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TMI Tax Updates - e-Newsletter
December 20, 2022
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
PMLA
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking grant of Regular Bail - evasion of GST - petitioners have been behind bars for a substantial period of 1 year and 4 months - a maximum sentence of rigorous imprisonment for 5 years is prescribed. Conclusion of trial is likely to consume time inasmuch as the trial has not even commenced till date - Both the petitions, as such, are accepted and the petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds - HC
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Ex-parte assessment order - service of notice - it is alleged that the orders have been issued in complete violation to section 73 (8) of the GST Act which prescribes minimum 30 days notice time - The notice dated 15.02.2021 (Annexure-P/4 series) directed the petitioner to file reply on 21st of February, 2021 which was within the period of 30 days. It is the mandate of law that 30 days’ period has to be afforded to the parties, which was not done in the instant case. - HC
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Cancellation of GST registration of petitioner - time limitation - Non-application of mind - The reason for not being able to reply to the show cause notice in time has been sufficiently explained by the petitioner - it would serve the ends of justice in the event the petitioner is provided a fresh opportunity to respond to the show cause notice. - HC
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Doctrine of Promissory Estoppel - Area Based Exemption - North-Eastern region - the doctrine of legitimate expectation cannot be claimed as a right in itself, but can be used only when the denial of a legitimate expectation leads to the violation of Article 14 of the Constitution. - HC
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Exemption from GST - sale of produces Distillery Wet Grain Soluble (DWGS) and Distillery Dry Grain Soluble (DDGS) - Cattle feed undertaken by the applicant - the plea of the applicant is not tenable in view of the fact that the impugned product is a by product of brewing or distilling activity. Only end use of the product could not be a criterion for arriving at a classification. - AAAR
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Place of supply - Finance Lease - as per the Provisions of Section 13 of IGST Act,2017 where the location of the supplier of services or recipient of services is located outside India, the place of supply is the location of recipient of services. Therefore, the transaction is taxable under reverse charge basis, with tax to be paid by the recipient of services - AAAR
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Place of supply - supplier of service and recipient of service are located in India - immovable property located outside India - The applicant who is the supplier of service & NBCCL who is recipient of service are located in India and therefore the place of supply is to be determined under Section 12 of the IGST Act. The proviso to Sub-Section (3) of Section 12 of IGST Act clearly mention that if the location of immovable property is intended to be located outside India, the place of supply shall be the location of the recipient i.e., NBCCL - AAAR
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Input Tax Credit (ITC) - Output service being renting / leasing of immovable property - certain material/goods were involved in completing the construction service. - ppellants are not eligible to take input tax credit of GST paid on supply of works contract service for payment of GST on their output service i.e., Renting of immovable property. - AAAR
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Governmental Authority or not - Rajasthan Housing Board - The Applicant is involved for the framing and execution of housing Schemes subject to the control of the State Government through its Board - RHB is constituted by State Government under Rajasthan Housing Board Act 1970 (Act No. 4 of 1970) and fully controlled by state government, Thus its amply clear for us that RHB is Governmental Authority under GST Act. - AAR
Income Tax
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Stay of demand - Addition u/s 68 - the Appellate Authority did not even deem it appropriate to decide the said application even when the Petitioner claims that a prayer was made for such a decision in that regard. - We stay the recovery based upon the impugned demand notices. Notwithstanding the fact that we have passed an interim order today, we direct the Appellate Authority to decide the application under Rule 46A, which is pending before it - HC
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Proceedings u/s 276-C (l)/276-D and 277 - Evasion of tax - on 26.09.2013 Show Cause Notice under Section 274 r/w 271 of the Act was issued against him and also that penalty under Section 271 (1) (b) of the Act for non-compliance of notice under Section 142(1) was also levied vide order dated 26.09.2013. It is only thereafter that the petitioner has chosen to file revised income tax return and by doing so, he cannot evade the judicial process of law for not disclosing his correct income and foreign account since the year 1991. - HC
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Reopening of Assessment u/s 147 - change of opinion - By change of opinion holding that reduction towards reversal on account of cancellation and price revision and deducting the same from the profit and loss account was irregular thereby having reason to believe that taxable income had escaped assessment, the concluded assessment could not have been reopened. - HC
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Penalty u/s 271(1)(b) - non-compliance of the notices - assessee did not participate in the assessment proceedings and ex parte order u/s 144 was passed - Even before us, after filing of the appeal, nobody has appeared. This appears to be a repeated pattern being adopted by the assessee to misuse the due process of law. - AT
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Addition u/s 68 - unexplained cash credit (security premium) - Except filing the appeal, there is no other effort from the side of the assessee to pursue its appeal. Unless and until the documents and the other materials are filed to explain the alleged cash credit it is not possible to accept the grounds raised by the assessee and thus, it is presumed that the assessee is unable to explain the source of alleged security premium. - AT
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Revenue recognition - uncertainties involved in quantifying and realization of revenues - AO cannot follow dual approach in taxing the revenues pertaining to earlier financial year and at the same time, disputing the deferment of revenues for the year under consideration on account of similar uncertainties involved. - AT
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Maintainability of revenue appeal against the order of CIT(A) granting relief to assessee - When NCLT has declared moratorium u/s 14 of IBC Code in the case of assessee, then there is a complete bar to initiate and continue proceedings against the assessee before any authority. Therefore, in view of the moratorium granted by NCLT, no proceedings against the assessee can continue. In view of the aforesaid facts, the appeal of Revenue deserves to be dismissed. - AT
Customs
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Seizure of imported goods (to be cleared for home consumption) - perishable goods - Fresh Kiwi Fruits - Once the Bank Guarantee is furnished of the requisite amount as above, the goods shall be provisionally released in favour of the petitioner. - directions for adjudication issued - HC
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Condonation of delay in filing appeal - 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. - delay condoned - matter restored back - AT
Direct Taxes
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Prohibition of Benami Property Transactions - attaching the properties - As in view of the undisputed fact that the transactions in question in these cases being of a period prior to 2016, the amendment of the Act made in the year 2016 would not be applicable and therefore, the impugned notices under Section 24 of the Act are not sustainable in law. - HC
Central Excise
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Clandestine Removal - while examining the correctness of the order of adjudication, the tribunal or the court should not apply the yardstick which a court would apply to a subordinate court which has arrived at a conclusion after a full-fledged trial. The facts of the case clearly shows that sufficient material was available with the adjudicating authority which came to the notice of the authority much later upon such operations being conducted and therefore the invocation of the extended period of limitation for initiating proceedings was fully justified. - HC
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Rebate claim - Relevant Date - The period of limitation of one year commences from the Relevant Date. The relevant date as defined in Explanation (B) to this provision, states that for the purposes of goods exported by sea, is the date on which ship in which goods are loaded, leaves India. Thereafter the relevant date for other contingencies has been enumerated and Clause (f), the residuary clause states that in any other case, the relevant date will be the date of payment of duty. - HC
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Levy of penalty u/s 25(1) of the Central Excise Rules, 2002 - evasion of duty - The imposition of penalty on both the appellants is un-called for - since Appellant No.1, had transferred the semi-finished goods for machining to the Appellant No.2, without permission from the Department, it is a procedural and technical lapse on the part of the appellants and the same requires imposition of token penalty in terms of Rule 27, which provides a maximum penalty of Rs.5,000/-. Accordingly, penalty on both the appellants is reduced to Rs.5,000/- each. - AT
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Extended period of limitation - The Appellant is duly registered with the Department and there is no allegation in the impugned order of non-submission of any periodical returns. The Appellant is subject to regular audits. Therefore, the allegation of suppressing the facts from the Department does not hold good in the event of periodic audits of the Appellant’s records. There is no other evidence in the impugned order to show that the Appellant has willfully suppressed the fact from the Department in order to evade payment of duty. - AT
Case Laws:
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GST
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2022 (12) TMI 820
Seeking grant of Regular Bail - availment of irregular input tax credit - creation and operation of bogus firms not only for availing inadmissible input tax credit (ITC) on the strength of fake invoices but also for passing on of fraudulent ITC to buyers on the strength of invoices which were not accompanied with any goods - HELD THAT:- Both the petitioners are alleged to have created bogus firms for the purpose of availing input tax credit (ITC) on the basis of fake invoices. The total amount involved is stated to be more than Rs.31 crores. However, this Court finds that the petitioners have been behind bars for a substantial period of 1 year and 4 months and the prosecution agency has not chosen to prosecute the accused for any of the offences under the IPC and the only offence for which they are sought to be prosecuted is offence under Section 132 of the Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 wherein a maximum sentence of rigorous imprisonment for 5 years is prescribed. Conclusion of trial is likely to consume time inasmuch as the trial has not even commenced till date and 13 prosecution witnesses have been cited. In these circumstances, further detention of the petitioners would not be justified. Both the petitions, as such, are accepted and the petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned. Application allowed.
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2022 (12) TMI 819
Levy of GST - employer and the contractor qua tenders and agreements - it is a case of the contractor/writ petitioner that tenders were prior to 01.07.2017 before the GST regime kicked in and therefore, GST incurred by the contractor has to be absorbed by the contractor - HELD THAT:- The captioned Writ Petition is disposed of with a simple directive to the second respondent to dispose of the aforementioned representation of writ petitioner dated 07.11.2022 on its own merits and in accordance with law as expeditiously as the official business of the second respondent would permit and in any event, within a fortnight from today i.e., by 27.12.2022. The disposal proceedings of the second respondent shall be communicated to the writ petitioner under due acknowledgment within three working days therefrom. Though obvious, it is made clear that there is no expression of view or opinion in this order and the second respondent shall dispose of the aforementioned representation on its own merits and in accordance with law - writ petition is disposed off.
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2022 (12) TMI 818
Maintainability of appeal - rejection on the ground of one day s delay - revocation of cancellation of CGST registration - violation of the principles of natural justice - HELD THAT:- It cannot be disputed that the petitioner would not be able to continue with his business in absence of GST registration and thus would be deprived of his livelihood which amounts to violation of his right to life and liberty as enshrined under Article 21 of the Constitution of India. In this background, the order dated 29.08.2022 is set aside. The delay in filing of appeal before respondent No.2 stands condoned and respondent No.2 shall now decide the appeal on its merits. The parties are left to bear their own costs. The writ petition is disposed off.
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2022 (12) TMI 817
Classification of goods - printed binded voter lists/voters slip, described as a book - whether exempt under the head 4901, or is not a book and is liable to tax under the head 4911? - N/N. 02 of 2017- Central Tax (Rate) dated 28.06.2017 - violation of principles of natural justice - HELD THAT:- In order to counter the submissions, it has been argued that the orders have been passed in violation of the principles of natural justice as certain documents were not supplied and that they are without jurisdiction inasmuch as the State cannot demand tax on behalf of the Central Government which accepts that the binded voter lists are in the nature of books and exempt from the tax. Be that as it may be, the matters require consideration on exchange of affidavits - petition allowed by way of remand.
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2022 (12) TMI 816
Cancellation of GST registration of petitioner - Section 30 of the Central GST Act - HELD THAT:- Since, the petitioner failed to furnish returns for a continuous period of six months and show cause notice has been sent to him, it is directed that the petitioner shall file an application for revocation under Section 30 of the CGST Act in terms of Rule 23 of the CGST Rules. Though it is time barred, we are inclined to wave the limitation and direct the petitioner to file application for revocation within 21 days hence - He shall also comply the other provision of Section 30 of the CGST Act, i.e, submission of returns for the defaulted six months and any further completed months after the revocation. In such case if dues is found to be due from the petitioner and he pays the same than his case shall be considered liberally by the revenue and shall be dispose of within 15 days. Application disposed off.
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2022 (12) TMI 815
Ex-parte assessment order - service of notice - it is alleged that the orders have been issued in complete violation to section 73 (8) of the GST Act which prescribes minimum 30 days notice time - time limitation - opportunity not provided for making payment - violation of principles of natural justice - HELD THAT:- Undisputedly, minimum statutory period of 30 days mandated under the provisions of Section 74(A) of CGST/BGST Act, 2017 was not afforded to the petitioner for making payment due and prior to the expiry of 30 days, the assessing officer proceeded to pass the order, ex parte in nature. The notice dated 15.02.2021 (Annexure-P/4 series) directed the petitioner to file reply on 21st of February, 2021 which was within the period of 30 days. It is the mandate of law that 30 days period has to be afforded to the parties, which was not done in the instant case. The notice dated 15.02.2021 (Annexure-P/4 series) as also the order of assessment dated 24.02.2021 (Annexure-P/1 ) are quashed, with the direction to the assessing officer to issue a fresh notice in the light of the statutory provisions and pass an appropriate order in accordance with law. All proceedings be positively complied with in these matters - petition allowed.
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2022 (12) TMI 814
Cancellation of petitioner s GST registration - failure on the part of the petitioner to file returns for a period of six months prior to issuance of the show-cause notice - Section 29(2) of the Andhra Pradesh Goods and Service Tax Act, 2017 - HELD THAT:- The learned Division Bench of the High Court for the State of Telangana having considered the fact that GST Tribunal has not been constituted under Section 109 of the CGST Act and thereby, the petitioner could not be left without any remedy, held that it would be just and proper if the entire matter was remitted back to the 2nd respondent therein to reconsider the case of the petitioner and pass appropriate order in accordance with law. The petitioner preferred appeal but it was rejected. In that view of the matter and as the GST Tribunal has not been constituted as per the provisions of the Act so as to enable the petitioner to pursue his further legal remedies, in the interest of justice, we consider it apposite to allow the writ petition and remit the matter back to the primary authority i.e., 1st respondent to re-consider the case of the petitioner and after affording a personal hearing to him, pass an appropriate order in accordance with law expeditiously but not later than two weeks from the date of receipt of copy of this order. The writ petition is allowed.
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2022 (12) TMI 813
Cancellation of GST registration of petitioner - time limitation - Non-application of mind - HELD THAT:- It is noticed that it is not in dispute that the petitioner could not file its returns under GST Act, for the period from August, 2021 to January, 2022 because of the financial crisis faced in the business, on account of Covid-19 Pandemic. The respondent no. 2 has in its affidavit-in-reply not controverted this aspect. In respect of order dated 8.3.2022, though the petitioner had not filed any reply to the show-cause notice within the time given, despite that the order of cancellation of registration dated 8.3.2022, refers to the reply of the petitioner dated 6.3.2022, which in our opinion shows non-application of mind by the authority. The authority has self-contradicted themselves by initially giving reference to reply dated 6.3.2022 and immediately in the next line stating that no reply to the show cause notice has been submitted. Moreover, in the order the date of cancellation of registration is made effective from 1.8.2021 as opposed to 23.2.2022 mentioned in the show cause notice. Therefore, we are of the opinion that the order dated 8.3.2022 is also issued without due application of mind. In respect of order dated 7.9.2022, admittedly the appeal could not be heard on merits as the same was rejected on the ground of limitation. Therefore, though we are conscious that opportunity inspite of being provided in the show cause notice dated 23.2.2022 was not availed of by the petitioner, at no stage can it be said that the petitioner was heard to explain the delay in filing returns. The reason for not being able to reply to the show cause notice in time has been sufficiently explained by the petitioner, which has not been controverted by the respondent in their affidavit-in-reply. Additionally, though the show cause notice dated 23.2.2022 talks about personal hearing on an appointed date, no such date was also prescribed, thereby providing no avenue to the petitioner to present its case. Thus, it would serve the ends of justice in the event the petitioner is provided a fresh opportunity to respond to the show cause notice. Resultantly, the writ petition deserves to be allowed and is accordingly partly allowed.
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2022 (12) TMI 812
Violation of principles of natural justice - Rejection of transitional credit - proper opportunity of hearing was not afforded - reply to show cause notice not given - HELD THAT:- In the present case, order against the petitioner has been passed without submission of reply to show cause notice. There is dispute with regard to the service of notice through mail. According to the petitioner, the mail ID was of an employee, who was no longer in service whereas according to the respondents, the mail ID was one which was supplied by the petitioner to the department. Further, we have gone through the memo of appeal filed by the petitioner against the order of adjudication and we find that substantial grounds have been raised. In our opinion, those grounds ought to be considered in its proper perspective. The Hon ble Supreme Court in the case of UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] has issued general directions to the Goods and Service Tax Network (GSTN) to open common portal for filing concerned forms for availing transitional credit through TRAN-1 and TRAN-2 for two months which period expires on 30.11.2022. The orders dated 12.12.2019 and 04.03.2021 are set aside with the direction that respondents shall provide facility to the petitioner for filing form TRAN-1 within the above extended period and shall not refuse to accept the same if so filed - petition allowed.
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2022 (12) TMI 811
Direction to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN- 2 - HELD THAT:- In view of the fact that opportunity to file the TRAN-1 and TRAN-2 Forms has been opened to all concerned parties for a period of two months from 01.09.2022 to 31.10.2022 and as the said period has further been extended till 30.11.2022 by virtue of Circular No.180/12/2022-GST dated 09.09.2022, the grievance raised by the petitioner in this writ petition has been ventilated. The writ petition is disposed off.
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2022 (12) TMI 810
Doctrine of Promissory Estoppel - Area Based Exemption - North-Eastern region - Constitutional Validity of N/N. F.No.10(1)/2017-DBA-II/NER dated 05.10.2017 issued by the Ministry of Commerce Industry, Department of Industrial Policy Promotion - scheme for providing budgetary support to the eligible unit for the residual period by way of reimbursement of Goods Service Tax paid by the unit limited to the Central Government s share of CGST and/or IGST retained after deduction of a part of their taxes to the States in so far as the same curtails the benefit as promised under NEIIPP, 2007 and Notification No. 20/2007. HELD THAT:- The Government of India had by way of the NEIIPP, 2007 had granted incentives to various industries to set up and open their industrial units within the northeastern region. In order to bring about industrial progress in this region, several incentives were granted for such industries who in response to the Industrial Policy announced, will set up their industries and carry on the manufacturing of the various articles and items which are notified in the policy itself. The petitioners are some of such industries who have set up their industries and factories in response to the incentives granted by the Government of India through the NEIIPP, 2007. There are several requirements which are to be fulfilled by these industries in order to make themselves eligible for the benefits/incentives offered under the NEIIPP, 2007. There is no dispute of facts with regard to the eligibility of the industries who are before this Court. All these petitioners have been receiving the incentives offered under the NEIIPP, 2007 in terms of the parameters provided therein. There is also no dispute that although initially the exemptions was to the extent of 100% subsequently, it came to be available only to the extent of value addition made by the concerned industries. Such reduction of the benefits during the currency of the NEIIPP, 2007 by the respondents were also assailed before several High Courts including this Court at an earlier point in time. These issues came to be decided by a Judgment of Apex Court rendered in UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. [ 2020 (4) TMI 669 - SUPREME COURT] . The Apex Court upheld the grant of exemptions/benefit/incentives to be extent of value addition made by the industries including the petitioners industries. There is also no dispute that after the advent of GST, the Central Excise Duty which was imposed earlier came to be subsumed. The GST came to be enforced with effect from 01.01.2017. It is also noteworthy that the GST Tax Structure required a constitutional amendment which was brought in w.e.f. 19.09.2016 by the 101st Constitutional Amendment. As such, it is seen that the petitioners are aware of the nature and structure of the GST which have been in force with effect from 01.01.2017. The denial of the benefits under the NEIIPP, 2007 has caused severe financial losses to the petitioners industries. Such withdrawal of the promise midway without taking into consideration of the grievances of the petitioners is completely opposed to the doctrine of promissory estoppel as developed by catena of Judgments rendered by the Apex Court over the years. It is contended that the budgetary scheme which is presently enforced by the respondents is outside the purview of the GST Scheme of the Tax Structure. The Apex Court in THE STATE OF JHARKHAND AND ORS. VERSUS BRAHMPUTRA METALLICS LTD. AND ORS. [ 2020 (12) TMI 1241 - SUPREME COURT] after referring to the earlier judgments of the Apex Court held that the doctrine of legitimate expectation cannot be claimed as a right in itself, but can be used only when the denial of a legitimate expectation leads to the violation of Article 14 of the Constitution. After elaborately examining the doctrines of promissory estoppels and the doctrine of legitimate expectation, the Apex Court held that the State having held out a solemn representation in the above terms, it would be manifestly unfair and arbitrary to deprive industrial units within the State of their legitimate entitlement. The State government did as a matter of fact, issue a statutory notification under Section 9 but by doing so prospectively with effect from 8 January 2015 it negated the nature of the representation which was held out in the Industrial Policy 2012 - The Apex Court observed that the pleadings are completely silent on the reasons for the delay on the part of the government and offer no justification for making the exemption prospective, contrary to the terms of the representation held out in the Industrial Policy 2012. It is one thing for the State to assert that the writ petitioner had no vested right but quite another for the State to assert that it is not duty bound to disclose its reasons for not giving effect to the exemption notification within the period that was envisaged in the Industrial Policy 2012. It was held that both the accountability of the State and the solemn obligation which it undertook in terms of the policy document militate against accepting such a notion of state power and the state must discard the colonial notion that it is a sovereign handing out doles at its will. In view of the very recent Judgment of the Apex Court rendered in M/S HERO MOTOCORP LTD. VERSUS UNION OF INDIA ORS. [ 2022 (10) TMI 677 - SUPREME COURT] and in view of the authoritative findings rendered by the Apex Court in the said Judgment, nothing further is required to be decided in the present proceedings. The findings rendered in the said Judgment by the Apex Court also squarely covers the issue raised in the present proceedings. It is seen that although the Apex Court has dismissed the appeals preferred by the appellants, herein, namely, Hero Motorcorp Limited, the Apex Court also arrived at a finding that although the appellants therein may not have a claim in law, they do have a legitimate expectation that their claim deserves due consideration. The Apex Court therefore, permitted the appellants therein to make representation to the respective State Government as well as to the GST Council and the said representations if made will be given due consideration in expeditious manner. Writ petition dismissed.
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2022 (12) TMI 809
Exemption from GST - sale of produces Distillery Wet Grain Soluble (DWGS) and Distillery Dry Grain Soluble (DDGS) - Cattle feed undertaken by the applicant - N/N. 102 of Notification No. 02/2017 -Central Tax (Rate) dated 28 June 2017 - Whether the appeal is filed in time? - HELD THAT:- It is clarified in Circular No. 163/19/2021-GST Dated 6th October, 2021, that Brewers' spent grain (BSG), Dried distillers' grains with soluble [DDGS] and other such residues are classifiable under heading 2303, attracting GST at the rate of 5% (S. No. 104 of schedule I of notification No. 1/2017-Central Tax (Rate) dated 28.06.2017). The order passed by the lower authority is upheld - appeal disposed off.
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2022 (12) TMI 808
Place of supply - Finance Lease - leasing of tank containers taken form a supplier i.e., lessor who is located outside India and the tank containers do not reach India - supply of goods and tank containers do not reach the Indian Territory - HELD THAT:- From the terms of the Lease purchase agreement it is evident that the appellant is obtaining the containers on lease for a period of 5 years and after expiry of 5 years or prior to five years the appellant has an option to purchase the container on payment of certain amount as per the contract. On exercising the option to purchase and payment of corresponding amount the ownership of the container passes on to the appellant from the lessor. If the appellant fails to purchase the containers he shall return back the same to lessor. Hon'ble Supreme court of India in case of M/S MAGMA FINCORP LTD. VERSUS RAJESH KUMAR TIWARI [ 2020 (10) TMI 1347 - SUPREME COURT] held that the financier/Lessee continues to remain the owner of a vehicle, covered by a hire purchase agreement till all the hire installments are paid and the hirer/lesee exercises the option to purchase. Till such time the option is exercised the hirer remains only as the trustee or bailee of goods covered by such agreement. The same is applicable to lease purchase agreements also. From the Conditions of the Lease purchase agreements and Judgment of Hon'ble Supreme court of India M/s Magma fincorp Limited Vs Rajesh Kumar Tiwari, the ownership of the containers lies with M/s Tankspan Leasing Ltd until the appellant exercises option to purchase the container as per the agreement - there is no transfer of title in goods until the appellant purchases the container and this fact wasn't disputed either. The appellant while bringing to fore the discussion on Accounting Standards has rightly contended that the substance of an agreement prevails over its form. However, substance prevails over form when Substance of an agreement doesn't align with its form. Here in this case, form of the agreement (leasing agreement) aligns with the substance (intention to lease). The intention of the parties was to lease the containers with an option to purchase - the intentions were evident as seen from the agreement; the monies arising out of the claim of insurance shall be transferred to the Lessor (the owner of the goods). As per the terms of agreement the lessee cannot even alter the color, identification marks or undertake Buffing(polishing) without the written approval from the lessor. Hence, the claim of the appellant that the intention of the parties is to transfer the title from the inception cannot be accepted. The transaction attracts IGST and is exigible to tax under the provisions of Sub-section(1) and Sub-section (3) of Section 5 of IGST Act and Notification No: 10/2017 -IGST(R) - Further as per the Provisions of Section 13 of IGST Act,2017 where the location of the supplier of services or recipient of services is located outside India, the place of supply is the location of recipient of services. Therefore, the transaction is taxable under reverse charge basis, with tax to be paid by the recipient of services, i.e. M/s Deccan Transco Leasing Private Limited with Place of Supply as 'Telangana'.
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2022 (12) TMI 807
Place of supply - supplier of service and recipient of service are located in India - immovable property located outside India - construction of Institute of Security and Law Enforcement studies at Addu City in Maldives, constructed for Government of Maldives under an Memorandum of Understanding between India and Maldives - recipient of service - place of supply in respect of the works contract for setting up of the Institute of Security and Law Enforcement Studies at ADDU City in Maldives - time limitation. HELD THAT:- In order to determine, the Place of Supply, it is necessary to determine the supplier and recipient of the supply and the location of the supplier and recipient. In this context, it is necessary to examine the definitions of Supplier and Recipient as per the Provisions of the CGST Act, 2017 Section (2), Sub-section (105) of the Act defines supplier as Supplier in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied - Here, the supply of service (works contract service), the agreement which enforceable by law is entered into between M/s Sri Avantika Contractors (I) Limited and M/s NBCC Limited, New Delhi. Hence, the appellant M/s Sri Avantika Contractors (I) Limited, will be the supplier of Works contract service. On careful perusal of the definition of person under subsection (84) of section 2 of the CGST Act, 2017 and the definitions of company and foreign company under Section 2 of the Companies Act, 2013, it is observed that a company incorporated in India and a foreign company incorporated outside India, are separate person under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a company incorporated in India and a body corporate incorporated by or under the laws of a country outside India (which is also referred to as a foreign company under the Companies Act) are separate persons under CGST Act, and thus are separate legal entities - the registered place of business of M/s Avantika Contractors (I) Limited, Maldives cannot be considered as fixed establishment of M/s Avantika Contractors (I) Limited, India. The location of immovable property is outside India, therefore the Place of supply of services is location of the recipient i.e., Delhi as per the provisions of Section 12(3) of the IGST Act, 2017 - the transaction becomes an inter-state supply and is taxable under the provisions of Sec 7, sub-section (1) of the IGST Act, 2017.
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2022 (12) TMI 806
Input Tax Credit (ITC) - Output service being renting / leasing of immovable property - works contract services when supplied for construction of property - certain material/goods were involved in completing the construction service. - separate and distinct service under clause 5(b) of Schedule II of CGST Act - supplies or transactions described in 17(5)(c) or 17(5)(d) of CGST? - HELD THAT:- A contract for construction of complex with transfer of property in goods (explicit or implicit) falling under the ambit of entry 5(b) of Schedule-II of CGST Act, 2017 does not cease to be works contract, as long as said the supply satisfies the conditions laid down in the definition of a works contract under Section (2) sub-section (119) of CGST Act, 2017. Works Contracts and a contract for construction of a complex or building are not mutually exclusive. They are neither a subset nor a super set of each other. Hence, the principles of generalia specialibus non derogant donot apply here, i.e. the principle is applicable only when either of them is a subset or superset of one another but not when intersecting / overlapping with each other - on a combined reading, it becomes imperative to assess or classify the service availed by the appellant, i.e., to say whether it qualifies as 'works contract service' or not - the services availed by the appellant is nothing but, 'works contract' in as much as the service involved is construction of immovable property with transfer of property in goods. Hence, the supply is covered under Para 6(a) of the Schedule II of the Act. As can be seen from the sections that section 16 provides for availment of ITC subject to certain conditions and procedures to be followed by the assessee. Whereas, such availment is restricted under Section 17 and various kinds of supplies/conditions are covered - even though a general condition is prescribed under Section 16 of the Act, for availment of ITC, specific exemptions or disallowance cannot be overlooked or ignored merely because one provision allows it. Section 17(5)(c) clearly specifies that ITC is allowed on input of 'works contract' only if the output service is also works contract. In the instant case, the output service provided by the appellant is leasing/renting of immovable property. As such input tax paid on supply of works contract cannot be availed by appellant for payment of tax on supply of renting of immovable property. The contentions of the appellant are not valid in as much as, Para 5(b) of Schedule II and Section 17(5)(c) are two different and distinct provisions of CGST Act, 2017, operating in their assigned spheres - appellants are not eligible to take input tax credit of GST paid on supply of works contract service for payment of GST on their output service i.e., Renting of immovable property. Appeal disposed off.
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2022 (12) TMI 805
Governmental Authority or not - Rajasthan Housing Board - clause (zf) Paragraph 2 vide notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 - services provided by the Rajasthan Housing Board as governmental authority such as permission for building construction, approval of map, permission of additional Floor Area Ratio, leasing of land etc. are exempt as per Notification no. 12/2017 CTR dated 28.06.2017 or not. HELD THAT:- The applicant The Rajasthan Housing Board (RHB) is established on 24th February, 1970 vide Rajasthan Housing Board ordinance later on notified under section 4 of the Rajasthan Housing Board Act 1970 (Act No. 4 of 1970). The RHB is constituted by the State Government and in light of section 5 of the Rajasthan Housing Board Act, 1970.The duties of Rajasthan Housing board are well defined in Sec 26 28 of Rajasthan Housing Board Act, 1970. The Applicant is involved for the framing and execution of housing Schemes subject to the control of the State Government through its Board - RHB is constituted by State Government under Rajasthan Housing Board Act 1970 (Act No. 4 of 1970) and fully controlled by state government, Thus its amply clear for us that RHB is Governmental Authority under GST Act. The said services provided by the Rajasthan Housing Board (RHB) qualifies being placed under the category of services as stipulated at sl. No. 4 under Notification No. 12/2017- (Rate).
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2022 (12) TMI 765
Detention of goods alongwith the vehicle - it is alleged that the goods transported were not accompanied by documents - HELD THAT:- In the normal circumstances, the sequitur would have been the writ petition would have become infructuous but the order came to be made when the writ petition was being actively heard by this Court. However, to be fair to the respondent it should be recorded that Section 129(3) prescribes a time line of seven days from the date of service of notice specifying the penalty payable. Such notice was served on writ petitioner on 02.12.2022 and therefore, the order came to be made yesterday. As a one off case, considering the peculiar facts and circumstances of the instant case and the trajectory the hearing has taken, making it clear that this order will not serve as a precedent, writ petitioner is permitted to move an amendment application inter-alia to assail 08.12.2022 order made by the respondent - List on Monday in the Admission Board i.e., 12.12.2022.
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2022 (12) TMI 764
Seeking grant of regular bail - clandestine procurement as well as supply of raw tobacco with an intent to facilitate the actual manufacturer for unaccounted manufacture and supply of Jarda in contravention of the applicable GST/CE law with mala-fide intent to evade the duty levied by the Government - HELD THAT:- The petitioner is behind the bars since 21.07.2022. Complaint has been filed on 17.09.2022. Under Section 132 of the Act of 2017 alleged offence is punishable with imprisonment for a term, which may extend to five years and with fine. Hon ble Apex Court in the case of LALIT GOYAL VERSUS UNION OF INDIA ANR [ 2022 (8) TMI 1319 - SC ORDER] did not interfere with the impugned order dt.07.09.2021 passed by Coordinate Bench of this Court in [ 2021 (9) TMI 1347 - RAJASTHAN HIGH COURT] S.B. CRLMB No.13042/2021, whereby the bail application of petitioner therein was dismissed in which he was arrested 22.02.2021. Submission made by learned counsel for the respondent was that the petitioner and other persons had taken part in various firms and also claimed Input Tax Credit of Rs.18.91 Crores without any transportation of goods. However, Hon ble Apex Court decided the aforesaid Case on 26.08.2022 and since then the accused had remained in custody for a period of about one year and six months. In the present case, the allegation against the petitioner pertains to an amount of Rs.15,57,28,345/- and custody period is about three months, therefore, looking to the above facts, circumstances, nature and gravity of the offence, this Court deems it not proper to enlarge the accused-petitioner on bail. Instant bail application is dismissed.
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Income Tax
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2022 (12) TMI 804
Stay of demand - Addition u/s 68 - Petitioner vehemently urged that the CIT(A) could not have refused to extend the stay order which was earlier granted by the AO - HELD THAT:- It transpires that the proviso contained in paragraph 2 of the Instruction No. 96 dated 21st August, 1969, which envisages that there should be no lapses on the part of the assessee for purposes of claiming the tax in dispute to be held in abeyance was conspicuously missing from Instruction No. 1914, dated 02nd February, 1993. CIT(A), it appears, while rejecting the prayer of the Petitioner for grant of stay, relied upon the instruction which appears had since been superseded. Also noticed that the Petitioner had all along been making desperate attempts for placing on record documents as additional evidence in terms of Rule 46A of the Rules, which application ought to have been decided inasmuch as there was sufficient time with the Appellate Authority to pass orders in that regard. Only thereafter a view then could have been taken as regards their genuineness or veracity. In the present case it appears that the Appellate Authority did not even deem it appropriate to decide the said application even when the Petitioner claims that a prayer was made for such a decision in that regard. We accordingly find prima facie case in favour of the Petitioner as it appears that the assessment was high pitched as was claimed who stated that as against the returned income of Rs.68,33,07,140/-, the income has been assessed at Rs.461,72,35,403/-. We stay the recovery based upon the impugned demand notices. Notwithstanding the fact that we have passed an interim order today, we direct the Appellate Authority to decide the application under Rule 46A, which is pending before it, as also the appeal within three months from today, Notwithstanding the pendency of the present petition before this Court. The directions passed today shall be liable to be vacated, in case it is reported that any deliberate attempt has been made before the Appellate Authority to delay the final decision in the appeal. Objections be fled to the writ petition within six weeks.
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2022 (12) TMI 803
Proceedings u/s 276-C (l)/276-D and 277 - evasion of tax for the assessment year 2006-07 - deposit and transaction in the undisclosed foreign account - Scope of instruction No. 5051, dated 07.02.1991 issued by the CBDT which prohibits prosecution of persons above 70 years of age - whether the Circular/ Instruction No. 5051 dated 07.02.1991 applies to the present case or not? - petitioner, on the ground of his old age being 80 years and medical conditions, sought exemption from personal appearance - application under Section 245(2) Cr.P.C. before the learned trial court for dropping of the proceedings on the ground of his age and on the basis of Circular/Instruction No. 5051 dated 07.02.1991 - HELD THAT:- Admittedly the said foreign account was opened in the HSBC Bank, London on 20.08.1991 and not disclosed. Taking the date of birth of petitioner, as claimed by him, as 30.03.1936, this Court finds that at the time of commission of offence in the year 1991 he was more than 55 years of age. The Circular/ Instruction No. 5051 dated 07.02.1991 notes that prosecution normally be not initiated against a person who has attained the age of 70 years at the time of commission of offence. Meaning thereby, in terms of Circular/ Instruction No. 5051 dated 07.02.1991, the age at the time of commission of offence has to be taken and not when the proceedings initiated. Even though petitioner claims to have filed a revised income tax return on 16.02.2015 declaring his additional income as Rs.2,53,00440/- under the head income from other sources i.e. the maximum credit balance in the undisclosed bank account maintained in HSBC account, however, this Court cannot lose sight of the fact that on 26.09.2013 Show Cause Notice under Section 274 r/w 271 of the Act was issued against him and also that penalty under Section 271 (1) (b) of the Act for non-compliance of notice under Section 142(1) was also levied vide order dated 26.09.2013. It is only thereafter that the petitioner has chosen to file revised income tax return and by doing so, he cannot evade the judicial process of law for not disclosing his correct income and foreign account since the year 1991. As decided in Pradip Burman [ 2015 (12) TMI 202 - DELHI HIGH COURT] as crystal clear that the petitioner had admitted to have bank accounts outside India only after the investigation by the Income Tax Department. The said foreign account was the undisclosed account and the deposits therein relates to his undisclosed income and the same needs to be examined. Thus in opinion petitioner cannot be permitted to take benefit of Circular/ Instruction No. 5051 dated 07.02.1991 to find an escape route for the wrong committed by him. Accordingly, the present petition is dismissed.
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2022 (12) TMI 802
Reopening of Assessment u/s 147 - change of opinion - Reopening permissible if the assessee had not disclosed all the relevant particulars fully and truly before the assessing officer - reopening on a standalone basis - disallowing the claim towards debiting to the profit loss account due to reversal on account of cancellation and price revision - HELD THAT:- The fact that the reopening of assessment was ordered on mere change of opinion has been upheld by two lower appellate authorities. It is evident that respondent had disclosed fully and truly all material facts to the assessing officer during the assessment proceeding on the basis of which assessment order was passed u/s 143(3) of the Act. By change of opinion holding that reduction towards reversal on account of cancellation and price revision and deducting the same from the profit and loss account was irregular thereby having reason to believe that taxable income had escaped assessment, the concluded assessment could not have been reopened. At the stage of third round of appeal we do not find any substantial question of law for interference by the High Court under Section 260A - We are, therefore, of the view that there is no merit in this appeal. - Decide against revenue.
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2022 (12) TMI 801
Reopening of assessment u/s 147 - order u/s 148A(d) - petitioner has received the gift from his father - As urged in the order u/s 148A(d) the officer accepts the limitation that the three years had elapsed from the end of relevant assessment year and for necessary sanction he refers the matter to the Commissioner of Income-tax instead of Chief Commissioner of Income-tax - HELD THAT:- Issue Notice, returnable on 13.12.2022. By way of interim relief, it is directed that the process of assessment shall continue with the cooperation of the petitioner, however, the final assessment order shall not be passed before the returnable date. Over and above the regular mode of service, direct service through e-mode (on official Email address) is also permitted.
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2022 (12) TMI 800
Reopening of assessment u/s 147 - Notice issued to the present petitioner u/s 148A(b) - case of third party, who has alleged to have indulged in giving accommodation entries through various dummy persons - as argued scrutiny assessment has been completed and AO even if, has got the informations he is not paying heed to his request and the reply while passing an order u/s 148A(d) would amount to this being a mere ordeal - HELD THAT:- As emphatically urged that there is not a single entry or transaction with Ganpati Textile or the search person. Issue Notice returnable on 19.12.2022. By way of interim relief, it is directed that the process of assessment shall continue with the cooperation of the petitioner, however, the final assessment order shall not be passed before the returnable date. Over and above the regular mode of service, service of notice through e-mode on the official e-mail ID is permitted.
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2022 (12) TMI 799
TP Adjustment - upward adjustment in imputing notional interest on the outstanding overdue receivables from Associated Enterprises (AEs) - AR submitted that the assessee has adopted Transaction Net Margin Method (TNMM) and therefore the interest on outstanding receivables is subsumed in the Arm s Length Price (ALP) charged to the AEs - HELD THAT:- As find from working of assessee s own case for the A.Y.2017-18 [ 2022 (9) TMI 587 - ITAT VISAKHAPATNAM ] the assessee s margin is significantly higher than the operating margin of the comparable companies. There may be a delay in the collection of receivables even beyond the agreed time limits due to a variety of factors which has to be decided on a case to case basis. When TNM method is considered as the most appropriate method, which was also not disputed by Revenue, the net margin thereunder would take care of such notional interest cost. As further explained by Ld.AR that the impact of the delay in collection of receivables would have a bearing on the working capital of the assessee. We find that these working capital adjustments on the ALP has been already factored in its pricing / profitability vis- -vis that of its comparables. We therefore are of the considered view that any further adjustment to the margin of the assessee on the outstanding receivables cannot be justified and no separate upward adjustment on outstanding export receivables is required and therefore we direct the AO to delete the upward adjustment made towards overdue receivables from AE. We therefore allow this ground raised by the assessee. Adjustment towards corporate guarantee - Addition of commission on the gross guarantee given to AE - HELD THAT:- As relying on assessee own case [ 2022 (9) TMI 587 - ITAT VISAKHAPATNAM ] following the ratio laid down in the case of CIT vs. Everest Kanto Ltd [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . We are of the considered view that the corporate guarantee commission is an international transaction and should be charged @ 0.50% on the corporate guarantee amount utilized, by the AE. We therefore allow the grounds raised by the assessee. Disallowance under section 14A r.w.r. 8D - As argued the assessee has not earned any exempt income warranting the disallowance u/s. 14A - AR pleaded that the assessee s holding shares is merely to retain the controlling interest and no income has been received by the assessee during the impugned assessment year - HELD THAT:- As relying on assessee own case [ 2022 (9) TMI 587 - ITAT VISAKHAPATNAM ] assessee has not earned any exempt income during the relevant assessment year mandating the invoking of provisions of section 14A - As in CIT vs. Chettinad Logistics (P.) Ltd [ 2017 (4) TMI 298 - MADRAS HIGH COURT] has dismissed the SLP [ 2018 (7) TMI 567 - SC ORDER] of the Revenue and held that section 14A can only be triggered if assessee claims any expenditure against an income which does not form part of the total income under the Act. The Hon ble Supreme Court further observed that Rule 8D only provides for a method to determine the amount of expenditure incurred in relation to income which does not form part of the total income of the assessee. - Decided in favour of assessee.
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2022 (12) TMI 798
Penalty u/s 271(1)(b) - non-compliance of the notices - assessee did not participate in the assessment proceedings and ex parte order u/s 144 was passed - assessee was not aware of uploading of the impugned order of the NFAC/ld.CIT(A) - HELD THAT:- Director Shri Bhavesh Chhatbar was all the while available, having received all orders passed i.e. assessment order under section 144 of the Act and penalty order u/s 271(1)(b) of the Act and the order of the NFAC/ld.CIT(A) in penalty proceedings, having repeatedly filed appeals before the higher forums against the said orders. There is no reason why the notices remained unresponded to. When the director of the assessee company, Shri Bhavesh Chhatbar, could have responded to the orders passed repeatedly, he could very well have responded to the notices also, and the statement made on behalf of the assessee that the directors were all absconding, therefore, appears to be totally false. Even before us, we find that after filing of the appeal, nobody has appeared. This appears to be a repeated pattern being adopted by the assessee to misuse the due process of law. We therefore see no reason to differ from the NFAC/ld.CIT(A) s finding and accordingly uphold the order of the NFAC/ld.CIT(A) confirming the levy of penalty under section 271(1)(b) of the Act of Rs.30,000/-. The grounds of appeal of the assessee are rejected.
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2022 (12) TMI 797
Deduction u/s.80P(2)(a)(i) - interest earned from various Co-operative Banks - HELD THAT:- The Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. [ 2022 (1) TMI 419 - ITAT PUNE] has held that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a Co-operative society registered under the Cooperative Societies Act. Respectfully overturn the impugned order and direct to grant deduction u/s.80P(2)(a)(i) of the Act on the amount of interest earned from various Co-operative Banks. Assessee appeal is allowed.
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2022 (12) TMI 796
Exemption u/s 54 - Payment made for the Purchase of the new property - Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house - whether deduction u/s 54 should be allowed to assessee even if the investment in new asset under builder construction agreement made before transfer of asset? - HELD THAT:- The agreement for sale was signed on 08.08.2014 and the payments have been completed by 08.10.2014. Since, the amount equivalent to the capital gains has been utilized for acquisition of new house, the assessee be permitted to avail the benefit allowable u/s 54 of the Act. Appeal of the assessee is allowed.
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2022 (12) TMI 795
Disallowance of power fuel expenses - Addition @ 5% of the total claim of expenses - CIT(A) after going through the details filed by the assessee held that expenses on power and fuel are proportionately high in certain months are not justified and specially in the month of March which was without any justification - HELD THAT:- On perusal of the details filed by the assessee notice that during AY 2013-14 fuel expenses are 14.45% of the total turnover Ct the assessee has purchased its own vehicle. Major Increase in the expenditure of power expenses - As assessee has been able to satisfy the considerable change. However, considering the fact that most of the expenses of power fuel have been booked at the fag end and there considerable increase in the percentage of this expenditure for the AY 2010-11 onwards, we deem it proper to sustain the addition/disallowance @ 1% of the total claim of expenditure at Rs.2,15,63,895/-. Therefore, against the disallowance of Rs.10,78,194/-, a sum of Rs. 2,15,638/- is sustained and remaining disallowance of Rs.8,62,556/- is deleted. Ground no.1 raised by the assessee is partly allowed. Disallowance of repair maintenance expenses - HELD THAT:- Assessee has filed complete ledger accounts of the expenditure incurred. Except an amount as incurred in cash remaining/balance amount has been paid through banking channel. We also note that percentage of repair and maintenance expenditure has scaled down as comparable to the preceding year. Disallowance of repair and maintenance expenses needs to be sustained only to the extent which the assessee failed to explain. Thus, remaining addition of is deleted. The assessee gets part relief. Ground no. 2 is partly allowed. Disallowance of unloading chipping expenses computed @ 5% - HELD THAT:- As most of the expenditure though has been incurred in cash but subjected to deduction of TDS, which has been duly deposited. Both the lower authorities have given general remarks and have not specifically pointed out any such payment, which has been made in cash and TDS not deducted and not supported by relevant documents. Considering the fact that loading and chipping expenses constitutes major parts of the expenditure of the assessee company i.e 32.14% and also considering the fact that turnover of the assessee has increased from 1.26 cr during AY 2010-11 to Rs. 14.92 cr during AY 2013-14 and also net profit which was declared at Rs. 9,04,071/- during AY 2010-11 has risen to Rs.99,15,955/- in AY 2013-14, the books of account regularly audited and complete details have been filed before us in the shape of paper book, we being fair to both the parties are inclined to sustain the disallowance @ 1% i.e at Rs. 4,79,618/- as against Rs.23,98090/- confirmed by the ld. CIT(A). Thus, assessee gets relief at Rs. 19,18,472/-. Ground no.3 is partly allowed.
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2022 (12) TMI 794
Penalty u/s 271(1)(c) - Defective notice u/ 274 - non-strike off of the irrelevant part - HELD THAT:- As could be seen from the above the Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s. 271(1)(c) held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(1)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. A.O passed the assessment order without mentioning the exact limb of the penalty proceedings to be initiated against the assessee and consequent to the same issuance of the notice u/s 274 which the A.O. has fail to specify the limb under which the penalty proceedings having initiated and proceeded with, apparently goes to prove that above notices have been issued in a mechanical manner without applying the mind. Being so, the said notice issued u/s 271(1)(c) of the Act is bad in law consequently the penalty levied there under cannot be sustained.Appeal filed by the assessee is allowed.
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2022 (12) TMI 793
Deduction u/s 80P(2)(a)(i) - interest from Cooperative Banks in respect of availing facility to take cash from the said banks - HELD THAT:- From the perusal of Profit Loss account the said receipts of dividend are shown to the extent of Rs. 12,660/- of bank share and thus the total receipt from Cooperative Banks come to Rs. 19,14,547/-. The reliance of the Hon ble Supreme Court s decision that of Totgars Cooperative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] is not justifiable in the present case as the interest income had on the surplus of its funds not immediately required for its business was declared as not income from business by the Hon ble Supreme Court in the said case. But in the present case the assessee claim deduction on interest from Cooperative Banks in respect of availing facility to take cash from the said banks which is directly related to the business of the assessee society. Thus, the CIT(A) as well as the AO was not right in disallowing the interest component claimed by the assessee under Section 80P(2)(a)(i) of the Act. Appeal of the assessee is allowed.
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2022 (12) TMI 792
Penalty u/s 271(1)(c) - deduction u/s 80G and 80HHC denied on the ground that the entire gross total income of the assessee comprised purely of Long Term Capital Gains and not business income - debatable issue - HELD THAT:- The contention of the assessee, therefore, that the issue was debatable is correct. The Ld.CIT(A) has not dealt with this contention of the assessee at all, brushing it aside simply by stating that the claim is inadmissible as per law in view of section 112(2) of the Act. In view of the decision of ARVIND MILLS LTD. [ 2001 (9) TMI 53 - GUJARAT HIGH COURT] laying down proposition in favour of the assessee it cannot be said that the claim was clearly inadmissible as per law. In these facts and circumstances of the case, the assessee cannot be charged with having furnished any inaccurate particulars of income so as to be exigible to levy of penalty u/s 271(1)(c)of the Act. The penalty so levied amounting is directed to be deleted. Appeal of the assessee is allowed.
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2022 (12) TMI 791
Levying the late filing fee u/s. 234E - delay in filing the TDS statement - genuine hardship to the assessee - reasonable cause on the part of the appellant Educational Society which resulted in delay in filing the TDS statement - HELD THAT:- Assessee had deducted tax at source u/s. 195 of the Act but belatedly filed the returns on 27/11/2015 under the bonafide intention that the amended provisions will not attract for levy of late fee u/s. 234E of the Act since the due date for filing the returns for Q1 of FY 2014-15 is 30/06/2014. AYs 2016-17 2017-18 - AO vide order passed U/s. 200A, imposed late fees U/s. 234E of the Act. In these cases since the assessee has filed its TDS returns on 12/02/2018 which is after the date of insertion of specific provision for levy of late fee U/s. 234E ie., 01/06/2015. Therefore, the action taken by the Ld. AO in levying the late fee for default in furnishing the TDS statement beyond the stipulated time is in accordance with law. Therefore, we have no hesitation to come to a conclusion that the orders of the Ld. Revenue Authorities invoking the provisions of section 234E in order to levy late fee for default in furnishing the TDS statement beyond the stipulated time is in accordance with law and accordingly the grounds raised by the assessee are hereby dismissed. Since the period under consideration is the 1st Quarter of FY 2014-15 ie., prior to the amendment to section 200A(1) of the Act wherein clause (c) was inserted w.e.f 01/06/2015 and the assessee had already deposited the tax at source prior to the amendment to section 200A(1), the levy of late fee u/s. 234E for default in furnishing the statement beyond the stipulated time is not sustainable in law. Respectfully following the ratio laid down in the judgment in the case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] , in the case of United Metals [ 2021 (12) TMI 1349 - KERALA HIGH COURT] and the levying of late fee u/s 234E for the period prior to 1/6/2015 is not sustainable in law. Thus, in the instant case since the period of default was before the said date ie., 01/06/2015, there is no merit in charging late filing fee u/s. 234E of the Act. Accordingly the Ld. AO is directed to delete the fee levied U/s. 234E of the Act in the order passed U/s. 154 r.w.s 200A of the Act Thus, the grounds raised by the assessee are allowed.
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2022 (12) TMI 790
ESOP expenditure - nature of expenditure - whether CIT(A) erred in holding that the ESOP expenditure was only notional and capital in nature, thus attracting disallowance? - HELD THAT:- As decided in assessee s own case in [ 2021 (11) TMI 1119 - ITAT DELHI] expenditure incurred in connection with the ESOP is treated as revenue expenditure, we hereby allow the ground of appeal on this issue. Addition on account or interest paid on money borrowed as unsecured loan - HELD THAT:- We note that the AO has prepared a chart in which interest paid to Smt. Vasntha Surya was Rs.8,36,424/- and the rate of interest varied between 13% to 24%. Assessee s claim was that it was in need of funds and banks did not provide necessary assistance, has been rejected by the authorities below on the ground that no such evidence is available. Comparing the interest rate with bank rates in the facts of this case is quite anomalous considering the fact that assessee has claimed that assessee has got the loan without any collateral security and rate varied from 13% to 24%. So blanket disallowance by the AO and confirmed by the ld. CIT (A) is without any basis. It is not the case that the expenditure is bogus. In these circumstances, we set aside the orders of the authorities below and decide the issue in favour of the assessee. Disallowing the expenditure incurred by the Appellant towards gift provided to foreign delegate as a part of business promotion - HELD THAT:- We find that assessee has not adduced any evidence before us also to take a contrary view than the one taken by ld. CIT (A) on above issues. As regards gold chain, we may also observed that if it was a souvenir on behalf of the assessee company, there is no reason why the bill is in the name of the Director in person. Hence, we confirm the disallowances as sustained by ld. CIT (A). Disallowing the claim for weighted deduction in respect of expenditure on scientific research u/s 35(2AB) - HELD THAT:- Upon careful consideration, we find ourselves in agreement with the submission of ld. Counsel of the assessee as above. Assessee has duly fulfilled the obligation cast upon it. It has duly obtained the required certificate from DSIR. The delay in respect of Form 3CL is not attributable to any act or omission of the assessee. Moreover the case laws referred above duly cover the issue in favour of assessee. No contrary decision has been brought to our notice. Hence, following the aforesaid precedents, we set aside the order of authorities below and decide the issue in favour of assessee.
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2022 (12) TMI 789
Addition u/s 68 - unexplained cash credit of share capital and security premium received during the year - assessee failed to appear before the AO and assessee did not produce the alleged share holder before the AO for identity, creditworthiness and genuineness of the transaction - HELD THAT:- The assessee company has miserably failed to source of alleged cash credit if the assessee had sufficient details to explain the alleged sum. Consistently escaping from appearing before the ld. AO and the appellate authority, CIT(A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium. In the case of assessee completely failed to explain the alleged cash credit and consistently escaped the provisions of section 68 are attracted. Thus it is held that the assessee has routed its unaccounted income in the books of account in the form of share capital and security premium by arranging the bogus share capital and share premium through accommodation entry provider. Therefore, we find no infirmity in the findings of the CIT(A) confirming the addition made u/s 68 of the Act and same is confirmed. Thus the ground of appeal raised by the assessee is dismissed.
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2022 (12) TMI 788
Addition u/s 68 - unexplained cash credit (security premium) - HELD THAT:- AO asked the assessee to explain the said credit on multiple occasions which the assessee was duty bound to explain so as to avoid the invocation of the provisions of Section 68 which relates to unexplained cash credit. It is not in dispute that the assessee received the alleged sum during the year towards security premium. AO was justified in asking the assessee to prove the identity and creditworthiness of the shareholders/share applicants and the genuineness of the transaction. All the efforts of ld. AO went in vain as the assessee did not comply to any of the notices and even before the ld. CIT(A) the assessee did not appear on any occasion and similar lethargic approach of the assessee stands continued before this Tribunal. Also, the assessee has not filed any application stating any reasonable cause for not appearing on the given dates of hearing. Except filing the appeal, there is no other effort from the side of the assessee to pursue its appeal. Unless and until the documents and the other materials are filed to explain the alleged cash credit it is not possible to accept the grounds raised by the assessee and thus, it is presumed that the assessee is unable to explain the source of alleged security premium. No infirmity in the detailed finding of ld. AO as well as CIT(A) duly supported by judicial pronouncements and therefore, the addition for unexplained security premium u/s 68 of the Act is confirmed. Thus, all the grounds raised by the assessee are dismissed.
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2022 (12) TMI 787
Reopening of assessment u/s 147 - issue not been agitated before the CIT(A) - HELD THAT:- Copy of Form No. 35 available on record has been seen. Hence, no finding of the First Appellate Authority is available on the issue. We find from the record that before us despite providing more than adequate opportunities to the assessee, no attempt has been made to show how the ground is maintainable and allowable. Nothing has been placed before us to show that the assessment was bad in law. Accordingly, ground No. 2 considering the record available is dismissed. Unexplained addition u/s 68 - HELD THAT:- Since nothing has been placed before us to rebut the finding on fact or address the issue on facts for want of submission and supporting evidences, the additions sustained by the CIT(A) are upheld. - Decided against assessee.
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2022 (12) TMI 786
Revision u/s 263 - disallowances u/s 14A - interest bearing borrowed funds have been utilized during the year to fund the non-current investments as evident from the steep increase in the finance cost during the year which doesn't stand justified with reference to revenue from operations and it is accordingly held that the finance cost is incurred during the year to sustain its non-current investments which call for disallowance u/s. 14A of the Act and which the AO has failed to enquire during the course of assessment proceedings - HELD THAT:- As submitted that basis the said submission that there are no fresh investments made during the year and consequentially, no interest bearing funds were utilized for making any such investment, no disallowance was made by the AO towards the interest expenditure incurred during the year. We find force in the arguments of the AR and are of the considered view that the matter has been adequately examined by the AO regarding fresh investments made during the year and after taking into consideration the factual position and submissions of the assessee including the comparative position of investments at the beginning and at the end of year which shows that there are no fresh investments made during the year, the AO has not made any disallowance towards interest expenditure u/s. 14A - we find that it is not the case of the ld. PCIT that the investments made in the earlier years were made out of interest bearing funds and interest cost thereof continue to be claimed during the year and which has escaped attention of the AO. Nothing has been brought on record to this effect either in the impugned order or during the course of hearing before us including any disallowances made u/s 14A in the earlier years. We find that there are justifiable basis to invoke the provisions of section 263 as the order passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the order so passed by the ld. PCIT is hereby set-aside and that of the AO is sustained.
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2022 (12) TMI 785
Revision u/s 263 by CIT - assessment of trust - vehicle in question i.e. Innova car is the sole passenger vehicle and purchase of the car was for the benefit and use of the school - actual ownership of a vehicle - whether disallowance should be made for vehicle purchased in the name of the Chairman if the vehicle is being used for the purpose of the trust? - HELD THAT:- These are undisputed facts clearly emerging from the records as so stated by the CIT(E) and we fail to understand what is the ambiguity involved and what further verification is required as so stated by the CIT(E) in the impugned order as we find that these facts adequately demonstrate that the ownership of the vehicle is with the assessee society. Therefore, on this account itself, the impugned order deserves to be set-aside. As far as usage of the vehicle is concerned, we find that the vehicle has been purchased towards the fag end of the financial year on 28/03/2017 and it has been submitted by the assessee that the Chairman who is aged 88 years has his own two vehicles in personal capacity and doesn't require any school vehicle for his personal usage and the said vehicle was not used by him rather the vehicle was used by the Principal and other staff members. CIT(E) has acknowledged the said explanation of the assessee where he held that there appears to be no evidence regarding any wrong use of the vehicle and the AO must remain cognizant that Shri. Rajinder Nath Chairman already has other vehicles in his personal name, and appears otherwise financially well-endowed and well settled. Therefore, on this account as well, the impugned order deserves to be set-aside. We are of the considered opinion that there is no justifiable basis to invoke the provisions of section 263 as the order passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the order so passed by the ld. CIT(E) is hereby set-aside and that of the AO is sustained. - Decided in favour of assessee.
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2022 (12) TMI 784
Revenue recognition - Addition on account of operation and maintenance service charges of transmission lines - Charges neither supported by agreement nor even paid by the other party to whom the services were rendered - bill was raised but not accounted for in the books of accounts by the assessee company - why the said amount should not be treated as income of the assessee for the year under consideration particularly when the assessee company is following the mercantile system of accounting drawing drawn reference to the Audit Report submitted by the Statutory Auditor? - HELD THAT:- We therefore find that the assessee has suitably demonstrated that there were uncertainties regarding the determination of the amount in absence of any agreement with UT Electricity Department as well as its ultimate collection and once, there was resolution and acceptance thereof at the revised figure after indulgence by Central Electricity Authority, the revenue has been duly recognized in the books of accounts in the subsequent financial year. We find that the assessee has been consistent in following the said policy as can be seen from the audit report where bills raised for F.Y. 2010-11 have been accounted for in the year under consideration and which has infact, formed the basis for the action on part of the AO. AO cannot follow dual approach in taxing the revenues pertaining to earlier financial year and at the same time, disputing the deferment of revenues for the year under consideration on account of similar uncertainties involved. We see no justifiable basis to allow the disturbance of well-accepted accounting policy consistently followed by the assessee where the recognition of revenue is deferred where there are visible uncertainties involved in quantifying and realization of revenues. In the result, the addition on account of operation and maintenance service charges of transmission lines is hereby set-aside and the ground of appeal is allowed.
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2022 (12) TMI 783
Maintainability of revenue appeal against the order of CIT(A) granting relief to assessee - NCLT has declared moratorium u/s 14 of IBC Code in the case of assessee - IBC Code overriding in any other enactment including Income Tax Act - AR has submitted that Hon ble by Edelweiss Asset Reconstruction Company Ltd.against the assessee u/s 7 of the IBC Code and has declared moratorium - HELD THAT:- Hon ble Apex Court in the case of PCIT vs. Monnet Ispat Energy Ltd. [ 2018 (8) TMI 1775 - SC ORDER] has held that IBC Code will override anything inconsistent in any other enactment including Income Tax Act. When NCLT has declared moratorium u/s 14 of IBC Code in the case of assessee, then there is a complete bar to initiate and continue proceedings against the assessee before any authority. Therefore, in view of the moratorium granted by NCLT, no proceedings against the assessee can continue. In view of the aforesaid facts, the appeal of Revenue deserves to be dismissed. However, liberty is granted to the Revenue to seek revival of the appeal after the lifting of the moratorium and in accordance with law. Grounds of appeal filed by Revenue are dismissed.
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2022 (12) TMI 782
Penalty u/s 271(1)(c) - AO disallowed 50% of the agricultural income - HELD THAT:- It is a fact on record that though the assessee contested the disallowance before learned Commissioner (Appeals) however, subsequently, it withdrew the appeals. Thus, the aforesaid facts presupposes that the assessee did not have a strong case on merits to contest the disallowance. Disallowance of Swap charges - Commissioner (Appeals) has given a categorical finding that the assessee did not furnish any evidence to establish whether the nature of Swap charges were disclosed before detection by the Assessing Officer. Since, the assessee has failed to appear before us and adduce any evidence or submission to demonstrate that no case of furnishing of inaccurate particulars is made out, it can be safely concluded that the assessee does not have much to say in the matter in its defence. That being the factual position, we do not find any valid reason to interfere with the decision of the Departmental Authorities. Therefore, we uphold imposition of penalty. Disallowance of depreciation on land - In view of specific directions of Commissioner (Appeals), no interference is called for. Accordingly, we uphold the decision of learned Commissioner (Appeals). Appeal of assessee dismissed.
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2022 (12) TMI 781
Bogus LTCG - penny stock purchases - genuineness of the claim of exempt income under section 10(38) of the Act in respect of long-term capital gain arising from sale of equity shares - HELD THAT:- As respectfully following the decision of this Tribunal [ 2022 (10) TMI 728 - ITAT KOLKATA] as well as in the light of ratio laid down in the case of Swati Bajaj Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] find no infirmity in the orders of the ld. CIT(Appeals) holding the alleged LTCG for sale of equity shares as bogus and not eligible to exemptions under section 10(38) of the Act and also confirming the addition of commission expenditure incurred for arranging bogus LTCG and dismiss the appeals of the assesses.
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2022 (12) TMI 780
Revision u/s 263 - Addition u/s 68 - Assessee has owned up and surrendered the amount of investment in firm as its investment and contribution - HELD THAT- In the absence of any credit in the books of assessee partner, the provisions of Section 68 has no application on which the al legation is based. In such factual matrix, we find merit in defense of the assessee that chargeability of tax with reference to Section 115BBE is not permissible in the present case towards purported undisclosed income declared by the assessee in the course of survey. As pointed out, the assessee being partner of the firm, claims to have invested the impugned amount in the partnership firm and surrendered as its undisclosed income. CIT in the revisional proceedings could not have invoked Sect ion 68 towards such unexplained investments in the firm in the absence of any credit in the books of assessee per se and the right course, possibly, could be Section 69 of the Act at best for which no case has been made out by the Pr.CIT. As contended Tribunal cannot uphold the revisional action of the Pr.CIT on a different ground then what is alleged in the revisional proceedings as held in CIT vs. Jagadhri Electric Supply and Industrial Company, [ 1981 (3) TMI 19 - PUNJAB AND HARYANA HIGH COURT] - We thus find traction in the contention that where Section 68 as alleged and invoked by the Pr.CIT is not applicable, Section 115BBE could not be triggered by modifying the premise of revisional direct ions. The revisional act ion of the Pr.CIT thus fails on this count also. Appeal of the assessee is allowed.
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Benami Property
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2022 (12) TMI 779
Prohibition of Benami Property Transactions - attaching the properties of the petitioners provisionally until passing of the order by the Adjudicating Authority u/s 26 (3) of the Act - primary contention of the petitioners is that an incorrect and illegal conclusion has been arrived at by the authorities that the petitioner in each of the three cases were benami holders of property or its beneficiary - grounds of violation of the principles of natural justice have also been taken as, according to the petitioners, their replies were not properly considered and they were not given an effective opportunity to defend themselves - Allegation of recording the statement of the petitioners in duress has also been made - HELD THAT:- Though contentious issues have been raised in these petitions which require elaborate deliberations, this Court is of the opinion that in view of the clear law laid down by the Hon ble Supreme Court in the case of Ganpati Dealcom Pvt. Ltd. [ 2022 (8) TMI 1047 - SUPREME COURT ] such deliberations are not at all required, as the same would otherwise, cause prejudice to either of the parties. As in view of the undisputed fact that the transactions in question in these cases being of a period prior to 2016, the amendment of the Act made in the year 2016 would not be applicable and therefore, the impugned notices under Section 24 of the Act are not sustainable in law. Accordingly, the impugned notices are set aside and the writ petitions are allowed.
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Customs
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2022 (12) TMI 778
Seizure of imported goods (to be cleared for home consumption) - Fresh Kiwi Fruits - seizure on the alleged premise that the Country-of-Origin certificates submitted by the petitioner are of suspicious nature and they are not co-relating with the documents submitted with the bill of entry - HELD THAT:- Section 1A of Section 110 of the Customs Act provides that the Central Government may, having regard to the perishable or hazardous nature of any goods, shall, as soon as may be after its seizure under sub-section (1), dispose of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure prescribed in the said provision - Sub-section (2) of Section 110 of the Customs Act provides that any goods which are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within shall be returned to the person from whose possession they were seized within six months of the seizure of the goods and the principal commissioner also has power to extend such period of further time not exceeding six months. Admittedly, this is perishable nature of the goods and therefore, Sub-section (1A) of Section 110 of the Customs Act obligates upon the officer concerned to decide in this relation as soon as possible after its seizure - Noticing the right of the authority concerned as also the balancing it from the point of view of the perishable goods which are required to be decided earliest possible, we deem it appropriate to provisionally release the same. Once the Bank Guarantee is furnished of the requisite amount as above, the goods shall be provisionally released in favour of the petitioner. We would like to direct at this stage that the respondent No.2 shall ensure that the inquiry is concluded within a period of twelve weeks from today. If for any good reason or if the respondent No.2 has some information as regards the origin of the goods and need some more time, then it shall be open for the respondent No.2 to file an appropriate application seeking extension of time period to complete the inquiry. The writ petition is disposed off.
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2022 (12) TMI 777
Condonation of delay in filing appeal - appeal filed beyond the statutory period of filing the Appeal before the tribunal due to Covid 19 pandemic - Delay in filing of appeal before the Commissioner (appeals) - HELD THAT:- The Order-in-Original dated 28.02.2019 was communicated to the Appellant on 07.03.2019 and accordingly he was required to file Appeal before the First Appellate Authority within 60(sixty) days i.e. on or before 07.05.2019, 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 - 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 limitation period has been calculated from the date of order instead of date of communication of the order - 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. The Appeal filed by the Appellant is allowed by way of remand to the Ld.Commissioner(Appeals).
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Insolvency & Bankruptcy
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2022 (12) TMI 776
Seeking Liquidation of Corporate Debtor - Section 33 (3) (b) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A Stakeholder, affected by the conduct of the Resolution Professional, may file a complaint, under IBBI (Grievance and Complaint Handling Procedure) Regulations 2017. Therefore, the Creditors are Stakeholders affected by the actions of Resolution Professional, may initiate Proceedings, under the aforesaid Regulations and in the event of allegations are sustained, the IBBI, may recommend for Replacement of a Resolution Professional, under Section 34 (4) (b) of the Code - As far as the present case is concerned, this Tribunal, points out that before the Adjudicating Authority, on behalf of Lenders, even though, a reliance was placed on the Minutes of Joint Lenders Meeting, that took place on 26.04.2022, the said Minutes, was conspicuously silent, about the aspect of any dissatisfaction being expressed, pertaining to the performance of the Resolution Professional, in the earnest opinion of this Tribunal. In the present case, despite, the fact that the Minutes of the Joint Lenders Meeting, that took place on 26.04.2022, were silent as regards the Lenders Expression of Dissatisfaction, relating to the Discharge of Duties, by the Resolution Professional and therefore, another Individual, be Replaced and Appointed, to function as Liquidator, there is no embargo in Law, for the Replacement of present / current Resolution Professional as Liquidator, by another Resolution Professional, on grounds / reasons, other than those specified under Section 34 (4) of the I B Code, 2016 (especially, when the Lenders in their Commercial Decision and Wisdom, had opted for such a Replacement of the existing Resolution Professional, as Liquidator, by another Resolution Professional, which carries due weightage and the same cannot be brushed aside so lightly. As a matter of fact, the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench - I, Hyderabad), had applied its mind and exercised its Judicial Discretion, in the impugned order, by making a pertinent Observation, that the graceful exit of the present Resolution Professional, will pave way for the smooth Liquidation Process, of the Corporate Debtor and permitted the plea of the Lenders, in this regard, and passed an Order of Liquidation, against the Corporate Debtor / M/s. Sainath Estates Pvt. Ltd., by appointing Mr. Gollamudi Krishna Mohan as Liquidator and the conclusion so arrived at, by the Adjudicating Authority, in the impugned order, is free from any Legal Infirmities, as held by this Tribunal. Appeal dismissed.
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2022 (12) TMI 775
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the Petition under Section 7 is maintainable on the ground of Limitation? - HELD THAT:- It is seen from the records that the cause of action arose on 04.07.2014 wherein the Financial Creditor issued a demand recall notice and called upon the Corporate Debtor to repay the dues and the Petition is filed in the year 2019. To corroborate the same, the Financial Creditor has placed on record Financial Statements for the period 01.04.2014 to 31.03.2015, 01.04.2018 to 31.03.2019 Annual Report for period 2019 to 2020 and Annual Report for period 2020 to 2021 wherein the Corporate Debtor has acknowledged the debt owed to the Financial Creditor and the amount therein is set out as Principal amount as secured loan owed by the Corporate Debtor - It is clear that the petition filed is well within Limitation period and the same has been demonstrated vide the Financial Statements as annexed to the petition. There were no cogent evidence to show that the Application is barred by Limitation as alleged by the Corporate Debtor - Further, it is seen from the records available that the Financial Creditor has established that the various term loans/Credit facilities were duly sanctioned and duly disbursed to the Corporate Debtor but there is no payment of Debt on the part of the Corporate Debtor. Hence, owing to the inability of the Corporate Debtor to pay its dues, this is a fit case to be admitted u/s 7 of the I B Code. Considering the above facts and on perusal of documents/ papers placed before the Bench, it is concluded that the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that there is a Default as defined under section 3 (12) of the Code on the part of the Debtor. The two essential ingredients, i.e. existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case - it is found that the Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves Admission . Petition admitted - moratorium declared.
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PMLA
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2022 (12) TMI 774
Money Laundering - aggrieved person - notice for interim attachment of properties not served - requirement to send the notice to person who is not the owner but in possession of property - possession notice has been issued to the petitioner for eviction of the petitioner from the premises - non-service of final attachment Order as well - Section 26 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The facts and circumstances of the case would reveal that the very property has been divested by the creating false documents, which has not been disputed. The property has been attached in the proceedings initiated against the second and third respondents. According to the petitioner, they are in possession of the property under some oral arrangement from the very inception and there was also an oral agreement for sale between the original owner and themselves. The factum of their possession is not disputed - this Court is of the view that as the possession of the petitioner has not been disputed by the Department, any Order evicting or taking away their possession, will certainly affect the right of a person and such person would be an aggrieved person and they will certainly fall under the ambit of Section 26 of The Prevention of Money-Laundering Act, 2002. They can very well challenge the action of the respondent by filing an appeal. Considering the facts and circumstances of the case, as the petitioners are certainly aggrieved persons, they are entitled to file an appeal and establish their stand before the appellate authority. It is for the petitioner to establish their right over the property before the appellate authority. Till such appeal is decided, the petitioners cannot be evicted and the notice served on them shall be put on hold till the disposal of the appeal. In such view of the matter, the respondent is directed to serve a copy of the Order of attachment passed under section 8 of the Prevention of Money-Laundering Act, 2002 enabling the petitioner to file an appeal before the Appellate Tribunal as per Section 26 of The Prevention of Money-Laundering Act, 2002. These Writ Petitions are disposed of.
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Central Excise
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2022 (12) TMI 773
Clandestine Removal - inputs/raw materials as defined under Rule 9(5) of the CENVAT Credit Rules, 2004 - cross-examination of third party witnesses - respondents could not satisfactorily account for the transportation/receipt of such inputs/raw materials to their premises - violation of Section 9D of Central Excise Act - whether there is a vested right on the respondent to seek for cross examination of any of the third party witnesses? - extended period of limitation - HELD THAT:- The issue has been well settled and is no longer res integra. The statement recorded from the Director of the respondent is admissible in evidence and the provisions of Section 164 of the Criminal Procedure Code are not applicable. Further it has been held that a confession statement made before the Customs Officer though retracted within the period of 6 days is an admission and binding since the customs officers are not police officers, and also as could be seen from the language of Section 108 of the Customs Act. Further, under the scheme of the Act the right to cross examination is not absolute and denial of cross examination was held to be valid upon sound logic and if the same had been done such orders of adjudication have been upheld. Undoubtedly, the adjudicating authority is not conducting a criminal trial. The decree of proof required in such matters is preponderance of probabilities and not proof beyond the reasonable doubt. Therefore, while examining the correctness of the order of adjudication, the tribunal or the court should not apply the yardstick which a court would apply to a subordinate court which has arrived at a conclusion after a full-fledged trial. The facts of the case clearly shows that sufficient material was available with the adjudicating authority which came to the notice of the authority much later upon such operations being conducted and therefore the invocation of the extended period of limitation for initiating proceedings was fully justified. At no point of time there has been any retraction of the statements recorded under Section 108 of the Customs Act. Therefore, those statements could be relied upon and for the other reasons we have given above, we are inclined to interfere with the order passed by the learned tribunal. Appeal allowed.
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2022 (12) TMI 772
Rebate claim - time limitation - Relevant Date - Petitioner s claim has been rejected on the ground that it is barred by limitation - section 35EE of the Central Excise Act, 1944 - HELD THAT:- The statutory provision governing the period of limitation would be the subject matter of discussion. Section 11B(1) of the Central Excise Act states that any person claiming refund of any duty of excise and interest may make an application for refund before expiry of one year from the relevant date. The period of limitation of one year commences from the Relevant Date. The relevant date as defined in Explanation (B) to this provision, states that for the purposes of goods exported by sea, is the date on which ship in which goods are loaded, leaves India. Thereafter the relevant date for other contingencies has been enumerated and Clause (f), the residuary clause states that in any other case, the relevant date will be the date of payment of duty. The Petitioner has admittedly paid excise duty after the alleged modification. The Petitioner has made specific assertion based on factual position in this petition. If a contingency arose which made it impossible to the Petitioner to fall within a particular classification regarding the period of limitation and the same provision provides for a residuary clause prescribing different starting point of limitation in other cases, then an opportunity needs to be given to the Petitioner to establish this factual position. The question, therefore, would arise whether the factual assertions made by the Petitioner are correct and, even if they are correct, whether the Petitioner can still take benefit of the residuary Clause (f) or whether the case falls under Clause (a) of the Explanation (B). In light of this position, we are inclined to accede to the request of the learned counsel for the Petitioner to give opportunity to the Petitioner to demonstrate this position before the authorities. Since this factual adjudication on the above aspect has not been done and the case of the Petitioner as it is before us was not considered by the authorities, we pass the following order - Appeal allowed.
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2022 (12) TMI 771
Maintainability of appeal - requirement of pre-deposit - Section 35 F of the Central Excise Act, 1944 - HELD THAT:- The appellant cannot be denied of being heard on merits in an appeal as more than 7.5% of the amount required for pre-deposit has been recovered by the Department from the petitioner's clients. The amount has to be treated as pre-deposit for the purpose of Section 35 F of the Central Excise Act, 1944 as made applicable to appeals against order passed under the Finance Act, 1994. Hence, the appeals are allowed. No costs.
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2022 (12) TMI 770
Levy of penalty u/s 25(1) of the Central Excise Rules, 2002 - evasion of duty - contravention of Rule 16B of the Central Excise Rules, 2002 - HELD THAT:- There is no evidence on record to show that Wheels Axles (Semi-finished products) sent to the hired premises was with mala fide intention or the appellant was in preparation to remove the goods subsequently. If the same were to be removed subsequently, the appellant could have removed the same from its own premises and there was no reason for them to first shift the goods to the hired premises and then remove them without payment of duty. In the overall facts and circumstances of the case, the explanation given by the appellant that since there were constraints in completing shift work of machining at their own premises and the additional premise was hired, has to be accepted. As such, the benefit of doubt is required to be extended to the appellants. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any willful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules. The imposition of penalty on both the appellants is un-called for - since Appellant No.1, had transferred the semi-finished goods for machining to the Appellant No.2, without permission from the Department, it is a procedural and technical lapse on the part of the appellants and the same requires imposition of token penalty in terms of Rule 27, which provides a maximum penalty of Rs.5,000/-. Accordingly, penalty on both the appellants is reduced to Rs.5,000/- each. Appeal allowed in part.
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2022 (12) TMI 769
CENVAT Credit - paper transaction without receipt of raw materials - Third party statements - corroborative evidences or not - suppression of facts or not - extended period of limitation - HELD THAT:- There is no other evidence on record of cash flow-back or any inculpatory statement to substantiate that CENVAT Credit was taken irregularly based on paper transaction i.e. without receipt of raw materials against invoices. The statements of the transporters are not corroborated with any evidence. Only on the basis of third party s statement, demand cannot be made. It is an undisputed fact that all the purchases were duly recorded in the statutory books of the Appellant and the goods were also found to be entered in the statutory records of the Appellant. There is no evidence which can show that the records maintained by the Appellant are not correct. Only on the basis of statement of some of the transporters, the credit is sought to be disallowed whereas the statements are in isolation with any corroboration. Therefore the entire demand of excess CENVAT Credit in absence of any corroborative evidence is nothing but based on presumption which is not permissible under the law. The Appellant is duly registered with the Department and there is no allegation in the impugned order of non-submission of any periodical returns. The Appellant is subject to regular audits. Therefore, the allegation of suppressing the facts from the Department does not hold good in the event of periodic audits of the Appellant s records. There is no other evidence in the impugned order to show that the Appellant has willfully suppressed the fact from the Department in order to evade payment of duty. As such, extended period of limitation cannot be invoked in the present case. In this case it is a fact on record that during the course of investigation, no shortage or excess of the goods were found in the premises of the Appellant. The demands are set aside. In the peculiar facts and circumstances of this case and in the absence of cogent evidence, the demands are not sustainable, as a consequence the penalties imposed upon both the Appellants are also not sustainable and are accordingly set aside. Appeal allowed.
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2022 (12) TMI 768
Levy of penalty under Rule 26(2)(i) of CER, 2002 - allegation is that these appellants have facilitated the fraudulent availment of Cenvat Credit to M./s Archon - HELD THAT:- It is clear that as regard Balaji Logistics they have issued blank LRs, which were used for issuing cenvatable invoices without supply of the goods. In respect of similarly placed appellant SAMIR TRANSPORT COMPANY AND SB ROADLINES VERSUS C.C.E. S.T. -AHMEDABAD-III [ 2022 (12) TMI 126 - CESTAT AHMEDABAD] , this Tribunal has upheld the penalty vide order No. A/11313-11314/2022 dated 31.10.2011, therefore, in this case also applying the same ratio penalty is sustainable and appeals are liable to be dismissed. Therefore, in the present case also the appellant was rightly imposed the penalty under Rule, 26(2)(i). As regard Topline Switchgear P Ltd and Riddhi Steel Tube Ltd., as per the facts discussed by the Adjudicating Authority, it was found that only invoices were issued and no goods were supplied. Therefore, it is establish that all the three appellants have helped M./s Archon for availing the fraudulent Cenvat credit. Accordingly, there are no infirmity in the impugned order imposing penalty under Rule, 26(2)(i) of Central Excise Rules, 2002. Penalties upheld - appeal dismissed.
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2022 (12) TMI 767
Levy of penalty u/r 26 (1) of Central Excise Rules, 2002 - case of the department is that the Urea was diverted and used for industrial purpose - demand of differential duty in the chain from manufacture up to the consumer - cross-examination done properly or not - HELD THAT:- The crossexamination of the witnesses was not carried out properly. The Hon ble High Court in two identical cases of GUJARAT NARMADA VALLEY FERTILIZERS AND CHEMICALS LTD [ 2020 (1) TMI 1204 - GUJARAT HIGH COURT ] and VIJAY CHANDRAKANT MULCHANDANI VERSUS UNION OF INDIA 2 [ 2017 (11) TMI 2011 - GUJARAT HIGH COURT] , considering the fact that no cross-examination was allowed but the same is necessary for passing a reasoned order by the adjudicating authority, directed the adjudicating authority to conduct the cross examination. This Tribunal in also one set of cases on identical issue in the case of Dhanlaxmi Pigments Pvt. Ltd and others vide Final Order No. A/11258-11368/2019 dated 08.07.2019 [ 2019 (9) TMI 1163 - CESTAT AHMEDABAD ] remanded the matter to the adjudicating authority. Thus, all these appeals should also be remanded to the adjudicating authority for passing a fresh order, after conducting the cross-examination of the witnesses - appeals are disposed of by way of remand to the adjudicating authority for passing a fresh order after complying the provision to Section 9D of Central Excise Act, 1944.
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Indian Laws
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2022 (12) TMI 766
Cancellation of its Certificate of Registration [CoR] to carry on its business as a Non-Banking Financial Institution - Section 45-IA of the Reserve Bank of India Act, 1934 - HELD THAT:- The facts in the instant case are similar to the one which this Court has recently had an occasion to consider in M/S. B.H.C. FINANCE AND LEASING PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2022 (8) TMI 1318 - DELHI HIGH COURT] wherein, under similar circumstances, the Court remanded the matter back to RBI for fresh consideration. Since the facts of the present petition are similar to the decision of this court in B. H. C. Finance and Leasing, in the opinion of the court, the same course of action would be appropriate - the matter shall now be considered afresh by RBI in light of the current position of law and judgments of this Court. Petition disposed off.
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