TMI Tax Updates - e-Newsletter
December 23, 2022

Case Laws in this Newsletter:

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

Articles

1. TAX DEDUCTED AT SOURCE UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

2. Revenue Expenditure or Capital Expenditure – The Contest continues

   By: Vivek Jalan

3. Non-mentioning of DIN will invalidate the revision order for violation of procedure as per CBDT’s Circular

   By: Bimal jain

News

1. Challenges and Opportunities in Scaling up Green Finance (Address by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India - December 22, 2022 - at the Business Standard BFSI Insight Summit at Mumbai)

2. Union Commerce and Industry Minister Shri Piyush Goyal appreciates roll-out of GeM services through CSC and India Post; says it will spur local procurement and further goal of Atmanirbhar Bharat

Notifications

Customs

1. 05/2022 - dated 21-12-2022 - CVD

Countervailing duty on imports of Copper Tubes and Pipes originating in or exported from Malaysia, Thailand and Vietnam - change the name of the producer viz. “M/s Kobelco and Materials Copper Tubes (Thailand) Co Ltd” to “KMCT (THAILAND) CO., LTD”, in pursuance of DGTR recommendation - Seeks to amend notification No. 2/2022- Customs (CVD) dated 28.04.2022.

GST - States

2. 24/2022-State Tax - dated 20-12-2022 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Fourth Amendment) Rules, 2022

3. 22/2022-State Tax - dated 20-12-2022 - Himachal Pradesh SGST

Himachal Pradesh Goods and Services Tax (Third Amendment) Rules, 2022

4. ERTS(T) 65/2017/Pt.III/317 - dated 15-11-2022 - Meghalaya SGST

Meghalaya Goods and Services Tax (Third Amendment) Rules, 2022

SEZ

5. S.O. 6003 (E) - dated 21-12-2022 - SEZ

Special Economic Zones set up for IT/ITES at Bommasandra Village Anekal Taluk, Bangalore District, in the State of Karnataka - De-notified area.

6. S.O. 6004 (E) - dated 20-12-2022 - SEZ

Special Economic Zone for IT and ITES at Village Purakkad, Taluk Ambalappuzha, District Alappuzha in the State of Kerala - de-notification of entire area of 13.4415 Hectares of the Special Economic Zone - Seeks to rescind Notification Number S.O. 2947 (E) dated 18th November, 2009

Circulars / Instructions / Orders

IBC

1. IBBI/LIQ/57/2022 - dated 21-12-2022

Proforma for reporting liquidator’s decision(s) different from the advice of Stakeholders’ Consultation Committee (SCC) under proviso to sub-regulation (10) of regulation 31A of IBBI (Liquidation Process) Regulations, 2016

DGFT

2. Trade Notice No. 23/2022-23 - dated 22-12-2022

Electronic filing and Issuance of Preferential Certificate of Origin (CoO) under India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA) w.e.f. 29th December 2022

3. 44/2015-2020 - dated 22-12-2022

Amendment of Appendix 2B [List of Agencies Authorised to issue Certificate of Origin (Preferential)] of Foreign Trade Policy, 2015-2020

Highlights / Catch Notes

GST

• Court Overturns Cancellation of Registration, Criticizes Inadequate Legal Consideration in Appellate Decision.

  Case-Laws - HC : Cancellation of registration of petitioner - The appeal should not be dismissed without due consideration of the ground taken in the appeal and the delay condonation application - this Court finds that the order passed by the first appellate authority, which is a cyclostyled order, is unsustainable in the eyes of law and same is hereby set-aside. - HC
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• Court Denies Blanket Stay on Confiscation Order; Considers Conditional Release of Goods and Conveyance u/s 129.

  Case-Laws - HC : Confiscation of goods alongwith conveyance - Power to invoke section 129 - While a blanket stay of the said order as prayed for cannot be granted, relief regarding release of goods and conveyance could be considered in favour of the petitioner upon imposing conditions. - HC
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• Roombr Device Classified as Automatic Data Processing Machine Under Tariff Heading 8471 41.

  Case-Laws - AAR : Classification of goods - Walltop Computer roombr - In the instant case the impugned product “roombr” comprises a central processing unit, a Bluetooth keyboard and IR pen to provide interactivity support as an input unit and a projected interactive display as an output unit. - the product squarely gets covered under the category of automatic data processing machines under the tariff heading 8471 41. - AAR
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• Transfer of Mobile App Software as Going Concern Attracts Nil GST, Says Advance Ruling Authority.

  Case-Laws - AAR : Levy of GST - transfer of mobile application software - there will be a continuity of business, as the said part of business is said to be functional and is decided to be transferred as a whole to a new owner, and thus amounts to transfer of a going concern, of the said independent part of the business. - the said activity amounting to 'Services by way of transfer of a going concern, as a whole or an independent part thereof attracts 'Nil' rate of tax without any conditions. - AAR
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• GST and 160% Compensation Cess Imposed on 'Raula Gundi' Chewing Tobacco Product.

  Case-Laws - AAR : Classification of goods - HSN Code - applicable rate of tax - Raula Gundi - The final product of the Applicant under the brand name 'Raula Gundi' is nothing but “Chewing Tobacco (without lime tube)” - Liable to GST @28% - Compensation Cess of 160% is leviable on it. - AAR
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Income Tax

• License Agreements Don't Grant Ownership: No Depreciation Claims Allowed u/s 32(1) of the Income Tax Act.

  Case-Laws - AT : Incorrect depreciation claim - fractional ownership - real ownership - Merely entering into an agreement or understanding of user of a asset, a License may be created in favour of user, however, that does not vest the user with the interest of any nature akin to owner for the purpose of Section 32(1) of the Act. So also no claim of depreciation beyond the law is allowable on mutual understanding between the owner and the user. - AT
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• Income Tax Appeals: Business Transaction with Landspace Not Deemed Dividend u/s 2(22)(e.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - CIT(A), has examined the issue threadbare and has rightly concluded that the amount obtained from Landspace is in the nature of business transaction outside the purview of Section 2(22)(e). Mere declaration in the financial statement of amount received as inter corporate loan is neither here nor there. - AT
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• Section 69 Case: No Income Addition Due to Unexplained Investment and Lack of Evidence in Unsigned Documents.

  Case-Laws - AT : Unexplained investment u/s 69 - The documents, which were found in the possession of other person, does not bear the name of the assessee, that is, the name of the assessee is not mentioned in the statement of another person. No addition can be made, if documents impounded during survey are unsigned and incomplete. No addition of unaccounted investment can be sustained when Assessing Officer had not made any further investigation. - AT
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• Natural Justice Requires Verification of New Evidence in Appeals u/s 144 & 145(3) for Fair Process.

  Case-Laws - AT : Assessment u/s 144 - Rejection of books of accounts u/s 145(3) - Once the books of accounts and other relevant records was produced by the assessee first time during the appellate proceedings before the CIT(A), the principles of natural justice demands that the other party should be given an opportunity to verify the evidence first time produced at the appellate stage. - AT
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• No Deductions or Loss Carry Forward for Assessee Without Existing Business: Depreciation, Expenses, Interest Claims Denied.

  Case-Laws - AT : Claim of expenses as against Nil income - When there is no business existed, in our opinion, the assessee is not entitled to claim deduction under the head “Depreciation, Establishment and General Expenses and Interest on Loan” and resultantly, carrying forward losses. - AT
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• Profit from Immovable Property Transfer is Business Income: Gains/Losses from Debt-Land Exchanges Are Business Operations.

  Case-Laws - AT : Correct head of income - treatment of profit on transfer of immovable properties - The assignment of debt in favour of another entity partly in exchange of land was integral part of the business activities of the assessee and any gain / loss arising on such an asset should be viewed as business profits only. The situation is no different from a situation wherein the assessee in exchange of loan debts, repossesses the assets of the borrower and sell the same subsequently in discharge of loan assets. Any resultant gains / losses arising therefrom would be part of normal business activities of the assessee. - AT
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• Assessment Order Invalidated for Exceeding Time Limit; Draft Order u/s 144C(1) Unjustified, Final Order Time-Barred.

  Case-Laws - AT : Validity of assessment order passed u/s 153(1) - Period of limitation - In this case, since, the Assessing Officer cannot invoke jurisdiction u/s.144C(1) and pass draft assessment order, question of extended 12 months period cannot be given to the Assessing Officer. Therefore, we are of the considered view that final assessment order passed by the Assessing Officer u/s.144C(3) r.w.s 143(3) of the Act, dated 28.02.2017 is barred by limitation, because time limit available for completion of assessment u/s.143(3) is 31.12.2016. - AT
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Customs

• Customs Act Penalties Reduced for Misdeclared Vehicle Imports; Notification Benefit Misuse Not Considered Fraudulent.

  Case-Laws - AT : Penalty u/s112(a), 112(b) & 114AA of the Customs Act, 1962 - fraudulent import of vehicles declared as brand new vehicles of foreign origin - the proceeding is hit by the bar of limitation. Availing of benefit of Notification, which the Revenue subsequently formed an opinion was not available, cannot lead to the charge of misdeclaration or mis-statement, etc. and even if an importer has wrongly claimed the benefit of the exemption, it is for the department to find out the correct legal position and to allow or disallow the same - the quantum of penalty is reduced @10% of the penalty imposed in each case. - AT
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IBC

• NCLT orders CIRP initiation as Corporate Debtor fails to reconcile accounts after multiple requests from Operational Creditor.

  Case-Laws - AT : Initiation of CIRP - the Corporate Debtor has tried to take advantage of their own wrong of being lackadaisical in reconciling the accounts in spite of nearly 30 requests made by the Operational Creditor to do so. In the entire discussion by the Adjudicating Authority, it is found that no notice has been taken in respect of repeated and multiple reminders sent by the Operational Creditor to the Corporate Debtor in this regard including undertaking visits to the office of the Corporate Debtor. - NCLT directed to pass order for admition of the application - AT
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• Appeal Refiled After 321 Days with New Facts; Allegations of Strategic Manipulation Acknowledged as Mistake, No Further Action.

  Case-Laws - AT : Delay in refiling of 321 days - Addition of new facts in the course of refiling which could not have been a part of the original version of the Appeals when it was filed in November 2021 thereby changing the frame of the Appeals as a clever manoeuvre has also been alleged by the Respondents. Though the allegation made is serious, however, since it has been admitted to be a mistake, we are not taking cognisance of it and refrain from making any comments thereon. - AT
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Service Tax

• Adjudicating Authority Ordered to Refund Unadjusted Pre-Deposit Not Considered Admitted Tax Under SVLDR Scheme.

  Case-Laws - AT : SVLDR Scheme - refund of pre-deposit - This amount remained as the Revenue deposit with the Department and was never adjusted. Further, this amount is not a part of the admitted tax - the Adjudicating Authority is directed to grant refund - AT
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• Appellant Challenges Rejection of Service Tax Refund Claim Due to Limitation on Works Contracts Classified as Original Works.

  Case-Laws - AT : Refund of service tax - contention of the appellant is that the tax having been paid under mistake - works contracts which is in the nature of original works - they paid tax on the balance 60% as their own liability (which was not payable) - the rejection of refund claim on the ground of limitation is not sustainable. - AT
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Central Excise

• Appeal Dismissed in Duty Refund Case on Physician Samples; Pre-Deposit Required Under Revised Appellate Scheme.

  Case-Laws - AT : Refund of duties discharged during investigation into undervaluation of physician samples - duty liability had been discharged at the option of the appellant; in the revised appellate scheme, prescribed pre-deposit pending disposal was the sole mandate of law. - Appeal dismissed - AT
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• Tax Liability Imposed on Assumptions Lacks Contextual Evaluation in Clandestine Removal Case; Circumstantial Evidence Unexamined.

  Case-Laws - AT : Clandestine removal - The tax liability has been fastened by resort to assumptions driven by absence of satisfactory explanation. Clandestine clearance, being provable only by circumstantial evidence, should be determined by reference to circumstances including complexion of the transactional engagement in which the submissions made in defence are required to be dealt with. The lack thereof in the adjudication order impugned here must be made good. - AT
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VAT

• Refund Denied for Export Goods u/r 41(4) Due to Carry Forward Instead of Claim in VAT R-2.

  Case-Laws - HC : Refund claim - export of goods - excess carried forward in the annual return - Rule 41(4) of the Haryana Value Added Tax Rules, 2003 - no refund was allowed as the petitioner had not claimed the same in the annual return filed in Form VAT R-2. Rather the petitioner had claimed excess carried forward in his annual return and the same was allowed. There was no occasion for Rule 42 to come into operation in such facts and circumstances. - HC
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Case Laws:

• GST

• 2022 (12) TMI 958
  Cancellation of registration of petitioner - rejection on the ground of delay - opportunity of hearing not provided - principles of natural justice - HELD THAT:- The appeal has been rejected on the date of its filing by a computer generated order whereby the reason shown is delay in submission of appeal has not been discussed by the first appellate authority in rejecting the appeal, nor any opportunity was provided to assessee to appear before the appellate authority and put forward his case. This Court finds that when the taxing authorities are dealing with the small traders/businessman, they should bear in mind that they are not very well educated, and well versed with the technicalities of law and procedure. They have to take help of legal world and sometime it is not possible for them to get best of legal services and there are certain lapses in compliance of formalities at their end - this Court does not hold brief for the wrong doers but only cautions the officers of the State, that when a new taxing regime has been enforced, which is only five years old, such drastic step of cancellation of registration should be avoided to the maximum extent, and if a trader or businessman is ready to comply the provisions of the Acts and Rules, the authorities may let of the traders with certain minor penalties such as imposition of fine, without taking drastic measure of cancelling his registration. The appellate authority is loathed with more responsibility, as it is a quasi judicial authority and acts as a Court, and while dealing with an appeal it should follow the principle of natural justice and before deciding and taking any decision on the appeal at least the assessee or his counsel should be heard - In the present case the appeal was filed by the assessee with delay alongwith delay condonation application on 30.03.2022. On the very same day by a computer generated order the appeal was rejected with the endorsement delay in submission of appeal . The appellate authority should follow the principle of natural justice by affording opportunity of hearing to the assessee before taking any decision. The appeal should not be dismissed without due consideration of the ground taken in the appeal and the delay condonation application - this Court finds that the order passed by the first appellate authority, which is a cyclostyled order, is unsustainable in the eyes of law and same is hereby set-aside. The matter is remitted to the first appellate authority to decide the appeal afresh after affording due opportunity of hearing to the petitioner - Writ petition stands partly allowed.

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• 2022 (12) TMI 957
  Cancellation of GST registration of petitioner - it is alleged that SCN does not specify the reason for which the registration of the petitioner is proposed to be cancelled - violation of principles of natural justice - HELD THAT:- From the tenure of the show cause notice dated 02.11. 2021, it is noticed that specific reasons are not stated as to why the registration of the petitioner is proposed to be cancelled. Supporting document are also not attached to justify the reason. Moreover, in the show-cause dated 02.11.2021, though opportunity granted, no time or date was specified, which in our opinion reflects non-application of mind by the respondent authority. As held in the decision of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] , reasons are heart and soul of any order and non-communication of the same amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice, and resultantly violates principles of natural justice. The show cause notice dated 02.11.2021 and the order of cancellation of registration dated 07.10.2022, being without reasons are cryptic and deserves to be quashed and set aside and hereby quashed and set aside - Petition allowed.

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• 2022 (12) TMI 956
  Seeking direction to the respondent to hear the case treating one case for allowing ITC even ITC non-reflection transaction in GSTR-2A - HELD THAT:- We are of the considered view that this Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. There is violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case - order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. The impugned order is set aside - petition disposed off.

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• 2022 (12) TMI 955
  Seeking release of confiscated conveyance alongwith the goods - e-way bill was wrongly generated by someone in the name of proprietor - principles of natural justice - HELD THAT:- The Appellate Authority has passed the impugned order without considering the submissions made by the petitioner and therefore, the same is required to be quashed and set aside by remanding the matter back to the Appellate Authority to pass a fresh de novo order after giving an opportunity of hearing to the petitioner. Such exercise shall be completed within a period of 12 weeks from the date of receipt of this order. At this stage, learned advocate Mr. Uchit Sheth has shown willingness to deposit the amount of tax and penalty and to furnish a bond for fine in lieu of confiscation of goods before the authority for release of goods and conveyance - Accordingly, the petitioners are directed to deposit a sum of Rs.3,00,300/- towards tax and a sum of Rs. 6,00,600/- for penalty and fine in lieu of confiscation of conveyance, totalling Rs. 9,00,900/- before the respondent authorities within a period of two weeks from the date of receipt of this order on furnishing a bond of Rs. 60,06,000/- within a period of two weeks from receipt of this order. The respondent authority is therefore, directed to release the goods and conveyance. Appeal allowed.

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• 2022 (12) TMI 954
  Confiscation of goods alongwith conveyance - whether when the goods are in transit, the authorities are entitled to invoke Section 129 of the Act or not? - HELD THAT:- What is prayed by the petitioner herein by way of the interim relief is to stay the operation and implementation of the order in FORM MOV-11 No. 182 dated 31.05.2022, confiscating the goods and conveyance of the petitioner and demanding tax, fine and penalty. While a blanket stay of the said order as prayed for cannot be granted, relief regarding release of goods and conveyance could be considered in favour of the petitioner upon imposing conditions. As could be seen from the impugned order, the penalty amount is Rs. 12,35,430/-. The fine and other charges are demanded to the extent of Rs.68,63,500/- and the tax is demanded of Rs.12,35,430/- - it is directed that the respondents shall release the goods and conveyance of the petitioner, confiscated and detained pursuant to the aforementioned order No. 182 dated 31.05.2022, subject to conditions imposed. The goods and conveyance of the petitioner be released by the authorities - the petitioner deposits the amount of tax of Rs. 12,35,430/- - petitioner deposits the amount of penalty to the tune of Rs. 12,35,430/- - petitioner furnishes bond to the tune of Rs. 68,63,500/- towards the amount of fine. Application allowed.

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• 2022 (12) TMI 953
  Levy of GST - Rent/ Lease received from Lessee and for filing the return relating to Renting / Leasing of the said premises - utilization of balance available in Electronic Credit Ledger (Input Tax Credit) in respect of purchase of Raw material, consumables, capital goods relating to the manufacture of Granite Slabs to discharge GST liability of Rent for the premises given for Rental/Lease basis - utilization of balance in Cash Ledger to discharge GST liability (Output Tax) of Rent for the premises given for Rental/ Lease basis. Whether the applicant can continue with existing registration for discharge of GST liability and also for filing of returns relating to their new business? - HELD THAT:- The applicant intends to know whether a separate registration needs to be taken or otherwise for conduct of his new business. It is seen, from the said question, that the applicant does not intend to know whether they are required to be registered or not. The applicant s only concern is whether registration can be continued or a fresh registration needs to be taken for their new business, which is not covered under Section 97 (2) (f) i.e. whether applicant is required to be registered and hence the said question cannot be answered. Utilisation of the ITC available in their Electronic Credit Ledger - HELD THAT:- The admissibility or entitlement of credit of tax charged to a registered person, on any supply of goods or services or both, which are used or intended to be used in the course or furtherance of business and the said amount shall be credited to the electronic credit ledger of such registered person, in terms of Section 16 of the CGST Act 2017, subject to the conditions under Section 17(5) of the said Act relevant rules. It is pertinent to mention here that the admissibility of the ITC is concerned till the credit of the said amount into the electronic credit ledger. The applicant in the instant question seeks advance ruling on the issue of utilization of ITC available in the Electronic Credit Ledger and thus the question is not covered under the issues specified in Section 97(2) of the CGST Act 2017. Utilization of amount available in their Electronic Cash Ledger towards discharge of GST liability on rental/lease income, which is not covered under the issues specified in Section 97(2) of the CGST Act 2017 - HELD THAT:- It is observed on examination that the notification 2/2019-Central Tax dated 29.01.2019 was issued to appoint the date i.e. 1.2.2019, from which certain provisions of CGST Act shall come into force. Further Notification No.16/2019-Central Tax dated 29.03.2019 is issued, in terms of Section 164 of the CGST Act 2017, notifying the amendment to the CGST Rules 2017 and is also applicable to all. Thus the notifications are not relevant to the questions raised and hence the questions are not covered even under applicability of a notification issued under the provisions of this Act , under Section 97(2)(b) of the CGST Act 2017. In fact the applicant filed the instant application seeking advance ruling in respect of the questions, claiming that the issues are allegedly covered under Section 97(2)(d) and (e) of the CGST Act 2017. The application is not maintainable as the questions on which advance ruling is sought by the applicant are not covered under the issues specified in Section 97 (2) of the CGST Act 2017 and hence the instant application is liable for rejection in terms of Section 98(2) of the CGST Act 2017.

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• 2022 (12) TMI 952
  Benefit of N/N. 12/2017 - KUIFDC, an intermediary agency between ULBs/Town Municipal Councils functioning as Programme Management Unit (PMU) through the divisional offices, implementing agencies of the Local Government Bodies and State Line Departments in the efficient monitoring of sub-programmes - amicable settlement - Government Entity or not - HELD THAT:- The applicant provided consultancy services to KUIDFC for the program called NKUSIP, involving supervision and programme management consultancy for the PMC works undertaken in divisions of Bellary and Gulbarga. Accordingly, the applicant entered into an agreement dated 26.07.2017 and completed the project during 2019. The instant application was filed on 08.11.2022, after completion of the said project in 2019, as the applicant intends to seek clarity as to whether services rendered to KUIDFC are exempted from GST or not. In the instant case the maintainability of the application needs to be examined. It is pertinent to mention here that the word being is the present participle of the verb be and used to form tenses in the progressive (or continuous) aspect. A present participle is a verb form (or verbal) made by adding-ing to the base that often functions as an adjective. Use of present participle denotes present and continuing action. Thus the phrase being undertaken refers to an ongoing and continuous supply. In the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to a completed supply, provided by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection. The application filed by the Applicant for advance ruling is rejected, in terms of Section 98(2) of the CGST Act 2017.

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• 2022 (12) TMI 951
  Classification of goods - Walltop Computer roombr - classifiable under tariff heading 8471 41 90 or not - HELD THAT:- The product roombr , in the instant case is a machine capable of performing all the functions envisaged under Note 5(A) to Chapter 84, simultaneously. It has 16GB RAM internal storage of 1 TB and hence is capable of storing the programs / data for execution of the programs; it has Intel 10th/11th Generation i5/i7 processor mother board and hence can be freely programmed in accordance with the requirements of the user; can also perform arithmetical computations specified by the user and can execute a processing program take logical decisions during the running of the said program. Therefore the impugned product squarely gets covered under category of automatic data processing machines. In the instant case the impugned product roombr comprises a central processing unit, a Bluetooth keyboard and IR pen to provide interactivity support as an input unit and a projected interactive display as an output unit. Therefore, even on this aspect also the impugned product squarely gets covered under the category of automatic data processing machines under the tariff heading 8471 41. The heading 8471 41 has three sub headings covering Micro Computer, Large or main frame computer and other. In the instant case the impugned product is neither a micro-computer nor a large or main frame computer and thus it gets covered under others. Therefore the impugned product is classifiable under tariff heading 8471 41 90.

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• 2022 (12) TMI 950
  Levy of GST - transfer of mobile application software - whether the impugned transfer of part of the applicant s business related to LoanFront App qualifies to be a service by way of transfer of going concern and thereby exempted or not in terms of N/N. 12/2017? - HELD THAT:- The seller, engaged in the business of providing various services to the financial institutions such as Banks NBFCs, has decided to sell its business (defined in the agreement) to the buyer (a NBFC registered with RBI) on a slump sale basis. Clause 1.1(c) read with Annexure I to the agreement defines the Assests to mean the mobile application called LoanFront which includes all the related software developed for its functionality such as Domain name, LMS software, Backend API, Websites, Analytical tools and Dashboards etc., and Business Intelligence / IP related to LoanFront application. Further clause 1.1 (k) defines the liabilities to include the Gratuity of the Employees of Rs.6,90,726/-. The statement of facts conveys that the transfer of business pertains to LoanFront app sought to be sold is a fully functional part of the business and the transaction contemplates the transfer of the entire aforesaid business to a new person (WPL), who would not only enjoy a right over the assets but shall also take over the liabilities. It thus postulates that there will be a continuity of business, as the said part of business is said to be functional and is decided to be transferred as a whole to a new owner, and thus amounts to transfer of a going concern, of the said independent part of the business. Further vide SI.No 2 of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017, the said activity amounting to Services by way of transfer of a going concern, as a whole or an independent part thereof attracts Nil rate of tax without any conditions.

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• 2022 (12) TMI 949
  Classification of goods - HSN Code - applicable rate of tax - Raula Gundi - HELD THAT:- The resultant product of the applicant is a combination of various ingredients/raw materials intended for chewing needs. The predominant ingredient is Tobacco dust which constitutes about 50% of the product and other ingredients are added to it as per required proportion to make it consumable. In the process of manufacturing the product, the raw materials used by the Applicant undergo a set of processes and emerge as Chewable Tobacco Gundi which is marketable/consumable. Therefore, the product prepared and sold by the Applicant is a Manufactured Tobacco product for chewing . Once it is held that the product is Manufactured Chewing Tobacco , the classification of the product is under HSN Code 24039910 which specifies Chewing Tobacco under the head 2403-Other manufactured tobacco . Further, as per Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, the said item appears at Sr. No. 15 of Schedule-IV of the said notification [on which GST liability is 28%. As per Notification No.01/2017-Compensation Cess(Rate) dated 28.06.2017, Chewing Tobacco (without lime tube) appears at SI. No.26 of the said notification (on which Compensation Cess is 160%) . Furthermore, it may be noted that the value for the purpose of GST computation will be the transaction value plus basic excise duty, NCCD and any other amount as prescribed in section 15 of the GST Act, 2017.

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• Income Tax

• 2022 (12) TMI 948
  Condone the delay in making the third payment under the Income Declaration Scheme, 2016 - Scope amendment to the scheme by Finance (No.2) Act of 2019 - HELD THAT:- In terms of the said amendment, notification dated 13th December, 2019 was issued by the Ministry of Finance by which the payment could be made on or before 31 st January, 2020. Since this amendment has been given retrospective effect and the appellant having paid third installment well before the notified date, this Court is of the prima facie view that the benefit of such amendment can be extended to the assessee. It appears that the representation given by the appellant to the PCIT 8 (Kolkata) dated 13th January, 2020 was not answered and stated to be still pending before the authority. Even much earlier, AO had completed the assessment. Thus, the assessee is left in a piquant situation and is before this Court for necessary relief. While upholding the view taken by the learned Single Bench, we are inclined to grant liberty to the appellant to approach the respondent authorities by way of fresh representation in which the amendment made by Finance (No.2) Act of 2019 as well as notification dated 13th December, 2019 can be placed before the concerned authority. Added to the fact that the third installment had been paid by the appellant well before the cut off date together with interest and if such representation is given to the appropriate authority, the same shall be considered and a speaking order be passed on merit and in accordance with law within a period of three weeks from the date of receipt of server copy of this order. AO is directed not to initiate any coercive step against the appellant for recovery of the tax and penalty pursuant to the assessment, which was framed on 26th December, 2017. The appellant is directed to enclose a copy of the representation dated 13th January, 2020 along with the said fresh representation, which has been directed to be submitted in terms of the above order.

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• 2022 (12) TMI 947
  Addition u/s 68 - unexplained credit - sale of penny stock company - bogus Long-Term Capital Gain - HELD THAT:- Tribunal via the impugned order has noted, that the assessing officer has not applied his mind, and has merely relied upon the Investigation Report. According to the Tribunal, as to whether or not the assessee was aware of the fact that the shares of the aforementioned companies which had been bought were through penny stocks, was an issue of fact. It also appears from the record, that SEBI had carried out investigations against 239 persons. Tribunal records, that the names of the aforementioned companies were not in the list of the said 239 persons. As neither the Assessing Officer conducted any enquiry nor has brought any clinching evidences to disprove the evidences produced by the assessee. The report of Investigation Wing is much later than the dates of purchase /sale of shares and the order of the SEBI is also much later than the date of transactions transacted and nowhere SEBI has declared the transaction transacted at earlier dates as void . According to us, these being findings of fact, they cannot be interfered by us. We are also informed, that the appellant/revenue had preferred appeals against the very same order in the case of Ms Karuna Garg and Ms Krishna Devi [ 2022 (12) TMI 858 - DELHI HIGH COURT] - These appeals was dismissed by a coordinate bench.

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• 2022 (12) TMI 946
  TDS u/s 194J - Non deduction of tax from the payment of Royalty - CIT(A) deleted the addition - DR has submitted that CIT(A) has erred in deleting the disallowance made by the AO u/s 40(a)(ia) without considering th fact that even through the expenditure is amortised under Rule 9A of the Income Tax Rules, disallowance under section 40(a)(ia) of the Act has to be made - HELD THAT:- We have gone through the above order passed by the CIT(A). Without considering the issue properly, CIT(A) has deleted the addition made by the AO. Thus, the order passed by the ld. CIT(A) has to be reversed. Accordingly, we reverse the order passed by the ld. CIT(A) and allow the appeal filed by the Revenue.

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• 2022 (12) TMI 945
  Incorrect depreciation claim - fractional ownership - real ownership - assets are held/ utilized jointly with a sister concern as they share same premises for conducting business operations and accordingly the assets are capitalized in the proportion of ownership and therefore proportionate depreciation has been claimed - HELD THAT:- Assessee does not dispute the fact that only one asset is the subject matter of dispute and the same was purchased by sister concern. The invoice is in the favour of the sister concern thus, the defacto and de-jure owner happens to be the sister concern. Merely because it has allowed to be share it to the sister concern, the assessee/ appellant, that does not give any right, title or interest in the nature of ownership to the assessee so as to be entitled for claim of depreciation u/s 32 of the Act. Said section provides that to claim depreciation assessee should be the owner of the asset and the asset must be used for the purposes of business or profession. Here in the case in hand both the requirements are not fulfilled as assessee is not the owner of the asset and the asset is not used for the purpose of business or profession of the owner, which is the sister concern but was used for the purpose of business of the appellant which was not the owner Merely entering into an agreement or understanding of user of a asset, a License may be created in favour of user, however, that does not vest the user with the interest of any nature akin to owner for the purpose of Section 32(1) of the Act. So also no claim of depreciation beyond the law is allowable on mutual understanding between the owner and the user. The grounds raised have no substance. The appeal of assessee is dismissed.

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• 2022 (12) TMI 944
  Estimation of profit @5% of the turnover - profit from liquor business - HELD THAT:- As in the instant case, as mentioned by the AO neither the assessee has maintained any books of accounts nor any books of accounts were produced for verification either at the time of search proceedings or during the post search proceedings or assessment proceedings. Therefore, the same decision, in our opinion, is not applicable to the facts of the present case. Even other wise also, the assessee during the course of assessment proceedings as well as appeal proceedings before theCIT(A) had requested to adopt the net profit rate of 5%. We do not find any infirmity in the order of the CIT(A) restricting the profit rate at 5% of the turnover. The ground raised by the assessee on this issue is accordingly dismissed. Addition as non agricultural income - HELD THAT:- Assessee, during the course of assessment proceedings, had not produced the requisite details as called for by the AO. However, before the ld.CIT(A), the assessee had filed the copy of certificate from the VRO regarding agricultural income along with other documents. Although, during the remand proceedings, the assessee did not appear, however, these documents were very much available with the AO and he could have conducted necessary enquiries. However, the AO was waiting for the assessee to appear and did not conduct any independent enquiry. Since, the agricultural income shown by the assessee is very less and since the assessee had filed a certificate from the VRO regarding the agricultural income along with other documents, therefore, considering the totality of the facts of the case including the smallness of the amount and this being an old matter, we direct the AO to restrict such disallowance to 10% of the income shown. Assessee ground is partly allowed.

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• 2022 (12) TMI 943
  Deduction u/s.80P(2)(a)(i) - interest received on Fixed Deposits kept with Bank - deduction was claimed with reference to interest income earned from banks which was not eligible for deduction u/s.80P - HELD THAT:- The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd.[ 2014 (9) TMI 833 - DELHI HIGH COURT] not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] - No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. When we consider the effect of this decision, it turns out that the same is not germane to case under consideration in view of the position that the primary claim of the extant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act. We, therefore, overturn the impugned order on this score and direct to grant deduction u/s.80P(2)(a)(i) of the Act. Assessee appeal is allowed.

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• 2022 (12) TMI 942
  Intimation framed u/s 143(1) - Foreign tax credit denied - assessee had derived salary income from Australia with which Indian Government had entered into DTAA - HELD THAT:- CIT(A) had chosen the convenient method to deny the said benefit to the assessee by going into the technical ground stating that intimation u/s 143(1) had lost its identity pursuant to section 154 order passed by Ld. AO. As per the provisions of the Act, against the intimation u/s 143(1) of the Act, the appeal shall lie to the CIT(A). CIT(A) need not take cognizance of section 154 proceedings which had happened subsequent to the filing of appeal. Though, the revised return in the instant case had been filed by the assessee beyond the time limit prescribed u/s 139(4) of the Act altogether with the revised Form-67, the grievance of the assessee had to be addressed on merits. We deem it fit and proper to remand this appeal to the file of AO to verify the veracity of the claim made by the assessee in the revised return and revised Form-67 in the interest of substantial justice to the assessee. We hold that the substantial justice would prevail over technical considerations. Accordingly, the ground raised by the assessee is allowed for statistical purposes.

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• 2022 (12) TMI 941
  Revision u/s 263 - As per CIT no enquiry which has been made by the AO on the applicability of provisions of section 115 BBE - HELD THAT:- The order passed by the AO is not erroneous and prejudicial to the interests of the Revenue. The issue which was the subject matter of 263 proceedings has been specifically discussed by the AO during the course of assessment and therefore it is not a case where there has been no enquiry which has been made by the AO on the applicability of provisions of section 115 BBE in the instant facts or that there has been a non-application of mind by the AO during the course of assessment proceedings. As observed that the amendment to provisions of section 115 BBE of the Act came into effect after survey was conducted on the assessee, and consequently, in the light of judicial precedents highlighted above, this is not a fit case for invoking the provisions of section 263 of the Act. Appeal of the assessee is allowed.

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• 2022 (12) TMI 940
  Excess deduction claimed u/s 80U - unexplained money u/s 69A - A.O. was silent about the section under which the addition was made - AO has calculated tax u/s 115BBE - HELD THAT:- Assessee has not challenged the additions made by the AO u/s 80U and 80G of the Act, but has only challenged the computation of tax liability by the AO u/s 115BBE - With respect to the first contention of the assessee that unless there is a specific finding that addition under section 80U is made u/s 68 or 69 then tax cannot be imposed under section 115BBE of the Act, we are in agreement with the contention of the assessee that once the AO has not invoked the provisions of section 68 to 69 tax cannot be imposed under a deeming provisions of section 115BBE - In the instant case, AO made disallowance of deduction claimed u/s. 80U (permanent disability) of the Act but did not do any discussion as to how the case of the assessee is covered by the provisions of section 68 or 69 of the Act so as as to compute tax liability u/s. 155BBE. Non production of receipt as Unexplained money u/s 69A - Whether ncorrect claim of donation under section 80G cannot be made under section 69A? - HELD THAT:- As we observe that section 69A of the Act can be invoked only in case where the assessee is found to be the owner of any money, bullion, jewellery or other valuable article which is not recorded in the books of account and the assessee offers no explanation about the nature and source of acquisition of such money, bullion, jewellery or other valuable articles. Therefore, AO has erred in facts and in law in invoking the provisions of section 69A in respect of incorrect claim of deduction under section 80G - Accordingly, since provisions of section 69A cannot be invoked in respect of disallowance made under section 80G and without a specific finding that the assessee is in possession of any unexplained money, bullion, jewellery or other valuable article in his possession, accordingly, AO cannot compute tax liability under section 115BBE with respect to disallowance for incorrect claim u/s 80G. Appeal of the assessee is allowed.

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• 2022 (12) TMI 939
  Deemed dividend u/s 2(22)(e) - receipt of amount from the lender co. where the assessee holds substantial interest is in question - credibility of explanation offered by the assessee to support its claim of business transaction qua a loan transaction of ordinary nature - assessee has inter alia undertaken certain related party transactions - as found that the assessee has received loans from a company wherein the assessee holds 20% equity shares and thus a holds substantial interest - HELD THAT:- The assessee claimed to have entered into an MOU dated 2nd April, 2012 with the lender company seeking to part with 50% right therein in favour of Landspace. As claimed, the MOU was acted upon and the money was transferred by the lender to the assessee in consideration of acquisition of rights in the property allotted in favour of the assessee by the builder. An Agreement to Sale (ATS) dated 13.07.2015 was thereafter was entered into jointly with Landspace (confirming party) as proposed sellers with the proposed buyer M/s. Garrison Developer. MOU was duly acted upon at a later point of time. The resultant profit were also claimed to have been shared equally as provided in MOU to support the inherent character of money received from Landspace. These facts clearly vindicates the claim of the assessee that the amount received was in consideration of transfer of rights in the property allotted and thus cannot be regarded as a loan transaction of ordinary nature. To support the nature of money received from Landspace, the assessee claims that such MOU has been acted upon. Where the rights in the property was sold and profits have been shared as business receipt by Landspace, the other considerations fades into insignificance. CIT(A), has examined the issue threadbare and has rightly concluded that the amount obtained from Landspace is in the nature of business transaction outside the purview of Section 2(22)(e). Mere declaration in the financial statement of amount received as inter corporate loan is neither here nor there. The nature of amount received is vouched by the subsequent actions. Thus, propriety of such explanation can hardly be questioned. Hence, without further delineation of factual matrix, we see no perceptible justification in the allegations made by the Revenue seeking to displace the character of transaction. We thus endorse the view taken by the CIT(A) and hence decline to interfere. Appeal of the Revenue is dismissed.

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• 2022 (12) TMI 938
  Rectification of mistake u/s 154 - seeking amendment in the Intimation u/s. 143(1)(a) in respect of the income claimed as wrongly returned, i.e., by way of a mistake - HELD THAT:- AO in the instant case would be required to decide as to whether the mistake in the return furnished by the assessee is, or lies, as claimed by him, in disclosing mistakenly additional income (Rs. 14.05 lacs) or, as inferred by the Revenue, in computing his tax liability incorrectly, i.e., corresponding to the additional tax liability on the said additional income. That the tax amount computed agrees with the income claimed as returned incorrectly, makes it an either or situation, so that, as afore-stated, either could be correct, and the same has to be determined in the conspectus of the case. The insistence of the Revenue on one, in preference to the other, without in any manner stating as to why it considers it as so, cannot be sustained. In fine, the same, i.e., the decision one way or the other ought to be a result of a considered opinion based on material on record, per a speaking order. The assessee in this regard, claims that the impugned income is of a non-existent business, returned by mistake, with his balance-sheet for the current year being in continuation of the closing balance-sheet for the immediately preceding year and, further, and similarly, the balance-sheet for the succeeding year also in agreement with that for that current year, so that all the three represent a continuum, even as additional income is only for the current year. This argument, surely valid and corroborative of his claim, made per submissions before the ld. CIT(A) do not find any mention in the impugned order. The matter, in view of the foregoing, is restored back to the file of the AO for adjudication afresh on merits and in accordance with law per a speaking order, after hearing the assessee, being also the mandate of sec. 154. Needless to add, the AO shall require the assessee to file all the required documents, which must be contemporaneous and proven, in support of his return of income. In this context we find on record (PB-1, pg. 9) a return for the current year reflecting the income claimed as correct, filed on 14/11/2018. How has the same been filed is not clear. Further, it may be, in view of our stating of either of the two mistakes as possible, both of which though simultaneously cannot be, does not make the issue contentious or debatable. We may clarify that we are conscious that the Intimation in the instant case was passed on 09/5/2013, while the rectification application under appeal is that filed on 27/11/2018, so that it is apparently outside the time limit u/s. 154(7). In Hind Wire Industries Ltd. v. CIT [ 1 995 (1) TMI 2 - SUPREME COURT ] it stood explained that the expression from the date of the order sought to be amended in section 154(7) was not qualified in any way, and it did not necessarily mean the original order: it could be any order including the amended or rectified order. The assessee has in the instant case, as afore-noted, made several applications, the first being on 07/7/2013, with the first responded to by the Revenue being dated 03/12/2015. The proceedings, accordingly, are valid.

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• 2022 (12) TMI 937
  Revision u/s 263 by CIT - treating the order of assessment passed u/s.143(3) r.w.s 153A as erroneous - HELD THAT:- The scope of making assessment of total income u/s.153A of the Act in an unabated assessment proceedings is limited and can be only of assessing income that is not disclosed which is detected or which emanates from material found in the course of search of the Assessee, as has been held by M/S. Delhi International Airport Ltd.[ 2021 (11) TMI 928 - KARNATAKA HIGH COURT] In assessee s case the assessment is completed u/s.143(3) r.w.s. 153A and as per the ratio laid down by the Hon ble High Court the scope of making additions by the AO is restricted only to income that is not disclosed which is detected or which emanates from material found in the course of search which are incriminating. The impugned issue of assets written off and the expenditure claimed without TDS for which the PCIT has invoked the revisionary power are not arising out of incriminating material and have already been disclosed in the financials of the assessee. AO therefore could not have made any addition towards the same. We therefore are of the considered view that treating the order of assessment passed u/s.143(3) r.w.s 153A as erroneous on this ground is not tenable and that the PCIT is not correct in invoking the revisionary powers u/s.263. Accordingly the order passed u/s.263 by the PCIT is quashed.

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• 2022 (12) TMI 936
  Unexplained investment u/s 69 - Reliance on un-signed, unstamped, Satakhat, which has not been registered and is found from CD of computer of a person not connected with the assessee - violation of principle of natural justice - additions made in absence of providing opportunity of cross-examination of the persons - HELD THAT:- Hon ble Supreme Court of India, in the case of Krishnachand Chelaram [ 1980 (9) TMI 3 - SUPREME COURT] and Andaman Timber Industries Vs. Commissioner of Central Excise[ 2015 (10) TMI 442 - SUPREME COURT] has held that additions without providing the opportunity of cross examination is in violation of natural justice. We note that additions made in absence of providing opportunity of cross-examination of the persons, whose statement has been relied upon for making the additions is violation of principle of natural justice. We also note that not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witness were made the basis of the impugned order is a serious flaw which makes the order nullity. We note that same view was expressed in the case of Eastern Commercial Enterprises [ 1993 (12) TMI 26 - CALCUTTA HIGH COURT] wherein it was held that it is a trite law that cross examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against the party unless the party is put on notice of the case made out against him. The documents, which were found in the possession of other person, does not bear the name of the assessee, that is, the name of the assessee is not mentioned in the statement of another person. No addition can be made, if documents impounded during survey are unsigned and incomplete. No addition of unaccounted investment can be sustained when Assessing Officer had not made any further investigation. No statement recorded of land owners or purchasers as mentioned in the sale deed by AO to corroborate contents of impounded Satakhat. No specific query raised in respect of impounded Satakhat or the assessee to Turmish or Meera Kama by investing wing or AO. No addition can be made in respect of un-signed, unstamped, Satakhat, which has not been registered and is found from CD of computer of a person who is not connected with the assessee. In view of these facts and circumstances and in law, the addition so made by the AO is without any basis, without any corroborating evidences and without allowing due opportunity of cross-examination to the assessee and is therefore, unsustainable in law. Therefore, we delete these additions. Appeals filed by the assessee are allowed.

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• 2022 (12) TMI 935
  Addition u/s 68 - difference in share premium amount - as per AO instead of following method of Fair Market Value of shares as prescribed under Rule 11UA of the Income Tax Rules, 1962, the assessee has worked out the value of shares based on the NAV method - HELD THAT:- All the Five investing companies are shell/conduit companies having no business of its own , and are merely created to launder money in order to convert unaccounted money of the investing companies under the garb of share capital/share premium to bring it into the books of the invested company under the farce shell of legitimate share capital and share premium , with an intent and view to defraud revenue and evade taxes. Thus, what is apparent is not real. We hold that the share capital including share premium raised by the assessee company, to the tune of Rs. 1,51,20,000/- from these five investing companies based at Kolkatta , is infact the undisclosed income of the assessee which was inducted by way of share capital and share premium in the assessee company by laundering through these five investing companies based at Kolkatta, and the assessee company fails to prove the creditworthiness of these five investing companies as well genuineness of these transactions, and the requirements of Section 68 read with newly inserted proviso are not fulfilled/satisfied, and hence we uphold the appellate order passed by ld. CIT(A) which in turn confirmed the addition made by the AO in the assessment order, to the tune of Rs. 1,51,20,000/- u/s 68 read with Section 115BBE of the 1961 Act. Addition u/s 56(2)(viib) with respect to 170000 equity shares of Rs. 10 face value issued by the assessee company at an issue price of Rs. 90 per share including share premium of Rs. 80 per share , issued by the assessee company during the year under consideration to thirteen investors - In a case of closely held company in which public is not substantially interested , which receives in any previous year , from any person resident any consideration for issue of shares that exceeds the FMV of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares, shall be treated as income from other sources and brought to tax. There are certain exceptions provided in Section 56(2)(viib). The Explanation to Section 56(2)(viib) provide the manner of computation of Fair Market Value. The method prescribed as is provided under Section 56(2)(viib) are provided in Rule 11UA of Income-tax Rules , 1962. There was amendment in Rule 11UA by Income-tax(Fifteenth Amendment Rules, 2012, w.e.f. 29.11.2012. The assessee has received consideration for issue of shares in May/June, 2012, but the date of allotment of shares is not furnished by the assessee . AO has computed Fair Market Value of shares at Rs. 25.29 per equity shares, but the AO has not furnished any details/break-up of the working to arrive at FMV of Rs. 25.29 per equity shares. The assessee has worked out FMV of Rs. 87 per equity share. No valuation report is furnished by the assessee. The valuation as determined by the assessee of Rs. 87 is on NAV basis. The assessee raised in the year 2009-10 ( date of incorporation of the assessee 23.06.2009) share capital by issuing equity shares of Rs. 10 each at share premium of Rs. 65 per share , to three Kolkatta based investing companies, which held more than 80% of share capital of the assessee, but while submitting the list of shareholders as at 31.03.2011 , these three companies are not reflected as shareholders. The assessee has not given any explanation for the same. The assessee s valuation of Rs. 87 per share as FMV vis- -vis face value of Rs. 10 per share , is mainly/majorly attributable to share premium received from these three investing companies based at Kolkatta in the year 2009-10. Three investing companies are untraceable - The issue has not been comprehensively dealt with by the authorities below. In our considered view, this matter need to be restored back to the file of the AO for fresh determination of income chargeable to tax u/s 56(2)(viib), after giving opportunity of being heard to the assessee. Thus, this issue is restored to the file of the AO for fresh denovo adjudication, after giving proper opportunity to the assessee. The assessee shall be allowed by AO to submit evidences/explanation in its defence, which shall be adjudicated by AO on merits in accordance with law. Appeal filed by assessee partly allowed for statistical purposes.

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• 2022 (12) TMI 934
  Addition was based on a statement u/s 132(4) - Capital gain computation - cost of construction at Rs.2200/- per sq.ft - assessee argued addition cannot be made solely on the basis of 132(4) statement without bringing any corroborative material - HELD THAT:- As held in various decisions that though the admission u/s 132(4) is an extremely important piece of evidence, but it cannot be said to be conclusive and it is open to the person who made it to show it that the impugned statement has been incorrectly made and the person making the statement should be given proper opportunity to show that it does not show the correct state of facts. In the instant case, we find the assessee during the course of his statement recorded during the course of search u/s 132(4) in reply to question No.12 had stated that the approximate cost of construction is Rs.2500/-. Further, during the course of P.O operation dated 22.01.2018, the M.D of the assessee had categorically stated that the cost of construction as per the agreement entered between Shri M. Satchidananda Rao with the Developer M/s. Namishree Infratech Project was Rs.1600/-. During the course of assessment proceedings; the assessee had furnished a confirmation letter from the developer M/s. Namishree Infratech Project vide letter dated 21.10.2019 that the estimated cost of construction was likely to be Rs.1600/- for the total project. AO had completely disregarded the same although he is also the Assessing Officer of the Developer. In the instant case, we find the addition was based solely on the basis of the statement of the Director of the assessee company at the time of search in the statement recorded u/s 132(4) but not backed by any other tangible or cogent evidence. Addition cannot be made solely on the basis of statement recorded u/s 132(4) without any corroborative evidence to substantiate the same especially when the assessee has retracted from his earlier statement by producing cogent evidence which has not been rebutted by the Assessing Officer in any manner - Appeal filed by the Revenue is dismissed.

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• 2022 (12) TMI 933
  Assessment u/s 144 - Whether AO ought to have invoked the provisions of Section 145(3) before framing the assessment u/s 144? - HELD THAT:- Only when the AO proposed to frame the assessment on best judgment basis the estimation of income is required to be made but when the AO has made specific disallowance of the claim then this proposition of estimation of income does not apply. In any case, the AO while framing the assessment cannot take an arbitrary decision or make improper additions but the AO being an adjudicating authority is supposed to assess the real income of the assessee. We do not subscribe to this reasoning of the CIT(A) that the AO ought to have invoked the provisions of Section 145(3) before framing the assessment u/s 144 of the Act. CIT(A) duly acknowledged the fact that the assessee did not produce the books of account, bills and vouchers as well as other relevant records before the AO despite the notices issued u/s 142(1) of the Income Tax Act and thereby, the assessee has failed to prove its claim on account of current liabilities as well as the expenditures and particularly to establish that these expenses are incurred wholly and exclusively for the business of the assessee. Therefore, instead of allowing the assessee to discharge its primary onus in support of these claims, the CIT(A) on its own ask the assessee to produce the complete books of accounts, relevant vouchers and supporting documents including the copy of sale-deeds/agreements. Once the books of accounts and other relevant records was produced by the assessee first time during the appellate proceedings before the CIT(A), the principles of natural justice demands that the other party should be given an opportunity to verify the evidence first time produced at the appellate stage. CIT(A) without giving any reason in the impugned order as to why the books of accounts and other relevant material produced by the assessee was not referred to the AO for his examination and report has passed the impugned order. Both the parties have fairly agreed before us that the matter can be restored to the file of AO for de novo assessment. This in our considered opinion is a clear violation of principles of natural justice, as the AO was not even given an opportunity to verify this material/evidence and give his comments/report. As in the facts and circumstances of the case and in the interest of justice we set aside the impugned order of the CIT(A) and the matter is remanded to the record of the AO for passing the assessment order afresh after verification and examination of the relevant record, books of accounts to be produced by the assessee as well as affording a proper opportunity of hearing to the assessee.

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• 2022 (12) TMI 932
  Addition u/s 68 - on money receipts - unexplained credit - Addition being the amount received in cash on booking of flat as per their seized diary - HELD THAT:- AO has not investigated the facts if the assessee returned part of cash component to Bhajiyawala Group or not nor verified if remaining of Rs. 21 lacs were offered in the subsequent year or not. AO has brought the entire amount to tax under section 68. So far as other alternative submissions of the assessee before assessing officer as well as submissions made before me, is that only the income component of such alleged on money may be considered for making additions and not the entire money. As find that division bench of this Tribunal while considering the similar issue for taxing the income component of on money in Enn Enn Corporation[ 2022 (4) TMI 1481 - ITAT SURAT] by following the decisions of Tribunal in other case sustained/ upheld the addition of 20% of alleged on money . However, no straight jacket formula can be applied in such case, therefore, direct the assessing officer to restrict the addition to the extent of 25% of Rs. 48 lacs. Ground of the appeal is partly allowed.

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• 2022 (12) TMI 931
  Determining the income of the assessee as against Nil income - Non existence of business of assessee - commencement of business - Disallowance of carry forward and set off of Depreciation, Establishment and General Expenses and Interest on Loan - assessee is a Co-operative Society (AOP) and derives income from rent and other income - HELD THAT:- We note that before the CIT(A), it was claimed that the assessee still intends to continue the business of distribution of electricity, but however, there was no evidences were shown before the CIT(A) as the assessee has every chance in continuing its business operations. CIT(A) clearly held that the assessee is not entitled to claim depreciation, establishment and general expenses and interest on loan as the assessee handed over electricity distribution and power system including all electrical system, sub-stations, overhead lines, service lines, office and associated facilities like lands, building, works, material, stores and plants in the area of its operation to MSEDCL w.e.f. 01-02-2011 which means the assessee has no business existed as on the end of F.Y. 2011 itself. The only contention has been made from 2011 to the year under consideration i.e. 2015-16, even before us, that the assessee s renewal application is pending before the competent appellate authority. When there is no business existed, in our opinion, the assessee is not entitled to claim deduction under the head Depreciation, Establishment and General Expenses and Interest on Loan and resultantly, carrying forward losses. We totally agree with the finding of CIT(A) in confirming the order of AO in denying deduction claimed by the assessee. Therefore, we do not find any infirmity in the order of CIT(A) and it is justified. Thus, the grounds raised by the assessee are dismissed.

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• 2022 (12) TMI 930
  Disallowance @ 10% out of foreign currency and credit expenses - HELD THAT:- The disallowance @ 10% out of foreign currency and credit expenses has no such specific finding. The assessee in its submission mentioned that the turnover of the assessee 177.64 crores out of which exports amounting to Rs. 70.94 crores. The appellant exported goods to various countries including Italy, Brazil, Germany, China, France, Sweden, Switzerland and Turkey. The appellant claimed foreign traveling expenses Rs. 84,22,581/-. In this reference, the assessee enclosed complete details of expenses so the partial disallowance in relation to the expenses was uncalled for as per the assessee. Here, we find that the 10% addition in the accountant of foreign currency and credit card expenses is liable to be deleted. Staff and welfare gift shagun expenses - To encourage the efficiency working mobility the amount was paid to staff in different occasions. All the payments are vouched and details of the payments are enclosed in APB pages 8 to 56 by the assessee. The expenses are related to this business. So, we find no specific findings in relation to this disallowance of Rs. 4 lac by the Ld. CIT(A) and the expenses are fully connected with the business income of the assessee. Accordingly, the addition amount of Rs. 4 lac is liable to be deleted. Disallowance of depreciation - In the observation of the revenue there is no under valuation of the assets. The assessee booked the expenses in capital account and reason of difference is explained before the revenue authorities. Also a copy of the valuation report from registered valuer of assessee is enclosed on which the clear reflection of assessee s own claim. The report of valuer Mr. V.K. Singhal is duly enclosed - Considering this, the depreciation cannot be rejected on basis of this valuation report. So, the addition is liable to be deleted.

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• 2022 (12) TMI 929
  Correct head of income - treatment of profit on transfer of immovable properties as business profit instead of long term capital gains - HELD THAT:- The consideration was settled partly by cheques and partly by transfer of certain vacant parcels of land in favor of the assessee which were under litigation and finally, sold in this year. Assessee, the receivables constitute business debt and any loss / gains arising in settlement thereof would be business income / loss for the assessee. Assessee has claimed losses on re-possessed assets as business loss in this year which has been allowed also. The assignment of debt in favour of another entity partly in exchange of land was integral part of the business activities of the assessee and any gain / loss arising on such an asset should be viewed as business profits only. The situation is no different from a situation wherein the assessee in exchange of loan debts, repossesses the assets of the borrower and sell the same subsequently in discharge of loan assets. Any resultant gains / losses arising therefrom would be part of normal business activities of the assessee. As clear that origin of the parcels of land so acquired is business asset only and therefore, the resultants gains would be business income of the assessee. The said proposition is duly supported by the decision of Hon ble Supreme Court as referred to in the impugned order. The case law of Pune Tribunal has rightly been distinguished [ 1991 (1) TMI 242 - ITAT PUNE] by CIT(A) and we concur with the same. We also concur with the findings that the land was received in lieu of a business loan foregone. The assets so received by the assessee would assume the character of same business assets irrespective of its treatment by the assessee in the books of accounts. AR has averred that the land has been shown as part of fixed asset and therefore, the same should be taken as capital asset. However, it is settled position that entries in the books of accounts would not be determinative of nature of income of the assessee.

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• 2022 (12) TMI 928
  Reopening of assessment - validity of assessment framed under section 147 - exemption claimed on the sale of shares - HELD THAT:- From the reasons recorded by the AO, it is revealed that the proceedings under section 147 of the Act were initiated on the verification of the case records which were available with the AO during the original assessment proceedings framed under section 143(3) of the Act. In the reason recorded there no whisper that the AO was having any fresh tangible material. Thus, the reopening of the assessment was initiated on the basis of same set of document already available with the AO at the time of regular assessment which is nothing but change of opinion. To our considered opinion reopening of assessment cannot be initiated in absence of fresh material or based on change of opinion. In holding so we draw support and guidance from the judgment of PCIT vs. Fibers and Fabrics International (P.) Ltd. [ 2022 (4) TMI 1433 - SC ORDER] Admittedly, the AO on verification of the same set of documents which were available during the original proceedings formed reasons to believe that there is an escapement of income on account of exemption claimed on the sale of shares. In view of the above, we hold that the proceedings initiated under section 147 of the Act are not sustainable and therefore liable to be quashed for the reasons discussed above. Hence, the ground of cross objection raised by the assessee is hereby allowed.

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• 2022 (12) TMI 927
  Disallowance of marketing expenses incurred during the year - Disallowance of marketing expenditure u/s 37(1) by treating the same as non-genuine/non-business transaction/expenditure - HELD THAT:- In order to determine the genuineness of the payment made by the assessee AO issued notices under section 133(6) - only 2 parties namely, M/s EIH Ltd and The Lalit Golf and Spa Resort failed to respond to the aforesaid notice. In order to substantiate the genuineness of the payment to these 2 entities, assessee furnished the bank account statement, which reflected the payment made to these parties, invoices raised by these entities to the assessee, details of tax deducted on payment made to these parties, PAN No. and complete address. It is no doubt true that payment through the bank channel is not conclusive proof of the transaction. At the same time, when the assessee has provided all the information available with it regarding the transaction, merely on the basis that the entity has not responded to notice issued u/s 133 (6) the transaction cannot be doubted and be treated as non-genuine, particularly when the same has been entered into with entities which are well-known Hotel chains in India. It is also not the claim of the Revenue that these entities are not in existence or the documents furnished by the assessee are bogus. Thus we find no basis in upholding the addition by the AO merely on the basis that only 2 out of 17 parties failed to respond to the notice issued u/s 133(6) of the Act. We direct the AO to delete the addition. Grounds raised in assessee s appeal are allowed.

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• 2022 (12) TMI 926
  Long-term capital gain earned from the sale of a flat - AO has treated the assessee to be not the owner of 50% share in the Skylark flat - AR submitted that the assessee along with his wife has sold the flats to a third party, and without being the legal owner registration could not have taken place. Further, the assessee also paid part of the purchase consideration in the year 1992 and enjoyed 50% ownership of the said flat till it was sold in the year 2014 - HELD THAT:- As in the records of Skylark Co-operative Housing Society Ltd, the name of the assessee and his wife is appearing as the shareholders. The assessee has also furnished a copy of the bank statement of assessee s account in Bombay Mercantile Co-operative Bank, to substantiate the payment as part of the purchase consideration of the Skylark flat. It has also not been disputed that the said flat was subsequently sold in July 2014 to third-party by the assessee and his wife and as per the registered deed of transfer the purchaser has agreed to pay the total consideration in equal proportion to the assessee and his wife Nothing has been brought on record that due to the alleged lack of ownership of the assessee, the title in the property has not been legally transferred to the purchaser. Therefore, we are of the considered opinion that the learned CIT(A) has rightly accepted the long-term capital gain in the hands of the assessee. Addition made by the AO by treating the part consideration from the sale of Skylark flat as unexplained credit - We find that the registered deed of transfer whereby the said flat was sold to the third party was already available on record before the AO and therefore in the aforesaid circumstances the amount of sale consideration received by the assessee, being the joint owner of the flat, cannot be held to be unexplained credit in the hands of the assessee. Thus, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, grounds No. 1 and 2 raised in Revenue s appeal are dismissed. Set off of long-term capital loss arising from STT paid transactions against long-term capital gain arising from the sale of the flat - HELD THAT:- It has not been denied by the assessee that the long-term capital loss arose on account of the sale of units of mutual funds on which STT was paid. The said long-term capital loss has been sought to be set off against the long-term capital gain arising on the sale of Skylark flat. We find that in Appolo Tyres Ltd. [ 2021 (9) TMI 708 - KERALA HIGH COURT] following question of law came up for consideration the claim of the assessee of set off of long-term capital loss arising from STT paid transactions against long-term capital gain arising from the sale of the flat is rejected. As a result, ground raised in Revenue s appeal is allowed.

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• 2022 (12) TMI 925
  Interest paid on service tax as compensatory in nature for delay in remittance of service tax - allowable expenditure u/s 37(1) - AO has disallowed a sum being interest on service tax relating to earlier years on the ground that the same is in the nature of penalty - HELD THAT:- We find that interest paid on belated payments of service tax is not a penalty, which can be disallowed u/s. 37(1) - Therefore, we are of the considered view that the Ld. CIT(A) has erred in sustaining addition made by the AO towards interest paid on service tax. Hence, we reverse the findings of the ld. CIT(A) and direct the AO to delete addition made towards disallowance of interest on service tax. Appeal filed by the assessee is allowed.

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• 2022 (12) TMI 924
  Employees Contribution of Provident Fund and Employees State Insurance (PF ESI) - disallowance made u/s. 36(1)(va) - HELD THAT:- Grounds taken by the assessee have come to rest by the recent verdict in Chekmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Thus grounds taken by the assessee are dismissed.

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• 2022 (12) TMI 923
  TP Adjustment - comparable selection - IT enabled services segment - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list. Mismatch of the income shown by the assessee and the entries shown in Form 26AS - HELD THAT:- The disagreement between the Assessing Officer and the assessee with respect to the income received by the assessee or vis- -vis the amount shown in 26AS can only be resolved by making necessary enquiries from the persons who had deducted the TDS amount. The details of the persons i.e., Names, PAN numbers and addresses, are all available in form 26AS. Therefore, we deem it appropriate to restore the issue to the file of the Assessing Officer with the direction to verify once again the claim of the assessee by using powers conferred under the Act and find out whether the said income pertains to assessee company or not from the said persons who had allegedly deducted the tax as reflected in 26AS. This ground is allowed for statistical purposes.

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• 2022 (12) TMI 922
  TP Adjustment - Selection of comparables - the assessee is engaged in provision of logistics services to its associated enterprises and also to non-associated enterprises - HELD THAT:- Deselection of comparables as compared to assessee benchmarking the international transaction pertaining to provision of logistics services . Grant of credit of TDS - HELD THAT:- We deem it appropriate to direct the AO to grant the credit of TDS as per law, after necessary verification/examination of details. Accordingly, ground raised in assessee s appeal is allowed for statistical purpose. Levy of interest u/s 244A - HELD THAT:- As per the assessee, Rs 32,64,829 has not been refunded to the assessee. Therefore, we deem it appropriate to direct the AO to de novo adjudicate upon the issue of levy of interest under section 244A of the Act after necessary verification/examination of details. As a result, ground no. 6 raised in assessee s appeal is allowed for statistical purpose.

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• 2022 (12) TMI 921
  Validity of assessment order passed u/s 153(1) - as argued that the assessment order passed by the Assessing Officer is beyond limitation and thus, invalid and void ab initio - scope of section 144C(1) and provisions of section 153(1) of the Income Tax Act, 1961 - HELD THAT:- The Mumbai Bench of this Tribunal IPF India Property Cyprus [ 2020 (2) TMI 1500 - ITAT MUMBAI] has considered an identical issue in light of provisions of section 144C(1) and amended provisions u/s.144C(1) w.e.f. 01.04.2020 and held that when there is no variation in income or loss returned by the assessee, which is prejudicial to the interest of the assessee, then question of issuing draft assessment order does not arise and consequently, the Assessing Officer does not get extended period for completion of assessment u/s.143(3) of the Income Tax Act, 1961. The provisions of section 153(1) prescribed time limit for completion of assessment for the assessee. As per the said provisions, limitation to pass assessment order under subsection (3) of section 143 of the Act, for the concerned assessment year 2014-15 was 21 months which ends on 31.12.2016. In this case, assessment order has been passed u/s.143(3) r.w.s 144C(3)(b) on 28.02.2017. If the assessment order passed by the Assessing Officer is considered as assessment order passed u/s.143(3), then the Assessing Officer ought to have passed order on or before 31.12.2016. If you consider the Assessing Officer is right in passing draft assessment order u/s.144C(1), then the Assessing Officer gets extended time and time limit for passing order is 31.12.2017. In this case, since, the Assessing Officer cannot invoke jurisdiction u/s.144C(1) and pass draft assessment order, question of extended 12 months period cannot be given to the Assessing Officer. Therefore, we are of the considered view that final assessment order passed by the Assessing Officer u/s.144C(3) r.w.s 143(3) of the Act, dated 28.02.2017 is barred by limitation, because time limit available for completion of assessment u/s.143(3) is 31.12.2016. Thus we are of the considered view that assessment order passed by the Assessing Officer u/s.143(3) r.w.s 144C(3)(b) of the Income Tax Act, 1961 dated 28.02.2017 is clearly barred by limitation and thus, assessment order passed by the Assessing Officer is void ab initio. Hence, we quash the assessment order passed by the Assessing Officer. Levying 30% tax on interest income by ignoring Article 11 of India-Cyprus DTAA on the ground that the assessee is beneficial owners which is covered under Article 11 of India- Cyprus tax treaty - The assessee has filed various details, including tax residency certificate issued by Republic of Cyprus, Ministry of Finance, to prove residential status and also notification No.86/2013 issued in terms of sec.94A of the Act and also subsequent withdrawal of said notification vide Circular No.15/2017 dated 21.04.2017 and argued that the assessee is covered under Article-11 of India-Cyprus tax treaty and liable to pay tax @ 10% - fact remains that although, the assessee has challenged issue on merits, but the issue has not been adjudicated at this point, because assessment order passed by the Assessing Officer has been quashed as void ab initio. Hence, we are not inclined to adjudicate the issue raised by the assessee on merits.

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• 2022 (12) TMI 920
  TP Adjustment - adjustment on account of interest on receivables - HELD THAT:- The assessee entered into various international transactions with its AEs resulting in outstanding receivables as per the payment terms stipulated in the inter company policy entered into with the AEs. The assessee being a captive unit has received advances from some of its AEs for services to be provided in future. As relying on case of Mckinsey [ 2021 (10) TMI 751 - DELHI HIGH COURT] we are of the view that the Ld. AO/TPO is not justified in charging interest on receivables without factoring in the payables to the AEs. Working capital adjustment in the international transaction of rendering services - Hon ble Delhi ITAT in Kusum Health Care Pvt. Ltd. [ 2015 (4) TMI 180 - ITAT DELHI] held that in case the differential impact of working capital of the assessee vis a vis its comparables has already been factored in the pricing/ profitability of the assessee, further adjustment to the margin of the assessee on the pretext of outstanding receivable is unwarranted and wholly unjustified. In case of Ameriprise India P. Ltd. [ 2015 (8) TMI 652 - ITAT DELHI] considered the decision of Coordinate Bench in the case of Kusum Health Care and held that allowing working capital adjustment in the international transaction of rendering services have no impact on the determination of ALP of the international transaction of interest on receivables from AEs. Having regard to the legal position set out above, we hold that the Ld. AO was not justified in making adjustment on account of interest on receivables in the facts and circumstances of the assessee s case. Accordingly, the assessee succeeds.

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• Corporate Laws

• 2022 (12) TMI 919
  Restoration of the name of the Appellant Company in the Register maintained by the Registrar of Companies (RoC) - Section 252 of Companies Act - HELD THAT:- In view of the fact that the sale deeds executed in favour of the Appellant Company and Audited Balance sheet from Financial Year 2011-12 to 2018-19 of the Appellant Company shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) as well as Registrar of Companies, Chhattisgarh is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed - appeal allowed.

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• Insolvency & Bankruptcy

• 2022 (12) TMI 918
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - whether any operational debt above the threshold limit had become due and payable to the Operational Creditor and a default in payment thereof had arisen and whether any pre-existing dispute can be deciphered? - HELD THAT:- It is well settled that in Section 9 proceeding of IBC, the Adjudicating Authority is not to enter into final adjudication with regard to existence of disputes between the parties regarding the operational debt but what has to be looked into is whether the defence raised by the Corporate Debtor is moonshine defence or not. It has been noted by the Adjudicating Authority that there is no prior dispute regarding quality of goods or material supplied. What however has been held as dispute by the Adjudicating Authority is the difference of views on the actual amount payable by the Corporate Debtor to the Operational Creditor. One reason for this difference to have cropped up is on account of express unwillingness on the part of the Corporate Debtor to clear the liability of outstanding debt for the period prior to change of management. The other reason for the difference has been attributed by the Corporate Debtor to non-reconciliation of accounts. The Adjudicating Authority has glossed over the fact that the Corporate Debtor has not controverted the outstanding liability which it had admitted on 15.04.2017. Furthermore, claiming that no amount is due and payable to the Operational Creditor, we find that the Corporate Debtor has made this statement with the caveat that only invoices, post change in management, have been paid in full. To our mind, this caveat needs to be examined to find out whether it supports the claims of there being a pre-existing dispute - the stand taken by the Corporate Debtor in their reply to the Demand Notice that they are not liable for the claims of the Operational Creditor prior to change in management is not a tenable argument. Change in management is an internal matter of the Corporate Debtor in which the Operational Creditor had no role to play. Change in management of the Corporate Debtor cannot be a ground for extinguishing/wiping off the past liabilities that they owed to the Operational Creditor. From the facts of the present case and the material on record, it also appears that the Corporate Debtor has tried to take advantage of their own wrong of being lackadaisical in reconciling the accounts in spite of nearly 30 requests made by the Operational Creditor to do so. In the entire discussion by the Adjudicating Authority, it is found that no notice has been taken in respect of repeated and multiple reminders sent by the Operational Creditor to the Corporate Debtor in this regard including undertaking visits to the office of the Corporate Debtor. Both these grounds lack merit to be treated as pre-existing dispute and appear to be clearly motivated by the Corporate Debtor to wriggle out of their obligation to clear outstanding liabilities and therefore the defence raised is at best a moonshine defence and hence untenable - the ground for rejection of the Application under Section 9 of IBC was erroneous. Appeal is allowed.

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• 2022 (12) TMI 917
  Delay in refiling of 321 days - adequate and sufficient reasons have been shown to justify that the delay in refiling of 321 days is reasonable for the application - HELD THAT:- There is no quarrel over the proposition that in the absence of any time-limit prescription in considering the question of delay in re-filing either in the Code or the NCLAT Rules, this Tribunal is to that extent not powerless to entertain an application even if there has been delay in re-filing. As a matter of general practice, it is commonplace that the yardstick applicable while considering a prayer for condonation of delay for re-filing purposes is usually less rigid than the standards applied for condoning delay in filing. Pretty much on the same lines it has been urged before this Tribunal by the Appellant, that for reasons proffered, it may take a more liberal approach in allowing the condonation of refiling delay in the present case - There being no hard and fast rule in this regard makes it all the more incumbent on this Tribunal to examine refiling delays with greater degree of caution. Any question of delay condonation must go through deep and sufficient scrutiny in the context of the Code. The circumstances cited for condonation of delay in re-filing has to be in consonance with the aims and objects of the Code and not frustrate the scheme of the Code. The natural corollary that follows is that condonation of delay in re-filing is not available just for the asking. This Tribunal needs to be fully satisfied that the delay was unavoidable and the applicant was consistently diligent in pursuing the matter. The question of condoning any delay in re-filing would have to be considered in the context of the plausible explanation given to show that the delay was on account of reasons beyond the control of the applicant and could not be avoided despite all possible efforts by the applicant. Addition of new facts in the course of refiling which could not have been a part of the original version of the Appeals when it was filed in November 2021 thereby changing the frame of the Appeals as a clever manoeuvre has also been alleged by the Respondents. Though the allegation made is serious, however, since it has been admitted to be a mistake, we are not taking cognisance of it and refrain from making any comments thereon. The grounds cited to explain the 321 days refiling delay when viewed against the parameters of timely, effective and efficient resolution as envisaged in the Insolvency and Bankruptcy Code, 2016 fall hopelessly short of meeting the desirable standards of being adequate and sufficient. There are no merit in the applications filed for seeking condonation of 321 days delay in refiling the appeals, the same are dismissed.

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• 2022 (12) TMI 916
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - barred by limitation - pecuniary jurisdiction to entertain the claim - HELD THAT:- This Tribunal is of the view that the averments made in the reply by the Respondent is clearly an afterthought only for the purpose of vitiating the proceedings. Further, as per Section 8(2)(a) of the I B Code, 2016, the existence of dispute, if any or, record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute. As per the above position of law the dispute must be specific with regard to the same amount. In that present case, the Respondent failed to raise any dispute prior to issue of demand notice and claim of set off is only an afterthought. Accordingly, the issue is answered. Whether the claim is barred by limitation - maintaining the pecuniary jurisdiction to entertain the claim - HELD THAT:- The Adjudicating Authority taken a stand that out of 13 invoices claimed by the Appellant 11 invoices are time barred i.e. the last invoice dated 23.08.2016 and the Application under Section 9 was filed on 26.08.2019, therefore, it is beyond 3 years as per Section 137 of the Limitation Act. However, the (2) invoices both dated 31.08.2016 are within the period of limitation, since the application filed on 26.08.2019. Having taken into consideration the 2 invoices which are within the period of limitation, the Adjudicating Authority failed to consider that the amount even for the 2 invoices satisfies the minimum threshold prescribed under Section 4 of the I B Code, 2016 (pre-amended). As per Section 4 of the I B Code, 2016 the minimum threshold was Rs.1,00,000/- and the amount for the 2 invoices both dated 31.08.2016 was Rs.3,64,100/-, thus, it exceeds the minimum threshold as prescribed under the law prior to the amendment. The Adjudicating Authority miserably failed to take into consideration the pecuniary jurisdiction under which the application ought to have been admitted. Thus, the observation of the Adjudicating Authority is factually incorrect with regard to the non-maintainability of the application. The Adjudicating Authority having noticed that the claim of the Appellant is more than Rs.1,00,000/- and is within the threshold limit, however, was of the view that the claim made by the Respondent is more than the claim made by the Appellant. The said observation is without any basis. Further the Adjudicating Authority was of the view that though the Corporate Debtor raised the claim after the issuance of demand notice, however, it observed that the goods were delivered by the Corporate Debtor to the Appellant before issuance of demand notice and raising of invoices was delayed by the Corporate Debtor, is absurd and without any basis. This Tribunal comes to an irresistible and inescapable conclusion that the order passed by the Adjudicating Authority is per-se illegal and the same is hereby set aside. The Company Appeal is allowed with a direction to the Adjudicating Authority to admit the application and initiate Corporate Insolvency Resolution Process (CIRP) proceeding against the Respondent / Corporate Debtor.

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• 2022 (12) TMI 915
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - NPA - Existence of debt and dispute or not - HELD THAT:- The 1st Respondent Bank filed an application before the Adjudicating Authority under Section 7 of the I B Code, 2016 seeking Initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor for the reason that the Corporate Debtor defaulted re-payment of Rs.218,14,20,222.95. From the perusal of Part-IV of the Application under Column-1, it is stated that the Financial Creditor had granted certain term loan and working capital facilities to the Corporate Debtor from time to time and restructured on the terms and conditions as per the sanctioned letter dated 25.03.2015 and the MRA dated 30.03.2015. The Corporate Debtor contested the matter by filing a reply affidavit taking the similar stand as taken in the present appeal stating that the Application under Section 7 of I B Code, 2016 is barred by limitation on the ground that the occurrence of NPA dated 27.05.2015 and Section 7 Application filed on 17.05.2018 which is beyond 3 years and is not permissible under the law of limitation as held by the Hon ble Supreme Court. Further, the Appellant taken the stand before the Adjudicating Authority that the alleged amount claimed by the Bank is not due and payable. From the perusal of the documents, it establishes the existence of debt and a default occurred in non-payment of debt due to the Bank. Further, it is also evident from the recall notice dated 01.02.2016 that the Bank demanded the payment of Rs.174.61 crores which there is no denial or dispute with regard to existence of debt. The Adjudicating Authority clearly observed that there is a debt and default in repayment by the Corporate Debtor. The argument of the Appellant that the Bank has issued a recall notice dated 01.02.2016 thereby the MRA has been revoked is concerned, this Tribunal is of the view that there is ample evidence with regard to the debt and default from the documents filed by the Banks such as the entries in a Banker s Book in accordance with Bankers Book Evidence Act, and recall notice itself establishes that there is a debt and default. The Application under Section 7 can be initiated when a default has occurred and there is no such provision that the occurrence of default can be taken into account from the date of NPA. The argument of the Appellant is negated with respect to the contention that the date of NPA is to be treated as date of default. In this regard, the word default has been defined under Section 3(12) of the I B Code, 2016 means a non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor, as the case may be. Section 18 of the Limitation Act, 1963 is applicable to Section 7 Applications under I B Code and held that the acknowledgment of debt by a borrower initiates a fresh period of limitation from the date of acknowledgement of debt - the documents as relied upon by the Respondent Bank is sufficient to establish that there is debt and default and the Adjudicating Authority having satisfied that there exists a debt and default and is incompliance with the provisions of law as encapsulated under Section 7 of the I B Code. There is no error and illegality in the order passed by the Adjudicating Authority. This Tribunal comes to an irresistible and inescapable conclusion that order passed by the Adjudicating Authority dated 12.08.2022 need no interference - Appeal dismissed.

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• 2022 (12) TMI 914
  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 there would be afresh period of limitation available to the Respondent from the date when the recovery certificate was issued by the DRT? - HELD THAT:- There is no doubt that in both the decisions, relied upon by the Respondent, namely, DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. [ 2021 (8) TMI 315 - SUPREME COURT] and KOTAK MAHINDRA BANK LIMITED VERSUS A. BALAKRISHNAN ANR. [ 2022 (6) TMI 13 - SUPREME COURT] the Hon ble Supreme Court has held that the limitation would start afresh from the date of issuance of recovery certificate but Counsel for the Appellant has submitted that the application under Section 7 of the Code should have been filed on the basis of the recovery certificate and merely placing on record of the said recovery certificate would not be suffice. The decision in the case of Dena Bank has been followed in the case of Kotak Mahindra Bank Ltd. In the case of Dena Bank the Corporate Debtor defaulted in repayment of its dues to the Bank and the loan account was declared NPA on 31.12.2013, O.A No. 16 of 2015 was filed by the Bank on or about 01.01.2015 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, now known as the Recovery of Debts and Bankruptcy Act, 1993 before the DRT at Bangalore. O.A was decreed on 27.03.2017. The Bank filed a petition under Section 7 of the Code before the Adjudicating Authority on 12.10.2018 and subsequently filed one application i.e.I.A. No. 27 of 2019 on 09.01.2019 for permission to place on record additional documents including final decision dated 27.03.2017 of the DRT in OA No. 16 of 2015 and the recovery certificate dated 25.05.2017. There is hardly any merit in the present appeal and the same is hereby dismissed.

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• PMLA

• 2022 (12) TMI 913
  Seeking directions to the Respondent Adjudicating Authority, PMLA, to supply the legible copies of all the Relied-Upon Documents - seeking extension of time period for filing the reply to the Show Cause Notice - HELD THAT:- The court has also seen a copy of the bundle of documents. Several of the documents are illegible or unreadable. Be that as it may, since the issue in the present petition only relates to legible copies of the RUDs being supplied, this Court is of the opinion that the said issue need not be delved into further, as the same is moot, in light of the judgment of this Court in J.K. TYRE AND INDUSTRIES LTD., KP SANGHVI AND SONS LLP ANR., SHRI VISHWANATH OVERSEAS, PARAS IMPO EXPO PVT. LTD., ALOK INDUSTRIES LIMITED, S.N. KAPOOR EXPORTS, M/S. HAMILTON HOUSEWARES PVT. LTD., SNB ENTERPRISES PVT. LTD., ORBIT EXPORTS LTD., SHANTIVIJAY JEWELS LTD., MAXIS INDUSTRIES, M/S. BLOSSOM FABRICS LIMITED, PROMPT INTERNATIONAL, M/S. MAYA TRADES, EASTMAN INDUSTRIES LIMITED, M/S. SUPRINT TEXTILES JAIPUR PVT. LTD., M/S. SUKU INNOVATIVES VERSUS DIRECTORATE OF ENFORCEMENT ANR., UNION OF INDIA ANR. [ 2021 (10) TMI 1176 - DELHI HIGH COURT ]. An inspection of all the original documents constituting the RUDs be given to the Petitioner or two representatives of the Petitioner, including a counsel, on 22nd December, 2022 at 11:00 a.m. - For the purposes of the said inspection, the Petitioner or the representatives of the Petitioner shall visit the office of the ED on the said date, and have a meeting with Mr. Amit Monga, the Investigating Officer. Upon the copies of the RUDs being supplied to the Petitioner or his representatives, after inspection, the reply to the Original Complaint shall be filed by the Petitioner, by 15th January, 2023. The Adjudicating Authority shall consider the reply filed by the Petitioner and adjudicate the matter, in accordance with law - Petition disposed off.

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• Service Tax

• 2022 (12) TMI 912
  Violation of principles of natural justice - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking to consider the Declaration filed by the Petitioner in Form SVLDRS-1 - It is the grievance of the petitioner that despite the facts and circumstances, respondent No.4 proceeded to issue the impugned communication dated 11.03.2020 rejecting the application filed by the petitioner, who is before this Court by way of the present petition - HELD THAT:- A perusal of the impugned order / communication at Annexure-A dated 11.03.2020 will clearly indicate that the same is a non-speaking, cryptic, laconic and unreasoned order which has been passed without any application of mind and without considering the detailed submissions of the petitioner nor the relevant provisions of the SVLDR Scheme or the Circulars and judgments relied upon by the petitioner and consequently, the impugned order / communication being violative of principles of natural justice, the same deserves to be set aside and the matter be remitted back to the concerned respondent for reconsideration afresh in accordance with law. The matter is remitted back to the concerned respondents for reconsideration afresh of the claim of the petitioner bearing in mind the observations made in this order as well as the material on record including the Circulars dated 29.10.2019 and 06.10.2022 - Petition allowed by way of remand.

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• 2022 (12) TMI 911
  SVLDR Scheme - pre-deposit could not be verified as per records available and the amount has also not been mentioned in the show cause notice for appropriation - HELD THAT:- There is no dispute as regards payment of this amount in question. Further, it is evident from the record that this amount remained unadjusted due to fault of the Department as well as the Designated Committee under the Sabka Vishwas Scheme, who have refused the adjustment of the amount of pre-deposit, stating that the amount is not verifiable. This amount remained as the Revenue deposit with the Department and was never adjusted. Further, this amount is not a part of the admitted tax - the Adjudicating Authority is directed to grant refund of Rs.29,36,382/- within a period of 30 days from the date of receipt of this order along with interest @12% per annum from end of three months from the date of filing of the application for refund, till the date of grant of refund. Appeal allowed.

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• 2022 (12) TMI 910
  Maintainability of appeal - noncompliance with the requirement of section 35F of Central Excise Act, 1944 - HELD THAT:- The appeal filed before the Commissioner (Appeals) should be entertained for a decision on merits. Since he has not discussed the merits of the case and simply dismissed the appeal for noncompliance with the requirement of Section 35F of Central Excise Act, 1944, we are of the opinion that the matter should go back to Commissioner (Appeals) for a decision on merits insofar as the appeal is concerned. The appeal is allowed in favour of the appellant by way of remand to the Commissioner (Appeals) for deciding the appeal afresh on the basis of available records and the submissions to be made by the appellant during the course of hearing of the appeal.

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• 2022 (12) TMI 907
  Refund of service tax - contention of the appellant is that the tax having been paid under mistake, the period of limitation as envisaged in Section 11B will not apply - Principles of unjust enrichment - HELD THAT:- Interestingly, it has to be noted that the adjudicating authority as per OIO No.34/2015 dt. 30.09.2015 has held that tax has indeed been paid by mistake by the appellant. The adjudicating authority has even sanctioned the refund. However, the amount was ordered to be credited to the Consumer Welfare Fund on the issue of unjust enrichment - it can be seen that there is an observation by the original authority in both the orders that the tax has been paid by mistake. However, the Commissioner (Appeals) in para-7 has summarily held that refund claim is hit by limitation without discussing the aspect whether the tax amount has been paid by mistake. In the present case, it has to be noted that as per Rule 2A of Service Tax (Determination of Value) Rules, 2006, the extract of which has already been reproduced; in the case of works contracts which is in the nature of original works, the service provider has to pay only on 40% of the total amount charged for the works contract. The levy of service tax on such works is 40% of the total amount and has to be paid by the service provider only. The service provider had correctly issued invoices collecting service tax @ 40% on the consideration received by them. It is the case of the appellant that as the invoice showed only collection of tax on 40% of the consideration paid by them, they were under the impression that they have to pay service tax for the balance 60% of the consideration. Thus they paid tax on the balance 60% as their own liability. This has been clearly discussed by the original authority in para 6.1 of the order No.33/2015 dt. 31.08.2015. It is clearly brought out from evidence that appellant has paid the tax by mistake. Moreover, the original authority vide OIO No.34/2015 dt. 30.09.2015 has held that limitation will not apply as the tax has been paid by mistake - the rejection of refund claim on the ground of limitation is not sustainable. The second ground of rejection of refund is that the amount paid is hit by the doctrine of unjust enrichment - HELD THAT:- Section 11B of Central Excise Act, 1944 deals with claim for refund of duty and interest, if any, paid on such duty. Section 83 of the Finance Act, 1994 makes certain provisions of Central Excise Act, 1944 applicable to service tax also. As per Section 83, the provisions dealing with refund (Section 11B, 11BB, 11C, 12,12A, 12B, 12C, 12D) are applicable to service tax. As per sub-section (1) of Section 11B any person who has paid the duty / tax can make an application for refund, along with documents to show that the incidence of such duty/interest/tax paid by him or collected from him has not been passed on to any other person. In the instant case, the disputed tax has been paid by the service recipient. He has paid it directly and has neither collected the amount nor issued any invoice. Further, when the amount of tax is held to be paid under a mistake, it cannot be said that the tax was paid under the Finance Act, 1994. It was an amount which was paid without having a liability to pay. There was no authority of law to collect such amount from the appellant. In the present case, the appellant has furnished the Chartered Accountant certificate. In page 132 and 133 of appeal paper book the appellant has enclosed the copy of this certificate. The Ld. A.R has relied upon the decision in the case of Rajasthan Spinning Mills Ltd. (supra) to contend that such certificate cannot be solely relied to establish that the incidence of duty has not been passed on. In the present case, there is no levy of tax on the balance 60% of the consideration. There is no invoice issued by appellant mentioning the amount as tax and they have paid from their own pocket. In the case on hand, the department does not dispute the veracity of the certificate, but merely denies the refund stating that appellant has to produce further documents. The Chartered Accountant who has issued the certificate has stated that he has examined the statutory records of the assessee-appellant. Taking into consideration, that the amount was paid by mistake, an no invoice was issued, that rejecting the said certificate in toto so as to hold that the incidence of duty has been passed on cannot be legally sustained. In the result, the appellant has succeeded in establishing that the amount is not hit by the doctrine of unjust enrichment. The appellant is eligible for refund. The appeals are allowed.

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• Central Excise

• 2022 (12) TMI 909
  100% Export Oriented Unit (EOU) - Clandestine removal - removal of goods to DTA without permission - Admitting the duty liability as against the duty demand and seeking cum-duty price benefit - violation of principles of natural justice - HELD THAT:- The First contention of the Petitioner is that the case of clandestine removal was not put to the Petitioner and, therefore, the Petitioner was handicapped in meeting the same before the Settlement Commission and that the Settlement Commission has relied upon the facts not put to the Petitioner. There is no merit in this contention. The entire case in the Show Cause Notice is of clandestine removal through M/s. Specialty. Witnesses have been examined. Not only the case against the Petitioner was of the sale of goods to the Domestic Tariff Area in violation of the policy being a 100% EOU but also creating a bogus record to route the sale through a defunct entity. The Petitioner dealt with these allegations in the appeal memo. He was given an opportunity before the Commissioner when the Order-in-Original was passed. Therefore, if the Settlement Commission has taken note of these facts to hold against the Petitioner, it cannot be said there was any breach of principles of natural justice. The second contention is that even assuming there was a removal of goods to DTA without permission, the benefit of cum duty price could not have been denied to the Petitioner - The Settlement Commission has referred to the decision of the Hon ble Supreme Court in the case of AMRIT AGRO INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., GHAZIABAD [ 2007 (3) TMI 14 - SUPREME COURT] and the decision of ASIAN ALLOYS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2006 (7) TMI 404 - CESTAT, NEW DELHI] and SARLA POLYESTER LTD. VERSUS COMMISSIONER OF C. EX. [ 2007 (11) TMI 47 - CESTAT AHMEDABAD] . The Tribunal has held that since all sales were clandestinely done in contravention of the provisions of EXIM Policy and Rules applicable to the 100% EOU, there is no scope to treat the sale price as a cum duty price. Apart from this, the Tribunal has also held that had the Petitioner cleared the goods from their unit and had they loaded the price of goods after duty paid clearance. There was evidence of the price released being inclusive of duty, and therefore, the Petitioner had to show that the price of the goods includes excise duty payable by it, and there is no question of exclusion of duty element from the price determination of the value - In the present case, since the Tribunal has opined that in the light of the transaction of the Petitioner, there is no evidence based on which it could be held that the price realized was inclusive of duty, and therefore, the benefit of cum duty could not be granted. Considering the limited scope of challenge against the order of the Settlement Commission, the Petitioner had to show that the impugned order was in breach of a settled position of law which covered the facts of the Petitioner s case. The order of the Settlement Commission cannot be assailed as if it is an order passed under an ordinary adversarial adjudication or as if the appellate power is being exercised - as per the opinion of the Commission, no reliable documents existed on record. It is in this context that the Settlement Commission concluded that there was no evidence of the price realized being conclusive of duty given the manner in which the goods were removed; the value of the goods as a benefit of cum duty price of clearance of goods could not be granted. Keeping in mind the scope of the judicial review and the ambit of proceeding for the settlement, we are not inclined to interfere in the writ jurisdiction of this Court - writ petition is dismissed.

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• 2022 (12) TMI 908
  Clandestine removal - corroborative evidences - admissibility of evidences - Investigating Officers have never taken the print out of Sundarlal ledger account from the computer, rather seized the said document from the residential premises of the Accountant of the Respondent - whether the said document cannot be used as evidence for not satisfying the conditions laid down in Section 36-B (2) of the Central Excise Act, 1944 - HELD THAT:- The title of Section 36-B of the CE Act itself refers to admissibility of computer print outs as documents and as evidence . It is mandatory in terms of Section 36-B (1), for a computer print-out to be admissible without further proof of production of the original, to satisfy the conditions set out in Section 36-B(2) read with Section 36-B (4) of the CE Act. The said conditions are more or less similar to the conditions stipulated in Section 65-B (4) of the EA. Since it is the Department which is seeking to place reliance on the seized computer print-out, the burden is on the Department to ensure that the requirements of the law as regards its admissibility are fulfilled. Even if the Department did not seize the computer from where the print-out was taken, it would still not relieve the Department, if it seeks to rely on such computer print-out, from the burden of ensuring that the mandatory requirement of Section 36-B(2) read with Section 36-B(4) of the CE Act is fulfilled. If the Department is for any reason not in a position to furnish the certificate as envisaged under Section 36-B(4) of the CE Act, then the person who in charge of the computer and aware of its working would have to give such certificate. The long and short of this discussion is that without a certificate as mandated under Section 36-B (4) of the CE Act, accompanying the computer print-out, it cannot be relied upon by the Department in the adjudication proceedings. Decided in favour of the Respondent-Assessee and against the Appellant-Department - appeal dismissed.

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• 2022 (12) TMI 906
  CENVAT Credit - denial on the ground of alleged irregular availment of CENVAT Credit and demanding of duty thereon - HELD THAT:- The Original Authority has not followed the directions of this Bench inasmuch as there was a specific direction by this Bench to take into account the submissions, etc., in paragraph 2 and 3 of the said order, which refers to various judicial pronouncements. Moreover, there is also an observation that in respect of two of the judicial pronouncements, the facts were more or less similar to the one in the case on hand. The Bench further permitted the appellant to produce any additional evidence, in support, but the same was not a direction. There are no reference to the binding precedents contained in such judicial pronouncements and moreover, there are merit in the contentions of the Learned Advocate for the appellant that the job description in the work order was referring to operational and maintenance charge for dry fly ash collection system , which is contrary to the conclusion drawn by the Adjudicating Authority at paragraph 14.5 of the Order-in-Original dated 23.02.2021. The Order-in-Original cannot stand as the same is passed not only without adhering to the directions of this Bench, but also omitting to properly take note of the contents / job description in the work orders reproduced by him. In view of the above serious irregularity in the Order-in-Original, the impugned order which has sustained the same cannot be sustained. Accordingly, the impugned order is set aside. The matter is once again restored to the file of the Adjudicating Authority who shall pass a speaking order as per law after granting reasonable opportunities to the appellant and since the matter pertains to an earlier period which has travelled twice before this forum, the Adjudicating Authority shall pass a de novo order within a time-frame of 90 days from the date of receipt of this order by the respective Commissionerate. Appeal allowed by way of remand.

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• 2022 (12) TMI 905
  Recovery under Rules 6(3) of the Cenvat Credit Rules, 2004 read with section 11A(4) of the Central Excise Act, 1944 - manufacturing of Bitumen Emulsion (Excisable) and Blown Bitumen (Non-excisabel) and trading of various items, out of which major items are Anti Corrosive, (Black Bitumen Paint), Bitumen Compound, Debonding strip, Sealing compound and Wrap Crat paper - willful mis-statement or suppression of facts - HELD THAT:- The certificate was filed before the Ld. Commissioner (Appeals) but the same has not been taken into cognizance in the impugned order. On going through the certificate, it is observed that it has been mentioned in the certificate that the company purchases various trading items from various parties by payment of Central Excise duty on prevailing rate. It has been certified that the Company maintains separate register for purchase of trading items. It has been consistently observed by the Tribunal and the Superior Courts that, when separate records are maintained for taxable/exempted items, there is no occasion to reverse the proportionate Cenvat Credit. In the present case, the appellants have all along submitted that they maintained separate records for trading items and this was brought to the notice of the authorities below. Further, the appellant is filling all the statutory returns and therefore the allegation of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or of the Rules made thereunder with an intent to evade payment of duty is unwarranted. There are no ingredient in the facts of the present case - appeal allowed.

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• 2022 (12) TMI 904
  Refund of duties discharged during investigation into undervaluation of physician samples - goods cleared by them between 8th January 2005 and 6th November 2006 - It is common ground that the credit restored in the account of the two units was the reversal of earlier debit for discharge of duty liability under protest during the investigations - HELD THAT:- Impossibility of utilisation of such credit upon restoration is not valid ground for monetisation as an alternative. The restoration of credit has placed the appellant no differently from that of having carried forward the credit till closure of the units without having undertaken discharge of duty liability. Furthermore, duty liability had been discharged at the option of the appellant; in the revised appellate scheme, prescribed pre-deposit pending disposal was the sole mandate of law. The submission of the Learned Counsel for appellant is thus devoid of logic or merit. There are no reason to interfere with the rejection of plea for monetisation of the impugned amount. Appeal is dismissed.

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• 2022 (12) TMI 903
  Conformity of the findings of the lower authorities with the terms of remand - proposal of central excise authorities to include 2 nos. cold rolling machines, claimed by the appellant to be standby and functionally inoperable, in assessment under compounded levy scheme , in pursuance of rule 96 ZA - ZV of Central Excise Rules, 1944 along with notification no. 109/94-CE (NT) dated 13th May 1994 - HELD THAT:- The findings of the first appellate authority appears to be rhetorical with intent to eliminate improbability coupled with mere restatement of observation of the Tribunal for adoption of conclusion that is vague. That is not consistent with the specific aspect highlighted in the order of remand requiring ascertainment of the claim of the appellant that the machines were, in fact, non-functional. This the lower authorities have failed to do. As the order of remand has not been complied with, it would be only fit and proper for the impugned order to be set-aside. Appeal allowed.

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• 2022 (12) TMI 902
  Clandestine removal - Leviability of duties of central excise on product deemed by law to have been manufactured - short-payment of duty on another product by misdeclaration of quality - packing and labelling - process amounting to manufacture or not - HELD THAT:- It is seen from the impugned order that the adjudicating Commissioner has, instead of subjecting the impugned activity to the test of conformity to note 9 of chapter 28 of Schedule to Central Excise Tariff Act, 1985 and noticeably so in the sparse findings therein, merely taken up the reliance placed upon the decision in re Ammonia Supply Company and other decisions following therefrom for disputation, by contriving a test derived by him from the findings therein which the impugned activity has been held to have not passed muster, and found sufficing to confirm liability to duties of central excise. It is akin to a step-down transformer that brings high tension electrical energy to the homes of consumers. Being a hazardous substance, there is legal requirement of affixing labels detailing source and handling instruction. There is, thus, packing and labelling and it was to be determined if these conform to the prescriptive threshold envisaged by the impugned note that is composed of four process with each of them standing on their own for manufacture to be deemed. We fail to see any finding that, with reference to the facts, narrows the impugned activity to one of the four alternatives. It is regrettable that adjudication is, at times, perceived as response to resistance put up by noticee instead of as a responsible exercise of determining, from established fact, either breach of statutory boundaries or inapplicability of context for escapement. That deficit must be made good before appellate determination can commence. The determination of breach as far as the liquid bromine seized from the manufacturing entity is concerned has been influenced by the finding of the adjudicating Commissioner and the taint therein infects the outcome before the first appellate authority in the second set of appeals requiring fresh determination. The tax liability has been fastened by resort to assumptions driven by absence of satisfactory explanation. Clandestine clearance, being provable only by circumstantial evidence, should be determined by reference to circumstances including complexion of the transactional engagement in which the submissions made in defence are required to be dealt with. The lack thereof in the adjudication order impugned here must be made good. Matters remanded back to the respective adjudicating authorities for proper discharge of statutory obligation - Appeal disposed off by way of remand.

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• 2022 (12) TMI 901
  Clandestine removal of excisable goods - MS Ingots - third party evidence can be the proof for the allegations or not - presumptions and assumptions - HELD THAT:- The appellants herein M/s. Pankaj Ispat Limited and its Director Shri Pankaj Agrawal are also the manufacturers of the same product. Same allegations based on the same documents of the above mentioned case have been used against both these appellants. Apparently and admittedly, no search was conducted in the premises any of these two appellants. The extract of the relevant statement of Shri Pankaj Agrawal dated 06.06.2016, it is perused that there is absolute denial of Shri Pankaj Agrawal about the documents recovered from M/s. Amit Steels and also about the statement given by its proprietor Shri Narendra Agrawal. Further perusal makes it clear that the allegations of the department against the appellant arose only because of the reason that Shri Narendra Agrawal in his statement dated 07.04.2015 had stated that word Vikki stands for M/s. Pankaj Ispat Limited. There are no document in any of these appeals which may corroborate the said statement of Shri Narendra Agrawal or such other document which sufficiently proves that Vikki stands for M/s. Pankaj Ispat Limited from no stretch of imagination there seems any correlation between the two - the findings by the Adjudicating Authority below for confirming the allegations of clandestine removal of finished goods (TMT Bars and MS Ingots) by M/s. Pankaj Ispat Limted are without any basis and cogent evidence. The only evidence is third party evidence. No efforts were put by the investigating team to seek corroboration from the documents of M/s. Pankaj Ispat Limited. The confirmation of demand and of allegations on third party evidence is highly unacceptable. There has been catena of decisions wherein it has been held that third party evidence has no evidentiary value and that the same is not at all admissible in law. As far as the proof of allegations of clandestine removal is concerned, it has been a settled law that such grave allegations cannot be confirmed merely on the third party evidence. There otherwise should be clinching evidence about nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. The investigating team would have put some efforts to seek corroboration of the documents recovered from the premises of M/s Amit Steels, had at the stage of investigation itself search in the premises of various manufacturers, raw material providers, transporters etc. would also been conducted and had the persons who were recorded at the stage of investigation would have been produced before the Adjudicating Authorities as well, there could be the evidence to support the department s investigation at least the appeals of the manufacturers/traders would not have been allowed for the lack of evidence. Departmental authorities are therefore directed to take the cogent steps to formulate certain guidelines for their investigating teams with respect to the compliance of mandatory provisions as that of Section 9D of Central Excise Act and Section 138 B of Customs Act, 1962. Appeal allowed.

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• CST, VAT & Sales Tax

• 2022 (12) TMI 900
  Refund claim - export of goods - excess carried forward in the annual return - period of limitation for filing appeal against the order of the Assessing Authority also stood expired - HELD THAT:- As per scheme of the provisions of the 2003 Act as also the Haryana Value Added Tax Rules, 2003 governing refund it would be open for the Assessing Authority at the stage of assessment to ascertain if a dealer has paid any amount in excess of tax, interest on penalty assessed or imposed on him, allow refund of the excess amount or allow the same to be carried forward for adjustment with future tax liability - Aforesaid is the mandate of Section 20(4) of the 2003 Act . Under Rule 41(4) of the Haryana Value Added Tax Rules, 2003 it is again at the stage of framing the assessment, if the Assessing Authority finds that the sum of tax paid and input tax exceeds the sum of output tax and purchase tax, it shall determine the excess amount and from the excess amount it shall then deduct any amount due from the dealer whether under the 2003 Act itself or the Central Act and then allow from the balance amount refund of the amount. In the facts of the present case the positive stand taken on behalf of the department is that the dealer had claimed excess carried forward in the annual return filed in Form VAT R-2. The Assessing Authority allowed the same in terms of assessment order dated 30.03.2018 (Annexure P-1). It is not even the case projected on behalf of the petitioner that a refund had been claimed at the stage of filing of the annual return. To the contrary, the pleaded case of the petitioner itself is that after passing of the assessment order dated 30.03.2018 (Annexure P-1), the application seeking refund had been made on 14.06.2018 (Annexure P-2) i.e. subsequent in point of time. In this regard it is observed that under Rule 42 of the Haryana Value Added Tax Rules, 2003 the case for refund is to be forwarded to a Committee within a stipulated time frame only in a situation when a refund has been allowed in the assessment order. In the facts of the present case no refund was allowed as the petitioner had not claimed the same in the annual return filed in Form VAT R-2. Rather the petitioner had claimed excess carried forward in his annual return and the same was allowed. There was no occasion for Rule 42 to come into operation in such facts and circumstances. There are no patent infirmity or illegality in the impugned order dated 27.10.2020 - Petition is dismissed.

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• 2022 (12) TMI 899
  Right to use between the Appellant and the railways has been entered into in the light of the scheme of the Central Govt., as own your wagon scheme - power of the State to tax the transaction which is an interstate sales or a transaction in other state - HELD THAT:- On a query of this Court as to whether any review was sought for in respect of order dated 05.12.2017 passed in WP(T) No. 54/2016, learned counsel for the parties are unable to apprise this Court. Learned counsel for the applicants, however, submit that the same would be inconsequential as the order dated 05.12.2017 was a common order in both the writ petitions. These cases are disposed of.

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