TMI Tax Updates - e-Newsletter
November 3, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

• NMC Notifies Medical Education reform 2020
• IMPOSITION OF PENALTY LESSER THAN MANDATORILY PRESCRIBED

News

• Central Government releases ₹ 6,000 crore as second tranche to 16 states and 3 Union Territories on account of GST compensation under Special Borrowing Window

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• ₹ 1,05,155 crore of gross GST revenue collected in the month of October 2020

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• Auction for Sale (Issue) of ‘New GS 2022’, Auction for Sale (Issue) of ‘New GS 2025’, Auction for Sale (Re-issue) of ‘5.77% GS 2030’, and Auction for Sale (Re-issue) of ‘ 6.80% GS 2060’

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• Government extends Emergency Credit Line Guarantee Scheme by one month

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Notifications

GST - States

• 57/2020-State Tax - dated 27-10-2020 - Himachal Pradesh SGST
  Amendment in Notification No. 76/2018-State Tax, dated the 31st December, 2018,

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• 50/2020-State Tax - dated 27-10-2020 - Himachal Pradesh SGST
  Himachal Pradesh Goods and Services Tax (Seventh Amendment) Rules, 2020.

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• 28909-FIN-CTI-TAX- 0002/2020 - dated 28-10-2020 - Orissa SGST
  Notification to make filing of annual return under section 44(1) of the OGST Act for the F.Y. 2019-20 optional for small taxpayers whose aggregate turnover is less than ₹ 2 crore and who have not filed the said return before the due date.

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• 28905-FIN-CT1-TAX- 0002 /2020 - dated 28-10-2020 - Orissa SGST
  Notification to prescribe the due date for furnishing FORM GSTR-1 for the quarters October, 2020 to December, 2020 and January, 2021 to March, 2021 for registered persons having aggregate turnover of upto 1.5 crore rupees in the preceding financial year o

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• 28901-FIN-CTI-TAX- 0001/2020 - dated 28-10-2020 - Orissa SGST
  Odisha Goods and Services Tax (Twelfth Amendment) Rules, 2020

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• G.O. Ms. No. 4/2020-Puducherry GST (Rate) - dated 9-10-2020 - Puducherry SGST
  Amendment in Notification No. G.O. Ms. No. 12/2017-Puducherry GST (Rate), dated the 29th June, 2017

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Highlights / Catch Notes

GST

• Jurisdiction - power to arrest - The contention canvassed by the petitioners that the Commissioner would not be in a position to form his reasonable belief that a person has committed an offence unless and until there is final adjudication of the liability of the assessee as prescribed under the Chapter VIII of the CGST Act, is without any basis. - HC
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• Liability to pay interest u/s 50 on Net Tax liability or Gross tax (GST) without adjustment of ITC - The present writ petition is disposed of in accordance with the Administrative Instruction dated 18th September, 2020 issued by the Ministry of Finance through the CBIC - HC
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Income Tax

• Assessment u/s 153C - on the date of search or satisfaction recorded, there is no any iota of evidence that the assessment was pending before the Revenue department. Accordingly, we have no hesitation but to uphold the findings of the CIT(A) annulling the assessment completed u/s. 153C of the Act in absence of any incriminating material. - AT
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• Additions towards Capital Grants & Subsidies and Consumers' Contribution - Total grants received during the aforesaid financial years were allocated among the four distribution companies for implementation of the aforesaid scheme of the State Government. - the aforesaid grants received cannot be treated as income of the assessee company. - HC
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Customs

• Classification of imported goods - telecommunication internet equipment and their parts - Classification of the imported goods should be based on specific headings, section notes and chapter notes and General Rules of Interpretation of Tariff and HSN. The department has tried to change the classification of the goods being imported by the appellants from CTH 85176290 to CTH 85176990 on the basis of a notification without making any case for revising the classification of the goods. This is not permissible. - AT
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• Refund of SAD - rejection on the ground of time limitation - The issue of time limit for filing refund claim was subject matter of litigation before the Hon’ble High court of Delhi - Thus, refund claim under Notification No. 102/2007-Cus. cannot be rejected as time-barred even if it is filed beyond the period of one year from the date of payment of additional duty - the rejection of refund on the ground of limitation cannot be sustained. - AT
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• Import from Pakistan - Leather - ratr of duty - The petitioners would be liable to pay duty as was applicable at the time of filing/generating of bill of entry on EDI system coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification - HC
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Indian Laws

• Dishonor of Cheque - In that very fact situation, even the appellate Court normally should not refuse the bail. The Court is conscious that bail is a rule and jail is an exception is no longer a good law, but certain categories of cases obviously would fall in the class where the refusal of bail can be equated with denial of legitimate freedom of personal liberty even in absence of presumption as to innocence. - HC
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IBC

• Liquidation of Corporate Debtor - Direction to release or vacate the subject property owned by the corporate debtor - This bench is of the view that recovery of rent from the tenant and the eviction of tenant from the property of the Corporate Debtor is in the exclusive domain of the civil courts and cannot be dealt with by the Adjudicating Authority by invoking section 60(5) of the Code and the jurisdiction lies with the Civil Court/Rent Control Court only - Tri
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Service Tax

• Exemption from service tax on the services rendered to the SEZ units - Receipt of Rent from SEZ units - Section 26(2) of the SEZ Act does provide that the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions shall be granted to the Developer under sub-section (1) but what is important to notice, is that, the word "prescribe" would mean “prescribed by rules made by the Central Government under the SEZ Act,” in view of the definition of "prescribed" under section 2(w) of the SEZ Act. The Notification dated March 3, 2009, which has been issued under section 93 of the Finance Act, therefore, has no application. - Benefit of exemption allowed - AT
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• Valuation - Includability of diesel, explosives etc. - The explosives and accessories and diesel would be supplied by SCCL - Learned Counsel for the Appellant is, therefore, justified in asserting that the explosives and diesel were received by the Appellant free of cost and the learned Authorized Representative of the Department is not justified in asserting that the agreement would indicate that the said materials were received cost by the Appellant but for a consideration and not free of cost - demand set aside. - AT
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Central Excise

• Reversal of Cenvat Credit - Exemption under the under SFIS Scheme - The dutiable goods cannot become exempted goods as per the convenience of the revenue - Moreover, the circular which has been relied by the revenue have no mention of notification in question and the Revenue has presumed that if the notification in question is not part of the Circular No. 973/07/2013-CX dated 04.09.2013 then the provisions of Rule 6 (3) is applicable. The said understanding of the revenue is against the mandate of law as it is based of assumption & presumption. - AT
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VAT

• Recovery of arrears of Sales Tax - The time limits specified in Rule 58(20) of KVAT Rules offer a safe guarding factor to define the limits of power under Section 42(3) of the Act. Meaning thereby, it would not be proper to re-open assessments to bring the tax escaped turnover, which cannot be exercised in a manner that prejudicially affect an assessee, who would not be in a position to meet the charge against him for want of books of accounts and other relevant material - HC
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Case Laws:

• GST

• 2020 (11) TMI 40
  Jurisdiction - power to arrest - whether the power to arrest as provided under section 69 read with section 132 of the CGST Act can be invoked by the Commissioner only upon completion of the adjudication process of finalising the assessment and determination of liability as per the provisions of the CGST Act? HELD THAT:- In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of arrest under Section 69 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probable cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith. The stipulation of the Commissioner to have reason to believe is of utmost importance in section 69(1) of the CGST Act. Section 26 of the Indian Penal Code defines the term reason to believe . It means a person is said to have reason to believe a thing, if he has sufficient cause to believe that thing but not otherwise. Reason to believe is a very subjective phrase and may vary in circumstances of each case. Section 147 of the Income Tax Act, 1961 also provides that reassessment can be made, if there is reason to believe by the Assessing Officer that there is escapement of income and failure on part of the assessee of true and full disclosures. Reason to believe consists of two words reason and to believe . The word reason means cause or justification and the word believe means to accept as true or to have faith in it. Therefore, there must be justification for it and belief is the result of the mental exercise based on information received. The words reason to believe' contemplate an objective determination based on intelligence, care and deliberation involving judicial review as distinguished from a purely subjective consideration. Therefore, reason to believe must have a rational connection or a relevant bearing to the formation of the belief and not extraneous or irrelevant to the purpose of the section. Therefore, the Commissioner has to form an opinion and to have reason to believe that the person has committed offences as specified in the clauses (a), (b), (c) or (d) of subsection( 1) of section 132 of the CGST Act and depending upon the punishment prescribed in clause (i) and clause(ii) of sub-section(1) of section 132, provisions of sub-section (2) and sub-section(3) of section 69 would operate depending upon whether the offence is cognizable or non cognizable as per the provisions of sub-section(4) and sub-section(5) of section 132 of the CGST Act. The contention canvassed by the petitioners that the Commissioner would not be in a position to form his reasonable belief that a person has committed an offence unless and until there is final adjudication of the liability of the assessee as prescribed under the Chapter VIII of the CGST Act, is without any basis. It is necessary to keep in mind that the section 69 of the CGST Act falls under the Chapter XII which provides for inspection, search, seizure and arrest which are in nature of measures prescribed under the provisions of the CGST Act to find out the evasion of tax, if any, by any person - the section 69 and the section 132 of the CGST Act operates in totally different fields and the attempt on part of the petitioners to canvass that unless and until adjudication proceedings of the assessment determining the tax and penalty liability is completed by the department as provided under Chapter VIII of the CGST Act, the Commissioner cannot form at any opinion to reason to believe that the assessee has committed any offence, is contrary to the entire scheme of the CGST Act. Subsection( 3) of section 69 of the CGST Act which is subject to the provisions of the Code provides for conferring the powers upon the Deputy Commissioner and the Assistant Commissioner to grant bail to the person who is arrested for non-cognizable and bailable offence as punishable as per clause(ii) of subsection( 1) or sub-section(2) of section 132 read with sub-section(1) of section 69 and subsection (4) of the section 132 of the CGST Act. Thus, the power to arrest as provided under section 69 of the CGST Act can be invoked if the Commissioner has reason to believe that the person has committed offences as provided under the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the CGST Act, which are punishable under the clause (i) or clause (ii) of sub-section (1) or sub-section (2) of the section 132 of the CGST Act without there being any adjudication for the assessment as provided under the provisions of the Chapter VIII of the CGST Act. The reference to section 132 in section 69 of the CGST Act is only for the purpose of indicating the nature of the offences on the basis of the same the reasonable belief is formed and recorded by the Commissioner for the purpose of passing an order of arrest. Whether the provisions of section 69 of the CGST Act envisages that the Commissioner is obliged to record his reasons of belief and furnish the same to the person who is sought to be arrested? - HELD THAT:- The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The Commissioner must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for the authority in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. A person is not liable to be arrested merely on the suspicion of complicity in an offence. There must be some reasonable justification in the opinion of the authority effecting the arrest that such arrest is necessary and justified. Whether the provisions of sections 154, 155(1), 155(2), 155(3), 157, 172 of the Code of Criminal Procedure, 1973 are applicable or should be made applicable for the purpose of invoking the power to arrest under section 69 of the CGST Act? In other words, whether the authorised officer can arrest a person alleged to have committed non cognizable and bailable offences without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973 - For the purpose of section 69(3) of the CGST Act, whether the officers of the GST department could be said to be a police officer in charge of a police station as defined under section 2(o) of the Code of Criminal Procedure, 1973? - HELD THAT:- An authorised Officer is a 'proper officer' for the purposes of the CGST Act. As the authorised Officers are not Police Officers, the statements made before them in the course of inquiry are not inadmissible under Section 25 of the Evidence Act - The power to arrest a person by an authorised Officer is statutory in character and should not be interfered with. Section 69 of the CGST Act does not contemplate any Magisterial intervention. Whether the constitutional safeguards laid out by the Supreme Court in D.K. Basu's case [1996 (12) TMI 350 - SUPREME COURT] in the context of the powers of the police officers under the Code of Criminal Procedure, 1973 and of officers of the Central Excise, Customs and Enforcement Directorate are applicable to the exercise of powers under the provisions of section 69 of the GST Act in equal measure? - HELD THAT:- We may now address ourselves on the last question as regards the applicability of the safeguards pertaining to arrest as explained by the Supreme Court in case of D.K. Basu. It is significant to note that in D.K. Basu (supra), the Supreme Court did not confine itself to the actions of police officers taken in terms of powers vested in them under the Code but also of the officers of the Enforcement Directorate including the Directorate of Revenue Intelligence ('DRI'). This also included officers exercising powers under the Customs Act, 1962 the Central Excise Act, 1944 and the Foreign Exchange Regulation Act, 1973 (FERA') now replaced by the Foreign Exchange Management Act, 1999 as well. There is no doubt that the arrest memo is a key safeguard against illegal arrest and a crucial component of the legal procedure of arrest. Full and consistent compliance is a responsibility of both, the officers of the GST as well as the Magistrate. It is high time that the GST department prescribes a standardized format for the arrest memo. The format must contain all the mandatory requirements and necessary additions. The gist of the offence alleged to have been committed must be incorporated in the arrest memo. It would be the duty of the concerned Magistrate to check that an arrest memo has been prepared and duly filled. In a given case, if the Magistrate finds that the arrest memo is absent or improperly filled or bereft of necessary particulars, then the Magistrate should decline the production of the arrested person. The petitions are accordingly ordered to be rejected. Ad interim relief granted earlier stands vacated.

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• 2020 (11) TMI 32
  Permission for manual filing of GST TRAN-1 - Transitional credit - migration to GST regime - Section 140 (3) of the CGST Act, 2017 - HELD THAT:- Issue Notice. List the matter along with Diary No. 38404 of 2019.

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• 2020 (11) TMI 24
  Liability to pay interest u/s 50 on Net Tax liability or Gross tax (GST) without adjustment of ITC - Refund of amount wrongly forfeited from the pending refund application of the petitioner - HELD THAT:- It is apparent that for the period of 1st July, 2017 to 31st August, 2020 field formations have been instructed to recover interest only on the net cash liability i.e. that portion of the tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger. In those cases where show case notices have been issued calling upon the noticees to make payment on gross tax liability, those have been directed to be kept in the Call Book till retrospective amendment is made in Section 50 of the CGST Act. The present writ petition is disposed of in accordance with the Administrative Instruction dated 18th September, 2020 issued by the Ministry of Finance through the Central Board of Indirect Taxes and Customs.

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• 2020 (11) TMI 1
  Principles of Natural Justice - Refund of unutilized input tax - zero rated supply - refund rejected solely on the ground that as per Section 54(3)(i) read with Rule 89(2)(f) of the GST Law, the provisions for refund of unutilized input tax is available to only those taxpayer who made supplies to SEZ Unit or the Developer - Whether the rejection of refund claim by the AA, is in tune with the provisions of (CGST/SGST) APGST Act, 2017 or not? HELD THAT:- On comprehending the Rule 89(1), the second proviso unambiguously stipulates that in respect of supplies to SEZ units/developers, the refund SHALL be claimed by suppliers of goods to the SEZ unit or developer only. Further, Rule 89(2)(f) prescribes that SEZ unit/developers shall not avail input tax credit on the supplies received by them from non SEZ suppliers and refund would be claimed by supplier to SEZ unit/developer only - On comprehending the Rule 89(1), the second proviso unambiguously stipulates that in respect of supplies to SEZ units/developers, the refund SHALL be claimed by suppliers of goods to the SEZ unit or developer only. Further, Rule 89(2)(f) prescribes that SEZ unit/developers shall not avail input tax credit on the supplies received by them from non SEZ suppliers and refund would be claimed by supplier to SEZ unit/developer only The refund eligibility claim by the appellant is not in tune with the provisions of Act and the AA has precisely rejected such refund claim duly observing the provisions of the Act - the levy of refund reject by the assessing authority, are confirmed - Appeal dismissed - decided against appellant.

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• Income Tax

• 2020 (11) TMI 39
  Disallowance u/s.36(1)(iii) - allegation that assessee had advanced interest bearing funds without charging any interest - whether matching principle in terms of income and expenditure is not applicable when cash method of accounting is followed as the sine qua non for allowability of expenditure is the nexus between the income and expenditure reported for the year in question as applicable in terms of Section 36 and 37 - HELD THAT:- As decided in M/S. SHRIRAM INVESTMENTS [ 2019 (4) TMI 570 - MADRAS HIGH COURT] no substantial question of law arises in the present case, because, it is essentially a finding of fact as to whether the lower interest paid on the borrowings made by the assessee company from the sister concerns or the group companies is for the purpose of its business or not. Whether it is commercially expedient or not for the Assessee cannot be decided by the Revenue authorities and unless a decision taken in the usual course of business by the Assessee can be held to be arbitrary or motivated, deliberately taken to defeat the purpose of the Revenue, it cannot be held that the lower interest rate paid to the borrowers on the borrowings made by the assessee company is disallowable u/s 36 (1) (iii). Tribunal, in our opinion, rightly held that when the cash system of accounting was adopted by the Assessee, an Investment Company, whose business is only to borrow and lend or invest, the same cannot be said to be not in the business interest or commercially expedient for the purpose of business and the concept of 'Matching Principles', which has been applied by the Assessing Authority and the CIT (A) in the present case, was not really applicable. Revenue authorities to substitute their own wisdom or notion about the rate of interest agreed to between the parties, including the group companies and, as such, the finding of fact about commercial expediency or absence thereof is a finding of fact, out of which, no substantial question of law can be said to be arising, requiring our consideration u/s 260A. - Decided against revenue.

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• 2020 (11) TMI 38
  Assessment u/s 153A - undisclosed income - Proof of incriminating material found in search - HELD THAT:- Documents are in the shape of income tax return filed by the female members of the family of the assessee and his brother Shri Gopal Lal Yadav and only these documents were made the basis for making addition in the income of the assessee - since these income tax returns or computations sheets were already in possession of income tax department before the date of search. When once the documents which are already in possession of income tax department, then the same cannot be regarded as incriminating material unearth during the search proceedings. Assessment proceedings of the year under consideration was not pending as on the date of search and therefore, in these circumstances, the completed assessment can be interfered by the A.O. while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search, which were not discharged in the course of original assessment. Admittedly, apart from these income tax returns and computation sheets seized, there is no other document found during the search which could indicate that the income declared by the assessee or his family members were incorrect. No corroborative evidence or material was brought on record by the A.O. to prove that the assessee had any other source of income other than that declared by him and that the assessee earned more than what he had declared in his return of income - A.O. had not recorded any finding and had mechanically added the amount while the A.O. ought to have supported the addition by recording findings on the basis of seized material. No addition can be made only on the basis of statements particularly when there is no material available with the department to prove that the surrender made was correct. In the present case, the department has not placed on record any material to prove that the surrender made by the assessee was correct. As admittedly, the assessment proceedings of the year under consideration was not pending as on the date of search and there was no incriminating document found, relating to the year under consideration, during the course of search. There cannot be any addition in the income of the assessee. The only document which the department is considering as incriminating material are only income tax returns and computation sheets belonging to the female members of the family of the assessee as well as his brother Shri Gopal Lal Yadav which admittedly were already in possession of the department, therefore, these documents itself cannot be termed as incriminating material . Since the documents found and seized during the course of search in the shape of income tax returns and computation sheets belonging to the female family members of the assessee as well as brother of the assessee which was already in possession of the income tax department, cannot be termed as incriminating document and no corroborative evidence/material was brought on record by the A.O. as discussed in detail above. Accordingly, the addition made by the A.O. and confirmed by the ld CIT(A) is hereby deleted. Unexplained expenditure - Addition on the basis of document seized during the course of search - HELD THAT:- In the present case, the document clearly exhibits the name in which it was issued, the transaction written on it is also clear and there is no corroborative evidence to suggest that this document is part of any undisclosed activity of the assessee. The assessee has not denied about the correctness of documents but at the same time he explained that the document was related to his nephew Manoj Kumar Yadav. It clear before AO that the documents did not belong to the assessee but the A.O. still proceeded to make the addition in income, which is in our view, was not sustainable AO had not brought on record any material or evidence to establish that there had been any construction activity by assessee and that the document seized are in any related to that activity. Accordingly, the addition made by the A.O. and confirmed by the ld CIT(A) is hereby deleted. Unexplained boundary expenses in the year under consideration and the assessee has failed to explain about it - HELD THAT:- There is no detail of construction of any kind and even no other documents have been found during search which could indicate about any construction activities being carried out by the assessee in the year under consideration. AO could not have concluded that the said bills were in relation to construction of shop. In para 6.1 of the order of assessment, although, the AO has tried to relate it to the documents relating to boundary wall expenses but we noted that among all the seized documents, there is only one document at Page no. 1 of Exhibit No. 7 which is relating to construction of boundary wall at Village Bhikhawas but these expenses relate to AY 2017-18 - these boundary wall expenses are not related in any way in respect of any construction in AY 2015-16 i.e. year under consideration. Therefore, we are of the considered view that the A.O. had made additions by misreading or misinterpreting the documents placed on record - Decided in favour of assessee.

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• 2020 (11) TMI 37
  Revision u/s 263 - assessee had claimed sec. 10(38) LTCG/LTCL claimed after transferring shares hold in M/s Kailash Auto Finance Ltd. - As per CIT said LTCG/Loss had been derived from share transactions sale-price in penny stock which rendered the assessment accepting the same as correct to be to erroneous causing prejudice to the interest of the Revenue - lack of inquiry OR erroneous enquiry - HELD THAT:- It is not in dispute that the assessee had filed all the supportive detailed evidence forming part of the assessment records. PCIT is also equally fair in not treating the impugned assessment as a case of the former limbs of lack of inquiry but he holds that it is an erroneous decision on Assessing Officer s part treating the gains / loss as genuineness as causing prejudice to the interest of the Revenue. We notice in these circumstances that this tribunal s coordinate bench s decision in batch of appeals M/s Gitash Tikmani, HUF [ 2019 (9) TMI 1177 - ITAT KOLKATA] has reversed the PCIT s similar exercises of revisional jurisdiction We adopt foregoing detailed discussion mutatis mutandis to reverse the PCIT s impugned revision order treating the regular assessment framed in the instant case as an erroneous and causing prejudice to interest of the Revenue. The said regular assessment stands restored as the necessary corollary.

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• 2020 (11) TMI 36
  Education Cess as allowable deduction - HELD THAT:- We are in agreement with the submissions of assessee that the income tax is chargeable at the rate specified in Part-I of First Schedule and such tax shall be increased by surcharge for the purpose of Union, calculated in each case in the manner provided therein. Education Cess is not included either as a rate or surcharge in Part-I. The objections raised by ld DR for the revenue that the decision of Bombay High Court [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] is per-incurium, is not tenable as the decision of Hon ble Supreme Court in Smith Kline French (India) Ltd. [ 1996 (4) TMI 2 - SUPREME COURT] has also been specifically considered by Hon ble Rajasthan High Court in Chambal Fertilizer [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] . In the result, this ground of appeal is allowed for statistical purpose. Addition u/s 40(a)(ii) read with section (r.w.s.) 2(43) - provision of section 40(a)(ii) applicable to the State Tax - Whether deduction is prohibited only for those taxes / credit is allowed under section 90/91? - HELD THAT:- As decided in own case [ 2019 (11) TMI 408 - ITAT MUMBAI] taxes levied overseas which are not eligible for relief either under section 90 or 91 of the Act, would not come within the purview of section 40(a)(ii) of the Act. It is the specific plea of the assessee that the State tax is not covered either under Indo US or Indo Canada tax treaty, hence, not eligible for any relief under section 90 of the Act. Pertinently, unlike section 91 read with Explanation (iv), section 90 does not provide for inclusion of tax levied by any State/ local authority of that country within the expression income tax . In view of the aforesaid, we direct the Assessing Officer to verify whether the State taxes paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, assessee s claim of deduction should be allowed. Advertisement Expenses disallowance - assessee submits that expenses incurred in respect of advertisement in newspaper/ Magazine in respect Experience Certainty Campaign which is routinely incurred for the ongoing business and not in the nature of Brand Building - HELD THAT:- As relying on own case [ 2019 (11) TMI 408 - ITAT MUMBAI] restore the issue to the Assessing Officer for de novo adjudication after providing reasonable opportunity of being heard to the assessee. Foreign tax credit in respect of income pertaining to section 10A/10AA eligible units in India - assessee submits that foreign tax credit should also be provided for taxes paid in overseas jurisdiction, in respect of section 10A/10AA eligible income in India, as per the tax credit provisions of respective DTAA - HELD THAT:- As decided in own case [ 2019 (11) TMI 408 - ITAT MUMBAI] where the respective tax treaty provides for benefit for foreign tax paid even in respect of income on which the assessee has not paid tax in India, still, it would be eligible for tax credit under section 90 of the Act. Like Article 25 of the Indo USA treaty, treaties with various other countries such as Indo Denmark, Indo Hungary, Indo Norway, Indo Oman, Indo US, Indo Saudi Arabia, Indo Taiwan also have similar provision providing for benefit of foreign tax credit even in respect of income not subjected to tax in India. However, Indo Canada and Indo Finland treaties do not provide for such benefit unless the income is subjected to tax in both the countries. Therefore, the foreign tax credit would be available to the assessee in all cases except the foreign tax paid in Finland and Canada. The Assessing Officer is directed to grant credit accordingly. Disallowance of payments of software from non-residents venders under section 40(a)(i) - HELD THAT:- As decided in own case [ 2019 (11) TMI 408 - ITAT MUMBAI] in case, the payment made by the assessee does not fit into the definition of royalty as provided under the relevant tax treaty, the assessee certainly would get the benefit of the tax treaty and in that event the liability under section 195 of the Act cannot be fastened on the assessee. Since, all these issues have not been properly examined and deliberated upon by the Departmental Authorities; we are inclined to restore the issue to the Assessing Officer for fresh adjudication in terms with our observations hereinabove. The Assessing Officer must decide the issue after providing reasonable opportunity of being heard to the assessee. Disallowance u/s 14A - assessee has earned dividend income which is claimed exempted under section 10(34) - No suo moto disallowances was offered by the assessee - HELD THAT:- No reason as to why the AO is not satisfied with the working of the assessee except recording that the expenses are very meager. The ld CIT(A) after considering the submissions and the material placed before him directed to delete the disallowance including the disallowance of Rule 8D(iii). The ld DR for the revenue failed to bring any material in our notice to take the other view, no contrary decision is also brought to our notice. Thus, we affirm the order of ld CIT(A). In the result this ground of appeal is dismissed. Expenses on advertisement in news paper / magazine for marketing of its product and is routinely incurred for its business and not in brand building. No enduring benefit is occurred by such expenses, which is revenue in nature. TDS u/s 195 - payment to non resident agents - HELD THAT:- As decided in own case [ 2019 (11) TMI 408 - ITAT MUMBAI] non resident agents have rendered the services in their respective countries and do not have either any business connection in India or any PE in India has not been controverted by the Revenue. Further, the nature of payment viz. commission has also not been disputed by the Revenue. That being the case, since the commission paid to the non resident agents is not chargeable to tax in India at their hands, there is no necessity for the assessee to withhold tax under section 195(1) of the Act on such payment. Accordingly, we uphold the decision of learned Commissioner (Appeals) on this issue. TP Adjustment - Comparable selection - TPO held that the PLI to compute the margin would be operating profit/ value added expenditure (OP/VAE) - HELD THAT:- As decided in own case [ 2019 (11) TMI 408 - ITAT MUMBAI] Commissioner (Appeals) examined them in detail and after a detailed analysis approved some comparables selected by the assessee and also added some new comparables. Comparable selected by the Transfer Pricing Officer were not on the basis of any detailed search process. At least, no such analysis is either forthcoming from the order of the Transfer Pricing Officer or could be brought to our notice by learned Departmental Representative. On the contrary, on a thorough and careful reading of the impugned order of learned Commissioner (Appeals), we are of the view that learned Commissioner (Appeals) has taken pains to examine in detail the alternative benchmarking done by the assessee with foreign comparables and after detailed analysis has shortlisted the final comparables to be considered for comparability analysis. No convincing argument or evidence has been brought on record by the learned Departmental Representative to persuade us to disturb the finding of learned Commissioner (Appeals) on these issues. Corporate guarantee commissions/ fee - decision of CIT(A) in restricting the charge of guarantee commission only on 34% i.e. onsite portion of the contract which was performed by AEs - HELD THAT:- As relying on own case we direct the Assessing Officer to charge guarantee commission @ 0.5% per annum both on performance / lease guarantee as well as financial guarantee. TP adjustment on account of interest free loans to AEs - HELD THAT:- As decided in own case [ 2019 (11) TMI 408 - ITAT MUMBAI] restore the issue to the file of the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. The Assessing Officer must examine all relevant facts to find out the exact nature of the advances made to the AEs. Excessive valuation paid for shares of AE - HELD THAT:- CIT(A) while granting relief to the assessee correctly has followed the decision of Vodafone India Services (P) ltd [ 2014 (10) TMI 278 - BOMBAY HIGH COURT] wherein it was held that share subscription is a capital subscription is a capital account transaction, therefore, no transfer pricing adjustment is warranted on such transactions. Disallowance of Interest paid in overseas countries - HELD THAT:- General principle of allowability that the expenditure cannot be overlooked and that the accepted principle is that only those expenditure can be allowed which are attributable to the business activity as well as laid out wholly and exclusively for the purposes of the business - we direct the AO to allow the interest on delayed payment of State tax or Federal Taxes being compensatory in nature. In the result these grounds of appeal are allowed. Computation of deduction u/s 10A - HELD THAT:- Total turnover for the purpose of section 10 of the Act cannot be understood as defined for the purpose of section 80 HHE. It was further held that thus the expenses which are to be excluded from the export turnover, would also have to be excluded for the purpose of computing total turnover. Charging of guarantee fee on the entire amount - HELD THAT:- Performance guarantees is treated as chargeable services, the charges should be levied only on the component of services performed by the AE and if the lease guarantee is treated as chargeable services, the charges should be levied only for the 60% during the year under consideration.

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• 2020 (11) TMI 23
  Valuation of Shares / assets - Validity of various provisions of Sections 49, 50CA and 56 of the Income Tax Act, 1961 as well as provisions of Rules 11U, 11UA, 11UAA, 11UAC and 11UAD of the Income Tax Rules, 1962 - HELD THAT:-Since there is challenge to validity of the relevant provisions of the statute, notice may be issued to the office of the learned Attorney General of India. Mr. Sham Walve, learned standing counsel for the Revenue submits that he has received instructions that a special counsel for the Respondents may be engaged in this case. Stand over to 26th November, 2020.

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• 2020 (11) TMI 17
  Additions towards Capital Grants Subsidies and Consumers' Contribution - appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant - Capital grant being @ 15% of total grant - HELD THAT:- We have gone through the material on record pertaining to the submission of the assessee stating that the assessee has not received any grant during the year and the grants received originally from the Govt. of Gujarat were apportioned against the subsidiary companies appropriate basis. In F.Y.2007-08, the State Government vide various GRS decided to convert the grant given during the F.Y. 2005-06 to 2007-08 [ 2019 (9) TMI 376 - ITAT AHMEDABAD] for implementation of Jyoti Gram Yojna (JGY) into equity share capital. Total grants received during the aforesaid financial years were allocated among the four distribution companies for implementation of the aforesaid scheme of the State Government. We do not find any infirmity with the decision of the Ld. Therefore, the aforesaid grants received cannot be treated as income of the assessee company. Accordingly, this ground of the appeal is dismissed

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• 2020 (11) TMI 16
  Revision u/s 263 - Commissioner took the view that AO had failed to follow the principle of carry forward and a set off as brought out in Section 10A - HELD THAT:- Deduction u/s 10A has to be allowed before set off of unabsorbed loss and depreciation of non-eligible business unit of assessee. We find no justification in such order passed by the PCIT who has not taken into consideration this particular aspect of the matter though the same was brought to his notice by the assessee . We find no justification in the order impugned before us which has re-opened the issue u/s 263 of the Act whereas, we find that the order passed by the Learned A0 is just and proper - There is nothing erroneous found in the order of the Learned AO, neither it is prejudicial to the instant of the Revenue. None of the conditions is being fulfilled by the order passed by the Learned PCIT in order to invoke the provision of section 263 - Decided against revenue.

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• 2020 (11) TMI 8
  Revision u/s 263 - N.P. rate determination - HELD THAT:- Income of the assessee at Karnal have been assessed at very high pitched income. Though the assessment order at Delhi was later on set aside by the Ld. CIT-13, New Delhi, vide Order Dated 23.03.2009 under section 263 of the I.T. Act, 1961, but, on the date of passing the impugned order at Karnal on 30.12.2008 the A.O. should have looked into the assessment order passed at Delhi in respect of the same assessee for the same assessment year. These peculiar facts clearly entitle the assessee that matter should be remanded back to the file of A.O. for fresh consideration When in preceding three years, we have directed the A.O. to apply N.P. rate of 2% only as against the N.P. rate of 8% determined by the A.O. and that contradictory Orders have been passed at Delhi and Karnal, interest of justice requires that entire matter should be reconsidered by the A.O. at Karnal in accordance with Law. We set aside the Orders of the authorities below and direct the A.O. to pass the assessment order de novo in accordance with Law, by giving reasonable, sufficient opportunity of being heard to the assessee. In case A.O. may not be satisfied with the book results of the assessee, he should not estimate the profit of the assessee by applying N.P. rate of 8% in view of our directions given in A.Ys. 2003-04, 2004-05 and 2008-09 above, the A.O. should restrict the profit at 2% only in case of rejection of the book results. Appeal of assessee allowed for statistical purposes.

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• 2020 (11) TMI 7
  Condonation of delay - delay is of nominal 47 days - HELD THAT:- Assessee has bonafide explanation and no prejudice is going to be caused to the Revenue if appeal is decided on merits. Thus, by taking a pragmatic view and considering the circumstances as explained above, we set aside the Orders of the authorities below and condone the delay in filing the appeal before the Ld. CIT(A). The appeal of assessee is restored to the file of CIT(A) with a direction to re-decide the appeal of assessee on merits, by giving reasonable, sufficient opportunity of being heard to the assessee as well as A.O. Appeal of the Assessee is allowed for statistical purposes.

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• 2020 (11) TMI 6
  Deduction u/s 10AA - AO found that the assessee had not fulfil the conditions for claiming the exemption u/s 10 AA and has not furnished any evidence of the full consideration in convertible foreign exchange being the brought to India within a period of 6 months from the end of the previous year and the particulars furnished under column 16 of the report in form No. 56F were said to have been not applicable - HELD THAT:- Entire exercise of assessment is to determine the just and correct tax liability of the assessee, refusing to look into the relevant material, though submitted at a belated stage, in the absence of any mandatory provisions of law prohibiting such a course, would run contrary to the object of assessment proceedings. Unless prohibited or provided contrary, all the endeavour in the assessment proceedings should be to give a fair chance to the assessee to justify their claim for any benefit provided by law. Lest, the assessment proceedings would be perfunctory rendering it to be a mechanical exercise. We are of the considered opinion that the provisions of section 10 A (3) of the Act cannot be made applicable to the case of the assessee, if the assessee is covered by the provisions of section 10AA of the Act and even otherwise, the AO is free to verify whether the full consideration of the export activity is brought to India in convertible foreign exchange within 6 months or not. We set aside the impugned order and remand the issue to the file of the AO to verify whether the assessee is otherwise entitled to claim the exemption under section 10AA and if the learned Assessing Officer feels it necessary, he may call for any information required for that purpose. Appeal of the assessee is allowed for statistical purpose.

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• 2020 (11) TMI 5
  Estimation of income - Bogus purchases - appellant prays that the credit of gross profit @ 7.58% declared by it shall be given against the addition @ 12.5% confirmed by CIT-A - HELD THAT:- As per assessee CIT(A) has erred in confirming the action of the A.O irrespective of the fact and submissions that, the assessee has maintained GP ratio of 7.58% in the financial year and the same has to be applied for the bogus purchases and emphasized that for the Assessment year 2011-12, the Hon ble ITAT has relied on the decision of Pr.CIT Vs. Md. Haji Adam Co [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] Accordingly, we set aside the order of the CIT(A) and restore the disputed to the file of the A.O to verify and examine the facts and apply the Ratio of the decisions. Appeal filed by the assessee is allowed for statistical purposes.

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• 2020 (11) TMI 4
  Levy of penalty u/s 271(1)(c) - bogus purchases - Estimation of income - HELD THAT:- CIT(A) has restricted the addition to the extent of 12.5% of the bogus purchases and was accepted and the penalty cannot be levied on estimated income. We found strength in the submissions of the AR. A.O has made total disallowance of bogus purchases but accepted the sales in the books of accounts and the CIT(A) has estimated the income of the assessee on purchases. Where the addition is sustained on the estimated basis, no penalty u/s 271(1)(c) of the Act can be levied on the estimated income. Accordingly, we, considering the facts and principles of natural justice set aside the order of the CIT(A) confirming the penalty and direct the A.O to delete the penalty and allow the grounds of appeal of the assessee.

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• 2020 (11) TMI 3
  Penalty levied u/s 271(1)(c) - Defective notice - HELD THAT:- In this case at the time of initiation of the penalty proceedings, show cause notice u/s 274 read with Section 271(1)(c) of the Act was issued on 24.07.2017 wherein the ld. AO did not strike off any of the twin charges on which penalty is initiated. Hon ble Delhi High Court in Pr. CIT Vs. Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] has categorically held that penalty is not sustainable if none of the twin charges in notice under Section 274 of the Act are cancelled or strike off. Penalty levied by the ld. Assessing Officer is not sustainable in law, hence we reverse the orders of the lower authorities and cancel the penalty levied by the ld. Assessing Officer under Section 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2020 (11) TMI 2
  Assessment u/s 153C - during the course of search and seizure operation certain books of accounts containing loose bundles identified as BNAH-01 BNAH-02 were found which relate to the assessee company - HELD THAT:- CIT(A) examined the documents referred to by the AO i.e. BNAH-01, BNAH-02 and BNRO-18 and found that there is not a shred of incriminating material against the assessee. The judicial opinion on the issue of notice and framing of assessment u/s. 153C is that the assets or books of account or documents or information relating to/pertaining to the 'Other Person' must be incriminating in nature. Thereafter the CIT(A) annulled the assessment framed by the AO u/s. 153C of the Act relying on the decision of Hon'ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society, [ 2015 (4) TMI 190 - BOMBAY HIGH COURT] . DR before us unable to controvert the above findings recorded by the CIT(A) by bringing any cogent material evidence. The assessee had filed return of income u/s. 139(1) of the Act on 22.11.2011 declaring income of ₹ 46,450/- and in pursuant to search, he filed return of income on 20.04.2015 declaring the same. We also noticed that on the date of search or satisfaction recorded, there is no any iota of evidence that the assessment was pending before the Revenue department. Accordingly, we have no hesitation but to uphold the findings of the CIT(A) annulling the assessment completed u/s. 153C of the Act in absence of any incriminating material. - Appeal of the Revenue is dismissed.

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• Customs

• 2020 (11) TMI 21
  Import from Pakistan - Leather - ratr of duty - Validity and legality of Notification dated 16.02.2019 - Auction of detained goods - HELD THAT:- The issue decided in the case of M/S RASRASNA FOOD PVT. LTD. VERSUS THE UNION OF INDIA AND ORS. [ 2019 (8) TMI 1400 - PUNJAB AND HARYANA HIGH COURT] where it was held that all the Petitioners would be liable to pay duty as was applicable at the time of filing of bill of entry coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification. The petitioners would be liable to pay duty as was applicable at the time of filing/generating of bill of entry on EDI system coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification - Respondent(s) shall release goods within seven days on payment of duty as declared and assessed, if not already paid, ignoring the impugned N/N. 5/2019 - Petition allowed.

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• 2020 (11) TMI 19
  Refund of excess duty paid - no appeal has been preferred by the respondents - HELD THAT:- After considering the submissions made by the learned counsel for the petitioner and after perusing and examining the order, dated 20.12.2013 passed by the second respondent, this Court is of the considered view that no useful purpose would be served if this writ petition is kept pending. Instead, a direction can be issued to the third respondent to process and settle the refund application, dated 11.02.2014 submitted by the petitioner seeking for refund of a sum of ₹ 3,07,141/- which is the alleged excess duty paid by the petitioner to the respondents, which they are now entitled to refund, as the said excess duty collection made by the respondents under the demand has been set aside by the second respondent under the order in Appeal No. 221/2013 (TTN) dated 20.12.2013. This Court directs the third respondent to consider the refund application of the petitioner, dated 11.02.2014 seeking for the refund of excess duty paid by them within a period of four weeks from the date of receipt of a copy of this order and pass final orders on merits and in accordance with law - Petition disposed off.

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• 2020 (11) TMI 15
  Refund of SAD - N/N. 102/2007-Cus. dated 14.09.2007 - Violation of notification condition - rejection on the ground that the imported oats have been re-packed, fumigated and affixed with brand name and not sold as such - rejection on the ground of time limitation - levy of penalty u/s 114AA of the Customs Act, 1962 - HELD THAT:- It can be seen from the above Notification that there is no condition that the goods imported have to be sold as such. The word used is subsequent . Thus, when an assessee pays VAT on the subsequent sale of imported goods, he may file an application for refund of the SAD paid at the time of import - In the present case, the appellant has done the processes of re-packing, fumigation, affixation of brand name, etc. The Department has denied refund alleging that such processes amount to manufacture and that the goods have not been sold as such. The Hon ble High Court of Gujarat in the case of AGARWALLA TIMBERS (P) LTD., MITTAL TIMBERS PRODUCTS (P) LTD., VARIETY LUMBERS (P) LTD. AND ASHIRWAD IMPEX (P) LTD. VERSUS CC [ 2013 (11) TMI 1013 - GUJARAT HIGH COURT] had held that the assessee was eligible for refund of SAD paid on imported timber logs even if the logs were cut to size for subsequent sale. The appeal filed by the Department against the said decision of the Hon ble Gujarat High Court was dismissed on merits, affirming the view taken by the Hon ble High Court, in COMMISSIONER OF CUSTOMS VERSUS VARIETY LUMBERS PVT. LTD. [ 2018 (6) TMI 1499 - SUPREME COURT] - Thus, the rejection of refund claim alleging that the goods were not sold as such is unsustainable in law. Time Limitation - ground for rejection of refund is that the refund claims were filed beyond one year from the date of payment of SAD and therefore, are barred by limitation - HELD THAT:- Sub-clause (c) of the Notification, as reproduced in paragraph 6.1 of this order, would show that the refund claim has to be filed before the expiry of one year from the date of payment of additional duty of Customs - The issue of time limit for filing refund claim was subject matter of litigation before the Hon ble High court of Delhi in the case of SONY INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS [ 2014 (4) TMI 870 - DELHI HIGH COURT] The Hon ble High Court in the said judgement held that the time period prescribed in the Notification has to be read down. The SLP filed by the Department before the Hon ble Apex Court in COMMISSIONER VERSUS SONY INDIA PVT. LTD. [ 2016 (11) TMI 500 - SC ORDER] , against such judgement was dismissed on the ground of limitation, leaving the question of law open. Thus, refund claim under Notification No. 102/2007-Cus. cannot be rejected as time-barred even if it is filed beyond the period of one year from the date of payment of additional duty - the rejection of refund on the ground of limitation cannot be sustained. Penalty u/s 114AA of the Customs Act, 1962 - HELD THAT:- We do not understand the logic of imposing penalty in an application for refund. This apart, it has been pointed out by the Learned Counsel for the appellant that there is no proposal in the Show Cause Notice to impose penalty. The imposition of penalty is without any ground and is, therefore, fully set aside. The impugned order rejecting the refund claims is set aside - Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 9
  Classification of imported goods - telecommunication internet equipment and their parts - classified under CTH 85176290 or under 85176290? - benefit of 10% BCD in terms of Notification No.57/2017 dated 30.06.2017 - HELD THAT:- The impugned goods have been classified under 85176290 by the appellant in the past and learned counsel has submitted evidence to the effect that the same are being classified under same heading even afterwards at various customs locations and exemption is being allowed as claimed. We also find that ADG (Adjudication), DRI has passed a comprehensive order holding the classification of the goods in favour of the appellants. Learned counsel has demonstrated that US and German Customs have given rulings classifying the goods at six digit level as claimed by the appellants. Department has not made out any case for reopening of the classification of the impugned goods. Classification of the imported goods should be based on specific headings, section notes and chapter notes and General Rules of Interpretation of Tariff and HSN. The department has tried to change the classification of the goods being imported by the appellants from CTH 85176290 to CTH 85176990 on the basis of a notification without making any case for revising the classification of the goods. This is not permissible. The department s reliance on Notification No.2/2019 which is subsequently issued is misplaced; cannot be made applicable retrospectively and therefore, not applicable to the present facts of the case. While Revenue was free to decide on the eligibility of the impugned products for exemption under any notification. It is to be noted that the learned counsel for the appellant submits that they are discharging duty, at the merit rate, on carrier Ethernet Switches when they are imported for supply to telecom service providers, even though classified under CTH 85176290. However, it is not open to them to change the classification on the basis of an exemption notification when there is no change in the Customs Tariff Act, 1975. The impugned goods are rightly classifiable under CTH 85176290 in view of the past and present practice of the department, Rulings of US and German Customs and the order by ADG (Adjudication), DRI. Department has not adduced any evidence to show that the said order has been stayed by any competent authority - Appeal allowed.

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• Corporate Laws

• 2020 (11) TMI 28
  Extension of benefit of moratorium - Repayment of Term Loan - HELD THAT:- The Petitioner has filed an interim intervention application before NCLAT. The Petitioner sought a declaration that the Petitioner does not owe the ₹ 100 crores as claimed by the Respondent to them. The prayers are to modify the order of embargo, to refrain IFIN from taking any steps regarding Loan Agreement No.III, discharge the Petitioner from loan agreement No.III. In this application, the Petitioner has narrated the history, and the same assertion is made that the Petitioner placed full trust and confidence in the senior management of IL FS. It is asserted that the facility sanctioned in favour of the Petitioner by IFIN was at the request of IFIN, and it was availed for a private loan to ITNL. Several parties are appearing before NCLAT and NCLT. Application filed by other entities for lifting the grant of the moratorium was rejected by the NCLAT by detailed order on 12 March 2020. Petitioner's application is still pending in NCLAT, and it is not rejected. If it is rejected, the Petitioner can challenge the rejection. The petitioner contends that the writ petition be entertained and merely because there is a fraud by IF LS group the Court should not proceed on the basis that the Petitioner is guilty. It is contended that there is nothing against the Petitioner as on date and the assertion of the Petitioner that the Petitioner was innocent third party needs to be accepted and direction to grant moratorium should be given - Though the Petitioner has urged that the Petitioner is not seeking clean chit from the Court, indirectly, the Petitioner is doing the same. The mismanagement of IL FS group is looked into by NCLT and NCLAT. SFIO is conducting its own investigation. The proceedings before us do not arise from the investigation carried out by SFIO nor from the orders passed by NCLAT. We do not have the inputs from the investigating agency. Based on the documents placed before us, the Petitioner wants us to uphold it s innocence. The new Board of Directors on 28 January 2019 appointed External Auditors to examine the loan given by the superseded Board. The interim report by the Forensic Auditor on 20 February 2019 has indicated that loans of approximately ₹ 2270 Crores were routed to the group companies with third parties like the Petitioner. A prerogative writ is not granted as a matter of course. The Writ Court intervenes where justice, equity, and good conscience require its intervention. Considering the totality of the circumstances, the simplistic foundation of the Petitioner's case cannot be accepted - Petition dismissed.

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• 2020 (11) TMI 26
  Recovery of outstanding dues - Possession of the immovable property - permission to complete the process of sale of the said immovable properties under the provisions of the section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - permission to continue with the actions taken under the provisions of Sections 13 and 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. HELD THAT:- The concern raised by the Official Liquidator with respect to the provisions of Section 529-A of the Companies Act, 1956, it is required to be noted that the said aspect has also been taken care of by the aforesaid principle. Therefore, in view of the principle laid down by the Apex Court in Pegasus Assets Reconstruction Private Limited vs. Haryana Concast Limited and Another [2015 (12) TMI 1472 - SUPREME COURT] , the applicant - Company is permitted to continue with the auction process under the provisions of Sections 13 and 14 of the SARFAESI Act, 2002 concerning the secured assets. The applicant - Company is permitted to continue with the action, as laid down under proviso to sub-section (4) of Section 13 of the SARFAESI Act, 2002. Application allowed.

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• 2020 (11) TMI 13
  Restoration of name of the company in the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The Appellant has submitted sufficient evidence that it has been in operation during the period preceding strike off, therefore it could not be termed as a defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act, 2013, which vests this Tribunal with a discretion where the Company, whose name has been struck off, and such Company is able to demonstrate that it is just to do so, can restore the name of the Company, in the Register and in the interest of all stakeholders, including the Appellant itself, who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserve to be restored. Appeal allowed.

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• 2020 (11) TMI 12
  Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the petitioner companies to the proposed scheme, as well as the no objections filed by the regional director, northern region, the official liquidator, and the income tax department and if any, have been satisfied vide an undertaking filed by the Petitioner Company, there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under section 230 232 of the companies act, 2013. The petitioners however remain bound to comply with the statutory requirements in accordance with law. The Scheme approved.

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• Insolvency & Bankruptcy

• 2020 (11) TMI 10
  Liquidation of Corporate Debtor - Direction to release or vacate the subject property owned by the corporate debtor - HELD THAT:- When the Adjudicating Authority is provided with a specific jurisdiction, the Civil Courts have no jurisdiction in respect of those matters such as Preferential transactions (sections 43 and 44 of the Code), Undervalued transactions (sections 45 to 48 of the Code), etc. When these provisions are read in conjunction with other provisions of the Code such as 18(f)(vi), 25(2)(b) and 35(1)(k) of the Code, the jurisdiction of the Adjudicating Authority does not extend to subjects such as recovery of money, specific performance, eviction proceedings, etc. which were to be dealt with by Civil Courts only. It is to be borne in mind that on the guise that the Insolvency and Bankruptcy Code is a complete Code, the Adjudicating Authority can neither enlarge nor amplify its jurisdiction. This bench is of the view that recovery of rent from the tenant and the eviction of tenant from the property of the Corporate Debtor is in the exclusive domain of the civil courts and cannot be dealt with by the Adjudicating Authority by invoking section 60(5) of the Code and the jurisdiction lies with the Civil Court/Rent Control Court only - In view of the fact that the respondent is paying rent all along for the property, which is an admitted fact, the liquidator is right in including this immoveable property in the liquidation estate of the Corporate Debtor. The Liquidator may take steps to register the sale deed for the property in his favour, if so advised, so that there will be a clear title for the property. The applicants in both the applications are required to approach the appropriate jurisdictional Civil Court for the remedies claimed in these applications except the sale of the property. As far as sale of the property by the liquidator is concerned, he can do so after taking possession by due process of law - Application dismissed.

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• PMLA

• 2020 (11) TMI 27
  Money Laundering - proceeds of crime - submission of Shri Venegaonkar is that the applicant has failed to discharge the burden and has failed to produce even prima facie material in support of his contention. Shri Venegaonkar specifically deny the submission of Shri Ponda that the applicant was not a member of COD of IFIN at any point of time - HELD THAT:- From the material placed by the respondent, it can be seen that the applicant was involved in the infrastructure projects and the documents from the Ministry of Corporate affairs rather corroborate the submission of the respondent. He was involved into various infrastructure projects and therefore, in various Special Purpose vehicles or various infrastructure Limited companies, his name feature as a Director. The submission of Mr.Ponda therefore thus require a mention, just for its rejection. The applicant has also received amounts towards PRP, deputation cost and sitting fee that is clearly reflective of the benefit being drawn by him from the dealings of IFIN as well as IL FS Financial Services. Reliance is placed on statements recorded during the course of investigation under the PMLA Act and the modus operandi of IL FS and its subsidiary companies has surfaced. The PMLA Act of 2002 which aim to prevent money laundering, it contain a provision which raises presumption as to records or property and into interconnected transactions. By virtue of Section 24 while dealing with proceedings relating to proceeds of crime unless the contrary is proved, a presumption exists that such proceeds of crime are involved, where a person is charged with offence of money laundering. The burden under Section 24 is cast on the accused to prove that proceeds of crime are not involved in purchasing the properties owned by the accused. The applicant who has been arraigned as an accused in the capacity as the Managing Director of ITNL and one of the members of the Committee of Directors of IFIN (for infrastructure projects) is attributed a key role. IFIN who was shouldering the responsibility of syndicating the debt and equity for ITNL and ITNL would post its requirement for the projects to IFIN, the RBI had advised IFIN to run down its exposure to group companies with no fresh lending. In spite of that, ITNL for whom the applicant was working as Managing Director received fund from IFIN. It is revealed during investigation that loans were sanctioned to various entities who were undertaking various projects and the applicant had given letter of assurance dated 29th March 2018 on behalf of ITNL. The CFO of one of the groups in his statement has admitted that he had meetings with K. Ramchand for obtaining fund from IFIN in favour of M/s.GHV Hotels Ltd which is running in loss for last few years which was entitled to be transferred to ITNL. Prima facie on the basis of the allegations levelled against him and on the basis of the statements of the co-accused, Arun Saha has described the applicant to be in executive management of ITNL as Managing Director and Chief Executive Officer and his response to the query whether ITNL had any control over the SPVs and the contractors to whom work was allotted, is that ITNL had control over those SPVs in which ITNL was one of the partners and holding majority stake and that the executive management of ITNL had a role to play by ascertaining the genuineness, working experience, good will etc for contractors and their companies. The applicant has played a pivotal role since in most of the SPVs, ITNL had 100% stake - The applicant who was working as Managing Director of ITNL, therefore, will have to answer the charge. It is a well settled position that the jurisdiction to grant bail has tobe exercised having regard to the facts and circumstances. The following factors are to be taken into consideration while considering an application for bail (a) The nature of accusastion and severity of the punishment in case of conviction and nature of material relied upon by the prosecution (b) reasonable apprehension of tampering with the witnesses or apprehension of threat to the complainant or the witnesses (c) reasonable possibility of securing the presence of accused at the time of trial or the likelihood of his abscondence (d) character, behaviour and standing of accused and circumstances peculiar to him. (e) larger interest of public of the State and similar other considerations. There is no hard and fast rule regarding grant or refusal to grant bail. The magnitude of the offence involving the applicant is enormous and the amount involved is huge. The effect of the conspiracy on behalf of the accused persons focusing on a desired result makes it a serious economic offence. The IL FS Financial Services which was facing a serious liquidity crisis leading to their inability to fulfil debt obligation and the investigation has revealed that those in helm of affairs played a hoax and in a disguised way duped the stakeholders and general public whose monies were at stake. The Committee of Directors failed to discharge their obligation and they were in hand-in-gloves with big corporate groups. They continued to refinance the big groups in connivance with their promoters, on the existing collateral or without sufficient security merely on personal guarantees being offered in order to avail the loans as also in re- financing - The default crisis in the IL FS has adversely impacted the growth of Non-banking Finance Companies. It has jeopardised hundreds of investors, banks and mutual funds associated with IL FS and sparked panic among equity investors, as several NBFC faced turmoil amid a default scare. The applicant is not entitled for being released on bail and the application deserves to be rejected - Application dismissed.

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• Service Tax

• 2020 (11) TMI 35
  Exemption from service tax on the services rendered to the SEZ units - Receipt of Rent from SEZ units - demand of service tax for the reason that though the exemption provided under the Special Economic Zones Act 2005, SEZ Act has been prescribed by Notification dated March 3, 2009, but the appellant did not follow the conditions prescribed therein - signage income - sale of space or time for advertisement service or not - HELD THAT:- It is not in dispute that the appellant is a co-developer of the four SEZ‟s. Two of them are situated in Gurgaon and one each in Chennai and Hyderabad. The appellant has rented out immovable property in the SEZ to units located within the SEZ and has received rent. The appellant also rented out some space in the SEZ to units to enable them to put up boards for displaying the name for identification purpose, for which it charged signage charges - Commissioner was not justified in examining whether the conditions set out in the Notification dated March 3,2009 were satisfied or not for grant of any exemption from service tax. Section 26(2) of the SEZ Act does provide that the Central Government may prescribe the manner in which, and the terms and conditions subject to which, the exemptions shall be granted to the Developer under sub-section (1) but what is important to notice, is that, the word prescribe would mean prescribed by rules made by the Central Government under the SEZ Act, in view of the definition of prescribed under section 2(w) of the SEZ Act. The Notification dated March 3, 2009, which has been issued under section 93 of the Finance Act, therefore, has no application. Signage income - HELD THAT:- Under the agreement, the appellant rented out office space in the two SEZ units in return for a specified rent amount and in addition also rented out some space to these units for displaying their name for identification purpose, for which the applicant charged signage charges - In the first instance, irrespective of classification of the said service, the said service had been used by the SEZ units for their authorized operations. There is no dispute on this aspect either in the show cause notice or the impugned order. In such circumstances, such service would be exempt from payment of service tax under the SEZ Act and the confirmation of demand of service tax on this service cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2020 (11) TMI 34
  Valuation - Includability of diesel, explosives etc. supplied free of cost, in the value of taxable services - Denial of CENVAT credit - excess availment of credit in the absence of bills/challans - non-reversal of credit availed on tippers - Demand of interest on suo-moto reversal of credit by the Appellant - extended period of limitation. Valuation - includability of diesel, explosives supplied free of cost in the value of taxable services provided by the Appellant - HELD THAT:- The explosives and accessories and diesel would be supplied by SCCL - Learned Counsel for the Appellant is, therefore, justified in asserting that the explosives and diesel were received by the Appellant free of cost and the learned Authorized Representative of the Department is not justified in asserting that the agreement would indicate that the said materials were received cost by the Appellant but for a consideration and not free of cost - demand set aside. CENVAT Credit - excess availment of credit - HELD THAT:- The Commissioner has concluded that the invoices furnished by the appellant did not add up to the amount of credit claimed to have been availed in September, 2009. This, according to the Appellant, was an absolutely presumptive and inconsequential finding since the Department had disputed the credit only for the reason that there was a difference between the opening stock and the closing stock. The order passed by the Commissioner does not take into consideration the explanation offered by the Appellant and only some invoices were examined by the Commissioner - matter remitted to the Commissioner to determine this particular issue afresh in the light of the charge leveled in the show cause notice and the explanation offered by the Appellant. Whether credit is admissible tippers as inputs under rule 2(k) of the Credit Rules? - HELD THAT:- In SOUMYA MINING LTD. VERSUS CCE, RAIPUR [ 2017 (6) TMI 1071 - CESTAT NEW DELHI] , the Tribunal held that even for the period prior to June, 2010 credit was admissible on tippers as inputs used by the service provider in providing output services. This view was followed by the Tribunal in CCE, CCG ST, DELHI III VERSUS M/S BHARMAPUTRA INFRASTRUCTURE LTD. [ 2018 (7) TMI 438 - CESTAT NEW DELHI] - thus, credit had been correctly availed by the Appellant as tippers qualify as input under rule 2(k) of the Credit Rule - The demand that has been confirmed cannot, therefore, be sustained and is liable to be set aside. Demand of Interest on suo-moto reversal of credit by the Appellant - HELD THAT:- When credit was reversed by the Appellant without utilization, no interest can be recovered from the Appellant - demand of interest set aside. Extended period of Limitation - HELD THAT:- It is not necessary to examine the contention raised by the Appellant that the extended period of limitation could not have been invoked. Appeal allowed in part and part matter on remand.

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• 2020 (11) TMI 33
  Permission for withdrawal of petition - the appellant/petitioner(s) seeks leave of this Court to withdraw the civil appeals/special leave petitions - HELD THAT:- The civil appeals/special leave petitions are dismissed as withdrawn.

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• 2020 (11) TMI 31
  Withdrawal of affidavit of valuation - Section 35L of the Central Excise Act, 1944 - HELD THAT:- Inasmuch as the operative portion of the order of CESTAT, which is under appeal, imposes a financial liability on the appellant, the affidavit of valuation that accompanied the appeals was in order and the request of the appellant to withdraw the affidavit so as to confine the Court Fee to the fixed amount of ₹ 10,000/- may not be legally sustainable. The appeal against Registrar Court s order is dismissed.

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• 2020 (11) TMI 14
  Levy of Service tax or VAT? - transaction of work wear rental - supply of tangible goods Service or not - right to use the goods - HELD THAT:- The Commissioner (Appeals) of Hyderabad Commissionerate has also held in the appellant s own case M/S LINDSTROM SERVICE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX [ 2019 (8) TMI 427 - CESTAT CHANDIGARH] held that work wear does not amount to supply of tangible goods so as to attract service tax. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (11) TMI 22
  Restoration/return of the Bank Guarantee - HELD THAT:- The applicant had submitted a bank guarantee of State Bank of India bearing No.0999514BG0001982 dated 3/12/2014 which was subsequently amended on 5/10/2017 extending validity period upto 30/11/2022 - In the meanwhile, Central Government introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. In order to avail the benefits under the aforesaid scheme, petitioner sought leave of the Court to withdraw the writ petition. By order dated 12/12/2019, this Court disposed of Writ Petition No. 8922 of 2014 as withdrawn. Writ Petition No. 8922 of 2014 be restored for the limited purpose of passing an order directing the Registry of this Hon ble Court to return the Bank Guarantee No. 0999514BG0001982 dated 03.12.2014 (as amended by amendment dated 05.10.2017).

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• 2020 (11) TMI 11
  Reversal of Cenvat Credit - Exemption under the under SFIS Scheme - appellant has cleared DG sets without payment of excise duty under the Status Holder Incentive Scheme by availing the benefit of Notification No. 33/2012-CE dated 09.07.2012 and under SFIS by availing the benefit of Notification dated 14.06.2006 - Whether the goods cleared under Notification No. 34/2006-CE dated 14.06.2006 under SFIS Scheme are exempted or not? - HELD THAT:- It is a fact on record that the appellant is manufacturing DG sets and enclosures which are dutiable under Chapter 85 of CETA 1985. The appellant is also clearing goods to the buyers under SFIS Scheme duty free in terms of the Notification No. 34/2006-CE dated 14.06.2006 - It is an admitted position by both sides that the goods in question manufactured by the appellant are dutiable under Chapter 85 of the CETA, 1985. The similar issue came up before this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS KIRLOSKAR CHILLERS PVT. LTD. [ 2017 (9) TMI 694 - CESTAT MUMBAI] , this Tribunal has following the decision in the case of M/S VOLTAMP TRANSFORMERS LTD. VERSUS CCE VADODARA [ 2011 (9) TMI 648 - CESTAT, AHMEDABAD] hold that the goods supplied under Notification No. 34/2006-CE dated 14.06.2006 is not exempted, therefore, the provisions of Rule 6 (3) (b) of CCR, 2004 are not applicable. These facts are found support from the decision relied upon by the Ld. AR as in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] wherein the Hon ble Apex Court is clarities that the taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in taxing statute so as to supply any assumed deficiency . It means that the dutiable goods cannot become exempted goods as per the convenience of the revenue - Moreover, the circular which has been relied by the revenue have no mention of notification in question and the Revenue has presumed that if the notification in question is not part of the Circular No. 973/07/2013-CX dated 04.09.2013 then the provisions of Rule 6 (3) is applicable. The said understanding of the revenue is against the mandate of law as it is based of assumption presumption. Therefore, it is a clear mis-interpretation of the Revenue by interpreting the CBEC Circular dated 04.09.2013 The goods supplied under Notification No. 34/2006-CE dated 14.06.2006 under SFIS Scheme are dutiable and not exempted goods, therefore, the provisions of Rule 6 (3) of the CCR, 2004 are not applicable to the facts of this case - as provision of Rule 6 (3) of CCR, 2004 are not applicable to the facts of this case, therefore, the demand is not sustainable. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (11) TMI 25
  Recovery of arrears of Sales Tax - inter-State sales turnover against 'C' Forms - time limitation - principles of natural justice - HELD THAT:- The recovery notices are of October 2014. The time limit prescribed vide amendment was, from five years, extended to six years as per the amendment brought in 2017. On account of a retrospective operation of newly introduced provision, assessee would not be in a position to adduce material to defend against an allegation of suppressed / escaped turnover. No doubt, retrospective operation of Section 42(3) would entail into reopening of assessments completed years back and assessee would not have relevant books of accounts and other records to defend the case against alleged escaped turnover. As per Rule 58(20) of KVAT Rules, assessee is required to maintain the books for a period of five years from the end of assessment year in question or two years from the date of disposal of the appeal or revision arising out of such assessment or from the date of completion of any other provisions under the Act connected with such assessment appeal or revision, whichever is later. Fixing of a reasonable period would have to be read in determining what reasonable should be. The oral scheme of KVAT Act in the interest of ensuring certainty in tax matters and also the necessity to interpret the provisions in the manner is to avoid unconstitutional results such as unreasonablness, unfairness and arbitrariness of statutory provisions. The time limits specified in Rule 58(20) of KVAT Rules offer a safe guarding factor to define the limits of power under Section 42(3) of the Act. Meaning thereby, it would not be proper to re-open assessments to bring the tax escaped turnover, which cannot be exercised in a manner that prejudicially affect an assessee, who would not be in a position to meet the charge against him for want of books of accounts and other relevant material - petition allowed.

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• 2020 (11) TMI 20
  Reopening of assessment - Interest Subsidy - Submissions were made that the Tax Board came to the conclusion that the department could not exercise powers under Section 26 of the RVAT Act, 2003 as the said power was not available under the RIPS, 2003 and also came to the conclusion on merits of the dispute that the amount of partial exemption received by the assessee was not part of payable tax and, therefore, basis for raising the demand was also quashed - it was submitted that the entire basis for reassessment is non-existent as the assessee was rightly allowed the subsidy and the interpretation sought to be placed on the term tax payable by including the amount of partial exemption granted under the CST Act cannot be sustained. HELD THAT:- The facts are not in dispute, whereby, initially under the RIPS, 2003 the orders were passed determining the amount of subsidy to the respondent assessee by orders dated 1/12/2012, 27/2/2013, 29/3/2013 and 21/6/2013 for four quarters beginning from 1/4/2011 and ending with 31/3/2012. Whereafter, a notice under Section 26 of the RVAT Act, 2003, which pertains to escaped assessment was issued on 27/5/2016 and after hearing the assessee, the Commercial Taxes Officer, Special Circle-II, Bhilwara by its order dated 22/6/2016 came to the conclusion that the assessee was allowed excess subsidy based on its interpretation of the words tax payable in the Scheme and consequently raised the demand along with interest. It was determined that the amount of partial exemption granted under the CST Act was not tax payable - It is not in dispute that the RIPS, 2003 did not contain any provision for reopening the orders passed under the Scheme or for their rectification. The only provisions which dealt with variation of the orders were for review and appeal under Clause 12, whereby, SLSC and DLSC were empowered to review their decisions and SLSC was made appellate authority and power of revision was given to the State Government under Clause 13, whereby, it could suo moto or otherwise review an order passed by the Screening Committee. The law on the aspect is well settled that if the right of the assessing authority to reopen the assessment is barred under the law for the time being in force, no subsequent enlargement of right can revive such right in the absence of express words or necessary intendment - the apparent exercise of power by the assessing officer under Section 26 of the RVAT Act, 2003 for reopening the order passed in absence of any enabling power cannot be sustained. Once this Court has also come to the conclusion regarding lack of jurisdiction in the assessing authority to pass the assessment order, the determination made by the Tax Board on merits, loses its significance. Therefore, in the circumstances of the case, it is left open for the petitioner department to agitate the issue, as determined by the Tax Board, in an appropriate case and to that extent, as this Court has not dealt with the aspect on merits, it would always be open for the petitioner department to raise and agitate the issue, if the occasion arises. Revision petition dismissed.

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• 2020 (11) TMI 18
  Rectification of Mistake - reconciliation of the Transit Pass for the Assessment Year 2014-15 - HELD THAT:- Earlier when the petitioner had challenged the proceedings of the respondent herein for the Assessment Year 2015-16 in W.P.Nos.285 and 286 of 2017, this Court, by an interim order dated 06.11.2019, had permitted the petitioner to appear before the respondent herein with the documents, pursuant to which, there was a reconciliation and the copy of the communication sent to the petitioner was produced before the learned Judge. Accordingly, this Court, by an order dated 06.12.2019, was of the view that there was substantial progress and the reconciliation exercise has resulted in reduction of tax exposure drastically and thereby remanded back the matter to the respondent for de novo consideration, after taking into account, the outcome of the reconciliation exercise. Petition allowed by way of remand.

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• Indian Laws

• 2020 (11) TMI 30
  Dishonor of Cheque - Grant of Regular Bail - offences punishable under sections 406, 409, 420, 504, 506(2), 120-B and 34 of IPC - HELD THAT:- It appears that there are allegations and counter allegations made by the parties. The notice under Section 138 of the Negotiable Instruments Act was issued and the same has been replied by the applicant and applicant has given a complaint against Himanshu Shah. All those facts could be examined during the trial. Hence, considering the facts and circumstances of the case, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant. The applicant is ordered to be released on regular bail registered with Sachin GIDC Police Station, District Surat on executing a personal bond of ₹ 15,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - application allowed.

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• 2020 (11) TMI 29
  Dishonor of Cheque - whether revision application is maintainable solely on the ground of non custody of accused while entertaining revision application under Section 397 of the Code of Criminal Procedure by this Court? - HELD THAT:- Pursuant to the plain reading of Section 389(3) of the Cr.PC, this Court is agreed that arguments advanced by the learned advocate Mr. Puj for the Respondent No. 1 that concerned learned Sessions Judge is not empowered to suspend the sentence on the contrary, learned Sessions Judge has given one week time to surrender before the concerned learned Metropolitan Magistrate Court if the applicant fails, in that case, learned Metropolitan Magistrate Court, shall be empowered to issue warrant, which appears against the principles of settled law. There is nothing on record so far as the issuance of warrant is concerned but one thing is true that accused is not behind the bar and preferred this revision application - Though, the relief that can be granted under Sub-section (3) of Section 389 of the Code is crucial, but the learned trial Judge has to play a very little role while dealing with the bail plea in a case where the accused was asked to undergo punishment for a period less than three years and the amount of fine imposed by the trial Court is paid. In that very fact situation, even the appellate Court normally should not refuse the bail. The Court is conscious that bail is a rule and jail is an exception is no longer a good law, but certain categories of cases obviously would fall in the class where the refusal of bail can be equated with denial of legitimate freedom of personal liberty even in absence of presumption as to innocence. This Court has not entered into the merits of the case except suspension of sentence for the offence under Section 138 of the Negotiable Instruments Act, which is concurrently confirmed by the learned trial Court - Application disposed off.

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