TMI Tax Updates - e-Newsletter
December 25, 2020

Case Laws in this Newsletter:

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

Articles

• SIGNIFICANT ROLE OF MSMEs IN GENERATING EMPLOYMENT OPPORTUNITIES

Notifications

GST - States

• 88/2020-State Tax - dated 14-12-2020 - Himachal Pradesh SGST
  Amendment in Notification No. 13/2020 – State Tax, dated the 23rd June, 2020

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• 87/2020-State Tax - dated 14-12-2020 - Himachal Pradesh SGST
  Extends the time limit for furnishing the declaration in FORM GST ITC-04

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• 91/2020 - State Tax - dated 23-12-2020 - Maharashtra SGST
  Seeks to extend the due dates for compliances and actions in respect of anti-profiteering measures under GST till 31.03.2021

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• GST-1-2020/13 - dated 9-12-2020 - Punjab SGST
  Prescribe return in FORM GSTR-3B of PGST Rules, 2017 along with due dates of furnishing the said form for October, 2020 to March, 2021

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• 1365/XI-2-20-9(42)/17-U.P. GST Rules 2017-Order-(168)-2020 - dated 17-12-2020 - Uttar Pradesh SGST
  Uttar Pradesh Goods and Services Tax (Forty Seventh Amendment) Rules 2020

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• 1376/XI-2-20-9(47)/17-U.P. Act-1-2017-Order-(167)-2020 - dated 9-12-2020 - Uttar Pradesh SGST
  Amendment in Notification No. 428/XI-2-9(47)/17-U.P. Act-1-2017-Order-(106)-2020 dated 30 April, 2020

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• 1374/XI-2-20-9(47)/17-U.P. Act-1-2017-Order-(166)-2020 - dated 9-12-2020 - Uttar Pradesh SGST
  Notify class of persons under proviso to section 39(1)

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• 1373/XI-2-20-9(47)/17-U.P. Act-1-2017-Order-(165)-2020 - dated 9-12-2020 - Uttar Pradesh SGST
  Notify special procedure for making payment of 35% as tax liability in first two month

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• 1372/XI-2-20-9(47)/17-U.P. Act-1-2017-Order-(164)-2020 - dated 9-12-2020 - Uttar Pradesh SGST
  Appoints the 10th day of November, 2020, as the date on which the provisions of section 7 of the Uttar Pradesh Goods and Services (Amendment), Act, 2020 shall come into force.

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• 1371/XI-2-20-9(47)/17-U.P. Act-1-2017-Order-(163)-2020 - dated 9-12-2020 - Uttar Pradesh SGST
  Amendment in Notification No. KA.NI.-2-983/XI-9(47)/17 U.P. Act-1 – 2017- Order (42)-2019 dated 02.07.2019

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Circulars / Instructions / Orders

DGFT

• 34/2015-2020 - dated 24-12-2020
  Amendment in Para 2.14 (Modification of IEC) of Chapter-2 of Handbook of Procedures, 2015-2020

Highlights / Catch Notes

GST

• Detention of goods alongwith the vehicle - goods detained by the respondent for the reason that the transportation of the goods was not accompanied by a valid e-way bill - Section 129(3) of the GST Act - Directions issued for release of goods with conditions - HC
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• Revocation of cancellation of registration - Section 30 of the CGST Act - the consultant of the writ applicant inadvertently applied on 06.07.2020 for cancellation in Form REG-16. - GST Authorities directed to hear the writ applicant at the earliest and pass appropriate order in accordance with law within a period of 8 days from the date of receipt of this order. - HC
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• Refund of excess cash deposited - In the instant case, it is not in dispute that during the period for which the refund was claimed by the petitioner assessee, there was no outstanding liability towards tax, interest, penalty or any other amount under the Act, and there were excess amounts in the Electronic Cash Ledger of the petitioner-assessee that could be considered for refund to him in terms of the first Proviso to Section 54 of the Act. - HC
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• Grant of anticipatory bail - evasion of GST - bogus bills - Present is a case where arrest is imperative for fair and full investigation - Considering the complexity of the issue, the tax impact on chain of sellers and purchasers, the material as on date with the investigating agency, the multi dimensional aspects involved which needs a deeper probe, no case is made out for grant of pre-arrest bail. - HC
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• Profiteering - purchase of Shop - the Respondent has benefited from the additional ITC to the extent of 5.91% of the turnover during the period from July, 2017 to June, 2019 - It is also apparent from the above that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the benefit of ITC to his buyers. - NAPA
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Income Tax

• Order u/s 197 refusing to grant a certificate of tax deduction at source at Nil rate - Perusal of Rule 28AA of the Income Tax Rules shows that the considerations prescribed under clause (2) are mandatory and the department is bound to determine the yearly TDS rates on the four parameters prescribed therein. - It is settled law that the Government is bound to follow the rules and standards they themselves had set on pain of their action being invalidated. In the present case, the assessing officer has not followed the aforesaid rule as there is no reference in the impugned reason to any computation carried out under Rule 28AA. - HC
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• Reopening of assessment u/s 147 - no notice u/s 143(2) issued - It is not a mere formality but it given the jurisdiction to the A.O. to complete the assessment U/s 143(3) of the Act, therefore, non-issuance of notice U/s 143(2) of the Act vitiates the assessment proceedings. - the assessment proceedings completed without issuance of notice u/s 143(2) of the act and void ab-initio and liable to be quashed. - AT
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• Correct head of income - interest received from partners - Department having accepted the treatment of the assessee in reducing interest from partners from work-in-progress in the immediately preceding assessment year and also in the immediately succeeding assessment year, we see no reason to reject the very same treatment given by the assessee for the interest received from the partners for the current Assessment Year - AT
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Customs

• Levy of penalty under Section 112 of the Customs Act, 1962 - When the authority wants to rely upon such documents, it is incumbent upon them to provide copy of such documents to the noticee and non-supply of such copies of relied upon documents to the noticee renders the process of adjudication void ab-initio. - AT
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Service Tax

• Determination of service tax liability on the approval of resolution plant under IBC - The amount of service tax dues having thus crystallized, the resolution plan says that the same would be settled at 5% of the principal dues adjudicated. The word used is “adjudicated” and not “adjusted” as sought to be read and applied by the respondent. Therefore, the amount that the petitioner would be required to pay is 5% of ₹ 7,02,20,725.00. In so far the recovered amount i.e. ₹ 6,23,82,214.00 is concerned, the same is part of the total demand determined i.e. ₹ 7,02,20,725.00. After retaining 5% of ₹ 7,02,20,725.00, respondent would be duty bound to refund the balance amount to the petitioner - HC
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• Levy of Service tax - Reverse Charge Mechanism - consulting engineer service - amount paid to Honda Japan under the Technical Agreement - the amount was paid to compensate Honda Japan for the research and allied work it had performed at its end and not towards supply of any technical information to the appellant. In the absence of any evidence to the contrary, the Commissioner (Appeals) could not have concluded that the aforesaid amount was paid by the appellant to Honda Japan for rendering any taxable service. - AT
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• Declared Service or not - appellant had collected an amount towards compensation/penalty from the buyers of coal on the short lifted/un-lifted quantity of coal; collected amount towards compensation/penalty from the contractors engaged for breach of terms and conditions; and collected amount in the name of damages from the suppliers of material for breach of the terms and conditions of the contract - It is not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards “consideration” for “tolerating an act” leviable to service tax under section 66E(e) of the Finance Act - AT
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Central Excise

• CENVAT Credit - few transactions of which consignments were either fake or fictitious - The investigation conducted by the department at the end of the transporter by searching the vehicles from the site ‘www.vahan.nic.in’ is an evidence which cannot be relied upon inasmuch as by the said evidence, the department is fastening the liability against the appellant, especially when the department could have investigated from the concerned State RTO in order to get the details of the truck owners. This exercise has not been done in the present case, thus, the said evidence cannot be relied upon in order to deny the lawful credit availed by the appellant. - AT
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VAT

• Principles of natural Justice - Non-application of mind - It is settled law that there must be an independent assessment made by the second respondent, while passing the assessment orders under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006. The second respondent cannot mechanically accept the findings of the Enforcement Wing Officials in his report submitted to the second respondent. - HC
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Case Laws:

• GST

• 2020 (12) TMI 945
  Detention of goods alongwith the vehicle - goods detained by the respondent for the reason that the transportation of the goods was not accompanied by a valid e-way bill - Section 129(3) of the GST Act - HELD THAT:- Taking note of the request of counsel for the petitioner for permission to clear the goods and the vehicle on furnishing a bank guarantee for the amount demanded in Ext.P3, the writ petition is disposed off by directing that if the petitioner furnishes a bank guarantee for the amount demanded in Ext.P3 notice, then the respondent shall release the goods and the vehicle to the petitioner, and thereafter proceed to adjudicate the matter, after hearing the petitioner, under Section 129(3) of the GST Act.

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• 2020 (12) TMI 944
  Seeking quashing of the selection of the respondent No.4 as L-1 bidder - seeking declaration that the bid of the respondent No.4 should be rejected as being non-responsive - It is the contention of the petitioner that the bid of the respondent No.4 does not comply with the tender conditions viz Clause 6.10.3, Clause 6.10.5 and 18 of the Instructions to the Bidders and it ought to have been rejected as non-responsive - HELD THAT:- The bidder had to indicate the exact rate of customs duty and applicable item of custom tariff under which it is covered. The amendment dated 04.01.2019 whereby a new Clause 6.10.5 was introduced, mandated that the tenderer had to state in its offer, the GST etc. whichever is applicable in India, over and above the prices being quoted. Instruction 7 of Annexure-1 prescribed that the bidders must not indicate the separate discount, if any. A perusal of the technical bid shows that the petitioner has indicated the rate of the GST which was applicable. However, in the commercial bid, respondent No.4 has indicated 000 against the column total amount of GST/IGST meaning thereby, that respondent No.4 was not passing on the tax element to the respondent No.1 to 3/Prasar Bharti. As rightly submitted by Mr. Sharma, learned counsel for the respondent No.1 to 3/Prasar Bharti that there is nothing in the tender which shows that it is mandatory for a bidder to pass on the tax element to respondent No.1 to 3/Prasar Bharti. It is up to the bidder to decide whether or not to pass on the tax element to the respondent No.1 to 3/Prasar Bharti. It is not mandatory in law that a dealer has to collect the tax from the purchaser and pass it on to the Government. A dealer is permitted to absorb the tax element in the price offered. The Government is only interested in getting the tax payable on the sale and is not concerned as to whether the tax element is passed on to the consumer or not. In this view of the matter, there are no anomaly in the decision making process adopted by the respondent No.1 to 3/Prasar Bharti. Since it is not necessary to pass on the tax element to the consumer and the respondent No.4 has decided to absorb the tax element in the cost of the products itself, respondent No.1 to 3/Prasar Bharti was justified in coming to the conclusion that the respondent No.4 is L-1 - there are no fault in the approach adopted by the respondents No.1 to 3/Prasar Bharti. There are no flaw in the decision making process adopted by the respondent No.2. Nor can the decision of the authority be said to be so arbitrary or irrational, that would warrant interference under Article 226 of Constitution of India - petition dismissed.

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• 2020 (12) TMI 943
  Permission for withdrawal of writ application - Detention of goods alongwith vehicle - Section 130 of the CGST Act, 2017 - HELD THAT:- After arguing the matter for some time and as this Court was not inclined to interfere at the this stage of show cause notice, Mr. Dave, made a request that he may be permitted to withdraw this writ application leaving it open for him to raise all the legal contentions available to him including the issue of jurisdiction. Application disposed off.

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• 2020 (12) TMI 942
  Revocation of cancellation of registration - Section 30 of the CGST Act - the consultant of the writ applicant inadvertently applied on 06.07.2020 for cancellation in Form REG-16. - HELD THAT:- The Commercial Tax Officer, GST, Ghatak- 58, Surat, should immediately look into the two applications filed by the writ applicant under Section 30 of the Act and pass appropriate order in accordance with law after giving an opportunity of hearing to the writ applicant. This writ application is disposed off with a direction to the respondent No.2 herein, to hear the writ applicant at the earliest and pass appropriate order in accordance with law within a period of 8 days from the date of receipt of this order.

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• 2020 (12) TMI 941
  Maintainability of petition - availability of alternative remedy of pursuing the appeal - HELD THAT:- The writ petition is disposed by relegating the petitioner to his alternative remedy of pursuing the appeal before the appellate authority. It is made clear, however, that the Bank Guarantee furnished by the petitioner (Ext.P12) at the time obtaining a release of the detained goods and vehicle from the respondent, shall be kept alive by the petitioner during the pendency of the appeal, and on that condition, the respondent shall refrain from invoking the Bank Guarantee for a period of two months from today.

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• 2020 (12) TMI 940
  Grant of Interim Bail - respondents have not been able to specify the offence committed by the applicant - HELD THAT:- Plainly, the issues involved in the present application require examination - A status report and the supplementary status report has been filed. Mr Gupta, learned senior counsel seeks time to examine the same and file response, if necessary. The applicant is directed to be released on interim bail on his furnishing a Personal Bond in the sum of ₹1 lakh with two sureties of the like amount to the satisfaction of the trial court/duty magistrate - List for hearing on 19.01.2021.

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• 2020 (12) TMI 939
  Refund of excess cash deposited - Balance in Electronic Cash ledger - It is the case of the petitioner that a considerable quantity of the sales effected by it is to SUPPLYCO and FACT, who deduct tax at the rate of 2% on payments made to the petitioner in terms of Section 51 of the GST Act - HELD THAT:- From a perusal of Ext.P4 order that is impugned in the writ petition that the 2nd respondent has completely misunderstood the nature of the claim made by the petitioner as also the scope and ambit of Sections 51 and 54 of the CGST Act. In the instant case, as is evident from the facts stated in the writ petition as also from a perusal of the claim for refund preferred by the 2nd respondent, what the petitioner was essentially claiming was the refund of the balance remaining in the Electronic Cash Ledger, that was maintained in accordance with the provisions of the Act. Section 54(1) deals with claims for refund of any tax and interest or other amount paid by the assessee, and the proviso to Section 54(1) deals with claim for refund of any balance in the Electronic Cash Ledger. In the instant case, it is not in dispute that during the period for which the refund was claimed by the petitioner assessee, there was no outstanding liability towards tax, interest, penalty or any other amount under the Act, and there were excess amounts in the Electronic Cash Ledger of the petitioner-assessee that could be considered for refund to him in terms of the first Proviso to Section 54 of the Act. The 2nd respondent, however, misdirected himself and treated the claim for refund preferred by the petitioner as one relating to Section 51(8) of the Act. It has to be noted that at no stage did the petitioner have a case that the deduction of tax at source by SUPPLYCO/FACT was excessive or erroneous. That being the case, there was no occasion for the 2nd respondent to have considered the application as one traceable to Section 51(8) of the Act. The only exercise that had to be done by the 2nd respondent was to ascertain whether there was a balance in the Electronic Cash Ledger, after meeting the known liabilities of the petitioner towards tax, interest or any other amount under the Act, and if there was such a balance, the refund had necessarily to be granted to the petitioner. Ext.P4 order of the 2nd respondent cannot be legally sustained - the 2nd respondent is directed to ascertain the excess amount lying to the credit of the petitioner in his Electronic Cash Ledger after making provision for any known and determined liability of the petitioner towards tax, interest, penalty or other amounts under the Act - Petition allowed.

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• 2020 (12) TMI 938
  Grant of Bail - evasion of GST - Applicant is being summoned for the reason that there has been some business transactions between the two companies which are allegedly not disclosed by the said company and the same are being enquired into for the purposes of collection of GST - HELD THAT:- This Court is of the opinion that since there have been summons and notices to the applicant for appearance in the inquiry relating to evasion of GST by the said company wherein, the applicant has been called upon, he is directed to appear before the competent authority whenever he is called upon by the concerned authorities. The applicant shall file his bail bond of ₹ 50,000/- and two sureties each in the like amount with an undertaking that he shall appear and co-operate in the assessment proceeding as and when required, to the satisfaction of the officer concerned, in which one of the sureties will be of his family members. In the event, the applicant does not respond to any of the summons/notices issued to him by the competent officer, this order shall stand vacated. Application disposed off.

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• 2020 (12) TMI 937
  Grant of anticipatory bail - evasion of GST - bogus bills - It is alleged that the tax was being evaded by ensuring that there was no checking or verification of the documents or goods, while being transported to from State of Punjab - HELD THAT:- It would be necessary to glance at working of Goods and Services Tax (GST). With the introduction of GST regime, one of the object worked upon was free movement of goods, by removal of barriers and Information Collection Centres. The responsibility was shifted upon the Excise and Taxation Officers/ officials and more so on the mobile wing of the department. Under the GST, there is an inter-connected chain of sellers and purchasers as the purchaser gets the credit of tax paid or suffered by seller. The chain can be within the State or PAN-India. One link in the chain being ingenuine, doctored or nonexistant, would impact the entire chain. The nature of allegation in present case of evasion of GST requires a deeper probe. There are far reaching ramifications which may vary from allowing of input credit/ MODVAT of tax not paid to the Government to an eventuality that the credit of tax paid on some other product is used for something else. Not only this, someone later in chain in spite of being a bonafide purchaser not aware of the earlier misdeed in the chain yet will have to suffer the consequences - The allegation in the present case are very serious. There is alleged connivance of the transporters, passers and the officials to facilitate the evasion of tax. The investigation is going on, it appears that the officials were being paid bribe on monthly basis. The investigating agency had initiated action on the basis of the the information. The allegations against the petitioner is that he is running a transport business and in connivance with the officials of Excise and Taxation Depatment, a racket is being run with the help of others to dent the public exchequer. The contention of learned counsel for the petitioner that no recovery is to be made is not well founded. Merely the fact that the computers and registers are already with vigilance department would not be enough to say that custodial investigation of the petitioenr is not required. Rather it is during investigation of the petitioenr that full picture would emerge - The material evidence is in possession of the petitioner. He is in a position not only to help himself out by not producing or tampering with the evidence but would be of great help to the official of the Excise and Taxation Department named in the FIR. From the pleadings and arguments it is forth coming that it was a well knitted trap for evasion of tax. The officials were being paid on monthly basis and the petitioner was in a position to even negotiate for the monthly payment to be made. There is no quibble that the liberty of a person is of utmost importance. But when personal liberty is pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail. Present is a case where arrest is imperative for fair and full investigation - Considering the complexity of the issue, the tax impact on chain of sellers and purchasers, the material as on date with the investigating agency, the multi dimensional aspects involved which needs a deeper probe, no case is made out for grant of pre-arrest bail. Petition dismissed.

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• 2020 (12) TMI 936
  Profiteering - purchase of Shop - allegation that the Respondent had not passed on the benefit of input tax credit to him by way of commensurate reduction in price - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Applicant No. 1 had alleged that the Respondent was not passing on the benefit of ITC to him on the Shop No. GF-0131-A, which he had purchased in the Mercado Project being executed by the Respondent in Sector-42, Gurugram, in spite of the fact that he was availing ITC on the purchase of the inputs at the higher rates of GST which had resulted in benefit of additional ITC to him and was also charging GST from him @12%. This complaint was examined by the Standing Committee on Anti-Profiteering and was forwarded to the DGAP for investigation who vide his Report dated 23.03.2020 has found that the ITC as a percentage of the total turnover which was available to the Respondent during the pre-GST period was 2.66% and during the post-GST period this ratio was 8.57% as per the Table-B mentioned above and therefore, the Respondent has benefited from the additional ITC to the tune of 5.91% (8.57% - 2.66%) of the total turnover which he was required to pass on to the buyers of this Project. The DGAP has also found that the Respondent has not reduced the base prices of his shops by 5.91% due to additional benefit of ITC and by charging GST at the increased rate of 12% on the pre-GST basic prices, he has contravened the provisions of Section 171 of the CGST Act, 2017. Respondent has contended that the incremental tax paid on the services should not form part of the profiteered amount - HELD THAT:- The benefit of additional ITC has to be computed by comparing the amount of ITC which has become available to the Respondent in the post GST period with the amount of CENVAT and VAT credit which he has availed during the pre GST period and accordingly, the amount of additional ITC has to be passed on by the Respondent to his buyers. Therefore, the ITC amounting to Rs, 1,08,55,599 claimed to have been paid by the Respondent as incremental tax on the procurement of input services cannot be excluded from the total amount of profiteering as it has not been paid by the Respondent from his own account. Accordingly, the above claim of the Respondent cannot be accepted. Respondent has also contended that the profiteered amount should have been restricted to the ITC availed in respect of goods only - HELD THAT:- The amount of ITC cannot be taken to be ₹ 2,52,00,202/- claimed to be relating to the purchase of the goods for computation of the profiteered amount, as has been asserted by the Respondent. Accordingly, all the above contentions of the Respondent are fallacious and hence they are not tenable. Respondent has further contended that due to slump in the real estate sector he has incurred additional expenses on marketing and payment of commissions which has resulted in overall increase in the project cost which should have been considered while calculating the profiteered amount - HELD THAT:- It would be appropriate to mention that every builder launches marketing campaigns and pays commission for selling his flats/houses/shops in the normal course of his business which is already built in the cost of every project and hence, the Respondent cannot claim any concession on this ground. Moreover, there is no provision under Section 171 (1) to consider the costs incurred by the Respondent while calculating the profiteered amount. Hence, the above claim of the Respondent cannot be accepted. Thus, It is established from the perusal of the above facts that the Respondent has benefited from the additional ITC to the extent of 5.91% of the turnover during the period from July, 2017 to June, 2019 as is evident from Table-B supra. It is also apparent from the above that the provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has not passed on the benefit of ITC to his buyers. Accordingly, the profiteered amount is determined as ₹ 2,44,80,835/- inclusive of GST @ 12% as has been mentioned in Table-C supra, in terms of Section 171 (1) read with Rule 133 (1). The Respondent has realized an additional amount of ₹ 66,463/- which includes both the profiteered amount @ 5.91% of the taxable amount (base price) and 12% GST on the said profiteered amount from the Applicant No. 1. He has also realized an additional amount of ₹ 2,44,14,372/- which includes both the profiteered amount @ 5.91% of the taxable amount (base price) and 12% GST on the said profiteered amount from the 228 shop buyers other than the Applicant No, 1. The details of the profiteered amount and the buyers have been mentioned by the DGAP in Annexure-14 of his Report dated 23.03.2020. These buyers are identifiable as per the documents placed on record. Therefore, as per the provisions of Section 171 (1) read with Rule 133 (3) (b) the Respondent is directed to pass on an amount of ₹ 2,44,80,835/- and an amount of ₹ 66,463/- to the other flat buyers and the Applicant No. 1 respectively along with the interest @ 18% per annum from the dates from which the above amount was collected by him from them till the payment is made, within a period of 3 months from the date of passing of this order as per the details mentioned in Annexure-14, attached with the Report dated 23.03.2020. Penalty - HELD THAT:- Perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 01.07.2017 to 30.06.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively. Accordingly, notice for imposition of penalty is not required to be issued to the Respondent. This Authority as per Rule 136 of the CGST Rules 2017 directs the Commissioners of CGST/SGST Haryana to monitor this order under the supervision of the DGAP by ensuring that the amount profiteered by the Respondent as ordered by this Authority is passed on to all the eligible buyers. A report in compliance of this order shall be submitted to this Authority by the Commissioners CGST /SGST through the DGAP within a period of 4 months from the date of receipt of this order.

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• Income Tax

• 2020 (12) TMI 935
  Application u/s 132 (B) for release of 7kg of gold seized by the authorities - HELD THAT:- There is a dispute on the factual aspects of the matter regarding ownership of the seized gold, the varying versions of the parties pertaining to the vouchers on the basis of which Respondent No.5 was carrying the gold bullion when he was apprehended, examination of evidence, regarding source of the 8kg bullion, the genuineness of the transaction etc. We also observe from impugned order as also confirmed by Counsel for Respondent No.5 that the said Respondent has filed appeal against the assessment order and that the said appeal is pending before the Commissioner of Income Tax (Appeals). Copy of the memo of the said appeal in Form 35 dated 11th January, 2019 has also been placed before this Court. In view of the pendency of appeal of Respondent No.5 before the CIT(A) Mumbai, who is the competent authority to render findings on the factual aspects of the matter, we do not deem it fit to interfere in the matter at this stage. Therefore, we decline to exercise our writ jurisdiction under Article 226 of the Constitution of India in view of pendency of the appeal before the CIT(A).

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• 2020 (12) TMI 934
  Revision u/s 264 - Order u/s 197 refusing to grant a certificate of tax deduction at source at Nil rate to the petitioner company - Petitioner is a wholly owned subsidiary of Manpower Holdings Inc USA and is engaged in the business of providing manpower related services - case of petitioner, the ratio of tax deduction at source to profits has been as high as 1758% in the recent past and the petitioner company has refunds due and payable which have arisen essentially on account of high rate of TDS - petitioner contended that the impugned order was contrary to the rule of consistency as the 1.50% rate with respect to payment under Sections 194J and 194I of the Act specified in the impugned order was three times higher than the 0.50% rate of tax deduction at source determined in the immediately preceding year by the respondent - HELD THAT:- This Court finds merit in the submission of the petitioner that since the impugned order was passed after an approval from the CIT, it cannot be challenged by way of a revision petition before the CIT under Section 264 of the Act. To hold otherwise, would amount to directing the petitioner to file an appeal from Caesar to Caesar . In the present writ petition, the petitioner has not claimed that the payments received by it are in the nature of technical services subject to 2% rate. The respondent has itself admitted in the impugned reasons that the nature of services of petitioner is Consultancy which falls under definition of fees for technical services subject to TDS rate of 1.50% for the current financial year 2020-21. Consequently, there is no need for any direction to be given to the petitioner to file a fresh application under Section 197. This Court is also of the view that the reliance placed by the respondent upon para no.4 of the impugned reasons is misplaced inasmuch as the rates mentioned therein have been superseded by the subsequent order dated 7th November, 2019 passed by the CIT under Section 264 of the Act. Accordingly, the respondent could not have relied upon the initial rates of 2019-20, which have been set-aside/superseded, to determine the average rate of TDS. This Court is in agreement with the submission of learned standing counsel for the respondent that it is the decision making process and not the decision that can be impugned in a writ petition. To appreciate the decision making process, it is necessary to outline the provision under which the TDS rates have to be determined under Section 197 of the Act. Rule 28AA of the Income Tax Rules prescribes the procedure to be followed by the assessing officer in determining the 'existing and estimated liability'. Perusal of Rule 28AA of the Income Tax Rules shows that the considerations prescribed under clause (2) are mandatory and the department is bound to determine the yearly TDS rates on the four parameters prescribed therein. It is settled law that the Government is bound to follow the rules and standards they themselves had set on pain of their action being invalidated. In the present case, the assessing officer has not followed the aforesaid rule as there is no reference in the impugned reason to any computation carried out under Rule 28AA. This Court vide order dated 8th December, 2020 had granted time to the respondent to place on record the computation of TDS rates under Rule 28AA, if any. Despite the said opportunity, neither any computation was filed nor was any reasonable explanation given as to why the computation under Rule 28AA was not carried out. Consequently, this Court is of the opinion that the impugned order is liable to be quashed on the ground that the decision making process in the present case is contrary to law. This Court finds that there is nonapplication of mind which vitiates the impugned order and reasons. Accordingly, we set aside the impugned order and reasons and remand the matter to respondent no.2 for fresh determination in accordance with law as expeditiously as possible preferably within a period of two weeks. In the interim, we direct that the benefit of revised TDS rates prescribed for financial year 2019-2020 (by respondent no.1 vide order dated 7th November, 2019) read with rebate of 25% given by Ministry of Finance on account of Covid-19 crisis from the rates applicable in the preceding year 2019-20 vide Press Release dated 13th May, 2020 be given to the petitioner.

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• 2020 (12) TMI 933
  Deduction u/s. 10A - Whether the Tribunal was correct in holding that, the assessee's activity of human resources services are IT enabled services, when the assessee was only making available the data base of qualified IT personnel and entitled to deduction u/s. 10A of the Act and recorded a perverse findings? - Whether assessee's activity of human resources services are IT enabled services, when the assessee was only making available the data base of qualified IT personnel and entitled to deduction u/s. 10A of the Act and recorded a perverse findings? - HELD THAT:- Substantial questions of law framed in this appeal have already been answered against the revenue by judgment [ 2020 (11) TMI 653 - KARNATAKA HIGH COURT] . The aforesaid submission could not be disputed by the learned counsel for the revenue.

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• 2020 (12) TMI 932
  Addition accepting change in the method of accounting adopted by the assessee - assessee was initially following the Percentage completion method by showing income on the basis of percentage of work done - in revised return filed assessee withdrew the claim of deduction u/s 80IB(10) of the Act and changed the method of accounting from the Percentage completion to the Project completion - HELD THAT:- We find that the assessee was regularly following the Percentage completion method by valuing the closing work-in-progress at estimated realizable price. Certain unforeseen circumstances developed. The assessee switched over from the Percentage completion method to the Project completion method by filing a revised return. It is not the case of the Revenue that the revised return was otherwise, not valid. Similarly, the Revenue has also not made out a case that the assessee did not consistently follow the Project completion method in the following years. AR vehemently submitted that the assessee continued to follow the Project completion method and offered income under this method in the later years. Once it is seen that the assessee switched over from the Percentage completion method to the Project completion method in a bona fide manner and continued with the changed method in the years to come, in our considered opinion, no fault can be found with the ld. CIT(A) deleting the addition made by the AO sticking to the Percentage completion method, which was abandoned by the assessee. We therefore, accord our imprimatur to the view canvassed by the ld. CIT(A).

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• 2020 (12) TMI 931
  Reopening of assessment u/s 147 - Notice issued by eligible jurisdictional officer - assessee had challenged the notice u/s 148 issued by the ITO, Ward 2(3), Jaipur while the case of the assessee falls under ITO Ward 2(2), Jaipur - HELD THAT:- After going through the records, we are in concurrence with the findings recorded by the ld. CIT(A) as we also noticed that the assessee himself had filed original return of income under ITO Ward-2(3), Jaipur which is apparent from the acknowledgement of return of income filed by the assessee. Therefore, the assessee himself submitted their jurisdiction to ITO Ward-2(3), Jaipur by admitting that ITO Ward-2(3), Jaipur was having jurisdiction over the assessee. As noticed that ITO Ward- 2(3), Jaipur had subsequently transferred the case to ITO Ward-2(2), Jaipur who completed the scrutiny assessment U/s 147/143(3) of the Act and even during the assessment proceedings, the assessee had never challenged the jurisdiction of the A.O. and rather participated in the proceedings. As per the provisions of Section 124(3) of the Act, it has categorically been mentioned that no person shall be entitled to call in question the jurisdiction of an A.O., where he had made a return under Sub-Section (1) of Section 139, after expiry of one month from the date on which he was served with a notice under sub-Section (2) of Section 142 or after completion of assessment whichever is earlier. See BRITISH INDIA CORPORATION LTD. [ 2001 (1) TMI 914 - ALLAHABAD HIGH COURT] Even as per the provisions of Section 124(3) of the Act, the issue of jurisdiction cannot be challenged after completion of assessment and as per the facts of the present case, the assessee himself had filed return of income with ITO Ward -2(3), Jaipur who had recorded the reasons for reopening, therefore, it cannot be held that reasons were recorded by wrong jurisdictional officer. - Decided against assessee. Reasons recorded in the present case was by non-jurisdictional A.O., therefore, the said A.O. had no jurisdiction upon the assessee - We found that the assessee had declared capital gain income in return which clearly shows that there is non-application of mind on the part of the A.O. while recording the reasons as he did not consider the return furnished by the assessee wherein capital gain income has been shown. Thus, non-existing facts/basis does not lead to formation of belief u/s 147 which is a condition precedent U/s 147 of the Act as there is no rational nexus of material/information available with formation of belief. Thus, according to us, no valid belief can be formed on the basis of incorrect/non-existing facts U/s 147 of the Act otherwise it would be then difficult to interpret what weighed with the mind of the A.O. while recording reasons as the reasons recorded cannot be modified or supplemented by further explanation. Therefore, the findings recorded by the ld. CIT(A) supporting the reasons on the ground of sufficiency of reasons, according to us, are misconceived and cannot be sustained. Assumption of jurisdiction U/s 147 of the Act by the A.O. is not tenable. Capital gain computation - Additions u/s 50C - CIT-A taking cognizance of the report of the DVO in considering the valuation made by the DVO in its report - HELD THAT:- A.O. passed provisional order of assessment after making reference to the DVO which according to us is not allowed as per the scheme of the Act as there is no provision in the law to pass provisional assessment order subject to receipt of DVO report. Although, the ld DR has submitted that by making reference U/s 50C(2)(b) of the Act while passing the order of assessment, the limitation U/s 153 of the Act has been extended by the A.O. but, we are not inclined to accept the argument of ld. DR as Section 153 specifically does not exclude period of reference u/s 50C of the Act. Thus, we are of the view that what cannot be done directly cannot be done indirectly. Ld DR could not bring on record any contrary decision or position of law to our notice to counter the judgment relied upon by the ld. AR of Hon ble Gujrat High Court in the case of Darshan Buildcon vs ITO [ 2019 (1) TMI 956 - GUJARAT HIGH COURT] therefore we hold that the assessment order passed by the A.O. and upheld by the ld. CIT(A) is liable to be set aside as there cannot be any provisional assessment order under the income tax law. Upholding of addition u/s 50C - DVO had made no attempt except to adopt the stamp valuation as on the date of sale deed. The said DVO report does not determine fair value U/s 50C of the Act. The DVO has merely accepted the stamp value given by the sub-registrar as on the date of sale deed, without considering and disposing the objections of the assessee that properties were disputed and prior agreement of sales were executed by the assessee. No fair value has been determined in DVO report, no comparable sale instances relied upon, no correct method applied to determine fair value, no adequate opportunity of being heard given. The information/documents relied upon by the ld. DVO have not been confronted and/or provided to the assessee. Further the very purpose of reference is defeated if stamp valuation is mechanically applied in valuation proceedings. CIT(A) was not justified by simply resorting to DVO report which does not determine fair value as envisaged under the law. Doubting on existence of agreement to sell is also not justified as no addition can be sustained merely on suspicion. The fact that the assessee received advance payment of ₹ 11.00 lacs in F.Y. 2004-05 and 2005-06 is undisputed. However, merely receipt of advance payment in cash and doubt on reliability of agreement to sell without any valid basis does not justify addition. Receipt of consideration in cash mode and not through cheque - Requirement of receipt of consideration in cheque only was made effective later on by inserting proviso to Section 50C - However, at the time of execution of agreement to sell, there was no such restriction of receiving cash consideration against agreement to sell, thus, having regard to the decision of the Coordinate Bench in the case of Indexone Tradecone (P.) Ltd [ 2018 (9) TMI 1231 - ITAT JAIPUR] the said basis is not a valid basis to deny benefit of taking stamp duty valuation considering DLC rates of FY 2004-05 for the purpose of section 50C of the Act. Therefore, the findings of ld. CIT(A) are set aside

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• 2020 (12) TMI 930
  Reopening of assessment u/s 147 - no notice u/s 143(2) issued - HELD THAT:- AO has not stated either in the assessment order or in the order-sheets of the assessment proceedings that any notice u/s 143(2) was issued to the assessee. It is clear that there is no notice u/s 143(2) and reassessment proceedings in the case of assessee were completed without issuance of a notice U/s 143(2) - Hon ble Supreme Court in the case of ACIT Vs Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] has held that failure on the part of the assessing authority to issue notice U/s 143(2) of the Act cannot be a mere procedural irregularity and the same is not curable. It is not a mere formality but it given the jurisdiction to the A.O. to complete the assessment U/s 143(3) of the Act, therefore, non-issuance of notice U/s 143(2) of the Act vitiates the assessment proceedings. In view of decision of Hon ble Supreme Court in the case of ACIT Vs Hotel Blue Moon (supra) as well as other decisions in this regard cited above, the assessment proceedings completed without issuance of notice u/s 143(2) of the act and void ab-initio and liable to be quashed. The judicial pronouncements referred and relied upon by the ld. DR are not applicable in the facts of the present case. In view of the above facts and circumstances, we quash the proceedings U/s 147/148 of the Act as invalid. Appeal of the assessee is allowed.

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• 2020 (12) TMI 929
  Disallowance u/s.14A - assessee had earned dividend income and claimed the same as exempt in the return of income - HELD THAT:- Even if the expenses are to be disallowed as attributable to the said investment activity, it could be disallowed on a proportionate basis only for 9 days and not for the whole year. Hence, in this regard, the computation mechanism provided in Rule 8D(2)(iii) of the Rules would only result in absurdity if it is followed. We find that the ld. AR at the time of hearing had placed reliance on the decision in the case of Lee and Muirhead Pvt. Ltd. [2019 (4) TMI 1871 - BOMBAY HIGH COURT] and the same, in our considered opinion, would come to rescue of the assessee wherein it had been held that Rule 8D cannot be applied blindly when the assessee had hardly incurred any expenses in relation to dividend earned and substantial investments were made temporarily in order to park idle funds. At the same time, some disallowance of expenses need to be made u/s.14A even though the investment was held for 9 days. In these peculiar facts and circumstances, we direct the ld. AO to adopt the disallowance workings given by the assessee during the course of assessment proceedings computing disallowance u/s.14A of the Act at ₹ 99,600/-. The disallowance of ₹ 99,600 could be treated as expenses incurred for 9 days attributable to investment activity and that would meet the ends of justice in the peculiar facts and circumstances of the instant case. Disallowance u/s.14A while computing book profit u/s.115JB of the Act - HELD THAT:- We find that the Special Bench of Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] had already held that the computation mechanism provided in Rule 8D(2) of the Rules cannot be applied for the purpose of disallowance of expenses under Clause f of Explanation to Section 115JB (2) of the Act. However, certain expenses need to be disallowed as per Clause f of Explanation to Section 115JB (2) of the Act. Hence, we hold that the disallowance computed by the assessee on rationale basis at ₹ 99,600/- be disallowed under Clause f of Explanation to Section 115JB(2) of the Act. The ld. AO is directed accordingly. Depreciation of revised written Down Value (WDV) of the assets acquired by the assessee from its holding company - whether the transaction would be covered by the provisions of Section 47(iv) and the actual cost as per Explanation 6 to Section 43(1) r.w.Explanation 2 to Section 43(6) ? - HELD THAT:- As decided in own case for A.Y.2007-08 in the case of the transferor company, the income is to be treated as income of the year in which the transfer has taken place. This shows that the subsequent event has the effect of withdrawing the exemption granted under section 47 and the income goes back to the date of transfer. Thus, provisions of section 47 are withdrawn on occurrence of the events mentioned under section 47A and the transaction has to be treated as a transfer under section 47(v) or (vi) of the Act as the case may be and the transferor company is liable to pay the capital gains tax. In the present case due to seizure of the assessee-company being a subsidiary of the transferor company, the provisions of section 47(iv) have ceased to apply, and the transaction has to be considered as a transfer. Section 47A provides for withdrawal of exemption and the resultant treatment to be given to income in the hands of the transferor company. Thus issue decided in favour of assessee.

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• 2020 (12) TMI 928
  TP Adjustment - Comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee's Software Development Services Business need to be deselected from final list. TDS u/s 194J - Disallowance u/s 40(a)(ia) - Leased line / date link charges - HELD THAT:- As relying on case of Channel Guide India Limited Vs. ACIT [ 2012 (9) TMI 95 - ITAT MUMBAI] and also the decision in the case of Gupshup Technology India (P) Ltd. [ 2017 (2) TMI 587 - ITAT MUMBAI] these payments made for lease line charges were neither comes under professional services nor under technical services u/s 194J of the Act. - Decided in favour of assessee.

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• 2020 (12) TMI 927
  Reopening of assessment u/s 147 - as argued in this case Joint Commissioner did not approve the reasons for reopening, the notice u/s. 148 of the Act is bad in law - HELD THAT:- We do not agree with the said contention of the Ld. AR because as per clause 28(C) of section 2 of the Act which defines the Joint Commissioner means also the person appointed as Additional Commissioner for the purpose of this Act. Since the AO has issued the notice u/s. 148 of the Act after getting approval of the Additional Commissioner which the statute recognizes as also the Joint Commissioner by virtue of section 2(28C) of the Act, the issuance of notice by AO cannot be held as bad. So, the legal issue raised by the assessee is dismissed. Unexplained investment in flat in the name of the assessee - HELD THAT:- AO has noted that the assessee had purchased a flat for ₹ 3,98,945/- which included a deposit of ₹ 1,50,000/- made by draft by the mother of the assessee to the builder. As noted that the assessee's consistent stand was that ₹ 1,50,000/- has been given by her mother Smt. Asha Sharma directly to the builder in the form of draft. In such a scenario, the assessee has discharged her burden to show the source of ₹ 1,50,000/-. Thereafter, if the AO had any doubt about the source of this amount, then the AO was at liberty to proceed against Smt. Asha Sharma which the AO has not done. Therefore, since the assessee has discharged her onus to show the source of ₹ 1,50,000/- no addition could have been legally made against the assessee as per the law in force in AY 1998-99, therefore, the Ld. CIT(A) erred in confirming the addition, therefore, I direct the deletion of addition of ₹ 1,50,000/-. This ground of appeal of assessee is allowed.

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• 2020 (12) TMI 926
  Deduction u/s 80P - interest derived from investments with the cooperative banks - HELD THAT:- The Hon'ble Karnataka High court in the case of PCIT vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] has held that for the purpose of section 80P(2)(d) Co-operative Bank should be considered as cooperative society. Similar view has been taken by the Hon'ble Gujarat High court in the case of Surat Vankar Sahakari Sangh Ltd. vs. ACIT [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] On the same issue in the case of PCIT vs. Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] has taken a contrary view holding that interest income earned from deposit with the cooperative bank does not qualify for deduction under section 80P(2)(d) of the Act. It would be relevant to mention here that the Hon'ble High Court while rendering the later judgement has not considered the earlier decision rendered in the case of Totagars Co-operative Sale Society (supra). No judgement from Hon'ble Jurisdictional High court on the issue of eligibility of deduction under section 80P(2)(d) of the Act on interest income derived by a Cooperative Society from a Cooperative Bank has been brought to our notice. The Hon'ble Bombay High Court in the case of K. Subramanian Vs. Siemens India Ltd. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT] has held that when two conflicting decisions of non-jurisdictional High Courts are available, the view that favours the assessee is to be preferred. Accordingly, following the decision of Hon'ble Karnataka High Court in the case of Totagars Cooperative Sale Society (supra) and the decision in the case of Hon'ble Gujarat High Court in the case of Vankar Sahakari Sangh (supra) the deduction claimed by the assessee under section 80P(2)(d) of the Act in respect interest derived from investments with the cooperative banks is allowed. I find merit in the grounds of appeal raised by the assessee. The impugned order is set aside and the appeal of assessee is allowed.

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• 2020 (12) TMI 925
  Addition u/s.68 - unexplained cash credits and consequential disallowance of interest expenses on unsecured loans - Admission of additional evidence - HELD THAT:- As perusing the additional evidences furnished by the assessee, we are of the view that all these additional evidences furnished by the assessee in respect of the 16 creditors would go to the root of the matter of the addition made in respect of these unsecured loan creditors. Thus, in the interest of justice we admit these additional evidences and restore them to the file of the Assessing Officer for denovo adjudication of the addition made in respect of these creditors as these evidences were not produced before the AO. Thus, this issue of addition towards unsecured loans and the disallowance of consequential interest thereon is restored to the file of the Assessing Officer for deciding afresh. Correct head of income - interest received from partners - treated as income from other sources or income earned in the course of the business of the assessee - HELD THAT:- Department having accepted the treatment of the assessee in reducing interest from partners from work-in-progress in the immediately preceding assessment year and also in the immediately succeeding assessment year, we see no reason to reject the very same treatment given by the assessee for the interest received from the partners for the current Assessment Year i.e. A.Y. 2010-11. Therefore, applying principle of consistency we direct the Assessing Officer to delete the addition made under the head income from other sources . Ground of appeal is allowed.

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• 2020 (12) TMI 924
  Eligibility for deduction u/s 10A - HELD THAT:- In principle, the deduction u/s 10A is allowable because this is offered by the assessee itself as Voluntary T P Adjustment and therefore, this issue in principle is covered in favour of the assessee by the tribunal order cited by the learned AR of the assessee as noted above. But on this factual aspect about Prior Period Expenses for F. Y. 2008 09 reported by the assessee in Schedule 8 of the Audited Accounts for F. Y. 2009 10 this is not clear as to whether these expenses or any part of these expenses is related to Prior Period income of ₹ 5,42,11,607/- reported in same Schedule 8 of the Audited Accounts for F. Y. 2009 10 because if the same is related then the actual income on this account will be less and then only actual such income can be considered for deduction u/s 10A. On this aspect, neither any detail is made available before us nor there is any finding of AO or CIT (A). Hence, we restore this matter to AO for fresh decision.

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• Customs

• 2020 (12) TMI 923
  Mandatory injunction seeking release of bills of lading illegally withheld by the defendants - Section 13(1-A) of the Commercial Courts Act, 2015 read with Order 43 Rule 1 (2) of the Code of Civil Procedure, 1908 - Right to retain shipment - Defendant are freight services agents - HELD THAT:- Upon reading the text messages of 1st, 2nd and 3rd June together, it is to be observed that after receiving ₹ 4,35,000/-, defendants made, the release of consignment, conditional and exercised right to retain goods under Section 171 of the Indian Contract Act, 1872. However, messages of 3rd June, 2020 show that the defendants had not exercised a particular liens but general liens. If read carefully, 3rd June message, does not suggest, goods were retained for not making payment of sea freight for second consignment. In fact, evidence and the circumstances emerging and flowing were indicative of the fact that ₹ 4,35,000/- were paid towards freight charges of second consignment and not against dues, however, in breach of assurance/promise, defendants, adjusted it against dues and declined to release bills. The question nos.15 (i., (ii. and (iii. are answered accordingly, in negative. Whether defendants were entitled to exercise lien under Section 171 of the Indian Contract Act, 1872? - HELD THAT:- It may be stated that defendants were not entitled to exercise general lien being not banker, factors, wharfingers, attorneys and also broker - In the case in hand, pleadings of either party do not suggest that bailee was empowered to exercise the general lien envisaged under Section 171 of the Indian Contract Act, 1872 - Goods cargo in the second shipment is a paper, a perishable product, which may loose its utility if kept for long period. Even otherwise, plaintiffs have paid sea freight for second consignment. Therefore, it is just and proper to direct defendants to release bills of lading immediately. In fact, it appears, that since second consignment has not been released within reasonable time, plaintiffs vendees have cancelled the orders. Therefore, the balance of convenience also tilts in favour of the plaintiffs. Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 922
  Provisional release of seized goods - enhancement of Bank Guarantee required to be furnished by the Petitioner - HELD THAT:- The Petitioner is required to furnish a Bank Guarantee in the sum of ₹ 15 Crores, pursuant to which the Respondents are required to release the seized goods in terms of the order of CESTAT dated 13.11.2019 as modified by the Supreme Court - It is thus open to the Petitioner to furnish a Bank Guarantee in the sum of ₹ 15 Crores to the satisfaction of the Competent Authority. The Competent Authority shall thereafter forthwith release the seized goods to the Petitioner, provisionally, on furnishing the requisite Bond as directed by CESTAT. Contempt petition disposed off.

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• 2020 (12) TMI 921
  Condonation of delay in filing appeal - application of the appellant rejected on the ground that the same is barred by limitation and no sufficient cause for condonation of delay of 455 days in filling the appeal - HELD THAT:- It is well settled in law that the expression 'sufficient cause' should receive liberal consideration so as to advance the cause of justice and the same should not be used as a penal statute to punish the erring parties. Reference can be made to the case of PERUMON BHAGVATHY DEVASWOM, PERINADU VILLAGE VERSUS BHARGAVI AMMA (DEAD) BY LRS ORS. [ 2008 (7) TMI 836 - SUPREME COURT] . In the application for condonation of delay, the appellant had stated that on account of the financial difficulty, he could not arrange the amount and the delay had caused - Taking into consideration that expression 'sufficient cause' should receive liberal consideration so as to advance the cause of justice, the substantial question of law framed in this appeal is answered in favour of the assessee and against the revenue. The matter is remitted to the Tribunal for decision on merit after affording an opportunity to the parties.

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• 2020 (12) TMI 920
  Import of Multi Function Devices (MFDs) for use within the country - contravention of the provisions of the Foreign Trade (Development Regulations) Act, 1992 read with the Foreign Trade Policy, Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016, e-Waste (Management and Handling) Rules, 2011 and Environment (Protection) Act, 1986 - HELD THAT:- The goods were released based on Annexure-3. However, in Annexure-3, there was a specific direction to intimate the DGFT about the import not being supported by an import licence from the DGFT, which could lead to confiscation proceedings being initiated under the Foreign Trade Act. It was also directed that a surety bond be executed for the market value of the goods, minus that imposed on the importer as redemption fee by the Commissioner of Customs and modified by the Tribunal. We direct the respondents who have already cleared the goods on the basis of the interim orders to execute such surety bonds within a period of two months from the date of receipt of a certified copy of this judgment failing which the Customs authorities could initiate proceedings for return of goods, the location of which should be in the knowledge of the respondent/importer as per the Extended Producer Responsibility Authorization. Petition disposed off.

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• 2020 (12) TMI 919
  Levy of penalty under Section 112 of the Customs Act, 1962 - proceeding of adjudication without supplying the relied upon documents - Alleged recovery and seizure was initially made by the BSF and subsequently was handed over to the Customs authority - burden of proof in terms of Section 123 of the Customs Act, 1962 - HELD THAT:- The learned Commissioner (Appeals) should have verified the facts prior to dismissal of the appeal of the appellant. It is not in dispute that the Show Cause Notice dated 14.8.2018 was issued without appending any relied upon documents though it had placed reliance upon several documents such as BSF seizure, Customs inventory, statements of different persons, Assay report etc. The imposition of penalty upon the present appellant by the Adjudicating authority is based upon such documents - It is a settled position of law that a Show Cause issuing authority is required to provide copies of all relied upon documents along with the Show Cause Notice. When the authority wants to rely upon such documents, it is incumbent upon them to provide copy of such documents to the noticee and non-supply of such copies of relied upon documents to the noticee renders the process of adjudication void ab-initio. In the present case also, order passed by the Lower adjudicating authority without supplying such relied upon documents along with the Show Cause Notice and finalizing adjudication of the matter w.r.t. the present appellant was bad in law. However, the Adjudication Order has already merged in two separate Orders-in-Appeal with respect to different noticee as recorded hereinbefore. Pertinent to observe that there is no appeal against Order-in-Appeal No. KOL /CUS (CCP) /AA /293 /2019 dated 01.05.2019 w.r.t. noticee no. 2 of the Show Cause Notice dated 14.08.2018. Since such Order-in-Appeal setting aside penalty upon the said noticee has reached its finality, no fresh proceeding against such noticee can be drawn at this stage. The matter remanded to the original Adjudicating Authority i.e. the Assistant Commissioner of Customs, Maldah Customs Division, Maldah for adjudication of the case afresh w.r.t. the present appellant being noticee no. 1 in the Show Cause Notice dated 14.8.2018 after providing authenticated copies of all relied upon documents to the present appellant - appeal allowed by way of remand.

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• Corporate Laws

• 2020 (12) TMI 918
  Maintainability of petition - conversion of PIL to company petition - HELD THAT:- Sri W.H. Khan, learned Senior Advocate, appearing for the applicants prays for a little time to address on the phrase pending immediately before such date used in Section 434(1)(c) of the Act 2013 as well as on the point of whether a PIL on conversion into a company petition under the facts and circumstances of the present case, can be proceeded with by the High Court? As prayed by learned counsel for the applicants/respondent no.12, put up in the additional cause list on 07.12.2020 at 3.00 P.M.

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• 2020 (12) TMI 917
  Approval of Amalgamation Scheme - Section 230-232 of Companies Act, 2013 - seeking the dispensation of the meeting of shareholders of the Transferor Company, M/s. Trion Chemicals Private Limited and Transferee Company M/s. Bodal Chemicals Limited - seeking the dispensation for the meeting of Secured Creditor of Applicant Transferor Company no. 1 - seeking the direction for convening the meetings of Secured Creditor of Applicant Transferee Company no. 2 and Secured and Unsecured Applicant Transferor Company No. 1. HELD THAT:- Various directions regarding dispensation and holding of various meetings issued - directions regarding issuance of notices also issued. Application disposed off.

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• 2020 (12) TMI 916
  Approval of Scheme of Amalgamation - Section 230-232 of Companies Act - HELD THAT:- Various directions regarding holding and convening of various meetings, issued - various directions regarding issuance of notices for the meetings to be held, is also issued. Application admitted - the scheme is approved.

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• Insolvency & Bankruptcy

• 2020 (12) TMI 915
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is pertinent to note that the Applicant has placed on record all the invoices, stating that the Respondent itself had acknowledged the said invoices and copies of ledger account. Once the debt is shown as due, it is for Respondent to prove that there are no outstanding dues to be paid to the Applicant. There has been much cloud in the submission of the Respondent. Therefore, without any specific details of material particulars or evidence the fact of existence of a dispute cannot be sustained. In MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] , Apex Court held that the Court does not need to be satisfied that the defense is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application. The applicant has attached an affidavit in compliance of section 9(3)(b), also, it has attached the copy of Bank statements in compliance of the requirement of Section 9(3)(c) of the IBC 2016 - The registered office of respondent is situated in New Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The present application is within the prescribed limitation period. Thus, the present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. Petition admitted - moratorium declared.

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• Service Tax

• 2020 (12) TMI 914
  Determination of service tax liability on the approval of resolution plant under IBC - Seeking declaration that total liability of the petitioner to the respondent does not exceed ₹ 35,54,682.55 in accordance with the order dated 30.08.2019 passed by the National Company Law Tribunal, Mumbai Bench sanctioning the resolution plan of the petitioner under section 31 of the Insolvency and Bankruptcy Code, 2016 - direction to the respondent not to appropriate an amount of ₹ 6,23,82,214.00 already recovered following the order in original dated 22.07.2020 - seeking direction to the respondent to refund an amount of ₹ 5,88,27,531.45 to the petitioner. HELD THAT:- As per the statement of objects and reasons which preceded the bill while being introduced in the parliament, there was no single law in India dealing with insolvency and bankruptcy. There were several laws dealing with different aspects and providing for creation of multiple fora. Existing framework for insolvency and bankruptcy was found to be inadequate and ineffective resulting in undue delays in resolution. Therefore, the said legislation was proposed. Objective of the Code is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund and matters connected therewith or incidental thereto - The Code seeks to provide the National Company Law Tribunal and Debts Recovery Tribunal as the adjudicating authorities for resolution of insolvency, liquidation and bankruptcy. The Code separates commercial aspects of insolvency and bankruptcy proceedings from judicial aspects besides providing for an Insolvency and Bankruptcy Board of India for regulation of insolvency professionals etc.. Insolvency professionals will assist in completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the Code. It is evident that focus of the Code is resolution of insolvency and bankruptcy. In other words the thrust is for revival of such corporate persons, partnership firms and individuals facing insolvency and bankruptcy rather than liquidation. The preamble of the Code was examined by the Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT ] . It was held that the preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a time bound manner, the value of the assets of such persons will deplete. Therefore, the maximization of the value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Thus, it is evident that if the adjudicating authority is satisfied that the resolution plan as approved by the committee of creditors under sub section (4) of section 30 meets the requirements of sub section (2) of section 30, it shall by order approve the resolution plan. Once such approval is granted by the adjudicating authority, it shall be binding on the corporate debtor and its employees, members, creditors (including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed), guarantors and other stakeholders involved in the resolution plan. As per the proviso, before passing an order under section 31 the adjudicating authority has to satisfy itself that the resolution plan has provisions for its effective implementation - From a conjoint reading of section 31(1) and section 238 of the Code, it is quite evident that the provisions of the Code shall have overriding effect. The non obstante clause in section 238 and the use of the expression shall in sub section (1) of section 31 makes it abundantly clear that a resolution plan approved by the committee of creditors and further approved (or sanctioned) by the adjudicating authority would be binding on all creditors including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed. Thus, the resolution plan mentions that the claim of service tax dues falls under the definition of operational creditors. Such dues should be settled at par with other operational creditors under the resolution plan which provides for settlement of dues of operational creditors at the rate of 5% of the principal amount with waiver of interest, penal interest and penalties. The claim amounting to ₹ 1929.85 lakhs was being contested by the corporate debtor before the concerned authority and the amount of admitted claim could not be determined until the outcome of the said proceeding. Therefore, the said amount of ₹ 1929.85 lakhs was kept in abeyance. However, the amount that would come to be determined upon adjudication would be settled at the appropriate time. In the present case, what we have noticed is that section 87(b) (i) was invoked as early as on 18.04.2013 whereas the first show-cause cum demand notice was issued to the petitioner only on 18.04.2015. While invocation of section 87(b)(i) and recoveries made thereunder are highly questionable, it may not be necessary for us to delve into the legality or illegality of the same in the present proceeding because of the binding nature of the resolution plan as approved by the committee of creditors and sanctioned by the Tribunal. However, attempt by the respondent for appropriation of the amount recovered through such questionable means in the face of the resolution place so approved and sanctioned is a live issue and hence needs to be adverted to. Once a resolution plan is approved by the committee of creditors by the requisite percentage of voting and the same is thereafter sanctioned by the adjudicating authority (Tribunal in this case), the same is binding on all the stakeholders including the operational creditors. As a matter of fact, respondent herein as an operational creditor had lodged its claim before the resolution professional. The resolution plan provides for settlement of service tax dues at 5% of the amount of principal dues that would be crystallized upon adjudication, further providing for waiver of interest, penal interest and penalty that may be charged. As we have held above, respondent may be justified in proceeding with the show-cause cum demand notices because that has resulted in crystallization of the total amount of service tax dues i.e., the principal amount payable by the petitioner which is ₹ 7,02,20,725.00. The amount of service tax dues having thus crystallized as above, the resolution plan says that the same would be settled at 5% of the principal dues adjudicated. The word used is adjudicated and not adjusted as sought to be read and applied by the respondent. Therefore, the amount that the petitioner would be required to pay is 5% of ₹ 7,02,20,725.00. In so far the recovered amount i.e. ₹ 6,23,82,214.00 is concerned, the same is part of the total demand determined i.e. ₹ 7,02,20,725.00. After retaining 5% of ₹ 7,02,20,725.00, respondent would be duty bound to refund the balance amount to the petitioner which will not only be in terms of the resolution plan and thus in accordance with law but will also be a step in the right direction for revival of the petitioner which is the key objective of the Code. There is no question of retaining the said amount. Submissions made by Mr. Jetly that the amount already recovered should be allowed to be appropriated by the respondent and that petitioner should pay 5% of the balance of the principal dues i.e. 5% of ₹ 7,02,20,725.00 less ₹ 6,23,82,214.00 is without any substance and liable to be rejected. There should be no hesitation to hold that principal service tax dues quantified by the respondent vide order in original dated 22.07.2020 has to be settled at the rate of 5%, in other words 5% of ₹ 7,02,20,725.00. The directions of the respondent for appropriation of the amount of ₹ 6,23,82,214.00 already recovered cannot be sustained. Respondent shall retain 5% of ₹ 7,02,20,725.00 from the above amount recovered and thereafter refund the balance amount to the petitioner. To that extent, impugned order in original dated 22.07.2020 is interfered with. Refund shall be made within a period of three months from the date of receipt of a copy of this judgment and order. Petition allowed.

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• 2020 (12) TMI 913
  Levy of Service tax - Reverse Charge Mechanism - consulting engineer service - amount paid to Honda Japan under the Technical Agreement - contention of appellant is that no services were received by the appellant from Honda Japan and, therefore, no service tax could have been levied - HELD THAT:- The show cause notice only refers to various clauses of the Technical Agreement and the taxing provisions and then alleges that the appellant is liable to pay service tax on the amount paid under the Termination Agreement, without identifying or specifying what particular consulting engineer service was rendered by Honda Japan to the appellant. The appellant has stated that the amount of JPY 130,000,000/- was paid to compensate for the work undertaken by Honda Japan towards the commencement of volume production of the new Honda CIVIC Model and details have also been provided, which details clearly indicate that the amount was paid to compensate Honda Japan for the research and allied work it had performed at its end and not towards supply of any technical information to the appellant. In the absence of any evidence to the contrary, the Commissioner (Appeals) could not have concluded that the aforesaid amount was paid by the appellant to Honda Japan for rendering any taxable service. It is, therefore, not possible to accept the contention of the learned authorized representative of the Department that in terms of Article 4.1 of the Technical Agreement, Honda Japan was required to furnish technical information to the appellant on a continuous basis or that the amount was paid for the commencement of the production. It has also been submitted by the leaned counsel for the appellant that the amount paid by the appellant to Honda Japan is actually in the nature of a cancellation fee and, therefore, neither any service was rendered by Honda Japan to the appellant nor any amount was paid for any service. The contention is that the amount was paid by the appellant only to restitute Honda Japan for the cost incurred, once the Model Agreement to provide the service was terminated - This submissions of learned counsel for the appellant also deserves to be accepted. In view of the specific provisions of the Termination Agreement, it is clear that no service, much less consulting engineer service, was provided to the appellant. The appellant, therefore, could not have been subjected to service tax on a reverse charge basis. In Ford India [ 2018 (1) TMI 1219 - CESTAT CHENNAI ], a Division Bench of the Tribunal, held that no identifiable service can be attributed for payments made if the agreement is terminated, since the consideration is to make good the loss - In Lemon Tree [ 2019 (7) TMI 767 - CESTAT NEW DELHI ], the Tribunal again held that the amount retained after cancellation cannot be subjected to service tax. The amount paid by the appellant to Honda Japan was not towards any consideration for a taxable service. It is, therefore, not possible to sustain the demand confirmed by the Commissioner (Appeals) - Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 912
  Declared Service or not - appellant had collected an amount towards compensation/penalty from the buyers of coal on the short lifted/un-lifted quantity of coal; collected amount towards compensation/penalty from the contractors engaged for breach of terms and conditions; and collected amount in the name of damages from the suppliers of material for breach of the terms and conditions of the contract - period from July 2012 to March, 2016 - Whether the appellant is providing a declared service contemplated under section 66E(e) of the Finance Act, which service became taxable w.e.f July 1, 2012? HELD THAT:- Liability has been fastened upon the appellant under section 65B read with section 66E(e) of the Finance Act for the period from July 2012 till March 2016 for the reason that by collecting the said amount the appellant had agreed to the obligation to refrain from an act or to tolerate the non-performance of the terms of the contract by the other party - Section 65B (44) defines service to mean any activity carried out by a person for another person for consideration, and includes a declared service. Under section 66E (e), a declared service shall constitute agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act. Section 66 B provides that service tax shall be levied at the rate of 12 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Section 66D contains a negative list of services, while section 66E contains a list of declared services. Section 68 provides that every person providing taxable service to any person shall pay service tax at the rate specified in section 66B in such manner and within such period as may be prescribed - It is, thus, clear that where service tax is chargeable on any taxable service with reference to its value, then such value shall be determined in the manner provided for in (i), (ii) or (iii) of subsection (1) of section 67. What needs to be noted is that each of these refer to where the provision of service is for a consideration , whether it be in the form of money, or not wholly or partly consisting of money, or where it is not ascertainable. In either of the cases, there has to be a consideration for the provision of such service. Explanation to sub-section (1) of section 67 clearly provides that only an amount that is payable for the taxable service will be considered as consideration . This apart, what is important to note is that the term consideration is couched in an inclusive definition. The Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT ], while deciding the appeal filed by the Department against the aforesaid decision of the Tribunal, also explained the scope of Section 67 of the Act. The Supreme Court observed that any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. It would also be pertinent to refer to TRU Circular dated 20 June, 2012 issued by the Central Board of Excise and Customs as an Education Guide when the Negative List based taxation regime was introduced from July 2012 to clarify various aspects of the levy of service tax. The Board dealt with consideration in paragraph 2.2 of this Circular and pointed out that since the definition was inclusive, it will not be out of place to refer to the definition of consideration as given in section 2(d) of the Indian Contract Act, 1872. A service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a declared service under section 66E(e) read with section 65B (44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e) - It is trite that an agreement has to be read as a whole so as to gather the intention of the parties. The intention of the appellant and the parties was for supply of coal; for supply of goods; and for availing various types of services. The consideration contemplated under the agreements was for such supply of coal, materials or for availing various types of services. The intention of the parties certainly was not for flouting the terms of the agreement so that the penal clauses get attracted. The penal clauses are in the nature of providing a safeguard to the commercial interest of the appellant and it cannot, by any stretch of imagination, be said that recovering any sum by invoking the penalty clauses is the reason behind the execution of the contract for an agreed consideration. It is not the intention of the appellant to impose any penalty upon the other party nor is it the intention of the other party to get penalized. The activities, therefore, that are contemplated under section 66E (e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity - In the present case, the agreements do not specify what precise obligation has been cast upon the appellant to refrain from an act or tolerate an act or a situation. It is no doubt true that the contracts may provide for penal clauses for breach of the terms of the contract but, as noted above, there is a marked distinction between conditions to a contract and considerations for a contract . It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act - Appeal allowed - decided in favor of appellant.

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• 2020 (12) TMI 911
  Distribution of CENVAT Credit - Cenvat Credit including Education Cess and SHE cess taken on the Research Development services received to their manufacturing units - Rule 7 of Cenvat Credit Rules, 2004 - HELD THAT:- This Bench in its earlier judgement DR. REDDY S LABORATORIES LIMITED VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX, HYDERABAD [ 2020 (3) TMI 1276 - CESTAT HYDERABAD] has held that the services used in the R D have a direct nexus with the manufacture of the final products. It is not necessary that the pharmaceutical industry has a complete R D facility in each of its manufacturing units. In order to economise and benefit from the economies of scale, R D units are set up as independent units for serving various manufacturing units of the manufacturer. In such a case, the services availed in the R D units have a direct nexus to the manufacture of the products in various units. If the assessee is registered as an input service distributor, the CENVAT Credit availed on the services used in the R D unit can be distributed to various manufacturing units. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (12) TMI 910
  Seeking payment of interest on the rebate sanctioned beyond the period of three months from date of filing of claim as per Section 11BB of the Central Excise Act, 1944 - HELD THAT:- A circular of the Central Board of Excise and Customs, New Delhi, dated 01.10.2002 reiterating an earlier circular dated 02.06.1998 that stressed the importance of disposing rebate/refund claims within three months from date of receipt of such application, stating that the provisions of Section 11 BB would stand attracted 'automatically' in the case of any refund sanctioned beyond the period of three months, was also noticed - The conclusion of the Court was to the effect that the liability of the revenue to interest under Section 11BB commences from the date of expiry of 3 months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which the the order of refund was made. The ratio of the judgment of the Hon'ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] is applicable on all fours to the present matter. Petition disposed off.

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• 2020 (12) TMI 909
  Principles of Natural Justice - Exemption to goods cleared from a unit located in the state of Jammu and Kashmir - benefit of N/N. 01/2010-CE dated 06.02.2010 - opportunity of hearing not provided to the petitioner - HELD THAT:- We have noticed the facts stated by the learned counsel for the parties, however, we are not dwelling on those for the reason that no findings, as such, are being recorded by this Court. The matter is being examined only with reference to violation of principles of natural justice. It is the admitted case of the parties that before passing the impugned order, the petitioner was not afforded opportunity of hearing by the authority concerned and the claim made by it, was rejected. It is a case in which the claim regarding exemption was made by the petitioner with reference to notification No. 01/2010-CE dated 06.02.2010, while it was already enjoying benefits as are available in terms of the notification No. 56 of 2002 dated 14.11.2002. The aforesaid claim of the petitioner was not accepted by the competent authority, in terms of the prayer of the petitioner, but without even issuing a show cause notice to it. In case, the competent authority was satisfied with the claim made by the petitioner, a notice may not be required to be issued. But if the authority was of the opinion that the claim made by the petitioner may not be tenable, a notice is certainly required to be issued so that the grounds on which the claim of the petitioner was sought to be rejected could be discussed. The matter is remitted back to the competent authority to be decided afresh after affording due opportunity of hearing to the petitioner - Petition allowed by way of remand.

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• 2020 (12) TMI 908
  CENVAT Credit - few transactions of which consignments were either fake or fictitious - 8 vehicles with respect to 24 invoices were found non-existent in the database - owners of 9 vehicles denied transportation by written communications - CENVAT Credit - HELD THAT:- During the course of search at the factory premises of the appellant neither incriminating documents were recovered nor any shortage/excess of raw materials/finished goods were found by the officers of the anti-evasion. The employees of the appellant in their statements have clearly stated that they have physically received the goods and utilized in the manufacture of their final products. The adjudicating authority is required to first conduct examination-in-chief of the witnesses whose statement is relied upon by the department and then to form an opinion whether the statements of the witness is admissible in evidence with respect to the facts and circumstances of the case and then only the witness shall be offered for cross-examination - in the present case, since no examinationin-chief has been conducted by the learned adjudicating authority, therefore the statements of witnesses are inadmissible in evidence and are eschewed from evidence. Also, the department has not confronted various evidences to the appellant, which further creates doubt about the said half-baked investigation conducted by the department - it is found that the investigation conducted at the end of transporter is not reliable piece of evidence and cannot be used against the appellant. The appellant has taken all reasonable steps as mentioned in Rule 9 of the Cenvat Credit Rules. The appellant has produced duty paid invoices under cover of which goods were received in the factory, showing names of manufacturer and supplier thereon and produced weighment slips evidencing receipt of goods. The payments have been made through the banking channels and the goods received have been duly entered into the RG-23 register - there is no evidence adduced by the department to show any flow back of money in the show cause notice. The department is not disputing the fact that these dealers raised invoices giving all particulars required to be given under the provisions of Cenvat Credit Rules in respect of materials supplied to the appellant. There is no evidence in the show cause notice that goods are not duty paid. The investigation conducted by the department at the end of the transporter by searching the vehicles from the site www.vahan.nic.in is an evidence which cannot be relied upon inasmuch as by the said evidence, the department is fastening the liability against the appellant, especially when the department could have investigated from the concerned State RTO in order to get the details of the truck owners. This exercise has not been done in the present case, thus, the said evidence cannot be relied upon in order to deny the lawful credit availed by the appellant. The department is alleging the non-existence of premises of manufacturer/dealers, relying solely upon the alert circulars issued by the different Commissionerates. In the present case, the department has neither relied upon nor stated in the SCN about the Panchnama drawn at the concerned premises. If the said evidences have not been relied upon, then there is no material for the appellant to controvert the same, which is in clear violation of the principle of natural justice. It is well settled law that, merely on the basis of alert circulars, it cannot be said that particular premises are non-existent. The appellant has taken all reasonable steps as mentioned in Rule 9 of the Cenvat Credit Rules, therefore, the denial of Cenvat credit is wrong and liable to be set aside - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (12) TMI 907
  Attachment of Bank Accounts - recovery of tax arrears - TNVAT Act - it is contended that inasmuch as the impugned order for recovery had been issued for the amount under an assessment order which has been set aside, such demand cannot survive and would have to be nullified - HELD THAT:- There is substantial force in the submissions made by the Learned Counsel for the Petitioner, which deserves acceptance and the impugned orders of recovery of the amounts demanded for the assessment made for the year 2013-2014 under the TNVAT Act, is set aside. Though obvious, it is made clear that the First Respondent is not precluded from recovering any amount due from the Petitioner in respect of fresh order of assessment passed by the First Respondent in Order No. TIN 33830947422/ 2013-14 dated 21.09.2015, if not already paid, by appropriate legal proceedings in the manner recognized by law. Petition disposed off.

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• 2020 (12) TMI 906
  Maintainability of petition - alternative remedy of appeal available - Petitioner did not prefer any appeal before the Appellate Authority, but has instead filed this Writ Petition challenging the order passed by the Respondent - HELD THAT:- Hon'ble Supreme Court of India in ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR VERSUS DUNLOP INDIA LIMITED AND OTHER [ 1984 (11) TMI 63 - SUPREME COURT] has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction holding that It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to by-pass the alternative remedy provided by statute. There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute. It is also not the case of the Petitioner that the contentions raised in this Writ Petition could not be agitated in the appeal before the Appellate Authority - Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in this case, touching upon disputed questions of fact for effectual and complete adjudication of the matter. Petition dismissed.

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• 2020 (12) TMI 905
  Principles of natural Justice - Non-application of mind - second respondent has observed that no document with regard to the purchase mentioned in the proposal made by the respondents for revision of assessments on the petitioner, has been produced by the petitioner - HELD THAT:- This Court is of the considered view that the impugned assessment orders passed by the second respondent are arbitrary and have been passed by total non application of mind - The second respondent ought to have furnished the documents which they are relying upon for passing the impugned assessment orders to the petitioner, as the petitioner has discharged his burden, as per Section 17 of Tamil Nadu Value Added Tax Act, 2006. As seen from the impugned assessment orders, the second respondent has passed the same only on the ground that no document has been furnished by the petitioner with regard to the proposal made by them for revision of assessments. The other ground for passing the impugned assessment orders is that before the Enforcement Wing Officials during their inspection, the petitioner has admitted that he is not having any documents for having effected inter-state sales / purchases and the Enforcement Wing Officials have also submitted their report that the petitioner has indeed effected sales /purchase from other States. It is settled law that there must be an independent assessment made by the second respondent, while passing the assessment orders under Section 27(2) of the Tamil Nadu Value Added Tax Act, 2006. The second respondent cannot mechanically accept the findings of the Enforcement Wing Officials in his report submitted to the second respondent. The judgments relied upon by the learned counsel for the petitioner referred to supra will also reveal the fact that the documents seized by the Enforcement Wing Officials from the petitioner must reveal the fact that the sale / purchase comes within the meaning of transaction . Thus, this Court is of the considered view that the impugned assessment orders have been passed by total non application of mind and principles of natural justice has been violated by the second respondent by not affording copies of the documents sought for by the petitioner in his replies - matter is remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders on merits and in accordance with law - petition allowed by way of remand.

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• 2020 (12) TMI 904
  Principles of Natural Justice - petitioner having sent replies to the pre-revision assessment notices sent by the second respondent for the assessment years 2013-2014 and 2014-2015, the same has not been considered by the second respondent in the impugned assessment orders - HELD THAT:- It is settled law that personal hearing is mandatory - Hence, this Court is of the considered view that in view of the non-consideration of the replies sent by the petitioner for the revision of assessment notices sent by the second respondent and for not affording personal hearing to the petitioner in the assessment proceedings, the second respondent has violated the principles of natural justice while passing the impugned assessment orders for the assessment years 2013-2014 and 2014-2015. The matter is remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders on merits and in accordance with law, after affording sufficient opportunity to the petitioner to raise all objections available to him under law - Appeal allowed by way of remand.

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