TMI Tax Updates - e-Newsletter
December 6, 2021

Case Laws in this Newsletter:

GST Income Tax Corporate Laws Insolvency & Bankruptcy FEMA Service Tax CST, VAT & Sales Tax Indian Laws

Articles

1. Proposed Scheme of amalgamation of PMC bank - Concerns RBI needs to look at while finalizing

   By: shivaprasad chhatre

2. FEES PAYABLE TO INVESTMENT ADVISER

   By: DR.MARIAPPAN GOVINDARAJAN

3. Exporters To-Do List in Nov’21 & Dec’21: RoDTEP/Agri-TMA & Foreign Trade Policy

   By: Vivek Jalan

News

1. Third round of India-UAE CEPA negotiations due to begin in Delhi on Monday

Notifications

GST - States

1. FTX.56/2017/736 - dated 16-9-2021 - Assam SGST

Assam Goods and Services Tax (Second Amendment) Rules, 2021

2. ERTS (T) 65/2017/Pt. I/407 - dated 27-10-2021 - Meghalaya SGST

Amendment in Notification No. ERTS (T) 65/2017/1, dated the 29th June, 2017

3. 15/2021-VI(1)/319(a)/2021 - dated 18-11-2021 - Tamil Nadu SGST

Seeks to exempt taxpayers having AATO upto ₹ 2 crores from the requirement of furnishing annual return for FY 2020-21

4. G.O. Ms. No. 121 - dated 4-10-2021 - Tamil Nadu SGST

Amendment in Notification No. . II(2)/CTR/532(d-4)/2017, dated 29th June 2017

5. G.O. Ms. No. 120 - dated 4-10-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-15)/2017, dated 29th June, 2017

6. G.O. Ms. No. 119 - dated 4-10-2021 - Tamil Nadu SGST

Amendment in Notification No. II(2)/CTR/532(d-14)/2017 dated 29th June 2017

Circulars / Instructions / Orders

GST - States

1. CCT/26-4/2017-18/E/2183 - dated 26-11-2021

Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th meeting held on 17th September, 2021 at Lucknow

2. CCT/26-4/2017-18/E/2184 - dated 26-11-2021

Clarifications regarding applicable GST rates & exemptions on certain services

Customs

3. Instruction No.-27/2021 - dated 3-12-2021

Guidelines for the sale of seized/confiscated gold

Highlights / Catch Notes

GST

• Court Grants Anticipatory Bail for Alleged Fake Input Tax Credit Fraud under CGST Act; Cites Non-Grave Nature of Offense.

  Case-Laws - HC : Seeking grant of Anticipatory Bail - fraudulent availment and passing on ineligible/fake Input Tax Credit - as per the scheme of the CGST Act, though the offence is of economic nature yet the punishment prescribed cannot be ignored to determine the heinousness of the offence - the offences under the Act are not grave to an extent where the custody of the accused can be held to be sine qua non. - This Court allows the instant application under section 438 of Code of Criminal Procedure. In the event of arrest, the petitioner be released on bail on his furnishing a personal bond - HC
  Visit to Get Source

  ---

• Supreme Court Rules on Mutuality Doctrine: Societies and Members Are Distinct, GST Applies on Contributions Over Rs. 7,500.

  Case-Laws - AAR : Levy of GST - contribution received from members - The doctrine of mutuality was examined by the Supreme Court in the context of the Sales Tax law. However, the amended definition of Section 7 has put an end to the issue of the doctrine of mutuality in the cases of registered societies like the applicant. According to the amended definition the applicant and its members are to be treated as distinct persons. Hence, it is held that there is a supply of service by Applicant to its members and the same is taxable under GST. - in case the said monthly contribution exceeds ₹ 7,500/- per month, then the GST is leviable on the entire value of the monthly contribution collected. - AAR
  Visit to Get Source

  ---

• High Court Denies Interim Order in Tax Evasion Case Involving Suspicious E-Way Bill and Closed Supplier Premises.

  Case-Laws - HC : Release of seized goods with vehicle - The alleged loading of goods from different places renders even the e-way bill and the invoice suspect. The notice also refers to the fact that the business place of the supplier was found to be closed and there was no evidence of any trading activity that tallied with the local accounts. These and other circumstances enabled the Proper Officer to be prima facie satisfied that there was an intention to evade tax. - This is not a fit case where an interim order can be granted as sought for and, hence, the same is rejected - HC
  Visit to Get Source

  ---

• High Court Quashes Order for Detained Goods Due to Bill Mismatch, Citing Natural Justice Violation, Restores Case.

  Case-Laws - HC : Violation of the principles of natural justice - Release of detained goods - bill & E-way bill was mismatched - The order impugned is in the complete breach of the principles of natural justice for not having issued the show cause notice in the first place and not even having afforded any opportunity of hearing to the petitioner. Quashment of the order will sub-serve the purpose and hence the impugned order passed by the competent authority dated 15.09.2021 will need to be quashed and set aside - Matter restored back - HC
  Visit to Get Source

  ---

• IGST Applies to Goods Traded Between Foreign Countries Without Entering India for July 2017 - January 2019 Period.

  Case-Laws - AAAR : Scope of Supply - import of goods - trading in foreign countries by the appellant, wherein the goods are supplied from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India - Integrated Goods and Services Tax (IGST) was payable during the period from 01.07.2017 to 31.01.2019 on supply of goods directly from the vendor’s premises (M/s. SPX Poland) located outside India in the non – taxable territory to the customer’s premises (M/s. BRAC, Bangladesh) located at another place outside India in the non-taxable territory, without such goods entering into India. - AAAR
  Visit to Get Source

  ---

• Fried Papad Shapes Classified Under Tariff Heading 19059040, Subject to 18% GST Rate Per Customs Tariff Act 1975.

  Case-Laws - AAAR : Classification of goods - rate of tax - sale/ supply of Fryums (papad) manufactured by the applicant - The product “fried - different shapes and sizes Papad” involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975 and chargeable to 18% rate of Goods and Services Tax - AAAR
  Visit to Get Source

  ---

• GST Applies to RIADA Land Premium Paid in Installments, Not Considered "Upfront" Payment for Exemption.

  Case-Laws - AAR : Imposition of the GST - land premium to be payable to the RIADA - Since the applicant has admitted himself that the word upfront means "beforehand" or "before the actual evident is due", the so called premium paid in instalment after the allotment does not qualify the criteria of upfront amount. - it is not exempted from the GST - AAR
  Visit to Get Source

  ---

• Body Building on Chassis Classified as Composite Supply Under GST, Vehicle Body is Principal Supply per CBEC Circular 34/8/2018-GST.

  Case-Laws - AAR : Classification of services - rate of GST - body building activity on the chasis provided by the principal - it is a supply of body of the vehicle and the activity of fitting/mounting of vehicle-body on chassis is an ancillary activity to the principal activity of supply of vehicle-body. Hence, in terms of the clarification issued by the CBEC vide circular No. 34/8/2018-GST, dated 1-3-2018, the impugned activity is a composite supply, with principal supply being supply of body of the vehicle. - AAR
  Visit to Get Source

  ---

• Advance Ruling Applications u/s 97 Cannot Address Justification or Validity of Tax Liability, Double Taxation Issues.

  Case-Laws - AAR : Scope of Advance Ruling application - This Authority is of the view that based within the meaning of Section 97 of the GST Acts, an application for Advance Ruling can only be made to determine the “liability to pay tax” on any goods or services or both. The Applicant himself accepts that the liability as per the notification comes under RCM. but the Tax has been paid on forward charge. The main stress is on the point of double taxation. Therefore, no application can be made to determine whether the liability is justified / valid or not or whether it shall amount to double taxation or not. - AAR
  Visit to Get Source

  ---

Income Tax

• Compensation for Compulsory Land Acquisition in 2014-15 Exempt from Tax u/s 96 of RFCTLARR Act.

  Case-Laws - AT : Exemption from the Income Tax of the compensation received on acquisition of land - In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016. - Benefit of exemption allowed - AT
  Visit to Get Source

  ---

• Commissioner of Income Tax (Appeals) Reduces Assessing Officer's 25% Addition on Business Travel Expenses to 10.

  Case-Laws - AT : Addition being @25% Travelling expenses & conveyance expenses - Such expenses are incurred for the business purpose. Since the addition is made by the Assessing Officer on estimation, the ld. CIT(A) is justified in restricting the same to 10%. - AT
  Visit to Get Source

  ---

• Tax Refund Adjustments Made Without Section 245 Notice; Court Orders Verification and Potential Refund of Excess Amounts.

  Case-Laws - HC : Refund adjustments against disputed tax demands - Non invoking Section 245 - no notice or opportunity of pre-decisional hearing had been provided to the petitioner prior to such adjustment of refund - the respondents directed to verify the facts stated in the writ petition and if it finds them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands - HC
  Visit to Get Source

  ---

• Denial of Transfer Pricing Adjustment for Underutilized Capacity Challenged; TPO Must Use Section 133(6) for Fair Assessment.

  Case-Laws - AT : TP Adjustment - main grievance is the non-granting of the adjustment with regard to underutilized capacity - The settled law is that adjustment on account of capacity utilization has to be granted. In this regard, the TPO is bound to exercise its powers under section 133(6) of the Act and to collate the information on capacity details of comparable companies such as actual capacity in units, installed capacity, breakup of fixed and variable cost, product wise segmental profitability (if any) and provide the assessee opportunity by sharing the details so obtained on the comparable companies. - HC
  Visit to Get Source

  ---

• Taxpayer Wins: Depreciation Error by Assessing Officer Leads to Income Additions Being Deleted u/ss 44AD & 44AE.

  Case-Laws - AT : Addition of the depreciation from contract income and Tripper income - claim not made by the assessee in his return of income since assessee had shown his income under the presumptive taxation u/s. 44AD and 44AE - the AO erroneously without application of mind has assumed that assessee has claimed depreciation which fact has not been examined properly by the Ld. CIT(A) while passing the impugned order - Additions to be deleted - AT
  Visit to Get Source

  ---

• AO Properly Reopens Assessment u/s 148 Due to Lack of Evidence Linking Seized Documents to Appellant.

  Case-Laws - AT : Reopening of assessment u/s 147 - In absense of meeting the mandatory requirement of belongingness of the seized documents with the appellant, the AO was not within his power to invoke the provisions of s. 153C of the Act in the present cases and therefore, in our considered view, the AO rightly dropped the proceedings so initiated u/s. 153C and was statutorily correct in invoking the provisions of s. 148 of the Act. - AT
  Visit to Get Source

  ---

Indian Laws

• ICAI upholds decision on Chartered Accountant misconduct; Karnataka High Court dismisses review petition on Amalgamation Scheme.

  Case-Laws - HC : Professional misconduct of Chartered Accountant - In fact, the Disciplinary Committee rightly refrained from interfering in the report by observing that it had no jurisdiction to even delve into the report, once it had received approval from the Karnataka High Court. Hence, no error was committed by ICAI in dismissing the complaint filed by the Appellant - It needs to be highlighted that the order of the Karnataka High Court sanctioning the Amalgamation Scheme was sought to be recalled by India Awake for Transparency, however, the recall application, being in the nature of a review petition, was dismissed. - HC
  Visit to Get Source

  ---

• Court Rules Sale Deeds Void Due to Lack of Consideration; Appellant Retains Half Ownership in Property.

  Case-Laws - SC : Owner of suit property - joint ownership - legality and validity of the power of attorney and the sale deeds - the sale deeds will have to be held as void being executed without consideration. Hence, the sale deeds did not affect in any manner one half share of the appellant in the suit properties - As no title was transferred under the said sale deeds, the appellant continues to have undivided half share in the suit properties. - SC
  Visit to Get Source

  ---

Service Tax

• Appellant Challenges Findings in Paras 8.3, 9 of Order; Claims Issues Not Initially Raised Before Commissioner (Appeals.

  Case-Laws - AT : Refund of CENVAT Credit - The appellant has no grievance against the order of the Commissioner (Appeals) remanding the matter back to the adjudicating authority. However, his grievance is against paras 8.3 and 9 of the impugned order as the findings recorded in these paras are in respect of the issues that were never before the Commissioner (Appela). - Two paras deleted - AT
  Visit to Get Source

  ---

VAT

• Central Sales Tax Turnover Cannot Be Included in VAT Turnover Under Tamil Nadu VAT Act, 2006.

  Case-Laws - HC : Inclusion of CST turnover into the VAT turnover - TNVAT Act, 2006 - the overlap between the CST Act, 1956 and the TNVAT Act, 2006 and the Rules made thereunder are only for the purpose of following the procedure prescribed under the latter Act for the former. Barring the above, there is no scope for including one turnover into another either for determining the tax liability or the determining the due date for filing the Returns, Section 9 of the CST and Rule made thereunder do not permit any inclusion of the turnover under one tax enactment into another. - HC
  Visit to Get Source

  ---

• Court Orders Refund of Excess Entry Tax After Verification by Assessing Officer; Government to Return Overpayments.

  Case-Laws - HC : Set off the excess entry tax paid - After verifying the total entry tax paid by the petitioner, for each of the assessment years referred, and the sales tax paid or set off, can be taken into account with the aid of the books of account of the petitioner, which can be submitted by him, the assessing officer can very well arrive at a figure as to what was the excess entry tax paid and it is available with the Government, and after finding out the same, the excess entry tax can very well be refunded to the petitioner. - HC
  Visit to Get Source

  ---

• Court Restores Case for Further Review on Typographical Error in TNVAT Act Section 84 Assessment of Inter-State Sales.

  Case-Laws - HC : Revision of assessment under Section 84 of the TNVAT Act, 2006 - mistake in the return by itself - inter-state sales - petitioner has made a typographical mistake by adding the VAT turnover for the respective months - nothing precluded the Officer from exercising the jurisdiction under Section 22(6a) of the TNVAT Act, 2006 to see whether any tax remained unpaid - Matter restored back - HC
  Visit to Get Source

  ---

• Court Finds Assessment Orders Violated Natural Justice Principles; Orders Subject to Judicial Review and Correction.

  Case-Laws - HC : Violation of principles of natural justice - validity of assessment order - rectification of mistake - This Court feel that the orders, which are impugned herein passed by the first respondent dated 15.03.2021 as well as the notice dated 07.01.2021 advising the petitioner to file a regular appeal against the revised assessment order cannot stand in the legal scrutiny, therefore, both the orders passed by the first and second respondent are liable to be interfered with by this Court - HC
  Visit to Get Source

  ---

Case Laws:

• GST

• 2021 (12) TMI 171
  Blocking of Input tax credit - blocking of credit challenged on the ground that same has lost its force after the expiry of one year from the date of the order of imposing such restriction - rejection also on the ground of allegedly insisting the petitioner by the respondents to pay the demand from time to time during the pendency of the impugned investigation proceedings - Rule 86(3)A of the CGST Rules - HELD THAT:- Blocking of the Input Tax Credit of the petitioner dated 16th January, 2020 is no more valid now, since it has lost its force in view of the aforesaid provisions of Rule 86(3)A of the CGST Rules and the authority concerned will immediately lift the blockage if it has not unblocked by date. DGGI- East, Kolkata is the relevant party in this writ petition who has not been impleaded by the petitioner. Let him be impleaded as respondent no.6 and the department is to act accordingly - Let the matter appear for final hearing after five weeks.

  ---

• 2021 (12) TMI 170
  Input tax credit - basic ground of challenge to the impugned order in original is that the assessee is being compelled to pay for output supply without any legal basis - HELD THAT:- It is because of such payment that assessee could not make the requisite payment under the CGST as well as SGST. The assessee can agitate all such grounds before the appellate authority. No case is made out for entertaining the writ petition challenging the order in original when there is alternative remedy provided under the statute - petition dismissed.

  ---

• 2021 (12) TMI 169
  Release of seized goods with vehicle - seeking to furnish explanation on the proposal for confiscation of the goods, transported and on the value of goods, tax and penalty estimated by the Proper Officer - Section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- This is not a fit case to issue any interim order staying further proceedings pursuant to Exts.P6 and P6(a) notices or to direct release of the goods and the vehicle, which are the subject matter of proceedings for confiscation. The Statute itself provides for such a remedy. The Courts must be slow to exercise the power under Article 226 of the Constitution of India, especially in matters where Section 130 of the Act is invoked by the Proper Officer. The reluctance to exercise the extraordinary powers stems from the fact that such orders will have a tendency to interfere with the power conferred by the Statute. Even otherwise, if a party aggrieved by the proceedings under Section 130 of the Act has an alternative remedy, and if this Court interferes with proceedings under the Act, the scheme and purport of the Statute will be affected - In the instant case, the impugned notices refer to the statement of the driver of the vehicle and the enquiry conducted at the alleged business place of the supplier. The alleged loading of goods from different places renders even the e-way bill and the invoice suspect. The notice also refers to the fact that the business place of the supplier was found to be closed and there was no evidence of any trading activity that tallied with the local accounts. These and other circumstances enabled the Proper Officer to be prima facie satisfied that there was an intention to evade tax. This is not a fit case where an interim order can be granted as sought for and, hence, the same is rejected - Application dismissed.

  ---

• 2021 (12) TMI 168
  Violation of the principles of natural justice - Release of detained goods - bill E-way bill was mismatched - Imposition of redemption fine - without serving a copy of the order and without even granting an opportunity of hearing, the stay order is passed - violation of the provisions of section 130 of the Central Goods Services Tax Act - alternative efficacious remedy available in the form of appeal or not - HELD THAT:- Much has been pressed into service by learned Assistant Government Pleader urging that the Court need not indulge when there is efficacious remedy available under the statute. Ordinarily, this Court by way of self-restraint chose not to interfere where there is statutory remedy provided it is otherwise alternative and efficacious. However, there are notable exceptions, under which the Court always entertains the writ petition. One of them is breach of the principles of natural justice, that is one issues which has been reiteratively harped upon by the petitioner. The show cause notice that had been issued under section 129 and thereafter under section 130 of the CGST Act is only to the truck driver and neither to the truck owner nor to the petitioner in its capacity of the owner of the goods. The respondent has unsuccessfully pointed out to the Court as to how there has been representation on the part of the owner of the goods at the stage of passing the order under MOV 11. However, the respondent has not pointed out as to whether any show cause notice was issued to any of these or whether any opportunity of hearing had been availed. Admittedly, there is no show cause notice issued to the owner of the goods, at any juncture. Unlike in the case of SITARAM ROADWAYS (URP) THROUGH PROPRIETOR VASHRAMBHAI ARJANBHAI DANGAR VERSUS STATE OF GUJARAT [ 2019 (10) TMI 665 - GUJARAT HIGH COURT] where there was a show cause notice issued to the petitioner and the date had also been fixed for hearing and where the allegation was of only passing the order without affording the opportunity of hearing and that too by a non-speaking order, in the instant case, what is to be noticed glaringly is a complete absence of any notice and gross violation of principles of natural justice. The petitioner, who is the owner of the goods has not been afforded the opportunity at all as no service of show cause notice is also made to the petitioner and the opportunity was only afforded to the driver. Surprisingly, expressed show cause notice was only to the driver and to none else. This Court notices that neither to the petitioner nor to the owner of the conveyeance bearing No.GJ-01-JT-0689, which was intercepted by the State Tax Officer, any notice of show cause had been issued. The order impugned is in the complete breach of the principles of natural justice for not having issued the show cause notice in the first place and not even having afforded any opportunity of hearing to the petitioner. Quashment of the order will sub-serve the purpose and hence the impugned order passed by the competent authority dated 15.09.2021 will need to be quashed and set aside - the matter is restored to the file of the respondent NO.3 to issue the notice under section 130 of the GGST and CGST Act and to decide the matter afresh in accordance with law - petition allowed.

  ---

• 2021 (12) TMI 167
  Maintainability of petition - availability of alternative remedy of appeal - ex-parte order - violation of principles of natural justice - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, we form an opinion that the order is bad in law. This we say so, for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. The impugned order order is set aside - petition disposed off.

  ---

• 2021 (12) TMI 166
  Scope of Supply - import of goods - trading in foreign countries by the appellant, wherein the goods are supplied from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India - applicability of Entry No. 7 in Schedule 3 of the CGST Act, 2017 - levy of IGST - out and out transactions taking place beyond the Customs frontiers of India - location of the supplier - place of supply - HELD THAT:- As per clause (a) of sub-section (1) of Section 10 of the IGST Act, 2017, where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient . In the present case, the supply involves movement from the premises of the vendor located outside India to the buyer of the appellant located outside India. Therefore, the place of supply in this case is outside India inasmuch as the movement of goods terminates for delivery at the premises of the buyer located outside India - As per clause (24) of section 2 of the IGST Act, 2017, words and expressions used and not defined in this Act (IGST Act, 2017) but defined in the Central Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act shall have the same meaning as assigned to them in those Acts. As the supplier (appellant) is located in India and the place of supply is outside India, the transaction of supply of goods to buyer in case of trading in foreign countries would be treated as supply of goods in the course of inter-State trade or commerce. As IGST is levied on all inter-State supplies of goods or services or both, (unless exempted or provided otherwise in any other provision of law) as per Section 5 of the IGST Act, 2017, the supply of goods by the appellant to the buyer located outside India is covered under the ambit of the said provision of the IGST Act, 2017. As the transactions of the appellant, wherein the goods are supplied from a place in the non-taxable territory to another place in the nontaxable territory without such goods entering into India, are covered under Entry 7 of Schedule III of the CGST Act, 2017, it is evident that the said transactions shall be treated neither as a supply of goods nor a supply of services with effect from 01.02.2019 - it is observed that various provisions of Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018), including section 32 whereby Paragraph 7 has been inserted in Schedule-III of the CGST Act, 2017, have specifically been declared to come into force with effect from 01.02.2019 vide Notification No. 2/2019-Central Tax dated 29.01.2019. Therefore, the Paragraph 7 of Schedule-III of the CGST Act, 2017 cannot be considered to have retrospective effect as the legislative intent is quite clear. Integrated Goods and Services Tax was payable during the period from 01.07.2017 to 31.01.2019 on supply of goods directly from the vendor s premises (M/s. SPX Poland) located outside India in the non taxable territory to the customer s premises (M/s. BRAC, Bangladesh) located at another place outside India in the non-taxable territory, without such goods entering into India - the supplier (appellant) in this case, who was liable to pay the IGST during relevant period, is located in India. Applicability of section 10 of the IGST Act, 2017 - HELD THAT:- Section 10 of the IGST Act, 2017 is applicable for determining place of supply of goods, other than supply of goods imported into, or exported from India. Thus, the plain reading of section 10 of the IGST Act, 2017 does not support the contention of the appellant. Advance Ruling is confirmed to the extent it has been appeal against, by holding that the Integrated Goods and Services Tax was payable by the appellant M/s. SPX Flow Technology (India) Pvt. Ltd. from 01.07.2017 to 31.01.2019 on supply of goods directly from the vendor s premises located outside India in the non taxable territory to the customer s premises located at another place outside India in the non-taxable territory, without such goods entering into India.

  ---

• 2021 (12) TMI 165
  Classification of goods - rate of tax - sale/ supply of Fryums (papad) manufactured by the applicant - HELD THAT:- The classification of goods under GST regime has to be done in accordance with the Customs Tariff Act, 1975, which in turn is based on Harmonised System of Nomenclature, popularly known as HSN . The rules of interpretation, section notes and chapter notes as specified under the Customs Tariff Act, 1975 are also applicable for classification of Goods under GST regime. However, once an item is classified in accordance with the Customs Tariff Act, 1975, the rate of tax applicable would be arrived at on the basis of notifications issued under GST by respective governments. From the ingredient of the product in question as submitted by the appellant, it is seen that the impugned product are manufactured from the wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour and all these products are covered under Chapter 10 and 11 of Customs Tariff Act. The said product can be categorized as crispy savoury food product as such it is made from the dough based on flour like wheat flour, rice flour, starch, corn flour and cereal flour. Therefore, the products of the appellant fall under the Chapter Heading 1905. However, the question still remains whether the products of the appellant can be termed as Papad. The product Papad is an eatable item, originated and mainly consumed in India. Therefore, there is no mention of the product Papad in the Explanatory Notes of the HSN. The term Papad has neither been defined in the Customs Tariff Act, 1975 nor under the CGST Act, 2017 or the Notifications issued there under. Fryums is brand name of a company and not the generic name of the impugned product, therefore it would not be logical to hold that the appellant s product is Fryums . However, in general public, Fryums is popular word for different shapes and sizes like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting each other or shape of any instrument, equipment, vehicle, aircraft, animal type Papad. Similarly, calling product in question of different shapes and sizes by Fryums does not change the basic character of the product and the product in question remains papad - traditionally PAPAD is round shaped but the PAPAD is ready to cook product and can be consumed after roasting or frying in oil and consumed as snacks with the Indian meal or soup. Similarly, the product in question of different shape and size is a ready to cook product and can be consumed after roasting or frying in oil and consumed as snack. Further cereal flour of Chapter 10 and 11 of Customs Tariff Act, 1975 are the ingredients of both the product. Both the products i.e. PAPAD and product in question are same except they are known by different name in general public i.e. as PAPAD and Fryums . The products of the appellant has found its use as an alternative to regular round shaped Papad or as an additional variety of Papad in the Indian meal, especially the meals served during the community functions. The caterers, who prepare the meals for the community functions, as well as the people in general, consider such products as a different type or variety of Papad only - the applicant s products of different shapes and sizes of papad, are nothing but Papad, classifiable under Tariff Item 1905 90 40 of the Customs Tariff Act, 1975. CTH No. 2106 of Customs Tariff Act, 1975 covers the Food preparations not elsewhere specified or included means under this heading all types of foods preparation are covered which are not covered under the specific heading of tariff. It is important to refer to Chapter Notes of Heading #21 wherein under clause 5 (b) it is stated that Heading 2106 includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption and under clause 6 it has been stated that Tariff item 2106 90 99 includes sweet meats commonly known as Misthans or Mithai or called by any other name. They also include products commonly known as Namkeens , mixtures , Bhujia , Chabena or called by any other name. Such products remain classified in these subheadings irrespective of the nature of their ingredients - in the case at hand, the product different shapes and sizes Papad is Papad of different shapes and size and find specific entry at CTH No. 19059040, therefore as per rule of interpretation, the product is to be classified under CTH No. 19059040 only and not under CTH No. 21069099 of the Customs Tariff Act, 1975 as classified by the GAAR. The product different shapes and sizes Papad involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975. As it is already held that the product in question is classifiable under CTH No. 1905 of the Customs Tariff Act, 1975, the said CTH No. 1905 is covered under entry No. 16 of Schedule-III of Notification No. 1/2017-CT (Rate) dated 28.06.2017 and accordingly chargeable to 18% {9% CGST +9% SGST} rate of Goods and Services Tax.

  ---

• 2021 (12) TMI 164
  Classification of goods - rate of GST - Roasted Chana products - HELD THAT:- It is found that the proceedings have already been initiated by Revenue in July 2021 against M/s Jabsons with respect to subject questions raised in the application filed in September 2021. As per Section 70(2) of CGST Act, every such inquiry referred to in sub-section (1) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code. Thereby it is held that subject inquiry initiated vide Section 70(1) of the CGST Act by the Revenue is a judicial proceeding. It is held that the said investigation initiated by Revenue is a proceeding within the ambit of Section 98 (2) of CGST Act. The Advance Ruling cannot be used as a mechanism to nullify the inquiry proceedings already initiated by the Revenue vide section 70(1) of CGST Act. The subject application is hereby rejected as non-maintainable and inadmissible.

  ---

• 2021 (12) TMI 163
  Seeking clarification on the imposition of the GST on the land premium to be payable to the RIADA - applicability of serial No. 41 of notification 12/2017 under heading 9972 of GST issued by the central government on the payment of upfront lease premium on future installments - HELD THAT:- In the present case (i) the lease is for 30 years, (ii) The lessor i.e. RIADA is a corporation established by the State Government but the premium paid for the lease in 10 equal instalment over a period of 5 years. After paying the first instalment as upfront the applicant has received the service i.e. the industrial land/shed for the period of 30 years from the date of allotment. Since the applicant has admitted himself that the word upfront means beforehand or before the actual evident is due , the so called premium paid in instalment after the allotment does not qualify the criteria of upfront amount.

  ---

• 2021 (12) TMI 162
  Classification of services - rate of GST - body building activity on the chasis provided by the principal - Taxable @ 18% of GST or not - applicability of clarification of CBIC vide para no. 12.3 of Circular No. 52/26/2018-GST dated 09.08.2018 clarifying 18% rate of GST in respect of building of body of buses - HELD THAT:- The said circular clarify that GST applicable on the activity of bus body building on job work basis is 18%. As such, the body building on job work basis is pre-requisite for applicability of GST rate of 18%. As per Section 2 (68) of the CGST Act, 2017, Job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly . The applicant builds the body on chassis by purchasing all materials required for body building of the vehicle. The applicant is receiving only chassis and all inputs/materials required for fabrication of the body has to be used by the applicant from its own account. It is observed from the sample tax invoice of the principal issued to the applicant that there is mention of value of chassis, GST amount and total amount. It indicates that the ownership of chassis has been transferred to the applicant by the principal. Moreover, Tax Invoice issued by the applicant to the principal has mention of description of goods along with Body Serial No. as well as charging GST Rate of 28%. As such, it is clear that there is supply of the body of the vehicle in the said transaction. The fact gets pretty clear when circular in situation 12,2(b) refers that body builder recover fabrication charges including certain material that was consumed during the process of job work. However, in the instant case, the dominant character of work relates to supply of goods rather than supply of service. As such, this case is not covered under circular No. 52/26/2018-GST dated 09-08-2018. All inputs required for fabrication of vehicle-body (Tippers, Trailers, Truck, Tankers) on chassis are procured by the applicant and fabricated vehicle-body mounted on the chassis is supplied by the applicant - Therefore, in the instant case, it is a supply of body of the vehicle and the activity of fitting/mounting of vehicle-body on chassis is an ancillary activity to the principal activity of supply of vehicle-body. Hence, in terms of the clarification issued by the CBEC vide circular No. 34/8/2018-GST, dated 1-3-2018, the impugned activity is a composite supply, with principal supply being supply of body of the vehicle.

  ---

• 2021 (12) TMI 145
  Scope of Advance Ruling application - Liability of tax - liability to pay tax under RCM - Will the tax paid by service provider under forward charge absolve the recipient from payment of tax? - applicability of N/N. 29/2018 dated. 31.12.2018 - Principles of revenue neutrality - HELD THAT:- The principle of revenue Neutrality is applicable in the case since there has been no loss to the Government and also it is just a procedural flaw causing no impact to the Treasury. The only assertion is whether the existence of such a liability creates irregularities in respect of tax laws outside the limited applicability of the GST Acts. In other words, the existence of such a liability is not being challenged by the applicant in the current application, rather this is an appeal to merit about the relevance or logic of levying the tax after the same has already been paid by the supplier. In other words, the applicant himself admits that the liability to pay tax exists, and is saying that the liability should not exist since it is against the fundamental principles established by various Hon ble Courts based on their interpretations of the various statutes. Therefore, the question proposed before the Advance Ruling Authority is not whether the liability exists or not, but whether such a liability is valid/sustainable or not. That is not within the purview of Advance Ruling Authority to decide. This Authority is of the view that based within the meaning of Section 97 of the GST Acts, an application for Advance Ruling can only be made to determine the liability to pay tax on any goods or services or both. The Applicant himself accepts that the liability as per the notification comes under RCM. but the Tax has been paid on forward charge. The main stress is on the point of double taxation. Therefore, no application can be made to determine whether the liability is justified / valid or not or whether it shall amount to double taxation or not. The current application is not covered within the scope of Section 97 of the CGST Act and thus, the Advance Ruling Authority cannot comment upon the question put forth before them under the said provisions. The application is therefore disposed of as such.

  ---

• 2021 (12) TMI 135
  Seeking grant of Anticipatory Bail - fraudulent availment and passing on ineligible/fake Input Tax Credit - HELD THAT:- In the case of P.V. RAMANA REDDY, G. SRINIVASA RAJU, VENKATA SATYA DHARMAVATHAR BOLLINA, BALARAMA KRISHNA MANDAVA, M/S. VS FERROUS ENTERPRISES PRIVATE LIMITED, SMT. JAGANNAGARI RAGAVI REDDY, CHALLA DURGA ADI DEVA VARA PRASAD, TELAPOLU RAM PRASAD VERSUS UNION OF INDIA, MINISTRY OF FINANCE, DEPT OF REVENUE, NEW DELHI AND OTHERS [ 2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT] prearrest bail in a similar matter was refused. This was a case arising out of petition under Article 226 of the Constitution. Therein, the court rejected pre-arrest protection to the petitioner in view of the special circumstances of the case. The court there distinctly noted that in view of several decisions of the Hon ble Supreme Court, pre-arrest protection being akin to anticipatory bail needs to be sparingly exercised under Article 226. No such constraint can be read into the present application, since the present application has been filed under Section 438 of the Code, which specifically calls for decision on anticipatory bail. The Special leave petition against this decision has been dismissed by the Hon ble Supreme Court. In the present case, there cannot be any conflict with the fact that petitioner has been charged with economic offence. However, it is to be reiterated that the offence does not contemplate punishment for more than five years or commission of any serious offence along with the economic offence as it is usually the case in offences under other special statutes dealing with economic offences like Prevention of Money Laundering Act, 2003. Thus, as per the scheme of the CGST Act, though the offence is of economic nature yet the punishment prescribed cannot be ignored to determine the heinousness of the offence - the offences under the Act are not grave to an extent where the custody of the accused can be held to be sine qua non. Since, the genesis of the statutory right to anticipatory bail can be found under Article 21 of the Constitution, it is essential to understand the true import of rights under Article 21 of the Constitution. The Hon ble Supreme Court has held that such right to life does not merely mean animal like existence but includes wider connotations to make the life meaningful. One such ingredient of right to livelihood has been accepted as a part of Article 21 - Since, anticipatory bail is a statutory right in consonance with the Right to life and personal liberty under Article 21, it is essential to be alive to the various facets that form a part of rights under Article 21 of the Constitution. It is in this background, that this court ventures upon to decide the present application. In the present case, the Petitioner has been accused of wrongfully utilizing the Input Tax Credit amounting to Rs. 72 Crores, an offence under Section 132(b) and (c). Since the alleged amount exceeds five hundred lakhs, the accused can be punished with a maximum of five year of imprisonment and with fine. It is equally important to highlight that the offences under the Act are bailable and non-cognizable except for the offence under Section 132(5) of the Act - The task before this Court is two-fold, first being to ensure that no unwarranted abuse of process is allowed to impinge upon life and liberty of the petitioner, and second to ensure that the investigation is not hampered, procedure of administration of justice is not adversely impacted and ultimately the guilty is prosecuted. This Court allows the instant application under section 438 of Code of Criminal Procedure. In the event of arrest, the petitioner be released on bail on his furnishing a personal bond in the sum of Rs. 5,00,000/- with two solvent sureties of like amount to the satisfaction of the Investigating Officer/Apprehending Authority with the terms and conditions imposed - application allowed.

  ---

• 2021 (12) TMI 134
  Levy of GST - benefit of exemption under entry no. 77 of Notification no.12/2017-CTR dated 28th June, 2017 for the value upto Rs. 7,500/- per month per member and in case the said monthly contribution exceeds Rs. 7,500/- per month - levy of GST on differential value - levy of GST on amount collected from its members towards Sinking Fund, Building Repair Fund and Election and Education Fund - supplies otherwise exempted from tax or charged at Nil rate shall be included in value in computing threshold amount of Rs. 7,500/- per month per member under entry no. 77 of Notification no.12/2017-CTR dated 28th June, 2017, for determining the tax liability or not - contribution collected to defray expenses for supply of water - Potable water received from MCGM u/s 169 of Mumbai Municipal Corporation Act, 1888 - Flush Water (Non Potable water) generated from Sewage treatment plant installed in the Society premises - Input tax credit on the expenses incurred for heavy repairs and maintenance of the society building premises and which are not capitalized in books of accounts - principles of mutuality. Whether the applicant is liable to pay GST on the contribution received from its members? - HELD THAT:- The applicant society and its members are distinct persons and the various charges received by the applicant from its members are nothing but consideration received for supply of goods/services as a separate entity. The principles of mutuality, which has been cited by the applicant to support its contention that GST is not leviable on the maintenance charges collected by them from its members, is not applicable in view of the amended Section 7 of the CGST Act, 2017 and therefore, the applicant has to pay GST on the said amounts received against maintenance charges, from its members. There is a marked difference in the concept of the levy between the Finance Act and the CGST Act. In terms of the Finance Act, it was sufficient that a service was rendered by one person to another for a consideration in the taxable territory for the levy of service tax to be attracted. However, under GST, the supply of the service should necessarily be in the course of or furtherance of business and business has been defined to include provision by a club, association, society or any such body which provides facilities or benefits to its members for a subscription. The doctrine of mutuality was examined by the Supreme Court in the context of the Sales Tax law. However, the amended definition of Section 7 has put an end to the issue of the doctrine of mutuality in the cases of registered societies like the applicant. According to the amended definition the applicant and its members are to be treated as distinct persons. Hence, it is held that there is a supply of service by Applicant to its members and the same is taxable under GST. Whether the applicant can avail the benefit of exemption under Entry No. 77 of Notification No, 12/2017-CTR dated 28.06.2017 for the value upto Rs. 7,500/- per month per member and in case the said monthly contribution exceeds Rs. 7,500/- per month, then GST is leviable only on differential value in excess of Rs. 7,500/-? - HELD THAT:- The exemption as per the entry 77 of the Notification No 12/2017 CT (R) is available only when a member s contribution per month is upto an amount of Rs. 7,500/-. A member who contributes an amount which is more than Rs. 7,500/-, will not be eligible for the exemption under entry No 77 and the entire contribution amount will be liable to be taxed - a member who contributes an amount which is more than Rs. 7,500/-, will not be eligible for the exemption under entry No 77 and the entire contribution amount is liable to be taxed, contribution may be by whatever name called. Whether the applicant is liable to pay GST on amount collected from its members towards a) Sinking Fund, b) Building Repair Fund and c) Election Education Fund - HELD THAT:- The applicant has not produced any evidence to show that there are instances when such collected amounts are returned back to members after its collection. In order to collect deposit by co-operative society, the society has to follow certain procedure of law. Anyone cannot simply collect amounts as deposit. The applicant has not produced any proof as to what procedure was followed while collecting such deposit, whether in balance sheet said amounts are shown as deposit collected individual name wise, what is the amount of interest paid towards the deposit etc. Hence, amount collected towards sinking/repair fund is nothing but collection of certain amount as maintenance advance for overall maintenance of society. Hence, the said amount is liable to tax. The fund once collected becomes the property of the society. The individual member does not have right over the said money. So to call it as a deposit will be misnomer. It is a charge by the society for specific purpose and said charge is authorized by the general body and is as per the other provisions of the co-operative law. Some-times it may be a percentage of maintenance amounts. Similarly with regard to question regarding election and education fund collected by the applicant, we find that the same are liable to tax. Whether the supplies otherwise exempted from tax or charged at Nil rate shall be included in value in computing threshold amount of Rs. 7, 500/- per month per member under entry no. 77 of Notification no.12/2017-CTR dated 28th June, 2017, for determining the tax liability? - HELD THAT:- As per clause (b) in Sr No 77 of said Notification, exemption is available to housing societies for provisions of carrying out any activity which is exempt from the levy of Goods and service Tax assuming that a housing society is a non-profit registered entity; and property tax and electricity, etc. are exempt from the levy of GST. Thus, charges, collected by the society on account of property tax, electricity charges and other statutory levies would be excluded while calculating the limit of Rs. 7,500/-. Whether contribution collected to defray expenses for supply of following types of water are covered under entry 99 of Notification 2/2017-CTR dated 28th June, 2017 i.e. under HSN Code 2201 and attracts NIL rate of tax? - HELD THAT:- Notification 2/2017-CTR dated 28th June, 2017 pertains to goods supplied and is not applicable to services supplied. The applicant in the subject case is not selling goods per se. Rather it is supplying potable water through storage and pumping system. Whereas the applicant is supplying Flush Water only after treatment carried out in its treatment plant. In both the cases water per se is not sold. The applicant is providing the services of supplying water to its members. The applicant would be charging the members not on the quantity of water supplied but on the process undertaken to supply the water which is nothing but rendering of services. Thus, the provisions of entry 99 of Notification 2/2017-CTR dated 28th June, 2017 is not applicable in the instant case. Whether input tax credit can be claimed on the expenses incurred for heavy repairs and maintenance of the society building premises and which are not capitalized in books of accounts? - HELD THAT:- The applicant is engaged in club or association supply of service as a business and the construction service is used for furtherance of the said business. Thus the supply rendered by the applicant is also covered under Section 17 (5) (d) read with explanation mentioned therein. ITC on GST paid on such supply of service as mentioned above will not be available to the extent of capitalisation of the said service. Any expenditure benefit which is likely flow over a few years needs to be capitalized, so no ITC is available for such expenditure. Major repairs involve large expenditures that extend the useful life of an asset - ITC on the expenses incurred for heavy repairs and maintenance of the society building will not be available to the extent of capitalisation as mentioned in Explanation of Section 17(5) of the CGST Act, 2017.

  ---

• Income Tax

• 2021 (12) TMI 161
  Exemption from the Income Tax of the compensation received on acquisition of land - whether the impugned transaction is exempt being covered under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 - (RFCTALARR Act, 2013) ? - whether the provisions of RFCTLARR Act, 2013 are applicable to the NH Act 1956 or not? - HELD THAT:- In the present case it is not in dispute that the assessee received compensation on account of land acquired by NHAI. As per the provisions of section 96 of the RFCTLARR Act, the exemption from Income Tax and Stamp Duty would apply to an award or agreement made under the new Act which came into force on 01/01/2014. In the instant case the assessee filed its return of income on 30/11/2015 as he was waiting for the clarification from the Income Tax Department wherein the subject of exemption from Income Tax on the compensation received on commercial land might get clear and the clarification from the CBDT came vide Circular No. 36/2016 dt. 25/10/2016. From para 3 of the aforesaid Circular it would be clear that no distinction has been made between compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from income tax under the RFCTLARR Act, 2013. Applicability of the Acquisition Act 2013 has been given effect to the NH Act 1956 w.e.f 01/01/2015 and the assessee received the compensation on 05/11/2014 23/11/2015. In the present case also the land was compulsorily acquired by NHAI therefore the compensation received by the assessee was exempted under the Income Tax Act. Since the clarificatory Circular was issued by the CBDT on 25/10/2016 i.e; after the date of filing the return by the assessee on 30/11/2015 that is why an application under section 154 of the Act was moved by the assessee. CBDT vide Circular No. 36/2016 dt. 25/10/2016 clarified that the compensation received in respect of award or agreement which has been exempt from levy of Income Tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if there is no specific provisions of exemption for such compensation in the Income Tax Act, 1961. In the said Circular it is also clarified that no distinction had been made towards compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from Income Tax under the RFCTLARR Act. In the instant case the assessee received compensation for compulsory acquisition of commercial land during the F.Y. 2014-15 which was exempted under section 96 of the RFCTLARR Act, as clarified by the CBDT Circular No. 36/2016 dt. 25/10/2016. We therefore considering the totality of the fact as discussed hereinabove are of the view that the Ld. CIT(A) was not justified in confirming the action of the A.O. in not accepting the claim of the assessee for exemption of the compensation received on compulsory acquisition of land acquired by the Land Acquisition Officer from Income Tax. Accordingly the appeal of the assessee is allowed.

  ---

• 2021 (12) TMI 160
  Assessment u/s 153C - incriminating material found in search or not? - As submitted that both the lower authorities failed to establish the existence of cogent and demonstrative material which is germane to adjudicating officer s satisfying for including that seized material/ document belong to the person other than the search person - HELD THAT:- As in the incriminating material name of the assessee is appearing and he has a direct connection with the same and it cannot be said that these documents do not belong to the assessee. It is also revealed that assessee entered into a partnership on 04.06.2009 and contributed the said piece of land to the partnership firm and then he retired from partnership on 14.12.2009, leaving that piece of land as irrevocable property of partnership firm and copy of this deed was also found during the course of search. All these material are sufficient enough for the Ld. Assessing Officer to issue notice u/s 153C of the Act and examine the matter. This is a well-established fact that merely issuing notice u/s 153C of the Act and conducting the proceedings on the basis of any seized material may not end up into an addition. However, Ld. Assessing Officer is well within his jurisdiction to examine the aspect and conduct the proceeding u/s 153C of the Act. As in the instant case seized material found during the course of search at Mr. Sanjeev Agrawal and Kiran Agrawal belonged to the assessee and thus the proceedings u/s 153C of the Act has been rightly initiated and carried out. This legal ground raised by the assessee stands dismissed. Addition for alleged on money payment - HELD THAT:- We observe that the alleged addition is purely based on the statement of Mr. Mangilal. Opportunity to cross examine was not provided. No other material was brought on record to establish that the assessee had paid on money . The revenue has also not brought on record that whether any addition for unaccounted income was made in the hands of Shri Mangilal. The only authentic and genuine piece of evidence is a registered sale deed, where both buyer and seller have signed before registering authority for the consideration of Rs. 40,00,000/- passed by the buyer to seller. One cannot appreciate the act of making addition in the hands of on assessee merely on the basis of statement of a person who himself have not stated a correct purchase consideration in the registered sale deed signed by him. Revenue authorities having not given any opportunity of cross examination to the assessee, defies the principle of natural justice as held by Hon ble Supreme Court in the case of Andman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] as the impugned addition is purely based on the statement of Mr. Mangilal who was not cross examined by the assessee. As well-established ratio laid down by Hon ble Courts that written evidence have much more weightage and needs to be given preference against the oral evidence. Similar view was also taken by us in the case of Mukesh Sharma. Lower authorities erred in confirming the addition for alleged on money payment in the hands of assessee without bringing on record any strong evidence against the assessee and without giving the opportunity of cross examination. We, therefore, delete the addition - Decided in favour of assessee.

  ---

• 2021 (12) TMI 159
  Unexplained investment in stock and gross profit thereon - as in search and seizure proceedings, certain loose papers in the form of Consignment memos, issued for the exhibition purpose which was in turn for the purpose of insurance, were seized by the Revenue - AO had compared these consignment memos with value of stock as per books and difference arising on such comparison was then added as unexplained investment in stock u/s 69 - Whether addition made is not based on any tangible evidence and is totally based on loose paper seized by the Revenue in the form of consignment memo for Exhibition Purpose? - HELD THAT:- There are no corroborative evidences in the hands of Revenue to substantiate the allegations of unaccounted purchase. During search proceedings there were no evidences found in the form of unaccounted purchase bills or unaccounted sales or list of suppliers from whom unaccounted purchases made or payments made for such alleged unaccounted purchase etc. In the absence of such corroborative evidence, the loose paper seized (Consignment Memo) is nothing but a dumb document and do not possess any evidentiary value in the eyes of Law. If the assessee would be doing transactions of such high magnitude of unaccounted purchase/sales, the same would have been easily corroborated through aforesaid tangible evidences. But the Revenue couldn t bring such evidences even on account of extensive search undertaken because no such transactions were conducted by the assessee. Therefore, we are of the view that the addition made on the basis of overvalued stock in Consignment memos prepared for getting Insurance claims requires to be deleted as books of accounts found were found genuine and no corroborative evidence were brought on record. We are of the view that the ld. CIT(A) has rightly appreciated the facts and reached to the justified conclusion in the light of the relevant judicial pronouncements. Even before us, the Revenue could not controvert the findings of the ld. CIT(A) by bringing any tangible or contrary evidence on record. Therefore, we confirm the findings recorded by the ld. CIT(A) on this issue. Accordingly, ground nos. 1 2 raised by the Revenue are dismissed. Addition being @25% Travelling expenses conveyance expenses - AO made this addition @25% on account of personal use and ld. CIT(A) restricted the same to 10% on the ground that disallowance of expenses is on higher side - HELD THAT:- On consideration of facts, we are of the view that such expenses are incurred for the business purpose. Since the addition is made by the Assessing Officer on estimation, the ld. CIT(A) is justified in restricting the same to 10%. Thus, we do not find any reason to interfere with the finding of the ld. CIT(A) on this issue. Accordingly, ground no.3 raised by the Revenue is also dismissed.

  ---

• 2021 (12) TMI 144
  Refund adjustments against disputed tax demands - Non invoking Section 245 - HELD THAT:- As refunds have been adjusted against outstanding tax demand by the Authority without invoking Section 245 of the Act and/or without following the due procedure prescribed under the said Section inasmuch as no notice or opportunity of pre-decisional hearing had been provided to the petitioner prior to such adjustment of refund, this Court is of the opinion that the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands. Consequently, this Court directs the respondents to verify the facts stated in the writ petition and if it finds them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2018-19 to the petitioner within four weeks.

  ---

• 2021 (12) TMI 143
  Addition on account of slump sale of chemical undertaking u/s 50B - HELD THAT:- As per case AKZO NOBLE INDIA LIMITED [FORMERLY KNOWN AS I.C.I. (INDIA) LIMITED] [ 2019 (8) TMI 659 - CALCUTTA HIGH COURT] issue decided in favour of assessee.

  ---

• 2021 (12) TMI 142
  Reopening of assessment u/s 147 - No notice served on assessee - HELD THAT:- Notice of re-opening of the assessment was never served on the assessee or its authorised representative - We do not find that the Tribunal has committed any error in setting aside the assessment. The counsel for the revenue however has strenuously argued that in view of Section 292BB inserted in the Income Tax Act, mere defect in service of notice had to be factually ignored. Tribunal has however correctly observed in Chetan Gupta [ 2015 (9) TMI 756 - DELHI HIGH COURT] that Section 292BB of the Act cannot be given a retrospective effect. Admittedly, the said provision was inserted in the Income Tax Act in 2008. Revenue appeal dismissed.

  ---

• 2021 (12) TMI 141
  TP Adjustment - main grievance is the non-granting of the adjustment with regard to underutilized capacity - HELD THAT:- The settled law is that adjustment on account of capacity utilization has to be granted. In this regard, the TPO is bound to exercise its powers under section 133(6) of the Act and to collate the information on capacity details of comparable companies such as actual capacity in units, installed capacity, breakup of fixed and variable cost, product wise segmental profitability (if any) and provide the assessee opportunity by sharing the details so obtained on the comparable companies. There is want of information / data, adjustment can be made to the tested party also - it would be just and appropriate to set aside the impugned order on this issue and remand the issue to the AO / TPO to carry out the exercise of allowing adjustment on account of underutilized capacity. Not allowing working capital adjustment has been rejected by the DRP but the DRP has given the direction to the TPO / AO to take the margins of the comparables by considering finance cost as non-operating in nature - The directions of the DRP cannot be regarded as substitute for not granting working capital adjustment and therefore we direct the AO / TPO to allow working capital adjustment. Whether transaction of payment of royalty can be aggregated with the international transaction of manufacturing activity also requires afresh look in the light of the submissions made by the learned Counsel for the assessee that the royalty payment as to whether it is linked with the trading segment also has not been verified. Comparables adopted by the assessee in the TP study, it is seen that the DRP has not properly analysed the submissions of the assessee. The 7 comparable companies also are engaged in manufacturing of plastic goods. The DRP has made observation that the assessee is engaged in manufacturing of plastic closures, caps, etc., and therefore the 7 companies are not functionally comparables. There seems to be a contradiction in the order of the DRP - we deem it fit and proper that the issue with regard to determination of ALP should be remanded to the AO / TPO for determination afresh in the light of the observations made by us in this order. AO / TPO shall decide the issue of determination of ALP in the manufacturing segment afresh after affording assessee opportunity of being heard. Accordingly, the order of the AO is set aside and the issue remanded to the AO / TPO.

  ---

• 2021 (12) TMI 140
  Disallowance of interest paid to bank u/s.43B - nexus between loans borrowed from bank and business activities of the assessee - HELD THAT:- Since the assessee has made payment of interest on loans for impugned assessment year, it has rightly claimed deduction towards said interest on payment basis, as per provisions of section 43B - The findings of fact recorded by the learned CIT(A) in light of facts brought out by the Assessing Officer and arguments advanced by the learned A.R for the assessee is in accordance with provisions of section 43B of the Act, which was further supported by decision of Associated Pigment Ltd. Vs. CIT[ 1998 (9) TMI 78 - CALCUTTA HIGH COURT] where the High Court has considered similar issue and held that even though the assessee has not made any provision in books of account in respect of purchase tax in the earlier year to which it relates, but same is deductible on payment basis in terms of provisions of section 43B of the Act. Revenue has failed to bring on record any evidences to counter findings of fact recorded by the learned CIT(A) nor bring on record any decision in favour of the Revenue to support its arguments that before claiming deduction on payment basis in terms of section 43B of the Act, the assessee needs to record such interest in the previous year to which such interest pertains. Therefore, we are of the considered view that there is no error in the reasons given by the learned CIT(A) to delete additions made by the Assessing Officer towards disallowance of interest paid to bank u/s.43B - Decided against revenue.

  ---

• 2021 (12) TMI 139
  Correct head on income - rental income derived from letting out properties under the head income from business or Business and profession - HELD THAT:- In this case, the main objects of the assessee is not into own, develop and let out properties on rent and further, the assessee has not carried out letting out of properties on rent as a systematic or organized business activity. Further, the assessee has not provided any amenities to the occupants of the premises except providing premises on simple leave and license basis. Case of the assessee is squarely covered by the decision of the Hon ble Supreme Court in the case of Chennai Properties Investment Ltd vs CIT, [ 2015 (5) TMI 46 - SUPREME COURT] and in the case of Raj Dadarkar and Associates [ 2017 (5) TMI 586 - SUPREME COURT] - AO without appreciating facts has wrongly concluded that income derived from letting out of properties is assessable under the head income from business or profession as against income declared under the head income from house properties . CIT(A) after considering relevant facts has rightly directed the AO to assess income derived from letting out of properties under the head income from house property. Hence, we are inclined to uphold findings of the Ld. CIT(A) and dismiss appeal filed by the Revenue.

  ---

• 2021 (12) TMI 138
  Addition of the depreciation from contract income and Tripper income - claim not made by the assessee in his return of income since assessee had shown his income under the presumptive taxation u/s. 44AD and 44AE - CIT(A) had confirmed the depreciation added by the AO by stating that since the assessee had adopted contract income u/s. 44AD and tipper income u/s. 44AE of the Act, the assessee was not eligible to claim depreciation - HELD THAT:- As assessee has not made any claim of depreciation as alleged by the AO as well as by the Ld. CIT(A). A perusal of the paper book page 13 from where computation of total income is placed it is discerned that the assessee has not claimed any depreciation on the leathe machinery and for the two tipper lorries. As noted that the assessee in his balance sheet placed at page 14 of the paper book has reflected the depreciation on these two items, however the assessee has not claimed the depreciation while computing tax in his return since he had adopted contract income u/s. 44AD and tipper income u/s. 44AE of the Act. However, the AO erroneously without application of mind has assumed that assessee has claimed depreciation which fact has not been examined properly by the Ld. CIT(A) while passing the impugned order. Ergo, the order of the Ld. CIT(A) is set aside and the depreciation added by the AO/Ld. CIT(A) is directed to be deleted. - Decided in favour of assessee.

  ---

• 2021 (12) TMI 137
  Reopening of assessment u/s 147 - Admission of additional evidence - HELD THAT:- Upon going through the comments of the concerning ITO, we find that the Revenue has conceded that the additional evidences so furnished by the appellant are already available on the record and many of these additional evidences were already considered by the AO while passing the assessment orders. Thus, we find no serious objection of the Revenue against furnishing of the additional evidences by the appellant and accordingly, the same are admitted. Issuance of Notice u/s. 148 - Search and Seizure operations u/s. 132 of the Act, were carried out on group of asseessee(s) - AO had categorically established that in the appellant s case, after recording the reasons and after taking due approval from his Range Head, the notices u/s. 148 were issued -income of the appellant had got escaped assessment in the form of receipt made by one of its directors on behalf of the appellant company, which were not so recorded in the books of account of the appellant - HELD THAT:- The basis for proposing the addition in the hands of the appellant company on substantive basis was the subject land, against which Shri Nilesh Ajmera made the payments, was owned by the appellant company only and therefore, the same was proposed to be added in the hands of the appellant company on substantive basis. We further find that despite giving a finding by the assessing officer of Shri Mohanlal Chugh in the assessment order for A.Y. 2009-10, the proposed addition in the hands of the appellant company on account of payment received by it from Shri Nilesh Ajmera, through Shri Mohanlal Chugh, could not be made - upon noticing such escapement of income, the AOs in the present case rightly issued the notices u/s. 148 to the appellant after recording the necessary reasons to believe and also after obtaining the necessary approval. The notices for both the assessment years have been issued within the time limit prescribed u/s. 149 of the Act. We also find that after issuing the notices, upon request of the appellant, the copies of the reasons recorded were provided to the appellant and the objections raised by the appellant subsequently against such reasons were also disposed off by the AO by passing speaking orders. Thus, in our considered view, the assessing officer has duly complied with all the conditions as enjoined in the law and has also complied with the ratio laid down by the Apex Court in the case of M/s. G.K.N. Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] Accordingly, we do not find any substance in the ground nos. 2(a) 2(c) raised by the appellant for both the assessment years and the same are hereby Dismissed. Proceedings so initiated u/s. 153C v/s 148 - We find that undisputedly, during the course of the search u/s. 132 in the case of the Satellite Group, certain documents were seized but, there is no finding by any of the authorities that the documents so seized were not belonging to the person who were so searched or from whose possession these were found. In particular, there is no finding that the documents so seized were belonging to the appellant company - in the pre-amended provisions of s. 153C of the Act, the provisions of s. 153C could have been invoked only if certain documents belonging to a person other than the person searched are found and seized u/s. 132 from the premises of the searched person. So, at the relevant time, the belongingness of the document seized to a third person was a sine- qua-non for invoking the provisions of s. 153C of the Act against such person. We find that the amendment in section 153C of the Act dispensing with the requirement of belongingness to any books of accounts or documents with the third person has come into force only by the Finance Act, 2015 w.e.f. 01.06.2015, and therefore, the amendment would not be applicable for the assessment years under consideration. We find that in absense of meeting the mandatory requirement of belongingness of the seized documents with the appellant, the AO was not within his power to invoke the provisions of s. 153C of the Act in the present cases and therefore, in our considered view, the AO rightly dropped the proceedings so initiated u/s. 153C and was statutorily correct in invoking the provisions of s. 148 of the Act. Thus, the Ground No. 2(b) raised by the appellant for both the years is also Dismissed. Addition u/s 69 - cash payments against purchases/proposed purchases of land - HELD THAT:- AO could not properly appreciate the facts of the present case in the proper perspective and could not understand the whole deal. The AO went also wrong when claiming that the appellant had purchased the land from Chughs and Ajmeras. However, it is a matter on record that Chughs family were the owners of the appellant company at the relevant time and the appellant company did not purchase any land from Chughs. On the contrary, we find that the case of the Revenue since the day one when search operations took in the case of the Satellite Group was that Shri Mohanlal Chugh on behalf of the appellant company sold the land of the appellant company and received the payment from Shri Nilesh Ajmera or his company. Thus, the findings given by the AO in his assessment orders are patently wrong which has culminated into an absolutely absurd and unwarranted addition in the hands of the appellant company. We find that during the financial year relevant to assessment years under consideration, the appellant had not made any investment either towards the purchases or towards the making of advances for purchases of the land at Pipliyakumar and therefore, the findings given by the AO in the assessment orders to the effect that the appellant had parted with certain sum for making the investments for purchases of land are not factually correct. Also merit in the contention of the ld. CIT(DR) that in the present case, if the addition could not be sustained in the hands of the appellant company, then, this Bench should make a direction for making the corresponding addition in the hands of Shri Mohanlal Chugh who made the actual receipts of the funds. In our view, first of all, there is no maxim known to the law that for the mistakes committed by the AO of an assessee, the untaxed amount should be added in the hands of other assessee. Even otherwise, we find that the subject land in respect of which the payments were made by Shri Nilesh Ajmera are in the ownership of the appellant company and Shri Mohanlal Chugh was only one of the functionaries of the appellant company and therefore, any receipts by Shri Mohanlal Chugh from Shri Nilesh Ajmera has to be regarded only as the receipts of the appellant company and not that of Shri Mohanlal Chugh in his individual capacity. - Decided in favour of assessee. Unexplained cash credit - Reopening of assessment - HELD THAT:- In the instant case, the notice u/s. 148 was issued on the basis of escapement of income in the hands of the appellant which was emanating in the form of making of unaccounted receipts in respect of some land at Pipliyakumar, but, eventually, we found that no addition has been made on such ground but, the addition has been made on an altogether different ground of making of the unexplained investment in purchase of the land. Although, the settled position of the law is that an assessee officer is eligible to make the addition on the issues in addition to the issue in respect of which the notice u/s. 148 was issued, but, the essential requirement remains that some addition on the core issue contained in the notice u/s. 148 must be made by the AO before making the addition on other issues, which is. We find in the instant case. Thus, without going into the merits of the addition, we find no substance in the addition on account of unexplained unsecured loans and the same is deleted

  ---

• 2021 (12) TMI 136
  Reopening of assessment u/s 147 - Addition u/s 69C - Bogus purchases - HELD THAT:- As relying on [ 2015 (12) TMI 1538 - ITAT DELHI ] Assumption of jurisdiction is bad in law and the additions made u/s.69C of the Act has no legs to stand. The appeal filed by the assessee is accordingly allowed.

  ---

• 2021 (12) TMI 133
  Validity of Assessment u/s 153A - denying deduction u/s 80IB(10) - whether no incriminating material were found during the course of search? - HELD THAT:- We find that in the case of assessee, assessment years 2008-09 to 2012-13 comes under the category of non-abated/completed assessment and the additions made by the ld. AO towards denying the benefit of deduction u/s 80IB(10) of the Act as well as taxing Long Term Capital Gain on sale of land as business income are not supported by any incriminating material found during the course of search and therefore, assessee succeeds on this legal ground and the addition made for A.Y. 2008-09 to A.Y. 2012-13 are deleted and deduction u/s 80IB(10) of the Act claimed by the assessee is accepted. Deduction u/s 80IB - AO denied the claim observing that the assessee worked in the capacity as contractor and not a developer as the assessee used to sale of vacant plot through a registered deed and thereafter construct the house and thus did not comply to the provision of section 80IB(10) - HELD THAT:- As in the given facts and circumstances of the case and respectfully following the judgments referred hereinabove and the decision of this Tribunal in assessee s own case for A.Y. 2009- 10 [ 2018 (9) TMI 2064 - ITAT INDORE] and in absence of any contrary binding decisions placed before us by the Revenue, are of the considered view that the assessee has rightly claimed deduction u/s 80IB(10) of the Act for A.Y. 2008-09 to 2014-15 and the same needs to be allowed as claimed in the return of income. Thus the finding of Ld. CIT(A) is set aside and grounds raised on merit pertaining to claim of deduction u/s 80IB(10) of the Act for A.Y. 2008-09 to 2014-15 are allowed. Correct head of Income - gain from sale of land - LTCG or business income - HELD THAT:- We find that assessee has not shown these plots of land as stock-in-trade in the profit and loss account. As it is judicial settled that the accounting treatment is in the books of accounts regularly maintained by the assessee is one of the main indicator of intent of the assessee and the nature of the outlay. The land in question on which assessee has shown Long Term Capital Gain pursuant to their sale, have been shown in the balance sheet as an asset and never shown them as part of stock-in-trade. The cost of the said land is shown as an investment in fixed asset in the balance sheet of the assessee since the year ended March 2007 till the year ended when these were sold. The copies of the balance sheet and profit and loss account for the relevant period showing that the land in questions has not been shown as stock-in-trade but as an assets directly in the balance sheet stands failed before both the lower authorities and before us. Thus the alleged gain from sale of land shown as assets in the balance sheet has been rightly shown as long term capital gain and it cannot be taxed as business income. Addition on account of profit from unsold units - CIT-A deleted the addition - HELD THAT:- As the assessee has itself shown the profit on unsold unit and has credited the profit and loss account. Even otherwise since the unit is eligible for deduction u/s 80IB(10) of the Act as held by us in the preceding paras, there remains no justification on the part of the Ld.AO to assume the sale price and make addition for unsold units. Thus, we find no merit in the ground no.2 raised by the revenue.

  ---

• Corporate Laws

• 2021 (12) TMI 158
  Seeking dismissal of the company petition - refund of money siphoned - mismanagement and oppression into the affairs of the Respondent No. 1 Company - HELD THAT:- From a bare perusal of the said company petition, it will be evident that the allegations raised in the Company Petition are since 2009 to 2019 despite the fact that the first round of litigation was filed by the petitioners were instituted in 2011 before the Learned Company Law Board, Kolkata Bench at Kolkata., inter alia, alleging mismanagement and oppression against the identical respondents. The said company petition was registered as C.P. No. 992 of 2011 - From a bare perusal of the said Company Petition being C.P. No. 992 of 2011, the allegations raised in paragraph VII to XII at pages 111 to 113, XVI-XX at pages 115 and 117, Para XXVI at page 120 and para XXXI at page 123 are the identical allegations raised in the company petition being C. P. No. 10 of 2021 and the same will be evident from a bare perusal of page no. 43 to 48 of the main Company Petition. The petitioners, during pendency of the civil appeal, had filed an application against the administrator before the Hon ble NCLAT raising frivolous allegation, however, the Hon ble NCLAT had refused to entertain such application in view of the fact that the civil appeal is pending before the Hon ble Supreme Court of India - The civil appeal is pending since 2019, notices were issued after admitting the said appeal by the Hon ble Supreme Court. In the said civil appeal, identical issues are pending adjudication which have been prayed for before this Hon ble Tribunal. In the present case, the issues, which are being agitated in the present company petition, are from 2009 till 2019 and during the entire period, the previous company petition being C.P. No. 992 of 2011 was pending before this Hon ble tribunal till March 8, 2018 and before the Hon ble NCLAT till May 28, 2019 and the allegations, which are now being raised, would have been raised in the earlier company petition, however, the petitioners have chosen not to agitate the same. In view of such omission, the petitioners are barred from raising such issues by filing the present company petition, that too during the pendency of the civil appeal arising out of the earlier company petition. The present Company Petition being C.P. No. 10 of 2021 is an abuse of process of law, forum shopping and is liable to and should be dismissed with exemplary costs.

  ---

• 2021 (12) TMI 157
  Seeking direction to Appellant to maintain Status Quo in relation to the shareholding pattern as well as in relation to the properties of the 1st Respondent Company - eligibility to file a petition under Sections 241, 242 of the Companies Act, 2013 - prime plea taken on behalf of the Appellant is that the Tribunal had passed the impugned order in negation of the principles of natural justice as against the well settled the principle of law and judicial precedent - HELD THAT:- There is no two opinion of a primordial fact that no waiver application as per Section 244 (1)(b) was filed before the Tribunal (National Company Law Tribunal, Chennai Bench, in main Company Petition) by the Respondent/Petitioner/Applicant. Taking note of the divergent contentions advanced by the Learned Counsel appearing for the parties, in view of the fact that the plea of maintainability of the petition going to the root of the matter is raised on behalf of the Appellant and the same is repelled/repudiated on the side of the Respondent and added further, that the plea of waiver as visualised under the Companies Act, 2013, in the absence of application being filed by the Respondent before the Tribunal is projected before this Appellate Tribunal , at this stage, this Tribunal, simpliciter, without traversing upon the merits of the case and also without expressing any opinion in disregard set aside the impugned order dated 21.02.2020, since the said Ex Parte impugned order was passed in disregard to the ingredients of Section 420 of the Companies Act, 2013 (providing reasonable opportunity of being heard) in negation of the principles of natural justice and in not issuing Notice to the opposite party as required under Rule 37 of the NCLT Rules, 2016 which is required to be adhered to by the Tribunal . This Tribunal allows the Appeal and remits back the matter for passing a de novo order , by granting opportunity to the respective parties to raise all factual and legal pleas before the Tribunal - Appeal disposed off.

  ---

• Insolvency & Bankruptcy

• 2021 (12) TMI 156
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- Section 3(7) of IBC 2016 reads that Corporate Person means a Company as defined in clause (20) of section 2 of the Companies Act, 2013, a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008, or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider. It is evident from the said Notification dated 18th November, 2019, that the said Rules shall apply to such Financial Service Providers of categories as may be notified by the Central Government under Section 227 of the IB Code, 2016 from time to time and pursuant to the exercise of power contained in Section 227 of the IB code, 2016 the Central Government has chosen to notify NBFC with the assets of Rs. 500 crore or more as per last audited balance sheet (Notification dated 18.11.2021) and it is also seen from the Rule framed by the Central Government that any one cannot initiate proceedings seeking for Corporate Insolvency Resolution Process (CIRP) of the Financial Service Provider and it is only the Regulators who have been given the power to initiate the proceedings before the Adjudicating Authority namely this Tribunal. The Corporate Debtors before this Hon ble Tribunal is a Financial Service Provider Company as per the above sections, rules etc., and we don t find any merit in the arguments of the Counsel for the FC and the submissions of the FC that the Application filed by it under Section 7 of IBC is admitted and CIRP initiated even though it has admitted that the Total Assets of the CD is Rs. 15.63 Crores only which is well below the stipulated limit amount of Rs. 500.00 crores - Applicant FC has not followed the Guidelines and filed this Application under Section 7 of IBC in respect of a Financial Service Provider without following the due process of law. Application dismissed.

  ---

• 2021 (12) TMI 155
  Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - Financial Creditors - Financial Debt or not - as per the Petitioner there is a default under Section 7 of IBC, 2016 as its put option was not entertained when the said demand notice dated 02.01.2018 was sent to the Respondent M/s. Hubtown Limited demanding exit by way of put option - HELD THAT:- The Bench notes that as per the SHA, GVFL invested in HBT Mehsana by purchasing the shares of ILFS group. This cannot be termed as an investment of GVFL by way of a loan. The money paid by GVFL to acquire the share of HBT Mehsana cannot be construed as a consideration for time value of money and it was solely for the purchase of shares of HBT Mehsana held by ILFS group to become a shareholder in the Company. The Bench also notes that as per shareholder of HBT Mehsana, GVFL had acquired various rights including that of appointing a Director, exercising votes in AGM/ EGM and exercising veto votes. It is abundantly clear to the Bench that no voting rights ever accrues to a Financial Creditor in any AGM/ EGM. The rights enjoyed by GVFL in HBT Mehsana like exercising votes in the AGM/ EGM are typically the rights of a Shareholder and not a Financial Creditor. This is because, Equity is not a debt and as such any contract for acquisition of shareholding in a body corporate can never result in the formation of a debt. The SPA and SHA are both contracts in relation to GVFL acquisition of equity shareholding in HBT Mehsana. The Bench is of the view that share purchase in HBT Mehsana by GVFL with exit option of inter alia Annual Put Option cannot be considered as a debt which is disbursed against consideration of time value for money. The Bench also notes that Internal Rate of Return (IRR) cannot be equated with interest payments. The relevance of IRR for an investor in shares is in relation to expected profit and dividend pay out and capital appreciation of the shares which is totally different to the interest which is return for any investment by way of loan - GVFL may be entitled to this claim under the SHA as a Shareholder of HBT Mehsana. However, the Bench has no doubt that the claim of GVFL cannot be termed as a Financial Debt as contemplated under IBC. Application allowed.

  ---

• 2021 (12) TMI 154
  Collection of all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor - seeking to receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under Sections 13 and 15 - HELD THAT:- In view of the facts that the Adjudicating Authority had observed in the impugned order at paragraph 8 that the applicant himself had admitted the application that the Ex-directors were fraudulent and in fact, the Payments claimed to be made by the Petitioners/Appellants for one Mr. Rohit were not supported with any of the entries in the Books of Account of the Corporate Debtor then I.A. No. 2771 of 2020 filed by the Applicants/Appellants seeking issuance of direction to the Resolution Professional of the Corporate debtor accept the claim in full filed by the Applicants is not maintainable and in fact the Adjudicating Authority had pertinently proceeded to observe in the impugned order that RP had admitted the claim of Rs. 15,75,279/- after allowing interest 8% on Rs. 15,29,057/- which was rightly calculated, which was not arbitrary in nature and no direction can be issued to the Resolution Professional etc. Appeal dismissed.

  ---

• FEMA

• 2021 (12) TMI 132
  Proceedings in terms of section 16(1) r/w sec. 13 of the Foreign Exchange Management Act, 1999 - contravention of the provisions of sections 3(b), 5, 6(2)(a) 10(6) of FEMA r/w. Regulations 3 4(a) of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulation 2000 in relation to a foreign exchange - HELD THAT:- After service of notice, the respondents having entered appearance through the Central Govt. Counsel vehemently oppose the petitions making submission in justification of the impugned notice the complaint and in support of the reasons on which they have been constructed. As these Writ Petitions being devoid of merits, are liable to be dismissed and accordingly, they are, all contentions having been kept open. Petitioners are granted a period of four weeks for submitting their reply to the subject notice; discretion lies with the answering respondents to grant some more time as well if a case is made out therefore; it is also open to the petitioners to seek reasonable clarifications from the quarters concerned, if need be. The observations herein above made being confined to disposal of these Writ Petitions, shall not shade the reply to be submitted by the petitioners and influence the formation of the opinion by the answering respondents as to enquiry-worthiness of the matter.

  ---

• Service Tax

• 2021 (12) TMI 153
  Denial of benefit of waiver from payment of Penalty under section 73 (3) of the Finance Act,1994 - renting of immovable property - petitioner was under a bona fide belief that he was not liable to pay service tax for renting of immovable property and that while the matter was pending before the second respondent, the first respondent issued the impugned show cause notice thereby denying the benefit of waiver from payment of Penalty under section 73 (3) of the Finance Act,1994 - HELD THAT:- The appellants raised a point that the demand was quantified even when the investigation was in process. It is not for the appellants to contend that the investigation was not completed before the issuance of the show cause notice. In fact, if there were any materials available to issue the show cause notice even before the completion of investigation, the 1st respondent can issue show cause notice. In the present case, it is for the respondent to take a decision whether sufficient material is available to issue show cause notice or not and the appellants cannot have any say on this aspect. Therefore, the contention raised by the appellants that the impugned show cause notice is liable to be quashed since it has been issued without completion of the investigation, has no substance. The appellants are at liberty to file a reply within a period of 30 days from the receipt of receipt of a copy of this order - Appeal dismissed.

  ---

• 2021 (12) TMI 152
  Refund of CENVAT Credit - input services - grievance is against paras 8.3 and 9 of the impugned order as the findings recorded in these paras are in respect of the issues that were never before the Commissioner (Appela) - failure to comply with the condition prescribed under Rule 6A(c) of export of services - non-fulfilment of condition of Rule 6 of Cenvat Credit Rules, 2004, Rule 6A of Service Tax Rules, 1994 and Notification No.27/2012.CE(NT) dated 18.06.2012 - HELD THAT:- The appellant has no grievance against the order of the Commissioner (Appeals) remanding the matter back to the adjudicating authority. However, his grievance is against paras 8.3 and 9 of the impugned order as the findings recorded in these paras are in respect of the issues that were never before the Commissioner (Appela). The ends of justice will be met if these two paras are deleted and the remaining part of the order of the Commissioner (Appeals) upheld. After deleting these two paras, we uphold the remand order passed by the Commissioner (Appeals) to the adjudicating authority for consideration of the refund claims in terms of the provisions of the law and the documents submitted along with the refund claims and during the proceedings before the adjudicating authority. The provisions as contained in Subsection 1, 2 and 3 of Section 11B, the refund claim needs to verified for correctness by the Assistant Commissioner, and his satisfaction recorded after causing due verification - Appeal allowed by way of remand.

  ---

• CST, VAT & Sales Tax

• 2021 (12) TMI 151
  Revision of assessment under Section 84 of the TNVAT Act, 2006 - mistake in the return by itself - inter-state sales - petitioner has made a typographical mistake by adding the VAT turnover for the respective months - HELD THAT:- The turn over declared in the TNVAT returns is reflected as the turn over in the CST returns. In the TNVAT returns, the petitioner has also undertaken to pay the tax as the assessment is the self-assessment under the TNVAT Act. In the CST return, the petitioner has not assessed any tax as the petitioner was not liable to pay tax as there was no transactions of Inter-state Sales. Since the petitioner has also filed an application under Section 84 of the TNVAT Act, nothing precluded the Officer from exercising the jurisdiction under Section 22(6a) of the TNVAT Act, 2006 to see whether any tax remained unpaid. There are no records to substantiate thus the petitioner had effected Inter-state Sales. The case is remitted back to the respondent to pass appropriate orders by examining whether the petitioner is indeed entitled for a revision under Section 22 (6a) of the TNVAT Act, 2006. If there was no Inter-state Sales, the respondent shall drop the proceeding notwithstanding delay - Petition allowed.

  ---

• 2021 (12) TMI 150
  Application for revision filed under Section 9 (2) of the Central Sales Tax Act, 1956 read with Section 87A of the Value Added Tax Act, 2003 - Denial of claim of export sales made by the appellants - appellants have not produced records before the revisional authority - HELD THAT:- The revisional authority records that the partner of the appellants could not produce any document relating to the case and therefore, rejected the prayer for adjournment and dismissed the revision petition on the ground that in the absence of books of accounts and other relevant documents, there is no scope for examination of the grievances of the appellants. In our considered view, the approach of the revisional authority should be with a view to ensure that the taxes which are legally leviable and collectable are collected at the appropriate time. Therefore, the authorities should seldom reject the prayer of the dealers on technicalities or hyper-technicalities. It may be true that the partner of the appellants was not in a position to adequately represent the matter but however, if a short accommodation had been granted, the entire exercise of the matter travelling up to this Division Bench could have been well avoided. Therefore, without expressing anything on the merits of the matter, it is held that one more opportunity may be granted to the appellants to establish that the transactions were in fact genuine exports for which the appellants will be entitled to produce necessary documents, most of which, according to the appellants, are already on record. The order and direction issued by the Learned Single Bench is modified by directing the appellants/petitioners to appear before the revisional authority on a date which may be intimated to the appellants - Appeal allowed.

  ---

• 2021 (12) TMI 149
  Classification of goods - local sales of stainless steel wires as well as the inter-State sales not supported by C forms - Entry No.85 of Schedule II of the VAT Act - HELD THAT:- Today, when the matter was taken up, learned advocate Mr. Sheth appearing for the petitioner has submitted that no order has been passed as that was the last date on which the member of the Tribunal is demitting the office. Learned Assistant Government Pleader confirms non-appointment of any Member of the Tribunal till date - Learned advocate Mr. Sheth submits that 40% of the amount of tax has already been deposited by way of predeposite. Without entering into the merit of the matter, the impugned recovery notice dated 29.05.2021 qua Financial Years 2011-2012 and 2013-14 is being stayed till the appointment of either the President or Member of the Tribunal. The additional two weeks time shall be given to the petitioners as taking up his matter may take some more time - Petition disposed off.

  ---

• 2021 (12) TMI 148
  Violation of principles of natural justice - validity of assessment order - rectification of mistake - assessment years 2008-2009 to 2014-2015 - HELD THAT:- Having receipt of the notice/order dated 07.01.2021, the petitioner having found any appeal provision against such order/notice dated 07.01.2021 has invoked the revisional power of the joint commissioner concerned under Section 54 of the Act and filed revisions before the first respondent on 04.03.2021 separately, in respect of each of the assessment order. Those revision petitions filed dated 04.03.2021 separately, for each of the assessment year referred to above, by the petitioner, had been rejected by separate orders passed by the first respondent dated 15.03.2021. Insofar as the assessment order originally passed by the second respondent for various assessment years referred to above dated 20.06.2017 is concerned, those orders were set aside and the matters were remanded back to the second respondent for reconsideration by the orders of this Court dated 06.02.2018 - the second respondent assessing authority, after reconsideration, passed a revised assessment order on 21.01.2020 in all these cases. As against those orders, if the petitioner has got aggrieved, no doubt, he can prefer an appeal under Section 51 of the Act, however, in the case in hand, it is the case of the petitioner that some apparent error occurred in the order of revised assessment passed by the second respondent dated 21.01.2020. Therefore, in such case, the petitioner can very well invoke the power vest with the authorities to rectify the mistake under Section 84 of the Act. Whether any error apparently available on the face of the record, has to be ascertained and decided only by the assessing authority or the appellate authority or the revising authority as the case may be, when such application under Section 84 is filed by the Assessee, once such application is filed, the same should be disposed of in the manner as has been provided under Section 84 of the Act. Here in the case in hand, such invocation has been made by the petitioner under Section 84 of the Act and accordingly, when he filed an application by way of representation dated 07.12.2020, where, he has specifically stated that the case should be finally considered and a revised order, under Section 84 of the Act, by rectifying the mistakes committed, by passing the assessment order at an very earliest date, can be passed. In the case in hand, the second respondent, assessing authority before whom such representation under Section 84 of the Act was made on 07.12.2020 by the petitioner, the same should have been disposed only under the said section, however, the second respondent instead, has issued a notice on 07.01.2021, wherein no show cause or anything has been asked for from the petitioner, but an advisory was given by the second respondent to the petitioner to file an appeal that is regular appeal under Section 51 of the Act r/w Rule 14 of the Rules as against the revised assessment order - this Court cannot find fault with the petitioner in preferring a revision before the first respondent. This Court feel that the orders, which are impugned herein passed by the first respondent dated 15.03.2021 as well as the notice dated 07.01.2021 advising the petitioner to file a regular appeal against the revised assessment order cannot stand in the legal scrutiny, therefore, both the orders passed by the first and second respondent are liable to be interfered with by this Court - the impugned orders passed in these writ petitions by the first respondent as well as the order against which such revision was filed by the petitioner that is the order by way of notice dated 07.01.2021 passed in all these cases by the second respondent are hereby quashed. The matter is now remitted back at the stage of Section 84 application dated 07.12.2020 submitted by the petitioner in each of the case to the second respondent - Petition allowed by way of remand.

  ---

• 2021 (12) TMI 131
  Violation of principles of natural justice - order was passed without affording an opportunity of hearing to the petitioner - inclusion of CST turnover into the VAT turnover - TNVAT Act, 2006 - HELD THAT:- Though the petitioner has an alternative remedy, no useful purpose will be served by either relegating the petitioner to the respondent or to work out the remedy before the Appellate Commissioner as the issue is one of interpreting of the provision of the two Act - the manner prescribed for the purpose of Section 21 of the TN VAT Act, 2006 is under Rule 7 of the TNVAT Rules 2007. Rule 7 as it stood on 01.01.2007 was amended with effect from 24.08.2009. A registered dealer specified in clause (a) or (b) Rule 7(1) of the TNVAT Rules, 2007, whose taxable turnover in the preceding year exceeded two hundred crores of rupees and above was required file the above returns on or before 12th of the succeeding month to the assessing authority in whose jurisdiction his principal place of business or head office was situated. Such return shall be accompanied by proof of payment of tax - This period for filing return was extended from 12th of succeeding month to the 14th of the succeeding month in the case of a registered dealer who made electronic payment of the tax vide the above amendment. In the case of other dealers making the time was extended till 22nd of the succeeding month along with proof of payment of tax. Barring the above, amendment in the year 2009 is of no significance. The taxable turnover under Section 2(38) under TNVAT Act, 2006 can include only the turnover on which a dealer was liable to pay tax under TNVAT Act, 2006as determined after making such deductions from total turnover and in such manner as may be prescribed for determining total turnover . The amounts to be deducted Rule 8(2) of TNVAT Rules, 2007 can never form part of the taxable turnover under Section 2 (38) of the TNVAT Act 2006 for the purpose of Section 21 of the TNVAT Act 2006 - the overlap between the CST Act, 1956 and the TNVAT Act, 2006 and the Rules made thereunder are only for the purpose of following the procedure prescribed under the latter Act for the former. Barring the above, there is no scope for including one turnover into another either for determining the tax liability or the determining the due date for filing the Returns, Section 9 of the CST and Rule made thereunder do not permit any inclusion of the turnover under one tax enactment into another. There is no merits in the impugned order - petition allowed.

  ---

• 2021 (12) TMI 130
  Refund of entry tax - appellant were paying 4% tax against C Form declaration for the inter-state sales - violation of Article 301 of the Constitution or not - HELD THAT:- As on date, the legal position is that the Hon ble Supreme Court in THE STATE OF TAMIL NADU ORS. VERSUS ITC LIMITED ANR. [ 2017 (8) TMI 1648 - SC ORDER] has upheld the validity of the Act. As pointed out by the learned Single Judge in the impugned order, if at all there is any right for the appellant herein to seek for refund of the tax already paid, such right will arise only after the disposal of the issue whether the Ingots purchased by the appellant from outside the State, is liable for entry tax and whether there is any discrimination in classification of the goods. Without a declaration regarding the legality of imposing entry tax for Ingots is held to be unconstitutional, refund of tax already collected will not arise. Writ Petition filed for a Mandamus, seeking refund of entry tax, is premature and to be dismissed.

  ---

• 2021 (12) TMI 129
  Seeking to forthwith activate registration certificate of the Petitioners on the online portal under the CST Act - seeking direction to Respondents to allow the Petitioners to file returns and generate C form declarations under the CST Act for purchase of natural gas for use in manufacture of finished products - seeking direction to Respondents to forthwith the Respondents to forthwith activate registration certificate of the Petitioners on the online portal under the CST Act - HELD THAT:- The petitioners are before this Court raising an identical question of law which now stands concluded with the decision of the Apex Court rendered in case of THE COMMISSIONER OF COMMERCIAL TAXES ANR. ETC. VERSUS THE RAMCO CEMENTS LTD. ETC. [ 2021 (3) TMI 1184 - SUPREME COURT] as well as with the decision of this Court in case of GAURAV CONTRACTS COMPANY VERSUS STATE OF GUJARAT [ 2019 (6) TMI 802 - GUJARAT HIGH COURT] where it was held that the contention that as the petitioners are dealers who are registered under the GST Act, they cannot be registered under the CST Act, does not merit acceptance. If a dealer is dealing in goods falling within the ambit of the GST Act as well as the CST Act, it is always permissible for him to hold separate registrations under both the Acts in respect of such goods. Therefore, a dealer who is registered under the GST Act can also be registered under the CST Act in respect of commodities which fall within the ambit of the expression goods as defined under section 2(d) thereof for getting the benefit of reduced rate of tax under section 8 of the CST Act. Petition disposed off.

  ---

• 2021 (12) TMI 128
  Seeking permission to petitioner to set off the excess entry tax paid by the petitioner for future payment of entry tax - HELD THAT:- The petitioner is a dealer dealing with motor vehicles and he had to pay the sales tax as per the rate prevailing during the relevant point of time. The main contention on the side of the revenue for rejecting the claim of the petitioner for refund of the excess entry tax is concerned, it is based on the law declared by this Court in KHIVRAJ MOTORS LIMITED VERSUS ASSISTANT COMMISSIONER (CT) , [ 2010 (2) TMI 1164 - MADRAS HIGH COURT] referred by the writ Court and accordingly, they have taken a stand that the payment of sales tax and payment of entry tax are two different separate entities, and therefore, based on the claim anything made by the dealer, that he has paid excess entry tax, after set off, towards the sales tax, still if there is excess entry tax, should it be refunded or not is concerned, it need not be refunded, it can be retained by the Government. After verifying the total entry tax paid by the petitioner, for each of the assessment years referred, and the sales tax paid or set off, can be taken into account with the aid of the books of account of the petitioner, which can be submitted by him, the assessing officer can very well arrive at a figure as to what was the excess entry tax paid and it is available with the Government, and after finding out the same, the excess entry tax can very well be refunded to the petitioner. Petition disposed off.

  ---

• Indian Laws

• 2021 (12) TMI 147
  Owner of suit property - joint ownership - legality and validity of the power of attorney and the sale deeds - contention of the respondents is that instead of purchasing suit properties only in the name of Sudarshan Kumar, the appellant incorporated his name in the sale deeds along with Sudarshan Kumar - HELD THAT:- It is an admitted position that the said Sudarshan Kumar did not step into the witness box. Moreover, there is a finding recorded by the District Court that no evidence was adduced by Sudarshan Kumar to prove that certain amounts were transmitted by him from a foreign country to the appellant. This finding has not been disturbed by the High Court. The modified decree passed by the High Court by the impugned Judgment and order proceeds on the basis of the finding that the appellant and Sudarshan Kumar were the joint owners of the suit properties as Sudarshan Kumar failed to establish his claim that he was the sole owner of the suit properties. The respondents have not chosen to challenge the impugned Judgment and order and therefore, the finding that the appellant and Sudarshan Kumar were the joint owners of the suit properties has become final. Admittedly, there is no evidence adduced on record by Sudarshan Kumar that his minor sons had any source of income at the relevant time and that they paid him consideration as mentioned in the sale deed. Similarly, no evidence was adduced to show that Sudarshan Kumar s wife had any source of income and that she paid consideration mentioned in the sale deed. An issue was specifically framed by the Trial Court on the validity of the sale deeds. There is a specific finding recorded by the District Court that there was no evidence adduced to show that Sudarshan Kumar s wife and minor children paid consideration as shown in the sale deeds. In fact, before the District Court, it was pleaded that Sudarshan Kumar s wife had brought some money from her parents - undisputed factual position is that the respondents failed to adduce any evidence to prove that the minor sons had any source of income and that they had paid the consideration payable under the sale deed. They did not adduce any evidence to show that Sudarshan Kumar s wife was earning anything and that she had actually paid the consideration as mentioned in the sale deed. It is the specific case made out in the plaints as originally filed that the sale deeds are void as the same are without consideration. It is pleaded that the same are sham as the purchasers who were minor sons and wife of Sudarshan Kumar had no earning capacity. No evidence was adduced by Sudarshan Kumar about the payment of the price mentioned in the sale deeds as well as the earning capacity at the relevant time of his wife and minor sons. Hence, the sale deeds will have to be held as void being executed without consideration. Hence, the sale deeds did not affect in any manner one half share of the appellant in the suit properties - It was not necessary for the appellant to specifically claim a declaration as regards the sale deeds by way of amendment to the plaint. The reason being that there were specific pleadings in the plaints as originally filed that the sale deeds were void. A document which is void need not be challenged by claiming a declaration as the said plea can be set up and proved even in collateral proceedings. As no title was transferred under the said sale deeds, the appellant continues to have undivided half share in the suit properties. That is how the District Court passed the decree holding that the appellant is entitled to joint possession of the suit properties along with Sudarshan Kumar. Therefore, for the reasons, by setting aside the impugned Judgment and order of the High Court, the decree passed by the District Court deserves to be restored - Appeal allowed - decided in favor of appellant.

  ---

• 2021 (12) TMI 146
  Dishonor of Cheque - discharge of legally enforceable debt or not - rebuttal of presumption or not - section 138 of NI Act - HELD THAT:- The Court, in the present case, is called upon to give verdict upon factual aspects of the matter which are required to be decided in trial Court. The truth can be unfolded after the evidence is lead in the matter. The proceedings cannot be allowed to be truncated and curtain brought down on the same only for the reason that the petitioners may have some defense which requires consideration in the trial. The argument is also raised that the respondent herein has not controverted the stand taken by the petitioners herein qua the application filed for dropping of proceedings before the trial court and therefore, the complaint is without basis - the Court finds no reason either to interfere in the order dated 19.05.2012, passed by the trial court, whereby the application filed for dropping of proceedings exemption to the applicants therein, was dismissed. Petition dismissed.

  ---

• 2021 (12) TMI 127
  Professional misconduct of Chartered Accountant - High Court of Karnataka appointed Respondent No.3/Chartered Accountant for verification of the books and other documents of the three Transferor Companies and to submit his report - scheme of merger sanctioned based on the report - HELD THAT:- The report was thus a part of the judicial proceedings before the said Court and it was duly considered and deliberated upon by the Karnataka High Court. The Court sanctioned the Scheme of Amalgamation vide judgment dated 26.03.2015 and it is apparent that the Court found no fault with or falsity in the report. Once the report passed the threshold of judicial scrutiny, there was no reason why the Disciplinary Committee of ICAI should have adjudicated the correctness or otherwise of the Report. In fact, the Disciplinary Committee rightly refrained from interfering in the report by observing that it had no jurisdiction to even delve into the report, once it had received approval from the Karnataka High Court. Hence, no error was committed by ICAI in dismissing the complaint filed by the Appellant - It needs to be highlighted that the order of the Karnataka High Court sanctioning the Amalgamation Scheme was sought to be recalled by India Awake for Transparency, however, the recall application, being in the nature of a review petition, was dismissed. The Appellant has repeatedly defaulted in complying with the orders of various Courts by not depositing the costs imposed - no error has been committed by learned Single Judge while deciding the petition and we are in complete agreement with the observations, reasoning and findings rendered in the impugned judgment. There is no merit in the appeal and the same is accordingly dismissed along with all pending applications with costs of Rs. 50,000/- to be deposited by the Appellant with the Delhi State Legal Service Authority within eight weeks from today. The aforesaid amount shall be utilized for the programme Access to Justice . The Appeal shall be listed on 07.01.2022, only for the limited purpose of reporting compliance with respect to deposit of costs.

  ---