Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 25, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Rectification of mistake - GST Transition Form-l (TRAN-l) - Courts have held time and again that rules and procedures are intended to sub-serve the cause of justice. In fact procedure is often referred to as ‘handmaid of justice’. Laws and procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice. It is intended to further the ends of justice and not a thing designed to trip people up. - HC
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Refund of utilized input tax credit - rejection of claim for refund - When the law requires that no application for refund shall be rejected without giving the applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of e-mails. This is more so in the case of a claim for refund where no time-limit is fixed vis-à-vis rejection of claim. Under subsection (7) of section 54, a time-limit of 60 days is prescribed for making of an order allowing claim of refund; but that period of 60 days would commence from the date of receipt of the application complete in all respects without there being a corresponding provision for rejection of application not complete in all respects. - HC
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Service of order - Since the petitioner’s right to pursue an appeal cannot be curtailed solely on account of non-receipt of an order or loss of an order, if law otherwise permits him to pursue the appeal, then certainly it is incumbent upon the first respondent to issue a certified copy to the petitioner. - The first respondent is directed to issue a certified copy of the order to the petitioner in accordance with law forthwith - HC
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Seizure and confiscation of goods - Carrying Gold without delivery challan - Validity of proceedings initiated u/s 130 - The question whether absence of mandatory documents in the particular case constitute an intention to evade tax or not is a matter within the realm of satisfaction of the Proper Officer. Interference in the satisfaction exercised by the Proper Officer, when the conclusion is supported by the circumstances surrounding the transaction, warrants no interference by this Court, as otherwise, the scheme and purport of the Act will be affected. - HC
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Classification of goods - Turmeric (Turmeric in Whole form - not in powder form) - Agriculture Produce or not - commission agent facilitates activities ancillary to supply of agriculture product 'Turmeric' in APMC, for which he gets a fixed commission - Turmeric is considered as a Spice - it is found that Fresh Turmeric other than in processed form falling under HSN 0910 30 10 attracts NIL Rate of GST and Dried Turmeric (subject Goods) is covered under HSN Code 0910 30 20 taxable at the rate of 5% GST. Thus, it is seen that the subject produce is a Spice and is not covered under the definition of an “agricultural produce” - AAR
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Levy of GST - services provided by the applicant to NMMT under the Agreement, by way of supplying, operating and maintaining air-conditioned electrically operated buses - the subject activity, amounts to 'renting of motor vehicle' and shall qualify as a taxable activity under the provisions of the GST Laws. - there is a Rental services of transport vehicles with or without operators and the activities of Renting of any motor vehicle/transport vehicle which is designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient are chargeable to either 2.5% GST or 12% GST depending on availment of Input Tax Credit. - AAR
Income Tax
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Penalty u/s. 271(1)(c) - assessee had wrongly shown the rental income as 'business income' - Even the pertinent fact on the file is that in the immediate preceding assessment year, the assessee had offered the same income as income from business and which was accepted by the AO under scrutiny assessment proceedings. Under the circumstances for the assessment year under consideration, the assessee can safely be said to be having bonafide belief for offering the same under the same head i.e. 'income from business or profession'. - No penalty - AT
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Validity of Settlement Commission order - by virtue of Section 132 (4A), Section 56 (2) (vii) and Section 292 (C), the presumption in law arose as a consequence of the action/inaction of the third party in not claiming the cash seized at the petitioner’s hands as may be treated as her income. Without drawing any final conclusion to that, we find that the said aspect has not been examined and has been completely overlooked by the Settlement Commission. - The approach taken by the Settlement Commission cannot be endorsed or appreciated. It is expected from the Settlement Commission to form clear opinion on facts, even at the stage of admission. - HC
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Revision u/s 263 - speculative transaction or not - majority of trades undertaken through day jobbing in which sale and purchase of scrips on same day are matched without taking the delivery of the scrips - if rule of consistency is applicable on the same facts and circumstances in these years, then merely changing the head of income from business to speculation, then it cannot be held that the assessment order is erroneous and prejudicial to the interest of revenue. More so, here in this case, section 263 has been done only on the basis of audit objection which was only for the purpose of verification and which has already been examined by the AO during the course of assessment proceedings. Accordingly, the impugned orders u/s. 263 are set aside - AT
Customs
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Disposal of the goods imported by the petitioner - Import of Dates - Country of origin - Goods were seized on the ground of evasion of duty - Jurisdiction of criminal court for issuing direction for disposal of goods are which are perishable in nature and kept in the custody of the respondent in accordance with the Disposal Manual 2019 - A perusal of the disposal manual does not indicate that provision under Section 451 Cr.P.C can be invoked for disposal of the goods confiscated under the Customs Act. - HC
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Smuggling - gold bullion of foreign origin - notified goods or not - burden to prove - The appellants have sufficiently discharged their burden of proof in terms of Section 123 of Custom Act by proving the licit possession of the impugned gold which was delivered for job work through approved mode of the Trade for transfer of Gold and Jewellery - the department has failed to show any cogent reason to believe that the goods were the smuggled one. - The Order-in-Appeal is nothing but the outcome of presumption on part of the authority - Appeal allowed- AT
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Condonation of delay in filing appeal before the Commissioner (appeals) - There is no denial about the date of receipt of recovery proceedings and receipt of O-I-O by the appellant on 6th January, 2017. Commissioner (Appeals) is observed to have been silent about any cogent reason for not considering 6.01.2017 as the date of receipt. - the matter is remanded back to Commissioner (Appeals) directing him to rehear the matter after condoning the delay of 28 days and to adjudicate denovo on the merits of the case - AT
Indian Laws
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Dishonor of Cheque - vicariously liability of Director - execution of guarantee deeds by the petitione - Admittedly, the cheques were signed by respondent No. 3, who, as per the averment made in the complaints, alone undertook that the same would be duly honoured upon presentation. Such an undertaking/assurance was not attributed to the present petitioner. In this backdrop, the execution of guarantee deeds by the petitioner at an earlier point in time would not attract vicarious liability under Sections 138/141 NI Act. - HC
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Dishonor of Cheque - The compromise would go a long way in maintaining the peace and harmony between the parties and thus, a prayer has been made to the Court for compounding the offence in terms of Section 147 of the Negotiable Instruments Act, 1881 read with Section 320 (6) Cr.P.C. Since the offence relating to dishonour of cheque has a compensatory profile and is required to have precedence over punitive mechanism, therefore, the present revision petition deserves to be allowed. - HC
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Dishonor of cheque - Territorial Jurisdiction - Seeking transfer of the criminal proceedings of a complaint case - In the case in hand, the petitioner has not pleaded any physical disability to travel the distance of approx. 160 KMs from his place of residence to Jorhat i.e. the place of trial. The petitioner has claimed himself to be as an agriculturist. The petitioner has declared his age as 38 years. The learned counsel for the parties at the Bar has submitted that the transportation facility from Dibrugarh to Jorhat is good. An able bodied person can complete to and fro journey from Dibrugarh to Jorhat and vice versa within the day. There are different modes of public transport like bus, rail, light motor vehicles, etc. are available at small intervals. - The ground of inconvenience that has been urged on behalf of the petitioner does not deserve acceptance - HC
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Dishonor of Cheque - insufficiency of funds - vicarious liability of Managing Director - Considering the citation and as no specific averments were made by the 1st respondent as to how and in what manner the petitioner was responsible for the affairs of the company and the role played by him in cheating the complainant, and as there are no specific averments that the petitioner had induced or made the 1st respondent to part with the said money with an intention to cheat him from the inception, it is considered fit to quash the proceedings against the petitioner - A3. - HC
IBC
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Initiation of CIRP - NCLT rejected the application - Words ‘if any’ after the word interest clearly indicates that it is not mandatory that debt should be alongwith interest in all cases - the consideration of the balance sheet for Financial Year 2016-17 may also be relevant for determining as to whether there was a financial debt or not. Thus, by taking into consideration the Balance Sheet, the Adjudicating Authority can re-consider the question of Applicant being Financial Creditor or not. - AT
Service Tax
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Levy of penalty - Both the lower authorities have erred in confirming the penalty as it is a settled principle that when tax is paid along with interest before issuance of SCN (other than cases of suppression or willful mis-statement), the Department cannot issue SCN in terms of section 73(3) of the Finance Act, 1994 - In the instant case of the Respondent, the Department has mechanically issued SCN alleging suppression of facts without according any reasons for such allegation. - AT
Central Excise
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Appropriate forum - High Court or Supreme Court - issue of limitation - Decision in rem or in personam - In the facts of this case, the revenue could challenge only part of the order having aggrieved on the issue of limitation. The appeal thus filed by the revenue is maintainable under Section 35G of the said Act before this Court. In this case, the issue of recovery of excise duty and issue of rate and classification of dispute decided by the Tribunal against the respondent-assessee has attained finality. It is not the case of the revenue of challenging any portion of the order selectively though aggrieved by the larger part of the order or entire order. - An appeal under Section 35G(1) of the Act would be maintainable before this Court - HC
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Clandestine removal of the finished excisable goods - No positive independent tangible evidence have been produced by the Revenue to substantiate the statements recorded during investigation and the entries made in the private documents which are undoubtedly unsigned, bearing no indication in any form that they relate to the appellant No.1 - specific description of the finished excisable goods alleged to have been clandestinely removed are also not found mentioned on the unsigned handwritten loose private records/documents - AT
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CENVAT Credit - cap and brush exported - common input service used for clearance of manufactured goods as well as trading goods - It is settled that even though the goods are exported without bond, the benefit of Rule 6(6)(v) is available to the assessee, and consequently, Rule 6(1), (2), (3) And (4) shall not attract - AT
Case Laws:
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GST
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2021 (12) TMI 1041
Rectification of mistake - GST Transition Form-l (TRAN-l) - alleged inaction of the respondents in permitting the petitioners to rectify the errors made by the petitioners in Transition Form l (TRAN-l) - HELD THAT:- The limitation under sub-rule (1) of Rule 117 of the CGST Rules, was 90 days from the appointed day, which was extendable by a further period not exceeding 90 days as per the first proviso. In other words, the revised declaration in FORM GST TRAN 1 had to be filed within 180 days i.e., within 27.12.2017. While the due date for filing of TRAN 1 form was extended from 27.12.2017 to 31.03.2020, the due date for filing revised declaration in TRAN 1 form was not extended. Courts have held time and again that rules and procedures are intended to sub-serve the cause of justice. In fact procedure is often referred to as handmaid of justice . Laws and procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice. It is intended to further the ends of justice and not a thing designed to trip people up. In the facts and circumstances of that case, Bombay High Court in HERITAGE LIFESTYLES AND DEVELOPERS AND PRIVATE LIMITED VERSUS THE UNION OF INDIA THROUGH THE REVENUE SECRETARY MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS MINISTRY OF FINANCE, STATE OF MAHARASHTRA, THROUGH THE SECRETARY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOODS AND SERVICE TAX COUNCIL, DEPUTY COMMISSIONER OF CGST CENTRAL EXCISE DIVISION-I, RANGE III NAVI MUMBAI, SUPERINTENDENT (COMPUTERS) CGST CENTRAL EXCISE NAVI MUMBAI SUPERINTENDENT OF CGST CENTRAL EXCISE, RANGE-III DIVISION-I, NAVI MUMBAI, DEPUTY COMMISSIONER OF GST CENTRAL EXCISE, MUMBAI COMMISSIONER OF CGST CENTRAL EXCISE, CHIEF COMMISSIONER OF GST CENTRAL EXCISE, MUMBAI [ 2020 (11) TMI 235 - BOMBAY HIGH COURT] took the view that when there was no dispute to the fact that petitioner was otherwise eligible for credit then to deny the benefit of such input credit merely on technical grounds cannot be justified. It was held that merely on technical ground an admitted input credit was sought to be denied to the petitioner, which was wholly unfair and a travesty of justice. Accordingly Bombay High Court directed the respondents to accept the TRAN-I filed by the petitioner and to give the benefit of input tax credit in the electronic credit ledger of the petitioner. The respondent No.1 is directed to take a decision on the representations of the petitioners dated 04.03.2020 either by reopening the online portal, or manually, within a period of four weeks from the date of receipt of a copy of this order - petition allowed.
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2021 (12) TMI 1040
Refund of utilized input tax credit - rejection of claim for refund on the ground that petitioner had not submitted the required documents in hard copies for verification - Section 54(3) of the Telangana State Goods and Services Tax Act, 2017 read with Section 54(3) of the Central Goods and Services Tax Act, 2017 (CGST Act) and Section 20(xiii) of the Integrated Goods and Services Tax Act, 2017 (IGST Act) - principles of natural justice - HELD THAT:- In a case where the proper officer is satisfied for reasons to be recorded in writing that the whole or any part of the amount claimed as refund is not admissible or is not payable, he shall issue notice to the applicant requiring filing of reply within 15 days of receipt of notice and after considering the reply make an order sanctioning the amount of refund in whole or in part or rejecting the refund claim which order shall be made available to the applicant. As per the proviso, an application for refund shall not be rejected without giving the applicant an opportunity of being heard. Therefore, there is a clear legal mandate that if an application for refund is to be rejected, the same can only be done after giving the applicant an opportunity of being heard. The expression 'opportunity of being heard' is not an expression of empty formality. It is a part of the well-recognized principle of audi alteram partem which forms the fulcrum of natural justice and is central to fair procedure. The principle is that no one should be condemned unheard - When the law requires that no application for refund shall be rejected without giving the applicant an opportunity of being heard, the same cannot be substituted by telephonic conversations and exchange of e-mails. This is more so in the case of a claim for refund where no time-limit is fixed vis- -vis rejection of claim. Under subsection (7) of section 54, a time-limit of 60 days is prescribed for making of an order allowing claim of refund; but that period of 60 days would commence from the date of receipt of the application complete in all respects without there being a corresponding provision for rejection of application not complete in all respects. It is settled law that if there is violation of the principles of natural justice, then the High Court will invoke its extraordinary jurisdiction under Article 226 of the Constitution of India notwithstanding the availability of the alternative remedy of appeal. The respondent is directed to hear afresh applications of the petitioner for refund within a period of two months from the date of receipt of a copy of this order - petition allowed.
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2021 (12) TMI 1039
Service of order - Original copy of order was not received or lost - Direction to serve a copy of an Order issued under Section 129(3) of the Central Goods and Services Tax Act - Non-invocation of bank guarantee furnished by the petitioner - whether petitioner was in receipt of the order issued by the first respondent under Section 129(3) of the Act? - HELD THAT:- As per the statutory prescription and going by the averments in the counter affidavit as well as the documents produced, it is evident that petitioner can be deemed to have been tendered with the order under Section 129(3) on 03.02.2020. The fiction that is created does not leave any room for doubt and since the tendering of notice is by registered post with acknowledgement due, there is no scope for even assuming that the order was not served on the petitioner. In this context, this Court notices the pleading of the petitioner that he had received the notice for hearing scheduled on 24.01.2020. The copy of dispatch register showing that the order was dispatched on 28.01.2020 and the copy of acknowledgement card produced as Ext.R1(c), fortifies the above conclusion - the order under Section 129(3) of the Act was served on the petitioner on 03.02.2020. Having regard to the contention that petitioner had not received the order or that he may have misplaced the order due to which petitioner ought to be given a certified copy to enable him to pursue appropriate statutory remedy is a contention which merits consideration - Since the petitioner s right to pursue an appeal cannot be curtailed solely on account of non-receipt of an order or loss of an order, if law otherwise permits him to pursue the appeal, then certainly it is incumbent upon the first respondent to issue a certified copy to the petitioner. The first respondent is directed to issue a certified copy of the order to the petitioner in accordance with law forthwith - petition disposed off.
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2021 (12) TMI 1038
Seizure and confiscation of goods - Carrying Gold without delivery challan - Validity of proceedings initiated under section 130 of the Central Goods and Services Tax Act, 2017 - dealer in gold jewellery - HELD THAT:- Ext.P5 order clearly endorses the satisfaction of the Proper Officer that the mandatory documents prescribed under section 31 of the Act read with rule 55 of the CGST Rules, 2017 was admittedly not available with the petitioner while transporting the huge quantity of gold ornaments. After conducting a hearing, pursuant to the notice issued, the officer came to the conclusion that absence of delivery challan and the circumstances attended therewith clearly showed an intention to evade tax without any ambiguity. The aforesaid conclusion is a finding of fact. This finding cannot be interfered with in exercise of the powers under Article 226, unless it is perverse or without anything explicitly contradicting such a finding. The question whether absence of mandatory documents in the particular case constitute an intention to evade tax or not is a matter within the realm of satisfaction of the Proper Officer. Interference in the satisfaction exercised by the Proper Officer, when the conclusion is supported by the circumstances surrounding the transaction, warrants no interference by this Court, as otherwise, the scheme and purport of the Act will be affected. Petition dismissed.
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2021 (12) TMI 1037
Classification of goods - SAC and rate of GST - Turmeric (Turmeric in Whole form - not in powder form) - Agriculture Produce or not - services rendered by Applicant as a Commission Agent in APMC, Sangli are liable to GST in terms of SI. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 or not - requirement of registration under the CGST Act, 2017 for his activities specified under Annexure-I - relevant section for registration - HELD THAT:- Chapter 9 covers Coffee, Tea, Mate and Spices, Further, it is observed that Turmeric is covered under Chapter Heading 0910 of the GST Tariff. Tariff Item 0910 covers Ginger, saffron, turmeric (curcuma), thyme, bay leaves, curry and other spices. Under Chapter 0910 Ginger (other than fresh ginger), saffron, turmeric (curcuma) (other than fresh turmeric), thyme, bay leaves, curry and other spices are chargeable to GST @ 5%. Thus it is clear that Turmeric is considered as a Spice - it is found that Fresh Turmeric other than in processed form falling under HSN 0910 30 10 attracts NIL Rate of GST and Dried Turmeric (subject Goods) is covered under HSN Code 0910 30 20 taxable at the rate of 5% GST. Thus, it is seen that the subject produce is a Spice and is not covered under the definition of an agricultural produce - the impugned services supplied by the applicant are not covered under clause (g) of Sr. No. 54 of Notification No. 12/2017-Central Tax (Rates) dated 27 th June, 2017. The impugned services supplied by the applicant are not exempt in terms of Sl. No. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. In other words the said SI. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017/SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 is not applicable in the applicant's case and therefore the applicant is required o pay GST on the commission amounts received by him - Since the services supplied by the applicant are not exempt in the instant case, the corollary to it is that, the impugned services are taxable and accordingly, the applicant has to get registered under the provisions of the GST Laws.
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2021 (12) TMI 1036
Levy of GST - services provided by the applicant to NMMT under the Agreement, by way of supplying, operating and maintaining air-conditioned electrically operated buses - appropriate SAC and rate of GST - eligibility to avail the input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement - HELD THAT:- The facts in the case of IN RE: M/S. M.P. ENTERPRISES ASSOCIATES LIMITED [ 2021 (6) TMI 522 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] and the present case are identical in nature and terms of underlying contracts are also similar. The only difference is, in that case the fuel was diesel and in the present case it is the electricity. The applicant during the course of oral arguments informed that it bears the cost of electricity required for charging of buses. Further the parking charges in respect of the buses are also borne by them. Since the facts of M/s MP Enterprises Associates Limited and the facts of the present case are same, there is no reason for us to deviate from the decision taken in the said case of M/s MP Enterprises Associates Limited. In the case of transportation of passengers, the recipient of service would be the passenger whereas in the case of renting of any motor vehicle, the recipient would not be the passenger. In the subject case, the consideration for supply of service is charged from NMMT and not the passenger. Therefore in the subject case it is clear that the recipient of service is NMMT. Hence, we have no hesitation in holding that the subject activity, amounts to 'renting of motor vehicle' and shall qualify as a taxable activity under the provisions of the GST Laws. Since the subject activity is taxable, the provisions of Notification No. 12/2017-CT (R) dated 28.06.2017 is not applicable in the subject case. The subject case is clearly covered by Entry Sr. No. 10 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended in as much as there is a Rental services of transport vehicles with or without operators and the activities of Renting of any motor vehicle/transport vehicle which is designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient are chargeable to either 2.5% GST or 12% GST depending on availment of Input Tax Credit. The service of operating AC buses by the applicant for NMMT would be subject to GST @12% under Tariff Heading 9966 i.e. 'renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient' inserted by way of Notification No.31/2017 dated 13.10.2017 (Amended Notification No.11/ 2017-CT(R) dated 28.06.2017) wherein the applicant is eligible to claim set off, as discussed, on its outward supplies, as provided in the above notification.
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Income Tax
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2021 (12) TMI 1045
Late remittance of employees contribution to PF and ESI - Payment prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT [ 2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) - the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration Employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the AO is deleted. - Decided in favour of assessee.
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2021 (12) TMI 1044
Delayed payment of employees contribution to PF and ESI paid after the due dates prescribed in the relevant Statutes but before the due date of filing of return under section 139(1) - HELD THAT:- As a similar issue relating to the disallowance on account of delayed payment of employees contribution towards PF and ESI was involved in the case of Lumino Industries Limited [ 2021 (11) TMI 926 - ITAT KOLKATA] and after considering the relevant provisions of the Income Tax Act as amended from time to time as well as the relevant judicial pronouncements on the issue, this Tribunal allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s. 139(1) - Decided in favour of assessee.
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2021 (12) TMI 1043
Penalty u/s. 271(1)(c) - assessee had wrongly shown the rental income as 'business income' whereas it was to be offered for taxation as 'income from house property' - HELD THAT:- Admittedly the assessee has not concealed the aforesaid rental income received from two parties. The income was duly offered for taxation, however, as income from business and profession. The assessee in this respect has relied upon its objects wherein it has been mentioned that one of the object of the assessee was to provide space solutions to its clients. The assessee taking shelter under the aforesaid object, returned the income from the space rented out by it to two parties as business income. However, the income tax authorities and even appellate authorities did not agree with the aforesaid plea of the assessee and held that the assessee was primarily in the activity of providing IT Solutions and related activities and that renting of property was not the business activity of the assessee. One fact which is apparent on the file is that the assessee had not concealed his income and under the bona fide belief, offered the same for taxation. However, the income tax authorities assessed it under different head. Even the pertinent fact on the file is that in the immediate preceding assessment year, the assessee had offered the same income as income from business and which was accepted by the AO under scrutiny assessment proceedings. Under the circumstances for the assessment year under consideration, the assessee can safely be said to be having bonafide belief for offering the same under the same head i.e. 'income from business or profession'. - We do not find that it is a fit case for levy of penalty u/s. 271(1)(c) - Decided in favour of assessee.
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2021 (12) TMI 1042
Deposit of employees contributions qua ESI PF after the due date - deposit before the due date of filing of return of income u/s.139(1) - HELD THAT:- We may observe that the issue related to the employees contributions qua ESI PF involved in the present appeal is squarely covered by the decision of coordinate bench of the Tribunal in VINKO AUTO INDUSTRIES LIMITED VERSUS DCIT, CPC, BANGALORE. [ 2021 (12) TMI 574 - ITAT AMRITSAR] wherein the Tribunal has deleted the disallowances made by the AO on account of delay in depositing the employees contribution towards ESI PF as the same were deposited later than the prescribed time in the relevant acts but prior to the filling of the Return u/s.139(1). Disallowances qua empoyeess contribution towards PF and ESI, sustained by the Ld. CIT(A) stands deleted. - Decided in favour of assessee.
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2021 (12) TMI 1035
Rejection of books of accounts - estimated net profit for the year under consideration at 7.6% of the total turnover - HELD THAT:- ITAT has observed that though there is no dispute regarding the fact that there are some technical mistakes in maintaining the books of accounts, however, AO should not loose sight of the gross profit rate shown by the assessee during the year under consideration as compared to the gross profit rate shown in the immediate proceeding year while coming to the conclusion of rejecting the books of accounts and estimating the net profit rate. ITAT has found that during the year under consideration, the gross profit rate shown by the assessee is 29.29% as compared to the gross profit fate of 27.87% shown in the immediately preceding year. ITAT is of the opinion that the gross profit rate shown during the very year is much better than the gross profit of preceding year and, in such circumstances, there is justification for complete decline of contract expenditure claimed by the asssessee, which goes to constitute the gross profit rate. ITAT has further taken into consideration the profit and loss accounts of the assessee for comparison of expenses and found that the same are in order. After finding the gross profit shown by the assessee as reasonable, the ITAT has found that the assessee s claim of interest expenditure and depreciation is required to be allowed. In our opinion, the ITAT after thoroughly examining the material available on record has assessed the income of the assessee and according to us, the same is essentially a question of fact and appreciation of evidence. After going through the entire material available on record, the ITAT has come to the conclusion, which in our view is not liable to be interfered with. Learned counsel for the Revenue has failed to point out any perversity in the finding of fact recorded by the ITAT.
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2021 (12) TMI 1034
Legality and validity of the assessment order passed by the National e-Assessment Centre, Delhi u/s 143(3) r.w.s.143(3A) and 143(3B) - inadvertent mistake in entering the code number, which was sought to be rectified by the petitioner - HELD THAT:- Since the return of the petitioner was taken up for complete scrutiny assessment through the National e-Assessment Centre, Delhi, before completion of the assessment proceedings, the rectification petition filed by the petitioner under Section 154 of the Act ought to have been taken into consideration. Failure to do so has vitiated the impugned assessment order dated 17.03.2021. That being the position, we set aside the assessment order dated 17.03.2021 and remand the matter back to respondent No.1 for passing a fresh assessment order after giving effect to the rectification petition filed by the petitioner on 17.01.2020. While doing so, respondent No.1 shall also take into consideration the response filed by the petitioner on 17.03.2021 in reply to the show cause notice and draft assessment order.
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2021 (12) TMI 1033
Validity of Settlement Commission order - Settlement Commission rejected the petitioner's settlement application, at the first stage itself - reason to reject the application is one, being the manner of earning the undisclosed income has not been satisfactorily explained - HELD THAT:- As decided in AJMERA HOUSING CORPORATION ANR. ETC. VERSUS COMMISSIONER OF INCOME TAX [ 2010 (8) TMI 35 - SUPREME COURT] burden cast upon the declarant is only to make a full and true disclosure. To make a disclosure and to prove that fact are two different things. In the nature of proceedings before the Settlement Commission, at the first stage, as laid down by the Supreme Court, it is only the factum of disclosure that is to be ascertained. In the present case, there is no denial of the fact that such a disclosure had been made by the petitioner. All that remains to be examined is whether the same was true and full in the eyes of the Settlement Commission. To test whether the disclosure made was true and full, the Settlement Commission was only obligated to record a satisfaction. Again, a satisfaction is different and distinct from a concrete finding of fact or law. The decision of the Supreme Court only uses the word 'satisfaction' and not finding. The satisfaction to be recorded is only an expression of a tentative opinion to entertain an application or to allow it to be processed further. Such a satisfaction does not and it could not determine either the rights of the parties to any extent or limit the options of the Settlement Commission to reach a different conclusion i.e. to reject the application either in part or in entirety, at a later stage. Unless the application filed is found to be wholly bogus or unfounded on facts or law, there may remain less reason to reject such applications outrightly. In the facts of the present case, the petitioner had supported his claim and the Settlement Commission had not reached a conclusion that the disclosure made was not full or true inasmuch as the quantification was not in dispute at that stage. The truthfulness of the disclosure made may be said to have been not believed by the Settlement Commission inasmuch as there are observations disbelieving the manner of acquiring the declared income. In that regard, the petitioner had supported the disclosures with material in the shape of income tax returns, bank statements and another documents pertaining to the business entity M/s SIB International with respect to disclosure of undeclared income of ₹ 1 crore 25 lakhs. It had also brought on record the will deed, the affidavit of the attesting witness and also the invoices of sale and purchase of jewellery etc. in support of the disclosure arising from the jewellery business. These materials have not been considered at all by the Settlement Commission while recording a satisfaction in the negative, to reject the application filed by the petitioner. We find no reason to endorse such an approach adopted by the Settlement Commission inasmuch as at that stage of the proceedings, there was no material to discard such evidence relied upon by the petitioner. The Settlement Commission had no basis to overlook the evidence produced by the petitioner. It would be one thing if the Settlement Commission after considering the same had recorded any conclusion disbelieving the same for cogent reasons. That having not been done, the order of the Settlement Commission can neither be described as reasoned nor it can be said to be based upon consideration of material on record. In fact, to that extent, it suffers from a non application of mind. Disclosure of income of cash observations made by the Settlement Commission are self contradicted. In the first place, the application could not be thrown out at the threshold on the reasoning that the petitioner had not made any disclosure of such income before filing an application before the Settlement Commission. In fact, if the petitioner had disclosed such income in any earlier proceeding it may have been a ground to record such negative satisfaction to disallow the application to proceed because the petitioner had already disclosed such income in any proceeding under the Act. Here, according to the Settlement Commission, the petitioner did not disclose the income either during search proceedings or during the investigation carried out after the search or in response to the notice issued under Section 153 (A) of the Act. To that extent, the reasoning of the Settlement Commission is clearly erroneous in law. As to the further reasoning offered by the Settlement Commission that the petitioner had not explained the manner of acquiring the income (cash and jewellery), the Settlement Commission has again failed to take into consideration the effect of the Memorandum of Agreement and the further claim of the petitioner that the signatories to that agreement (who had contributed ₹ 10.5 crores to set up a new business) had disowned that amount, subsequent to that search. Prima-facie , there is merit in the submissions advanced by learned Senior Counsel for the petitioner that by virtue of Section 132 (4A), Section 56 (2) (vii) and Section 292 (C), the presumption in law arose as a consequence of the action/inaction of the third party in not claiming the cash seized at the petitioner s hands as may be treated as her income. Without drawing any final conclusion to that, we find that the said aspect has not been examined and has been completely overlooked by the Settlement Commission. Settlement Commission appears to have remained in some doubt about the aspect of the matter inasmuch as its observation on the issue are hypothetical and plural. It has thus tried to weigh between two hypothetical possibilities of the money belonging to the third party and, the money belonging to the petitioner. The approach taken by the Settlement Commission cannot be endorsed or appreciated. It is expected from the Settlement Commission to form clear opinion on facts, even at the stage of admission. Accordingly, the order passed by the Income Tax Settlement Commission, Additional Bench-II, New Delhi is hereby set aside.
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2021 (12) TMI 1032
Revision u/s 263 - speculative transaction or not - majority of trades undertaken through day jobbing in which sale and purchase of scrips on same day are matched without taking the delivery of the scrips - one of the reasons for selecting the case for scrutiny was large value sale of share which were settled otherwise than by actual delivery or transfer of STT - HELD THAT:- If the amount of ₹ 93,23,384/- is treated as speculation loss then business loss of ₹ 26,58,196/- will get set off against the income from house property of ₹ 20,52,542/-, against income from other sources of ₹ 5,40,403/- and against short term capital gain of ₹ 65,251/-. This will result in balance short term capital gain of ₹ 3,84,32,308/- to be set off against carry forward loss under the same head 'short term capital gain' against available carry forward short term capital gain of ₹ 4,41,05,508/-. There is no impact of any revenue loss in this year nor in the subsequent year. Similar is the fact in A.Y. 2016-17 wherein if ₹ 2,92,861/- is treated as speculation loss instead of business loss, taxable income will remain the same of ₹ 59,70,000/-. This fact has not been denied by the ld. Pr. CIT or ld. CIT DR. Thus, if there is no loss of revenue in this year or in subsequent year nor will it impact the taxable income, then the assessment order cannot be held to be prejudicial to the interest of revenue and accordingly, in view of the principle laid down by Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] the assessment order cannot be set aside. Otherwise also, it is purely a case of change of opinion for the reason that similar nature of transaction of day trading of shares and F O has been held to be business income/business loss in all the earlier years wherein assessment has been completed u/s. 143(3) of the Act. Thus, if rule of consistency is applicable on the same facts and circumstances in these years, then merely changing the head of income from business to speculation, then it cannot be held that the assessment order is erroneous and prejudicial to the interest of revenue. More so, here in this case, section 263 has been done only on the basis of audit objection which was only for the purpose of verification and which has already been examined by the AO during the course of assessment proceedings. Accordingly, the impugned orders u/s. 263 are set aside and assessment orders passed u/s. 143(3) of the Act are restored. - Decided in favour of assessee.
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2021 (12) TMI 1031
Delayed payment of employees contribution to PF and ESI - Amount paid after the due dates prescribed in the relevant Statutes but before the due date of filing of return under section 139(1) - HELD THAT:- As the issue involved in the present appeals as well as the material facts relevant thereto are similar to the case of Lumino Industries Limited [ 2021 (11) TMI 926 - ITAT KOLKATA] we respectfully follow the decision rendered by the Tribunal in the said case and delete the disallowances made by the Assessing Officer and confirmed by the ld. CIT(Appeals) in the appeals on account of delayed payment of employees contribution towards PF and ESI. - Decided in favour of assessee.
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2021 (12) TMI 1030
Delayed payment of employees contribution to PF and ESI - Amount paid after the due dates prescribed in the relevant Statutes but before the due date of filing of return under section 139(1) - HELD THAT:- As the issue involved in the present appeals as well as the material facts relevant thereto are similar to the case of Lumino Industries Limited [ 2021 (11) TMI 926 - ITAT KOLKATA] we respectfully follow the decision rendered by the Tribunal in the said case and delete the disallowances made by the Assessing Officer and confirmed by the ld. CIT(Appeals) in the appeals on account of delayed payment of employees contribution towards PF and ESI. - Decided in favour of assessee.
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2021 (12) TMI 1029
Demand u/s 201 (I) - AO treated the assessee as an assessee in default for non-deduction of tax u/s 201 - Form Nos.15G/15H not filled in properly - Assessee submitted that once the appellant bank has obtained the declarations forms from the depositors. it has no option but not to deduct the tax at source. The appellant bank has no legal obligation to deduct tax at source on the payments made to depositors - HELD THAT:- As decided in own case [ 2016 (5) TMI 1566 - ITAT HYDERABAD] once the assessee obtained Form 15I from the sub-contractors whose contents are not disputed or whose genuineness is not doubted, then, the assessee is not liable to deduct tax from the payment made to sub-contractor. Once, assessee is not liable to deduct tax disallowance u/s 40(a)(ia) cannot be made. The assessee s breach of the requirement to furnish details to the income tax authority in the prescribed form within the prescribed time may attract other consequences but cannot result in a section 40(a)(ia) disallowances. Hence, addition made on this count is deleted. - Decided in favour of assessee. The facts and findings recorded therein, has substance over the order passed by the ITO(TDS) u/s 201(1) 201(1A) of the Act. Considering the observations of the Tribunal in the assessee s own case as quoted supra, we allow the grounds raised by the assessee on this issue.
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2021 (12) TMI 1028
Late payments towards EPF and ESI under section 36(1)(va) - payment before furnishing the return of income under section 139(1) - HELD THAT:- Since the facts involved in the present case are identical to the facts involved in the case of Mohangarh Engineers and Construction Company and in the case of Bikaner Ceramics Private Limited, Bikaner [ 2021 (9) TMI 1319 - ITAT JODHPUR] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted - Decided in favour of assessee.
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2021 (12) TMI 1027
Addition u/s 68 - unsecured loan obtained by the assessee from three directors - addition on the ground that the assessee failed to substantiate with evidences to his satisfaction regarding creditworthiness of the three directors and the genuineness of the transactions - CIT(A) sustained the addition as the assessee did not appear before her to substantiate the creditworthiness of the directors and the genuineness of the transactions - as assessee submitted that adequate opportunity was not granted by the learned CIT(A) and given an opportunity, the assessee is in a position to substantiate with evidences to the satisfaction of the learned CIT(A) regarding the creditworthiness of the Directors and the genuineness of the transactions - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the learned CIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law - Appeal filed by the assessee is allowed for statistical purposes
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Customs
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2021 (12) TMI 1026
Drug trafficking - concealment of contraband goods - admissibility of statements u/s 67 of NDPS Act - HELD THAT:- A reading of Section 37 of the NDPS Act indicates that bail can be granted only when there are reasonable grounds for believing that the accused is not guilty of an offence and that he is not likely to commit any offence when released on bail. In Union of India v. Rattan Mallik, [ 2009 (1) TMI 844 - SUPREME COURT] , the Supreme Court had held that while considering an application for grant of bail under the NDPS Act, the Court was not called upon to record a finding of not guilty , but to see whether there was any reasonable ground for believing that the accused was not guilty of the offence(s) that he was charged with and further that he was not likely to commit an offence under the said Act while on bail. In the instant case, the quantity of contraband recovered is 151.980 kgs of ketamine, which is a commercial quantity. In Gurdev Singh v. State of Punjab, [ 2021 (4) TMI 286 - SUPREME COURT] , the Supreme Court had discussed the deleterious impact of narcotic drugs on society, and how the menace of drug addiction did not only have the ability of destroying the life of just one individual, but how it could destroy the lives of generations to come. Therefore, the consequences of dealing of drugs and drug abuse can be experienced across the board, from causing economic issues to societal disintegration. The purpose of enacting the NDPS Act was to curb this menace, and this purpose must be borne in mind while considering the grant of bail pertaining to the NDPS Act. Deprivation of personal liberty without the assurance of speedy trial contravenes the principles enshrined in our Constitution under Article 21, and is, therefore, unconstitutional to its very core. In such cases, in absence of the pronouncement of conviction, the process itself becomes the punishment. Nine years cannot be said to be a short period of time. This Court is of the opinion that the instant case is fit for grant of bail - bail is granted subject to conditions imposed - application allowed.
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2021 (12) TMI 1025
Disposal of the goods imported by the petitioner - Import of Dates - Country of origin - Goods were seized on the ground of evasion of duty - Jurisdiction of criminal court for issuing direction for disposal of goods are which are perishable in nature and kept in the custody of the respondent in accordance with the Disposal Manual 2019 - HELD THAT:- The Customs Act provides for a comprehensive framework governing the import and export of goods, articles into the country with an objective to curb smuggling of goods into the country through seaports and airports. The Customs Act is a complete code in itself and it being a special legislation, it has its own powers, procedures, rules and mode of operation including the powers of arrest, investigation, examination of persons, inspection, seizure, confiscation, adjudication, imposition of penalty, appellate mechanisms, the settlement commission. These reasons in itself confer vast powers on the customs department for it being a statute which aims at preventing the proliferation of a parallel economy which is askew from the normal economy and which allows the spreading of all illegal and banned activities including terrorism, illegal money transfers, trafficking of vulnerable groups and the derailment of the normal economy thereby shifting the balance of demand and supply and creating an artificial shortage or excess of goods. While dealing with the Foreign Exchange Regulation Act, the Supreme Court in CBI V. State of Rajasthan, [ 1996 (7) TMI 461 - SUPREME COURT ] , held that the Foreign Exchange Regulation Act was a self-contained code which was governed by its special trappings and that a police officer could not make an application under Section 155(2) CrPC to the Chief Judicial Magistrate to obtain permission to investigate offences committed under the FERA. A perusal of the disposal manual does not indicate that provision under Section 451 Cr.P.C can be invoked for disposal of the goods confiscated under the Customs Act. This Court does not find any reason to differ from the view expressed in Directorate of Revenue Intelligence V. M/s PRK Diamonds Pvt. Ltd. [ 2019 (5) TMI 88 - DELHI HIGH COURT ] where it was held that the goods confiscated under the Customs Act cannot be disposed of under Code of Criminal Procedure. Petition allowed.
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2021 (12) TMI 1024
Smuggling - gold bullion of foreign origin - notified goods or not - burden to prove - sufficient evidence present or not - contravention of provisions/conditions of notification no. 12/2012 dated 17.03.2012 read with section 3 of Foreign Trade (Development Regulation) Act, 1992 - HELD THAT:- Though M/s DI Gold designer jewellery and M/s Ridhi Sidhi did not make them available before the investigating officer in furtherance of summon issued to them but from the time date chart as mentioned in the appeal, it is abundantly clear that the notices were served for just five to seven days time for both these appellants to appear and in fact, most of them were received by these appellant after the date of hearing mentioned therein use to expire. In such circumstances, the findings of the adjudicating authority below that both these appellants failed to co-operate the investigating agency are held to be false on the face of it - out of the gold weighing 1255.3 gms as purchased from said Shreenath Corporation, the gold weighing 351.54 gms was mentioned to have been sent to M/s Ratuaria Jewellers for making jewellery. Accordingly, the work order dated 15/10/2014 stands corroborated in view of this letter of M/s. DI Gold Designee Jewellery. It was also corroborated that Ratusaria since could not get the jewellery made, hence, returned the said gold quantity of 351.54 gms. vide delivery note of 30/10/2014. It has been found clarified that it was not necessary to return the gold of same marking. Section 123 of Customs Act cannot be resorted to otherwise also as already discussed above, there is ample evidence for discharging the said burden by the appellants in terms of said Section 123. The present, therefore becomes a clear case where department has failed to established that the seized foreign marked gold was smuggled one. Merely because the foreign marked gold is involved, the same is wrongly held to be smuggled one - In the present case, when apparently, the show cause notice proposing confiscation of goods seized under Section 110 of Customs Act was issued after one year from the date of seizure. The show cause notice itself gets hit by limitation as the show cause notice was mandatorily to be issued within the six months time of the seizure. The show cause notice has been objected since beginning to have been hit by time still the adjudicating authority failed to take cognisance thereof. Accordingly, the show cause notice itself is held to be barred by time and as such being void ab initio. As far as DI Gold Designee Jewellery M/s. Ridhi Sidhi are concerned, the order against them has been passed to holding them to fail to appear and respond but from the date chart as relied upon by the appellants with respect to the date of issue of summons the date of receipt thereof and the date of hearing mentioned in summons it is abundantly clear that the absence of these appellant was not at all intentional but because of too short time as was given to them to make themselves available before the investigating officer. Absence of reasonable time for seeking presence amounts to absence of reasonable opportunity and is definite violation of Principles of Natural Justice. Show cause notice under Section 124 of Customs act confirming confiscation of seized gold being issued beyond six months of the date of seizure is held to be barred by limitation - Lack of appropriate and reasonable opportunity of hearing to the appellant amounts to violation of natural justice, the findings against them are liable to be set aside on this score as well. The appellants have sufficiently discharged their burden of proof in terms of Section 123 of Custom Act by proving the licit possession of the impugned gold which was delivered for job work through approved mode of the Trade for transfer of Gold and Jewellery - the department has failed to show any cogent reason to believe that the goods were the smuggled one. The Order-in-Appeal is nothing but the outcome of presumption on part of the authority - Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1023
Condonation of delay in filing appeal before the Commissioner (appeals) - EPCG License - head race tunnel - EPCG License / authorization for duty saved value for import of capital goods - non-compliance with the requirement to furnish prescribed documents for the same within 3 months from the expiry of the block years - N/N. 97/2004-Cus dated 17.09.2004 - HELD THAT:- The EPCG authorization was issued in favour of the appellant way back in the year 2004. Under the said authorization, appellant imported a machine by saving a custom duty of ₹ 9,56,32,082/- which was against the license value of ₹ 76,50,566.56. However, it is apparent that the completion of export obligation was never brought to the notice of the concerned Department during the time stipulated in the Notification No.097/2004-Cus dated 17.09.2004, as is apparent from the letter dated 21.04.2015 as produced by the appellant. Perusal of this letter, in addition, clarifies the acknowledgment of the appellant about receiving the Show Cause Notice dated 25.03.2013 on 30.03.2015. Hence the appellant s own document is sufficient to falsify the appellant s submission that Show Cause Notice was never received by the appellant. By the time of reply dated April 21, 2015 even the O-I-O dated 21.03.2014 was passed. There is no cogent evidence about the proof of service, nor there is cogent explanation as to why the O-I-O was served upon Delhi address despite that the address mentioned by the appellant for its registered office was that of Bangalore. It is further observed that there is no denial about the date of receipt of recovery proceedings and receipt of O-I-O by the appellant on 6th January, 2017. Commissioner (Appeals) is observed to have been silent about any cogent reason for not considering 6.01.2017 as the date of receipt. Accordingly, matter is remanded back to the Commissioner (Appeals). In accordance whereof the Commissioner (Appeal) has no authority to condone the delay of more than 90 days from the date of communication of the order assailed before him. There is no infirmity in the order under challenge but in view of the discussion and keeping in view that the appeal before Commissioner (Appeals) was filed well within the period of 90 days from 6th January, 2017, the date of communication of Order-in-Original to the appellant, the matter is remanded back to Commissioner (Appeals) directing him to rehear the matter after condoning the delay of 28 days and to adjudicate denovo on the merits of the case - appeal allowed by way of remand.
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Corporate Laws
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2021 (12) TMI 1022
Seeking approval of scheme of amalgamation - seeking exemptions from and/or seeking directions for convening/holding of the meetings of Shareholders and/or Creditors of the Appellant 1/Company and Appellant 2/Company - Section 230-232 of the Companies Act, 2013 - HELD THAT:- Having regard to the fact that the Scheme of Amalgamation is already approved with most of the stakeholders assenting, with Equity Shareholders representing 100% in number and 100% in value of Appellant 1/Company who had given their consent on affidavit; the Secured Creditors of Appellant 1/Company representing 100% in number and 100% in value have given their consent and no objection to the Scheme in Affidavit, the Appellant Companies had sought for direction to dispense with the meeting before the NCLT. The direction in the Impugned Order with respect to fixing of the Quorum by 10 % of Shareholders i.e. 440 and minimum of 50 Unsecured Creditors is hereby set aside. The meetings may be conducted within 8 weeks from the date of this Order. Appeal allowed.
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2021 (12) TMI 1021
Approval of the Scheme of Amalgamation - Seeking to dispense with the meeting of Shareholders and Creditors in relation to the Transferor Companies, dispensing with the meeting of Shareholders of the Transferee Company and convening the meeting Unsecured Creditors and dispensing the meeting of Secured Creditors of the Transferee Company - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT:- It is seen from the record that the Board of Directors of the Applicant Companies vide separate meetings held on 31.05.2021 have approved the proposed 'Scheme of Amalgamation'. Since there are no Secured Creditors in any of the Applicant Companies. Therefore, the requirement of convening their meeting does not arise - That more than 90% in value' of unsecured creditor of all Transferor Companies have given 'no objection' to the Scheme on respective affidavits. Therefore, the requirement of convening the Meetings of Unsecured Creditors in respect of all the Transferor Companies is dispensed with. Application allowed.
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2021 (12) TMI 1020
Sanction of Scheme of Amalgamation - section 230-232 of Companies Act, 2013, and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Various directions with regard to holding, convening and dispensing with various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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2021 (12) TMI 1019
Reduction of share capital - HELD THAT:- Since the requisite statutory procedure has been fulfilled, the company petition is made absolute in terms of the prayer clause of the petition. All concerned regulatory authorities to act on certified copy of the order and the form of minutes forming part of the petition, duly certified by the designated Registrar, National Company Law Tribunal. The petitioner- company undertakes to file the same with the Registrar within 30 days from the date of the receipt of the order. Application allowed.
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Insolvency & Bankruptcy
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2021 (12) TMI 1018
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time Limitation - Adjudicating Authority rejected the submission of acknowledgment observing that Appellant has not placed any law before it that amount mentioned in the Balance Sheet comes under the definition of acknowledgment of debt under Section 18 of the Limitation Act, 1963 - HELD THAT:- The Balance Sheet for the Financial Year 2016-17 having been signed on 01.09.2017 and the above Application having been filed on 20.03.2020, it is well within three years period from acknowledgment of debt as claimed by the Appellant. It is now well settled that acknowledgment in the Balance Sheet is sufficient acknowledgment under Section 18 of the Limitation Act, 1963. In recent judgment of the Hon ble Supreme Court in DENA BANK (NOW BANK OF BARODA) VERSUS C. SHIVAKUMAR REDDY AND ANR. [ 2021 (8) TMI 315 - SUPREME COURT] , after referring to the judgment of ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL ANR. [ 2021 (4) TMI 753 - SUPREME COURT] , the Hon ble Supreme Court again reiterated that Section 18 of the Limitation Act, 1963 is fully applicable to proceedings under I B Code and entries in books of accounts and/ or balance sheets of a Corporate Debtor would amount to an acknowledgment under Section 18 of the Limitation Act. The Adjudicating Authority having not examined the balance sheet for Financial Year 2016-17 ending on 31.03.2017. In the interest of justice, the Adjudicating Authority has to examine the balance sheet to find out as to whether it contain acknowledgment within the meaning of Section 18 of the Limitation Act or not. Second ground given by the Adjudicating Authority for rejecting the Application i.e. that there is no document to show that any interest has ever been paid to the Petitioner by the Corporate Debtor in lieu of the amount, hence, Appellant is not covered in the definition of Financial Creditor - HELD THAT:- The definition begins with the expression financial debt means a debt alongwith interest, if any. Thus a financial debt may be with interest, if any. The definition, thus, clearly contemplates that debt along with interest is not mandatory to be there it to be a financial debt. Interest will be a part of the debt only if there is interest in the transaction. Words if any after the word interest clearly indicates that it is not mandatory that debt should be alongwith interest in all cases - the consideration of the balance sheet for Financial Year 2016-17 may also be relevant for determining as to whether there was a financial debt or not. Thus, by taking into consideration the Balance Sheet, the Adjudicating Authority can re-consider the question of Applicant being Financial Creditor or not. Matter remanded to the Adjudicating Authority for fresh consideration of the Application under Section 7 after issuing fresh notice to the Corporate Debtor and after giving opportunity to the Corporate Debtor also - appeal allowed by way of remand.
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2021 (12) TMI 1017
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - dishonor of cheque which was issued in discharge of the liability - existence of debt and dispute or not - HELD THAT:- It is seen from the petition that the Corporate Debtor has admitted its liability towards Financial Creditor as it has issued the cheques in discharge of its liability and those cheques were dishonoured which clearly shows that there is default in payment. The evidence placed by the financial creditor is sufficient to establish the existence of debt as well as default in payment on the part of the Corporate Debtor. The Hon'ble Apex Court has clearly stated in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ] that the moment it is established that there is a default in payment of financial debt by the corporate debtor, which is due and payable and the application is complete and no disciplinary proceedings is pending against the proposed RP then the adjudicating authority has no option but to admit the application. The Financial Creditor has fulfilled all the requirements of law - this Adjudicating Authority is inclined to admit this application and initiate the process of CIRP of the Corporate Debtor - application admitted - moratorium declared.
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2021 (12) TMI 1016
Seeking dissolution of the Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'Code') read with Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is seen from the record that no assets are left with the Corporate Debtor and no other business operation is being carried. Hence, it is of no use to keep alive the Corporate Debtor as legal entity in existence. For the purpose of pronouncement of Dissolution of the Corporate Debtor it is necessary to peruse Section 54 of the Code along with Regulation 14 of the Regulations. The present Application is allowed as the dissolution is the last step to wind up the proceedings of the Corporate Debtor as per the provisions of law - decided in favor of applicant.
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Service Tax
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2021 (12) TMI 1015
Refund of tax paid - rents charged on the space which remained unregistered as premises from which output service was rendered - after examining the two claims for refund, the file was sent for pre-audit and objection, of wrongful availment of credit of tax on rentals paid by the assessee, originating there prompted rejection of the claims- rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- The scheme of rule 5 of CENVAT Credit Rules, 2004 is abundantly clear. To the extent of eligibility, the assessee cannot be denied refund and the disallowed portion, if any, remains in the credit of the assessee for debit of future tax/duty liability. Therefore, denial of refund does not extinguish the credit but restores it in the account. In the impugned order, there is no finding of disallowance and, on the contrary, the denial has been on the ground of ineligibility for CENVAT credit which is permissible to be ordered only in proceedings initiated under rule 14 of CENVAT Credit Rules, 2004 after issuing notice to the assessee. Neither of the two is evident in the records. The denial of refund CENVAT credit is incorrect in law in the absence of recovery of credit for ineligibility - Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1014
Dropping of demand under Rule 6 of the CCR, 2004 - appeal against the option of reduced penalty of 25% given by the Ld.Commissioner (Appeals) - reversal of Rule 6 of CCR, 2004 on the abated value of Restaurant Services by taking the same as exempted services and applying 6% on the value of exempted services so determined to raise the demand of recovery of common Cenvat credit - HELD THAT:- The issue is no more res-integra in view of CBIC s CIRCULAR NO 213/3/2019-Service Tax, dated July 05, 2019 wherein it has been clarified by the board that there is no requirement of reversal under Rule 6 of the CCR, 2004 for provision of restaurant services. Thus, the Revenue s appeal to that extent is liable to be dismissed. Imposition of penalty on the amounts of Service Tax already paid by the Respondent during the course of audit before issuance of SCN - HELD THAT:- Both the lower authorities have erred in confirming the penalty as it is a settled principle that when tax is paid along with interest before issuance of SCN (other than cases of suppression or willful mis-statement), the Department cannot issue SCN in terms of section 73(3) of the Finance Act, 1994 - In the instant case of the Respondent, the Department has mechanically issued SCN alleging suppression of facts without according any reasons for such allegation. The appeal of the Revenue to the extent of imposition of penalty on the Respondent is also dismissed - The Departmental appeal is dismissed in entirety and the order of the first appellate authority is modified to the extent of deleting the imposition of penalty - decided against Revenue.
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Central Excise
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2021 (12) TMI 1013
Appropriate forum - High Court or Supreme Court - issue of limitation - Decision in rem or in personam - maintainability of appeal before this Court when there is no dispute with regard to the rate of duty and / or valuation as arrived at by the Tribunal (both parties accept the decision of the Tribunal on that issue) and challenge the impugned order only to the extent of the demand being barred by limitation - whether the only issue of limitation which is subject matter of the Central Excise Appeal would lie before this Court under Section 35G or before the Hon ble Supreme Court under Section 35L of the said Central Excise Act? - HELD THAT:- A comparative reading of Sections 35G and 35L of the said Act would clearly indicate that the order passed by the Appellate Tribunal on the issue of determination of any question in relation to the rate of duty of excise or to the value of goods for the purposes of assessment is maintainable under Section 35-L before the Hon ble Supreme Court only. Under Section 35L(2), it is expressly clarified that the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purposes of assessment. It was also observed in the said case of STEEL AUTHORITY OF INDIA LTD. VERSUS DESIGNATED AUTHORITY, DIRECTORATE GENERAL OF ANTI-DUMPING ALLIED DUTIES OTHERS [ 2017 (4) TMI 881 - SUPREME COURT] that before admitting an appeal under Section 130E(b) of the Customs Act, 1962 (which is pari materia to Section 35L of the Excise Act), the question raised or arising must have a direct and/or proximate nexus to the question of determination of the applicable rate of duty or to the determination of the value of the goods for the purposes of assessment of duty and that this is a sine qua non for the admission of the appeal before this Court and such question must involve a substantial question of law which has not been answered or on which there is a conflict of decisions. It was further held in this case that if the tribunal, on consideration of the material and relevant facts, had arrived at a conclusion, the same must be allowed to rest even if this Court is inclined to take another view of the matter. Any decision on the issue whether the revenue could have invoked the extended period of limitation for recovery of the excise duty, or would not have any bearing or impact on the rate of duty of excise or to the value of goods for the purposes of assessment. Such determination on the issue of limitation would also have no bearing on the issue of determination of taxability or excisability of goods for the purposes of assessment - the issue of limitation in this case being purely question of fact or atmost mixed question of fact and law disclosed in decision of the Tribunal would thus not be a decision in rem but has to be in personam. No appeal against the order of the Tribunal in this situation would lie before the Hon ble Supreme Court under Section 35L of the said Act. Upon careful perusal of the said exclusion to Sections 35G and 35L minutely, it can be noticed that expression determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment prescribed under Sections 130 and 130E of the Customs Act is in pari-materia to Sections 35G and 35L of the said Central Excise Act. Interpretation of both these provisions i.e. Sections 130 and 130E of the said Customs Act fell for consideration before the Hon ble Supreme Court in case of NAVIN CHEMICALS MFG. TRADING CO. LTD. VERSUS COLLECTOR OF CUSTOMS [ 1993 (9) TMI 107 - SUPREME COURT] wherein it is held that the phrase relation to is ordinarily, of wide import but, in the context of its use in the reading Section 129C, must be read to mean a direct and proximate relationship to the rate of duty and to the value of goods for purposes of assessment. The Hon ble Supreme Court held that the questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the expression a dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relating directly and proximately to the rate of duty applicable thereto for purposes of assessment . In the facts of this case, order of Tribunal holding that the revenue could not have invoked the extended period of limitation for recovery of excise duty from the respondent-assessee purely based on the finding of facts inter-se and would not fall within the purview of public importance falling under Section 35L of the said Act. In this case, it is not the case of the respondent-assessee that the issue of limitation decided by the Tribunal would involve the question of any general/public importance - the issue as to whether the revenue could have invoked the extended period of limitation for recovery of excise duty being a question of fact and/or a mixed question of fact and law, only such order cannot be impugned before the Hon ble Supreme Court under Section 35L of the said Central Excise Act. The issue of limitation raised in this Central Excise Appeal has no direct or proximate relationship to the rate of duty and the value of goods for purposes of assessment. Only such questions which relate to the rate of duty and the value of goods for purposes of assessment would squarely fall within the meaning of the said expression determination of any question having relationship to the rate of duty and to the value of goods for the purposes of assessment - the adjudication on the said issue of limitation in the Central Excise Appeal filed by the revenue under Section 35G before this Court even remotely, would not determine either the rate of duty of excise or the value of goods for the purposes of assessment. The order, if any passed in appeal under Section 35G would also not determine the taxability or excisability of the goods for the purposes of assessment. The provisions of Sections 130 and 130E of the Customs Act are in pari-materia to Sections 35G and 35L. A party may seek to challenge only that part of the order of the Tribunal which relates to questions other than those relating to the rate of duty or the value of the goods for the purposes of assessment. In the facts of this case, the revenue could challenge only part of the order having aggrieved on the issue of limitation. The appeal thus filed by the revenue is maintainable under Section 35G of the said Act before this Court. In this case, the issue of recovery of excise duty and issue of rate and classification of dispute decided by the Tribunal against the respondent-assessee has attained finality. It is not the case of the revenue of challenging any portion of the order selectively though aggrieved by the larger part of the order or entire order. An appeal under Section 35G(1) of the Act would be maintainable before this Court when there is no dispute with regard to the rate of duty and / or valuation as arrived at by the Tribunal (both parties accept the decision of the Tribunal on that issue) and challenge the impugned order only to the extent of the demand being barred by limitation. Appeal is maintainable against the respondent in this Court - Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1012
Clandestine Removal - three fake invoices - absence of any evidences regarding transport of goods - corroborative evidences produced or not - HELD THAT:- The findings in the order under challenge are held to be nothing but presumptive. There is observed absolute ignorance of the statement in cross-examination of alleged kin-pin Shri Amit Gupta and the transporter Shri Sanjeev Maggu. There is no other relevant evidence to prove the Departments case. Rather there is statement of Shri D.P. Sharma, Senior Manager of M/s. Aggarwal Metals Pvt. Ltd. as was reorded on 24.05.2017 which is relevant w.r.t. the impugned three invoices of M/s. V.K. Enterprises. He specifically deposed that M/s. Agrawal Metals used to purchase copper scrap from V.K. Enterprises against the payments either by RTGS or by Cheques. He has outrighly denied the invoices to be mere cenvatable without delivery of goods. He also denied receiving any cash from M/s.V.K. Enterprises of the amount sent by them through RTGS/Cheque. This deposition clearly falsifies the presumptive alleged modus-operandis. Law has been settled that mere statements are not sufficient to prove clandestine removal - Admittedly, there is no other evidence on record so as to relate to the clandestine activities of the assessee. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1011
CENVAT Credit - both manufacture of taxable goods and provision of exempted service - proper procedure of Rule 6 of the CCR, 2004 not followed - Rule 6(3) of the CCR, 2004 - period 2012-13 to 2016-17 - extended period of limitation - HELD THAT:- It is seen that the Range Superintendent vide its report dated 23/07/2019 at page number 395 of the appeal paper book had provided a detailed report as to the compliance of Rule 6 of CCR, 2004 by the Appellant for the period covered in the SCN and it has been held that the Appellant was in compliance with the procedures laid down and that there has been excess reversal in the years 2014-15 to 2016-17 by the Appellant - the SCN was issued by the Audit Commissionerate to verify the contentions of the Appellant and accordingly the ld. Commissioner adjudicating the case should have taken into account the submissions of the Appellant from pre SCN stage and the report dated 23/07/2019. It is found from the records that the Appellant has complied with all the provisions of Rule 6 of the CCR, 2004 and that there is no further reversal required for the period under dispute. It is also noted that for 2012-13 and 2013-14, the entire Cenvat credit of the Appellant stood reversed and adjudicated vide OIO dated 21/06/2016 which had attained finality as no appeal against the same had been preferred by the Department. Extended period of limitation - HELD THAT:- Also for the period 2014-15, the department had issued a spot memo for Rule 6 of CCR, 2004 on 29/09/2015 wherein the SCN has been issued on 04/09/2018 much after the expiry of normal period of limitation. There is no ground on which the demand can be raised by invoking extended period of limitation as all the documents were at the disposal of the Department since 2015 itself and hence the entire demand also fails on the ground of limitation. The demand of Cenvat credit cannot be sustained both on merits and on limitation and is accordingly set aside. Since demand of Cenvat credit is set aside, penalty and interest are also not sustainable - appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1010
Clandestine removal of the finished excisable goods from the factory - MS bars and rods - MS angles - MS flats - MS rolls - rolling waste - allegation mainly based on the statement of employees - corroborative evidences present or not - wilful misstatement and suppression of facts - period 18.12.2011 to 31.08.2012 and from 01.10.2012 to 23.07.2013 - HELD THAT:- The entire plank of the case rests on the private loose documents/ Papers which were recovered and seized during searches on 24.07.2013 and the statements of Sri Vijay Kumar Sinha, Sri Prabhat Kumar Singh (both being employees of Appellant no.1) and Shri Sudhir Kumar Garg Appellant no. 2. It is an admitted position that the premises of Alok Raj Associates located at 212, Ashiana Tower, Exibition Road, Patna which is being referred to by the department as the secret office‟ of Appellant no.1, belongs to Shri Alok Chaudhary. Private documents were recovered and seized from this premises, but no statement of Shri Alok Chaudhary was recorded either on 24.07.2013 or at any point of time subsequent to the search - There is nothing on record to suggest or indicate that attempts were made to record the statement of the said Shri Alok Chaudhary who was available. Although these documents contain verifiable clues, no attempts appear to have been made to make inquiries with the persons whose names appear on them. No inquiries appear to have been made with regards to the vehicle numbers featuring on them. No transporter was called to affirm the quantity and the description of the goods transported by the vehicle numbers found mentioned on those private documents - The appellants requested for cross-examination of all those persons whose statements were recorded as well as the Panchas, which were relied upon by the Revenue. However, none of them could be presented by the Revenue for cross examination by the appellants. No positive independent tangible evidence have been produced by the Revenue to substantiate the statements recorded during investigation and the entries made in the private documents which are undoubtedly unsigned, bearing no indication in any form that they relate to the appellant No.1 - specific description of the finished excisable goods alleged to have been clandestinely removed are also not found mentioned on the unsigned handwritten loose private records/documents, and as a result of which the amount of duty alleged to have been evaded and confirmed by the impugned order appears to be vague, in the realm of conjecture. On a careful evaluation of the submissions and arguments put forth by both the sides, it can be held that the Revenue has failed to discharge the burden to prove the case of clandestine removals of finished excisable goods by the appellants beyond doubt by collecting and producing independent corroborative tangible evidences to sustain their claim/findings - appeal allowed - decided in favor of appellant.
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2021 (12) TMI 1009
CENVAT Credit - cap and brush exported - common input service used for clearance of manufactured goods as well as trading goods - pure trading activity or a manufacturing activity in terms of Rule 6(3)? - requirement of reversal of credit under Rule 6(3) of CCR - HELD THAT:- The trading goods, i.e. cap and brush was procured by the appellant duly duty paid and the same was exported. Since the appellant has not taken the cenvat credit, they were neither required to pay the duty nor to execute bond for export, therefore, for export of such trading goods no bond was executed. This issue has come up before the Hon ble Bombay High Court that whether to allow the benefit of 6(6)(v) execution of export bond is compulsory or otherwise, the Hon ble Bombay High Court in case of REPRO INDIA LTD. VERSUS UNION OF INDIA [ 2007 (12) TMI 209 - BOMBAY HIGH COURT] clearly held that in case of non-dutiable goods or exempted goods, even though export was not made under bond, benefit of Rule 6(6)(v) cannot be denied and consequently, Rule 6(3)(b) is not attracted. It is settled that even though the goods are exported without bond, the benefit of Rule 6(6)(v) is available to the assessee, and consequently, Rule 6(1), (2), (3) And (4) shall not attract - Appeal allowed - decided in favor of appellant
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Indian Laws
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2021 (12) TMI 1008
Dishonor of Cheque - execution of guarantee deeds by the petitioner prior to issuance of cheques in question - vicariously liability of Director for the offence under Section 138 read with Section 141 NI Act - resignation tendered to the accused company prior to issuance thereof - HELD THAT:- It is no longer res integra that to attract vicarious liability under Section 141 NI Act against any person, the accused person should have been in-charge and responsible for the conduct of the business of the accused company at the time of commission of offence. A person who was not a Director, and/or not in-charge of the affairs of the accused company or for the conduct of the business thereof, at the time when the offence was committed, cannot be held vicariously liable - To make a Director of a company vicariously liable under Section 141 NI Act, specific allegations have to be made out against him in the complaint. Considering that Section 141 NI Act is a deeming provision, whereby liability is attributed to Directors who were in-charge and responsible for the affairs of the accused company at the time when the offence was committed , it is discernible that regardless of a guarantee deed being executed as part of the impugned transaction, no criminal liability would be attributable to a Director of the accused company who executed such deed if he resigned therefrom prior to the issuance of the cheques in question. The petitioner had executed personal guarantee deeds dated 17.05.2011 and 18.06.2013. As the aforementioned relied-upon documents indicate, he ceased to be associated with the accused company as a Director with effect from 28.02.2014, whereas the cheques in question were issued only thereafter, i.e., from 30.03.2014 to 31.01.2016. Admittedly, the cheques were signed by respondent No. 3, who, as per the averment made in the complaints, alone undertook that the same would be duly honoured upon presentation. Such an undertaking/assurance was not attributed to the present petitioner. In this backdrop, the execution of guarantee deeds by the petitioner at an earlier point in time would not attract vicarious liability under Sections 138/141 NI Act. Besides, there is nothing on record to indicate that the petitioner was in-charge of and responsible for the conduct of the affairs of the accused company at the time of the commission of the offence under Sections 138/141 NI Act. This Court is of the opinion that the summoning orders against the petitioner are liable to be set aside - Petition allowed - decided in favor of petitioner.
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2021 (12) TMI 1007
Dishonor of Cheque - during the pendency of the appeal, there was compromise which had been arrived at between the parties - major part of amount agreed, was duly paid - HELD THAT:- It is apparent that both the contesting parties are ad idem that the compromise has been effected between the parties without any pressure, threat or undue influence and the terms of the said compromise have been duly complied with. The compromise would go a long way in maintaining the peace and harmony between the parties and thus, a prayer has been made to the Court for compounding the offence in terms of Section 147 of the Negotiable Instruments Act, 1881 read with Section 320 (6) Cr.P.C. Since the offence relating to dishonour of cheque has a compensatory profile and is required to have precedence over punitive mechanism, therefore, the present revision petition deserves to be allowed. Petition allowed.
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2021 (12) TMI 1006
Territorial Jurisdiction - Seeking transfer of the criminal proceedings of a complaint case - ground raised is of inconvenience - Section 407 of the Code of Criminal Procedure, 1973 - HELD THAT:- The provision of Section 407 of the Code has provided power to the High Court to transfer cases and appeals. It is laid down therein that whenever it is made to appear to the High Court [a] that a fair and impartial inquiry or trial cannot be had in any Criminal Court subordinate thereto, or [b] that some question of law of unusual difficulty is likely to arise; or [c] that an order under the section is required by any provision of this Code, or will tend to the general convenience of the parties or witnesses, or is expedient for the ends of justice, then the Court may inter alia order that any particular case be transferred from a Criminal Court subordinate to its authority to any other such Criminal Court of equal or superior jurisdiction. In the case in hand, the petitioner has not raised any apprehension regarding any unfair and partial trial nor regarding any question of law of unusual difficulty which is likely to arise in the complaint under Section 138 r/w 142 of the Negotiable Instruments Act. The only ground that the petitioner has raised is with regard to the inconvenience he likely to face in attending the trial at Jorhat by travelling from his village of residence at Tingkhong, which is situated at a distance of approx. 160 KMs to Jorhat - In the case in hand, the petitioner has not pleaded any physical disability to travel the distance of approx. 160 KMs from his place of residence to Jorhat i.e. the place of trial. The petitioner has claimed himself to be as an agriculturist. The petitioner has declared his age as 38 years. The learned counsel for the parties at the Bar has submitted that the transportation facility from Dibrugarh to Jorhat is good. An able bodied person can complete to and fro journey from Dibrugarh to Jorhat and vice versa within the day. There are different modes of public transport like bus, rail, light motor vehicles, etc. are available at small intervals. The ground of inconvenience that has been urged on behalf of the petitioner does not deserve acceptance - Petition dismissed.
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2021 (12) TMI 1005
Dishonor of Cheque - Discharge of legally enforceable debt or not - actual person to whom the cheque is issued - acquittal of the accused - rebuttal of presumption - cross-examination of witnesses - HELD THAT:- Perusing the material available on record vis- -vis reasoning assigned by learned Courts below, while holding accused guilty of having committed offence punishable under 138 of the act, this court finds it difficult to agree with learned counsel for the petitioner that the learned courts below have failed to appreciate the evidence in right perspective rather, close scrutiny of evidence and pleadings clearly reveals that both learned courts below have dealt with each and every aspect of the matter meticulously and no scope is left for interference by this court - Interestingly, in the case at hand, there is no denial on the part of accused with regard to issuance of cheque as well as his signatures thereupon. He has categorically stated in the statement recorded under S. 313 CrPC, that he had not issued cheque in question to the complainant but to his son-in-law, who further gave it to the complainant as security. Once there is no denial of issuance of cheque and signatures thereupon, presumption as available under Ss. 118 and 139 comes into play. Section 118 and 139 of the Act clearly provide that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability - True, it is that to rebut aforesaid presumption accused can always raise probable defence either by leading some positive evidence or by referring to the material, if any adduced on record by the complainant. The Hon'ble Apex Court in M/S LAXMI DYECHEM VERSUS STATE OF GUJARAT ORS. [ 2012 (12) TMI 106 - SUPREME COURT] , has categorically held that if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. To raise probable defence, accused can rely on the materials submitted by the complainant. Needless to say, if the accused/drawer of the cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, statutory presumption under Section 139 of the Negotiable Instruments Act, regarding commission of the offence comes into play. In the case at hand, complainant with a view to prove his case examined himself as CW-1 and successfully proved on record contents of the complaint. Cross-examination conducted upon this witness nowhere suggests that the opposite party was able to extract anything contrary to what he stated in his examination-in-chief - witness admitted that the house of accused is situate near Kali Bari Temple, Shimla. While admitting the suggestion that he has not cited his wife as witness, he feigned ignorance that the cheque has been filled in two different inks. This witness self-stated that the cheque was filled in by the accused himself. This witness denied the suggestion that he has misused the cheque. Careful perusal of the statement of the accused clearly reveals that he has not denied issuance of cheque and his signatures thereupon, rather, his simple defence is that the cheque in question was issued to one Rajan, his son-in-law, who was to further hand over the cheque to someone from whom he had taken ₹ 25,000/-. There is no explanation that in case cheque was issued to Rajan, how it reached complainant. It is not the case of the accused that Rajan, had borrowed ₹ 25,000/- from the complainant and he had handed over cheque to the complainant as security. The present revision petition is dismissed being devoid of any merit - decided against petitioner.
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2021 (12) TMI 1004
Dishonor of Cheque - insufficiency of funds - vicarious liability of Managing Director - Sections 138, 141 and 142 of the NI Act read with Section 420 IPC - HELD THAT:- The complaint was filed under Sections 138, 141 and 142 of the NI Act read with Section 420 IPC against A1 to A5. A5 is the Company shown as represented by its Managing Director Gade Manikumar - A1. The description or status of A2 to A4 was not mentioned in the compliant. It was only mentioned that A1 in his reply letter admitted that he and the Executive Director, petitioner- A3, were working on raising funds and settling the issue. The learned counsel for the petitioner filed Form-32 wherein A1 was shown as the Managing Director of the company, one Srikanth Akkina S/o. Venkata Raju Akkina as Director and the name of A2 as one of the Director and A4 as Additional Director. The cheque filed by the petitioner would disclose that it was issued by A1 in the capacity of the Managing Director of A5 company. Thus, the complaint or the documents filed would not disclose that the petitioner was neither the Director of the company nor issued the cheque on behalf of A5 - The name of the petitioner was not found anywhere in the said bond. Nowhere in the complaint, it was mentioned that the petitioner was responsible for the affairs of the company or that he issued the cheque. The Hon'ble Apex Court in National Small Industries Corporation Limited case [2010 (2) TMI 590 - SUPREME COURT] held that not every person connected with the company, but only those in-charge of and responsible for conduct of business of the company at the time of commission of offence were vicariously liable. Considering the citation and as no specific averments were made by the 1st respondent as to how and in what manner the petitioner was responsible for the affairs of the company and the role played by him in cheating the complainant, and as there are no specific averments that the petitioner had induced or made the 1st respondent to part with the said money with an intention to cheat him from the inception, it is considered fit to quash the proceedings against the petitioner - A3. Petition allowed - decided in favor of petitioner.
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2021 (12) TMI 1003
Dishonor of Cheque - cheque issued under duress or not - whether petitioner nos.2 and 3 are in no way related to the firm represented by the petitioner no.1 and are residents of Pune? - HELD THAT:- In view of the decision of the Hon ble Supreme Court in SUNIL TODI ORS. VERSUS STATE OF GUJARAT ANR. [ 2021 (12) TMI 175 - SUPREME COURT] it would not be mandatory on the part of the Magistrate to hold an enquiry under Section 202 (2) of the Criminal Procedure Code as specified in Section 145 of the N.I. Act. However, the petitioners have a legal right to assail a proceeding initiated against them in the form of complaint before the Court of a Magistrate. The matter be listed on 20.01.2022 for filing affidavit of service and affidavit in opposition, if any.
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