Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 24, 2022
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Period of limitation for levy of penalty - Penalty proceedings u/s 271D - penalty order, was passed beyond the time period prescribed by Section 275(1)(c) - the same having been passed after the lapse of six months from the end of the month in which the penalty proceedings were initiated by the AO - ITAT rightly deleted the penalty - HC
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Levy of interest u/s 220(2) - Revenue demanded interest on the amount refunded to the Assessee - The demand for interest raised by the AO is contrary to the Circular issued by CBDT as well as the mandate of Section 220(2). The Section 220(2) does not empower the revenue to demand interest relating back to a set aside order, when a fresh assessment order has been passed thereafter. - HC
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Revision u/s 263 by CIT - we could not made out any evidence of the assessee having explained the issue of 'prior period expenses' before the AO. Therefore, assessment order passed by the AO on the issue of 'prior period expenses' is definitely erroneous and prejudicial to the interest of the Revenue - Revision order sustained - AT
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Disallowance of expenditure incurred on the acquisition of the land made in cash u/s 40A(3) - the income having been held taxable under the head “income from business or profession” the disallowance under section 40A(3) of the Act, we hold, has been rightly made. - AT
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Exemption u/s 11 - Scope of amendment to Section 2(15) - dominant object test - the aforesaid activities of the Appellant are directed towards the benefit of investors and potential investors forming part of the general public and are not limited to the benefit of its members. - AO is directed to allow exemption under Section 11 of the Act to the Appellant - AT
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Disallowance of donation paid by the assessee to school - how a school would block the business of the assessee on account of non-payment. If at all, this payment had been made for non-business requirements These are nothing but gratuitous payments. It is not allowable expenditure - Additions confirmed - AT
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Disallowance of Commission paid to 13 persons for a single land deal - No material has been placed by assessee to controvert the findings of lower authorities - Additions confirmed - AT
Customs
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Levy of penalty - import of new/unused jewellery - there is absolutely no misdeclaration between the description and / or value declared in the Bill of Entry and the goods actually imported by petitioner, both being diamond studded gold and silver jewellery. Accordingly, question of invoking Section 111(m) of the Customs Act does not arise at all in the present case. It is also noteworthy that there is no such requirement under the SEZ Act. - HC
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Custodian of ICD - cost recovery charges of the custom staff - The Commissioner, under the impugned orders, did not revoke the approval of the custodianship nor was the security forfeited - It has, therefore, to be held that the Commissioner committed an illegality in ordering recovery the cost recovery charges under the aforesaid provisions of the 2009 Regulations - AT
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Confiscation - Smuggling - Gold Bars - town seizure - the burden of proof under Section 123 of the Act is not shifted on the appellant. Revenue has not been able to establish the smuggled nature of gold in question. In this view of the matter, the impugned order is set aside - AT
Corporate Law
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The registered valuer can follow either of the valuation standards as specified not the both - (a) internationally accepted valuation standards or (b) valuation standards adopted by any registered valuers organisation. - Rule 8 of the Companies (Registered Valuers and Valuation) Rules, 2017
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Eligibility for registered valuers - "not ineligible" took five years to become "not eligible" - Rule 3(2)(c) of the Companies (Registered Valuers and Valuation) Rules, 2017
Indian Laws
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Dishonor of Cheque - It is held that the witnesses examined by one party cannot be allowed to be examined on behalf of the opposite party at its instance. Learned Magistrate has, thus, erroneously passed the impugned order by misdirecting himself to invoke Section 540 Cr. PC to summon the witnesses already examined by the complainant to be called as witnesses on behalf of the accused-respondent. - HC
IBC
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Attachment of immovable property - In forensic audit report it appears that it was noticed that fraud was committed by the appellant in getting the property registered in his name. It has further been noticed that after getting the property registered in his name both the directors tendered resignation from the Board of the company. However, the record suggests that both the directors were continuing to run the corporate debtor even thereafter. - Appeal dismissed - AT
Service Tax
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Classification of Works Contract service -original work - Had the authorities below gone through each and every work order and the annexure mentioning the scope of work of that work order then perhaps they might have also come to the same conclusion that more or less the entire works in issue falls under Rule 2A(ii)A ibid which require service tax @ 40%. - AT
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Refund of service tax deposited under mistake of law - doctrine of unjust enrichment - it is held that under the facts and circumstances as the appellant have deposited the service tax from their own pocket, it is held that the doctrine of unjust enrichment is not attracted. - AT
Central Excise
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Extended period of limitation - there is no failure and/or willful suppression of any fact of the transaction by the Appellant, having entered and recorded the transaction in its books of accounts. Therefore, no longer period could be invoked - AT
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Reversal of CENVAT Credit - provision for slow/non-moving inventory made - Admittedly, revenue have not been able to identify the details of inventory or asset, for which the general provision has been made. It is further evident that the appellant have demonstrated that such provision has been made year to year by way of increasing or reducing the provision, depending on the usage of inventory as required. - AT
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Levy of Equivalent penalty u/s 11AC - In the case where the appellant has paid the entire amount of duty due along with the interest thereon, the central excise officer could not have proceeded to any notice in respect of the payment so made demanding the duty so paid. - No penalty - AT
VAT
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Classification of goods - emulsified bitumen - Rate of tax - 12.5% or 4% - Assessee is held liable to a levy 4 per cent tax in terms of the Entry 16, Schedule 2, Part II of the Madhya Pradesh VAT Act for the purpose of levy of VAT for the relevant period. - SC
Case Laws:
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Income Tax
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2022 (11) TMI 1038
Penalty proceedings u/s 271D - violation the provisions of Section 269SS - Period of limitation - HELD THAT:- AO has initiated the penalty proceedings in his/her assessment order, the said date is to be taken as the relevant date as far as the Section 275(1)(c) of the Act is concerned. In these cases, the quantum proceedings were completed by the AO on 17th/18th December, 2008, and the AO initiated the penalty proceedings in December, 2008, thus, the last date by which the penalty order could have been passed is 30th June, 2009. The six months from the end of the month from which action of imposition of penalty was initiated would expire on 30th June, 2009. In this case, admittedly, the penalty order(s) were passed on 29th September, 2009, and therefore, the ITAT rightly concluded that the order(s) were barred by limitation. Consequently, we answer the question of law against the Revenue and in favour of the Assessee by holding that, in the facts and circumstances of the present appeals, the ITAT was correct in law in deleting the penalty imposed by the Additional Commissioner of Income Tax, u/s 271D on the ground that the penalty order(s) dated 29th September, 2009, was passed beyond the time period prescribed by Section 275(1)(c) the same having been passed after the lapse of six months from the end of the month in which the penalty proceedings were initiated by the AO. - Decided against revenue.
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2022 (11) TMI 1037
Levy of interest u/s 220(2) - Revenue demanded interest on the amount refunded to the Assessee - since the tax liability of the Assessee remained the same even after the matter was remanded by the ITAT to AO for fresh consideration and the addition remained under the same head, the Assessee is liable to pay interest in relation to the demand issued pursuant to the original assessment order - contention of the Revenue that the Assessee is liable to pay interest in relation to the demand issued pursuant to the original assessment order, if on a remand, the addition remained under the same head has no basis in law - HELD THAT:- In the present case there was no default by the Assessee as the assessment order dated 28 th December, 2006, was set aside by the ITAT and therefore no liability to pay interest can arise under Section 220 (2) of the Act. The demand for interest raised by the AO is contrary to the Circular issued by CBDT as well as the mandate of Section 220(2). The Section 220(2) does not empower the revenue to demand interest relating back to a set aside order, when a fresh assessment order has been passed thereafter. The facts of the present case are clearly covered by para 2.1 of the said CBDT circular which anticipates the situation that has arisen in the present proceedings and therefore, the CIT(A) and the ITAT have correctly held that the levy of interest by the AO relating back to the set aside assessment order, was incorrect and have correctly ordered the same to be deleted. Thus, this Court sees no merit in the appeal and accordingly, the same is dismissed.
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2022 (11) TMI 1036
Revision u/s 263 - distinction between lack of enquiry and inadequate enquiry - as per CIT, AO has not enquired about the transaction entered into by the assessee, which resulted in capital gains and it was claimed as exempt u/s 10(38) of the Act, thereby making the assessment order not only erroneous but also prejudicial to the interest of the Revenue - HELD THAT:- We are of the considered view that the Assessing Officer had made specific enquiries during the assessment proceedings to which specific reply was furnished by the assessee alongwith supporting documentary evidences and all such evidences were duly examined and considered by the Assessing Officer before completing the assessment proceedings u/s 143(3) of the Act. In our considered view, the power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry as held by the Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi[ 2016 (6) TMI 1004 - BOMBAY HIGH COURT] We find that in the case of CIT Vs Sunbeam Auto [ 2009 (9) TMI 633 - DELHI HIGH COURT] has held that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Whether there was application of mind before allowing the expenditure in question has to be seen. If there was any inquiry, even inadequate, that would not by itself give occasion to the CIT to pass orders under section 263 of the Act, merely because he has different opinion in the matter. In the case of Anil Kumar Sharma [ 2010 (2) TMI 75 - DELHI HIGH COURT] has held that there is a distinction between lack of enquiry and inadequate enquiry If there was any enquiry, even inadequate, that would not by itself give occasion to the Commissioner to pass orders u/s 263 of the Act. Appeal of assessee allowed.
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2022 (11) TMI 1035
Exemption u/s 11 and 12 - denial of deduction as assessee has not furnished the return of income along with audit report in Form No.10B on or before the due date of furnishing of return of income - HELD THAT:- CBDT vide circular No.F.173/193/2019-ITA-1, dated 23.04.2019 and subsequent circular No.2/2020 vide F.No.197/55/2018-ITA-I dated 03.01.2020 were not considered by the ld.CIT(A)/NFAC, although, these are instructions/circulars issued by the Board and are binding on the revenue authorities, therefore, we deem it proper to restore the issue to the file of ld.CIT(A)/NFAC with the direction to adjudicate the issue afresh in the light of the circulars/instructions issued by the CBDT clarifying the time allowed for filing of return of income subsequent to the insertion of clause(ba) in sub-section (1) of section 12A - CIT(A)/NFAC shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. Appeal filed by the assessee is allowed for statistical purposes.
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2022 (11) TMI 1034
Unabsorbed depreciation set off against business income - HELD THAT:- The issue of the set off of carry forward unabsorbed depreciation has been held in favour of the assessee by even jurisdictional Hon ble Bombay High Court in the case of CIT v/s Hindusthan Unilever Ltd [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] held that restriction of eight years to carry forward and set off the unabsorbed depreciation has been dispensed with. Consequently, unabsorbed depreciation for the intervening periods between assessment 1997-98 upto 2001-02, if available in the assessment year 2002-03 would be allowable as part of carried forward depreciation from Assessment Year 2002-03 onwards. No decision contrary to the decision of the Gujarat High Court [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] has been shown to us. No substantial question of law.
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2022 (11) TMI 1033
Revision u/s 263 by CIT - computation of total income by considering loss declared by the assessee - HELD THAT:- We are of the considered view that the assessment order passed by the AO neither erroneous nor prejudicial to the interest of the Revenue in so far as the first issue of computation of total income by considering loss declared by the assessee - Although, the AO has taken loss admitted as per original return of income filed by the assessee on 03.11.2017 in the assessment order, but in the computation sheet, the AO has adopted loss declared by the assessee in revised return of income filed on 30.03.2018, which is evident from the fact that the AO has considered current year loss in Column-11 of computation sheet as per revised return filed by the assessee. Therefore, assumption of jurisdiction by the ld. PCIT on this issue is fails. Disallowance of 'prior period expenses' - Although, the assessee has claimed deduction for 'prior period expenses' in the P L A/c, but did not made any disallowance in statement of total income, even though, said expenses is inadmissible under the law. The AO has failed to consider the disallowance of 'prior period expenses' while completing the assessment order u/s. 143(3) of the Act. Although, the Ld. Counsel for the assessee submitted that the AO has verified the issue by way of specific notice and the assessee has filed its reply, but on perusal of details filed by the assessee, we could not made out any evidence of the assessee having explained the issue of 'prior period expenses' before the AO. Therefore, assessment order passed by the AO on the issue of 'prior period expenses' is definitely erroneous and prejudicial to the interest of the Revenue and thus, we are of the considered view that the ld. PCIT has rightly assumed jurisdiction u/s. 263. Appeal filed by the assessee is partly allowed.
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2022 (11) TMI 1032
Deduction u/s 36(1)(ii) - deduction being bonus paid to employees - non-furnishing of fresh certificate from the Auditor - whether payment of bonus to employees cannot be equated with profits or dividend payable? - HELD THAT:- On a perusal of the impugned order of learned Commissioner (Appeals), it is observed, though, the assessee contended that it is a mistake committed by the Auditor in mentioning the deduction claimed at column no. 16(a) of the Audit Report instead of clause 21(b). However, learned Commissioner (Appeals) declined to accept such claim of the assessee on the reasoning that the assessee failed to obtain a certificate from the Auditor acknowledging the mistake. However, before us the assessee has furnished certificate dated 15th February, 2019 issued by the same Auditor acknowledging the mistake in reporting the bonus paid to the employee. Of course, the assessee has filed the aforesaid document as additional evidence. As in case of M/s. Dalal Broacha Stock Broking Pvt. Ltd. [ 2011 (6) TMI 251 - ITAT, MUMBAI ] after analyzing the provisions of section 36(1)(ii) has held that any sum paid to an employee as bonus or commission for services rendered has to be allowed as deduction as the reasonableness of the payment or adequacy of services rendered by the employee are not relevant factors in deciding the allowability of deduction. The Bench has held that disabling provision of section 36(1)(ii), which provides that if the sum so paid is in lieu of profit or dividend applies only to employees who are partners or shareholders. In the facts of the present appeal, there is no finding that the employees are either partners or shareholders of the assessee. That being the case, assessee s claim has to be allowed. This ground is allowed. Addition u/s 68 - unsecured loan transactions - Admission of additional evidence denied by Commissioner (Appeals) - HELD THAT:- In case, the assessee for some reasons was unable to furnish the evidences to prove the loan transaction before the Assessing Officer and produced the requisite documents by way of additional evidence before Commissioner (Appeals), they should not have been rejected, merely because, AO in the remand report observed that such evidences should not be admitted. There can be various factors which could have prevented the assessee from furnishing the requisite documents before the AO. However, if the assessee files such documents before Commissioner (Appeals), they should not be rejected on technicalities, considering the fact that such evidences may have a crucial bearing in deciding the issue - We are inclined to restore this issue to the file of the AO for fresh adjudication,considering the evidences filed by the assessee.
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2022 (11) TMI 1031
Disallowance u/s.14A r.w.Rule 8D(2) - disallowance of expenses was suomoto made by the assessee in the return of income - HELD THAT:- We find that assessee is having sufficient own funds which is evident from the balance sheet in page 3 of the paper book and hence, it could be reasonably presumed that the investments which had yielded exempt income to the assessee had been made out of interest free funds available with the assessee by placing reliance on the decision of South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] - We direct that there could be no disallowance of interest in terms of Rule 8D(2)(ii) of the Rules. The ld. AO is directed accordingly to delete the same. Disallowance made under Rule 8D(2)(iii) of the rules - We direct the ld.AO to consider only those investments which had actually yielded exempt income to the assessee during the year under consideration and recompute the disallowance accordingly. The workings for the same are given by the assessee in page 43 of the paper book. The ld. AO is directed to verify the same and re-compute the disallowance. Accordingly, the ground of assessee allowed for statistical purposes. Disallowance of foreign travel expenses - Allowable business expenditure - HELD THAT:- We find that the grievance of the Revenue seems to be that wife of Director had accompanied Director to the foreign country and her expenditure is also debited in the books of the company. This is factually incorrect as is evident from the perusal of the ledger account of travelling expenses (International), wherein the travel expenditure of Director's wife has been reimbursed by her to the assessee company and the expenditure of the assessee is duly credited to that extent. This categorically goes to prove that no expenditure pertaining to Director's wife has been debited in the books of the assessee company. Hence, there cannot be any personal element of expenditure debited in the assessee company s books. These details were duly furnished before the lower authorities which had been ignored by the lower authorities. Hence, we have no hesitation in directing the ld. AO to delete the disallowances made on account of foreign travel expenses - ground raised by the assessee is allowed. Adhoc disallowance at 5% in respect of travelling expenses, sales promotion, office maintenance and staff welfare expenses - HELD THAT:- The assessee in order to maintain the guest house had incurred expenditure towards groceries, fruits, vegetables, purchase of milk etc., The ld. AO observed that these groceries are meant for the purposes of guest house and hence, not incurred for business purpose of the assessee. We are unable to persuade ourselves to accept to this argument of the Revenue as the expenditures were incurred by the assessee in the guest house maintenance which are meant for usage of the assessee company employees and its Directors on their official visits. Obviously those persons who are staying in the said guest house on their official trip had to consume food, tea, coffee etc., for which purpose, the aforesaid groceries are very much required to be purchased and kept ready. Had these employees gone and stayed in a private hotel, the assessee company would have to incur the accommodation purpose together with the food bills thereon which would be more costlier for the assessee. Travelling expenses Incurred to meet various customers and to go along with various customers coming from various parts of the country for evaluation of mining prospects. The assessee also takes help of reputed experts and consultants in the field and had to incur their travelling expenses while visiting on their official trips for the purpose of benefit of the assessee company. Hence, we hold that the entire travelling expenses as being incurred wholly and exclusively for the purpose of business of the assessee only and there cannot be any adhoc disallowance towards the same. The ld. AO is directed to delete the same. Sales promotion Expenses - Bills of the same were duly furnished before the lower authorities. The assessee also pointed out that a sum was incurred as conference expenses wherein the same was paid to M/s. Thackers Caterers for providing food in the conference meeting to the customers of the assessee who attended conference. These expenses are to be construed only as expenditure incurred in the normal course of business of the assessee company. We hold there cannot be any adhoc disallowance of the same without finding any defect in the books or in the bills and vouchers produced by the assessee before the lower authorities. The ld. AO is directed accordingly. Office maintenance charges - We are unable to persuade ourselves to the stand taken by the Revenue as the premises in which these expenses were incurred where the business of the assessee is being carried on. It is duty bound on the part of the assessee to pay maintenance charges to the housing society and house keeping charges to a contractor outsourced by the housing societies. Hence, we hold that the said expenditure is wholly and exclusively incurred for the purpose of the business of the assessee and accordingly allowable as deduction. The ld. AO is directed accordingly. Staff welfare expenses - We find that assessee has incurred expenses towards milk, tea, water, medicines, vegetables kept at guest house. We have already held that assessee is maintaining guest houses at various locations to house its employees on their official visits. Accordingly, these expenses are to be mandatorily incurred to maintain the said guest house for providing basic amenities to its employees. Hence, we hold that these are wholly and exclusively incurred for the purpose of business and accordingly, the ld. AO is directed to allow deduction for the same in toto. Accordingly, the ground No.4 raised by the assessee is allowed.
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2022 (11) TMI 1030
Nature of land sold - Revenue not accepting the assesses claim of income from sale of land being exempt u/s 10 - whether the asset qualifies as capital asset or not as per section 2(14) ? - Whether the land sold was not capital asset as they were situated outside the specified limit of 8kms. meaning thereby that the land were rural agricultural land? - HELD THAT:- The finding of fact by the ld.CIT(A) that the land is non-agricultural land has remained unchallenged before us. In the light of this fact, the distance of land from Municipal limit is wholly irrelevant for the purpose of determining whether the asset qualifies as capital asset or not as per section 2(14) of the Act, since as per the said section only agricultural land situated beyond the specified municipal limits do not qualify as capital assets. Therefore, twin conditions of the land being agricultural land and land being situated beyond a specified limit from the municipal boundary ,both has to be fulfilled for the asset to qualify as not being a capital asset. In the present case, there being no dispute to the fact that the asset was not agricultural land, arguments raised vis- -vis distance beyond municipal limit, is wholly irrelevant since the assesses fails to fulfill the criteria of being an agricultural land for not qualifying as a capital asset. Disallowance of expenditure incurred on the acquisition of the land made in cash u/s 40A(3) - We are in agreement with the finding of the ld.CIT(A) that the income from sale of the land was not exempt as it was not agricultural land. Further the assessee has nothing to say against holding the transaction as business income of the assessee. The income from the transaction having been assessed under the head income from business , disallowance made by invoking provisions of section 40A(3) has been rightly made by the lower authorities. The only argument of the ld.counsel for the assessee that the income was not taxable under the head income from business or profession having already been rejected and the income having been held taxable under the head income from business or profession the disallowance under section 40A(3) of the Act, we hold, has been rightly made. Appeal of assessee dismissed.
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2022 (11) TMI 1029
Reopening of assessment u/s 147 - Necessity of independent application of mind by AO - Reasons to believe - HELD THAT:- We observe that from the reasons recorded by the AO it is amply clear that the AO noted that the assessee has not filed the return of income for AY 2011-12 whereas the copy of the return of income available clearly reveals that the assessee did file the return of income for AY 2011-12 on 31.03.2012. It is also clearly discernible that in the proforma for obtaining approval u/s 151 of the Act, in column 8(a), the AO noted that the assessee has not filed any return of income. Therefore, we safely presume that the AO has proceeded to initiate reassessment proceedings u/s 147 of the Act and issued notice u/s 148 on incorrect facts without application of mind. See AJENDRA PAL SINGH C/O. SANJEEV ANAND AND ASSOCIATES case [ 2022 (6) TMI 1322 - ITAT DELHI] Thus reassessment proceedings u/s 147 of the Act and notice u/s 148 of the Act has been issued without application of mind by the AO on the basis of incomplete information without any verification of the facts and without complying with the mandatory requirement of section 147 and 148 of the Act. Consequently, the impugned reassessment order passed u/s 147 r.w.s 143(3) of the Act is not sustainable being bad in law and, thus, the same is quashed - Decided in favour of assessee.
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2022 (11) TMI 1028
Exemption u/s 11 - Scope of amendment to Section 2(15) - dominant object test is to be applied for determining whether an assessee is engaged in business, trade or commerce, and/or any activity in the nature of business, trade or commerce - as per AO after the insertion of First Proviso to Section 11 of the Act, the activities of the Appellant which earlier qualified as charitable were, on account of amendment to Section 2(15) of the Act effective from 01.04.2009, were rendered non-charitable - HELD THAT:- The approach of the Revenue cannot be countenanced. Circular No. 11 of 2008 issued by the CBDT clearly provides that whether an assessee has for its object 'the advancement of any other object of general public utility' is a question of fact to be examined keeping in view the facts of each case. It is admitted position that the Appellant was registered under Section 12A of the Act since 09.01.1996 and was granted the benefit of exemption in terms of Section 11 of the Act in the preceding assessment years even though the Appellant had receipt registration fee for certified agents, certification test fee etc. It is admitted position that the registration and certification activities were carried out by the Appellant as per the directives of SEBI. Appellant has been holding investor education camps and publishes material/information. In our view, the aforesaid activities of the Appellant are directed towards the benefit of investors and potential investors forming part of the general public and are not limited to the benefit of its members. Appellant has also maintained separate accounts in respect of these activities. As regards activities of the Appellant directed towards the benefit of its members are concern, the Assessing Officer has granted the benefit of principle of mutuality in respect of the same. AO is directed to allow exemption under Section 11 of the Act to the Appellant. Appeal of assessee allowed.
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2022 (11) TMI 1027
Stay of demand - recovery proceedings - direction to deposit 20% of the demand - Relaxation to pre-condition of deposit - HELD THAT:- This Court is of the view that the requirement of payment of twenty percent of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases. The said pre-condition of deposit of twenty percent of the demand can be relaxed in appropriate cases. Even the Office Memorandum dated 29th February, 2016 gives instances like where addition on the same issue has been deleted by the appellate authorities in earlier years or where the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee. In fact the Supreme Court in the case of PCIT vs. M/s LG Electronics India Pvt. Ltd. [ 2018 (7) TMI 1905 - SC ORDER ] has held that tax authorities are eligible to grant stay on deposit of amounts lesser than twenty percent of the disputed demand in the facts and circumstances of a case. Till the stay application filed by the petitioner is not decided, no coercive action shall be taken by the Respondents against the Petitioner
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2022 (11) TMI 1026
Validity of Faceless Assessment - non issuance of show cause notice / a draft assessment order - HELD THAT:- Since in the present case, the impugned order has been passing without issuing a show cause notice / a draft assessment order which has been mandated under Section 144B(1)(xvi)(b) of the Act, the impugned assessment order dated 8th September, 2021 issued under Section 143(3) read with Section 144B of the Act is set aside and the Respondent is directed to issue a show cause notice within four weeks. The Respondent is at liberty to issue a draft assessment order / show cause notice to the petitioner and thereafter, the proceedings shall continue in accordance with law. Present writ petition along with pending application is disposed of.
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2022 (11) TMI 1025
Reopening of assessment u/s 147 - Validity of impugned order passed u/s 148A(d) conducted proceedings on deactivated PAN - assessee had filed no response on the merits of the case and hence determined as income having escaped assessment in the form of stock / bills of entry for import - HELD THAT:- This Court is of the view that interest of justice would be served if the petitioner is given an opportunity to file a supplementary reply to the notice issued under Section 148A(b) of the Act. Consequently, the impugned order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act, both dated 26th July, 2022 for the Assessment Year 2017-18 are set aside and the petitioner is directed to file a supplementary reply to the notice issued under Section 148A(b) of the Act within four weeks. The Assessing Officer shall pass a fresh order under Section 148A(d) within eight weeks thereafter in accordance with law.
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2022 (11) TMI 1024
Recovery proceedings u/s 220 - appropriate authority seeking protection against any coercive proceedings - HELD THAT:- If the Petitioner intends to seek protection against any coercive proceedings, it is always open to the Petitioner to approach the appropriate authority under Section 220(6) of the Income Tax Act, 1961 by filing stay application pending appeal. Petitioner may move an application u/s 220(6) within a week from today. If any such application is filed, the same shall be disposed of within a period of ten days from the date of receipt of such application in accordance with law. The above order will not have any bearing on adjustments, if any, already made. It is made clear that this Court has not expressed any view with regard to the merits of the matter and it is open to the appropriate Respondents to consider the same on its own merits. WP disposed of.
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2022 (11) TMI 1023
Reopening of assessment u/s 147 - petitioners are non-filers and there been also been no compliance to the various notices and questionnaires issued by the respondents - case of the Appellant is that the reply was given to the aforesaid notices wherein it was stated that the appellant had inadvertently applied for PAN as a Firm instead of 'Association of Person' - Appellant submitted that the Appellant had taken steps to surrender the PAN obtained as a Firm - HELD THAT:- We do not find any reasons to differ from the findings of the learned Single Judge. We however give liberty to the appellant to file statutory appeals. As the time limit for filing of the Statutory Appeals would have already expired, we direct the appellant to file statutory Appeal before the Appellate Commissioner u/s 246 A within a period of four weeks from the date of receipt of a copy of this order, along with required documents to putforth its submissions. If such appeals are filed within such time, the Appellate Commissioner shall pass necessary orders on merits and in accordance with law. All the issues are left open for being canvassed before the Appellate Commissioner.
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2022 (11) TMI 1022
Search and seizure - Operation of Bank locker without government authorization / permission - prohibitory order under section 132(3) of the Income Tax Act - HELD THAT:- It transpires from the contents of the FIR that pursuant to search and seizure conducted on 5.2.2021, an order under section 132(3) of the I.T. Act was served by the Authorised Officer to the HDFC Bank, Exhibition Road Branch, Patna to put a stop operation on the Bank accounts, fixed deposits and bank locker of the assessee. Inspite of the prohibitory order having been communicated to the Bank, the FIR discloses that the same was breached and Smt.Sunita Khemka operated the Bank locker no. 462 on 9.11.2021 at 11.53 a.m.. The said fact is validated from the statements of Bank officials, Smt Sunita Khemka herself as also from the CCTV footage. On quashing of the FIR, the Hon ble Supreme Court has settled the legal proposition in large number of judgments in one after the other. In the case of PRATIBHA RANI VERSUS SURAJ KUMAR AND ANOTHER [ 1985 (3) TMI 60 - SUPREME COURT ] it held that while exercising its power to quash an FIR or a complaint, the High Court would have to proceed entirely on the basis of the allegations made in the complaint or the documents accompanying the same per se. It has no jurisdiction to examine the correctness or otherwise of the allegations. Further from the reading of the FIR in the instant case, the contents of which has to be accepted as true at this stage and the Court cannot inquire into the reliability or genuineness or otherwise of the allegations made therein, it cannot be said that no cognizable offence is made out from the contents thereof. The application is dismissed.
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2022 (11) TMI 1021
TDS u/s 40(a)(ia) - wrong section had been mentioned - assessee had paid rent - TDS u/s 194C v/s 194I - HELD THAT:- Wrong mentioning of section does not amount to wrong application of jurisdiction. Lack of jurisdiction is in respect of procedure of assessment. Once an assessment has been validly initiated, typographical errors could take place in respect of mentioning of particular section. Admittedly, the Assessing Officer has invoked his powers u/s.40(a)(ia) of the Act for the purpose of making the disallowance on account of non-deduction of TDS. Admittedly, reference to the relevant section under which TDS should have been done is wrong. This does not excuse the assessee for non-deduction of TDS. This being so, we are of the view that the findings of the ld CIT(A) in deleting the disallowance is on wrong footing, hence, same stands reversed and the order of the AO on this issue stands restored. TDS u/s 194C - Non-deduction of TDS in respect of payments to transporters - CIT(A) deleted the disallowance by holding that there is no contract between the assessee and the transporters and, therefore, no deduction of TDS u/s.194C of the Act is called for - HELD THAT:- In the present case, the assessee has not produced PAN details in respect of the contractors to an extent of Rs.28.74 crores. In this regard, we are of the view that the interest of justice would be served if the assessee is granted another opportunity to produce the PAN details before the AO in the light of sub-clause(6) of the provisions of section 194C. In these circumstances, the order of the ld CIT(A) on this issue stands reversed and the issues are restored to the file of the AO for granting the assessee adequate opportunity to produce the PAN details as required under sub-clause(6) of Section 194C of the Act in respect of the transport contract. TDS u/s 194H - disallowance of commission paid on account of non-deduction of TDS - HELD THAT:- AO has asked the assessee to produce the proof. The assessee has produced only handmade vouchers which were not verifiable. A perusal of the order of the ld CIT(A) shows that the ld CIT(A) has given a categorical finding that the assessee has not given even the name and address to whom, the commission has been paid. This being so, we are of the view that the findings of the ld CIT(A) on both the issues are on right footing and does not call for any interference Disallowance of donation paid by the assessee - Coming to the issue of donation to four organizations, an amount is the payment to school. We fail to understand that how a school would block the business of the assessee on account of non-payment. If at all, this payment had been made for non-business requirements These are nothing but gratuitous payments. It is not allowable expenditure. Appeal of the assessee stands dismissed.
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2022 (11) TMI 1020
Disallowance of Commission paid to 13 persons for a single land deal - Transaction between parent company and subsidiary company - AO has noted that despite various opportunities, assessee could not justify the payment of commission - as per CIT-A assessee company did not corroborate with supporting documentary evidences and justification of the commission paid to different persons on the sale of project - HELD THAT:- Assessee company did not appear despite sending notices through Speed Post which have been returned by the postal authorities with the remarks Refused to receive the envelope . We notice that when the appeal is filed before the Tribunal by the assessee company itself against the orders of the lower authorities, it is expected that the assessee company may put forth some documentary evidences in support of its contentions to decide the appeal as it is the duty of the assessee company to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. No material has been placed by assessee to controvert the findings of lower authorities. We find no reason to interfere with the order of CIT(A) and thus we dismiss the grounds of the assessee.
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2022 (11) TMI 1019
Disallowance of commission paid to six parties - assessee was asked to produce the parties, but, despite various opportunities, the assessee failed to produce the parties nor provided their new addresses - HELD THAT:- Even before the Tribunal, the assessee company did not appear despite sending notices through Speed Post which have been returned by the postal authorities with the remarks No such person at the address . We are of the view that when the appeal is filed before the Tribunal by the assessee company itself against the orders of the lower authorities, it is expected that the assessee company may put forth documentary evidences in support of its contentions to decide the appeal as it is the duty of the assessee company to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. However, the assessee company neither appeared before the Tribunal nor placed any material to controvert the findings of lower authorities. In this view of the matter and in absence of any contrary material brought on record to rebut the findings of lower authorities, we find no reason to interfere with the order of CIT(A) and thus we dismiss the grounds of the assessee.
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2022 (11) TMI 1018
Exemption u/s 11 - proceedings were pending before the AO - appellant Trust is continuing the charitable work in Leh region in India and duly granted registration u/s 12AA(1) - exemption to be granted for the year under consideration - AR argued that that the appellant trust having been granted registration u/s 12A therefore, the benefit of such exemption should be granted for the year under consideration also, in view of the amendment in section 12A(2) vide finance Act, 2014 - HELD THAT:- As decided in Sansthan Shree Eknath Maharaj Vishwastha Mandal [ 2022 (2) TMI 227 - ITAT PUNE] assessment proceedings for the year under consideration, which commenced with the filing of return on 17.01.2017, were pending on the date of grant of registration by the ld. CIT(E) on 16.05.2017. Therefore, hold, in principle, that the assessee is eligible for exemption u/s 11 On similar facts, the coordinate Bench in the case of Dera Bhai Gurdas Ji Udasin Trust (Regd.) Mansa [ 2022 (10) TMI 386 - ITAT AMRITSAR] directed the Assessing Officer to grant the benefit of Section 11 12 to the appellant trust. Judgement in the case of CIT vs. Shiv Kumar Sumitra Shikshan Sansthan, [ 2019 (9) TMI 55 - ALLAHABAD HIGH COURT] relied by the DR is distinguishable on facts as in that case the proceeding were pending before the Tribunal and not before the AO, whereas in the present case the proceedings were pending before the AO. Thus we hold that the assessee is eligible for deduction u/s 11 and 12 for A.Y. 2010-11 under the first Proviso to section 12A. Accordingly, we delete the disputed addition by granting the benefit of Section 11 12 to the appellant trust. Appeal of the assessee is allowed.
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2022 (11) TMI 1017
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected. Also comparable fails SWD service revenue 75% filter need to be rejected. Delay in receivables or deferred receivables as an international transaction - A.R. submitted that the period of credit given to the parties is only 24.5 days and as per agreement, 90 days credit has been given to the parties - HELD THAT:- In our opinion, the argument of Ld. A.R. is justified. The provision for doubtful loans and advances cannot be considered for computation of interest on intra-group trade and advances as the recovery of the principal itself is doubtful. Hence, we direct the AO/TPO to consider net advances after deducting provision for doubtful loans and thereafter apply LIBOR+2% as held by Tribunal in the case of Swiss Re Global Business Solutions India Pvt. Ltd [ 2022 (1) TMI 1275 - ITAT BANGALORE] - Accordingly, this issue remitted to the file of AO/TPO for re-examine if the credit period is more than 90 days adjustment towards interest receivable to be made. Issue is accordingly remitted to AO/TPO. Disallowing the expenditure on ESOP u/s 37 - Expenditure incurred is not notional expense - HELD THAT:- Similar issue came for consideration before this Tribunal in the case of Novo Nordisk Inia Pvt. Ltd [ 2013 (11) TMI 218 - ITAT BANGALORE] expenditure in question is wholly and exclusively for the purpose of the business of the assessee and the fact that the parent company is also benefited by reason of a motivated work force would be no ground to deny the claim of the assessee for deduction, which otherwise satisfies all the conditions referred to in section 37(1) of the Act. The decision of the Hon ble Supreme Court in the case of Sassoon J. David Co. (P) Ltd. [ 1979 (5) TMI 3 - SUPREME COURT] and Mysore Kirloskar Ltd. [ 1986 (9) TMI 62 - KARNATAKA HIGH COURT] clearly support the plea of the assessee in this regard. Thus the expenditure in question was wholly and exclusively for the purpose of the business of the assessee and had to be allowed as deduction as a revenue expenditure. The assessee is not liable for TDS u/s 195 - since, on perusal of the final assessment, it is clear that the disallowance of ESOP expenses has made under the provisions of section 37 of the I.T.Act (though there was some discussion in the draft assessment order with reference to disallowance u/s 40(a)(i) of the I.T.Act). - Decided in favour of assessee.
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2022 (11) TMI 1016
Penalty proceedings u/s 271D - Assessee settled the matter under VSVS 2020 for appeal filed as against the assessment u/s 143(3) - independent of assessment proceedings - HELD THAT:- The penalty imposed u/s 271D of the I.T.Act is independent of assessment proceedings completed u/s 143(3) - Even without completion of assessment u/s 143(3) of the I.T.Act, penalty u/s 271D of the I.T.Act can be imposed for violation of provisions of section 269SS of the I.T.Act. The penalty proceedings u/s 271D of the I.T.Act is unconnected with the assessment order passed u/s 143(3) of the I.T.Act. The assessee in the instant case has only settled the matter under VSVS 2020 insofar as the issues that are raised in the appeal filed as against the assessment u/s 143(3) of the I.T.Act. the assessee has not settled the penalty imposed u/s 271D under VSVS 2020. CIT(A) has erred in rejecting the appeal of the assessee stating that the issue raised in the appeal has become infructuous and the same has been dismissed as infructuous. The issue is restored to the files of the CIT(A). The CIT(A) is directed to adjudicate the grounds raised before him as regards the merits of imposition of penalty u/s 271D of the I.T.Act. Appeal filed by the assessee is partly allowed for statistical purposes
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Customs
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2022 (11) TMI 1015
Levy of penalty - SEZ unit - import of new/unused jewellery for remaking after melting is permitted or not - whether petitioner is permitted to import new/unused jewellery for remaking after melting the same? HELD THAT:- The import of finished jewellery for the purpose of remaking in a SEZ is a permitted / authorised operation and there is no prohibition whatsoever on such an activity. In this connection the definition of manufacture as contained in Section 2(r) of the SEZ Act is important - in view of what is stated in Rule 27 of the SEZ Rules, it is patently clear that only the DC (respondent no.5) can decide whether any goods or services as required by a unit or developer are for authorised operations or not. This position has also been clarified by the DC (respondent no.5) vide letter dated 22nd May, 2009 addressed to the Commissioner of Customs, Sahar Airport. However, respondent no.2, even though being fully aware of this position, has failed to consider the said letter while adjudicating the case and passing the impugned order. Section 111(m) deals with intentional misdeclaration and mis-match between what has been declared on the Bill of Entry and what has actually been imported by the importer - In the facts of the present case, there is absolutely no misdeclaration between the description and / or value declared in the Bill of Entry and the goods actually imported by petitioner, both being diamond studded gold and silver jewellery. Accordingly, question of invoking Section 111(m) of the Customs Act does not arise at all in the present case. It is also noteworthy that there is no such requirement under the SEZ Act. Alleged Violation of Rule 29(7) of the SEZ Rules - HELD THAT:- There is no allegation in the SCN and / or no finding in the impugned order with respect to any alleged violation of Rule 29(7) of SEZ Rules. This entire issue was raised for the first time in the affidavit dated 25th November 2009 filed by respondent no.2 before this Court. It is settled law that a show cause notice is sacrosanct and all allegations must find mention therein for an assessee to effectively deal with it and respondents cannot be permitted to improve upon the show cause notice or the impugned order by way of filing an affidavit in the Court - In any event the ingredients of Rule 29(7) of the SEZ Rules are not applicable to the facts of the present case. The imports in question do not correspond to any of the four (4) scenarios mentioned in Rule 29(7) of the SEZ Rules. Accordingly, it cannot be said in any manner that petitioner has not followed the due procedure under Rule 29(7) of the SEZ Rules as petitioner was in law never required to do so. Violation, if any, of non-adherence to procedure of Rule 29(7) of SEZ Rules, is only a procedural violation under the SEZ Rules for which appropriate action may be taken by the DC, and cannot be said to be a violation material for the purpose of invoking the provisions of Section 111(m) of the Customs Act - respondent no.2 has completely erred in invoking Section 111(m) of the Customs Act. Penalty u/s 114A of Customs Act - HELD THAT:- In facts of the present case, petitioner s SEZ license has not been cancelled under Section 16(1) till date, let alone during the impugned period. Accordingly, petitioner has rightly and legally continued to avail of the customs duty exemption under Section 26 of the SEZ at all points in time. Further, and in any event, even if the SEZ registration of petitioner is cancelled, then petitioner is only liable to remit the duty concessions which have been availed with respect to capital goods and unused raw material / unsold finished stock only. Even at the highest, there is no question whatsoever of going back 5 years and demanding Customs Duty on all imports made in the past - the imposition of penalty under section 114A of the Customs Act ought to be set aside. The impugned notices dated 14th July 2009 read with the addendums dated 21st July 2009 and addendum/corrigendum dated 18th August 2009 to the impugned notice, as well as the impugned orders dated 18th August 2010/19th August 2010 in all petitions are set aside - petition disposed off.
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2022 (11) TMI 1014
Refund of SAD - Time limitation - HELD THAT:- The very same issue is also covered by another coordinate bench judgment of this court in COMMISSIONER OF CUSTOMS (IMPORT) VERSUS WILHELM TEXTILES INDIA PVT. LTD. [ 2016 (9) TMI 1370 - DELHI HIGH COURT] where it was held that refund should be allowed. The appellant/revenue will, accordingly, process the application for refund preferred by the respondent, as per law, having regard to the decision taken in the instant appeal - appeal dismissed.
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2022 (11) TMI 1013
Custodian of ICD - cost recovery charges of the custom staff - whether there is a procedure set out for recovery of the outstanding cost recovery charges for the posting of the custom officers at ICD/CSF/ACC under the 2009 Regulations? - Handling of Cargo in Customs Area Regulations 2009 HELD THAT:- The show cause notices were issued to the appellant under regulation 12 of the 2009 Regulations. What was stated was that the appellant has rendered itself liable for suspension/revocation of approval of the custodianship in terms of the provisions contained in regulation 11(1) of the 2009 Regulations and also for forfeiture of security and imposition of penalty under regulation 12(8) of the 2009 Regulations. The Commissioner, under the impugned orders, did not revoke the approval of the custodianship nor was the security forfeited. This issue was also examined at length by the Division Bench of the Tribunal in M/S. THE THAR DRY PORT AND M/S. JAIPUR GEMSTONE EXCHANGE VERSUS C.C.E. S.T., JAIPUR I [ 2019 (7) TMI 1788 - CESTAT NEW DELHI ] and it was held that the Commissioner could not have ordered for cost recovery charges under the aforesaid provisions of regulations 5(2) and 6(1)(o) of the 2009 Regulations. The penalty that was imposed under regulation 12(8) was also set aside. It has, therefore, to be held that the Commissioner committed an illegality in ordering recovery the cost recovery charges under the aforesaid provisions of the 2009 Regulations. The penalty that has been imposed is also liable to be set aside - the impugned orders dated 30.10.2018, 17.01.2019 and 29.04.2019 passed by the Commissioner to the extent that the demand of outstanding cost recovery charges have been confirmed and penalty has also been imposed are liable to be set aside and are set aside. Appeal allowed.
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2022 (11) TMI 1012
Confiscation - Smuggling - Gold Bars - town seizure - presumption as to reasonable belief - burden to prove - HELD THAT:- Admittedly it is a case of town seizure and admittedly there is no foreign marking on the seized gold. Further admittedly the said person Mr. T. Nandu who sold the gold to this appellant, has procured the gold from Chennai - open market and thus was not involved in any alleged smuggling of gold. In such facts and circumstances, thus no presumption is available to Revenue to form a reasonable belief of the gold in question being of smuggled nature. Thus, the burden of proof under Section 123 of the Act is not shifted on the appellant. Revenue has not been able to establish the smuggled nature of gold in question. In this view of the matter, the impugned order is set aside so far this appellant is concerned. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (11) TMI 1011
Maintainability of appeal - Oppression and Mismanagement - Forum Shopping - cancellation of shares - restoration of shares in the register of members - nomination of directors - grievance of the Respondents / Petitioners is that the ₹ 1st Appellant / 2nd Respondent had kept the Respondents / Petitioners intentionally and deliberately in dark, without updating them, on the developments that were happening in the ₹ 4th Appellant / ₹ 1st Respondent / Company. Maintainability of appeal - It is the version of the Respondents / Petitioners that the instant Appeal, preferred by the ₹ 1st Appellant / 2nd Respondent and the ₹ 2nd Appellant / 3rd Respondent , is not maintainable in law, because of the fact that they have not disclosed that they are Disqualified as Directors of the Company, for the period from 01.11.2016 to October 2022 - HELD THAT:- The ₹ 2nd Appellant / 3rd Respondent is described as a Director, of the ₹ 4th Appellant / 1st Respondent / Company, and not directly holding any Shares in the said Company. As a matter of fact, the ₹ 1st Appellant / 2nd Respondent along with his family members is described as promoted the ₹ 3rd Appellant / 4th Respondent / Company and further that the ₹ 1st Appellant / 2nd Respondent is described as the Managing Director of the ₹ 3rd Appellant / 4th Respondent / Company. Further, the entire Share Capital of Rs.1,00,000/- of the ₹ 3rd Appellant / 4th Respondent / Company is mentioned, to be held by the ₹ 1st Appellant / 2nd Respondent, together with his family members, etc. A mere glance of the Cause Title of CP/54/2012 (TCP/26/2018 filed by the Petitioners / Respondents in Appeal), indicates that the Respondents / Appellants, do figure as Appellants, in Comp. App (AT) No. 83 of 2020. Therefore, it is candidly clear that the Appellants in Comp. App (AT) No. 83 of 2020, on the file of this Tribunal, when they were arrayed as Respondents in CP/54/2012 (TCP/26/2018) by the Petitioners / Respondents in the Appeal, a Final Order was passed by the Tribunal in A. JAWAHAR PALANIAPPAN, A KOTHAI VERSUS KUMUDAM PUBLICATIONS PRIVATE LIMITED, P VARADARAJAN, DR. P SRINIVASAN, IMPRINT TECH INDIA PRIVATE LIMITED [ 2020 (12) TMI 419 - NATIONAL COMPANY LAW TRIBUNAL , CHENNAI BENCH] inter se between the Parties, they are entitled to prefer an Appeal, having Locus Standi, before the Appellate Tribunal, as per the ingredients of Section 421 of the Companies Act, 2013, as Any Person aggrieved by an Order of the Tribunal. This Tribunal pertinently points out that the word Aggrieved means a substantial grievance, a denial of some personal, pecuniary or private rights / imposition upon a Party of a burden / obligation. Appeal against decision of Company Law Board - HELD THAT:- Section 10F of the Companies Act, 1956, provided that an Appeal, shall lie against any Decision / Order of the Company Law Board, meaning that an Appeal, can be filed against any Order, passed by the said Board. However, the Companies Act, 2013, employs the words, an Order of Tribunal in sub-section 1 of Section 421, meaning that an Appeal, against any Order, passed by the Tribunal, shall be filed, even if the Order of the Tribunal, had not finally decided the Rights of Parties. In regard to the plea of the Respondents / Petitioners that no accounts were audited and no Annual Returns, filed by the 4th Appellant / 1st Respondent / Company and was in Default and therefore, the Appellant Nos. 1 and 2 were Disqualified as per Section 164 read with 167 of the Companies Act, 2013, the same cannot be countenanced because of the fact that the National Company Law Tribunal, Chennai, had passed an Order based on the consensus arrived between the parties and on the basis of Draft Terms, being filed inter alia stating that the Applicant / Respondent / Company has by an undertaking recorded by this Hon ble Tribunal, proposed that they would not hold AGMs, except to file IT Returns, which was not objected to by the Respondents / Petitioners and accepted by this Bench, etc., in the considered opinion of this Tribunal, in lieu of the fact that the restraint on holding of any of the AGM was because of the Order, passed by the Tribunal, at the behest of the Respondents / Petitioners. Hence, the plea of Disqualification of the Appellant Nos. 1 and 2 as Directors, put forward on the side of the Respondents / Petitioners is unworthy of acceptance by this Tribunal. Bar of Order II Rule 2 of Civil Procedure Code - the plea taken on behalf of the Appellants is that the Respondents / Petitioners after unconditionally withdrawing an earlier proceeding cannot be permitted to file a subsequent proceeding on similar facts - HELD THAT:- The Learned Counsel for the Respondents proceeds to point out that the Company Law Board in its Order dated 26.05.2015 had not dealt with the issues raised in the Company Petition on merits, but ordered that Final Adjudication of the Company Petition, shall be deferred, until completion of two events (a) Adjudicating by the Enforcement Directorate on the validity of the acquisition of the 1st Respondent / 1st Petitioners in the Shareholding in the company and the Adjudication on the prayer for withdrawal of certain reliefs by the Respondents / Petitioners in CS No. 139 of 2012, before the Hon ble High Court of Madras (both of them) were completed before the Final Hearing of the main Company Petition. Plea of Bar - Order II Rule 2 of the Civil Procedure Code - HELD THAT:- Order II Rule 2 of the Civil Procedure Code is based on the Rule of Law that no man shall be vexed twice for one and the same cause of action. In fact, Order II Rule 2 of the Civil Procedure Code, requires a Collection of all Claims, based on the same cause of action in one Suit. Cause of Action - HELD THAT:- The requirement of Order II Rule 2 (3) of the Civil Procedure Code is that, this omission debars the Plaintiff, to sue for the Omitted Relief, in any further Suit or Proceedings, except when he omits to sue for the Relief with Leave or Permission of Court. In order to attract the ingredients of Order II Rule 2 (3) of the Civil Procedure Code, it must be shown that the second Suit is based on identical cause of action, the criterion for judging so, is whether the same evidence would maintain both actions. In the instant case, it cannot be lost sight of when the four prayers were deleted as per the Order of the Hon ble High Court of Madras, the Hon ble High Court at paragraph 20 had in a crystalline manner had observed that the 1st Respondent /1st Petitioner (Plaintiff) had not sought for Liberty to file a fresh Suit, it is like giving up his Claim and further that once the Plaintiff filed an Application to Withdraw the Suit in Full or Part, that is the end of Litigation and there can no objection - It is pointed out that National Company Law Tribunal and the National Company Law Appellate Tribunal are creatures of Statute / Law and while disposing of any proceeding, before it or an Appeal, shall not be bound by the Procedure, prescribed in the Civil Procedure Code. But, they are to adhere to the principles of natural justice, Equity and can regulate their own procedure. Moreover, the Fetter of Civil Procedure Code, is not binding on the Tribunal and the Appellate Tribunal, as opined by this Tribunal. Suit under Civil Procedure Code - HELD THAT:- When a Civil Suit, is filed before the Competent Court of Law, then, all the ingredients of Civil Procedure Code, will apply, to the conduct of proceedings, before the said Forum - Where matters are to be determined pertain to the exercise of jurisdiction of Tribunal or an Appellate Tribunal, those matters cannot be determined by a Civil Court, although, the Tribunal or the Appellate Tribunal in discharging its functions is to exercise certain powers vested in Civil Court. One cannot remain in oblivion to the fact that a Civil Court, does not Grant Leave, to file another Suit/ Given Proceeding. If the Law permits, the Plaintiff, may file another Suit, but not on the basis of observations made by a Superior Court. This Tribunal without any haziness, comes to a cocksure conclusion that either the ingredients of Order II Rule 2 of the Civil Procedure Code or Order II Rule 3 of the Civil Procedure Code are inapplicable, based on the facts and circumstances of the instant case, which float on the surface and answered accordingly. In the instant case on hand, the Allotment of Shares, to the 1st Respondent / 1st Petitioner (Foreigner) is not a legally valid one, as opined by this Tribunal, because of the fact that the Acquisition and holding of Shares by the ₹ 1st Respondent / 1st Petitioner in the ₹ 4th Appellant / 1st Respondent / Company (M/s. Kumudam Publications Pvt. Ltd.), in the Year 2001-2002, is in violation of Regulation 4 and 7 of Foreign Exchange Management (Transfer or Issue of Security by a Person, resident outside India) Regulations (FEMA Regulations), which clearly prohibits the issuance of shares of a Print Media company to a person resident outside India, Regulations 2000 - It cannot be forgotten that the Regulation 7 of FEM (Transfer or Issue of Security by a Person, resident outside India) Regulations 2000, does not differentiate between the Acquisition of Shares of the Amalgamated company by way of Foreign Direct Investment or in any other manner, in the considered opinion of this Tribunal. The Doctrine of Public Policy or the Policy of Law is an Unruly Horse and the Doctrine is extended to a Harmful Case and Harmful Tendencies. No wonder, the Doctrine of Public Policy, is only a Branch of Common Law. In the instant case on hand, there being no permission being obtained from the Reserve Bank of India / Central Government in respect of the Allotment of Shares in favour of the 1st Respondent / 1st Petitioner (a Foreign Citizen), the said Allotment of Shares is not a Valid and Proper one. Also that, not obtaining the necessary / due permission from the Reserve Bank of India / Central Government, does not change the Scheme sanctioned by the Hon ble High Court, as held by this Tribunal - this Tribunal, at this stage, relevantly points out that without obtaining permission from the Reserve Bank of India, for Acquiring/ Holding / Allotment of Shares, a Person holding the Shares is not recognised as a valid person, to enter his name in the Register of Members of the Company. To put it pinpointedly, the Board of Directors of a company, has every right / duty, to decline the registration of such shares, until the time of the permission of Reserve Bank of India is obtained. Reduction of share capital - HELD THAT:- The company and the Board of Directors, do have an option, to cancel the Shares which was originally allotted and later found to be an illegal allotment, allotted in violation of the prevailing Law of the Land - In as much as the Allotment of Shares, to and in favour of the 1st Respondent / 1st Petitioner, made by the 4th Appellant / 1st Respondent / Company (M/s. Kumudam) is not in accordance with the prevailing law of the land (i.e., FEMA 1999 and its Regulations), the said Allotment, has no sanction in the eye of Law, as held by this Tribunal, and further that the said Cancellation of Shares, by the 4th Appellant / 1st Respondent Company, is a valid one, in the eye of Law and therefore, the aspect of Restoration of Cancelled Shares, does not arise on any score. On a consideration of respective contentions, this Tribunal, ongoing through the impugned order dated 27.05.2020 (delivered on 01.06.2020) in CP/54/2012 (TCP/26/2018), passed by the Tribunal (National Company Law Tribunal, Chennai Bench), in the teeth of attendant facts and circumstances of the case, in an integral, holistic and conspectus fashion, comes to an inescapable, inevitable, and an irresistible conclusion that the said Order, is an Invalid, Untenable and Unsustainable one, bristling with Legal Infirmities. Appeal allowed.
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Insolvency & Bankruptcy
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2022 (11) TMI 1010
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice as per Section 8 of IBC - HELD THAT:- A reading of Section 8 of IBC indicates that the requisite conditions necessary to trigger CIRP under Section 9 of the IBC are existence of a debt due and its default by the corporate debtor; that there has taken place delivery of demand notice of an unpaid and undisputed debt; that there has been no payment of the unpaid and undisputed debt within the period of 10 days of receipt of demand notice and no real pre-existing dispute is discernible. The Adjudicating Authority has held that there have been a number of communication exchanged between the operational creditor and corporate debtor which make it apparent that there are certain strong differences between the two. In other words, the Adjudicating Authority has endorsed that there has been dispute between the two parties on the claims amount. However, going ahead therefrom, the Adjudicating Authority has taken a conscious decision to further find out if any part of the liability on the part of the Corporate Debtor is undisputed and if the amount exceeded the threshold limit to qualify for admission of the Section 9 application. The provision under Section 8(2)(a) of IBC makes it clear that the Corporate Debtor has to bring to the Operational Creditor the fact of the existence of a dispute within ten days of the receipt of the demand notice. The Corporate Debtor in its reply on 29.06.2018 to the Section 8 notice dated 21.06.2018 has denied the claim raised by the Operational Creditor on the grounds that they are not legally due or payable besides making a mention of ongoing and unresolved disputes related to the debt amount that has been claimed. Where operational creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two which however is not so borne out by the facts of the present case. The Adjudicating Authority committed serious error in admitting Section 9 application in the facts of the present case. Appeal allowed.
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2022 (11) TMI 1009
Attachment of immovable property - Validity of attachment warrants - fraudulent trading - Section 25(2)(J) read with Section 66 of IBC - HELD THAT:- For purchase of the property in question, loan was obtained in joint name of company/corporate debtor and both the appellants. It is also not in dispute that the loan amount was repaid from the account of the corporate debtor/company. However, at the time of registration to the reasons best known to the appellants the said property was got registered in the name of Appellant No. 1. It has also been noticed that after getting the said property registered which was purchased from the fund of corporate debtor, sometime in the year 2006 both the appellants tendered resignation as directors of the company. However, subsequently it has been noticed by the competent authority that the said company was being run by both the appellants - In forensic audit report it appears that it was noticed that fraud was committed by the appellant in getting the property registered in his name. It has further been noticed that after getting the property registered in his name both the directors tendered resignation from the Board of the company. However, the record suggests that both the directors were continuing to run the corporate debtor even thereafter. Fraudulent trading - HELD THAT:- Levelling of section does not matter if a petition is filed before the Court having jurisdiction to deal with the same - On perusal of the section 66 of IBC, it is evident that if during liquidation process it is found that any fraud was committed then the Adjudicating Authority has jurisdiction to examine the same and pass appropriate order. In the present case on the basis of forensic audit report it was noticed that in relation to registration of property in the name of appellant fraud was committed. Loan for the purchase of the said property was taken on the joint agreement of appellants as well as corporate debtor and thereafter entire loan amount was repaid from the corpus of the corporate debtor itself and as such it can be inferred that by committing fraud the property was got registered in the name of Appellant No. 1. Accordingly considering the fraud which was noticed in the Forensic audit report the appellant is not entitled to raise question of limitation. Appeal dismissed.
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Service Tax
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2022 (11) TMI 1008
Rejection of declarations of the petitioners under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - rejection only on the ground that the appeal pending before the Apex Court is not pursuant to the show cause notice issued by the Department - applicability of Circular No. 1073/06/2019.CX dated 29th October 2019. It is clarified that the Retailer Association of India has represented that the department has initiated proceedings against lessors for non-payment of service tax on rent over immovable property rented by the members. The Apex Court has allowed the lessees to file a Civil Appeal challenging the applicability of service tax subject to the condition that they deposit appropriate pre-deposit as well as the remaining dues if the case of the petitioners is decided against them eventually. HELD THAT:- The said circular is clarificatory in nature. In view of the circular, the petitioners are allowed to file declaration under the Scheme and avail benefits subject to complying with the remaining conditions of the Scheme. The said circular is binding upon the respondent. In the light of above, the impugned orders rejecting the declaration filed by the petitioners are set aside. Petition disposed off.
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2022 (11) TMI 1007
Non/short payment of service tax - Commercial or Industrial Construction Service - benefits of Notification No. 12/2003 ST .dated 20.06.2003 - HELD THAT:- The condition in the Notification is only production of documentary proof indicating the value of the goods and materials supplied. This does not in any manner mean that the goods have to necessarily be supplied under invoices. Therefore, evidence was produced before the authority and the sufficiency of it has to be examined. If the appellant is able to show from the documents i.e. contract read with other documents including its R.A. Bills (Running Account Bills) ,books of accounts and returns filed with the Sales Tax Authorities, the value of goods sold and supplied to the satisfaction of the authorities, it would be compliance with the condition provided in Notification No. 12/2003-S.T., dated 20 June, 2003. Matter remanded to the Original authority to reconsider the impugned matter afresh and pass order after permitting the appellant to lead documentary evidence to establish its claim with regard to the value of goods and materials supplied in execution of its contracts for construction services for availing of the benefit of Notification No. 12/2003-S.T., dated 20 June, 2003. Appeal allowed by way of remand.
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2022 (11) TMI 1006
CENVAT Credit - input services - renting-a-cab service during the period 2011-12, credit denied on the ground that definition of input service w.e.f. 01.04.2011 excludes the service - outdoor catering service during the period 2014-15, credit denied on the ground of nexus? - HELD THAT:- Although the Appellants have received rent-a-cab service prior to 01.04.2011 which is supported by the documentary evidence wherein the travel date is prior to 01.04.2011 but the invoices has been recorded in the books of accounts and in Cenvat credit register post 01.04.2011, which still make the appellant eligible to avail the Cenvat credit - the decision of this Tribunal in the matter of M/S MEDIACOM MEDIA INDIA PVT. LTD. VERSUS C.C.G. ST., MUMBAI EAST [ 2019 (10) TMI 690 - CESTAT MUMBAI] supports the present case. Even the circular dated 29.4.2011 issued by the Government clarified that the credit in respect of rent a cab service would be available in case the provision of the service was completed before 1.4.2011. Outdoor catering services - HELD THAT:- The amount which pertains to air travel service has to be deducted from the total amount of Rs.1,66,860/- as Air travel service has already been allowed by the Authority below. Once the amount of air travel service is deducted from the total amount of Rs.1,66,860/- then only Rs.1,837/- remains under the head outdoor catering service. Now I have to see whether the appellant is eligible to avail the credit of Rs.1,837/- which relates to outdoor catering service. The said service has been used by appellant for providing meals to its employees round the clock and certainly the same is going to enhance efficiency and performance of the appellant s employees which undoubtedly has nexus with the output service and therefore the credit is admissible - Undisputedly the said service is used by the appellant for its business activity during office hours and not as a personal or welfare measure for its employees nor it s a perquisite provided by the appellant to its employees. Other issues like extended period, penalty etc. not entered upon - appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1005
Valuation - Classification of Works Contract service received by the appellant - whether the service pertains to original work in terms of Rule 2A(ii)(A) of Service Tax (Determination of Value) Rules, 2006 or is it classifiable under clause B(ii) of Rule 2A ibid as claimed by Revenue? - HELD THAT:- Both the authorities below were required to separate the grain from the chaff in the instant case. Except for extracting the table of the Works in issue and thereafter denying it by not treating it to be original work the authorities below have not discussed it anywhere. Although it was the specific case of the appellant before the learned Commissioner that the Adjudicating Authority has not discussed in detail as to how these works contracts are not covered under the definition of original work and by merely reproducing the bill number and name of service provider it has been held by the said authority that the demand raised is correct but the learned commissioner without going into the details and without addressing that argument merely endorses the view of the adjudicating authority. Justice should not only be done but seen to have been done. It is nowhere discussed in detail as to how each work can be said to be or not to be falling under Rule 2A(ii) ibid. None of the authorities below have thrown light on it. Although a bare reading of the work order and scope of work annexed with the work order made it clear that it is nothing but new construction but despite that it has been denied by terming it as misc. work or otherwise - Had the authorities below gone through each and every work order and the annexure mentioning the scope of work of that work order then perhaps they might have also come to the same conclusion that more or less the entire works in issue falls under Rule 2A(ii)A ibid which require service tax @ 40%. For the sake of arguments if majority of the work falls under Rule 2A(ii)A and a fraction of it falls otherwise then better classification of the work would be under Rule 2A(ii)A ibid. The appellants have rightly placed the work contract services under Rule 2A (ii)A - Appeal allowed.
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2022 (11) TMI 1004
Interest on refund not sanctioned - case of Revenue is that Since the refund has been sanctioned within three months thereof that interest was not to be paid - HELD THAT:- It is observed that the amount of refund claimed was applied and has been sanctioned for the amount of pre-deposit as was deposited by the appellant pursuant to the directions of the Court. It is also observed that till date the liability of the appellant as was proposed vide three separate show cause notices of 22.10.2009, 22.10.2010 and 20.02.2011 has yet not finalised. The Original Adjudicating Authority has yet to adjudicate the same pursuant to the directions by the Tribunal to decide the matter afresh in line with the decision of Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] and also the decision of this Tribunal in the case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] . Perusal makes it abundantly clear that amount in question of above facts is not yet held as the liability of the appellant. The department has no authority to retain such amount which otherwise is the amount of pre-deposit. Another fact of the present case is that pursuant to the said order application for refund was filed on 14.3.2019. It is held 14.3.2019 as the relevant date from which the calculation of interest be made - the adjudication of duty demand has yet not been finalized. In the given circumstances, Section 35FF has wrongly been invoked by Commissioner (Appeals). In view of entire above discussion, the order under challenge is hereby set aside, consequent thereto the appeal stands allowed holding the appellant entitled for the interest on the amount of Rs.14,15,694/- @12 per cent to be sanctioned to the appellant from the date of application for refund i.e. 14.03.2019 till the payment thereof. Appeal allowed.
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2022 (11) TMI 1003
Refund of service tax deposited under mistake of law - Construction of Residential Complex Service - Commissioner (Appeals) have held that the appellant is not liable to tax as the appellant have constructed the individual houses single/duplex, which do not qualify as residential complex - applicability of doctrine of unjust enrichment - HELD THAT:- For service tax paid under mistake of law or under wrong advice, the amount so paid, is in the nature of revenue deposit. For such refund, limitation under Section 11 B is not attracted. Further, it is held that under the facts and circumstances as the appellant have deposited the service tax from their own pocket, it is held that the doctrine of unjust enrichment is not attracted. Thus, the appellant is entitled to refund of service tax so deposited of Rs.11,42,999/-. The Adjudicating Authority is further directed to grant refund within a period of 60 days from the date of receipt of copy of this order along with interest under Section 11 BB as per Rules - appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (11) TMI 1002
CENVAT Credit - Furnace Oil - non-existence suppliers - fake firms - fake invoices - inadmissible duty paying documents - Rule 9(1)(a) of CENVAT Credit Rules, 2004 - alert notice No.01/2013 dated 30.07.2013 issued confirming that M/s. Sri Kamala Udyog, Rishra has no existence - whether the Appellant can be denied CENVAT Credit of Rs.92,660/- only on the basis of alert circular? - invocation of extended period of limitation. HELD THAT:- In the present case, the Appellant was a bona fide purchaser of the goods for a price which included duty element on the basis of a valid certificate of registration issued to the manufacturer/supplier by the Superintendent of Central Excise supported with Cenvatable invoice. The Appellant has substantively taken reasonable steps to comply with the provisions of Rule 9(5) - The fact that the assessee made payments by cheque is held to be a proof of his bona fide. Further, the Revenue has failed to establish that the Appellant received any unlawful kickback for executing the alleged purchase. The buyer can take only those steps which are within his control and can not be expected to verify the records of the supplier to check whether in fact he had paid duty on the goods supplied by him. The only reasonable steps which he can take is to ensure that the supplier is trust-worthy, as the inputs are in fact received and the documents, prima facie, appeared to be genuine - The Circular of the Central Board of Excise and Customs dated 15.12.2003 clarifying that CENVAT Credit should not be denied to a user manufacturer as long as bona fide nature of the consignee s transaction is not doubted. Hon ble Allahabad High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX VERSUS M/S. JUHI ALLOYS LTD., ANIL KUMAR SHUKLA [ 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT ] held that the assessee has taken reasonable steps to ensure that the inputs in respect of which he has taken CENVAT Credit were goods on which appropriate duty of excise was paid. Once, it is demonstrated that reasonable steps had been taken which is a question of fact in each case it would be contrary to the Rule to cast impossible and impractical burden on the assessee. Extended period of limitation - Show Cause Notice was issued on 27.01.2016 whereas the normal period expired on 08.09.2013 - suppression of facts or not - HELD THAT:- In the present case, the Department has undertaken Audit of the Books of Account for the period 2012-13 to 2014-15 on dated 28.05.2016 i.e., much after the issue of Demand-cum-Show Cause Notice. However, no adverse inference has been drawn against the CENVAT Credit availed. Thus there is no failure and/or willful suppression of any fact of the transaction by the Appellant, having entered and recorded the transaction in its books of accounts. Therefore, no longer period could be invoked - the Appellant have a strong case on limitation too and the Show Cause Notice is barred by limitation. Existence of supplier M/s. Sri Kamala Udyog - HELD THAT:- Central Excise Registration granted to M/s. Sri Kamla Udyog is bonafidely issued by the departmental authorities. Invoice was issued to the appellant by M/s. Sri Kamla Udyog fulfilling all the requirements of Central Excise Rules - It is further submitted by the Appellant that on the date of the visit of the Central Excise officers, they had recovered 40.73 lakhs from both the dealer i.e. M/s.Sri Kamla Udyog and M/s. Bedanta Petro. Therefore, it further strengthens the Appellant s contention that M/s. Sri Kamala Udyog existed on 30.07.2013 even. Thus, the Appellant being a bonafide purchaser of goods for a price which included the duty element and payment made by cheque, having received the inputs at his premise and entered into the statutory records maintained by the Appellant demonstrating transportation of goods from Rishra Road, Hooghly, West Bengal to Chancha Industrial Estate, Baripada, Mayurbhanj, the Appellant has rightly availed CENVAT Credit with the required Cenvatable documents. Appeal allowed - decided in favor of appellant.
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2022 (11) TMI 1001
Reversal of CENVAT Credit - removal of inputs as such - provision for slow/non-moving inventory made - whether the provisions of Rule 3(5)(B) of CCR, 2004 are attracted in case of making a general provision in the books of account for slow moving/non moving inventory, without reducing the value of such inventory? HELD THAT:- The appellant have only created a general provision for slow/non-moving inventory and have admittedly not written of the inventory from the inventory or the asset account. In actuality, such provision have been made by appropriation in the profit and loss account, without writing of any amount/value from the asset/inventory account - Rule 3(5B) of CCR is attracted only when the value of the asset and/or inventory is written off fully or partially or wherein any specific provision to write off a fully or partially has been made in the books of account - In the facts of the present case, the appellant have made a general provision, which is not attributable to any particular asset/inventory. Admittedly, revenue have not been able to identify the details of inventory or asset, for which the general provision has been made. It is further evident that the appellant have demonstrated that such provision has been made year to year by way of increasing or reducing the provision, depending on the usage of inventory as required. The impugned order is set aside - The ground of limitation raised is left open - appeal allowed.
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2022 (11) TMI 1000
Levy of Equivalent penalty u/s 11AC - entire duty amount and interest thereon has been paid by the appellant prior to issuance of any show cause notice(by own or by being pointed out) - HELD THAT:- Admittedly and undisputedly the entire duty amount and interest thereon has been paid by the appellant prior to issuance of any show cause notice either on their own ascertainment or on being pointed out by the revenue during the course of audit. In the case where the appellant has paid the entire amount of duty due along with the interest thereon, the central excise officer could not have proceeded to any notice in respect of the payment so made demanding the duty so paid. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (11) TMI 999
Classification of goods - emulsified bitumen - whether emulsified bitumen , which is stated to be a liquid form obtained from the process of heating the bitumen at certain temperature, is different and distinct from bitumen ? - taxable at the rate of 12.5 per cent as an unclassified item or not. HELD THAT:- Learned counsel for the parties are ad idem that, an identical question stands answered in favour of the Appellant-Assessee by a Co-ordinate Bench of this Court in Commissioner of Commercial Tax, Uttar Pradesh Versus AR Thermostat Private Limited [ 2016 (9) TMI 410 - SUPREME COURT ] where it was held that the use or end use test is also satisfied - bitumen and bitumen emulsion are one and the same commodity - taxable at 4%. The Appellant-Assessee is held liable to a levy 4 per cent tax in terms of the Entry 16, Schedule 2, Part II of the Madhya Pradesh VAT Act for the purpose of levy of VAT for the relevant period. Appeal disposed off.
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2022 (11) TMI 998
Availability of alternative remedy - Review of own order in the guise of reassessment - change of opinion - exemption of penultimate sale in course of export under Section 5(3) of the CST Act - appreciation of Certificate of Export in Form H required to be furnished under Rule 12(10) of the Central Sales Tax (Registration and Turnover) Rules, 1957 HELD THAT:- It is ex facie manifest that the Sales Tax Officer has not formed any opinion as required in Rule 12(4). Rather the context is indicative of fact that the Assessing Authority sought to review the Order dated 29.07.2011 passed under Rule 12(3) in the garb of exercise of power under Rule 12(4) of the CST(O) Rules - Neither any reason is assigned prior to issue of said notice contemplating initiation of proceeding under Rule 12(4) of the CST(O) Rules nor the record of proceeding indicated independent application of mind. As is manifest from bare reading of provision as it existed in Rule 12(4) of the CST(O) Rules, 1957, at the relevant point of time that the Assessing Authority is empowered to serve notice in Form IVA on the dealer to proceed with the reassessment, if on the basis of any information in his possession he is of the opinion that the whole or any part of the turnover of the dealer in respect of any period(s) has escaped assessment, or has been under-assessed, or has been assessed at a rate lower than the rate at which it is assessable or that the dealer has been allowed wrongly any deduction from his turnover or exemption under the Act or has been wrongly allowed set off of input tax credit in excess of the amount admissible under clause (c) of sub-rule (3) of Rule 7 - In the instant case, scrutiny of Order Sheet at Annexure-7 shows that vide Order dated 24.08.2013 the Assessing Authority merely directed for issue of notice in Form IVA without forming any opinion much less ascribing reason . This is indicative of non-application of mind and mechanical application of mind. In absence of power of review conferred by or under the statute, in the garb of reassessment, the concluded assessment could not be reopened by the Assessing Authority. As the material available on record does not show independent application of mind of the Assessing Authority having regard to the material in his possession, if any, merely based on objection of Auditor General, Odisha issue of notice in Form IVA in exercise of power under Rule 12(4) of the CST(O) Rules for reopening Audit Assessment concluded under Rule 12(3) on examination of books of account, etc. is impermissible in law and such an action is without jurisdiction. Availability of alternative remedy - HELD THAT:- Conspectus of enunciation of law on the subject as discussed in the preceding paragraphs applied to the fact-situation of the instant case vis- -vis Order dated 24.08.2013 as maintained in the Order Sheet vide Annexure-7 drives this Court to safely conclude that the initiation of proceeding for reassessment was not in consonance with the statutory requirement - there is no quarrel over the proposition that availability of alternative remedy under the statute is not absolute bar for exercise of power under Article 226 of the Constitution of India, moreso when the facts are not disputed and in identical fact-situation this Court earlier accepted the writ petition. The Hon ble Supreme Court of India in the case of DR. SMT. KUNTESH GUPTA VERSUS MANAGEMENT OF HINDU KANYA MAHAVIDYALAYA, SITAPUR (UP) ORS. [ 1987 (9) TMI 302 - SUPREME COURT ] held that review by quasi judicial authority in absence of statutory prescription being without jurisdiction, exercise of power under Article 226 of the Constitution of India is permissible - This Court has already found that the Assessing Authority has reviewed order of assessment dated 29.11.2011 (Annexure-4) passed under Rule 12(3) of the CST(O) Rules and passed order of reassessment dated 28.01.2014 under Rule 12(4) ibid. reconsidering same transaction. The Assessment Order dated 28.01.2014 passed under Rule 12(4) of the Central Sales Tax (Odisha) Rules, 1957, by the Sales Tax Officer, Barbil Circle, Barbil pertaining to tax periods from 01.07.2007 to 31.03.2010 is set aside - Petition allowed.
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2022 (11) TMI 997
Levy of Entry Tax - material consumed during trial production undertaken by petitioner between 05.08.2010 to 01.11.2010 - alleged date of commencement of commercial production - HELD THAT:- A bare reading of the expression Business reveals that tax is leviable inter alia on the event of manufacturer whether or not such event is carried on with motive to make gain or profit and whether or not any gain or profit accrues from such manufacturer - Words and expression employed in Sec.2(d) of VAT Act are clear that tax is leviable on the activity of manufacturer notwithstanding such activity entailing profit or not. Thus, it is obvious that in the present case, the authorities have factually found that manufacturer had started business on 05.08.2010. Whether appellant chooses to call this process as a trial manufacturer will not make any difference. Importantly, the authorities have also factually found that not only manufacturing but sale of cement had also started from 05.08.2010 which is luminous by reading of the order of Appellate Board especially para 5(4). The so called trial production of cement and clinker from 05.08.2010 till 01.11.2010 when the appellant claims to have started commercial production has been claimed to be not coming within the definition of Business as defined in Sec.2(d) of VAT Act - this Court has no manner of doubt that factual findings rendered by the Appellate Board are in accordance with law and none of the proposed substantial questions of law are made out herein. Petition dismissed.
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2022 (11) TMI 996
Maintainability of petition - availability of alternative remedy of appeal - Levy of Entry tax with penalty - motor vehicle as defined under Section 2(28) of the Motor Vehicles Act, 1988 or not - HELD THAT:- We do not think it will be proper for us now to relegate the appellant to the alternative remedy available under the Act. No doubt, the Writ Court had dismissed the writ petition directing the appellant/petitioner to avail the alternative remedy, but this writ appeal has been entertained by this Court and it has been pending for nearly 15 years. Hence, we do not think we will be justified in relegating the appellant/petitioner to the alternative remedy under the Act. The Division Bench in SRI BALAKRISHNA TRANSPORT VERSUS COMMERCIAL TAX OFFICER, TAMBARAM I ASSESSMENT CIRCLE, CHENNAI [ 2009 (2) TMI 787 - MADRAS HIGH COURT] had held that there is no provision in the Entry Tax Act, for assessing a person who fails to furnish a return under Section 7 of the Act. The appellant has admittedly not filed a return as required under Section 7 of the Act, on the ground that the mobile crane is not a motor vehicle as defined under Section 2(28) of the Motor Vehicles Act, 1988. The vehicle was imported in the year 2001 and the notice impugned was issued in the year 2005. The order of the learned Single Judge dismissing the writ petition directing the appellant to take recourse to the alternative remedy available under the enactment, is set aside - Appeal allowed.
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2022 (11) TMI 995
Adjustment of interest under Section 42 (3) of TNVAT Act, 2006 - It is submitted that the adjustment of the amount towards interest itself is unwarranted as the Department was having a sum of Rs.24,19,835/- of the petitioner - HELD THAT:- In this case, the petitioner had admittedly not filed a return for the month of June 2017 and later sent representations to the respondents to adjust the tax against the tax due. The order came to be passed on 27.06.2018 by the 3 rd respondent as the Original Authority. Though a copy of the order has not been served on the petitioner, the fact remains that the petitioner has also not contested the same and is amenable for the tax liability arrived at therein. Since the petitioner's amount was already with the respondent Department, the imposition of interest under Section 42(3) of the Act at 2% per annum appears to be unreasonable and unwarranted. This writ petition is allowed with a direction to the 3rd respondent to refund a sum of Rs.6,26,404/- together with interest at 2% from the date of 1st July 2017.
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Indian Laws
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2022 (11) TMI 994
Dishonor of Cheque - witness produced by prosecution/complainant, properly examined or not - Section 540Cr. PC - HELD THAT:- It is made clear that as noticed, the application moved by the respondent-accused has been allowed by the learned Magistrate invoking the provisions of Section 540 Cr. PC without being prayed therefor. It is a fact that one of the witnesses sought to be examined by the accused namely Nazir Ahmad Joo is one of the complainants who had also been examined as the complainants witness, so is the case of Manager J K Bank Branch Chadoora who had already been examined as complainants witness and that both these witnesses have been subjected to lengthy cross examination by the respondent-accused before they were relieved without any resistance. The respondent-accused had all the liberty to cross examine the witnesses examined by the complainants on all the aspects and even beyond the scope of examination-in-chief, therefore, it appears that the accused either with a motive to delay the proceedings or with a view to harass the complainants, have given the names of complainant Nazir Ahmad Joo and Manager J K Bank Branch Chadoora to be called as witnesses on his behalf. In the considered opinion of this Court the trial Magistrate on an application moved by the accused-respondent has invoked the provisions of Section 540 Cr.PC without asking for it. The question to be decided by the learned trial Magistrate was as to whether the witnesses examined by the complainants can be asked to appear as witnesses for the defence. Even if the learned Magistrate was of the view that certain clarifications were required to be made by these witnesses while being cross examined and re-examined during trial, it could not be legally tenable to call these witnesses on behalf of the opposite party - It is also not clear as to what the Patwari Halqa Wathora has to prove about the details of the property of the accused when the accused himself can do that and for a complaint under Section 138 N.I Act, the property, if any of the accused-respondent, is not relevant at all. It is held that the witnesses examined by one party cannot be allowed to be examined on behalf of the opposite party at its instance. Learned Magistrate has, thus, erroneously passed the impugned order by misdirecting himself to invoke Section 540 Cr. PC to summon the witnesses already examined by the complainant to be called as witnesses on behalf of the accused-respondent. Learned Magistrate has also not applied his mind as to whether Patwari Halqa Wathora was required to be produced by the accused-respondent so as to prove his property, as the property of the accused-respondent, was not the relevant factor in a complaint under Section 138 N.I.Act. The impugned order thus, suffers from illegality and amounts to abuse of process of court. The impugned order is required to be set aside, partially, the impugned order is resultantly quashed to the extent of calling Nazir Ahmad Joo, Manager J K Bank Branch Chadoora and Patwari Halqa Wathora, as witnesses on behalf of the accused-respondent - Petition disposed off.
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2022 (11) TMI 993
Dishonor of cheque - insufficient funds - rebuttal of presumption - preponderance of probabilities - Section 138 of NI Act - HELD THAT:- Merely because the accused has produced some copies of the alleged invoices, it cannot be inferred that those invoices, which are disputed by the complainant, have been established as the one created on the date shown therein by none else than the accused himself. Even otherwise, the said place-Hosur not being far away from Bengaluru where the office of the accused is said to be situated, it is easily possible for the accused to travel from Hosur to Bengaluru either to receive the loan or to deliver the cheque in question. As such also, the oral and documentary evidence of the accused to make out a case of preponderance of probabilities to rebut the presumption formed in favour of the complainant could not be successful in achieving its goal. In addition to the above, though the accused has taken a contention that the cheque was given to one Sri Parthasarathy few years back and that Parthasarathy got the cheque presented through the complainant, but, to substantiate the same, neither the accused has produced any document nor examined said Sri Parthasarathy in his favour - admittedly for several years, the accused has kept quite without taking any action against the said Parthasarathy for alleged withholding of the cheque of the accused by him for no valid reasons. This also creates a doubt in believing the alleged defence of the accused. It is appreciating these aspects in their proper perspective, both the trial Court and the Sessions Judge's Court have held that the complainant has proved the alleged guilt against the accused and that the accused could not able to rebut the presumption formed in favour of the complainant. Accordingly, both the Courts have held the accused guilty of the alleged offence punishable under Section 138 of N.I. Act and confirmed the conviction respectively. The said witness has failed to tender himself for his further cross-examination from the accused side in spite of giving sufficient opportunities to him and also by virtue of the memo filed by the accused seeking discarding the evidence of PW-1, the trial Court and the Sessions Judge's Court ought not to have considered the evidence of PW-1, in which an event, the finding given by them would have been otherwise. As such, the impugned judgments deserves to be set aside, for which purpose, interference in them is warranted by this Court. The Criminal Revision Petition stands allowed.
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