TMI Tax Updates - e-Newsletter
December 30, 2023

Case Laws in this Newsletter:

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

Articles

1. CANCELLATION OF GST REGISTRATION - SOME ISSUES

   By: DR.MARIAPPAN GOVINDARAJAN

2. Minimum thirty days to be provided to reply to a GST SCN

   By: Vivek Jalan

News

1. Advisory: Date extension for reporting opening balance for ITC reversal

2. Indian and Hong Kong Customs bust Trade-Based Money Laundering network, 4 held

3. Calendar for Auction of Government of India Treasury Bills (For the Quarter ending March 2024)

4. Monthly Review of Accounts of Union Government of India upto the month of November, 2023 for the Financial Year 2023-24

5. Building resilient brand India amidst global uncertainty (Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India - December 28, 2023 - at the 10th SBI Banking and Economic Conclave in Mumbai)

6. Govt. is promoting India as global MICE destination to showcase India’s MSME sector, traditional handicrafts, artisanal offerings, weavers and manufacturing prowess: Union Commerce and Industry Minister Shri Piyush Goyal

7. Financial Intelligence Unit India (FIU IND) issues compliance Show Cause Notices to nine offshore Virtual Digital Assets Service Providers (VDA SPs)

8. CBDT issues guidelines under section 194-O of the Income-tax Act, 1961

9. Domestic Systemically Important Bank (D-SIB) Framework - Review of the Assessment Methodology

10. RBI releases Draft Directions on Bond Forwards under Section 45W of the RBI Act, 1934

Notifications

Customs

1. 94/2023 - dated 28-12-2023 - Cus (NT)

Sea Cargo Manifest and Transhipment (First Amendment) Regulations, 2023.

GST

2. 56/2023 - dated 28-12-2023 - CGST

Relevant date of issuance of order u/s 73(10) of CGST Act, 2017 for the financial year 2018-19 and 2019-20 extended - Date extended exercising the powers u/s 168A

GST - States

3. 38/1/2017-Fin(R&C) (269)/3967 - dated 29-12-2023 - Goa SGST

Seeks to extend dates of specified compliances in exercise of powers under section 168A of Goa Goods and Services Tax Act, 2017

4. 19/2023-State Tax (Rate) - dated 20-10-2023 - Gujarat SGST

Amendment in Notification No. 4/2017-State Tax (Rate) dated the 30th June, 2017

5. 18/2023-State Tax (Rate) - dated 20-10-2023 - Gujarat SGST

Amendment in Notification No. 2/2017-State Tax (Rate) dated the 30th June, 2017

6. 14/2023-State Tax (Rate) - dated 20-10-2023 - Gujarat SGST

Amendment in Notification No. 13/2017-State Tax (Rate), dated the 30th June, 2017

7. 13/2023-State Tax(Rate) - dated 20-10-2023 - Gujarat SGST

Amendment in Notification No. 12/2017-State Tax (Rate) dated the 30th June, 2017

8. 48/2023-State Tax - dated 24-11-2023 - Mizoram SGST

Seeks to bring in force provisions of Mizoram Goods and Services Tax (Amendment) Ordinance, 2023

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/PoD-1/P/CIR/2023/196 - dated 28-12-2023

Framework on Social Stock Exchange (“SSE”)

2. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2023/197 - dated 28-12-2023

Settlement of Running Account of Client’s Funds lying with Trading Member (TM)

3. SEBI/HO/DDHS/POD1/P/CIR/2023/194 - dated 28-12-2023

Modifications to provisions of Chapter XXI of NCS Master Circular dealing with registration and regulatory framework for Online Bond Platform Providers (OBPPs)

Income Tax

4. 20/2023 - dated 28-12-2023

Guidelines under sub-section (4) of section 194-O of the Income-tax Act 1961

Highlights / Catch Notes

GST

• Charges for Metering, Testing, Labor, and Bills in Electricity Distribution Exempt from GST, Court Rules.

  Case-Laws - HC : Exemption from GST - Transmission or distribution of electricity - charges for metering equipment, testing fee for meter, labour charges from customers for shifting of meters, charges for bills - Validity of clarification issued by CBIC - Since the impugned circular has been set aside and it is clarified that the supplies mentioned in the impugned circular are bundled supplies and form an integral part of the supplies of distribution of electricity, the said supplies are not chargeable to GST. - HC
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Income Tax

• Penalty for Failing to Collect Tax at Source Overturned; Empty Liquor Bottles Not Considered Scrap Under Tax Law.

  Case-Laws - HC : Penalty u/s.271CA - “assessee in default” for failure to collect tax at source u/s 206C - running bars on contract / licnece basis - empty bottles can be considered as scrap or not? - Mere opening, breaking or uncorking of a liquor bottle by mere twisting the seal in a liquor bottle will not amount to generation of “scrap” from “mechanical working of material” for the purpose of explanation to Section 206C. - No waste or scrap was generated by the petitioner for it to be sold by the petitioner. - Left over bottles after consumption are not owned by the petitioner. Neither the petitioner nor the licensee are the owner of the waste bottles. - Entire demand set aside - HC
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• Late Tax Refund Claim Approved After Initial Rejection; Court Orders Interest Payment on Delayed Refund.

  Case-Laws - HC : Refund of tax - Applications to condone delay in filing the return of income and claim of refund u/s 119(2)(b) rejected - The petitioner came to know about the fact of the deduction of TDS from the amount of interest deposited by the Irrigation Department and realized that the date of filing the return of income to claim a refund of the amount of TDS had already gone - Delay directed to be condoned and allow the refund with interest - HC
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• Secured Creditor Bank Wins Priority in Mortgage Dispute Over Encumbered Properties in Recovery Proceedings.

  Case-Laws - HC : Recovery proceedings - Encumbrance attachment entry - These properties were already a subject matter of mortgage with the petitioner Bank in the year 2015 itself - It is now too well settled that the Bank as a secured creditor will have a priority over the dues that are payable to the first respondent. - The relief as sought for by the petitioner is granted. - HC
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• Tax Appeal Overturns Disallowance of Improvement Costs Due to Lack of Evidence Against Valuer's Statement.

  Case-Laws - AT : LTCG - Deduction towards the ‘Cost of Improvement’ - The authorities have blown hot & cold in disallowing the expenditure. The selective reading of the sale agreement and lack of mentioning of pump and modular kitchen cannot necessarily lead to disallowance. AO could not bring anything on record that the statement given by the valuer is wrong on facts or had inconsistencies. Hence, we allow the appeal of the assessee on this ground. - AT
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• Assessing Officer Corrected: Income Taxed at Normal Rate Instead of Higher Rate Due to Explained Income Source.

  Case-Laws - AT : Addition u/s 69A - on-money in respect of 100% of unit is brought on record - taxability at higher rate of tax u/s 115BBE - no such provision was invoked by Assessing Officer while making addition in the assessment order - further, since source of income has been explained, AO directed to tax the same at normal rate - AT
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• TP Adjustment Dispute: Double Addition of Expenses Deemed Inconsistent with Transfer Pricing Rules.

  Case-Laws - AT : TP Adjustment - apportioning the expenses of assessee’s affiliates - Also noted that the assessee has received certain services from its AE which has been treated by the Ld.TPO at arms length by the assessee. However, the Ld.TPO has apportioned 1/5th of the expenses once again to the assessee and proposed a TP adjustment which in our view amounts to double addition. Such kind of computation of adjustment is not in accordance to the sound principles of transfer pricing rules. - AT
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• Derivative Loss on NSE Platform Justified; Revenue's Argument on Open Positions Lacks Merit.

  Case-Laws - AT : Disallowance of loss in derivative transactions on the platform of National Exchange of India (NSE) - The derivative loss claimed by the assessee appears fully justified and requires to be accepted. The plea on behalf of revenue that such loss from open position has no effect on profit and loss is devoid of any merit. - AT
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• Freezer Deposits as Lapsed Liabilities: Annual Assessment Required for Non-Refundable Amounts Under Income Tax Act.

  Case-Laws - AT : Additions u/s 41(1) - Cessation of liability - Freezer Deposit (security deposit) considered as lapsed liability u/s 41(1) - termination of agreement - The exercise is to be carried out at each year-end, determining the deposit amounts no longer refundable. There being no dispute on quantum at any stage, we have no hesitation in according our approval to the impugned addition. - Income is liable to be taxed for the right year, and it being taxed in another year is no ground for it being not brought to tax for the right year - AT
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• Share Premium Classified as Unexplained Cash Credit Overturned; CIT(A) Accepts Evidence, Deletion Upheld.

  Case-Laws - AT : Addition of share premium - AO has treated the amount received by the assessee from its holding company as unexplained cash credit u/s 68 on the ground that source of funds has not been explained - CIT(A) deleted addition admitting of additional evidence - Order of CIT(A) sustained - AT
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Customs

• Provisional Release of Used Digital Machines Approved Pending Enhanced Duty Payment by Petitioners.

  Case-Laws - HC : Seeking release of various models of second hand Highly Specialised Equipment digital Multifunction Print, Copying & Scanning Machines, imported - There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of three (3) weeks thereafter - HC
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Indian Laws

• Court Upholds Fairness: Complaint Restored After Counsel's Negligence in Cheque Dishonor Case.

  Case-Laws - HC : Dishonour of Cheque - Restoration of complaint - mere negligence either on the part of the petitioner or his counsel in prosecution of the complaint should not be a ground for not restoring the complaint. The petitioner cannot be allowed to be suffer due to the negligence of his previous counsel. - HC
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• Society Must Be Accused in Cheque Dishonor Cases, Says High Court; Prosecution Without Society Improper.

  Case-Laws - HC : Dishonour of Cheque - Section 14 of the H.P. Societies Registration Act provides that every Society shall be a body corporate - The complainant could not have filed a complaint against the petitioner and respondent no. 3 without impleading the Company to an accused. The prosecution of the petitioner in the absence of the Company is bad - HC
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IBC

• Liquidation Order Validity and Resolution Plan Rejection Upheld in Corporate Insolvency Resolution Process.

  Case-Laws - AT : CIRP - Validity of order of liquidation - Rejection of resolution plan - eligibility criteria - terms and conditions as stipulated in RFRP are required to be treated valid and legal binding terms and conditions which has been stipulated by the CoC after fair deal of deliberations. The framing of such terms and conditions, evaluation of the Resolution Plan against such matrix is considered to be entirely within the commercial wisdom domain of the CoC. - AT
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• Higher Court Confirms Timely Section 7 Application Filing Under Insolvency Code; Tribunal Review on Debt Unnecessary.

  Case-Laws - AT : Initiation of CIRP - Maintainability of section 7 application - time limitation - The question of limitation was taken to the higher court and ultimately it has been proved that the application was within the limitation. In such circumstances, the Tribunal should not have gone in for further investigating on the issue as to whether there is debt and default in the present case for the purpose of admission of the application. - AT
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Service Tax

• Service Tax Demand Limit Extension Invalid Without Evidence of Intent to Evade Payment.

  Case-Laws - AT : Extended period of limitation - suppression of facts or not - It is for the Superintendent to scrutinize the returns and ascertain if the service tax had been paid correctly or not. - The fact that the alleged short payment came to light only during audit does not prove the intent to evade payment of service tax by the appellant, but it only proves that the Range Superintendent had not done his job properly. For these reasons, it is found that the demand for the extended period of limitation cannot be sustained. - AT
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• No Penalty Imposed for Irregular CENVAT Credit: Amount Reversed Before Show Cause Notice, Avoiding Further Action.

  Case-Laws - AT : Levy of penalty - non discharge of tax liability - availment of irregular CENVAT Credit - amount already reversed by the appellant was proposed to be appropriated against the said demand - the amount which is ordered to have been appropriated was reversed much prior to issuance of SCN. The SCN should not have been issued in view of proviso to section 73 of the Finance Act, 1994. - No penalty - AT
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Case Laws:

• Income Tax

• 2023 (12) TMI 1234
  Penalty u/s.271CA - assessee in default for failure to collect tax at source u/s 206C - running bars on contract / licnece basis - empty bottles can be considered as scrap or not? - tax has also been imposed u/s 206CC and Section 206CCA and further interest u/s 206C(7) - HELD THAT:- Under Sub-Section (7) to Section 206C where a person responsible for collecting tax fails to collect it in accordance with Section 206C(1) shall be liable to pay tax to the credit of the Central Government in accordance with the provisions of Sub Section (3). As per Sub-Section (3) to Section 206C any person collecting any amount under this Section shall pay within the prescribed time the amount so collected to the credit of the Central Government or as the Board directs. Provided that the person collecting tax on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Section shall, after paying the tax collected to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority, or the person authorised by such authority, such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed. As per Sub Section (7) to Section 206C a person responsible for collecting tax failing to pay tax to the credit of the Central Government on or before the date specified, either after collecting the tax or fails to collect tax, shall be liable to pay simple interest at the rate of 1% per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which the tax was actually paid or payable and such interest shall be paid before furnishing the quarterly statement for each quarter in accordance with the provisions of sub-section (3). In absence of definition for the expression mechanical working of materials in Section 206C the above doctrine of nocitur a sociis can be usefully applied to the facts of the case to resolve the legal conundrum. Court is faced with. The meaning of the expression mechanical working of materials in Section 206C can therefore to be gathered by applying the doctrine of noscitur a sociis from the meaning of the expression manufacture in Section 2(29BA). The definition of the expression manufacture in Section 2(29BA) of the Income Tax Act, 1961 is similar to the definition of manufacture in Section 2(f) of the Central Excise Act, 1944. Therefore, for a waste or a scrap to be liable to excise duty under Section 3 of the Central Excise Act, 1944, such waste or scrap was also to be specified in the 1st Schedule to Central Excise Tariff Act, 1985. Certain activity may amount to manufacture yet not liable to Central Exercise Duty. An activity may resemble to a manufacturing activity , yet may not amount to manufacture . Only those activity can came within the purview of the expression of mechanical working of material . Only those activity which resemble manufacturing activity , but are not a manufacturing activity can come within the purview of the expression of mechanical working of material . Only such scrap arising of such mechanical working of material are in contemplation of Section 206C. Only such scarp generated from such mechanical working of material which are not manufacturing activity but are akin to manufacturing activity can be said to be in contemplation of Section 206C. The expression mechanical working of material in Section 206C would apply only to such activity which are akin to manufacturing activity but not manufacturing activity . Only such scrap generated from such activity i.e. either manufacturing activity or from mechanical working of material can be construed to be in contemplation of Section 206C. Mere opening, breaking or uncorking of a liquor bottle by mere twisting the seal in a liquor bottle will not amount to generation of scrap from mechanical working of material for the purpose of explanation to Section 206C. Activity of opening or uncorking of the bottle is also not by the petitioner. These are independent and autonomous acts of individual consumers who decides to consume liquor purchased from the Tasmac Shops of the petitioner which have a licensed premises (Bar) adjacent to them under the provisions of the Tamil Nadu Liquor Retail Vending (in Shops and Bars) Rules, 2003. No waste or scrap was generated by the petitioner for it to be sold by the petitioner. Scrap, if any, was generated at the licensed premises which was leased by the licensees from the provide owners of the premises. Left over bottles after consumption are not owned by the petitioner. Neither the petitioner nor the licensee are the owner of the waste bottles. What the respective bar licensees are permitted under the terms of the license under the provisions of the Tamil Nadu Liquor Retail Vending (in Shops and Bars) Rules, 2003 is merely to sell food and water and clear the left over bottles more from the point of view of ensuring cleanliness. The bar owners incidentally monetize the left over bottles. Rule 9(a) of the Tamil Nadu Liquor Retail Vending (In Shops and Bars) Rules, 2003 merely grants privilege to the respective bar owners only to run the bars to sell the eatables and to clear left over empty bottles. Bottles are neither Scrap nor a property of either the TASMAC or Bar Licensee. Ownership over the bottles at best would stand vested with the respective bar owners / licensees who have been licensed. Sale of left over bottles are merely regulated. Mere regulation of such sale would not render the petitioner sale of bottles A mere privilege is conferred on the respective bar owners / licensees to collect the left over bottles and sell them to the breweries and distilleries. There is no scope to conclude sale bottles by the petitioners to the respective bar owners / licensees. To be a seller of used bottle, the petitioner should be the owner of the bottle. Neither the petitioner nor the Bar owners / licensees are the owners of the bottles left behind in the licensed premises (Bar). The petitioner merely decides the upset price and other terms and conditions in the tender process with the approval of the Commissioner of Prohibition and Excise. Merely because used bottles are to be cleared which implies sale by them would not render the petitioner seller for the purpose of Section 206C of the Act. There is neither a manufacture nor a generation of scrap from mechanical working of materials , the liability under Section 206C of the Income Tax Act, 1961 is not attracted. Suffice to state that the petitioner is neither the owner of the bottle nor generates scrap as is contemplated under the Income Tax Act, 1961. The activity of opening and uncorking is not a mechanical working of material . Invocation of Section 206 C, 206CC and 206CCA of Income Tax Act, 1961 was wholly misplaced and unwarranted under the circumstances against the petitioner for the alleged failure to collect tax at 1% on 99% of the license fee payable to the Government and 1% retained as agency commission. Therefore, there is no merits in the impugned order. Consequently, the question of paying simple interest under Section 206C(7) of the Income Tax Act, 1961 cannot be countenanced with. Since Section 206C of the Income Tax Act, 1961 is not applicable, question of imposing liability on the petitioner to furnish the PAN Number of the Bar owners under Section 206CC of the Income Tax Act, 1961 cannot be countenanced with. WP allowed.

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• 2023 (12) TMI 1233
  Tribunal not dealing with second issue/question - whether the respondent/assessee had a Permanent Establishment (PE) in India? and whether the subject transaction was at Arm s Length and, if it was so, whether any profit could be attributed to the respondent/assessee? Tribunal has dealt only with the first issue and concluded that the respondent/assessee neither a fixed place PE nor a dependent agent PE in India. Because the Tribunal reached this conclusion, it observed that the other issue was academic. HE;D THAT:- As the record discloses that the respondent/assessee had raised an alternative plea concerning the second issue. In our opinion, it would save time and costs if the Tribunal were to render a view with regard to the second issue as well, which is broadly referred to hereinabove. Therefore, without disturbing the impugned orders passed by the Tribunal, with the consent of counsel for the parties, the above-captioned matters are remitted to the Tribunal for rendering a decision with regard to the second issue.It is made clear that whichever party is aggrieved by the impugned order, as well as the order passed upon remand by the Tribunal, will have liberty to approach the court by way of a statutory appeal. Since the instant appeal concerned the impugned orders passed by the Tribunal as and when the appellant/revenue files an appeal, the period spanning between the date when the above-captioned appeals were instituted in this court and the date when the Tribunal passes the order post remand, will not be factored in while calculating the period of limitation.

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• 2023 (12) TMI 1232
  Refund of tax - Applications to condone delay in filing the return of income and claim of refund u/s 119(2)(b) rejected - HELD THAT:- Respondent could not have rejected the applications to condone the delay of the petitioners when in case of similarly situated persons, the respondent has ordered to condone the delay after considering the decision in case of Hari Singh and others [ 2017 (11) TMI 923 - SUPREME COURT] while exercising the jurisdiction u/s 119(2)(b) of the Act, 1961. Therefore, the impugned orders rejecting the applications to condone the delay are required to be quashed and set aside in each petition with a direction to condone delay u/s 119(2)(b) as per order passed by the respondent in case of similarly situated persons, however, with a rider to direct the AO to issue refund with interest on the amount of refund claim from the date of deposit by the Executive Engineer, Irrigation department till the date of granting of refund. For passing such direction of issuance of the refund with interest under section 244A, similar reasons as given by this Court in case of Special Civil Application No. 12466/2021 [ 2023 (12) TMI 1165 - GUJARAT HIGH COURT] the words or the deductor, as the case may be, which is inserted with effect from 01.04.2017 would not be applicable as the petitioners have been permitted to file the refund claim for the AY 2013-2014 after condonation of delay and such delay in claiming the refund cannot be said to be attributable to the petitioners as the petitioners were not made aware about the deduction of tax at source by the deductor in absence of issuance of Form No. 16-A which was mandatorily required as per Rule 31(3) of the Rules. In view of the foregoing reasons, the petitions succeed and are accordingly allowed. The respondents are directed to pass the order to condone the delay in filing the return for the Assessment Year 2013-2014 and to issue the refund with interest under section 244A of the Act, 1961 from the date of deposit of the amount of TDS till date of payment of refund as per provisions of section 244A of the Act, 1961

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• 2023 (12) TMI 1231
  Recovery proceedings - Validity of Attachment of property - Encumbrance attachment entry - grievance of the petitioner is that the first respondent has attached the properties of the third and fourth respondents towards the income tax dues for the year 2018-19, and even though the mortgage properties were sold, the encumbrance certificate reflected, as if, there is a clog in the title by virtue of the entries made in the Encumbrance Certificate due to attachment order passed by the first respondent. It is under these circumstances, the present writ petition has been filed before this Court. HELD THAT:- It is quite clear from the materials placed before this Court that the properties, which were attached by the first respondent in the year 2018-19, were already a subject matter of mortgage with the petitioner Bank in the year 2015 itself and it is apparent from the particulars that have been extracted supra. It is now too well settled that the Bank as a secured creditor will have a priority over the dues that are payable to the first respondent. The Full Bench judgment of this Court in UTI Bank Ltd [ 2006 (12) TMI 2 - MADRAS HIGH COURT ] also took note of the priority of the Bank over the dues as against the crown s debts. The relief as sought for by the petitioner is granted. There shall be a direction to the second respondent to make necessary footnote and delete the attachment entries made by the first respondent. It is made clear that this order will not stand in the way of the first respondent to recover the income tax dues from the third and fourth respondents, if other properties are available for sale and recovery of dues.

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• 2023 (12) TMI 1230
  LTCG - Deduction towards the Cost of Improvement in the Lucknow House u/s 54 - AO observed that the photographs produced by the assessee were vague and insufficient to prove the year of incurrence of expenditure as claimed - HELD THAT:- We find that the AO has categorically accepted that Air conditioning, modular kitchen and kitchen chimney, tube-well and submersible pump are not a part of the building. AO also accepts the fact that the building was valued as per the CPWD guidelines. Having said so, the AO holds that the expenses relatable to Air conditioning, modular kitchen and kitchen chimney, tube-well and submersible pump are not allowable as cost of improvement. The AO again agrees that the valuation report cannot be completely disregarded and parts of it are based on evidence and is in line with existing CPWD guidelines but has an objection that the photographs produced by the assessee are vague and insufficient to prove the incurrence of expenditure. AO also held that the photographs do not portray the exact specification of the improvement made. It cannot be said that the house operated, made to live without a modular kitchen. The availability of submersible pump is a finding of fact and not mentioning it in the agreement doesn t entitle the deduction. All the improvements made necessarily lead to the improvement in the value of the sale. The authorities have blown hot cold in disallowing the expenditure. The selective reading of the sale agreement and lack of mentioning of pump and modular kitchen cannot necessarily lead to disallowance. AO could not bring anything on record that the statement given by the valuer is wrong on facts or had inconsistencies. Hence, we allow the appeal of the assessee on this ground. Cost of improvement - Bangalore property - We find that the revenue has not disputed the import of Pneumatic Vacuum Elevator (PVE) however held that it is not essential for the improvement of the house to make it habitable. Whether to have a lift in the house or not is certainly not the purview of the Assessing Officer. Notwithstanding that, we find that the father of the assessee, Brig. V. K. Ghai is 90 years old staying with the assessee which is also a fact on record before the AO. Hence, we hold that the sum of Rs. 12,00,000/- incurred for installation of lift is an allowable item of cost of improvement. The amount of Rs. 1,80,000/- was made with regard to installation of the lift and the other sundry expenses to make the house habitable and hence the amounts are also to be allowed. Hence, we allow the appeal of the assessee on this ground. Eligibility for deduction u/s 54 though the assessee did not purchase new house property himself rather got it as gift from parents - As find that the ld. CIT(A) had diligently, meticulously conscientiously, after considering the Hon ble jurisdictional High Court judgments in the case of ACIT Vs. Suresh Verma [ 2012 (3) TMI 256 - ITAT DELHI] CIT Vs. Kamal Wahal [ 2013 (1) TMI 401 - DELHI HIGH COURT] came to a valid conclusion that the investments have been made by the assessee from his bank account of Rs. 17,65,000/- on 14.08.2014 and Rs. 3,31,82,000/- dated 21.08.2014 for payment to Sh. V. Ravindran, seller of the property and the parents have gone to registration owing to the absence of the assessee in India. It is also a fact that such registered property has also been gifted to the assessee by the parents on 10.06.2015. Hence, we decline to interfere with the order of the ld. CIT(A) invoking rule of purposive construction and object of Section 54F and allowing the deduction u/s 54F on the house registered in the name of the parents of the assessee.

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• 2023 (12) TMI 1229
  Disallowance u/s. 14 r.w.s. 8D - sufficiency of own funds - expenditure incurred on earning exempt income - HELD THAT:- The undisputed fact is that the exempt income of the assessee is Rs. 1615/- only, therefore, in the light of the decision of Caraf Builders and Construction [ 2018 (12) TMI 410 - DELHI HIGH COURT ] disallowance should not exceed the exempt income. Suo-moto disallowance As decided in case of GMR Enterprises Private Limited [ 2021 (11) TMI 565 - ITAT BANGALORE ] following the decision of M/s. Marg Limited [ 2020 (10) TMI 102 - MADRAS HIGH COURT ] disallowance u/s 14A of the 1.T.Act cannot exceed the exempt income earned during the relevant assessment year irrespective whether larger amount was disallowed by the assessee u/s. 14 A of the IT Act while filing the return of income - we direct the AO to delete the disallowance and restrict the same to Rs. 1615/- only. Appeal of the assessee is partly allowed.

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• 2023 (12) TMI 1228
  Addition u/s 69A - taxability at higher rate of tax u/s 115BBE - on-money in respect of 100% of unit is brought on record - HELD THAT:- As incriminating material is not found relating to each and every unit. AO extrapolated the rate in respect of all 384 units. No independent investigation of facts was carried out by AO during assessment proceedings. There is no refinance in the assessment order that the search party while preparing appraisal report suggested collection of on money in respect of all the units. There is no allegation of AO that units were sold below the Jantri rate. No other independent evidence or material to substantiate the on-money in respect of 100% of unit is brought on record. We find that in CIT Vs Standard Tea Processing Co. Ltd. [ 2013 (7) TMI 539 - GUJARAT HIGH COURT] held that the addition for undisclosed income on account of inflated purchase price can be made only for the period to which document found during the search is related and not for the entire block period As in CIT Vs B. Nagendra Baliga [ 2014 (6) TMI 114 - KARNATAKA HIGH COURT] held that the Assessing Officer has not entitled to extrapolate undisclosed income detected in the course of search for a particular period to entire block period on estimate basis. The Coordinate Bench of Tribunal in ACIT Vs M/s Amar Corporation Ltd. [ 2011 (3) TMI 1676 - ITAT AHMEDABAD] and in Sayan Textiles Park Ltd. [ 2015 (4) TMI 184 - ITAT AHMEDABAD] also held that question of extrapolation can only arise only in a situation when the documents give an indication that it was a regular occurrence in a systematic manner. Thus, in view of aforesaid factual and legal discussion, we uphold the order of ld. CIT(A) on our aforesaid observations. In the result, grounds of appeal raised by revenue as well as assessee are dismissed. Taxing of addition u/s 115BBE - We find that no such provision was invoked by AO while making addition in the assessment order. We further find that combination this bench in case of Dagina Jewellers ([ 2023 (4) TMI 1277 - ITAT SURAT] held that when the source of income was explained and is apparently established, hence section 115BBE is not applicable for such business receipts. It was held that the provisions of Sections 68 and 69 are not applicable for trading transactions like deposit of cash out of cash sales and excess closing stock. While giving such finding, we have made reliance on the decision of Shilpa Dyeing Printing Mills Ltd, [ 2015 (7) TMI 691 - GUJARAT HIGH COURT] Thus, in view of aforesaid position, the Assessing Officer is directed to tax the addition under normal provision/rate applicable on assessee. In the result, the ground No. 2 of appeal is allowed.

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• 2023 (12) TMI 1227
  TP Adjustment - apportioning the expenses of assessee s affiliates - HELD THAT:- We note that the Ld.TPO has not considered the agreements between the assessee and its AE and the nature of the transaction entered into, the services rendered by the assessee to its AE and the benchmarking method adopted by the assessee on a consistent basis. In the interest of justice, we remand this issue back to the Ld.AO/TPO to consider the claim of assessee by analysing all the details vis- -vis the contracts and the functions performed by the assessee in respect of the services rendered. Also noted that the assessee has received certain services from its AE which has been treated by the Ld.TPO at arms length by the assessee. However, the Ld.TPO has apportioned 1/5th of the expenses once again to the assessee and proposed a TP adjustment which in our view amounts to double addition. Such kind of computation of adjustment is not in accordance to the sound principles of transfer pricing rules. We direct the Ld.AO/TPO to consider the segments of the assessee under the receipt of business development services from its AE denovo in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Grant of depreciation at the rate of 60% on NMS CG/TX Cards, switches, etc., on the ground that these items do not come within the definition of computers - HELD THAT:- Identical issue has been considered by Coordinate Bench of this Tribunal for A.Y. 2015-16 [ 2022 (8) TMI 1343 - ITAT BANGALORE] we direct the Ld.AO to allow the depreciation at 16% on the CG/TX Cards, switches etc. TDS u/s 195 - grant of deduction of tax paid outside India in respect of which no foreign tax credit is eligible in India by holding that the same would be outside the scope of Section 40(a)(ii) - HELD THAT:- We direct the Ld.AO to verify the amount of foreign tax credit paid that is attributable to the income accruing / arising in India and to allow the same. Accordingly in the light of the decisions relied by Coordinate Bench of this Tribunal hereinabove in assessee s own case for A.Ys. 2014-15 and 2015-16 Accordingly, Ground nos. 2-3 raised by revenue is remanded to the Ld.AO to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee.

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• 2023 (12) TMI 1226
  Disallowance of loss in derivative transactions on the platform of National Exchange of India (NSE) - as submitted by the assessee before the CIT(A) that the loss in derivative segment arose as a result of transactions made through registered brokers on the platform of NSE which are duly verifiable from the records and the Assessing Officer has rejected the claim of loss cursorily without any opportunity to the assessee to corroborate its claim - HELD THAT:- The derivative loss claimed by the assessee is supported threadbare by scrip-wise tabular statement. The mis-match between derivative loss claimed qua the working of the CIT(A) is found to be explained and is on account of unilateral omission on part of the CIT(A) to take cognizance of the losses arising on account of open position at the beginning of the year which matured during the year in question and likewise open position which remained unmatured and carried forward in the subsequent financial year. The approach of the assessee to recognize profits/losses in open contracts appears to be prima facie in tune with the accounting practices. The effect of open position if not taken will give rise to totally absurd conclusions. The profit/loss carried already reported for a part of the period in the preceding accounting year will get accounted for again during the year. Similarly, the profits/losses accounted for covering a part of the financial period during the year will again get accounted for in the subsequent year on termination of derivative contracts at the time of maturity. The action of the CIT(A) is apparently flawed and has lead to manifestly absurd results. The action of the CIT(A) cannot be justified in any manner and thus liable to be set aside. The derivative loss claimed by the assessee appears fully justified and requires to be accepted. The plea on behalf of revenue that such loss from open position has no effect on profit and loss is devoid of any merit. We thus set aside the order of the CIT(A) and direct the Assessing Officer to allow the claim towards derivative losses as business losses of the assessee as claimed. Penalty u/s 271(1)(c) on the impugned derivative losses disallowed - The imposition of penalty under Section 271(1)(c) has thus lost the very premise to hold its sustainability. The penalty u/s 271(1)(c) in question thus cannot be sustained in law. Besides, the action of the assessee is fully supported by the documentary evidences, the confirmation from the registered SEBI brokers and the audited financial statement showing presence of open interest in derivative scrips both at the beginning of the year as well as at the end of the year. This being so, in the absence of any mistake or culpability in the action of the assessee, the imposition of penalty cannot be justified by any stretch of imaginations. We thus set aside the impugned first appellate order and delete the penalty.

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• 2023 (12) TMI 1225
  Additions u/s 41(1) - Cessation of liability - Freezer Deposit (security deposit) considered as lapsed liability u/s 41(1) - Relevant in which such incomes taxable - assessee-company manufactured ice creams and frozen foods, sold it through distributors from whom it obtained deposits in lieu of installing deep freezers at their premises - HELD THAT:- There is, we observe, no dispute on the primary facts. That is, the refundable deposits, to secure the assessee s interest, are accepted from it s dealer by the assessee on provision of equipment to them, which is though subject to depreciation. Though refundable only on termination of the agreement, the amount refundable reduces at a definite rate for each year (or part thereof) of the agreement, corresponding with the rate of depreciation, i.e. @25% p.a. The amount refundable thus reduces at a defined rate each passing year. This ascertained reduction in the amount refundable and, thus, the ceasing of the assessee s liability qua deposit is regarded as it s income by Revenue. How, one wonders, being axiomatic, could that be disputed, signify as it does the right to receive, case law on which is legion The amount having been already received, income arises to that extent; the assessee acquiring a dominion or unqualified right over the same. That the assessee may not have appropriated it as it s income in it s accounts is another matter, it being trite that that the passing or, as the case may be, non-passing of accounting entries is not determinative of the matter. Accounting entries do not create income, but only recognize it. Non-booking of income in accounts would be to no consequence Sutlej Cotton Mills Ltd. v. CIT [ 1978 (9) TMI 1 - SUPREME COURT ]. Reliance on case law, de hors the facts and ratio, is of no moment, rendered in fact of no consequence in view of identity of the ratio or the principle of law relied upon. The assessee s challenge, in fact, is not based on merits per se , but on precedence, which we have again found to be in agreement with the Revenue s case, i.e., cessation of liability signifying accrual of income. For the reasons unknown, this cessation has, as it appears, in assessee s view, coincided with the termination of agreement, which represents the fundamental flaw in assessee s case. It is not the amount refundable, which is only on the said termination, but that non-refundable, which is independent of termination, which results in accrual of income. True, termination also signifies the amount refundable, but then that is only the amount not non-refundable, since determined at the expiry of each year. The exercise is to be carried out at each year-end, determining the deposit amounts no longer refundable. There being no dispute on quantum at any stage, we have no hesitation in according our approval to the impugned addition. We are conscious that the said sum or part thereof may have been booked as income in the subsequent years, i.e., on termination of the relevant agreements. It is, however, again trite that income is liable to be taxed for the right year, and it being taxed in another year is no ground for it being not brought to tax for the right year [CIT v. British Paints India Ltd. [ 1990 (12) TMI 2 - SUPREME COURT ]; CIT vs. Chunilal V. Mehta Sons P. Ltd. [ 1971 (8) TMI 4 - SUPREME COURT ]. Disallowance u/s 14A - expenditure incurred on earning exempt income - HELD THAT:- Until and unless there is diversion of funds, of which there is no whisper, the term loan, as indeed working capital loan/advance, are for business purposes, would not stand to be allocated, which is only qua common expenses. The assessee has also claimed that it has sufficient funds of it s own, i.e. vis-a-vis the investment yielding non-taxable income, being at an average of Rs. 305 lakhs and Rs. 19 lakhs respectively, and that therefore no part of the tax-free investment could be regarded as financed from interest bearing borrowings. The matter is completely factual. It is only in the absence of the assessee exhibiting it s case with reference to facts and figures that the average formula prescribed u/r. 8D comes into play. The comparison as made is misplaced. The term loan, for example, does not finance the fixed assets to the extent of 100%, so that the balance is by own capital, as indeed the repayment of the term loan, increasing the share self-financed to that extent. Similarly, for the working capital borrowing, which also entails margin money. Money has no bones and, therefore, it is only the fund flow statement (or Balance Sheets as at the end of the year/s) that would clarify the financing pattern of the taxable assets and, by implication, of the non-taxable or the tax-free investment. No such exercise has been done at any stage for us to issue any finding in the matter. No interference, therefore, apart from the exclusion of the term loan aforesaid is warranted in computing disallowance u/s. 14A. Assessee s appeal is partly allowed.

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• 2023 (12) TMI 1224
  Eligibility of exemption u/s 11 - main grievance of the revenue is that the relevant year under consideration is AY 2018-19; and the Parliament had substituted the first and second proviso of section 2(15) of the Act by Finance Act, 2015 w.e.f 01.04.2016 which is applicable for the year under consideration - whether the assessee s case falls under mischief of proviso to section 2(15)? - HELD THAT:- We note that the relevant year under consideration is AY 2018-19 and the Parliament had substituted the first and second proviso of section 2(15) of the Act by Finance Act, 2015 w.e.f 01.04.2016 which is applicable for the year under consideration. And the Hon ble Supreme Court had laid the law on the issue regarding claim of exemption by similar assessee s in the case of Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] [as well as in the case of Servants of People Society [ 2023 (2) TMI 535 - SUPREME COURT] ] which was decided after considering the proviso to section 2(15) of the Act, which admittedly the Ld. CIT(A) did not consider, before he passed the impugned order. n the light of the recent decision of the Hon ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) as well as Servants of People Society (supra), we are of the opinion that Ld. CIT(A) erred in merely following the order of the Tribunal in assessee s own case for AY. 2011-12 to AY. 2013-14 passed on 06.09.2022. And that AO has framed the assessment only discussing the Principle of Mutuality and did not consider the application of proviso to section 2(15) of the Act. And since the ratio laid by the Hon ble Supreme Court (supra) is applicable in the case of assessee for assessment [regarding claim of exemption] for the relevant year under consideration, in the interest of justice and fair play, we are inclined to set aside the impugned order and restore the assessment back to the file of AO for denovo assessment. AO to decide the issues [claim of exemption] involved in assessment for AY. 2018-19 after giving proper opportunity to assessee and assessee is directed to file relevant/details/written submission and request for video conference as per rules. Appeal of the revenue stands allowed for statistical purpose.

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• 2023 (12) TMI 1223
  Addition of share premium - AO has treated the amount received by the assessee from its holding company as unexplained cash credit u/s 68 on the ground that source of funds has not been explained - CIT(A) deleted addition admitting of additional evidence as provided in sub-rule (2) of Rule 46A of the Income Tax Rule 1962 - HELD THAT:- We find that assessee has explained before the ld. CIT(A) that it has submitted the relevant details as sought by the assessing officer during the course of assessment proceedings and no further any notice was received for calling any other details. Therefore, the assessee has further submitted the following details before the ld. CIT(A) as additional evidences under Rule 46A of the Income Tax Rule. Under the aforesaid circumstances the ld. CIT(A) has rightly admitted the same as additional evidences. We find that the assessing officer has not contrary disproved the genuineness of the various documents as discussed in the finding of the ld. CIT(A). CIT(A) has elaborated in his finding the relevant supporting document furnished by the assessee which categorically established the identity, genuineness and creditworthiness of the transactions. CIT(A) has also referred the CBDT instruction 2/2015 dated 29.01.2015 that premium on share issue was on account of capital account transaction and does not give rise to income and, hence not liable to transfer pricing adjustment as held in the case of M/s Vodaphone Services Pvt. Ltd. Vs. Union of India Others [ 2014 (10) TMI 278 - BOMBAY HIGH COURT ] During the course of appellate proceedings the ld. Counsel has also referred the decision of ITAT in the case of ITO 6(2)(4) Vs. Chiripal Poly Films Ltd. [ 2019 (4) TMI 1422 - ITAT MUMBAI ] wherein held that the assessee complied with the requirements of RBI guidelines by filing FIRC with RBI and also filed Unique Identification number received from RBI. Further it had also filed FCGPR with RBI that the assessee was having sufficient authorised share capital to issue shares to investor then no addition could be made u/s 68 of the Act. In view of the above facts and finding we don t find any error in the decision of ld. CIT(A). Therefore, these ground of appeal of the revenue stand dismissed. Disallowance of 20% of advertisement and Sales promotion expenses and 25% of travelling expenses - CIT(A) deleted the addition - HELD THAT:- AO has disallowed the expenditure on estimated basis without considering the aforesaid details furnished by the assessee. The assessee explained that advertisement and sale promotion expenditure were related to the marketing of Carlisle Brand of products which had global presence and this expenditure incurred on year to year basis and such expenditure constitutes only of small proportion of the revenue of the assessee. Travelling expenses the assessee submitted that it has reimbursed the claim of its employee for incurring expenses for business travel and such expenses comprised incidental expenses towards meals refreshment and travel expenses for which it is not feasible to furnish invoices and vouchers for all such expenses CIT(A) has elaborated in his finding that assessing officer has not brought on record any cogent basis for disallowing such expenditure without considering the percentage of expenditure compared to the revenue generated by the assessee company. During the course of appellate proceedings before us the ld. Counsel has also referred decision of R.G. Buildwell Engineers Ltd. [ 2018 (10) TMI 252 - SC ORDER ] wherein the decision of Hon ble High Court was upheld for not making adhoc disallowance of expenses without rejecting the books of account. No infirmity in the decision of ld. CIT(A), therefore all these grounds of appeal of the revenue are dismissed.

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• Customs

• 2023 (12) TMI 1222
  Seeking release of various models of second hand Highly Specialised Equipment digital Multifunction Print, Copying Scanning Machines, imported - HELD THAT:- This Court had already dealt with the similar issue M/S. SIMPLE MACHINES VERSUS THE COMMISSIONER OF CUSTOMS (CHENNAI II) IMPORT, THE ADDITIONAL COMMISSIONER OF CUSTOMS (CONCOR ICD) , THE DEPUTY COMMISSIONER OF CUSTOMS (CONCOR ICD) [ 2023 (12) TMI 198 - MADRAS HIGH COURT] held that Sl.No.(b) of Notification No.5/2015-2020, dated 07.05.2019, states that all electronics and IT goods notified under the Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time are restricted . Therefore, they are supposed to get authorization from the DGFT. When the said policy was in force, at that point of time also several imports have been made for importing second hand multi-function devices and similar issue was raised that these are all the multi function devices coming under Sl.No.(b). Therefore, unless otherwise authorization is obtained from the DGFT, the same cannot be imported. There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of three (3) weeks thereafter - For payment of such duty, quantification shall be made by the Customs forthwith within one (1) week from the date of receipt of a copy of this order. On receipt of such quantification, the payment shall be immediately made by the petitioners and on receipt of the payment in entirety, the goods shall be released as indicated above at the outer limit of three (3) weeks. Petition disposed off.

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• 2023 (12) TMI 1221
  Validity of SCN - Power of DRI to issue SCN - delayed adjudication of the show cause notice, which was issued almost about 8 years back - Jurisdiction of adjudicating authority to adjudicate the show cause notices - HELD THAT:- There is no dispute that the impugned show cause notice has been issued by the Director of Revenue Intelligence (DRI). Prima-facie, there are substance in the submission as urged on behalf of the petitioners - as the show cause notice has been issued by the DRI, the same would certainly attract the law laid down by Canon India Pvt. Ltd. [ 2021 (3) TMI 384 - SUPREME COURT] . Contention of the respondents that show cause notice should be proceeded - reliance placed in this regard on the orders passed by this Court in the case of LAXMI ORGANIC INDUSTRIES LTD VERSUS UNION OF INDIA, THROUGH ITS SECRETARY, DEPARTMENT OF REVENUE ORS. [ 2023 (12) TMI 1157 - BOMBAY HIGH COURT] - HELD THAT:- The said decision is not applicable to the facts of the present petitioners. In Laxmi Organic Industries Ltd, show cause notice was of October 2019 which was followed by Covid-19 Pandemic from March 2020 and, therefore, the adjudication of the show cause notice was not of a nature falling on the principles discussed in the case of Coventry Estate Pvt. Ltd. [ 2023 (8) TMI 352 - BOMBAY HIGH COURT] . In the case of the present petitioners, the show cause notice is dated 29th February 2016 which is thus 8 years old. Therefore, on such facts, the order relied upon by the Respondents in the case of Laxmi Organic Industries Limited would not assist the respondents. The impugned show cause notice dated 29th February 2016 shall remain stayed. Pending hearing and final disposal of the petition - The Respondents are at liberty to move this Court for vacating the interim stay if the Respondents are of the opinion that such orders ought not to be continued and/or after decision of the Supreme Court on the review proceedings filed in Canon India Private Limited and on the final adjudication on the challenge to the Finance Act, 2022.

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• Corporate Laws

• 2023 (12) TMI 1220
  Sanction of the Scheme of Amalgamation - NCLT fixed the Appointed Date to 01.10.2022, while allowing the Chennai Second Motion Petition and sanctioning the Scheme, when the NCLT Mumbai, had sanctioned the Scheme filed by the Transferee Company with the Appointed Date of 01.10.2020. It is argued that since NCLT, Mumbai, had by way of an Order dated 06.06.2022, already sanctioned the Scheme with the Appointed Date as 01.10.2020, the impugned order by changing the Appointed Date to 01.10.2022, has made the Scheme unworkable . HELD THAT:- It is not in dispute that the NCLT, Mumbai had already sanctioned the Scheme with the Appointed Date of 01.10.2020, vide Order dated 06.06.2022. In the IA filed on 31.03.2023, the Appellants had sought for rectification of the Appointed Date to 01.10.2020, which was dismissed on the ground that NCLT did not have the power to review its own order. It is seen from the record that the Appointed Date as per the Scheme is 01.10.2020 and the same is within a period of one year from the date of filing of the Application for Approval of the Scheme with NCLT i.e., 29.09.2021 . It is relevant to rely on the Judgment of this Tribunal, in which matter, this Tribunal placed reliance on the Judgment of the Hon ble Apex Court in Miheer H. Mafatlal v. Mafatlal Industries Limited., [ 1996 (9) TMI 488 - SUPREME COURT] , in which case, the Court had laid down the broad contours of the jurisdiction of the Company Court in granting a sanction to the Scheme holding that jurisdiction of the Company Court while sanctioning the Scheme is supervisory only, i.e., to observe that the procedure set out in the Act is met and complied with and that the proposed scheme of compromise or arrangement is not violative of any provision of law, unconscionable or contrary to public policy. The Court is not to exercise the appellate jurisdiction and examine the commercial wisdom of the compromise or arrangement arrived at between the parties. It is held by this Tribunal in the Accelyst Solutions Private Limited [ 2021 (3) TMI 1009 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI] , that the settled legal position, while exercising its power in sanctioning a Scheme of Amalgamation, the Courts / Tribunal has to examine as to whether, the Provision of Statute has been complied with . The Courts / Tribunal would have no further jurisdiction to sit in Appeal over the Commercial Wisdom of the Shareholders of the Company . In the instant case, apart from the fact that NCLT Mumbai, had already fixed the Appointed Date of the Scheme as 01.10.2020, the date of filing of the Application for Approval of the Scheme with NCLT Chennai is 29.09.2021 and therefore is within a period of one year, and hence, attracts Clause 6(c) of the MCA General Circular No. 09/2019 dated 21.08.2019 - Additionally, NCLT has the discretion to fix the Appointed Date which could be beneficial to the interests of the Company, which in the instant case ought to have been fixed at 01.10.2020 as having two different Appointed Dates, would render the Scheme unworkable. The NCLT has powers under Rule 11 of the NCLT Rules, 2016, to fix the Appointed Date, which would be beneficial to the Scheme of Amalgamation. Appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (12) TMI 1219
  CIRP - Validity of order of liquidation - Rejection of resolution plan - eligibility criteria - Resolution Plan not considered by the Committee of Creditors (CoC) - bank guarantee furnished with delay of 3 days as the last date of submission of bank guarantee was 1st March 2021 - submission of bank guarantee of ICICI bank as against the bank guarantee which should have been issued from nationalised bank located in India - ineligibility u/s 29 A of IBC. HELD THAT:- This Appellate Tribunal is of considered opinion that terms and conditions as stipulated in RFRP are required to be treated valid and legal binding terms and conditions which has been stipulated by the CoC after fair deal of deliberations. The framing of such terms and conditions, evaluation of the Resolution Plan against such matrix is considered to be entirely within the commercial wisdom domain of the CoC. After analysing the facts in the appeal in details in provisions paragraphs, it is held that the Appellant failed to comply with the conditions as stipulated in RFRP - there are no reason to interfere with the Impugned Order dated 02.02.2023 passed by the Adjudicating Authority since, there are no error in the Impugned Order. Appeal dismissed.

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• 2023 (12) TMI 1218
  Approval of Resolution Plan - Appellant are personal guarantors of the Corporate Debtor - HELD THAT:- The Resolution Plan does not absolve the personal guarantors from their guarantee. The law well settled by the Hon ble Supreme Court in the matter of LALIT KUMAR JAIN VERSUS UNION OF INDIA AND ORS. [ 2021 (5) TMI 743 - SUPREME COURT ], that by approval of resolution plan the guarantees are not ipso facto discharged. The resolution applicant has taken liability of only one crore, the other liabilities of the personal guarantors are not discharged. There are no ground to interfere with the approval resolution plan within meaning of Section 61 - the order of the Adjudicating Authority approving the Resolution Plan need not be interfered - there is no merit in the Appeal - appeal dismissed.

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• 2023 (12) TMI 1217
  Maintainability of section 7 application - time limitation - dispute raised regarding the liability of the Corporate Debtor towards the Financial Creditors and the guarantee by the Respondent - HELD THAT:- This is one such case in which direction has to be issued to the Tribunal to admit the application filed under Section 7 of the Code in view of the findings recorded by the Tribunal in its order dated 25.03.2022 wherein it has been held that the debt and default both are present in this case but the Tribunal did not admit the application only on the issue that the Application was found to be barred by limitation. The question of limitation was taken to the higher court and ultimately it has been proved that the application was within the limitation. In such circumstances, the Tribunal should not have gone in for further investigating on the issue as to whether there is debt and default in the present case for the purpose of admission of the application. The Tribunal is directed to admit the application filed by the Appellant on the next date of hearing and pass further necessary orders in accordance with law - Appeal allowed.

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• Service Tax

• 2023 (12) TMI 1216
  Refund of the amount paid during investigation but not appropriated by the department after conclusion of such investigation - Refund barred by limitation under the provisions of Section 11B of the Central Excise Act, 1944 or not - HELD THAT:- The refund claim filed by the Appellant cannot be rejected on the ground of limitation as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law. The provisions of Section 11B ibid would, therefore, not be applicable to an application seeking refund thereof. Moreover, since the retention of the amount in issue by the department is without authority of law, the question of applying the limitation prescribed under Section 11B ibid would not arise. For a service to be taxable, it is necessary that the service has to be rendered by one person to another and without a perceived service money contribution cannot be held to be a consideration which is liable to tax. The authority concerned is duty bound to refund such amount as retention of such amount would be in violation of Article 265 of the Constitution of India which mandates that no tax shall be levied or collected except by authority of law. Since Service Tax received by the concerned authority is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution of India, the authority concerned has no right to retain the same. The judgment of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] has been considered and interpreted by several judgments including the Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT] , by this Tribunal in the case of M/S. ASL BUILDERS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GST CX, JAMSHEDPUR [ 2020 (1) TMI 431 - CESTAT KOLKATA] . The said judgments have concluded that statutory limitation periods are not applicable to amounts paid under mistake of law. Thus, it is concluded that the statutory limitation period prescribed under Section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax. The present appeal is allowed.

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• 2023 (12) TMI 1215
  Levy of service tax - Business Auxiliary Service - services of Sizing of coal to customers - HELD THAT:- The issue is no longer res integra, as the Tribunal Kolkata Bench has decided the issue in favour of the Appellant in the case of COMMR. OF CENTRAL EXCISE S. TAX, BOLPUR VERSUS M/S INTEGRATED COAL MINING LTD. [ 2021 (1) TMI 179 - CESTAT KOLKATA ] where it was held that By discharging the tax liability on the job work charges as well as by discharge of VAT liability on brought out items used for fabrication at site, the scope for considering the activity as manufacture is eclipsed entirely. The Appellant is not liable to service tax under the category of Business Auxiliary Service and hence the demands confirmed in the impugned order is not sustainable - the demands of duty along with interest and penalty confirmed in the impugned order is set aside - appeal allowed.

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• 2023 (12) TMI 1214
  Non/short-payment of service tax - contention of the appellant was that it had neither issued the invoice nor had received the amount mentioned in the notice - principles of natural justice - HELD THAT:- In view of the factual position as to whether the service tax paid by the consortium partner of the appellant was linked with the invoice issued by the consortium partner, it would be in the fitness of things that the adjudicating authority examines this issue and it would be not appropriate to examine this issue in this appeal. Whether the service tax to the extent of Rs. 6,42,177/- has been paid on the excess income of Rs. 51,95,614/- by the service tax recipient, namely, M/s Bihar Urban Infrastructure Development Corporation Ltd.? - HELD THAT:- In view of the nature of controversy that has arisen, it would be appropriate if this issue is also again examined by the adjudicating authority after providing an opportunity to the appellant to submit relevant documents to establish the link between the invoice and the service tax paid by M/s Bihar Urban Infrastructure Development Corporation Ltd. Whether service tax was required to be paid on the amount of Rs. 31,84,835/-, which amount was shown in the books of account as work-in-progress by the appellant? - HELD THAT:- The Commissioner (Appeals), after having noted all the submissions, recorded a finding that it was for the appellant to have shown by positive evidence that it had not received the amount as advance and since it could not substantiate this fact, the demand had to be upheld - The Commissioner (Appeals) completely erred in recording this finding. It was for the Department to have established that the appellant had received the payment in that particular year, more particularly when the contention of the appellant was that it had not received any payment and the amount was only shown as work-in-progress in the balance sheet. This demand, which has been confirmed by the Commissioner (Appeals), therefore, deserves to be set aside. The present appeal has to be allowed in part.

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• 2023 (12) TMI 1213
  Levy of penalty - non discharge of tax liability - availment of irregular CENVAT Credit - suppression of facts or not - amount already reversed by the appellant was proposed to be appropriated against the said demand - HELD THAT:- The present case is merely a case of non discharge of tax liability, same cannot be equivalent to an intentional and positive act to evade payment of duty. The onus to prove such an act is upon the department. There are no iota evidence proving any positive intentional act of the appellant to evade the duty. The appellant was regularly/claiming credit of duty paid on coal as their input i.e. coal was exempted till 1.3.2011. They continued availing said credit for subsequent few more months due to inadvertence or ignorance on the part of the appellant to take into consideration the amendment which came into effect on 1.3.2011 making coal as an excisable goods. Thus it is far a different situation than an intention to evade payment of duty. The tax returns were otherwise regularly undisputedly filed. There is also no demand of excise duty on the coal from the appellant which otherwise stands paid. This apparent fact makes it clear that there is no suppression of facts, nor any element of fraud, mis-statement on the part of the appellant. It is also observed that the amount which is ordered to have been appropriated was reversed much prior to issuance of SCN. The SCN should not have been issued in view of proviso to section 73 of the Finance Act, 1994. The order imposing equal penalty of Rs.46,21,582/-, is not sustainable and the order under challenge is set aside to that extent - Appeal allowed.

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• 2023 (12) TMI 1212
  Maintainability of appeal - appeal dismissed as it was not filed within the time stipulated in section 85 (3A) of the Finance Act, 1994 - HELD THAT:- In the present case, the appeal was presented before the Commissioner (Appeals) even beyond the extended period of one month after the expiry of the normal period of limitation of two months. In SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] , the Supreme Court observed The Supreme Court held that the period upto which the prayer for condonation can be accepted is limited by the proviso to sub-section (1) of Section 35 of the Act and the position is crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of thirty days after the expiry period of sixty days. In view of the aforesaid decision of the Supreme Court in Singh Enterprises, the Commissioner (Appeals) did not commit any error in dismissing the appeal - Appeal dismissed.

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• 2023 (12) TMI 1211
  Extended period of limitation - suppression of facts or not - mining service or not - service of blasting the rocks/boulders from the quarries, loading them into trucks and transporting them to the site of the crusher - HELD THAT:- As per section 73 of the Act, demand of service tax not paid or short paid can be raised only within the normal period of limitation. However, extended period of limitation can be invoked, if the non-payment or short payment of service tax is on account of fraud or collusion or willful statement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade payment of service tax. Evidently, fraud, collusion and willful statement have an in-built element of mens-rea. Without the intent being established, these cannot be alleged. As far as the suppression of facts is concerned, it has been held in a series of judicial pronouncements that since the words suppression is used along with words, such as, fraud, collusion and willful statement mere omission cannot be called suppression and intent has to be established. It has now well settled position of law. The two SCNs merely state that the appellant had not disclosed the value of the taxable services which it had rendered correctly in its ST-3 returns and, therefore, presume that the appellant had an intention to evade payment of service tax. There is not an iota of evidence in either of the SCN of this intent - Both the SCNs further state that had the audit not conducted scrutiny of the records, the short paying the service tax would not have come to notice. It is a matter of fact that all the details were available in the records of the appellant. The appellant was required to furnish returns under section 70 with the Superintendent of Central Excise which it did. It is for the Superintendent to scrutinize the returns and ascertain if the service tax had been paid correctly or not. If the assessee either does not make the returns under section 70 or having made a return, fails to assess the tax in accordance with the provisions of Chapter or Rules made thereunder, the Superintendent of Central Excise can make the best judgment assessment under section 72. The fact that the alleged short payment came to light only during audit does not prove the intent to evade payment of service tax by the appellant, but it only proves that the Range Superintendent had not done his job properly. For these reasons, it is found that the demand for the extended period of limitation cannot be sustained. It is evident that neither SCN has given any opportunity to the appellant to defend its case for the period after 01.07.2012. Both SCNs only proposed the demand under the head Mining Services for the period pre 01.07.2012 as well as period post 01.07.2012. As far as the demands for the period pre 01.07.2012 are concerned, it is already held that the extended period of limitation was wrongly invoked in both the SCNs and, therefore, demand cannot be sustained. The legal provisions pertaining to the post 01.07.2012 have not been invoked and the appellant was not put to notice although the Commissioner has, in the impugned order, confirmed the demand on the ground that the services rendered by the appellant were not covered by the negative list. It is a well settled legal principle that the adjudicating authority cannot travel beyond the SCN. Therefore, he could not have confirmed the demand under the provision after 01.07.2012. Under these circumstances, it is found that the demand in the impugned order is not sustainable and needs to be set aside. Consequently, the demand of interest and the penalties imposed also need to be set aside. Appeal allowed.

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• 2023 (12) TMI 1210
  Non-payment of service tax - gross amount of commission received by the appellant under business auxiliary service - extended period of limitation - HELD THAT:- A perusal of the order passed by the Commissioner (Appeals) indicates that what was examined by the Commissioner (Appeals) was whether the services rendered by the appellant would fall under business auxiliary service , as defined under section 65 (19 (vi) of Finance Act, 1994, or under business support service as defined under section 65 (104c) of the Finance Act, 1994. After a careful analysis of services provided, the Commissioner (Appeals) after noticing that business support service was subjected to levy of service tax from 01.05.2006 and since there was no amendment in the definition of business auxiliary services , recorded a categorical finding that the activity of the appellant would not fall under business auxiliary service . The demand made for the period April, 2005 to March, 2006 was, therefore, set aside. On perusal of the order dated 23.04.2012 passed by the Commissioner (Appeals) shows that a categorical finding has been recorded that the services would appropriately fall under the category of business support service, which service was made taxable with effect from 01.05.2006. The period involved in the present appeal is prior to 01.05.2006. The order dated 16.01.2018 passed by the Commissioner (Appeals) cannot, therefore, be sustained and is set aside - appeal allowed.

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• Central Excise

• 2023 (12) TMI 1209
  Levy of penalty - wrongly passing on the Modvat Credit - HELD THAT:- The Tribunal found no reason to interfere with the Order-in-Original bearing in mind the fact that while the appellant was purchasing scrap from Maruti Udyog at the rate of Rs. 9000/- 10000/- MT, it was selling the same at the rate of Rs. 7000/- 9000/- MT. Although before the original authority, the appellant appears to have set up a case of having graded the scrap according to quality and value, the said Authority had on a due appreciation of the evidence led, found no basis to accept that explanation and consequently proceeded to levy the penalties. The issues that are raised principally relate to an appreciation of evidence and since no question of law appears to arise, the appeal shall stand dismissed.

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• 2023 (12) TMI 1208
  CENVAT Credit - trading activities/exempt services - Management Consultancy Service - service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted service - absence of ISD registration at the time of availing credit - extended period of limitation. CENVAT Credit - trading activities/exempt services - Management Consultancy Service - service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted service - HELD THAT:- As far as admissibility of cenvat credit of trading activity, the Hon ble Madras High Court in Ruchika Global Interlinks [ 2017 (6) TMI 635 - MADRAS HIGH COURT] held Having regard to the rule, position and given the admitted fact that no separate accounts were maintained by the appellant, with regard to the taxable and non-taxable services, clause (c) of sub-rule (3) of Rule 6 of 2004 Rules would apply. Further, the Hon ble Delhi High Court in Lally Automobiles Pvt. Ltd. [ 2018 (7) TMI 1679 - DELHI HIGH COURT] held In the present case, the assessee s argument that there is no mechanism to reverse credit, once taken, in the opinion of this Court, cannot be accepted. The assessee was well aware of the exact nature and extent of its service tax liability. It was also aware of the eligible service tax inputs. Therefore, when it did claim successfully and unchallenged input credits in respect of activities that were not subjected to service tax levy, it was aware that the claim was excessive and could not be justified. Extended period of Limitation - HELD THAT:- On the issue of invoking extended period of limitation on similar circumstances, lordships of Delhi High Court held that Being conscious of its trading activity and that it was not liable to service tax (since it did not include the amounts earned from that business, in its returns) meant that the assessee was aware of what it was doing. It cannot now take shelter under the plea that non-trading activity was expressly exempt from claiming credit, in 2011. That amendment made no difference, given that trading was never taxable under the Finance Act, 1994. In these circumstances, the Revenue was justified in invoking the extended period of limitation in this case - Thus, the confirmation of demand with interest by the learned Commissioner invoking extended period of limitation on cenvat credit availed on trading activity is upheld. CENVAT Credit - absence of ISD registration at the time of availing credit - HELD THAT:- The issue is also covered by the judgment of the Hon ble Karnataka High Court in the case of Hinduja Global Solutions Ltd, [ 2022 (4) TMI 71 - KARNATAKA HIGH COURT] . Their Lordships following the judgment of Hon ble Gujarat High Court and Madras High Court, held that cenvat credit cannot be denied to the assessee prior to its registration as an ISD, since the same is procedural irregularities - the appellant is entitled to avail cenvat credit of Rs.15,83,168/-. Thus, the impugned order is modified to the extent of confirming inadmissible cenvat credit of Rs.79,22,225/- attributable to trading activity and applicable interest of Rs.15,38,789/- paid on the said credit amount; since the cenvat credit and applicable interest is paid much before the issuance of show-cause notice, the appellant is entitled for the benefit of 25% of penalty imposed under Section 11AC of the Central Excise Act read with Rule 15(4) of CENVAT Credit Rules, 2004 - demand of cenvat credit of Rs.15,83,168/- confirmed with interest and equivalent penalty before ISD registration is hereby set aside. Appeal disposed off.

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• 2023 (12) TMI 1207
  Calculation of Excise duty - includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - suppression of facts or not - extended period of limitation - penalty - HELD THAT:- The Appellant has not suppressed any information from the department. There were decisions of the Tribunals that the sales tax concession retained by the assesses is not required to be added in the assessable value for the purpose of levy of Central Excise duty. Thus, it is observed that the appellant cannot be faulted for not including the same in the assessable value. As there is no evidence of suppression of facts available on record, it is held that the demand confirmed by invoking the extended period is liable to be set aside. In the present case, it is observed that the Adjudicating Authority and the Appellate Authority has failed to show any positive act of suppression on the part of the Appellant. The details of VAT collected and retained are reflected in the audited Profit Loss account and balance sheet of the impugned periods. Therefore, we hold that extended period of limitation as provided under section 11A(4) of the Central Excise Act, 1944 cannot be invoked for recovery of the short paid duties. The Circular issued by the Board also supports this view. Following the above Circular issued by the Board, the extended period cannot be invoked in this case to demand duty. Accordingly, penalty also not imposable in this case. The appeal is disposed by way of remand for calculating the duty, payable for the normal period of limitation, with consequential relief, if any, as per law.

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• 2023 (12) TMI 1206
  Exemption to goods manufactured in a factory workshop and used for the maintenance of machinery installed in the factory - Exemption to capital goods and inputs captively consumed within the factory of production - applicability of N/N. 65/95-CE and 67/95-CE - denial of benefit on the ground that acetylene gas has not been manufactured in the workshop - denial also on the ground that acetylene gas has been used for repair and maintenance of machineries that are not used for the manufacture of final goods, the exemption will not be applicable. HELD THAT:- The Appellant claimed the exemption of captively consumed acetylene gas under the Notification 65/95 as well as under 67/95. The adjudicating authority has denied the exemption for the acetylene gas consumed within the factory for repair and maintenance of railway track, railway wagon, loco and in certain shops and departments for repair and maintenance of machineries under the Notification 65/95. However, it is observed that they are eligible for the exemption under the notification 67/95, since the said railway track, rail wagons, and locomotives are integral to the manufacture of the goods - The inability to transport the inputs and intermediate products in the absence of rail traffic will cause stoppage of production and can also result in damage of the plant and machinery. The said railway track, rail wagons, and locomotives are integral to the manufacture of the goods of the Appellant and are therefore they can be considered as machineries installed in the factory for the manufacture of the goods. It is observed that Notification 67/95 exempts from payment of duty all goods specified therein manufactured in a factory and used within the factory of production in or in relation to manufacture of final products. The scope of this notification is wide enough to cover the acetylene gas manufactured by the Appellant and used in the traffic department for repair and maintenance of railway track, wagons etc., and the acetylene gas used in 26 shops/departments for repair and maintenance of machineries. The issue of whether railway tracks used in the plant form a part of manufacture is no longer res-integra since the Hon ble Supreme Court in the case of M/S JAYASWAL NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2015 (4) TMI 569 - SUPREME COURT] held the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron. Thus, the use of railway tracks are meant for production of goods. The acetylene gas used in 26 shops/departments for repair and maintenance of machineries was also used in connection with the manufacture of the finished goods for the Appellant - the Appellant is eligible for the benefit of exemption notification no. 67/95-CE. Hence, the demand confirmed in the impugned order by denying the benefit of exemption notifications 65/95 or 67/95 is not sustainable. The impugned order set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (12) TMI 1205
  Seeking release on regular bail - claiming bogus refund on account of input tax credit - use of false and fabricated documents - HELD THAT:- A Co-ordinate Bench of this Court in Ashwani Kumar Vs. State of Punjab [ 2023 (6) TMI 188 - PUNJAB AND HARYANA HIGH COURT] examined the provisions of Sections 57 58 of the Punjab Value Added Tax Act, 2005, providing for penalty for failure to issue invoices and use of false invoices and observed that allegations of the FIR are squarely covered under the provisions of Sections 57 58 of the 2005 Act. It was further observed that the 2005 Act is a complete Code in itself and there is no provision provided in the 2005 Act for registration of the FIR. It was further observed that the 2005 Act only provided for imposition of penalty in case there is any contravention of its provisions and since the 2005 Act is a special law, principle of generalia specialibus non derogant would apply, meaning thereby it would operate in exclusion to the general law i.e., the IPC. However, this Court notices that in the absence of factual matrix in Ashwani Kumar s case, it is not possible to comment as to whether in those cases also, there were allegations regarding bogus refund of input tax credit based on false and fabricated documents. In these circumstances, it will be a debatable issue as to whether the provisions of IPC shall be applicable to the present case or not. No explanation is given in the FIR about the delay of more than 5 years so as to write a letter to the Superintendent of Police, Sirsa on 11.12.2019 to take action against the culprits and then another approximately one year for getting the FIR registered on 24.10.2020. Thus, no purpose shall be served by keeping the petitioners detained, particularly when no apprehension has been expressed by ld. State counsel that if released on bail, petitioners may abscond from justice - petition allowed.

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• 2023 (12) TMI 1204
  Addition of Truck, Tripper, Dumper, JCB, Crane, Dozer, etc. to the registration certificate - Rule 13 of the Act, 1957 read with Section 8(3)(b) of the Act, 1956 - HELD THAT:- A registration certificate was issued to the petitioner according to Rule 5(1) of CST (R T) Act, 1957 on 09.02.2011. It is not in dispute that the petitioner is indulged in the construction of roads etc. and in that process, he had plied various types of equipment, machinery including Trucks, Trippers, Dumpers, JCBs, Cranes, Dozers, Mixers etc. whereas, in the registration certificate, these articles were not included earlier, therefore, he moved an application to include these commodities which was declined by the Commercial Tax Officer, Durg and only Soil (Murum) was allowed to be included in the certificate as the same is the raw material used for construction of the road - Section 8(3)(b) of the Act, 1956 says that a dealer would be entitled to get a rebate in the tax for goods of the class or classes specified in the certificate of registration according to rules made by the Central Government to be used by him in manufacture or processing of goods for sale or mining or in general or distribution of electricity. The Hon ble Supreme Court in J.K. Cotton [ 1964 (10) TMI 2 - SUPREME COURT] while dealing with Section 8(3)(b) of Act 1956 and Rule 13 of the Act, 1957 has clearly held that the intention must be to use the goods as raw materials, as processing materials, as machinery, as plant, as equipment, as tools, as spare parts, as stores, as accessories, as lubricants, as fuels etc. and the restricted interpretation is not warranted. The Hon ble Supreme Court further held in no uncertain terms that articles used in the process of manufacture would be liable for concessional tax, even though such articles may not be incorporated in the manufactured end-product. The High Court of Patna in the matter of M/s Larson Toubro [ 1994 (12) TMI 313 - PATNA HIGH COURT] and the High Court of Calcutta in the matter of Nagarjuna Constructions [ 2014 (3) TMI 1043 - CALCUTTA HIGH COURT] while dealing with similar issues included machinery, plant, equipment, tools, spare parts, stores, accessories, fuels, lubricants etc. in the registration certificate according to the provisions of Section 8(3)(b) of Act, 1956 and Rule 13 of Act, 1957. Thus, the authorities have committed an error of law in rejecting the application moved by the petitioner to include the articles mentioned in the application - the order passed by Deputy Commissioner, Commercial Tax, Durg is hereby set aside and the application moved by the petitioner under Section 8(3)(b) of the Act, 1956 is hereby allowed.

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• Indian Laws

• 2023 (12) TMI 1203
  Dishonour of Cheque - restoration of complaint - whether the negligence either on the part of the petitioner or his counsel in prosecution of the complaint can be a ground for not restoring the complaint? - HELD THAT:- The present complaint pertains to cheques total amounting to Rs.89,00,000/- which were dishonoured due to insufficient funds. There is no dispute by the respondent regarding the fact that the said cheques were signed and issued by him and also regarding the dishonour of the cheques on the ground Funds Insufficient . The petitioner is stated to be a qualified doctor. The petitioner was under the impression that he would be adequately represented by his previous counsel. The various orders passed by the trial court are reflecting that the petitioner and his counsel were not diligent in the prosecution of the complaint. However, mere negligence either on the part of the petitioner or his counsel in prosecution of the complaint should not be a ground for not restoring the complaint. The petitioner cannot be allowed to be suffer due to the negligence of his previous counsel. The impugned order dated 07.12.2016 passed by the trial court is set aside - the complaint is ordered to be restored to its original number before the trial court subject to the cost of Rs.25,000/- to be paid by the petitioner to the respondent on the next date of hearing before the trial court. The petitioner and the respondent are directed to appear in person before the trial court on 15.01.2024 at 2:30 p.m. for further directions.

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• 2023 (12) TMI 1202
  Dishonour of Cheque - discharge of legal liability or not - Society is not a body corporate - applicability of Section 141 of the Negotiable Instruments Act - HELD THAT:- Section 141 of the Negotiable Instruments Act deals with the liability of the Company and provides that where the offence is committed by a Company, every person who, at the time the offence was committed, was in charge of, and was responsible to the Company for the conduct of its business as well as the company, shall be deemed to be guilty of the commission of the offence. It is apparent from the bare perusal of the provisions that in the case of a Company, the Company as well as the office bearers are liable. Hence, the company is primarily liable and the office bearers are vicariously liable. It was laid down by the Hon ble Supreme Court in ANEETA HADA VERSUS GODFATHER TRAVELS TOURS (P.) LTD. [ 2012 (5) TMI 83 - SUPREME COURT ] that it is not permissible to prosecute the Directors in the absence of the Company - in view of the binding precedents of the Hon ble Supreme Court, the submission that the prosecution of the Company is necessary before prosecuting its office bearers has to be accepted as correct. It is an admitted position that the Himalayan Mahila Avam Jan Kalyan Sansthan is registered under the Societies Registration Act. Section 14 of the H.P. Societies Registration Act provides that every Society shall be a body corporate by the name under which it is registered having perpetual succession and a common seal - This Section specifically provides that the Society shall be a body; hence, the submission that the Society is not a body corporate is not acceptable. The complainant could not have filed a complaint against the petitioner and respondent no. 3 without impleading the Company to an accused. The prosecution of the petitioner in the absence of the Company is bad - the complaint titled Mukesh Kumar vs Anjana Kumari and another quashed qua the petitioner pending before the learned Additional Chief Judicial Magistrate, Sarkaghat against the petitioner and the consequent proceedings arising out of the same are ordered to be quashed qua the petitioner. Petition allowed.

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