Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 3, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Violation of principles of natural justice - Thus, it is clear that by means of the last so-called III Opportunity of hearing, the petitioner was granted only a short span of time, i.e. less than 2 days, and which is less than 36 hours, and at any costs, it does not merit on the aspect of providing due opportunity. As per the provisions of the Act, sufficient time ought to have been granted for filing their reply, unless and until, sufficient time is granted to the petitioner, they will not be in position to file their reply in an effective manner. - HC
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Restriction on Benefit of reduction / Nil rate of penalty - Applicability of Section 73(11) or 73(8) - assessee had paid the tax within thirty days from the issue of notice along with interest - Amount of GST was collected from the others - AO rightly denied the benefit applying the provision of section 73(11) - HC
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Provisional attachment of bank account of petitioner - Since the proceedings were initiated under Section 67 of CGST Act, this procedure falls under Chapter XIV. Hence, even after amendment of Section 83 (1) of the CGST Act w.e.f 01.01.2022, the power of attachment can be exercised on initiation of any proceedings under Chapter XV, which has been done in the present case. - there is no infirmity in attachment of the bank account of the petitioner - HC
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Cancellation of GST registration of petitioner - Failure to file GST returns - It is found difficult to extend further time for filing the returns and restrain the authorities from taking the proceedings under section 46 of the GST Act to wait for issuance of revised invoices by IREL. However, as last opportunity, if the petitioner files returns within a period of three weeks from today, the same shall be processed in accordance with the law. - HC
Income Tax
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Upfront payment of processing fee on the loan - revenue expenditure u/s 37 or capital expenditure - merely because the loan processing charges though paid upfront but amortized over a period of five years, solely to be in consonance with the mercantile system of accounting, deduction of the entire charges in lump sum in the year in which the same were paid could not be denied to the respondent/assessee. - HC
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Assessee in Default u/s 201(1) and 201(1A) - period of limitation - non deduction of TDS - the term ‘reasonable period’ in the absence of any statutory limitation cannot be accepted as a straight jacket answer. - Since the CIT(A) and ITAT have accepted the period of limitation to be four (4) years, which in the teeth of the order of the Division Bench in the case of Dr. Reddys Laboratories Limited (supra) cannot be said to be proper, legal or justified. - HC
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Penalty u/s 271(1)(c) - Specific charge - There was obviously no clarity in the mind of the AO as to which limb of Section 271(1)(c) got attracted in the instant case for initiation, followed by imposition of penalty. ITAT was justified in law in deleting the penalty - HC
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Addition u/s 68 - assessee’s alleged failure to explain as to why the subject shares which had a face value of Rs. 10/- were issued at a premium of Rs. 90/- per share - total value of per share was Rs. 100 which was well below the value arrived at as per the valuation report. - CIT(A) correctly observed that it was not a sham transaction - HC
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Validity of assessment - shorter time period to respond - It is clear that the Impugned Order has been passed to ensure that the assessment does not get barred by limitation u/s 153 of the Income Tax Act, 1961. The procedure u/s 144B, as in force between 01.04.2021 till 30.03.2022 was required to be followed. It has not been fully followed. - Matter restored back - HC
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Set-off of the losses against the deemed income u/s 69C - Determination of correct head of income - there is no iota of doubt that the deemed income assessed u/s 69C of the Act should not be treated as income falling outside the ambit of classification contained in section 14. - Therefore lower authorities committed illegality in not allowing the set-off of the losses against the deemed income u/s 69C - AT
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Nature of receipt - income received towards severance of employment - one time compensation received - severance compensation received by the assessee on voluntary basis towards termination of employment from his employers is a “capital receipt” and, hence, not taxable in the hands of the assessee. - AT
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Assessee in Default u/s 201(1)/201(1A) - non deduction of TDS on payment of external development charges (EDC) to Haryana Urban Development Authority (HUDA) - appellant was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned addition is not sustained. - AT
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Mark to market loss - Contingent loss or not - Unrealized foreign exchange forward contract losses - 'mark to market' loss on such future and forward contracts are not a notional loss of contingent nature and the loss stands crystallized at the end of the year notwithstanding the continuance and spilling over of the contract to next year.- AT
Customs
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Benefit of exemption from customs duty - import of Wireless Access Points WAP / MIMO Product (products having MIMO Technology) - WAP imported by the appellant works on technology and does not support LTE standard. Ingram Micro was, therefore, justified in claiming exemption from the whole of the customs duty - AT
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Classification of goods proposed to be imported - Routers - Collectively, the nodes function as a single network. The device gets connected to the node that is closest to it. - The Routers covered under present application are classifiable under sub-heading 8517 62 90 - Benefit of duty exemption available - AAR
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100% EOU - Import of textile machinery without payment of duty - Failure to install the capital goods within stipulated time - since the impugned goods have been imported without payment of customs duty, the inherent value of the goods comprises the element of Customs duty therein and therefore permission of allowing destruction of goods without authority of customs law will amount to arbitrary abatement of leviable customs duty. - Matter restored back for fresh adjudication - AT
Indian Laws
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Dishonour of Cheque - Veracity of the said ‘Authority Letter’ - whence the present petition has been filed on technical grounds wherein almost more than 2 years have elapsed and the issues raised therein are a matter of trail. As per this Court, the present petition seems to be motivated to somehow delay and derail the proceedings/ trial before the learned MM. Thus, the present petition is a fit one calling for not only dismissal but also for imposition of costs. - HC
PMLA
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Seeking grant of bail - Money Laundering - proceeds of crime - Ultimately, the consideration has to be made on a case to case basis, on the facts. The primary object is to secure the presence of the accused to stand trial. The argument that the appellant therein was a flight risk or that there was a possibility of tampering with the evidence or influencing the witnesses, was rejected by the Court. - SC
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Money Laundering - presumption that proceeds of crime - There is a presumption in inter-connected transaction also Section 24 castes a burden on a person charges with the offence of money laundering under Section 3, unless the contrary is proved, the presumption that such proceeds of crime are involved in the money transaction. - HC
SEBI
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Front running trading activity by certain entities - fraud’ for the purposes of the PFUTP Regulations - Offence under SEBI - WTM order and the AO order have correctly held that due to the trading based on prior information of trades of the aforesaid 7 noticees and of the Sterling group, petitioners defrauded investors in the securities market and caused loss to other investors / deprived the investors from profits, and made unlawful gains in their respective trading accounts. - AT
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Unfair Trade Practices relating to Securities Market - scheme of using the GDR proceeds to fund a subscriber to the GDR issue was a fraudulent scheme - The corporate announcement was misleading and presented a distorted version to the investors and created a false version inducing the investors to deal in securities - in the light of the aforesaid decisions the findings against the appellants in the instant appeals does not require any interference - AT
Central Excise
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Reversal of CENVAT Credit - manufacture and clearance of Hemophilus Vaccine which is duty free - The Department having not negated the claims of the appellant that it was not the appellants who have manufactured impugned exempted product i.e the Hemophilus Flu Vaccine. Therefore, there are no case made by the Department to invoke the provisions of Rule 6(3) of the CCR, 2004. - AT
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Demand of duty by denying the benefit of exemption - Capital goods for specific use - Merely based on presumption that few of the hydraulic excavators procured from appellant have been withdrawn from the project, few are in the process of being withdrawn and others to be withdrawn once the project is completed, no finding can be made to deny the benefit of ibid notification - There is no averment in SCN or impugned order regarding date of sale, date of removal of the goods and date of completion of the project - Demand set aside - AT
VAT
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Recovery of dues - Waterfall mechanism - prevalence of Section 48 of the Gujarat Value Added Tax 2003 over Section 53 of the Insolvency and Bankruptcy Code 2016 - As evident from the bare reading of the impugned judgment, the Court had considered not only the Waterfall mechanism under Section 53 of IBC but also the other provisions of the IBC for deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets. - The well-considered judgment sought to be reviewed does not fall within the scope and ambit of Review. - SC
Case Laws:
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GST
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2023 (11) TMI 139
Violation of principles of natural justice - new SCN not served at new address which was appearing on the portal of the respondents - petitioner was not provided an opportunity of hearing - HELD THAT:- The impugned O-I-O dated 30th November 2022 has been passed without granting the petitioner an opportunity of hearing since the show cause notice was issued at the old address. Admittedly, the petitioner has informed the new address to the respondents which is evident from the registration certificate issued by the respondents. Therefore, the respondents ought to have issued the show cause notice at the new address and not at the old address. The impugned order, therefore, is passed without giving opportunity of hearing and, therefore ought to be quashed and set aside. The Order-in-Original dated 30th November 2022 is quashed and set aside - Petition disposed off.
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2023 (11) TMI 138
Exemption from GST - educational institution - fee collected by the petitioner from its enrolled students to extend the benefit of coaching for entrance examination and other educational services would not be exempted service - HELD THAT:- All services supplied by an 'educational institution to its students are exempt from GST. Consideration charged by the educational institutes by way of entrance fee for conduct of entrance examination is also exempt. The exemption is wide enough to cover the amount or fee charged for admission or entrance, or amount charged for application fee for entrance, or the fee charged from prospective students for issuance of eligibility certificate to them in the process of their entrance/ admission to the educational institution. Services supplied by an educational institution by way of issuance of migration certificate to the leaving or ex-students are also covered by the exemption - such activities of educational institution are also exempt. Accordingly, it is clarified that the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions to the leaving or ex-students is covered by exemption under Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017. The proceedings are remanded to the third respondent for reconsideration reserving liberty to the petitioner to file a detailed response - Appeal allowed in part.
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2023 (11) TMI 137
Input Tax Credit - denial on the ground that there is mismatch in GSTR 2A and GSTR 3B - HELD THAT:- As per the stand of the petitioner/assessee, the tax for which the petitioner claimed input tax credit is reflected in Form GSTR 2A, though with some delay, the claim of the petitioner for input tax credit which has been denied in Exhibit P1 does not appear to be correct. To prove his case, one opportunity is granted to the petitioner to appear before the Assessing authority, within seven days from today with all relevant documents. The present writ petition is allowed. Impugned order Exhibit P1 and notice Exhibit P2 are set aside.
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2023 (11) TMI 136
Detention of goods alongwith vehicle - Jurisdiction - exercise of powers under Section 129 of CGST Act and thereafter switching over to Section 130 and passing order thereunder without availing the petitioner the benefits of release of the goods under Section 129 - HELD THAT:- Rule, returnable on 27.9.2023. In the facts and circumstances of the case, by way of interim relief, it is directed that the goods of the petitioner as well as vehicle bearing registration vehicle Truck No.GJ- 27-TT-7795, shall be released, provided the petitioner comply with the conditions imposed - application allowed.
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2023 (11) TMI 96
Seeking grant of bail - respondent claims that they have followed the procedure while detaining the applicant by issuance of summons - HELD THAT:- Perusal of the case diary reveals that the applicant was given summon for his appearance on different dates, therefore, at this stage, his detention cannot be termed as illegal. The facts available in case diary indicates that applicant has co-operated in the investigation by making himself available as and when summons issued against him and his statement was also recorded even in the jail - The respondent has not expressed any apprehension of flight risk for the applicant and has also not moved any application for police remand so also has not expressed any fear of tampering with the evidence or influencing the witnesses. This application is allowed and it is directed that the applicant be released on bail on furnishing a personal bond in the sum of Rs. 10,00,000/- (Rupees Ten Lakhs only) with two local solvent sureties in the like amount to the satisfaction of the trial Court/committal Court, and subject to further conditions imposed.
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2023 (11) TMI 95
Violation of principles of natural justice - sufficient time to file effective reply to defend not provided - HELD THAT:- Admittedly, the notice dated 21.06.2023 was not served on the petitioner by way of any physical mode and was only uploaded through online Portal on 21.06.2023, which falls on Wednesday, followed two working days, and unfortunately, the petitioner could not have access through the website on those days and happened to notice the same belatedly and the moment, the petitioner noticed the said notice dated 21.06.2023, they appeared before the respondent-Department on very next working day, i.e. Monday and requested time for production of documents. Thus, it is clear that by means of the last so-called III Opportunity of hearing, the petitioner was granted only a short span of time, i.e. less than 2 days, and which is less than 36 hours, and at any costs, it does not merit on the aspect of providing due opportunity. As per the provisions of the Act, sufficient time ought to have been granted for filing their reply, unless and until, sufficient time is granted to the petitioner, they will not be in position to file their reply in an effective manner. This Court is of the view that the impugned orders are wholly untenable not only on the ground of total violation of principles of natural justice but also on other grounds, including failure to pass a speaking order as rightly contended by the learned counsel for the petitioner - the Writ Petition is allowed, impugned order, viz., the assessment order dated 29.06.2023 is set aside and the matter is remanded to the second respondent for fresh consideration.
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2023 (11) TMI 94
Violation of principles of natural justice - opportunity of hearing not provided - Penalty order - weight mentioned in the e-way bill was higher than the actual weight - intent to evade tax present or not - HELD THAT:- After detaining the goods, show cause notice was issued. Before the seizure order could be passed, the correct e-way bill was produced cancelling the earlier e-way bill. This Court, on various occasions, has held that if, after issuance of show cause notice and before passing the seizure order, documents are produced, no adverse inference can be drawn, but in the case in hand, the petitioner has issued two bills of the same number with correct weight and the same was produced before the authorities below. On the said premise, the penalty and seizure order was not passed, but while rejecting the appeal, an adverse inference has been drawn that the petitioner has issued two tax invoices of the same number. Once the authorities intend to take an adverse view, the petitioner has to be informed and put to notice to rebut the same and therefore, the impugned order cannot be sustained in the eyes of law - In the instant case, the petitioner was not put to any notice or opportunity being afforded to bring material on record to contest its case, which is in clear violation of the principles of natural justice. The matter is remanded back to to the Additional Commissioner for deciding the issue afresh after giving full opportunity of hearing to all the stake holders in accordance with law, preferably, within a period of three months from the date of production of a certified copy of this order - petition allowed by way of remand.
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2023 (11) TMI 93
Restriction on Benefit of reduction / Nil rate of penalty - Applicability of Section 73(11) or 73(8) - assessee had paid the tax within thirty days from the issue of notice along with interest - Amount of GST was collected from the others - HELD THAT:- Considering the provisions of Sub-sections 6, 8 and 9 of Section 73 of the GST Act, 2017 it is provided that if a person chargeable to tax fails to deposit the tax collected by him within a period of thirty days from the due date of the payment of the such tax, Sub-section 8 will not have any effect and such a person is liable to pay penalty. The Assessing Authority has taken the correct view in the matter and, therefore, there are no error of law which requires interference by this Court - petition dismissed.
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2023 (11) TMI 92
Provisional attachment of bank account of petitioner - SCN was issued to the petitioner after initiation of proceedings under Section 67 of the Act - HELD THAT:- Once the proceedings were initiated under Section 67 of CGST Act, which falls under Chapter XIV of the Act, there is no infirmity in the provisional attachment of the bank account which will remain in force for a period of one year. The show cause notice is pending before the proper officer/adjudicating authority, therefore, in the interest of safeguarding the interest of the Government revenue, it is imperative that the Bank account of the petitioner remains provisionally attached till the adjudication of the case and thereafter, till the realization of the confirmed Government dues. In the present case after the search was conducted on 08.01.2021 under Section 67 of CGST Act and thereafter bank account of the petitioner was attached under Section 83 of the Act, the power of attachment can be exercised on initiation of any proceedings under Chapter XII, XIV or XV. Since the proceedings were initiated under Section 67 of CGST Act, this procedure falls under Chapter XIV. Hence, even after amendment of Section 83 (1) of the CGST Act w.e.f 01.01.2022, the power of attachment can be exercised on initiation of any proceedings under Chapter XV, which has been done in the present case. In the present case, the show cause notice was issued after initiation of proceedings under Section 67 of the Act and these proceedings falls under Chapter XV and, thus, there is no infirmity in attachment of the bank account of the petitioner, which would be enforced for a period of one year. The petition is devoid of any merits and is dismissed.
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2023 (11) TMI 91
Cancellation of GST registration of petitioner - Failure to file GST returns - HELD THAT:- The petitioner has approached IREL for issuing the revised invoices after the time for filing the return got expired. The petitioner cannot be granted time on ground of spacious him approaching the IREL for issuing revised invoices. It can be seen that the petitioner has taken steps immediately on receipt of the notice dated 13.06.2023. More than three months have gone by since 13.06.2023, i.e, the date of request of the petitioner for revised invoices. Ext.P7 is the communication from IREL dated 06.09.2023. It is found difficult to extend further time for filing the returns and restrain the authorities from taking the proceedings under section 46 of the GST Act to wait for issuance of revised invoices by IREL. However, as last opportunity, if the petitioner files returns within a period of three weeks from today, the same shall be processed in accordance with the law. Petition disposed off.
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Income Tax
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2023 (11) TMI 135
Ownership of benami assets - company in liquidation - as appellant submits that in this case, the company which is under liquidation is not the owner of any benami property. Purchase of the shares in a company under liquidation does not make the company itself the owner of the benami property. Issue notice Notice will be served by all modes, including dasti. We clarify that we have not stayed the appellate proceedings, which will continue in accordance with law.
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2023 (11) TMI 134
Nature on sale - Slump Sale - capital gain u/s 50B - Transfer of asset or not? - assessee submitted that and and buildings were not transferred under the Agreement and only individual assets were transferred but the ownership was retained by assessee. Therefore, it is not as slump sale as per Section 2(42C) and capital gains cannot be computed under Section 50B of the Act holding that it is a long-term slump sale - HELD THAT:- As per Clause 2.1(i) of the Business Agreement it is clear that assessee has transferred the right to use the immovable properties . Assessee has not transferred the whole undertaking which is one of the essential conditions under Section 2(42C) of the Act. Therefore, the transfer cannot be considered as a slump sale . Section 50B of the Act provides a mechanism for assessment of capital gain on transfer of an undertaking in a slump sale . Admittedly, immovable assets of the assessee s business were not transferred. Therefore, it does not satisfy the essential conditions under Section 2(42C) of the Act. Decided in favour of assessee.
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2023 (11) TMI 133
Disallowance of engineering fees paid to its head office - time log sheets were not filed - Tribunal concluded that there was no material basis for discrediting the debit notes furnished by the respondent/assessee - HELD THAT:- We are inclined to agree with the view taken by the Tribunal for the reason that the involvement of the respondent/assessee in the project which was under execution is not in doubt. The DMRC had availed the engineering services rendered by the employees of the head office. Assessee only remitted the engineering fee to the head office. There is no dispute with regard to the fact that the debit note provided sufficient information as noted above, not only concerning the names of the employees, but also as to the nature of duties and number of hours that they spent on the job assigned to them. Since the Tribunal is the final fact-finding authority, no interference is called for, especially in the circumstance where the appellant/revenue has not proposed any question which is indicative of the fact that any of the findings returned by the Tribunal is perverse. Decided in favour of assessee.
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2023 (11) TMI 132
Reopening of assessment u/s 147 - assessee was not served with a notice u/s148 - HELD THAT:- The assessment order was passed by the AO despite being made aware of the fact that the assessee had not been served with a notice u/s 148 of the Act. The reassessment proceedings can be triggered only when a notice under Section 148 has been issued and served on the concerned assessee. This is a finding of fact. Both the CIT(A) as well as the Tribunal have come to a definitive conclusion that the service of notice under Section 148 was not effected on the respondent/assessee. Therefore, according to us, no interference is called for with the impugned order passed by the Tribunal stating that as noted that the CIT(A) had called for the remand report and had also examined the record available with AO before concluding that the notice issued under Section 148 of the Act had been served at the wrong address.
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2023 (11) TMI 131
Reopening of assessment - validity of notice u/s 148A - computation of capital gain - As per AO petitioner has receipts in the AY which is applied towards incurring certain expenditure but has not declared the same by filing ITR, and therefore, there is escapement of tax - HELD THAT:- The petitioner, in furnishing details of the cost of improvement [as expenses incurred], has referred to the cost of construction incurred by the builder. If the petitioner could indeed justify that there was no actual income/ receipt or expenditure but has claimed the cost incurred by the builder towards the construction of the units allotted to him under the Joint Development Agreement and sold for deduction u/s 148, such justification be specifically considered and reasoned why, despite there being no income, there would be escape of income justifying reopening of the assessment u/s 147 and 148 - This Court must opine that the petitioner is categorical that he has not received any income in the AY 2016-17 but has claimed a notional expenditure in the next Assessment Years while declaring capital gain, the merit of such claim should be considered before concluding that there is escapement of tax. FAA has not considered this material circumstance, and therefore, there must be interference by this Court to restore the proceedings for reconsideration. The petition is allowed, and the impugned order u/s 148A[d] is quashed. The proceedings are restored for consideration.
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2023 (11) TMI 130
Rectification u/s 254 seeking revival of appeal - petitioner could not pay the amount demanded by the Department vide Form-3 under DTVSV scheme within stipulated time - application for rectification of order of Tribunal rejected as not filed within a period of six months - HELD THAT:- In considered opinion of this Bench, Section 254(2) of the Act has no application to the petition filed by the petitioner, which was filed for revival of the appeal. Therefore, rectification of an order and revival of an appeal are different and cannot be equated. Though there is delay on the part of the petitioner in approaching the Tribunal, in the considered view of this bench, the petitioner should be afforded an opportunity to pursue his appeal, to meet the ends of justice or else he would be rendered remedy-less. Since the application under Section 254(2) itself was not maintainable, using the inherent powers with the Tribunal, they should have treated the application u/s 254 (2) as one seeking revival of the appeal, in the light of the earlier order of the Tribunal dated 20.01.2021. The order passed by the Tribunal is set aside and consequently, the application under Section 254(2) is ordered to be treated as an application for revival of the appeal.
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2023 (11) TMI 129
Validity of order u/s 119(2)(b) - Rejection of request for Condonation of delay in filing of Income Tax Return (ITR) - Non speaking order - violation of principles of natural justice in view of the fact that opportunity of personal hearing was not granted nor has materials relied upon been furnished - HELD THAT:- As reading impugned order would reveal that it only contains the conclusion without assigning any reasons in support thereof. In other words, the impugned proceeding is non-speaking. The nature of the power/ function discharged by the Respondents in exercise of its power u/s 119(2)(b) of the Act is quasi-judicial in nature and thus ought to be made in compliance with principles of natural justice which inter-alia requires the authority to grant a reasonable opportunity apart from assingning reasons. In other words, an order u/s 119(2)(b) of the Act ought to be a speaking order. This Court finds that the impugned order is made in violation thereof, in view of the fact that the impugned order does not assign reason but only contains the conclusion, in other words non-speaking and thus unsustainable. The impugned order is thus set-aside and the Respondents are directed to consider the petitioner's application under Section 119(2)(b) after granting a reasonable opportunity of hearing within a period of 8 weeks from the date of receipt of a copy of this order and pass a speaking order.
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2023 (11) TMI 128
Benefit of Refund - Retention / withholding of refund in anticipation of demand - Status of the enforceability of the demand for the assessment years - Proceedings are still pending before DRP and yet to be adjudicated - HELD THAT:- As there is no recoverable demand from the petitioner as of today, and the readjustment is in anticipation of the conclusion of a particular proceeding in a possible manner without due process. At this stage, Respondents /Sri E. I. Sanmathi submits that the Ao could give due credit to the amounts refundable in terms of the order dated 28.02.2023 when the Ao will have to pass Orders-to-Give-Effect to the directions by the DRP. However, he is not able to point out any provision in the statute or otherwise to justify the retention in the peculiarities of this case. In the absence of the statutory provisions or the enablement otherwise in law, the retention of the amount in anticipation of conclusion of the DRP proceedings, and to give credit to this amount while giving-effect to the orders thereafter cannot be accepted. There would be no justification for denying the petitioner the advantage of the refund. It is too salient that a levy cannot be unless it is with the authority of law and therefore, there has to be a direction to the first respondent to ensure that steps are taken to affect refund in terms of the order dated 28.02.2023 to the petitioner. The next question for consideration is the reasonable time that must be accorded to the first respondent in the circumstances of the case, and after hearing both sides, this Court is of the considered view that the first respondent must be allowed six weeks from the date of receipt of certified copy of this order to extend the benefit of refund to the petitioner. The petition is allowed. The first respondent is directed to identify and take all steps to refund to the petitioner a sum of Rs. 380,39,86,658/- within six [6] weeks from the date of receipt of a certified copy of this order.
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2023 (11) TMI 127
Reopening of assessment u/s 147 - deemed dividend addition u/s 2(22)(e) - HELD THAT:- As perusal of the reasons recorded indicate that the basis and the reasons to believe for the revenue to reopen the assessment would indicate that the reasons to believe were based on scrutiny of the case records, balance-sheet, Profit Loss Account and computation of income. There was no fresh or new tangible material available with the revenue to reopen the assessment. What is evident from the records too is that it was clearly pointed out that the assessee company is not a shareholder of GSEC Aviation Limited from whom the loan has been received.. From the annual accounts annexed to the petition, it is evident that a notice was given under Sec. 142 of the Act, to which the petitioner had responded showing that the shareholder of the companies were original owners and the shares holding not less than 10% of the voting power. Delhi High Court in the case of Ankitech [ 2011 (5) TMI 325 - DELHI HIGH COURT] had held that where loans and advances are given in the normal course of business and transaction in question benefits both, i.e. the payer and the payee companies, the provisions of Sec. 2(22)(e) cannot be invoked. It is well settled in the case of Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] that reason must have a link with the formation of the belief - Decided in favour of assessee.
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2023 (11) TMI 126
Admissibility of benefit u/s 80P on delay in filing ITR - delay of 61 days in filling ITR - HELD THAT:- The embargo on the admissibility of deductions under Chapter VIA, in view of the provisions of Section 80AC, is if the ITRs are not filed before the due date specified under sub-section (1) of Section 139 of the IT Act. The provisions of Section 80AC do not stipulate in express terms that the deductions will be inadmissible if the delay in filing the ITR is condoned. This would be crucial because it remains redoubtable that in the peculiarities of each case, the concerned, in exercise of powers conferred under Section 119(2)(b) of the IT Act could condone the delay in filing ITR beyond the due date contemplated under Section 139(1). This Court must also refer to the Circular dated 26.07.2023 in No. 13/2023 issued by the Central Board of Direct Taxes on condonation of delay in filing ITR and allowing deductions under Section 80P of the IT Act for various assessment years starting from 2018-19. The petitioner had to file ITR on or before 31.10.2018 in terms of Section 139(1) of the IT Act, and because of the provisions of Section 139(1) ITR could have been filed until 31.12.2018. The petitioner has filed the ITR on 31.12.2018. There is no dispute that the elections to the Managing Committee is held on 27.01.2019. This Court must observe that elaborate electoral processes such as finalization of voters list are contemplated under the provisions of the Karnataka Co-operative Societies Act/Rules, and these processes which will have to be commenced within certain timeline will have to be completed on or before the calendar of events of elections are announced. When an application is filed for condonation of delay by a Co-operative Society, as clarified by the above Circular dated 26.07.2023, the concerned will have to examine whether the delay in filing ITR was caused due to circumstances beyond control, and in the circumstances of this case, it must be opined that the delay is for reasons beyond the petitioner s control. In the light of the aforesaid, this Court is of the considered view that the impugned order must be quashed and the delay in filing ITR has to be condoned but observing that the time for commencement of limitation for the purposes of Section 143(2) of the IT Act must be reckoned from the end of 31.12.2023. The petition is allowed, and the third respondent's impugned order is quashed condoning the delay of 61 days in the petitioner filing ITR for the Assessment year 2018-19. Timeline for completion of the assessment will have to be necessarily reckoned from the expiry of three months now provided for viz., 31.03.2024.
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2023 (11) TMI 125
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge or struck-off the relevant limb - HELD THAT:- AO s corresponding penalty show cause notice issued to the taxpayer had nowhere specified or struck-off the relevant limb as to whether he had concealed particulars of his income or furnished inaccurate particulars of such an income, as the case may be. Faced with the situation, we quote recent Full Bench landmark decision in Mohd. Farhan A.Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] has settled the law that the above stated failure on the Assessing Officer s part indeed vitiates the entire penal proceedings itself. We thus delete the impugned penalty for this precise reason alone. Decided in favour of assessee.
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2023 (11) TMI 124
Validity of assessment order without DIN - Communications emanating from the revenue - scope of CBDT Circular no. 19/2019 dated 14.08.2019 - HELD THAT:- A perusal of the AO order shows that it is clear in the body of AO order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the AO. Is such a situation, the AO order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. Failure to Non allocate DIN is not mere mistake as corrected by taking recourse to Section 292B of the Income Tax Act We are referring to the decision of the Hon ble jurisdictional High Court in the case of CIT vs Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] as held that communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular. Appeal of assessee allowed.
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2023 (11) TMI 123
Income deemed to accrue or arise in India - Salary receipts filled under NRI status - remuneration to the assessee was received in Nigeria but directly credited to his NRE account in India - assessee being a non-resident and engaged in on-shore projects has requested his employer in Nigeria to transfer the salaries to his NRE account in India to meet his family commitments - Ld. DRP concluded that the Ld. AO is absolutely correct in invoking the provisions of section 5(2)(a) - HELD THAT:- The assessee is employed in Nigeria is not disputed by the revenue. Since the salary is received by the assessee in NRE account in India, it cannot be considered as income in India, as services were rendered onshore by the assessee, the salary cannot be considered as accrued or deemed to accrue to the assessee in India and hence the provisions of section 5(2)(a) of the Act cannot be applied. From the bare reading of Section 9(1)(ii) salary shall be deemed to accrue or arise in India and shall be regarded as income earned in India, only when services are rendered in India. We find that there is merit in the argument of the Ld. AR wherein the CBDT Circular No. 13/2017 shall be applied to the assessee who is working on-shore and merely because of the use of the word seafarer in the Circular the benefit to the assessee cannot be denied. The clarification given by the Ministry of Finance in Circular No. 13/2017 is to mitigate the hardships faced by the assessees where a non-resident received his salary in the NRE account maintained with an Indian Bank, since conditions of his employment are not restricted to a single place but either in the ships or in the onshore projects elsewhere. We are therefore of the considered opinion that this beneficial Circular No. 13/2017 of the CBDT shall be applied to the instant case. Considering the above facts and circumstances of the case, we are inclined to quash the directions of the Ld. DRP and allow the grounds raised by the assessee.
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2023 (11) TMI 122
Levy of penalty u/s 271(1)(b) - non-compliance of the statutory notices issued by AO u/s 142(1) - HELD THAT:- Since the Ld. NFAC has categorically observed that the assessee failed to furnish reasons for non-compliance of the statutory notices issued by the AO - Further the assessee has not filed her Return of Income u/s. 139(1) - also in response to the reopening of notice u/s. 148 issued, the assessee failed to furnish the Return of Income and also not responded to the u/s. 142(1) notice[two] issued by the AO. Thus the assessee is in the habit of not complying to the statutory notices issued by the Authorities. As the assessee has not adduced any proof or reasons for non-compliance of the statutory notices, which has resulted in exparte assessment order. The assessee neither filed the Return nor responded to the notice which has resulted in levying penalty u/s. 271(1)(b) which in our considered opinion does not require any interference - Decided against assessee.
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2023 (11) TMI 121
Nature of expenses - payment of royalty - revenue or capital expenditure - Permission to user the name and Trade Mark - Royalty is payable on the basis of Annual Sales Turnover - CIT(A) directed the AO to delete the addition made on account of royalty payment - HELD THAT:- As in assessee's own case [ 2022 (4) TMI 804 - ITAT CHENNAI] for the assessment year 2012-13 vide order dated 04.04.2022 assessee is using the trade name as well as management services under contractual terms. The payment was to be made on annual basis and the same was based on fixed percentage of net sales turnover. Upon termination of the agreement, the benefits / licenses / services were to lapse and the assessee was to return the manuals, reports etc. No new asset was acquired by the assessee. The assessee merely acted as user. Therefore, it could not be said that the rights acquired by the assessee were enduring in nature. CIT(A), in our considered opinion, has clinched the issue in the correct perspective and therefore, the same would not require any interference on our part. Appeal filed by the Revenue is dismissed.
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2023 (11) TMI 120
Value of electricity supplied for the purpose ALP and claim of deduction u/s. 80IA - Determination of value of electricity supplied by the Captive Power Plant for the purpose of deduction - HELD THAT:- Value of electricity supplied by the Captive Power Plant for the purpose of deduction u/s. 80IA is to be computed on the market value of power supply or the rate of power charged by State electricity Board, the same is no more res integra by case of PCIT-Vs-Gujarat Alkalies Chemicals Ltd [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT] AND Meghmani Finechem Ltd.-Vs-National E Assessment Centre [ 2023 (6) TMI 337 - ITAT AHMEDABAD] as held it is a well settled principle that where an assessee, being a captive power plant provided electricity to its associated enterprises and claimed deduction u/s. 80-IA, then for the purpose of deduction, market value of power, supplied by the assessee to its associated enterprises should be computed considering rate of power charged by State Electricity Board for supply of electricity to industrial consumers and and thus, assessee was justified in adopting ALP of electricity supply to its AES at rate charged by State Electricity Board and Revenue was not justified in excluding certain heads of charges out of it. The assessee has rightly computed the sale of electricity generated through its CPP by adopting Rs. 5.50 per unit being the supply of electricity rate by Torrent Power Ltd. for the purpose ALP and claim of deduction u/s. 80IA of the Act. The same does not require any interference. Decided against revenue. ITAT discretion to a new ground - Nature of receipt - TUFF Subsidy - issue not emanate from the assessment records - Whether capital receipt and not taxable? - HELD THAT:- This issue of TUFF subsidy received by the assessee as capital receipt is not a subject matter of discussions and disallowance by the Assessing Officer in the assessment order. This TUFF Subsidy is not an issue arising from the record of the assessment proceedings. As decided in the case of National Thermal Power Corporation Ltd.[ 1996 (12) TMI 7 - SUPREME COURT] wherein it was held that undoubtedly, the ITAT has the discretion to allow or not to allow a new ground to be raised but where the ITAT is only required to consider the question of law arising from the facts which are on record in the assessment proceedings , in order to correctly assess the tax liability of an assessee. In our considered view this issue of TUFF Subsidy does not arise from the record of the assessment proceedings of the Assessing Officer. The Ld. Counsel also not drawn our attention to the claim in Return of Income and other records. When this issue does not emanate from the assessment records, we do not have power to adjudicate the same. Decided against assessee.
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2023 (11) TMI 119
Set off of brought forward losses and unabsorbed depreciation of Amalgamating Company - requirement of complying with section 72A - assessee company was amalgamated with its 100% subsidiary company - HELD THAT:- CIT(A) by placing reliance on the order passed by his predecessor in assessee s own case upheld the action of the ld. AO in disallowing the claim of depreciation on non-compete fees and also by placing reliance on the decision of Sharp Business System [ 2012 (11) TMI 324 - DELHI HIGH COURT] CIT(A) also upheld the action of the ld. AO in disallowing the set off of brought forward losses during the year. Before us, no cogent evidences has been brought on record by the assessee to buttress the categorical findings recorded by the ld. CIT(A). Hence not to interfere in the order passed by the ld. CIT(A). Accordingly, the grounds raised by the assessee are dismissed.
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2023 (11) TMI 118
Addition u/s 68 - bogus LTCG - Transaction with shell companies - HELD THAT:- CIT(A) held that in the assessment order the AO has relied upon the statement recorded by DDIT (Investigation), Kolkata on 11.04.2017 of Narendra Kumar Jain stated to be an entry operator who managed a net work of shell companies which provided accommodation entries. However, in the said statement there is no reference to the assessee or the company SMS ITS PL whose shares have been sold. In the said statement there is reference to SVPL i.e. the company who purchased the shares. However, there is no reference to the transaction of sale of shares of SMS ITS PL by the assessee to SVPL in the said statement. On examination of statement it was found to be in context with accommodation entries given by Narendra Kumar Jain to SESA group. There is no linkage between SESA group and assessee or and SMS ITS PL or SESA group and SVPL in the statement. AO has also given a finding that SVPL is a shell company. SVPL is a company who purchased the shares of SMS ITS PL from the assessee. No adverse inference can be drawn against the assessee on basis of doubtful credentials of SVPL as the assessee has parted away with a valuable asset i.e. shares of a company having prime immovable property at Hailey Road Delhi and in lieu thereof, the assessee had received sale consideration at market price/fair market value. Decided in favour of assessee.
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2023 (11) TMI 117
Exemption u/s 10(38) - LTCG derived from sale of mutual fund through venture capital fund assessee is invested in Alternative Investment Fund (AIF) - as per revenue gain derived from sale of any investments by said venture capital fund is not exempt u/s. 10(38) - HELD THAT:- AIF has sold shares of Capacit'e Infra projects Limited, after a period of 12 months and also paid necessary Security Transaction Tax (STT). As gain received by the assessee from transfer of shares by AIF is a long-term capital asset and income from said sale is taxable under the head long-term capital gains. As per provisions of section 115UB of the Act, Alternative Investment Fund is a pass through entity for investors and whatever gain or loss derived by such fund is assessable in the hands of unit holders. To this effect, the assessee has furnished Form no. 64C issued by the AIF in terms of Rule 12CB(1)(i) of the I.T. Rules, 1962 and also Form no. 16A in deducting applicable TDS as per the provisions of law. From the details, it is very clear that income distributed by venture capital fund to unit holders is assessable in the hands of unit holders as per the provisions of Income Tax Act, 1961. In the present case, the assessee received long-term capital gains from AIF, which is exempt from tax u/s. 10(38) of the Act, if such shares is suffered STT. AO and CIT(A) were completely erred in taxing income distributed by AIF to the assessee by rejecting exemption u/s. 10(38). The reason is given by the CIT(A) to sustain additions made by the AO is completely irrational and devoid of merits, because as per the provisions of section 10(38) of the Act, any long-term capital gain derived from shares and securities which suffered STT is exempted, whether such fund is invested in equity funds or real estate funds. But what is required to seen is whether the gain derived by the assessee is from transfer of equity shares, which has suffered Security Transaction Tax or not. Since, the long-term capital gains derived by the assessee from mutual fund is out of sale of equity share, which suffered Security Transaction Tax, in our considered view capital gain derived by the assessee is exempt under section 10(38) - Decided in favour of assessee.
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2023 (11) TMI 116
Penalty u/s. 271D - assessee had raised a cash loan from his nephew for making an investment towards purchase of property - AO treated it as undisclosed investment and rejected the claim of the assessee that the investment made by him towards purchase of properties was sourced out of the cash loan as raised from his relative - HELD THAT:- Once the A.O had rejected the claim of the assessee, there was no justification for the department to infer that the assessee had raised any such cash loan from the aforementioned person. Once the AO had concluded that no part of investment in the properties was sourced out any cash loan, but in fact it was the latters undisclosed income that was so utilized for sourcing the same, then, it is beyond comprehension that after having rejected the aforesaid explanation of the assessee how the department could have adopted a view to the contrary and saddled the assessee with penalty u/s 271D. Once the source of money invested by the assessee has been given the color as that of unexplained income and accordingly brought to tax by the AO, thereafter the department could not have taken a contrary view and held that part of the said investment was sourced out of a cash loan raised by the assessee. Decided in favour of assessee.
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2023 (11) TMI 97
Inequality in Computation of LTCG - AO took only sale consideration from the seized material AND not cost of acquisition - AO accepted cost of acquisition with indexation filed in original return of income filed u/s 139 - As argued when sale consideration of a capital asset is taken by the assessing officer from the seized documents, then cost of acquisition should also be accepted which is mentioned in the seized documents to compute long term capital HELD THAT:- We note that an apple-to-apple comparison is often needed in legal cases to ensure that similar facts and circumstances are being considered when making legal decisions. This principle is closely related to the concept of fairness in adjudication. The legal systems aim to treat similar cases similarly to ensure fairness and consistency in the application of the law. In case of equity and justice an apple-to-apple comparison helps to ensure that the legal outcome is just and equitable. If different standards are applied to similar cases, it can result in unequal treatment under the law. In the assessee`s case under consideration, as observed that in order to compute the long term capital gain (LTCG), AO took sale consideration from the seized material, however, the cost of acquisition of the said asset was also mentioned in the seized material, but the AO has not taken into account to compute LTCG, which is not tenable. It creates inequality in the computation of LTCG, as when the sale consideration and cost of acquisition, both are mentioned in the seized material, then in that circumstances the Assessing Officer has to consider both to compute LTCG. Therefore, the approach of the Assessing Officer to take the sale consideration from seized material and cost of acquisition from assessee`s return of income, is not acceptable, as it creates discrimination in the computation of LTCG - addition made by AO should be deleted. Decided in favour of assessee.
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2023 (11) TMI 90
Scope of of Sections 44BB(1) and 44BB(2) - computation of the presumptive taxable income of the assessee service tax collected in the course of provision of services and facilities in connection with, or supply of plant and machinery on hire, in the prospecting for, or extraction or production of, mineral oils in India - As decided by HC amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in Clauses (a) and (b) of sub-section (2) of Section 44 BB HELD THAT:- We are not inclined to interfere in the matter. Special Leave Petition is dismissed.
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2023 (11) TMI 89
Addition u/s 68 - unexplained unsecured loans obtained by the assessee - HC confirmed ITAT findings that the additions made by AO were not sustainable - companies through which the assessees had indulge into bogus accommodation entries, were not managed or controlled by Mr. Anand Sharma, who was supposed to be the kingpin and there was no link found in the documents and the financial statements of the companies concerned. HELD THAT:- No ground to interfere with the impugned order(s). The Special Leave Petitions are, accordingly, dismissed.
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2023 (11) TMI 88
Deduction of the depreciation as well as the interest - Construction of towers - Passive use - respondent/assessee commenced business through lease of towers under IRU Agreement - Upfront payment of processing fee on the loan - revenue expenditure u/s 37 or capital expenditure - HELD THAT:- AO had proceeded in the absence of the requisite material pertaining to the tower-wise details and the said material was provided subsequently at the first appellate stage and on the basis thereof the learned Tribunal passed the impugned order. Depreciation and the interest on loan is similar to the issue of payment of upfront fee towards loan processing charges in the sense that the AO opted to truncate the said charges proportionally for the reason that not all the towers might have been put to use as the tower-wise details had not been furnished and that the respondent/assessee had amortized loan processing fee over a period of time in its profit loss account. On these aspects, the above cited judicial precedents clearly fortify the view taken by the learned Tribunal. The towers which were constructed subsequent to commencement of business of the respondent/assessee were so constructed admittedly during the year relevant to the subject Assessment Year. As laid down in the above cited judicial precedents, the expression used for the purposes of the business in Section 32(1) of the Act has to be construed liberally so as to include even passive user of the subject machinery (towers in the present case). It is nobody s case that the profits earned by the respondent/assessee had no nexus with the towers in question. Therefore, we find no infirmity in the view taken by the learned Tribunal on the basis of factual matrix, thereby allowing the amount of depreciation concerning the said towers to be deducted. Upfront payment of processing fee on the loan - revenue expenditure u/s 37 or capital expenditure - HELD THAT:- We have no hesitation to reiterate that it being undisputed that the loan in question was raised by the respondent/assessee only for the purposes of its business, merely because the loan processing charges though paid upfront but amortized over a period of five years, solely to be in consonance with the mercantile system of accounting, deduction of the entire charges in lump sum in the year in which the same were paid could not be denied to the respondent/assessee. On this aspect also we find no infirmity in the view taken by the learned Tribunal in the impugned order. No substantial question of law.
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2023 (11) TMI 87
Assessee in Default u/s 201(1) and 201(1A) - period of limitation - non deduction of TDS on payments made to the international telecom operators - HELD THAT:- As respondent does not dispute the fact that the Division Bench of this very High Court itself recently had taken a view tha t there is no specific period of limitation prescribed for initiating a proceeding u/s 201(1) and 201(1A) of the Act. In the given factual backdrop and the recent decision of the Division Bench of this very High Court in the case of Dr. Reddys Laboratories Limited [ 2023 (9) TMI 111 - TELANGANA HIGH COURT ] which as a matter of judicial propriety binds this Bench also, we are inclined to endorse the view of the Division Bench of this Court. What needs to be considered is the fact that the Division Bench in the case of Dr. Reddys Laboratories Limited (supra) have also considered the decision of the High Court of Delhi and have reached to a specific conclusion that the term reasonable period in the absence of any statutory limitation cannot be accepted as a straight jacket answer. It was also held by the Division Bench of this Court that what is a reasonable period would depend on the facts and circumstances of each case. The Division Bench went on to quote that neither a period of four (4) years nor a period of one (1) year can be said to be the period of limitation for passing of an order under Section 201. Since the Commissioner of Income Tax (Appeals) so also the Tribunal have decided the two appeals accepting the period of limitation to be four (4) years, which in the teeth of the order of the Division Bench in the case of Dr. Reddys Laboratories Limited (supra) cannot be said to be proper, legal or justified. Thus the orders therefore, are not sustainable and the same deserves to be and are ordered accordingly. The matter is further ordered to be remitted back to the Commissioner of Income Tax (Appeals) for passing of fresh orders.
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2023 (11) TMI 86
Reopening of assessment u/s 147 - undisclosed bank deposits - as per AO petitioner had failed to provide any evidence to establish that the amounts found in the accounts maintained with HDFC Bank and DCB Bank in the FY 2014-15 did not belong to him, i.e., he was not the beneficiary - HELD THAT:- As noted while narrating the events, the petitioner had taken an emphatic stand that the bank accounts adverted to by the AO did not belong to him. Petitioner instead had furnished the statement of accounts of the two banks, i.e., ICICI Bank and Jammu and Kashmir Bank which were maintained by him. Thus, without any actionable material, the AO embarked on a journey to reopen, in a sense, a closed assessment which had reached culmination via order at least at the point in time when notice under Section 148A(b) of the Act was issued. What has compounded, in our view, at least for the moment, the problem of the respondents/revenue is the order passed by the CIT(A). Assessment order had, in fact, made no addition to the declared income of the petitioner. As noticed hereinabove, despite this position obtaining, a demand notice was served on the petitioner pursuant to the assessment order . It is perhaps because of this position that even though the CIT(A) had called for a response to the remand report, the AO failed to place before the CIT(A) his stance in the matter . Reopening order set aside - Decided in favour of assessee.
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2023 (11) TMI 85
Penalty u/s 271(1)(c) - Specific charge - Mandation of recording satisfaction regarding furnishing of inaccurate particulars of the income in the assessment order - whether failure on the part of AO to put to assessee a specific charge is fatal to the penalty proceedings, having regard to the provision of Section 271(1)(c)? - HELD THAT:- A perusal of the notice would show, something which the Tribunal has also recorded, that the AO did not indicate to the respondent/assessee as to whether this was a case of concealment of particulars or furnishing inaccurate particulars or even, as indicated above, the case where both charges were sought to be levelled against the respondent/assessee. The penalty order, as a matter of fact, injects greater confusion in this behalf. There is obviously an internal inconsistency in the penalty order. The AO begins by saying that the respondent/assessee had furnished inaccurate particulars of his income in respect of disallowance of various additions made by the AO and, then, while computing the penalty that he imposed on the respondent/assessee, he goes on to say that the respondent/assessee had furnished inaccurate particulars of income or concealed income . There was obviously no clarity in the mind of the AO as to which limb of Section 271(1)(c) got attracted in the instant case for initiation, followed by imposition of penalty. ITAT was justified in law in deleting the penalty - Decided in favour of assessee.
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2023 (11) TMI 84
Validity of Order passed u/s 201 - TDS liability on interest paid to the citizens who have given Form No.15G and 15H as required u/s 197A(1A) and 197A(1C) - Alternate remedy u/s 151 by way of an appeal before the Joint Commissioner - HELD THAT:- The petitioner appears to have furnished few details prior to the issuance of the Show Cause Notices through e-mail. This has not been taken note of by the AO. At the same time, AO cannot be found fault as the petitioner has failed to respond to the Show Cause Notices issued under Section 201(1)/201(1A) of the IT Act. Petitioner was to not only respond but also appear for a personal hearing when the case was fixed for personal hearing on 24.11.2022 at about 11.29 a.m. A similar reply was sent on 05.09.2022 stating that the petitioner has been appointed as a nodal body to implement the Social Welfare Scheme of the State Government. A reading of the representations/replies indicates that the petitioner has not fully collated the information that was required to be furnished prior to the Show Cause Notices, although the petitioner has furnished few details earlier by e-mail dated 05.09.2022. This ought to have been examined by the respondent while passing the impugned Assessment Orders. Considering the above, no useful purpose will be served by directing the petitioner to file a statutory appeal under Section 251 of the IT Act before the Appellate Commissioner, although the Appellate Commissioner can call for a remand report. The impugned Assessment Orders are set aside and the cases are remitted back to the respondent to pass a fresh order on merits and in accordance with law preferably within a period of three months from the date of receipt of a copy of this order.
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2023 (11) TMI 83
Addition u/s 68 - assessee s alleged failure to explain as to why the subject shares which had a face value of Rs. 10/- were issued at a premium of Rs. 90/- per share - Requirement for carrying out due diligence - CIT(A) deleted addition as confirmed by ITAT - HELD THAT:- The only issue that arose before the AO concerned due diligence which, according to us, the CIT(A) correctly answered by observing that the persons who had loans converted into share capital were either directors of the respondent company or directors of a group of companies and therefore, there was no requirement for carrying out due diligence. Valuation of the subject shares - According to the AO, the share premium was arrived at in a collusive manner - As per the valuation carried out by the chartered accountant of the respondent/assessee in terms of Rule 11UA, which permitted utilization of DCF Method, the value of subject shares as on 31.07.2012 was Rs. 101 per share. Assessee had factored in only Rs.90 per share as share premium component, the rest being the face value.Thus, total value of per share was Rs. 100 which was well below the value arrived at as per the valuation report. Given this position, the CIT(A), in our view, correctly observed that it was not a sham transaction contrary to conclusion arrived at by the AO. Whether Sub Rule (2) of Rule 11UA would be applicable even to those transactions which occurred prior to 29.11.2022? - We are in agreement that no such distinction could have been drawn. Once the amended rule kicked-in, it would apply to transactions which were carried out both before and after the amended Rule became operable. We may note in this particular case that the loans were converted into share capital after 29.11.2022.The conversion of loan to equity occurred pursuant to Board of Directors Resolution, passed on 06.03.2013. It is in this backdrop that the CIT(A) deleted the addition. The Tribunal via the impugned order sustained the deletion of the addition. Revenue said Tribunal lost sight of the fact that the addition was made under Section 68 of the Act and therefore, the discussion with regard to the provisions of Section 56(2) of the Act was not called for in the instant matter - We are unable to agree with this submission of revenue for the reason that although the addition was sought to be made u/s 68 it was in fact the AO, who had referred to Rule 11UA and Section 56(2) of the Act. AO proceeded to enquire into the receipt of share premium by the respondent/assessee by adverting to parameters contained in Section 56(2) - AO in fact had asked for a valuation report. Although the respondent/assessee, was remiss in not providing the valuation report to the AO, it had submitted the same to the CIT(A), who examined the said report in great detail. The valuation, as observed above, was carried out under the DCF Method, which is permissible under clause (viib) of Rule 56(2) read with the Rule 11UA. Decided in favour of assessee.
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2023 (11) TMI 82
Validity of assessment - shorter time period to respond - case of the petitioner is that petitioner has not received the notice although it would be the contention of the Department that the said notice was posted in a web portal and therefore it was for the petitioner to respond to the same - HELD THAT:- The notice has been uploaded and sent to the petitioner at about 2.50 am on 28.03.2022 calling upon the petitioner to respond by 29.03.2022 by 23.59 Hours as the assessment was getting time barred on 30.03.2022. It is clear that the Impugned Order has been passed to ensure that the assessment does not get barred by limitation under Section 153 of the Income Tax Act, 1961. The procedure under Section 144B of the Income Tax Act, 1961, as in force between 01.04.2021 till 30.03.2022 was required to be followed. It has not been fully followed. In this case, no Draft Assessment Order has been passed by the Assessing Unit as is contemplated under Section 144B of the Income Tax Act, 1961. Thus, there is a material violation of the procedure prescribed under Section 144B of the Income Tax Act, 1961. Consequently, the Impugned Order is set aside and the case is remitted back to the respondents to pass a fresh order on merits and in accordance with law within a period of six (6) months from the date of receipt of a copy of this order.
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2023 (11) TMI 81
Set-off of the losses against the deemed income u/s 69C - Determination of correct head of income - AO had denied such set-off only on the ground that the deemed income u/s 69C does not fall within any category of income contained in section 14 of the Act - HELD THAT:- Hon ble Supreme Court in the case of CIT vs. D. P. Sandhu Bros. Chembur (P.) Ltd. [ 2005 (1) TMI 13 - SUPREME COURT ] and in the case of United Commercial Bank Ltd. vs. CIT [ 1957 (5) TMI 11 - SUPREME COURT ] held that the provisions of the Income Tax Act does not envisage taxing any income under any head not specified u/s 14 of the Act. The Hon ble Madras High Court in the case of CIT vs. Chensing Ventures [ 2007 (4) TMI 204 - MADRAS HIGH COURT ] as well as case of CIT vs. Shilpa Dyeing Printing Mills (P.) Ltd. [ 2015 (7) TMI 691 - GUJARAT HIGH COURT ] held that the income of such nature from undisclosed sources to be treated as income, should be assessed under income from other sources . Therefore, in the light of this legal position, there is no iota of doubt that the deemed income assessed u/s 69C of the Act should not be treated as income falling outside the ambit of classification contained in section 14. As it is only from the assessment year 2017-18, the Parliament had introduced the amended provisions of section 115BBE prohibiting the set-off of the losses against such deemed income. Therefore lower authorities committed illegality in not allowing the set-off of the losses against the deemed income u/s 69C - we direct the AO to allow the set-off of the losses against the deemed income u/s 69C of the Act. Grounds of appeal filed by the assessee stand allowed.
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2023 (11) TMI 80
Assessment of trust - Benefit of exemption u/s 11 - investment made in Prakash hospital - As contended that the entire investment has been received back by the trust, therefore, no benefit is derived by Prakash Hospital Private Limited - CIT(A) allowing benefit of exemption to assessee - HELD THAT:- CIT(A) was of the opinion that even if the entire investment has been received back by the assessee the fund which was utilized by Prakash Hospital Private Limited saved interest in as much as if the assessee trust had not given the loan fund Prakash Hospitals would have borrowed the loan and paid interest thereon. The appellant has worked out interest @ 12% over the fund utilized by the hospital - The above findings of the CIT(A) are in line with the relevant provisions of the Act, therefore, called for no interference. Denial of benefit of exemption claimed u/s. 11 - HELD THAT:- We are of the considered view that any violation u/s. 13 does not result in denial of exemption u/s. 11 of the Act to the total income of the assessee meaning thereby that only that income is denied exemption which is in violation of section 13 of the Act. For this proposition we draw support from case of Mullers Charitable Institutions [ 2014 (2) TMI 1033 - KARNATAKA HIGH COURT] wherein as held that it is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed . Revenue appeal dismissed.
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2023 (11) TMI 79
Rectification of mistake - nature of receipt - income received towards severance of employment - one time compensation received by the assessee from his employers towards Cessation and termination of his employment - amount not separately shown as exempt income - whether was a capital receipt and hence not chargeable to tax? - rectification was rejected by AO on the ground that the amount was not bifurcated by the assessee in the return of income - Whether order passed u/s. 143(1) of the Act could not have been rectified u/s. 154 of the Act since there was no mistake apparent from the record ? HELD THAT:- As on identical set of facts, in the case of Arunbhai R.Naik vs. ITO [ 2015 (10) TMI 2434 - GUJARAT HIGH COURT] held that where ex-gratia compensation paid to the assessee on his discharge was very voluntary in nature, it would not amount to compensation in terms of section 17(3)(i) of the Act. In the instant facts, we observe that on perusal of the terms of employment letter of the assessee, the aforesaid amount paid to the assessee as compensation towards discharge of his services was voluntary in nature, as is evident in the terms of employment. Accordingly, in our considered opinion, the case of the assessee was directly covered in his favour by case of Arunbhai R. Naik(supra). Thus severance compensation received by the assessee on voluntary basis towards termination of employment from his employers is a capital receipt and, hence, not taxable in the hands of the assessee. Further, even the Department has not contested the claim of the assessee that the aforesaid amount is not taxable in the hands of the assessee as his income. The same should not have been taxed in the hands of the assessee as his taxable income and the same was liable to be deleted u/s. 154 of the Act. Decided in favour of assessee.
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2023 (11) TMI 78
Penalty u/s 271(1)(c) - estimation on income on Unexplained cash deposits in the saving bank account -assessee had stated that he was earning agricultural income from last many years and he has deposited the said cash from earning from the agricultural activities - AO has partly accepted assessee submission and estimated the income - HELD THAT:- The issue involved in the present appeal is no longer res integra. The question as to whether the penalty u/s 271(1)(c) of the Act, on estimated addition is sustainable or not, was considered by various judicial forums across India. As find in the case of Gipilon Texturising Pvt. Ltd. Vs. ITO [ 2021 (4) TMI 860 - ITAT SURAT] held that penalty on estimated addition is not sustainable in the eye of law - Penalty deleted - Decided in favour of assessee.
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2023 (11) TMI 77
Short granting of TDS credit - because of late deposit of TDS by some of the customers, a further incremental TDS credit was reflected in Form No.26AS - CIT-A held that the credit available in Form No.26As should have been granted by AO - HELD THAT:- We do not find any infirmity in the order of the Learned CIT-A in granting the total credit of TDS - It is not the case of the Revenue that the income comprising the TDS has not been offered by the assessee in its income in the impugned assessment year. Accordingly, we confirm the order of the Learned CIT-A on this issue and dismiss ground of the appeal of the Revenue. Disallowance of ESOP expenditure - allowable revenue expenditure u/s 37 or not? - CIT(A) deleted the addition - HELD THAT:- Issue is squarely covered in favour of the assessee by the decision of Biocon Ltd. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] wherein it has been held that the above deduction is allowable to the assessee u/s 37(1) - CIT-A has further referred to the decision of PVP Ventures Ltd [ 2012 (7) TMI 696 - MADRAS HIGH COURT] holding similar view. Employees Stock Option Scheme expenditure incurred by the assessee is reimbursed to the holding company with respect to the employees employed by the assessee. This is equivalent to the emoluments paid to the employees of the assessee company. Therefore, it is part of employees remuneration. This is a crystallised expenditure and not notional or contingent. No infirmity in the order of the Learned CIT-A in directing deletion of disallowance. Decided against revenue.
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2023 (11) TMI 76
Assessee in Default u/s 201(1)/201(1A) - non deduction of TDS on payment of external development charges (EDC) to Haryana Urban Development Authority (HUDA) - HELD THAT:- As decided in M/s RPS Infrastructure Limited [ 2019 (9) TMI 39 - ITAT DELHI] payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the appellant but rather Haryana Government which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, appellant was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned addition is not sustained. Decided in favour of assessee.
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2023 (11) TMI 75
Mark to market loss - Unrealized foreign exchange forward contract losses treated as contingent in nature - AO noted that the aforesaid loss on account of exchange fluctuation on forward cover contracts not crystallised and is in the nature of notional loss - Assessee said such mark to market (MTM) gains arising in the subsequent A.Y. 2013-14 has also been offered for taxation in tune with accounting policy and claimed that such fluctuation losses are a fait accomopli and not a notional loss of contingent nature - HELD THAT:- The issue is squarely covered in favour of the assessee by plethora of judgments which in unequivocal terms have held that mark to market loss on such future and forward contracts are not a notional loss of contingent nature and the loss stands crystallized at the end of the year notwithstanding the continuance and spilling over of the contract to next year. We also simultaneously take note of the plea of the assessee that the claim has been made in consonance with Accounting Standards prescribed by ICAI. Besides, the gains arising in A.Y. 2013-14 due to devaluation of foreign exchange has also been similarly offered for taxation. Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] has considered such losses as allowable and not of contingent in nature. Similar view has been taken by the Co-ordinate Bench in the case of Investmentor Securities Limited [ 2018 (5) TMI 2161 - ITAT AHMEDABAD] and M/s. SAL Steel Ltd. [ 2017 (1) TMI 1822 - ITAT AHMEDABAD] We thus concur with the view taken by the CIT(A) that loss occurred due to such fluctuation in forward contract is a ordinary business loss and not merely a notional loss of provisional nature. We thus decline to interfere with the first appellate order.
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Customs
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2023 (11) TMI 115
Maintainability appeal before High Court - Substantial Question of Law - Imposition of penalty u/s 114AA of Customs Broker / CHA - Requirement to follow timeline of Regulation 16 and 17 of Customs Broker License Regulations (CBLR), 2018 while revoking the license - Whether once the order suspending the license of CHA/appellant was revoked, the proceedings of revocation of license under Regulation 17 of CBLR, 2018 could not be initiated? - violation of Regulation 10(a), 10(d) and 10(n) of CBLR, 2018 - HELD THAT:- A careful perusal of the Section 130 of Customs Act, would show that an appeal lies to the High Court only when the impugned decision/order involves a substantial question of law . Suffice it to state that this Court cannot re-appreciate the evidence brought on the record in the proceedings conducted before the Adjudicating Authority as well the CESTAT and re-appreciate the same so as to came to a different finding unless the appreciation of evidence is perverse or manifestly erroneous and/or is contrary to the law. The learned CESTAT conducted a meticulous exercise to examine and appreciate the evidence on the record and came to a categorical finding that the respondent/CHA was not guilty of non-performance of any of the statutory duties cast upon it. It is evidently brought out that there was a private arrangement between the two importers for which the respondent/CHA facilitated customs clearance in the name of companies, having valid IECs for the goods imported by the owners of the companies involved; and that the respondent/CHA had been duly authorized in this regard by Mr. Sidharth Sharma - There was proper verification on the part of the respondent/CHA with regard to genuineness of the IEC as also GSTIN [Goods and Services Tax Identification Number] and mere allegations that some other person was importing goods in the name of the importers, whose names were mentioned in the Bills of Entry, did not render the identity of the importer doubtful especially when there was apparently an arrangement with mutual consent of the importer and the beneficial owner and in the said circumstances there was no basis for the Adjudicating Authorities to pass the impugned order thereby suspending the license of the CHA based on the statements of the importers, which were otherwise also retracted. The learned CESTAT neither committed any patent illegality nor any manifest error in appreciating the evidence on the record. The instant appeal fails to raise any question of law. Hence, the present appeal is dismissed in limine.
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2023 (11) TMI 114
Levy of Additional Customs Duty - misclassification and misdeclaration of import the value of -Vessel Pride of Goa - levy of penalty under Section 112 (a) of the Customs Act, 1962 - HELD THAT:- The main charges against the importer and its director has already been dropped by this Tribunal vide its order in case of SHRI ASHOK KHETRAPAL, M/S GOA COASTAL RESORTS RECREATION PVT. LTD. VERSUS CC JAMNAGAR [ 2014 (4) TMI 421 - CESTAT AHMEDABAD ] wherein, it has been held classification of POG and its assessments have been correctly made and it is held that any value addition will not have effect on duty when the vessel of CTH 8901 imported by the appellant stood exempted under an exemption notification. Since the issue has already been decided in favour of the importer and his director as mentioned above since the cause of imposing penalty against the present appellant does not exist anymore and therefore the Order-In-Original is set aside. Appeal allowed.
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2023 (11) TMI 113
Confiscation of the vehicle - imposition of penalties under section 112 of Customs Act - Smuggling - Betel Nuts - notified goods - burden to prove - HELD THAT:- On going through the impugned order of Commissioner (Appeals), it is noted that he has primarily gone by the fact that betel nuts are not notified under Section 123 of the Customs Act and the onus to prove that the same are smuggled is on the Revenue as held by the Tribunal in the case of BABOO BANIK VERSUS COMMISSIONER OF C. EX. CUS., LUCKNOW [ 2004 (7) TMI 482 - CESTAT, KOLKATA] . Further, the Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA [ 2005 (11) TMI 306 - CESTAT, KOLKATA] has held that the local trade opinion cannot take the place of the legal evidence. It is also noted that the reliance on the opinion of Arecanut Research Development Foundation (ARDF), Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory - The respondent had also brought on record a survey report on the cultivation of areca nuts in India issued by the Directorate of Arecanut and Spices Development, Ministry of Agriculture, Government of India which shows substantial production of betel nuts in West Bengal, Assam and North Eastern State. In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country, the Appellate Authority is agreed that their confiscation is neither warranted nor justified. There are no infirmity in the impugned order of the Commissioner (Appeals) to the extent it pertains to the respondent in this appeal and the same is upheld - appeal of Revenue dismissed.
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2023 (11) TMI 112
Recovery of Duty Drawback - failure to produce certificate evidencing the realization of sale proceeds within the period of 12 months from the date of export in terms of Notification No.FEMA-176/2008-RB dated 23.07.2008 - HELD THAT:- There are no merits in the appeal because the fact that proof that entire amount which was to be realized against the exports was submitted to the Commissioner (Appeal). Commissioner (Appeals) while passing the impugned order has admitted the BRC s submitted after due verification. Approximately, out to the six BRCs four were within the time limit prescribed, and two were subsequent to that. However, there is no doubt that entire sale proceeds have been released in full neither the appeal memo says so that this amount is not released the only reason for filing this appeal is that the amount was released beyond the period prescribed. Once, the fact of realization is not disputed there cannot be any reason for denial of substantiated benefit to the appellant for this delay which is nothing but a procedural laps. It is settled position in law that such procedural lapses are technical violation should not come in the way for extending the substantial benefit to the appellant. Reliance is placed on the decision of Hon ble Allahabad High Court in the case of M/S GLOBAL SUGAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR [ 2016 (4) TMI 797 - ALLAHABAD HIGH COURT] where it was held that Rule 57T of the Rules is only procedural in nature. We are also of the opinion, that Modvat credit cannot be denied on a technical ground that the procedure for availing Modvat credit was not followed at the material moment of time. There are no merits in the appeal - appeal dismissed.
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2023 (11) TMI 74
Confiscation of imported goods - fresh apples - minimum import price - CIF value is below Rs. 50/- per kg - prohibition on import of the goods or not - HELD THAT:- In similar circumstances in M/s.Delhi Photocopiers v. Commissioner of Customs, Chennai and others [ 2021 (8) TMI 1244 - SUPREME COURT ], the Hon'ble Supreme Court has ordered for provisional release of the goods, on terms, and complete the process of adjudication within a fixed time frame. Having considered the fact that the stay of operation of the notification is in force till date and the same is yet to attain finality and also taking note of the nature of the subject goods viz., fresh apples, which are perishable in nature and are meant for human consumption and also in the light of the order of the supreme court as referred to above, this court finds it appropriate to order release of the goods to the respondent, however, subject to the condition that the respondent shall furnish bank guarantee to the value of differential duty to be determined by the authority, in order to safeguard the interest of the Department. The appellant is directed to release the subject goods on furnishing of bank guarantee to the tune of Rs. 2,25,000/- towards differential duty, by the respondent. It is made clear that this interim arrangement would be made only to safeguard the interest of both parties; and the bank guarantee to be furnished by the respondent is kept alive, till the decision is arrived at with regard to validity of the notification no.5/2023 dated 08.05.2023. Appeal disposed off.
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2023 (11) TMI 73
Recovery of Customs Duty foregone with respect to Zero Duty EPCG Licence - simultaneously availing SHIS scheme and Zero Duty EPCG Scheme by suppressing the information of availment of SHIS Scheme in ANF 5A form - HELD THAT:- The duty foregone into Zero Duty EPCG Licences was demanded through the show cause notice. Both the licences were issued before 05.06.2012. Before 05.06.2012, there was no requirement of giving an undertaking under para 4B of ANF 5A form. Therefore, the allegation of suppression in the show cause notice is not proved. The Public Notice dated 08.09.2016 is also gone through. Further, the original authority has accepted the contents of the said public notice and dropped the proposals for imposition of penalties. There are no irregularity on the part of the appellant for Revenue to recover customs duty of Rs.15,29,559/- under extended period of limitation. The impugned order set aside - appeal allowed.
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2023 (11) TMI 72
Seeking provisional release of seized goods - crude gold bullion seized from the office - prohibited goods or not - gold seized from the appellant s premises was allegedly procured from importers who have diverted imported gold to the local market contrary to the conditions and restrictions placed on such imports - HELD THAT:- The contentions of the appellant that the gold is in crude form and does not bear foreign marking, and hence it is not yet proved to be of foreign provenance. The same has been seized as a part of investigation from the appellant s premises. Appellant claims to have provided proof of their licit origin and of having been properly recorded in their books of account and informed to the Department in their periodic returns, but these could only be considered during adjudication and hence, no views expressed at this stage. But the matter has not been adjudicated even after a lapse of more than one and half years - the balance of convenience would be to ensure that the Department s interests are secured while the appellant is also allowed to continue with its business. The Hon ble High Court of New Delhi in its judgment in Its ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) VERSUS M/S. ITS MY NAME PVT. LTD. [ 2020 (6) TMI 72 - DELHI HIGH COURT] has held that the power and jurisdiction of the Tribunal hearing the appeal, is coequal with the powers exercised by the adjudicating authority. The Hon ble High Court has held that a Bank Guarantee of an amount of around 30% of the value of the goods seized along with a Bond for the full value of the seized goods containing an auto renewal clause to be a sufficient safeguard for the interest if Revenue. It would serve the interest of the Revenue and the appellant to follow the said terms and conditions while ordering release of the impugned goods provisionally as per Section 110A of the Customs Act 1962 - the release of the seized goods is ordered, for which the appellant may furnish a bond, for the full value of the seized goods, along with a Bank Guarantee containing an auto renewal clause for an amount of 30% of the value of the seized goods subject to the condition that the premises of the appellant would be kept open for inspection by the Revenue, at all reasonable hours, and all utilization/sale of the gold/gold jewellery shall be duly accounted for. The impugned order is therefore set aside - appeal disposed off.
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2023 (11) TMI 71
100% EOU - Import of textile machinery without payment of duty - violation of condition No. 6 of Notification No. 53/97-Cus dated 03.06.1997 - respondent-assessee could not satisfy the department regarding their failure to install the textile plant - HELD THAT:- It can be seen from the bare perusal of the condition No. 6 of the said notification of the exemption notification that duty free imported goods namely plant-machinery for textile industry should have been for manufacture of export products and export obligation need to have been fulfilled within prescribed time-limit. There is no denying of the fact that duty free imported consignment of machinery was neither installed nor they were used for manufacture of the export items. The order of re-export of duty free imported machineries provided by impugned order-in-original is legally not tenable as the permission for the re-export of the goods could have been given by the concerned proper officer, had they followed the prescribed time schedule as given in the exemption notification and made a request for re-export at the proper time - since the impugned goods have been imported without payment of customs duty, the inherent value of the goods comprises the element of Customs duty therein and therefore permission of allowing destruction of goods without authority of customs law will amount to arbitrary abatement of leviable customs duty. The impugned order-in-original is without any merit and the same is set-aside - matter remanded back to the original adjudicating authority to re-adjudicate the matter, after giving proper hearing to the respondent-assessee - the appeal is allowed by way of remand to the original adjudicating authority.
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2023 (11) TMI 70
Refund of customs duty which was paid at the time of provisional clearance of subject goods - On finalization of the bills of entry, it is found that customs duty payable was less than the duty which was provisionally assessed and deposited by the appellant - HELD THAT:- The matter is no longer res-integra as the Hon ble Supreme Court in the case of MANGALORE REFINERY AND PETROCHEMICALS LTD. VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [ 2015 (9) TMI 245 - SUPREME COURT] has already decided the matter where it was held that the quantity of crude oil actually received into a shore tank in a port in India should be the basis for payment of customs duty. Consequential action, in accordance with this declaration of law, be carried out by the customs authorities in accordance with law. The impugned order-in-appeal is legally tenable and the same is correct and legal - Appeal dismissed.
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2023 (11) TMI 69
Availability of exemption from the whole of the customs duty by Beetal Teletech under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014 - Classification of imported goods - Wireless Access Points WAP / MIMO Product (products having MIMO Technology) - classifiable under Customs Tariff Item CTI 8517 62 90 or not - period from July 2014 to June 2017 - Extended period of limitation. Whether the exclusion clause covers products having only MIMO technology and not working on LTE standard. Exclusion clause (iv) uses the conjunction and and, therefore, it can be urged that the scope of clause (iv) can be restricted to those products that have MIMO and LTE both and that the product that only has MIMO technology may, therefore, not be covered by this exclusion clause and, therefore, may not be excluded from the scope of Serial No. 13? HELD THAT:- What needs to be remembered is that MIMO is a technology and cannot be treated as an independent product. If the intention was to exclude even products having only MIMO technology, then the word products should have been used after MIMO as well as after LTE. It, therefore, follows that the scope of products excluded by entry (iv) would be products which use both MIMO and LTE. Thus, the term Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products means products which contain both MIMO and LTE. This view finds support from the the decision of Division Bench of the Tribunal in Ingram Micro India [ 2020 (11) TMI 9 - CESTAT CHENNAI] confirmed the classification of identical product (i.e. WAP) under CTI 8517 62 90 and extended the benefit of the subsequent notification dated 30.07.2017. The Department has accepted the Order passed by the Tribunal. Therefore, once the benefit has been granted to Ingram Micro in the subsequent notification for an identical product, the benefit under the notification dated 01.03.2005, as amended on 11.07.2014 should also be extended to Beetal Teletech. It is also well settled law that an exclusionary clause in an exemption notification should be strictly construed and must be given a narrow meaning so as to not frustrate the intention behind the exemption notification - It has been stated that the investigation by the DRI was not only against Beetal Teletech but few other importers of these goods also and the proceedings initiated against other importers was dropped but appeals have not been filed by the Department. The aforesaid discussion leads to be inevitable conclusion that WAP imported by the appellant works on technology and does not support LTE standard. Ingram Micro was, therefore, justified in claiming exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification. There is, therefore, no infirmity in the order dated 28.11.2019 passed by the Additional Director. The two Customs Appeals filed by the Department, therefore, deserve to be dismissed and are dismissed.
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2023 (11) TMI 68
Classification of goods proposed to be imported - Routers - to be classified under sub-heading 8517 62 90 or not - eligibility benefit of exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended - HELD THAT:- The impugned goods are devices that connect two or more packet-switched networks or sub-networks and deliver Wi-Fi network access to all parts of the house. They serve two primary functions: managing traffic between these networks by forwarding data packets to their intended IP addresses, and allowing multiple devices to use the same internet connection. The Wavlink models Quantum D2G, Quantum S2K and WL-WN529E4 are wireless routers, which use an Ethernet cable to connect to a modem. A mesh Wi-Fi system is a home networking solution that opts for a more decentralised approach. Instead of connecting all the devices through the same router, mesh Wi-Fi systems rely on multiple Wi-Fi nodes. One node is the designated primary router and is directly wired into the gateway connection, while the other nodes act as satellites. Collectively, the nodes function as a single network. The device gets connected to the node that is closest to it. As per the applicant, the subject goods are classifiable under Chapter Heading 8517 of Customs Tariff Act, 1975 and ought to be specifically classified under sub-heading 8517 62 90, as they are routing apparatus and are supported by the HSN Explanatory notes under Heading 85.17. Further they attract eligibility benefit of exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended. In order to merit classification under 8517, it is essential that the subject goods under consideration meet the criteria as laid down in the relevant headings, sub-heading and notes cited above. From the relevant headings and HSN notes reiterated above, it is apparent that (a) Switching and routing apparatus are specifically covered under sub-heading 8517 62, (b) Routers are covered as other communication apparatus in the HSN notes under sub-heading 8517 62 and (c) Communication apparatus of sub-heading 8517 62 including routers, support the reception, conversion and transmission of signals and allow for the connection to a wired or wireless communication network - As the goods under consideration satisfy all the above conditions, they merit classification under sub-heading 8517 62. As the routers are not specifically covered under any tariff entry under said sub-heading 8517 62, they are classified under the residual Tariff Heading 8517 62 90. Further, Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended, exempts Routers falling under Heading 8517 62 90 from the whole of the duty of customs leviable thereon. As the impugned goods are held as classifiable under sub-heading 8517 62 90 they are entitled to the duty exemption benefit under the notification. The Routers covered under present application are classifiable under sub-heading 8517 62 90 of the First Schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of duty exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended.
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Securities / SEBI
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2023 (11) TMI 67
Share manipulation - unlawful gains through disguised trading - transaction pursuant to the alleged SMS - synchronized trades, self-trades and reversal of trades thereby creating a false appearance of trading and manipulation of the trading volumes in the scrip in question - violation of Section 12A of the SEBI Act r/w Regulation 3 and 4 of the SEBI PFUTP Regulations - combined shareholding had triggered the requirement of making an open offer under Regulations 10 and 11 of the SAST Regulations as these 5 noticees were acting in concert and had failed to make an open offer thereby violating the said regulations - orders restraining the appellant from accessing the securities market for a period of four years and from associating himself with any listed Company as a Director HELD THAT:- The finding that the modus operandi adopted by Arvind Babulal Goyal was to accumulate the shares and thereafter dispose off such shares pursuant to circulation of SMS is patently erroneous and against the material evidence on record. As upon perusal of the relevant documentary records, we find that the finding that the appellant was trading from the account of Abhay Javlekar is not based on proper appreciation of the documentary evidence. In the first instance, we find that the Know Your Client ( KYC ) document of Abhay Javlekar shows the email ID of Arvind Goyal and mobile number as given - WTM has presumed that the mobile no. is of Arvind Goyal. This number has been denied by the appellant. No effort was made by the investigating officer or by the WTM to find out as to who is the owner of this mobile no. quoted. Abhay Javlekar admits before the investigating officer that his DIS slip book and cheque book was issued to one Jayesh Solanki which statement is contrary to the stand which he now takes that Arvind Babulal Goyal had taken the DIS slip and cheque book for the purpose of trading. In our opinion, contradictory stand has been taken by Abhay Javlekar. Abhay Javlekar further admits that many trades were carried out without his knowledge by Pradeep Makhija of Yoke Securities. In the light of the aforesaid glaring evidence which is on record it is difficult to believe that Arvind Babulal Goyal was using Abhay Javlekar s trading account. Thus, the finding given by the WTM that Arvind Babulal Goyal was using Abhay Javlekar s account for trading purpose is not based on sound evidence. Similarly, the finding that Arvind Goyal was involved in manipulative and unfair trade practice by employing self-trades, synchronized and reversal trades thereby creating an artificial volume in the scrip in question is again erroneous and against the evidence in as much as no trades were carried out by Arvind Goyal or Pooja Goyal after the issuance of SMS. Since no trades were carried out by Arvind Goyal and Pooja Goyal pursuant to the alleged SMS the question of their trades being manipulative and adopting unfair trade practice does not arise. For the same reason, the violation of Regulations 3 and 4 of the PFUTP Regulations cannot be sustained as a result the order of disgorgement towards unlawful gain or loss averted cannot be sustained since we do not find any violation of the PFUTP Regulations. Order of disgorgement - We are of the opinion that the disgorgement amount has been crystalized under the show cause notice and therefore the said amount could only be considered by the WTM and the WTM could not consider the figures mentioned in the impounding order. We further find that the direction to pay 12% interest per annum on the disgorged amount could not have been issued as we find from a perusal of table 17 that the disgorged amount included the component of interest and, therefore, double interest cannot be charged. Since we have already held that Arvind Goyal had not traded from the trading accounts of Abhay Javlekar, the allegation that they were acting in concert is thus not proved. Arvind Babulal Goyal, Pooja Goyal and Abhay Javlekar in their own capacity had acquired the shares. Whether they individually crossed the trigger of 15% / 5% under Regulations 10 and 11 of the SAST Regulations is required to be considered afresh. The AO is required to see whether or not Arvind Babulal Goyal and Pooja Goyal collectively as husband and wife and Abhay Javlekar in his individual capacity had triggered the obligation to make an open offer under Regulations 10 and 11 of the SAST Regulations respectively and if they had triggered the requirement of making an open offer under Regulations 10 and 11 of the SAST Regulations then appropriate penalty commensurate with the acquisition should be levied. Appeal allowed.
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2023 (11) TMI 66
Front running trading activity by certain entities - fraud for the purposes of the PFUTP Regulations - Offence under SEBI - investigation found that the appellant Manish Chaturvedi was the key person who perpetrated the front running activity with the aid and assistance of other noticees including his parents (Laxmi Chaturvedi and Manohar Chaturvedi) - HELD THAT:- WTM and the AO correctly held that the trades of Anandilal Chanda and Anandilal Chanda HUF were based on the specific information obtained by Anandilal Chanda from Madhu Chanda, and more so in the absence of any plausible explanation by the appellants (the Chandas) of the peculiar and unusual manner in which their trades were executed ahead of the trades of the clients of Sharekhan and matched with the trades of the Sterling group. We further find that the nature, volume and value of trades of Anandilal Chanda and Anandilal Chanda HUF further corroborate the fact that they were carrying out front running activity in order to front run the clients of Sharekhan based on the information that was being passed on by Madhu Chanda to Anandilal Chanda. WTM order and the AO order have correctly held that due to the trading based on prior information of trades of the aforesaid 7 noticees and of the Sterling group, Madhu Chanda, Anandilal Chanda and Anandilal Chanda HUF defrauded investors in the securities market and caused loss to other investors / deprived the investors from profits, and made unlawful gains in their respective trading accounts. The front runners viz. Viraj Mercantile, Josh Trading, Pinky Auto, E-Ally, Shree Jaisal and Bhavesh Gadhavi respectively have also admitted their role in lending the trading accounts to Praveen Jain and in fact couched their submissions before this Hon'ble Tribunal as a 'mercy petition' whereby they have restricted their submissions only to reduction of penalty and period of debarment imposed against them. In this regard, it is submitted that lending of trading accounts is an offence of grave nature as the same may lead to misuse of trading accounts for activities in the securities market that may not be for genuine transactions as has happened in the present case and the same amounts to fraud for the purposes of the PFUTP Regulations.
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2023 (11) TMI 65
Fraudulent Scheme of using the GDR proceeds to fund a subscriber - GDR issue was fully subscribed was misleading as the investors were not informed that the GDR was subscribed by only one entity - fraudulent scheme and violative of Section 12A of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations - AO found that the GDR was subscribed by one entity, namely, Vintage - AO further found that on account of the pledge created by the Company with EURAM Bank the funds were not made available at the Company s disposal and the same became available in tranches as and when the loan amount was repaid by Vintage. Further, the loan agreement was not disclosed to the stock exchange and to the Indian investors. HELD THAT:- We find that this modus operandi in the instant appeals is the same as has been dealt with by this Tribunal in a large number of matters relating to the GDR issue wherein the Tribunal has held that non-disclosure of the loan agreement and the pledge agreement was totally fraudulent and violative of the Listing Agreement. This Tribunal also held that the Company and its MDs were aware of the execution of the pledge agreement as well as loan agreement and it was no longer open to them to deny the existence of the said agreements. This Tribunal also held that the Company and its Directors misled SEBI into believing that there were more subscribers to the issue and not one subscriber. We also held that Company and its MDs were aware of the pledge agreement, non-disclosure of the pledge agreement and loan agreement invited penalty. Further, the corporate announcement did not disclose the fact that the subsisting pledge agreement facilitated the subscribers to subscribe to the GDR issue. The corporate announcement was misleading and presented a distorted version to the investors and created a false version inducing the investors to deal in securities. See Sibly Industries Ltd. vs SEBI . [ 2022 (7) TMI 1478 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] , Aksh Optifibre Ltd. [ 2022 (6) TMI 1441 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] and Praveen Kumar Hastimal Shah [ 2022 (7) TMI 1477 - SECURITIES APPELLATE TRIBUNAL, WTM and the AO while admitting that the appellant was a non-executive independent director and had resigned on February 7, 2012 found that he was a member of audit committee and was required to ensure all the transfer of the GDR proceeds to the accounts of the Company in India - The finding given by the WTM and the AO cannot be accepted. There is nothing on record to indicate that the matter relating to GDR issue was placed by the Company before the audit committee. In the absence of any evidence the finding that it was the responsibility to monitor the end use of the funds is patently erroneous. We are of the opinion that Section 177(4) of the Companies Act, 2013 cannot be applied in the instant case inasmuch as the said provision only came into existence when the Companies Act, 2013 was enacted. n the absence of any finding that the GDR issue was placed before the audit committee we are of the opinion that members of the audit committee cannot be held responsible for the alleged violation. Further, the finding that there was a long association with the Company is purely based on surmises and conjectures. We also are of the opinion that there is no finding that the appellant was involved in the day to day affairs of the Company merely attending board meetings cannot lead to a conclusion that the appellant was involved in the day to day affairs of the Company. Independent directors cannot be penalized when they are not part of day-to-day affairs of the company . See Prafull Anubhai Shah vs SEBI [ 2021 (6) TMI 1159 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] and Rajesh Shah vs SEBI [ 2021 (7) TMI 1433 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] In view of the aforesaid, the impugned orders passed by the WTM and AO cannot be sustained and are quashed insofar as it relates to the appellant. The appeals are allowed.
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2023 (11) TMI 64
Unfair Trade Practices relating to Securities Market - scheme of using the GDR proceeds to fund a subscriber to the GDR issue was a fraudulent scheme and violative of Section 12A of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations - non-disclosure of the loan agreement and the pledge agreement was violative of Clause 36 of the Listing Agreement as well as Section 21 of the SCRA Act read with Clause 32 and 50 of the Listing Agreement - penalty imposed on company and directors and MCDs HELD THAT:- We find that this modus operandi in the instant appeals is the same and has been dealt with by this Tribunal in a large number of matters relating to the GDR issue wherein the Tribunal has held that non-disclosure of the loan agreement and the pledge agreement was totally fraudulent and violative of the Listing Agreement. This Tribunal also held that the company and its MDs were aware of the execution of the pledge agreement as well as loan agreement and it was no longer open to them to deny the existence of the said agreements. This Tribunal also held that the company and its Directors misled SEBI into believing that there were more subscribers to the issue and not one subscriber. We also held that company and its MDs were aware of the pledge agreement, non-disclosure of the pledge agreement and loan agreement invited penalty. Corporate announcement did not disclose the fact that the subsisting pledge agreement facilitated the subscribers to subscribe to the GDR issue. The corporate announcement was misleading and presented a distorted version to the investors and created a false version inducing the investors to deal in securities - in the light of the aforesaid decisions the findings against the appellants in the instant appeals does not require any interference nor we require to give elaborate reasons. The findings of the AO are upheld. Quantum of penalty and on the issue of proportionality - SEBI has passed various orders against company and its directors imposing different penalties for identical / similar offences. In a large number of penalties ranging from Rs. 25 lakh to Rs. 1.25 crore have been imposed upon the companies which we have appropriately reduced to Rs. 25 lakh. Similarly, for managing director considering the factor in each of the case the penalties have been reduced to Rs. 10 lakh and Rs. 20 lakh. Similarly, in many cases the penalty ranging from Rs. 5 lakh and Rs. 10 lakh have been imposed upon the directors. In a large number of cases, we have exonerated independent directors. Thus without going into the specific details, in the instant case, we find that penalty imposed against the company is appropriate as in many other cases we have been reduced the penalty against the company to Rs. 25 lakh. Thus, the penalty imposed by the AO against the company noticee nos. 1 needs no interference. Similarly, we find that the penalty of Rs. 25 lakh imposed upon the noticee nos. 2 who is the CMD is also appropriate and commensurate with the alleged violation as he was the signatory to the account charge agreement / pledge agreement. In so far as noticee nos. 3, 4, 5 and 6 are concerned, we find that noticee nos. 3 was non-executive director and noticee nos. 4, 5 and 6 were independent directors. There is no evidence to show that all these noticees apart from being signatory to the resolution of the board of directors were not involved in the day-to-day affairs of the company nor were they aware or monitor the issuance of the GDR issue. Independent directors cannot be penalized when they are not part of day-to-day affairs of the company . See Prafull Anubhai Shah vs SEBI [ 2021 (6) TMI 1159 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] and Rajesh Shah vs SEBI [ 2021 (7) TMI 1433 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] - Thus the penalty imposed upon notice nos. 3 to 6 to the tune of Rs. 10 lakh each are set aside.
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Insolvency & Bankruptcy
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2023 (11) TMI 111
Admission of Section 9 application - existence of pre-existing dispute or not - time limitation - HELD THAT:- Along with the Demand Notice, Annexure statement of showing calculation of total debt has been mentioned. On looking into the invoices and the due date, Demand Notice was issued after expiry of due date in all the invoices. The statement filed along with the Demand Notice clearly indicates that most of the invoices were of June 2019; one was of 04.07.2019 and one was of 08.07.2019. Thus, 45 days of credit period came to an end with regard to all invoices which are part of the Demand Notice. Thus, the submission of the Appellant that no amount became due cannot be accepted. Insofar as the submission that the cheques which were submitted in the Bank by the Operational Creditor were security cheques, these are the issues which need not be adverted to the present proceedings. Section 138 proceedings have already been initiated and that can be looked into in the said proceedings. There are no error in the order of the Adjudicating Authority admitting Section 9 Application. There is no merit in the Appeal - appeal dismissed.
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2023 (11) TMI 110
Admissibility of section 7 application - time limitation - HELD THAT:- The Adjudicating Authority did not commit any error in allowing the Amendment Application permitting the State Bank of India to amend the Part IV of Form-1 in so far as date of default is concerned - With regard to the observation made in Para 12, it is observed that it was for the purposes of allowing the Amendment Application. At the time of hearing of the Section 7 application filed by the State Bank of India, the Adjudicating Authority shall consider the submissions of the parties on the question of limitation being uninfluenced by any observation made while allowing the Amendment Application. With these observations, the appeal is disposed off.
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2023 (11) TMI 109
Assignment of debt under Sections 43, 45, 50 66 of IBC, 2016 before the adjudication of Avoidance/PUFE of proceedings by Liquidator - HELD THAT:- The issue which is sought to be raised by the appellant need not be entertained and decided in the appeal which has been filed by the Liquidator. The appeal is dismissed.
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2023 (11) TMI 108
Seeking direction from the Adjudicating Authority to accept the claim as a Financial Debt under the provision of Section 5(8) of I B Code - Appellant submits that since the Application for approval of Resolution plan is still pending before the Adjudicating Authority, the order can be passed to consider the claim of the Appellant - HELD THAT:- The Hon ble Supreme Court in recent Judgment in M/S. RPS INFRASTRUCTURE LTD. VERSUS MUKUL KUMAR ANR. [ 2023 (9) TMI 516 - SUPREME COURT] has already taken the view that after approval of the plan by the CoC, the claims cannot be entertained. There is no dispute with the facts that the claim was filed by the Appellant after approval of the plan by the CoC. The Appellant has also not been able to show that claim of the Appellant was reflected in the records of the Corporate Debtor. Thus, no error has been committed by the Adjudicating Authority rejecting I.A. There is no merit in the Appeal, the Appeal is dismissed.
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2023 (11) TMI 107
Validity of order if Initiation of CIRP - After the final hearing of the matter, ITAT reserved the order for passing - Thereafter, appellant prayed for recall the reserved order and re-hear the matter on the basis of new facts - Request of the appellant was rejected - Whether rejection of application caused serious miscarriage of justice to the Appellant which warrants the setting aside of both the impugned orders? HELD THAT:- The Appellant was fully aware of the assignment of debt by the original Financial Creditor to the Respondent No.1 which is amply evident from the fact that they had themselves chosen to send the OTS proposal to Respondent No.1 on 21.10.2016 instead of sending the same to the original Financial Creditor. The OTS proposal is placed at page 287 of the Appeal Paper Book (APB). It is, therefore, clear that the Appellant/Corporate Debtor was not only aware of the assignment of the debt but had accepted and acknowledged this fact by sending the OTS proposal to the assignee. Moreover, the issue of assignment deed was never raised by the Appellant during the hearing of the main petition or at any stage prior to reserving the matter for orders. It is a well settled proposition of law that the two stages of reserving of judgment and pronouncement of judgment are in a continuum with no hiatus or gap as such in the two stages. That being the well accepted and time-tested practice in court proceedings, subsequent pleadings filed by way of an I.A. after the judgement is reserved is normally not entertained for reasons of procedural propriety - There is no material on record to show that this debt had been liquidated by the Corporate Debtor. That being so, the debt was continuing and there was a default in repayment and nothing on record controverts that position. The Corporate Debtor having accepted the assignment agreement in their OTS proposal has no ground to deny knowledge of the fact that the Respondent No.1 had stepped into the shoes of the original Financial Creditor and therefore it has been correctly concluded by the Adjudicating Authority that the loan facility acknowledged in the name of the Financial Creditor in the balance sheet is to be construed as acknowledgement of debt qua the Appellant. Since in the facts of the present case, a debt has arisen which is due and payable by the Corporate Debtor and a default has occurred, admission of Section 7 application cannot be obfuscated by raising technical pleas and that too after hearing in the main petition stood concluded and matter was reserved for hearing. There are no convincing reasons to interfere with either of two impugned orders - Appeal dismissed.
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2023 (11) TMI 106
Wilful Obedience - Application filed under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 by the Liquidator praying for directions to be issued to the Respondent to hand over the vacant possession of the immovable property - HELD THAT:- This Tribunal on 21.04.2023 in allowing the Respondent to settle the dues of the statutory creditors had done so by holding that the liquidator should assume a more positive approach and not shun the bonafide efforts made by the present Respondent to clear the debt of the Corporate Debtor. It had therefore decided to give an opportunity to the present Respondent to settle with the fourth statutory creditor rather than straight away allow auction of the subject property with the caveat that this settlement was to be completed within a limited and stringent timeframe. This was allowed so as to balance the interests of all stakeholders while being fully conscious of the objectives of timeliness in the completion of proceedings under IBC. Despite allowing two extensions of time to the Respondent, he failed to submit a responsive proposal and instead chose to file an appeal before the CESTAT. The object behind filing the appeal was to reach an end which was clearly different from the purpose for which time was allowed by this Tribunal towards full and final settlement. Instead of clearing the claims of the majority stakeholder, endeavours have only been made to dispute and stagger the claims by filing an appeal - In the process, the objectives of the IBC have been upset and defeated. Speed is the essence of IBC and the process of liquidation is time-bound to be completed within one year. Keeping in mind that the liquidation process in the instant case is already much delayed we do not find strong and cogent reasons to allow more time. Application disposed off.
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2023 (11) TMI 51
Maintainability of application - initiation of CIRP - Financial Creditor had invoked the Corporate Guarantee on 25.08.2020, which is falling under the period specified under Section 10-A of the IBC, 2016 - HELD THAT:- Before the AA, in Form I, Part IV, the Appellant had clearly stated that the Bank Guarantee was invoked on 25.08.2020. Since the Corporate Guarantee was invoked on 25.08.2020, the debt became due for payment thereafter. As per the provisions of Section 10-A of IBC, 2016, CIRP cannot be initiated for defaults arising in 12 months period beginning 25.03.2020. Since the Deed of Guarantee was invoked on 25.08.2020, CIRP cannot be initiated for default in repayment as the default arises in the period excluded by provisions of Section 10A of IBC, 2016. The AA has rightly held that the default falls within the specified period in Section 10-A of the IBC, 2016 and the Application U/s 7 of IBC, 2016 is non maintainable. Appeal dismissed.
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PMLA
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2023 (11) TMI 63
Seeking grant of bail - Money Laundering - proceeds of crime - scope and ambit of the constitutional protection under Articles 74 and 163 of the Constitution of India on the decisions taken by the Council of Ministers - interpretation of Section 3 of the PML Act - 'the act/process of generation or the attempt to generate the proceeds of crime falls within the ambit of the expressions assist , acquisition , possession or use under Section 3 of the PML Act or not - person can be prosecuted under the PML Act only when there is material to show that he has indulged or assisted in any activity/process of money laundering, albeit an activity/process different and separate from the scheduled offence? - Sections 45 and 50 of the PML Act should be read down in view of the constitutional scheme and mandate of Article 20 of the Constitution of India? HELD THAT:- In Mohan Lal [ 2015 (4) TMI 688 - SUPREME COURT] , the expression possession , it is held, consists of two elements. First, it refers to corpus of physical control and second it refers to the animus or intent which has reference to exercise of self-control. In the context of narcotics laws, a person is said to possess control over the substance when he knows the substance is immediately accessible and exercises dominion or control over the substance. The power and dominion over the substance is, therefore, fundamental. The stand of the DoE as to the constructive possession, will be satisfied only if the dominion and control criteria is satisfied. If the proceeds of crime are in dominion and control of a third person, and not in the dominion and control of the person charged under Section 3, the accused is not in possession of the proceeds of the crime. In the present case, the involvement of an accused may be direct or indirect. Prima facie, there is lack of clarity, as specific allegation on the involvement of the appellant Manish Sisodia, direct or indirect, in the transfer of Rs. 45,00,00,000 (rupees forty five crores only) to AAP for the Goa elections is missing. The offence of conspiracy and abetment, in terms of Sections 120/ 120B and Sections 107/108 of the IPC, are not applicable to offences under the PML Act. At the same time, Section 3 of the PML Act is wide and encompassing as it uses the words, directly or indirectly , with reference to the person involved, and knowingly assists, or knowingly is a party in an offence in relation to the concealment, possession, acquisition, use, projecting or claiming the proceeds of crime as untainted property. The appellant Manish Sisodia, it is claimed, had deliberately destroyed the two mobile phones so as to prevent any investigation. Further, he had changed his mobile phone on 22.07.2022, the date on which the media had covered the news of the complaint sent by the LG of NCT of Delhi to the CBI for investigation. The appellant Manish Sisodia states that people do change mobile phones frequently, and old phones need not be retained. Whether or not the allegation as to deliberate destruction of mobile phones is correct would be decided post recording of evidence, but this would not be a weighty factor for deciding the question of bail, given the period of detention undergone by the appellant Manish Sisodia. Prolonged period of incarceration suffered by the appellant Manish Sisodia - HELD THAT:- In P. Chidambaram v. Directorate of Enforcement [ 2019 (12) TMI 186 - SUPREME COURT] , the appellant therein was granted bail after being kept in custody for around 49 days In P. Chidambaram v. Central Bureau of Investigation, [ 2019 (10) TMI 879 - SUPREME COURT] , the appellant therein was granted bail after being kept in custody for around 62 days, relying on the Constitution Bench in Shri Gurbaksh Singh Sibbia and Others v. State of Punjab [ 1980 (4) TMI 295 - SUPREME COURT] , and Sanjay Chandra v. Central Bureau of Investigation [ 2011 (11) TMI 537 - SUPREME COURT] , that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case. Ultimately, the consideration has to be made on a case to case basis, on the facts. The primary object is to secure the presence of the accused to stand trial. The argument that the appellant therein was a flight risk or that there was a possibility of tampering with the evidence or influencing the witnesses, was rejected by the Court. Detention or jail before being pronounced guilty of an offence should not become punishment without trial. If the trial gets protracted despite assurances of the prosecution, and it is clear that case will not be decided within a foreseeable time, the prayer for bail may be meritorious - The right to bail in cases of delay, coupled with incarceration for a long period, depending on the nature of the allegations, should be read into Section 439 of the Code and Section 45 of the PML Act. The reason is that the constitutional mandate is the higher law, and it is the basic right of the person charged of an offence and not convicted, that he be ensured and given a speedy trial. When the trial is not proceeding for reasons not attributable to the accused, the court, unless there are good reasons, may well be guided to exercise the power to grant bail. This would be truer where the trial would take years. In view of the assurance given at the Bar on behalf of the prosecution that they shall conclude the trial by taking appropriate steps within next six to eight months, liberty given to the appellant Manish Sisodia to move a fresh application for bail in case of change in circumstances, or in case the trial is protracted and proceeds at a snail s pace in next three months. If any application for bail is filed in the above circumstances, the same would be considered by the trial court on merits without being influenced by the dismissal of the earlier bail application, including the present judgment. Appeal dismissed.
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2023 (11) TMI 62
Money Laundering - fraud in sale and purchase of land belonging to two Housing Co-operative Societies - presumption that proceeds of crime used in money transaction - shame and bogus sale deed - HELD THAT:- From the provision of law of Section 3 of the PML Act, it is clear that whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party, connected with proceeds of crime including its concealment, possession, acquisition or use shall be guilty of the offence of money laundering. As per the explanation, a person shall be guilty of money laundering if such persons is found to have indirectly or directly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in any of its concealment, possession, acquisition, use etc. in any manner whatsoever. Prima facie, involvement of the applicant comes within the purview of Section 3 of the PML Act. Under Section 22 of the PML Act, there is a presumption as to the record or property in certain cases, according to which where any record or property is found in the possession or control of any person in the course of a survey or a search, such record or property shall be presumed to be belonging to such person. There is a presumption in inter-connected transaction also Section 24 castes a burden on a person charges with the offence of money laundering under Section 3, unless the contrary is proved, the presumption that such proceeds of crime are involved in the money transaction. Under Section 22 of the PML Act, there is a presumption as to the record or property in certain cases, according to which where any record or property is found in the possession or control of any person in the course of a survey or a search, such record or property shall be presumed to be belonging to such person. There is a presumption in inter-connected transaction also Section 24 castes a burden on a person charges with the offence of money laundering under Section 3, unless the contrary is proved, the presumption that such proceeds of crime are involved in the money transaction. Therefore, as on today, no clean chit can be given to the applicant under Section 482 of the Cr.P.C. The burden is on the present applicant to prove his innocence in the trial. Application dismissed.
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Service Tax
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2023 (11) TMI 105
Appropriate Forum - High Court or Supreme Court - Scope of Negative List services - Business Support Service cover the activity done by assessee as per Section 65(104c) of the Finance Act, 1994 or not - agreement create the relationship of employer employee or not - HELD THAT:- By virtue of section 83 of the Finance Act, 1994 all the appeal to the High Court from order of CESTAT were to be filed under Section 35G of the Central Excise Act, 1944. Section 35G of the Central Excise Act, 1944, provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 ( not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law - under the Central Excise Act, any question relating to rate of duty of excise or to the value of goods, or its classification, the appeal regarding same was only maintainable before the Hon ble Supreme Court under section 35 L of the Central Excise Act. The rationale behind same is to maintain uniformity in the rate of duty as well as classification of the items across the country. For the purposes of the Service Tax Act, same rationale is not applicable as the rate of duty is uniform and further there is no classification of services. The only classification of service is whether they fall under the negative list or not. In the present case there is no question concerning determination of any question having a relation to the rate of duty or to the value of goods. Rate of duty is fixed, there is also no dispute as to the value. Reliance placed in the case of COMMISSIONER OF CE AND CGST BHAVNAGAR VERSUS KRISHNA CONSTRUCTIONS [ 2023 (10) TMI 64 - GUJARAT HIGH COURT ] where it was held that Reading the question of law framed indicates that the issue under consideration is as to whether the assessee was eligible for exception / exemption under Notification No. 25 of 2012. The exemption if denied, would require adjudication on rate of duty and therefore the appeal would fall under the caption not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment . Thus, tax appeal is not maintainable.
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2023 (11) TMI 104
Non-payment of Service Tax - operational surplus - service charges / tax exempted - freight and brokerage - demand of Service Tax alleging that these are in the nature of consideration received for CHA services as well as Steamer agent services - extended period of limitation. Demand of Service Tax on the income earned under the head operational surplus - HELD THAT:- Form the totality of facts as seen from the records and also on the basis of the submissions made, it is appreciated that while discharging the services as a CHA, the appellant collects certain charges in the nature of freight charges, port handling charges, statutory payment charges etc., from the client. So also charges in the nature of courier, fax, etc.,. The appellant not being able to quantify the expenses required in advance, has collected adhoc amount and later adjust these amounts towards the various expenses and charges incurred by them for providing the CHA services. This is in no way consideration received by the appellant from the client for providing the CHA service. In the invoices, the consideration for CHA service is mentioned as agency commission on which the appellant has discharged the Service Tax - The Department has proceeded to demand Service Tax only on the operational surplus. Again, it has to be stated that the figure as operational surplus is taken from the financial statements (profit and loss account) and not from the invoices raised by the appellant. This means it is the total operational surplus that has come into the hands of the appellant while incurring expenses and is not consideration received for services provided to a client(s). The Hon ble Apex Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] has considered the issue whether reimbursable expenses or cost incurred by the service provider and charged in the course of providing the taxable service is includable in the taxable value for payment of Service Tax. The issue has been answered in favor of the assessee whereby the Hon ble Apex Court has held that such reimbursable expenditure or cost incurred by the service provider and charged is not to be included in the taxable value. After appreciation of the facts, the clarification issued by the Board as per the Trade Notice No. 39-CE/97 dated 11.06.1997 and the decision of the Hon ble Apex Court in the case of Intercontinental Consultants and Technocrats, it is opined that the demand of Service Tax on operational surplus cannot sustain and requires to be set aside. Service charges / tax exempted - HELD THAT:- Trade Notice No. 39-CE/97 dated 11.06.1997 was in vogue till 2007. The period of dispute in these appeals is from 01.04.2003 to 31.03.2004. The said Trade Notice is therefore binding on the Department. However, the Ld. Counsel has been fair enough to submit that the said circular was superseded by Master Circular No. 96/7/2007-ST dated 23.08.2007 wherein it was clarified by the Department that services provided by sub-contractors is taxable even though the main contractor is discharging the tax liability - The Larger Bench of the Tribunal in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] had an occasion to consider the said issue as to whether the sub-contractor is liable to pay Service Tax even though the main contractor has discharged the Service Tax liability. The issue was answered in favour of Revenue and against the assessee - the Department had clarified that a sub-contracting CHA is not required to pay Service Tax, the demand raised invoking the extended period is also not sustainable under this head. Freight and brokerage - HELD THAT:- In the case of COMMISSIONER OF SERVICE TAX, NEW DELHI VERSUS M/S. KARAM FREIGHT MOVERS [ 2017 (3) TMI 785 - CESTAT NEW DELHI] , the Tribunal observed that the mark-up value collected by the assessee from the exporter is an element of profit in the transaction. The said amount is not a commission earned by the assessee and is not while acting as an agent of the exporter or shipping line and cannot be considered as a consideration. The assessee while acting as an agent on behalf of the shipping line was discharging the Service Tax as Steamer Agency services. The Tribunal took the view that the mark-up value collected by the assessee being an element of profit in the transaction cannot be subject to levy of Service Tax - In the present case also the Department does not have a case that the appellant has not discharged Service Tax on the agency commission received as a Steamer Agent or CHA. The demand is raised on the mark-up made which is the profit out of the difference in value of ocean freight collected by the shipping line and paid by the exporter / client - the demand of Service Tax on freight brokerage cannot sustain and requires to be set aside. Time Limitation - HELD THAT:- Apart from a vague allegation in the Show Cause Notice that the appellant has suppressed facts with intent to evade payment of Service Tax, there is no positive act of suppression established against the appellant. Moreover, the entire figures which has been the basis for rasing the demand as per these Show Cause Notices has been collected from the financial statements of the appellant. This proves that the appellant has properly accounted all the transactions and amounts collected by them - the Service Tax on the amount received as a sub-contracting CHA was not paid by them as during the relevant time the Board had clarified that the activities of a sub-contracting CHA is not subject to levy of Service Tax - there is no suppression of facts on the side of the appellant. The appellant succeeds on limitation also. The impugned orders are set aside - Appeal allowed.
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2023 (11) TMI 103
Validity of SCN - Invocation of Extended period of Limitation - validity of SCN - present is third SCN, earlier two SCN also invoked extended period of limitation - Invocation of Extended period of Limitation - Business Auxiliary Service - providing services in relation to material handling, loading, unloading, providing trailers, low bed trollies, tractor trollies, tractor cranes, erection commissioning installation of plant machinery with requisite manpower to Nestle - providing Maruti Van Tata 407 to M's Nestle to carry purchases from outside the factory - HELD THAT:- In the present case show cause notice was issued on 29.09.2008 for the period April, 2003 to December, 2005 demanding service tax on various activities carried out at the premises of M/s Nestle India Ltd. and Maruti Van tata 407 for carrying out activities of purchase. The said activity carried by the appellant for Nestle India Ltd were very much within the knowledge of the department for which earlier show cause notice was issued on 22.11.2001 for the period April, 2000 to March, 2001 and the second show cause notice was issued on 19.03.2007 for the period 01.01.2006 to 30.09.2006 - the said show cause notice was set aside by the Tribunal vide its order dated 24.05.2011, therefore, the present show cause notice invoking the extended period of limitation is completely barred by limitation as held in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [ 2006 (4) TMI 127 - SUPREME COURT] by the Hon ble Apex Court. As far as the merits of the case are concerned, as per the various agreements which are produced on record, low bed trollies with tractors proved with drivers to run within the factory, tractor crane with driver run within the factory of M/s Nestle do not fall in the category of Business Auxiliary service rather it falls under supply of tangible goods service which was made taxable w.e.f. 16.05.2008. We also find that various works carried out for M/s Nestle India Ltd. value wise certificate for the period in question has been provided by Nestle India Ltd. which is at page 41 of appeal memo. But the said certificate was not considered by both authorities below - The said certificate clearly gives the nature of the work carried out by the appellant and the amount paid by the Nestle to the appellant. This issue is clearly held in favour of the appellant in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, HALDIA COMMISSIONERATE VERSUS M/S. INDUSTRIAL HANDLING [ 2021 (12) TMI 526 - CALCUTTA HIGH COURT] wherein it has been held that when the tangible goods are supplied along with operators on monthly hire basis without transferring right of possession and effective control then the same was covered under supply of tangible goods services as introduces as introduced vide amendment to Finance Act w.e.f. 16.05.2008 and not under business auxiliary service. Pickup Van Tata 407 - Maruti Van - HELD THAT:- The same were provided to M/s Nestle India for purchase of goods and during hiring of vehicle, possession control was with the appellant and repair maintenances were also with the appellant, hence, the activity do not fall under Rent-a-cab service - Identical issue was considered by the Tribunal in the case of RAHUL TRAVELS, DEEPAK TRANSPORT BUS SERVICE AND ANAY TOURS TRAVELS VERSUS COMMISSIONER OF CENTRAL EXCISE NAGPUR / PUNE III AND COMMISSIONER OF CENTRAL EXCISE NAGPUR / PUNE II VERSUS V-LINK TOURS AND TRAVELS PVT. LTD. TRAVEL LINK [ 2016 (11) TMI 1294 - CESTAT MUMBAI] wherein the Tribunal held that when the cars and Buses are given in hiring as contract carriage on payment basis on their usage as per kilometer basis though possession with repair and maintenance remained with the owner, the same is not taxable prior to 01.01.2007 either under Rent-a-Cab service or under Tour Operator service. The impugned order is bad on merits as well as on limitation and is set aside - appeal allowed.
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2023 (11) TMI 102
Classification of Services - Manpower Recruitment or Supply Agency service or not - activity undertaken by the appellant was primarily for helping in manufacturing of various types of brass articles which were further cleared on payment of Central Excise duty by M/s. Rajhans Metal Pvt. Limited. - HELD THAT:- The appellant have not supplied any manpower to the client as per the contract the same are basically for execution of a particular work as per the work contract at a per Kg/ MT rate fixed for the work - it is found that the matter under consideration is no more res-integra as it has already been decided by this Tribunal in the case of ABBAS MUSSA PROPERITOR VERSUS C.C.E. S.T. -RAJKOT [ 2023 (8) TMI 249 - CESTAT AHMEDABAD] where it was held that the appellant have not provided the Manpower Recruitment or Supply Agency Services . The work undertaken by the appellant do not fall under the service category of Manpower Recruitment or Supply Agency Service and therefore, the impugned orders are without any merit and are set aside - appeal allowed.
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2023 (11) TMI 101
Recovery of Service tax alongwith interest and penalty - non-payment of service tax - Management, Maintenance and Repair Services - providing IT support services to its clients in and outside service - period 2006-07 - HELD THAT:- Hon ble Madras High Court in case of KASTURI SONS LTD, CHENNAI VERSUS UNION OF INDIA OTHERS [ 2011 (2) TMI 76 - HIGH COURT OF MADRAS] was in any case not even concerned with the taxation under the category of repair and maintenance service, the issue in case of Kasturi Sons was in respect of taxation under the category of Business Auxiliary Service as has been noted in the order of Hon ble High Court. Hon ble High Court did not decide the issue in respect taxability under the category of Management Repair and Maintenance Services but had observed that the circular issued giving retrospective effect to the amendments made by Finance Act, 2007, cannot be upheld and the same should have no application while deciding the cases for the past period. Thus it is observed that on the issue of the taxation under category of Management Maintenance and Repair Services various benches of tribunal has consistently taken the view that the software maintenance services which are akin to the services provided by the appellant in present case are only taxable from 01.06.2007. Nothing contrary is available on records. Appellant has been paying service tax in respect of these services as submitted by the counsel for appellant with effect from 01.06.2007 - there are no merits in the impugned order. Levy of penalties under Section 76, 77 and 78 of the Finance Act, 1994 - It is contended in the appeal that separate penalties should have been imposed under each section - HELD THAT:- As it is held that the demand is not maintainable in the present case, the issue of imposition of any penalty on the appellant cannot survive. Accordingly, this appeal filed by the revenue asking for imposition of penalties under Section 76, 77 78 is without any merit. Appeal of Revenue dismissed.
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2023 (11) TMI 100
Best judgment assessment invoked in the SCN - relevant date for reckoning the limitation under section 73 of FA - normal period of limitation - Invocation of extended period of limitation - Imposition of penalties under sections 77 and 78. Best judgment assessment - HELD THAT:- Nothing in the section 72 suggests that best judgment assessment has to be done at the request of the assessee or at the behest of anyone. The Central Excise officer, evidently, can do this on his own, in other words, suo moto. Therefore, the submission of the learned counsel for the assessee that this cannot be done suo moto holds no water. Nothing in the section says that best judgment can be resorted to only if the assessee requests for it. The assertion of the learned counsel that Form 26AS can be provided only by the Income Tax department to the Central Excise officers is not correct. The assessee himself could have provided this form to the central excise department as well - the demand for the normal period of limitation which the assessee has admitted and is not contesting is also as per the best judgment assessment, inter alia, based on the Form 26AS and other records - the assessee s objections to best judgment assessment in the impugned order has no legs to stand on and deserves to be dismissed. What is the relevant date for reckoning the limitation under section 73 and what was the normal period of limitation? - HELD THAT:- The proposition of the department that the date on which the return is filed after the due date should be reckoned as the relevant date cannot be accepted because (a) once the assessee does not file the return by the due date, the relevant date sets in and there is no provision in the law to modify this relevant date by any subsequent events including filing of the returns; and (b) because it results in absurdity because the assessee will be worse off by filing the return late than by not filing it at all. Hence it needs to be rejected. As far as the normal period of limitation is concerned, it was 18 months from the relevant date up to 13 May 2016, after which it was increased to 30 months. The question as to what would happen to the past cases when the period of limitation is increased was answered by the Supreme Court in Uttam Steel. It was held that limitation being a procedural law will have retrospective effect but any case which has already lapsed on the date the amendment came into force will not revive. The amendment will not put life into dead cases but those which are still live on the date of amendment will be governed by the new limitation - Therefore, for the half year ending September 2014 in the present case, the last date for filing returns was 25 October 2014 and the normal period of limitation ended on 24 April 2014. The new limit of 30 months came into force only on 13 May 2016. The normal period of limitation ended for the period upto September 2014 and for the period from October 2014, the new limit of 30 months applies. Invocation of extended period of limitation - HELD THAT:- The department has not made out a case to invoke extended period of limitation in the matter. While it is true that the DGCEI discovered that some tax had escaped assessment and that the assessee does not dispute it on merits, it is equally true that the entire demand is based on the records of the assessee, some of which it produced and the other records which the DGCEI could obtain through the Income Tax department. Such a scrutiny could have been and should have been done by the Range officer with whom the Returns were filed and he was fully competent to call for any records from the assessee. Such scrutiny could also have been done by the audit team which audited its records. What is evident is that if some tax escaped assessment even after the Returns being filed with the Range Superintendent and despite the assessee was audited is that neither had done their job properly - in this case, the demand only in respect of the normal period of limitation can be sustained. Imposition of penalties under sections 77 and 78 - HELD THAT:- Since it is held in favour of the assessee with respect to extended period of limitation, the penalty under section 78 needs to be set aside - The assertion of the learned counsel that the penalty under Section 77(1) (c) cannot exceed Rs. 10,000/- is also not correct. He has completely mis-read the section which provides for penalty of Rs. 10,000/- or Rs.200/- per day whichever is higher. Thus, the penalty cannot be less than Rs. 10,000/- but there is no upper limit. For all these reasons, the penalty imposed under section 77(1) (c) calls for no interference - Late fee was imposed under section 70 on the assessee for late filing of returns. This is a statutory fee and no specific averments have been made regarding this late fee - The penalty under sections 77(2) and 78 need to be set aside and the penalty under section 77(1)(c) needs to be upheld. Appeal allowed in part.
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2023 (11) TMI 99
Condonation of delay in filing appeal - Appellant was required to file the appeal on or before 17.03.2017 but the appeal was finally filed only on 15.05.2017 i.e. even after the condonable period of 30 days - HELD THAT:- Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT ] held that The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period. Thus, the Tribunal is not competent to condone the delay in filing of the appeal before the first Appellate Authority beyond the condonable period, and accordingly the appeal is dismissed.
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2023 (11) TMI 98
Levy of service tax alongwith interest and penalty - Works Contract Service - providing Erection, Commissioning or Installation Services to M/s BPCL at the pumping station, Gujari - HELD THAT:- On going through the special conditions of the Tender, it is clear that the bidder shall execute all the civil and electrical work of supply of all material; no separate amount to be paid for the service rendered is indicated; therefore, the work executed by the appellants fairly fall under the category of Works Contract Service, which is not taxable before 01.06.2007 as held by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] - the Department does not dispute the fact that the contract is of composite nature. Once the demand is held to be not sustainable, the question of interest and penalty does not arise. Appeal allowed.
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2023 (11) TMI 61
Scope of SCN - Failure to pay the Service Tax by the due date - contravention of Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994 - demand alongwith interest and penalty - HELD THAT:- A perusal of the Show Cause Notice makes it clear, and admittedly, that there is no specific service alleged against the appellant, as having been rendered by it, rather, a consolidated tax liability has been worked out, which makes it indefensible. It is relevant to note the decision of the Hon ble Apex Court in the case of COMMISSIONER OF C. EX., BANGALORE VERSUS BRINDAVAN BEVERAGES (P) LTD. [ 2007 (6) TMI 4 - SUPREME COURT ] wherein it has been categorically held The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice. In the instant case, what the appellant has tried to highlight is the alleged connection between the various concerns. Thus, no case is made out to take a different view deviating from the view expressed in the case of M/S. T.M.P. MANOHARAN CO. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [ 2023 (11) TMI 15 - CESTAT CHENNAI ] and therefore, the demand in the impugned order cannot sustain, for which reason the same is set aside. Appeal allowed.
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Central Excise
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2023 (11) TMI 60
Pre-deposit - Requirement of mandatory pre-deposit u/s 35-F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - financial hardship involved in such compliance - HELD THAT:- A perusal of the application would go on to show that the merits of the case had been addressed as to the liability of the petitioner to pay service tax as in the application there has been no such averment made regarding the undue hardship which would be caused to the petitioner which the Tribunal could have decided upon regarding dispensing with the liability subject to certain conditions. The amount mentioned in the application itself is Rs. 10,08,243/- and bare averment has been made that it would lead to great financial hardship to the appellant-firm which has already raised loans to the extent of Rs. 12,49,76,747/- which are outstanding. Keeping in view the earlier decision of this Court in M/S G.D. GOENKA WORLD INSTITUTE, SANJAY AGGARWAL, M/S IL FS RAIL LIMITED, M/S AUTO DYNAMIC CORPORATION, M/S OCEANIC CONSULTANTS PRIVATE LIMITED, M/S G.D. GOENKA WORLD INSTITUTE (UNIT OF GDG EDUCATION TRUST) , TARUN MONGA AND M/S SWIFT FUNDAMENTAL RESEARCH AND EDUCATION SOCIETY VERSUS UNION OF INDIA AND OTHERS AND COMMISSIONER OF CENTRAL EXCISE COMMISSIONERATE, LUDHIANA AND ANOTHER [ 2018 (11) TMI 522 - PUNJAB AND HARYANA HIGH COURT] , the Tribunal was well justified in insisting for the mandatory pre-deposit as required under Section 35-F of the Act. It was for the petitioner who had to put-forth his case in the application in a detailed manner as to how undue hardship would be caused to him. The present writ petition warrants no interference under Article 226 of the Constitution of India and the same is hereby dismissed in limine.
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2023 (11) TMI 59
Reversal of CENVAT Credit - manufacture and clearance of Hemophilus Vaccine which is duty free - Rule 6(3) of CCR, 2004 - Appellants or M/s Panheber are manufacturers of the vaccine or not - HELD THAT:- The Drug Controller has categorically clarified vide Letter dated 06.04.2017 that M/s Panacea Biotec Pvt. Ltd. and M/s Panheber Biotec Pvt. Ltd. were issued different drug manufacturing licences for separate modules in the year 2008 and that M/s Panheber Biotec Pvt. Ltd. has been renamed as M/s Panera Biotec Pvt. Ltd. registered with the same address. We find that there is an Agreement dated 10th July, 2008 between the appellant and M/s PanEra Biotec Pvt. Ltd. and the same is named Agreement for providing manufacturing facility, utilities and services of employees . Similarly, the books of accounts of M/s Panheber Biotec Pvt. Ltd. indicates that they have taken various assets situated at Lalru, Punjab on operating lease agreements from its associate M/s Panacea Biotec Pvt. Ltd. (the appellant); these are generally non-cancellable and are renewable by mutual consent on mutually agreed terms. The books of accounts do indicate that lease amounts have been paid to the appellant. Learned Commissioner has relied upon the fact that there are not records maintained by M/s Panheber and that the records maintained by the appellant do have the entries for the manufacture of the said vaccine - It is also not on record whether any communication or correspondence was made with the Drug Authorities to ascertain the claims of M/s Panheber and the appellants. Drug manufacturing being closely monitored by various agencies and subject to various controls cannot happen in a secretive manner. It is on record that various authorities, national and international, have visited the facility where M/s Panheber have manufactured the vaccines. Under the circumstances, the claim of the appellants cannot be simply brushed aside saying that they might have contravened Drug Laws and that it was a flimsy stand taken by the appellants. The Department having not negated the claims of the appellant that it was not the appellants who have manufactured impugned exempted product i.e the Hemophilus Flu Vaccine. Therefore, there are no case made by the Department to invoke the provisions of Rule 6(3) of the CCR, 2004. Coming to the alternate submission that Rule 6 provides for the situations where a manufacturer manufactures dutiable as well as exempted products and avails CENVAT credit on all the inputs/ input services/ capital goods and that the options given under Rule 6(3) of CCR, 2004 cannot be enforced, it is found that as submitted by the learned Counsel for the appellants that Hon ble High Court of Telangana has clearly interpreted the provisions in favour of the appellants. The findings of the Hon ble High Court are clear that Rule 6 does not provide any mechanism for recovery of the said 10% amount and that the Department is free to invoke Rule 14 of CCR, 2004 to demand wrongly availed credit, if any - the issue stands decided in favour of the appellants on the alternate submissions also. Appeal allowed.
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2023 (11) TMI 58
Reversal of CENVAT Credit as per provisions of Rule 3 (5) of Cenvat Credit Rules, 2004 - clearance of transformer oil as such along with final product - HELD THAT:- From the flow chart produced by the learned counsel for the respondent, it is evident that the transfer oil purchased by them has been used for inspection and testing during the process of manufacture. The adjudicating authority in para-12 has considered the use of transformer oil in the inspection and testing stage of manufacture of transformer - While dispatching the transformer, required quantity of transformer oil is filled and the balance required quantity is cleared in barrels along with transformer. On perusal of the impugned order, it is found that the reason for holding that the credit need not be reversed is not merely because the value of inputs (transformer oil) has been included in the assessable value but also upon the fact that the transformer oil is used in the process of manufacture for inspection and testing of transformers and not cleared as such . The transformer oil purchased by the respondent was used inside the factory in the process of manufacture and only for convenience has been transported in barrels along with finished product. The transformer oil is not cleared as such - there are no grounds to interfere with the impugned order. The same is sustained. The appeal filed by the Department is dismissed.
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2023 (11) TMI 57
CENVAT Credit - CVD of 2% paid on imported steam coal - Rule 3 of CCR 2004 - HELD THAT:- The issue is whether the appellant is eligible to take the CENVAT Credit of 2% CVD paid on imported steam coal vide notification 12/2012 Cus. dated 17/3/2012. The issue has been considered by the Tribunal in the case of M/S. TAMIL NADU NEWSPRINT PAPERS LIMITED VERSUS COMMISSIONER OF GST CENTRAL EXCISE, TIRUCHIRAPPALLI [ 2021 (10) TMI 13 - CESTAT CHENNAI] where it was held that the adjudicating authority has committed a legal error while denying the benefit of reduced CVD on imported coal while placing reliance upon the Excise notification for manufacture of coal. Order is therefore, held not sustainable and accordingly, is hereby set aside. The demand cannot sustain and requires to be set aside. The impugned order is set aside. The appeal is allowed.
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2023 (11) TMI 56
Demand of duty by denying the benefit of exemption - Capital goods for specific use - Clearance of hydraulic excavators to contractors/construction companies - violation of Notification No.108/95 CE dated 28.08.1995 - goods withdrawn from the project or not - HELD THAT:- Regarding scope of denovo adjudication, while remanding the matter to adjudication authority, this Tribunal has not considered the plea of appellant that they have not removed the goods before completion of the project and only held that demand against the appellant can be sustained only for one year period which is within the period of limitation - Hence considering the issue whether the appellant violated the condition of exemption notification by removing the goods before completion of the project cannot be considered beyond the scope of remand order. There are strong force in the submissions made by the appellant that the goods supplied during the relevant period by availing the exemption notification whether withdrawn from the project has to be examined and only if it is removed before completion of the project, the benefit of notification can be denied. Merely based on presumption that few of the hydraulic excavators procured from appellant have been withdrawn from the project, few are in the process of being withdrawn and others to be withdrawn once the project is completed, no finding can be made to deny the benefit of ibid notification - There is no averment in SCN or impugned order regarding date of sale, date of removal of the goods and date of completion of the project to ascertain whether the goods were removed from the project prior to completion of the project for one year where duty confirmed. Hence in the absence of any evidence regarding removal of the goods before completion of the project, the benefit of the notification cannot be denied and the demand against the appellant is unsustainable - appeal allowed.
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2023 (11) TMI 55
Levy of Excise Duty - packaging charges being part of the value but no duty was paid claiming it as freight charges - recovery of CENVAT Credit on rejected/returned goods - demand of differential duty availed on inputs used in the manufacture of Aluminium Foils. Demand of Rs. 24,586/- on packaging charges being part of the value but no duty was paid claiming it as freight charges - HELD THAT:- Analyzing the evidences, the adjudicating authority after scrutiny of the relevant invoices placed on record, recorded the findings that even though the appellant have claimed that these are transport charges and not handling charges, however, supporting transport receipt has not been produced. Since no evidence has been produced by the appellant before the lower authorities nor before this Tribunal, thus, duty of Rs. 24,586/- payable on packaging charges is confirmed. Regarding the CENVAT Credit of Rs. 44,469/- on rejected/returned goods - appellant failed to produce the evidences ie. proper account of receipt and disposal of the same - HELD THAT:- The appellant had not enclosed any evidences in this regard, thus it is clear that they had not maintained proper records of receipt goods, processes carried out and disposal of the said goods under Rule 16 of CER,2002 on which credit availed; hence, the said demand is also confirmed. Recovery of differential duty as equivalent to CENVAT Credit involved on the inputs on the ground that the processes undertaken by the appellant do not result in to manufacture - HELD THAT:- The processes carried out by the Appellant on the Aluminum Foils received in the factory are described as foil wash and thereafter subjected to nitro cellulose and then slit into different sizes as per requirements of customers. It is not a simple process of merely cutting the foils into different sizes but other processes are involved which would definitely satisfy the definition of manufacture pertaining Section 2(f) of Central Excise Act, 1944. Besides, the appellant have been discharging duty on finished goods treating the said process as manufacture - Hon ble Bombay High Court in the case of Commissioner of Central Excise, Pune-III Vs. Ajinkya Enterprises [ 2012 (7) TMI 141 - BOMBAY HIGH COURT ] held that in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR/CR coils. The demands of Rs.24,586/- and Rs.44,469/- with interest are confirmed and the demand of Rs.2,30,887/- is set aside. The impugned order is modified to that extent and the appeal is partly allowed to that extent.
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CST, VAT & Sales Tax
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2023 (11) TMI 54
Recovery of dues - first charge over the property of the Corporate Debtor - Waterfall mechanism - prevalence of Section 48 of the Gujarat Value Added Tax 2003 over Section 53 of the Insolvency and Bankruptcy Code 2016 - whether the Review Petitioners have been able to make out any case within the ambit of Order XLVII of Supreme Court Rules, read with Order XLVII of CPC, for reviewing the impugned judgment? HELD THAT:- It is well settled proposition of law that a co-ordinate Bench cannot comment upon the discretion exercised or judgment rendered by another co-ordinate Bench of the same strength. If a Bench does not accept as correct the decision on a question of law of another Bench of equal strength, the only proper course to adopt would be to refer the matter to the larger Bench, for authoritative decision, otherwise the law would be thrown into the state of uncertainty by reason of conflicting decisions. Apart from the well-settled legal position that a co-ordinate Bench cannot comment upon the judgment rendered by another co-ordinate Bench of equal strength and that subsequent decision or a judgment of a co-ordinate Bench or larger Bench by itself cannot be regarded as a ground for review, the submissions made by the learned Counsels for the Review Petitioners that the court in the impugned decision had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC, are factually incorrect - As evident from the bare reading of the impugned judgment, the Court had considered not only the Waterfall mechanism under Section 53 of IBC but also the other provisions of the IBC for deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets. The well-considered judgment sought to be reviewed does not fall within the scope and ambit of Review. The learned Counsels for the Review Petitioners have failed to make out any mistake or error apparent on the face of record in the impugned judgment, and have failed to bring the case within the parameters laid down by this Court in various decision for reviewing the impugned judgment. All the Review Petitions are dismissed.
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2023 (11) TMI 53
Rejection of Form E - 1 and C, filed along with application for filing additional evidence - appeal dismissed without considering that the application for additional evidence was already on record and a report from assessing authority was sought by the Tribunal - violation of principles of natural justice - HELD THAT:- It is admitted that inter-State transaction has been made. In the event the forms submitted by the applicant are not accepted, the applicant will be compelled to pay higher rate of tax - In the peculiar facts circumstances of the case, when the transaction has already been made and covered by the requisite forms, the applicant, if due to unavoidable circumstances, could not obtain the forms and had produced the same upto the state of Tribunal, even in the subsequent stage, providing the claim has already been made for the same, the form should be accepted. This view has been taken by this Court in the case of M/s Dhan Prakash Cane Crushers Vs. Commissioner of Sales Tax [ 2002 (4) TMI 898 - ALLAHABAD HIGH COURT ], where, this Court accepted the form, which was furnished for the first time in the revisional jurisdiction and had remanded the matter to the Tribunal to reconsider the same. The impugned judgements orders passed by Commercial Tax Tribunal in these revisions cannot be sustained and the same are modified to the extent that the Tribunal is directed to accept the forms submitted by the applicant and thereafter, decide the issue in accordance with law - the matter is remanded back to the Tribunal by restoring the case to its original number before the Tribunal - Revision allowed.
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Indian Laws
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2023 (11) TMI 52
Dishonour of Cheque - Veracity of the said Authority Letter , the execution thereof and the phraseology used therein - HELD THAT:- Records reveal that the petitioner has nowhere disputed the execution of a Promissory Note , in his handwriting, under his signatures, acknowledging his liability of the debt to the respondent no. 2 and his wife. Similarly, the petitioner has also nowhere disputed the factum of issuance of any of the aforesaid 9 cheques or his signatures thereon or his handwriting thereon. So much so, the petitioner has also nowhere denied that there is no liability/ debt against the aforesaid 9 cheques. It is also nowhere denied that all the aforesaid 9 cheques were [i] pertaining to the very same transaction; [ii] issued on the same date; and [iii] returned on the same date by the very same Bank - A perusal of the pleadings made by the petitioner herein also disclose that there is no such averment exhibiting any special cause and/ or reason made anywhere before this Court to exercise its inherent powers under Section 482 CrPC. With respect to issue(s) of the execution of the Authority Letter , the phraseology used therein as also the same being improperly executed, non-filing of the complaint under Section 138 NIA by the wife of the respondent no. 2, respondent no. 2 not being either the payee or the holder in due course, and non-certification of the bank memo or the return slip by the bank, in the opinion of this Court, the aforesaid being disputed questions of facts, require trial and due adjudication by the learned Trial Court and not by this Court and that too at this stage, whence the learned MM is already seized of the complaint and has merely passed the summoning order. In the opinion of this Court, if this Court proceeds to consider the aforesaid issues, it would tantamount to holding a mini trial, which as per trite law and under the facts and circumstances involved herein, is per se not permissible under Section 482 CrPC, especially whence the trial before the learned MM is ongoing. This Court cannot substitute or carry out the functions of the learned Trial Court. In any event, considering that the proceedings before the learned MM are at a very nascent stage, it would be improper for this Court to enter the merits of the Complaint Case. In the opinion of this Court, the petitioner has not been able to make out a case for invoking its powers under 482 of the CrPC. More so, whence the present petition has been filed on technical grounds wherein almost more than 2 years have elapsed and the issues raised therein are a matter of trail. As per this Court, the present petition seems to be motivated to somehow delay and derail the proceedings/ trial before the learned MM. Thus, the present petition is a fit one calling for not only dismissal but also for imposition of costs. The present petition along with the application is dismissed with costs of Rs. 50,000/- to be paid in favour of the Delhi State Legal Services Committee within a period of two weeks.
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