Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 20, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Grant of Bail - Input Tax Credit - presence of ground of parity - GST Evasion - Here in this case as prayed on behalf of accused to grant bail on the ground of parity with the other co-accused persons, the ground of parity is not available here since accused, unlike the co-accused persons, despite his arrest in this case has not co-operated with the investigation and he even refused to give his statement. He even has not provided the Telly data in order to help in completing the investigation. There is nothing which accused has offered to deposit with the complainant in lieu of his evasion of GST - Parity also not available on the ground that accused firm has been most of the time falls under level 1 or level 2 but not paid any tax in cash but shown the same to have been paid in their returns. - DSC
Income Tax
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Income accrued in India - Shipping income earned in India - India Singapore DTAA - income is exempt in the singapore - AO has made an attempt to deny the benefit of exemption claimed by the assessee by invoking Article 24 of India Singapore DTAA, even though, the conditions stipulated under Article 24 are not satisfied. AO as well as the Ld.DRP were erred in coming to the conclusion that income earned by the assessee from shipping operations in India is taxable in India by virtue of Article 24 of India Singapore DTAA - HC
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Provision for Leave Encashment - Validity of order the Tribunal holding that no expenditure shall be allowed u/s.43B(f) on account of any leave salary unless the expenditure is actually paid? - Order of tribunal is correct - HC
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Validity of reopening of assessment u/s 147 - Search of another person - There has been no action on assessee under section 132 or requisition is made under section 132A as per section 153C(2). - Reopening notice is issued as assessee failed to include the disclosure made as per statement recorded in the return filed for year under consideration. It is apparently clear that the reopening notice has been issued subsequent to the filing of return for year under consideration by assessee - AT
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Reopening of assessment u/s 147 - Addition u/s 68 - transaction of the sale of shares - Assessee has explained the source of the source of funds available with buyer which is paid to the assessee, supported by the fact of the existence of the assets, its transfer to the buyer by assessee. - Additions deleted - AT
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Estimation of net profit - Rejection of books of accounts - Just because that the assessee is having 5 bank accounts and not shown in the regular books cannot be the sole basis to reject the regular books of accounts. On the undisclosed turnover the assessee has already opted and duly offered the net profit seperately but on the disclosed turnover unless the Ld. A.O points outs specific mistake or doubt about the genuineness of the purchase/sale and expenses transactions, the book results cannot be doubted. - AT
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Assessment u/s 153C - Period of limitation - although the Assessing Officer of the searched person and the other person(the assessee) was the same, satisfaction was recorded by the Assessing Officer for invoking the provisions of section 153C of the Act on 21/12/2010, the said date would be deemed to be the date of receiving documents by the Assessing Officer. Thus, the year of search would be FY 2010-11 relevant to AY 2011-12. - AT
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Exemption u/s 11 - undue benefit to specified persons - denial of exemption to extent of rent paid by the assessee to one of its trustees holding the same to be on higher side as compared to market rate by invoking the provisions of section 13 (1)(c) - when the entire land was required by the assessee society for its objective of imparting education, there cannot be said that any benefit had been given to the lessor by retaining its land on lease instead of buying it off - Denial of exemption u/ s 11 rejected - AT
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Undisclosed cash deposited in the bank account - it will not be fair to treat the entire cash deposits as the unaccounted income of the assessee as it can be reasonably construed to represent as the undisclosed turnover of the firm in which the assessee is a partner. - AT
Customs
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Overvaluation of export goods - There is no illegality in conducting a local market survey to gather the valuation of the goods for the purpose of exercising power under section 110(1) of the Customs Act. - Once the officer had detected shortage of export goods and the market survey revealed that the goods were grossly overvalued, it cannot be said that the proper officer did not have ‘reason to believe’ that the goods were liable to confiscation under the provisions of section 113(i) of the Customs Act. - AT
Corporate Law
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Transfer of Equity Shares - When the original share certificates were lost / mislaid / untraceable, it is not prudent for the Appellants to insist upon the production of original share certificates in question to effect the transfer of shares, as opined by this Tribunal. Besides this, the other reasons projected on behalf of the Appellants that just because the Respondent / Petitioner had filed numerous criminal / civil cases and that he was not attending the ‘Board Meetings’ and he would create problems for smooth functioning of affairs of the Company will not hold water and they are unworthy of acceptance in the considered opinion of this Appellate Tribunal. - AT
Service Tax
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Classification of services - Cleaning services or not - It is not a case where the Appellant goes to the premises of the industries to perform any cleaning activity. Instead, the waste is delivered to the site of the Appellant in safe leakage proof bags by the industries for proper disposal. The industries are not concerned with the waste thereafter. - incineration of waste is not taxable under business auxiliary service or any other taxable service. - AT
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Levy of Penalty u/s 78 of FA - There are no positive evidence has been brought on record in the entire proceedings that non-payment of tax was attributable to reasons to deliberately evade payment of tax. - Moreover, the appellant is a PSU in the instant case. The Courts have consistently held that there is a presumption that PSU would not have intention to evade payment of duty or tax. - AT
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Works Contract Services - Commercial of Industrial Building and Civil Structures and Erection Commissioning and Installation service - When the revenue itself has allowed the abatement, it has admitted that the material cost is included in the gross value of the Works Contract Service. With this fact also, it is clearly established that the service provided by the appellant is Works Contract Service. - AT
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Tax Relief under the SVLDR Scheme - application for Tax Relief rejected on the ground that there is error in filling up Form No.SVLDRS-1 - in view of the fact that the SVLDR scheme is envisaged as a time bound exercise, this Court is of the considered opinion that the petitioner is entitled for issuance of Discharge Certificate as contemplated under Section 127(8) of the SVLDR Scheme. - HC
Central Excise
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SSI Exemption - clandestine removal - Admittedly, the total electricity bill for the two months in dispute is about ₹ 20,100/- or ₹ 10,000/- per month approximately. With such meager consumption of power and taking in view the installed capacity, as well as the idle time due to power failure or break down of machine from time to time, the estimated production and confirming of duty by Revenue is found to be erroneous and high pitched. - AT
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Clandestine Removal - If allegations can be made just on evidence obtained from third parties, there would be no dearth of such cases. We find that leaving alone proof with a mathematical precision, in the instant case, evidence made available is not even enough even for a Gross approximation. - the said allegation cannot be sustained on the basis of assumptions and conjectures. - AT
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CENVAT Credit - input services used for the Repair and Maintenance Service, etc of wind mills located far away from the factory - appellant have never sold any electricity generated from the wind mill to anybody and , therefore, they are not hit by the mischief Rule 6(1) of CENVAT Credit Rules, 2004 - credit allowed - AT
Case Laws:
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GST
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2020 (11) TMI 574
Time Limit for filing Form TRAN - 1 - carry forward the tax credit pertaining to pre-GST period to GST regime - Vires of Rule 117 of the CGST Rules, 2017 - HELD THAT:- Rule 117 of the CGST Rules, 2017 and the parameteria provisions of the U.P. GST Rules provides for carry forward of tax or duty credit under any existing laws or on goods held in stock on the appointed day. The appointed day under the GST regime was 01.07.2017. Learned counsel for the Central GST and the learned Special Counsel for State GST could not inform as to whether any recommendation under sub - Rule (1 A) of Rule 117 was made by the Council and thereupon the Commissioner has extended the date for filing TRAN -1 form. They pray for and are granted three days' time to obtain complete instructions in the matter particularly with regard to the recommendations of the Council and the order of the Commissioner for extension of time for filing TRAN -1 Form under sub - Rule 1/1A of Rule 117 of the CGST Rules/UPGST Rules. Put up as a fresh case on 23.11.2020.
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2020 (11) TMI 573
Best judgment assessment - Service of Demand Notices - petition dismissed without prejudice to the right of the petitioner to pursue its appellate remedy against the assessment orders in question - HELD THAT:- During the course of hearing of another writ petition, where the same issue came up for consideration, this court had occasion to interact with the officers of the GST department of the State, who were familiar with the technical aspects of uploading orders of the State authorities on the common web portal. It then became apparent that the assessment orders were not being simultaneously uploaded on the common web portal and that the statements made before this court on the earlier occasion were as regards uploading of the assessment orders on the back-end web portal maintained by the State Government and not to the common web portal maintained by the GST Network. Application allowed.
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2020 (11) TMI 572
Seizure of goods alongwith the vehicle - seizure merely on the ground that invoice was found to be in the name of some other party - Section 129(1) (a) of the U.P. GST Act - HELD THAT:- The present petition is disposed off with a liberty to the petitioner to approach the respondent no. 3 by filing a fresh application for release under Section 129(1) (a) of the U.P. GST Act. In case, such an application is filed, the respondent no. 3 shall take a decision thereupon in accordance with law considering the documents that may be filed by the petitioner. The said exercise shall be completed positively within a period of two weeks from the date of filing of the application.
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2020 (11) TMI 571
Grant of Bail - Input Tax Credit - presence of ground of parity - It is alleged that the companies owned and controlled by accused Rakesh Kumar Goyal have availed most of the amount of ITC from companies owned or controlled by said Rakesh Kumar Goyal himself - HELD THAT:- The law in regard to grant or refusal of bail is very well settled by Hon ble Supreme Court and Hon ble High Court in innumerable judgements. The court while granting bail should exercise its discretion in a judicious manner and not as a matter of course. Though at the stage of granting bail a detailed examination of evidence and elaborate documentation of the merit of the case need not be undertaken, there is a need to indicate in such orders reasons for prima facie concluding why bail was being granted particularly where the accused is charged of having committed a serious offence. Any order devoid of such reasons would suffer from non-application of mind. Here in this case as prayed on behalf of accused to grant bail on the ground of parity with the other co-accused persons, the ground of parity is not available here since accused, unlike the co-accused persons, despite his arrest in this case has not co-operated with the investigation and he even refused to give his statement. He even has not provided the Telly data in order to help in completing the investigation. There is nothing which accused has offered to deposit with the complainant in lieu of his evasion of GST - Parity also not available on the ground that accused firm has been most of the time falls under level 1 or level 2 but not paid any tax in cash but shown the same to have been paid in their returns. Furthermore, there are allegations against the accused that the total ITC passed on by the companies of R.K. Goyal is estimated to more than ₹ 180 Crore, including ITC passed/ circulated amongst his own companies. The gravity is to be judged by the impact, the offence has, on the society, economy and financial stability of the country. In the today s time when country is fighting with corona virus pandemic and struggling all over on the economic front such evasion and false claims have further pushed the country towards poverty, unemployment and starving. Such offence are committed with cool mind and scrupulous planning. Therefore, in this case offence alleged against the accused is grave in nature considering the manner in which it committed and the amount involved in commission of the offence. As accused has not co-operated in investigation therefore, apprehension of tempering of witness as alleged against him is not unfounded. Ground of parity with the co-accused is not available to the applicant considering is role and involvement. Application dismissed.
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2020 (11) TMI 570
Refund of unutilized ITC - export of Goods and Services without payment of Integrated Tax - refund rejected on the ground that the appellant had shown in return GSTR-3B the turnover of the zero-rated supply as Zero i.e. outward Zero-rated supplies are Zero and the appellant had not corrected in subsequent returns - period of October to December, 2017 - Section 54 of CGST Act - HELD THAT:- The appellant has committed an error in GSTR-3B by not furnishing the export value/sale figure in proper column i.e. 3.1(b) outward taxable supplies (Zero-rated) the export value/sale figures have been furnished in wrong column i.e. 3.1(c) i.e. other outward taxable supplies (Nil rated, exempted) due to that refund claim was rejected. The appellant simply stated that they had filed GSTR-1 properly - Further, the appellant in their defence submission has not discussed/elaborated much about the amendment/correction/ rectification has been done in GSTR-1. The appellant did not file any corrected/modified GSTR-1 return of subsequent month for which the appellant was required to do. If the appellant has committed an error while submitting FORM GSTR-3B, the steps should have been taken to rectify the same. The corresponding column in the table provides the step to be followed by the appellant to rectify such error. The appellant was required to rectify such omission or incorrect particulars in the subsequent return to be furnished for the month or quarter during which such omission or incorrect particulars are occurred - there are no force in the contention of appellant. Appeal dismissed - decided against appellant.
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2020 (11) TMI 569
Detention of goods alongwith the vehicle - absence of E-way Bill - penalty - HELD THAT:- Department had made the case against the appellant on the ground that the valid E-way Bill was not available with the conveyance at the time of interception at 05.18 PM on 30-11-2018. MOV-01 and MOV-02 were served accordingly. The Person In-charge of the vehicle provided an e-way bill at the physical verification stage. After verification it was found that the said e-way bill updated with the conveyance No. RJ-14-GF-6858 at 05.28 PM. Hence, the valid e-way bill was not available with the intercepted vehicle at 05.18 PM i.e. time of interception and cleared impugned goods without e-way bill and the Person-in-charge of the vehicle provided an E-way Bill at the physical verification stage. The E-way-Bill No. 741043010569 was got generated prior to the commencement of movement of the goods at 04.37 PM which was contained all details i.e. details of the goods, tax invoice number as well as the name of the buyer or the goods including his registration number under the GST Act; and the transport receipt of the transporter and packing list was also accompanying the goods. In so far as E-way Bill was not available with the conveyance at the time of interception at 05.18 PM, the appellant has explained and I also find that the vehicle of the Driver was carrying the E-way Bill No. 741043010569 in which the vehicle registration number was shown RJ14-GF-6858 in place of vehicle registration number RJ-14-GF-6831 due to sudden change in vehicle plan by the transporter, the transporter has placed another vehicle bearing Registration No. RJ-14-GF-6831 in place of Registration No. RJ14-GF-6705. As soon as the mistake came to the notice of the appellant the same mistake was rectified by the appellant and got generated the E-Way Bill at 05.28 P.M. mentioning therein the Vehicle Registration Number RJ-14-GF-6858. All the necessary statutory requirement under the provisions of CGST Act and Rules was fulfilled by the appellant except mentioning corrected vehicle number at the time of interception, though this mistake was corrected soon after it came to notice. Thus, there appears no ill intention to evade the tax and just mere technical mistake. Penalty - HELD THAT:- Since the appellant himself admitted their mistake by not correcting the vehicle number. Therefore, they are liable for a penalty under Section 125 of the CGST Act, 2017. Appeal allowed in part.
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2020 (11) TMI 568
Detention of goods alongwith the conveyance - undervaluation of goods - Department has made the case against the appellant on the ground that the appellant had cleared the goods on considerably lesser value keeping in view the MRP marked on goods with intent to evade tax - HELD THAT:- Under GST law, taxable value is the transaction value, i.e. price actually paid or payable, provided the supplier and the recipient are not related and price is the sole consideration. In most of the cases of regular normal trade, invoice value will be the taxable value. However, to determine value of certain specific transactions, Determination of Value of Supply rules have been prescribed in CGST Rules, 2017. In GST, tax is payable on ad valorem basis, i.e. percentage of value of the supply of goods or services. Section 15 of the CGST Act and Rule 27 to Rule 35 of CGST Rules, 2017 contain provisions related to valuation of supply of goods or services made in different circumstances and to different persons. As per sub-section (1) of Section 15 of CGST Act, 2017 The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply . In the instant case before me nothing was brought on record by the adjudicating authority to substantiate that the appellant has undervalued the goods and value declared by the appellant is not a true value in terms of Section 15(1) of CGST Act, 2017. No investigation was made by the concerned authority and simply on the basis of MRP the case was made for undervaluation. In GST law there is no provisions for determination of value on the basis of MRP. Therefore, the order passed by the adjudicating authority is contrary to the provision of CGST Act, 2017 and not sustainable. Appeal allowed - decided in favor of appellant.
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2020 (11) TMI 530
Review of Order - It is the case of the petitioner that the dates shown in the order as date of issue of assessment order does not reflect the correct date on which the assessment orders were put up on the web portal of the Department and the actual date of publishing the order in the web portal was much later, and on the dates indicated in the Review Petition - HELD THAT:- The statement filed by the respondents that was relied upon while passing the judgment aforesaid, was filed on 19.08.2020. On receipt of the statement the petitioner had filed a reply to the same and the final hearing of the Writ Petition was on 29.09.2020. The contention now taken by the petitioner, as regards availability of material that would suggest that the date on which the Department had posted the details of the assessment order on the web portal are not correct, is one that was available to the petitioner to establish at the time of final hearing. This material not having been produced then, the production of the said material, and raising such contentions in a Review Petition is not permissible. Review Petition dismissed.
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Income Tax
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2020 (11) TMI 567
Income accrued in India - Shipping income earned in India - India Singapore DTAA - whether shipping income is exempt u/s 13F of Singapore income tax, the DTAA benefit be denied to the assessee? - assessee is a tax resident of Singapore - HELD THAT:- AO referring to Article 24 of the tax treaty, was of the opinion that although global shipping income of a Singapore tax resident is taxable only at resident State, but by virtue of Article 24 exemption would apply only to the extent of the amount repatriated / remitted to Singapore. In our view, the above conclusion of the AO is under the misconception of the provisions of India Singapore tax treaty, because as per Article 8 of India Singapore tax treaty, it was clearly specified that only the resident country has the right of taxation of freight income earned from operation of ships in international traffic. As may be seen from the provisions of Article 8(1), we are of the considered view that it is not an exemption provision but an enabling provision which provides an exclusive right of taxation of income to the residence country. By entering in to treaty with Singapore, India has given up its right to tax shipping income of a non-resident in India. Therefore, any income of a non-resident shipping company which is a tax resident of Singapore is liable to tax only in Singapore but not in India. Exclusive right of taxation in one Contracting State is not the same as the specific exemption being available in other Contracting State. Further, shipping income dealt with in Article 8 states that profits derived by an enterprise of a Contracting State by operation of ships in international traffic shall be taxable only in the State of residence. The word only debars the other Contracting State to tax the shipping income; i.e. India is precluded from taxing the shipping income even if it is sourced from India. When India does not have any taxation right on a shipping income of non-resident entity, exemption or reduced rate of taxation in the source state is of no relevance because once the taxing right has been given off, the other conditions like exemption or reduced rate of tax has no bearing on the taxability of particular income in other Contracting State. As we noted earlier Article 8 of India Singapore DTAA does not provide for exemption or reduced rate of taxation of such income. It is crucial to note that Article 8 of India Singapore DTAA contemplates the taxation rights of a particular income in particular State. As per said article, the country of residence is having exclusive right over taxation of shipping income and that being the case, the assessee being resident of Singapore vest with right to tax such income under the Singapore Income Tax laws. Accordingly, the shipping income earned in India is neither exempt nor taxed at reduced rate as per Article 8 of DTAA which is a condition precedent for applicability of Article 24 As we have already noted in earlier para of this order, under Article 8 of India Singapore DTAA, global shipping income of a tax resident of Singapore is only taxable in the country of residence. Once the income is taxable in the country of residence on accrual basis, the second condition prescribed under Article 24 of India Singapore DTAA is not satisfied. This fact is further strengthened by the letter of the Inland Revenue Authority Singapore (IRAS) letter 17.09.2018, where it was clarified that the income of a Singaporean company from the operation of ships in international traffic is taxable in Singapore on accrual basis. Thus, both the conditions of Article 24 is not satisfied in the present case. We, therefore are of the considered view that the AO was erred in invoking Article 24 of India Singapore DTAA to tax the income earned by the assessee from shipping operations in India. Assessing Officer has attempted to deny the exemption claimed by the assessee under Article 8 by invoking Article 24 of India Singapore tax treaty on a misconception of two clauses of India Singapore DTAA by referring to the provisions of Section 13F of the Singapore Income Tax Act, ignoring the fact that Section 13F of the Singapore Income Tax Act was already in existence since 01.04.1991 and as such the articles provided in India Singapore DTAA which was came in to existence from 27.05.1994 was inserted by the Competent Authorities of both the Contracting States after thoroughly considering the provisions of Section 13F of Singapore Income Tax Act and further choose not to alter the taxation right of shipping income which is generally available to the country of residence. Assessing Officer has denied the benefit only on the simple ground that the income of the assessee received in India is exempt by virtue of separate provisions of Singapore Income Tax Act and on the misconception of law to come to the conclusion that once a country of residence has exempts particular income from tax, the other Contracting State (source country) can levy tax on such income without understanding the true meaning of Article 8 of India Singapore DTAA. - AO has also ignored the arguments taken by the assessee in the light of DIT relief certificate issued by the Department for the subject assessment year, where the AO after considering the TRC and supporting documents issued DIT Relief Certificate dated 25.06.2014 and 14.08.2014 by holding that Article 8 of India Singapore DTAA is applicable to the assessee and income from operation in international traffic will not be taxable in India. AO has made an attempt to deny the benefit of exemption claimed by the assessee by invoking Article 24 of India Singapore DTAA, even though, the conditions stipulated under Article 24 are not satisfied. AO as well as the Ld.DRP were erred in coming to the conclusion that income earned by the assessee from shipping operations in India is taxable in India by virtue of Article 24 of India Singapore DTAA. Hence, we direct the Assessing Officer to delete the additions made towards shipping income of assessee earned in India. - Decided in favour of assessee.
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2020 (11) TMI 566
Provision for Leave Encashment - Validity of order the Tribunal holding that no expenditure shall be allowed u/s.43B(f) on account of any leave salary unless the expenditure is actually paid? - HELD THAT:- The above substantial questions of law have to be answered against the appellant/assessee in the light of the decision of the Hon'ble Supreme Court in the case of Union of India and others vs. Exide Industries Limited [ 2020 (4) TMI 792 - SUPREME COURT] . - Decided in favour of revenue.
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2020 (11) TMI 565
Disallowance u/s.14A r.w. Rule 8D being the exempt income - HELD THAT:- The question proposed by the Revenue is no longer res integra relying on cases Vision Finstock Limited [ 2017 (7) TMI 1277 - GUJARAT HIGH COURT ] , [ 2018 (7) TMI 1246 - SC ORDER ], Gujarat Fluorochemicals Limited [ 2019 (7) TMI 541 - GUJARAT HIGH COURT ] - Appeal dismissed.
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2020 (11) TMI 564
Validity of reopening of assessment u/s 147 - search and seizure of another person including the husband of assessee - unaccounted money that is discernible from the seized documents owned by assessee in search - as alleged by assessee that, proceedings in assessee s case should have been in accordance with provisions of section 153C since addition is found during search - HELD THAT:- As per the scheme of the Act the year in which search is conducted does not fall within the purview of the provisions either under section 153A or under section 153C. Act allows 6 years period to be computed from the previous year relevant to the year in which the search was conducted. In Present facts the year under consideration is relevant to financial year in which search took place. There has been no action on assessee under section 132 or requisition is made under section 132A as per section 153C(2). In the present facts none of these conditions stands satisfied. We therefore find argument advanced by Ld.AR challenging the reopening is without any basis and does not satisfy the required conditions to be considered as per law. The reopening cannot be quashed on such technicalities as argued by Ld.AR that, assessee falls under the category of other person as per section 153A - reopening notice was issued as assessee failed to include the amount disclosed vide her letter dated 17/09/2010 in the return filed for year under consideration on 29/09/2011.Arguments advanced by Ld.Sr.DR deserves to be upheld. Pursuance to the declaration by assessee that the summon under section 131 was issued based upon the statements recorded therein the reopening has been initiated. We note that reopening notice is issued as assessee failed to include the disclosure made as per statement recorded in the return filed for year under consideration. It is apparently clear that the reopening notice has been issued subsequent to the filing of return for year under consideration by assessee - Decided against assessee.
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2020 (11) TMI 563
TP Adjustment - Comparable selection - application of turnover filter - HELD THAT:- We notice that the co-ordinate bench has considered the issue of application of turnover filter in the case of Tavant Technologies India P Ltd [ 2020 (8) TMI 712 - ITAT BANGALORE] as relying on AUTODESK INDIA PRIVATE LTD [ 2018 (7) TMI 1862 - ITAT BANGALORE] , thus comparables Larsen Toubro Infotech Ltd,Mindtree Limited (seg.), Persistent systems Ltd and Tech Mahindra Ltd (seg.) whose turnover is more than 200 crores and hence they cannot be considered as good comparable companies and need to be excluded. Provision for bad and doubtful debts as an operating expenditure - HELD THAT:- No dispute that if the provision for doubtful debts is taken as operating expenses in the hands of the assessee, then the said expenditure has to be taken so in the case of comparable companies also.The Tribunal accepted the submission of the assessee and accordingly it has held that it is a non-operating in nature - As relying on BROCADE COMMUNICATIONS SYSTEMS PRIVATE LIMITED case [ 2020 (6) TMI 584 - ITAT BANGALORE] and ROLLS-ROYCE INDIA PVT. LTD. VERSUS DCIT, NEW DELHI [ 2015 (12) TMI 516 - ITAT DELHI] we direct the AO/TPO to consider Provision for doubtful debts as an operating expense. Transfer pricing adjustment relates to the claim of working capital adjustment and risk adjustment - TPO has granted working capital adjustment of 1.70% by making his own calculations - HELD THAT:- In E VALUE SERVE. COM AND VICA-VERSA [ 2016 (9) TMI 1363 - ITAT DELHI] held that insisting on daily balances of working capital requirements to compute working capital adjustment is not proper as it will be impossible to carry out such exercise and that working capital adjustment has to be based on the opening and closing working capital employed. Hence the reasoning given by Ld DRP to reject the working capital adjustment is liable to be set aside. Accordingly we direct AO/TPO to allow working capital adjustment Claim of risk adjustment - we notice that the assessee did not raise any objection before Ld DRP regarding denial of the same. Hence we decline to adjudicate this ground. Additional depreciation on computers claimed u/s 32(1)(iia) - assessee claimed additional depreciation @ 20% on the new computers purchased - AO took the view that the assessee is developing computer software and it cannot be taken as an article or thing. He took the view that the computers are office equipment and separate rate of depreciation is allowed under the depreciation schedule - HELD THAT:- Additional depreciation prescribed u/s 32(1)(iia) is admissible to an assessee engaged in the business of manufacture or production of any article or thing etc. Hence, in order to claim this additional depreciation, an assessee should first satisfy the condition that he is engaged in the business of manufacture or production of any article or thing. The conditions for allowing additional depreciation u/s 32(1)(iia) was different at that point of time, when the case of Startronics Enterprises (P) Ltd [ 1994 (10) TMI 325 - ITAT AHMEDABAD] was decided by the Tribunal and High Court. Under the old provisions, the condition of manufacture or production of article was not available. However, the additional depreciation was not available to a machinery or plant installed in any office premises. Hence the Hon'ble High Court was required to consider the question as to whether the computers used for development of software would fall under the category of office equipment or not. Under the current provisions of sec.32(1)(iia), the first condition that should be satisfied is that an assessee should be engaged in the business of manufacture or production of an article or thing. We have agreed with the view expressed by Ld DRP that the development of computer software would not fall under that category, for the reasons discussed above - we hold that the assessee would not be entitled to Additional Depreciation prescribed u/s 32(1)(iia) of the Act. Accordingly, we confirm the order passed by Ld DRP. Disallowance u/s 40(a)(i) - lease line charges and payroll processing fee paid by the assessee for non-deduction of tax at source - HELD THAT:- AO has not made addition of above said payments in the final assessment order. Hence this addition does not arise out of the impugned final assessment order. Accordingly, we decline to admit this ground.
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2020 (11) TMI 562
Reopening of assessment u/s 147 - Addition u/s 68 - whether there was reason to believe that income has escaped assessment? - HELD THAT:- AO was having definite information about the assessee that there is a transfer of a sum of ₹ 4 crores from the account of Mr. Parminder Rana in the bank account of the assessee. It was STR information. Such bank account from where the money has been transferred in the account of the assessee is also found in suspicious transaction report. Therefore it is apparent that information available with the AO was a specific, definite and correct. More so this information is also not denied by assessee himself. Whether this information has any live nexus with escapement of income by the assessee? - Merely receiving a credit in the bank account cannot per se lead to reason to believe of escapement of income. When AO has categorically stated in the reasons recorded for reopening of the assessment that assessee has not disclosed the long-term capital gain/loss incurred by the assessee on sale of those shares, but it is found that assessee has given categorically each item of sale of shares in his revised return of income it cannot be said that the assessee has not disclosed the capital gain in the revised return of income. Had this revised return been examined by the learned assessing officer, it could have been found that assessee has disclosed long-term capital loss on sale of 40 lakhs shares of Sudarshan oversees Ltd in the month of December, 2008 wherein assessee has shown the long-term capital loss of ₹ 1, 23,30,161. AO could have stated that the long-term capital loss shown by the assessee is bogus but that is not the fact coming out from the reasons recorded. In spite of having a material, AO failed to show live nexus with the escapement of income. Whether the AO has applied his mind to the material available or not? - Reason of escapement of income is based on the fact that assessee was director of Willey Agrotech Ltd (sudarshan Consolidated Ltd) up to December 2008 and thereafter its President is found to be incorrect. Another fact that assessee has not disclosed the transaction of the sale of those shares in its revised return of income is also found to be incorrect. The third presumption that assessee has not filed the balance sheet wherein the holding of the shares is not available is also not supported by the law as there was no requirement of preparing balance sheet by the assessee, but, the holding was shown to have been owned by the assessee from the annual return of the investee company and further with all the assertions made by the assessing officer for reopening of the assessment are not supported by any evidence. We hold that despite having information AO has failed to record a reason that there is an escapement of income and further failed to apply his mind on the facts available in the revised return as well as with respect to the directorship of the assessee in Willey Agrotech Ltd. - there is no reason to believe is demonstrated by the learned assessing officer in the reasons recorded for reopening of the assessment - Decided in favour of asseessee. Assessee has explained the source of the source of funds available with buyer which is paid to the assessee, supported by the fact of the existence of the assets, its transfer to the buyer by assessee. In view of this the addition made by the learned assessing officer u/s 68 and sustained by the learned CIT A is not tenable. - Decided in favour of assessee.
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2020 (11) TMI 561
Special audit u/s 142[2A] - assessment order passed during the extended time period as allowed as per proviso to Section 142(2C) - HELD THAT:- On going through the proviso of Section 142(2C) of the Act we observe that the time for furnishing the report could be extended not exceeding 180 days from the date on which the directions u/s 142(2A) of the Act is received by the assessee. Extension can be either suo-moto by the Ld. A.O or on an application made in this behalf by the assessee quoting good and sufficient reasons. In the proviso there is no mention that whether the Special Auditor can approach for extension of time limit to submit the report. Power is vested with the Ld. A.O which either on the application of the assessee or suo-moto (emphasis applied) can extend the time period up to 180 days. In the instant case the assessee has not approached for extension of time period. It was only between the Ld. A.O and the Special Auditor that there was a communication of extension of time period. A.O who is having sufficient powers under proviso to Section 142(2C) to suo-moto extend the period not exceeding 180 days from the date of issue of order u/s 142(2A) of the Act. Ld. A.O has acted well within his power and extended the time period and subsequently accepted the Special Audit Report dated 23.05.2014 and further completed the assessment u/s 143(3) of the Act within two months from the date of receipt of Special Audit Report. We therefore find no reason to interfere in the findings of Ld. CIT(A) and find no merit in Ground No.1 raised by the assessee. Accordingly Ground No.1 of assessee s appeal is dismissed. Estimation of net profit - Revenue has challenged the relief given by Ld. CIT(A) of having applied 1% of net profit rate as against 5% net profit rate applied by Ld. A.O on total turnover - HELD THAT:- Just because that the assessee is having 5 bank accounts and not shown in the regular books cannot be the sole basis to reject the regular books of accounts. On the undisclosed turnover the assessee has already opted and duly offered the net profit seperately but on the disclosed turnover unless the Ld. A.O points outs specific mistake or doubt about the genuineness of the purchase/sale and expenses transactions, the book results cannot be doubted. This is also a fact that the assessee has maintained quantitative details and books are duly audited. So far as the book results i.e. net profit shown in the regular books @0.29% on the disclosed turnover of ₹ 23,01,37,927/- is concerned, we are of the view that the same should be accepted and estimation of Ld. A.O applying @5% of net profit and Ld. CIT(A) @1% of net profit on the disclosed turnover is devoid of any merits. Undisclosed turnover - The assessee suo-moto accepted that the bank charges have already been charged in the regular books and therefore net profit rate before claiming of finance charges should be adopted as net profit on the undisclosed turnover. Assessee has accordingly added 1.04% of finance cost to 0.29% of the net profit offered in the regular books and the total i.e. 1.33% is adopted as Net Profit rate and accordingly offered net profit of ₹ 27,28,606/- on the undisclosed turnover of ₹ 20,53,98,966/-. We are thus satisfied with the net profit offered by the assessee in the Income Tax Return on the disclosed turnover and Net profit of 1.33% offered on undisclosed turnover during assessment proceedings and thus applying the ratio of the decision in the case of Shri Sitaram Agrawal [ 2020 (8) TMI 807 - ITAT INDORE ] which is squarely applicable in the instant case, we allow Ground No.2 of the assessee s appeal and dismiss Ground No.1 of the Revenue s appeal. Addition made on account of peak balance in undisclosed bank accounts - HELD THAT:- Apart from cash the assessee also has stock in hand and the same in the case of M/s. Monika Trading Company and M/s. White Gold Enterprises is ₹ 56,25,609/- and ₹ 25,59,663/- respectively totaling to ₹ 81,85,272/-. So as on 27.10.2010 total of cash and stock in hand available in the regular books of the two proprietorship concerns run by the assessee totals to ₹ 1,22,62,009/- and this figure is much more than than the peak balance of unaccounted bank accounts at ₹ 75,80,285/-. So there is no negative balance of cash and stock after considering the total closing balance of all the 5 bank accounts. We thus applying our own finding in the case of Sitaram Agrawal (supra) are of the considered view that in the instant case Ld. A.O as well as Ld. CIT(A) erred in making the addition of unaccounted investment/ peak balance of undisclosed 5 bank accounts. We therefore set aside the finding of Ld. CIT(A) and delete the addition of ₹ 51,65,904/- sustained by Ld. CIT(A). Thus Ground No.3 raised by the assessee is allowed and Ground No.2 raised by the Revenue is dismissed.
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2020 (11) TMI 560
Assessment u/s 153A or 153C - Period of limitation - Whether the assessment for assessment year 2010-11 was required to be framed u/s. 153C of the Act being part of block assessment period or the assessment has been rightly made under regular provisions considering impugned assessment year relevant to the year of search? - HELD THAT:- Since, the Revenue has itself admitted the fact that the year of search would be Financial Year 2010-11 relevant to AY 2011-12, the block period of six years for search assessment u/s.153C of the Act would comprise of assessment years 2005-06 to 2010-11. The assessment for AY 2010-11 being part of block assessment period should have been u/s 153A r.w.s. 153C of the Act. We find merit in the additional ground of appeal raised by the assessee. In the case of CIT vs. Jasjit Singh [ 2015 (8) TMI 982 - DELHI HIGH COURT] has held that the date of initiation of search u/s. 132 of the Act or requisition u/s.132A of the Act in the case of other person shall be the date of receiving the books of account or documents or assets seized or requisition by the AO having jurisdiction over such other person. In the instant case, although the Assessing Officer of the searched person and the other person(the assessee) was the same, satisfaction was recorded by the Assessing Officer for invoking the provisions of section 153C of the Act on 21/12/2010, the said date would be deemed to be the date of receiving documents by the Assessing Officer. Thus, the year of search would be FY 2010-11 relevant to AY 2011-12. Since, the Revenue has itself admitted the fact that the year of search would be Financial Year 2010-11 relevant to AY 2011-12, the block period of six years for search assessment u/s.153C of the Act would comprise of assessment years 2005-06 to 2010-11. Under these facts, the assessment for AY 2010-11 being part of block assessment period should have been u/s 153A r.w.s. 153C of the Act. We find merit in the additional ground of appeal raised by the assessee.
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2020 (11) TMI 559
Exemption u/s 11 - denial of exemption to extent of rent paid by the assessee to one of its trustees holding the same to be on higher side as compared to market rate by invoking the provisions of section 13 (1)(c) - undue benefit had been given to the trustee by way of rent paid - as per CIT-A assessee society purchased further tracts of land - HELD THAT:- The assessee had duly demonstrated the reasonableness of the rent paid comparing the per sq. ft. rent paid per month in the present case which came to ₹ 10. 53, with other comparable cases which varied from ₹ 28. 84 on premises leased to Punjab National Bank to ₹ 62 on premises leased to ING Vysya Bank in the same vicinity. No infirmity in the aforesaid facts has been pointed out by the Revenue before us, nor has, we find the AO done so during assessment proceedings when the same was brought to his notice, or the Ld. CIT(A) who did not consider it necessary to comment on the same. Rent paid to Trustee, was found reasonable by the ITAT in A. Y 2003 - 04 2004 - 05, when identically exemption was denied by the AO - DR has not brought to our notice any distinguishing facts vis a vis those years. Further in subsequent assessment years, i. e from A. Y 2010 - 11 TO A. Y 2014 - 15, the Revenue made no such addition to the income of the assessee society in scrutiny assessment u/ s 143 (3) of the Act. No reason for holding the rent paid by the assessee society to Sh Amar Jyot Singh in the impugned year as unreasonable. CIT(A) has gone on a totally different tangent for holding so stating that the fact that the assessee society purchased further tracts of land when it should have purchased the land taken on lease so as to do away with the rent payment, shows that undue benefit was being given by the assessee society to the lessor Shri Amarjyot Singh - No merit in this reasoning of the Ld. CIT(A) particularly when the assessee had demonstrated that the land purchased was not lying surplus with it but had been put to use for furthering the objective of the assessee society of imparting education. The assessee we have noted had filed a complete detail of usage of land both owned and leased by it - when the entire land was required by the assessee society for its objective of imparting education, there cannot be said that any benefit had been given to the lessor by retaining its land on lease instead of buying it off, as per the reasoning of the Ld. CIT(A) also. Denial of exemption u/ s 11 rejected - Decided in favour of assessee.
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2020 (11) TMI 558
Undisclosed cash deposited in the bank account - HELD THAT:- Cash deposited in the bank account of the assessee can be safe presumed to be from the sale proceeds of the firm. Revenue has also shown laxity by not obtaining the statement from the UTI bank with respect to the transactions made by the assessee. In this situation, it will not be fair to treat the entire cash deposits as the unaccounted income of the assessee as it can be reasonably construed to represent as the undisclosed turnover of the firm in which the assessee is a partner. Addition of 17% on the undisclosed turnover of the firm of ₹ 12,83,408/- can be treated as the unaccounted income earned by the assessee to meet the end of justice. Hereby sustain the addition as the unaccounted income of the assessee.
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2020 (11) TMI 557
Unexplained term deposit and cash deposit in the bank account - Admission of additional evidence - HELD THAT:- From bank account of the assessee it is clear that prior to the term deposit and cash deposit the assessee has made various withdrawals which is around ₹ 5,00,000/-.Considering this withdrawal of the assessee from the bank account about ₹ 5,00,000/- and further, a sum of ₹ 5,00,000/- received under the development agreement out of which ₹ 2,49,000/- received in cash prima facie support the case of the assessee. These two documents being a registered agreement and bank account are beyond the scope of any manipulation by the assessee and details of the bank account was very much available with the AO being the basis of this addition - Assessee has also filed an affidavit to explain the reasons for source as well as not furnishing the documentary evidence before the authority below. From documents filed by the assessee as additional evidence we find that though the assessee could not produce these documents before the authorities below however, these documents were very much in existence at the time of assessment and there is no scope of any manipulation - we admit the additional evidence filed by the assessee and set aside the matter to the record of the AO to adjudicate the same afresh after verification and examination of the additional evidence filed by the assessee as well as giving an opportunity of hearing to the assessee - Appeal of the assessee is allowed for statistical purposes.
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Customs
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2020 (11) TMI 554
Revocation of Customs Broker Licence - imposition of penalty - contention in the Writ Petition is essentially that if the respondent wanted to disagree with the findings of the Enquiry Officer, then the notice issued to the petitioner in that regard should have clearly indicated that the respondent was proposing to disagree with the findings of the Enquiry Officer - HELD THAT:- Ext.P9 order passed by the respondent cannot be legally sustained. When an Enquiry Report is furnished before the respondent in proceedings under the Customs Brokers Licensing Regulations, 2018 and the Enquiry Report is in favour of the petitioner, then the notice subsequently issued by the respondent ought to have indicated very clearly as to whether the respondent was proposing to accept the Enquiry Report or not accept the same. Only such a notice would have indicated to the petitioner the future course of action proposed against him by the respondent. Inasmuch as there was no notice issued to the petitioner, whereby the respondent indicated that he was not ready to accept the Enquiry Officers Report, the petitioner cannot be faulted for having assumed that the Enquiry Report that was in his favour would be accepted by the respondent. The respondent are directed to pass a fresh order after issuing a notice to the petitioner giving the reasons as to why the respondent proposes not to accept the findings of the Enquiry Officer in Ext.P5 Report - respondent shall pass the fresh order within a period of three months from the date of receipt of a copy of this judgment.
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2020 (11) TMI 546
Overvaluation of export goods - mis-match in the quantity declared in the invoice and the quantity actually found in the shipping bill - claiming undue export benefits and excess duty drawback - Seizure of goods - Confiscation - HELD THAT:- The exporter of any goods shall make entry thereof by presenting electronically on the customs automated system to the proper officer a shipping bill and while presenting the shipping bill, the exporter has to make and subscribe to a declaration as to the truth of its contents. The exporter has also to ensure that the information given therein is accurate and complete. The exporter has also to ensure about the authenticity and validity of any document supporting it and compliance with the restriction or prohibition, if any, relating to the goods under the Customs Act or under any other law for the time being in force. It is only where the proper officer is satisfied that the goods entered for export are not prohibited goods and the exporter has paid duty, that the proper officer may make an order permitting clearance and loading of the goods for exportation. In the present case, the proper officer seized the goods as he had reason to believe that the goods were liable to confiscation under the provisions of the Customs Act for the reason that the goods entered for exportation did not correspond with what was mentioned in the shipping bills. These facts have been stated in the seizure memo dated June 3, 2020. In the instant case, the shipping bills are dated May 23, 2020. The panchnama recovery memo dated June 3, 2020 refers to the earlier panchnama proceedings June 1, 2020, wherein a shortage of 1872 pieces was detected and samples of the export product were also taken for conducting a market enquiry and obtaining opinion of traders/ dealers of such type of garments. There is no illegality in conducting a local market survey to gather the valuation of the goods for the purpose of exercising power under section 110(1) of the Customs Act. The panchnama proceedings dated June 3, 2020 record that there was a shortage of 1872 pieces and the export goods were also grossly overvalued. The value declared and the average price arrived at on the basis of the opinion of the three dealers were also indicated in the panchnama. There is on record a separate inventory cum seizure memo dated June 3, 2020 bearing case number 01/2020-21, which contains the inventory of the goods seized and also gives reasons for seizure of the goods. Once the officer had detected shortage of export goods and the market survey revealed that the goods were grossly overvalued, it cannot be said that the proper officer did not have reason to believe that the goods were liable to confiscation under the provisions of section 113(i) of the Customs Act. Whether they are actually confiscated or not is a matter that can be determined only in accordance with the procedure prescribed under section 124 of the Customs Act by issuing a show cause notice to the exporter and also giving him a reasonable opportunity of making a representation in writing. All that was required to be considered for exercising power under section 110 (1) of the Customs Act was whether there was a reason to believe that the goods are liable to confiscation. At what stage the provisions of section 14 of the Customs Act and the provisions of rule 3 of the Export Valuation Rules have to be applied? - HELD THAT:- Section 110(1) of the Customs Act empowers the proper officer to seize the goods if he has reason to believe that goods are liable to confiscation. As noticed above, the goods attempted to be improperly exported are confiscated under section 113 of the Customs Act after providing an opportunity as contemplated under section 124 of the Customs Act. It is at that stage that it is determined whether the goods entered for exportation actually correspond in respect of value or in any material particular with the entry made in the shipping bill. The Commissioner (Appeals) completely failed to appreciate the provisions of section 110(1) of the Customs Act and proceeded to examine the matter as if he was examining an order of confiscation under section 113(i) of the Customs Act and not an order of seizure of goods under section 110(1) of the Customs Act, where the proper officer should only have reason to believe that the goods are liable to confiscation. Thus, for both the issues relating to the valuation of the goods or shortage of 1872 pieces mentioned in the seizure memo, the exporter will get ample opportunity to put forth his case when proceedings are initiated under section 124 of the Customs Act and it is neither possible nor permissible at the stage of seizure to determine this issue. Appeal allowed - decided in favor of appellant.
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2020 (11) TMI 543
Misdeclaration of description of goods - goods declared as polyester filament yarn, which, upon examination, was found to be chenile yarn - Confiscation - Penalty - HELD THAT:- The value had not been re-determined under section 14 of Customs Act, 1962 despite the goods having been re-classified under chapter 56 of First Schedule to Customs Act, 1962. However, in the statement recorded by the investigating officer, the importer had admitted to error in description and tariff item, corresponding to the description of the goods, in the bill of entry. The argument of Learned Counsel that the revised description, as polyester feather yarn , is the same as polyester filament yarn in the original declaration is, therefore, not tenable and may have been an arguable submission if the revised classification was also disputed in this appeal. There is no finding that goods were undervalued - The fine determined for redemption and the penalty imposed appear disproportionate. Therefore, while upholding the confiscation of impugned goods under section 111(m) of Customs Act, 1962, the ends of justice will be served by restricting the fine to ₹ 50,000 and penalty under section 112(a) of Customs Act, 1962 to ₹ 50,000. Appeal allowed in part.
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2020 (11) TMI 541
Rectification of Mistake - Error apparent on the face of record or not - certain decisions referred without establishing the relevance of those decisions - HELD THAT:- We are not in position to agree with the submissions made by the applicant to the effect that there is an error apparent on record in para 4.7, of the impugned order - From the plain reading of para 4.7, it is evident that it is the finding which has been recorded by the tribunal and it cannot be said that finding is perverse. In our view any finding of fact or finding in law recorded cannot be an error apparent on record, which can be rectified in terms of Section 129 B (2) of Customs Act, 1962. Appellants in their application stated that while passing the order, tribunal has referred to certain decisions without establishing the relevance of those decisions. They referred to para 4.4, and have stated that tribunal has relied upon the decision of Hon ble Bombay High Court in case of Valecha Engineering Ltd [ 2009 (8) TMI 451 - HIGH COURT OF BOMBAY ] , without stating how the same is applicable in their case, and also they were not given the opportunity to argue against the same - After having considered and recorded the findings as available in the Order of Commissioner, tribunal has referred to this decision of Hon ble Bombay High Court and the other decisions to finally conclude the issue at para 4.7. In our view finding of facts and law as recorded in para 4.7 cannot be brushed aside as an error apparent on record for the purpose of Section 129 B(2). The decision in respect of the power of rectification, referred by the appellant will come into play only if it can be shown that there exists an error apparent on record in the impugned order. In present case in view of this we find the decision referred in para 11, 12 13 of the Rectification application filed by the appellant as distinguishable and not applicable. The application filed under Section 129 B (2) of the Customs Act, 1962, praying for rectification of mistake apparent on the face of the record is dismissed.
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Corporate Laws
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2020 (11) TMI 547
Transfer of Equity Shares - Section 56 of the Companies Act, 2013 - specific case of the Appellant is that in the Share Transfer Form SH- 4 furnished by the Respondent, the distinctive number of the share was not mentioned, corresponding certificate numbers were not mentioned, witness signature and name was not found, the Transferee s details was not mentioned - HELD THAT:- It is the version of the Respondent that the Appellants Grounds of Appeal and the Questions of Law are based on non-existent Articles of Association dated 18.02.1992 which is a forged and fabricated document with a view to mislead this Tribunal in reversing the findings of the impugned order. For the fraudulent acts committed by the Company and its Directors an investigation is to be ordered and a direction for filing of criminal complaint under the provisions of the Companies Act is to be issued, in the interest of justice. In the instant case the Respondent had furnished the Indemnity Bonds / Sworn Affidavit to the effect that they had lost the original share certificates and that the first Appellant / Company was requested for issuance of Duplicate Share Certificates to the Respondent / Petitioner since the shares were sold. When the original share certificates were lost / mislaid / untraceable, it is not prudent for the Appellants to insist upon the production of original share certificates in question to effect the transfer of shares, as opined by this Tribunal. Besides this, the other reasons projected on behalf of the Appellants that just because the Respondent / Petitioner had filed numerous criminal / civil cases and that he was not attending the Board Meetings and he would create problems for smooth functioning of affairs of the Company will not hold water and they are unworthy of acceptance in the considered opinion of this Appellate Tribunal. Taking into consideration of the facts and circumstances of the present case in a holistic fashion, especially in the teeth of rejection of transfer of shares through letter dated 30.10.2015 mentioning two reasons therein, this Tribunal without any simmering doubt holds that they are clearly unsustainable in the eye of Law and hence, the said letter dated 30.10.2015 was set aside in the impugned order, by the National Company Law Tribunal, Bengaluru Bench, Bengaluru. Appeal dismissed.
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2020 (11) TMI 532
Reduction of capital - repayment of excess capital - sections 66 and 52 of the Companies Act, 2013, read with the National Company Law Tribunal (Procedure for Reduction of Share Capital of the Company) Rules, 2016, and the applicable provisions of the National Company Law Tribunal Rules, 2016 - HELD THAT:- Section 66 of the Companies Act, 2013, deals with reduction of share capital of a company limited by shares or guarantee, after applying to the Tribunal, and based on a special resolution passed by the board of directors in this regard. This section provides for reduction of share capital either through extinguishment or reduction of the liability on any of the shares of a company in respect of the share capital which is not paid-up, or on cancellation of any paid-up share capital which is lost or is unrepresented by available assets, or on payment of any paid-up share capital which is in excess of the wants of the company, subject to the conditions enumerated therein. The reduction of paid-up share capital does not involve the diminution of any liability in respect of unpaid share capital. No prejudice is caused to any of the creditors or other stakeholders with the proposed reduction as there is no reduction in the amounts payable to them, no compromise or arrangement is contemplated with the creditors and there is no reduction in the security, if any. The company also has sufficient funds even after the reduction, and hence neither its business operations would be adversely affected, nor its ability to honour its commitments or to pay its debts in the ordinary course of its business. Hence it appears that the impugned action will not cause prejudice to any of the stakeholders, if the reduction of capital is approved. On a perusal of the material brought on record, it appears that the applicant fulfils the conditions laid down in section 66 of the Companies Act, 2013 and the proposed reduction is conformity with the accounting standards specified in section 133 of the Companies Act, 2013 - the company petition is disposed off by according approval to the proposed reduction of capital. Application allowed.
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Insolvency & Bankruptcy
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2020 (11) TMI 551
Implementation of the approved Resolution Plan - Resolution Plan was rejected on the ground that he could not provide for lump sum time bound payment within 30 days of the approval of its Resolution Plan - HELD THAT:- The Appellant has no locus to question the implementation of the approved Resolution Plan of the Successful Resolution Applicant. Admittedly, appeal preferred against approval of the Resolution Plan of the Successful Resolution Applicant stands dismissed by this Appellate Tribunal. Direction given in terms of the impugned order on the application filed under Section 60(5) of the I B Code to the Successful Resolution Applicant follows as a necessary corollary to the dismissal of appeal filed against approval of Resolution Plan of the Successful Resolution Applicant to implement the approved Resolution Plan on or before the extended date of 30th September, 2020. Once the Appellant is out of the fray, it has neither locus to call in question any action of any of the stakeholders qua implementation of the approved Resolution Plan nor can it claim any prejudice on the pretext that any of the actions post approval of the Resolution Plan of Successful Resolution Applicant in regard to its implementation has affected its prospects of being a Successful Resolution Applicant. It is not a case of alleged material irregularity in the Corporate Insolvency Resolution Process which is in final stages with the approved Resolution Plan being under implementation. Outbreak of COVID-19 pandemic has slowed down the economic activity and operations have been adversely impacted. Viewed in that context some necessary changes in the agreed terms and extension of time for implementation would not be uncalled for. Appeal dismissed.
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2020 (11) TMI 550
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - acknowledgment on the part of the Corporate Debtor in the form of revival letter extending the period of limitation which is said to have been overlooked by the Adjudicating Authority while passing the impugned order - HELD THAT:- In the application to Adjudicating Authority filed in prescribed format the date of default is recorded as 10th June, 2014 whereas the application under Section 7 came to filed on 19th September, 2018 i.e. more than four years after the default occurred. The time, for purposes of reckoning limitation in terms of Article 137 of the Limitation Act, would commence from the date of default i.e. 10th June, 2014 which would neither be shifted not extended once a default has occurred. On the basis of such default the Financial Creditor, in the instant case, has approached Debts Recovery Tribunal on 20th October, 2015. In the given circumstances, it cannot lie in the mouth of the Appellant that the date of default gets extended on account of acknowledgment made in the OTS proposal emanating from the Corporate Debtor. There cannot be two defaults in respect of the same debt, one for the purpose of claim filed before the Debts Recovery Tribunal and the other for purposes of I B Code based on OTS proposal, more so when in application filed before the Adjudicating Authority in prescribed format date of default has unambiguously been reflected as 10th June, 2014. The application having been filed before the Adjudicating Authority beyond three years of occurrence of default is hopelessly time barred and it is not permissible for Appellant to take recourse to Section 18 of the Limitation Act for triggering Corporate Insolvency Resolution Process under Section 7 of the I B Code against the Corporate Debtor - Appeal dismissed.
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2020 (11) TMI 545
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - arrears of rent - Operational Debt or not - pre-existing dispute - HELD THAT:- The words and expressions used in IBC which have not been defined but which have been defined in the Acts mentioned above can be directly imported. However, the Consumer Protection Act, 2019 and Central Goods and Services Tax Act, 2017 do not appear to have been covered under the Section 3 (37) and thus definition of Service and Activities to be treated as supply of service cannot simply be lifted and applied in IBC. It is clear that the legislature was conscious regarding liabilities arising from lease but although for particular types of lease, as mentioned in above sub-clause (d), legislature made specific provision to even make it Financial Debt, while dealing with Operational Debt, no such provision has been made. Thus, even on the parameters of interpretation of statutes, we are not in a position to hold that the rents due could be treated as Operational Debt. Even if the Debt was said to be Operational Debt from the email dated 12th September, 2017 which was sent subsequent to the email dated 18th August, 2017 (at Annexure A-1 (Colly) Diary No. 22971) it is clear that the Corporate Debtor had referred to Financial Stress and terminated the lease which had lock in period. Whether or not the said termination of lease was legal would be an issue of trial between the parties - the findings of the Adjudicating Authority regarding Rent not to be Operational Debt, and that even if looked at in the alternative, there is a pre-existing dispute is upheld. Appeal dismissed.
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2020 (11) TMI 535
Completion of period of 116 days from the statutory period of 180 days' time limit for completion of the CIRP - section 12(2) of IBC, 2016 R/w Rule 11 of NCLT Rules, 2016 - HELD THAT:- Hon'ble Supreme Court of India in [ 2020 (5) TMI 418 - SC ORDER ] where it was held that the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purposes of computation of the time-line for any task that could not be completed due to such lockdown, in relation to any liquidation process. The material facts of the issue are not in dispute, and the law on the issue is also settled by the judgments cited above. Therefore, the Applicant is justified to seek extension and exclusion of time as sought for in the Application, and thus we are inclined to allow the instant Application. The exclusion of 116 days i.e., from the statutory period of 180 days and to complete the Corporate Insolvency Resolution Process - application disposed off.
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2020 (11) TMI 533
Amicable Settlement - Applicant represents that he does not have any objection to the terms and conditions as reflected in the memo, which correlates with the exchange of the e-mail communications happened as transpired between the parties namely the Applicant and the 1st Respondent viz., the Scheme Proponent - HELD THAT:- According to the terms and conditions contained in the joint memo filed by the 1st and 2nd Respondent, the period within which the Applicant is manning the dredger as covered in the joint memo, is only up to 30.09.2020 and in the circumstances, the mediation referred to the Chartered Accountant/Statutory Auditor of the Corporate Debtor in relation to the claim pertaining to the Applicant is to be suitably withdrawn - In relation to the balance claim which has been made by the Liquidator, both the parties represent, namely the 1st and 2nd Respondent and the Liquidator, Learned Counsel for the Liquidator represents that the same will go on for the mediation/Chartered Accountant. Application dismissed as withdrawn.
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Service Tax
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2020 (11) TMI 552
Tax Relief under the SVLDR Scheme - application for Tax Relief rejected on the ground that there is error in filling up Form No.SVLDRS-1 - HELD THAT:- In the present case there is no dispute about the petitioner being issued with Audit Note dated 04.04.2019 which mentions not only the duty demand but also the service tax recovered from the petitioner, and thus, there has been quantification of the duty demand in a sum of ₹ 23,86,861/- and acceptance of service tax recovered in ₹ 8,09,269/- during audit before the 30th day of June, 2019. There is also no dispute that the petitioner satisfies the other conditions of the SVLDR Scheme and is entitled to avail the tax relief. If these facts cannot be disputed and the conditions as contemplated under the SVLDR Scheme are satisfied, an accrued substantive right by way of Tax relief cannot be denied on the technical ground that there is an error in filling in the details in Form-SVLDRS as Nil , especially when there is an onus on the Department to verify the records. The technical glitch asserted by the petitioner while filling in the details in Form SVLDRS-1 is not seriously contested. In the peculiar facts and circumstances of the case, including the fact that the petitioner is not extended an opportunity as contemplated under the provisions of section 127(3) of the SVLDR Scheme with the issuance of Form SVLDRS-2 and an error apparent in Form SVLDRS-3 cannot be controverted, and also in view of the fact that the SVLDR scheme is envisaged as a time bound exercise, this Court is of the considered opinion that the petitioner is entitled for issuance of Discharge Certificate as contemplated under Section 127(8) of the SVLDR Scheme. The writ petition is allowed in part directing the Designated Committee to expeditiously consider issuance of Discharge Certificate to the petitioner as contemplated under Section 127(8) of the SVLDR Scheme.
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2020 (11) TMI 538
Short payment of Service Tax - Works Contract Services - Commercial of Industrial Building and Civil Structures and Erection Commissioning and Installation service - period is from October, 2004 to March, 2007 i.e. before 01.06.2007 - HELD THAT:- There is no dispute that the service provided by the appellant is otherwise specified under Works Contract Service. The criteria for qualification of Works Contract Service is that the service should be provided along with material. It is obvious that when the services on construction is provided along with the material the assessee needs to pay VAT or the Works Contract Tax. From the above contract it is seen that the appellant is required to provide the service along with material like Cement, Metal, Steel Reinforcement, Sand, Charcoal, Salt and Earting Material. Moreover, in respect of the Works Contract Service the recipient of the service will deduct the Works Contract Tax which shows that the works contract service is suffered with works contract tax. As per this fact there is absolutely no doubt that the nature of service as well as facts such as service provided along with the material and it suffered works contract tax which clearly qualifies as Works Contract Service - When the revenue itself has allowed the abatement, it has admitted that the material cost is included in the gross value of the Works Contract Service. With this fact also, it is clearly established that the service provided by the appellant is Works Contract Service. As per the Hon ble Supreme Court s judgment in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] the works contract service is not taxable before 01.06.2007. In the present case, the entire period is prior to the said date therefore, in view of the apex court judgment the service being Works Contract Service is not taxable. Appeal allowed - decided in favor of appellant.
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2020 (11) TMI 537
Levy of Penalty u/s 78 of FA - Non-payment of service tax - Renting of Immovable Property Service - amnesty scheme - VCES scheme - HELD THAT:- The service tax has been duly paid and informed to the Department well before the issuance of Show Cause Notice Applicable interest has also been deposited subsequently as noted by the Learned Commissioner (Appeals) in the impugned order. The tax amount for the period in dispute has been deposited together with the previous period covered under the VCES scheme in installments as noted in the original order - There are no positive evidence has been brought on record in the entire proceedings that non-payment of tax was attributable to reasons to deliberately evade payment of tax. Moreover, the appellant is a PSU in the instant case. The Courts have consistently held that there is a presumption that PSU would not have intention to evade payment of duty or tax. Penalty do not sustain - appeal allowed - decided in favor of appellant.
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2020 (11) TMI 536
Levy of Service Tax - Healthcare services/Business Support Services - revenue sharing - whether service tax is payable by the appellant for having allowed usage of the infrastructure provided by it to the contracted doctors? - HELD THAT:-This precise issue was considered by the Tribunal in connection with the earlier show cause notice to the appellant which involved the period both before and after July 1, 2012. The Tribunal held, after a careful consideration of the conditions prescribed in the agreement, that the arrangement was for joint benefit of both the parties with shared obligations, responsibilities and benefits. The Commissioner was not justified in confirming the demand of service tax under business support service - Appeal allowed - decided in favor of appellant.
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2020 (11) TMI 534
Classification of services - Cleaning services or not - Appellant is engaged in the manufacture of lubricating oil/ grease and break oil and also in the refining of waste oil - Department formed a view that by incinerating the waste of other industries, the Appellant was rendering cleaning activity services in terms of section 65(24b) of the Finance Act, which is taxable under section 65(105) (zzzd) of the Finance Act - HELD THAT:- A reading of the scope of cleaning activity under section 65(24b) of the Finance Act would indicate that the essence of the activity is to clean either an object which is present within the premises or the premises itself of a commercial building/factory/plant or machinery. These services are rendered by the service provider at the premises of the recipient, where the intended objects or premises are required to be sanitized. Thus, the taxable service of 'cleaning' would include only those services wherein the cleaning activity has been undertaken at the premises of the service recipient. Incineration of waste is a process involving destruction of waste/residue at high temperatures, which has been undertaken by the Appellant at its own plant. The waste of other industries which is intended to be incinerated by the Appellant is delivered by the industries to the premises of the Appellant. It is not a case where the Appellant goes to the premises of the industries to perform any cleaning activity. Instead, the waste is delivered to the site of the Appellant in safe leakage proof bags by the industries for proper disposal. The industries are not concerned with the waste thereafter. It is clear that 'exterminating of objects covers destroying insects, rodents and other pests in respect of objects/premises. Hence, the term extermination has to be in connection with activities such as fumigation; pest control or other such activities which are in the form of treatment of premises / objects against animal or pest infestation. The impugned order, therefore, erred in treating the term extermination as being equivalent to incineration - It would be also be pertinent to refer to the CBEC Circular dated July 13, 2007 which specifically provides that incineration of waste is not taxable under business auxiliary service or any other taxable service. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2020 (11) TMI 531
Grant of Bail - Service Tax Evasion - The applicant/accused is also reported to be involved in multiple other economic offences. - requirement to deposit FDR as surety, as a pre-requisite for release on bail - case involving duty evasion of ₹ 22 crores - It is submitted that considering the antecedents of the applicant/accused, his chances of fleeing are very high and therefore the conditions imposed by the Ld. ACMM are not only just but mandatory for ensuring the presence of the accused during the course of trial - HELD THAT:- There is no provision under CrPC making it obligatory for the surety to deposit the FDRs to secure the release of the accused on bail. The surety merely owes a duty to ensure the presence of the accused during the course of trial failing which he shall be liable for payment of penalty u/s 446 CrPC. Towards this end, the Magistrate is competent to enquire into the soundness of the surety but directing him to deposit FDR in the sum of ₹ 50.0 lacs, besides furnishing the surety bonds, is not the expection of the law from the surety. Even otherwise also, the condition sounds very harsh and onerous as a considerable amount i.e. around ₹ 50.0 lacs, of the sureties shall lie locked for an indefinite period of time as nobody can predict the date of disposal of the case against the applicant/accused. Consequently, the requirement of furnishing FDR by the surety needs to be set aside. It is a settled proposition of law that in matters relating to bail, economic offences constitutes a separate and distinct class. In the case at hand, the applicant/accused is alleged to be involved in a case of service tax evasion to the tune of ₹ 22, 71,07,389/-. The applicant/accused is also reported to be involved in multiple other economic offences. Off late, a trend amongst persons involved in economic offences fleeing abroad is a cause of concern for the entire nation. Considering the past criminal antecedents of applicant/accused and the nature of allegations in the present case, his chances of fleeing from the course of justice are apparently very high and the concern of the Ld. ACMM while imposing condition no. 2 cannot be brushed aside lightly - the impugned condition is modified to the extent that the applicant/accused shall deposit 15% of the total amount involved in the present case i.e. ₹ 22,41,07,389/- by way of an FDR in the court as a pre-requisite for grant of bail. The bail order dated 12.10.2020 accordingly stands modified. Application allowed in part.
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Central Excise
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2020 (11) TMI 556
Area Based Exemption - Northeastern/Backward region - substantial expansion or not - doctrine of promissory estoppel - benefit of N/N. 39/2001-CE dated 31-07-2001 - Irregular availment of CENVAT Credit - Bogus Sale - it is argued that in respect of North-eastern area, there is not even a single case of detection of fraudulent availment of benefit. HELD THAT:- The petition is dismissed as having become infructuous.
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2020 (11) TMI 549
Clandestine Removal - 13683.05 MT of MS Billets - cogent, positive and concrete evidence to prove the said allegation, present or not - unaccounted purchase of various raw materials - reliability of third party documents - HELD THAT:- It is found from the show cause notice, that the allegation itself was that in the specific question set out before him as to how he would disprove the facts of such clandestine clearance of their finished goods side by side their authorised clearance, whereas both of which have candidly confessed by M/s SPRML. Shri Mahapatra miserably failed to disprove the same whereby it led to the natural conclusion of conscious and organized modus operandi to evade legitimate Govt revenue in the guise of transaction that they have pretended to project themselves in clearing only authorised clearance of goods with M/s SPRML. It can be made out that the Notice means to say that Shri Mahapatra could not disprove the allegation; it was accepted by Shri Debasis Samal and Shri Anil Jain of M/s SPRML and that in spite of the same Shri Mohapatra maintained that they have not cleared any goods other than those shown in authorised clearances. We find that the above is only an allegation and the department has not adduced any evidence whatsoever to establish the case of clandestine removal against the appellants. It was incumbent upon the department, who are alleging, to prove the same with evidence. The reliability of such an evidence becomes weak as the same comes from a third party. It has been alleged that the appellants have clandestinely removed 13,683.05 MT of MS Billets without payment of duty. The allegation is only based on the data set to have been recovered from the secret office of M/s SPRML and no other evidence has been put forth. We find that as averred by the learned Counsel for the appellants, reliance cannot be placed only on the evidence available with the Third Party. The appellants have alleged that while obtaining the electronic record at M/s SPRML, department did not adhere to the provisions of 36(B) of the Central Excise Act, 1944 and a certificate as required under Section 36B(4) is not issued. It is found that neither the SCN nor the adjudication order have dealt with the facts relating to this issue and from the records of the case, it cannot be made out whether the same were followed. The learned commissioner did not controvert the allegations in the adjudication order. Therefore, the reliance on the records thus seized from M/s SPRML alone, do not help the case of department, unless the same are corroborated by other evidence. We agree to the proposition of the learned Commissioner that the department is not required to prove clandestine removal by mathematical precision. However, the instant case, we find that not even single evidence has been brought on record to show clandestine removal, conclusively establishing at least in a sample transaction. We find that the Annexure-H contains alleged receipts by M/s SPRML date wise from the appellants - Having conducted no investigation whatsoever, department cannot confirm the demand only on the basis of documents seized from some other person, more so the contents of which were never accepted by the appellants and cross examination was not allowed. If allegations can be made just on evidence obtained from third parties, there would be no dearth of such cases. We find that leaving alone proof with a mathematical precision, in the instant case, evidence made available is not even enough even for a Gross approximation. The appellant has relied upon a number of cases wherein it was settled that in order to prove the allegations of clandestine removal the department must bring on record cogent, positive and concrete evidence to prove the said allegation, the said allegation cannot be sustained on the basis of assumptions and conjectures. Though, there is no bar in issuing SCNs for the same period covering different aspects backed by different set of evidence, it is not understood as to why the Department chose to issue different SCNs to the appellant on the allegation of clandestine removal when the genesis of both the cases was in the investigation conducted by DGCEI against M/s SPRML. However, as we found that the present SCN is not sustainable on merits, we are not going into the above issue. The appellants have also raised an issue that while the appellants have been issued a SCN alleging clandestine removal to M/s SPRML on the basis of documents alleged to have been recovered from M/s SPRML, M/s SPRML have not been made party to the impugned SCN and thereby, the case suffers from the principle of non-joinder. Appeal allowed.
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2020 (11) TMI 548
SSI Exemption - clandestine removal - manufacture of MCBs (Miniature Circuit Breaker) - use of Brand name of others - demand of duty by the Department is primarily worked out on the basis of a rough register (RUD-26), which was recovered from the factory, alleged to be showing movement of the goods i.e. removal of finished goods and receipt of raw/packing materials - retraction of statements - SCN issued about 20 days before the end of 5 years from the date of search - HELD THAT:- It is evident on the face of the record that the show cause notice was issued by way of wide guess work wherein duty demand of ₹ 1.22 crores was made approximately. Further, the Revenue in the proceeding before the Settlement Commissioner itself revised the demand at ₹ 49,50,711/-, thereafter in the adjudication proceedings, the demand was further reduced and confirmed at ₹ 34,94,797/- which was also found erroneous and further reduced by the Commissioner (Appeals) at ₹ 34,06,203/-. It is also noted that the installed capacity (30,000 switches per month) as certified by the Chartered Engineer has not been found to be untrue or wrong, and the same was not considered without assigning any reason by the court below. It is also evident from the overall state of affairs that the appellant have not maintained proper records of the transactions. Further it is found that the Rough register (RUD-26) on the basis of which the quantum of clandestine removal has been estimated, is not reliable, as the author of the same Shri Sanjay has not been examined by the Revenue, neither the proprietor - Shri Ashish Gaur have been interrogated about the entry and interpretation in the said rough register. From the statement dated 15.12.2010 of Shri A. Gaur under Section 14 of the Act, it is found that there is no categorical admission of clandestine removal. Further this statement was retracted within a week. Further, Revenue have not worked out the source of raw material for manufacture of the huge quantity alleged to be clandestinely cleared, nor flow back of the proceeds of the alleged clandestine removal. Further, no adverse quantitative ratio has been found out nor any adverse ratio with respect to consumption of electricity is found. Admittedly, the total electricity bill for the two months in dispute is about ₹ 20,100/- or ₹ 10,000/- per month approximately. With such meager consumption of power and taking in view the installed capacity, as well as the idle time due to power failure or break down of machine from time to time, the estimated production and confirming of duty by Revenue is found to be erroneous and high pitched. In the interest of justice, the demand of duty is restricted to ₹ 2,51,596/-, which is the duty accepted or admitted by the appellant in their pleadings. This amount will further be adjustable from the duty liability disclosed in the Returns for the relevant period. Accordingly, penalty under Section 11AC read with Rule 25 of Central Excise Rules is set aside as case of Revenue is not proved. Appeal allowed in part.
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2020 (11) TMI 544
CENVAT Credit - input services used for the Repair and Maintenance Service, etc of wind mills located far away from the factory - applicability of Rule 6(1) of Cenvat Credit Rules, 2004 - HELD THAT:- The explanation inserted to Notification No. 6/2015- CE (NT) dated 01.03.2015 come in to play if the appellant sold the electricity generated the appellant s counsel has confirmed that they never sold electricity generated from the wind mill - In the present case, appellant have never sold any electricity generated from the wind mill to anybody and , therefore, they are not hit by the mischief Rule 6(1) of CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant.
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2020 (11) TMI 542
CENVAT credit - input services - gardening services - appellants are engaged in manufacturing of gear motors - denial on account of nexus - HELD THAT:- The compliance of various environment related laws and factories act mandate clean environment in factory. Thus, the said service becomes essential for functioning of the factory. Credit allowed - appeal allowed - decided in favor of appellant.
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2020 (11) TMI 540
CENVAT Credit - input - input services - Cement, TMT Bar, Beam, Angle, Channels Joist etc. - inward transportation services - HELD THAT:- The Ld. Adjudicating authority had confirmed the demand of recovery of Cenvat credit on items such as Cement, TMT Bar, Beam, Angle, Channels Joist by relying on the judgment of the Larger bench of the Tribunal in the case of VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] ,. However, the said judgment, as rightly pointed by the Ld. CA has been quashed by the Hon ble High Court of Chattisgarh. Also, the Hon ble Calcutta High Court had in the case of SURYA ALLOY INDUSTRIES LTD. VERSUS UNION OF INDIA [ 2014 (9) TMI 406 - CALCUTTA HIGH COURT] had disapproved the judgment of the Larger Bench. Thus, the Cenvat credit of the items along with Service tax credit of inward transportation for such items is an eligible Cenvat credit upto 06/07/2009 and hence we are of the view that the appeal to this extent ought to be allowed. The usage of various iron and steels items is to be analysed in light of the decision of the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] . In this judgement, the Hon ble Supreme Court has referred to the user test outlined in the case of COMMISSIONER OF C. EX., COIMBATORE VERSUS JAWAHAR MILLS LTD. [ 2001 (7) TMI 118 - SUPREME COURT] , which lays down the ratio in determining whether particular goods could be categorized as capital goods or not. As regards the period post 07/07/2009, it is seen from the records that the Appellant has already reversed a substantial amount of Cenvat credit being ₹ 16,29,837/-. Since the issue therein was in respect of interpretation of law, we are of the considered view that there cannot be any deliberate suppression, as alleged in the impugned order. Appeal disposed off.
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2020 (11) TMI 539
Application for withdrawal of appeal - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Registry is directed to list the appeal for regular hearing on 28.10.2020. The Misc. Application for withdrawal of appeal is dismissed as infructuous.
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CST, VAT & Sales Tax
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2020 (11) TMI 553
Principles of Natural Justice - sufficient opportunity to show cause against the re-assessment not provided - levy of tax on interstate stock transfer and sales made locally in other States, which cannot be subjected to levy of tax in the State of Karnataka - levy of tax on subsidy received by the petitioner from the Central Government - Nutrients Based Subsidy Scheme (NBS Scheme) - HELD THAT:- The essential premise for the petitioner s case, apart from the question whether there could be levy of tax on subsidy granted to the petitioner based on the aforesaid two schemes, is whether there could be a levy on interstate stock transfer and sales made locally in other States. This question incontrovertibly has not been examined and it would be imperative for the authorities to consider the same as it relates to the very jurisdiction to levy taxes on such stocks impacting the reassessment. Further, if the petitioner succeeds in this regard, the impugned order would have to be modified. As such, the impugned order will have to be set aside on this ground remanding the matter for reconsideration by the Deputy Commissioner of Commercial Taxes [the third respondent]. Furthermore, the other contention on behalf of the petitioner that there cannot be a levy of tax on subsidy availed by the petitioner will perforce have to be considered in the light of the dictum by the Hon ble Supreme Court in the decision of NEYVELI LIGNITE CORPORATION LTD. VERSUS COMMERCIAL TAX OFFICER, CUDDALORE AND ANOTHER (AND OTHER APPEALS AND CASES) [ 2001 (9) TMI 926 - SUPREME COURT ] and the other contentions of the petitioner. The distinction attempted on the ground that the provisions of the KVAT Act are different from the provisions of similar enactment in the State of Tamil Nadu and Kerala would not be permissible if the Hon ble Supreme Court in similar set of circumstances has decided the question in favour of an entity that has received subsidy. The impugned order passed by the third respondent is set aside and the matter remanded to the third respondent for reconsideration - petition allowed in part by way of remand.
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Indian Laws
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2020 (11) TMI 555
Review Petition - Restraint on transfer of disputed property - scope and ambit of the Court s power under Section 114 read with Order 47 Rule 1 CPC - HELD THAT:- To appreciate the scope of review, it would be proper for this Court to discuss the object and ambit of Section 114 CPC as the same is a substantive provision for review when a person considering himself aggrieved either by a decree or by an order of Court from which appeal is allowed but no appeal is preferred or where there is no provision for appeal against an order and decree, may apply for review of the decree or order as the case may be in the Court, which may order or pass the decree. From the bare reading of Section 114 CPC, it appears that the said substantive power of review under Section 114 CPC has not laid down any condition as the condition precedent in exercise of power of review nor the said Section imposed any prohibition on the Court for exercising its power to review its decision. However, an order can be reviewed by a Court only on the prescribed grounds mentioned in Order 47 Rule 1 CPC. An application for review is more restricted than that of an appeal and the Court of review has limited jurisdiction as to the definite limit mentioned in Order 47 Rule 1 CPC itself. The powers of review cannot be exercised as an inherent power nor can an appellate power can be exercised in the guise of power of review. The High Court has clearly overstepped the jurisdiction vested in the Court under Order 47 Rule 1 CPC. No ground as envisaged under Order 47 Rule 1 CPC has been made out for the purpose of reviewing the observations made in para 20. It is required to be noted and as evident from para 20, the High Court made observations in para 20 with respect to possession of the plaintiffs on appreciation of evidence on record more particularly the deposition of the plaintiff (PW1) and his witness PW2 and on appreciation of the evidence, the High Court found that the plaintiff is in actual possession of the said house. Therefore, when the observation with respect to the possession of the plaintiff were made on appreciation of evidence/material on record, it cannot be said that there was an error apparent on the face of proceedings which were required to be reviewed in exercise of powers under Order 47 Rule 1 CPC. The High Court has committed a grave error in allowing the review application and deleting the observations made in para 20 of its order dated 10.12.2013 passed in First Appeal No.17.04.2005 in exercise of powers under Section 114 read with Order 47 Rule 1 CPC. Under the circumstances the impugned order is unsustainable and deserves to be quashed and set aside. The impugned order passed by the High Court of Madhya Pradesh at Gwalior is hereby quashed and set aside - appeal allowed.
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