TMI Tax Updates - e-Newsletter
November 19, 2020

Case Laws in this Newsletter:

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

Articles

1. RBI Ease of Doing Business Initiatives (under FEMA)

   By: CSLalit Rajput

News

1. Telangana decides to go for Option-1 to meet the GST implementation shortfall

Notifications

GST - States

1. 94/GST-2 - dated 17-11-2020 - Haryana SGST

Notification to make filing of annual return under section 44 (1) of HGST Act for F.Y. 2019-20 optional for small taxpayers whose aggregate turnover is less than ₹ 2 Crores and who have not filed the said return before the due date under the HGST Act, 2017

2. 93/GST-2 - dated 17-11-2020 - Haryana SGST

Notification to prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year under the HGST Act, 2017

IBC

3. IBBI/2020-21/GN/REG067 - dated 13-11-2020 - IBC

Insolvency and Bankruptcy Board of India (Liquidation Process) (Fourth Amendment) Regulations, 2020

4. IBBI/2020-21/GN/REG065 - dated 13-11-2020 - IBC

Insolvency and Bankruptcy Board of India (Information Utilities) (Amendment) Regulations, 2020

5. IBBI/2020-21/GN/REG 066 - dated 13-11-2020 - IBC

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS/CIR/P/2020/232 - dated 17-11-2020

Amendments to guidelines for preferential issue and institutional placement of units by a listed InvIT

Customs

2. Instruction No. 19/2020 - dated 18-11-2020

Imports from North Korea (KP)/Exports to North Korea(KP)

Highlights / Catch Notes

GST

• BCCL Liable for GST Under Reverse Charge for Services Imported via MARC Agreement, Not the Appellant.

  Case-Laws - AAAR : Levy of GST - reverse charge mechanism - supply of service to BCCL in terms of MARC - import of service or not - it is amply clear that the service is being provided by the appellant’s foreign entity. Contrary to any material finding in the order of the Advance Ruling, it is clear beyond doubt that the conditions of import are satisfied in the present case. - The recipient of services (i.e. BCCL) is liable pay service tax and not the appellant - AAAR
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• GST Rate on Micafunign Sodium Set at 5%: Appellate Authority Overturns AAR Ruling Based on Drug Usage.

  Case-Laws - AAAR : Classification of goods - rate of GST - sale of Micafunign Sodium by the DTA unit of the applicant - The Customs Notification is worded in the same manner as the GST rate Notification. We therefore disagree with the findings of the lower Authority and hold that in this case, the usage of the drug is the basis on which the concession has to be given - The ruling of AAR set aside. - Rate of GST is 5% - AAAR
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• Court Orders IGST Refund and Interest Processing Within 45 Days; Officer Faces Rs. 25,000 Penalty for Delay.

  Case-Laws - HC : Refund of IGST - Let this claim of refund and interest thereon be processing within a period of 45 days from the date of receipt of the judgment. - In case no action is taken, the officer concerned is liable to pay cost of ₹ 25,000/-, which will be recovered from the salary of the officer. - HC
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Income Tax

• Exemption u/s 10(34) upheld: Investor entitled to dividend income exemption, conditions apply to venture capital undertaking.

  Case-Laws - AT : Disallowance of exemption claimed u/s 10(34) on Dividend income - the conditions laid down u/s 115-O to avail the exemption u/s 10(34), is to be complied with at the level of venture capital undertaking and not at the stage when the investor, the assessee in this case, received the dividend income from VCF. So, the assessee is entitled for exemption u/s 10(34) of the Act and its share of dividend income is out of dividend income received by SARA fund. - AT
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• Tax Deduction at Source Required u/s 195 for Payments to Foreign Legal Counsel Not Covered by DTAA Benefits.

  Case-Laws - AT : TDS u/s 195 - professional charges to counsel/ lawyers outside India - Norway, Denmark, Sri Lanka, Malaysia, Russia, Luxembourg, Australia, Republic of Korea, South Africa, New Zealand, Mexico, Indonesia, Colombia and Serbia - assessee should have deducted tax at source on the above payment u/s 195 as the recipient of the income are not entitled to avail benefit of article 14 or article 15 of the respective Double Taxation Avoidance Agreements. The disallowance made by the learned assessing officer cannot be found fault with. - AT
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• Assessee exempt from tax deduction on payments to Australian lawyers if DTAA Article 4(1) and 14 conditions met.

  Case-Laws - AT : TDS u/s 195 - professional charges to counsel/ lawyers outside India - The assessee is directed to produce before the assessing officer necessary details with respect to their residential status. If same is found that those parties are resident of Australia according to article 4 (1) of the Double Taxation Avoidance Agreement and the necessary conditions of article 14 are satisfied, then assessee is not required to deduct tax at source on such payment. - AT
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• Court Orders Deletion of Undisclosed Income Additions Due to Insufficient Evidence and Director's Retraction.

  Case-Laws - AT : Unaccounted cash receipt - Addition on the basis of scribbling pad found during the course of search - even though the employees statement were not retracted, the same cannot be considered as an evidence which can be used against the assessee when the Managing Director of the assessee company has retracted his statement along with sworn affidavit explaining the reasons. - AO directed to delete additions made towards undisclosed income on the basis of scribbling pad - AT
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• Unaccounted Investments Lacked Evidence; Commissioner of Income Tax (Appeals) Correctly Deleted Additions, No Sub-Registrar Summons Issued.

  Case-Laws - AT : Unaccounted investment recorded in the seized document - No registered document whatsoever was found during the course of search, - No summons were issued to Sub-Registrar to find out as to whether any such document referred to in the paper was readly executed in favour of assessee or not, he had simply presumed that the figures were unaccounted investment made by the assessee for the year under consideration, without there being any material on record to support such presumption. - Additions were rightly deleted by the CIT(A) - AT
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• Notice Issued Without Jurisdiction u/s 143(2) Renders Order Null; Section 124(3) Offers No Justification.

  Case-Laws - AT : Non-issue of legally valid notice u/s. 143(2) - Whether it is a curable defect? - Section 124(3) of the Act does not in any way help the Department to justify the action of AO at Shillong in issuing notice under Section 143(2) to the assessee, which is an action done by him without jurisdiction. - Since in the present case no valid notice u/s 143(2) was issued by the AO who held jurisdiction over the case of the appellant, the consequent order passed u/s 143(3) dated 24.03.2014 was legally unsustainable and therefore is null in the eyes of law and therefore quashed. - AT
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Customs

• Government Must Refund Terminal Excise Duty Paid in Error Despite Lack of Policy Provision, Court Rules.

  Case-Laws - HC : Refund claim - petitioner had deposited the TED which is not required in case of deemed exports, but in the absence of the provision of refund in the foreign trade policy, claim was rejected - Once there was such finding, the Appellate Authority ought to have examined the matter in the background that it is a welfare State and the Department/ Government do not indulge into profit making. If inadvertently certain amount has been paid, even if there is no provision in the Foreign Trade Policy, Government cannot unduly retain the amount. - Matter remanded back - HC
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Indian Laws

• High Court Questions Fairness of Gujarat Bar Enrollment Rules Requiring Job Resignation Before Advocate Enrollment.

  Case-Laws - HC : Validity of Rules 1 and 2 of the Bar Council of Gujarat (Enrollment) Rules - It is too much to say that a person desirous to get himself enrolled as an Advocate with the State Bar Council should be asked at its inception to give up any other vocation, business or job and only, thereafter, he can be enrolled on the roll of the State Bar Council. We are dealing with a matter, in which, as single mother has come before us saying that no sooner she is enrolled as an Advocate after clearing the Bar Council Entrance Exam, then she would file a declaration on oath that she has given up the job which she has as on date. The lady is in a helpless situation. Today, if she gives up her job being a single mother, and god forbid if she is unable to clear the All India Bar examination, then she would be left without any means of livelihood. - HC
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• Accused's Conviction Upheld for Failing to Disprove Presumption u/ss 118 and 139 of Negotiable Instruments Act.

  Case-Laws - HC : Dishonor of Cheque - Both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Section 118 and 139 of the N.I.Act. The burden is not discharged rightly. Hence, the conviction of the accused for the offence under Section 138 of the N.I.Act is only to be upheld. - HC
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• Court Upholds Presumption of Debt in Cheque Dishonor u/s 138; Accused Fails to Rebut Evidence.

  Case-Laws - HC : Dishonor of Cheque - Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. - HC
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Central Excise

• Court Invalidates Revenue's Overreaching Interpretation on CENVAT Credit for Common Inputs in Ammonia Case.

  Case-Laws - AT : Reversal of CENVAT Credit - common inputs used for taxable as well as exempt goods - non-maintenance of separate records - Ammonia - Revenue is trying to stretch the law in disregard to express provisions of the Act and the Cenvat Credit Rules. - it is evident from the plain reading of the Rule that it speaks about the goods manufactured and removed during the financial year, and the intermediate products emerges during the manufacture of exempted final products. - The case of the Revenue is mis-conceived and the show cause notice is bad - AT
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Case Laws:

• GST

• 2020 (11) TMI 529
  Permission for withdrawal of petition - Release of refund of Input Tax Credit - export for the months of July and August, 2019 - petitioner states that procured goods had been exported under Section 16 of Integrated Goods and Services Tax Act, 2017 as zero rated supply without payment of IGST against LUT for the months of July and August 2019 - HELD THAT:- The learned counsel for petitioner wishes to withdraw the present writ petition with liberty to also challenge the two letters informing and fixing the date for opportunity of personal hearing. The present writ petition stands disposed of.

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• 2020 (11) TMI 528
  Levy of GST - reverse charge mechanism - supply of service to BCCL in terms of MARC - import of service or not - benefit of N/N. 10/2017-Integrated Tax (Rate) dated 28.06.2017 - Challenge to AAR decision - HELD THAT:- From the definition of fixed establishment , it is clear that the registered place of business cannot be termed a fixed establishment. Here, the domestic entity IZ-KARTEX is registered with GST authorities and hence, going by the definition, it cannot be termed a fixed establishment. In that sense, the decision of the WBAAR does not hold good in legal terms. Also, the WBAAR has not adduced any finding to draw conclusion that IZ-Kartex as registered in India maintains suitable structures in terms of human and technical resources to provide the service for which the MARC has been entered into between the parties. Further, the findings of the WBAAR mentions that it is evident that the MARC holder maintains suitable structures in terms of human and technical resources at the sites of BCCL. This finding is somewhat different from what is required to declare the MARC holder a fixed establishment. Here, as per the findings, the suitable structure in terms of human and technical resources is maintained not at the premises of the MARC holder but at the premises of BCCL. This does not comply the definition of the fixed establishment . From the facts of the case, it is seen that the IZ-Kartex named after Korobkov, the Russian company has entered into the MARC with BCCL. They have deployed DDP-N, an Indian company as the subcontractor. DDP-N in turn, issues invoice to the Russian company. Again, the Russian company is raising bills on BCCL against supply of service. Hence, it is amply clear that the service is being provided by the appellant s foreign entity. Contrary to any material finding in the order of the Advance Ruling, it is clear beyond doubt that the conditions of import are satisfied in the present case. The order of Advance Ruling is modified to the extent that the supply of service by the appellant to BCCL qualifies as import of service as defined under Section 2(11) of the IGST Act, 2017 and GST is payable on such import of service by BCCL under reverse charge mechanism in terms of Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017.

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• 2020 (11) TMI 527
  Classification of goods - rate of GST - sale of Micafunign Sodium by the DTA unit of the applicant - covered under Serial No. 114 of Entry No. 180 of the Rate Notification No 01/2017 Central Tax (R) or not - GST at the rate of 5% applicable or not? - Karnataka AAR had held that sale of Micafungin sodium by the DTA unit of the applicant is not covered under Serial No. 114 of Entry No. 180 of the Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017, and therefore, is not entitled for concessional rate of GST at the rate of 5% - challenge to AAR decision - HELD THAT:- A reading of entry No. 180 of Schedule Ito Rate Notification No 01/2017 IT (R) / CT (R) dated 28-06-2017, indicates that drugs and medicines falling under Chapter 30 or any other Chapter and specified in List 1 are eligible for 5% GST under the entry Sl.No 180 of Schedule I. The said entry also covers the specified drugs and medicines which are in the form of their salts and esters and diagnostic test kits. It is the case of the Appellant that the product Micafungin Sodium supplied by them is solely for the purpose of injection and hence is covered under the item No 114 of List I. The lower Authority has taken a stand that the impugned product is supplied as a bulk drug and bulk drugs are not covered under the entry SL.No 180. It is also observed from the invoice placed on record that the impugned product is classified by the Appellant under Chapter sub-heading 294190 90. We have also perused the technical write up of the product Micafungin Sodium . The terms bulk drug and drug have not been defined either in the rate notifications or in the GST laws - In this case, Micafungin Sodium is the sodium salt form of the antifungal drug Micafungin which is used in the treatment of internal fungal infections. It is the active pharmaceutical ingredient in the manufacture of the drug Mycamine which is the brand name for the antifungal injection. We find that the Central Drugs Standards Control Organisation (CDSCO), the authority which approves new drugs in India, has granted approval for the drug Micafungin Sodium for Injection of strength 50mg and 100mg, for the treatment of patients with candidemia, acute disseminated candidiasis, abscess and esophageal candidiasis, etc. The approval given is for the drug which is to be administered only as an injection.Therefore, although Micafungin Sodium is a bulk drug, its use can be only by way of injection as there is no statutory approval given for using the drug in any other form. In this case, the Micafungin Sodium supplied by the Appellant is in the form of a lyophilised powder. The term lyophilized refers to a process of freeze drying where a product becomes stable and absolutely free of moisture. The lyophilized powder gets reconstituted to its original form for injection with the addition of a suitable vehicle which in this case is Sodium Chloride. Therefore, the Micafungin Sodium supplied by the Appellant is the drug Micafungin Sodium for Injection . As already stated, the phrase for injection used in the Notification is only an indication of the form in which the drug is supplied i.e. in a dry solid form. The Customs Notification is worded in the same manner as the GST rate Notification. We therefore disagree with the findings of the lower Authority and hold that in this case, the usage of the drug is the basis on which the concession has to be given - The ruling of AAR set aside. The sale of Micafunign Sodium by the DTA unit of the Appellant is covered under Serial No. 114 of Entry No. 180 of the Rate Notification No 01/2017 IT (R) / CT (R) and therefore, is leviable to GST at the rate of 5%.

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• 2020 (11) TMI 526
  Principles of Natural Justice - opportunity of hearing not provided - primary contention is that before passing Ext.P14 series of orders, the petitioner was not heard - whether there was actually a hearing extended to the petitioner or not? - HELD THAT:- Inasmuch as the impugned orders were passed without hearing the petitioner, the said orders cannot be legally sustained inasmuch as they have been passed in violation of the rules of natural justice. Accordingly, I quash Ext.P14 series of orders and direct the 7th respondent to pass fresh orders in lieu thereof, after hearing the petitioner. I also make it clear that the 7th respondent shall consider the objections raised by the petitioner with regard to jurisdiction, and the orders passed by him shall reflect a consideration of each of those objections raised by the petitioner on jurisdiction, as well as on the merits of the case. The 7th respondent shall pass fresh orders as directed within three months from the date of receipt of a copy of this judgment - application disposed off.

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• 2020 (11) TMI 524
  Refund of IGST - export of Ply wood other than commercial plywood classified under the Customs Tariff Heading 44129990 - Section 163 (3) (b) of the IGST Act, 2017 - HELD THAT:- This writ petition is directed with a direction to the 2nd respondent to consider the request of the petitioner as reflected from shipping bills referred to above for sanctioning the refund claims and interest thereon. Let this exercise be completed within a period of 45 days from the date of receipt of the judgment. In case no action is taken, the officer concerned is liable to pay cost of Rs. 25,000/-, which will be recovered from the salary of the officer.

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• Income Tax

• 2020 (11) TMI 523
  Best judgment assessment - as contented petitioner did not have notice of the proposed assessment proceedings and as such, the petitioner could not furnish the details - demand notice - revenue said request for stay of the operation of the impugned order would be considered by the appellate authority only if 20% of the amount due as per the impugned assessment order is deposited - HELD THAT:- Assessment is based on the best judgment and no notice is addressed to the aforementioned petitioner email ID, this Court is of the considered view that it would be just and reasonable to set aside the impugned Assessment Order and the consequential Demand Notice without expressing any opinion on the merits of the assessment remitting the matter for reconsideration subject to the condition that the petitioner shall deposit 20% of the impugned demand as per the impugned assessment order within a period of two weeks from the date of receipt of a certified copy of this order and informing the authorities on email about such deposit. If the petitioner makes such deposit and informs the concerned authority by email, the assessing authority shall extend an opportunity to the petitioner to show cause and decide the question of assessment in accordance with law.

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• 2020 (11) TMI 522
  Disallowance of exemption claimed under section 10(34) on Dividend income - Disallowance of exemption claimed under section 10(38) on long term capital gain - HELD THAT:- From the perusal of the records, it can be seen that the issues contested by the assessee in the present assessment year 2013-14 are identical to that of A.Y. 2006-07 to 2008-09 2010-11 [ 2016 (2) TMI 882 - ITAT DELHI] wherein held CIT(A) have taken a wrong view by holding that the assessee cannot grow tax free income u/ss 10(34) and 10(35) of the Acts unless additional tax has been paid as per the provisions of Sections 115-O and 115-R of the Act and as such the exemption claimed u/ss 10(34) and 10(35) is to be allowed only if the dividend income distributed as per the provisions of Sections 115-O and 115-R whereas, the conditions laid down u/s 115-O to avail the exemption u/s 10(34), is to be complied with at the level of venture capital undertaking and not at the stage when the investor, the assessee in this case, received the dividend income from VCF. So, the assessee is entitled for exemption u/s 10(34) of the Act and its share of dividend income is out of dividend income received by SARA fund. As assessee has furnished complete details of computation which are exhibited at pages 153 to 154 of the paper book/appeal memo. The said computation was not disputed by the Revenue at any stage. Therefore, the Assessing Officer as well as the CIT(A) were not justified in making the said addition of dividend income and long term capital gain. - Decided in favour of assessee.

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• 2020 (11) TMI 521
  Estimation of income - Bogus purchases - HELD THAT:- As relying on M/s. Amy Diam Vega Jewellery Pvt. Ltd [ 2017 (10) TMI 236 - ITAT MUMBAI] we direct the Assessing Officer to estimate the profit element from bogus purchases @4% and recompute the income of the assessee.

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• 2020 (11) TMI 520
  TDS u/s 195 - professional charges to counsel/ lawyers outside India - fees for professional services rendered by foreign practitioners on which no tax is deducted by the assessee - assessee is a lawyer by profession and derived income from business or profession and income from other sources - HELD THAT:- The services are definitely qualifying as independent Personal services . Therefore wherever in DTAA there is clause of Independent personal services and, if the recipient qualifies i.e. he does not have fixed base regularly available to him in source country and he does not reside for N number of days in source country, for benefit of that particular clause of DTAA, then, such income shall be taxed in the country of residence of the provider of the services and same shall not be chargeable to tax in India. Then on such payments there is no requirement of withholding tax u/s 195 of the act. Assessee has made payment to the recipient of fees in Brazil, China, Chez Republic, Japan, Philippines, Thailand (article 14 of Double Taxation Avoidance Agreement of India with those countries) and Vietnam (article 15 of Double Taxation Avoidance Agreement). According to the Double Taxation Avoidance Agreement of India with these countries Independent Personal Services, if paid to resident of those countries, shall be taxable in those countries subject to certain exceptions. Who are resident of those countries are already specified as per article 4 of those agreements. He shall be liable to be taxed in those country of residence. Therefore, assessee is directed to produce necessary evidences before the learned assessing officer that those residents are liable to tax in those respective countries of the residence. Therefore, the learned assessing officer is directed to examine the evidence produced by the assessee that recipient of the above payment are resident of those countries and liable to be taxed in those countries. Payment made to partnership firm of resident of Australia where independent personal services according to article 14 of the Double Taxation Avoidance Agreement, an individual or a firm of individuals (other than a company) who is a resident of Australia subject to certain exceptions covered therein shall be taxable only in Australia. The only condition is to be seen that according to article 4 (1) such individuals or form of individuals are resident of that country, liable to tax therein. The assessee is directed to produce before the assessing officer necessary details with respect to their residential status. If same is found that those parties are resident of Australia according to article 4 (1) of the Double Taxation Avoidance Agreement and the necessary conditions of article 14 are satisfied, then assessee is not required to deduct tax at source on such payment. Accordingly, after examination, the learned assessing officer may delete the disallowance, if found in accordance with the law in terms of the agreement. Payment to an individual of Republic of Korea - According to article 14 of The Double Taxation Avoidance Agreement if the payment is made to an individual who is a resident of Korea and does not have a fixed base available to him regularly or number of days stayed in India is less than specified, then same shall be taxable only in Republic of Korea. The assessee is directed to produce evidence that the recipient of the income is an individual and also resident according to article 4 (1) of the act and does not satisfy the necessary conditions of availability of regular fixed base as well as stay of number of days, the learned assessing officer may verify the same and if found correct then assessee is not required to deduct any tax at source u/s 195 of the income tax act. Payment to the various parties of Norway, Denmark, Sri Lanka, Malaysia, Russia, Luxembourg, Australia, Republic of Korea, South Africa, New Zealand, Mexico, Indonesia, Colombia and Serbia - Two different articles negotiated between the countries for taxability of two different types of business activities. Therefore there is a strict compartment between the incomes received by the recipient residents of those countries in these two different articles. It cannot be said that if an assessee fails to claim non taxability in the source country as per article 14 or 15 of the Double Taxation Avoidance Agreement automatically he can claim the benefit under article 7 of the Double Taxation Avoidance Agreement. Income of the assessee is correctly characterised as professional services under article of Independent personal services under DTAA. But because of some reason it fails to qualify for exemption from taxation in source country. Therefore same becomes income taxable in the sources country, Source country gets right to tax such income of non residents. We hold that assessee should have deducted tax at source on the above payment u/s 195 as the recipient of the income are not entitled to avail benefit of article 14 or article 15 of the respective Double Taxation Avoidance Agreements. The disallowance made by the learned assessing officer cannot be found fault with. Accordingly disallowance u/s 40(a) (i) of the act to that extent of Rs. 2,26,94,888/- is upheld for non-deduction of tax at source u/s 195 of the act. Disallowance of travelling expenditure - HELD THAT:- In the present case undoubtedly the assessee has incurred foreign travel expenditure and the learned assessing officer has disallowed an ad hoc amount applying the ratio of 10% to prevent any leakage as assessee could not produce the relevant evidences holding that those expenditures have not been incurred for the purposes of the business. We do not subscribe to the view of the learned lower authorities. AO should have disallowed only the sum for which no evidences have been produced by the assessee. Applying an ad hoc percentage of 10% without any finding about the amount of expenditure for which no evidences were furnished by the assessee is not in accordance with the law. Accordingly we direct the learned assessing officer to delete the above disallowance

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• 2020 (11) TMI 495
  Disallowance of interest expenditure - AO observed that assessee has earned interest income on term deposits -deduction u/s. 57 in respect of interest expenditure disallowed -HELD THAT:- As decided in own case [ 2017 (12) TMI 1668 - ITAT MUMBAI ] we find force in the submission of the learned A.R. that since the assessee as well as the recipients are notified entities under the Special Court Act unless the Court directs for distribution of the assets towards existing liabilities under Section 11(2) of the Special Court Act, the assessee cannot make the payment to these creditors. Even otherwise since the existence of liability towards interest has accrued especially when the assessee is following the mercantile system of accounting the interest is to be allowed. we find that there is a nexus between borrowed funds and investments in term deposits. Therefore, the interest paid on the borrowed funds has to be allowed out of the interest earned by the assessee on term deposits. We set aside the order of the CIT(A) and direct the AO to allow deduction in respect of said interest accrued and calculated at 12% per annum after disallowing proportionate interest in respect of the investment in shares. Disallowance u/s 14A - Capitalization of interest expenditure - Deduction on account of interest expenditure - HELD THAT:- ITAT in assessee s own case [ 2017 (12) TMI 1668 - ITAT MUMBAI ] held to the extent the interest relate to the investment, i.e. being disallowable under Section 57 will become part of cost of acquisition of shares and therefore the AO is directed to take it as part of the cost of shares for determining profit on sale of the shares. Thus, the additional ground stands allowed to that extent. Addition of personal house hold expenses u/s. 69C - HELD THAT:- Addition made by the AO as well as sustained by the CIT(A) are though on ad-hoc basis, but same was done because no details of expenditures was filed by the appellant. Before us, the Ld. Counsel has submitted that, most of the expenses have been incurred by Dr. Hitesh S. Mehta and other family members living in a Joint family set-up. Further other members have contributed for household expenses and that some of the additions have been confirmed on account of personal household expenses by the Department. Following the said order of the Tribunal we reduce the disallowance sustained by the CIT(A) by 50%. Levy of interest u/s. 234A, 234B and 234C - HELD THAT:- As decided in own case [ 2017 (12) TMI 1668 - ITAT MUMBAI ] we direct the AO to recomputed the interest liability after reducing the amount of tax deductible at source on the income earned.

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• 2020 (11) TMI 494
  Non-issue of legally valid notice u/s. 143(2) - Whether it is a curable defect? - AO jurisdiction over the case of the appellant - territorial jurisdiction of the ITO, Ward-1, Shillong to issue notice to assessee - assessee has raised the jurisdiction of the AO at Gauhati who passed the assessment order without issuing notice u/s. 143(2) - HELD THAT:- Admittedly the AO at Gauhati had enjoyed jurisdiction u/s. 124 of the Act since its place of business was at Ulubari at Gauhati and the Shillong Assessing Officer did not enjoy jurisdiction u/s 124 or u/s 127 of the Act. Therefore, in our opinion as far as in the appellant s case is concerned, the provision of section 124(3) does not come into play since the Shillong Assessing Officer never had jurisdiction u/s 124 of the Act. In my considered opinion Section 124(3) of the Act does not in any way help the Department to justify the action of AO at Shillong in issuing notice under Section 143(2) to the assessee, which is an action done by him without jurisdiction. So the challenge raised by the Ld, Sr. DR against the legal issue raised by assessee fails. Since in the present case no valid notice u/s 143(2) was issued by the AO who held jurisdiction over the case of the appellant, the consequent order passed u/s 143(3) dated 24.03.2014 was legally unsustainable and therefore is null in the eyes of law and therefore quashed.

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• 2020 (11) TMI 493
  Unaccounted investment recorded in the seized document - CIT(A) deleted addition holding that the documents found and seized from the premises of the assessee on which an addition was made by the AO is a dump document - HELD THAT:- AO did not carried out any inquiry either during the course of search or during the course of assessment proceedings to find out the nature of transactions and the period in which these transactions were carried out or to locate and being on record the where abouts of the land alleged as purchase. No summons were issued to Sub-Registrar to find out as to whether any such document referred to in the paper was readly executed in favour of assessee or not, he had simply presumed that the figures were unaccounted investment made by the assessee for the year under consideration, without there being any material on record to support such presumption. The entries on the page 10 of Exhibit 4 of Annexure AS are merely rough scribbling. Such Scribbling were not in the handwriting of assessee. Such document was undated and noting did not bear any signature and the name appearing therein are not of assessee. No registered document whatsoever was found during the course of search, which was registered in the name of assessee with amount for which addition is made. No efforts whatsoever were made by the AO to bring on record such alleged registered document in the name of assessee more particularly when the AO had vast powers U/s 133(6) to even call for information from Sub-Registrar office. No material was brought on record to prove from which sources assessee had made such alleged investment . AO had drawn inferences, made presumption, relied on surmises and thus made unsustainable additions. Therefore CIT(A) had also after appreciating the facts had rightly concluded that these documents i.e. page 10 of exhibit- 4 of Annexure- AS has no relatibility with any assets in the name of the assessee therefore, the addition made by the AO cannot be based on scribbling on the impugned document - Decided in favour of assessee.

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• 2020 (11) TMI 492
  Disallowance of expenditure u/s.14A r.w. Rule 8D - AO made disallowance on the ground that although the assessee has not earned any exempt income for the impugned assessment years, but incurring of expenditure in relation to dividend bearing investments cannot be ruled out, more particularly when the assessee had made huge investments in shares and securities which yield exempt income - HELD THAT:- It is a settled position of law by the decisions of the Hon ble Supreme Court and other High Courts that when there is no exempt income for the year, then disallowance contemplated U/s.14A of the Act cannot be made. Hon ble Supreme Court in the case of CIT vs. Chettinad Logistics Pvt. Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] has held that no disallowance u/s.14A of the Act can be made if there is no dividend income. A similar view has been expressed by the Hon ble Supreme Court in the case of Oil Industry Development Board [ 2019 (3) TMI 1571 - SC ORDER] where the court while dismissing the SLP filed by the Revenue has confirmed the decision of the Hon ble High Court of Delhi which held that in the absence of any exempt income disallowance U/s.14A of the Act of any amount was not permissible. The Hon ble Supreme Court while arriving at a conclusion has followed its earlier decision in the case of Cheminvest Limited vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] , where a similar view has been expressed by the court. In this case, the assessee has filed all evidences to prove the fact that no exempt income is earned for the year. The assessee has also filed all evidences to prove that its own fund being share capital and reserves and surplus is over and above amount of investments. No disallowances could be made for any expenditure including interest expenses. Therefore, we are of the considered view that the Ld.CIT(A) has rightly deleted additions expenditure including interest expenses. Therefore, we are of the considered view that the Ld.CIT(A) has rightly deleted additions - Decided in favour of assessee. Disallowance of marketing expenditure and business promotion expenses - AO has disallowed 100% of marketing expenditure incurred in cash and 100% of marketing expenditure incurred in cheque, but payment made without deduction of tax at source on the ground that the assessee has incurred huge marketing expenditure in cash but failed to file supporting bills and vouchers to justify said expenditure to establish that it was incurred wholly and exclusively for the purpose of business of the assessee - HELD THAT:- No error in the findings of the Ld.CIT(A) as regards expenditure incurred in cash and hence we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. As regards the claim of the assessee that for the assessment year 2017-18, the Ld.AO has disallowed a sum of Rs. 28,18,994/- even though said expenditure has been incurred in cheque but for not furnishing supporting bills and vouchers, we find that the Tribunal has given categorical finding for earlier assessment years that once expenditure is incurred in cheque through proper banking channels then there cannot be any disallowance even though there is no supporting bills and vouchers furnishes in support of said expenditure. Therefore, we are of the considered view that to that extent the findings of the AO as well as CIT(A) deserves to be reversed. However facts are contradictory because there is no clarity from the orders of the authorities below in so far as the nature of payments under which these payments are made. Therefore for the limited purpose of ascertaining the fact with regard to the nature of payment, we remit the issue back to the file of the AO for the assessment year 2017-18 and direct him to re-examine the issue in the light of the claim of the assessee that said expenditure has been incurred through proper banking channel. Unaccounted cash receipt - Addition on the basis of scribbling pad found during the course of search in the possession of Smt. Banusree, Accountant of the assessee company - During the course of search incriminating documents in the form of scribbling pad was found and seized which contains the transactions in the form of cash received from various vendors and suppliers and the same has been used to make unaccounted cash expenditure - HELD THAT:- Had it been the case of the AO that the alleged scribbling pad and its contents was tested by cross examining the parties as stated by the AO in his assessment order, then obviously it would give raise to an occasion to the AO to rely on said documents to make additions. In this case, the AO has not made any effort to verify the entries recorded in the scribbling pad by making further enquiries and cross examining the alleged persons or suppliers named in the said incriminating document - on perusal of incriminating documents found during the course of search, we find that nothing was emanating regarding name and address of persons from whom said amount was received and the nature of expenditure for which said amount was paid. In absence of any effort from the AO by way of further enquiries, merely on the basis of a dumb paper coupled with statement recorded during the course of search, additions made towards undisclosed income cannot be sustained, more particularly when said statement has no longer in operation. We find that when a statement was recorded from employee of assessee which was further vetted by the Managing Director, then the earlier statement given by the employees are merged with the subsequent statement of a Managing Director, because the person in charge of the affairs of the company is always Managing Director, who is having knowledge of affairs of the company. Therefore even though the employees statement were not retracted, the same cannot be considered as an evidence which can be used against the assessee when the Managing Director of the assessee company has retracted his statement along with sworn affidavit explaining the reasons. Therefore, the arguments that the other two statements are sufficient enough to draw an adverse inference against the assessee cannot be accepted. CIT(A) without appreciating these facts has simply confirmed additions made by the AO towards undisclosed income on the basis of scribbling pad found during search. We, therefore for above reasons reverse the findings of the Ld. CIT(A) and direct the AO to delete additions made towards undisclosed income on the basis of scribbling pad for the asst. years 2014-15 to 2017-18. Disallowance of deduction claimed u/s.32AC - HELD THAT:- In this case, the assessee has explained the process of manufacturing brewery as per which it is a continuous process plant where various stages of processing needs to be carried out for which different plant and machineries are required to be installed including malting, kilning, mailing, mashing, boiling of wort hops and fermentation and all these process requires different stages of setting up and construction. In so far as plant and machinery, the assessee has acquired and installed the plant and machinery which is above the prescribed limit and such plant and machinery has been installed within the prescribed date provided U/s.32AC of the Act. Merely for the reason that the plant is not ready for use, the amount spent for acquiring and installing plant and machinery, the benefit of additional allowance provided under said section cannot be denied more particularly when the provision is a beneficial provision which needs to be liberally considered. In this case, on perusal of facts, the assessee has fulfilled all terms and conditions to get the benefit of additional deduction and said deduction is available for the impugned assessment year alone. In case, the assessee did not avail the deduction for the impugned assessment year, then it cannot claim the deduction for subsequent assessment year.AO as well as the CIT(A) were erred in not allowing the additional allowances claimed by the assessee U/s.32AC of the Act and hence, we direct the AO to delete the additions made towards disallowance of deduction claimed U/s.32AC of the Act.

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• 2020 (11) TMI 491
  Disallowance u/s 14A - Assessee has made suo moto disallowance - Non recording of satisfaction - HELD THAT:- AO without recording any satisfaction to the correctness of the claim of the assessee proceeded to apply provisions of Rule 8D of the Income Tax Rules for disallowances u/s 14A - This is against the mandate of the provisions of section 14A(2) - recording of the satisfaction about the correctness of the claim of the assessee with respect examination of accounts is the primary conditions to invoke any disallowance u/s 14A - several judicial precedents relied upon before us also held so - AO has failed to record any satisfaction with respect to the correctness of claim of the assessee of not incurring any expenditure to earn exempt income , on examination of the account, the disallowance made by the AO and disallowance restricted by the ld CIT(A) cannot be upheld Interest paid to the bank u/s 36(1)(iii) - assessee has given loans and advances to various sister concern and other parties on which interest has not been charged - HELD THAT:- In the present case the assessee has interest free funds available in the form of share capital and free reserve amounting to Rs. 37.05 crores whereas interest free loans and advances were only Rs. 17.32 crores. Therefore, it is apparent that assessee has sufficient interest free funds available to advance the above loan to its sister concern free of interest. The issue is squarely covered in favour of the assessee in CIT Vs. Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] wherein, it has been held that when the interest free funds available to the assessee were sufficient to make its investment which could be presumed that such interest free loans are made from interest free funds available with the assessee - we direct the ld AO to delete the disallowance of interest expenditure - Decided in favour of assessee.

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• Customs

• 2020 (11) TMI 519
  Refund claim - petitioner had deposited the TED which is not required in case of deemed exports, but in the absence of the provision of refund in the foreign trade policy, claim was rejected - whether the petitioner who was not required to deposit Terminal Excise Duty (TED) for export of goods from one unit to another, can the authorities remain as a mute spectator is not refunding the amount on the ground of any provision in the Foreign Trade Regulation and Development Act, 1992 with consequential relief of refund or alternatively quashing Ext.P2 letter dated 5.11.2019? HELD THAT:- No doubt, under the different provisions of the Act, an alternative remedy has been provided for the affected parties to seek the vindication of the grievances, if any, but the quasi judicial authorities are also legitimately expected to take the congnizance of the matter in correct perspective by giving due consideration to the respective contentions and the law cited at the Bar, but should not pass an order in a most mechanical and sketchy manner, which is reflected from the impugned order Ext.P1. Development Commissioner in his order submitted that if the credit is availed, leavy certain, but if not availed, final goods are exempted, and in the absence of any provision of refund in the FTP, the case has been rejected. Once there was such finding, the Appellate Authority ought to have examined the matter in the background that it is a welfare State and the Department/ Government do not indulge into profit making. If inadvertently certain amount has been paid, even if there is no provision in the Foreign Trade Policy, Government cannot unduly retain the amount. The matter is remitted to the Appellate Authority by reviving the appeal Ext.P14. Appellate Authority is directed to decide the appeal afresh in accordance with law, by assigning reasons - Petition allowed by way of remand.

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• 2020 (11) TMI 497
  Permission for withdrawal of petition - Levy of Penalty u/s 112(a) and 114(AA) of the Customs Act, 1962 - HELD THAT:- These Writ Petitions are dismissed as withdrawn with a clarification that it would not preclude the right of the Petitioner to raise same contentions in W.P. Nos.30376 and 30377 of 2016 before this Court.

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• Corporate Laws

• 2020 (11) TMI 518
  Grant of Leave to proceed with the suit - HELD THAT:- To have smooth and proper trial of the suit in question, it will be in the fitness of the things that the appellant / plaintiff is allowed to have the trial of the suit filed by the plaintiff against the defendants at the Delhi High Court itself upon its restoration by Delhi High Court as leave to proceed with the suit has been granted by the Company Judge now, as required under Section 446 of the Companies Act, 1956 since the appellant / plaintiff has undertaken to reimburse the cost of the Official Liquidator, Madras to contest the suit at Delhi in view of the shortage of the funds of the Company in liquidation M/s.Rayalaseema Commodities Limited and has agreed to make the initial deposit of Rs. 3,00,000/- subject to the account of the same being furnished by the said Official Liquidator before the Hon ble Company Judge as well as to the appellant / plaintiff. We consider it appropriate to consider the said request of the appellant / plaintiff. The appellant / plaintiff is directed make a deposit of Rs. 3,00,000/- by way of a Demand Draft in favour of the Official Liquidator, Madras within a period of three weeks from today, after obtaining due acknowledgement thereof. The account of the expenses incurred for the same and further deposits, if any required, will be governed by the orders to be passed by the learned Company Judge - appeal disposed off.

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• 2020 (11) TMI 517
  Sanction of Scheme of Amalgamation - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT:- From the material on record, the scheme appears to be fair and reasonable and does not violate of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, Petition is made absolute in terms of prayer made in the petition. Hence ordered. The scheme, with the appointed date fixed as August 1, 2018 placed at page Nos. 196 to 211, annexure F to the company scheme petition is hereby sanctioned. It shall be binding on the petitioner and the companies involved in the scheme and all concerned including their respective shareholders, secured creditors, unsecured creditors/trade creditors and employees - application allowed.

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• Law of Competition

• 2020 (11) TMI 516
  Sanction of Amalgamation Scheme - sections 230 to 232 of the Companies Act, 2013 read with rule 15(1) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- It has been stated by the Regional Director that, on a consideration of the materials on record, the scheme of amalgamation appears to be fair, reasonable and is not detrimental against the members or creditors or contrary to public policy and the same can be approved. In his report, the Regional Director, MCA has concluded that the scheme appears to be fair, reasonable and not detrimental against the members or creditors or contrary to public policy and the same can be approved. The scheme in question will enable consolidation of all companies indirectly and jointly held by the HMK group and RR group, and helps in streamlining operations, reducing overheads, administrative, and other expenditure and achieving operational rationalization, organizational efficiency and optimal utilization of resources in the interest of shareholders, etc. On a consideration of the facts of the case as mentioned in the preceding paragraphs, which are not elaborating here again to avoid duplication and repetition, we are satisfied that the procedure specified in sub- sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the scheme of amalgamation, as approved by the boards of both the transferor company and the transferee company, is hereby sanctioned, as prayed. Application allowed.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 515
  Liquidation of Corporate Debtor - section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is evident in the averments as contained in the application that in the second meeting of the CoC held on March 5, 2020 the CoC discussed in detail the possibility of resolving through resolution, and considering the fact that the company was not in operation for the last two years and that the industry as such was not attracting new investors now due to the Government policies manufacturing and selling of agricultural fertilizers and also that no concrete information about the prospective investor was provided by the promoter group, the CoC has come to the conclusion to liquidate the corporate debtor. The CoC has unanimously decided to liquidate the company namely the corporate debtor and appoint the present resolution professional as liquidator. Since, no resolution plan has been received by this Authority under sub-section (6) of section 30 of the I and B Code, 2016, before the expiry of the maximum period of 180 days CIR process, in exercise of the powers conferred under sub-clauses (i), (ii) and (iii) of clause (a) of sub-section (1) of section 33 of the I and B Code, 2016, this Authority proceeds to pass the liquidation order - Application allowed.

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• 2020 (11) TMI 514
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The application made by the financial creditor is complete in all respects as required by law. It clearly shows that the corporate debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the Insolvency and Bankruptcy Code at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the petition. In view of this, this Adjudicating Authority admits this petition and orders initiation of CIRP against the corporate debtor. Petition admitted - moratorium declared.

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• FEMA

• 2020 (11) TMI 513
  Restrictions on dealing in foreign exchange - diversion of exported goods, non-realisation of export proceeds, non-clearance of imported bills and write off/ set off - HELD THAT:- Trend Setters Group of Companies had failed to submit Bill of Entry as evidence for actual import of the goods. Trend Setters Group of Companies did not realised the substantial portion of export proceeds and it is also established that except filing a Suit before a Sub-Court in Ernakulam, Kerala and writing to the RBI for write off/ set off, no other steps have been taken. In other words, no sufficient and visible efforts have been by/ on behalf of the Trend Setters Group of Companies to realise the export proceeds. Who was/were the person/persons responsible for the diversion of export goods / non-realisation of export proceeds and remittances of payment towards import of goods - Shri Sebastian Chokkattu was the Chairman of the Trend Setters Group of Companies and was overall in-charge of the same. It has also come on record that he was also a Director of the said group of companies. The Adjudicating Authority has imposed a total penalty of Rs. 42,15,000/- on Shri Sebastian Chokkattu. There is nothing on record that he has taken any sufficient steps/action to realise the export proceeds and that on the grounds stated in the Show Cause Notices and the reasons cited in the impugned order it is clear that exports were made and diverted. The nonrealisation of export proceeds cannot be said to be beyond the control. Mere pendency of the application for set off/write off does not absolve the responsibility of the appellants. On the given facts and circumstances of the case, I do not find any infirmity or illegality in the impugned order passed by the Adjudicating Authority. Considering the amount involved in the contraventions, it is held that the amount of penalties imposed on Shri Sebastian Chokkattu, on the basis of individual Show Cause Notices wherein contraventions has been described in details, are proper and proportionate. Hence no interference in the findings arrived at by the Adjudicating Authority, in respect of Shri Sebastian Chokkattu, is called for. Shri B. Balakrishnan was appointed as the Director of M/s. Intimate Apparels Pvt. Ltd. on 11.07.1995. It is seen from Copy of Form No.32 presented before the Registrar of Company on 14.08.1995 that Shri Sebastian Chokkattu presented the said form incorporating therein that Shri V.P. Gopalakrishnan Nair has resigned from the Directorship of the company from 11.07.1995 and Shri B. Balakrishnan appointed on the same date. Shri B. Balakrishnan became the Director from 11.07.1995 to 1997 by stepping in the shoe of Shri V.P. Gopalakrishnan Nair and thus was in-charge of and responsible to the said company for the conduct of the business of the company at the time when the aforesaid exports were made. Therefore, there is no illegality in the impugned order in holding Shri B. Balakrishnan as one of the contravener as alleged and the impugned order does not call for any interference as the penalty of Rs. 4,00,000/- imposed on him is just, proper and proportionate. Shri Biju Thomas or Trend Setters Group of Companies have approached the Commercial Attache, Indian Embassy, Washington and the U.S. Ambassador to India for realisation of export proceeds. During the course of hearing the learned counsel for the appellants did not place any evidence in this regard. So, the contention raised in the appeals regarding the steps taken to realise the export proceeds cannot be believed. However, there is nothing on record placed by the respondent nor there is anything in the impugned order and the SCNs that the appellant Shri Biju Thomas was looking after the day-to-day affairs of the Trend Setters Group of Companies. In the light of the same, the provision of Section 68(2) of FERA, 1973 is not attracted.Shri Biju Thomas cannot be held liable for contraventions of Sections 8(3) 8 (4) of FERA, 1973 read with Paragraph 7A-20 of RBI Exchange Control Manual Vol- I,1993 Edition, Sections 18(2) 18(3) read with Section 68 of FERA, 1973, the Central Government Notifications dated 01.01.1974. In view of the above, the findings of the Adjudicating Authority holding Shri Biju Thomas liable for the aforesaid contraventions and imposition of penalties are erroneous and not legal, hence, quashed and set aside. Shri S. Sunil Kumar cannot be held liable for contraventions of Sections 8(3) 8 (4) of FERA, 1973 read with Paragraph 7A-20 of RBI Exchange Control Manual Vol-I,1993 Edition, Sections 18(2) 18(3) read with Section 68 of FERA, 1973, the Central Government Notifications dated 01.01.1974. In view of the above, the findings of the Adjudicating Authority holding Shri S. Sunil Kumar liable for the aforesaid contraventions and imposition of penalties are erroneous in law and not legal, hence, quashed and set aside.

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• Service Tax

• 2020 (11) TMI 512
  Principles of Natural Justice - the request of the appellant for granting of cross-examination of the witnesses has been denied - HELD THAT:- There is no dispute that the witnesses of which cross-examination has been sought for by the appellant have given their statements during investigation and such statements were relied upon in the Show cause notice. Some of the statements given by the third parties. The appellant for making their effective defence wish to cross-examine the witnesses. The appellant should be given all the opportunity for making their defence including the cross- examination. Denial of cross- examination will amount to unfair justice in the case and also violation of principles of natural justice. When the noticee seeks for cross examination of witnesses, in the interest of justice and as mandated in section 9D of Central Excise Act, 1944, the Adjudicating Authority is under legal obligation to grant cross-examination of witnesses to the noticee. Therefore, the appellant s prayer for seeking cross- examination of witness is just and proper and the same is allowed. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (11) TMI 490
  Reversal of CENVAT Credit - common inputs used for taxable as well as exempt goods - non-maintenance of separate records - Ammonia - intermediate goods/captive consumption - Sl.No.86 of Notification No.12/2012 - period of dispute is April, 2015 to Jan. 2016 and Feb., 2016 to March, 2016 - Extended period of Limitation - HELD THAT:- Evidently, when the appellant clears part of Ammonia being Surplus, on payment of duty, admittedly, the final product being cleared is Ammonia. Therefore, Ammonia becomes the dutiable goods manufactured by the appellant. Majority of the Ammonia so produced, however, is used as an intermediate product and consumed for the manufacture of Urea. Thus, the final product of the appellant is Urea and SSP (exempt). Thus, the captively consumed Ammonia cannot be treated as exempted final product by any stretch of imagination. The final product of the appellant is Ammonia, Urea and SSP, value of which has been taken for computation under Rule 6 (3A). Revenue is trying to stretch the law in disregard to express provisions of the Act and the Cenvat Credit Rules. Rule 6(3)(i) provides for payment of an amount equal to 6% of value of the exempted goods and 7% of value of the exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts - It is further provided under Rule 6(3A) (b) to apply the standard formula for calculating the amount to be reversed or the ineligible Cenvat Credit. Rule 6 is attracted only in case, where an assessee manufacturers two output goods or is rendering two output services, where one is exempt and the other dutiable. Further, Statute is very clear, under the Rule 6(3)(ii) read with Rule 6(3A), which clearly provides for eligibility of input services in or in relation to the manufacture of exempted goods, and its clearance upto the place of removal shall be calculated proportionately - it is evident from the plain reading of the Rule that it speaks about the goods manufactured and removed during the financial year, and the intermediate products emerges during the manufacture of exempted final products. Extended period of Limitation - HELD THAT:- The issue being wholly interpretational, extended period of limitation is not invokable. The case of the Revenue is mis-conceived and the show cause notice is bad - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (11) TMI 525
  Settlement of arrears outstanding - KGST Act - applicability of amnesty scheme - petitioner contends that the amnesty scheme is separately applicable to the various statutes mentioned therein and the petitioner cannot be compelled to opt for the amnesty under enactments other than the one he has chosen for settlement under the scheme - HELD THAT:- The statutory provision which deals with the amnesty scheme makes it applicable to outstanding dues under various statutes such as the Kerala Value Added Tax Act, Central Sales Tax Act, Tax on luxuries Act, Kerala Surcharges Act, Kerala Agricultural Income Tax Act and the Kerala General Sales Tax Act. A perusal of the scheme, as also the circular relied on by the respondent, would also indicate that arrears under the various enactments are separately dealt with. For instance, in the case of dues under the KGST Act, the amnesty scheme is made applicable only for outstanding dues prior to the period 1.4.2005 and it is clarified that in case of arrears from 1.4.2005 to 31.03.2020, the principal amount and interest shall be paid subject to there being a full waiver of penalty. The scheme therefore indicates that it is all the outstanding dues pertaining to a particular legislation that have to be cleared together, while availing the benefit of the amnesty scheme. In the instant case, it is not in dispute that there are no other outstanding dues from the petitioner under the KGST Act and what has been offered for settlement under the amnesty scheme is the entire dues pertaining to the petitioner under the KGST Act. The 2nd respondent assessing authority is directed to accept the application of the petitioner for settling arrears under the KGST Act, in terms of Section 23(B) of the said Act - petition allowed.

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• 2020 (11) TMI 510
  Refund of amount deposited as pre-deposit - Proceedings under Delhi Sales Tax Act, 1975 - HELD THAT:- This petitioner preferred the refund application which is at Annexure P-5 to the memo of this writ petition. Thereafter, representations was also made before the Commissioner of State, GST, for refund (Annexure P-6). These refund applications have not been scrutinized and decided by the respondent, and therefore it is submitted by learned counsel for the petitioner that suitable directions be given to concerned respondent-authority to decide the refund application in accordance with law, rules and regulations within a time bound schedule, and make the required payment along with statutory interest. Respondent no. 2 is directed to decide the application for refund of the amount along with statutory interest, which is at Annexure P-5 to the memo of this writ petition, in accordance with law - petition disposed off.

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• 2020 (11) TMI 509
  Refund of Input Tax Credit - amount to be carried forward by way of TRAN-1 Return - HELD THAT:- This petitioner has preferred the writ petition for directions to the respondent to pay Rs. 3,14,284/- for the input tax credit alongwith interest under Section 38 of Delhi Value Added Tax Act, 2004. There is also alternative prayer for allowing the aforesaid amount i.e. Rs. 3,14,284/- to be carried forward by way of TRAN-1 Return. The concerned respondents-authorities are directed to decide the application of this petitioner for refund of input tax credit for Rs. 3,14,284/- in accordance with law, rules, regulations and government policies applicable to the facts of the case. The respondent authorities will also keep in mind the decision rendered in W.P, if applicable, and will also keep in mind the alternative prayers in this writ petition. Petition disposed off.

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• Indian Laws

• 2020 (11) TMI 511
  Grant of Compulsory Bail - Section 167(2) of the Code of Criminal Procedure - whether an application for a bail under Section 439 Cr.PC would be sufficient for a court to construe that the accused had availed of his right to be released on bail under the provisions of Section 167(2) of the Cr.PC if the condition stipulated therein were met? HELD THAT:- In HUSSAINARA KHANTOON ORS. VERSUS HOME SECRETARY, STATE OF BIHAR, PATNA [ 1979 (4) TMI 159 - SUPREME COURT ], the Supreme Court had considered affidavits filed by the Superintendent of the Patna Central Jail, Superintendent of Muzaffarpur Jail and the Superintendent of the Ranchi Central Jail which indicated towards prisoners who were confined in the said jails and who had been produced before Magistrates from time to time in compliance with the requirement of the Proviso (a) to Section 167(2) of the Cr.PC. A plain reading of the Proviso (a) to Section 167(2) of the Cr.PC indicates that an accused would necessarily have to be released on bail if he is prepared to and does furnish bail . Thus, in cases where the statutory period of sixty days or ninety days has expired, the accused would be entitled to be released on bail provided he meets the condition as set out therein that is, he is prepared to furnish and does furnish bail. It is important to note that there is no provision requiring him to make any formal application - It is also trite law that there is no inherent power in a court to remand an accused to custody. Such power must be traced to an express provision of law. The petitioner had, unequivocally, stated that he was ready to furnish bail and provide a sound surety. He had further indicated that he would ready and willing to comply with any condition that may be imposed by the Trial Court and had also undertaken to appear before the Trial Court as and when required. Clearly, the Proviso to Section 167(2)(a) of the Cr.PC did not require the petitioner to do anything more except to indicate that he is prepared to furnish bail. In the present case, there is no doubt that the petitioner had applied for being released on bail and had offered to abide by the terms and conditions of bail. Bearing that in mind, it is at once clear that the petitioner would be entitled to default bail even though he had not specifically mentioned the provisions of Section 167(2) of the Cr.PC in his application. There is no dispute that an accused cannot be released on bail by a court on its own motion and it is necessary for the accused to apply and offer to furnish bail. The language of Proviso (a) to Section 167(2) of the Cr.PC also requires an accused to indicate that he is prepared to furnish bail before he can be released on bail - it would be apposite to consider an application for bail filed on expiry of stipulated period of filing chargesheet, as an application for bail under the provisio to Section 167 (2), since it does indicate that the accused is prepared to furnish bail. The Proviso to Section 167(2) of the Cr.PC is intrinsically linked to the right under Article 21 of the Constitution of India that no person shall be deprived of his life or personal liberty except according to the procedure established by law . It embodies a safeguard that circumscribes the power to detain an accused pending investigation. This Court considers it apposite to allow the present petition - petitioner is directed to be released on bail on his furnishing a personal bond in the sum of Rs.10,000/- with one surety of an equivalent amount to the satisfaction of the concerned Trial Court/Duty Magistrate - Petition allowed subject to conditions imposed.

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• 2020 (11) TMI 508
  Interpretation of statute - validity of Rules 1 and 2 of the Bar Council of Gujarat (Enrollment) Rules - Bar Council of India as well as the Bar Council of Gujarat has a common argument to canvas that the rules framed by the Bar Council of Gujarat (Enrollment) Rules under Section 28(2)(d) read with Section 24(1)(e) of the Advocates Act, 1961 puts an embargo upon the writ applicant unless she resigns from her present employment and files an affidavit to that effect. Whether we should strike down Rules 1 and 2 of the Bar Council of Gujarat (Enrollment) Rules being violative of Article 14 of the Constitution or we should uphold the validity by adopting the principle of reading down or reading into so as to make the rule effective and workable and ensure the attainment of the object of the rule? HELD THAT:- Ordinarily, the Courts would be reluctant to declare a law or rule invalid or ultra-vires on account of unconstitutionality. The Court should make all possible endeavour to interpret in a manner which would be in favour of the constitutionality, as declaring the law or a rule unconstitutional should be one of the last resorts which the Court may take. According to the Black s Law Dictionary, a lawyer is a person learned in the law; as an attorney, counsel or solicitor, a person licensed to practice law . The legal profession is not a business or a trade. A person practicing law has to practice in the spirit of honesty and not in the spirit of mischief-making or money-getting. The advocate is expected to devote full time to his profession of law. Although, the profession is called a noble profession, yet it does not remain noble merely by calling it as such unless there is a continued, corresponding and expected performance of a noble profession. Its nobility has to be preserved, protect and promoted. An institution cannot survive in its name or on its part glory alone. The glory and greatness of an institution depends on its continued and meaningful performance with grace and dignity. The profession of law being noble and honourable one, it has to continue its meaningful, useful and purposeful performance inspired by and keeping in view the high and rich, traditions consistent with its grace, dignity, utility and prestige. Hence, the provisions of the Act and Rules made thereunder, inter alia, are aimed at to achieve the same. Such provisions of the Act and Rules should be given effect to in their true spirit and letter to maintain clean and efficient Bar in the Country to serve the cause of justice which again is noble one. Rule 49 provides that an advocate shall not be a full time salaried employee of any person, government, firm, corporation or concern. The rule further provides that so long as such advocate continues to practice, there is no problem but if an advocate takes up any such employment referred to above, he is obliged to intimate such fact to the Bar Council on whose roll his name appears. The advocate was thereupon ceased to practice as an advocate so long as he continues in such employment. In fact by reading down the Rules 1 and 2 of the State Bar Council (Enrollment) Rules, we are bringing the Rules 1 and 2 respectively of the State Bar Council in tune or in conformity with Rule 49 of the Bar Council of India Rules. Rule 49 specifically talks about an advocate . It is suggestive of the fact that a person can be termed as an advocate only after he is lawfully enrolled on the Bar Council. This is suggestive of the fact that if a practicing advocate decides to take up any other job with any person, government, firm, corporation or concern, his duty is to intimate the Bar Council and after the necessary intimation he would cease to practice as an advocate. It is too much to say that a person desirous to get himself enrolled as an Advocate with the State Bar Council should be asked at its inception to give up any other vocation, business or job and only, thereafter, he can be enrolled on the roll of the State Bar Council. We are dealing with a matter, in which, as single mother has come before us saying that no sooner she is enrolled as an Advocate after clearing the Bar Council Entrance Exam, then she would file a declaration on oath that she has given up the job which she has as on date. The lady is in a helpless situation. Today, if she gives up her job being a single mother, and god forbid if she is unable to clear the All India Bar examination, then she would be left without any means of livelihood. She has made herself very clear that she may be issued a provisional Sanad and such provisional Sanad shall remain in deposit with the Bar Council of Gujarat and she would obtain the final Sanad after clearing the Bar Council of India Exam. She has already filed an undertaking to this effect. We read down Rules 1 and 2 respectively of the Bar Council of Gujarat (Enrollment) Rules so as to read that a person may be either in full or part time service or employment or is engaged in any trade, business or profession, who otherwise is qualified to be admitted as an Advocate shall be admitted as an Advocate, however, the enrollment certificate of such a person shall be withheld with the Bar Council and shall lie in deposit with the Council until the concerned person makes a declaration that the circumstances mentioned in Rule 2 have ceased to exist and that he or she has started his/her practice. The Bar Council of Gujarat as well as the Bar Council of India is directed to act accordingly after applying the rules in consonance with what has been stated above and issue a provisional Sanad to the writ applicant so as to entitle her to appear in the Bar Council of India Exam - The Bar Council of Gujarat shall issue the Enrollment Number to the writ applicant on the same line and in the same format as given to all other applicants who apply for enrollment as an Advocate and which is acceptable to and compatible with the On-line All India Bar Examination portal. Let this exercise be undertaken at the earliest and the registration number shall be given to the writ applicant within a period of three days from the date of issue of the writ of this order. Application disposed off.

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• 2020 (11) TMI 507
  Grant of Regular Bail - applicant has submitted that the allegations made against the applicant are vague and he has been falsely implicated in the alleged offence - HELD THAT:- In the facts and circumstances of the case and considering the nature and gravity of accusation made against the applicants in the FIR, this Court is of the view that discretion is required to be exercised in favour of the applicants for grant of bail. Moreover, the applicants assure that they will abide by the terms and conditions that may be imposed by the Court and shall not commit any breach. Further I do not intend to go into the merits of the matters and I am persuaded to exercise my discretion in favour of the applicants. The investigation is going on and the charge-sheet is not filed and the trial would take a considerable long period of time. The applicant is ordered to be released on regular bail on executing personal bond of Rs. 10,000/- each with two surety of like amount to the satisfaction of the trial Court and subject to the conditions that they shall - Application allowed.

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• 2020 (11) TMI 506
  Dishonor of Cheque - offence punishable under Section 138 of NI Act - legally enforceable debt or not - allegation is that the cheques of the petitioner/accused have been forcibly taken away by one Meena Pandi, for which, complainant was also lodged and the cheques, which were forcibly taken have been misused through the respondent/complainant and different others under the provisions of the NI Act - HELD THAT:- The cheque [ExP1] belongs to the petitioner and the same has not been denied. The cheque [ExP1] was presented for collection by the respondent/ complainant on 16.09.2010 and the same was returned with an endorsement account closed . The respondent issued statutory notice dated 13.10.2010 and the same was returned unserved as unclaimed and hence, the complaint was filed - Since the issuance of cheque [ExP1] is admitted, the presumption under Section 139 of the Negotiable Instruments Act is attracted. To discharge the presumption, the petitioner / accused has examined himself as DW1 and examined his father as DW2. ExR1 to ExR19 were also marked before the Court, to rebut the presumption. The case of the petitioner/accused is that the account in Kotak Mahindra Bank was maintained at Adayar Branch as a salary account, when he was working in a Call Centre at Chennai and the said account was closed a long ago. The petitioner/accused neither knew the complainant nor borrowed any money. His father DW2, borrowed money from one Meena Pandi and in that transaction, the petitioner/accused had given two blank cheques to the said Meena Pandi. According to the petitioner/accused, the said loan transaction with Meena Pandi was fully discharged. However, Meena Pandi demanded more interest and refused to return the blank cheques, which were given to him by his father as a collateral security - DW2 lodged a complaint to the Superintendent of Police, Thanjavur as well as to the Chief Minister s Cell on 03.01.2011 against the said Meena Pandi. One of the said blank cheques has been misused by the said Meena Pandi, through his friend/ complainant and other Binamis. The trial Court also found that the cheque number of this ExP1 has not been mentioned in the said complaints [ExR1 and ExR2] and the statutory notice in this case was issued on 13.10.2010 and this complaint was made only on 03.01.2011. Considering all these points, the contention of the petitioner/accused was rightly rejected the Courts below - Though the petitioner has attempted to rebut the presumption, he was not successful in rebutting the presumption and as pointed out by the learned Counsel for the respondent/complainant that the service of notice is sufficient in this case. The criminal revision case is partly allowed - conviction rendered by the learned Judicial Magistrate [Fast Track Court at Magestrial Level], Thanvur is confirmed.

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• 2020 (11) TMI 505
  Dishonor of Cheque - Grant of Anticipatory Bail - Act of Cheating - applicant states that he has got nothing to do with the alleged transaction with the 2nd accused and the defacto complainant and that it was entirely the responsibility of the 2nd accused who have agreed to arrange the job Visa as stated by the defacto complainant - HELD THAT:- The promise to arrange Visa was made entirely by the 2nd accused. He was not able to fulfill the promise, and therefore, agreed to return the amount. He entered into an agreement, which is produced before this Court, which indicates that he has unconditionally agreed to return the amount to the defacto complainant. He has also issued cheques for the amount and the cheques were not honoured and in consequence of that a complaint under Section 138 of the Negotiable Instruments Act has also been filed by the defacto complainant. Nowhere in the complaint filed by the defacto complainant under Section 138 or in the agreement executed by the 2nd accused, the involvement of the applicant is mentioned. It is only in the F.I.Statement that the name of the applicant is mentioned by the defacto complainant regarding his introducing the defacto complainant to the 2nd accused. In case the applicant was also involved in the sharing of the money and cheated, the agreement executed by the 2nd accused would definitely have made mention of the applicant. The fact that the name of the applicant has not been mentioned in the agreement indicates that there is no material to prove his complicity at present. There is no reason to believe that he will not cooperate with the investigation or abscond or flee from justice. The bail application is allowed and the applicant is directed to surrender before the investigating officer within two weeks.

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• 2020 (11) TMI 504
  Dishonor of Cheque - commission of the offence punishable under Section 138 of the NI Act against the accused - issuance of Cheque for the discharge of debt or liability - rebuttal of presumption as provided by the provisions of Sections 118 and 139 of the NI Act - HELD THAT:- Applying the definition of the word proved in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the NI Act, it becomes evident that in a trial under Section 138 of the NI Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the NI Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is well settled law that when concurrent findings of facts rendered by the trial court and the appellate court are sought to be set aside in revision, the High Court does not, in the absence of perversity, upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret the evidence on record in a case, where the trial court has come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. Both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Sections 118 and 139 of the NI Act. The burden is not discharged rightly. Hence, the conviction of the accused for the offence under Section 138 of the NI Act is only to be upheld. Validity of sentences imposed - HELD THAT:- Ext.P1 cheque was executed as early as on 31.08.2007. The accused has been conducting this criminal case for the last 13 years. Considering the facts and circumstances, it is just and proper to modify the sentence awarded by the two courts below by sustaining the conviction imposed. The conviction against the accused under Section 138 of the NI Act is confirmed - The accused is sentenced to pay a fine of Rs. 2,00,000/- and in default of payment of fine to undergo simple imprisonment for a period of three months - In case the fine amount is deposited by the accused before the trial court as ordered, the same shall be disbursed to the complainant as compensation in accordance with rules - The criminal revision petition is partly allowed.

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• 2020 (11) TMI 503
  Dishonor of Cheque - commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumptions as envisaged by the provisions of Sections 118 and 139 of the N.I.Act - HELD THAT:- Applying the definition of the word proved in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the N.I.Act, it becomes evident that in a trial under Section 138 of the N.I.Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that, as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the N.I.Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is necessary on the part of the accused to set up a probable defence for getting the burden of proof shifted to the complainant. Once such rebuttable evidence is adduced and accepted by the court, the burden shifts back to the complainant. Section 141 of the N.I.Act provides constructive liability on the part of the Directors of the company or other persons responsible for the conduct of the business of the company. Though the heading of Section 141 of the N.I.Act reads Offences by companies , as per the Explanation to that Section company means any body corporate and includes a firm or other association of individuals ; and director in relation to a firm, means a partner in the firm. Their liability is joint and several. Consequently, therefore, when an offence is alleged to have been committed by the partnership firm, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of its business as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded under Section 138 of the N.I.Act. The conclusions drawn by the trial court and the appellate court to convict the accused 1 and 2 are perfectly legal. The cheques in question were drawn for consideration and the holder of the cheques received the same in discharge of an existing debt. Thereafter, the onus shifts on the accused to establish a probable defence so as to rebut such presumption, which onus has not been discharged by the accused. Once the cheque is proved to be issued, it carries statutory presumption of consideration under Sections 118 and 139 of the N.I.Act. Then the onus is on the accused to disprove the presumption at which they have not succeeded - It is well settled law that when concurrent findings of facts rendered by the trial court and appellate court are sought to be aside in revision, the High Court does not, in the absence of perversity upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret the evidence on record in a case where the trial court has come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. Both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Section 118 and 139 of the N.I.Act. The burden is not discharged rightly. Hence, the conviction of the accused for the offence under Section 138 of the N.I.Act is only to be upheld. Quantum of sentences - HELD THAT:- The appellate court had considered everything in detail and reduced the sentence to one of imprisonment till the rising of the court by maintaining the compensation awarded by the trial court under Section 357(3) of Cr.P.C. The sentence of fine of Rs. 5,000/- imposed against the 1st accused was also maintained. The appellate court had maintained compensation amount for an amount of Rs. 2,60,000/- although the amount covered under the cheques was only Rs. 2,52,009/-. An amount of Rs. 5,000/- was imposed additionally as fine against the 1 st accused. The conviction and sentence imposed by the appellate court is confirmed. In view of the situation prevailing in the country due to the outbreak of Covid-19 Pandemic, this Court is inclined to grant six months time from today to the revision petitioners/ accused 1 and 2 to deposit the compensation and the fine amount before the trial court, failing which the learned Magistrate shall take necessary steps to execute the sentence against the revision petitioners/accused 1 and 2 in accordance with law - the criminal revision petition is allowed in part.

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• 2020 (11) TMI 502
  Dishonor of Cheque - petitioner challenges the composite order taking cognizance and issuing summons on the grounds that there is no proof as to when the notice under Section 138 of the Negotiable Instruments Act read with Section 141 of the Negotiable Instruments Act was served upon these petitioners - main contention raised by the petitioner is that the complainant in his complaint petition, has not stated as to when notices under Section 138 of the Negotiable Instruments Act was served upon the petitioners. HELD THAT:- The deeming fiction in respect of service of notice is applicable in respect of notice under Section 138 of the Negotiable Instruments Act also if the notice is properly and correctly addressed. In this context, it is to be noted that it is not the case of the petitioners that the notice so issued is not properly or correctly addressed - the grounds taken by the petitioner has got no legs to stand. The notice is deemed to have been served upon the petitioner. Another ground taken by the petitioners is that the petitioner No.3 is a sleeping partner and has got nothing to do with the day to day affairs of the business and merely putting the words in the complaint that she was incharge of the day to day activity is not sufficient to take cognizance. Section 141 of the Negotiable Instruments Act does not make all the persons and directors liable for the offence. Criminal liability has been fastened on those, who at the time of commission of offence, were in charge of, and were responsible to the firm for the conduct of the business of the firm. There may be cases where the partners are sleeping partners or directors, who are not required to take part in the business, they may be ladies and those, who know nothing about the business. The accused No.2 and 3 are directors of the company, who are responsible for and looking after day to day affairs of the business - the complainant has discharged their onus in terms of Section 141 of the Negotiable Instruments Act. Now it is the accused, who have to rebut the same by cogent evidence. Before this Court, at this stage, save and except only the oral submission, no impeachable material has been brought on record by the petitioners to suggest that the petitioner No.3 is not responsible and also is not looking after the day to day affairs of the company. In absence of any materials, at this stage, to give a finding in favour of the accused is not proper. It is well settled principle that when prima facie an offence is made out, a criminal proceeding cannot be quashed at the very threshold. In these cases, the cheques were issued in favour of the complainant, whose payments were stopped. Admittedly, notices were sent, which were deemed to have been served. Admittedly, the amount involved in each cheque was not paid - Since the cheques were issued by accused No.2, he has been summoned / noticed. Since accused No.3 is a director and it has been mentioned in the complaint petitions that she is also looking after the day to day affairs of the company, by application of Section 141 of the Negotiable Instruments Act notice has also been issued to her. There are no illegality in the impugned orders in all these cases, by which cognizance has been taken and the petitioners have been summoned in all these cases - petition dismissed.

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• 2020 (11) TMI 501
  Dishonor of Cheque - acquittal of acused - the trial court found that the accused is not guilty under Section 138 of the Negotiable Instruments Act - Existence of offence punishable u/s 138 of NI Act or not - HELD THAT:- The trial court after considering the entire oral and documentary evidence came to the definite conclusion that the accused is not guilty under Section 138 of the Negotiable Instruments Act. The lower court after perusing the oral and documentary evidence came to such conclusions. There are no no reason to interfere with the finding of facts by the trial court - Criminal Appeal dismissed.

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• 2020 (11) TMI 500
  Dishonor of Cheque - alteration of charge invoking the power under Section 216 Cr.P.C. - HELD THAT:- It is an admitted fact that the case pending against the petitioner is initiated under Section 138 of the Negotiable Instruments Act. Section 138 of the Negotiable Instruments Act is usually tried as a Summary Trial or as a Summons Case. In those proceedings, there is no question of framing charge. As per Section 251 Cr.P.C., only particulars of the offence will be put to the accused and there is no framing of charge in the summons Trial. Section 216 Cr.P.C. is included in Chapter XVII of the Cr.P.C. That Chapter deals about charge. Section 216 is applicable when a court want to alter or add to any charge at any time before the judgment is pronounced. To attract Section 216 Cr.P.C. a charge is necessary. Then only it can be altered or any other charge can be added. Here is a case where there is no charge. Therefore, Section 216 Cr.P.C. is not at all applicable. The petition filed by the petitioner is not legally maintainable - Application dismissed.

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• 2020 (11) TMI 499
  Dishonor of Cheque - prosecution case is that the accused has misused the blank cheque leaf and papers signed by the complainant, which is given to the 1 st accused as security and hence cheated the de facto complainant - HELD THAT:- This is not a fit case in which I can quash the entire proceedings in Annexure-2 final report. Of course there may be legal contentions to the petitioners regarding the maintainablity of the prosecution. But, when the petitioners themselves admit that this is the counter blast to a prosecution initiated by them against the de facto complainant under Section 138 of Negotiable Instruments Act, this Court can not quash one proceedings invoking the powers under Section 482 of Cr.P.C. The case of the de facto complainant in this case is his defence in Annexure-3 proceedings initiated under Section 138 of Negotiable Instruments Act - Application dismissed.

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• 2020 (11) TMI 498
  Dishonor of Cheque - offences under Sections 138 142 of Negotiable Instruments Act - petitioner would submit that the petitioner is innocent and he has not committed any offence as alleged by the prosecution - HELD THAT:- The issue decided in the case of DEVENDRA PRASAD SINGH VERSUS STATE OF BIHAR ANR. [2019 (4) TMI 1876 - SUPREME COURT] where it was held that High Court while hearing the application under Section 482 of the Cr.P.C. had no jurisdiction to appreciate the statement of the witnesses and record a finding that there were inconsistencies in their statements and, therefore, there was no prima facie case made out against respondent No.2. In our view, this could be done only in the trial while deciding the issues on the merits or/and by the Appellate Court while deciding the appeal arising out of the final order passed by the Trial Court but not in Section 482 Cr.P.C. proceedings. The judgment is squarely applicable to this case and as such, the points raised by the petitioner cannot be considered by this Court under Section 482 Cr.P.C. This Court is not inclined to quash the proceedings in C.C.No. 450 of 2015 on the file of the learned Judicial Magistrate, Valliyoor, Tirunelveli District. The petitioner shall be present before the Court at the time of furnishing of copies, framing charges, questioning under Section 313 Cr.P.C. and at the time of passing judgment. The trial Court is directed to complete the trial in C.C. No.450 of 2015 , within a period of six months from the date of receipt of copy of the order - Petition dismissed.

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• 2020 (11) TMI 496
  Cheque issued for Dishonor of Cheque - Recovery of arrears of rent - HELD THAT:- There is no dispute that the petitioner is the head lessor ; the second respondent is the lessee ; and the first respondent is the sub lessee. At the outset, it is to be stated that the first respondent owes no amount to either the petitioner or the second respondent as arrears of rent. On the other hand, the second respondent failed to discharge her liability to the petitioner and was in arrears of rent for certain period, i.e., August 2010, July 2011 and from 01.04.2012 to 30.09.2013 - Admittedly, the second respondent issued the cheque for a sum of Rs. 14,885/-, which was returned with the endorsement funds insufficient , but there is no record to show that the petitioner had initiated any criminal prosecution against the second respondent under the Negotiable Instruments Act, 1881. Further, the issuance of the cheque itself goes to show that the second respondent admitted the liability and also the receipt of rent from the first respondent. Though the rent for the months of August 2010 and July 2011 were not paid the petitioner kept quiet for sometime, without taking any action and only issued the notice to the first respondent on 25.12.2011, a copy of which is not produced before this Court conveniently by the petitioner. Even thereafter, the petitioner had chosen to send another notice to the first respondent only on 10.03.2015 seeking the arrears of rent for the default committed by the second respondent, which was followed by a rejoinder notice dated 11.04.2015. The petitioner himself sent another representation on 20.10.2015 - However, taking note of the default on the part of the second respondent, the first respondent invoked clause 3(h) of the agreement dated 28.12.2005 and commenced to pay the arrears of rent directly from 01.10.2013, which was also communicated to the petitioner vide letter dated 06.06.2014 by the first respondent and the first respondent has categorically stated the same in the counter-affidavit. In the counter-affidavit, the first respondent also informed the second respondent to work out his remedies in the manner known to law, as per his contractual obligations with the second respondent and not against the first respondent. The first respondent could not have been mulcted with the liability to pay the arrears of rent, which was otherwise paid to the second respondent and it is open to the petitioner to redress his grievance with the second respondent in accordance with law - Petition dismissed.

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