Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 9, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of CGST & SGST wrongly paid - Interpretation of the term “subsequently held” - the term “subsequently held” in section 77 of CGST Act, 2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-State or intra-State supply made by a taxpayer, is either subsequently found by taxpayer himself as intra-State or interState respectively or where the inter-State or intra-State supply made by a taxpayer is subsequently found/ held as intra-State or inter-State respectively by the tax officer in any proceeding. Accordingly, refund claim under the said sections can be claimed by the taxpayer in both the above mentioned situations, provided the taxpayer pays the required amount of tax in the correct head. - HC
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Scope of clarification / circular issued by the board (CBIC) - Section 168(1) makes it clear that, only for the purpose of uniformity in the implementation of the Act, orders or directions to the Central Tax Officers, as deem fit, may be issued by the Board. Therefore, most probably, such kind of orders, instructions or directions must be procedural in nature, not substantive in nature - The exemption provided by the Central Government by exercising its powers either under Section 11(1) of CGST Act, 2017 or under Section 6(1) of IGST Act, 2017 are the substantive right provided to the stake-holders by giving such exemption. Therefore, such kind of exemptions cannot be taken away or done away by issuing clarificatory Circulars by the Board, in exercise of its powers under Section 168 of the CGST Act, 2017. - HC
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Classification of goods - Fish Meal in powdered form - Merely because such a finished product of fish meal produced by the petitioners' industries are being utilised also for the purpose of further manufacturing of further animal feed or poultry feed, by that reason itself, it cannot be stated that, it is only a raw material and not a finished product - Benefit of exemption allowed. - HC
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Exemption from GST or not - Renting of immovable property - pure service - services provided by the applicant to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls - it is not possible to find whether the said services are supplied by the applicant by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - Benefit of exemption not available - AAR
Income Tax
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Special audit u/s 142(2A) - Period of limitation - reasons for change in accounting system - method of valuation of closing stock - AO does not point out a single complexity in the accounts of the assessee. - What is clearly evident is that the reference for special audit was merely made for obtaining certain explanation and information which were further required by the AO for the purposes of assessment of income of the assessee. In effect,the AO, was shifting his responsibility to the special auditor. This is surely not the purpose for which special audit can be referred to under law. - AT
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Enhancement of total income by CIT-A - Procedure to be followed - It is bounden duty of the CIT(A) to follow due process of law before coming to his own conclusions on unverified facts and before making comments thereon. CIT(A) is bound to confront the assessee with material evidence, if any, in his possession. The statutory obligations in case of enhancement are far wider. As alleged, the impugned enhancement has apparently been made without giving notice to the assessee and without confronting him with his process of reasoning for doing so. - The direction for enhancement is thus quashed and set aside - AT
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Validity of the assessment framed u/s 147 - Proof of service of notice - There was no valid service of notice u/s 148 of the Act in the present case. The finding of the Ld.CIT(A) that the notices served through Speed Post and affixture were at the address as per PAN Database and, therefore, tantamounted to valid service, is of no assistance to the Revenue since admittedly the PAN Database also contains the residential address of the assessee and no attempt at all was made by the Revenue to service the notice at the residential address when the notice could not be served at the office address. - AT
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Bogus LTCG - Unexplained cash credit u/s 68 - Reliance on information unearthed from third party - the capital gain earned by the assessee cannot held bogus merely on the basis of some report which was unearthed in case of third party/parties unless cogent material brought against particular assessee - AT
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Condonation of delay - inordinate delay of 508 days - “sufficient cause” - In case the delay is not condoned, it would amount to legalise an illegal and unconstitutional order. - when this Tribunal is empowered and capable of removing injustice, in our opinion, the delay of 508 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merits. In view of the above, we condone the delay of 508 days in filing the appeal and admit the appeal for adjudication. - AT
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Assessment u/s 153A - the scope and ambit of section 153A of the Act is to restrict to only incriminating material in case of unabated years. Since the assessment for the year under consideration is an unabated one which is undisputed and that we find no existence of any such incriminating material which is the pre-requisite to make assessment u/s.153A of the Act, the consequent additions made by the Revenue are without jurisdiction and will not survive - AT
Customs
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Refund of pre-deposit - refund claim filed by the CHA is proper or otherwise - It is not the case that whether CHA is claiming the refund. Those are applications of refund filed by the CHA but ultimately the refund has to be given to the appellant only. Therefore, only on the ground that the application for refund was filed by CHA, refund cannot be denied which is otherwise due to the appellant. - AT
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Finalization of duty in respect of one shipping bill - issuance of Export Obligation Discharge Certificate (EODC) - From the grounds stated in the appeal, it is seen that much effort has been taken by the appellant by issuing several representations to the authorities to trace out the lab test report. The Board in its Circular No.79/2002-Cus. dated 28.11.2002 has clarified that in such situation when the test report is not available, the duty has to be finalized on the basis of available test reports. - AT
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Failure to Levy of Anti Dumping Duty - import from China PR, Malaysia and Vietnam - It is not possible to sustain the decision taken by the Central Government, contained in the Office Memorandum dated 14.12.2020, not to impose anti- dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty. The matter would, therefore, have to be remitted to the Central Government to take a fresh decision on the recommendation made by the designated authority. - AT
Indian Laws
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Dishonor of Cheque - The law is well-settled that the complaint under Section 138 of the Negotiable Instruments Act is not maintainable, if no demand was made for payment of the cheque amount in the notice. In the present case also, the notice i.e., Ext.-7, even when read as a whole, does not reflect any demand for making payment of any amount much less the cheque amount - complaint itself was not maintainable - HC
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Dishonor of Cheque - failure to comply with the statutory formality of issuing a notice - It is not necessary to consider the question as to whether Exhibit P1 cheque was actually executed by the first respondent/accused and as to whether the learned Magistrate had gone wrong in finding that an offence under Section 138 of the Negotiable Instruments Act could not be made out on account of the difference in the signature on Exhibit P1 cheque with the admitted signature of the first respondent/accused - a complaint under Section 138 can be filed only after complying with the statutory formalities.- HC
PMLA
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Money Laundering - proceeds of crime - conspiracy - provisional attachment of assets/properties of the petitioner - it is an admitted fact that there is no finding and it has not been identified that movable or immovable property linked directly with proceeds of crime but the same could not be done by the authority concerned. The material and reason has also not been disclosed so far as alienation of the property in question is concerned. There is no doubt that the authority is having the power to attach the property, but that power is required to be exercised in terms of the statute, which is lacking in the case in hand. - HC
Service Tax
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Levy of service tax - Business Auxiliary Services - booking of segments and thus assisting in marketing and promotion of the CRS of various companies - once the issue of leviability under the category of “business auxiliary services” is decided in favour of the appellant, the demand of service tax fails and consequently the demand for interest and penalties too will fail. - AT
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Taxability - Construction of residential complex for personal use - staff quarters/ said residential units - work done by the sub-contractor - The services provided by the appellant to M/s. PGCIL are covered under the exclusion part of said sub clause (iii) of section 65(91a) of the Act, M/s. PGCIL being ‘a person’ of the said sub clause and appellant being the ‘any other person’. Hence, irrespective the impugned service is the service of construction of residential complex but is the one as stands exempted from the tax liability due to the exclusion given to the residential complex which is meant for personal use as residence by the person who directly engaged the service provider and that no element of commerce or industry is involved - AT
Central Excise
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Extended period of limitation - In the present case, what is seen is that the audit was conducted between June 17, 2011 to June 22, 2011 and the show cause notice refers to this audit only. The notice, therefore, should have been issued within one year from the relevant date and there is no good reason as to why the Central Excise Officer should have waited till March 19, 2015 to issue the show cause notice. The extended period of limitation, for this reason alone, could not have been invoked. - AT
VAT
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Levy of Excise Duty or VAT - transit loss suffered in the transportation of Grain Extra Neutral Alcohol - The Government Order insofar as it authorises respondent-State authorities to levy excise duty/penalty over transit loss of Grain Extra Neutral Alcohol is quashed. Demand of excise duty/penalty imposed on Grain Extra Neutral Alcohol are also quashed - HC
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Transaction of sale taking place or not - sale of Furnace - machinery or not - The contract involving receipt of lease rent for leasing of the flameless furnace does not constitute sale or resale of goods within the meaning of sale under Section 2(g) of the OST Act - Leasing of flameless furnace cannot be the subject matter of taxation since it has suffered Orissa Sales Tax at an interior stage in view of Section 8 of the Orissa Sales Tax Act. - HC
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Works Contract - deemed sale or not - inter-state trade - the principle enunciated in M/s.LARSEN AND TOUBRO LIMITED‘s case would squarely apply to the case on hand, as the movement of goods from other States and outside the country had occasioned as a result of covenant of contract entered into by the petitioner with its contractees and such purchases by the petitioner in the course of inter-State trade are integrally connected with use of the same in execution of works contract. - HC
Case Laws:
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GST
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2021 (11) TMI 232
Legal right of the petitioner on account of the Taxes being shared and borne by the petitioner on post enactment goods and Service Tax Act, 2017 - infringement of GST Act, 2017 - restitution of benefit of GST to the petitioner - direction to prepare a fresh schedule of rates considering rapidly change of rate and price - calculation of differential amount of GST on the contract in which estimate was prepared under VAT - HELD THAT:- On perusal of the judgment delivered by this Court in M/S. HARISH CHANDRA MAJHI VERSUS STATE OF ODISHA OTHERS [ 2021 (6) TMI 381 - ORISSA HIGH COURT ], the Court finds that the Court has dealt with a large number of grounds which are more or less similar to the points urged in the present petition - it was held in the case that The statute should clearly and unambiguously convey three components of the tax law i.e., the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. In the instant case, three components of the tax, i.e., subject of tax, person liable to pay the tax and rate of tax has been clearly defined in the statute. The OM dated 10th December, 2018 only prescribes the manner/procedure of calculation to determine the amount of tax in a particular eventuality in the transitional period of migration to GST Act with effect from 1st July, 2017. The Court is not satisfied that any new ground has been made out requiring the Court to revisit its judgment in Harish Chandra Majhi. Consequently, the Court is not inclined to interfere in the impugned petition. It is dismissed for the reasons already stated in Harish Chandra Majhi. Petition dismissed.
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2021 (11) TMI 231
Levy of tax and penalty - seizure of goods alongwith vehicle - Evasion of tax - HELD THAT:- With regard to interim relief, the learned counsel for the petitioner contends that the finding recorded in the original order cannot be sustained inasmuch as the e-way bill that was generated was in terms of sub-rule (10) of Rule 138 of the GST Rules and the e-way bill was valid at the time of interception. It is contended that, therefore, since the goods are perishable in nature therefore, under Rule 140 of the GST Rules after obtaining the security, the goods may be released. It is provided that in case the petitioner pays the amount in terms of Rule 141 of the CGST Rules, 2017 to the authorities concerned, the goods shall be released forthwith. Application disposed off.
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2021 (11) TMI 230
Utilization of ITC from dubious firms - bill trading and passing on fake ITC without movement of actual goods - HELD THAT:- The Form GST DRC-01 issued against the petitioner by the respondent authorities on the premises that in the investigation the petitioner had not satisfied the authorities as regards the ITC they had relied upon and therefore, the authorities had arrived at a view that they had relied upon some dubious ITC for the purpose. As it is apparent that the said view was formed as because the petitioner had not provided appropriate material and document at the time of the investigation and therefore, such Form GST DRC-01 was issued, we are of the view that ends of justice would be met if an opportunity is given to the petitioner tax payer to appear before the respondent Joint Commissioner of State Taxes, Guwahati with all relevant materials that he may desire to rely upon and satisfy the authorities in their investigation pursuant to the earlier summons dated 10.09.2021. The reasoned order to be passed shall prevail and till such reasoned order is passed, the Form GST DRC-01 both dated 08.10.2021 shall be kept in abeyance. In the event, the reasoned order goes in favour of the petitioner it has to be understood that the said Form of GST DRC-01 will no longer remain effective and in the event it is against the petitioner, a fresh Form GST DRC-01 may be issued and in doing so adequate time required under the law shall be given to the petitioner before taking any action. Petition disposed off.
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2021 (11) TMI 229
Refund of CGST SGST wrongly paid - Interpretation of the term subsequently held u/s 77 of the CGST Act, 2017 - period i.e. from April 2018 to December 2018 - HELD THAT:- Doubts have been raised regarding the interpretation of the term subsequently held in the aforementioned sections, and whether refund claim under the said sections is available only if supply made by a taxpayer as inter-State or intra-State, is subsequently held by tax officers as intra-State and inter-State respectively, either on scrutiny/ assessment/ audit/ investigation, or as a result of any adjudication, appellate or any other proceeding or whether the refund under the said sections is also available when the inter-State or intra-State supply made by a taxpayer, is subsequently found by taxpayer himself as intra-State and inter-State respectively. It is clarified that the term subsequently held in section 77 of CGST Act, 2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-State or intra-State supply made by a taxpayer, is either subsequently found by taxpayer himself as intra-State or interState respectively or where the inter-State or intra-State supply made by a taxpayer is subsequently found/ held as intra-State or inter-State respectively by the tax officer in any proceeding. Accordingly, refund claim under the said sections can be claimed by the taxpayer in both the above mentioned situations, provided the taxpayer pays the required amount of tax in the correct head. In normal case this may have been an appropriate order to pass but in the present case it cannot be lost sight of that there is no dispute about the amount of tax, rather it was on the requirement of the respondents that the petitioner paid an additional amount of ₹ 108 crores approximately - respondents are directed to fund ₹ 108 crores approximately which was deposited earlier by the petitioner towards CGST and SGST along with applicable interest within a period of one month - Petition allowed.
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2021 (11) TMI 228
Levy of penalty u/s 74 (1) of the CGST Act - Validity of assessment order - suppression of turnover and evasion of tax - HELD THAT:- The remedy under Article 226 cannot be invoked by the petitioner. It is noticed from a reading of paragraph 37 of Ext.P9 that the very same contentions, now raised by the petitioner before this Court, was raised by the petitioner before the assessing officer also. Adverting to the said contentions, it was held by the assessing officer that the allegations raised against the period and the date to which the data relates have no basis. It was also observed by the assessing officer that in the mahazar prepared on 26.11.2019, it was specifically mentioned that the data related to the business transactions of the dealer for the period 14.01.2013 to 01.09.2019 and the dealer signed it without any objection. On an appreciation of the findings recorded by the assessing officer, this Court is of the view that the contentions raised by the petitioner alleging violation of natural justice was in fact raised before the assessing authority itself and even considered. The learned counsel for the petitioner also submitted that Ext.P10 is challenged in the writ petition and that there is no appellate remedy available against Ext.P10. Though this Court was impressed with the said contention initially, on an appreciation of the reliefs claimed in this writ petition, it is noticed that no specific relief is claimed in the writ petition against Ext.P10. As held by the Supreme Court repeatedly including in the latest decision of THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS VERSUS M/S COMMERCIAL STEEL LIMITED [ 2021 (9) TMI 480 - SUPREME COURT] where an alternate remedy exists under the statute, unless exceptional circumstances exists, the jurisdiction of this Court under Article 226 is not liable to be invoked - petition dismissed.
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2021 (11) TMI 227
Classification of goods - Fish Meal in powdered form - covered under entry 2301 2309 or not - Scope of clarification / circular issued by the board (CBIC) - exemption under Sl.No.102 of Exemption Notification No.1/17 or N/N. 2/17 - HELD THAT:- After the GST regime, which came into effect from 01.07.2017, the Customs Tariff Act, 1975 classification selectively has been adopted by the GST regime. Therefore, few days prior to the implementation of the GST regime, these two notifications, namely, Notification No.1/17 and Notification No.2/17, were issued by the Central Government, of course, by exercising their powers under Sections 9(1) and 11(1) of the CGST Act, respectively. It may be either under 2301 or may be under entry 2309. In both way, the fish meal is explicitly provided under exemption category. Merely because such a finished product of fish meal produced by the petitioners' industries are being utilised also for the purpose of further manufacturing of further animal feed or poultry feed, by that reason itself, it cannot be stated that, it is only a raw material and not a finished product - The Central Government while giving Exemption Notification No.2/17, though originally included only Entry Nos. 2302, 2304, 2305, 2306, 2308 2309, subsequently, issued a corrigendum that entry 2302 should be read as 2301 2302. Therefore, 2301 also is included. Section 168(1) makes it clear that, only for the purpose of uniformity in the implementation of the Act, orders or directions to the Central Tax Officers, as deem fit, may be issued by the Board. Therefore, most probably, such kind of orders, instructions or directions must be procedural in nature, not substantive in nature - The exemption provided by the Central Government by exercising its powers either under Section 11(1) of CGST Act, 2017 or under Section 6(1) of IGST Act, 2017 are the substantive right provided to the stake-holders by giving such exemption. Therefore, such kind of exemptions cannot be taken away or done away by issuing clarificatory Circulars by the Board, in exercise of its powers under Section 168 of the CGST Act, 2017. This Court feels that the impugned Circular insofar as Clause (ii) of the same, namely, fish meal and other raw materials used for making cattle / poultry / aquatic feed is concerned, is unsustainable and therefore, insofar as the said product is concerned, whatever the clarification issued in the impugned Circular dated 31.12.2018 is set aside - Petition allowed.
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2021 (11) TMI 226
Exemption from GST or not - services provided to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls - applicability of TDS provisions in case where the supply of services is exempt - Applicant is not registered under GST and provide services to Social Welfare Department (Soma] Kalyan Department), a Department of State Government - entitlement to refund if TDS is deducted. Whether the services provided by the applicant to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls is exempt from GST? - HELD THAT:- Even though the applicant as per her submission is supplying Pure Services, in light of insufficient material on record, it is not possible to find whether the said services are supplied by the applicant by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - The renting of immovable property services by the applicant is not liable for exemption under the provisions of Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017. Whether TDS provisions will be applicable in case where the supply of services is exempt? - HELD THAT:- The impugned services supplied by the applicant are liable to tax and therefore not exempt. Thus the TDS provisions under the relevant section 51 of the GST Act are applicable in the subject case. As the Applicant is not registered under GST and provide services to Social Welfare Department (Samaj Kalyan Department), a Department of State Government, then whether TDS notification issued under section 51 would be applicable for deduction of TDS? - HELD THAT:- TDS notification issued under section 51 would be applicable for deduction of TDS in the subject case. In case TDS is deducted, whether applicant would be entitled for refund of the same? - HELD THAT:- The said question pertains to entitlement of refund and is not covered under Section 97 of the CGST Act, 2017 and therefore we refrain from answering this question.
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2021 (11) TMI 225
Exemption from GST or not - services provided to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls - applicability of TDS provisions in case where the supply of services is exempt - Applicant is not registered under GST and provide services to Social Welfare Department (Soma] Kalyan Department), a Department of State Government - entitlement to refund if TDS is deducted. Whether the services provided by the applicant to Samaj Kalyan Department, State Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls is exempt from GST? - HELD THAT:- Even though the applicant as per her submission is supplying Pure Services, in light of insufficient material on record, it is not possible to find whether the said services are supplied by the applicant by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - The renting of immovable property services by the applicant is not liable for exemption under the provisions of Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017. Whether TDS provisions will be applicable in case where the supply of services is exempt? - HELD THAT:- The impugned services supplied by the applicant are liable to tax and therefore not exempt. Thus the TDS provisions under the relevant section 51 of the GST Act are applicable in the subject case. As the Applicant is not registered under GST and provide services to Social Welfare Department (Samaj Kalyan Department), a Department of State Government, then whether TDS notification issued under section 51 would be applicable for deduction of TDS? - HELD THAT:- TDS notification issued under section 51 would be applicable for deduction of TDS in the subject case. In case TDS is deducted, whether applicant would be entitled for refund of the same? - HELD THAT:- The said question pertains to entitlement of refund and is not covered under Section 97 of the CGST Act, 2017 and therefore we refrain from answering this question.
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Income Tax
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2021 (11) TMI 224
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - as argued inappropriate words in the penalty notice has not been struck off - HELD THAT:- The inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. Although the Ld. DR submitted that mere non-striking off of the inappropriate words will not invalidate the penalty proceedings, however, the decision of the Hon ble Karnataka High Court in the case of SSA S Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] where the SLP filed by the Revenue has been dismissed [ 2016 (8) TMI 1145 - SC ORDER] is directly on the issue contested herein by the Assessee. Further, when the notice is not mentioning the concealment or the furnishing of inaccurate particulars, the ratio laid down by the Hon ble High Court in case of M/s. Sahara India Life Insurance Company Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] will be applicable in the present case.- Decided in favour of assessee.
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2021 (11) TMI 223
Depreciation claim of assessee trust - Assessee earned net surplus from hostel activity - HELD THAT:- Depreciation in respect of hostel facilities the same was granted to the assessee and was never disputed by the Revenue since 2009-10 till 2014-15 except for these years i.e. 2011-12. Thus, in light of the decision cited by the Ld. AR as well as the consistency in respect of the Revenue s application of the said claim in earlier as well as subsequent years should have been taken into consideration by the CIT(A), but the CIT(A) failed to do so. The Hon ble Supreme Court in case of CIT vs. Rajasthani Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT ] held that the depreciation in respect of cost of the assets allowed to the assessee as expenditure is allowable. Thus, the issue is squarely covered in favour of the assessee
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2021 (11) TMI 222
Exemption u/s 11 - rejection of application seeking registration u/s 12AA - profit of charitable object u/s 2(15) - HELD THAT:- Merely because the assessee company has been registered u/s 8 of the Companies Act, we are not saying that the same by default mean that it shall be eligible for grant of registration u/s 12AA of the Act as the legislation is currently not worded to support the said proposition. Where another arm of the government administering the company law legislation has examined the objects and intended application of profits and has granted the registration as section 8 company, the said registration allows the assessee company to take necessary steps to seek separate and independent registration u/s 12AA and where such an approval is placed on record, as part of assessee s application u/s 12AA and supporting documentation as required under law, it shall provide an additional level of comfort to the ld CIT(E) in terms of examining the true intent behind its objects of setting up/incorporation and also for the purposes of examining compliance of other laws material for achievement of its objectives under section 12AA(a)(ii) Appellant company s application seeking registration u/s 12AA for undertaking the aforesaid objects of general public utility deserve to be accepted as falling within the purview of charitable purpose u/s 2(15) of the Act. In terms of examining the allowability of benefit u/s 11, 12 r/w section 13, it is a settled position that the same can be examined on year to year basis by the Assessing officer and he shall be free to take action, as per law including under section 13(8) as so provided in the statue, during the course of regular assessment proceedings. We accordingly direct the ld CIT(E) to grant approval to the assessee company u/s 12AA of the Act. - Decided in favour of assessee.
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2021 (11) TMI 221
Bogus LTCG - Unexplained cash credit u/s 68 - Reliance on information unearthed from third party - HELD THAT:- We hold that in absence of any specific finding against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated as far as long term capital gain earned on sale of share of both companies is concern. Co-ordinate bench Mumbai Tribunal in case of DCIT vs. M/s Jiana Investments [ 2021 (3) TMI 50 - ITAT MUMBAI] CIT(A) deleted the addition by observing that information received from investigation only a general modus operandi employed by the various entry operators but no evidences available that the particular assessee was involved in such scam. Without bringing cogent material establishing the assessee earned or incurred bogus gain or losses the AO cannot made addition merely on the basis of suspicion or assumption. The view taken by the learned CIT was confirmed by the Hon ble bench of Mumbai ITAT. It is pertinent to mentioned that the script involve in the above case is also in the present case. Thus we also find support and guidance from the finding given in aforesaid case. We hold that the capital gain earned by the assessee cannot held bogus merely on the basis of some report which was unearthed in case of third party/parties unless cogent material brought against particular assessee. - Decided in favour of assessee.
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2021 (11) TMI 220
Delay in deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) - assessee contributing/depositing the same before the due date of filing of return of income u/s 139(1) - CIT-A allowed deduction - HELD THAT:- As relying on M/S. VIJAY SHREE LIMITED [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] and HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [ 2021 (7) TMI 942 - ITAT KOLKATA] CIT(A) has rightly allowed the deduction in respect of employee's contribution to PF ESI which had been admittedly remitted on or before the due date for filing the return of income u/s. 139(1) of the Act. We therefore do not find any infirmity in the order of the Ld. CIT(A) and, we confirm the same and dismiss this ground of appeal of revenue. Disallowance of discount brokerage debited to the Profit Loss Account - HELD THAT:- As decided in [ 2018 (11) TMI 1877 - ITAT KOLKATA] adopt judicial consistency in this facts and circumstances to affirm the CIT(A)'s findings under challenge deleting discount and brokerage disallowance -Decided against revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in own case [ 2018 (5) TMI 420 - ITAT KOLKATA] we remand this issue to the file of A.O. with the direction to consider only the investment which yielded dividend income to the assessee for computing the disallowance under section 14A of the Act read with Rule 8D(2)(ii) of the Rules. Transfer pricing adjustment made by the TPO to the claim of deduction u/s 80-IA - arm s length price of power transferred by the three CPPs at Vasavdatta, Karnataka to the cement unit - HELD THAT:- Even if the Ld. CIT, DR s contention is accepted at its face value and the eligible unit is taken as the tested party , we still find that there was reliable internal CUP data available to benchmark the transfer price of power supplied by the CPPs to the cement unit. If the rates at which the CPPs sold power to IEX, GEPL (₹ 6.24/unit) is taken as the benchmark ALP rate, even then the transfer price of power adopted by the assessee (₹ 5.96 - ₹ 6.23/unit) was comparable and accordingly no adjustment was permissible in this regard. We find that, on same set of facts and circumstances, the Revenue had categorically accepted this manner of application of internal CUP Method in respect of power supplied by the CPPs at Karnataka in the immediately preceding AY 2013-14 and accordingly no transfer pricing adjustment was made in relation thereto. When enquired in this regard, the Ld. CIT, DR fairly agreed with the Ld. CIT(A) s above findings qua the CPPs at Vasavdatta, Karnataka. For the reasons as aforesaid, we do not find any infirmity in the order of the Ld. CIT(A) deleting the transfer pricing adjustment of ₹ 40,03,60,133/- made by the TPO to the transfer value of power supplied by the CPPs at Vasavdatta, Karnataka to the noneligible cement unit. CPP at Hooghly, West Bengal - As from the data provided by the assessee, it is noted that both the CPP and SEB have supplied power in all the months of the year and therefore there are no timing differences as well. In the circumstances, we find merit in the findings of the Ld. CIT(A) that the transaction involving purchase of power by the non-eligible unit from the SEB, fulfilled the internal CUP parameters and thus the landed cost paid by the rayon unit to the SEB represented internal comparable arm s length rate. CIT(A) had indeed taken into account the amendment made by the Legislature to Explanation to Section 80-IA(8) by the Finance Act, 2012 introducing the transfer pricing regulations, and had held that the open market value as determined by this Tribunal in the earlier years in relation to the power transferred by the CPPs to the non-eligible units was in adherence to the arm s length principle enunciated in Section 92C Referring to the decisions of this Tribunal in assessee s own case for earlier years, we uphold the order of the Ld. CIT(A) deleting the transfer pricing adjustment made in relation to the transfer price of power supplied by the CPP at Hooghly, West Bengal to the rayon unit.
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2021 (11) TMI 219
Special audit u/s 142 (2 A) - Period of limitation - reasons for change in accounting system - method of valuation of closing stock - HELD THAT:- Query raised asking explanation of how figures of industrial activity upto 31.03. 2013 were incorporated in the impugned years balance sheet, the assessee had explained that it had switched over from cash system of accounting done upto 31/03/13 to accrual system and had also explained the manner of doing so as also furnishing year wise bifurcation of expenses and recoveries in the IA account as on 31.03. 2013. AO notes that no explanation has been furnished as to how cumulative calculations were made no break up of certain details provided and site wise break also not provided. Similarly the assessee explanation regarding why income be not computed as in earlier years the assessee justified the change in system of accounting as being in compliance with accounting standard issued by the ICAI and also in accordance with government notifications, to which the AO merely brushes aside the explanation as not being tenable without assigning any reason for stating so. On the query regarding method valuation of closing stock for year ending 31/03/2013 and 31/03/2014 the assessee replied that upto 31/03/13 since it was following cash system of accounting no stock was accounted for while thereafter it followed the Percentage Completion Method (PCOM) for accounting for inventory, valuing it at cost or net realizable value which ever was less. To this the AO notes that no calculation of working of inventory has been provided by the assessee. To the query raised regarding how PCOM method was applicable to the assessee, the assessee replied that its activities fell under the scope of transactions covered By the guidance note issued by ICAI on Accounting for real estate transactions which recommended PCOM method. It was also explained as to how its activities fell under the said guidance note. To this the AO noted that why this method was not adopted in earlier years also. On being asked to explain basis of ascertaining revenue from operations, due reply explaining the same was filed. To this the AO notes simply that it is not verifiable since assessee passes through various stages and no specific information/no detailed working has been provided by the assessee. To the query as to why ₹ 1050 crores has been reduced from the income of the assessee in the revised return filed. the assessee explained in detail that the department had already collected taxes on the same in earlier years when it had rejected its cash basis of accounting and taxed income on accrual basis. To this the AO notes that the assessee has filed appeal against the said additions made by the department and therefore by reversing the income in the impugned year it was taking a contradictory stand. After so stating the AO notes that considering the facts and circumstances and the nature and complexity of accounts of the assessee, volume of transactions and multiplicity of transactions, special audit u/s 142 (2 A) of the Act is proposed. AO does not point out a single complexity in the accounts of the assessee. On the contrary he has only pointed out certain information still lacking in the reply submitted by the assessee. With regard to each explanation he has stated that the assessee has either not given certain explanation required by him or certain working or calculations had not been explained. It is not coming out from the notice, therefore, that there was any complexity in the nature of the accounts of the assessee which had come to the notice of the AO. Nor has the Ld.DR been able to enlighten us as to what complexity was pointed out by the AO in the accounts of the assessee for enabling reference to a special audit. What is clearly evident is that the reference for special audit was merely made for obtaining certain explanation and information which were further required by the AO for the purposes of assessment of income of the assessee. In effect,the AO, was shifting his responsibility to the special auditor. This is surely not the purpose for which special audit can be referred to under law. Assessee filed a detailed reply to the show cause notice explaining at length all doubts and queries raised by the AO in its previous reply and furnishing all information which he found lacking (P. B 222 - 252), but despite the same, the AO sought approval of the PCIT for special audit on the same day the reply was filed by the assessee and after obtaining the same ordered special audit on the very same day. The only inference which can possibly be drawn in the facts of the present case as narrated above, is that the reference to special audit was made only to buy further time for completing the assessment, having been made at the fag end of the period for completion of assessment that too merely for obtaining further details and information and not because any complexity was noted in the accounts of the assessee. The reference to special audit, therefore we hold, is an invalid reference, contrary to law. Assessment order passed therefore in the extended period, as a consequence of the invalid reference, we hold, is barred by limitation and hence void. Appeal of assessee allowed.
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2021 (11) TMI 218
Enhancement of total income by CIT-A - Procedure to be followed - HELD THAT:- Enhancement for the assessment year in question was carried out by the CIT(A) without giving any formal intimation to the assessee in this regard and without communicating the basis for arriving at the said figure of enhancement to the assessee. Such approach of the CIT(A) is contrary to statutory protocol as well as law codified in S. 251(2). Power of enhancement conferred under s. 251(1) of the Act is restricted to the subject-matter of assessment or the source of income which have been considered expressly or by clear implication by the AO from the point of view of the taxability of the assessee. Besides, the enhancement proceedings are intrinsically a serious exercise undertaken independently by the CIT(A). Hence, for making any comments adverse to the assessee, it is bounden duty of the CIT(A) to follow due process of law before coming to his own conclusions on unverified facts and before making comments thereon. CIT(A) is bound to confront the assessee with material evidence, if any, in his possession. The statutory obligations in case of enhancement are far wider. As alleged, the impugned enhancement has apparently been made without giving notice to the assessee and without confronting him with his process of reasoning for doing so. The impugned enhancement is thus wholly unsustainable in law. The direction for enhancement is thus quashed and set aside. - Decided in favour of assessee. Enhancement of income to the AO for the earlier assessment years which are not in appeal before him - HELD THAT:- Findings of the CIT(A) seeks to travel beyond the A.Y. 2012-13 in question and seeks to displace the completed assessment of the other years (some of which have already become time barred at the time of passing of original assessment order in appeal) by giving directions to the AO to take remedial actions towards service tax allowed in earlier assessment years. Such findings and directions are outside the scope of powers entrusted under S. 251 as well as S. 150(1) of the Act. To reiterate, Section 150(1) does not permit issue of such directions to the AO without showing as to how such findings/directions are necessary for the purposes of adjudicating the issue of allowability of service tax in the year in question. In the instant case, the issue of allowability of service tax was also examined by the AO under s. 143(3) of the Act for AY 2010-11. The appeal on the point was filed before the CIT(A). The order of the AO thus stood merged with the first appellate order. Such assessment already merged in the order of the higher authority cannot be distributed by the authority of equal rank. Hence, action of the CIT(A) can not be upheld from this perspective as well. As a sequel to such delineation, the directions to the AO to examine the service tax issue in relation to earlier assessment years require to be quashed and expunged. We do so accordingly. Ground No. 3 of the assessee's appeal is thus allowed. Enhanced claim of service tax on actual payment basis before the due date of return - HELD THAT:- Mere admission on the part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed under erroneous impression of law or facts even if it is attributable to the mistake of assessee. We do see potency in the argument laid on behalf of the assessee that both AO and CIT(A) committed error in denying the relief claimed. In our considered view, the action of the revenue authorities is in defiance of the judicial precedents on the issue and thus cannot be countenanced. In our view, the assessee can not be prevented from raising such additional claim merely because the ROI could not be revised. The factual matrix towards actual payments however does not appear to have been verified by the AO. It would thus be in fitness of things to remit the issue back to the file of AO. AO shall allow the higher claim of service tax in accordance with law on being satisfied with the actual payments. Ground no. 4 of the assessee is allowed for statistical purposes. Lump sum disallowances out of wages and 'transportation charges site expenses' - HELD THAT:- As the assessee could not seriously dispute the rationale for indulging in estimations of disallowance in the facts of the case. A part relief has been granted by the CIT(A) out of estimations under the head 'wages'. No relief has been granted on 'transportation charges and site expenses'. In the absence of any attendant circumstances on record, some estimations cannot be entirely condemned. However, having regard to nature of business and totality of circumstances, a further relief of Rs. One lakh each from two expense heads in question appears just and benign and would meet the ends of justice.
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2021 (11) TMI 217
Income accrued in India - Royalty receipts - receipts from Indian customers - receipts from CAS division as well as from PUBS division - India-USA DTAA - HELD THAT:- As relying in assessee's own case [ 2019 (4) TMI 1818 - ITAT MUMBAI ] we would hold that receipts from CAS division as well as from PUBS division could not be held to be royalty and hence, not taxable in the hands of the assessee. - Decided in favour of assessee.
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2021 (11) TMI 216
Deduction u/s 10A computation - export turnover disallowance - HELD THAT:- We find force in the assessee's ground No. (i) to be specific wherein its case is that whatever revenue item is excluded from export turnover, the very course of action applies to the total turnover as well. DR fails to dispute that not only the hon'ble apex court's landmark decision in CIT Vs. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] has settled the instant issue but also the CBDT has issued its circular No. 4/2018, dt. 14-08-2018 that such an item; excluded from the export turnover, is not included in the total turnover as well.
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2021 (11) TMI 215
Exemption u/s 11 - exemption u/s 12AA - Seeking benefit of registration granted under section 12AA of the Act with retrospective effect from assessment year under consideration - HELD THAT:- CIT(A) observed that, due to the removal of section 10(22) with effect from 01/04/1999, the entitlement of exemption and under the relevant provisions was not available to assessee he has also observed that assessee has not made any application seeking exemption under section 10(23C) of the act. And subsequently assessee applied for exemption under section 12 AA of the Act vide application dated 21/09/2006 with effect from 10/01/1980. CIT(A) observed that due to the intervention of this Tribunal which was also approved by Hon'ble High Court the exemption was granted from assessment a 2002-03 onwards. The Ld. CIT(A) also denied exemption claimed under section 11 of the act for year under consideration. Before as also assessee seeking retrospective effect of the exemption granted with effect from assessment a 2002-03, for the relevant assessment years. This in our view is a far-fetched argument that cannot be entertained such tests by this forum. There is no fault in the view taken by the Ld. CIT(A). Assessee has been rightly sent under the normal provisions of the act by the authorities Assessee appeal dismissed.
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2021 (11) TMI 214
Disallowance u/s 14A r.w.r. 8D - Mandation of receipt of exempt income received by the assessee - HELD THAT:- We observe that there is no exempt income received by the assessee during the impugned AY. Therefore, the disallowance made by the AO u/s 14A r.w.r. 8D is not correct. It is a settled law that if there is no exempt income, no disallowance can be made as there are Catena of judgements of Hon ble Tribunal that if there is no exempt income, no disallowance can be made u/s 14A of the Act. Therefore, we uphold the order of CIT(A) in deleting the disallowance made u/s 14A rwr 8D of the Act. Thus, the grounds raised by the revenue on this issue is dismissed. Disallowance u/s 68 - Share application money pending allotment - HELD THAT:- Amount received in the previous year cannot be taxed in the current AY. Accordingly, the assessee gets relief. Further, on perusal of the above table, the assessee received ₹ 60 lakhs from the Yashoda Energy Pvt. Ltd. during the year and assessee has filed only confirmation letter indicating PAN with the address at Secunderabad, but, no other documents were filed. Whereas the CIT(A) has allowed the addition of ₹ 60,00,000/- without examining the issue in detail as per section 68 of the Act. The AR of the assessee also did not prove the genuineness of the transactions and credit-worthiness of the share applicant, namely, Yashoda Energy Pvt. Ltd. as per section 68 of the Act. The address provided by the assessee is vague as merely quoting the address as Secunderabad, how the department can trace the share applicant whereabouts. In view of the above observations, we deem it fit and proper to remit this issue to the file of the AO with a direction to decide the issue afresh. The assessee is directed to substantiate its claim as per section 68 of the Act before the AO. Thus, the ground raised by the revenue is partly allowed for statistical purposes.
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2021 (11) TMI 213
Condonation of delay - inordinate delay of 508 days - sufficient cause - whether 508 days was excessive or inordinate? - HELD THAT:- Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 508 days has to be condoned. Whether 508 days was excessive or inordinate ? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. The Madras High Court in the case of Sreenivas Charitable Trust [ 2005 (10) TMI 36 - MADRAS HIGH COURT] held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression sufficient cause the principle of advancing substantial justice is of prime importance and the expression sufficient cause should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression sufficient cause should receive a liberal construction. In case the delay is not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. The Parliament conferred power on this Tribunal with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, when this Tribunal is empowered and capable of removing injustice, in our opinion, the delay of 508 days has to be condoned and the appeal of the assessee has to be admitted and disposed of on merits. In view of the above, we condone the delay of 508 days in filing the appeal and admit the appeal for adjudication. Disallowance being PF ESI contribution of employees paid beyond the due date u/s. 36(1)(va) r.w.s. 43B - HELD THAT:- As contribution is deposited within the due date of filing return u/s. 139(1) - As relying on M/S JANA URBAN SERVICES FOR TRANSFORMATION PVT. LTD. VERSUS THE DY. COMMISSIONER OF INCOME TAX, CPC, BENGALURU. [ 2021 (10) TMI 842 - ITAT BANGALORE] we allow this ground taken by the assessee and there cannot be any disallowance by invoking the provisions of section 36(1)(va) r.w.s. 43B - Decided in favour of assessee.
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2021 (11) TMI 212
Validity of the assessment framed u/s 147 - Proof of service of notice - addition made on account of cash found deposited in the bank account of the assessee - HELD THAT:- Notice u/s 148 of the Act served by Speed Post was returned back unserved, there is no evidence of service of notice by affixture and the notice server had only carried a letter addressed to the assessee which he had refused to take and no notice u/s 148 of the Act was served by the notice server. There was no valid service of notice u/s 148 of the Act in the present case. The finding of the Ld.CIT(A) that the notices served through Speed Post and affixture were at the address as per PAN Database and, therefore, tantamounted to valid service, is of no assistance to the Revenue since admittedly the PAN Database also contains the residential address of the assessee and no attempt at all was made by the Revenue to service the notice at the residential address when the notice could not be served at the office address. The facts on record demonstrate that there was no valid service of notice in the present case on the assessee even at the PAN Database available. Notice u/s 148 of the Act being a jurisdictional notice essential for assuming jurisdiction to frame assessment u/s 147 of the Act, in the absence of service of the same, the assessment framed, we hold, is without jurisdiction and, hence void abinitio. - Decided in favour of assessee.
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2021 (11) TMI 211
Levy of penalty u/s 271(1)(c) - Proof of concealment/furnishing of inaccurate particulars - employers contribution to ESI/PF disallowable u/s 43 B - HELD THAT:- Addition stood disclosed in the tax audit report, interest on TDS income tax refund, and ESI /Income Tax penalty all stood duly disclosed by the assessee. It is just that while certain disallowances/additions, i.e. ESI PF and Interest on refund TDS and difference in interest receipts reflected in Form 26AS and that returned, were inadvertently missed to have been made by the assessee who surrendered the same when it was made aware during scrutiny assessment, the rest being minor penalty of ESI and interest on late payment of TDS, income tax and service tax penalty were contested as being compensatory and hence allowable but were subsequently offered for taxation. Considering the huge losses, the additions and disallowances inviting the levy of penalty amounting in all to ₹ 5,59,803/-, are too immaterial and coupled to it is the fact that a major portion of it relating to ESI/PF disallowed u/s 43B of the Act of ₹ 4,79,986/- had stood disclosed in the tax audit report as disallowable but was inadvertently left out while computing the income for the year. The same is clearly not liable to any penalty being squarely covered by the decision in the case of Price Waterhouse Coopers [ 2012 (9) TMI 775 - SUPREME COURT ]The remaining additions/disallowances of ₹ 79,817/- are pathetically immaterial and can be safely said to have been bonafidely mistakenly not disallowed/added back to the income of the assessee as claimed by it. We hold that no penalty u/s 271(1)(c) of the Act was leviable on account of additions made as listed above in our order and the order of the Ld.CIT(A), therefore, upholding levy of penalty is set aside - Decided in favour of assessee.
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2021 (11) TMI 210
Denying for registration u/s 12AA - scope of objects and genuineness of the charitable and public activities carried out towards the objects of the trust by the appellant trust - HELD THAT:- As documents filed alongwith appeal memo is not in consonance with Income Tax Tribunal Rule, 1963. The assessee-trust was required to file document with separate list of documents with a certificate, certifying that these documents were furnished before the lower authorities. However, we instead of going into such technicality find that assessee was filed application under section 12AA and furnished required details with the said application. The assessee-trust again in response to show cause notice dated 03.05.2017 filed its reply on 11.05.2017. The reply of assessee is duly acknowledged by Ld. PCIT(E) in its order. We find that the assessee instead of filing detail explanatory submission relied on various documents furnished alongwith original application. PCIT(E) rejected the application of assessee by taking view that assessee-trust failed to file documentary evidence about the genuineness of activities in consonance with object. Considering the fact that the assessee-trust has furnished almost or requisite detail vide reply dated 11.05.2017, the Ld. PCIT(E) instead of referring all those documentary evidence rejected the application of the assessee-trust. Therefore, considering the facts and circumstances, we deem it appropriate to set aside the impugned order of Ld. PCIT(E) and restore the mater back to the file of Ld. PCIT(E) for considering the application afresh - Appeal of assessee is allowed for statistical purpose.
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2021 (11) TMI 209
Addition u/s 68 - Unexplained share application money received - No proof regarding agricultural activities given - CIT-A deleted the addition - HELD THAT:- Assessing Officer merely doubted the investment made by the share applicants for the reason that they did not submit any proof regarding agricultural activities done by them. It is therefore quite evident that the Assessing Officer himself accepted the identity of the share applicants and genuineness of the transactions as entered into with them. We are of the view that the assessee company satisfactorily discharged the primary onus as cast upon it under section 68 by establishing the identity and creditworthiness of the share applicants and genuineness of the transactions as entered into with them and therefore, addition made by the Assessing Officer on account of share application money received from remaining share applicants was neither legal nor proper and was rightly deleted by the Ld CIT(A). The action of the Ld CIT(A) is therefore, confirmed.- Decided in favour of assessee. Disallowance of interest - addition made as assessee has not charged interest on loan and advance but paid interest to others - proof of sufficiency of own funds - HELD THAT:- CIT(A) was justified in deleting the addition because the interest bearing funds in possession of the assessee company were higher than the amount as advanced by it and most of the advances were carried forwards from the erstwhile firm where no interest bearing funds were used. See SA BUILDERS LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2006 (12) TMI 82 - SUPREME COURT] , RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HERO CYCLES (P.) LTD. [ 2015 (11) TMI 1314 - SUPREME COURT] - Decided in favour of assessee.
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2021 (11) TMI 208
Assessment u/s 153A - Whether any incriminating material found during the course of search? - statements recorded u/s.132(4) whether constitute incriminating material or not ? - HELD THAT:- DR could not produce any material to suggest that the assessment made u/s.153A for the year under consideration and the consequent additions were based on any seized material revealing undisclosed income of the assessee. He has simply relied upon the orders of the lower authorities and contended that the findings unearthed during the course of search constitute incriminating material for justifying the assessment u/s.153A of the Act. We are unable to appreciate the above argument since there is nothing even apparent to prove anything incriminating against the assessee except for statements of third parties alone. We find merit in the contention of the Ld. Counsel that transactions duly recorded in the regular books of account do not constitute incriminating material. In the instant case, the advance and loan obtained from Gulmohar Towers Pvt. Ltd. M/s.Rowland Trexim Pvt. Ltd. respectively have been duly recorded in the books of account based on which return of income was filed and the same can by no stretch of imagination be construed as incriminating material found during the course of search. In this regard, support is drawn to the decision of the Hon ble Delhi High Court in the case of CIT v. RRJ Securities Ltd.[ 2015 (11) TMI 19 - DELHI HIGH COURT] We once again reiterate that the scope and ambit of section 153A of the Act is to restrict to only incriminating material in case of unabated years. Since the assessment for the year under consideration is an unabated one which is undisputed and that we find no existence of any such incriminating material which is the pre-requisite to make assessment u/s.153A of the Act, the consequent additions made by the Revenue are without jurisdiction and will not survive - Decided against revenue.
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Customs
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2021 (11) TMI 207
Confiscation of Container - seeking directions against the respondent authority to release the seized container - goods in the container is Methyl Benzene Sulfonate - hazardous goods as per Material Safety Data Sheet or not - HELD THAT:- Without entering into the merit and without even, in any manner, touching upon the issue which has been already initiated by the respondent authority in the show cause notice which has been issued upon the petitioner and others, for the disposal of the hazardous material, as the time line given is of three (3) months, the respondent is directed to complete the process by strictly following the rules and regulations in this regard. Noticing the hazardous nature of the goods, let the process be completed at the earliest. An attempt shall be made to dispose it of as far as possible within three (3) months. Petition disposed off.
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2021 (11) TMI 206
Seeking provisional release of goods - section 110A of the Customs Act, 1962 - HELD THAT:- Mr. Pabale is personally present in Court. He has tendered an affidavit dated 26th October 2021. He has sought to explain therein the reasons why portions of the writ petition including the verification clause were left blank; however, before us, he has tendered unconditional apology and has prayed that the show-cause notice dated 20th October 2021 may be discharged. The apology tendered by Mr. Pabale is accepted - SCN discharged.
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2021 (11) TMI 205
Condonation of delay in filing appeal - delay in filing of the Bills of Entry - Seeking direction for consideration of representations dated July 14, 2020 in respect of two Bills of Entry - HELD THAT:- The Deputy Commissioner of Customs shall bear in mind that the shipments had arrived within a month of the national lockdown being announced and at least till the end of the year, normalcy was not restored in Maharashtra. There being special circumstances prevailing in the nation for which even the Supreme Court of India by its order passed in a suo motu Public Interest Litigation had suspended the period of limitation, the Deputy Commissioner of Customs ought to proceed to consider the representations bearing in mind the situation prevailing at the time the shipments arrived and when the representations were made. An appropriate order on the representations be made after granting an opportunity of personal hearing to the authorized representative of the petitioner as early as possible, but not later than a fortnight of receipt of a copy of this order. Petition disposed off.
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2021 (11) TMI 204
Violation of principles of natural justice - Import of capital goods under EPCG Scheme - no show-cause notice indicating initiation of adjudication process issued - N/N. 102/2009-Cus dated 11.09.2009 - HELD THAT:- A perusal of the records would indicate that no show-cause notice has been issued as the first step in the proceedings of adjudication as contemplated under Section 28 - It is admitted that petitioner was not afforded any opportunity of personal hearing. Wherever the benefit conferred upon the petitioner by issuance of redemption letter is sought to be revoked, there has to be strict adherence to the principles of natural justice. The recovery notice dated 18.09.2018 issued by the respondent no.3 at Annexure-'M' and the letter dated 18.09.2018 at Annexure-'N' are set aside. The respondent authorities to issue a show-cause notice and decide the matter after affording an opportunity of personal hearing to the petitioner. The action of invocation of bank guarantee by the respondent is set aside and the communication of the authority to the bank is held to be illegal as the same was issued without issuance of prior show-cause notice as per the statutory scheme - Petition disposed off.
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2021 (11) TMI 203
Concessional rate of duty - import of capital goods - EPCG scheme - N/N. 49/2000-Cus dated 27.04.2000 - time limitation - HELD THAT:- The Appellate Authority as well as the Tribunal being fact finding authorities have meticulously examined the material on record in arriving at a finding that non-mentioning of O.C.No.4066/2011 is not fatal for the delivery of the assessment order on the assessee. It is obvious that the Post Master General while giving the report has referred to the query made by the petitioner as regards the acknowledgment card with reference under O.C.No.4066/2011 as to whether that letter has been delivered. It is unrealistic to expect the said O.C.No.4066/2011, the reference number maintained in the register of the Assessing Officer, to be entered in the acknowledgment card as the reference number in the envelope and the postal acknowledgment. Any report given by the Post Master General with reference to O.C.No.4066/2011 would not assist the petitioner. Time Limitation - HELD THAT:- The request made by the petitioner to decide the issue on merits dehorse the time barred appeal would run counter to the well established principles of law reiterated by the Hon'ble Apex Court in catena of decisions. No power was vested with the authorities as well as the Tribunal to condone the delay beyond the statutory period of limitation - It is well settled that the Court can come to the rescue of the person who is vigilant about his rights and not to a person who sleeps over the matter and rises from the slumber at his convenience. It cannot be expected that the petitioner would have awaited the assessment order from 14.09.2011 till 31.12.2012 when attempts were made before the Appellate Authority to consider the matter on merits as per the letters relied upon by the assessee itself. Petition dismissed.
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2021 (11) TMI 202
Refund of IGST - allegation is that the appellant attempted to obtain undue refund of duty - penalty u/s 114AA of Customs Act - HELD THAT:- It can be seen that the refund claim was filed on 9.10.2018 in a situation where appellant paid duty and was not able to clear the goods. The duty of ₹ 61,24,785/- having been paid on 5.9.2018 and 11.9.2018, the appellant filed refund claim since he did not find any ways to clear the goods. Later, the foreign supplier has arranged for a new purchaser and the NOC was issued by the appellant. It is understood from the facts of the case that by this time the duty paid vide bill of entry presented by the appellant was appropriated towards the imported goods. Even though the title of the goods were transferred to the new purchaser by amended bills of entry, the duty could not be collected from the new purchaser as the duty on the goods already stood discharged. The allegation in the Show Cause Notice is that the appellant has made deliberate attempt to obtain undue refund. In fact, the appellant has replied to the Show Cause Notice explaining the entire situation by which he had to file the refund claim and thereafter the application for withdrawing the refund claim. The adjudicating authority however proceeded to impose a penalty of ₹ 50 lakhs. Interestingly, the Commissioner (Appeals) after taking cognizance of all the facts has observed that the appellant did not respond to the Show Cause Notice and did not appear for personal hearing before the adjudicating authority - the conclusion arrived by the Commissioner (Appeals) that the appellant did not reply to the Show Cause Notice did not appear for the personal hearing would establish the mens rea is not only wrong but highly absurd. Levy of penalty u/s 114AA of Customs Act - HELD THAT:- There is nothing brought out in evidence which attracts the ingredients of section 114AA of the Customs Act, 1962. The mere fact that the department had already appropriated the duty amount paid by the appellant towards the imported goods and therefore could not collect further amount against the amended bills of entry presented by the new purchaser cannot be a ground to issue a Show Cause Notice alleging attempt to claim undue refund. Appeal allowed - decided in favor of appellant.
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2021 (11) TMI 201
Finalization of duty in respect of one shipping bill - issuance of Export Obligation Discharge Certificate (EODC) - cancellation of bond - HELD THAT:- The reason why the department is not able to accept the claim of the appellant that imported goods were used for manufacture of finished products, is the non-availability of the test report. From the grounds stated in the appeal, it is seen that much effort has been taken by the appellant by issuing several representations to the authorities to trace out the lab test report. The Board in its Circular No.79/2002-Cus. dated 28.11.2002 has clarified that in such situation when the test report is not available, the duty has to be finalized on the basis of available test reports. Observing that the bond has been cancelled and returned to the appellant, nothing further survives - Appeal allowed - decided in favor of appellant.
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2021 (11) TMI 200
Failure to Levy of Anti Dumping Duty - import from China PR, Malaysia and Vietnam - maintainability of appeal u/s 9C of Customs Act - Violation of principles of natural justice - HELD THAT:- A very elaborate procedure has been prescribed for determining whether anti-dumping duty has to be imposed or not. A perusal of the final findings of the designated authority shows that the designated authority had examined the market economy treatment, normal value, export price and determination of dumping margin after taking into consideration the submissions made by the domestic industry and the other interested parties. It also examined whether injury cost to the domestic industry can be attributed to any factor, other than the dumped imports and whether there was a causal link between dumped imports and the injury to the domestic industry as also the magnitude of injury and injury margin. The designated authority had, after a detailed analysis, arrived at a conclusion that anti- dumping duty was required to be imposed and accordingly made a recommendation to the Central Government. It was, therefore, necessary for the Central Government to have examined all the relevant aspects necessary for deciding whether anti-dumping duty was required to be imposed or not and deal with the findings recorded by the designated authority, if the Central Government was to take a view different from the view expressed in the recommendation made by the designated authority. Recording of reasons, therefore, is a must if the Central Government decides not to follow the recommendation made by the designated authority. It is also necessary for the Central Government to record reasons in such a situation because an appeal lies to the Tribunal against the determination made by the Central Government. It is not possible to sustain the decision taken by the Central Government, contained in the Office Memorandum dated 14.12.2020, not to impose anti- dumping duty despite a recommendation having been made by the designated authority for imposition of anti-dumping duty. The matter would, therefore, have to be remitted to the Central Government to take a fresh decision on the recommendation made by the designated authority. The matter is remitted to the Central Government to reconsider the recommendation made by the designated authority - Appeal allowed by way of remand.
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2021 (11) TMI 199
Refund of pre-deposit - refund claim filed by the CHA is proper or otherwise - applicability of principle of unjust enrichment - HELD THAT:- It is not the case that whether CHA is claiming the refund. Those are applications of refund filed by the CHA but ultimately the refund has to be given to the appellant only. Therefore, only on the ground that the application for refund was filed by CHA, refund cannot be denied which is otherwise due to the appellant. Unjust enrichment - HELD THAT:- Though appellant have paid the Revenue deposit but the same was appropriated against the duty demand. Therefore, the Revenue deposit has been converted into duty - Hon ble Supreme Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] has categorically held that all the refund has to pass through test of unjust enrichment. Therefore, in the present case also unjust enrichment is very much applicable for granting the refund of duty. There is a subsequent development that after appropriation of the refund against their demand, the same was settled in favour of the appellant in MOSAIC INDIA PRIVATE LIMITED VERSUS C.C. -JAMNAGAR (PREV) [ 2020 (6) TMI 285 - CESTAT, AHMEDABAD] . Therefore, the amount appropriated needs to be refunded subject to passing of the test of unjust enrichment. The matter needs to be remanded to the Adjudicating Authority for passing a fresh order - Appeal allowed by way of remand.
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Corporate Laws
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2021 (11) TMI 198
Seeking direction to make repayment of the deposit along with interest due thereon at 18% per annum - Section 73 (4) of the Companies Act, 2013 - HELD THAT:- In order to decide the issue whether the amount in question was deposited on the request of the respondent in order to overcome the financial difficulties faced by the company, when a question was put to both sides, as in whose bank account the deposit of ₹ 30,00,000/- was credited by the petitioner, both sides could not answer the question. Hence, the Bench directed both the parties to submit their respective bank account details for the relevant period with regard to the deposit of ₹ 30,00,000/- with an affidavit. Both sides filed affidavit enclosing the bank account details. On-going through the bank account details produced by the respondents, it is seen that the amount in question has been credited to the account of Kerala Trade Centre, which is a separate entity. The Company Petition has been filed against Kerala Chamber of Commerce and Industry as the respondent. The payments have not been made to the account of respondent company, but to the account of Kerala Trade Centre, a joint venture bank account which is maintained and handled separately for the purpose of construction, development and selling of apartments under the brand name 'Kerala Trade Centre'. This application filed against Kerala Chamber of Commerce and Industry will not stands scrutiny and is without any merits - Petition dismissed.
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2021 (11) TMI 197
Winding up of the Petitioner Company in pursuance of the special resolution passed by the members of the Petitioner Company through its Director Mr. Suresh Kurkute - Section 271(a) and other applicable provisions of the Companies Act, 2013 - HELD THAT:- The Petitioner Company should be wound up the direction of the Hon'ble tribunal as per the provisions of the Companies Act, 2013 - the Liquidator from the panel maintained by the Central Government as per Section 275(2) of the Companies Act be appointed as the Company Liquidator. The Petitioner Company undertakes to serve notice to the Income Tax Department within a period of thirty days of appointment of the Liquidator, as required under Section 178 of the Income Tax Act, 1961 - petition admitted.
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2021 (11) TMI 196
Reduction of share capital - Section 66 of the Companies Act, 2013 - HELD THAT:- Upon receipt of the notice, the Regional Director has submitted its observation dated 29.04.2021, wherein it has been observed that the company has not complied with the provisions of Section 203 of the Companies Act, 2013 read with Rule 8A of the Companies (Appointment Remuneration of Managerial Personnel) Rules, 2014 from 02.09.2019 as the post of Company Secretary is vacant from 01.09.2019. However, it is stated in the report that the Company has appointed new Company Secretary with effect from 01.03.2021 and further filed an affidavit undertaking to file application with RoC Chennai for adjudicating the delay in appointment of Company Secretary. This Tribunal is of the view that it is just and proper to confirm the Reduction of Share capital of the Applicant Company as resolved by the members of the Company by passing a special resolution and by way of the consent in the form of affidavit - While approving the Reduction of share capital as above, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. Application allowed.
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Insolvency & Bankruptcy
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2021 (11) TMI 195
Auction sale - Seeking ratification and ratification of e-auction sale of the Lot 1 assets - HELD THAT:- From a perusal of the extract of the Liquidation Regulation as at 01.04.2018 (applicable) and the amended Liquidation Regulation in juxtaposition to each other, it is clear that due to a change in law, the present circumstances requires indulgence of this Tribunal to ratify and allow the Auction Sale of the Lot 1 and Lot 2 assets of the corporate Applicant, since the Applicant herein is not empowered as a Liquidator to accommodate the requests of the successful bidders to pay the balance sale consideration within 90 days as per the amended Liquidation Regulations, when the Liquidation Regulations as at 01.04.2018 (old) is applicable to the present Corporate Applicant Which stipulate a time limit of only 15 days from the date of demand i.e. the signing of the LoI. This Adjudicating Authority not inclined to give benefit of provision of 90 days to pay balance sale consideration as per amended clause 12 of Schedule I of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Relying on Circular issued by the IBBI, it is held that benefit cannot be granted as the liquidation order in the proceeding was passed before the amendment dated 25.07.2019 benefit under amended clause 12, could not be granted. Therefore, E-Auction dated 26.02.2021 is null and void as bad in law. Liquidator is directed to get assets valued again and issue fresh E- Auction sale notice in accordance with Liquidation Regulations as at 01.04.2018 (applicable) and complete Auction expeditiously - application disposed off.
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2021 (11) TMI 194
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - issuance of demand notice - time limitation - HELD THAT:- Admittedly, the invoices pertain to the period from November 2013 to February 2014 and were part of the undated demand notice under Section 8 of IBC sent by the Petitioner - The law with respect to 'date of default' and 'limitation' under IBC has been clearly laid down by Hon'ble Supreme Court in several judgments and since the Limitation Act 1963 is applicable to applications filed under Sections 7 and 9 of IBC from the inception of IBC therefore, Article 137 of the Limitation Act 1963 gets attracted. The Petitioner has filed the present petition on 30.01.20 and also failed to file any application for condoning the delay. Thus, three years from the date when the right accrues is the period when OC gets the right to trigger CIRP. The existence of debt and default on the part of the CD cannot be established as the due debt is stated to be on 03.03.14, which is barred by limitation period which expired in the year 2017. The present Petition deserves to be dismissed without going into merits of the case - Petition dismissed.
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2021 (11) TMI 193
Purchase of Corporate Debtor as a going concern under liquidation on As is Where is basis - HELD THAT:- It is pertinent to note that when any Corporate Debtor, under Liquidation is purchased as a going concern, the auction purchaser, by virtue of law, is entitled to certain reliefs as folllows: Past Dues - In relation to claims prior to auction purchase, it is the duty of the Liquidator to collate and admit the claims in accordance with law, Thus, any claim arising prior to e-auction is to be dealt with as per the provisions of Section 53 of the Code by the Liquidator and the Applicant/Corporate Debtor shall not be held liable to pay the same. Statutory dues - In relation to the waiver of payment of stamp duty, applicable statutory dues, taxes post purchase of corporate Debtor, it is settled position of law that there shall not be any exemption or waiver, unless provided under the Law and same shall be dealt by competent Authority in accordance with the relevant Law. Infusion as Equity - That upon purchase of Corporate Debtor as a going concern, the Auction purchaser by virtue of law shall be entitled to make allotment of shares and reconstitute board as he desires as per the provisions of the Companies Act, 2013 by following the procedure prescribed thereunder. This Adjudicating Authority is not entitled to grant any waiver or concession to any of the Auction purchaser, who purchases the Corporate Debtor as a going concern - auction purchaser may approach the respective authorities, who may consider the requests made by the applicant under the provisions of respective statutory provisions - Application disposed off.
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2021 (11) TMI 192
Liquidation of Corporate Debtor - Section 33(1) of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- Despite all possible steps as required under the Code taken during the CIRP, the Applicant failed to receive any resolution plan. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, there are no option than to pass an order of liquidation of the Company in the manner laid down in Chapter-III of the Code. This Adjudicating Authority is of the view that the efforts to obtain resolution of the Corporate Debtor has failed and as per the directions of this Tribunal, decided to liquidate the Corporate Debtor - application allowed.
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2021 (11) TMI 191
Dissolution of the Corporate Debtor - seeking orders for payment and reimbursement of CIRP and Liquidation costs and expenses to the Liquidator by the financial creditors of the Corporate Debtor - HELD THAT:- The financial creditor was directed to make payment and reimbursement of CIRP and the liquidation costs and expenses to the liquidator within 10. In compliance thereof the financial creditor, Tata Capital Financial Services Ltd. made the said payment. Receipt and payment of the Corporate Debtor reflecting payment of said cost and expenses is annexed as Annexure-7 to the final report filed. Prima facie as there is no tangible assets of realization or saleable value of the Corporate Debtor and it is not doing any business, therefore the Applicant herein submits that there are absolutely no means or sources available with the Corporate Debtor to discharge its liabilities. In view thereof it is inferred that this application for dissolution is the last resort option available with the Applicant herein to wind up the proceeding of the Corporate Debtor. Through this Order it is hereby declared that not only it is just and equitable but because of the fact that no asset is available for the purpose of 'Liquidation' as reported by the Applicant, this is a fit case of a Corporate Debtor to be dissolved with the directions imposed - the Corporate Debtor, is hereby dissolved. Application allowed.
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2021 (11) TMI 190
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - pre-existing dispute between the parties - HELD THAT:- It is noted that Operational Creditor had received a sum of ₹ 66,70,774/- as against the total bill for ₹ 1,03,37/256/- and ₹ 7,92,520/- as against the total bill for ₹ 18,79,942/-. The Corporate Debtor was legally liable to pay an amount of ₹ 36,73,997/- and ₹ 10,87,422/- respectively towards outstanding bills. Then after Operational creditor filed Civil Suits and withdrawn the same and filed before this Tribunal and also filed for winding up the Corporate Debtor before Hon'ble High Court and both the parties initiated conciliation process but failed. It is noted by the Bench that there are disputes regarding the claim of the Operational Creditor and those disputes were pending much prior to the issuance of the demand notice - It is settled law that Application under Section 9 of the Code by the Operational Creditor is not maintainable in the event there is preexisting dispute between the parties in relation to a debt and in the event of Operational Creditor has received a notice of dispute before the issuing the demand notice. In view of the pre-existing dispute between the parties in relation to the amounts claimed by the Operational Creditor and the chain of events associated with it, the Bench is of the view that this Petition under Section 9 of the Code is not maintainable and deserves to be dismissed - Application dismissed.
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2021 (11) TMI 189
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Arbitration proceedings are pending between the Financial Creditor and the Corporate Debtor - maintainability of parallel proceedings - HELD THAT:- In the present case though the Arbitration proceedings are pending between the Financial Creditor and the Corporate Debtor, the same cannot affect the proceedings under the IBC as these two legislations are separated and independent in its nature. Therefore, this Bench is of opinion that there is no any other reason to deny the insolvency of the Corporate Debtor and admit the Petition filed by the Financial Creditor. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than ₹ 1,00,000/- is due and payable by the Corporate Debtor to the Applicant. There is default by the Corporate Debtor in payment of debt amount. Hence, the Application filed by the Financial Creditor is hereby admitted - the application is complete and has been filed under the proper form. The debt amount is more than Rupees One Lakh and default of the Corporate Debtor has been established and the application deserves to be admitted. Application admitted - moratorium declared.
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2021 (11) TMI 188
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - reliability of undated, unstamped and unregistered Memorandum of Understanding (MoU) signed by the Respondent along with Harmony Developers Private Limited (the Developers) on one side and the Petitioner (the Joint Developer) on other side - Payment of Refundable Security Deposit made by the third party i.e. Sunteck Realty Ltd. - Does the Refundable Security Deposit given by a Joint Developer constitute a Financial Debt? - default occurred or not - dishonor of cheque constitute the existence of Financial Debt and Default due from Respondent to Petitioner or not. HELD THAT:- As no disbursement has been made by the Petitioner to the Respondent, the Petitioner Magnate Industries LLP is not entitled to file an application under section 7 of the IBC-2016 as Financial Creditor against Respondent Safal Developers Private Limited. - Admittedly, the petitioner has filed Axis Bank Statement of Sunteck Realty Ltd. as Exhibit-I of the petition, showing a payment of ₹ 25 crore to the Respondent. If at all, somebody can file Insolvency petition against the Respondent under section 7 or under section 9 of IBC-2016, it is Sunteck Realty Limited, of course subject to satisfying the criteria of being a financial or an operational creditor. As there is no financial debt owed by the respondent to the petitioner being a Joint Developer, the Joint Developer becomes a Joint Venture Partner in the project, the question of default does not arise. The date of default as mentioned in the Part-IV of the Form 1 of Petition is 31.07.2020 whereas, as per NeSL record of default the date of default is shown as 04.01.2020 as submitted by the petitioner himself. The respondent issued two cheques in favour of the petitioner amounting to ₹ 25,00,00,000/- and ₹ 1,74,57,534/- totalling to ₹ 26,74,57,534/-. These cheques were dishonoured. For dishonouring of the cheques, there is a specific remedy available to the petitioner under section 138 of the Negotiable Instrument Act 1881. The petitioner chose not to proceed against the respondent in this regard. The mere fact of dishonouring of cheques, by itself, cannot be construed as existence of financial debt and default so as to admit a petition under section 7 of the IBC-2016. Petition filed by Magnate Industries LLP, the Financial Creditor/Applicant, under section 7of Insolvency Bankruptcy Code, 2016 (I B Code) against Safal Developers Private Limited, Corporate Debtor is hereby dismissed.
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2021 (11) TMI 187
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- Admittedly, the first default in repayment of interest took place on 30.06.2015. As per the Limitation Act, 1963, the period of limitation commenced on 30.06.2015 and ended 3 years from that date. The Insolvency Application is filed beyond the stipulated period of 3 years and, it is ex-facie apparent that the underlying purported claim is not legally enforceable and the petition is barred by limitation. Further, it is settled position of law that the limitation would have to be counted from the date of first default i.e. 30.06.2015 in the present case, unless waiver is pleaded. Pertinently, no waiver is available to the applicant bank at this belated stage, as the same has not been pleaded in the Insolvency Application. On all counts therefore, the Corporate Debtor submits and reiterates that the Insolvency Application is barred by limitation. In the Corporate Debtor's respectful submission, limitation is an issue of jurisdiction which precludes this Tribunal from granting any relief to the Applicant Bank. This also renders the Insolvency Application as not maintainable. The Bench is of the clear view that there is a Financial Debt in terms of Section 5(8) and there is default in terms of Section 3(12). The limitation aspect raised by the Corporate Debtor does not hold good. Petition allowed - moratorium declared.
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2021 (11) TMI 186
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - Applicability of Notification No. 1205(E) dated 24.03.2020 issued by the Ministry of Corporate Affairs - whether this application filed on 18.01.2021 claiming default of an amount as on 05.08.2020 is maintainable or not? - HELD THAT:- In view of the Notification No. 1205(E) dated 24.03.2020 issued by the Ministry of Corporate Affairs specified the Rupees One Crore as the minimum amount of default and that the amount claimed which is below Rupees One Crore, this application cannot be entertained. The last date of payment of ₹ 25,000/- was made on 20.08.2020, this will come under the preview of Section 10A of IBC, 2016. Application dismissed.
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2021 (11) TMI 185
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - HELD THAT:- The demand notice was delivered to the registered address of the corporate debtor on 02.05.2019 and original postal receipt along with the tracking report are attached as Annexure A-6 (Colly) of the petition. As per tracking report, it is seen that notice was delivered with the remarks Item Delivered to the registered address of the corporate debtor. In view of the same, it is held that the demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It could be seen that the corporate debtor has chosen not to file reply to the petition despite being granted 3 weeks to do so nor has corporate debtor entered into appearance after 27.01.2020. It is deposed by the operational creditor that no reply has been received to the demand notice dated 25.04.2019 from the corporate debtors. It is also deposed that there is no dispute of unpaid operational debt pending between the parties in any court of law or any other authority. It implies that there is no dispute in relation to the debt claimed as per Part IV of Form 5. Whether this application is filed within limitation? - HELD THAT:- A demand notice in Form 3 attached as Annexure A-6 (Colly) was duly served on the corporate debtor on 02.05.2019 and the due date to honour the outstanding due as per the demand notice was on 12.05.2019. It is observed that neither any reply from the corporate debtor has been filed in lieu of the above stated demand notice nor any payment has been made, therefore, the period of limitation would begin from 12.05.2019. This application was filed on 17.07.2019 - this Adjudicating Authority finds that this application was filed within limitation. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due. It is also observed that the conditions under Section 9 of the Code stand satisfied. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 lakh by the respondent-corporate debtor. The present petition being complete and having established the default in payment of the Operational Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 9 of the IBC - moratorium declared.
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2021 (11) TMI 184
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - service of demand notice - HELD THAT:- The demand notice was sent to the registered address of the corporate debtor as per the master data at Annexure P-6 (Page No. 46) of the application in which registered office is shown as Village Bassikalekhan PO Hariana Hoshiarpur Punjab - it is established that the notice was served properly. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It can be seen that even after service of Demand Notice dated 13.02.2019, no notice of dispute has been raised by the corporate debtor. In view of the same, there is no pre-existing dispute. Whether the C.P. is filed within limitation? - HELD THAT:- All the invoices are pertaining to the year 2018 and since the C.P. is filed in the year 2019, therefore, the C.P. is well within the period of limitation. Quantum of debt - HELD THAT:- As per ledger account of corporate debtor maintained with operational creditor from 01.04.2018 to 31.03.2020 (Annexure P-5); an outstanding balance of ₹ 28,90,257/- is due and payable by corporate debtor. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 lakh by the respondent-corporate debtor. The present petition being complete and having established the default in payment of the Operational Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 9 of the IBC - Moratorium declared.
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2021 (11) TMI 183
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - Service of demand notice - HELD THAT:- The demand notice was sent to the registered address of the corporate debtor on 24.09.2020 and original postal receipt are found at Page No. 70 of Annexure P-5 (colly). As per tracking report for consignment number EP584068944IN, it is seen that notice was not delivered with the remark Dispatched to BO . As per tracking report for consignment number EP584068825IN, it is seen that the notice was delivered with the remark Item delivery confirmed on 01.10.2020. It is also observed that the petitioner has sent the demand notice vide email dated 24.09.2020 to the e-mail address provided by the corporate debtor in the company Master Data which has not bounced back. In view of the same, it is held that the demand notice has been duly served. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- It is deposed by the operational creditor in their affidavit dated 16.11.2020 attached at Page Nos. 170-173 of the petition that the corporate debtor challenged the instant application on grounds of limitation. However, the respondent-corporate debtor has in their reply vide Diary No. 017781/1 dated 22.03.2021 submitted that corporate debtor is unable to pay the debt due to financial crisis. Their secured financial creditor i.e. Punjab National Bank has taken physical possession of manufacturing facility of the corporate debtor - there is no dispute as to the liability of the corporate debtor. It is observed that copy of bank statements has been attached as Annexure P-7 (colly) of the application and the specific entries showing payments being made to the operational creditor. Whether present application is filed within limitation? - HELD THAT:- Since the last payment was made to the operational creditor by corporate debtor for ₹ 50,000/- (Annexure P-7 Colly) on 17.11.2017, the period of limitation would begin on 17.11.2017. The demand notice was served on 01.10.2020 (Page 72) of the present application was filed on 18.11.2020. Therefore, the petition is filed within limitation. It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. Accordingly, the petitioner proved the debt and the default, which is more than ₹ 1 lakh by the respondent-corporate debtor. The present petition being complete and having established the default in payment of the Operational Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 9 of the IBC - moratorium declared.
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2021 (11) TMI 182
Seeking extension of 90 days beyond the period of 180 days - HELD THAT:- The applicant is directed to file an amended application and we also allow the prayer of the applicant to delete the name of the respondent Nos. 1, 2 3 from the cause title portion of the application. The applicant is directed to file the amended application within a week from today and also send a copy to the respondent No. 4 by all modes including her Email-ID. We recall our earlier order by which we have deleted the name of respondent Nos. 1, 2 3 from the cause title portion of the application - the applicant is directed to serve the copy of amended application to all the respondents by all modes including on the email id of the Respondents - List the matter on 26.10.2021.
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2021 (11) TMI 181
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - short supply of goods - Raw Cashew Nuts Crops - HELD THAT:- The cause of action in the 'Demand Notice' is exactly identical to the present Company Petition (IB). When this was brought to the attention of the Petitioner/Operational Creditor, the Petitioner Mr. Jackson J. (Power of Attorney Holder) filed this Interlocutory Application praying to withdraw the Company Petition (IB) i.e., CP(IB)/03/KOB/2021. This was done on coming to know that Mr. Jose Samuel issued a Section 8 notice to the Corporate Debtor. This Company Petition (IB) was filed by the Petitioner/Operational Creditor falsely claiming to be the Power of Attorney Holder of Mr. Jose Samuel, with the intention to obtain a wrong gain to him and causing a wrongful loss to the Respondent/Corporate Debtor Company. The Applicant/Operational Creditor are directed to pay the costs of ₹ 25000/- through Bharatkosh to the Ministry of Corporate Affairs within one week from that day and submit proof of payment along with an affidavit on or before 10.08.2021, in order to consider his request for withdrawal of CP(IB)/03/KOB/2021 - application allowed.
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2021 (11) TMI 180
Approval of Resolution Plan - preferential undervalue or extortionate transaction - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is noted that CoC in its 10th meeting held on 22.01.2021 with 100% voting right approved the Resolution Plan submitted by Resolution Applicant. It is also noted that Resolution Applicant is not a related party of the Corporate Debtor. There are no preferential undervalue or extortionate transaction. The total outstanding debt claims by all stakeholders stand at ₹ 1,70,426.58 Lakhs and Resolution Applicant has committed for payment to them at ₹ 7,860.00 Lakhs which amounts to 4.61% of total outstanding debt. The Resolution Plan also contains provisions for its effective implementation and we as Adjudicating Authority are satisfied that the Resolution Plan so approved can be successfully implemented. The monitoring committee and supervisory committee as mentioned in the Resolution Plan shall be formed for effective implementation of the Resolution Plan. The Resolution Plan as proposed by Resolution Applicant and approved by CoC is approved - application allowed.
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2021 (11) TMI 179
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- A perusal of the typed set of documents filed by the Corporate Debtor would reveal the fact that there are series of e-mails which have been exchanged between the parties even before issuance of the Demand Notice. A perusal of the aforesaid emails as exchanged between the parties would show that the Corporate Debtor had raised certain disputes in relation to the project executed by the Operational Creditor and that this Court, unlike a Civil Court cannot go into the aspect of whether the said defects as raised by the Corporate Debtor were rectified and completed by the Operational Creditor and also cannot adjudicate upon the said issue - the Corporate Debtor has clearly pointed out the dispute which existed between the parties, much prior to the issuance of the Demand Notice. Further, without producing precise documents by the Operational Creditor, substantiating that the 'debt' has become due and payable by the Corporate Debtor, this Authority would certainly not be able to ascertain the 'default' on the part of the Corporate Debtor. It is also seen that the Corporate Debtor has raised a 'dispute' in relation to the completion of the work on the basis on which the work has been progressed in relation to the Operational Creditor and also it is seen that the Operational Creditor was unable to complete the project within the stipulated time - it is also significant to point out here that it is not for the first time that the Corporate Debtor has raised the dispute in the reply to the Demand Notice. Also, it emerges from the series of e-mails exchanged between the parties show that there is a dispute between the parties in relation to the work done by the Operational Creditor. The Hon'ble Supreme Court of India in the matter of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT ] has clearly laid down that the test for determination for the Adjudicating Authority is to see at the stage of Admitting/rejecting the Application is whether there is a plausible contention which requires further investigation and that the 'Dispute' is not a patently feeble legal argument or an assertion of fact unsupported by evidence - it is not required for this Adjudicating Authority to explore the gravity and intensity of the dispute which exists between the parties and is only required to see that whether the dispute as raised by the Respondent requires further investigation and that the dispute is not patently feeble legal argument or an assertion of fact unsupported by evidence. There exists a dispute between the parties and the said dispute required further investigation and the alleged debt and default, can be established only after detail trail and not in a summary proceeding - Application dismissed.
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PMLA
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2021 (11) TMI 178
Money Laundering - proceeds of crime - conspiracy - provisional attachment of assets/properties of the petitioner - offence u/s 120 (B) read with Sections 420, 467, 468 and 471 of the Indian Penal Code, 1860 and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 - HELD THAT:- On perusal of Section 2(1)(u) of the Prevention of Money Laundering Act, it is crystal clear that any property derived or obtained, directly or indirectly by any person as a result of criminal activity will come within the proceeds of crime. In the explanation it is clarified that proceeds of crime include property not only derived or obtained from the scheduled offence, but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. It is crystal clear that any property derived or obtained, directly or indirectly by any person as a result of criminal activity will come within the proceeds of crime. In the explanation it is clarified that proceeds of crime include property not only derived or obtained from the scheduled offence, but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. While conditioning the exercise of the power on the formation of an opinion by the Commissioner that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, it is evident that the statute has not left the formation of opinion to an unguided subjective discretion of the Commissioner. The formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of the Government revenue. An anticipatory attachment of this nature must strictly conform to the requirements, both substantive and procedural, embodied in the statute and the rules. The exercise of unguided discretion cannot be permissible because it will leave citizens and their legitimate business activities to the peril of arbitrary power. It is an admitted fact that the landed property was purchased by the petitioner prior to institution of the criminal case. The amount in question shown to the tune of ₹ 89,63,511/- to be invested in construction of hotel in question. The authority has come to the conclusion that the proceeds of crime of ₹ 1,08,95,583/- has been invested, which is the subject matter of 26 forged invoices. Thus, it is an admitted fact that there is no finding and it has not been identified that movable or immovable property linked directly with proceeds of crime but the same could not be done by the authority concerned. The material and reason has also not been disclosed so far as alienation of the property in question is concerned. There is no doubt that the authority is having the power to attach the property, but that power is required to be exercised in terms of the statute, which is lacking in the case in hand. The provisional attachment order contained in Annexure-2 passed by respondent no.2 is, hereby, quashed. The matter is remanded back to the concerned authority to pass a fresh order - petition allowed by way of remand.
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Service Tax
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2021 (11) TMI 177
Maintainability of petition - availability of alternative remedy - Non-payment/short payment of service tax - whether the Commissioner was right in proceeding to hold that none of the case laws submitted by the petitioner had application in the case? - HELD THAT:- There is nothing in Article 226 of the Constitution of India which refers to an alternative efficacious speedy remedy made available by a statute leading to ouster of jurisdiction of the writ court. By judicial pronouncements, certain restrictions have been imposed in the exercise of discretion bearing in mind that writ remedy is after all a discretionary remedy. One of these self-imposed restrictions is when an aggrieved party has a remedy under a statute, the writ court may in the judicious exercise of its discretion decline interference and relegate the party to avail such remedy. Since violation of principles of natural justice is the point based whereon the writ court s jurisdiction has been invoked, we hold on the pleaded case in the writ petition that the petitioner has not asserted any of the fundamental principles of natural justice, as understood in the traditional and contemporary sense, viz. audi alteram partem or nemo debet esse judex in propria causa, to have been breached - It has also been held to violate natural justice if the order that is ultimately passed in the proceedings, after extending due, adequate and reasonable opportunity of hearing, does not reveal the grounds in support of the conclusion reached by the decision maker. The first and the most prominent shade is where an order is passed without notice/without opportunity/without hearing. In such a case, there is an obtrusive violation of the rule of audi alteram partem and the writ court may not labour much to decide on the entertainability of a writ petition even if an alternative efficacious speedy remedy were made available by a statute. Complaints of violation of natural justice, which fall in the second shade and may appear to be lighter than the first, are orders passed without reasons - It is also not the complaint that the order has not assigned reasons in support of the conclusion reached. The petitioner is left aggrieved because the impugned order does not say, in so many words, as to why the authorities cited by it were not considered to be applicable. A judicial order is obviously required to deal with the authorities cited in a manner that reflects application of mind, but it is not always the case in respect of an order of the present nature. If at all, we would view the omission of the Commissioner not to separately deal with the authorities cited as something like an error committed within jurisdiction which is not the same as acting in excess of jurisdiction. Such error, if required, can be corrected by the Tribunal if at all the same is approached. We, therefore, do not propose to hold that the order impugned suffers from a violation of principles of natural justice. There is no ground of substance to entertain this writ petition despite the statutory remedy of appeal being available to the petitioner. Petition dismissed.
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2021 (11) TMI 176
Levy of service tax - Business Auxiliary Services - booking of segments and thus assisting in marketing and promotion of the CRS of various companies - demand of interest and penalty - HELD THAT:- Since on the issue of the leviability of the service tax, under the category of business auxiliary services , on the incentives received by the appellant in this appeal have been considered and decided by the larger bench in KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI] , in favour of appellant holding against the leviability, this bench will be barred from reconsidering the same issue. Once the issue of leviability under the category of business auxiliary services is decided in favour of the appellant, the demand of service tax fails and consequently the demand for interest and penalties too will fail. Appeal allowed.
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2021 (11) TMI 175
Taxability - Construction of residential complex for personal use - staff quarters/ said residential units - excluded under Explanation II to Section 65(91a) read with Section 65(30a), 65(105)(zzzza) and 65(105)(zzzh) or not - work done by the sub-contractor - falls under the Exclusion Clause of Section 65 (91a) or not - difference of opinion - Majority Decision HELD THAT:- Apparently and admittedly, the nature of construction in the present case is that of staff quarters. Therefore, more precise definition will be as given under section 65(91a), Finance Act. Bare perusal makes it clear that construction of residential complex, should have more than 12 residential units with common area and facilities in the same premises. Sub-clause (iii) of this section contains the exclusion clause by virtue of which the service rendered for construction of residential complex is exempted from the tax liability provided it meets the following criteria: (i) Residential complex is constructed by a person; (ii) Who has directly engaged another person for designing or planning of the layout and its construction; and (iii) The complex is intended for personal use as residence by such person. It is observed from the show cause notice itself that the appellant was observed to have been engaged in providing construction of the residential complex service to M/s. PGCIL, Patna for constructing the complex for staff quarters of M/s. PGCIL at three different locations viz. Madhubani, Phulparas and Darbanga in Patna. M/s. PGCIL, in turn, admittedly, has given these quarters to its staff free of charge. Thus it becomes clear that there is no element of commerce /industry when M/s. PGCIL received services of construction of residential complex from the appellant. Admittedly the staff quarters/ said residential units were not meant for the employees of M/s. BSEB. Though Letter of Award was executed in association with M/s. BSEB, but for the only reason that the land required for the impugned residential complex is owned by BSEB as is found clearly mentioned in clause 3.0 of the said letter of Award. Sub-clause (iii) Section 65(91a) of Finance Act do not require a person to be the owner. The only requirement is that a person should be one who needs the residential complex for its personal and he shall directly engage the service provider of construction of residential purposes. As already observed above, it is M/s. PGCIL and not M/s. BSEB who required quarters for the residence of its own staff and M/s. PGCIL only has directly engaged the appellant. The another requirement of said clause(iii) is that the other person engaged should be the service provider of the Construction of Residential Complex service - In the present case, the said other person is the appellant and not M/s. PGCIL. Later is rather a person who in association with owner of the requisite land, M/s. BSEB, directly engaged the service provider, the appellant. The circular both of 2004 and 2007 which clarifies that if the builder is constructing the complex for someone including Government from which no commercial benefit has to be derived, such construction is not to be taxed under section 65(105(zzza). The services provided by the appellant to M/s. PGCIL are covered under the exclusion part of said sub clause (iii) of section 65(91a) of the Act, M/s. PGCIL being a person of the said sub clause and appellant being the any other person . Hence, irrespective the impugned service is the service of construction of residential complex but is the one as stands exempted from the tax liability due to the exclusion given to the residential complex which is meant for personal use as residence by the person who directly engaged the service provider and that no element of commerce or industry is involved - Board s circulars No. B2/8/2004-TRU dated 10.9.2004 and Circular No. 80/10/2004/ST, dated 17.09.2004 also clarifies the same. The appellant is a sub-contractor or not - HELD THAT:- M/s. PGCIL was not engaged by M/s. BSEB for providing the construction services but was authorized to act on their behalf to engage any other person who may provide the construction of residential complex services. Apparently and admittedly, PGCIL is not the concern which is engaged in providing services of construction of residential complex. This particular finding is sufficient for me to hold that the appellant cannot be called as sub -contractor of PGCIL. PGCIL rather was the agent acting on behalf of BSEB and as such is to be classified as a person as mentioned in sub-clause (iii) of 65(91(a). In view of this finding, CBEC Circular No. 25/2010 as relied upon by Hon ble Member (Technical) has no significance. The said circular talks only about the sub-contractor being engaged by the provider of service of construction of residential complex for providing the said services to the persons for him he was otherwise engaged as the service provider. In the present case, facts and circumstances are that the appellant was directly engaged by M/s. PGCIL for construction of staff quarters to be used by M/s. PGCIL. Service receiver is M/s. PGCIL and service provider is the appellant. The work of providing the service of construction of residential complex has not further been awarded by the appellant to anyone else. This particular fact, to my opinion, distinguishes the present case from COMMISSIONER OF CENTRAL EXCISE SERVICE TAX CUSTOMS, BANGALORE-II VERSUS NITHESH ESTATES LTD., [ 2018 (7) TMI 1135 - KARNATAKA HIGH COURT] , thus also gets out of the scope of Circular dated 24.5.2010 - In the present case, none is the sub-contractor, as already discussed under Issue No. 1, service provided by the appellant falls under the exclusion part of Section 65 (91a)(iii). The appellant is not liable to pay the service tax. Otherwise also the services rendered are apparently and admittedly in the nature of composite contract or work contract service. Though the period in dispute is pre as well as post the said date, even for the post dated period, the appellant is not liable to pay the service tax, the service being covered under exclusion part of 65(90a)(iii), Finance Act. Extended period of limitation is attracted or not - HELD THAT:- The show cause notice of 11.8.2010 raising the demand for the period from 2006-2008 is beyond the normal period of issuing the show cause notice raising the demand - I draw my support from the decision in the case titled as M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [ 2007 (8) TMI 11 - SUPREME COURT] , wherein Hon ble Apex Court has held that omission by a party to do what he might have done would not render it suppression. As far as fraud, collusion are concerned, it is evident that the intent to evade duty, is build into these words. So far as the mis-statement or suppression is concerned, they are clearly clarified by the word wilful preceding the words mis-statement or suppression of facts which again means intent to evade duty. Apparently, there is no deliberate intent on part of appellant to not to pay the duty. Whether the appeal has been rightly allowed by way of remand for re-determination of quantum of duty liability? - HELD THAT:- The appellant not being the sub contractor, but the service provider of construction of residential complex service being directly engaged by a person i.e. M/s. PGCIL who require the said residential complex for their own personal use, was not liable to pay the service tax. The Board s circular of May, 2010 and the proviso to section 73 of Finance Act invoking the extended period of limitation are observed to be not applicable to the facts and circumstances of the present case - I am in agreement with the findings of Hon ble Member (Judicial) setting aside the order of Departmental Adjudicating authority confirming the demand. I do not deem fit that the case be remanded back for redetermination of the quantum of duty liability. The findings of Hon ble Member Judicial is confirmed - appeal allowed.
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Central Excise
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2021 (11) TMI 174
Recovery of CENVAT Credit - service of notice upon the appellant within one year from the relevant date or not - the SCN was issued on March 19, 2015 - invocation of extended period of limitation under sub-section (4) of section 11A of the Excise Act or not - HELD THAT:- A perusal of section 11A (1) of the Excise Act shows that where any duty of excise has not been paid for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Excise Act with intent to evade payment of duty, the Central Excise Officer shall, within one year from the relevant date, serve notice on the person requiring him to show cause why he should not pay the amount specified in the notice. However, sub-section (4) of section 11A of the Excise Act provides that where any duty of excise has not been levied or short paid by reason of fraud or collusion or any wilful mis-statement, the notice can be issued by the Central Excise Officer within five years from the relevant date. Suppression of facts or not - HELD THAT:- The suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty - In EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE [ 2003 (1) TMI 107 - SUPREME COURT] , the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. In the present case, what is seen is that the audit was conducted between June 17, 2011 to June 22, 2011 and the show cause notice refers to this audit only. The notice, therefore, should have been issued within one year from the relevant date and there is no good reason as to why the Central Excise Officer should have waited till March 19, 2015 to issue the show cause notice. The extended period of limitation, for this reason alone, could not have been invoked. It cannot be said that the appellant had suppressed any information with intent to evade payment of tax - Appeal allowed - decided in favor of appellant.
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2021 (11) TMI 173
Exemption from excise duty or not - waste or not - fatty acids, wax and gum arising in the course of manufacture of refined vegetable oil - exemption Notification dated 18.05.1995 - HELD THAT:- As the definition of excisable goods was amended by insertion of an Explanation in section 2(d) of the Excise Act w.e.f. 10.05.2008, the issue in Excise Appeal No. 21589 of 2014 was covered by the unamended section 2(d) of the Excise Act, while that in Excise Appeal No. 31049 of 2016 was covered by the amended provisions of section 2(d) of the Excise Act. In the present five appeals, the period involved is both prior to the amendment made in the definition of excisable goods and after the amendment on 10.05.2008 - the benefit of the Notification dated 18.5.1995 would, therefore, be available to the Appellant. The impugned orders have denied the benefit of this Notification and have confirmed the demand of duty on clearance of soap muddy/ third grade oil/wax. Appeal allowed.
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CST, VAT & Sales Tax
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2021 (11) TMI 172
Direction to deposit 40%of deposit - seeking full stay on demand - constitutional validity of the Uttarakhand Tax on Entry of Goods Into Local Areas Act, 2008 is subjudice before this High Court - applicability of Section 53(8) of Uttarakhand Tax on Entry of Goods Into Local Areas Act, 2008 - HELD THAT:- Admittedly, even when the constitutional validity of the Act has been challenged before this Court, this Court has not granted any stay on the recovery of the assessed amount. Therefore, merely because constitutional validity is under challenge, it will not prevent the Department from assessing and from passing the assessment order. Moreover, it will not prevent the learned Joint Commissioner from directing the revisionist to deposit at least 40% of the demand amount. In fact, the law bestows a discretionary power on the Joint Commissioner to decide as to how much of the demand amount should be stayed by him. Since it is the discretionary power, which has been validly exercised, the learned Tribunal was justified in upholding the order passed by the learned Joint Commissioner. The learned counsel for the revisionist is equally unjustified in claiming that the learned Tribunal could not have relied on Section 53(8) of the Act - obviously, when the revisionist filed the Second Appeal, Section 53 of the Act would have come into effect. Therefore, even the second contention raised by the learned counsel is unsustainable. Admittedly, the amount to be deposited by the revisionist is around ₹ 50 Lacs. The revisionist possibly cannot claim that it on the brink of liquidation, or that it does not have the said amount within its finances. Therefore, even the third contention being raised by the learned counsel is an attempt to seek misplaced sympathy of this Court - revision dismissed.
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2021 (11) TMI 171
Levy of Excise Duty or VAT - transit loss suffered in the transportation of Grain Extra Neutral Alcohol - HELD THAT:- In UPPER GANGES SUGAR AND INDUSTRIES LTD. VERSUS STATE OF U.P. AND ORS. [ 2005 (4) TMI 639 - ALLAHABAD HIGH COURT] , it had been held if the State has no power to levy excise duty by whatever name called on rectified spirit as it is not a potable liquor, the State cannot claim to have legislative competence to levy excise duty by giving it another name. Also, it may be noted, no private law between the parties arising from a contract may override or negate the Constitutional provision or the statutory law. The Government Order dated 18.03.2016 (Annexure no.22 to the writ petition) insofar as it authorises respondent-State authorities to levy excise duty/penalty over transit loss of Grain Extra Neutral Alcohol is quashed. Demand of excise duty/penalty imposed on Grain Extra Neutral Alcohol are also quashed - It is further directed, subject to applicability of the rule against unjust enrichment, any amount paid against demand raised from the petitioner by way of excise duty/penalty on Grain Extra Neutral Alcohol, after 01.07.2017 may be refunded to it within a period of one month. Petition allowed.
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2021 (11) TMI 170
Transaction of sale taking place or not - sale of Furnace - machinery or not - Section 12(4) of the Orissa Sales Tax Act, 1947 - Whether furnace being an immovable property the sale price of it is not liable to tax under the Act? - HELD THAT:- In its judgment in CCE, INDORE VERSUS VIRDI BROTHERS ORS. [ 2006 (12) TMI 3 - SUPREME COURT] the Supreme Court while dealing with the correctness of the order passed by the CEGAT holding that refrigeration plant/cold storage plant which were fabricated out of duty paid materials would be subject to excise duty, held that these plants are basically systems comprising of various components and are thus in the nature of systems and are not machines as a whole. Therefore, they could not be considered to be excisable goods. The Supreme Court accordingly dismissed the Department s appeal. The furnace permanently embedded to the earth is an immovable property and is not liable to Orissa Sales Tax as sale of machinery - The furnace in question is not covered under machinery under Entry 70 List-C of Schedule of rates and therefore, is not exigible to sales tax. The contract involving receipt of lease rent for leasing of the flameless furnace does not constitute sale or resale of goods within the meaning of sale under Section 2(g) of the OST Act - Leasing of flameless furnace cannot be the subject matter of taxation since it has suffered Orissa Sales Tax at an interior stage in view of Section 8 of the Orissa Sales Tax Act. The impugned orders which hold to the contrary shall stand set aside - revision petitions are disposed of.
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2021 (11) TMI 169
Validity of Revision/re-assessment Order - reasonable opportunity to show-cause before a revision order is passed under Section 27 of TNVAT Act - HELD THAT:- Vide common proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act, it is statutorily imperative to give a reasonable opportunity to show-cause before a revision order is passed under Section 27 of TNVAT Act. The respondent has no doubt complied with this requirement by issuing 06.01.2021 notices - In the case on hand, a perusal of the impugned order reveals that the matter inter alia pertains to reconciling difference in sales turn over between profit and loss account and monthly returns. Therefore, this reconciliation can be done if the writ petitioner is permitted to respond to 06.01.2021 notices albeit by putting the writ petitioner on some terms rather than prolonging the matter. Impugned orders being are set aside solely to facilitate the writ petitioner to send in its replies to 06.01.2021 pre revision notices bearing reference TIN/33040842563/2013-14 and TIN/33040842563/2014-15 within a week from today - petition disposed off.
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2021 (11) TMI 168
Concessional rate of duty - inter-state sale - C forms not produced - applicability of Entry No.85 of Schedule II of the VAT Act - HELD THAT:- Without entering into the merit and without endorsing anything that has been done in the past years by the Tribunal as no such challenge is before this Court solely on the ground of absence of the Presiding Officer and for want of forum as the parties litigating must not suffer the Court first has chosen to intervene and presently would direct the respondent not to pursue any coercive recovery till the appointment of Presiding Officer is made. Acceding to the request for present, without entering into the merit of the matter and without deciding also on the propriety of the earlier order of the Tribunal waiving the pre-deposit and of remanding the matter to the concerned authority, the impugned recovery notice dated 11.06.2021 is being stayed till the appointment of either the President or Member of the Tribunal. The additional two weeks time shall be given to the petitioners as taking up his matter may take some more time. As a parting note, it is being specifically mentioned that grant of the stay will not weigh with the Tribunal in considering the matter on merit. It is only because of the absence of the Forum that the Court needed to intervene in exceptional circumstances - petition disposed off.
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2021 (11) TMI 167
Principles of natural justice - petitioner has not been given an opportunity to show-cause, much less a reasonable opportunity to show-cause before making of the impugned order - Section 27 of TNVAT Act - HELD THAT:- The expression 'a reasonable opportunity to show cause' occurring in proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act, has been explained by this Court in STATE BANK OF INDIA OFFICER'S ASSOCIATION (CC) SBIOA VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2019 (9) TMI 698 - MADRAS HIGH COURT] . This Court is informed that this order has not been reported in any law journal. Therefore, this Court deems it appropriate to give the writ petition number and date of the order for convenience of all concerned. It may not be necessary to delve further into State Bank of India officers case as that was a case where 'reasonable opportunity to show cause' occurring in the common proviso to sub-sections (1) and (2) of Section 27 of TNVAT Act and the expression 'reasonable opportunity of being heard' occurring in the proviso to sub-section (4) of Section 22 of TNVAT Act were considered, distinguished and explained. That may not be of great significance in the case on hand as the simple point urged by learned counsel for writ petitioner is, impugned order has been made without giving opportunity to show-cause, much less a reasonable opportunity to show-cause. A careful perusal of the impugned order makes it clear that no prior notice has been issued and obviously, no opportunity has been given to the writ petitioner. On instructions, learned Revenue counsel submits that no notice was issued to the writ petitioner prior to the impugned order. The impugned order being order is set aside solely on the ground that the writ petitioner has not been given an opportunity to show-cause, much less a reasonable opportunity to show-cause before the impugned order was made - this Court (in this order) has not expressed any opinion or view on the merits of the matter - petition disposed off.
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2021 (11) TMI 166
Validity of assessment order - orders granting conditional stay on the ground that the same are not speaking orders - principles of natural justice - HELD THAT:- Since Ext.P10 order relating to the appeal filed against assessment years 2014-15 is passed on consent, the petitioner is not entitled to challenge the same. The consent as endorsed in the order impugned, deprives the petitioner the basis for challenging such an order. Hence challenge against Ext.P10 fails. On a perusal of orders impugned, it can be seen that the amount directed to be deposited in the three cases in Ext.P10(a), P10(b) and P10(c) are not substantial part of the demand, but are only 20% of the demand raised and on that basis, the said judgment of the Supreme Court could be distinguished. However, in M/S ARCHANA AGENCIES VERSUS THE COMMERCIAL TAX OFFICER AND DEPUTY COMMISSIONER [ 2014 (5) TMI 1024 - KERALA HIGH COURT] , the learned single Judge of this Court had held that the requirement of giving reasons, although minimal in stay orders in matters of taxation, the same cannot be understated and also that the duty to give reasons is only conducive to fairness - the learned single Judge of this Court in the decision in SHYLA PUSHPAN, K.P. PUSHYA AND K.P. SHAN VERSUS THE COMMISSIONER INCOME TAX (APPEALS) , THRISSUR, THE DISTRICT COLLECTOR, THRISSUR AND INCOME TAX OFFICER, WARD NO. 2 (4) , THRISSUR [ 2019 (10) TMI 519 - KERALA HIGH COURT] had, in an identical case where condition to pay 20% of the demand was imposed for grant of stay was challenged, the same was set aside and fresh consideration was directed due to absence of reasons. Exts.P10(a), P10(b) P10(c) relating to the assessment years 2015-16, 2016-17 and 2017-18 shall stand set aside and the Tribunal shall pass fresh orders after hearing the petitioners - Petition allowed in part.
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2021 (11) TMI 165
Works Contract - deemed sale or not - inter-state trade - subject sales/deemed sales fall within the ambit of Section 3(a) and Section 5(2) of the CST Act or not - HELD THAT:- The issue involved in the present writ petition being covered by the decision rendered by this Court in M/S. LARSEN AND TOUBRO LTD. VERSUS STATE OF ANDHRA PRADESH REP. BY ITS PRINCIPAL SECRETARY (REVENUE) , HYDERABAD AND OTHERS [ 2015 (12) TMI 470 - ANDHRA PRADESH HIGH COURT] , there is no need for this Court to delve into the details of the case. Further, by the counter-affidavit filed by the respondents, it has been specifically admitted by the respondents that the contractees with whom the petitioner had entered into contracts for execution of works also had given list of suppliers/manufacturers from whom the petitioner is required to obtain goods for being used in execution of the works contract; and that the said goods are non-standard goods - Thus, this court is of the view that the principle enunciated in M/s.LARSEN AND TOUBRO LIMITED s case would squarely apply to the case on hand, as the movement of goods from other States and outside the country had occasioned as a result of covenant of contract entered into by the petitioner with its contractees and such purchases by the petitioner in the course of inter-State trade are integrally connected with use of the same in execution of works contract. Also no such material has been placed on record by the 3rd respondent while revising the order of assessment denying the claim of the petitioner that the subject transactions are covered under Section 3(a) or 3(b) of the CST Act. The impugned order passed by the 3rd respondent, is hereby set aside, and the matter is remitted back to the revisional authority to pass orders afresh - petition allowed by way of remand.
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2021 (11) TMI 164
Grant of stay of recovery of amount - requirement of payment of pre-deposit amount of 30% of the modified demand and also on furnishing simple bond for the balance amount within one month - HELD THAT:- The Tribunal has rightly exercised the discretion not only by granting the stay but has put the petitioner on reasonable condition. In the case on hand we would have certainly declined to exercise our jurisdiction under Article 227 of the Constitution for any purpose but for the fact that the petitioner claims to have suffered a few set backs due to on going situation arising from Covid-19 and financial difficulties are being faced by petitioner. The petitioner commits default of one instalment, the stay granted by Ext.P4 and modified by this order would stand vacated - Petition disposed off.
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Indian Laws
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2021 (11) TMI 163
Dishonor of cheques - service of legal notice - legally enforceable debt or not - rebuttal of presumption or not - Section 139 of the Negotiable Instruments Act - HELD THAT:- It appears that none of the witnesses has stated as to what happened to the legal notice and as to whether the same was served or not. A defence witness was also produced from the side of the accused indicating that he had intimated in the police station regarding loss of cheques and the defence evidence was also considered by the learned trial court indicating that the information to police (Exhibit-A with objection) did not even state the number of cheques and their numbers which were lost and accordingly, the defence evidence was rejected by the learned trial court. The learned trial court, while convicting the petitioner, held that once a cheque is signed and issued, there is presumption that the same was issued against a debt or liability. However, the learned trial court did not record any specific finding with regard to compliance of the other preconditions to constitute an offence under Section 138 of Negotiable Instruments Act for the purposes of even filing a criminal case under the said section. This Court is of the considered view that the complaint filed by the complainant was premature as the cause of action for filing the complaint case under Section 138 of Negotiable Instruments Act was not crystalized on the date of filing of the complaint on 11.02.2003 and accordingly, the condition precedent for filing the complaint case under Section 138 of Negotiable Instruments Act, 1881 having not been satisfied, the conviction and sentence of the petitioner cannot be sustained in the eyes of law. The present criminal revision petition is allowed.
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2021 (11) TMI 162
Dishonor of Cheque - debt has not been proved - basic ingredients of offence under Section 138 of the Negotiable Instruments Act, 1881 have been fulfilled or not - HELD THAT:- This Court finds that the basic ingredients for conviction of the petitioner for offence under Section 138 of Negotiable Instruments Act stood satisfied and the learned trial court has convicted the petitioner by a well-reasoned judgment and has sentenced the petitioner accordingly. There are concurrent findings recorded by the learned courts below that the cheque was issued by the petitioner in favour of the complainant, marked as Exhibit - 1, which was issued in discharge of the loan taken by the petitioner from the complainant. There are concurrent findings that all the basic ingredients for constituting an offence under Section 138 of the Negotiable Instruments Act, 1881 has been satisfied in the present case. There being no illegality or perversity or material irregularity in the impugned judgments, the present criminal revision is dismissed. Revision dismissed.
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2021 (11) TMI 161
Seeking grant of Bail - siphoning off of funds - defrauding large number of home buyers - petitioner urged since January 2021 the investigation is complete and no useful purpose would be served by keeping the petitioner in custody - petitioner did not cooperate with the police nor provided requisite documents and rather changed the registered office of the company - HELD THAT:- The petitioner was arrested on 09.12.2020 after issuance of NBWs. A press statement dated 11.02.2020 was issued by the Delhi Police on its official website stating interalia sincere efforts were made to arrest the accused person, but all were absconding and all their possible hide outs were checked, but no clues were found. The allegations are apprehending his arrest the petitioner too had shifted his residence at various locations and ultimately was arrested from a hotel at Faridabad, Haryana. Even one of the co-accused A.K. Sirohi, a joint managing director was granted interim bail to perform last rites of his mother, but did not surrender, rather is declared a proclaimed offender. The allegations are the accused company has been giving undertakings to various Courts from time to time to settle or pay the amount to victims, but all such undertakings have been violated and if the petitioner is granted bail, the possibility of his again absconding from justice, as shown by his previous conduct, cannot be ruled out. A chart presented by petitioner before this Court is though to the effect he has spent more than the amount received from customers appear to be misleading as he seem to have suppressed the fact the company had taken loans from various financial institutions for the project to an appropriate extent of ₹ 271 Crores which makes its total liability as ₹ 560 Crores approx; and hence even if it is admitted they have allegedly spend ₹ 421 Crores, much of the amount has been siphoned off to different entities having no concern with the projects. The allegations are also the petitioner had tried to collude with initial IPR of M/s. Shah Infratech Private Limited and the NCLT per its order dated 05.04.2021 had noted of such collusion between accused person and IPR - the present FIR since pertain to multi-victims, wherein the petitioner has allegedly duped of the investors of ₹ 120 Crores, thus defrauded large number of home buyers; coupled with his conduct of having failed to cooperate during investigation, cannot be released on bail at this stage. Application disposed off.
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2021 (11) TMI 160
Dishonor of Cheque - whether the notice sent by the petitioner to the opposite party No.-2 in connection with the cheque was in terms of Section 138 of the Negotiable Instruments Act or not? - HELD THAT:- Upon perusal of the said notice, this Court also finds that the complainant had made an allegation that since beginning, the father of the opposite party No.-2 wanted to cheat the complainant and had mis-utilized the money to his benefit and even hampered the business of the complainant. This Court further finds that the details of only one of the cheques i.e., cheque No. 794335 dated 17.10.2004 amounting to ₹ 5,000/- was mentioned in the notice and so far as other cheque bearing No. 0689316 dated 05.11.2004 is concerned, it was simply stated that the same had bounced, but no further details of that cheque was given in the notice. Upon perusal of the entire notice, this Court finds that no demand was ever made by the petitioner asking the opposite party no. 2 to pay the cheque amount/amounts and accordingly, the learned appellate court has rightly held that the notice issued in the present case was not in conformity with the provision of Section 138 of the Negotiable Instruments Act. The law is well-settled that the complaint under Section 138 of the Negotiable Instruments Act is not maintainable, if no demand was made for payment of the cheque amount in the notice. In the present case also, the notice i.e., Ext.-7, even when read as a whole, does not reflect any demand for making payment of any amount much less the cheque amount - the judgment passed by the learned appellate court holding that complaint itself was not maintainable as the notice was not in accordance with the provisions of Section 138 of the Negotiable Instruments Act, is neither perverse nor illegal and the same does not call for any interference. This Court does not find any merit in the present criminal revision application, which is accordingly dismissed.
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2021 (11) TMI 159
Dishonor of Cheque - insufficiency of funds - appellant/complainant had failed to prove that he had sent the statutory notice to the last known address of the first respondent/accused - Section 138 of the Negotiable Instruments Act - HELD THAT:- On a reading of the evidence rendered by PW1 as well as the evidence rendered by PW3, the postman, who stated that after the marriage of the first respondent/accused, she was not staying at Nadapuram, it is clear that despite the knowledge that the first respondent/accused was not staying at Nadapuram, the appellant/complainant had for reasons best known to him decided to issue notice to the former address of the first respondent/accused at Nadapuram - I am constrained to hold that there is a clear failure to comply with the statutory mandate to issue a notice, as required under the provisions of the Negotiable Instruments Act. It is not necessary to consider the question as to whether Exhibit P1 cheque was actually executed by the first respondent/accused and as to whether the learned Magistrate had gone wrong in finding that an offence under Section 138 of the Negotiable Instruments Act could not be made out on account of the difference in the signature on Exhibit P1 cheque with the admitted signature of the first respondent/accused - a complaint under Section 138 can be filed only after complying with the statutory formalities. There is a clear failure on the part of the appellant/complainant to comply with the statutory formality of issuing a notice to the last known address of the first respondent/accused - Appeal dismissed.
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