Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 22, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Distribution and eligibility of Input Service Distributor (ISD) credit of Service Tax under Section 140 of the CGST Act 2017 - Petitioner, through its respective units/offices registered under CGST Act and/or State Acts, as the case may be, can avail this window and file GST TRAN-1/revised GST TRAN-1 at the units/offices in terms of the Hon’ble Supreme Court’s order in Filco Trade - HC
Income Tax
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Exemption u/s.11 - Denial of exemption audit report in form 10B was not furnished along with the return of income - audit report was filed by the assessee before the completion of the assessment - the assessee cannot be denied the benefit of exemption for which it is entitled merely on the lapse of procedural requirement i.e. delay in filing the audit report in the prescribed form. - AT
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Nature of receipt - Agriculture income - sale of tea bushes and receipt received on account of sale of trees as business income of the assessee - the action of the lower authorities in taxing compensation received on account of sale of tea bushes and shade trees cannot be held to be justified- AT
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Disallowance of loss on sale of shares being stock in trade - The transaction in question, since was not related to the business activity of the assessee, therefore, the said land/shares cannot be said to be a stock in trade. Even if for the sake of argument it is assumed that the transaction was of sale of shares, the said shares cannot be treated as stock in trade of the assessee. Even otherwise, the said transaction of shares would be hit by the provision of Section 73 of the Act and this loss claimed by the assessee being speculation loss could not be adjusted against the business income of the assessee. - AT
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Fresh registration of trust u/s 12A(1) w.e.f. 1.4.2021 and u/s 80G - Power of CIT(E) to impose conditions - CIT(E) did not enjoy the power to prescribe/impose any conditions on his own (other than what is stipulated in law) while granting the registration u/s 12AB we similarly hold that the Ld. CIT(E) lacked jurisdiction to impose any conditions on his (other than what is stipulated in law) while granting the approval u/s 80G of the Act as well. - AT
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Penalty u/s 271AAA - declaration of undisclosed income - voluntary or not - CIT(A) confirmed the levy of penalty - income was declared in the ITR post search but not u/s 132(4) - The assessee failed to support its claim and no material is placed before us to rebut the finding of learned CIT(Appeals) - Levy of Penalty confirmed - AT
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Revision u/s 263 by CIT - As against the interest income as per Form 26AS, the assessee has accounted for the same at less in the P&L account and there is under assessment of interest income which the AO failed to enquire. - Revision proceedings are valid - AT
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Validity of reopening of assessment u/s 147 - Reason to believe - AO had sufficient material to form a prima facie belief that the assessee has engaged in creating bogus subcontracting expenses in the instant set of facts, thereby leading to escapement of income - AT
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Estimation of income from the business of plying of buses - The deposit of the specified bank notes is about 5% of the total turnover of the assessee. When the AO himself has estimated the income of the assessee at 2.25%, it would be farfetched even presumed that 5% of the assessee’s turnover could be an undisclosed income of the assessee from the operation of the contracted Government buses. - AT
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Reopening of assessment u/s 147 - Reason to believe - Addition u/s.68 - unsecured loans obtained - the nexus between the alleged material, i.e. the investigation report of the CBI, and the belief of escapement of income from assessment under section 147 of the Act is missing and thus renders the reasons to be reasons to suspect for making further investigation - AO are not only vague but also lack the vital link - AT
Customs
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Detention of detenue - COFEPOSA - smuggling activity - Delay in passing the order of detention - the delay in the execution of the detention order is satisfactorily explained. Further, it is trite that an absconding detenu cannot cite the delay in the execution of the order to contend that the detention order is liable to be quashed.- HC
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Revocation of Customs Broker License - there is not even an assertion by the Revenue that on the day the Shipping Bills were filed the exporters did not exist at the premises. - The evidence available on record in the form of verification reports relied upon in the SCNs are vague and in some cases, even the name of the exporter who they were enquiring about is not indicated in them - Order of revocation, forfeiture of security deposit and penalty set aside - AT
Corporate Law
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Initiation of multiple proceedings by ROC under section 206(4) of The Companies Act, 2013 - the provisions for inspection, inquiry and investigation are distinct from sections 271-273 dealing with the circumstances in which a company may be wound up by the Tribunal. Section 273 in fact empowers the Tribunal not only to make an interim order but to pass any other orders as it may deem fit subject to the three provisos following section 273(1)(e) of the Act. - HC
Indian Laws
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Validity of e-auction sale - property sold by Bank against recovery of default loan - HC set aside the auction - The finding returned by the Tribunal was well reasoned and duly supported with the material on record and the interference made by the High Court under the impugned judgment while recording a finding that it was in breach of Rule 9(4) of the Rules, 2002 is not legally sustainable in law and deserves to be set aside - SC
IBC
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Initiation of CIRP for realisation of interest due - The interest clause in the invoices cannot be treated as an agreement between the parties for claiming interest and moreover, such interest amount cannot be the sole reason for continuing proceedings against the Corporate Debtor under this Code after the principal amount has been repaid - Tri
PMLA
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Money Laundering - generation of proceeds of crime - predicate offence - Simply labeling pure civil disputes with “moneylaundering” or “an Economic Offence” itself cannot automatically acquire such status and ultimately drag an innocent person in a miserable situation in the guise of arrest - Both accused are basically arrested illegally. Both of them are entitled to parity in view of disparity made by the ED in not arresting the main accused persons Rakesh(A1), Sarang (A2), their HDIL, MHADA and Government Officials/staff responsible for misdeeds of A1 and A2 at the relevant time - DSC
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2022 (11) TMI 944
Distribution and eligibility of Input Service Distributor (ISD) credit of Service Tax under Section 140 of the CGST Act 2017 - procedural and functional difficulties in relation to the GST forms and portal - HELD THAT:- The Hon ble Apex Court, to aid the assessees to overcome the procedural/technical hurdles in Union of India Another V/s. Filco Trade Centre Pvt. Ltd. Another [ 2022 (7) TMI 1232 - SC ORDER ] directed the GST Network to open the common portal to file/rectify TRAN-1 and TRAN-2 for a period of two months, i.e., with effect from 1st September 2022 to 31st October 2022 to enable the different private parties to avail Transitional Credit. Petitioner, through its respective units/offices registered under CGST Act and/or State Acts, as the case may be, can avail this window and file GST TRAN-1/revised GST TRAN-1 at the units/offices in terms of the Hon ble Supreme Court s order in Filco Trade - GST TRAN-1/revised GST TRAN-1 filed by the units/offices will be basis the manual ISD invoices issued/to be issued by ISD of petitioner subject to aggregate credit cumulatively not exceeding the ISD credit available with petitioner of Rs.13,43,92,019/- as stated by petitioner in its petition - Petition disposed off.
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2022 (11) TMI 918
Reimbursement of tax effect on introduction of the GST Act with effect from 01.07.2017 from the Executive Engineers - Execution of works contract - discrepancy observed between the figures furnished by the petitioner-taxpayer in the returns furnished in Form GSTR-3B under Rule 61 of the GST Rules and the data made available in the web portal - Circular vide Memo No. 36116-FIN-CT1- TAX-0045-2017/F., dated 07.12.2017 - HELD THAT:- The statutory provision and the legal position as set forth by this Court lead to show that the petitioner-contractor is supplier of service which is subject to levy of GST and for that matter ascertainment of liability and correct quantification of tax liability is subject-matter of adjudication by the authorities bestowed with power under the provisions of the GST Act. Going through the impugned notices dated 06.08.2022 ex facie indicates that the proper officer initiated action under Section 73 of the GST Act for adjudication of appropriate fact and determination of correct figure as there is anomaly in the data available on the WAMIS and the figures disclosed in the return furnished to the CT GST Organisation in Form GSTR-3B. This has nothing to do with disposal of representation(s) at Annexure-7 series stated to be pending before the Executive Engineer(s) which has separate cause of action, if any, inasmuch as the Executive Engineer is not the competent authority vested with power for adjudication of tax liability under the GST Act - there is little scope to show indulgence in the present matter as the petitioner is required to justify his claim made in the returns in Form GSTR-3B prescribed under Rule 61(5) of the GST Rules read with Section 39 of the GST Act vis- -vis data disclosed in WAMIS. In UNION OF INDIA VERSUS BAJAJ TEMPO LTD. [1 997 (7) TMI 137 - SUPREME COURT ] it is advised that the appropriate course for the assessee was to reply to the show cause notice enabling the authorities to record their findings of fact in each case and then, if necessary, the matter could be proceeded to the Tribunal and thereafter to the High Court. The petitioner, in the instant case, has the fullest opportunity to refute allegations, if any, and rebut adverse finding/observations involved in the matter, as discussed above. The petitioner may also raise legal issues as well as factual disputes before the Assessing Officer during the course of proceeding. It is possible for the petitioner to seek further time, if according to him the time given by the authority for filing the reply was required to be extended in order to enable it to collect further material. It cannot, therefore, be said that the notices dated 06.08.2022 under Section 73 are vulnerable - Considering the fact that the petitioner has ample opportunity to agitate issues before the Assessing Officer, this Court holds that entertainment of the writ petition at the stage of notice would be premature. This Court does not warrant it necessary to invoke extraordinary jurisdiction in exercise of power under Article 226 of the Constitution at the stage of Show Cause Notice - Petition dismissed.
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2022 (11) TMI 917
Seeking direction to 1st Respondent to enable the Petitioner to file GST TRAN 1 electronically and treat it as filed in accordance with law - HELD THAT:- The issue stands covered by the order of this Court in the case of he issue stands covered by the order of this Court in the case of M/S. A-ONE TILES REP. BY ITS PROPREITOR, MRS. REKHA JAIN, M/S. ARIHANT MARBLES REP BY ITS PROPRIETOR, MR. RAJESH JAIN VERSUS. THE ASSISTANT COMMERCIAL TAX OFFICER, PUDUCHERRY, THE NODAL OFFICER/JOINT COMMISSIONER OF COMMERCIAL TAXES, PUDUCHERRY, THE CHAIRMAN, THE GOODS SERVICE TAX NETWORK, NEW DELHI [ 2022 (8) TMI 1306 - MADRAS HIGH COURT] wherein it was held that direction No.2 permits 'any aggrieved registered assessee' to file a form seeking Transitional credit or revision thereof. The Writ Petition stands disposed of.
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Income Tax
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2022 (11) TMI 943
Penalty u/s 271AAA - declaration of undisclosed income - voluntary or not - CIT(A) confirmed the levy of penalty - income was declared in the ITR post search but not u/s 132(4) - HELD THAT:- CIT(A) in its order has observed that, the appellant made the disclosure only pursuant to action u/s 132 and there can be no scope for any element of voluntary action on part of the appellant in this scenario. There is no element of voluntary disclosure per se. However, it is also a fact that the appellant did declare, the income so disclosed, in its return of income. But, the appellant doesn't get the automated shade in form of sub-section 2 of section 271 AAA as the disclosure is not u/s 132 (4) nor is it conferred a shroud of voluntary action of disclosure. The assessee failed to support its claim and no material is placed before us to rebut the finding of learned CIT(Appeals). We, therefore, do not see any reason to interfere into the finding of learned CIT(Appeals) and the same is hereby affirmed. The grounds raised in this appeal are dismissed.
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2022 (11) TMI 942
Revision u/s 263 by CIT - As per CIT excess purchases debited to the P L account and short admission of interest income, which are not verified by the AO - HELD THAT:- A perusal of the assessment order clearly shows that the AO has not at all examined the difference in purchases as per P L account and as per VAT returns and has also not discussed anything regarding the discrepancy in the interest income offered for taxation and the interest income as per From 26AS . Since, there is complete non application of mind by the AO and the assessee has not filed any reconciliation statement at the time of original assessment proceedings, therefore, there is complete non application of mind by the AO to this vital issue. Non application of mind by the AO and non examination of this vital issue in our opinion makes the order erroneous as well as prejudicial to the interest of the revenue and therefore, the ld.PCIT in our opinion is fully justified in invoking the provisions of section 263 As against the interest income as per Form 26AS, the assessee has accounted for the same at less in the P L account and there is under assessment of interest income which the AO failed to enquire. Therefore, the order passed by the AO in our opinion has become erroneous and prejudicial to the interest of the revenue for which the PCIT is justified in invoking the provisions of section 263 of the I.T.Act. Accordingly, the same is upheld. Directions given by the ld.PCIT to recompute the total income of the assessee by disallowing excess purchases debited to the P L account and directing the AO to add the interest income in our opinion is not in accordance with law. PCIT should have either examined himself or should have given direction to the AO to recompute the income after verifying the details and decide the issue by giving an opportunity of being heard to the assessee. We, therefore, modify the order of the ld.PCIT to this extent and direct the AO to examine the details and pass appropriate order as per law after giving due opportunity of being heard to the assessee and without being influenced by the direction given by the ld.PCIT at para 8 of this order. Appeal filed by the assessee is dismissed.
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2022 (11) TMI 941
Validity of reopening of assessment u/s 147 - Reason to believe - sufficient material to form a prima facie belief - assessee had incurred bogus sub- contracting expenses - HELD THAT:- AO has given detailed reasonings on the basis of which he formed the belief that in the instant set of facts, the AO was of the view / had reason to believe that the assessee has created bogus sub-contracting expenses and thus income had escaped assessment. It is a well settled principle of law that that while recording the reasons, the AO need not establish the escapement of income. The belief at that time is only primafacie and not conclusive. In the case of Raymond Woollen Mills Ltd. [ 1997 (12) TMI 12 - SUPREME COURT] as observed that the Court has only to see whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. Accordingly, in our view, the AO had sufficient material to form a prima facie belief that the assessee has engaged in creating bogus subcontracting expenses in the instant set of facts, thereby leading to escapement of income. Therefore, in the instant set of facts, we find no infirmity in the order of Ld. CIT(Appeals) when he held that issuance of notice under section one 47 of the Act was valid in the instant set of facts. Assessee s application under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 challenging the reopening of assessment under section 147 of the Act is hereby dismissed.
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2022 (11) TMI 940
Estimation of income from the business of plying of buses - Undisclosed income from deposits from specified bank notes - HELD THAT:- A perusal of the Circular issued by the RBI on 08.11.2016 clearly shows that the public sector transport operators and government transport operators have been permitted to accept the specified bank notes as legal tender during the demonetisation period. The assessee admittedly is a contractor, who operates the government buses on contract. The assessee very much falls within the specified category which is an exempted category as per the Circular issued by the RBIOnce the assessee falls within the exempted category as provided by the RBI then the deposit of such specified bank notes by such exempted category persons cannot be treated as undisclosed income of such person. Addition as made by the AO and as confirmed by the ld. CIT(A) is unsustainable and we delete the same. Even otherwise, the turnover of the assessee is more than Rs.4.05 crores. The deposit of the specified bank notes is about 5% of the total turnover of the assessee. When the AO himself has estimated the income of the assessee at 2.25%, it would be farfetched even presumed that 5% of the assessee s turnover could be an undisclosed income of the assessee from the operation of the contracted Government buses. Appeal of the assessee is allowed.
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2022 (11) TMI 939
Reopening of assessment u/s 147 - Reason to believe - Addition u/s.68 - unsecured loans obtained - HELD THAT:- From the reasons recorded by the AO it is evident that reference has been made to the report of ADIT (Investigation), which is based on the investigation carried out by the CBI. In the aforesaid reasons, on one hand, the assessee is alleged to be one of the group companies formed by Shri Arun and Harsh Dalmia and is engaged in providing accommodation entries to various concerns. While on the other hand, the assessee was alleged to be the beneficiary, which has received bogus accommodation entries. In the entire reasons, as recorded by the AO, there is no mention of the entity from which the assessee is alleged to have received the bogus accommodation entry. There is also no allegation that the 20 dummy concerns which are alleged to be operated by directors of the assessee have provided the aforesaid bogus accommodation entry to the assessee. Though the investigation carried out by the CBI is alleged to be the basis for initiating the reassessment proceedings u/s 147 however, there is no mention as to which information can prima facie lead to the conclusion that income chargeable to tax has escaped assessment in the case of the assessee. There is also no mention of any alleged transaction resulting in bogus accommodation entry in favour of the assessee. As in the present case, the nexus between the alleged material, i.e. the investigation report of the CBI, and the belief of escapement of income from assessment under section 147 of the Act is missing and thus renders the reasons to be reasons to suspect for making further investigation. Thus we are of the considered view that in the present case reasons recorded by the AO are not only vague but also lack the vital link between the alleged material and the belief that income of the assessee has escaped assessment. - Decided in favour of assessee.
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2022 (11) TMI 938
Disallowance of work in progress in respect of Kirti Chambers - genuineness of the amount of work in progress - Lower authorities rejected the genuineness of the expenditure incurred against payment to tenanted authorized/unauthorized dwellers (i.e. which has been acclaimed as work-in-progress) mainly on the ground that in the registered deed of transfer, purchase value was recorded at nil as compared to the value recorded in unregistered agreements and declaration of seller parties - HELD THAT:- The registered or unregistered sale agreement are in the nature of the agreement between the parties and in law those agreements can we challenged by the parties and it is not within the powers or authority of the Income-tax Authority to challenge or dispute the terms and condition mentioned in those agreements. Income-tax authorities are authorized to examine the expenditure incurred from the angle of section 37(1) so as to verify whether the expenditure has been incurred wholly and exclusively for the purpose of the business of the assessee. The onus was on the assessee to establish that expenditure was incurred wholly and exclusively for the purpose of the business of the assessee. In the case, the Assessing Officer was required to verify two things. Firstly, whether the payments has been made by the assessee or on behalf of the assessee to the seller parties. Secondly, the payment has been made for the purpose of the business of the assessee. Since in the case it is claimed by the assessee that payments have been made for purchase of legal or illegal tenanted premises, therefore the assessee was required to substantiate with documentary evidence to the effect that the payment have made to the seller parties and that too for the purpose of purchase of relevant properties. The assessee attempted to substantiate with the help of non-registered agreement and declaration of the seller parties. But in the facts of the case, the assessee was required to produce those parties before the AO for confirmation of the facts stated in their affidavits and to show deposit of said payment in the bank accounts. The seller parties were also required to show from Income-tax Returns filed that payments have been shown as income from sale/transfer/vocation of tenanted premises. In view of additional evidence filed before us, which goes to the root of matter, we feel appropriate to restore the issue in dispute to the file of the Assessing Officer for adjudicating afresh after taking into consideration the evidences, which would be filed by the assessee. It will the responsibility of the assessee to produce the seller parties before the AO and cooperate in disposal of the matter. The AO is at liberty to carry out enquiries as deemed fit for disposal of the issue in dispute. The ground of appeal is accordingly allowed for statistical purposes.
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2022 (11) TMI 916
Condonation of delay in preferring the appeal before HC - delay of 86 days - HELD THAT:- High Court ought to have condoned the delay of 86 days in preferring the appeal and ought not to have been too technical in dismissing the appeal on the ground of delay. The impugned order passed by the High Court refusing to condone the delay of 86 days and dismissing the appeal on the ground of delay of 86 days is unsustainable. Under the circumstances, the present appeal is allowed. The impugned order passed by the High Court dismissing the appeal on the ground of delay is hereby quashed and set aside and the delay of 86 days in filing the appeal is hereby condoned. Now, the High Court to decide and dispose of the appeal in accordance with law and on its own merits
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2022 (11) TMI 915
Assessment u/s 153A - incriminating material gathered during the course of search - legal requirement in law that incriminating material must be found during search - HELD THAT:- This Court finds that the ITAT upheld the findings of the CIT-(A) that the additions made in the present appeals were not based on any material incriminating or otherwise recovered in the course of search action. This Court in Principal Commissioner of Income Tax vs. Bhadani Financiers Pvt. Ltd [ 2021 (9) TMI 902 - DELHI HIGH COURT] has held that where the assessment of the respondents have attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made u/s153A of the Act as the cases of the respondents were of non-abated assessment. No substantial question of law.
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2022 (11) TMI 914
Validity of assessment - notice u/s 143(2) was issued against the dead person - HELD THAT:- The death of the Assessee was duly communicated by his legal heirs (the Petitioner herein). The ITR also duly disclosed that the same has been filed by the legal representative. In ignorance of the said facts available on the record the scrutiny proceedings have been wrongly conducted in the name of the deceased Assessee without bringing on record all his legal heirs as per the requirement of law. In the present case, the jurisdictional notice u/s 143(2) was issued against the dead person and the assessment order has also been passed against the dead person on his PAN without bringing on record all his legal representatives, therefore, the said assessment order and the subsequent notices are null and void and are liable to be set aside. Consequently, the impugned notice issued u/s 143(2) and the impugned assessment order is set aside along with all consequential proceedings and notices.
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2022 (11) TMI 913
CIT-A Power u/s 250(4) - procedures envisaged by section 250(4) - Deduction u/s 80JJAA - fresh claims made by the assessee - remand of the relief allowed by the CIT( A) in exercise of powers under first part of section 250(4) - HELD THAT:- Admittedly, the issue of grant of deduction u/s 80JJAA has been decided in assessee s favour in the preceding Assessment Year ( AY ) 2007-08 by a Coordinate Bench of this Court in the case of Assessee itself being International Tractors Ltd. [ 2021 (4) TMI 1033 - DELHI HIGH COURT] held fresh claims made by the assessee, as allowed by the Commissioner of Income-tax (Appeals), will have to be sustained. Deduction of loss on exchange rate fluctuations - Deduction of loss on account of exchange rate fluctuation has not been dealt with in the aforesaid judgment, yet the logic/reasoning given in the said judgment applies as the Tribunal has not given any cogent reason for remanding the matter. Consequently, as the impugned order is non-reasoned, the same is set aside and the detailed order passed by CIT(A) on all issues including the issue of loss arising on account of exchange rate fluctuation is sustained.
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2022 (11) TMI 912
Reopening of assessment u/s 147 - correctness of claim made u/s 54F - HELD THAT:- Reasons recorded by AO to reopen the assessment for the purpose of verification of the claim made u/s 54F are not in accordance with law. While reopening the assessment, AO has to record his satisfaction that there is an escapement of income chargeable to tax. However, in this case, the reopening was done on the ground to verify the correctness of claim made u/s 54F which is not in accordance with law. Therefore, we hold that the reopening is invalid. CIT(A) has recorded that the 4 years had already passed from the end of the assessment year, which means, the reopening was done after 4 years. In the reasons recorded by the Assessing Officer, this fact is not coming out. AO has not recorded that there is a failure on the part of the assessee to disclose fully and truly all material facts to complete the assessment. On this count also, the reopening is invalid. Accordingly, we quash the notice issued under section 148 - ground raised by the assessee is allowed.
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2022 (11) TMI 911
Addition u/s 68 - assessee has failed to prove identity, creditworthiness of the investors and genuineness of the transactions - CIT-A deleted the addition - HELD THAT:- Assessee as an approved vendor of NHPC, UNITECH, TATA Wipro, Power Grid, DLF etc. We note that assessee has filed all the details before the AO containing the detailed particulars of investors, their addresses, PAN NOs. and amounts invested by these respective companies besides filing of details of cross-share holdings and common directors. We also note that the CIT(A) called for remand report from the AO on some issues on which the AO has having some wrong notions which were apparently wrong and contrary to the facts on records. We further observe from the remand report furnished by the AO during appellate proceedings before CIT(A) after looking into all these evidences/documents sated that all these evidences were before the AO in the original assessment proceedings and did not require any further investigation into the matter. CIT(A) only after having received this remand report and after considering all the evidences on record and also capacity of the investors who were having sufficient own sources, deleted the addition. Under these facts and circumstances we do not find any infirmity in the order of Ld. CIT(A) and accordingly grounds raised by the revenue are dismissed.
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2022 (11) TMI 910
Unexplained cash credit - conflicting claims made by the assessee on the ground that these are current liability and not advance for sale of property as claimed - HELD THAT:- We deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate with evidence to his substantiate that the amount, which has been received as advance for sale of property, has in fact advance for the sale of property and the sale has been concluded in the subsequent year. The AO shall decide the issue as per fact and law. We hold and direct accordingly. Ground of appeal No.1 is accordingly allowed for statistical purposes. Unexplained purchase of property - CIT(A) deleted the addition on the ground that the property was purchased in the name of the father of the assessee and the AO without bringing any further evidence on record made addition in the hands of the assessee which is not justified - HELD THAT:- The relevant observation of the CIT(A) deleting the addition has already been reproduced in the preceding paragraph. No infirmity in the order of the ld.CIT(A) on this issue. Since the property has been purchased by the father of the assessee Shri C.Sathyanarayana, a finding given by the ld.CIT(A) and not controverted by the revenue, therefore, in our opinion addition, if any, could have been made in the hands of Mr.C.Sathyanarayana and not in the hands of the assessee. DR also could not controvert the findings given by the ld.CIT(A) on this issue by bringing any material before us. In this view of the matter and in view of the detailed reasoning given by the ld.CIT(A), we do not find any infirmity in the order of the ld.CIT(A) deleting the addition - Accordingly, the same is upheld. The ground raised by the revenue is dismissed. Amount received from the HUF with no supporting evidence - CIT(A) deleted the addition on the ground that the addition is not made on the basis of any seized material, but on the basis of the capital account furnished by the assessee during the course of assessment proceedings - HELD THAT:- Order of the CIT(A) cannot be accepted on this legal issue that no addition can be made in absence of any incriminating material found during the course of search. However, the request of the ld.counsel for the assessee that given an opportunity, the assessee in a position to substantiate with evidence to the satisfaction of the AO regarding the source of the HUF from where the amount was received is accepted. We, therefore, deem it proper to restore the issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate his case by producing cogent evidence to his satisfaction. The AO shall decide the issue as per fact and law. We hold and direct accordingly. The ground raised by the revenue is accordingly allowed for statistical purposes. Undisclosed Income - difference between the income originally returned and income returned in response notice u/s.153A - HELD THAT:- We find before the ld.CIT(A), the assessee filed the details of the total income under various heads as per original return of income as well as income as per revised return based on which the ld.CIT(A) directed the AO to adopt the correct taxable amount and pass consequential order, since the AO in the computation has included certain income which is exempt from tax. The order of ld.CIT(A) giving direction to the AO has already been reproduced in the preceding paragraph. No infirmity in the order of the ld.CIT(A) on this issue. A perusal of the order shows that the ld.CIT(A) has only directed the AO to adopt the correct taxable amount and pass consequential order by considering the profit from the firm, which is exempt and which was included in the total income. We, therefore, do not find any infirmity in the order of the ld.CIT(A) on this issue. Accordingly, the same is upheld and the ground raised by the revenue on this issue is dismissed.
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2022 (11) TMI 909
Unexplained Cash Credits - Addition u/s 68 - HELD THAT:- In the instant case, although the amounts have been received through banking channel, however the assessee did not produce the above three persons before the AO during the course of assessment proceedings, which is one of the reasons for making the addition by the AO apart from not proving the creditworthiness to his satisfaction. It is the submission of the ld.counsel for the assessee that given an opportunity the assessee is in a position to produce the above three persons before the AO for his examination and prove their creditworthiness. We deem it proper to restore the issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate his case by producing three parties for his examination and file necessary evidence to prove their creditworthiness. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed for statistical purposes. STCG on sale of land - agreed price as per document found at the time of search - assessee denied to have received any money over and above what has been mentioned in the sale deed - HELD THAT:- We deem it proper to restore the issue to the file of the AO with a direction to give an opportunity to the assessee to substantiate his case by producing Mr.C.Veerabhadra Reddy for his examination. Further, the assessee is also directed to produce necessary evidence to show that the proposed plan was drifted away from the land in question for which the price has come down. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. This ground raised by the assessee is accordingly allowed for statistical purposes.
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2022 (11) TMI 908
Assessment of Partnership firm v/s individual partner - Addition at the hands of the assessee on substantive basis - liability of taxes - assessee had filed a Supplementary Partnership Deed which clarified about the liability of the assessee firm - HELD THAT:- As stated that the partner of the assessee firm in his individual capacity as owned up the contractual receipts as his own business receipt. The reasons for not accepting the Supplementary Partnership Deed as stated by the AO is that this Supplementary Deed was not produced during the assessment proceedings for AY 2008-09 in the case of Shri Satish Kuamr, partner of the firm. Though, the assessment in his case was completed on 28.12.2010 on protective basis. Considering the facts available on record, authorities below ought to have given clear finding regarding the terms of Partnership Deed and Supplementary Deed as furnished by the assessee. Even, Ld.CIT(A) failed to advert the submissions of the assessee. Therefore, the impugned order is set aside and the issue is restored to the file of AO to decide it afresh after giving adequate opportunity of hearing to the assessee. Thus, grounds raised by the assessee are allowed for statistical purposes.
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2022 (11) TMI 907
Ex parte order by CIT(A) - CIT(A) upheld the addition in ex parte order by taking view that three notices were served through ITBA portal but none of the notices were compiled by the assessee - assessee made submission that assessee was not well verse with the electronic gadgets and could not made compliance in time and that in future he undertakes on behalf of assessee to make proper compliance - HELD THAT:- Section 250(6) of the Act mandates that the Ld. CIT(A) while deciding the appeal is required to pass order on points of determination (grounds of appeals), decision therein on and reasons for such decision. So far as objection of ld DR is concerned, that the assessee was given sufficient opportunity and that she is not eligible for further opportunity. We find that for non-compliance of the notices of lower authorities, the assessee has to bear the cost of appeal fees. Assessee has not disputed the service of notice and fairly conceded that the assessee was unable to use electronic gadgets. Considering the facts and circumstances of the present case that NFAC/Ld. CIT(A) passed ex parte order without adjudicating the grounds of appeal raised by the assessee and the assessee was not afforded fit and proper opportunity, thus, we are of the view that assessee deserves hearing on merit. Therefore, the grounds of appeal raised by assessee are restored back to the file of NFAC/Ld.
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2022 (11) TMI 906
Estimation of net profit at the rate of 10% of sales - assessee during the assessment proceedings failed to furnish the documentary evidences for the expenses claimed in the return of income - HELD THAT:- From the preceding discussion, we note that the assessee has already declared an income at the rate of 9.34% in his return of income. Even under the provisions of section 44AD of the Act, the presumptive rate specified therein is 8% of the turnover whereas the assessee has declared income more than 8 percent. There was no basis provided by the authorities below for estimating the income at the rate of 10% of the turnover. Accordingly, we are not convinced with the finding of the learned CIT(A) and reverse the same with the direction to the AO delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. Addition being the peak credit of the amount shown in the bank accounts - amount of cash deposits which is supported by the subsequent withdrawals - HELD THAT:- Admittedly the huge amount of cash was deposited and withdrawn from the bank account of the assessee. It is the onus upon the assessee to explain each and every transaction of the cash deposit and withdrawn. But the assessee failed to explain the same. It is also true that the entire amount of cash deposit cannot be treated as income of the assessee in a situation where there is a subsequent withdrawal and deposit in the bank account of the assessee. The amount withdrawn from the bank is available with the assessee for subsequent deposit in the bank account. In such facts and circumstances the Hon ble Courts in series of cases has held that the peak amount lying in the bank account should be treated as income of the assessee. No infirmity in the order of the authorities below. Before parting, we note that the assessee has not given his working for the amount of the peak credit. Accordingly, in the interest of justice and fair play we are inclined to give one opportunity to the assessee to work out the peak-credit and provide the same to the AO. Ground of appeal of the assessee is allowed for the statistical purposes. Addition of low household withdrawals - HELD THAT:- It is the onus upon the assessee to furnish the necessary details as desired by the AO. From the preceding discussion we note that the assessee has not furnished the details of the family members Therefore the addition was made on account of low withdrawal of household expenses. However, we note that there is no basis of making the disallowance on ad-hoc basis. However in the interest of justice and fair play we restrict the disallowance to the tune of 25,000.00 only. Thus the ground of appeal of the assessee is partly allowed.
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Customs
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2022 (11) TMI 937
Detention of detenue - smuggling activity - All relevant and necessary documents were not produced before the detaining authority - Delay in passing the order of detention - Delay in execution of the order of detention - Copies of all the relied upon and relevant documents were not furnished to the detenu - Delay in disposing the representations. All relevant and necessary documents were not produced before the detaining authority - HELD THAT:- A perusal of Exts.P2 and P3 would reveal that all the relevant documents sufficient to establish seizure of the gold from the possession of Sri. M. Sunil Kumar at the exit gate in the Airport have been placed before the Detaining Authority. Now, the allegation is regarding non production of CCTV visuals and three other documents which were never in the possession of the Sponsoring Authority. There is nothing on record to probabilise that those records/documents reached the possession of the Sponsoring Authority. Also, the learned counsel for the petitioner did not point out any fact or circumstance suggesting that on account of inaction on the part of the Sponsoring Authority such records/documents did not come to their possession. The contention of the petitioner regarding non submission of all the four documents cannot be countenanced. None of such documents was in the possession of the Sponsoring Authority. The petitioner could not substantiate that in the absence of such documents, the subjective satisfaction arrived at by the Detaining Authority is vitiated at least prima facie - Ext.P1 order of detention is not liable to be set aside on the ground that the subjective satisfaction arrived at by the Detaining Authority is vitiated for want of consideration of the documents mentioned by the petitioner. The contention of the petitioner in that respect is rejected. Delay in passing the order of detention - HELD THAT:- The Detaining Authority after detailed consideration of all the relevant documents arrived at the conclusions constituting the grounds for detention and resultantly issued Ext.P1. Eight persons were ordered to be detained in connection with the same incident. The detailed narration of grounds for detention contained in Ext. P2 and voluminous documents enlisted in Ext. P3 would show that a detailed investigation was required before initiating steps under section 3(1) of the COFEPOSA Act against the detenu and his co-indictees. Many persons, including the detenu, did not appear before the authorities in time or ever, for the purpose of investigation despite issuing repeated notices/summons. The Detaining Authority was bound to consider all the connected documents before passing that common order. After considering the chronology of incidents from 13.05.2019, the date of arrest and seizure till the culmination of the proceedings for issuance of the detention order on 27.09.2019, we are convinced that there occurred no unjustified delay. In WAHEEDA ASHRAF AND ORS. VERSUS THE UNION OF INDIA AND ORS. [ 2021 (4) TMI 1248 - KERALA HIGH COURT] this Court held by placing reliance on the judgment of the Apex Court in MALWA SHAW VERSUS THE STATE OF WEST BENGAL [ 1974 (2) TMI 96 - SUPREME COURT] that delay in issuing the order of detention by itself is not fatal to the order. The contention of the petitioner in this regard is therefore rejected. Delay in execution of the order of detention - HELD THAT:- It is quite evident that the authorities took all possible steps to procure the presence of the detenu to execute the order. Only because he evaded the process and hid himself the order of detention could not be executed. It is clear from the counter affidavits filed by the respondents and the records made available for our perusal that all possible efforts were taken to execute the order of detention. Steps including publication of notice in the newspapers and declaring the detenu an absconder as contemplated under Section 7(1)(b) of the COFEPOSA Act were taken. Under such circumstances, we find that the delay in the execution of the detention order is satisfactorily explained. Further, it is trite that an absconding detenu cannot cite the delay in the execution of the order to contend that the detention order is liable to be quashed. Copies of all the relied upon and relevant documents were not furnished to the detenu - HELD THAT:- In J. ABDUL HAKEEM VERSUS STATE OF TAMIL NADU [ 2005 (8) TMI 381 - SUPREME COURT] the Apex Court held that the detenu has a right to be supplied with the material documents on which the reliance is placed by the Detaining Authority for passing the detention order but the detention order will not be vitiated, if the document although referred to in the order is not supplied which is not relied upon by the Detaining Authority for forming its opinion or was made basis for passing the order of detention. Crux of the matter lies in whether the detenu's right to make a representation against the order of detention, is hampered by non-supply of the particular document. The contention of the learned counsel of the petitioner that Ext. P1 is liable to be abrogated for non-supply of the aforesaid documents and the consequent denial of the right of the detenu to make an effective representation is therefore devoid of merits and it is rejected. Delay in disposing the representations - HELD THAT:- The Central Government shall wait before considering the representation of the detenu till the report of the Advisory Board is received, if the representation is received after the case of the detenu has been referred to the Board. Whereas, the Detaining Authority who is a specially empowered officer shall consider and dispose of the representation of the detenu with a sense of immediacy and cannot wait for receipt of the report of the Advisory Board - The representations dated 27.01.2022 sent by the detenu by e-mail were received by the authorities on 28.01.2022. From the perusal of the files, it is seen that on 03.02.2022, the sponsoring authority has submitted para-wise comments on the representations and the representation was rejected by the Detaining Authority on 4.2.2022. Ext.P10 is the memorandum sent by Director (COFEPOSA) informing the detenu that his representation was rejected by the detaining authority on 4.2.2022. In the matter of consideration of the representation by the Detaining Authority, therefore, there is absolutely no delay and the petitioner has no allegation of delay also in that regard. The facts would reveal that there was no lethargy on the part of the authorities of the Central Government and no inordinate delay in disposing of Ext.P4 representation submitted by the detenu. Therefore the contention of the learned counsel for the petitioner in this respect also is untenable. None of the grounds put forward by the petitioner to challenge validity of Ext.P1 and to abrogate it can be accepted - Petition dismissed.
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2022 (11) TMI 936
Maintainability of petition - availability of alternative remedy of appeal - Condonation of delay of 178 days in filing appeal - no reason is recorded for rejecting the explanation tendered by the petitioner - HELD THAT:- Considering the peculiar facts of the case and passage of time spent by the petitioner before this court since 2019, especially in the set of facts obtained in this case, we are inclined to entertain this petition, though that the appeal under Section 130 of the Customs Act, 1962 is maintainable. It appears on perusal of the order passed by the CESTAT that no reason is recorded for rejecting the explanation tendered by the petitioner for delay of 178 days in filing Appeal. It is well settled legal position that in order to do the substantial justice, the delay should not come in way of litigant. In that view of the matter, the delay of 178 days caused in preferring the Appeal is ordered to be condoned and the said appeal is restored to the file of the CESTAT.
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2022 (11) TMI 935
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty for violation of Regulation 10(n) of CBLR 2018 - verification of correctness of Importer Exporter Code (IEC) number and Goods and Services Tax Identification Number (GSTIN) - verification of identity of client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. HELD THAT:- On a query from the bench as to how the Customs Broker can be faulted when he relied on the IEC, GST Registration and several documents issued by the Government and if the exporters did not exist at all at the premises how these documents were issued by several Government officer - The officers are not mandated to ensure that the exporter(s) existed and were functioning from these premises but the Customs Broker is so mandated by Regulation 10(n) of the CBLR, 2018 which obligation does not get obliterated or diluted by the fact that officers of various departments have issued the documents. On examination of order in the case of Millenium Express Cargo it is found that, that was a case where the cigarettes were smuggled concealed in a consignment of induction cookers and the Bill of Entry was filed by the CHA whose licence was then revoked for violation of Regulations 13(e) and 13(o) of CHA licensing Regulations, 2004. Of these, 13(o) is pari materia with CBLR 10(n) under consideration in this case. In the case of Millenium express cargo, the CHA has not even ever claimed that it had verified the existence of the importer at the given address - Millenium express Cargo does not support the case of the Revenue since there is nothing on record to show that the exporters did not exist at the premises at the time of export or that the appellants were aware about the non-existence of the exporters when they filed the Shipping Bills. In fact, there is not even an assertion by the Revenue that on the day the Shipping Bills were filed the exporters did not exist at the premises. Documents issued by various Government officers - HELD THAT:- It is common knowledge that in designing schemes for issuing registrations, certificates or providing incentives, two conflicting objectives of due diligence and facilitation are balanced. Too many checks can make life difficult for the exporter or the citizen and too much facilitation can open the doors for frauds. Determining the golden mean and where to draw the line is a matter of public policy. The extent of liberalization or tightening may also vary greatly from one system to another and that is also a matter of public policy. The entire system of exports is based heavily on trust and facilitation and very less emphasis on due diligence which enhances trade facilitation but also makes it vulnerable to misuse by fraudsters - the burden of this very liberal, open, scheme and its potential misuse cannot be put at the doorstep of a Customs Broker. Just as the officer s responsibility ends with doing his part of the job (which may be issuing a registration without physical verification or allowing exports without assessing the documents or examining the goods), the Customs Broker s responsibility ends with fulfilling his responsibilities under Regulation 10 of the CBLR, 2018. In dispute in these appeals is CBLR 10(n) which, as we have discussed above, does not require any physical verification of the address of the exporter/importer. Two verification reports in respect of this appellant state that the exporter is not bonafide . The third verification is self contradictory inasmuch as it, on the one hand, states that the exporter does not exist at the place and on the other hand confirms that physical copies of PAN and IEC were provided during verification. It is not clear who has provided these documents if the exporter did not exist at that premises. The reports nowhere state that the exporters never functioned from those premises and the GSTIN were issued by the department to non-existent firms or they ceased to function from those premises after the GSTIN were issued - In fact, it is not even clear what the officers meant that the exporters are not bonafide. If the officers report that some exporters are not bonafide, it does not establish that the Customs Broker had not fulfilled its obligations under Regulation 10(n). The entire case of the Revenue based on which the impugned order was passed was these verification reports which nowhere establish that the Customs Broker had not fulfilled its obligations under Regulation 10(n). The evidence available on record in the form of verification reports relied upon in the SCNs are vague and in some cases, even the name of the exporter who they were enquiring about is not indicated in them - the impugned orders revoking the Customs Brokers licences of the appellants forfeiting their security deposits and further imposing penalty on the appellants cannot be sustained and need to be set aside - Appeal allowed.
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Corporate Laws
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2022 (11) TMI 934
Initiation of multiple proceedings by ROC under section 206(4) of The Companies Act, 2013, in respect of the same alleged contraventions - submission of report on the inspection under section 208 of the Act - HELD THAT:- A careful perusal of the provisions relating to inspection, inquiry and investigation of companies under sections 206-210 of the Companies Act, 2013 indicates that the sequential steps required to be taken by the ROC must be followed before the ROC submits the report in writing to the Central Government for further investigation into the affairs of the company if necessary. The stage of filing a report comes only after inspection of books of accounts or conducting inquiry under sections 206 and 207 of the Act. Section 210 is the culmination of this batch of provisions relating to inspection, inquiry and investigation into the affairs of the company where the Central Government may investigate into the affairs of a company if it is of the opinion that it is necessary to do so and on fulfillment of the conditions under section 210(1)(a)-(c). The contention that the respondents are statutorily precluded from initiating a proceeding under section 206(4) after the impugned inquiry report dated 13th April, 2021 is mis-reading the relevant provisions. Sections 206-210 of the Act do not contain a bar on the Registrar calling for information or conducting an inspection or inquiry if the Registrar comes across additional material warranting the second proceeding under section 206. The presumption that the impugned report dated 13th April, 2021 should be stayed since a parallel inquiry has been initiated in July, 2022 is not borne out from the relevant statutory provisions. It is also relevant to state that the provisions for inspection, inquiry and investigation are distinct from sections 271-273 dealing with the circumstances in which a company may be wound up by the Tribunal. Section 273 in fact empowers the Tribunal not only to make an interim order but to pass any other orders as it may deem fit subject to the three provisos following section 273(1)(e) of the Act. This Court is hence not inclined to interfere with or interdict the impugned inquiry report dated 13th April, 2021 - Application dismissed.
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Insolvency & Bankruptcy
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2022 (11) TMI 933
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt which is due and payable and has not been paid? - Corporate Debtor is liable to pay for the debts or not? Whether there exists debt which is due and payable and has not been paid? - HELD THAT:- The definitions make the distinction between Operational Debt and Financial Debt. As seen from above, financial debt is an inclusive and non-exhaustive definition given under Section 5(8) of the I B Code to mean a debt alongwith interest, if any, which is disbursed against the consideration for time value of money. Financial creditors have relationship with the entity as financial contract, like loan or security etc. Whereas, an operational debt as defined under section 5(21) of I B Code, 2016 signifies a claim in respect of the provisions of goods or services. This Appellate Tribunal notes that no concrete evidence has been brought out or documentation has been produced to establish that there existed any pre-existing disputes between the parties. The Arbitration proceedings that the 2nd Respondent is trying to portray as a pending dispute is infact not between the 2nd Respondent (Corporate Debtor) to 1st Respondent (Operational Creditor) and is rather between 2nd Respondent and his principal employer for the supply services i.e. TANGEDCO - this Appellate Tribunal, therefore, in the present appeal do not find any error in the impugned order passed by the Adjudicating Authority and notes that the Adjudicating Authority followed all the steps laid down in Mobilox while ascertaining the application under Section 9. Therefore, this Appellate Tribunal holds that the Adjudicating Authority has correctly examined the existence of debt which was not paid and there was no pre-existing dispute between the 2nd Respondent (Corporate Debtor) and the 1st Respondent (Operational Creditor). Whether the Corporate Debtor is liable to pay for the debts or not? - HELD THAT:- It is seen that, though an NOC was issued by the 2nd Respondent however they did not seek prior approval from TANGEDCO that such payments would be made by TANGEDCO . Therefore, there does not exist any valid contract between 2nd Respondent (Corporate Debtor) and TANGEDCO stating that payment to 1st Respondent (Operational Creditor) would be made by TANGEDCO . Therefore, in such a scenario the onus/ liability comes back to the 2nd Respondent (Corporate Debtor) to ensure that amounts are paid to the 1st Respondent (Operational Creditor), and as such all the claims made against the 2nd Respondent (Corporate Debtor) are valid. This Appellate Tribunal is of the considered opinion that there is no error in the impugned order dated 16.09.2022 passed by the Adjudicating Authority . Appeal devoid of any merit is therefore is set aside and stand dismissed.
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2022 (11) TMI 932
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditors - scope of pre-existing dispute - stand of the Appellant is that the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) had failed to take into account the consideration of the fact that the Case filed by the Respondent before the Hon ble Commercial Court, was filed after the receipt of the Demand Notice, thus falling clearly outside the ambit of a pre-existing dispute as per Section 8 (2) of the Insolvency Bankruptcy Code, 2016 - violation of principles of natural justice. HELD THAT:- The Appellant/ Petitioner / Operational Creditor, after coming to know that the Demand Notice dated 04.09.2020 was not in conformity with the facts and transactions that had taken place between them, had issued an another Fresh Notice dated 05.03.2021, as per the ingredients of Section 8 of the Insolvency Bankruptcy Code, 2016. In this connection, this Tribunal, pertinently points out that in the Fresh Notice dated 05.03.2021, the Appellant / Operational Creditor had brushed aside the prior Demand Notice dated 04.09.2020. It transpires that the disputes pertaining to the existence and extent of alleged Debt, the Liabilities / Claims / Counter Claims and issues pertaining to the violation of the contentions and warranties under the Agreement, executed between the parties are a subject matter of conclusion and trial in the Commercial Suit, pending before the Hon ble Commercial Court, Bangalore. It is crystalline clear, that there was a pre-existing Dispute(s) between the Appellant / Petitioner / Operational Creditor, and the Respondent / Corporate Debtor, and in such circumstances, filing of the petition is, per se, not maintainable in the eye of Law. Viewed in that perspective, the conclusion arrived at, by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) in petition, in dismissing the Application, is free from any Legal errors. Appeal dismissed.
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2022 (11) TMI 931
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of Pre-existing dispute or not - HELD THAT:- Upon perusal of the purchase order dated 25 September, 2017, purchase order no. CIMM/17-18/000568, it emanates that various part supplies made there under. The instant claim of the Operational Creditor was covered by a Letter of Credit opened by the Corporate debtor through Indusind Bank being LC No. for a sum of Rs. 1,86,16,500/- for supply of 90 bogies, out of which a sum of Rs. 98,32,716 /- against supply of 45 bogies has been paid to the Operational Creditor and the price for the remaining supply of bogies is what remains due and payable. - Separate purchase orders were issued which gave rise to separate cause of actions. Hence, it is clear that the Purchase order is a separate contract for which independent proceedings has been initiated before this Adjudicating Authority, and against which no dispute whatsoever has been ever raised by the Corporate Debtor. As such it is construed that there is no pre-existing dispute. The present petition made by the Operational Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Application admitted - moratorium declared.
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2022 (11) TMI 930
Maintainability of petition - initiation of CIRP for realisation of interest due - Corporate Debtor failed to make repayment of its dues of interest - Operational Creditors - existence of debt and dispute or not - whether CIRP can be pursued for realization of the interest amount alone? - HELD THAT:- The Corporate Debtor has time and again acknowledged the existence of the operational debt and sought time to repay the same. Undisputedly, the payment was delayed by the Corporate Debtor but it is the Operational Creditor s own submission that an amount of Rs. 19,66,159/- was repaid by the Corporate Debtor over a period of two years thus paying back the entire principal amount out of the total outstanding debt. Pursuant to the Order of this Bench dated 13th February 2020, the Operational Creditor revised the Petition and amended the claim amount to Rs. 9,54,749/- which solely includes the interest component that remains unpaid till date. In this regard, we note that it is now settled law that interest, in itself, is not sufficient to maintain a Petition under Section 9 of the Code. The interest clause in the invoices cannot be treated as an agreement between the parties for claiming interest and moreover, such interest amount cannot be the sole reason for continuing proceedings against the Corporate Debtor under this Code after the principal amount has been repaid - The Operational Creditor now continues to proceed against the Corporate Debtor for the interest amount which was considered to be barred by the NCLAT in S.S. Polymers vs. Kanodia Technoplast Limited [ 2019 (11) TMI 1428 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]. Thus, by continuing to proceed against the Corporate Debtor for the interest amount alone, all the Operational Creditor intends is to recover and realise their debt which is against the letter and spirit of the Code. Petition dismissed.
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2022 (11) TMI 929
Opportunity to seek replacement of Resolution Professional - right of hearing - principles of natural justice - HELD THAT:- The arguments that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for. It was held that the argument, that before report of Resolution Professional the Debtor must get a chance to seek replacement of Resolution Professional and thus notice was required to be given, has no substance. It is clearly held that, it is only after the Resolution Professional is appointed by the Adjudicating Authority under Section 97(5), that the step under Section 98 is contemplated. The principles of natural justice, which were considered by the Bombay High Court in the above cited judgment, are not violated by not providing for a notice before appointment of IRP, as can be seen from Section 99 of IBC. Any amount of audience is provided to the debtor before the Resolution Professional submits a report. Section 99(2) of IBC gives an opportunity to the debtor to prove repayment of debt claimed as unpaid by the creditor. Section 99(4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report. Thus, no notice is required for the Respondent at the stage of appointment of Resolution Professional (RP) - this Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016, since the application is found to be complete. Mr. Madasa Kumar is appointed as the Resolution Professional - application allowed.
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2022 (11) TMI 928
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Corporate Debtor did not choose to file any reply, contesting the above Company Petition. The Corporate Debtor has not complied with the order of this Bench, dated 18.07.2022, in which the Corporate Debtor was directed to submit a copy of reply, before next date and argue the matter, failing which the argument of the Corporate Debtor would be treated as heard. The Corporate Debtor did not furnish any reply and did not appear before this Bench on 23.09.2022. The Corporate Debtor was set exparte. This Bench feels that the Petitioner has successfully demonstrated the existence of debt and default committed by the Corporate Debtor in this case. Since the Corporate Debtor did not file any reply, the claim of Operational Creditor remained unchallenged. The above Company Petition being filed on 04.12.2019 is well within limitation. Thus, Company Petition satisfies all legal requirements for admission. Petition admitted - moratorium declared.
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2022 (11) TMI 905
Wrongful furnishing of Corporate Guarantee - seeking direction to the Respondent/ Original Petitioner to address the liabilities arising out of unauthorized Corporate Guarantee dated 09.01.2017 in favour of M/s Sourya Container Leasing Company - Applicant submits that at no point did the Respondent have appropriate authorization from Original Respondent No.1 Aranca (Mumbai) Pvt. Ltd. to execute the said Corporate Guarantee - Can orders can be passed in the present proceedings relating to Section 7 proceedings? HELD THAT:- The Applicant herein, has filed the present application seeking directions against the Respondent to make payment of the amount claimed by Mr. Vikram Kumar in C.P.(IB) No. 143 of 2020 on the ground that the respondent issued the Corporate Guarantee without any authorisation from Aranca (Mumbai) Pvt. Ltd. amongst other grounds as detailed in the present Application. It is a matter of record that Aranca (Mumbai) Private Ltd. greatly suffered at the time when the respondent was in-charge of the day to day management. For instance, the Respondent entered into several related party transactions and misuse of Aranca Funds unjustly enrich himself report of the SKP Business consulting LLP in November 2017 set out in significant detail the conduct of the respondent - Pursuant to Section 7 Petition Aranca (Mumbai) Private Ltd. was exposed to the possibility of dragged into CIRP on account of the conduct of the Respondent. In any event, the Respondent is exposed to liability of at least Rs.3,94,99,355/- which is an amount claimed by Mr. Vikram Kumar in the Section 7 petition. The Respondent did not approach the NCLT with clean hands and has suppressed material information - the Respondent are directed to indemnify Aranca (Mumbai) Private Ltd. from any liability arising from signing of the unauthorised, purported Corporate Guarantee by the Respondent contrary to Section 185 of the Companies Act, 2013 that is all liabilities arising out of the purported transactions with M/s Sourya Containers leasing Company ought to be borne solely by the Respondent. Thus, there is express irregularity in issuance of the Corporate Guarantee by the respondent and provisions under section 85 and provisions under section 185 of the Companies Act, 2013, were not followed - this Bench direct the respondent herein, to deposit an amount of Rs.3,94,99,355.00/- with Registry of NCLT Mumbai Bench within 15 days from this order to secure interest of Aranca (Mumbai) Private Ltd. Application disposed off.
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PMLA
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2022 (11) TMI 927
Money Laundering - generation of proceeds of crime - predicate offence - whether materials indicates existence of scheduled offence - approbate and reprobate of proceeds of crime - whatever monies and trail thereof mentioned, demonstrate that no monies have been received by the applicant(A3) from the alleged FSI Sale Proceeds? - twin conditions of section 45(1) of PMLA fulfilled or not - HELD THAT:- This Court reached at following conclusion. i. Extreme and exceptional power of effecting arrest which ought to have been used very very sparingly, has been used by the ED Investigating Officers under Sec.19 of the PML Act, is ab initio illegal. Hence, on this count alone the question of attracting rigors of stringent twin conditions under Sec.45(1)(i)(ii) of the PML Act does not arise and both accused cannot be detained in the judicial custody henceforth, for the same. ii. Simply labeling pure civil disputes with money laundering or an Economic Offence itself cannot automatically acquire such status and ultimately drag an innocent person in a miserable situation in the guise of arrest under Sec.19 and stringent twin conditions of Sec.45(1)(i)(ii) of the PML Act. THE Court has to do what is right irrespective of who is before it. iii. From the records materials and the detailed discussion made above, it is clear how Pravin Raut (A3) is arrested for a pure civil litigation, whereas Sanjay Raut(A5) for no reason. This truth is glaring. The Court is under legal obligation and duty to find out truth even at the stage of bail. The Hon'ble Supreme Court time and again laid down, Truth is the guiding star. Criminal trial is voyage of discovery of truth. The truth alone triumphs and every endeavour has to be made by the Court to discover the truth and make justice. iv. Even otherwise the twin conditions cast such an important duty on the Court to have a thorough examination and assessment at the stage of bail without making any mini trial v Even if MHADA, who is party to the every stage and every litigation, which had reached upto the Hon'ble High Court, yet astonishingly lodged FIR No.22 of 2018 for the facts and circumstances of transaction which had allegedly taken place during 2006 to 2013. In this way the conduct of MHADA right from beginning till date is suspicious and even ED admitted the same in their complaints, yet ED has not made any MHADA staff accused. vi MHADA's attitude as such lodging FIR No.22 of 2018 on one fine morning can neither throw dust in the eyes of the Court nor can brush of and wash out long civil litigations which were even acknowledged by the Hon'High Court. Hence, this Court cannot join its voice in the chorus of ED and MHADA. vii Rakesh and Sarang (A1 and A2) for their misdeeds and being the main accused persons admitted the same by affidvit of Sarang Wadhawan, were not arrested by the ED but they have been left scot free. But at the same time Pravin Raut(A3) was arrested for civil dispute, whereas Sanjay Raut(A5) for no reason. All this clearly indicates disparity, pick and choose attitude of the ED and the Court cannot put premium on the same but legally bound to make parity. viii If the Court still accepts contention of ED and MHADA and further rejects the bail applications of Pravin Raut (A3) and Sanjay Raut(A5) that will amount putting premium on such pick and choose strategies of the Agency. Certainly in that event any common man, innocent and honest people, will loose faith and confidence which they have reposed in the judicial system as a temple of justice. Hence, judicial principles which guide the Court cannot be ignored. ix. Many statements of witnesses recorded by ED clearly refer the prominent role of Wadhawans (A1 and A2) and their HDIL, but they were not arrested and Pravin Raut (A3) and Sanjay Raut(A5) who have absolutely no concern in generating POC or laundering money as well as indulging the criminal activities relating to the Scheduled Offence, were arrested for subsequent transactions, they have made from their own money. Such conduct of the Agency cannot be garbed for detaining both accused (A3 and A5) behind bars for an uncertain period. x. Like the laudable object of the PML Act casting duty on the Court to safeguard it, equally the court is protector of rights of accused and innocent persons who are illegally arrested. The Court cannot become predator of such valuable rights of the accused, but is duty bound to be a protector thereof as laid down by the Hon'ble Supreme Court. If the Court ignores this aspect, where the people will go for justice? xi. This Court being the Court of First Instance has great responsibility of not committing a slightest mistake which will turn into miscarriage of justice. Therefore, this Court has taken a thorough survey of the available records/materials within four corners of the limits required to resolve this question relating to the twin conditions and only thereafter, arrived at such conclusion by not transgressing the boundaries and not committing any mini trial. xii. In PMLA bail matters, orders become long and run into at least around 40 50 pages, does not mean that Court has done minitrial as argued by the Ld. A.S.G. Mr. Anil Singh. On the contrary the stringent twin conditions under Sec.45(1)(i)(ii) of the PML Act prescribe prima facie thorough examination. Even the recent order of the Hon'ble High Court in the case of Anil Vasantrao Deshmukh (supra) runs into 53 pages. The present order is a common order for two bail applications relating to voluminous record, hence bound to run in number of pages. Both accused are basically arrested illegally. Both of them are entitled to parity in view of disparity made by the ED in not arresting the main accused persons Rakesh(A1), Sarang (A2), their HDIL, MHADA and Government Officials/staff responsible for misdeeds of A1 and A2 at the relevant time in 20062018. Apart from this, I also held that both accused have satisfied twin conditions under Sec.45(1)(i)(ii) of the PML Act. There is absolutely nothing before the Court that eversince Pravin Raut (A3) has been released on bail in a Scheduled Offence, he has committed any breach of the conditions imposed by the said Court. Similarly, whatever contended by ED against Sanjay Raut(A5) can be safeguarded by imposing certain conditions on him. Application allowed.
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Service Tax
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2022 (11) TMI 926
Levy of service tax - reimbursement of service tax component as raised in the invoice of the provider - applicability of Municipal Commissioner s Circular No.83 of 2013-14 - correct interpretation of the Mega Exemption Notification issued by the Central Government or not - reverse charge mechanism - HELD THAT:- Since the appellant did not remit the service tax component to the department, show cause notices were issued to all the three appellants. The matter has culminated in an order of adjudication which has been challenged by the said service provider before the Customs, Excise and Service Tax Appellate Tribunal, Kolkata Bench (CESTAT). The learned single Bench, by the impugned order, though separate orders, they contain the same reasoning, taking note of the fact that the service tax authorities had issued summons to the appellants and that the proceedings are yet to attain finality, opined that it would be appropriate to permit the service tax authorities to conclude the proceedings against the appellants in accordance with law - the authorities deciding the liability of the service tax under the Finance Act, 1994 is the appropriate authority to adjudicate the liability of the appellant to pay service tax in respect of the contract between it and the KMC in accordance with law. Though such was the observation in the penultimate paragraph of the order, the writ petition stood dismissed. The KMC has taken a stand as is evident from the Circular No.83 of 2013-14 dated 4th January, 2014 that the services rendered by them and services given to them in rendering public services is exempted from payment of service tax in view of Mega Exemption Notification No.25/2012-ST dated 20th June, 2012 issued by the Government of India since the functioning and duties of the KMC is concomitant to the public interest as enshrined in the Constitution of India. Therefore, the KMC opined that they are not liable to pay service tax in terms of the provisions of the said notification until further orders in view of the fact that the KMC is discharging constitutional obligation imposed upon them by the Constitution of India. The correctness of the interpretation made by KMC in their Circular dated 4th January, 2014 has to be decided - The Service Tax Department has not put KMC on notice in any of the three proceedings initiated against the appellants. The appellants stand apart from other things is that the service tax component which is remitted by them as a service provider has to be reimbursed by the recipient, KMC. Thus, unless and until the adjudication is done in the presence of the KMC, it will not be a binding adjudication. The three appeals are disposed of by this common judgement and order by directing the concerned Service Tax Commissionerate to issue fresh notices to the appellants as well as KMC which shall be treated as continuation of the earlier show cause notices. After hearing the parties, the concerned authority shall adjudicate the issue and pass a reasoned order on merits in accordance with law - no coercive action shall be initiated against the appellants till the adjudication is complete.
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Central Excise
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2022 (11) TMI 925
Classification of goods - plastic Tape strips - Woven Fabrics Woven Sacks - FIBC (flexible intermediate bulk carriers) - HDPE/PP/LDPE sacks - Bags and warp knit fabrics - whether merits classification under Chapter Heading No s 54041990, 54072090, 63053300, 630533200 and 60053300 respectively or merit classification under Chapter Heading No. 39201099, 39269099, 39232100/39232990 as sought by DGCEI? HELD THAT:- The Commissioner has held that there are no hesitation in holding that the products manufactured by the Noticee deserve to be classified under Chapter Heading 54, 63 and 60. It is not disputed by the learned Authorized Representative appearing for the Department that the issue raised before the Commissioner in the present matter was the issue considered in the two orders passed by the Commissioner (Appeals), which orders have been accepted by the Department. There is no error in the order passed by the Commissioner. The appeal is, accordingly, dismissed.
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2022 (11) TMI 924
Levy of Excise duty - Polycarbonate Containers - Goods returned for repairs due to quality issues - goods were cleared after repairs - Rule 173H of CER - whether the goods were exempt from payment of duty under Sr. No.57 of Notification No.4/97-CE dated 1-3-1997? - Clandestine removal or not - HELD THAT:- As is evident from the record, up to February 1999 AIL was clearing the Polycarbonate Bottles under the belief that the same were exempt from duty and duly reflecting such duty-free clearances in the RT-12 Returns. There could therefore be no motive or reason for AIL to wrongly declare freshly manufactured Bottles as repaired Bottles under Rule 173H. Upon perusal of records, it is clear that on receipt back of the Bottles earlier cleared, the AIL had duly filed with the Excise department, intimation of receipt of the goods in Form Annexure A; the said Forms Annexure A were duly received by the department as is evident from Received Stamp/ signature of the Inspector on the said Forms Annexure A and that the fact that such Forms in Annexure A were duly filed with the department; that after receipt of the duty paid goods in the factory for repairs and after giving intimation thereof to the department, particulars of the same were duly recorded in Form V Register - The said statutory records/ documents viz. Forms Annexure A bearing Received Stamp/ signature of the Inspector, Form V Register, Forms Annexure C bearing receipt stamp/ signature of the Inspector and Invoices clearly establish the receipt of the goods cleared earlier, for the purpose of repairs, and the removal after carrying out of repairs. That the show cause notice has not disputed the genuineness of the aforesaid documents/ records; no statement has been recorded of the central excise officers who had acknowledged the said intimations and thus in the face of the said statutory documents/ records, the case of the department that no goods were received under Rule 173H for repairs and that what was cleared as repaired goods were in fact freshly manufactured goods cannot be sustained. That the Commissioner s finding that rejection of Bottles was without any reasonable ground or that the nature of the defects were such as required remaking of the Bottles cannot be appreciated without there being any evidence in support thereof. Clandestine removal or not - HELD THAT:- The department has not produced any evidence to show procurement of excess quantity of raw materials required to manufacture the quantity of Bottles which the department alleges was not return of repaired goods but freshly manufactured goods. It is settled law that in the absence of evidence of purchase of raw materials to manufacture the quantity of finished goods alleged to be clandestinely cleared, no case for clandestine removal can be said to have been made out. Eligibility to exemption under serial No.69 of Notification No.5/98-CE dated 2-6-1998 - HELD THAT:- Serial No.69 of Notification No.5/98-CE dated 2-6-1998 grants exemption to All goods of headings 39.23, 39.24 and 39.26 except goods of Polyurathanes, insulated ware and certain bags and sacks and fabrics. The goods in the present case are Polycarbonate Bottles of heading 39.23 and they are not hit by the said three exceptions. The said exemption is subject to condition No.10 which is duly fulfilled in the present case. The said condition 10 requires that credit of duty paid on the products mentioned in column 2 of the Notification or on any other product manufactured in the same factory should not have been availed. That there is no dispute to the fact that Appellant-AIL have not availed credit of the duty paid on the Bottles or of the duty paid on any other product manufactured in their factory. The Commissioner erred in proceeding on the basis that since AIL had availed Modvat Credit of the duty paid on the inputs used in the manufacture of another product viz. Weighing Scale manufactured in the same factory, Condition No.10 was not satisfied - the goods were otherwise also entitled to exemption from duty under serial no. 69 of the said notification no. 5/98-CE dated 2-6-1998. The demand for duty of Rs.49,039/- is confirmed on 490 Bottles received under Rule 173H on the ground that the same were cleared after a period of six months from the date of receipt of the rejected goods under Rule 173H is also untenable. That there is no such stipulation of 6 months in Rule 173H. It is not open to the department to read into the statutory provision of Rule 173H, a limitation period which is not prescribed in the Rule. The Commissioner erred in relying on a trade notice which stipulated the said limitation period of 6 months. When no limitation period was stipulated in Rule 173H, no such limitation period can be introduced in the statutory Rule 173H by means of a Trade Notice which has no statutory force. Even otherwise since in view of above there was no manufacture of fresh goods there cannot be a duty demand merely for reason of clearance after 6 months. Since no duty was payable on the said goods and since the said goods are not liable to confiscation, the imposition of fine and penalties on appellants are liable to be set aside - confiscation of land, building, plant and machinery and in imposition of redemption fine, since the duty demand itself is unsustainable in law, the said order of confiscation and fine is liable to be set aside. Appeal allowed.
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2022 (11) TMI 923
Refund claim - inadvertent reversal of CENVAT Credit under rule 6(3A) of CENVAT Credit Rules, 2004 - liquefied petroleum gas (LPG) - exempt goods or not - April 2010 and March 2011 - HELD THAT:- The appellant is a manufacturer of excisable goods and had availed credit under CENVAT Credit Rules, 2004 on eligible inputs used in the manufacture of excisable goods but, under the impression that liquefied petroleum gas (LPG) , exempted by notification no. 4/2006-Central Excise Act, 1944 dated 1st March 2006 when cleared for use under the public distribution system (PDS) were exempted goods within the meaning of rule 2(d) of CENVAT Credit Rules, 2004, reversed such proportion and also excluded it for the computation prescribed in rule 6(3A) of CENVAT Credit Rules, 2004. The case has been decided in appellant own case in THE PRINCIPAL COMMISSIONER, CENTRAL GST AND CENTRAL EXCISE VERSUS M/S. RELIANCE INDUSTRIES LTD. [ 2022 (5) TMI 650 - GUJARAT HIGH COURT] where the Hon ble High Court of Gujarat had considered the very same decisions for the approval accorded to that of the Tribunal and held that This Court, held that since the assessee could not have manufactured gelatin (dutiable final product) using a lesser quantity of hydrochloric acid, Rules 6(1) and 6(2) of the CCR would not come into play. In these circumstances, the principle stands established that rule 6 of CENVAT Credit Rules, 2004 is inoperable ab initio in such clearances - demand set aside - appeal allowed - decided in favor of appellant.
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2022 (11) TMI 922
CENVAT Credit - input services - Outward GTA Services - sale of goods on FOR basis - non-submission of documents showing the sale of goods on FOR basis - HELD THAT:- This Tribunal in the appellant s own case BANCO PRODUCTS LTD VERSUS C.C.E. S.T. -VADODARA-I [ 2021 (7) TMI 662 - CESTAT AHMEDABAD] has decided that if the sale is on FOR basis the appellant is entitled for cenvat credit on outward GTA - thus, it is clear that the sale is on FOR basis and the entire risk or loss of damages and the freight charges were borne by the appellant, Therefore, it is a clear case of FOR sale. Accordingly, the facts of this case and the case decided by the Tribunal in the appellants own case are identical. Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 919
CENVAT Credit - waste - exempt goods or not - zinc dross, zinc dust and flux skimming - applicability of Rule 6 of CCR - HELD THAT:- Both the authorities below while upholding the demand raised, have relied upon the amendment made in Rule 6 ibid with effect from 1.3.2015 and came to the conclusion that after the aforesaid amendment w.e.f. 1.3.2015 zinc dross/flux/skimmings cleared by the appellant are covered by the provisions of Rule 6 ibid. The issue involved herein is no more res integra in view of the decision of the co-ordinate Bench (Chennai Bench) of the Tribunal in Appellant s own case M/S. APL APOLLO TUBES LTD. (UNIT-II) VERSUS COMMISSIONER OF GST CENTRAL EXCISE [ 2019 (7) TMI 733 - CESTAT CHENNAI ] in which the Tribunal while dealing with the aforesaid amendment in Rule 6 ibid allowed the Appeal filed by the appellant and held that when the zinc scrap, a waste arising out of process of manufacture of finished goods, is not the goods manufactured by the appellant, the same cannot be considered as exempted goods manufactured by them - In yet another case similar view has been taken by the Bangalore Bench of the Tribunal in SHRI LAKSHMI METAL UDYOG LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALURU SOUTH COMMISSIONERATE [ 2019 (8) TMI 420 - CESTAT BANGALORE] . In view of the series of decisions of different Benches of the Tribunal deciding the issue in favour of the assessee, even after considering the amendment made in Rule 6 ibid, the impugned order is accordingly set aside - appeal allowed.
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Indian Laws
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2022 (11) TMI 921
Validity of e-auction sale - property sold by Bank against recovery of default loan - HC set aside the auction - default in repaying the outstanding loan amount and have also failed to pay the interest accrued to the loan accounts - loan accounts classified and NPA - HELD THAT:- The indisputed facts which manifest from the record are that the respondent borrowers availed three loan facilities from the respondent Bank (secured creditor) to the tune of Rs.26 lakhs after executing necessary security documents. Respondent no.4 stood as guarantor and created equitable mortgage over her immovable property as security for due payment of the said loan amounts. The property is a residential building of 266 sq. yards of land - At this stage, the proceedings initiated by the respondent bank came to be assailed by the respondent borrowers before the Debts Recovery Tribunal of Andhra Pradesh at Hyderabad under Section 17(1) of the Act. It may be relevant to note that in the description of the property under Sections 13(2) and 13(4) of the Act, door number indicated was 12-3-393 in place of 12-3-39 and this question about the alleged error in the door number of the mortgaged property was available to the borrowers in the first round of litigation before the Tribunal, if at all, it has any material bearing in reference to the proceedings initiated by the respondent Bank (secured creditor), but the proceedings initiated at the instance of the respondent borrowers before the Tribunal came to be dismissed by a judgment dated 12th December, 2014 and no further appeal was preferred and accordingly it has attained finality. In the instant case, although the respondent borrowers initially approached the Debts Recovery Tribunal by filing an application under Section 17 of the SARFAESI Act, 2002, but the order of the Tribunal indeed was appealable under Section 18 of the Act subject to the compliance of condition of predeposit and without exhausting the statutory remedy of appeal, the respondent borrowers approached the High Court by filing the writ application under Article 226 of the Constitution. We deprecate such practice of entertaining the writ application by the High Court in exercise of jurisdiction under Article 226 of the Constitution without exhausting the alternative statutory remedy available under the law. The High Court under the impugned judgment has nonsuited the present appellant (auction purchaser) on the premise that there is an error in the description of the door number of the property and instead of 12-3-39 , it was indicated as 12-3-393 , although there was no error in the description of the property rather the dimensions with measurement and boundaries were properly indicated of the mortgaged property and on the premise that Rule 9(4) of the Rules has not been followed by the appellants by depositing 75% of the bid amount which ought to have been deposited by 11th April, 2015, instead it was deposited on 15th April, 2015 - there are substance in the submissions made by the learned counsel for the appellant for the reason that so far as the error in the description of door number of the property is concerned, which admittedly indicated throughout as 12-3-393 instead of 12-3-39 , but the fact is that the description of the mortgaged property from the commencement of the proceedings under Section 13(2) of the SARFAESI Act, 2002, due to human error instead of 12-3-39 , door number was indicated as 12-3-393 , but admittedly the fact is that there is no such property available in the locality/vicinity with Door no. 12-3-393 and as full description of the mortgaged property was mentioned/indicated, although there was a typographical error, but the respondent borrowers failed to demonstrate any prejudice being caused on account of the inadvertent error being caused in description of the mortgaged property. The four days delay which was caused in terms of the original auction notice, in no manner, would frustrate or annul the auction proceedings and the Debts Recovery Tribunal has rightly held that because in such state of flux, particularly when the bank/secured creditor requested the auction purchaser to wait for some time because the borrowers are negotiating with the bank in the light of interim order dated 26th March, 2015 of the Tribunal, delay in depositing 75% of the bid amount by four days in no manner would frustrate the rights of the parties inter se, more so, when the conduct of the borrowers in getting extension orders on two different occasions and still not depositing Rs.6 lakhs in terms of the order of the Tribunal would clearly reflect that the intention of the borrowers was only to frustrate the auction sale by one reason or the other, which they could not succeed. The finding returned by the Tribunal was well reasoned and duly supported with the material on record and the interference made by the High Court under the impugned judgment while recording a finding that it was in breach of Rule 9(4) of the Rules, 2002 is not legally sustainable in law and deserves to be set aside - Appeal allowed.
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2022 (11) TMI 920
Dishonor of Cheque - complainant failed to comply with the mandatory provision as laid down under the N.I. Act as the notice was not served upon the accused persons - Reversal of order of acquittal passed by learned Metropolitan Magistrate - maintainability of impugned judgement in view of statutory mandate expounded under Sub-Section 3 of Section 401 of Criminal Procedure Code - HELD THAT:- In view of the statutory mandate expounded under Sub-Section 3 of Section 401 of Criminal Procedure Code the impugned judgement cannot be allowed to remain in force. Under the Code of Criminal Procedure specific provision is there to prefer appeal against the order of acquittal under Section 378. Therefore, in view of the judgement pronounced in the case of MADHU LIMAYE VERSUS STATE OF MAHARASHTRA [ 1977 (10) TMI 111 - SUPREME COURT] there is no room for this Court to invoke the inherent jurisdiction to consider the order of acquittal passed by learned Trial Court, while dealing with an application under Section 482 of the Cr.P.C. challenging the legality of another judgement. While acknowledging the constitutional right of the litigants to have speedy jusice, Court should not and cannot pass any order that runs counter to the intention of the legislature as reflected in statutory provision. However, when it is found that the Opposite Party/complainant was prosecuting with due diligence with another prosecution the benefit of Section 470 of Criminal Procedure Code may be extended - while refusing to imbibe myself with the argument of Mr. Hussain, I am inclined to give liberty to the Opposite Party No. 1, if any application is filed under Section 378 of the Criminal Procedure Code before the appropriate Court having jurisdiction, challenging the order of acquittal within 30 days from this day in that event learned Appellate Court shall consider the application for appeal keeping in mind the provision of Section 470 of the Criminal Procedure Code. The criminal revision is disposed of.
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