - After going through the order of the ld.CIT(A) we do not find any merit, and more particularly, no convincing arguments were advanced. It is confirmed.

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• 2019 (10) TMI 196
  Validity of the notice u/s 153A - whether the ITAT was justified in the circumstances of the case in remanding the assessment back to the CIT (Appeals) in respect of the aforesaid assessment years - HELD THAT:- Since the CIT (Appeals) had already formed an opinion on the merits of the case while deciding the case in relation to the assessment year 2007- 08 and considering the fact that even according to the Tribunal, there was no need to investigate into fresh facts to adjudicate on the aspect of validity of the notice under Section 153A, we are of the view that the Tribunal should have decided all the issues raised in the appeals and the cross-objections raised before it on its own rather than remanding the proceedings to the CIT (Appeals). The remand to the CIT (Appeals), in the aforesaid background, would entail incurring of unnecessary expenditure by the parties and also prolong the proceedings. We, therefore, answer the question of law in favour of the appellant and set aside the impugned order dated 02.04.2019 with a direction to the Tribunal to proceed to decide the appeals and the cross-objections filed before it on its own.

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• 2019 (10) TMI 195
  Exemption u/s 10(4)(ii) - whether the interest income from NRE account of the assessee is taxable in India or exempt u/s 10(4)(ii) as claimed by the assessee? - HELD THAT:- The assessee had an NRE account in Canara Bank in India. Although the assessee was non-resident earlier, he became a Resident and Ordinarily Resident in the relevant previous year 2014-15. On the interest income earned from NRE FD account of Rs. 1.10 crore, the assessee claimed exemption u/s 10 (4)(ii) in the return of income. AO rejected the assessee s claim of exemption and brought to tax and the CIT(A) upheld it. CIT(A) held that the exemption of interest on Non-Resident (external) accounts - both NRE savings accounts and NRE fixed deposit accounts - is governed by the provisions of section 10 (4) (ii) of the Act. Under those provisions, the interest for the relevant financial year 2014-15 will be exempt only if the assessee is a person resident outside India for the concerned fiscal year under FEMA. FEMA defines a person resident outside India as somebody who is not a person resident in India . The assessee would be a person resident in India as per clause (v) of section 2 of FEMA as he has come to and stays in India in the FY 2014-15 for the purpose of taking up employment in India, etc. Since, the assessee has come and stays in India in the financial year 2014- 15, CIT(A) held that the assessee was a Resident and Ordinarily Resident in India for both income tax purpose and also under FEMA and therefore, he is not eligible for exemption u/s 10(4)(ii) as he does not fulfil the condition required under proviso to the said section, that is, he was a resident outside India in the relevant previous year 2014-15 under FEMA. Since the assessee has come and stays in India during the financial year 2014-15 for 283 days, his residential status under FEMA is a person resident in India only. Therefore, the assessee is not entitled for the deduction U/s.10(4)(ii). The assessee has also not placed any material to dislodge the findings recorded by the ld.CIT(A), before us, i.e., to prove that he is a Resident outside India in the relevant previous year 2014-15 within the scope of the FEMA as well as for income tax purpose, therefore we do not find any reason to interfere with the order of the ld.CIT(A) and hence the assessee s corresponding appeal grounds are dismissed.- Decided against assessee.

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• 2019 (10) TMI 194
  Disallowance out of labour expenses - profit estimation - HELD THAT:- We are of the view that only element of profit embedded in these receipts are required to be treated as unaccounted income. Since the ld.CIT(A) has restricted the disallowance at 12.5% on the basis of finding recorded in the Asstt.Year 2011-12, but that finding of the ld.CIT(A) was not upheld by the ITAT, and has scaled down to 2%. Therefore, respectfully following the order of the Co-ordinate Bench, we allow this ground of appeal and direct the AO to compute disallowance out of labour expenses at 25% of the total labour payment made by the assessee. In other words, it should 2% (two percent) of Rs. 1,90,43,133/-. This ground of appeal is partly allowed.

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• 2019 (10) TMI 193
  Penalty u/s 271 (1) (C) - Addition of expenditure held to be not for the purposes of the business u/s 37 - admission of additional evidence - HELD THAT:- Admitting additional ground of assessee with respect to not specifying any of twin charges in notice, penalties were cancelled. Identical additional ground has been raised by assessee for these years. Therefore according to judicial precedent available before us in assessee s own case as well as it is merely a legal issue, which can be raised by assessee at any stage, we must admit additional ground raised by assessee. Further claim of learned departmental representative that fresh facts are required to be investigated is also not acceptable because of reason that penalty notices issued under 274 of income tax act are already available on appeal files. Thus, respectfully following decision of coordinate bench in assessee s own case on same set of facts, we admit additional grounds raised by assessee. Levy of penalty u/s 271 (1) (C) read with section 274 has not mentioned clearly any of twin charges for which penalty is initiated. Though in assessment order penalty has been initiated by assessing officer for furnishing inaccurate particulars of income but in accompanying notice along with assessment order learned assessing officer has not cancelled 1 of twin charges for making charge very specific and clear to assessee. Levy of the penalty on the basis of not striking of any of the twin charges in the notice issued u/s 274 of the income tax act in earlier years cancelling the penalty levied - Decided in favour of assessee

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• 2019 (10) TMI 192
  TP Adjustment - Comparable selection - HELD THAT:- As per present position of law, RPT filter should be applied is at 15%. We therefore set aside order of Ld.AO/TPO and restore back the issue to file of Ld.AO/TPO for fresh decision by applying RPT filter of 15% Companies functionally dissimilar with that of assessee s ITES segment and with a difference risk profile or any extraordinary event like amalgamation seeked need to be deselected from final list.

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• 2019 (10) TMI 191
  Addition u/s 56(2)(viib) - Excess amount of premium over and above the value of the value per share - assessee filed certain additional evidences and submitted that in view of Rule 11UA of the Income Tax rules, 1962, the value should be Rs. 66.50 per share instead of Rs. 6.50 per share computed by the AO - HELD THAT:- Assessee that the value of its shares in terms of clause (ii) of Explanation (a) of section 56(2)(viib) on the basis of the value of its land at market value which is Rs. 113 crores comes to Rs. 658.83 per share. Therefore, it is the submission of assessee that instead of taking the book value of the property at Rs. 47.81 crore as per the balance sheet, the lower authorities should have taken the fair market value of land which was converted from agricultural to institutional at Rs. 113,00,72,749/- and other assets of Rs. 9,17,608/-. Thus, according to him, the fair market value of the shares comes to Rs. 658.83 per share. From the various details furnished by the assessee, we find the assessee had obtained permission of the competent authority for change of land use from agricultural to institutional for art, culture and convention centre for a total area of 42949 sq. mtrs or 51366.94 sq. yards. A perusal of the circle rate for such institutional area shows that the circle rate has been prescribed at Rs. 22,000/- per sq. yard. Thus, as per the circle rate prescribed by the competent authority, the value of total assets i.e., the fair market value of the land which was converted from agricultural into institutional comes to Rs. 113,00,72,749/-. If the other assets of Rs. 9,17,608/- is added to such asset and the total liability of 46,55,69,537/- is deducted, then, the net asset comes to Rs. 665,420,820/-. If the same is divided by the number of equity shares of 10,10,000/-, then, the value per share comes to Rs. 658.83 which is more than the premium of Rs. 5/- charged by the assessee on a share of Rs. 10/-. We, therefore, find merit in the argument of assessee that the valuation of the shares should be made on the basis of various factors and not merely on the basis of financials and the substantiation of the fair market value on the basis of the valuation done by the assessee simply cannot be rejected where the assessee has demonstrated with evidence that the fair market value of the asset is much more than the value shown in the balance sheet. Grounds raised by the assessee are allowed.

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• 2019 (10) TMI 190
  Rectification u/s 254 - default in reopening of assessment u/s 147 - whether the change of address was communicated by the assessee to the Department; the AR submitted that change of address was not communicated to the Department by the assessee - HELD THAT:- On the date of hearing i.e. 07.02.2019, when the Bench re-enquired whether the change of address was communicated by the assessee to the Department; the Ld. AR submitted that change of address was not communicated to the Department by the assessee. The assessee is silent about the fact as to why he has not communicated his new address to the Department. In whatever manner satisfaction is recorded by the Assessing Officer for re-opening of assessment, the principles of natural justice demands that the reasons for re-opening the assessment should convey in an unambiguous manner for which the assessee is being penalized. AO in his order has given a clear-cut findings regarding re- opening of assessment and also on enquiry regarding genuineness of the transactions, the assessee has not responded to and on the basis of which, the Tribunal observed on verification of AST data, that the assessee has not furnished his return of income for the assessment year 2008-09. The assessee has not offered the amount of Rs. 16.04 Lakh for taxation. AO has reason to believe the amount HAS escaped the assessment within the meaning of section 147 Power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] Thus in the guise of rectification, the assessee is seeking review of the order of Tribunal, which is beyond the scope of powers as envisaged u/s. 254(2)

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• 2019 (10) TMI 189
  Period of computation of interest u/s. 201(1A) - addition u/s 40(a)(ia) - short deduction of TDS - Contention of the Ld. AR is that the Supreme Court in the case of Hindusthan Coca-Cola Beverages Pvt. Ltd. vs. CIT [ 2007 (8) TMI 12 - SUPREME COURT] held that interest u/s. 201(1A) of the Act is to be charged till the date of payment of tax by deductee-assessee - HELD THAT:- In the present case, the Assessing Officer has to consider the short deduction of TDS and thereafter, he shall charge interest u/s. 201(1A) of the Act from the date of deductible tax till the date on which the deductee-assessee paid the tax on its total income. With this observation, we remit this issue to the file of the Assessing Officer to re-compute the interest u/s. 201(1A) of the Act.

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• 2019 (10) TMI 188
  Unexplained cash credit u/s 68 - genuineness of the transactions - HELD THAT:- Onus of proof is not a static one. Though in section 68 of the Income-tax Act, 1961, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income-tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue. Therefore, once the assessee had discharged the primary onus, which was cast upon the assessee, it was incumbent upon the AO to prove on the basis of cogent evidence that the transaction was not genuine. There was no such evidence in assessee`s case under consideration. The conclusions of the Assessing Officer and the Commissioner (Appeals) with regard to the genuineness of the transactions were merely based on surmises and assumptions. Thus after taking into consideration the totality of the facts discussed as above and in view of the case laws discussed above, it is well established that the assessee by producing necessary documents viz., ITR Acknowledgements, audited accounts, bank statement copy, PAN Number and confirmations etc has sufficiently established the identity, creditworthiness and genuineness of the loan creditors and interest paid. Therefore, we delete the addition - Decided in favour of assessee.

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• 2019 (10) TMI 187
  Jurisdiction of Addl. CIT to pass the assessment order under section 143(3) - Jurisdiction was not assigned in the manner prescribed u/s 120 - HELD THAT:- It is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Under these circumstances, we have no other option but to hold the same as nullity and, therefore, the impugned assessment order is quashed having been passed without authority of law, A plain reading of section 124 would show that it refers to an order issued under subsection (1) or (2) of section 120, whereas, we are concerned with an order purported to be passed under section 120(4)(b) empowering the Add CIT to act as an Assessing Officer. Therefore, in our view, the provisions of section 124 are not applicable to the present case. For that reason we do not feel it expedient to deal with the decisions relied upon by the earned Departmental Representative in that regard. Thus, in view of the aforesaid the additional ground and supplementary additional grounds are allowed. We allow the additional ground raised by the assessee challenging the validity of the assessment framed by the Addl. CIT and accordingly, quash the assessment framed under section 143(3) of the Act. Assessment framed u/s 143(3) as made on a non-existent entity - scheme of merger conceived - HELD THAT:- We noted that admittedly, the assessee is a non-existent company and merged with Tata Chemicals Limited as on 01.04.2000. These facts are undisputed. Admittedly, the assessment is done after the merger in the name of a non-existent company. Once, this is the fact situation, the issue is squarely covered by the decision of Hon ble Supreme Court in the case of Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] - we set aside the final assessment order as it is void and ab-initio, having been passed in the name of non-existent company by the AO

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• 2019 (10) TMI 185
  Disallowance u/s. 14A r.w. Rule 8D - HELD THAT:- The Special Bench of Tribunal in the case of ACIT Vs. Vireet Investments (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that only those investments are to be considered while computing average value of investments, which yielded exempt income during the year. Thus, in the light of decision of Special Bench we concur with the contentions of assessee. The issue is restored back to the file of Assessing Officer for recalculation of disallowance u/s. 14A r.w. Rule 8D after excluding those investments on which the assessee has not earned any exempt income during the period relevant to the assessment year under appeal. Assessee has stated at the Bar that if amount of disallowance u/s. 14A after recomputation is reduced below suo-moto disallowance made, the assessee would not claim refund/adjustment of excess suo-moto disallowance already made. Thus, ground No. 1 raised in the appeal by the assessee is allowed for statistical purpose. Disallowance of weighted deduction of expenditure incurred on in-house research development activities u/s. 35(2AB) - HELD THAT:- As decided in own case [ 2018 (12) TMI 1497 - ITAT PUNE] where facility has been recognized by the prescribed authority and agreement has been entered into between facility and the prescribed authority and thereafter the role of Assessing Officer is to look into and allow the expenditure incurred on in-house R D facility as weighted deduction under section 35(2AB) - no merit in the orders of authorities below in restricting weighted deduction claimed under section 35(2AB) of the Act by Rs. 18,42,000/- on the ground that DSIR had not approved the said expenditure. It may be pointed out herein itself that reasons for not approving expenditure have also not been made available to the assessee. Consequently, the same cannot be basis for curtailing deduction claimed under section 35(2AB) - Ground No. 2 raised in the appeal by the assessee is allowed

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• 2019 (10) TMI 184
  Disallowance of interest expenditure u/s 40A(2)(b) - HELD THAT:- As could be seen in course of assessment proceedings the assessee has furnished certain details. However, it could not furnish the log book to show the usage of the motorcar. Similarly, the assessee could not bring sufficient material on record to show that the telephone was not used for personal purpose. In such circumstances, part disallowance out of the motorcar and telephone expenses have to be sustained as personal use of the motor car and telephone cannot be ruled out. Insofar as the sale promotion and travel expenses are concerned, as per the Assessing Officer s own admission, the assessee had submitted the details of such expenses. Therefore, without making necessary enquiry to prove that the expenditure claimed by the assessee under these two heads is not genuine or unverifiable, the Assessing Officer cannot disallow a part of it purely on ad hoc basis. Therefore, in our view, no disallowance out of sales promotion and travelling expenses are called for. In view of the aforesaid, we sustain the disallowance made by the Assessing Officer out of motor care and telephone expenses

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• 2019 (10) TMI 158
  Transfer u/s 127 - transfer of the assessee s case from Chennai to Bangalore - need of agreement between the two Commissioners - requirement of recording of such agreement in writing specifically - HELD THAT:- Chennai Commissioner has passed the impugned order of transfer, after issuing show cause notice to the assessee and after giving them an opportunity of being heard as well. Therefore, find that the statutory requirement under Section 127(2)(a) is fully complied with in this case. No doubt, there may be some inconvenience for the assessee to attend the enquiry before the Assessing Officer, to whom the case is transferred. Mere inconvenience or facing certain practical difficulties themselves cannot be a ground to refuse the transfer of investigation. Certainly, the administrative exigencies of the Investigating Agency would outweigh the practical difficulties or inconvenience of the person to be investigated. It should be borne in mind that it is for the Investigating Agency to take the call and decide as to how and in what manner, the investigation has to be proceeded with. Of course, while making such transfer, the statutory requirement need to be followed and when such compliance is evident on the face of the proceedings, it is better that such transfer proceedings are not interfered with at the very stage of investigation itself. Considering the above stated facts and circumstances, find that the impugned order of transfer and the consequential impugned notice do not warrant any interference.

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• Customs

• 2019 (10) TMI 183
  Release of seized containers - Petitioners state that the Containers in which the imported goods had arrived are not being released by the customs authorities for over a period of five years inter alia on the ground that the goods contained in the Containers are still subject to investigation - HELD THAT:- We direct all the stakeholders and authorities involved in the withholding of the Containers to assist the Customs in ensuring expeditious release of the Containers to the Petitioners - Petition allowed.

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• 2019 (10) TMI 182
  Enhancement in the quantum of penalty - import of complete computer systems - confiscation - redemption fine - penalty - HELD THAT:- The impugned order dated 26 May 2004 of the Tribunal while reducing the penalty upon the Respondents records the fact even according to the Revenue the mastermind of the conspiracy to import computer was M/s. Crompton Greaves Limited. This as the contract between M/s. Packard Bell Limited and M/s. Crompton Greaves Limited was negotiated and finalised before the Respondent came into the picture. Therefore the impugned order in the overall facts and circumstances of the case reduced the penalty from Rs. 5 lakhs to Rs. 2.50 lakhs. In these facts the view taken by the Tribunal is a very possible view and cannot be said to be perverse. The question as proposed does not give rise to any substantial question of law. Thus not entertained - appeal dismissed.

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• 2019 (10) TMI 181
  Extension of time limit for issuance of SCN - Seizure of goods - principles of natural justice not followed - Section 110(2) of the Customs Act, 1962 - HELD THAT:- The issue covered in the decision in the case of M/S RAJKAMAL INDUSTRIAL PVT LTD VERSUS C.C. -KANDLA [ 2019 (6) TMI 169 - CESTAT AHMEDABAD] where it was held that there is no legal authority with the department for dispensing with the issuance of SCN to the appellant, therefore, the impugned order passed without issuance of any SCN will not sustain We have dealt with the position of law even post amendment and it was held that it is necessary to issue SCN on the part of the Commissioner for extension of time limit in issuance of SCN under Section 110(2) - In the facts of the present case also neither any SCN was issued nor any hearing was given. The period of six months has already been expired, therefore, the impugned order extending time limit for issuance of SCN in the matter of seizure of the goods being passed without following the principles of natural justice will not sustain. Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 180
  Refund of SAD - N/N. 102/2007 Cus dated 14.09.2007 - whether in a case where the goods are imported by the assessee after paying Special Additional Duty of customs @ 4% and sold thereafter under a tax/VAT invoice but where the rate of VAT applicable is nil , the appellant is entitled to refund of SAD paid under N/N. 102/2007-Cus or otherwise? HELD THAT:- When the imported goods are subsequently sold, such sale brings the imported goods at par with the domestic goods because both suffer the same rate of VAT. Therefore, the SAD which is levied is refundable as per the Notification No. 102/2007 Cus. This parity between the imported goods and the domestic goods when the imported goods are sold does not change with the rate of VAT. The exemption notification nowhere specifies the rate at which VAT on the imported goods to be paid when the goods are subsequently sold. While the SAD is uniformly levied at 4%, the applicable VAT on such goods could be high say, 12% or low say 0%. The notification does not make a distinction between these cases on the basis of the rate of VAT applicable on the goods. Similarly, the rate of SAD is only 4% regardless of the exact rate of VAT applicable to the goods. The refund under N/N. 102/2007-Cus only requires the appropriate amount of VAT to be paid after selling the goods. It does not indicate any specific rate of VAT. Therefore if the appropriate rate of VAT is nil sale of goods on payment of nil rate of VAT amounts to paying appropriate amount of VAT. The issue is no longer res integra and refund of SAD under N/N. 102/2007-Cus is available even if the appropriate rate of VAT is nil - Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2019 (10) TMI 179
  Maintainability of application - initiation of CIRP - Corporate Debtor - outstanding amount which is due and payable by the respondent - HELD THAT:- It is evident form the record that the application has been filed on the proforma prescribed under insolvency and bankruptcy (application to adjudicating authority) rules, 2016. We are satisfied that a default has occurred and the application under sub-section 2 of section 9 is complete. The statutory notice under section 8 of the Code was served on the Corporate Debtor as discussed above and no reply was received within the time period as given in Section 8(2) of the Code. The amount claimed to be in default is Rs. 95,01,856/- and the default occurred from 22.08.2015 and application is filed on 24.01.2018 hence the debt is not time barred and the application is filed within the period of limitation. The present application is complete after hearing learned counsel for both the parties and perusing the documents on records it goes beyond doubt that the Applicant is entitled to claim its dues, which remain uncontroverted by the Corporate Debtor, establishing the default in payment of the operational debt beyond doubt. In the light of above facts and records the present application is admitted. Application admitted - moratorium declared.

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• 2019 (10) TMI 178
  Liquidation of Corporate Debtor - section 33 of the IB Code - revival of resolution plan - extension of time for CIRP by further 90 days - HELD THAT:- Seen the application as well as the documents annexed in the application and on hearing the Applicant, it is found that, it is a fit case to pass an order for liquidation which is pending since long as the CIRP has already been expired long back i.e. somewhere 16.09.2018. Since, Resolution does not reflect with regard to the appointment of Liquidator, the Adjudicating Authority hereby recommend the name of Mr. Sunil Kumar Agarwal, from the Panel of Insolvency Professionals recommended for appointment as Liquidator for Corporate Debtors located in the States of Gujarat and Madhya Pradesh. RP will discharge his duty till the appointment of Liquidator. Dy. Registrar is directed to refer the matter to the IBBI recommending the name of Liquidator for approval of the name of Liquidator and confirmation thereto. Application allowed.

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• 2019 (10) TMI 177
  Maintainability of application - initiation of CIRP - Corporate debtor - outstanding dues - existence of debt and dispute - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the invoices at Page Nos. 16 to 20 to the application. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code - thus the petitioner is able to establish that there exists debt as well as occurrence of default. The Application filed by the Applicant is complete in all respects and deserves to be admitted - petition admitted - moratorium declared.

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• 2019 (10) TMI 176
  Maintainability of application - initiation of CIRP - Corporate debtor - dishonor of cheque due to insufficiency of funds - debt due and payable -existence of dispute or not - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the invoices at Page Nos. 22 to 260 to the application. As per the track report submitted by the applicant it appears that the notice has been served upon the respondent on 10.04.2019. Therefore, service is complete and the dispute raised by the respondent is not supported by any document. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code - thus the petitioner is able to establish that there exists debt as well as occurrence of default. The Application filed by the Applicant is complete in all respects and deserves to be admitted. Application admitted - moratorium declared.

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• FEMA

• 2019 (10) TMI 175
  Sh. P. Chidambaram seeks bail - proposal for downstream investment - Petitioner, the then Finance Minister, Sh. P. Chidambaram approved the downstream proposal of INX News on 30.10.2008 - FIR alleging commission against Sh. Karti P. Chidambaram [arraigned as accused No. 3 in the said FIR under Section 120-B read with Section 420 of Indian Penal Code, 1860, Section 8 of the Prevention of Corruption Act, 1988 (hereinafter referred to PC Act ) and Section 13(2) read with Section 13(1)(d) of the PC Act.] HELD THAT:- As petitioner instead of joining the investigation approached this Court seeking anticipatory bail and this Court was pleased to pass an interim order protecting the petitioner from arrest. Pursuant thereto, when the petitioner was called for interrogation under the protective umbrella of a pre-arrest bail reducing the said interrogation into a mere ritual and farce, therefore, the investigation agency contested the said anticipatory bail application and same was considered by this Court . It cannot be disputed that if case is proved against the petitioner, the offence is on the society, economy, financial stability and integrity of the country. The economic offences constitute a class apart and a class by itself, as it cuts the very root of probity and purity of public administration and results in eroding the public confidence which it reposes on the Government elected by it. It is fact that the entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book as such offences affects the very fabric of democratic governance and probity in public life. A murder may be committed in the heat of moment upon passing being aroused. However, an economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the community can be manifested only at the cost of forfeiting the trust and faith of the community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest . as observed by the Hon ble Supreme Court in the State of Gujarat vs. Mohanlal Jitamalji Porwal [ 1987 (3) TMI 111 - SUPREME COURT] Thus, order of remand, for judicial custody, of the Trial Court is justified. As argued by learned Solicitor General, (which is part of Sealed Cover , two material witnesses (accused) have been approached for not to disclose any information regarding the petitioner and his son (co-accused). This Court cannot dispute the fact that petitioner has been a strong Finance Minister and Home Minister and presently, Member of Indian Parliament. He is respectable member of the Bar Association of Supreme Court of India. He has long standing in BAR as a Senior Advocate. He has deep root in the Indian Society and may be some connection in abroad. But, the fact that he will not influence the witnesses directly or indirectly, cannot be ruled out in view of above facts. Moreover, the investigation is at advance stage, therefore, this Court is not inclined to grant bail.

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• 2019 (10) TMI 174
  Canara Bank abetted in the illegal and unauthorized dealing of foreign exchange - penalties against the appellants for the contravention of Sections 6(4), 6(5) r/w Sections 49, 8(1), 9(1)(a) and 9(1)(e) along with Para 10.3 (ii) - HELD THAT:- It is stated that from a conjoint reading of the facts and the definitions that there was neither any commission nor any omission on the part of the Appellant. Cheques issued by BFEA on an account maintained with Canara Bank were presented in the normal course of clearing and these cheques were honoured by Canara Bank. Canara Bank did not know at that point of time that the proceeds of those cheques would be remitted abroad after being credited to a convertible rupee account maintained at the ANZ Grindlays Bank. In any event the Canara Bank had nothing whatsoever to do with the crediting of money to the convertible rupee account of GIRO bank maintained at ANZ Grindlays Bank. It is settled law that to constitute abetment it must be established that there was active complicity and intentional aiding. Counsel has referred the reported case of Shri Ram vs. State of U.P. AIR 1975 SC 175 paragraph 6. It is alleged that it is not sufficient that an act on the part of the alleged abettor happens to facilitate the commission of the offence. Therefore no case of abetment is sustainable against the Appellants. The Adjudicating Authority has failed to show that the ingredients of abetment have been fulfilled in order to hold the Appellant guilty of abetment. As further submitted that as far as the Appellant is concerned the money was transferred from an account in India to another account maintained in India. The fact that the said money was later on transferred abroad was not within the knowledge of the Appellants. The same was not a part of the transaction over which the Appellant had any control. It is not the case of the respondents that the Canara Bank had cleared the cheque which was to be credited to a convertible account. It is pointed out that the ANZ Grindlays Bank presented the drafts to the Appellant for payment in normal clearance without being accompanied by the required form A3 and in the circumstances the Appellant had no reason whatsoever to believe or to apprehend that the proceeds of the said draft were to have been remitted outside India or to be credited to the Vostro account of Girobank Plc. by ANZ Grindlays Bank. The finding reached by the Special Director in his order dated 30.11.2007 in Para 30 clearly shows that at the most the only allegation that can stand against the appellants is that of negligence and not of abetment. Negligence can under no stretch of imagination be raised to a case of abetment. As stated on behalf of appellant that in any event since ANZ Grindlays Bank had brought the foreign exchange back to India the offence had,, if at all, been mitigated and therefore punishment should have been commensurate with the gravity of economic loss to the country. Since there was no economic loss in the instant case, penalty, if any should have been of a token amount. As advised by the RBI, the Appellant has surrendered to TBI USD 5,196,506 by purchasing from the markets at the value on 29.10.2003 i.e. Rs. 31.37 per USD and have paid Rs. 16,30,14,393/-; whereas the Appellant had received only Rs. 13,09,07,900/-; at the prevailing exchange rate in the Year 1991 and has incurred a loss of Rs. 3,21,06,493/- and hence the appellant has already been penalized. The Adjudicating Authority has without considering the role of the officers of Canara Bank imposed penalty on them. S.A. Laxmi, one of the notices was not even concerned with the Vostro section of Canara Bank and was therefore not a person concerned with the transaction and could therefore not have been punished at all. The abovesaid appeals were heard after the hearing of appeals filed by Standard Chartered Bank and other. Many of the issues in both set of appeals are common. The decision passed would have impact in the present set of appeals. The detailed order has been passed allowing all appeals which may also be read in the present set of appeals. As the main issues are decided in favour of Standard Chartered Bank Ltd. and Ors. including the issue of abetment of any offence does not arise. The appeals are accordingly allowed.

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• 2019 (10) TMI 173
  Sum acquired/possessed/held/owned outside India with LGT Bank without any General or Special permission of RBI - contravention alleged by invoking presumption under section 39 of FEMA, 99 - presumption of documents. - Penalty enhanced - Power of special director in the absence of appeal from Revenue side - HELD THAT:- It is stated on behalf of appellants that before the Special Director, the Appellants reiterated their contentions, in addition to submitting that the conclusion of guilt against the appellant is based on no material and that the order passed is perfunctory without application of mind and even contrary to show cause notice where the theory of 1/4th of amount was not even alleged, but the Special Director affirmed the order of the Adjudication Authority on his self-innovated and imaginary reasoning, neither based on any evidence nor based on any material but based on assumptions and presumptions arrived at by indulging in an intellectual flight of imagination. While arriving at the guilt the Special Director devised his own fresh reasoning, contrary to material on record and without complying with the law of evidence and in derogation of the principles of natural justice un-confronted tried to justify the order by creating an imaginary basis for attributing the name of the trust to the first alphabet of the names of the appellants but in this exercise also he could not find anything to refer to the alphabet u in Ruvisha . Special Director without recording the main contentions of the Appellant and without any cross-appeal, then proceeded to enhance the penalty and imposed a penalty of Rs. 1,60,98,308/- against each of the appellants instead of the original imposed penalty of Rs. 5 lakhs. Before this Tribunal the Appellants have filed their sworn affidavit stating on oath that appellants have nothing whatsoever to do with the alleged trust and have never opened and maintained any account or have any title in respect of any amount of such Trust. It appears from is a letter dated 11th June 2013 wherein the Deputy Director of the ED made some queries to the Income Tax Department, seeking to know whether the documents sent by the Income Tax to ED are authenticated and if there is any document about the opening of the account of trust etc. There was no response to this letter. The SCN is issued thereafter on 5 February 2015. This document clearly shows that the respondent itself had entertained doubts as to the credibility, reliability and authenticity of the relied upon material but without any response from Income Tax to this letter, have proceeded to initiate serious proceedings against the appellants and charged the appellants on the same non-credible and inadmissible material and conduct perfunctory proceedings. The respondent has not discharged its burden about the predicament of the non-availability of the evidence has tried to overcome the same by invoking Section 39 of FEMA which is relating to presumption of documents. It is humbly submitted that Section 39 has been misread by the respondent, as the documents received from abroad in any proceedings need to be duly authenticated under FEMA (Authentication of documents) Rules, 2000 which require authentication of the documents received from abroad by way of seal and signature of any person who is authorised by the Diplomatic and Consular Officers (Oaths Fees), Act, 1998. Similar provision was available under FERA and is also available under Customs Act. The Special Director has enhanced the penalty arbitrarily without any Appeal filed by the Department, as if the Special Director is himself the aggrieved party, which renders the order void ab initio. In the absence of appeal by aggrieved person the Special Director had no authority to enhance the penalty which renders the order void ab initio. In view of different law and issues of hand all the appeals are accordingly allowed.

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• Service Tax

• 2019 (10) TMI 172
  Imposition of penalty - Appellant did not file the ST-3 returns nor paid service tax within the stipulated time under the Act - HELD THAT:- The SCN was issued to the Appellant consequent to investigation done by the department and on failure of the Appellant to respond to the various letters addressed by the department directing the Appellant to pay the dues along with interest. It was only consequent to investigation and summoning the proprietor that not only was the service tax for the period involved in the present show cause notice paid along with interest but also service tax which was not paid for the earlier period was paid by the Appellant on his own. In this case the Appellant does not dispute the demand of service tax even after payment of tax before the issue of show cause notice as it is found that there is suppression of fact on the part of the Appellant. The penalty which has been imposed under Section 78 of the Act is only a consequence of the demand being confirmed on account of suppression of facts. Therefore, in the above facts there is no merit in this submission and would not give rise to any substantial question of law. The notice which was issued to the Appellant was on invoking the extended period of limitation and that has not been a subject of challenge before the Tribunal or before us - The Appellant does not dispute that so far as demand is concerned the extended period of limitation is applicable. The view taken by the authorities under the Act has found that the conduct of the Appellant is soiled with suppression of facts. This finding of fact is a possible view. Nothing has been shown to us which indicate non consideration of the above submission. Thus the imposition of penalty under section 78 of the Act cannot be faulted. The question of invoking of Section 80 of the Act in such cases would not arise because Section 78 of the Act itself supposes lack of bona-fides on the part of the assessee and this view has not been shown to be perverse. In these circumstances, the question as proposed does not give rise to any substantial question of law. Thus, not entertained. Appeal dismissed - decided against appellant.

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• 2019 (10) TMI 171
  Works contract service - construction of residential complex service or nor - demand of service tax on row houses which they have constructed and sold to individuals under the project name Nilgiri Homes - HELD THAT:- The appellant has taken a piece of land and developed that into a complex of individual residential units in the form of row houses with some common areas for parking, roads, etc. We have also seen the photographs produced by the appellant. These clearly indicate that they are row houses with some common boundaries along with roads and other facilities. Residential complex or otherwise? - HELD THAT:- The only logical understanding of the residential complex is that there should be 12 or more residential units either in the form of flats or as single houses in the entire complex. Evidently, in this particular case, the complex comprises of row houses as a gated community along with some common facilities and has more than 12 residential units. For this reason, we find that the project Nilgiri Homes qualifies as residential complex. It is not in dispute that the services were rendered in the form of works contract and therefore are chargeable to service tax in the works contract service. Nature of the contract on which service tax is proposed to be charged - HELD THAT:- The explanation to section 65(91a) categorically states that personal use includes permitting the complex for use as residence by another person on rent or without consideration. Therefore, it does not matter whether the individual buyer uses the flat himself or rents it out. There is nothing on record to establish that the individual buyers do not fall under the aforesaid explanation - thus no service tax is chargeable from the appellant on the agreements entered into by them with individual buyers for completion of their buildings as has been alleged in the SCN. Consequently, the demand needs to be set aside - Accordingly, the demands for interest and imposition of penalties also need to be set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 170
  Refund of accumulated CENVAT credit - input invoices which are addressed to their unit, a premise which is not registered - refund denied only on the ground that the premises where the services have been used was not registered, but the registration was in the name of their head office - HELD THAT:- Merely because the premises is not registered from where the services are rendered and service tax is paid, CENVAT Credit cannot be denied on the input services used for providing output services from the said premises. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 169
  Levy of penalty u/s 78 of FA - appellant was providing Cleaning Services to Tumkur Dairy without disclosing the tax liability, etc - tax with interest paid on being pointed out - HELD THAT:- Admittedly, the tax as well as the interest has been paid much before the issuance of SCN; even the SCN does not point out to suppression of fact, fraud or mis-statement etc. to fasten the liability of penalty under Section 78. In fact, the alleged activity was observed by the Audit Party from the appellant s ST-3 Returns only and it is not the case of the Revenue that there was gross violation by act of suppression, etc. - the bonafides of the appellant could not be doubted and hence, it is a fit case to invoke Section 80 of the Finance Act. There is no case made out with regard to the suppression, fraud or mis-statement etc. to fasten the penalty under Section 78 - Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 160
  Club and association services - Doctrine of mutuality - Nature of transaction - sale or service - scope of sale and service - Failure to make payment of sales tax - sale of food and drinks to the permanent members during the quarter ending 30-6-2002 - scope of sale in terms of Section 2(30) of the West Bengal Sales Tax Act, 1994 - Deemed transfer - club and association services -taxability under service tax - situation post 1/7/2012. HELD THAT:- When profits and gains of a mutual insurance company are sought to be brought to tax, they are so done by express reference to the fact that the business of insurance is carried on by a mutual insurance company. The absence of any such language in subclause (e) of Article 366(29-A) is also an important pointer to the fact that the doctrine of mutuality cannot be said to have been done away with by the said 46th Amendment. Deemed transfer - HELD THAT:- It can be seen from the provision of Deemed Transfer that profits or gains arising from a transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-trade of a business, is by a deeming fiction brought to tax, despite the fact that there is no transfer in law by the owner of a capital asset to another person. Modalities such as these to bring to tax amounts that would do away with any doctrine of mutuality are conspicuous by their absence in the language of Article 366(29-A)(e). The service tax was thus leviable on all services as defined, short of a negative list of services which was set out in Section 66D of the Act - After exhaustively reviewing a number of judgments, the Court stated that Parliament has legislative competence to levy service tax under Entry 97 List I of the Constitution of India. The definition of club or association contained in Section 65(25a) makes it plain that any person or body of persons providing services for a subscription or any other amount to its members would be within the tax net. However, what is of importance is that anybody established or constituted by or under any law for the time being in force, is not included - It is, thus, clear that companies and cooperative societies which are registered under the respective Acts, can certainly be said to be constituted under those Acts. This being the case, we accept the argument on behalf of the Respondents that incorporated clubs or associations or prior to 1st July, 2012 were not included in the service tax net. Position post 1st July, 2012 - HELD THAT:- It can be seen that the definition of service contained in Section 65B(44) is very wide, as meaning any activity carried out by a person for another for consideration. Person is defined in Section 65B(37) as including, inter alia, a company, a society and every artificial juridical person not falling in any of the preceding sub-clauses, as also any association of persons or body of individuals whether incorporated or not. What has been stated in the present judgment so far as sales tax is concerned applies on all fours to service tax; as, if the doctrine of agency, trust and mutuality is to be applied qua members clubs, there has to be an activity carried out by one person for another for consideration - We have seen how in the judgment relating to sales tax, the fact is that in members clubs there is no sale by one person to another for consideration, as one cannot sell something to oneself. This would apply on all fours when we are to construe the definition of service under Section 65B(44) as well. The Jharkhand High Court and the Gujarat High Court are correct in their view of the law in following THE JOINT COMMERCIAL TAX OFFICER, HARBOUR DIVISION II, MADRAS VERSUS YOUNG MEN S INDIAN ASSOCIATION, MADRAS AND OTHERS [ 1970 (2) TMI 87 - SUPREME COURT] - Young Men s Indian Association is expressly based upon the English judgments which disregarded the corporate form and stated that there could not be a sale, on the facts of those cases, between two persons because Foster, i.e. a member of the club, could be regarded as vendor as well as purchaser - What is essential is that the holding of the property by the trustee or agent must be a holding for and on behalf of, and not a holding antagonistic to, the members of the club. Young Men s Indian Association (supra) made no distinction between a club in the corporate form and a club by way of a registered society or incorporated by a deed of trust. What is the essence of the judgment is that the holding of property must be a holding for and on behalf of the members of the club, there being no transfer of property from one person to another. Proprietary clubs were distinguished, as there the owner of the club would not be the members themselves, but somebody else. Also it must be noted that from 2005 onwards, the Finance Act of 1994 does not purport to levy service tax on members clubs in the incorporated form. Appeal dismissed - decided against Revenue.

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• Central Excise

• 2019 (10) TMI 186
  Refund claim - value addition as per special rates - Jurisdiction of Ld. Commissioner (Appeals) - HELD THAT:- Issue decided in appellant own case [1762294], where it was held that at the time of entertaining the refund claim filed by the appellant before the adjudicating authority, their claim for fixation of special rate was pending before the Ld. Commissioner, in that circumstances, the impugned orders deserve no merits. The matter are remanded back to the adjudicating authority for reconsideration - appeal allowed by way of remand.

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• 2019 (10) TMI 168
  CENVAT Credit - bought out items exported under bond - HELD THAT:- The appellant had demonstratively established through the invoices copy and export documents that purchase was made in bulk but exported in small packets of 25 Kg. each. Be that as it may, Rule 16 of Central Excise Rules also permits removal of goods for any other reason on which duty has been paid at the time of removal but for export since such removal is permissible under bond, appellant is entitled to avail CENVAT credit on the duty paid on such inputs. Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 167
  CENVAT credit - input services or not - minimum take of pay (MTOP) charges - electricity charges - extended period of limitation - penalty - HELD THAT:- As per the Product Supply Agreement dated 06.06.2005 between the appellant and M/s Praxair India Pvt. Ltd., the appellant is required to lift the particular quantity of gases and in the event of any failure on the part of the appellant to take products mentioned in Article 8.1, the appellant will be required to pay MTOP charges paid towards non-lifting of gases on which the Service Tax has been paid by the seller. Further, in the present case, MTOP charges are for the purpose of non-lifting of the goods and it is a fact that the goods have not been lifted by the appellant and they have not been received and used in the manufacturing activity or output services. Further, the said services were not used directly or indirectly by the appellant in the manufacturing activity and therefore there is no nexus between the said services and the final product produced by the appellant. Though the CBEC has issued Instruction dated 10.11.2014 but the said Circular also clarified that when the gases are used as inputs by another assessee, the admissibility of the credit of the duty paid will be decided in accordance with CCR, 2004. Extended period of limitation - HELD THAT:- Taking of CENVAT credit on declared services is a matter of interpretation of law and therefore there is no justification invoking larger period alleging suppression of fact with malafide intention to evade tax. The demand for the normal period is confirmed - the demand invoking extended period of limitation set aside - case remanded back to the Original Authority for quantification of the demand for the normal period along with interest - Penalties under Rule 15 (1) and (2) of CCR, 2004 read with Section 11AC of the Central Excise Act, 1984 are also set aside. Appeal allowed in part by way of remand.

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• 2019 (10) TMI 166
  Demand u/s 11D - collection of reversal of CENVAT Credit from the customers - whether the assessee has unjustly benefited and enriched - Rule 6 of the CENVAT Credit Rules, 2004 - extended period of limitation - HELD THAT:- It has been admitted in the impugned order that the appellant has debited or reversed the duty at the end of the month which was collected from the principal manufacturers. In view of the reversal of the duty collected from the principal manufacturers, it is found that there is no amount that has been collected from the customers and retained by the appellant which would attract Section 11D of the Central Excise Act, 1944. In fact, invoking Section 11D(1A) of the Central Excise Act, 1944 in the facts and circumstances of the case is not justified when the appellants have collected only the amount of CENVAT admittedly debited, and the said amount is not retained by the appellant. Further, by following the ratio of the decisions in the case of M/S LAMICOAT INTERNATIONAL PVT. LTD., SHRI LOK NATH PRASAD GUPTA, DIRECTOR, SHRI OM PRAKASH GUPTA, DIRECTOR, SHRI DIPANKAR GHOSH, MANAGER VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2015 (9) TMI 679 - CESTAT NEW DELHI] and in the case of COMMISSIONER OF CENTRAL EXCISE, BHOPAL VERSUS SS. CROP CARE LTD. [ 2010 (4) TMI 932 - CESTAT NEW DELHI] , it is held that invoking Section 11D to demand the amount is not sustainable in law. Extended period of limitation - HELD THAT:- When the Revenue has not brought any evidence on record to show that there was suppression on the part of the appellant with intent to evade payment of duty, the appellant has shown invoice-wise detail of CENVAT in ER-1 returns and the copies of the invoices and ER-1 returns are also on record. Show-cause notice was issued on 6.12.2013 demanding an amount of Rs. 10,42,791/- for the period from April 2009 to October 2012 which is entirely barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 165
  Benefit of N/N. 6/02-CE dated 1/3/02 - manufacture and clearance of AC Pressure Pipes - AC Pressure Pipes, claimed by appellant to be made by using fly ash and which contain not less than 25% by weight of fly ash - period from December 2003 to March 2006 - Department s contention is that the pipes in respect of which the exemption under Notification No. 6/02-CE dated 1/3/02 (Sl. No. 158) has been availed either do not contain fly ash or the fly ash content is much less than 25% and, hence, the same do not qualify for exemption - Extended period of limitation. HELD THAT:- From the findings of the Commissioner in para 27 of the impugned order it appears that during 2005-2006, the appellant used 9411.8 M.T. of cement for manufacture of AC Pressure Pipes containing only cement and not containing fly ash, while 46553.754 M.T. of cement had been used for manufacture of 53995.600 M.T. of Asbestos Cement Pipes containing fly ash. The fly ash content on this basis would come to 13.8% which is much less than the required 25%. Though the appellant plead that out of total 55965.554 M.T. of cement received at Bhilwara Plant, the quantity of 19882.4 of the cement had been sent to manufacturing unit at Ahmedabad and as such 26671.35 M.T. of cement had been used during 2005-2006 for manufacture of 53995.6 M.T. of Asbestos Cement Pipes containing fly ash, no evidence in this regard has been produced which makes the assertion doubtful. The entire case of the Department is made on the basis of statements of the various persons, who have not been examined by the adjudicating authority while adjudicating the case and also the Appellants were not permitted to cross examined these witnesses and thus the impugned orders suffers from the inherent infirmity. Reliance placed on the decision of M/S G-TECH INDUSTRIES VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 957 - PUNJAB HARYANA HIGH COURT] and SWADESHI POLYTEX LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MEERUT [ 2000 (7) TMI 85 - SC ORDER] wherein it is held that it is mandatory on the part of the adjudicating authority to examine the witnesses whose statements have been relied upon and thereafter these witnesses are required to be subjected to cross examination by the Appellant. The case needs to be remitted back to the adjudicating authority so as to follow mandatory conditions prescribed under Section 9D of the Act. Accordingly, the matter remanded to the adjudicating authority by setting aside the impugned order - appeal allowed by way of remand.

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• 2019 (10) TMI 164
  Default for payment of Central Excise duty - Revenue was of the view that during the default period, the appellant assessee was required to make payment of Central Excise duty on goods cleared on consignment to consignment basis only in cash, without making use of the credit accumulated in cenvat credit account - Rules 8 (3) 8 (3A) of the Central Excise Rules, 2002. HELD THAT:- The provisions of Rule 8 (3A) of the Central Excise Rules, 2002, based on which the demand for duty has been raised by the Department has been struck down by the various High Courts as ultra vires as held in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] - I am inclined to follow the decision of jurisdictional High Court of Calcutta in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT] , which has not been stayed and has a binding force as on date. The Jurisdictional High Court at Calcutta, in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT] , while taking note of the fact that the decision in Indsur Global has been stayed, observed that the Revenue cannot take a stand contrary to that taken in other High Courts and accordingly declared the rule to be invalid. Thus, there is no bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period. Appeal allowed.

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• 2019 (10) TMI 163
  Refund of education cess and higher education cess - N/N. 56/02 dated 14.11.2002 - HELD THAT:- The said issue has been decided by the Hon ble Apex Court in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [ 2017 (11) TMI 655 - SUPREME COURT] wherein it has been held that the assessee is entitled to claim refund of education cess and higher education cess paid by them in terms of N/N. 56/02 dated 14.11.2002 - Appeal allowed - decided in favor of appellant.

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• 2019 (10) TMI 162
  Refund of excess Excise duty paid - unjust enrichment - authorities below have rejected the refund claim holding that as per the doctrine of unjust enrichment, the duty has been passed on to the buyer - HELD THAT:- The authorities below have rejected the refund claim holding that as per the doctrine of unjust enrichment, the duty has been passed on to the buyer. Mere issuance of credit notes will not establish that the duty has not been passed on to another. The Hon ble Apex Court in the decision of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. [ 2016 (8) TMI 1071 - SUPREME COURT] has well analysed the issue and held that mere issuance of credit notes cannot be the sole basis for holding that the duty has been borne by the assessee and that it has not been passed on to another. The credit of the sanctioned refund to the Consumer Welfare Fund is legal and proper - Appeal dismissed - decided against appellant.

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• 2019 (10) TMI 161
  Entitlement of interest on the refund - refund of pre-deposit made by the appellant in terms of Stay Order passed by the Tribunal - HELD THAT:- The refund application was filed on 07.09.2015, after the receipt of the Tribunal s order dated 22.07.2015 allowing their appeal. The refund was sanctioned by the Revenue on 06.11.2015 i.e. before the expiry of the period of three months. In such a scenario, the question of any claim of interest does not arise - appeal dismissed - decided against appellant.

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• Indian Laws

• 2019 (10) TMI 159
  Dishonor of Cheque - insufficiency of funds - offence punishable under Section 138 of the Negotiable Instruments Act - legally enforceable debt or liability or not - HELD THAT:- The cheques issued by the Petitioner in favour of the complainant have been presented by the complainant in his bank within a period of six months. On their presentation, the same were dishonoured on account of stoppage of payment. Thereafter the complainant issued demand notice to the Petitioner, however, the Petitioner fails to make the payment of the said amount to the complainant. Therefore there is a compliance of mandate of Section 138 of the Negotiable Instruments Act by the Complainant. Whether there is legally enforceable debt existed as asserted by the complainant, and the cheques in question were issued in discharge of the said liability/debt? - HELD THAT:- It is a settled law that at the stage of taking cognizance and summoning or issuing process, the Magistrate is required to apply his judicial mind only with a view to taking cognizance of the offence, In other words, the Magistrate has to find out whether a prima facie case has been made out or not, and the Magistrate is not required to evaluate the merits of the material or evidence in support of the complaint. The Petitioner/Accused in the present case has to adduce evidence to rebut the presumption that the cheques have been given by the Petitioner to the complainant in discharge of his debt/liability in the trial - further, having regard to the said undertaking given by the Petitioner in the consent terms, this Court is of the prima facie opinion that the Petitioner has admitted his liability. Considering the material on record, the complainant has succeeded in showing that all the essential ingredients of offence under Section 138 have been attracted. It is a settled law that onus lies upon the accused to rebut the presumption and to establish that the cheques in question were not given in respect of any debt or liability, with the standard of proof being preponderance of probabilities. As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge. Prima facie the complainant has succeeded in showing that the accused has issued the cheques in discharge of legally enforceable liability, which were dishonoured on their presentation, and that the Petitioner accused failed to make payment of the cheques - Whether the cheques obtained by the complainant from the Petitioner under duress or coercion and/or whether the documents signed by the Petitioner under pressure will be the issue that has to be decided in the trial after adducing evidence by parties. Hence the orders of issuance of process passed by the learned Magistrate do not require any interference. This Court is of the considered opinion that, no case for interference in the impugned orders is made out - Petition dismissed.

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