Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 13, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
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Auction for Sale (issue/re-issue) of (i) ‘6.69% GS 2024’, (ii) ‘7.10% GS 2029’, (iii) New GS 2036 (iv) ‘7.40% GS 2062’
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More than 37.76 crore loans amounting to over Rs. 20.43 lakh crore disbursed since inception of Pradhan Mantri Mudra Yojana
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NIIF managed fund invested in 16 entities covering ports and logistics, renewable energy, roads, digital infrastructure, healthcare and manufacturing among others
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More than 12 lakh loans extended in rural areas across the country between April, 2020 and November, 2022
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Rs 3.58 lakh crore issued under ECLGS, benefiting 1.19 crore borrowers upto 30.11.2022
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94 Financial Institutions onboarded on Account Aggregator (AA) platform as Financial Information User (FIU) 26 Financial Institutions onboard as Financial Information Provider (FIP)
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DICGC settles deposit insurance claims of 3,06,146 eligible depositors of 35 banks under AID, amounting to ₹4,055.10 crore since inception
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Central Bank Digital Currency (CBDC) pilot launched by RBI in retail segment has components based on blockchain technology
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1st Finance & Central Bank Deputies Meeting under the G20 Presidency of India scheduled in Bengaluru on Tuesday
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking provisional release of detained goods alongwith vehicle - when the goods are in transit and are to be confiscated they are required to be seized for the purpose of invocation of section 130 of the GST Act. Therefore, in such circumstances, provisions of section 67(2) of the GST Act comes into play and seizure of goods under section 129 then becomes seizure u/s 67 of the GST Act so as to confiscate the same u/s 130 of the GST Act. - Once the goods are to be treated as seized u/s 67(2) of the GST Act, the same would be liable to be provisionally released u/s 67(6) - HC
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Classification of services - rate of tax - works contract service - The structures constructed by the applicant will be used for the purpose of business and therefore these contracts are not qualified for concessional rate of tax made to Government Entity. Hence the rate of tax applicable on supply of these contract services is 9% CGST & SGST each from the inception of the contracts. - AAR
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Supply of services or not - leasing of goods from one unit to other units in different states of the same assessee - pallets, crates and containers - In the current case, Cl PL, Maharashtra can enter into lease transaction with CIPL branches in other States registered under the respective State GST legislation across India say for e.g., Cl PL, Karnataka and such transaction would be taxable under GST as a lease transaction between the two branches which are deemed to be distinct entities for the purpose of GST legislation. - AAR
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ssification of goods - Glaze Gels - The impugned product (which is semi solid in nature) is definitely a 'Sugar Confectionery' but cannot be termed as a Sugar Boiled Confectionery - attracts GST rate of 18% - AAR
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Classification of goods - Tata Ace Garbage Tipper vehicle - Special Purpose Motor Vehicles or not - As shown in underlined portion above the applicant admitted that it can be used for transportation of goods. The starting words of Entry 8704 are “Motor Vehicles for the transport of goods”. Thus rate of tax applicable shall be 28%; as only refrigerated vehicles are taxable at 18%; and remaining all trucks covered under heading 8704 are taxable at 28%. - AAR
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Input Tax Credit - inputs are consumed in the construction of an immovable property outside MAFFFL's licensed premises - The sole issue involved in the present case is regarding entitlement of ITC with regard to the said pipeline. The applicant has failed to establish how it is entitled to ITC in the presence of the express legal bar to claim such ITC. Apart from the entitlement of ITC, in respect of said 90% of the pipeline outside their premises, there is no other issue involved in the present case. - AAR
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Advance Ruling - question raised without any further information or documents - The answer to the question can only be given after considering the underlying facts. If no records. bills. tender documents or correspondence. or agreement which govern the transaction or any document whatsoever related to transaction being undertaken or proposed to be undertaken is produced, it is not possible to comprehend the transaction. Hence. there is no other alternative. but to hold that the answer to the question cannot be given in the absence of proper details. - AAR
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Levy of IGST - reverse charge mechanism (RCM) - import of service - In the subject case other than the service provided by the applicant to MCGM, there is a very definite service being provided by IVL Sweden, located outside India - on account of its experience, credentials and expertise to the applicant, located in India that enables the applicant to perform under the contract. Further, there is no doubt that the services are being supplied in taxable territory i.e. in India - the applicant has to pay GST on the money proceeds which is being transferred to IVL Sweden. - AAR
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Supply of goods on High Sea Sales - Supply of goods or supply of services - Supply of imported goods on High Sea Sales basis will not be treated as supply of "goods" - However, the supply of "services" in relation thereto, if any, will fall under the purview of "supply" as defined under Section 7 of the CGST Act. - AAAR
Income Tax
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Additions towards cash payment against the purchase of the flat - disclosure made by such 3rd party before the settlement commission - in the absence of such cross-examination opportunity, to our understanding the addition is not sustainable despite the fact that there are material evidence available before the AO which are against the assessee - AT
Customs
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Revocation of CB license - Mis-declaration of value of goods - Use of IEC code of others - Although the Respondent failed to discharge its obligation under CBLR, 2013, yet it cannot be denied that efforts were made by the said Respondent to discharge a part of its obligations under the said Regulations and, therefore, the Order with regard to revocation of the Broker Licence would be excessive in the facts and circumstances of the case - HC
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Interest on the delayed transmission of refund of IGST - Interest will be paid on the shipping bills, the details with regard to which are given, at the rate of 6 percent p.a., commencing from 24.05.2021, till the date of remittance - HC
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Levy of penalty on an authorised courier - failure to collect KYC - There is no violation of the provisions of Regulation 12(i), (iv) and (v) as the appellant has obtained the prescribed documents for identity and have maintained proper records. Further, there is no case of lack of due diligence made out, as the appellant has kept a proper record of address of delivery as the same was different from the address contained in the Aadhar Card. - AT
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Levy of penalty - existence of mens rea or not - The orders merely proceed on speculations as it uses the terms like ‘the appellant must have experience’ or ‘must have been aware’. No penalty or conviction can be based merely on speculations. There has to be some role assigned to that person corroborated by some concrete evidence on record. In my view no one can be penalised merely on the basis of speculations/doubt. - AT
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Change in classification of goods - warehoused goods - ex-bond bills of entry for home consumption - It is settled law that in case of warehousing goods at the time of ex-bond clearance for home consumption, the goods have to be re-assessed under section 2(2) of Customs Act, 1962 - Revenue has no authority to question the change of classification at the time of filing ex-bond bills of entry in the present case which is the correct one as compared to the classification declared in the into-bond bill of entry. - AT
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Project import - warehoused goods - contract registered after filing an into bond Bill of Entry but before filing of an ex-bond bills of entry for home consumption - merely because the project was registered prior to clearance of goods for home consumption from warehouse there is no contravention on the part of the appellant and they are legally entitled for the exemption available to the project import. - AT
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Revocation of Customs Broker License - Scope of the obligation of the Customs Broker under Regulation 10 (n) - Even when the reports say “Nonexistent”, they do not clarify if the exporter never functioned from that premises and GSTIN has been wrongly issued or the exporter ceased to function at that address after the exports. Therefore we do not find any evidence to prove that the Customs broker violated Regulation 10 (n). The impugned order, therefore, cannot be sustained. - AT
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Levy of penalty on the Company as well as on the Director under Section 114(i) of the Customs Act, 1962 - seizure of Red Sandal Wood - illegal export out of India - The allegation of abetting in the attempted illegal export of prohibited goods are not supported by any direct, corroborative or cogent evidence - It has been held time and again that separate penalty on the company and the Director for the same default should not be imposed. - AT
Corporate Law
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Validity of allotment of shares to majority shareholders of private limited company - The stand of the Company is that since it is a family Company and the decisions are taken in an informal manner by the members and no formal notices were required to be issued in view of the closely held family company. - Be that as it may, between the equity and law, the law will prevail. In the present case, the NCLT and this Tribunal is firm opinion that the company has not followed the principles of natural justice by issuing notice for the EOGM and issue letter of offer to the existing shareholders of the Company for allotment of shares. - AT
IBC
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Nature of relationship between appellant and respondent - buyer-seller relationship or not - source document - Financial Creditor or not - the Adjudicating Authority has not erred in treating High Seas Sale Agreement as source document and other two agreements can be treated as part of full documentation. - AT
Service Tax
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CENVAT Credit - inputs/ inputs services used for construction of immovable property - While constructing the immovable properties, assessee would have availed various services and paid input tax. The said building is used by the assessee in its business. Therefore, assessee must be entitled to avail the input services to discharge services on various output services. - HC
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Termination fee - demand of service tax under the category of “permitting commercial use or exploitation of any event service” - The tripartite agreement which has been entered into has effectively circumvented this situation by transferring the rights from ZEEL to IMGR directly with the concurrence of the appellant for a consideration known as the termination fee paid by IMGR to ZEEL. The appellant has not rendered any service in this agreement, but has concurred to the agreement whereby the rights were transferred from ZEEL to IMGR. - demand set aside - AT
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Export of services - intermediary services or not - Refund of unutilized input service - The telecommunication service provided by SGIPL qualify for export since it is providing telecommunication services to SingTel which is outside India and is receiving convertible foreign exchange for such services. SGIPL is not a privy to the Agreement entered into between SingTel and its end customers. Merely because SGIPL is charging handling fee on SingTel would not mean it is an intermediary. - AT
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Job Work - Manpower Recruitment and Supply Agency Services or not - charges were calculated on per ton basis therefore, the number of manpower, man-days or man-hours is not relevant for carrying out the activities of harvesting, transportation etc. The arrangement is job specific and not the manpower specific. - AT
Case Laws:
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GST
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2022 (12) TMI 520
Principle of zeroing - increase in customs duty to the extent of Rs. 16.26 crores and an increase in additional grammage to the extent of Rs. 22.85 crores - last sale price - HELD THAT:- We are inclined to issue notice to the respondents on the steps being taken within a period of ten days from today. List in the month of March 2023.
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2022 (12) TMI 519
Seeking grant of Regular bail - second bail application - availment of illegal benefits of input tax credits - HELD THAT:- First bail application of application of applicants was rejected on merits on 18.1.2022. On the said date, investigation was not complete, as stated by learned counsel for non-applicant. There is allegation of causing loss of Rs.258 Crore approximately to the government ex-chequer by applicants. However, this Court cannot overlook the fact that by now applicants have been in custody for about 23 months and they cannot be indefinitely detained in custody pending trial. Maximum sentence which can be imposed upon applicants under Section 132 of the GST Act, 2017 is of five years. Charges against applicants has yet not been framed and during course of arguments, learned counsel for non-applicant on instructions submitted that investigation, so far as present applicants are concerned, is complete. Perusal of list of witnesses (Annexure A-1) would reflect that most of witnesses belong to non-applicant department i.e. government servant. Considering the above decisions of Hon'ble Supreme Court and the facts and circumstances of case at hand, particularly the fact that respondent filed complaint, applicants are in jail since 25.1.2021, maximum sentence which can be imposed is upto five years and no minimum sentence is prescribed under Section 132 of GST Act and investigation is complete, as submitted by learned counsel for non-applicant, without entering into merits of the case, I am inclined to grant regular bail to applicants herein. This second bail application of applicants is allowed and it is directed that applicants shall be released on bail, subject to the conditions imposed.
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2022 (12) TMI 518
Cancellation of registration of petitioner - appeal rejected on the ground that the counsel for the petitioner on three dates has not appeared and pressed the appeal and in view of Section 107(9) of the Act of 2017 only three adjournments can be granted and thereafter the First Appellate Authority proceeded to pass an ex parte order rejecting the application - HELD THAT:- This Court finds that by ex parte order the first appeal filed by the petitioner has been dismissed as he has failed to appear before the authority on 6.4.2021, 24.9.2021 and 2.11.2021. Taking a lenient view, this Court directs the Appellate Authority to reconsider the appeal of the petitioner on merits after hearing the counsel for the petitioner and decide the same within a period of one month from the date of production of certified copy of this order. This Court further directs that the petitioner's counsel shall remain present on the date fixed by the First Appellate Authority and shall argue the matter on merits. The writ petition stands disposed of.
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2022 (12) TMI 517
Principles of Natural Justice - validity of action of the respondent authority on the ground of non-availment of opportunity of hearing - HELD THAT:- Considering the fact that that notice itself is quite cryptic and non-sustainable, without entering into the merit following the decision, this petition would warrant interference of this decision categorically directs the authority concerned to be specific and ensure to avail opportunity of hearing. The show cause notice must contain the requisite details for the person to meet with the challenges. While quashing the notice, it is being directed that the authority concerned would be permitted to issue the detailed notice and avail the opportunity of hearing to the otherside. Petition allowed.
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2022 (12) TMI 516
Seeking provisional release of detained goods alongwith vehicle - sections 129 and 130 of the GST Act - HELD THAT:- The provisions of section 67 of the GST Act pertains to seizure of the goods whereas section 129 also provides for seizure of goods in transit if goods in transit is in contravention of the provisions of the GST Act - provisions of Sub-section (6) of section 67 and sub-section (2) of section 129 provides for provisional release. The provision for confiscation of goods as per section 130 of the GST Act has to be preceded by seizure of goods because there cannot be confiscation without seizure. In such circumstances, when the goods are in transit and are to be confiscated they are required to be seized for the purpose of invocation of section 130 of the GST Act. Therefore, in such circumstances, provisions of section 67(2) of the GST Act comes into play and seizure of goods under section 129 then becomes seizure under section 67 of the GST Act so as to confiscate the same under section 130 of the GST Act. Once the notice in Form MOV-10 under section 130 for confiscation of goods is issued, the goods in question stand seized under section 67(2) of the GST Act, applicability of section 129 of the GST Act comes to an end. Once the goods are to be treated as seized under section 67(2) of the GST Act, the same would be liable to be provisionally released under section 67(6) of the GST Act by the GST authority either upon execution of bond and furnishing of security in such manner and of such quantum as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. Therefore, as the petitioners are ready to either execute a bond and furnish the security in prescribed manner and/or make payment of applicable tax, interest and penalty, the respondents authorities were not justified in denying the provisional release of the goods and conveyance as it is mandatory for the authority to exercise powers under section 67 (6) of the GST Act for provisional release of the goods and conveyance as there is mandate by word shall provided under section 67(6) of the GST Act. The respondents authorities are required to release the goods on provisional basis in exercise of powers under section 67(6) of the Act once the show cause notice under section 130 of the GST Act for confiscation of the goods and conveyance is issued irrespective of whether goods are seized at the place of the taxable person or during the course of transit as the same would not make any difference for exercise of powers for confiscation of goods under section 130 of the GST Act - the authorities are directed to provisionally release the goods on aforesaid conditions by applying the provisions of section 67(6) of the GST Act subject to adjudication of the show cause notice issued under section 130 in Form MOV 10 after giving an opportunity of hearing to the petitioners in accordance with law.
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2022 (12) TMI 515
Classification of services - rate of tax - Government authority/entity or not - works contract service provided to the Telangana State Industrial Infrastructure Corporation Limited (TSIICL) which is wholly owned by the Government of Telangana State by way of construction of building on their land - Whether it is 12% as the for Telangana State Industrial Infrastructure Corporation Limited (TSIICL) is wholly owned by the Government of Telangana or 18% as the for Telangana State Industrial Infrastructure Corporation Limited is a business entity and collecting rent for letting our Godown/Building from its customers? HELD THAT:- Telangana State Tourism development corporation limited is a Government entity. However the original notification No.11/2017 applied concessional rate of tax to Government Entities Governmental Authorities @6% of CGST SGST each only if such construction is predominantly for use other than for commerce, industry or any other business or profession. As seen from the agreement contract, the contract is for construction of ware house cold storage at primary processing centre in Jillela Village, Tangalapally Mandal of Rajanna Sircilla District. Further, the applicant has also averred that these godowns will be given on rent by TSIICL. Therefore, the concessional rate of tax is not applicable to this transaction and tax payable will be 9% CGST SGST each. Further, this entry was amended in Nov 2021 vide Notification No. 15/2021 dt. 18.11.2021 and the phrases Government Entity Governmental Authority were deleted from the Entry at S.No. 3(vi) of Notification No. 11/2017 with effect from 01.01.2022. Thus the works executed even for the Governmental Entity or Government Authority will be taxable @9% CGST SGST each.
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2022 (12) TMI 514
Classification of services - rate of tax - works contract service provided to the Telangana State Tourism Development Corporation Limited by way of construction of building on their land - Whether it is 12% as the Telangana State Tourism Development Corporation Limited is wholly owned by the Government of Telangana or 18% as the Telangana State Tourism Development Corporation Limited is a business entity and collecting fee from its customers? HELD THAT:- Telangana State Tourism development corporation limited is a Government entity and falls under the Entry at S.No. 3(vi) of Notification No. 11/2017 and therefore attract a concessional rate of tax in the capacity of contracts made to Government entity @6% CGST SGST upto 31.12.2021 as this entry was amended to exclude Government Entity Government authority vide Notification No. 15/2021 dt:18.11.2021 so that now the rate of tax for works executed from 01.01.2022 is 9% CGST SGST each. The structures constructed by the applicant will be used for the purpose of business and therefore these contracts are not qualified for concessional rate of tax made to Government Entity. Hence the rate of tax applicable on supply of these contract services is 9% CGST SGST each from the inception of the contracts.
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2022 (12) TMI 513
Levy of GST - Supply or not - assignment/transfer of leasehold rights in land structures standing there by the applicant to M/s. Greenscape IT Park LLP - time of supply of services - HELD THAT:- As per the provisions of Section 13 (2) of GST Act, the time of supply of services in the instant case is the date of receipt of payment by the applicant and as per the submissions made by the applicant, the date of receipt of payment against the impugned supply of services is much prior to the date of filing of the subject application. In view of the same we find that the supply has been completed prior to the date of filing of the subject application. It is found that on the date on the filing of the subject application the subject supply was already completed (in all respects) and was neither being undertaken, nor was proposed to be undertaken - the applicant/application does not satisfy the conditions of Section 95 of the CGST Act, 2017 and the application is, therefore, rejected as being not maintainable. Application dismissed.
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2022 (12) TMI 512
Classification of supply - supply of services or not - pallets, crates and containers leased by CHEP India Private Limited located and registered in Maharashtra to its other GST registrations located across India - lease transaction or not - value of GST - documents that should accompany the movement of the goods from CIPL, Maharashtra to CIPL, Karnataka - movement of leased equipment from CIPL, Karnataka to CIPL, Tamil Nadu on the instruction of CIPL, Maharashtra - documents that should accompany the movement of the goods from CIPL, Karnataka to CIPL, Tamil Nadu. HELD THAT:- The GST is leviable on supply of goods or services. The definition of supply is wide and includes lease within its ambit. Also, as per point 5(f) of Schedule II, transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration is deemed as service under GST. The applicant has rightly referred to Ind AS 116 and also referred to Section 105 of the Transfer of Property act, 1882, in this respect. Accordingly, any lease transaction is deemed as supply of services as per Schedule II, since it involves transfer of right to use the goods for a consideration. In the current case, CIPL, Maharashtra transfers the right to use the equipment for a period of time to third party customers in Maharashtra and other CIPL registrations across India for periodical considerations. In respect of the customers in Maharashtra, the Applicant is considering the transaction as leasing. CIPL, Maharashtra is discharging GST on the invoice amount which is computed on the basis of period of usage of equipment (as per pleadings made by the applicant) - as per the entry in Schedule I of the CGST Act, there can be supply of goods or services between such registrations even in case no consideration is involved. In the current case, Cl PL, Maharashtra can enter into lease transaction with CIPL branches in other States registered under the respective State GST legislation across India say for e.g., Cl PL, Karnataka and such transaction would be taxable under GST as a lease transaction between the two branches which are deemed to be distinct entities for the purpose of GST legislation. What is the value on which GST has to be charged i.e. whether it should be lease charges or the value of equipment in terms of Section 15 of the CGST Act and MGST Act read with relevant Rules? - HELD THAT:- The rates to be applied for leasing to equipment to the other customers and to the branches of applicant would be same or similar. If such rates (for leasing of equipment) are by and large same or similar there would not be any problems as such. Since in leasing transactions the equipment is returned back to the original person who leased the equipment (after completion of lease period), the rate of leasing is normally fixed by such lessor at such a price which would cover the cost plus other overheads and profit. So, whatever rates are fixed for normal customer, if applied to branch, would not cause any serious problem - When the movement (from Maharashtra to other state) happens because of order by customer at the other state branch, the value as offered by the ultimate customer for providing lease services is available and that may be considered for adopting value of supply for branch transfer. Whether movement of leased equipment from CIPL, Karnataka to CIPL, Tamil Nadu on the instruction of CIPL, Maharashtra can be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act and MGST Act, and thereby not liable to GST? - HELD THAT:- If the situs of transaction in question is not within the state of Maharashtra, then as per provisions of section 96 of the Central Goods and service Tax Act 2017 (and similar provision under the MGST Act), the Maharashtra Advance Ruling Authority cannot acquire the jurisdiction over the questions raised, hence no ruling can be given on this question.
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2022 (12) TMI 511
Classification of goods - Glaze Gels - to be classifiable under schedule II, sl. no 32AA as sugar boiled confectionery or not - rate of tax - HELD THAT:- Sugar Boiled Confectionery is bought and consumed by end users, whereas the impugned products are sold only to bakeries/cake manufacturers. As per the submissions of the applicant, the impugned products are not meant for consumption by the end users directly but are used in the process of cake making only. The applicant has correctly stated that lay persons will never ask for Orange sugar boiled confectionery, but will put the same demand asking for Orange goli/orange candy. However, even though such lay persons may not know the product as Orange sugar boiled confectionery, fact will remain that an Orange Goli/Orange Candy is nothing but an Orange sugar boiled confectionery, a vitreous product. From the copy of invoices submitted by the applicant, it is seen that the impugned products are mentioned as Glaze Gels even though the applicant is claiming the impugned product to be Sugar Boiled Confectionery. The impugned product (which is semi solid in nature) is definitely a 'Sugar Confectionery' but cannot be termed as a Sugar Boiled Confectionery - the impugned product cannot be considered as a Sugar Boiled Confectionery and there fore the Sr. No. 32 AA (Schedule II) of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 is not applicable to the said product - the impugned product is Sugar Confectionery the said product falls under Sr. No. 12 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 attracting GST rate of 18%. The impugned product i.e. Glaze Gels is covered under Chapter 1704 9090 i.e. Others, of the GST Tariff and falls under Sr. No. 12 of Schedule III of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 as amended from time to time, attracting 18% GST.
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2022 (12) TMI 510
Classification of goods - Special Purpose Motor Vehicles or not - Tata Ace Garbage Tipper vehicle with its variants for Garbage applications, manufactured exclusively keeping in view the requirements of National Green Tribunal (NGT), for supply to Municipal Corporations, Municipalities, Urban Development Bodies, Gram Panchayats and to contractors to whom operation maintenance contract has been awarded by these Govt, bodies under Swachh Bharat Mission, for collection and disposal of household garbage. HELD THAT:- Applicant stated that the Chapter sub-heading 8705 covers special purpose vehicles and defines special purpose vehicles as other than those principally designed for the transport of persons or goods. Few illustrative examples of vehicles which would be covered under this heading are also given in this sub-heading. These vehicles cover trucks used for cleaning streets, gutters, airfield runways etc. (sweepers, sprinklers, sprinkler-sweepers cesspool emptier), break-down lorries, crane lorries, fire fighting vehicles, concrete-mixers lorries, spraying lorries, mobile workshops, mobile radiological units etc. Applicant further stated that the Garbage Tipper vehicles are specially / exclusively designed for garbage application and for use by Govt. Bodies. The Garbage Tipper vehicle enable access to small lanes for garbage collection for tipping the same in to a compactor or at dumping sites as decided by Govt. Bodies. This Garbage Tipper vehicle has 60:40/ 70:30 partition for segregation of DRY waste WET waste at source (while collecting it from lanes/houses) as per National Green Tribunal (in short NGT) guidelines. The bodies are designed with tarpaulin/ hard metallic cover to transfer garbage under covered condition as per NGT guidelines. Also, these vehicles have exclusive features of Power Take off (PTO) through gear box for operating hydraulic tipping equipment. In the column of Type of vehicle it is mentioned as goods carrier . Thus, as per the certificate itself it is goods carrier. Thus the said vehicle would get covered under heading 87049090, after considering all the contentions and facts as available on record. The dealer has not produced details as to tonnage of vehicles, so this finding that it is covered by 87049090 is given on the best judgment basis. As shown in underlined portion above the applicant admitted that it can be used for transportation of goods. The starting words of Entry 8704 are Motor Vehicles for the transport of goods . Thus rate of tax applicable shall be 28%; as only refrigerated vehicles are taxable at 18%; and remaining all trucks covered under heading 8704 are taxable at 28%. Thus, Garbage Tipper vehicle for the transport of the goods would fall under tariff item 8704 and would attract tax at 28% under Sr. No. 166 of Schedule IV of CGST Rates notified by Notification No. 1/2017-CGST Tax (Rate), dated 28.06.2017 as amended.
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2022 (12) TMI 509
Input Tax Credit - inputs are consumed in the construction of an immovable property outside MAFFFL's licensed premises which are meant and intended to be for the provision of taxable output services - HELD THAT:- As per the explanation to Section 17, Plant and Machinery does not include a pipeline laid outside the factory premises. As a consequence, the ITC of goods and services used for construction of a pipeline laid outside the factory premises is not available in terms of Section 17(5) (c) and 17(5) (d) of the GST Act. As per the applicant, connector pipeline connecting the storage tanks to the refueller, which is immovable in nature, forms Plant and Machinery, which contention does not hold merit. Their key activity is providing the services, for supply to aircraft, which inter alia includes delivery in a form and manner which is consumable, usable and saleable. Hence, as per applicant, the provision of the ATF to the nearest practical delivery point i.e. refueller, is an integral and essential part of the economic activity being carried out by the applicant. Therefore, as per the applicant, the connector pipeline connecting the storage tanks to the refueller, which is immovable in nature, forms Plant and Machinery. The sole issue involved in the present case is regarding entitlement of ITC with regard to the said pipeline. The applicant has failed to establish how it is entitled to ITC in the presence of the express legal bar to claim such ITC. Apart from the entitlement of ITC, in respect of said 90% of the pipeline outside their premises, there is no other issue involved in the present case.
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2022 (12) TMI 508
Advance Ruling - question raised without any further information or documents - Classification of supply - supply of goods or services - activity of printing and supply of question papers for Universities, Educational Boards and Educational Institutes - benefit under SI. No.66 of the Notification No.12/2017-Central Tax (Rate) as amended from time to time, and Noti. No.12/2017-State Tax (Rate) - exempt goods under SL. No. 119 of the exempted list at Nil rate of tax under CH 4901 i.e. Printed Books including braille books or not? HELD THAT:- In spite of specific directions in writing and explained during the course of hearing at the time of admission as well as at the time of final hearing on 15/11/2022, no details are produced. The case is finally heard on 15/11/2022. No such details are produced before the Advanced Ruling Authority. The applicant wants to know the answer to certain question. The answer to the question can only be given after considering the underlying facts. If no records. bills. tender documents or correspondence. or agreement which govern the transaction or any document whatsoever related to transaction being undertaken or proposed to be undertaken is produced, it is not possible to comprehend the transaction. Hence. there is no other alternative. but to hold that the answer to the question cannot be given in the absence of proper details. Thus, none of the questions are answered.
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2022 (12) TMI 507
Levy of IGST - reverse charge mechanism - transfer of monetary proceeds by the IVL India Environmental R D PVT Ltd to IVL Swedish Environmental Research Institute Limited without underlying import of service - applicability of entry no. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. HELD THAT:- As per the Minimum Qualifying condition (mentioned at pars 2 D of the submissions), only wholly owned subsidiary (in this case, the applicant) of the foreign company was eligible to quote based on the credentials of its parent company/sister concern, if they submitted a certificate from the parent company/sister concern to that effect and in case the wholly owned subsidiary qualified on the basis of credentials of the Parent Company/sister concern, then the contract with MCGM was to be signed by both, the subsidiary as well as the Parent Company (if the bidder qualified on the basis of Parent Company). Thus the applicant has submitted that it was eligible to quote for the tender/contract. There is a contradiction in the submissions made in as much as in para 2D it has been submitted that the applicant was eligible to quote for the tender/contract on the basis of the credentials of IVL Sweden whereas in para 8 a it has been made clear that it was IVL Sweden which has bid for the project and the applicant, as a wholly owned subsidiary, was only supposed to execute the project - the applicant would execute the project only on the credentials and expertise of the IVL Sweden which would further imply that, without the transfer of the expertise by IVL to Sweden, the contract could not be performed. The application is silent as to how such expertise is transferred from IVL Sweden to the applicant without any supply of services or goods or both. The applicant is the one which is performing the service at the ground level and the entire support for such service is being provided by IVL Sweden who has obtained the contract on the basis of its own credentials and work experience and it is a fact that the applicant cannot provide the services under the contract without receiving support services from IVL Sweden - the services are received by the applicant from IVL to further perform its services under the contract, for which monetary proceeds flow from the applicant to IVL Sweden. In the subject case other than the service provided by the applicant to MCGM, there is a very definite service being provided by IVL Sweden, located outside India - on account of its experience, credentials and expertise to the applicant, located in India that enables the applicant to perform under the contract. Further, there is no doubt that the services are being supplied in taxable territory i.e. in India - in view of Sr. No. 1 of Notification No. 10/2017 Integrated Tax (Rate) dated June 28, 2017, since support services are being supplied by IVL Sweden, located in a non-taxable territory to the applicant the whole of integrated tax leviable under section 5 of the Integrated Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services i.e. the applicant. Thus the applicant has to pay GST on the money proceeds which is being transferred to IVL Sweden.
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2022 (12) TMI 496
Scope of Section 97(2) for Advance Ruling - Place of supply - Supply of goods on High Sea Sales - Supply of goods or supply of services - Whether the question falls within the domain of Customs Authorities - Customs' as Circular-33/2017-CUS - HELD THAT:- Section 7 of the CGST Act defines the term 'supply' in an inclusive manner to inter alia include all forms of supply of goods or services or both made or agreed to be made for a consideration by a person in the course or furtherance of business. Further, Section 7(2)(a) of the CGST Act refers to Schedule III of the CGST Act which specifies certain activities or transaction that shall be treated neither as supply of goods nor a supply of services for the. purposes of CST law. we also find that central Goods and Services Tax (Amendment) Act, 2018 inserted two new entries under the said Schedule Ill. From a plain reading of entry no. 8 (b) to Schedule III as inserted by Central Goods and Service Tax (Amendment) Act, 2018 with effect from 01.02 2019 it is clear that, only supply of goods by the consignee by way of endorsement of documents of title to the goods during their sale on high sea sales basis for delivery in India, is covered therein. However, the supply of services is not covered in entry no. 8 (b) to Schedule Ill of CGST Act, 2017, as amended. The question sought to be answered is squarely covered u/s 97(2) of the CGST ACT. Supply of imported goods i.e components needed for Pneumatic Conveying System made by the appellant to its customers on High Sea Sales basis will not be treated as supply of goods by virtue of entry 8(b) to the Schedule III of CGST Act, 2017 as amended, with effect from 01.02.2019. However, the supply of services in relation thereto, if any, will fall under the purview of supply as defined under Section 7 of the CGST Act.
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Income Tax
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2022 (12) TMI 506
Promotion with retrospective effect - Consequential benefits to be included a salary in a post applicant has not worked - whether consequential benefits cannot include salary attached to a post in which they had not worked? - HELD THAT:- It is the case of the petitioners/department that they have complied with the order dated 27.11.2019 and in their understanding, consequential benefits cannot include salary attached to a post in which they had not worked. We are unable to countenance this submission. It is trite law that it is not open for the litigant to interpret the judgment and we also do not propose to enter upon the correctness of the said submission as the writ petitions are liable to be rejected on the ground of delay alone. Its is not in dispute that the order has been partially complied with by granting promotion to the respondents from the date on which the promotion was given to the junior and now when contempt petitions are preferred, the instant writ petitions are filed belatedly that too after a passage of nearly 2 years. The writ petitions stand rejected on the ground of delay and laches. The dismissal of the writ petitions shall not come in the way of the petitioners seeking any clarification from the tribunal so far as grant of consequential benefits particularly regarding entitlement of arrears of salary for the period not worked. Petitions stand dismissed.
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2022 (12) TMI 505
Deduction u/s 80P(2)(a)(i) - interest income received from other Co-operative societies - HELD THAT:- As similar issue has been considered in Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. [ 2020 (9) TMI 964 - ITAT PUNE] claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income earned on investments made with co-operative banks. Thus overturn the impugned order to the extent of denial of deduction u/s 80P in respect of interest income. - Decided in favour of assessee.
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2022 (12) TMI 504
Deduction u/s.80JJAA - Denial of deduction as assessee has not filed audit report, as required under the provisions of section 44AB of the Act, in Form No.10DA - Debatable issue - Whether filing of audit report in Form No.10DA is a pre-condition for claiming deduction u/s.80JJAA? - HELD THAT:- We find that an identical issue had been considered by the Tribunal in assessee s own case for assessment year 2019- 20[ 2022 (7) TMI 1356 - ITAT CHENNAI] where under identical set of facts, it was held that the AO cannot make any adjustments towards deduction claimed u/s. 80JJAA of the Act, in the intimation issued u/s. 143(1)(a) of the Act, because such issue is highly debatable which can be resolved by deliberation, including verification of necessary documents. We are of the considered view that the AO has erred in disallowing deduction claimed u/s. 80JJAA of the Act, while processing return of income u/s. 143(1)(a) of the Act, and thus, we direct the AO to delete the additions made towards disallowance u/s. 80JJAA of the Act. Appeal filed by the assessee is allowed.
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2022 (12) TMI 503
Reopening of assessment u/s 147 - reasons to believe that the long term capital gain from the said transaction is taxable, and the income, to that extent, has escaped assessment - year of transfer in which the taxability arises - AO noted that the assessee was a director of M/s Abid Steels Co Ltd (ASCL, in short) and the assessee had given his personal guarantee to, on behalf of the ASCL and in respect of its commercial borrowings from, the State Bank of India - HELD THAT:- Transaction before us is concerned, that is between the ARC and the end buyer but the very fact that ARC is selling the property as the owner of the property does indicate that the transfer from the assessee to the ARC, via SBI perhaps, taken place at an earlier stage. That is the year of transfer in which the taxability arises so far as the assessee is concerned. There is no categorical finding about that aspect of the matter at any stage. It is also not clear as to what is the date on which the transfer took place from the assessee to the State Bank of India, and what is the documentation or court/ DRT orders in this regard. This aspect of the matter has simply not been examined. We deem it fit and proper to remit the matter to the file of the CIT(A) for recording a specific finding in this regard, after giving a due and reasonable opportunity of hearing to the assessee, in accordance with the law and by way of a speaking order. The question of taxability of capital gains will arise only in the year in which such a transfer takes place. As the matter is being reknitted to the file of the CIT(A) for this purpose, all contentions remain open. There is, also, a fundamental point regarding the protection of legitimate interests of the revenue. In most of the cases in which the assets are taken over, as part of the recovery of commercial borrowings, by the bankers, or by the ARCs, the owners of these assets are not in a position to pay their dues, and that is the reasons that these assets get taken over. On a conceptual note, that is an undesirable situation, and it is time that the Government seriously considers protecting its legitimate interests by ensuring some mechanism to ensure that the tax liability on the capital gains is duly recovered from the borrower whose property is sold, and when it is not possible to do so on account of the borrower‟s genuine financial difficulties, from the person who receives the proceeds of the sale of such assets. As we have remitted the matter to the file of the CIT(A) for fresh adjudication, after taking a call on the year in which the actual transfer has taken place, the issues raised by the assessee with respect to the correct quantification of capital gains are academic at this stage. Appeal is allowed for statistical purposes.
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2022 (12) TMI 502
Levy of penalty u/s. 271(1)(c) - assessee earned capital gains and claimed exemption u/s. 54F 54EC - deduction u/s 54F was solely due to difference in interpretations of the provisions and therefore, the penalty was not to be levied on this count - HELD THAT:- Assessee considered the sale transactions as three sale transactions and made three separate investments in REC bonds to claim deduction u/s 54EC. The assessee accordingly claimed deduction of aggregate investment. The assessee furnished full particulars and made the claim in the return of income which was partly accepted. Mere non-acceptance of claim made in the return of income would not attract penalty. In such a case, the ratio of decision of CIT V/s Reliance Petroproducts Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] was squarely applicable to assessee s case. In this decision, it has been held by Hon ble Court that mere making of wrong claim do not amount to furnishing of inaccurate particulars of income. In the absence of finding that any details supplied by the assessee is incorrect or false, penalty could not be levied. AO must prove that there was concealment of income or the return of income furnished by the assessee or documents submitted by assessee were based on incorrect fact, falsity and untruth. It is not a fit case for imposition of penalty. The other two additions are small additions which, in any way, is not a fit case for levy of penalty considering the fact that the assessee is a senior citizen and may have missed out to compute pension and interest correctly. Therefore, we by deleting the impugned penalty, we allow the appeal.
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2022 (12) TMI 501
Assessment u/s 153A - Non following provisions of section 144C - as argued AO has made variation to the income declared by the assessee, which is prejudicial to the interest of the assessee hus he should have proposed a draft assessment order in terms with section 144C(1) which was not done - HELD THAT:- As respectfully following the decision in case of Zuari Cement Ltd. [ 2013 (9) TMI 1167 - SC ORDER] we hold that the AO has committed a gross jurisdictional error in not following the mandatory provisions of section 144C - Therefore, the impugned assessment order passed u/s 153A being wholly without jurisdiction, is void ab initio. Accordingly, the assessment order dated 30.03.2014 passed u/s 153A is hereby quashed. Resultantly, the impugned order of learned Commissioner (Appeals) is set aside. Appeal of assessee allowed.
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2022 (12) TMI 500
TP Adjustment - assessee did not exercise the option of converting the accumulated interest and the bad debts into equity - as argued transfer pricing adjustment proposed without resorting to any transfer pricing exercise as per any of the methods prescribed in section 92C (1) to determine the ALP, is bad in law and has to be deleted - HELD THAT:- We fail to understand how merely conversion of the accumulated interest and bad debts into equity would amount to their recovery. It is the settled principle of law that the Revenue officers cannot sit in the armchair of the businessman, while taking the decisions basing on the business expediency. It s not out of place at this juncture to refer to the observations of the Hon ble Bombay High Court in the case of Harshad J Choksi [ 2012 (8) TMI 710 - BOMBAY HIGH COURT] wherein it was held that if an amount cannot be deducted as a bad debt in view of non-compliance of the conditions precedent as provided under section 36(2) of the Act, the same will not prevent the assessee from claiming deduction of the same as business loss incurred in the course of carrying on the business. It is not in dispute that the interest that is written off was in fact shown in the P L Account on accrual basis and such interest income was assessed as business income in the earlier assessment years, or that the bad debts written off were already offered as part of sales during the earlier assessment years. It is also not in dispute that when the interest in the earlier years was offered as business income, the same was accepted by the Department. In these circumstances, it is not known how the writing off of such amounts would affect the ALP of the transaction. Apart from that, it is also not in dispute that the Ld. TPO did not refer to any particular method prescribed in section 92C(1) of the Act. When the Revenue accepted the TNMM in respect of the sales and purchases, and CUP method in respect of the interest received on loans and reimbursement of expenses, the writing off of these two amounts are subsumed into the transactions of receipt of interest on loans, and it does not necessitate any separate benchmarking. Viewing from any angle, we find it difficult to sustain the addition made on account of the writing off by the assessee of the dues from Aurobindo (Datong) Bio Pharma Co. Ltd., China and bad debts from ZAO Aurobindo Pharma Ltd., Russia and accordingly allow the grounds of appeal.
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2022 (12) TMI 495
Validity of the reopening of the assessment u/s 147 - cash payment against the purchase of the flat - whether the reasons to believe formed by the AO are within the provisions of law or the AO without having proper reasons to believe is trying to reassess the income in the garb of income escaping assessment? - HELD THAT:- In the case on hand, the AO while recording the reasons has clearly recorded the fact that there was a search conducted at the premises of the builder Dharmdev Infrastructure Ltd wherefrom the information was received that such builder was found in receipt of on money from various customers. Therefore, such builder has also accepted to have received a sum of ₹85.45 crores as on money before the settlement commission. In the petition filed before the settlement commission, it was also disclosed a sum of Rs. 4 lakhs received from the assessee against the purchase of flat. Based on this information the proceedings under section 147 of the Act were initiated. In our considered view, such information was tangible material in the sense that it was received from the outside party and that too based on search and consequently disclosure was made before the settlement commission. Thus, to our mind there was sufficient material available with the AO to draw an inference that the income of the assessee has escaped assessment. At this juncture, the AO while initiating the proceedings under section 147 has to make a prima facie opinion about the escapement of income which must be based on some tangible material. As such the AO is not expected to draw a conclusion that the income of the assessee has escaped assessment while recording the reasons to believe. In holding so, we draw support and guidance from the judgement of Zaveri Company (P.) Ltd.[ 2021 (7) TMI 312 - GUJARAT HIGH COURT] Thus we are of the view that there was no illegality in the initiation of the proceedings under section 147 of the Act and therefore the issue raised by the assessee on technical ground fails. Hence, the ground of appeal of the assessee is hereby dismissed. Addition of cash payment against the purchase of flat - Relevance of document found from the premises of 3rd party - whether document found from the premises of 3rd party and the disclosure made by such 3rd party before the settlement commission can be used against the assessee without affording the opportunity of cross-examination? - HELD THAT:- As revealed that the opportunity of cross-examination was sine quo non before making any addition to the total income of the assessee based on the 3rd party information especially in the circumstances when the assessee time and again has demanded for such cross examination opportunity. Thus, in the absence of such cross-examination opportunity, to our understanding the addition is not sustainable despite the fact that there are material evidence available before the AO which are against the assessee - we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
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2022 (12) TMI 494
Validity of re-opening of assessment u/s 147 - parity between reasons recorded and notice issued - reasons to believe - addition on account of undisclosed receipts out of sale of plots of land - HELD THAT:- As in the assessment order, we note that AO has not made any additions and nor even discussed the issue on the basis of which the reassessment proceedings were initiated. Accordingly, in our view, the order passed by the AO u/s 147/148 of the Act is liable to be set aside on the grounds of jurisdiction, in light of the discussion above. Having held that additions made during reassessment proceedings deserve to be set aside on grounds of jurisdiction, we are not going into the individual grounds with respect to merits of the case. Appeal of the Department is dismissed.
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2022 (12) TMI 493
Deemed dividend addition u/s 2(22)(e) - assessee had shown an amount under Other payables being payable to M/s. Niharika Impex Pvt.Ltd - nature of loan/payments was not clear from the submissions received. - HELD THAT:-As contention of the assessee that the amount in question was not paid during the year under consideration in support of this and relied on ledger A/c of M/s. Niharika Impex Pvt.Ltd. This fact needs verification at the end of AO. We therefore, restore this issue to AO for decision afresh. If the AO finds that the amount was not paid during the year under consideration, he shall delete the addition. This Ground of assessee s appeal is allowed for statistical purposes. Addition u/s 41(1) of cessation of liability - discharge of liability towards the outstanding creditors - HELD THAT:- The assessee stated that she was unable to discharge her liability towards the outstanding creditors and other payables as all the bank account of the assessee have been attached by the Income Tax Department and as a result, the assessee had been put to lot of inconvenience. The amount was withheld during the course of business payments and there is no cessation of liability as such. The contention of the assessee is that the liability is still subsisting hence, it can not be treated as income of the assessee. Therefore, looking to the totality of facts, the question whether the liability was subsisting, needs verification. AO is hereby directed to carry out necessary verification by making necessary inquiry. Needless to say that AO would afford adequate opportunity to the assessee. Ground No.2 raised by the assessee is allowed for statistical purposes. Addition u/s 41(1) of the Act on account of cessation of liability - HELD THAT:- We find that it is the contention that liability has been subsisting, this needs verification by the AO. We therefore, direct the AO to verify the claim of the assessee that the impugned liability is still subsisting and if he finds that the liability is still subsisting, he would delete the addition. Thus, Ground No.3 raised by the assessee is allowed for statistical purposes.
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2022 (12) TMI 492
TP Adjustment - ALP determination - as per TPO assessee has incurred expenses for sale promotion under instructions and was reimbursed the same without any mark up by the said AE thus by incurring these expenses, the assessee was providing marketing support services to the AE - TPO recommended an ALP adjustment of 6.86% on the amount spent on behalf of the AE, and this figure of 6.86% was arithmetic mean of seven comparables that the TPO picked up for market support services margin - HELD THAT:- As assessee is a limited risk distributor and this sale promotion expenses was incurred, under the terms of the agreement and under the instructions of the principal, as a part of this composite activity, and that the sale promotion activity, on behalf of the overseas AE, is not a standalone activity. It is also important to bear in mind that the margins of the assessee have been accepted to be at an arm s length, on the basis of the arithmetic mean of the margins of the selected comparables with admittedly similar activity, and, therefore, whether the additional profits on account of the mark-up are taken into account or not, the profits of the assessee cannot be subjected to the arm s length price adjustment. We, therefore, deem it fit and proper to delete the impugned ALP adjustment - The assessee gets the relief accordingly.
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2022 (12) TMI 491
TP Adjustment - international transactions in respect of license fee for distribution of software products and related services on a back to back basis in respect of Druva USA and Druva Europe - most appropriate method for the international transactions entered thereto - HELD THAT:- Sub-rule 4 of Rule 10D explains that the information and document specified under sub-rule 1, 2 and 2(a) are as far as possible be contemporaneous and should exist latest by the specified date referred to in Clause (iv) of section 92F. Clause (iv) of section 92F explains the specified date means the date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139 for the relevant assessment year. We note that admittedly during the course of TP proceedings the assessee submitted unaudited financials of Druva USA and Druva Europe and the TPO did not consider the same. Thus, in our opinion, issue requires fresh adjudication in view of the additional evidences filed in the form of paper book Nos. 5 7. Therefore, taking into consideration the submissions of ld. AR and ld. DR and in the interest of justice, we deem it proper to remand the matter to the file of TPO for its fresh consideration.TPO shall look into the additional paper book before the Tribunal and pass order, in accordance with law. Thus, the ground Nos. 3 to 7 raised by the assessee are allowed for statistical purpose. Selection and application of the most appropriate method - The assessee adopted TNMM as the most appropriate method but however the TPO rejected the same in view of his in adopting 7% mark up to the sales. Thus, in view of our decision remanding the matter to the file of TPO, we leave it open to the TPO regarding the most appropriate method. Disallowance on account of ESOP expenditure - AR submits that the AO disallowed the said expenditure on ad-hoc basis and the DRP without going into the details confirmed the order of AO - HELD THAT:- We note that as rightly pointed by the ld. AR that the AO disallowed expenditure on account of ESOP by holding such expenditure is in notional in nature and no reasons were recorded in this regard. AR submits that the assessee is having all details and may be remanded the issue to the file of AO for its fresh consideration. Therefore, taking into consideration the submissions of ld. AR and ld. DR, in the interest of justice, we deem it proper to remand the issue to the file of AO. The assessee is liberty to file evidences, if any, in support of its claim. Thus, ground raised by the assessee are allowed for statistical purpose.
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Customs
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2022 (12) TMI 490
Revocation of CB license - Mis-declaration of value of goods - the stand of the Respondent before the authorities below consistently had been that it had verified the credentials of the IEC holder from the website of the DGFT and that the KYC documents were accordingly scrutinized as per its obligations in terms of the CBLR, 2013 - Whether the CESTAT is right in law in allowing the appeal of the CB being the first breach irrespective of the contravention of provisions of Regulations of the Customs Brokers Licensing Regulations and gravity of the offence? HELD THAT:- The doctrine of proportionality is a well recognized concept of judicial review which Courts invoke to test the punishments imposed which are disproportionate to the alleged misconduct. In RANJIT THAKUR VERSUS UNION OF INDIA AND ORS [ 1987 (10) TMI 374 - SUPREME COURT] , the Apex Court, while testing the imposition of punishment on the principle of proportionality held that The doctrine of proportionality, as part of the concept of judicial review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the Court- Martial, if the decision of the court even as to sentence is an outrageous defance of logic, then the sentence would not be immune from correction. Irrationality and perversity are recognised grounds of judicial review. Since the facts and issues involved in the that case are not different from the one which we are concerned with in the present case, there are no justification or reason to take a different view in this case than the one taken in the case of Unnati Shipping. Although the Respondent failed to discharge its obligation under CBLR, 2013, yet it cannot be denied that efforts were made by the said Respondent to discharge a part of its obligations under the said Regulations and, therefore, the Order with regard to revocation of the Broker Licence would be excessive in the facts and circumstances of the case - Appeal dismissed.
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2022 (12) TMI 489
Jurisdiction - power of DRI in proceeding with the show cause notice issued by the DRI for Re-determination and re-assessment of the Bills of Entry - HELD THAT:- Considering the pendency before the Hon ble Apex Court of Review Petitions preferred by the Union of India, coupled with challenge to the retrospectivity of the amended Act, we deem it appropriate to issue Notice returnable on 19/01/2023 and grant ad-interim relief in terms of Para 12(d). Direct service permitted today.
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2022 (12) TMI 488
Seeking grant of bail - Smuggling - validity of dropping/dismissing the complaint if the non-bailable warrants could not be executed - offences punishable under Sections 132 and 135(1)(A) of the Customs Act, 1962 - HELD THAT:- The section 82 Cr.P.C. deals with proclamation for the person Absconding. Sub section (1) provides that if any Court has reason to believe that any person, against whom a warrant has been issued by it, has absconded or is concealing himself so that such warrant cannot be executed, such Court may publish a written proclamation requiring him to appear at a specified place and at a specified time not less than thirty days from the date of publishing such proclamation. Admittedly the accused no.1 i.e. Olga Kozireva in the complaint was admitted to bail but absconded thereafter. The non-bailable warrant has already been issued against the Olga Kozireva but could not be executed. Thereafter the appropriate procedure which was required to be followed by the Trial Court to issue the proclamation against Olga Kozireva for appearance at specified place and at specified time. The Trial Court was not required to drop the proceedings as per the impugned order. The impugned order is not sustainable in law and accordingly set aside. The Trial Court is directed to take appropriate steps further in accordance with law in case the non-bailable warrant received unexecuted due to reason whatsoever. Petition disposed off.
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2022 (12) TMI 487
Refund of IGST - interest on the delayed transmission of refund of IGST - mismatch in the information furnished by the petitioner concerning the shipping bill qua which IGST has not been refunded - HELD THAT:- The only case, in which the date of payment is not noted, is the shipping bill, in which case, the amount is scrolled out [i.e., sanctioned], but not remitted. Interest will be paid on the shipping bills, the details with regard to which are given, at the rate of 6 percent p.a., commencing from 24.05.2021, till the date of remittance - The contesting respondents will ensure, that the interest is paid in respect of 16 shipping bills referred to above, as expeditiously as possible, though not later than six (6) weeks from today. Petition disposed off.
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2022 (12) TMI 486
Levy of penalty on an authorised courier - failure to collect KYC, address proof and authorisation for past shipments cleared to Sh. S. Mondal - it is also alleged that appellant have not verified and collected the KYC and address proof for the shipment(s) cleared to Sh. S. Mondal at different address all over India - Regulation 14 of the Courier Regulations - HELD THAT:- The appellant authorised courier under the Courier Regulation have duly obtained the proof of identity cum proof of address by collecting the Aadhar and PAN as well as verification report of both the cards. Further, admittedly the appellant have recorded the place/ address of delivery each time they have delivered the goods to the consignee (S. Mondal). There is no violation of the provisions of Regulation 12(i), (iv) and (v) as the appellant has obtained the prescribed documents for identity and have maintained proper records. Further, there is no case of lack of due diligence made out, as the appellant has kept a proper record of address of delivery as the same was different from the address contained in the Aadhar Card. The appellant have not violated any of the provisions of the Courier Regulations read with the provisions of the Customs Act read with Explanatory Circular - appeal allowed - decided in favor of appellant.
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2022 (12) TMI 485
Reduction in the quantum of penalty - import of gold jewellery from Thailand without payment of Basic Custom Duty of 10% by misusing the benefit of exemption notification No.85/2004-Cus. Dated 31.08.2004 read with Notification No.101/2004-Cus. (NT) dated 31.08.2004 - resignation of the director on whom penalty was imposed - existence of mens rea or not - HELD THAT:- Although initially seven (7) Bills of entry were in issue but at the Adjudication level only on the basis of one Bill of entry dated 23.3.2009 penalty has been imposed on the appellant herein under Sections 112(a) (b) and 114AA Customs Act without there being any finding of any mens rea on his part. The penalty has been imposed only on the basis that he was one of the Directors of M/s. Damasy Retail Jewellery Pvt. Ltd. at the relevant point of time. A perusal of the show cause notice suggest that suppression, mis-statement etc. everything has been attributed to M/s. Damasy Retail Jewellery Pvt. Ltd. but in the said show cause notice there is no whisper about any suppression or misstatement or abatement on the part of the appellant. No role has been assigned or alleged against the appellant there in the Show-cause notice. He has been penalized merely because he was the Director of the company during the relevant period. But both the authorities below have overlooked one fact that in his resignation letter dated 28.11.2008 while resigning from the post of country head, the appellant has specifically mentioned therein that he would not take any decisions after 30.11.2008 which in other words means that after that date he would not participate actively in any manner in the affairs of the company. Had the resignation been not there, still the department has failed to bring out any evidence on record suggesting any active role of the appellant in that single import/bill of entry in issue. It has not been established anywhere that the appellant is the beneficiary or has gained anything out of the import. The orders merely proceed on speculations as it uses the terms like the appellant must have experience or must have been aware . No penalty or conviction can be based merely on speculations. There has to be some role assigned to that person corroborated by some concrete evidence on record. In my view no one can be penalised merely on the basis of speculations/doubt. It is settled principle that the order needs to be passed within a reasonable period after the conclusion of hearing and the circular dated 05.08.2003 issued by Ministry of Finance, Deptt. of Revenue, Central Board of Excise Customs, as placed on record by the learned counsel, specifically laid down the time period to a maximum of one month for issuance of order from the date of conclusion of hearing. Same time limit of one month has been reiterated in the later Circular No. 1053/02/2017-CX dated 10.03.2017 and in latest instruction dated 18.11.2021 issued by Ministry of Finance, Department of Revenue it has been emphasised that instructions issued vide Master Circular dated 10.03.2017 should be adhere to - The Hon'ble Supreme Court in catena of decisions has laid down that an undue delay between conclusion of the arguments and delivery of judgement shakes the confidence of people in judicial system and affects the right of the parties. The impugned order is liable to be set aside - Appeal allowed.
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2022 (12) TMI 484
Project import - contract is registered with the customs authorities after filing an into bond Bill of Entry but before filing of an ex-bond bills of entry for home consumption - Exemption from payment of custom duty - Mega Power Project - capital goods required for setting up the project - change in classification at the time of ex-bonding from the warehouse for the home consumption - HELD THAT:- The Adjudicating Authority/Commissioner (Appeals) denied the exemption available for the project import applying the regulation 5 whereby it was interpreted that as per the said regulation of Project Import Regulation, 1986 (PIR, 1986) the assessee s is required to register the project before the commencement of importation in other word the project should be registered before the goods entered the territorial border of India. In the present case the facts are not under dispute that the goods under the project import have been warehoused under into bond bill of entry thereafter before clearance of the goods from the warehouse under ex-bond bills of entry the project has been registered. In the instant case it is not in dispute that all the contracts and purchase orders in question were registered by the appellant before an order of clearance of home consumption was passed in all 63 bills of entry. Therefore, there are no contravention of Regulation 4 and/or 5 of the PIR, 1986 - Therefore, merely because the project was registered prior to clearance of goods for home consumption from warehouse there is no contravention on the part of the appellant and they are legally entitled for the exemption available to the project import. Change of classification to chapter 98.01 - HELD THAT:- There was no charge in the SCN regarding change of classification. Therefore, entire proceeding on the issue which is not flowing from the SCN is vitiated. It is settled law that an adjudicating authority cannot go beyond the scope of SCN. In view there of this finding of lower authority and the consequent conclusion drawn thereof are totally untenable and needs to be discarded at the threshold - Without prejudice we also find that since at the time of in bonding of goods in warehouse project was not registered obviously classification could not have been made under chapter 9801. In case of project import a specific tariff entry has been created under chapter heading 9801 even though the goods are otherwise classifiable in the respective head of individual item. When the project was registered and ex-bond bills of entry were filed the correct classification was 9801 only. Therefore, we do not find any error on the part of the appellant or there has been no mis-classification of goods. There is a force in the submission of he learned counsel, as regard the information gathered under RTI that at various customs ports even though the into bond bills of entry were filed under tariff item of individual goods but in ex-bond bill of entry the project import has been classified under CTH 9801 and benefit was allowed without raising any objection - the revenue s contention that the appellant are not allowed to change the classification in the ex-bond bills of entry is absolutely incorrect and illegal. It is settled law that in case of warehousing goods at the time of ex-bond clearance for home consumption, the goods have to be re-assessed under section 2(2) of Customs Act, 1962 - Revenue has no authority to question the change of classification at the time of filing ex-bond bills of entry in the present case which is the correct one as compared to the classification declared in the into-bond bill of entry. Therefore, the revenue has wrongly restricted the benefit of PIR to the appellant. Confiscation of the goods - HELD THAT:- Since the appellant have availed the PIR benefit correctly and legally the confiscation being a consequential to the charge of the revenue shall also not be maintainable. Without prejudice, we find that it is an admitted fact that the goods were cleared from the warehouse and same were never seized and nor released provisionally on execution of any provisional release bond. In this position neither confiscation can be made nor the redemption fine can be made. Consequently, the penalty is also not sustainable - Since on the merit itself we have decided that the appellant is entitled for the benefit of PIR and their appeal against the common order of Commissioner (Appeals) succeeds there is no substance in the Revenue s appeal and the same is not maintainable. The impugned orders are not sustainable and hence the same are set aside - Appeal allowed.
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2022 (12) TMI 483
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Scope of the obligation of the Customs Broker under Regulation 10 (n) - evidence adduced in each of the show cause notices to allege that the Customs Broker had not fulfilled its obligation under Regulation 10 (n) - presumption as to genuineness of certified copies - HELD THAT:- In this case, investigations were conducted only in respect of three exporters. Of these the report in respect of A to Z International is that the exporter seems risky. In case of Suryavanshi Impex, the Report does not indicate even the name of the exporter. Enquiries appear to have been conducted based on GSTIN number only. The report says NOC denied and Non-existent entity . In case of M/s T.R. Trading it is reported that the exporter was not bonafide. There is nothing in Regulation 10 (n) which requires the Customs broker to check if the exporter was risky in the opinion of any officer or obtain any NOC from any officer or to get a confirmation from any officer that the exporter is bonafide. Even when the reports say Nonexistent , they do not clarify if the exporter never functioned from that premises and GSTIN has been wrongly issued or the exporter ceased to function at that address after the exports. Therefore we do not find any evidence to prove that the Customs broker violated Regulation 10 (n). The impugned order, therefore, cannot be sustained. Cancellation of Customs Broker Licence - entire amount of security deposit was forfeited and the penalty of Rs. 50,000/- was imposed upon the appellant - HELD THAT:- The verification report shows that during physical verification, the exporter was found to be non-existent. However, the report further clarifies that several GST Returns have been filed by the exporter and tax was also paid. Nothing in this report supports the view that the exporter never operated from that premises let alone prove that the Customs broker has not verified the exporter as per Regulation 10 (n). The impugned order cannot, therefore, be sustained. Revocation of Customs Broker licence - forfeiture of security deposit - levy of penalty - non-existence exporters - HELD THAT:- None of the three reports establish that the exporters never operated from those premises. Nor do they support the view that the Customs broker had not verified as per Regulation 10 (n). The Customs broker is not required obtain any Recommendation or a certificate form any officer that the exporter is bonafide . The impugned order, therefore, cannot be sustained. The evidence produced in the show cause notices does not support the allegations made therein that the appellants had violated Regulation 10 (n) of CBLR - the impugned orders cannot be sustained and need to be set aside. Appeal allowed.
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2022 (12) TMI 482
Levy of penalty on the Company as well as on the Director under Section 114(i) of the Customs Act, 1962 - seizure of Red Sandal Wood - illegal export out of India - prohibited goods or not - HELD THAT:- The Appellant is neither a Customs Clearing Agent nor an exporter/importer. The Appellant s main business activities remain restricted to the booking of empty containers as per the requirement of the exporter and in appropriate cases merely suggested the suitable Clearing Agent to facilitate their export and with this their activities come to an end. The Manager of M/s. Marine Container Services (I) Pvt.Ltd. mentioned in his submission that the said container belongs to Perma Container Line and M/s. Marine Container Services is the agent of M/s.Perma Container Line - the Department proceeded against the Appellant on the ground that they failed to bring forward the real exporter and thereby abetted and connived with the exporter in the attempt of illegal export of prohibited goods. I find that in the present electronic era, procuring orders and conducting business activities online taking advantage of internet facility is a normal phenomenon. The allegation of abetting in the attempted illegal export of prohibited goods are not supported by any direct, corroborative or cogent evidence. The entire proceedings against the Appellants have been framed on the basis of assumption and presumption without conclusively establishing any direct nexus between the Appellants and the exporter. It is also not understood that why the exporter was not traced to bring the entire proceedings to a logical end. It has been held time and again that separate penalty on the company and the Director for the same default should not be imposed. The impugned order is modified to the extent of setting aside of penalty of Rs.5.00 Lakh each imposed under Section 114(i) of the Customs Act, 1962 on M/s.Geotrans Maritime Logistics Pvt.Ltd. and its Director Shri Tirthankar Chakraborty - Appeal allowed in part.
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2022 (12) TMI 481
Condonation of delay in filing appeal - appeal filed beyond the statutory period of filing the Appeal before the Tribunal - HELD THAT:- The Order-in-Original dated 28.02.2019 was communicated to the Appellant on 14.03.2019 and accordingly he was required to file Appeal before the First Appellate Authority within 60(sixty) days i.e. on or before 14.05.2019, but however, the Appeal was filed only on 31.05.2019 i.e. after expiry of the statutory period of 60(sixty) days from the date of communication of the order. I find that though the Appellant had filed Appeal beyond the statutory period of 60(sixty) days, but it was filed within the condonable period of 30(thirty) days. However, the Ld.Commissioner(Appeals) chose not to condone the delay and rejected the Appeal before him without going into the merits of the case. The delay in filing the Appeal before the Ld.Commissioner(Appeals) is condoned and it is found appropriate to remand the matter to the Ld.Commissioner(Appeals) for deciding the Appeal on merits without further visiting the aspect of limitation. Appeal allowed by way of remand.
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Corporate Laws
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2022 (12) TMI 480
Validity of allotment of shares to majority shareholders of private limited company - family company - rectification of member s register of the R-1 Company - legality of the Extra Ordinary General Meeting conducted on 23.03.2017 - legality of board meetings held on 28.02.2017 and 25.3.2017 - HELD THAT:- It is mandatory to offer to the shares to the existence shareholders in proportions their shareholding and this Tribunal does not find any document to establish that the company issued letter of offer to the existing shareholder for offering the shares for subscription. The NCLT at para 32 observed that there is no proof to show that offer is made to the petitioners for purchasing the shares. No proof that such an offer is made to any of the Petitioners to purchase the shares. There is also no valuation report to value the shares of the Company. This Tribunal having gone through the documents and the relevant provisions of law is of the view that the Company has not complied with the law with regard to allotment of shares to the existing shareholders and also has not followed the mandatorily requirement of notice calling EOGM. The stand of the Company is that since it is a family Company and the decisions are taken in an informal manner by the members and no formal notices were required to be issued in view of the closely held family company. Be that as it may, between the equity and law, the law will prevail. In the present case, the NCLT and this Tribunal is firm opinion that the company has not followed the principles of natural justice by issuing notice for the EOGM and issue letter of offer to the existing shareholders of the Company for allotment of shares. Appeal dismissed.
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Insolvency & Bankruptcy
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2022 (12) TMI 499
Removal of RP - expunging remarks against CoC as well as RP - HELD THAT:- It is true that IA was filed for amendment of the relief in the Memo of Appeal but fact remain that said IA was filed much after the expiry of the period of limitation as prescribed under Section 61 of the Code. Besides this it is admitted fact that such IA was filed after filing of the reply by the Respondent No.1. In reply filed by the Respondent No.1 as preliminary objection it has been stated that without assailing the order on the point of reconstitution of CoC and induction of Respondents in CoC, the appellant was not authorised to assail the order in entirety even then it was earlier also argued on behalf of the appellant which is evident from the order dated 11.06.2021 passed by this Tribunal - while passing order for replacement of RP, the Learned Adjudicating Authority has not committed any error rather the situation warranted the Adjudicating Authority which has been dealt with in the order to take such stringent step. On examination of the impugned order in the present appeal it is evident that though some of the respondents were allowed to participate in 1st CoC Meeting subsequently without prior approval of the Adjudicating Authority they were restrained from participating in the proceeding. Similarly number of other irregularities were committed by the RP. In such situation it was imperative for the Adjudicating Authority to pass order for removal of the RP by the impugned order. Appeal dismissed.
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2022 (12) TMI 498
Fraudulent trading/transactions - wilful default - stand of the Appellants is that the Adjudicating Authority, (National Company Law Tribunal, Kochi Bench, Kerala) had failed to distinguish between Section 66 (1) of the I B Code, 2016 for Fraudulent Trading and Section 66 (2) of the I B Code, 2016 for Wrongful Trading, while holding the Directors, jointly or severally, liable without reference to any particular Sub-Section of Section 66 or the Conditions to be satisfied, while invoking each particular Sub-Section - HELD THAT:- From the contents of the Forensic Auditor s Report, the Status Report filed by the 1st Respondent / the Resolution Professional, and also on the basis of facts and circumstances of the instant Case, it is latently and patently evident that Appellants / Respondents had indulged in carrying on the Business of the Corporate Debtor in a dishonest and fraudulent manner, with a view to Defraud the Creditors and because of the Fraudulent Transactions in the subject matter, in issue,, the Appellants / Respondents are responsible in a Joint and Several Manner, to pay a sum of Rs.2,94,77,269/- only with an interest at 12% per annum, in respect of the Resolution Professional s Account of the Corporate Debtor, of course, within Six Weeks, from the date of passing of this Judgment. The conclusion arrived at by the Adjudicating Authority, (National Company Law Tribunal, Kochi Bench, Kerala), holding that the Appellants / Respondents are required to make good the Loss, caused to the Creditors of the Corporate Debtor, because of the fact that the Transactions, mentioned in the Forensic Auditor s Report, as detailed in this Judgment are without any simmering doubt, partake the character of Fraudulent Transaction and, as such, the Appellants / Respondents, are personally liable to pay for Knowingly and Dishonestly, committing this malevolent acts / misdeeds, are free from any Legal Flaw. Appeal dismissed.
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2022 (12) TMI 479
Period of limitation for filing appeal before Tribunal (NCLAT) - Last date being Saturday - Liberal approach - Requirement of physical filing of documents before the NCLAT, for the purpose of computation of limitation - Section 419(5) of the Companies Act, 2013 - HELD THAT:- As per Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter IBC ) an appeal against an order passed under Section 419(5) of the Companies Act, 2013 can filed before the NCLAT within a period of thirty days. However, the said thirty-day period can be extended by another 15 days, if there is sufficient cause. Since the matter is pending adjudication before the NCLAT, which is a duly constituted Tribunal under Section 410 of the Companies Act, 2013, this Court does not wish to give any opinion on the factual issue i.e., whether the appeal was within limitation period or not. Suffice it to observe that the prevalent position with regards to e-filing of documents across Courts and Tribunals in the country, encouraging e-filing, which may become the norm in the future, would duly be taken into consideration by the Tribunal. Petition disposed off.
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2022 (12) TMI 478
Approval of resolution plan - Agreement to Sell between the Corporate Debtor and the Appellant vested ownership rights on the Appellant in respect of the project land over which leasehold rights had been obtained by the Corporate Debtor from Noida authority after executing a Lease deed on 22.10.2008 - project land in the pool of assets of the Corporate Debtor - within the scope of statutory framework of IBC or not. Whether the Agreement to Sell dated 14.04.2015 between the Corporate Debtor and the Appellant vested ownership rights on the Appellant in respect of the project land over which leasehold rights had been obtained by the Corporate Debtor from Noida authority after executing a Lease deed on 22.10.2008? - HELD THAT:- It is a settled proposition of law that an Agreement to sell does not convey a property from one person to another, either in present or even in future. Agreement to sell is a promise of a future transfer of property ownership which outlines the terms and conditions under which the property will be transferred. An agreement to sell an immovable property is therefore a bilateral contract under which the two parties, i.e. the buyer and the seller, agree to certain terms and conditions, subject to which the property in question would be transferred by the seller to the buyer for a decided sale consideration. It is only after such bilateral obligations are discharged that the execution of the sale deed kicks in and it is this sale deed, which is compulsorily registrable under the Registration Act, 1908, which upon being registered, would transfer the right, title and interest in the property in question on to the purchaser. In the present factual matrix, the agreement to sell was yet to culminate into a registered sale deed and therefore not ripe for transfer of the title of property in question from the Corporate Debtor to the Appellant. It is held in negative the claim of the Appellant that upon execution of the Agreement to Sell, the ownership of the project land stood transferred from the Corporate Debtor to the Appellant. Whether the Resolution Professional/Respondent No.1 by including the project land in the pool of assets of the Corporate Debtor had acted beyond the statutory framework of IBC? - HELD THAT:- It is incumbent upon the Resolution Professional under Section 18 of IBC to embark upon necessary steps to take control and custody of the assets of the Corporate Debtor and under Section 20 of IBC to protect and preserve the value of the property of the Corporate Debtor. Thus in having included the project land in the pool of assets of the Corporate Debtor, the Resolution Professional cannot be held to be remiss in the performance of his duties - there are no cogent grounds to agree with the Appellant s contention that Resolution Professional had acted in a manner that transgressed the statutory framework of IBC or that his conduct did not inspire confidence in the credibility of the insolvency process undertaken by him. Whether the approval of the Resolution Plan of the Corporate Debtor by the Adjudicating Authority without deciding the two IAs filed by the Appellant suffered from impropriety? - HELD THAT:- The Adjudicating Authority has noted in the impugned order while approving the Resolution Plan submitted by M/s Wing Constructions Developers Private Limited and Consortium of Mr. Rajbir Goyat M/s. Antriksh Infradesign Private Limited that the plan was approved by the CoC in its 15th meeting with 99.12% voting share. The Adjudicating Authority had also noted that the resolution plan filed with the Application met the requirements of Section 30 and 31 of IBC, 2016 and Regulations 37, 38, 38(IA) and 39(4) of the IBBI(CIRP) Regulations, 2016; that the provisions of Section 29A of IBC were not attracted and that the Resolution Plan approved by the CoC does not contravene any of the provisions of the law for the time being in force. There are no convincing reasons to interfere with the order of the Adjudicating Authority approving the Resolution Plan of the Corporate Debtor under Section 31(1) of the IBC - Appeal dismissed.
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2022 (12) TMI 477
Sanction of scheme of compromise and arrangement under section 230 of the Companies Act, 2013 - HELD THAT:- It is clearly established that the Adjudicating Authority provided reasonable and sufficient opportunity to the Appellant to submit a credible scheme of compromise and arrangement, and the fact that the scheme so presented by the Appellant was prima-facie found to inflate the total payments by provisioning payments to creditors who are either related to the corporate debtor or for such creditors who had not filed legitimate claims in the liquidation process and thus, the proposed payments were in effect not of greater value than the amount being offered by the successful bidder in the e-auction. The Adjudicating Authority has not committed any error in disposing of the IA 154/2022 by the Impugned Order allowing the Liquidator to proceed with the e-auction and not allowing any more time for consideration of the scheme proposed under section 230 of the Companies Act, 2013 - the Adjudicating Authority has not erred in passing the Impugned Order. Appeal dismissed.
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2022 (12) TMI 476
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - High Seas Sale Agreement, source document or not - nature of relationship between appellant and respondent - buyer-seller relationship or not - validity of arbitral award. What is nature of relationship between the Appellant- M/s Shakti International Pvt. Ltd. and the Respondent- M/s Pandi Devi Oil Pvt. Ltd.? - Whether above relationship is to be treated as Buyer/Seller in commercial transactions or as Financial Creditor and Corporate Debtor? - HELD THAT:- Prima-facie Loan Agreement as subsequent Renewal Agreement were entered into to facilitate successful completion of the original Master Agreement i.e. High Seas Sale Agreement. It is also observed that the MoU makes reasonably clear the relationship between the Appellant and the Respondent as Buyer and Seller in course of normal commercial transactions rather than as pure Financial Creditor and Corporate Debtor - this Appellate Tribunal do not find any error in the impugned order whereby the Appellant has not been treated as Financial Creditor and in effect Section 7 Application under I B Code, 2016 the Appellant was not entertained. Whether the High Seas Sale Agreement dated 23.04.2012 is to be treated as source document or ought to be considered along with other two agreements i.e. Loan Agreement dated 09.04.2021 Loan Renewal and Working Capital Loan Agreement dated 21.03.2013 as part of full documentation? - HELD THAT:- From the impugned order 27.04.2021 it is seen that the Adjudicating Authority had detailed examination of all the record and heard the submissions by both the parties in course of various stages of 17 hearings. It is for neither expected nor desirable for this Appellate Tribunal to go into detailed of various claims and counter claims based on the alleged Ledger Accounts of both the parties which evidently has been scrutinised in details and gone into by the Adjudicating Authority - This Appellate Tribunal observes that the Adjudicating Authority has treated High Seas Sale Agreement as a source documents. Looking to the detailed examination done by the Adjudicating Authority and elaborate discussions in the preceding paragraphs, this Appellate Tribunal comes to the conclusion that the Adjudicating Authority has not erred in treating High Seas Sale Agreement as source document and other two agreements can be treated as part of full documentation. Whether the Arbitral Award based on consent terms is subject to subsequent MoU dated 19.03.2015 entered into between Appellant and Respondent to give effect to consent term? - HELD THAT:- From the averments made during proceedings, this Appellate Tribunal observed that subsequent to settlement/consent term dated 18.03.2015, both the parties agreed to sign MoU dated 19.03.2015 to give effect to consent terms. It has been brought to the notice of this Appellate Tribunal that as per this MoU, in view of financial difficulties of the Respondent, the Appellant agreed to run Respondent s plant/factory independently. The Appellant also further agreed to give advance of Rs. 25,00,000/- to the Respondent for overhauling/ revamping plant and machinery. The consent term was converted into MoU dated 19.03.2015 which apparently has again been disputed by allegations by both parties of not fulfilling their terms. It can therefore be presumed that the Arbitral Award based on consent terms is subject to subsequent MoU dated 19.03.2015 entered into between the Appellant and the Respondent to give effect to consent term. This Appellate Tribunal, otherwise, do not find any prima-facie valid/ solid reasons for parties to sign MoU on 19.03.2015 just after one day of signing of Arbitral Award dated 18.03.2015 which in turn was based on consent terms dated 18.03.2015, other than to give effect and ensure implementation of consent terms. It is therefore felt that the Arbitral Award based on consent terms is subject to subsequent MoU dated 19.03.2015 entered into between the Appellant and the Respondent to give effect to consent term. This Appellate Tribunal also conscious of the fact that the I B Code, 2016 is primarily for resolution and keeping the company/ corporate debtor in running condition as far as possible. In catena of judgements, it has been held that the Corporate Insolvency Resolution Process should not be used as recovery mechanism. Adequate alternative legal recourse and platforms including Civil Courts are available to enforce their respective claims. This Appellate Tribunal, is of the considered opinion that there is no error in the impugned order dated 27.04.2021, passed by the Adjudicating Authority. Appeal is devoid of any merit and stand dismissed - Appeal dismissed.
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Service Tax
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2022 (12) TMI 475
Valuation - inclusion of cost of material - printed material supplied to the students - coaching services - HELD THAT:- Having gone through the findings recorded by the learned Tribunal, more particularly as it has been found that there is no credit availed at all, no interference of this Court is called for. As such, we are in complete agreement with the view taken by the learned Tribunal. Appeal dismissed.
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2022 (12) TMI 474
Classification of services - works contract services or not - appellants are concessionaire, who have been granted on Build, Operate and Transfer(BOT) basis, construction, maintenance on cost recovery basis - HELD THAT:- Delay condoned. There are no good ground and reason to interfere with the impugned order/judgment and hence, the present appeal is dismissed.
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2022 (12) TMI 473
Maintainability of petition - seeking waiver of pre-deposit in the appeal filed by the Petitioner against Order-in-Original No. 30/2022-ST dated 28.01.2022 without insistence of payment of pre-deposit of 7.5% - levy of service tax - whether the petitioner is required to pay service tax on the commission received or the gross amount for the taxi service? HELD THAT:- The learned counsel appearing for the petitioner states that during the previous two years, the petitioner could hardly generate any revenue; in fact, the petitioner has suffered huge losses and therefore today is not in a position to make the mandatory pre-deposit quantified at Rs.1.45 crores for filing an appeal before the Customs, Excise and Services Tax Appellate Tribunal (CESTAT). The insistence of pre-deposit in this case would under the remedy of appeal, illusory. Given the mitigating circumstances and the financial condition of the petitioner, this Court considers it apposite to direct that if the petitioner makes the pre-deposit of a sum of Rs.50,00,000/- within a period of two weeks, the petitioner s appeal in respect of its service tax liability for the period December, 2011 to February, 2015 shall be heard by CESTAT on merits. Petition disposed off.
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2022 (12) TMI 472
CENVAT Credit - inputs/ inputs services used for construction of immovable property - utilization of the same to discharge the service tax liability on output services namely, renting of immovable property service - Board's circular No.98/01/2008 ST dated 04.01.2008 issued vide F.No.345/6/2007 TRU - HELD THAT:- The assessee therein, was in the business of renting immovable properties and the issue involved was whether the assessee therein was entitled for CENVAT credit on the input and input services consumed or utilized in construction of the Commercial Complex. After considering various authorities, the Tribunal has held that the assessee was entitled to CENVAT credit both on inputs and input services utilized for the construction to be utilized as output service being renting of immovable property. It is not in dispute that the said order passed by the CESTAT, Bengaluru has not been challenged by the Revenue. This appeal does not merit consideration for more than one reason. Firstly, Revenue has accepted the view taken by the Tribunal in M/s. Millennia Realtors. Secondly, assessee is admittedly in the business of renting immovable property. While constructing the immovable properties, assessee would have availed various services and paid input tax. The said building is used by the assessee in its business. Therefore, assessee must be entitled to avail the input services to discharge services on various output services. Appeal dismissed.
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2022 (12) TMI 471
Invocation of extended period of limitation - Demand of service tax with interest - tri-partite agreement - granting rights or permitting commercial use or exploitation of any event including an event relating to art, entertainment, business, sports or marriage - levy of penalty. Whether the amount paid by IMGR to ZEEL as termination fee as per tripartite agreement entered into between the appellant, ZEEL and IMGR can be taxed and if such tax has to be paid by the appellant under the category of permitting commercial use or exploitation of any event service under section 65 (105) (zzzzr)? - HELD THAT:- It is undisputed the rights were originally granted to ZEEL at which time they were not taxable. Had ZEEL continued to use the rights for the full 10 years no tax would have been payable. Had an agreement been reached whereby the rights were returned by ZEEL to the appellant for a consideration that could have been a consideration for termination of the original contract. Thereafter, had the appellant sold the rights to IMGR or to any other entities, it would have been taxable under section 65 (105) (zzzzr). The tripartite agreement which has been entered into has effectively circumvented this situation by transferring the rights from ZEEL to IMGR directly with the concurrence of the appellant for a consideration known as the termination fee paid by IMGR to ZEEL. The appellant has not rendered any service in this agreement, but has concurred to the agreement whereby the rights were transferred from ZEEL to IMGR. The amount paid by IMGR to ZEEL on behalf of the appellant cannot be considered as an amount paid to the appellant for any service - Demand set aside - appeal allowed.
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2022 (12) TMI 470
Rejection of refund claim of amount paid under protest - time limitation - applicability of second proviso to Section 11B of CEA - HELD THAT:- It is not in dispute that when the amount was paid during investigation no formal protest was launched at the time of the said deposit. It is also not in dispute that duty was otherwise leviable and it was not a tax collected under mistake of law or unconstitutionally. It is also not in dispute that refund claim has been filed beyond the period of limitation prescribed under Section 11B. In the case of THE KISAN COOPERATIVE SUGAR FACTORY LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2017 (11) TMI 1486 - ALLAHABAD HIGH COURT] relied by appellant there is clear finding of the tribunal that the duty has been paid under protest and therefore, the facts are different from the instant case. In the instant case there is no finding that duty has been paid under protest. Appeal dismissed.
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2022 (12) TMI 469
Refund of unutilized input service credit of input services used by SGIPL to export telecommunication services - intermediary services or not - place of provision of services - intermediary services - HELD THAT:- An intermediary is a person who arranges or facilitates provision of the main service between two or more persons. SGIPL is not involved in the arrangement or facilitation of the supply of service. In fact, it has entered into two Agreements; one with SingTel and the other with the Indian telecommunication service providers. It needs to be noted that SingTel had entered into Agreements with end customers for providing telecommunication services and it is for the provision of this telecommunication services that SingTel entered into an Agreement with SGIPL on a principal to principal basis - The telecommunication service provided by SGIPL qualify for export since it is providing telecommunication services to SingTel which is outside India and is receiving convertible foreign exchange for such services. SGIPL is not a privy to the Agreement entered into between SingTel and its end customers. Merely because SGIPL is charging handling fee on SingTel would not mean it is an intermediary. The judgment of the Delhi High Court in VERIZON COMMUNICATION INDIA PVT. LTD. VERSUS ASSISTANT COMMISSIONER, SERVICE TAX, DELHI III, DIVISION-XIV ANR. [ 2017 (9) TMI 632 - DELHI HIGH COURT] squarely applies to the facts of the present case, where it was held that The denial of the refund of the Cenvat credit to Verizon India and the raising of a demand of service tax on the consideration received by it for export of telecommunication services to Verizon US are not sustainable in law - The Commissioner (Appeals) correctly appreciated the position in the impugned orders in holding that SGIPL was not intermediary and had provided export of service to SingTel. The decision of the Tribunal in COMMISSIONER OF SERVICE TAX, CENTRAL EXCISE VERSUS LAMHAS SATELLITE SERVICES LTD. (VICE-VERSA) [ 2019 (6) TMI 271 - CESTAT MUMBAI] was in the context of the agreement between Lamhas Satellite Services and Globecast Asia PTE Ltd. The appellant acted only to mediate the provision of service by the channel distribution partner to GlobeCast and the service was not provided by the appellant to GlobeCast. It is in such circumstances that the Tribunal observed that the service would an intermediary service. The decision of the Delhi High Court in Verizon India was distinguished for the reason that the agreement was entirely different - The said decision of the Tribunal in Lamhas Satellite Services would not, therefore, help the revenue and it is the judgment of the Delhi High Court in Verizon India that would apply to the facts of these appeals. Appeal dismissed - decided against Revenue.
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2022 (12) TMI 468
Job work - Manpower Recruitment and Supply Agency Services or not - arrangement with the farmers for harvesting and transportation of sugarcane to sugar mills - appellants while paying the cost of sugarcane to the farmers they deduct the expenses of harvesting and transportation of sugarcane - HELD THAT:- The fact is not in dispute that the appellants have no arrangement for supply of manpower for harvesting and transportation of sugarcane for supply to sugar mills. It is also the fact that charges were calculated on per ton basis therefore, the number of manpower, man-days or man-hours is not relevant for carrying out the activities of harvesting, transportation etc. The arrangement is job specific and not the manpower specific. Considering the various decisions referred including judgment of Hon ble Bombay High Court in SATARA SAHAKARI SHETU AUDYOGIK OOS TODANI VAHTOOK SOCIETY VERSUS CCE., KOLHAPUR [ 2014 (12) TMI 42 - CESTAT MUMBAI] , the issue is no more res-integra and the demand under Manpower Recruitment and Supply Agency Services is not sustainable. Appeal allowed - decided in favor of appellant.
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2022 (12) TMI 467
Condonation of delay in filing appeal - power of Commissioner (Appeals) to condone the delay - sufficient reasons for not filing the appeal within prescribed time limit is shown or not - HELD THAT:- Reliance placed on the decision in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] where it was held that Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period. Thus there are no merits in the appeal filed by the appellant - Accordingly the appeal is dismissed under Rule 20 of CESTAT (Procedure) Rules, 1982 for non-prosecution and also on merits following the Hon ble Supreme Court decision in the case of Singh Enterprises.
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2022 (12) TMI 466
Classification of services - cargo handling service/mining service or not - whether the appellant had provided cargo handling service for the period 01.06.2007 and mining service for the period 01.06.2007 or had provided transport of goods by road service? HELD THAT:- The taxable service of mining under section 65 (105) (zzzy) of the Finance Act means any service provided or to be provided to any person by any other person, in relation to mining of mineral, oil or gas. The Commissioner has placed reliance upon the definition of mines under the Mines Act, 1952 and has observed that all processing including handling and movement of coal from one point of mines to dispatch point of mines are activities carried out in relation to mining of minerals. The issue as to was whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Finance Act was examined by the Supreme Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR VERSUS SINGH TRANSPORTERS [ 2017 (7) TMI 494 - SUPREME COURT] . The Supreme Court held that the activity would appropriately be classified under the head transport of goods by road service and the activity does not involve any taxable service in relation to mining of mineral as contemplated under section 65(105) (zzzy) of the Finance Act. The Supreme Court also held that the definition of mines has no apparent nexus with the activity undertaken under the service rendered. It would be seen that the Supreme Court categorically held that the activity undertaken by the appellant would fall under the head transportation of goods by road service. The Commissioner (Appeals) was, therefore, not justified in holding that the appellant had undertaken the activity of mining service w.e.f. 01.06.2007. The appellant had, therefore, not provided cargo handling service prior to 01.06.2007 under section 65(23) of the Finance Act and mining service w.e.f. 01.06.2007. The order dated 04.11.2015 passed by the Commissioner (Appeals), therefore, cannot be sustained - Appeal allowed.
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2022 (12) TMI 465
Liability of interest - whether the liability of interest under Section 75 survives, once it has been held that there is no demand of service tax for the period 2014-15? - Works Contract Service - HELD THAT:- Once it has been held that no service tax is payable for the financial year 2014-15, there can be no payment of interest under Section 75. Accordingly, this appeal is allowed and the impugned order is set aside.
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Central Excise
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2022 (12) TMI 464
Rectification of mistake - error apparent on the face of record or not - Denial of Cenvat Credit - ineligible documents - period of June, 2002 to March, 2004 - HELD THAT:- If few capital goods have not been specifically mentioned in the order such as G.I. wires and Galvanized Sheets, Valve Grinding Compounds, plastic sheet, sealant tape, fabric laminated sheet, rubber sheets, clutch plates etc. for packing and insulation purpose, pump Spares (for water treatment), Vanadium Pentaxide, Platinum Catalyst and Copper Oxide, Sodium Nitrate/ Hydrazine Hydrate (water treatment chemicals) Paint Thinner, Varnish, but since none of them have been denied to be used by the appellant in the manufacturing process, the findings in impugned Final Order equally applies to those goods also. There is no error apparent on the face of the Final Order. Accordingly, we reiterate that the impugned Final Order hold appellant entitled for availing entire amount of Cenvat Credit as was denied on the ground of ineligible inputs/capital goods. Necessary rectification of para 16 18 of the Final Order as prayed to be rectified to be incorporated in the Final Order - application for ROM allowed in part.
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CST, VAT & Sales Tax
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2022 (12) TMI 463
Levy of penalty under Section 42(5) of the OVAT Act - contention of the Petitioner is that upon adjustment of the ineligible ITC from the surplus ITC available, no tax would be due is to no avail since the treatment by the 1st Appellate Authority of the surplus ineligible ITC as tax due by the Petitioner has affirmed by the Tribunal and no question in that regard has been framed by this Court. HELD THAT:- The decisions in STATE OF GUJARAT VERSUS JAY STEEL AND TUBES TRADERS [ 2015 (2) TMI 372 - GUJARAT HIGH COURT] andSTATE OF GUJARAT VERSUS NISHI COMMUNICATION [ 2015 (2) TMI 927 - GUJARAT HIGH COURT] are clearly distinguishable in view of the wording of Section 42(5) of the OVAT Act when compared to Section 34(7) of Gujarat Value Added Tax Act which beings the expression if the Commissioner is satisfied that the dealer in order to evade or avoid payment of tax . In other words, under Section 34 (7) of the GVAT Act an element of discretion is available to the Assessing Authority while imposing penalty, Section 42(5) of the OVAT Act does not. This Court answers the question framed in the affirmative i.e. in favour of the Department and against the Petitioner-Assessee. The revision petitions are accordingly dismissed, but in the circumstances, with no other as to costs.
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2022 (12) TMI 462
Eligibility for filing application under settlement of dispute scheme - Recovery of sales tax arrears - attachment of property - settlement of dispute - whether respondent was a dealer within the meaning of Section 2(1)(a) r/w Section 2(1)(e) of the Settlement Act, 2010 and therefore eligible to file a declaration under the Settlement Act, 2010 or whether the respondent stepped into the shoes of the tax defaulter namely Tvl.Srinivasa Chemicals Pvt. Ltd., while purchasing the assets of the defaulter in an auction? HELD THAT:- Prior to Settlement Act, 2010, a Scheme under the Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2006 was there. There was a specific bar for filing an application for settling the dues on a person who had availed deferral and had defaulted. However, under the Settlement Act, 2010, such a restriction is not there. Therefore, under the provisions of the Settlement Act, 2010, the defaulter namely Tvl.Srinivasa Chemicals Pvt. Ltd. would have been entitled to file an application to settle the case - To be eligible for the benefit of the Settlement Act, 2010, the person should have been a dealer within the meaning of Section 2(1)(a) r/w Section 2(1)(e) of the said Act. The respondent herein (i.e.petitioner in W.P.Nos.2784, 2775, 2780, 2781, 2788, 2785 2787 of 2020) was not a dealer . The respondent has also not stepped into the shoes of the defaulting dealer viz. Tvl.Srinivasa Chemicals Pvt. Ltd., to avail the benefit of the Settlement Act, 2010 - The respondent has also not produced any documents to substantiate that the respondent was a dealer for the purpose of Section 2(1)(a) r/w Section 2(1)(e) of the Act - The respondent herein was merely an auction purchaser who purchased the stressed asset of defaulter Tvl. Srinivasa Chemicals Pvt. Ltd. in as is where is condition for a bid amount of Rs.70,00,000/- in the auction held on 01.12.2009 by the TIIC. Considering the fact that concession was given by entertaining the applications filed by the respondent under the aforesaid Act and considering the fact that the order of the Designated Authority was not challenged by the Commercial Tax Department in the manner known to law, we do not wish to deny the partial benefit conferred on the respondent vide impugned order dated 29.04.2021 under the Settlement Act, 2010 - the direction in the impugned order of the Court directing a refund of Rs.14,41,755/- out of Rs.27,46,304/- paid by the respondent deserves to be interfered. The order of the learned Single Judge directing appropriation of the amounts only to those years for which assessment orders were available cannot be countenanced. The writ petition filed by the respondent is dismissed and it is directed that the respondent should pay the differential sum of Rs.41,48,920/- (68,95,224 - 27,46,304) to the Commercial Tax Department within a period of 8 weeks from the date of receipt of a copy of this order.
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2022 (12) TMI 461
Grant of refund - refund at the statutory rate from the date when SOHA had allowed the objections, i.e., 17.07.2018 - HELD THAT:- The interest should be granted to the petitioner on the refunded amount from the date when SOHA passed the order i.e., 17.07.2018, which is also the prayer made by Mr Bhatia on behalf of the petitioner. The reason being that although the rectification order was passed on 07.09.2021 with regard to the typographical error which had crept in the order of the SOHA dated 08.07.2017 concerning the value of the C-Forms, the conclusion remained undisturbed, i.e., the demand continued to be shown as nil - there is no dispute that the petitioner had presented, at the relevant point in time, i.e., before the order was passed by the SOHA on 08.07.2017, C-Forms worth Rs. Rs.3,42,20,991/-, as recorded in the order dated 07.09.2021. Interest in this case, is accorded to the assessee based on the principle that it represents the value concerning money that the assessee could not make use of. The money which was due to the petitioner remained with the respondent/revenue, and therefore, the petitioner was entitled to be compensated. The compensation mechanism is provided in the DVAT Act. Besides this, if we were to accept the stand taken by Mr. Vashisht, it would amount to allowing the respondent/revenue to take advantage of the wrong committed by it. It was for the respondent/revenue to have the error corrected. The interest at the statutory rate, i.e., 6% per annum will be paid to the petitioner for the period commencing from 17.07.2017 till the date of payment of the principal amount, which, we are told is 10.09.2021 - petition disposed off.
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2022 (12) TMI 460
Levy of VAT - sale of textile - Orissa Value Added Tax Act, 2004 (OVAT Act) - basis for the impugned assessment order is that by virtue of an amendment to the schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADE Act), Additional Excise Duty (AED) on textiles was exempted - HELD THAT:- It was perhaps not brought to the notice of the assessing authority that by a separate clarification dated 3rd May 2006 issued by the Department of Revenue, Ministry of Finance, Government of India, it was clarified that the AED would continue to be leviable on goods described in column (3) of the First Schedule to the ADE Act although the rate had become 0% . Since the very basis of the impugned assessment order stands removed by virtue of the clarification issued by the Central Government on 3rd May, 2006, the impugned assessment order is unsustainable in law and is hereby set aside. Petition allowed.
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Indian Laws
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2022 (12) TMI 497
Summon of appellant as an additional accused by exercising the power under Section 319 of the Criminal Procedure Code, 1973 - power of Trial Court under Section 319 of CrPC for summoning additional accused when the trial with respect to other co-accused has ended and the judgment of conviction rendered on the same date before pronouncing the summoning order - power of Trial Court under Section 319 of the CrPC for summoning additional accused when the trial in respect of certain other absconding accused (whose presence is subsequently secured) is ongoing/pending, having been bifurcated from the main trial - guidelines that the competent court are required to follow while exercising power under Section 319 CrPC. HELD THAT:- A close perusal of Section 319 of CrPC indicates that the power bestowed on the court to summon any person who is not an accused in the case is, when in the course of the trial it appears from the evidence that such person has a role in committing the offence. Therefore, it would be open for the Court to summon such a person so that he could be tried together with the accused and such power is exclusively of the Court. Obviously, when such power is to summon the additional accused and try such a person with the already charged accused against whom the trial is proceeding, it will have to be exercised before the conclusion of trial. If the Sessions Court while analysing the evidence recorded finds that there is no evidence to hold the accused for having committed the offence, the judge is required to record an order of acquittal. In that case, there is nothing further to be done by the learned Judge and therefore the trial concludes at that stage. In such cases where it arises under Section 232 of CrPC and an order of acquittal is recorded and when there are more than one accused or the sole accused, have/has been acquitted, in such cases, that being the end of the trial by drawing the curtain, the power of the court to summon an accused based on the evidence as contemplated under Section 319 of CrPC will have to be invoked and exercised before pronouncement of judgment of acquittal. If the Court finds from the evidence recorded in the process of trial that any other person is involved, such power to summon the accused under Section 319 of CrPC can be exercised by passing an order to that effect before the sentence is imposed and the judgment is complete in all respects bringing the trial to a conclusion. While arriving at such conclusion what is also to be kept in view is the requirement of sub-section (4) to Section 319 of CrPC. From the said provision it is clear that if the learned Sessions Judge exercises the power to summon the additional accused, the proceedings in respect of such person shall be commenced afresh and the witnesses will have to be re-examined in the presence of the additional accused. In a case where the learned Sessions Judge exercises the power under Section 319 of CrPC after recording the evidence of the witnesses or after pronouncing the judgment of conviction but before sentence being imposed, the very same evidence which is available on record cannot be used against the newly added accused in view of Section 273 of CrPC - what is important is that the decision to summon an additional accused either suo-moto by the Court or on an application under Section 319 of CrPC shall in all eventuality be considered and disposed of before the judgment of conviction and sentence is pronounced, as otherwise, the trial would get concluded and the Court will get divested of the power under Section 319 of CrPC. Since a power is available to the Court to decide as to whether a joint trial is required to be held or not, this Court was justified in holding the phrase, could be tried together with the accused as contained in Section 319(1) of CrPC, to be directory. The trial court has the power to summon additional accused when the trial is proceeded in respect of the absconding accused after securing his presence, subject to the evidence recorded in the split up (bifurcated) trial pointing to the involvement of the accused sought to be summoned. But the evidence recorded in the main concluded trial cannot be the basis of the summoning order if such power has not been exercised in the main trial till its conclusion. The Registry is directed to obtain orders from Hon ble the Chief Justice and place before the appropriate Bench to take a decision on the factual aspects arising in the case in the background of the legal position and contentions on merits.
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