TMI Tax Updates - e-Newsletter
November 11, 2021

Case Laws in this Newsletter:

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

Articles

1. ARBITRATION AWARD ATTRACTS GST

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Cabinet approves mechanism for procurement of ethanol by Public Sector Oil Marketing Companies under Ethanol Blended Petrol programme revised - ethanol price for supply to Public Sector OMCs for Ethanol Supply Year 2021-22

2. Cabinet approves incurring expenditure for reimbursing the losses under MSP operations for cotton during the cotton season (October to September) 2014-15 to 2020-21

3. Cabinet approves reservation norms for Jute Packaging Materials for Jute Year 2021-22 under JPM Act, 1987

4. As part of Azadi Ka Amrit Mahotsav celebrations, APEDA organised 75 awareness-cum-training programmes for farmers in seven Basmati growing states

Notifications

Companies Law

1. G.S.R. 785 (E) - dated 9-11-2021 - Co. Law

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2021.

GST - States

2. 1133/X1-2-21-9(47)/17- U.P.Act- 1-2017-Order- (207)-2021 - dated 27-10-2021 - Uttar Pradesh SGST

Seeks to amend notification NO.KA.NI.-2-836/XI-9(47)/17- U.P. ACT-1-2017-ORDER-(69)-2017 DATED 30.06.2017

3. 1045/XI-2-9(47)/1 7- U.P. Act-1-2017-Order-(206)-202 - dated 1-10-2021 - Uttar Pradesh SGST

Seeks to EXEMPT SGST ON SPECIFIED MEDICINES USED IN covid-19, UP TO 31ST DECEMBER,2021

SEBI

4. SEBI/LAD-NRO/GN/2021/57 - dated 9-11-2021 - SEBI

Securities and Exchange Board of India (Alternative Investment Funds) (Fifth Amendment) Regulations, 2021

5. SEBI/LAD-NRO/GN/2021/56 - dated 9-11-2021 - SEBI

Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2021

6. SEBI/LAD-NRO/GN/2021/55 - dated 9-11-2021 - SEBI

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2021

Circulars / Instructions / Orders

DGFT

1. 34/2015-2020 - dated 10-11-2021

Enlistment of PSIA as per para 2.55 (d) of HBP 2015-2020

2. Trade Notice No. 23/2021-22 - dated 9-11-2021

Re-constitution of Committee for RODTEP

Highlights / Catch Notes

GST

• HDPE Drums Not Eligible for 0.1% GST Rate Due to Shipping Route Non-Compliance with Export Requirements.

  Case-Laws - AAR : Concessional rate of tax @ 0.1% or not - In the instant case, the applicant supplies HDPE drums by raising the invoice under Billed to Merchant Exporter and shipped to the manufacturer of the ethyl alcohol. Thus, the impugned goods are not moved directly to the Port, Inland Container Deport, Airport or Land Customs Station or to a registered warehouse, which is a pre-condition for availing concessional rate of GST. Therefore, the applicant is not entitled to supply the impugned goods at the concessional rate of GST at 0.1%. - AAR
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• Electroplating Job-Work for Aerospace Components Subject to 12% GST under Clause (id) of Entry 26, Notification 11/2017.

  Case-Laws - AAR : Rate of GST - Job-Work service - business of plating Industry, approved for Electroplating and surface treatment of aerospace and non-aerospace components - Goods owned by others - In the instant case the applicant provides the job work services on the goods belonging to registered persons and hence are covered under clause (id) of entry number 26 of the Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended and accordingly attract GST rate of 12%. - AAR
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• Service Classified as Inter-State Supply Under CGST and IGST Acts; Place of Supply Determination Not in Authority's Jurisdiction.

  Case-Laws - AAR : Levy of tax - import of service - The applicant, with regard to taxability of the impugned service, admitted that the said service amounts to supply in terms of Section 7 of the CGST Act 2017. It is also admitted by the applicant that the impugned services are imported into India and shall be treated to be an inter-state supply in terms of Section 7(4) of the IGST Act 2017. - the determination of place of supply is beyond the jurisdiction of this authority. - AAR
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• Default Bail Under Cr.P.C. Section 167(2) Is an Indefeasible Right, Separate from Discretionary Court Bail Powers.

  Case-Laws - HC : Grant of Default Bail - The default bail under Section 167(2) Cr.P.C. cannot be equated with the discretion of the Court under Sections 437, 438 or 439 Cr.P.C., wherein the Court has got ample power to impose any condition as would be deemed fit on the facts and in the circumstances of the case. The indefeasible right under Section 167(2) Cr.P.C., accrued due to the failure on the part of the investigating agency to complete the investigation and present the challan within the stipulated period would, therefore, be a right free from any inhibition or embargo. - HC
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• Application Rejected for Non-Payment of Rs. 5,000 Fee Under CGST Act 2017, Section 98(2), Only Paid Under KGST Act.

  Case-Laws - AAR : Maintainability of application - the applicant has to discharge fee of ₹ 5,000/- each in terms of Section 97(1) of the CGST Act 2017 as well as KGST Act 2017, where as the applicant has discharged the fee of ₹ 5,000/- under KGST Act 2017 only and hence the instant application is liable for rejection under Section 98(2) of the CGST Act 2017. - AAR
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Income Tax

• Pending Appeal Doesn't Delay Penalty Proceedings u/s 270A of Income Tax Act, Says High Court.

  Case-Laws - HC : Penalty u/s 274 read with Section 270 - Merely because an appeal against the said assessment order is pending consideration, the same is not a reason to defer initiation of proceedings for penalty under Section 270A of the Act. If the contention of the petitioner is accepted, the same will unnecessarily delay the proceeding under Section 270A of the Act which is not contemplated under the scheme of the statute. - HC
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• Penalty Waived for Non-Filing of Tax Audit Report if Genuine Belief Accounts Aren't Audit-Required u/s 44AB.

  Case-Laws - AT : Penalty u/s. 271B - non filing the tax audit report - when the assessee entertained bona-fide belief that its account were not subject to audit u/s. 44AB, it would certainly constitute reasonable cause for not obtaining the audit report and, therefore, the question of imposing of the penalty u/s. 271B does not arise. - AT
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• Partnership Deed Bars Interest, Remuneration Claims Under Deduction 10AA(9); Alidhra Case Precedent Applied by Tax Commissioner.

  Case-Laws - AT : Deduction 10AA(9) - Interest and remuneration to partners - Claim allowable on net income or gross income - In the present case, the clauses of partnership deed specifically restrict not to charge payment of interest to partners on their capital contribution as well as remuneration. We find that ld. CIT(A) has decided the issue after proper appreciation of fact and following the decision of Alidhra Taxspin Engineers - AT
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• Assessing Officer Finds No Discrepancy in Stock Valuation; Additions Not Justified Without Identifying Excess Quantity.

  Case-Laws - AT : Excess stock found during the search - A.O. has not held that there was any difference in quantity of stock as per valuation report and as per hooks of accounts. There can be no addition simply on the basis of valuation unless excess quantity of stock is found. If such addition is somehow made on account of said valuation of stock and sustained in assessment than credit of same has to be allowed in year end while computing profit at year end which has not been allowed - No additions - AT
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• Section 153A Assessment: No Evidence Found for Alleged Financial Suppression; Additions Dismissed Due to Lack of Proof.

  Case-Laws - AT : Assessment u/s 153A - Not an iota of evidence of any excess raw material purchase, out of books expenses, labour and other manufacturing expenses or receipt of unaccounted sales proceeds, has been found or brought on record even after a detailed search. The additions for alleged suppression have been made purely on selective misinterpretation, without dealing with the explanations/clarification of the production manager and the assessee, completely ignoring the record including audits/inspection by third party and in absence of any incriminating evidence. - No additions - AT
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• Court Deletes Additions u/s 68 as Assessee Proves Genuineness and Creditworthiness of Share Applicants with Extensive Evidence.

  Case-Laws - AT : Addition u/s 68 - unexplained share application money - It is not a case that the assessee had filed merely a confirmatory letters of share applicants but it is a case that the assessee had filed affidavit of the director, certification of incorporation of the share applicants, full particulars of directors of the share applicant companies, bank account of the share applicants, PAN of share applicants, tax returns of the share applicants, audited final accounts i.e. balance sheet & profit & loss account of the share applicants. All these documents proved the identity of the share applicants, creditworthiness of the share applicants and genuineness of the transactions - Additions deleted - AT
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• Assessment Reopening u/s 147 Needs More Than Excel Extracts; Third-Party Entries Insufficient for Unexplained Investments.

  Case-Laws - AT : Reopening of assessment u/s 147 - Merely extracts of excel sheet do not provide any evidence of the allegation made by the AO against the assessee. Thus, mere fact that there were certain entries found from record of third party is not sufficient to make addition on the ground that assessee had made unexplained investments. - AT
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• Exemption Denied: Assessee's Building Project for Profit Doesn't Align with Town Planning Objective u/s 11.

  Case-Laws - AT : Denial of exemption u/s 11 - treatment of assessee as AO - proof of profit motive - the assessee has carried on systematic activities in a regular manner for construction of Building as per plan, which have led to profit, and such activity is not incidental to the main object of town planning, therefore, it is clear that the assessee has carried on a business which is not incidental to attainment of objects of the authority. - assessee can’t be granted exemption under sec. 11 - AT
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• Assessee Allowed to Adjust Salary Income Without Revised Return; Must Prove Legitimate Claim for Correct Taxation.

  Case-Laws - AT : Claim of modification in salary income during the assessment proceedings - Assessee changing income and reducing income offered in the return of income without filing the Revised return of income - The assessee should not be deprived of his legitimate claim and tax has to be levied on the income actually generated. - one more opportunity granted to the assessee to substantiate the claim - AT
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• Section 43CA Not Applicable: No Evidence of Understated Property Sale Value, No Additions to Taxable Income Allowed.

  Case-Laws - AT : Understatement in the value of a flat sold - Addition u/s 43CA - Without making any enquiry or bringing material on record to establish the fact that the assessee has received any amount over and above the declared sale consideration, no addition could have been made when it is accepted that section 43CA meant for such deemed addition, is not applicable to the subject transaction. - AT
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Customs

• Rule 74 SEZ Rules: Exit Orders Don't Require Hearing for Co-Developers; Petitioner Can't Contest Orders P10, P11.

  Case-Laws - HC : Exit order in terms of Rule 74 of the Special Economic Zone Rules, 2006 - There is nothing in Rule 74 or in the Act 2005, which will give an opportunity of hearing to a co-developer while considering an application for exit order. The short point raised by the petitioner is that the prayer of the 4th respondent is not for getting an exit order. - If there is any grievance to the petitioner regarding the arrears of rent, the petitioner is free to agitate the same in accordance to law, before the appropriate authority. But the petitioner cannot challenge Exts.P10 and P11 order, which according to me, is only an exit order and the co-developer of the 4th respondent has no role in it. - HC
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• Refund Claim Rejected Unjustly; No Appeal Needed After Re-assessment u/s 149 of Customs Act 1962.

  Case-Laws - AT : Refund claim - rejection of refund on the ground that no appeal was filed - In the present case, the Revenue admittedly, amended the Bills of Entry by re-assessing the same under Section 149 of the Customs Act, 1962. Once, the Bills of Entry has been re-assessed and the refund is arising out of it, there is nothing exist against which any appeal need to be filed. Therefore, the contention of the Revenue that appellant has not filed appeal against the Bills of Entry is absolutely incorrect. - AT
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• No Appeals Allowed to Tribunal on Orders About Goods Imported or Exported as Baggage u/s 129A.

  Case-Laws - AT : Appeal shall lie before the Tribunal under Section 129A or not - Baggage Rules, 2016 - Section 129A(1)(a) makes it clear that no appeal shall lie to the Tribunal in respect of any order which relates to any goods imported or exported as baggage. The gold which is imported here having been excluded by the definition of “personal effects” under Baggage Rules ibid, automatically falls within the ambit of baggage. - AT
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Corporate Law

• Bar Council of India Not an "Enterprise" Under Competition Act; Tribunal Rules on Economic Activity Definition.

  Case-Laws - AT : Reduction of the competition to its electors by creating indirect entry barriers into the profession of legal service - whether the Second Respondent/ ‘Bar Council of India’ comes within the ambit of ‘enterprise’ as per Section 2(h) of the Competition Act, 2002? - It is crystalline clear that the Second Respondent/ ‘Bar Council of India’/ Statutory Body has its primordial role to perform its duties and hence, this ‘Tribunal’ without any haziness holds that the Second Respondent/ ‘Bar Council of India’ is not an ‘enterprise’ having any economic and commercial activity. - AT
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Indian Laws

• Prosecution Fails as Companies Not Named in Cheque Dishonor Case; Authorized Signatory Alone Insufficient to Proceed.

  Case-Laws - HC : Dishonor of Cheque - authorised signatory to the cheque was in control of the day to-day affairs of the said company at the time of issuance of the cheques or not - Once this Court has unambiguously arrived at a conclusion that the present proceeding initiated against the petitioner has no legs to stand in view of the companies not having been arrayed as a party, the ancillary contentions raised by the petitioner does not require any consideration as the whole prosecution initiated against the petitioner falls down like a pack of cards in the absence of the companies being arrayed as accused. - HC
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• Cheque Dishonor Case: Applicant Admits Signature, Triggers Presumption of Liability u/ss 118 & 139 NI Act.

  Case-Laws - HC : Dishonor of Cheque - misuse of disputed cheque - rebuttal of presumption or not - Section 138 of NI Act - In the facts of the present case, the respondent no. 2 has specifically averred in the complaint that the money was lent to applicant by her through her husband and relatives. When cheque was presented for the collection, the name of present applicant as payee was written on the cheque. The applicant being a drawer of the cheque, has not denied his signature - It is settled law that once the accused admitted a signature on the cheque in question, the presumption under Sections 118 and 139 of the NI Act is to be drawn in favour of the complainant. - HC
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• Arbitrator's Award Violates Section 28(3) of 1996 Act Due to Ignoring Contract Terms, Constituting Patent Illegality.

  Case-Laws - SC : Reduction in the rate of interest - disallowance of supervision charges - patent illegality ground or not - The failure on the part of the learned Sole Arbitrator to decide in accordance with the terms of the contract governing the parties, would certainly attract the “patent illegality ground”, as the said oversight amounts to gross contravention of Section 28(3) of the 1996 Act, that enjoins the Arbitral Tribunal to take into account the terms of the contract while making an Award. The said ‘patent illegality’ is not only apparent on the face of the Award, it goes to the very root of the matter and deserves interference. - SC
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• Appellate Court Overturns Conviction; Prosecution Fails to Prove Case Beyond Reasonable Doubt u/ss 405 and 420 IPC.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - The Prosecution cannot shirk its burden of proving its case beyond a reasonable doubt nor foist such responsibility on the Accused. Hence, the ingredients of Section 405 of the IPC, have clearly not been established. - It is clear that the Prosecution has failed to establish the ingredients of Sections 405 and 420 of the IPC and inevitably, in the absence of any such evidence, the Learned Trial Court could not have convicted the Respondent No.1 - no error arises in the findings of the Learned First Appellate Court, which has correctly reversed the order of Conviction of the Learned Trial Court. - HC
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• Cheque Dishonor Conviction u/s 138 Resolved; High Court Sets Aside Sentence After Compensation Paid in Full.

  Case-Laws - HC : Dishonor of Cheque - compoundable offences or not - as the matter has been settled between the parties and the compensation amount has been paid to the complainant–Opp party No.2, in full and final settlement of the dispute, the compounding of the offence under Section -138 of the N.I.Act is allowed and the conviction of the petitioner under Section 138 of N.I. Act and the sentence to undergo simple imprisonment for one year and to pay compensation of ₹ 2,50,000/- imposed, is set aside. - HC
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IBC

• NCLT Rejection Overturned: Financial Creditor's Claim u/s 5(8)(e) Qualifies as Financial Debt, Initiating CIRP.

  Case-Laws - AT : Initiation of CIRP - In the instant case, because of the fact that the advances made by the Appellant / Financial Creditor to the Corporate Debtor was supported by the ‘Irrevocable Undertaking for Recourse’ and as such, it is within its ambit to demand the repayment from the ‘Corporate Debtor’ etc. Added further, it cannot be forgotten that the invoices purchased and assigned to the Appellant / Financial Creditor/Petitioner were with ‘Recourse’ and that the said advances will squarely come within the definition of Section 5(8)(e) of the ‘I&B’ Code, 2016. - Order of rejection of application by the NCLT set aside - AT
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Service Tax

• Court Rules Individual Houses in Complexes Not Taxable u/s 65(91a) of Finance Act, 1994.

  Case-Laws - HC : Levy of service tax - Residential Complex or not - construction of individual house/villas in residential complex having common areas, common address, common facilities etc. - Each being the residential unit, the attention drawn to the explanation by the learned counsel for the revenue also would be of little assistance to the revenue, even if we consider the residential unit in the background of the building or buildings, the residential units constructed by the respondent/assessee would not certainly fall under Section 65(91a) of Finance Act, 1994. - HC
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Central Excise

• Appellants Denied Cement Duty Refund; Rule 8 of Valuation Rules Deemed Inapplicable by Authorities.

  Case-Laws - AT : Refund of duty paid in excess - captive consumption - applicable valuation rules - manufacture of cement and cement clinker - The appellants were also using the manufactured cement for their own consumption - the applicability of Rule 8 of Valuation Rules has rightly been denied by the Adjudicating Authorities below. The appellant is therefore, not entitled for refund, claiming the said applicability. - AT
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• No interest on refund as it was sanctioned within three months of application; no delay in processing.

  Case-Laws - AT : Interest on refund - claim of interest from the date of pre-deposit made against stay order - The refund claim was sanctioned within three months from the date of application filed by the appellant for the said claim. - There is no delay in grant of refund consequently, no question arises for grant of interest. - AT
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• CENVAT Credit Reversal: Rule 6 Option on Common Inputs Deemed Impermissible, Orders Set Aside for Manufacturer.

  Case-Laws - AT : Reversal of CENVAT Credit - appellant manufactures both dutiable goods and exempted goods. - Common inputs - It is not permissible for the Department to foist an option under Rule 6 upon the assessee as has been done in the impugned orders. For this reason also the impugned orders cannot be sustained and need to be set aside. - AT
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• Prototype Vehicle Valuation Based on Comparable Goods Upheld u/s 4(1)(b) and Rule 4 of Excise Laws.

  Case-Laws - AT : Method of Valuation - prototype vehicles - goods cleared from the factory on payment of duty under self invoice on the comparable value of the similar vehicle applying Section 4(1)(b) of Central Excise Act, 1944 and Rule 4 of Central Excise Valuation Rules, 2000 - the value determined under Rule 4 of the Central Excise Valuation Rules, i.e. price of comparable goods shall apply, accordingly, the valuation arrived by the appellant in the facts of the present case is correct and legal. - AT
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Case Laws:

• GST

• 2021 (11) TMI 335
  Provisional attachment order - no proceedings pending or initiated against petitioner - section 62, 62, 64, 67, 73 and 74 of CGST Act - provisional attachment of a cash credit limit account was otherwise impermissible or not - HELD THAT:- List again on 14.02.2022 for consideration.

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• 2021 (11) TMI 334
  Grant of Default Bail - seeking to set aside/modify stringent conditions imposed by the learned Chief Judicial Magistrate, Ludhiana - complaint under Section 132(1)(b)(c) and (I) punishable under Section 132(1)(i) of the CGST Act, 2017 - HELD THAT:- The right to default bail arises when the investigating agency is not able to complete the investigation and put up the challan within the stipulated period, as the case may be. As has been held in catena of judgments by the Hon ble Apex Court as also this Court, such a right is an indefeasible right. The accused, thus, does derive such a benefit due to the failure on the part of the investigating agency/prosecution. Such right having been recognized as a Fundamental Right in a plethora of judgments, cannot be equated with the discretionary right of the Court, wherein the Court in its discretion may impose any condition, as may be deemed fit so as to enlarge the accused on bail. The Hon ble Apex Court in Saravanan s case [ 2020 (10) TMI 1249 - SUPREME COURT] , has held that default bail under Section 167(2) Cr.P.C. is an indefeasible right and no condition of deposit of the alleged amount involved in the alleged crime can be imposed by the Court while granting default bail/statutory bail to the accused. The default bail under Section 167(2) Cr.P.C. cannot be equated with the discretion of the Court under Sections 437, 438 or 439 Cr.P.C., wherein the Court has got ample power to impose any condition as would be deemed fit on the facts and in the circumstances of the case. The indefeasible right under Section 167(2) Cr.P.C., accrued due to the failure on the part of the investigating agency to complete the investigation and present the challan within the stipulated period would, therefore, be a right free from any inhibition or embargo. This Court is of the view that the conditions of deposit of Rupees One crore with two sureties in the like amount (atleast one local) and furnishing of bank guarantee /FDR for an amount of Rs. 50 lakh to be forfeited to the State in case of violation of any of the terms and conditions of the order, as contained in the order passed by the Chief Judicial Magistrate, Ludhiana, are set aside - Petition allowed.

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• 2021 (11) TMI 333
  Prayer for direction for expeditious consideration of representation made by the appellant before the expiry of time stipulated in Ext.P7 notification - HELD THAT:- The learned Single Judge was pursuaded, in our view rightly not to exercise his discretionary jurisdiction on the ground that the appellant had the remedy of appeal against the order impugned in the writ petition and the writ remedy is misconceived. Prima facie, we are of the view that both from the circumstances of the case and also the cogent reasons given by the learned Single Judge, the writ appeal does not merit interference with the jurisdiction exercised by the learned Single Judge. This observation, ought not to be understood as shutting out the other options available to the appellant in this behalf. The appellant is given liberty to avail the options open under Ext.P7 notification. The Standing Counsel appearing for respondents Nos.2 to 6 is instructed to immediately intimate respondents Nos.2 to 6 about the liberty granted by this Court immediately - Appeal disposed off.

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• 2021 (11) TMI 332
  Maintainability of application - Classification of goods - Hydraulic Power Pack - falling under HSN 8412 of Customs Tariff Act, 1975 as adopted to GST can be treated as Parts of heading 8906 attracting 5% IGST? - Schedule I (Sr.No.252) of Notification no 1/ 2017 Central Tax (Rate) dated 28.06.2017 or not - HELD THAT:- The applicant, prior to the opportunity of hearing, vide their letter dated 24.08.2021, requested this authority to permit them to withdraw their application, quoting the reason that their business model has been changed and they do not require the ruling. Further the applicant has to discharge fee of Rs. 5,000/- each in terms of Section 97(1) of the CGST Act 2017 as well as KGST Act 2017, where as the applicant has discharged the fee of Rs. 5,000/- under KGST Act 2017 only and hence the instant application is liable for rejection under Section 98(2) of the CGST Act 2017. The application filed by the Applicant for advance ruling is hereby rejected.

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• 2021 (11) TMI 292
  Concessional rate of tax @ 0.1% or not - supply of HDPE Drums for use by the manufacturer of Ethyl Alcohol in his factory for packing his manufactured goods and supply to merchant exporter - Applicability of N/N. 41/2017-IT (Rate) - HELD THAT:- The Notification stipulates certain conditions for supply of goods to the merchant exporter at concessional rate of GST at 0.1%. To avail the concessional rate of GST, the registered recipient is required to move the goods directly from the place of registered supplier to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported, or to a registered warehouse from where the goods shall be further moved to the Port, Inland Container Deport, Airport or Land Customs Station. In case the merchant exporter procures goods from different registered suppliers, the merchant exporter should move such supplies to the registered warehouse, aggregate such procured goods at the warehouse and should move the goods to the Port, Inland Container Depot, Airport or Land Customs Station from where the goods are exported. In the instant case, the applicant supplies HDPE drums by raising the invoice under Billed to Merchant Exporter and shipped to the manufacturer of the ethyl alcohol. Thus, the impugned goods are not moved directly to the Port, Inland Container Deport, Airport or Land Customs Station or to a registered warehouse, which is a pre-condition for availing concessional rate of GST. Therefore, the applicant is not entitled to supply the impugned goods at the concessional rate of GST at 0.1%.

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• 2021 (11) TMI 291
  Rate of GST - Job-Work service - business of plating Industry, approved for Electroplating and surface treatment of aerospace and non-aerospace components - Goods owned by others - whether the job work services provided by the applicant are covered under clause (id) or clause (iv) of entry number 26 of Notification No.11/2017-Central Tax(Rate) dated 28-06- 2017, as amended, by Notification 20/2019 Central Tax (Rate) dated 30-09-2019, effective from 01.10.2019, for the heading 9988 and also the rate of GST applicable thereon? HELD THAT:- It could be inferred from circular. No.126/45/2019-GST dated 22-11-2019, issued by the CBIC, that the job works defined under Section 2 (68) of the CGST Act i.e. job work services by way of treatment or processing undertaken by a person on goods belonging to another registered person are covered under clause (id) of entry number 26 of the Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, and clause (iv) of the notification supra covers only services which are excluded under clause (id) and also carried out on physical inputs (goods), owned by the unregistered person/s. In the instant case the applicant provides the job work services on the goods belonging to registered persons and hence are covered under clause (id) of entry number 26 of the Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended and accordingly attract GST rate of 12%.

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• 2021 (11) TMI 290
  Levy of tax - services procured by the applicant from Beacon US in respect of the referral of the FIS client - import of service - person liable to tax in respect of the services rendered by Beacon US to applicant - whether the place of supply of service is in India? - Intermediary services or not - HELD THAT:- The applicant herein is a subsidiary of M/s Workplace Options LLC (USA), who entered into a global arrangement with M/s Beacon Health Options Inc. -USA (formerly known as Value Options Inc.-USA), which is a company established in USA and does not have any office or fixed establishment in India, for the purpose of mutual referral of clients and work arrangements to Workplace Options Group Companies across the Globe. M/s Beacon, USA, as part of global arrangement identified a customer M/s FIS Global Solutions India Private Limited ( FIS India ) and referred the said client to the applicant, for a commission named as referral fee based on a formula, agreed by both the parties, which is equivalent to a percentage of the price charged by the applicant to FIS India. Beacon raised the invoice directly to the applicant for the referral fee. In terms of Section 5 of IGST Act 2017, IGST is levied on all inter-state supplies of goods or services, and in terms of Section 2 (21) of Act, ibid, supply shall have the same meaning as assigned to in Section 7 of the CGST Act 2017. The applicant, with regard to taxability of the impugned service, admitted that the said service amounts to supply in terms of Section 7 of the CGST Act 2017. It is also admitted by the applicant that the impugned services are imported into India and shall be treated to be an inter-state supply in terms of Section 7(4) of the IGST Act 2017. Place of supply of service - HELD THAT:- The issue whether the impugned services qualify to be import of services or not it is required to determine the place of supply of the impugned service, which is beyond the jurisdiction of this authority in terms of Section 97(2) of the CGST Act 2017. The application is disposed off without any ruling as the determination of place of supply is beyond the jurisdiction of this authority.

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• 2021 (11) TMI 289
  Cancellation of GST registration of petitioner - Section 29(3) of CGST Act, 2017 - HELD THAT:- From the facts available on the records it is quite clear that the appellant has applied for cancellation of registration on 17-12-2018. Thus, as per the first proviso of Section 29 of CGST Act, 2017 read with Rule 21A of CGST Rules, 2017 the registration of appellant was deemed to be suspended till the pending the completion of proceeding of cancellation of registration under Rule 22 of CGST Rules, 2017. Further, it is observed that the process of cancellation of registration was pending since long time and thereafter show cause notice was issued to the appellant vide reference Number ZA081120018826S, dated 7-11-2020 wherein additional information/clarification/documents relating to application for cancellation was asked and also it was directed in the said show cause notice to file the GST Return. The proper officer has rejected the application for cancellation of registration of the appellant vide REG-05 ZA0812200C0253F, dated 1-12-2020 on the ground that response not received whereas, it is found that the proper officer has not commented upon the appellant contention that he was appeared on due date before proper officer and submitted his reply - the proper officer should have taken contention of appellant on record before rejection of application of cancellation of registration but he did not do so and also he did not explain properly the same on comments offered on appeal memo sought by this office. The appellant was not able to file returns as his registration was deemed to be suspended - as per Section 29(3) of CGST Act, 2017 in the event of cancellation of registration the liability of the person to pay tax and other dues or to discharge any obligation under the Act or rules are made thereunder shall not affect for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. The effective date of cancellation of registration of appellant may be considered from 17-12-2018 by the proper officer - the proper officer is ordered to consider the application of cancellation of registration from the date of first time apply i.e. 17-12-2018 by the appellant. Appeal allowed - decided in favor of appellant.

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• Income Tax

• 2021 (11) TMI 331
  Violation of the principles of natural justice - Availing remedy of appeal - Petitioner submits that it is a settled proposition of law that when there is violation of principles of natural justice, the aggrieved party can invoke the writ jurisdiction of the High Court under Article 226 of the Constitution of India notwithstanding availability of alternative remedy - HELD THAT:- Adverting to the facts of the present case, we are not convinced that it is a case of no notice or no hearing. Whether opportunity of hearing granted and availed was adequate or reasonable would depend upon the facts and circumstances of each case. There cannot be any straight jacket formula. If as the petitioner contends the opportunity of hearing was inadequate which affected his right to make a proper response, certainly the same can be gone into by the appellate authority, since it may require examination of facts which we are not inclined to do in exercise of our writ jurisdiction. Petitioner is relegated to the forum of appeal before the first appellate authority i.e., Commissioner of Income Tax (Appeals) under Section 246A of the Income Tax Act, 1961. To enable the petitioner to effectively avail the remedy of appeal, we direct that for the next 30 days from today, no coercive steps shall be taken by the respondent against the petitioner in terms of the impugned assessment order dated 04.09.2021. It would be open to the petitioner to file necessary application either before the assessing officer or before the appellate authority for interim stay. Needless to say, if such application is filed, the same shall be considered on its own merit and in accordance with law. We express no opinion.

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• 2021 (11) TMI 330
  Penalty u/s 274 read with Section 270 - Appeal against the assessment order is pending - Scope to pursue the statutory remedies available - HELD THAT:- Order of assessment was passed on 26.03.2021 and the quantum of income for the relevant assessment year has already been assessed. Once the said assessment is completed, there is no prohibition in initiating proceedings for penalty under Section 274 read with Section 270A of the Act. Merely because an appeal against the said assessment order is pending consideration, the same is not a reason to defer initiation of proceedings for penalty under Section 270A of the Act. If the contention of the petitioner is accepted, the same will unnecessarily delay the proceeding under Section 270A of the Act which is not contemplated under the scheme of the statute. In matters of taxation, this Court would be loath to interfere especially when statutory forums are available to redress the grievance of the assessees. The parameters when interference can be made by this Court under Article 226 has been restated even recently in the decision in Assistant Commissioner of State Tax v. Commercial Steel Ltd. [ 2021 (9) TMI 480 - SUPREME COURT ] The case of the petitioner does not come within those parameters. If the petitioner is aggrieved by the order of penalty imposed, statutory remedies are available. The reasons put forth by the petitioner to overcome the statutory remedy of appeal is not tenable. Hence, the writ petition does not merit consideration and is dismissed leaving open the liberty of the petitioner to pursue the statutory remedies available.

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• 2021 (11) TMI 329
  Disallowance being employees contribution to PF and ESI - scope of amendment to section 36(1)(va) and 43B - HELD THAT:- Since, the assessment year concerned in this case being 2018-2019, we hold that the amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 does not have application - direct the A.O. to delete the disallowance being employees contribution to PF and ESI, since the same has been paid prior to the due date of filing of the return u/s 139(1). Disallowance of GST - An identical figure has been disallowed by the assessee voluntarily in the return of income filed u/s 40A(3) of the I.T.Act. If an identical amount has been disallowed inadvertently u/s 40A(3) then further disallowance u/s 43B of the I.T.Act by the A.O. would amount to double taxation. Therefore, restore this issue to the files of the A.O - AO is directed to examine whether the assessee has voluntarily made disallowance of GST since the same was not paid before the due date of filing of return u/s 139(1) of the I.T.Act. If the assessee has voluntarily made disallowance of the said amount (though inadvertently u/s 40A(3) the same needs to be deleted because the disallowance by A.O. u/s 43B of the I.T.Act tantamount to double taxation, which is impermissible in law. With these observations, I direct the A.O. to examine the issue afresh and pass an order after affording a reasonable opportunity of hearing to the assessee

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• 2021 (11) TMI 328
  Penalty u/s. 271B - non filing the tax audit report - reasonable cause for not obtaining the audit report - HELD THAT:- Whether the explanation offered in response to the show cause notice constitutes a reasonable cause for not obtaining the audit report. The explanation of the appellant is that it was under bona-fide belief that there is no requirement under law to obtain the audit report u/s.44AB as its income was exempt u/s.80P(2) of the Act and its books accounts were subject to audit by Government Auditor. This explanation was not found to be false by the lower authorities. The lower authorities merely rejected the explanation and proceed with levy of penalty. There is nothing on record to doubt the explanation offered by the appellant society. Therefore, when the assessee entertained bona-fide belief that its account were not subject to audit u/s. 44AB, it would certainly constitute reasonable cause for not obtaining the audit report and, therefore, the question of imposing of the penalty u/s. 271B does not arise. Further, we find audit report under the provisions of Maharashtra Co-operative Society was obtained only 27th June, 2017 and, therefore, occasion for filing the tax audit report along with the return of income does not arise. In the circumstances, we find that the lower authorities was not justified in confirming the levy of penalty and accordingly we direct the Assessing Officer to delete the penalty levied u/s. 271B - Decided in favour of assessee.

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• 2021 (11) TMI 327
  Revision u/s 263 by CIT - HELD THAT:- Section 263 of the Act confers power on the CIT to revise an assessment order, subject to certain conditions. Instantly, we are confronted with a situation in which the revision was initiated on the basis of the AO sending a proposal to the CIT and not on the CIT suo motu calling for and examining the record of the assessment proceedings and thereafter considering the assessment order erroneous and prejudicial to the interests of the revenue. AO recommending a revision to the CIT has no statutory sanction and is a course of action unknown to the law. If AO, after passing an assessment order, finds something amiss in it to the detriment of the Revenue, he has ample power to either reassess the earlier assessment in terms of section 147 or carry out rectification u/s 154 of the Act. He can t usurp the power of the CIT and recommend a revision. No overlapping of powers of the authorities under the Act can be permitted. As the revision proceedings in this case have triggered with the AO sending a proposal to the ld. CIT and then the latter passing the order u/s 263 of the Act on the basis of such a proposal, we hold that it became a case of jurisdiction deficit resulting into vitiating the impugned order.

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• 2021 (11) TMI 326
  Rejection of application seeking registration u/s 12AA - AR submitted that the appellant is a company incorporated under the provisions of Section 8 of the Companies Act, 2013 and promoted by IIS (Deemed to be University) Trust which is also solely engaged in imparting education having necessary approvals u/s 12AA - main object of the appellant company is to set up high class incubation facility to foster entrepreneurial culture - HELD THAT:- Merely because the assessee company has been registered u/s 8 of the Companies Act, we are not saying that the same by default mean that it shall be eligible for grant of registration u/s 12AA of the Act as the legislation is currently not worded to support the said proposition. Where another arm of the Government administering the company law legislation has examined through its designated authority the objects and intended application of profits and has granted the registration to the assessee company as section 8 company, the said registration allows the assessee company to take necessary steps to seek separate and independent registration u/s 12AA and where such an approval is placed on record, as part of assessee s application u/s 12AA and supporting documentation as required under law, it shall provide an additional level of comfort to the ld CIT(E) in terms of examining the true intent behind its objects of setting up/incorporation and also for the purposes of examining compliance of other laws material for achievement of its objectives under section 12AA(a)(ii) of the Act. The appellant company s application seeking registration u/s 12AA for undertaking the aforesaid objects of general public utility deserve to be accepted as falling within the purview of charitable purpose u/s 2(15) of the Act. In terms of examining the allowability of benefit u/s 11, 12 r/w section 13, it is a settled position that the same can be examined on year to year basis by the Assessing officer and he shall be free to take action, as per law including under section 13(8) as so provided in the statue, during the course of regular assessment proceedings. We accordingly direct the ld CIT(E) to grant approval to the assessee company u/s 12AA of the Act - Appeal of the assessee company is allowed.

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• 2021 (11) TMI 325
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - whether for concealment of income or for furnishing of inaccurate particulars of income? - HELD THAT:- The notice has specified both charges i.e. concealment of income and furnishing of inaccurate particulars of income and has not specified the charge for which action has been taken against assessee. The non specific nature of notice indicates non application of mind by AO. It is a settled position of law that if notice u/s 274 read with 271(1)(c) is not specific about the charge or limb under which penalty is being levied u/s 271(1)(c) of the Act, then any penalty levied on the basis of such notice is bad in law and liable to be deleted. The law mandates that the authority, who is proposing to impose penalty, shall be certain as to what basis penalty is being levied and notice must reflect that specific reason so that assessee, to whom such notice is given, can well prepare himself regarding defence, which he likes to take to support his case. This is even enshrined in the principles of natural justice and as has been upheld by Hon ble Apex Court and other High Courts. In the present cases, unlike in the case of Sundram Finance Ltd [ 2018 (5) TMI 259 - MADRAS HIGH COURT] the assessee has taken this argument before learned CIT(A) and before us also whereas in Sundram Finance Ltd., the issue was raised for the first time before Hon ble Supreme Court therefore, this case law is distinguishable from the facts of the present cases and therefore, is not applicable

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• 2021 (11) TMI 324
  Deduction 10AA(9) - Interest and remuneration to partners - Claim allowable on net income or gross income - AO while passing the assessment order restricted the deduction under section 10AA by making allowance of remuneration to partners and interest @ 12% on their capital contribution - CIT(A) deleting the disallowance by invoking provisions of Section 80(IA)(10) r.w.s. 10AA(9) in giving deductions of interest on Capital and Remuneration to partners of the assessee firm after finding that the assessee had taken undue benefits of Section 10AA by not claiming interest on Capital and Remuneration to partners which resulted increase in exempted profit of the assessee - HELD THAT:- CIT(A) while granting relief to the assessee followed the decision of Alidhra Taxspin Engineers [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT ] wherein it was held that mere incorporation of interest on partner s account and remuneration does not signify that same are mandatory in nature CIT(A) also considered the CBDT s Circular No.739 of 1996 dated 25.03.1996 wherein it has been clarified that no deduction under section 40(b)(v) of the Act is admissible under partnership deed either specified the amount of remuneration payable to each individual working partners or laid down the manner quantify of such remuneration. In the present case, the clauses of partnership deed specifically restrict not to charge payment of interest to partners on their capital contribution as well as remuneration. We find that ld. CIT(A) has decided the issue after proper appreciation of fact and following the decision of Alidhra Taxspin Engineers (supra). Appeal raised by the revenue are dismissed.

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• 2021 (11) TMI 323
  Excess stock found during the search - one of the partner of the firm categorically admitted the excess stock in the statements recorded during the search u/s 132(4) of the IT Act - CIT- A deleted the addition - HELD THAT:- We found that in search proceedings the authorized officer found no excess stock in quantity and no excess stock in quantity was determined. Total value of stock of all the items of gold jewellery and gold jewellery studded with precious semi-precious stones was determined by the valuer at the prevailing rate of gold and precious stones as on 28-01-2016 i.e. as on the date of search. Correct excess value of closing stock as on the date of search works out to Rs. 2,83,49,302/- in place of Rs. 5,64,20,450/- determined and mentioned in the statement recorded u/s 132 (4) - statement of assessee recorded u/s 132 (4) is wrong to the above extent i.e. instead of correct excess stock of Rs. 2,83,49,362/- the wrongly calculated excess stock of Rs. 5,64,20,450/- by authorized officer in search was admitted as excess stock as additional income of the year and surrendered to tax. Thus there is no retraction but what assessee firm did is simply to correct calculation mistake and accepted his statement u/s 132 (4) in toto. AO is wrong in not allowing gross profit margin @ 9.50% which was claimed as per last year G.P. rate. The assessee has not specifically asked for allowance of discount element but as a general trade practice referred to bargaining discounts being allowed which Ld. A.O. not accepted. As for reduction of G.P. margin from market value of stock the. A.O. has not stated any thing in assessment order which is allowable in law to assessee and in fact the authorized officers in search and A.O. in assessment themselves in various similar cases (Bhura Mal Raj Mal Surana P. Ltd., Bhuramal Raj Mal Surana (Mfg.). Chandra Kumar Surana A.Y. 2015-16 passed by same AO - appeals heard by ld. CIT(A)-iv, Jaipur has allowed deduction of margin of G.P. from valuation made by approved valuer. A.O. is therefore wrong and incorrect in law in not allowing the said deduction of said G.P. margin of 9.50% from valuation of stock done by valuer at market value on the date of search. The allowance of said G.P. margin will result in excess stock as on date of search as given above which assessee declared as its additional income in return filed and paid tax. AO has not held that there was any difference in quantity of stock as per valuation report and as per hooks of accounts. There can be no addition simply on the basis of valuation unless excess quantity of stock is found. If such addition is somehow made on account of said valuation of stock and sustained in assessment than credit of same has to be allowed in year end while computing profit at year end which has not been allowed and as assessing officer accepted declared closing stock as on 31-3-2016 in books of accounts the addition of difference in value as on 28-01-2016 will got set off the assessee carried forward the closing stock of this year end as declared in books of accounts as on stock for next year. A.O. neither allowed credit of difference while accepting closing stock at year end but accepted closing stock declared by the assessee which has been taken as op. stock in next year. In next year also no credit allowed for enhanced stock and even if it is done it will be revenue neutral exercise. Considering the totality of facts and circumstances, we are of the view that the ld. CIT(A) has passed a well-reasoned order and no new facts or circumstances have been brought before us by the ld DR in order to controvert or rebut the factual findings so recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same. A.O. has not held that there was any difference in quantity of stock as per valuation report and as per hooks of accounts. There can be no addition simply on the basis of valuation unless excess quantity of stock is found. If such addition is somehow made on account of said valuation of stock and sustained in assessment than credit of same has to be allowed in year end while computing profit at year end which has not been allowed and as assessing officer accepted declared closing stock as on 31-3-2016 in books of accounts the addition of difference in value as on 28-01-2016 will got set off the assessee carried forward the closing stock of this year end as declared in books of accounts as on stock for next year - A.O. neither allowed credit of difference while accepting closing stock at year end but accepted closing stock declared by the assessee which has been taken as op. stock in next year. In next year also no credit allowed for enhanced stock and even if it is done it will be revenue neutral exercise. CIT(A) has passed a well-reasoned order and no new facts or circumstances have been brought before us by the ld DR in order to controvert or rebut the factual findings so recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same. - Decided against revenue.

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• 2021 (11) TMI 322
  Assessment u/s 153A - Addition on account of alleged suppressed profit at Unit-1, Vapi and alleged exaggerated profits at Unit-11, Baddi - HELD THAT:- The figures for the three years as submitted by the production manager match with the figures submitted by the assessee independently. The department has curiously alleged suppression of sales, just on the basis of change of Units (without assigning any basis) of the figures supplied by the assessee. CIT(A) observed that all these data has been submitted to AO during assessment proceedings. These have been reproduced in the assessment order. The same difference in Units (strips vs. numbers of capsules/tablets) exists for the other four years also vis-a-vis the sale record. If the numbers of capsules/tablets in lakhs as given by the assessee are compared with strips in the sale data for other years also; same absurd and erroneous additions could have been made for these years too. Therefore, ld CIT(A) held that this demonstrates the arbitrariness and travesty of the approach of the AO. Not an iota of evidence of any excess raw material purchase, out of books expenses, labour and other manufacturing expenses or receipt of unaccounted sales proceeds, has been found or brought on record even after a detailed search. The additions for alleged suppression have been made purely on selective misinterpretation, without dealing with the explanations/clarification of the production manager and the assessee, completely ignoring the record including audits/inspection by third party and in absence of any incriminating evidence.That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2021 (11) TMI 321
  Bogus LTCG - unexplained credit u/s 68 - HELD THAT:- Backed by the substantial documentary evidence filed by the assessee which beyond doubt substantiates the genuineness of the transaction of purchase and sale of shares of M/s Splash Media Ltd. by her, we are afraid that the unsubstantiated claim of the A.O that the assessee had converted her unaccounted money by taking fictitious LTCG in a pre-planned manner does not merit acceptance. Our aforesaid view that in the absence of any evidence, whatsoever, to allege that money had changed hands between the assessee and the broker or any other person, or that some person provided the entry to convert unaccounted money for getting benefit of LTCG, the uncorroborated claim of the department that the assessee had taken recourse to a structured transaction for evading taxes and laundering her unaccounted money in the garb of exempt LTCG u/s 10(38) of the Act cannot be accepted is supported by the judgment in the case of Pr. CIT Ors. Vs. Krishna Devi Ors. [ 2021 (1) TMI 1008 - DELHI HIGH COURT] . There is no material with the department which would falsify the assessee s claim of having carried out genuine purchase/sale of shares of M/s Splash Media Ltd., we are unable to persuade ourselves to concur with the disallowance of the assessee s claim for exemption of LTCG u/s 10(38) of the Act. As we have held that the assessee had carried out genuine transaction of purchase/sale of shares, therefore, as a consequence thereto the addition u/s 69C of commission expenditure would also meet the same fate and is accordingly vacated. - Decided in favour of assessee.

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• 2021 (11) TMI 320
  Bogus LTCG - unexplained credit u/s 68 - HELD THAT:- There is no material with the department which would irrefutably falsify the assessee s claim of having carried out genuine purchase/sale of shares of M/s Sunrise Asian Limited, we are unable to persuade ourselves to concur with the disallowance of the assessee s claim for exemption of LTCG u/s 10(38) of the Act. As we have held that the assessee had carried out genuine transaction of purchase/sale of shares, therefore, as a consequence thereto the addition u/s 69C of commission expenditure would also meet the same fate and is accordingly vacated.

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• 2021 (11) TMI 319
  Assessment of trust - Anonymous donation addition u/s 115BBC(3) - assessee society was established on 12.04.1996 as granted registration u/s 12AA(1)(B)(i) AND also granted approval u/s 80G(5)(vi) - HELD THAT:- Assessee had provided complete details of name and address of the donors giving alleged donation and complete detail of all such donation are entered in the regular books of accounts which have been audited, the book results have not been disputed by the Revenue Authorities except for the alleged donation and further where the assessee had provided identity proof of most of persons which were summoned by the ld. AO and have also filed the confirmation letters from such donors and the assessee society being undisputedly carrying out the charitable and educational activities, applying the funds received through voluntary contribution for achieving the object of the society and also providing free medical facility from its 1200 bed facility hospital running consistently in the Rural area, near Indore, find no infirmity in the finding of Ld. CIT(A) appreciating the fact of the case, details of name and address of 27746 donors from A.Y. 2013-14 38625 donors for A.Y. 2015-16 alleged to have given donation of Rs. 14,06,75,754/- for A.Y. 2013-14 and Rs. 17,23,85,000/- for A.Y. 2015-16 and also rightly holding that the assessee has provided the details of donation of Rs. 4,35,00,000/- received from other persons giving their name address and Permanent Account No.. Therefore, the alleged sum undisputed before us by the revenue for A.Y. 2013-14 2015-16 cannot be held to be anonymous donation . Difference in interest income as per the form 26AS and offered to tax - HELD THAT:- Under the given circumstances wherein there are different claim by both the sides on the same issue i.e. 26AS form available on the wave site of the Income Tax Department then in such situation Ld. CIT(A) has rightly restored the matter to the Ld. Assessing Officer to carry out necessary reconciliation with the help of the documents to be placed by the assessee society before Ld. AO and the documents relied on by the ld. Assessing Officer to make the impugned addition. Thus, no interference is called for in the finding of Ld. CIT(A) as the ld. Assessing Officer can decide accordingly on the basis of 26AS statement for A.Y. 2013-14 available on the wavesite of the Income Tax and the explanation/reconciliation given by the assessee with respect to the interest on Bank FDR.

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• 2021 (11) TMI 318
  Addition u/s 68 - unexplained share application money - undisclosed income - As per AO assessee failed to prove the identity of the alleged lenders, the credit worthiness of the lenders and the genuineness of the transactions - HELD THAT:- In the course of assessment proceedings, confirmation letters were filed, affidavit of directors are also filed. The full addresses of the companies were also given - bank accounts of the creditors were also furnished. In the said bank accounts, there are also no cash deposits by the creditors before issuing cheque to the assessee. No cogent material or any other incriminating material was found which showed that it is the assessee s money which has gone to the aforesaid share applicants in cash and then it came back to the assessee in the form of share capital - there are no findings of the A.O. that the creditors bank accounts are the benami bank accounts of the assessee. There are also no evidences which show the various credits in the bank accounts of the creditors are the undisclosed income of the assessee deposited in those bank accounts and, therefore, the receipt of share application from the aforesaid share applicants could not be assessed as a deemed income of the assessee u/s.68 - We find that all transactions are from the regular banking channel verifiable from the bank account of the assessee as well as the bank accounts of the share applicants It is not a case that the assessee had filed merely a confirmatory letters of share applicants but it is a case that the assessee had filed affidavit of the director, certification of incorporation of the share applicants, full particulars of directors of the share applicant companies, bank account of the share applicants, PAN of share applicants, tax returns of the share applicants, audited final accounts i.e. balance sheet profit loss account of the share applicants. All these documents proved the identity of the share applicants, creditworthiness of the share applicants and genuineness of the transactions - We also find that the assessee s case is on strong footing as by the Finance Act, 2012, the provision for source of source was inserted w.e.f. 1.4.2013 but the present matter pertains to the assessment year 2012-13. Hence, the insertion of that provision is also not applicable in the present matter. Thus assessee in these circumstances had duly discharged its burden lay upon it u/s.68. The case-laws referred by the Revenue Authorities are distinguishable on facts and they are not applicable on the facts of the assessee s case. Therefore, the addition made u/s.68 in assessment year 2012-13 is bad in law and unjustified and, therefore, we delete the addition. Decided in favour of assessee.

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• 2021 (11) TMI 317
  Nature of receipt - suppliers credit received from various suppliers of aircraft - capital ad revenue receipt - HELD THAT:- As decided in own case [ 2017 (2) TMI 630 - ITAT DELHI ] the supplier s credit received by the assessee from various suppliers of aircrafts is a capital receipt. Accordingly, ground number 1 of the appeal of the learned assessing officer is dismissed. Whether the above receipt constituted receipt from exploitation of valuable commercial rights and chargeable to tax u/s 28 (iv)? - In view of the above findings of the special bench that credit receives are also not taxable either u/s 28 (i) or u/s 28(iv) of the act we dismiss ground number 2 of the appeal of the learned AO. Disallowance u/s 37 (1) of the lease rent payable - HELD THAT:- No disallowance u/s 37 (1) of the lease rent payments could be made. Accordingly, the AO is directed to delete the same. Disallowance u/s 40 a (i) on account of payment of supplementary rent for non-deduction of the tax - HELD THAT:- Respectfully following the decision of Tribunal for A.Y. 2007- 2008 which has also been followed in subsequent years, we hold that payment of Supplementary Rent is exempt from tax in hands of Lessors as per provisions of section 10(15A) and hence, disallowance under section 40(a)(i) is not called for. However, the above figure is subject to verification by the AO. Disallowance of supplementary rent for lease agreements executed after 1 April 2007 - HELD THAT:- Profits from rental of Aircrafts is taxable only in state of residence of Lessor. We, therefore, find merit in the arguments of the Learned Senior Counsel for the Assessee that as per Articles 12 and 8 of the Tax Treaty with Ireland, profits derived by an enterprise of a contracting State from rental of Aircraft are taxable only in Ireland. Supplementary Rent paid for Lease Agreements executed after 01.04.2007 are, therefore, not chargeable to tax in India. However, the above figure is subject to verification by the A.O.

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• 2021 (11) TMI 316
  Rectification of mistake u/s 154 - Assessee seeking rectification of intimation claiming that an amount received as gratuity is not exigible to tax in view of the judgement of Avinash Chand Puri Others [ 2013 (7) TMI 1179 - PUNJAB AND HARYANA HIGH COURT] - AO rejected the application on the ground that mistake is not apparent from record. - Thereafter the assessee filed a second revised return in physical form again claiming refund on the basis of his contention but d. CIT(A) dismissed the appeal filed by the assessee and confirmed the action of the AO holding that the issue has not attained finality and, therefore, there is no mistake apparent from record - assessee submitted before us that this issue is covered in favour of the assessee by the decision of the Delhi Bench of the Tribunal in ACIT, Circle- 33(1) New Delhi Vs Pearls of Beauty [ 2017 (7) TMI 999 - ITAT DELHI] wherein the Tribunal has upheld the findings of the ld. CIT(A) directed the AO to allow the claim of deduction u/s 80IB and 80IC in the ROI of the relevant assessment year with the consequential relief HELD THAT:- As perused the material on record including the decision of the Delhi Bench of the Tribunal aforesaid relied upon by the ld. counsel. We notice that the facts of the case relied upon by the assessee are not identical to the facts of the present case, therefore the decision is not applicable to the assessee s appeal. Moreover, as pointed out by the Ld. DR, the coordinate Bench of the Tribunal has mentioned in the order sheet dated 08.10. 2020 that the Hon ble High Court has already heard the case involving the identical issue and the Bench has directed the assessee to produce the copy of order or status of the said case. Since, the assessee has not filed the said order/ status till date, we do not deem it appropriate to decide the present appeal or to keep this appeal pending. Hence, we set aside the impugned order passed by the Ld. CIT(A) and send the file back to the AO to decide the issue afresh in accordance with the order of the Hon ble High Court in CWP referred above after affording a reasonable opportunity of being heard to the assessee. We further direct the assessee to produce the copy of the Hon ble High Court before the AO. Appeal of the assessee is allowed for statistical purposes.

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• 2021 (11) TMI 315
  Assessment of trust - grants to be considered as eligible income for section 11 - Whether grants received from various organisations are in the nature of voluntary contributions? - HELD THAT:- The issue involved has rightly been claimed to be covered by case of CIT v Gem Jewellery Export Promotion Council [ 1982 (6) TMI 28 - BOMBAY HIGH COURT ] - Despite the same being before Ld.CIT(A), he has not followed the same. Not only not follow, he has not bothered to refer or distinguish the same. Despite that he has referred to non jurisdictional High Court decision and rejected assessee s plea. This is absolute violation of judicial discipline. It is settled law that decision of Hon ble jurisdictional High Court is binding upon subordinate Tribunal and courts. Hence, in our considered opinion, this decision of Hon ble High Court is applicable fully in the facts of this case. Nothing has been provided before us to show that this decision is not applicable. Hence decide the issue in favour of assessee.

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• 2021 (11) TMI 314
  Addition u/s 69C - Unexplained purchase of shares - HELD THAT:- CIT(A) has invoked provisions of section 145(3) of the Act. We note that assessing officer has not discussed any of these documents and evidences in the assessment order. AO has not made any adverse finding in any of these documents, even though all the details were furnished by the assessee before him. AO ought to have examined all these details and refuted/rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion. On the contrary, the assessing officer has just brushed aside these evidences and documents, submitted by assessee, without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made, is deleted. Hence these two grounds of the assessee are allowed.

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• 2021 (11) TMI 313
  Disallowance of deduction claimed u/s. 24(b) - interest incurred on outstanding purchase consideration to acquire the properties of real estate division of M/s. Ballarpur Industries Ltd. on its demerger - HELD THAT:- We find that the ld. CIT(A) has not solely adjudicated based on the earlier assessments but has also so considered the various judgments of Hon ble High Court of Calcutta in the case of CIT Vs. R.P Goenka [ 1998 (3) TMI 106 - CALCUTTA HIGH COURT] and the judgment of Sunil Kumar Sharma [ 2002 (2) TMI 91 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that unpaid price is to be treated as borrowed capital within the meaning of Section 24(b). Hence, on independent examination of the facts and the provisions of law, we hold that the interest paid by the assessee to BIL is an allowable deduction as it amounts to interest on the capital borrowed. Disallowance u/s. 14A - AR argued that the disallowance cannot be more than the exempt income earned - HELD THAT:- Since, the proposition of law is clear by now that the disallowance cannot exceed the exempt income, the contention of the ld. AR is allowed. Disallowance of expenses u/s.14A for computing the book profit u/s. 115JB - In accordance with the clause (f) of Explanation to Section 115JB, the disallowance under Section 14A of the Act is a notional disallowance and therefore, by taking recourse to Section 14A of the Act, the amount cannot be added back to book profit under clause (f) of Section 115JB of the Act. The AO is directed to re-compute the profits following the two directions given above.

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• 2021 (11) TMI 312
  Disallowance of long term capital loss - CIT(A) confirmed the disallowance made by the AO by holding that no sale deed has been produced either before the AO or before the undersigned that transfer of the property had indeed taken placed in the year under consideration - HELD THAT:- Even before us, the assessee failed to submit the sale deed, if any, issued by the authority to establish that the property had been transferred in the year under consideration. Mere considerations received and possession handed over without any documentary evidence for enjoyment of the property to the buyer is not sufficient, hence, the section 2(47)(vi) is also not applicable. As per the documents available, we find that the transaction was done in the financial year 2009-10 and till the date of hearing, the assessee is unable to rebut the finding of the assessing officer in regard to non-submission of the sale deed. As in the case of CIT Vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] has settled the issue in respect of the transfer of the property where the registered sale deed has not been executed in favour of the prospective buyer. We uphold the order of the CIT(A) in confirming the AO s action in disallowing the assessee s claim of long term capital loss - As it is clear from the order of AO that the assessee can offer income under the head long term capital gain in the year in which the land is duly transferred in all respects as per the above cited decision to the proposed buyer to which the assessing officer can decide the issue as per law in the respective year. Disallowance u/s 14A rwr 8D(2)(iii) - HELD THAT:- We do not accept the contention of the assessee that no administrative/ managerial expenses incurred by the assessee for earning exempt income. Assessee earned dividend income which is exempt u/s 10(34)/10(35). The findings given by the CIT(A) are not in accordance with rule 8D(2)(iii). The disallowance can be made under this rule only on 0.5% of the average value of investments which yield exempt income. The assessee has received dividend from the investments as quoted in the above table and the average value of these investments is Rs. 53,03,543/- and 0.5% of the average value comes to Rs. 26,518/-. Therefore, the disallowance is to be restricted to Rs. 26,518/- and assessee gets relied of Rs. 51006/-, hence, this ground of assessee is partly allowed. Assessee claimed bad debts regarding receivables from C F agents - HELD THAT:- On going through the financial statements, in the P L account bad debts/advances/deposits written off of Rs. 4,28,33,731/-, which includes 90,01,443/-, which is the disputed amount. The ld. CIT (A) has rightly allowed this issue after relying on the judgement TRF. LTD. [ 2010 (2) TMI 211 - SUPREME COURT] we do not find any infirmity in the decision of CIT(A) in directing the AO to allow the claim of bad debts of Rs. 90,01,443/- and upholding the order of CIT(A) on this count, we dismiss the ground No. 02 raised by the revenue on this issue. Addition deposits/advances written off by the assessee - HELD THAT:- To claim bad debts, the amounts must be treated as income but, the issue in dispute relates to advance/deposits which have never been considered as income of the assessee. Even if it is considered as expenditure u/s 37(1) of the Act, the expenditure must be crystalized during the impugned AY, but, the assessee failed to produce any documentary evidence to substantiate its claim that the parties to whom advances have been given as per pages 23 24 of the paper book that the parties were refused to pay back the advances. In support of our decision, we rely on the coordinate bench in the case of Elite International (P.) Ltd.[ 2017 (6) TMI 494 - ITAT MUMBAI] - The case law relied on by the assessee cited supra as well as relied on by the ld. CIT(A) are not applicable to the case of the assessee. In view of the above observations, we set aside the order of the CIT(A) and restore that of the AO on this issue.

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• 2021 (11) TMI 311
  Disallowance on account of irrecoverable debts/advances written off during the year, on the ground that irrecoverability of the debts has not been proved - DR submitted that above company has been referred to the Insolvency Bankruptcy Code, 2016. Nobody appeared on behalf of the assessee - HELD THAT:- On careful consideration it is found that the above company has been referred for initiation of corporate insolvency process in terms of Section 14 of the Insolvency Bankruptcy Code, 2016. The National Company Law Tribunal, New Delhi has referred this company for insolvency proceedings. The present appeals are found to be filed by Shri Sunil Kumar Sharma in the capacity of Executive Vice Chairman of the appellant s company. The moment IRP is appointed, the board of the company is super-ceded. Therefore, these three appeals filed by the Executive Vice Chairman are not maintainable. In view of this, we dismiss all the appeals filed by the assessee company with a liberty that as soon as the committee of creditors is being decided to pursue these matters then the IRP should file these appeals. If it is so decided, then we give liberty to the IRP either to make an application for recall of this common order by filing corrected Form No. 36 or to file the fresh appeals with the condonation of delay request. Accordingly, all the three appeals filed are dismissed.

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• 2021 (11) TMI 310
  Appeal of the assessee dismissed by the ld. CIT(A) ex parte - As submitted assessee is not interested in pursuing his case, therefore, no opportunity should be given to the assessee and the appeal of the assessee may be dismissed with cos - HELD THAT:- On the dates neither the assessee appeared nor any adjournment application on behalf of assessee was filed. Even before the Tribunal, none has appeared on behalf of the assessee. It was the bounded duty of the parties i.e. assessee as well as the Department to appear before the Revenue authorities at all stages. Since, this was the assessee s appeal, therefore it was all the more important for the assessee to appear before A.O. as well as before the Ld. CIT(A). However, the assessee had not acted with due diligence. Nevertheless, the principles of natural justice demand that the lis between the parties should be decided on merits after providing due opportunity of hearing to both the parties. Accordingly, we decide to give one more opportunity of hearing to the assessee and remand the matter back to the record of the ld. CIT(A) for deciding the issue afresh on merits after giving an opportunity of hearing to the assessee subject to cost of Rs. 2,000/- to be paid by the assessee in the account of Prime Minister s National Relief Fund/Prime Minister s Care Fund within 30 days from the date of receipt of this order. The assessee is also directed to cooperate with the ld. CIT(A) in deciding the appeal on merits and without any sufficient reason, not to take further adjournments.

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• 2021 (11) TMI 309
  Assessment of trust - Disallowance of carry forward of excess expenditure - HELD THAT:- The issue raised in no longer res integra. The Hon ble jurisdictional High Court in the case of Pr. CIT (Exemption) v. Agastya International Foundation [ 2018 (8) TMI 1894 - KARNATAKA HIGH COURT] by following the earlier judgment of Ohio University Christ College [ 2018 (11) TMI 1055 - KARNATAKA HIGH COURT] held that income derived from trust property has to be computed on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust to charitable and religious purposes in the subsequent year in which adjustment is made having regard to the benevolent provisions contained in section 11 of the Act and such adjustment will have to be excluded from the income of the trust under section 11(1)(a). Also see case of CIT (Exemption) v. Subros Educational Society [ 2018 (4) TMI 1622 - SC ORDER] . In view of the above judicial pronouncements, we hold that the CIT(A) is justified in allowing carry forward excess expenditure. Therefore, we uphold the CIT(A) s order as correct and in accordance with law. - Decided in favour of assessee.

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• 2021 (11) TMI 308
  Reopening of assessment u/s 147 - Assumption of jurisdiction by AO u/s 147 - Eligibility of reasons to believe - reliance on extracts of certain uncorroborated excel sheets found in search - As per assessee reopening has been done solely on the basis of information received from DCIT, Central Circle-03, Jaipur and there is no independent application of mind by the Assessing Officer - Addition of cash loans - HELD THAT:- As manifest from the reasons so recorded by the AO that he has basically relied upon the information received from the DCIT Central Circle -3, Jaipur and enquiries conducted by the Investigation wing. Further, given that the original assessment has been completed u/s 143(3) and more than four years have elapsed from the end of the impugned assessment and proviso to section 147 applies, with a view to satisfy the additional condition that there should be failure or omission on the part of the assessee in disclosing full and true material facts, he has considered the assessee s assessment records and thereafter, has concluded that there was no necessity to make further inquiries as the information available on record is self-sufficient. Assessing officer has merely relied upon extracts of certain uncorroborated excel sheets, found during the course of search in case of Ramesh Manihar Group. Such excel-sheets do not point out to the fact of assessee having given loans, in cash, to different persons through Ramesh Manihar Group. Nothing concrete is discernible from these excel sheets. AO has failed to corroborate the excel sheets with independent evidences. Unless such corroborative evidences were brought on record, the present additions are not justified. Nowhere in the excelsheets found during the course of search in case of Ramesh Manihar Group and relied upon by the AO, it could be established that PCK as mentioned in those documents stand for the assessee only. No trail of documents or corroborative evidences could be established in this regard. The extracts of the excel sheets on which reliance had been placed were found from the computers of employees of Shri Ramesh Manihar. Those employees were never examined independently by the AO to find out whether PCK as mentioned in such excel sheets represent assessee only. There is no positive confirmation or concrete evidence available with the AO, in the form of acceptance by the parties alleged to have received loans that they have actually received loans, in cash, which was provided by the assessee through Ramesh Manihar Group. CIT(A) has rightly held that relying upon the statement and not providing cross examination to find out any involvement of the person affected by such statement is a gross violation of principles of natural justice which renders such reliance a nullity and if such statement is discarded, there remain no evidence to hold that the appellant has given any such advance to the tune of Rs. 25 crores. Merely extracts of excel sheet do not provide any evidence of the allegation made by the AO against the assessee. Thus, mere fact that there were certain entries found from record of third party is not sufficient to make addition on the ground that assessee had made unexplained investments. CIT(A) has rightly held that though cognizance may be taken in respect of entries by third-party in the assessment of other person so as to initiate inquiry for assessment, yet when there is no finding that such entries are in fact pertaining to such third person only which should be emanating from the entries itself or from the person who has recorded such entry, no cognizance can be taken so as to fasten tax liability on such third person. There is no basis for making the addition in the hands of the assessee made on account of cash loans and consequent interest charged thereon and for the reasons cited supra, we affirm the findings of the ld CIT(A) deleting the said additions.Appeal of assessee allowed. Carry forward of long term capital loss - HELD THAT:- In the order passed u/s 147 read with section 143(3), it is an admitted fact that the issue of capital gains didn t arise for consideration during the course of reassessment proceedings and there is no finding which has been recorded by the Assessing Officer disputing the figures as reported by the assessee in his return of income under the head long term capital gains . We therefore find that it is a clear mistake on the part of the Assessing Officer while computing the total income wherein the Long Term Capital Gains amounting to Rs. 50,05,578/- has been inadvertently brought to tax in the hands of the assessee. The Assessing Officer is hereby directed to delete the said amount of Rs. 50,05,578/- and the ground of appeal taken by the assessee is allowed. In the result, appeal of the assessee is allowed.

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• 2021 (11) TMI 307
  Denial of exemption u/s 11 - treatment of assessee as AO - proof of profit motive - CIT(A) held that assessee has lost its charitable character and the income has been rightly taxed in the status of an AOP as per law - Whether the activities carried on by the assessee are commercial in nature with the motive to earn profits? - as argued assessee has been created with the object of general public utility which is a charitable object within the meaning of Section 2(15), and is eligible for exemption under section 11 - whether, the activity of construction and sale of immovable property constitutes business ? - HELD THAT:- Assessee undertakes projects/schemes on behalf of the State government and also through private negotiations. Activity of assessee was to construct housing projects on land provided by State Government or acquired by it and sell it to people belonging to different income groups. Thus, the assessee has consistently earned substantial profit in this activity. Therefore, the activity has been carried on with profit motive in the same manner in which a private builder would conduct his business. It can t be said that such activities are incidental to the main object of the trust. The activity of construction and sale of immovable property cannot be the object but only a mean to achieve the object of development of area in accordance with the plan. Therefore, while the object in a given case may be a charitable purpose, not involving profit, the activities undertaken by assessee in pursuance of the object, attained the colour of business. Each individual receipt from disposal of the property cannot be said to be income of the assessee available for charitable purpose because expenditure has to be incurred and has been incurred in acquiring land and construction thereon - only the surplus from this activity can be said to be the income derived from property held under trust. There is yet another angle, namely, that some meaning has to be placed on the content of sub-section (4A) of section 11 and especially on the words unless the business is incidental to attainment of the objective of the trust . The legislature postulates that a charitable institution may have to carry on incidental business for attainment of objective. If the argument of the Ld.AR is that, there is no profit motive in so far as the development authority is concerned and, therefore, there is no question of carrying on any business, then no meaning can be placed on the contents of this provision. As mentioned earlier that the assessee has carried on systematic activities in a regular manner for construction of Building as per plan, which have led to profit, and such activity is not incidental to the main object of town planning, therefore, it is clear that the assessee has carried on a business which is not incidental to attainment of objects of the authority. Subsection (4A) provides that no deduction shall be allowed under subsections (1), (2), (3) or (3A) from such profit. However, the incidence of taxation is lifted provided that-(i) the business is incidental to the attainment of the objective, and (ii) separate books of account are maintained in respect of such business. It is not the case of assessee that assessee maintained separate books of accounts as per section 11(4A). Being so, assessee can t be granted exemption under sec. 11 of the Act for both the assessment years. Grounds raised by assessee stands allowed for statistical purposes.

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• 2021 (11) TMI 306
  Claim of modification in salary income during the assessment proceedings - Assessee changing income and reducing income offered in the return of income without filing the Revised return of income - assessee has inadvertently included the higher income in the return of income filed and withholding tax - HELD THAT:- Contentions of the Ld.AR that that the assessee should not be made to pay the tax on higher salary but only actual salary has to be taxed - mistake on the part of the employee is not a wanton act but due to oversight the correct income could not be considered in the return of income filed. We found the submissions of the Ld.AR are realistic. The assessee should not be deprived of his legitimate claim and tax has to be levied on the income actually generated. We considering the overall facts, circumstances and judicial decisions are inclined to grant one more opportunity to the assessee to substantiate the claim. Accordingly, the disputed issue is restored to the file of the AO for limited purpose and the A.O shall examine and pass the order. We allow the grounds of appeal of the assessee for statistical purpose.

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• 2021 (11) TMI 305
  Understatement in the value of a flat sold - Addition u/s 43CA - assessee urged a preliminary ground that th provisions of section 43CA having introduced into the statute by Finance Act, 2013 w.e.f. 01-04-2014, would not be applicable to the transaction relating to the sale of a flat which was concluded upon registration on 23-04-2013, i.e. much before section 43CA came into effect - HELD THAT:- CIT-A doubted the genuineness of expenditure claimed,he has not made any direct disallowance of expenditure - allegation that some flats were sold at higher rate is vague and general in nature without bringing on record cogent material to demonstrate whether these flats sold by the assessee were identical in nature to Flat No.2. Moreo er, no enquiry has been conducted with the buyer of the flat to ascertain whether any on-money was paid by him for purchasing the flat. Without making any enquiry or bringing material on record to establish the fact that the assessee has received any amount over and above the declared sale consideration, no addition could have been made when it is accepted that section 43CA meant for such deemed addition, is not applicable to the subject transaction. Once CIT (Appeals) concluded that section 43CA was not applicable to the subject transaction, there is no reason for him to sutain the addition on different reasoning - no hesitation in deleting the addition - Ground raised by assessee allowed.

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• Customs

• 2021 (11) TMI 288
  Smuggling - Gold - terrorist offence - incarceration pending investigation and trial - infringement of right to life guaranteed under Article 21 of the Constitution - HELD THAT:- A nation s currency is legal tender brought out by the Central Bank of that nation, in our case, the Reserve Bank of India. The observation made by the Division Bench with respect to smuggling of other precious metals with a profit motive to find smuggling of gold having no distinctive status from those other precious metals is significant. Gold as was observed by the FATF is global currency and is a medium of exchange more so in India where there is a tendency to hoard that particular metal. In fact, even smuggling of gold and other precious metals which aims at destabilizing the economy would be covered under threats to economic security, as generally understood. The facts of the case as seen from Annexure-B indicates the activities of the accused having been first detected, when contraband was seized from the import cargo addressed to the Charge D Affaires at the Consulate General of the UAE, on 05.07.2020 at the Air Cargo Complex of Trivandrum International Air Port by the Customs [Preventive] Commissionerate, Cochin. A1 was first arrested, which led to the arrest of A2 to A4. The facts unearthed during investigation reveals a conspiracy entered into by A1 to A5 for facilitating smuggling through the diplomatic cargo addressed to the Consulate General of UAE. A1, with the knowledge and assistance of A2, to further the plans hatched, forged authorisation letters on behalf of the Consulate General and with the active connivance of the other accused carried out smuggling by clearing the contraband sent through diplomatic baggage and handed them over to the various accused - the charges alleged do not commend us to find the accused having any connection with any terrorist act under S.15, least of all, a threat to the economic security of the nation, which we have found; on an interpretation of S.15(1)(a)(iiia); is restricted to counterfeiting high quality notes and coins and any other material dealt with, towards that end. The appellants/accused shall be released on bail on their executing a bond for a sum of Rs. 25,00,000/- each with two solvent sureties each for the like-sum to the satisfaction of the Special Court - Application allowed.

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• 2021 (11) TMI 287
  Validity of exit order in terms of Rule 74 of the Special Economic Zone Rules, 2006 - Lease agreement - rent control provisions - dispute between the petitioner and the 4th respondent in connection with the lease - HELD THAT:- The 4th respondent - M/s. Zerone Consulting Private Limited, is a Unit inside the Infopark SEZ, Kakkanad engaged in IT services with LOA given in 2008. Ext.R4(a) is the LOA. The 4th respondent approached the office of the Development Commissioner with an application for exit order from the SEZ scheme under Rule 74 of the SEZ Rules, 2006. The same was considered by the 3rd respondent and passed Exts.P10 and P11 orders. A Unit may opt out of Special Economic Zone with the approval of the Development Commissioner and such exit shall be subject to payment of applicable duties on the imported or indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock. It is also stated in Rule 74 that if the unit has not achieved positive Net Foreign Exchange, the exit shall be subject to penalty that may be imposed under the Foreign Trade (Development and Regulation), Act, 1992. Rule 74(2) says about three conditions that is applicable on the exit of a unit. Similarly, other formalities are also mentioned in Rule 74 (3), (4) and (5). There is nothing in Rule 74 or in the Act 2005, which will give an opportunity of hearing to a co-developer while considering an application for exit order. The short point raised by the petitioner is that the prayer of the 4th respondent is not for getting an exit order. If there is any grievance to the petitioner regarding the arrears of rent, the petitioner is free to agitate the same in accordance to law, before the appropriate authority. But the petitioner cannot challenge Exts.P10 and P11 order, which according to me, is only an exit order and the co-developer of the 4th respondent has no role in it. Therefore, according to me there is nothing to be interfered with Exts.P10 and P11 - Petition dismissed.

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• 2021 (11) TMI 286
  Whether Bhabha Atomic Research Centre is the appropriate authority to declare the age of the subject product for the purpose of treating it as not an antique, as claimed by the petitioner? - HELD THAT:- Stand over to September 21, 2021.

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• 2021 (11) TMI 285
  Refund claim - rejection of refund on the ground that no appeal was filed against the Bills of Entry under Section 128 of the Customs Act, 1962, when the said Bills of Entry were re-assessed by way of amendment under Section 149 of the Customs Act, 1962 - HELD THAT:- The Revenue against the sanction of the refund which arose out of re-assessment of the Bills of Entry, filed appeal before the Commissioner (Appeals), and the Commissioner (Appeals) accepted the appeal by holding that since the appellants have not filed appeals against the Bills of Entry the refund is not legal and correct. The refund was not filed against the assessment of Bills of Entry but the Bills of Entry were admittedly re-assessed by the assessing officer in terms of Section 149 of the Customs Act, 1962. Once, the Bills of Entry was reassessed by the Revenue thereafter if neither side is aggrieved with the said re-assessment, it attained finality. In the present case, the Revenue admittedly, amended the Bills of Entry by re-assessing the same under Section 149 of the Customs Act, 1962. Once, the Bills of Entry has been re-assessed and the refund is arising out of it, there is nothing exist against which any appeal need to be filed. Therefore, the contention of the Revenue that appellant has not filed appeal against the Bills of Entry is absolutely incorrect. Since the refund arising out of re-assessment of Bills of Entry neither side has grievance against such re-assessment of Bills of Entry, refund is clearly permissible - Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 284
  Smuggling - appeal shall lie before the Tribunal under Section 129A or not - assessee should file the review petition in terms of Section 129DD of the Central Excise Act, 1944 or not - Baggage Rules, 2016 - HELD THAT:- Baggage Rules, 2016 defines personal effects to mean things required for satisfying daily necessities but does not include jewellery. So, when the jewellery on a person is itself excluded, the gold that was not worn but hidden, gets automatically excluded. Further, Section 129A(1)(a) makes it clear that no appeal shall lie to the Tribunal in respect of any order which relates to any goods imported or exported as baggage. The gold which is imported here having been excluded by the definition of personal effects under Baggage Rules ibid, automatically falls within the ambit of baggage. Thus, no appeal could be entertained by this forum. The appellant can only invoke Section 129DD if he is so advised and accordingly, this appeal is held not maintainable - appeal dismissed.

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• Law of Competition

• 2021 (11) TMI 304
  Reduction of the competition to its electors by creating indirect entry barriers into the profession of legal service - whether the Second Respondent/ Bar Council of India comes within the ambit of enterprise as per Section 2(h) of the Competition Act, 2002? - HELD THAT:- Undoubtedly, the definition of enterprise is very wide and the definition does not only cover those institutions connected with activities pertaining to goods but also covers activities relating to provisions of services of any kind, which gives a very broad connotation to the range of activities that can be covered in the definition of the services - any entity to come within the meaning of enterprise as per Section 2(h) of the Competition Act, 2002 that it is or has been engaged in any activity of the nature defined therein. Moreover, the activities mentioned in the Section 2(h) enterprise of the Competition Act, 2002 have to be Economic and commercial in character. Also that the words employed in preceding the words any activity reflect not only regularity and continuing of activities made mention of in the Section. It is crystalline clear that the Second Respondent/ Bar Council of India / Statutory Body has its primordial role to perform its duties and hence, this Tribunal without any haziness holds that the Second Respondent/ Bar Council of India is not an enterprise having any economic and commercial activity. The First Respondent/ Competition Commission of India are not of any economic and commercial/business activity and further that keeping in mind yet another fact that the Second Respondent/ Bar Council of India / Statutory Body, which is to perform its role as a Regulatory one, cannot be said by any stretch of imagination that the ingredients of Section 4 of the Competition Act, 2002 abuse of dominant position are attracted in the present case, with a view to consider the same, as opined by this Tribunal - the view taken by the First Respondent/ Competition Commission of India in the impugned order dated 20.01.2021 in Case No.50 of 2020 stating that there existed no prima facie case as per Section 4 of the Competition Commission Act, 2002, not granting any interim relief as per Section 33 of the Act and ultimately rejecting the case are free from any legal flaws. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2021 (11) TMI 283
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- It is quite evident from the Notice of Default cum Demand dated 14.10.2019 addressed to the Respondent by the authorised signatory of the Appellant Outstanding Receivables on the due date of USD 37,585.00 together with interests, default interest, overdue fees and all other charges were claimed till the date of actual payment, to be paid by the Respondent / Concord Creations (India) Pvt. Ltd. within three days from the date of this letter. In the instant case, because of the fact that the advances made by the Appellant / Financial Creditor to the Corporate Debtor was supported by the Irrevocable Undertaking for Recourse and as such, it is within its ambit to demand the repayment from the Corporate Debtor etc. Added further, it cannot be forgotten that the invoices purchased and assigned to the Appellant / Financial Creditor/Petitioner were with Recourse and that the said advances will squarely come within the definition of Section 5(8)(e) of the I B Code, 2016. The Adjudicating Authority in the impugned order had observed that the Respondent was not an Insolvent Company and that it was of the considered view that Respondent should be given some more time to repay the debt etc. had directed the Respondent / Corporate Debtor to repay the balance debt or the amount as settled with the Appellant within a period of six months failing which the Appellant / Petitioner would be at liberty to file a fresh petition for admission - this Tribunal interferes with the impugned order, since it suffers from patent legal infirmities. Appeal allowed - decided in favor of appellant.

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• Service Tax

• 2021 (11) TMI 303
  Refund of service tax - time limitation - refund claim filed more than 3 months in a single claim application - registration with department not availed - for the claim period no ST-3 return was filed - services exported by the appellant was not used outside India - HELD THAT:- On a close reading of the provisions of Rule 5 of CENVAT Credit Rules, 2004, it would clearly reveal that more than one claim application cannot be filed in a quarter but such claim is not restricted to be filed only for a quarter i.e. for 3 months in one application - Since, refund can be claimed within a period of one year and Notification No. 5/2006-C.E. (NT) dated 14.05.2006 has only provided additional benefit to the Export Oriented Units and units having more than 50% export turnover to file such refund claim in each calendar month, the use of word may in the said notification has made it discretionary to the claimant to choose filing refund every month as a privilege granted to the exporter but the same cannot be treated as a mandatory requirement for filing in one month or three months without which refund claim should be refused - answered in the affirmative and in favour of the appellant. Rejection on the ground that the appellant did not avail registration with the department for the period during which invoices were raised - HELD THAT:-The registered premises is to be situated within the territorial jurisdiction of the Deputy/Assistant Commissioner before whom Form A application was to be filed. In the case of the applicant, as reveals from case record and admitted by both the parties, appellant got registered with retrospective effect from 11.08.2009 and the first refund application was filed on 30.08.2009 i.e. after the registration was completed. It is, therefore, immaterial to examine the date of invoices if raised before the registration date as there is no such stipulation or conditionality in Notification No. 5/2006-C.E. (NT) or to say Circular No. 120/01/2010-ST. - Further in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] it has been clearly held that registration is not a requirement for filing refund claim - refund cannot be denied on this ground. Filing of ST-3 returns periodically - HELD THAT:- Admittedly, this is a procedural lapse since provider of output service availing CENVAT credit shall submit half-yearly returns in the form specified in the notification but there is no express provisions that in the event of non-filing of such returns, refund will be rejected except for violation of safeguards, conditions and limitations set out in the Appendix of Notification issued under Rule 9 for exporters. This being the facts on record and legal position, refund cannot be disallowed on this grounds. Rejection on the ground that the services exported by the appellant was not used outside India - HELD THAT:- It can be said that during the relevant period, as per Export Service Rule, 2005 if service recipient is situated outside India and the consideration has been receipt in convertible foreign exchange it would satisfy the definition of export of services - refund cannot be denied on this ground. Rejection also on the ground that some of the input services like rent-a-cab and club or association services were not having any nexus to export - HELD THAT:- Those credits were valid credits which were required to be refunded. Rejection on the ground that some invoices raised in the old address and some were time barred - HELD THAT:- The address mentioned in the invoice is immaterial when the same is raised in the appellant s name when the other address is appellant s own old premises concerning which no withdrawal of registration of that premises is available on record, except that a new registration is taken by the appellant for another location. The partially time barred refund claim for the period October, 2009 to March, 2010 which has been rejected by the Assistant Commissioner in his order dated 09.07.2012 and confirmed by the Commissioner (Appeals) needs no interference by this Tribunal. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 282
  Levy of service tax - Residential Complex or not - construction of individual house/villas in residential complex having common areas, common address, common facilities etc. - doctrine of unjust enrichment - HELD THAT:- The provision of Section 65(91a) of the Finance Act, 1994 which contemplates about a building or buildings having more than 12 residential units. In the present case, each building is not having more than 12 residential units. On the other hand, individual sanction plan has been given by the local authority. Each being the residential unit, the attention drawn to the explanation by the learned counsel for the revenue also would be of little assistance to the revenue, even if we consider the residential unit in the background of the building or buildings, the residential units constructed by the respondent/assessee would not certainly fall under Section 65(91a) of Finance Act, 1994. Doctrine of unjust enrichment - HELD THAT:- As regards the doctrine of unjust enrichment plea raised by the assessee/respondent that only 40% of tax was collected under Karnataka Value Added Tax and not Service Tax on the purchase value as per the agreement entered into with the purchasers and limitations under Section 11B of the Central Excise Act would not be applicable to the facts of the case has been extensively analysed by the CESTAT and a finding has been recorded that no contracts were entered with respect of collection of service tax and there is only mention of 40% VAT collection in the agreements. Accordingly, it has been held that the principles of unjust enrichment and the limitations under Section 11B of the Central Excise Act would also be not applicable. The substantial question of law in favour of the assessee and against the revenue - appeal dismissed.

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• 2021 (11) TMI 281
  Refund of service tax paid under protest - assessment proceedings were not challenged - service tax was not payable by authorities concerned in an appeal of another assessee of the very same transaction - HELD THAT:- Learned commissioner has recorded a specific finding that the payment made by the appellant was not voluntary and is under protest and also that the application for refund is not barred by limitation. The aforesaid findings of the learned commissioner have not been challenged by the department and therefore it attained finality. As per the impugned order of learned Commissioner, tax has been collected in accordance with law i.e. under the enactment itself and no amount is refundable unless a refund can be claimed in terms of the stature/enactment. It is settled position that if the payment made by the assessee is not for any services rendered by him, the amount collected by Revenue as service tax is without authority of law and cannot be termed as tax even and can t be retained by them. Where there is no levy of service tax, amount wrongly paid cannot partake the character of service tax . The authority concerned is duty bound to refund such amount as retention of such amount would be hit by Article 265 of the Constitution of India which bears the heading Taxes not to be imposed save by authority of law and lays down that no tax shall be levied or collected except by authority of law. So the act of the authorities by keeping the deposit is directly in conflict with Article 265. When the amount deposited by the appellant is not a tax and merely a deposit, there is no question of applying the provisions of the Finance Act for its refund. The refund provisions should be interpreted in a reasonable and practical manner and when warranted, liberally in favour of the assessee - appeal allowed.

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• 2021 (11) TMI 280
  Utilization of CENVAT Credit for payment of service tax - construction/works contract services - renting of immovable property services - period January, 2015 to September, 2015 - extended period of limitation - penalties - HELD THAT:- The Department never issued any show cause notice for disallowance of cenvat credit taken, which has been disclosed in the Returns filed before the Department and further, proper records were maintained. Further, it is found that once the credit has been taken in terms of Rule 3 of Cenvat Credit Rules. The same has been objected to by the Department under Rule 14 of Cenvat Credit Rules only on the utilisation of such credit for payment of output service tax, in accordance with Rule 3(4) (e) of Cenvat Credit Rules. It is further noticed that Rule 14 has been invoked only on the event of utilisation of accumulated cenvat credit. Extended period of limitation - Penalties - HELD THAT:- The appellant has rightly utilised this accumulated cenvat credit for payment of output service tax of Rs. 3,98,150/-, which has been objected to by the Revenue and further demand on this score is set aside - extended period of limitation is not attracted in the facts and circumstances as the issue being wholly of interpretation. Accordingly, penalties imposed under Rule 15 of CCR as well as under Section 78 of the Finance Act are set aside. Matter remanded to the adjudicating authority for verification and to allow, if found eligible - appeal allowed by way of remand.

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• Central Excise

• 2021 (11) TMI 302
  Rejection of rectification petition filed by the petitioner - process amounting to manufacture or not - processing of raw fish, manufacture of frozen fish and its export - HELD THAT:- It is noticed that Ext.P1 is an order of the jurisdictional Tribunal relating to the petitioner on an identical issue for an earlier assessment year. When identical issues are raised, that too by the same assessee for a subsequent year, the order of the jurisdictional Tribunal, which has become final too, is bound to be adhered to by the authorities subordinate to the Tribunal. Judgments or orders inter parties cannot be ignored. Viewed in that perspective, Ext.P1 can primarily be seen as a binding decision for the third respondent. When binding decisions are pointed out and the same are not relied upon by the authority to render its decision, it will tantamount to an error apparent on the face of the record, as held in HONDA SIEL POWER PRODUCTS LTD VERSUS COMMISSIONER OF INCOME TAX, DELHI [ 2007 (11) TMI 8 - SUPREME COURT] - Hon ble Supreme Court had observed in the said judgment that the Tribunal in that case was justified in exercising the power under section 254(2) of the Income Tax Act, 1961, when it was pointed out to the Tribunal that the judgment of the coordinate bench was mistakenly omitted to be considered when the material was available on record. Acknowledging the said mistake it was held that the omission amounts to an error apparent on the face of the record enabling rectification. Similar orders have been passed by other High Courts as well and the aforesaid proposition holds the field even now. The observation of the 3rd respondent in Ext.P9 that if the contention of the petitioner is accepted it will amount to a revision and not a rectification, is incorrect - Omitting to consider the order of a jurisdictional Tribunal by the subordinate authorities, when the same was brought to the notice of the authority, is certainly a ground for rectification. Therefore, refusal of the 3rd respondent to consider the petition for rectification filed as Ext.P8 and Ext.P8(a) is wrong in law. The 3rd respondent is directed to reconsider Ext.P8 and Ext.P8(a) petitions for rectification and pass fresh orders thereon after affording an opportunity of being heard to the petitioner - petition allowed.

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• 2021 (11) TMI 301
  Refund of duty paid in excess - captive consumption - applicable valuation rules - manufacture of cement and cement clinker - The appellants were also using the manufactured cement for their own consumption - The appellant undertook the discharge of liability for the cement for own consumption in terms of Rule 8 with effect from 01.04.2011. Since the Central Excise duty as was paid on the basis of MRP and prevailing local market rate was higher than the valuation in terms of Rule 8, the appellant filed refund claim. HELD THAT:- The moot controversy to be adjudicated in the facts and circumstances is as to whether any change in the definition of Industrial Consumer under Rule 3 of Legal Metrology (PC) Rules, 2011 as came into effect from 01.04.2011 has caused any change as far as the duty liability of appellant herein is concerned. No doubt due to this change, the appellant can be categorised industrial consumer but still he is consumer of such product as has been manufactured by him, i.e. the appellant is using the cement manufactured by him but for the construction of his own premises. This admitted fact is sufficient to hold that Valuation Rules, 2008 shall not be applicable to the appellant s case. It becomes clear that the appellant still fall under the said Rule if and only if manufactured cement is used by him for manufacture of his another industrial product. From the above discussion, I hold that the applicability of Rule 8 of Valuation Rules has rightly been denied by the Adjudicating Authorities below. The appellant is therefore, not entitled for refund, claiming the said applicability. Decided against the assessee.

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• 2021 (11) TMI 300
  Interest on refund - claim of interest from the date of pre-deposit made against stay order - HELD THAT:- The only interpretation of section 11BB can be that interest under the said section becomes payable only on expiry of a period of three months from the date of receipt of application under sub section (1) of section 11B of the Act. Perusal to section 11B makes it clear that application for claiming the refund of any duty or interest it made before the expiry of one year from the relevant date, proviso thereof makes it clear that the said period of limitation shall not apply in case the duty has been paid under protest. Relevant date is defined under section 11B oc CEA, 1944 and Rule 5 (B) of Central Excise Rules itself. Sub clause (e) and (c) are applicable in the present case for the purpose of relevant date for the sole reason that the duty was paid consequent to the order of Tribunal. The refund claim was sanctioned within three months from the date of application filed by the appellant for the said claim. - There is no delay in grant of refund consequently, no question arises for grant of interest. The question of interest from the date of deposit does not at all arises also for the reason that there is no apparent protest of the appellant while depositing the amount in question which otherwise was deposited pursuant to the said order of this Tribunal.

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• 2021 (11) TMI 299
  Reversal of CENVAT Credit - appellant manufactures both dutiable goods and exempted goods. - Common inputs - The appellant has not availed Cenvat credit on inputs used exclusively in manufacture of exempted goods. - Not only is the furnace oil a common input procured jointly for all the products, it is also used to generate steam which is further used for manufacture of dutiable as well as exempted products. The steam is used both for extraction of herbs and for production of sugar syrup. The sugar syrup is in turn used for manufacture of goods dutiable and exempted products. HELD THAT:- The retrospective amendment made by Finance Act, 2010 allowed the assessee to reverse proportionate amount of Cenvat credit. They had to file a declaration, which the appellant did. The appellant reversed the amount with interest. The appellant has, according to the learned counsel, debited the amount of Cenvat credit accordingly. The quantity of dutiable and exempted products manufactured by the appellant are a matter of record. The quantity of furnace oil attributable to unit quantity of each of those products is a technical matter. The appellant has used the technical report to debit and there is nothing in the Commissioner s order to show that the calculations were wrong and more or less of furnace oil was attributable to the production of exempted goods and if so, by how much. Whether the appellant can be compelled to choose one of the options under Rule 6 of Cenvat Credit Rules, 2004. - HELD THAT:- It is not permissible for the Department to foist an option under Rule 6 upon the assessee as has been done in the impugned orders. For this reason also the impugned orders cannot be sustained and need to be set aside. We also note that there is no provision in the Central Excise Act or Cenvat Credit Rules, 2004 whereby an amount under Rule 6(3) can be recovered from the assessee. Section 11A of the Act provides for recovery of duty. Rule 14 of the CENVAT credit Rules provided for recovery of irregularly availed CENVAT credit. Any demand under Rule 14 of CENVAT Credit Rules, 2004 for recovery of an amount under Rule 6(3) therefore, is without the authority of law and hence needs to be set aside regardless of the merits of the case. Since the confirmation of the demands cannot be sustained under Rule 6(3), the demand for interest and imposition of penalty also need to be set aside.

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• 2021 (11) TMI 298
  Recovery of CENVAT Credit - finished goods returned back, on rejection by their customers on detection of certain defects - rejected goods, beyond repair - levy of interest u/r 14 of CER read with section 11AB of CEA - levy of penalty u/r 15 (2) of CENVAT Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1944 - HELD THAT:- There seems to be no dispute on the issue involved in the matter. For the past period, in the appellants own case, KALYANI FORGE LIMITED VERSUS COMMISSIONER OF C. EX., PUNE-III [ 2006 (12) TMI 338 - CESTAT, MUMBAI] referred to by the authorized representative, tribunal, while dismissing the appeal filed by the appellants, held that the process of subjecting the returned goods to further inspection and test would result in process of manufacture of goods returned to the customer once again on payment of duty. Reliance also placed in the case of COMMISSIONER, CENTRAL GOODS AND SERVICE TAX COMMISSIONERATE VERSUS M/S INTERNATIONAL TOBACCO CO. LTD., R.K. GUPTA [ 2019 (12) TMI 336 - ALLAHABAD HIGH COURT] , where it was held that Clearly, the goods were not brought back to the factory by the assessee to be re-made , refined , re-conditioned , or for any other reason as contemplated in Rule 16(1) of the Central Excise Rules, 2002. The transactions were devices to illegally avail Cenvat credit. The intent to illegal avail Cenvat credit and escape duty was fully established. There are no merits in the submissions made by the appellants challenging the penalty imposed on them - appeal dismissed.

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• 2021 (11) TMI 297
  Method of Valuation - prototype vehicles - goods cleared from the factory on payment of duty under self invoice on the comparable value of the similar vehicle applying Section 4(1)(b) of Central Excise Act, 1944 and Rule 4 of Central Excise Valuation Rules, 2000 - case of the department is that in the transaction of prototype since it is not sale value should be determined in terms of Rule 8 of the Central Excise Valuation Rules, 2000 - HELD THAT:- The fact which is not under dispute is that the appellant have manufactured prototype vehicle and cleared for various testing on self consumption basis, the said motor vehicle was not used for consumption by the appellant or on his behalf for manufacture of any other article which is prime condition to invoke Rule 8. Therefore Rule 8 clearly not applicable to the facts of the present case. This Tribunal considering the same issue in the case of COMMISSIONER OF GST CENTRAL EXCISE CHENNAI VERSUS M/S. MAHINDRA MAHINDRA LTD. [ 2018 (11) TMI 1136 - CESTAT CHENNAI] held that the value of comparable vehicle shall apply in terms of Rule 4 of Central Excise Valuation Rules, 2000 - the facts are identical accordingly, the value determined under Rule 4 of the Central Excise Valuation Rules, i.e. price of comparable goods shall apply, accordingly, the valuation arrived by the appellant in the facts of the present case is correct and legal. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2021 (11) TMI 296
  Principles of natural justice - refund claim - applicability of sub-rule (2) of Rule 11 of TNVAT Rules - HELD THAT:- A careful perusal of the impugned orders reveals that it does not mention that personal hearing was granted. To be noted, 03.09.2021 notices were served on the writ petitioner / dealer on 04.09.2021, excluding 04.09.2021, 7 days elapsed on 11.09.2021 and the impugned orders have been made one working day later on 13.09.2021. Therefore, the likelihood of personal hearing if at all could have been only on 12.09.2021, but the law is well settled that an impugned order cannot be improved by filing a counter affidavit. There is no difficulty in accepting the submission of learned Revenue counsel that it is not statutorily imperative to grant personal hearing with regard to refund applications under Section 18 (3) read with Rule 11 (2) of TNVAT Act under TNVAT Rules respectively. However, in this case, the respondent has chosen to grant a personal hearing to the writ petitioner at his discretion. Therefore, this Court is of the view that it is only appropriate that the writ petitioner is granted the opportunity of personal hearing. The language of sub-Rule (2) of Rule 11 of TNVAT Rules is clear that an applicant qua refund should annex the invoices or bills related to purchases along with this refund application and personal hearing is not statutorily imperative and therefore this order will not serve as a precedent in these aspects of the matter. In the case on hand, the respondent has chosen to call upon the refund applicant to produce documents and has also chosen to give an opportunity of personal hearing and therefore, this order is being passed. Impugned orders are set aside solely on the ground that personal hearing has not been granted to writ petitioner though pre-impugned order notices offer one to the writ petitioner and the writ petitioner could have produced the documents sought for though pre-impugned notices give such an opportunity - Petition disposed off.

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• Indian Laws

• 2021 (11) TMI 295
  Reduction in the rate of interest - disallowance of supervision charges - patent illegality ground or not - HELD THAT:- It is an admitted position that both, the Original Agreement dated 30th August, 1979 and the renewed Agreement dated 30th April, 1992 included a clause relating to levy of supervision charges . Most of the terms and conditions of the Original Agreement dated 30th August, 1979 and the Renewed Agreement dated 30th April, 1992 are materially the same. Clause 6(b) of the Agreement dated 30th August, 1979 is identical to Clause 5(b) of the Agreement dated 30th April, 1992. The said clauses stipulate that expenses incurred by the State Government towards supply of Sal seeds were to include amongst others, supervision charges . Clause 8 of the first Agreement is identical to Clause 7 of the second Agreement which stipulates that supply of Sal seeds to the respondent-Company would be against advance payment. There is also a similarity between Clause 9(ii) of the Agreement dated 30th July, 1979 and Clause 8(ii) of the Agreement dated 30th April, 1992, that require the respondent-Company to take delivery of the collected Sal seeds within a stipulated time and prescribe that in case of failure to do so, supervision charges and godown rent shall be payable at a fixed price of 0.05p. [five paise] per quintal per day. It remains undisputed that though the appellant-State did raise an objection before the Arbitral Tribunal on the claim of the respondent-Company seeking deduction of supervision charges, for which it relied on Clause 6(b) of the Agreement and the Circular dated 27th July, 1987 to assert that recovery of supervision charges along with expenses was a part and parcel of the contract executed with the respondent- Company, the said objection was turned down by the learned Sole Arbitrator by giving a complete go by to the terms and conditions of the Agreement governing the parties and observing that there is no basis to admit any such indirect expenses . The Circular dated 27th July, 1987 issued by the Government of Madhya Pradesh that provides for imposition of 10% supervision charges on the amounts calculated towards the cost of the Sal seeds in the expenditure incurred, was also ignored. Once the appellant-State had taken such a ground in the Section 37 petition and it was duly noted in the impugned judgment, the High Court ought to have interfered by resorting to Section 34(2A) of the 1996 Act, a provision which would be equally available for application to an appealable order under Section 37 as it is to a petition filed under Section 34 of the 1996 Act. In other words, the respondent-Company cannot be heard to state that the grounds available for setting aside an award under sub-section (2A) of Section 34 of the 1996 Act could not have been invoked by the Court on its own, in exercise of the jurisdiction vested in it under Section 37 of the 1996 Act. Notably, the expression used in the sub-rule is the Court finds that . Therefore, it does not stand to reason that a provision that enables a Court acting on its own in deciding a petition under Section 34 for setting aside an Award, would not be available in an appeal preferred under Section 37 of the 1996 Act. Existence of Clause 6(b) in the Agreement governing the parties, has not been disputed, nor has the application of Circular dated 27th July, 1987 issued by the Government of Madhya Pradesh regarding imposition of 10% supervision charges and adding the same to cost of the Sal seeds, after deducting the actual expenditure been questioned by the respondent- Company. The failure on the part of the learned Sole Arbitrator to decide in accordance with the terms of the contract governing the parties, would certainly attract the patent illegality ground , as the said oversight amounts to gross contravention of Section 28(3) of the 1996 Act, that enjoins the Arbitral Tribunal to take into account the terms of the contract while making an Award. The said patent illegality is not only apparent on the face of the Award, it goes to the very root of the matter and deserves interference. It has permitted deduction of supervision charges recovered from the respondent-Company by the appellant-State as a part of the expenditure incurred by it while calculating the price of the Sal seeds, is quashed and set aside, being in direct conflict with the terms of the contract governing the parties and the relevant Circular - the present appeal is partly allowed. The present appeal is disposed of.

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• 2021 (11) TMI 294
  Dishonor of Cheque - compoundable offences or not - composition of cost of 15% of the dishonoured cheque value - offence punishable under Section 138 of the Negotiable Instruments Act - HELD THAT:- In the present case the parties have settled the matter after the judgment passed by the Appellate Court. Hence as per the guidelines framed by the Hon ble Apex Court, the composition should be allowed by imposing cost of 15% of the dishonoured cheque value. But considering that fact that the petitioner has been taken into custody and has spent more than two months in judicial custody in the meanwhile, the imposition of cost of Rs. 1,000/- would be in the interest of justice - the said cost should be deposited in High Court Bar Association Advocate s Welfare Fund. In course of hearing when this amount was suggested to the counsel for the petitioner he has submitted that he will deposit the said amount and file the receipt in course of the day and has in fact filed the receipt. That as the matter has been settled between the parties and the compensation amount has been paid to the complainant Opp party No.2, in full and final settlement of the dispute, the compounding of the offence under Section -138 of the N.I.Act is allowed and the conviction of the petitioner under Section 138 of N.I. Act and the sentence to undergo simple imprisonment for one year and to pay compensation of Rs. 2,50,000/- imposed, is set aside. Application allowed.

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• 2021 (11) TMI 293
  Dishonor of Cheque - insufficiency of funds - offence of criminal breach of trust - delay of more than one year in lodging the FIR or not - fulfilment of ingredients of Sections 406 and 420 of the IPC, to enable the Learned Trial Court to accordingly convict the Respondent No.1 - reversal of order of Conviction, correct or not - HELD THAT:- Admittedly, entrustment has been established in the matter at hand, yet it is trite to state that mere entrustment cannot constitute the offence under Section 405 of the IPC. To establish an offence under this Section, the fact of entrustment of the property as well as any or more of the ingredients detailed above have to be established by the Prosecution, the gist being a dishonest intention on the part of the Accused. The burden of proving such dishonest intention is on the Prosecution, which can justifiably be inferred from the attending circumstances, the conduct of the Accused and steps taken by him - It was the duty of the Prosecution to have investigated as to whether there was a Chairman of the Indian Chamber of Commerce and not taken the Statement of P.W.14 as gospel truth, based on Exhibit 23, the response of P.W.14. Further, no Witness was ever produced from the Syndicate Finance Pvt. Ltd. to prove that the Respondent No.1 had ever deposited or not deposited any amount by way of Promoter s Capital Contribution and no investigation appears to have been conducted on this aspect. The onus would shift on the Respondent No.1 only if the Prosecution had conducted investigation as to whether the money taken by the Respondent No.1 had been deposited and on concluding that no amount was deposited by the Respondent No.1 in any of the Financial Institutions mentioned above, the onus would fall on the Respondent No.1 to prove how he had misappropriated the amount. The Prosecution cannot shirk its burden of proving its case beyond a reasonable doubt nor foist such responsibility on the Accused. Hence, the ingredients of Section 405 of the IPC, have clearly not been established. The entire matter of the Appellant appears to pivot around the dishonouring of the Cheque Exhibit 15, for a sum of Rs. 10,00,000/- only, issued by the Respondent No.1 to the Appellant on 30.12.2014, on the ground of insufficiency of funds in the Account of the Respondent No.1 pursuant to which, he lodged the FIR Exhibit 16. It is worth noting that Exhibit 1 was executed between the parties and mere breach of the terms of Exhibit 1 ipso facto does not constitute the offence either of Criminal breach of trust as provided under Section 405 of the IPC or of cheating under Section 420 of the IPC nor is mens rea deducible. It is clear that the Prosecution has failed to establish the ingredients of Sections 405 and 420 of the IPC and inevitably, in the absence of any such evidence, the Learned Trial Court could not have convicted the Respondent No.1 - no error arises in the findings of the Learned First Appellate Court, which has correctly reversed the order of Conviction of the Learned Trial Court. Appeal dismissed.

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• 2021 (11) TMI 279
  Dishonor of Cheque - insufficiency of funds or not - authorised signatory to the cheque was in control of the day to-day affairs of the said company at the time of issuance of the cheques or not - HELD THAT:- A perusal of the complaint filed by the respondent herein reveals that the said complaint has been made u/s. 138 and 142 of the Negotiable Instruments Act only against the petitioner herein. The companies have not been made as party to the complaint, though the cheques have been issued by the authorised signatory on behalf of the companies. In the case on hand, a perusal of the complaint reveals that the petitioner alone is shown as party to the said complaint and it is the clear averment in the complaint that he is the authorised signatory. Therefore, it is crystal clear that the petitioner, in his capacity as authorised signatory of the company, had issued the cheques, which, in turn, got dishonoured, resulting in the present proceeding. However, without making the respective companies from which the cheques have been issued, the complaint against the petitioner alone cannot be proceeded with. Without arraigning the company as an accused, which is imperative, no prosecution could be maintained against the petitioner. Once this Court has unambiguously arrived at a conclusion that the present proceeding initiated against the petitioner has no legs to stand in view of the companies not having been arrayed as a party, the ancillary contentions raised by the petitioner does not require any consideration as the whole prosecution initiated against the petitioner falls down like a pack of cards in the absence of the companies being arrayed as accused. Petition allowed.

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• 2021 (11) TMI 278
  Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - Acquittal of accused - presumption of innocence or not - HELD THAT:- It is well settled by catena of decisions that an appellate Court has full power to review, re-appreciate and consider the evidence upon which the order of acquittal is founded. However, the Appellate Court must bear in mind that in case of acquittal, there is prejudice in favour of the accused, firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reaffirmed and strengthened by the trial Court. In the case under NI Act, the cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability. Further, explanation to this section defines the debt and other liability to mean a legally enforceable debt or other liability. In this context, after due appreciation and evaluation of the evidence on record, the learned trial Judge has come to such a conclusion that the debt cannot be said to be legally enforceable debt and the complainant has failed to prove otherwise. Eventually, the learned trial Judge has opined that it cannot be overruled that the cheque was given for security. Further, the respondent - accused has also examined independent witnesses and considering their depositions in detail, the learned trial Judge has come to the conclusion that defence of accused is probable. In the overall facts and circumstances of the case, the learned trial Judge has come to the conclusion that the debt cannot be said to be the legally enforceable debt, which is sine qua non in such matters and the complainant has failed to prove the same beyond reasonable doubt. The presumption Under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the instant case, the accused has succeeded in rebutting the presumption, showing preponderance of probability by leading evidence and hence, onus shifts upon the complainant to prove otherwise, however, as said earlier, the complainant has failed to prove that the cheque was drawn towards legally enforceable debt - when the respondent - accused has succeeded in rebutting the presumption, the learned trial Judge has rightly come to the conclusion that the said provision would be of no help to the complainant. It transpires that the complainant has failed to prove the case against the accused beyond reasonable doubt inasmuch as the ingredients of the offence alleged are not fulfilled. The Court has gone through in detail the impugned judgment and order and found that the learned trial Judge has meticulously considered the depositions of all the witnesses and came to such a conclusion and in the considered opinion of this Court, the learned trial Judge has rightly come to such a conclusion, which do not call for any interference at the hands of this Court. The complainant has failed to bring home the charge against accused for want of sufficient material - Appeal dismissed.

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• 2021 (11) TMI 277
  Dishonor of Cheque - misuse of disputed cheque - rebuttal of presumption or not - Section 138 of NI Act - HELD THAT:- This Court finds that the respondent no. 2 has specifically averred that the applicant had borrowed money from her through her husband and relatives and for discharging the liability, the disputed cheque was given by the applicant. Much emphasis has been laid on the alleged agreement executed by the applicant and husband of respondent no. 2 to point out that, the cheque was given to husband of respondent no. 2. In the facts of the present case, the respondent no. 2 has specifically averred in the complaint that the money was lent to applicant by her through her husband and relatives. When cheque was presented for the collection, the name of present applicant as payee was written on the cheque. The applicant being a drawer of the cheque, has not denied his signature - It is settled law that once the accused admitted a signature on the cheque in question, the presumption under Sections 118 and 139 of the NI Act is to be drawn in favour of the complainant. Thus, as per Section 118(g) of the NI Act, the holder of cheque is presumed to be holder in due course and accused has to prove that the cheque was not issued to the complainant. The present complaint is maintainable by the payee of the cheque, i.e. respondent no. 2. Whether she is not holder in due course of the cheque in question, is an aspect which cannot be pre-judged at this initial stage and is required to be considered after the evidence is recorded. Defence regarding legally enforceable liability or debt cannot be examined at this stage. The issue raised by the applicant in the present petition requires evidence, which cannot be appreciated, evaluated or adjudged by the High Court under the powers vested under Section 482 of the Code. There is no any error or infirmity in the view taken by the revisional court as well as the trial Court while issuing the process - Petition dismissed.

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• 2021 (11) TMI 276
  Dishonor of Cheque - issuance of notice u/s 138 of NI Act or not - HELD THAT:- Admittedly notice as required under Section 138 of the Negotiable Instrument Act had not been issued to the petitioners. There is no averment that they are in-charge of the day-to-day activities of A-1. The cheque had not been issued by A-1. The cheque had been issued by A-4 in his personal capacity from and out of his bank account. It must be very specifically stated in the complaint that the petitioners were in-charge of the day-to-day activities of A-1. It has not been so stated in the instant complaint. The cheque was issued by A-5 from and out of his personal account. It had not been issued by the present petitioners/A-2 and A-3. The advocate notice was not issued to the present petitioners/A-2 and A-3. There has been no compliance of the stipulations under Section 138 Negotiable Instruments Act 1881. Petition allowed.

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• 2021 (11) TMI 275
  Dishonor of Cheque - matter proceeded in summary triable manner or not - cross-examination by defence side or not - HELD THAT:- The applicant had given an application vide Exh. 38 before the trial court under section 236 of the Cr.P.C. requesting the court for de novo trial as the plea was recorded by the predecessor Magistrate and trial could not be concluded. Further, it appears that the trial court after hearing both the parties came to the conclusion that the plea was recorded under section 251 of the Code of Criminal Procedure i.e. as per summons trial procedure and thereafter, the complainant is examined. Thereafter, he was cross-examined by the respondent no. 2. Further statement was also recorded of the respondent no. 2. The trial court has held that the matter was not proceeded in summary triable manner. It appears that by not applying the ration laid down in the case of Nitinkumar Saventilal, learned trial court has rejected the application. The deposition of the complainant was also brought on record which speaks that he was examined but unfortunately right to cross-examine was closed by the Court and thereafter bank witness was also examined and such witness was cross-examined by the defence side. And thereafter, at the request of the complainant, further statement of the respondent no. 2 was recorded. The case was tried by the Metropolitan Court as summons triable case as provided under the provisions of Code of Criminal Procedure. It further appears that during the entire trial no objection was raised by the accused in the trial and after completing recording evidence from prosecution, the entire trial, an application Exh. 38 was submitted by the accused persons with a request to record the plea under section 326 of Code of Criminal Procedure. The Honourable Court has held in Criminal Appeal No. 968-971 of 2013 that, the evidence in that case was recorded in full and not in a summary manner and therefore the prayer of the accused persons cannot be accepted in the present case also when the plea was recorded under section 256 of the Code of Criminal Procedure - As the matter is pending before the trial court since 2008 and was fixed at the stage of final arguments, the learned Metropolitan Magistrate shall proceed with the matter and decide the same within a period of four months from the date of receipt of this order. Application disposed off.

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