TMI Tax Updates - e-Newsletter
November 25, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. Taxation Implication Crypto Currencies in India: Some Thoughts

   By: Mallikarjuna Gupta

News

1. NITI Aayog Releases Discussion Paper on Digital Banks Seeking Comments A Proposal on a Licensing and Regulatory Regime for Digital Banks Mooted Last Date for Sending Comments is 31 December 2021

2. India and USA agree on a transitional approach on Equalisation Levy 2020

3. Cabinet approves continuation of National Apprenticeship Training Scheme for next five years Stipendiary support of ₹ 3,054 crore to apprentices who undergo apprenticeship training under National Apprenticeship Training Scheme Approximately 9 lakhs apprentices will be trained by industry and commercial organisations

4. Cabinet approves continuation of the umbrella scheme "Ocean Services, Modelling, Application, Resources and Technology (O-SMART)" The umbrella scheme to cost of ₹ 2177 crore

5. Cabinet approves Continuation of the umbrella scheme "Atmosphere' & Climate Research-Modelling Observing Systems & Services (ACROSS)" from the 14th Finance Commission to the next Finance Commission Cycle (2021-2026) ACROSS along with its eight sub-schemes to the next finance cycle of five will cost estimated of ₹ 2,135 crore

6. India, ADB sign $300 million loan to improve primary health care in India

7. Income Tax Department conducts searches on a leading Gutkha distributor in Gujarat

8. India and United States Joint Statement on the Trade Policy Forum

Notifications

Income Tax

1. 133/2021 - dated 23-11-2021 - IT

U/s 10(46) of IT Act 1961 - Central Government notifies ‘Haryana State Legal Services Authority’ in respect of the specified income arising to that Board.

2. 132/2021 - dated 23-11-2021 - IT

Income tax (32nd Amendment), Rules, 2021. - FORM NO. 52A amended - Statement to be furnished to the Assessing Officer under section 285B of the Income-tax Act, 1961, in respect of production of a cinematograph film

Highlights / Catch Notes

GST

• Arbitration Award on Elevator Supply GST Dispute: Balancing Equity and Legal Obligations u/s 28(2) of Arbitration Act.

  Case-Laws - HC : Burden to bear the GST amount - Arbitration award- supply of the elevators - The phrase “ex aecquo et bono” means according to equity and conscience. It empowers the arbitrator to dispense with consideration of the law and to take decisions on notions of fairness and equity. The term ‘amiable compositeur’ is a French term and means an unbiased third party who is not bound to apply strict rules of law and who may decide a dispute according to justice and fairness. In view of Section 28(2) of the A&C Act, the Arbitral Tribunal was required to decide the disputes in accordance with law and not render a decision in disregard of the same, in the interest of justice and equity. - HC
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• Petitioner seeks cash release after GST seizure; utilizes CGST Section 74 relief, resulting in case dismissal and Rs. 25,000 costs.

  Case-Laws - HC : Search and seizure under GST - Seeking release of seized cash - Revenue alleges concealment of facts - The effect of Subsection (5) and (6) of Section 74 of CGST Act is that the assessee can by making voluntary deposit of tax, interest and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, the petitioner availed of this remedy and based thereon, proceedings against the petitioner arising out of the search and seizure activities carried out on 04.03.2021 were closed. - The Petition is dismissed with costs quantified at ₹ 25,000/- - HC
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• Court Orders Portal Reopening for Revised TRAN-1 Filing to Claim Input Tax Credit Within Eight Weeks.

  Case-Laws - HC : Permission to revise the Form TRAN- 1 resulting in deprivation of the Input Tax Credit - The order of the learned Single Judge is affirmed in directing the petitioner/ respondent to enable the respondent herein to file a revised Form TRAN-1, by opening of the portal and that such exercise is to be completed within a period of 8 weeks from the date of issue this order. - HC
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• Court Rules Provisional Attachment u/s 83 of CGST Act Invalid After Exceeding One-Year Limit.

  Case-Laws - HC : Provisional attachment of the property - Continuation of the attachment beyond the period of one year - Section 83 of CGST ACt - As the cause is no longer surviving and the provisional attachment made does not survive any longer by virtue of the order dated 23.09.2021, the petition is being disposed of with the word of caution to the respondents that the statutory provision needs to be complied with very strictly and stringently. - HC
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• Appellant Classified as Intermediary for Airbus France u/s 2(13) of IGST Act, 2017; Lower Authority's Decision Upheld.

  Case-Laws - AAAR : Classification of the service - Intermediary Service - activities carried out by the Appellant in India would constitute a supply of “Other Support Services” - The Appellant is not supplying such goods on his own account and hence, the Appellant does not fall within the ambit of the exclusion contained in the definition of ‘intermediary’. Therefore, the Appellant is clearly playing the role of intermediary for Airbus France, as envisaged under Section 2(13) of the IGST Act, 2017 and we uphold the findings of the lower Authority in this regard. - AAAR
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Income Tax

• Assessing Officer Cannot Reopen Assessment u/s 147 Based on Change of Opinion with Same Facts.

  Case-Laws - HC : Reopening of assessment u/s 147 - When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. It is also held that when on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open for the Assessing Officer to reopen assessment based on the very same material and to take another view. - HC
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• High Court Upholds Charge Alteration for Tax Evasion u/s 276(C)(1), Adding Evasion of Tax Payment.

  Case-Laws - HC : Alteration of charge - main charges for the offence u/s 276(C)(1) in connection with the very same Assessment Year for non payment of Tax - As stated supra, the Assessment Year is one and the same. Initial charge is for evasion of tax. Now, by way of alteration of charge, it is included to add evasion of payment of tax and hence, we do not find any error in the order passed by the Special Sessions Judge, in allowing the application. - HC
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• Pr.CIT's Jurisdiction u/s 263 Challenged in Vivad Se Vishwas Scheme Assessment; Assessee's Claims to Be Examined.

  Case-Laws - AT : Revision u/s 263 by CIT - Whether assessment order has been made subject matter of Vivad Se Vishwas Scheme, the ld. Pr.CIT cannot exercise jurisdiction u/s 263 ? - since the ld PCIT himself is the appropriate authority who has issued Form 3 dated 23.02.2021 in the instant case and the fact that the said contentions have been advanced for the first time before us, it is relevant to afford an equal opportunity to the ld PCIT to examine such contentions raised on behalf of the assessee challenging his exercise of jurisdiction u/s 263 of the Act. Therefore, the contentions so advanced by both the parties are left open to be examined by the ld PCIT as per law - AT
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• Dependent Agency PE Irrelevant for Tax in India Without Underpayment Claim by Assessing Officer.

  Case-Laws - AT : Income taxable in India - PE in India - Once we hold that in the light of the present legal position, existence of dependent agency permanent establishment in wholly tax neutral, unless it is shown that the agent has not been paid an arm's length remuneration, and when it is not the case of the Assessing Officer, as we have noted earlier, that the agents have not been paid an arm's length remuneration, the question regarding existence of dependent agency permanent establishment, i.e. under article 5(4), is a wholly academic question. - AT
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Customs

• Customs Act Deadline Extension Validates Late Service of Assessment Orders; Government's Authority to Extend Time Limits Upheld.

  Case-Laws - HC : Period of limitation - Validity of assessment order - Extension of time limit in exercise of its power under the proviso to Section 110(2) of the Customs Act, 1962 - The Central Government has now extended the date from 30.09.2020 to 31.12.2020 for completion or compliance of action such as completion of any proceeding or issuance of any order, notice, intimation, notification or sanction or approval, by whatever name called, by any authority, commission, tribunal, by whatever name called. In view of the above notification, the proceedings dated 30.09.2020 though served on 07.10.2020 is within the period extended by the Central Government and thus valid. - HC
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IBC

• NCLAT upholds NCLT decision: Appellant's procedural error in CIRP notice leads to dismissal; Supreme Court cites jurisdictional limits.

  Case-Laws - SC : Initiation of the CIRP - deficiencies in its services - The NCLT has merely relied upon the procedural infirmity on part of the appellant in the issuance of the termination notice, i.e., it did not give thirty days’ notice period to the Corporate Debtor to cure the deficiency in service. The NCLAT, in its impugned judgment, has averred that the decision of the NCLT preserves the ‘going concern’ status of the Corporate Debtor but there is no factual analysis on how the termination of the Facilities Agreement would put the survival of the Corporate Debtor in jeopardy. - The proceedings initiated against the appellant shall stand dismissed for absence of jurisdiction. - SC
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• Liquidator can't claim goods in Customs Bonded Warehouses as Corporate Debtor's assets without paying duties upfront per Customs Act 1962.

  Case-Laws - AT : Seeking removal of the materials lying in the Customs Bonded Warehouses without payment of Customs Duty - the assets lying in the Customs bonded warehouses cannot be considered assets of the Corporate Debtor. The Liquidator intends to possess the uncleared goods from the customs warehouses without upfront payment of Customs duty, which is against the statutory provisions of the Customs Act, 1962. Therefore, the imported goods subject to levy of Customs stand on a different footing than the goods /assets, not in the Corporate Debtor's possession. Therefore the assets lying in the Customs bonded warehouses cannot be considered assets of the Corporate Debtor. - AT
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• NCLT and NCLAT Hold High Court-Level Contempt Powers; Appellate Tribunal Overrules Adjudicating Authority's Decision on IBC Contempt Jurisdiction.

  Case-Laws - AT : Contempt proceedings - The Tribunal (NCLT) and the Appellate Tribunal (NCLAT) have the same ‘jurisdiction’, ‘powers’ and ‘Authority’ in respect of contempt of it as the ‘High Court’ viewed in that perspective, the conclusions arrived at by the Adjudicating Authority (National Company Law Tribunal) in the impugned order by making it clear that the IBC is devoid of contempt of jurisdiction and thereby dismissing the application, leaving it open to the Appellant/Applicant to seek remedy through recourses available, are clearly unsustainable in the eye of Law and the same is interfered with by this ‘Tribunal’ in furtherance substantial cause of justice, sitting in ‘Appellate Jurisdiction’. - AT
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• Auction Buyers Not Liable for Pre-Sale Property Tax Under IBC, Section 53: Municipality Claims as Unsecured Creditors.

  Case-Laws - AT : IBC - Auction sale - The outstanding dues of the property tax relating to period prior to sale confirmation are thus dues that are akin to claim of an unsecured creditor (Bhatpara Municipality in the present case) and should be discharged in terms of the properties regarding distribution of assets given in section 53 of IBC. The auction-purchaser cannot be held liable to pay any such dues relating to period prior confirmation of sale - AT
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Central Excise

• Excise duty refund claim filed timely after appeal; rejection as time-barred u/s 11B deemed unjustified.

  Case-Laws - AT : Refund of Excise Duty, paid under protest - The refund claim is filed within one month after passing of the second Order-in-Appeal which is dated 27.02.2018. The claim having been made within one year from the date on which the demand was set aside by the Commissioner (Appeals) finally, the rejection of refund claim as time-barred under Section 11B of the Central Excise Act, 1944 is not justified. Moreover, the amount having been paid as duty pursuant to the Show Cause Notice, the question of unjust enrichment does not arise. - AT
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• Penalty Imposed for Alleged Fact Suppression Overturned; Adjudicating Authority Mistakenly Penalized for Clerical Error.

  Case-Laws - AT : Extended period of limitation - penalty - suppression of facts or not - since there has been prompt reversal by the appellant that too of a such amount which was meant for the appellants own both units, however was utilised only by one unit. Hence allegation of wilful mis-statement with an intent to evade payment rather not at all justified - Though the adjudicating authority below had been right while dropping the demand on the same ground by holding it to be mere clerical error, they have definitely got wrong while still imposing penalty. - AT
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Case Laws:

• GST

• 2021 (11) TMI 821
  Burden to bear the GST amount - Arbitration award- supply of the elevators - Reimbursement of amount payable on account of GST as stated in the tax invoices raised by Kone - input tax credit - contravention of provisions of Section 171 of CGST Act, 2017 or not - jurisdiction/scope of authority of the Hon ble Arbitral Tribunal as per the provisions of the Arbitration and Conciliation Act, 1996 - Whether GST or DVAT is applicable for the transaction between the parties under the Contract Agreement? - principles of unjust enrichment - Claimant or Respondent is entitled to interests and/or costs or not? HELD THAT:- It is apparent that the principal dispute before the Arbitral Tribunal remains unadjudicated. The issue struck by the Arbitral Tribunal was whether Kone had erred in not claiming the Input Tax Credit. Thus, the Arbitral Tribunal was required to address the question whether Kone was entitled to claim Input Tax Credit in respect of the Excise duty paid for the lifts in question prior to 30.06.2017 and if so, whether DMRC was obliged to reimburse the GST, notwithstanding, that Kone had not availed of such benefits - It is seen that the Arbitral Tribunal found both the parties wanting for not engaging in joint discussions for exploring the possibility of availing Input Tax Credit under the CGST Act. Accordingly, the Arbitral Tribunal reasoned that both the parties should equally bear the amount of Input Tax Credit that may have been possibly available. This Court is of the view that since the impugned award does not address the dispute, the impugned award in this regard is liable to be set aside. It is also relevant to refer to Section 28(2) of the A C Act. The Arbitral Tribunal might decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so and not otherwise. The phrase ex aecquo et bono means according to equity and conscience. It empowers the arbitrator to dispense with consideration of the law and to take decisions on notions of fairness and equity. The term amiable compositeur is a French term and means an unbiased third party who is not bound to apply strict rules of law and who may decide a dispute according to justice and fairness. In view of Section 28(2) of the A C Act, the Arbitral Tribunal was required to decide the disputes in accordance with law and not render a decision in disregard of the same, in the interest of justice and equity. It is relevant to note that there was no dispute that Kone had, in fact, paid the GST. It is also not in dispute that DMRC was required to reimburse the GST in addition to the price as fixed. The Arbitral Tribunal had rejected DMRC s contention that DVAT was payable. In view of the Arbitral Tribunal s findings, the onus to establish that Kone was entitled to an Input Tax Credit in respect of the Excise duty of Rs.1,27,30,042/- rested with DMRC - The Arbitral Tribunal has not rendered any decision in respect of the aforesaid issues and has in fact left the disputes in this regard undecided. Petition disposed off.

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• 2021 (11) TMI 820
  Cancellation of registration of petitioner - absence of any reply being filed to the show cause notice - requirement of granting opportunity of hearing or not - Rule 22 of the Uttar Pradesh Goods and Services Tax Rules, 2017 - HELD THAT:- In the admitted facts of the present case, though no reply may have been furnished by the petitioner still, it was incumbent on respondent no.2 to fix a date and afford opportunity of hearing to the petitioner in compliance of the first proviso to Section 29(2) of the Act. In view of such facts, no useful purpose would be served in keeping in the present petition pending or calling for a counter affidavit as the instructions received by the learned Standing Counsel are complete with respect to the issue being dealt with by the Court. The order dated 29.06.2019 issued by respondent no.2 is set aside - Petition allowed - decided in favor of petitioner.

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• 2021 (11) TMI 819
  Search and seizure - Seeking release of seized cash - Revenue alleges concealment of facts - erroneous recovery by the respondents from the petitioner without proper adjudication - HELD THAT:- Admittedly, the search at the residential premises of the Director of the petitioner company was carried out on 04.03.2021. The petitioner made no complaint to the respondents at the relevant time and till the letter dated 12.10.2021 of non-supply of Panchnama and other documents in respect of the search carried out at the premises. Clearly, this plea is being set up as an afterthought by the petitioner. As far as the power to seize cash is concerned, the same need not be adjudicated in the present petition for the reason that it is an admitted fact that on the basis of the representation/letter dated 24.03.2021 referred, the cash amount so seized was released in favour of the petitioner. The said question, therefore, in the present petition is merely of an academic importance and is, therefore, left open to be adjudicated in an appropriate case. The petitioner clearly stated that the tax liability is being discharged by it voluntarily and requested the respondents not to issue any Show Cause Notice in relation to the search and seizure undertaken by it on 04.03.2021. Clearly therefore, the tax amount has been deposited by the petitioner voluntarily and the case of coercion now being set up by the petitioner is an afterthought. The effect of Subsection (5) and (6) of Section 74 of CGST Act is that the assessee can by making voluntary deposit of tax, interest and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, the petitioner availed of this remedy and based thereon, proceedings against the petitioner arising out of the search and seizure activities carried out on 04.03.2021 were closed. The petition is dismissed with costs quantified at Rs. 25,000/- to be deposited with Delhi High Court Legal Services Committee.

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• 2021 (11) TMI 818
  Permission to revise the Form TRAN- 1 resulting in deprivation of the Input Tax Credit - transitional arrangement for Input Tax Credit - Section 140 of the GST Act - HELD THAT:- There seems to be a consistent view that if there is substantial compliance, denial of benefit of Input Tax Credit which is a beneficial scheme and framed with the larger public interest of bringing down the cascading effect of multiple taxes ought not to be frustrated on the ground of technicalities. The order of the learned Single Judge is affirmed in directing the petitioner/ respondent to enable the respondent herein to file a revised Form TRAN-1, by opening of the portal and that such exercise is to be completed within a period of 8 weeks from the date of issue this order. Appeal disposed off.

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• 2021 (11) TMI 817
  Provisional attachment of the property - Section 83 of the Central Goods and Services Tax Act - It is the grievance of the petitioner that on 23.06.2020, respondent No.4 issued notice in the form of GST DRC-01A without considering the reply of the petitioner - HELD THAT:- The Court vide order dated 20.08.2020 quashed and set aside the Form GST DRC-01A dated 23.07.2020 and directed respondent No.4 to initiate fresh proceedings. However, the Court did not disturb the order of provisional attachment passed on 24.07.2020. It is further grievance of the petitioner that respondent No.4 had been directed to initiate fresh proceedings which should have issued in the form of GST DRC-01A instead he chose to issue notice in the form of GST DRC-01A. On 25.08.2020, the summons has been issued under Section 70 of the GST Act where certain documents have been called for. It appears that there is challenge to the order of the assessment which has been passed without filing any appeal on the ground that the order is cryptic and challenge is made on the ground of non-reasoned order. The Court is not rightly concerned with the same as the separate petition had been preferred. Continuation of the attachment beyond the period of one year - contravention of the provisions of Sub Section (2) of Section 83 of the CGST Act, or not - HELD THAT:- As the cause is no longer surviving and the provisional attachment made does not survive any longer by virtue of the order dated 23.09.2021, the petition is being disposed of with the word of caution to the respondents that the statutory provision needs to be complied with very strictly and stringently. There must not be any requirement for the parties to approach this Court for compliance of the provisions of law. If there are statutory remedies available, they may take recourse to, however, the State cannot insist on continuing with something which is impermissible under the law. Petition disposed off.

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• 2021 (11) TMI 816
  Classification of the service - activities carried out by the Appellant in India would constitute a supply of Other Support Services , falling under Heading 9985 or as Intermediary Service classifiable under Heading 9961/9962? - Levy of GST - intermediary services or not - export of services or not - zero-rated supply or not - refund of unutilized ITC - HELD THAT:- The definition of intermediary as given in Section 2(13) of the IGST Act excludes a person who supplies such goods or services or both on his own account. It is the contention of the Appellant that the services being provided to Airbus France are on their own account and they are not engaged in supplying services on behalf of the Principal. The Appellant has placed reliance on the Education Guide 2012 issued by the CBIC under the Service Tax regime and contended that none of the conditions required for qualifying to be intermediary service as explained in the Education Guide are satisfied in their case. There does not seem to be any difference between the meaning of the term intermediary under the GST regime and pre-GST regime. In the pre-GST regime, an intermediary referred to a person who facilitates the provision of a main service between two or more person but did not include a person who provided the main service on his account. Similarly, in the GST regime, an intermediary refers to a person who facilitates the supply of goods or services or both between two or more persons but excludes a person who supplies such goods or services or both on his own account. The phrase such goods or services used in the definition of intermediary implies that the person should not be supplying on his risk and reward entirely, the very goods or services whose supply he is arranging or facilitating. In the instant case, the Appellant is arranging for and facilitating the Principal in procuring a supply of goods from India. He is not undertaking any supply of goods. The Appellant is not supplying such goods on his own account and hence, the Appellant does not fall within the ambit of the exclusion contained in the definition of intermediary . Therefore, the Appellant is clearly playing the role of intermediary for Airbus France, as envisaged under Section 2(13) of the IGST Act, 2017 and we uphold the findings of the lower Authority in this regard. As regards the classification of the services provided by the intermediary, it is found that the services of the Appellant, who is acting as an intermediary, would aptly be classified under the Heading 998599 as Other support services . The Explanatory Notes to the Scheme of Classification of Services which is a guiding tool for classification of services indicates the scope and coverage of the Heading 998599 as specifically covering business services of intermediaries and brokers under this heading - there are no merit in the Appellant s contention of classifying their activity under Heading 998399. It is trite law that in classification matters, a specific heading is preferred to a general heading. In this case, the services of intermediaries is specifically covered under Heading 998599 and hence the intermediary service rendered by the Appellant is correctly classifiable under the said Heading. In this case, the activity of the Appellant who is the supplier of intermediary service i.e collection of information of parties in India, analysis of potential suppliers and skill development of existing suppliers, are all very much done in India, which is the location of the supplier of intermediary service. Therefore, by virtue of Section 13 (8) (b) of the IGST Act, it automatically flows that the place of supply of the intermediary service provided by the Appellant to Airbus France, is in India. When the place of supply is in India, it does not satisfy one of the conditions for export of service, that the place of supply should be outside India - the intermediary services provided by the Appellant to Airbus France, do not qualify as export of service.

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• Income Tax

• 2021 (11) TMI 815
  Capital gain on distribution of assets - Conversion of the partnership firm into a private limited company - Violation of the conditions stipulated u/s 47(xiii) - transfer by way of distribution of assets - partners of the erstwhile firm derived benefit other than allotment of shares by way of loan credits in their favour on conversion of the partnership firm into a private limited company - HC held unless and until the first condition of transfer by way of distribution of assets is satisfied, Section 45(4) will not be attracted. Therefore, in the facts and circumstances of the case, we find that there is no transfer by way of distribution of asset - HELD THAT:- As the respondent has already availed the benefit under the scheme i.e. Vivad se vishwas.In view of the same, no further order is required. Accordingly, the special leave petition is disposed of.

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• 2021 (11) TMI 814
  Slump sale - Section 2(42C) - valuation entire unit - valuer assigned separate valuation to different parts of the unit - Effective date of sale of this unit - CRM division stood sold from the effective date - Date of transfer - Date of agreement - Disallowance of expenditure made in terms of section 14A - HELD THAT:- We see no reason to interfere. The Special Leave Petition is dismissed.

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• 2021 (11) TMI 813
  Reopening of assessment u/s 147 - Validity of reasons to believe - HELD THAT:- There is no material which has come in the hands of respondent after the assessment order was passed on 12/3/2016 which can be considered as material fact and the same was not truly and fairly disclosed. By letter dated 9/11/2015 petitioner had received the letter from office of the Assistant Commissioner, Office of Income Tax calling upon to furnish the documents and details of about 27 transactions/flat sales. Transaction amount has also been mentioned and the total of these transactions which is the amount mentioned in the reasons for reopening. In reply petitioner vide its letter dated 17/11/2015 provided all details and documents to the AO. Subsequently, the assessment order dated 29/2/2016 was passed. Date given as 12/3/2016 in the reasons, Shri Jain says appears to be erroneous. We are satisfied that this is nothing but change of opinion and using the words I have reason to believe that income chargeable to tax . By reason of the failure on the part of the assessee to disclose fully and truly all material facts . in the reason for reopening is clearly an attempt to take the case out of restrictions imposed by the proviso of Section 147 of the Act - Decided in favour of assessee.

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• 2021 (11) TMI 812
  Reopening of assessment u/s 147 - Assessment sought to be reopened after a period of 4 years - HELD THAT:- The criterion for reopening of assessment after a period of 4 years are no longer res-integra in view of the Judgment of Division Bench of this Court in the case of Ananta Landmark (P.) Ltd. [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] wherein this Court held that where assessment was not sought to be reopened on reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of Assessing Officer about manner of computation of deduction under section 57, reopening was not justified. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. It is also held that when on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open for the Assessing Officer to reopen assessment based on the very same material and to take another view. In the facts of the present case, in view of reply filed by Petitioner (Exh.B), it is clear that the Assessing Officer was aware of the issue of AIR and ITS data. Once the Assessing Officer had applied his mind in regular assessment proceeding of Petitioner having sold 29 flats, it is not open for Assessing Officer to reopen the assessment in absence of material to show escapement of income. See Aroni Commercial Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] and in Marico Ltd [ 2019 (8) TMI 1337 - BOMBAY HIGH COURT] AO is reopening the assessment merely on the basis of change of opinion which is not permissible and hence could not have issued a notice of re-opening of assessment to Petitioner. - Decided in favour of assessee.

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• 2021 (11) TMI 811
  Validity of reopening of assessment u/s 147 - A argued admittedly, notice(s) were issued to entities which were not in existence at the relevant time, as they had merged with the petitioner-company i.e., GE India Industrial Pvt. Ltd. - HELD THAT:- As the impugned notice(s) issued under Section 148 of the Act cannot be sustained, as they were issued to entities [i.e., GE India Technology Centre Pvt. Ltd. and GE India Exports Pvt. Ltd.which were not in existence at the relevant time, as they had merged with the petitioner-company i.e., GE India Industrial Pvt. Ltd. Therefore, the impugned notice(s) dated 30.06.2021 are set aside. The respondents/revenue will have liberty to take next steps in the matter, albeit as per law. In case any such steps are taken, the petitioner-company will have the liberty to assail the same, in accordance with law.

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• 2021 (11) TMI 810
  Alteration of charge - main charges for the offence under Section 276(C)(1), after examination of P.W.7, in connection with the very same Assessment Year for non payment of Tax, charge under Section 276(C)(2) Income Tax Act was now sought to be added by way of alteration of charge - HELD THAT:- It is not disputed that sanction under Section 279 (1) of Income Tax Act is already been granted and sanctioned for the offence under Section 276(C)(1) and other offences. Since the expression unless the sanction had been already obtained for a prosecution on the same facts as those on which, the altered or added charge is found , new or fresh sanction is not required, as contemplated under Section 216(5) of Cr.P.C., is present. As stated supra, the Assessment Year is one and the same. Initial charge is for evasion of tax. Now, by way of alteration of charge, it is included to add evasion of payment of tax and hence, we do not find any error in the order passed by the Special Sessions Judge, in allowing the application. Stage of the case - According to the petitioner, the matter is posted for argument, at this stage, whether, this type of nature of the petition can be entered - HELD THAT:- The Hon ble Supreme Court in Dr.Nallapareddy Sridhar Reddy Vs. The State of Andhra Pradesh Ors. [ 2020 (1) TMI 1412 - SUPREME COURT] has held that the stage of the proceedings is irrelevant for alteration of the charge and hence, I find no illegality or irregularity in the impugned order passed by the learned Sessions Judge.

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• 2021 (11) TMI 809
  Revision u/s 263 by CIT - Period of limitation - Allegation of lack of adequate opportunity being provided by the ld PCIT - HELD THAT:- This is clearly a case of lack of adequate opportunity being provided by the ld PCIT. We find that the show-cause notice has been issued on 26.03.2021 at the fag end of the limitation period, which was expiring on 31.03.2021, wherein the assessee has been provided effectively one working day to respond by 29.03.2021, and the order was thereafter pronounced on 31.03.2021. We understand that being a limitation period, the ld PCIT could not have granted more time but the question is what stopped the ld PCIT to atleast initiate the proceedings earlier and why the proceedings were initiated at the fag end of the limitation period - We believe that the assessee deserve a reasonable and sufficient opportunity to put forth his submissions and supporting documentation in response to the show-cause notice raised by the ld PCIT. We therefore deem it fit and appropriate that the matter be set-aside to the file of the ld PCIT to decide the matter a fresh as per law after providing reasonable opportunity to the assessee. Whether assessment order has been made subject matter of Vivad Se Vishwas Scheme, the ld. Pr.CIT cannot exercise jurisdiction u/s 263 ? - PCIT is also directed to examine the contentions so raised on behalf of the assessee in terms of exercise of jurisdiction u/s 263 in context of declaration of the assessee having been accepted under the direct taxes Vivad Se Vishwas Scheme Act, 2020 prior to the issuance of the show-cause notice u/s 263 - since the ld PCIT himself is the appropriate authority who has issued Form 3 dated 23.02.2021 in the instant case and the fact that the said contentions have been advanced for the first time before us, it is relevant to afford an equal opportunity to the ld PCIT to examine such contentions raised on behalf of the assessee challenging his exercise of jurisdiction u/s 263 of the Act. Therefore, the contentions so advanced by both the parties are left open to be examined by the ld PCIT as per law and have not been adjudicated upon by us.

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• 2021 (11) TMI 808
  Revision u/s 263 by CIT-A - essential prerequisite for assuming revisionary jurisdiction u/s 263 - AO having not inquired into the difference in the amount of sales, trade receivables and trade payments as reflected in the financial statements of the assessee and that submitted in the details to the AO, causing prejudice to the Revenue on account of income relating to sales to that extent having escaped assessment or there being unexplained investments of the assessee - HELD THAT:- It is a settled proposition of law that for assuming revisionary jurisdiction u/s 263 of the Act there has to be a clear finding of error by the PCIT/CIT in the order so sought to be revised. And this finding has to be arrived at after conducting necessary inquiry if required. In cases of inadequate inquiry there has to be a finding that the inquiry made was erroneous. And this can happen only when the PCIT/CIT himself conducts an inquiry and verification and establishes therefrom the error made by the AO, making his order unsustainable in law. The finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further inquiries without a finding that the order is erroneous. Where the assessee we find had duly furnished an explanation of the issue not allegedly found to have been examined by the AO and the Ld.Pr.CIT having not even made an effort of examining the explanation simply restoring it to the AO to do so, there is we hold no finding of error by the Ld.PCIT in the order of the AO. We hold that the orders passed by the ld. Pr. CIT being beyond the scope of section 263 of the Act are not valid. Accordingly we set aside the revision orders passed by the Ld.PCIT for the two years under consideration. - Decided in favour of assessee.

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• 2021 (11) TMI 807
  Addition u/s. 68 - unexplained cash credit - addition relying on the statement of Shri Raj Kumar Kothari who had retracted the statement within ten (10) days alleging threat and coercion on the part of the Investigation Wing - DR submitted that based on information from the Investigation Wing that the assessee had taken unsecured loan from ten (10) shell companies controlled and operated by Shri Raj Kumar Kothari who have accepted before the Investigation Wing that he through his legal entities (Private Limited companies) is indulging in providing bogus share capital and unsecured loan in lieu of commission - CIT-A deleted the addition - HELD THAT:- All the ten (10) lender companies are corporate entities which are incorporated by the ROC and thus the existence and status of them can be taken note by the A.O. from the master data available in the public domain/website of ROC; And it was brought to our notice that these companies are still active companies which are discernable from ROC website. All the lender companies have their respective PAN identity and the jurisdiction under whom they are assessed are available in the ITR filed by them directly to the A.O. pursuant to the section 133(6) notice issued by the A.O. and transactions have been made through account payee cheques thus A.O. of the assessee who borrows or is in receipt of credit/loan (like assessee in this case) cannot brand the lender company as lacking in creditworthiness, unless the A.O. undertakes the exercise of enquiring from the A.O. of the lender companies and in case if the A.O. of the lender companies have accepted the transactions shown by them with the assessee company, then the A.O. of the assessee company cannot impute un-creditworthiness of the lender company . The lender companies have sufficient creditworthiness to give loan to the assessee company and cannot be termed as shell companies by simply basing his (A.O) conclusion on the strength of selected questions and answers given by Shri Raj Kumar Kothari and that too recorded on third party proceedings and which were admittedly recorded behind the back of the assessee. Shri Raj Kumar Kothari has retracted the said statement recorded on 02.03.2016 within ten (10) days and has alleged threat and coercion on the part of officers who elicited the statement as they wished, so the statement/truth of the contents of the statement cannot be relied upon by the A.O. and doing so is bad in law; and therefore according to us, it could not have been the basis to draw adverse inference against the assessee company in respect of loan taken by it. A.O. had summoned Shri Raj Kumar Kothari and his statement has been recorded by him from which he could not elicit any incriminating material/statement against the assessee/loan transaction or can term the assessee as a beneficiary. And neither the AO has carried out any enquiry regarding creditworthiness of the lenders from their respective AO s, without which AO of the assessee could not have drawn adverse view of un-worthiness of credit in respect of lenders as held by the Hon ble Calcutta High Court in the case of M/s. Dataware Private Limited [ 2011 (9) TMI 175 - CALCUTTA HIGH COURT ] so the A.O. of the assessee erred in branding the lender companies as lacking in creditworthiness. AO could not successfully elicit incriminating evidence against the assessee and on the other hand, Shri Raj Kumar Kothari has confirmed that loan transaction with the assessee as genuine and the AO after having recorded directly the statement of Shri Raj Kumar Kothari should not have relied on the earlier statement recorded by the Investigation Wing in third party proceedings which has been retracted - AO has not found any infirmity with the documents filed by the assessee to prove the loan transactions as discussed supra. So, other than the third party statement, which did not incriminate the assessee, and which was retracted, and while giving statement to AO Shri Kothari having confirmed the loan transaction with assessee and since Shri Kothari has corroborated the transaction, the retracted statement should not have been used as the basis to draw adverse inference against the assessee. Therefore, no addition was warranted. - Decided against revenue.

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• 2021 (11) TMI 806
  Taxability of supply of software as royalty - business connection/PE in India - AO held that the assessee had an Agency PE in India - AO directed attribution of profits of 15% from the sale of equipment - AO held that the amount received by the assessee on account of software licensing as loyalty u/s 9(1)(vi) (vii) of the Income Tax Act, 1961 and under the Article 12 of the treaty between India and USA - HELD THAT:- As decided in own case [ 2017 (4) TMI 1504 - DELHI HIGH COURT] consideration received by the Assessee for supply of product along with license of software to End user is not royalty under Article 12 of the Tax Treaty. Even where the software is separately licensed without supply of hardware to the end users (i.e. eight out of 63 customers), we are of the view that the terms of license agreement is similar to the facts of Infrasoft Ltd [ 2013 (11) TMI 1382 - DELHI HIGH COURT] . Accordingly, we- hold that there was no transfer of any right in respect of copyright by the Assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/PE in India as per adjudication on Ground - Decided in favour of assessee.

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• 2021 (11) TMI 805
  Validity of reopening of assessment - allegation of non issue of notice under Section 143 (2) - addition of Bogus purchases - HELD THAT:- In the absence of fulfillment of mandatory requirement of issuance of notice under section 143(2) of the Act, the assumption of jurisdiction by issuance of notice of reopening itself would not be sustainable in law. Besides, section 292BB of the Act would apply with regard to failure of service of notice and not with regard to issue of notice u/s 143(2) prior to finalization of assessment order, cannot be condoned by referring to section 292BB of the Act. Merely because assessee participated in proceedings pursuant to notice issued under section 148, it does not obviate mandatory requirement of issue of notice under section 143(2) of the Act.This is an undisputed position of fact, as far as the present case is concerned, that assessing officer failed to issue a notice to the assessee under section 143(2) of the Act when the Assessee made a request before the assessing officer vide letters dated 23.12.2014 and dated 21.02.2015 that the original return filed should be treated as return filed in response to notice under section 148 of the Act. AO has unequivocally admitted in his Remand Report that no notice was issued (not available on record) u/s 143(2) of the Act. The assessee has also filed an affidavit dated 31.01.2017 (duly notarized) stating that he never received notice under section 143(2) of the Act. These averments remained uncontroverted. Thus, we do not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

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• 2021 (11) TMI 804
  Income taxable in India - PE in India - whether Zee Telefilms Limited (ZTL) does not constitute a Permanent Establishment (PE) of the assessee in India? - CIT(A) held that, in the absence of a permanent establishment (PE), income of the assessee is not taxable as per article 7 of the DTAA? - HELD THAT:- As decided in own case [ 2021 (2) TMI 95 - ITAT MUMBAI ] even if there is held to be a dependent agency permanent establishment on the facts of this case, as at best the case of the Assessing Officer is, it is wholly tax neutral inasmuch as the Indian agents have been paid arm s length remuneration, and nothing further can, therefore, be taxed in the hands of the assessee. It has not been the case of the revenue authorities at any stage that the remuneration paid to the Indian agent is not an arm s length remuneration for the services rendered by the agents concerned. There is no material whatsoever before us to show, or even indicate, that the remuneration paid to the agents is not arm s length remuneration. Under these circumstances, we see no reasons to remit the matter to the file of the Assessing Officer, for fresh round of ALP ascertainment proceedings, as prayed by the learned Departmental Representative. The plea of the assessee, as raised in the cross objections, therefore, merits acceptance. Whether there is a DAPE or not, there are no additional profits to be brought to tax as a result of the existence of the DAPE, and, therefore, the question about existence of a DAPE on the facts of this case is wholly academic. Once we hold, as we have held above, that in the light of the present legal position, existence of dependent agency permanent establishment in wholly tax neutral, unless it is shown that the agent has not been paid an arm s length remuneration, and when it is not the case of the Assessing Officer, as we have noted earlier, that the agents have not been paid an arm s length remuneration, the question regarding existence of dependent agency permanent establishment, i.e. under article 5(4), is a wholly academic question. - Decided in favour of assesse.

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• 2021 (11) TMI 803
  Deemed dividend u/s 2(22)(e) - transaction of money received from the company - HELD THAT:- We notice from the records submitted before us indicate that the assessee was having regular transactions with the company and paid advances to the company in the earlier assessment year and this year assessee has entered into transactions like sale of plot to the above said company and also intend to give office space on rent, even though the MOU submitted by the assessee are unsigned, the transactions declared by the assessee in the previous assessment year clearly indicates that assessee has already taken Rs. 12,25,000 as rental advance in the previous year. Since it is a continuous transaction and we notice that still assessee to receive Rs. 12,64,000 from the company against the advance paid during the previous assessment year, in our opinion, we do not see any reason to treat the current year transaction as deemed dividend. In the present case, we notice that irrespective of the reserves and surplus balance outstanding in the company, the assessee was dealing with the company by paying advances/deposit to the company. Further we notice that the assessing officer has proceeded to treat the difference between the closing balance and the opening balance as the deemed dividend. In order to make the addition under the head deemed dividend, the Assessing Officer should investigate each transaction of money received from the company and the make the addition accordingly. Therefore, we do not see any reason to sustain addition made by the Assessing Officer. Accordingly, we direct the Assessing Officer to delete the addition made under the head deemed dividend under section 2(22)(e) - Decided in favour of assessee. Correct head of income - Gain on sale of shares - capital gain or business income - assessee declares income from sale of shares as capital gains and also deals in derivative transactions while AO treated the transactions carried on by the assessee as business transaction- HELD THAT:- Assessee had shares held for more than 12 months and we are in agreement with the assessee that assessee can have choice of treating the income under the head capital gains as per the circular No. 6 above 2016 dated 29 February 2016 and also in our opinion that statements submitted by the assessee needs verification, therefore we find it appropriate to remit this issue back to the file of assessing officer to verify the claim of the assessee and accordingly treat the income declared by the assessee under the head capital gains to those portfolios which was held by the assessee as investment. Short-term capital gain and derivative transactions, as held in the case of Ghopal Purohit [ 2010 (1) TMI 7 - BOMBAY HIGH COURT ]the assessee is allowed to maintain its business transaction/portfolio management under 2 categories one held as stock in trade and another held for investment - we direct the assessing officer to complete the assessment based on the ratio of above decision. Accordingly ground No.2, 3 and 4 are allowed for statistical purpose. Exemption as profit on sale of agricultural land - new claim under section 54B - HELD THAT:- We notice that assessee has claimed deduction under section 54B first time before Ld CIT(A) and Ld CIT(A) rejected the claim of the assessee without going into the documents submitted by the assessee and he rejected the claim based on the information available on record. We re in agreement with the assessee that assessee can claim the deduction/exemption anytime during the appellate proceedings. Since assessee is making a fresh claim and it is found that assessee is legally eligible to claim the same. In order to verify the claim of the assessee, we are remitting this issue back to the file of AO and we are directing the assessing officer to verify the relevant documents and submissions made by the assessee and in case it is found that assessee is eligible to claim deduction then it may be allowed as per law. With the above direction, we are allowing the ground raised by the assessee for statistical purpose.

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• Customs

• 2021 (11) TMI 802
  Valuation of imported goods - Star Aniseeds - rejection of declared value - suppression of value of goods - Retraction of voluntary statements - Section 46(4) of the Customs Act, 1962 - principles of natural justice was not complied with - HELD THAT:- The writ Court had specifically noted the steps that contemplated in Rule 12 of the Customs Valuation(Determination of Value of Imported Goods) Rules and found that once the value declared by the importer is rejected, the proper Officer will have to determine the value by separate proceedings sequentially in accordance with Rules 4 to 9. The appellant failed to do so and therefore, the writ Court had rightly remitted back to the authorities for fresh consideration in accordance with law. Having failed to follow the procedure prescribed and the steps to be followed, the case had been remitted only for a fresh consideration for which, the authorities cannot have any grievance - there are no merit in the case of the appellant and the writ appeal is dismissed as devoid of any merits. Appeal dismissed.

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• 2021 (11) TMI 801
  Period of limitation - Validity of assessment order - Extension of time limit in exercise of its power under the proviso to Section 110(2) of the Customs Act, 1962 - Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020 - HELD THAT:- Notification G.S.R.601(E) [F.No.450/61/2000-Cus.IV (Part-I)] extending the time limit for completion or compliance of various action such as completion of any proceeding or issuance of any order, notice, intimation, notification or sanction or approval, by whatever name called, by any authority, commission, tribunal, by whatever name called, from 30.09.2020 to 31.12.2020. The above notification extending the time limit from 30.09.2020 to 31.12.2020 for various actions set out thereon has apparently not been brought to the notice of the learned Single Judge. The learned Single Judge has found that in view of the Ordinance 2020, the time limit prescribed under Section 110(2) of the Customs Act, 1962 would stand extended to 30.09.2020. However, as the subsequent notification has not been brought to the notice of the learned Single Judge, the learned Single Judge was prompted to hold that the impugned intimation extending the time limit under the proviso to Section 110(2) of the Customs Act, 1962 dated 30.09.2020 and receipt of the same by the respondent herein on 07.10.2020 was beyond the period stipulated in the proviso to Section 110(2) of the Customs Act,1962 and thus bad in law. The Central Government has now extended the date from 30.09.2020 to 31.12.2020 for completion or compliance of action such as completion of any proceeding or issuance of any order, notice, intimation, notification or sanction or approval, by whatever name called, by any authority, commission, tribunal, by whatever name called. In view of the above notification, the proceedings dated 30.09.2020 though served on 07.10.2020 is within the period extended by the Central Government vide notification G.S.R.601(E) [F.No.450/61/2000-Cus.IV (Part-I)] and thus valid. Appeal allowed.

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• Corporate Laws

• 2021 (11) TMI 800
  Seeking issuance of a writ of quo warranto directing Respondent No.2 to set out the Authority under which the said Respondent is holding office as Technical Member of National Company Law Appellate Tribunal - HELD THAT:- It is a settled law that in matters of appointments, it is the Selection Committee, which is the expert body to decide the merits and demerits of a candidate and it is not in the domain or jurisdiction of the Courts in a judicial review to substitute the wisdom, expertise and decision of the Selection Committees. There is no allegation of bias or malafides against the Selection Committee. It is a settled law that it is the domain of the Selection Committees to make selections and the Courts, while sitting in a judicial review, cannot substitute the decision of the Selection Committees, which are expert bodies unless there are allegations of bias or malafides or there is a challenge to the composition of the Committee, which is admittedly not the case here. Petitioner has itself averred in the writ petition that Respondent No.2 has been serving as a Judicial Member of the District and State Consumer Forums and has been a Judicial Member of the NCRDC since 2015 - It needs no emphasis that the recommendations of the Search-cum-Selection Committee were duly approved by none other than the Appointments Committee of Cabinet and needless to state, there are no allegations of bias or malafides against any Member of the ACC. In our view, therefore, no grounds have been made out by the Petitioner to interfere in the selection and appointment of Respondent No.2. The order passed by Regional Director (Southern Region), Ministry of Corporate Affairs, on 17.08.2018 clearly reveals that the license of the Petitioner Company as a Section 8 Company has been cancelled and the Petitioner is legally debarred from using the name India Awake for Transparency , by which name the present petition has been filed - the Petitioner not only lacks the locus to file the present petition, but has also deliberately concealed and suppressed the aforementioned crucial facts, which have been brought to our knowledge by Respondent No.1 and the intervener. This writ petition along with all the pending applications is accordingly dismissed, with costs of Rs. 25,000/- to be deposited by the Petitioner with the Delhi State Legal Services Authority within four weeks from today.

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• 2021 (11) TMI 799
  Transfer of the company property - appointment of an administrator, to direct respondent No. 1 not to increase its authorised share capital or allot any fresh shares - HELD THAT:- The applicant herein was not a shareholder when the transaction in question took place. He got associated with respondent No. 1/company subsequently. Thus, the applicant does not have locus to question the transaction in question. The applicant is not able to establish a prima facie case or balance of convenience in his favour for grant of interim relief. However, no further alienation of assets of respondent No. 1/company shall be made from the date of this order in order to avoid multiplicity of proceedings. Application disposed off.

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• Insolvency & Bankruptcy

• 2021 (11) TMI 798
  Initiation of the CIRP - deficiencies in its services - Stay on termination by the appellant of its Facilities Agreement - facilities to the appellant for conducting examinations for educational institutions - residuary jurisdiction of NCLT under Section 60(5)(c) of the IBC to adjudicate upon the contractual dispute between the parties - Imposition of an ad-interim stay on the termination of the Facilities Agreement, by residuary jurisdiction - HELD THAT:- In INDUS BIOTECH PRIVATE LIMITED VERSUS KOTAK INDIA VENTURE (OFFSHORE) FUND (EARLIER KNOWN AS KOTAK INDIA VENTURE LIMITED) OTHERS [ 2021 (3) TMI 1178 - SUPREME COURT] , a three judge Bench of this Court, of which one of us was a part (Justice AS Bopanna), held that Section 238 of the IBC overrides all other laws. This Court was considering whether a reference to arbitration made under Section 8 of the Arbitration and Conciliation Act 1996 in terms of the agreement between the parties would affect the jurisdiction of the NCLT to examine an application filed under Section 7 of the IBC. Admittedly, the appellant is neither supplying any goods or services to the Corporate Debtor in terms of Section 14 (2) nor is it recovering any property that is in possession or occupation of the Corporate Debtor as the owner or lessor of such property as envisioned under Section 14 (1) (d). It is availing of the services of the Corporate Debtor and is using the property that has been leased to it by the Corporate Debtor. Thus, Section 14 is indeed not applicable to the present case - It is evident that the appellant had time and again informed the Corporate Debtor that its services were deficient, and it was falling foul of its contractual obligations. There is nothing to indicate that the termination of the Facilities Agreement was motivated by the insolvency of the Corporate Debtor. The trajectory of events makes it clear that the alleged breaches noted in the termination notice dated 10 June 2019 were not a smokescreen to terminate the agreement because of the insolvency of the Corporate Debtor. The order of the NCLT dated 18 December 2019 does not indicate that the NCLT has applied its mind to the centrality of the Facilities Agreement to the success of the CIRP and Corporate Debtor s survival as a going concern. The NCLT has merely relied upon the procedural infirmity on part of the appellant in the issuance of the termination notice, i.e., it did not give thirty days notice period to the Corporate Debtor to cure the deficiency in service. The NCLAT, in its impugned judgment, has averred that the decision of the NCLT preserves the going concern status of the Corporate Debtor but there is no factual analysis on how the termination of the Facilities Agreement would put the survival of the Corporate Debtor in jeopardy. The proceedings initiated against the appellant shall stand dismissed for absence of jurisdiction.

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• 2021 (11) TMI 797
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The Applicant has issued demand notice under Section 8 of the IBC upon the CD on 25.01.2021 during severe Pandemic Period when the notification of Govt. of India/RBI is clear that no proceedings under Section 7, 9 and 10 of I B Code can be initiated for the default occurs during Covid Pandemic period between 25.03.2020 to 25.03.2021. One of the necessary preconditions for admitting any Application filed under Section 9 of the I B Code is that, mere existence of Debt is not enough but a default in payment of that debt must have occurred. A default can be said to be occurred only after expiry of the time period agreed to by the Parties within which the payment is to be made - In this case, no such time or period for making the payments of Goods sold has been specified and the Applicant could not produce any documents to show the Due and Date of Default of Debts. The Application filed under Section 9 of I B Code is hereby rejected in the absence of submission of proof of Due and Default date of the unpaid dues by the Applicant - Application dismissed.

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• 2021 (11) TMI 796
  Seeking issuance of directions to the Appellant to allow removal of the materials lying in the Customs Bonded Warehouses without payment of Customs Duty - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The learned Adjudicating Authority has passed the impugned Order on the premise that Insolvency and Bankruptcy Code, 2016 is a special law that provides a non-obstante clause under Section 238 of the Code with overriding effect over other prevailing law and statute, time being in force. Further, relying on the case-law of Hon ble Supreme Court in the case of SOLIDAIRE INDIA LTD. VERSUS FAIRGROWTH FINANCIAL SERVICES LTD. [ 2001 (2) TMI 968 - SUPREME COURT] , it is argued that if there are two special statutes, which contain non-obstante provisions, the later statute must prevail. Therefore, by virtue of Section 238 of the Code being a subsequent law, the proceeding contained therein shall have an overriding effect on the other proceedings of the Customs and Central Excise Act. The Adjudicating Authority held that provisions of Section 53 of the Code prescribe the Order of priority for distribution of proceeds from the sale of liquidation assets, which shall prevail over the provisions of Section 11(e) of the Central Excise Act and other provisions of the Customs Act - the Respondent Department cannot legally withhold the releasing of the material/goods, which are the property of the Corporate Debtor Company (in Liquidation) and impose a prerequisite condition for making payment of the customs duty by the Liquidator of the Corporate Debtor Company (under Liquidation) because the claims of the Respondent s Department have to be treated as a Government Dues and needs to be dealt with under the waterfall mechanism provided under Section 53 of the Insolvency and Bankruptcy Code, 2016. The Liquidator could take possession of only the Company s assets, which the Company itself could have obtained. The liquidation proceedings do not change the rights in this regard, and Customs Duty needs to be paid for the release of the goods by the importer. In the circumstances, the materials lying in the customs bonded warehouses can not be treated as Assets of the Corporate Debtor . Thus, the Liquidator cannot claim goods without payment of Customs dues to settle claims of the secured creditors. Section 142 of the Customs Act deals with the provision to settle the claims of Customs by proceeding against the materials lying uncleared/unclaimed in the warehouses since liabilities under the Customs Act are the first charge under Section 142 A of the Customs Act. It is clear that NCLT and NCLAT cannot usurp the legitimate jurisdiction of other Courts, Tribunals and fora when the dispute does not arise solely from or relating to the Insolvency of the Corporate Debtor. In the instant case, the Corporate Debtor had abandoned the imported goods in the Customs warehouses for several years and failed to pay the import duty and other charges and had not taken any steps to take possession of those goods for several years. Therefore, the importer had lost his right to the imported goods - The Liquidator has no right to take into possession over those goods for which the Corporate Debtor s title is deemed relinquished by implication of law. It can not be presumed that the Appellant had relinquished its right over the property and submitted to the jurisdiction of the Liquidator. The Claim is filed in an effort to realise its dues. Still, it will not amount to relinquishment of its right over the Warehoused goods under its custody for which Appellant has every right to sell those goods for the realisation of the Government dues - the assets lying in the Customs bonded warehouses cannot be considered assets of the Corporate Debtor. The Liquidator intends to possess the uncleared goods from the customs warehouses without upfront payment of Customs duty, which is against the statutory provisions of the Customs Act, 1962. Therefore, the imported goods subject to levy of Customs stand on a different footing than the goods /assets, not in the Corporate Debtor s possession. Therefore the assets lying in the Customs bonded warehouses cannot be considered assets of the Corporate Debtor. The Adjudicating Authority committed an error in directing the release of goods without paying customs duty and other applicable charges - Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 795
  Interpretation of statute - prime submission of the Learned Counsel of the Appellants is that Sections 97(1) 97(2) of IBC are mandatory pre-condition which ought to be satisfied before the Adjudicating Authority can proceed to pass order under Section 97(5) of IBC - HELD THAT:- In the instant case on hand, ongoing through word shall occurred in Section 97(1) of IBC employed in Section 97(1) of IBC , this Tribunal is of the considered view that it is only Directory and not Mandatory and holds it so, in the teeth of Rule 8(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 and also by which the NCLT may pick up any one from the Panel for appointment of IRP Liquidator, Resolution Professional and Bankruptcy Trustee. As such, when the Adjudicating Authority had exercised its judicial discretion in fair manner for the appointment of Mr. Anil Kohli as an IRP , the same cannot be found fault with as opined by this Tribunal . Appeal dismissed.

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• 2021 (11) TMI 794
  Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repaying dues - Financial Creditors - non-performing assets - contention of Appellant is that the date of default has not been mentioned in the Form-1 filed before the Adjudicating Authority , therefore the application filed under Section 7 is defective - HELD THAT:- It is seen that the respondent herein has enclosed fact sheet relating to details of debt granted and default made by the Corporate Debtor. The date of NPA is mentioned as 28.11.2018, however the Learned Counsel for the Respondent contended that there is a typographical error that instead of 27.11.2018 by mistake the date has been mentioned as 28.11.2018 and from many other documents, the date of default is shown as 27.11.2018 in support of the said date of default, there are other documents filed to establish the date of default is 27.11.2018. It is also evident from the SARFAESI Notice issued under Section 13(2) by the Financial Creditor dated 28.01.2019 to the Corporate Debtor in schedule A at Page 701 of Appeal Paper Books, Column I, the Financial Creditor Bank, the date of Non-Performing Assets (NPA) shown as 27.11.2018. Further the OA filed before the DRT-II at Chennai by the Consortium of Banks in the list of Non-Performing Assets (NPA) in respect of R1 it is shown as 27.11.2018. Therefore, it is evident that the date of default is 27.11.2018, though it did not mention in Part IV of Form-1 - it is evident that the date of default is 27.11.2018. Further in Column 8 of Part V in Form-1, the applicant is entitled to attach documents along with Form to prove the existence of Financial Debt, the amount and date of default. Therefore, it is presumed that the applicant, Financial Creditor complied with the procedure as prescribed in Form-1. In the present Appeal, though the first date of NPA is with respect to Axis Bank i.e. 10.02.2017. However, the RBI circulars/Directives provides filing of independent application by the Financial Creditor i.e. the SBI before the Adjudicating Authority (NCLT) under Section 7 of the IBC. Accordingly, the Applicant the 1st Respondent herein filed application under Section 7 of the IBC for initiating the CIRP against the Corporate Debtor independently taking into the date of NPA/default and the amount of debt and default. There is no dispute with regard to the existence of debt and default committed by the Corporate Debtor. However, there is only an objection raised with respect to omission to mention the date of default in Part IV of Form 1 filed before the Adjudicating Authority. It is evident from the records that the date of NPA of the SBI is 27.11.2018 and the application filed by the Financial Creditor on 19.12.2019 even if the 90 days period prior to NPA is taken into consideration for the purpose of deciding default - as per Col.8 of Part V in Form 1 regarding particulars of Financial Debt documents, records and evidence of default to be attached, the Financial Creditor has shown sufficient documentary evidence to establish the date of NPA i.e. 27.11.2018 and the Adjudicating Authority has taken note of the same and admitted the application. This Tribunal do not find any illegality in admitting the application. In view of the acknowledgement dated 16.08.2018 given by the Corporate Debtor the period of limitation also can be extended under Section 18 of the Limitation Act, 1963 and the Hon ble Supreme Court in Laxmi Pat Surana held that: a subsequent acknowledgement to extend the limitation, being a fresh date of default of date. Even taking into consideration, the limitation period of three years from 16.08.2018, the application filed on 19.12.2019 is well within the period of limitation - the Respondent/Financial Creditor had stated the date of default in the pleadings and in other documents which the Corporate Debtor has received and acknowledged, therefore as held supra the non-mentioning of the date of default in Col. IV is not fatal to the application and on the sole ground, the application cannot be rejected mere taking a technical impediment as held by the Hon ble Supreme Court that it is only a directory . This Tribunal is of the firm opinion that the Appeal is devoid of merits and liable to be dismissed - Appeal dismissed.

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• 2021 (11) TMI 793
  Initiation of contempt proceedings against the Respondent for wilful disobedience - Jurisdiction of NCLT - Section 425 of the Companies Act, 2013 r/w Section 12 of the Contempt of Courts Act, 1971 and Rule 11 of the NCLT Rules, 2016) - HELD THAT:- This Tribunal relevantly points out that the Adjudicating Authority (National Company Law Tribunal) in Contempt Application No.A-01(PB) of 2020 in CA-1081/2019 in (IB)-560(PB)/2017 (filed under Section 425 of the Companies Act, 2013 r/w Section 12 of Contempt of Courts Act and Rule 11 of the NCLT Rules, 2016) seeking to initiate the contempt proceedings against the Respondent therein (1st Respondent in the Appeal) for wilful disobedience of the Order dated 7.11.2019 passed by the Tribunal in Contempt Application No.A-01(PB) of 2020 in CA-1081/2019 in (IB)-560(PB)/2017 on 23.9.2020, had finally dismissed the application by observing that IBC is devoid of contempt jurisdiction , leaving it open to the Appellant/Applicant to seek remedy through recourses available. The definition of Section 5(1) of the I B Code under Part II Insolvency Resolution and Liquidation for Corporate Persons Chapter I Preliminary means the Adjudicating Authority for the purpose of this Part as National Company Law Tribunal constituted under Section 408 of the Companies Act, 2013. Section 408 of the Companies Act, 2013 provides for the constitution of National Company Law Tribunal . Section 410 of the Companies Act, 2013 pertains to constitution of the Appellate Tribunal - the National Company Law Tribunal is to act as an Adjudicating Authority for the purpose of matters pertaining to the I B Code. Under the I B Code, 2016 the Adjudicating Authority (National Company Law Tribunal) adjudicates all proceedings before it and renders its decision. Just because the I B Code does not specifically mention about the contempt provisions, it cannot be said that the Adjudicating Authority (National Company Law Tribunal) has no powers of contempt. If one is to give such a restricted interpretation that the Adjudicating Authority (National Company Law Tribunal) has no jurisdiction of contempt, then it orders cannot be implemented and in fact, the I B Code will remain in Black Letters without a teeth to bite, in the considered opinion of this Tribunal - as per Section 425 of the Companies Act, 2013 it is clear that the Contempt proceedings can be exercised by the National Company Law Tribunal , being the Adjudicating Authority as per Section 5(1) of the I B Code. Also that a conjoined reading of Section 408 and 425 of the Companies Act, 2013 will unerringly points out that the power to punish for Contempt is vested with the Tribunal shall be while adjudicating on matter not only confine to the Companies Act, 2013 but also to matters relating to the I B Code, 2016. The Tribunal (NCLT) and the Appellate Tribunal (NCLAT) have the same jurisdiction , powers and Authority in respect of contempt of it as the High Court viewed in that perspective, the conclusions arrived at by the Adjudicating Authority (National Company Law Tribunal) in the impugned order by making it clear that the IBC is devoid of contempt of jurisdiction and thereby dismissing the application, leaving it open to the Appellant/Applicant to seek remedy through recourses available, are clearly unsustainable in the eye of Law and the same is interfered with by this Tribunal in furtherance substantial cause of justice, sitting in Appellate Jurisdiction . Application allowed.

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• 2021 (11) TMI 792
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make payment of its debt - Operational Creditors - existence of debt and dispute - HELD THAT:- The Respondent has reported deficiency of services from October, 2018 and also the issue of not getting the supporting documents form the Appellant showing compliances of various labour laws in spite of numerous correspondence between them - Correspondence between the parties in the form of email reflects prior to issue of demand notice revolving around non-submissions of documents for compliance of various labour laws as per agreement between them as also supply of shortage of staff and other related issue. The Hon ble Supreme Court in MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] has laid down that Adjudicating Authority must reject the Application if a notice of dispute has been received by Operational Creditor. The Appellant has failed to comply with labour laws leading to labour dispute before the labour commissioner and the Respondent has to release certain amount directly to the employees of the Appellant - It is proved beyond doubt that the Appellant is chasing for payments which is not the object of IBC. It is amply clear that the Order passed by the Adjudicating Authority is in order and requires no review or reconsideration. There is no infirmity in the order passed by Adjudicating Authority - Appeal dismissed.

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• 2021 (11) TMI 791
  Auction sale - Validity of demand notice for pending dues of property tax issued by the Appellant to Respondent No. 1 - Respondent No. 1 was a party to the proceedings under IBC or not - limit of jurisdiction by adjudicating dispute regarding Municipal Tax on a third party - HELD THAT:- The liquidator had a duty to prepare an asset memorandum containing the value of the assets. Clause (f) of sub regulation 2 of regulation 34 stipulates the inclusion of any other information that may be relevant for the sale of the asset . Regulation 13 of the said Regulations (supra) enjoins upon the liquidator to submit a preliminary report to the Adjudicating Authority with the Asset Memorandum. Therefore, the liabilities with respect to the assets should have been brought to the notice of the Adjudicating Authority by the liquidator. The outstanding dues of the property tax relating to period prior to sale confirmation are thus dues that are akin to claim of an unsecured creditor (Bhatpara Municipality in the present case) and should be discharged in terms of the properties regarding distribution of assets given in section 53 of IBC. The auction-purchaser cannot be held liable to pay any such dues relating to period prior confirmation of sale - We are unable to accept the plea made by the Appellant that Respondent No. 1 should not be absolved from paying outstanding dues relating to the property stated in the demand notice dated 1.2.2021 amounting to Rs. 68,09,123.61. The demand notice is quashed. The auction-purchaser is held to be not liable to pay to the Appellant the amount as demanded by its notice dated 1.2.2021 - Appeal dismissed.

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• 2021 (11) TMI 790
  Seeking liquidation of Corporate Debtor - Section 33(1) of IBC - HELD THAT:- It is seen that in the 11th CoC meeting held on 26.05.2021, the CoC with majority of 100% voting rights approved to apply before the Adjudicating Authority for liquidation of the Corporate Debtor under section 33 (2) of the IBC. It is permitted to initiate liquidation process against the Corporate Debtor - moratorium ceased to exist - application allowed.

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• 2021 (11) TMI 789
  Liquidation of the Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is evident from the record that in compliances of Section 21 of Code read with Rule 6 8 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulation), the IRP constituted CoC - the CoC in the 4th meeting held on 11.05.2021 had unanimously resolved to liquidate the Corporate Debtor and also resolved to appoint the Applicant herein Mr. Darshan Bharatbhai Patel bearing registration No. IBBI/IPA-001/IP-P01579/2018-19/12442 as a liquidator under Section 34 (4) of the Code. Further in accordance with Regulation 39D of CIRP Regulations, liquidator s fee was fixed to the tune of Rs. 40,000/- per month. Shri Rushi Dattani, being suspended management present in the 4 h meeting of CoC stated that he has no objection if the Corporate Debtor is liquidated. The Corporate Debtor is ordered to be liquidated - liquidation of the Corporate Debtor is effective from the date of this order and the Moratorium declared vide order dated 03.02.2021 - application allowed.

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• 2021 (11) TMI 788
  Liquidation of Corporate Debtor - Section 33 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A bare perusal of the provision shows that if a person is aggrieved by the order of the liquidator, then the aggrieved person/Creditor may file an appeal within 14 days of the receipt of the such decision. Admittedly, as per the averments made in the memo of appeal, the liquidator has communicated the rejection of the claim to the appellant vide email dated 09.08.2019, whereas this appeal is filed on 18th February, 2021, much after the order of rejection that was communicated to the appellant by the liquidator. It is noticed that this application was filed on 28/08/2019, whereas the order of the Liquidator was communicated to him on 09/08/2019. Admittedly, the first application was also filed beyond 14 days, as required under Section 42 of the IBC, 2016 - we are unable to accept the contention of the applicant that due to lockdown, the applicant could not file the appeal within time. The first application filed under Section 60 (5) of the IBC, 2016 was filed after the 14 days of the prescribed period of the limitation and this application has also been filed much after the withdrawal of that application - the appeal is barred by limitation and on this ground alone, it is liable to be dismissed. Appeal dismissed.

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• 2021 (11) TMI 787
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- On Perusal of Part- IV of the Application which contains the Particulars of Operational Debt the Date of Default is mentioned as 21.04.2016 the date on which the last demand was raised by the Operational Creditor however, the present application has been filed on 10.10.2019 which is way beyond the period of three years hence, it can be ascertained that the present application has been filed beyond the period of three years from the date of default. The Hon ble Supreme Court in BABULAL VARDHARJI GURJAR VERSUS VEER GURJAR ALUMINIUM INDUSTRIES PVT. LTD. ANR. [ 2020 (8) TMI 345 - SUPREME COURT ] has held that the right to apply under the code accrues on the date when the default occurs and that the date of commencement of the code is not the trigger point for the limitation and if the default had occurred over three years prior to the date of filing of the application, the application would be time-barred. It is clear that the Present application filed under section 9 of IBC, 2016 fails the test of limitation - since the debt is time-barred, there are no option but to reject the prayer of the Operational Creditor to initiate proceedings under Section 9 of IBC, 2016. Application dismissed.

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• 2021 (11) TMI 786
  Seeking approval of the Resolution Plan - Section 30(6) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- All the requirements of Section 30 (2) are fulfilled. In respect of compliances regarding CIRP Regulations especially Regulations 38 and 39, the Resolution Professional has certified in Form-H and explained in details that the Resolution Plan has complied with all the required Regulations. There is no impediment in giving approval to the Resolution Plan. Accordingly, the Resolution Plan is approved, which was earlier approved by the CoC by the majority vote of 99.09% - It is clarified that Section 30 (2) (f) of the Code mandates that the Resolution Plan should not be against any provisions of the existing law. The Resolution applicant therefore, shall adhere to all the applicable laws for the time being in force under the proposed Resolution Plan, whether or not specifically provided therein. Application allowed.

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• Service Tax

• 2021 (11) TMI 785
  Business Auxiliary services - Short payment of service tax - non-prosecution of the case - HELD THAT:- The matter has been adjourned considerable number of times in past on the request of both the sides. For this reason why we had made it clear vide our order on 23 rd September 2021, that no further request for adjournment from either of side shall be entertained and the matter shall be taken up for hearing next time. About Rs. 227 crore of Service Tax with interest and equivalent amount of penalty is involved in the matter. The Appellant, M/s Air India is Public Sector Undertaking (as it was at the time of adjudication and till recently) and Ministry of Finance are respondent in matter. Both arms of Central Government litigating the matter for what reason and Counsels appointed by both the sides seeking adjournments after adjournments do not benefit the cause of litigants. Fairly such protracted and continued litigation between the arms of the government do not benefit the cause of public exchequer and shakes the faith of the public in the entire system. Taking note of the Rule 20 of CESTAT Procedure Rule, 1982, we dismiss this appeal for non prosecution - Appeal dismissed.

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• Central Excise

• 2021 (11) TMI 784
  Refund of education cess and higher education cess - restriction in terms of Notification Nos. 19/2008-CE dt. 27.03.2008 and 34/2008-CE dt. 10.06.2008 - HELD THAT:- It is an admitted fact that earlier orders of this Tribunal have been accepted by the Revenue and no appeal has been filed against those orders. In the absence of any challenge to the orders of this Tribunal, the adjudicating authority was duty bound to implement the orders of this Tribunal which they failed to do so. Further, in earlier round of litigation, the orders of this Tribunal were final. The decision relied upon by the ld. AR in the case of ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT VERSUS SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] is not applicable to the facts of this case as in that case, the issue was alive by filing the application for rectification of mistake. There is no such case in these matters, therefore, the said decision cannot be applied here. The adjudicating authority is directed to implement the orders passed by this Tribunal in earlier round of litigation as chart mentioned herein above within 30 days of receipt of this order - Appeal disposed off.

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• 2021 (11) TMI 783
  Refund of Excise Duty, paid under protest - goods are sold as waste and scrap - appellant submitted that since the goods are cleared as waste and scrap , they are not liable to pay duty - time limitation - principles of unjust enrichment - HELD THAT:- The litigation with regard to the demand raised in the Show Cause Notice dated 06.08.2009 has continued till 27.02.2018 whereby the Commissioner (Appeals), Coimbatore has set aside the demand, interest and penalties confirmed in the Order-in-Original. Though after the first adjudication and consequent appeal (whereby the demand was set aside), the appellant ought to have filed the refund claim within a period of one year, since the Department has adjudicated the Show Cause Notice for a second time and confirmed the demand again, it cannot be said that the refund claim filed by the appellant is time-barred. The refund claim is filed within one month after passing of the second Order-in-Appeal which is dated 27.02.2018. The claim having been made within one year from the date on which the demand was set aside by the Commissioner (Appeals) finally, the rejection of refund claim as time-barred under Section 11B of the Central Excise Act, 1944 is not justified. Moreover, the amount having been paid as duty pursuant to the Show Cause Notice, the question of unjust enrichment does not arise. There are no hesitation to hold that the appellant is eligible for the refund - appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 782
  MODVAT Credit - stock lying as on 31.03.2003 in terms of Notification No.25/2003-CE(NT) dated 25.03.2003 - Credit in respect of inputs in transit before 31.03.2003 - Modvat Credit in respect of inputs which were in transit was denied on the ground that the goods were only in transit and were not in stock as on 31.03.2003 - HELD THAT:- The appellant have obtained the report under RTI given by the Range Superintendent to the Commissioner (Adjudication) vide letter dated 5.12.2005. From the said report, it is clear that the Range Superintendent has recorded the Grey Stock in transit therefore, it is not in dispute that there is a stock which was covered under the consignment which were in transit as on 31.03.2003. Whether in terms of the notification allowing the credit on the stock as on 31.03.2003 whether the goods in transit shall be considered as stock as on 31.03.2003? - HELD THAT:- This tribunal in the earlier round of appeal remanded the matter making a categorical observation that the issue to be decided in the light of the judgments in the case of ELECON FABRICS VERSUS COMMISSIONER OF CUS. C. EX., RAJKOT [ 2007 (6) TMI 57 - CESTAT, AHMEDABAD] where it was held that there is no dispute that the said goods have been received and utilized by the appellants. Private records including the subsequent returns filed by them indicates the details of such receipts and utilization. Inasmuch as the Board envisaged the condonation of procedural lapses to ensure the credit being taken as a transitional measure, the order of the Commissioner (Appeals) is set aside. Thus, it is clear that even though the goods have not arrived in the factory but the assessee have purchased the goods and the said goods were in transit, the same was considered as stock as on 31.03.2003 and Modvat Credit was allowed. Therefore, ratio of the judgment is clearly applicable in the facts of the present case. The appellant is entitle for Modvat Credit also in respect of stock which was in transit accordingly the Modvat Credit is allowed - Appeal allowed.

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• 2021 (11) TMI 781
  CENVAT Credit - short payment of service tax - erroneous availment of CENVAT Credit - suppression of facts or not - extended period of limitation - penalty - HELD THAT:- Apparently and admittedly out of the total demand of Rs. 11,64,424/- major amount of Rs. 6,89,256/- pertaining to the alleged excess availment of input service tax credit has already been held not assessable by both the adjudicating authorities below. The remaining amount of Rs. 4,75,168/- pertaining to the alleged irregular availment of inputs service tax credit taken on any irregular service (Rs. 2,20,969/-) and alleged irregular availment of inputs service tax credit taken on common inputs service Rs. 2,54,199/- was reversed in August, 2016 itself immediately after the audit team raised the objection. Also, it is admitted fact that appellant carried much more balance in their CENVAT credit account when they reversed the aforesaid amount, due to which the authorities below have accepted that there is no liability of the appellant to pay interest thereupon. Whether the case in hand was merely a case of wrong apportionment of credit between the appellants both units, a bonafide clerical error or it was a case of intentional malafide intention to evade payment of duty? - HELD THAT:- Though the amount was not proportionately bifurcated between both the units of the appellants but simultaneously it is an admitted fact that the amount of Rs. 2,54,199/- was not further distributed to the second unit of the appellant despite being claimed by the first unit. So the eligibility of claim of credit of Rs. 8,28,621/- stand admitted - deficiency was made good even before the issue of impugned show cause notice dated 28.7.2013 and the credit were properly being recorded in their ER 1 returns at the time of taking the same and also at the time of reversing the same. Once those have been properly recorded in the books of accounts of the appellants, the allegation of intentional evasion remains only assumption having no legs to stand upon. Extended period of limitation - penalty - suppression of facts or not - HELD THAT:- When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. Above all, suppression of facts is clearly qualified by word wilful in the section. Hence, presence of mensrea to evade duty has to be there. From the facts, it is found that since there has been prompt reversal by the appellant that too of a such amount which was meant for the appellants own both units, however was utilised only by one unit. Hence allegation of wilful mis-statement with an intent to evade payment rather not at all justified - Though the adjudicating authority below had been right while dropping the demand on the same ground by holding it to be mere clerical error, they have definitely got wrong while still imposing penalty. Appeal allowed - decided in favor of appellant.

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• 2021 (11) TMI 780
  CENVAT Credit - clearance of both dutiable and exempted items manufactured - non-utilization of separate inventory for input services utilized in terms of Rule 6(2) of CENVAT Credit Rules, 2004 - issue pertains to 2006-2007 - invocation of extended period of limitation - HELD THAT:- Even if extended period was applicable, the show-cause-notice should have been issued by April 2012. However, the show-cause-notice was issued on 17.08.2012 that is beyond the permissible period of 5 years without the any authority of law. The appellants have submitted the same during the proceedings before the learned Commissioner. However, it is found that learned Commissioner instead of giving reasons as to how the show-cause-notice was hit by limitation simply observes that the appellant s claim that the show-cause-notice was received by them on 22.08.2007 is factually incorrect and it was a clear mis-representation of facts. The show-cause-notice clearly covers the period 2006-2007 even assuming that the Returns for the month of March 2007 are filed in the month of April 2007, the 5 years period comes to an end by April 2012. When the show-cause-notice itself is issued in August 2012 which is clearly beyond the period of limitation, even if extended by 5 years therefore, it is to be held that the show-cause-notice is clearly hit by limitation and will not survive legal scrutiny. Appeal allowed - decided n favor of appellant.

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• Indian Laws

• 2021 (11) TMI 779
  Arbitration award - Dispute between parties - Smuggling - Gold - recovery of pure gold weighing 3648.80 grams said to have been in the possession of the appellant - modification in the original award - HELD THAT:- The original award was passed considering the claim made by the claimant as per its original claim and as per the statement of the claim made and therefore subsequently allowing the application under Section 33 of the 1996 Act to modify the original award in exercise of powers under Section 33 of the 1996 Act is not sustainable. Only in a case of arithmetical and/or clerical error, the award can be modified and such errors only can be corrected - In the present case, it cannot be said that there was any arithmetical and/or clerical error in the original award passed by the learned arbitrator. What was claimed by the original claimant in the statement of claim was awarded. Therefore, the order passed by the learned arbitrator on an application filed under Section 33 of the 1996 Act and thereafter modifying the original award cannot be sustained. Both, the City Civil Court as well as the High Court have committed a grave error in dismissing the arbitration suit/appeal under Sections 34 and 37 of the 1996 Act respectively. The modified award passed by the learned arbitrator allowing the application under Section 33 of the 1996 Act cannot be sustained and the same deserves to be quashed and set aside. The impugned judgment and orders passed by the High Court in an appeal under Section 37 of the 1996 Act and City Civil Court in arbitration suit under Section 34 of the 1996 Act and the order passed by the learned arbitrator dated 14.1.2011 modifying the original award dated 04.12.2010 are hereby quashed and set aside - the original award passed by the learned arbitrator dated 04.12.2010 stands restored. Appeal allowed.

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• 2021 (11) TMI 778
  Seeking grant of building permission - seeking mandamus to direct the respondents to allow the petitioner to raise the commercial construction on the leased land, as per the plans submitted by him - principle of deemed permission - HELD THAT:- This Court in the present proceeding is not required to determine or decide about the title of the land, nor could such an issue be raised in the writ petition. Going by the judgment cited by Mr. Qayoom in Mohinder Singh v. Chief Election Commissioner [ 1977 (12) TMI 138 - Supreme Court ], this Court in its power of review is required to judge the validity of the impugned order by the reasons mentioned therein. Perusal of the impugned order reveals that there are various facts and circumstances mentioned as reasons therein which have prompted the Authority to refuse the building permission in favour of the petitioner. The principal reason mentioned therein, apparently, is that the land on which building was proposed to be constructed by the petitioner belongs to Mandir Shiv Ji under the control of Sant Tapanand, Chaila, and that pursuant to the various orders passed by the High Court in the writ/contempt petition and directions of Divisional Commissioner, Kashmir, the Srinagar Municipal Corporation has issued show cause notices dated 22.06.2020 regarding cancellation/revocation of permissions to those applicants who had previously obtained building permission on mandir properties. The Authority has clearly mentioned the directions of the Court passed in the writ petition and the contempt petition as well as the orders issued by the Divisional Commissioner, Kashmir. The impugned order states that pursuant to the directions issued by the Divisional Commissioner, Kashmir, the Srinagar Municipal Corporation issued notices even to those persons for cancellation of building permissions in whose favour such permissions had already been issued by it, meaning thereby that the Divisional Commissioner, Kashmir, in compliance to the Court orders had issued directions to the Srinagar Municipal Corporation not only to desist from issuing building permissions for construction on the lands belonging to the religious places, but also to revoke and cancel those building permissions which the Corporation had already issued. The fact/reason thus stated in the impugned order about the orders issued by the Divisional Commissioner is not denied by the learned Advocate General, but is, in fact, admitted by him by saying that pursuant to the Court direction, the Government and its functionaries had to take action and intervene. Alternate plea of necessity taken by the petitioner - HELD THAT:- This Court in this petition, in its capacity as being a coordinate Bench, cannot overlook, ignore or undo the aforesaid direction passed by the coordinate Bench of the Court. Swami Tapanand having failed to take recourse to either of the options available to him, the Government and its all concerned functionaries are bound by the direction passed by the Court in the said writ petition and the Srinagar Municipal Corporation is not excepted. It is, therefore, immaterial that the lease deeds have not been challenged by any person. Plea of deemed permission - HELD THAT:- It is true that Clause 5.1 of the Bye-laws provides that in case the applicant has fulfilled all the requisite formalities and the Authority has failed to refuse the sanction of the building or work or upon refusal he has failed to communicate the refusal of the building permit to the applicant within sixty (60) days, the Authority shall be deemed to have accorded the sanction to the building etc and the applicant shall be at liberty to commence or proceed with such building or work in accordance with the plans - the question of deemed building permission in favour of the petitioner, in the given facts and circumstances, would not arise. Since the Court has come to a definite conclusion on merits of the case, the question of maintainability of the writ petition is left to be decided in future in some other case. The judgments cited by Mr. Qayoom at the Bar, therefore, need not be mentioned - this petition is held to be without merit and, therefore, deserves to be dismissed. Petition dismissed.

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• 2021 (11) TMI 777
  Application for grant of permission to visit United States of America (USA) and to release the passport of the petitioner - Alleged non-cooperation of the petitioner in the investigation - placing of two purchase orders after the Board of Directors had been suspended - Offences u/s 420, 406, 120-B, 34 of the Indian Penal Code, 1860 - HELD THAT:- A perusal of the order reproduced would show that reliance has also been placed upon the order dated 04.01.2021 vide which the prosecution had withdrawn their application for cancellation of bail by stating that the petitioner and other co-accused had joined the investigation. Moreover, it is an admitted case of both the parties that in the present case, the investigation has been completed and the challan has been filed. Further, on the question of merits, the allegations in the present case are not such so as to disentitle the petitioner to travel abroad. Thus, the first three issues are decided in favour of the petitioner and it is held that the said three issues would not come in the way of the petitioner being granted the permission to travel abroad. Change of period with respect to which permission is sought for going abroad inasmuch as before the Chief Judicial Magistrate, period was stated to be from 18.12.2020 to 10.01.2021 and before the Sessions Court, it was stated to be from 09.01.2021 to 30.01.2021 and in the present petition, it is stated to be 30 days from the date of receiving the passport - HELD THAT:- In para 2 of the judgment passed in Parvez Noordin Lokhandwalla s case [ 2020 (10) TMI 1258 - SUPREME COURT ] , the Hon ble Supreme Court has categorically observed that though the time period for which the appellant therein had sought permission to travel abroad had lapsed, the cause survived and thus, in the said case, the appellant therein was permitted to travel abroad. In the present case, the visit was not for a specific function/event, upon the finishing of which, the cause would cease to survive. For instance, in case a person has to travel abroad to attend the marriage of a near and dear one and the marriage has already been performed or to participate in a particular event and the said event has already taken place, then the cause, depending upon the facts and circumstances of the case, would have invariably lapsed - Issue decided in favour of the petitioner. Whether the Petitioner has a right to go abroad based on the pleas raised in the present petition? - HELD THAT:- In the present case, although, the pleas raised by the petitioner before the Courts below, have been considered to be sufficient by this Court so as to entitle the petitioner to travel abroad, but it is always open to this Court while exercising its powers under Section 482 of Cr.P.C. to consider any additional/ancillary plea, and thus, in this case, the same may be considered so as to grant permission to the petitioner to travel abroad. The additional plea raised with respect to the petitioner being a permanent resident of USA since 02.04.2011 which is to expire on 06.04.2023, as is apparent from Annexure P-6, as also on the basis of the relevant Chapter of the US Citizenship and Immigration Services - issue decided in favour of the petitioner. In case, permission is to be granted, then the conditions, which are required to be imposed on the petitioner so that the petitioner would not flee from the course of justice - HELD THAT:- This Court is aware of the fact that it is a debatable issue as to whether the petitioner would be personally liable to pay the said amount or not or if it is the company in question which has to pay the said amount. There are 41 cases under Section 138 of the Act of 1881 stated to be pending against the petitioner and the company M/s Indsur Global Limited and the amount involved in the same is stated to be Rs. 25 crores by the learned Senior Counsel for the complainant. Although, learned Senior Counsel for the complainant has not been able to produce the complaints filed under Section 138 of the Act of 1881, which would have enabled this Court to come to a prima facie conclusion as to what is the total amount due and to what extent is the liability of the petitioner, however, on the other hand, even the learned Senior Counsel for the petitioner has not produced anything to affirmatively controvert the fact that the petitioner is an accused in the said 41 cases. The company in which the petitioner was on the Board of Directors, can be seen to be accused No.1 in the said complaints under Section 138 of the Act of 1881. This Court is required to draw a balance between the right of the petitioner to travel abroad and also right of the prosecution to duly prosecute the petitioner so as to prevent him from evading the trial. From perusal of the various judgments passed by the Hon ble Supreme Court of India as well as this Court, it is clear that paramount consideration is given to the conditions imposed upon the persons who have been granted the permission to go abroad, so as to ensure that they do not flee from justice - In the present case, keeping in view the facts and circumstances, moreso the fact that the petitioner does not own any property in his own name in India and the wife and son of the petitioner also reside abroad and also keeping in view the offer made by learned Senior Counsel for the petitioner so as to prove his bonafide, the petitioner is allowed to go abroad for a period of one month subject to the conditions imposed. Petition disposed off.

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