TMI Tax Updates - e-Newsletter
December 7, 2021

Case Laws in this Newsletter:

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

Articles

1. Burning issues in GST Input Tax Credit (ITC)

   By: Ganeshan Kalyani

2. PAYMENT OF PRICE IS AN ESSENTIAL PART OF A SALE COVERED UNDER SECTION 54 OF TRANSFER OF PROPERTY ACT

   By: DR.MARIAPPAN GOVINDARAJAN

3. TAXABILITY OF ALCOHOL FOR NON-HUMAN CONSUMPTION UNDER GST

   By: Dr. Sanjiv Agarwal

News

1. Union Budget 21-22 provided capital outlay of ₹ 5.54 lakh crore, an increase of 34.5% over Budget Estimate of FY 2020-21, to boast economy after COVID-19 pandemic

2. Auction for Sale (Re-issue) of (i) ‘4.56% GS 2023’, (ii) ‘5.74% GS 2026’, (iii) ‘6.67% GS 2035’, and (iv) ‘6.99% GS 2051’

3. Digital payments increased over last 3 financial years

4. Strategic disinvestment of Air India and its identified subsidiaries/JVs

5. 1,42,73,910 new accounts opened under Sukanya Samriddhi Account (SSA) between 2018 and 2021

6. Finance Minister Smt. Nirmala Sitharaman’s meeting with Chief Ministers and Finance Ministers of States/Lt. Governors of UTs to discuss overall investment climate

7. Scheduled Commercial Banks recover ₹ 90 crore from financial frauds in last 5 years

8. Income Tax Department conducts search operations in Delhi

9. Income Tax Department conducts search operations in West Bengal

10. RBI rate decision, Omicron worries to drive stocks this week: Analysts

11. More than 3 crore Income Tax Returns filed on new e-Filing portal of Income Tax Department; Taxpayers who are yet to file their ITRs for AY 2021-22 advised to file at the earliest

Notifications

GST - States

1. (4-F/2021)/FD 02 CSL 2021 - dated 4-12-2021 - Karnataka SGST

Karnataka Goods and Services Tax (Seventh Amendment) Rules, 2021.

Highlights / Catch Notes

GST

• Court Orders Restoration of Old GST Registration After Department Fails to Act on Revisional Authority's 2018 Order.

  Case-Laws - HC : Seeking direction regarding restoration of old registration number under the GST Act - validity of demand as a result of denial of the Input Tax Credit (ITC) to the Petitioner - In the present case, the Court finds the stand taken by the Opposite Parties in insisting on the Petitioner continuing new registration to be unreasonable particularly since admittedly the Department has not yet implemented the order dated 17th September, 2018 of the revisional authority while at the same time not challenging it. - HC
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• Court Criticizes Order for Lack of Clarity in Refund Rejection; Violates Legal Standards by Being Non-Speaking.

  Case-Laws - HC : Rejection of refund of unutilized compensation cess - Not only the show cause notice lacks the clarity and requisite material necessary to meet with the same, the order impugned is also in clear violation of the settled cannon of law. Lack of reasons in the show cause notices has not enabled the parties to make an effective representation and file the reply nor would the grant of personal hearing for contesting such show cause notices would sub-serve the purpose. The order of rejection also is a non-speaking order and the same had been passed without bearing in mind requirements of giving any reasons for rejection. - HC
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• Court Orders Response to Show Cause Notices in 10 Days Under CGST Act Section 83 for Property Attachment.

  Case-Laws - HC : Provisional attachment of properties - Section 83 of the Central Goods and Services Tax Act, 2017 - The Court chooses not to enter into the arena of the merit at this stage when the hearing has already been concluded, however, noticing that there are certain obligations to be fulfilled by the company, it is deemed appropriate that the respondent authority shall deliver the order of the hearing, concluded of the show cause notices, within 10 days of the receipt of the copy of this order. - HC
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• Court Grants 4-Week Period to Resolve Late Refunds u/s 56 CGST Act; Interest Payment Not a Justification for Delay.

  Case-Laws - HC : Disbursement of refund - Section 56 of the CGST Act - Payment of interest on late payment can never furnish the reason to delay payment, the four weeks time is granted to resolve the issue, if need be felt for outsourcing by the authority concerned for taking assistance of experts on the part of the software engineers, let that also be taken for attending to this issue. - HC
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• GST ITC Eligibility: Service Provider Cannot Claim ITC on Employee Reimbursement for Bus Hire Over 13 Seats.

  Case-Laws - AAR : Input Tax Credit - GST charged by service provider on hiring of bus, having seating capacity of more than thirteen person for transportation of employees to & from workplace - although the assessee is entitled for input service credit for the manufacturing of final product but the amount reimbursed by the employees by way of contribution is not entitled for input tax credit. - AAR
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• ITC Not Allowed for GST on Building Costs Due to Section 17(5) Restrictions on Civil Structures.

  Case-Laws - AAR : Input Tax Credit - Tax paid on cost proposed to be incurred - According to the provisions of Sec. 17(5) read with the explanation to it, credit of civil structure is covered under blocked credit. Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property As such, input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available. - AAR
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Income Tax

• Section 264 as Alternative Remedy to Appeals: Validity of Revisions and Reopening Assessments under Income Tax Act.

  Case-Laws - HC : Validity of Revision u/s 264 - Reopening of assessment u/s 147 - Whether revision under Section 264 of the 1961 Act is an alternate remedy to the remedy of regular appeal provided under Section 246 of the 1961 Act or not? - Remedy under Section 264 of the 1961 Act is an alternate remedy to the appeal under Section 246 of the 1961 Act. Once the petitioner chose to revoke the revisional jurisdiction, the authority was under obligation to decide the same in accordance with the provisions of Section 264 of the 1961 Act only - HC
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• High Court Rules No Penalty u/s 271(1)(c) for Incorrect Tax Claims Unless Inaccurate Particulars Furnished.

  Case-Laws - HC : Penalty u/s 271(1)(c) - the words are clean and simple and in order to expose the assessee to the penalty, unless the case is strictly covered by the Proviso, the penalty provision cannot be invoked and by no stage of imagination the incorrect claim in law can tantamount to furnishing of inaccurate particulars. - HC
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• Petition Seeks RTI Action for Missing Section 12A Registration Certificate Affecting Section 11 Tax Exemption Eligibility.

  Case-Laws - HC : Exemption u/s 11 - RTI - certificate of registration u/s 12A not traceable - the record which is to be maintained of the unit by the concerned authority is required to respond positively and the same when is not only the requirement but an obligation to maintain it. The application made by the petitioner be treated as an application under the RTI Act and be considered within the time period specified under the very statute. Let the appellate authority under the RTI Act respond to the petitioner without fail. - HC
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• Assessee's Guest House Assets Entitled to Higher Depreciation Rate; AO's 5% Restriction Found Incorrect per Act.

  Case-Laws - AT : Disallowance of depreciation on guest house - assessee has claimed depreciation @ 10% on guest house, which is applicable to factory and office buildings - assessee had also claimed depreciation @ 15% on plant & machinery, kitchen equipments and electrical fittings - Once, a particular asset is entitled for higher depreciation as per the Act, the AO was erred in restricting depreciation on said assets to 5%, which is applicable to residential building merely because those assets are installed in guest house building. - AT
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• TPO's Unwarranted Transfer Pricing Adjustment Disallows Legitimate Business Expense Reimbursement, Violating ALP Standards.

  Case-Laws - AT : Upward TP adjustment on account of reimbursement of expenses - The expenses in question were thus clearly for the purpose of the business of the assessee, and deserved to be allowed in full. The TPO should not have ventured into the job of the AO, but that technicality apart, even on merits, entire related expenses, which have been wrongly disallowed by making an ALP- something clearly contrary to the scheme of the Act, these expenses were fully admissible for deduction. - AT
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• Only the "Proper Officer" can assess corporate guarantee-related transfer pricing adjustments for imported goods. No other authority has this power.

  Case-Laws - AT : Upward TP adjustment on account of corporate guarantee - There has to be a proper determination as to whether there is prohibition of the imported goods. This exercise can be carried only by a “Proper Officer” and cannot be usurped by the third or fourth respondents or their counter parts in Chennai - Merely because the officers of the third and the fourth respondents have powers to investigate by itself means will not mean that they can insist on a “hands off approach” by a competent officer who have been given the powers to assess Bill of Entry filed by an importer. - AT
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Customs

• Proper Officer Must Determine Areca Nut Classification for Import; Others Cannot Override Authority in Chennai.

  Case-Laws - HC : Classification of imported goods - Areca Nuts - There has to be a proper determination as to whether there is prohibition of the imported goods. This exercise can be carried only by a “Proper Officer” and cannot be usurped by the third or fourth respondents or their counter parts in Chennai - Merely because the officers of the third and the fourth respondents have powers to investigate by itself means will not mean that they can insist on a “hands off approach” by a competent officer who have been given the powers to assess Bill of Entry filed by an importer. - HC
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• Court Orders Provisional Release of Seized Export Goods; Requires Bond Equal to Goods' Value, No Duty or Penalty Needed.

  Case-Laws - AT : Rejection of application for provisional release of the seized warehoused goods - The warehoused goods which are meant for export only must be released provisionally by accepting only a bond of the total value of the goods, accordingly, we direct the concerned respondent to release the goods provisionally on execution of only a bond for full value of the goods and the same shall be allowed to be exported without any payment of duty, fine, penalty. - AT
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• Interest on Customs Duty: Provisional Assessment Not Final u/s 18(3) of Customs Act, Says Commissioner (Appeals.

  Case-Laws - AT : Levy of interest on Customs duty levied before final assessment - Section 18(3) of the Customs Act - The legality of findings of the Commissioner (Appeals) that such provisional assessment was a deemed final assessment in view of dismissal of WRIT by the Hon'ble Delhi High Court is unsupported by any provision of law and apparently based on imagination/surmises. - AT
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Indian Laws

• Can Directors Be Held Liable for Cheque Dishonor? Examining Section 141 of the Negotiable Instruments Act.

  Case-Laws - SC : Dishonor of Cheque - legally enforceable debt or other liability - vicarious liability against the appellants - The test to determine if the Managing Director or a Director must be charged for the offence committed by the Company is to determine if the conditions in Section 141 of the NI Act have been fulfilled i.e., whether the individual was in-charge of and responsible for the affairs of the company during the commission of the offence. However, the determination of whether the conditions stipulated in Section 141 of the MMDR Act have been fulfilled is a matter of trial. There are sufficient averments in the complaint to raise a prima facie case against them. - SC
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• Issue Estoppel Bars New Claims: Arbitrator's 2008 Award Remains Binding, Preventing Parallel Proceedings on Same Issues.

  Case-Laws - SC : Principle of Issue Estoppel - Simultaneous parallel proceedings while arbitration proceedings - So long as the award passed by the Arbitrator – Housing Commissioner dated 07.11.2008 stands, there cannot be any subsequent fresh proceeding with respect to the same claims which were considered and adjudicated by the Arbitrator – Housing Commissioner while passing the award dated 07.11.2008. So long as the said award stands it is binding between the parties. - SC
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Service Tax

• Petitioner Entitled to SVLDRS Deduction for Pre-Notice Deposits; Designated Committee's View Overturned. Credit Required for All Payments.

  Case-Laws - HC : SVLDRS - Right of the petitioner to get deduction of deposits made prior to the issuance of show cause notice - Amount deposited by the petitioner falls in the second category. The provision only talks of amount irrespective of whether it has been paid as tax or interest or penalty. Thus, the view taken by the Designated Committee cannot be sustained. There is another side to the story. Had the petitioner remitted the entire amount paid by him towards tax, the respondents would have given credit of entire amount and his interest liability would have been waived off as well. The petitioner cannot be punished for depositing the amount under different heads once the provision mandates to discount the amount paid during the investigation dehors the head it has been deposited under. - HC
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• Dispute Over Service Tax Refund for Ship Broking Services; Appellate Authority Questions CA Certificate on Unjust Enrichment.

  Case-Laws - AT : Refund of Service Tax - service tax was paid under the mistake of law - Unjust enrichment - Instead of discharging the burden of correctly classifying and establishing taxability of ship broking services under a particular taxable category by putting the Appellant to notice, the Revenue has on the contrary sought to shift this burden upon the Appellant - the findings of the appellate authority as regards the CA Certificate dated 25 March 2015 being not a conclusive proof of the incidence of tax not having been passed on by the Appellant to any other person also cannot be accepted. - AT
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• Commissioner Missteps in Tax Case: Incorrect Issues Addressed Beyond Show Cause Notice for HDD Activities.

  Case-Laws - AT : Classification of services - Appellant’s activities relating to Horizontal Directional Drilling (HDD) works - The learned Commissioner has erred in adjudicating the issues not raised in the SCN. - The issue of non-fulfillment of the conditions of Notification No.32/2007 is a separate and distinct issue and there has to be a specific allegation regarding the same considering the facts and circumstances of a particular case. This has indisputably not been done in the instant case. - AT
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Central Excise

• Show Cause Notices Invalid for Revisiting Resolved Issue; Must Adhere to Final Orders Unchallenged by Department.

  Case-Laws - HC : Legality and validity of the show cause notices (SCN) - The impugned show cause notice once again of raising the very issue when the order of Commissioner (Appeals) has attained finality without any challenge by the department, which deserves indulgence. It is a judicial discipline which demands following the mandate of superior authority, even when it is a quasi judicial body as such discipline is an intigral part of this well laid down principle and deserves scrupulous observance by all concerned. No one is permitted to obliterate this well defined boundaries, even in a zeal to earn more revenue or profit the interest of the State as done by the respondent No.2. - HC
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• Extended Limitation Period Inapplicable: Concrete Mix Not Subject to Excise Duty; Department Aware of Compliance Activities.

  Case-Laws - AT : Levy to Excise Duty - Ready Mix Concrete (RMC) - Extended period of limitation - in the facts and circumstances, it is concluded that what has been manufactured and supplied by the appellant is ‘concrete mix’, which is not dutiable - the appellant has taken registration for service tax, paying service tax and making compliances for the said activity under dispute, the facts were in the knowledge of the Department and as such extended period of limitation is not invokable. - AT
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Case Laws:

• GST

• 2021 (12) TMI 231
  Seizure of goods - genuineness of invoices - Contention of the learned counsel for the petitioner is that at the time of interception, admittedly, certain invoices could not be produced by the driver before the intercepting authority - HELD THAT:- The learned Standing Counsel has not been able to deny that despite the petitioner claiming himself to be the owner and having produced invoices concerned, he was not declared by the proper authority or the appellate authority to be the owner of the goods. The matter requires consideration - Learned Standing Counsel prays for and is granted three weeks time to file counter affidavit. Rejoinder affidavit, if any, may be filed within two weeks thereafter.

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• 2021 (12) TMI 230
  Seeking direction regarding restoration of old registration number under the GST Act - validity of demand as a result of denial of the Input Tax Credit (ITC) to the Petitioner - seeking direction to the Opposite Parties to permit the Petitioner to avail the ITC as an existing dealer under the existing law or on the goods held in stock on the appointed day - HELD THAT:- The case of the Department is that the cancellation of the Petitioner s registration certificate issued originally under the Orissa Value Added Tax Act came about since the Petitioner failed to file returns. The case of the Petitioner, however, was that because of the cancellation of the registration certificate under the OVAT Act, he was not able to file returns and therefore was compelled to obtain a new registration - the fact remains that the Petitioner did seek the legal remedies against the cancellation of his old registration number. His revision petition came to be allowed on 17th September, 2018 by Opposite Party No.2. By that order, the old registration certificate was under OVAT Act restored and the further consequential restoration of the RC under the OST and CST Act, if any, also issued. With the Petitioner being constrained to apply for a new RC, in order to continue to transact business, it cannot be held against him that his application for the new RC should be construed as his having given up his claim for restoration of his old RC. On the contrary, he has an order in his favour by the revisional authority for restoration of his old RC. Even the filing of the present petition indicates the clear intention of the Petitioner that he wants the old RC to be restored. In the present case, the Court finds the stand taken by the Opposite Parties in insisting on the Petitioner continuing new registration to be unreasonable particularly since admittedly the Department has not yet implemented the order dated 17th September, 2018 of the revisional authority while at the same time not challenging it. In implementation of the order passed by Opposite Party No.2, the Opposite Parties will restore the Petitioner s old RC number and cancel the new RC number issued to him - Petition disposed off.

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• 2021 (12) TMI 229
  Rejection of ITC claim - name of the agency and GSTIN has been incorrectly mentioned - Section 73 of the Bihar Goods and Services Tax Act. 2017 - HELD THAT:- The notice dated 06.06.2019 is quashed with the direction to the assessing officer to issue a fresh notice in the light of the statutory provisions and pass an appropriate order in accordance with law. All proceedings be positively complied with in these matters. Petition stands allowed.

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• 2021 (12) TMI 228
  Seeking direction to respondent no.4 to pass the fresh refund order of total amount without reducing the amount of interest u/s. 50(1) - seeking direction to respondent no 1 2 for constitution of GST Appellate Tribunal within a time frame so that the statutory right of appeal can be exercised - HELD THAT:- When the matter was taken up for hearing, the attention of this Court is drawn to the amendments brought under the Central Goods and Services Tax (CGST) Act in the Finance (No.2), Act, whereby the proviso has been added to Section 15 of the CGST Act, which has been substituted w.e.f. 01.07.2017. According to the learned Standing Counsel, fresh application if is preferred by the petitioner in wake of these amendments, his case shall be considered by the respondent Authority. Learned advocate Shri Avinash Poddar on instructions seeks withdrawal of this matter to file a fresh application before the concerned Authority for him to prefer in two weeks time from receipt of this order. After that once received, the respondent Nos.2 and 3 shall consider the same in accordance with law bearing in mind the amendments in law within six weeks - Petition disposed off.

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• 2021 (12) TMI 227
  Rejection of refund of unutilized compensation cess - Section 54 of the CGST Act read with Section 16 of the IGST Act read with Rule 89 of the CGST Rules - HELD THAT:- It is to be noticed that the petitioners preferred the refund claims. It emerges that the petitioner no.1 preferred refund claim of unutilized compensation cess for the period from July, 2019 to September, 2019 on account of the export and supply of goods to the SEZ and such refund applications were made on 03.02.2020. It is not disputed that the same had been received by the Assistant Commissioner, Division-4, Surat. The acknowledgment also had been received on 19.02.2020 of the receipt of such refund applications. As rightly pointed out by the petitioners, the only ground assigned for proposing the rejection of the claim for refund is the others with a remark that error in adjusted total turnover. It is surely and rightly has been termed as a show cause notice which is completely vague and lacks the fundamental details which otherwise is required to be given for anyone to comprehend the same. A notice since is a foundation of any proceedings and if the same is not clear and is vague, the very edifice is extremely weak and based on such hollow foundation, when an attempt is made to raise a superstructure, the same cannot be sustained. Not only the show cause notice lacks the clarity and requisite material necessary to meet with the same, the order impugned is also in clear violation of the settled cannon of law. Lack of reasons in the show cause notices has not enabled the parties to make an effective representation and file the reply nor would the grant of personal hearing for contesting such show cause notices would sub-serve the purpose. The order of rejection also is a non-speaking order and the same had been passed without bearing in mind requirements of giving any reasons for rejection. Matter restored back.

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• 2021 (12) TMI 226
  Cancellation of registration of petitioner - cancellation on the ground that the same has been obtained by means of fraud, willful misstatement and suppression of the facts - HELD THAT:- It emerges from the material on record that the application for revocation has been preferred by the petitioner on 16.08.2019, no procedure has been followed thereafter by the proper Officer and he has chosen not to issue any notice to show cause indicating his intention of rejection. When the statutory Rules provide for prescribed limit, he could not have simply sat tight over this application without doing anything in that regard and without fail he shall need to complete this process within one week from the date of receipt of the copy. Noticing the fact that it is only after he decides not to accede to the request of revocation of cancellation that such a stage would come at that eventuality be also taken note of once the Officer chose not to allow the request straightaway he would have further period of 4 (four) weeks, 1 (one) week for issuance of notice and availing time to petitioner of one week as also to allow him representation and then 2 (two) weeks thereafter for him to decide finally. However, in the event he is agreed with the request of revocation of cancellation, the same shall be decided in a week s time. Petition disposed off.

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• 2021 (12) TMI 225
  Provisional attachment of properties - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- As is quite clear from the various decisions which have been discussed, that there shall need to be ordinarily the pendency of proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the GST Act for the commissioner to form an opinion for the purpose of protecting the interest of the Government Revenue to order in writing to attach the provisionally any property including the bank account belonging to the taxable person. In absence of any kind of pendency of proceedings, it is not permissible for the respondent authority to invoke powers under Section 83 for the purpose of provisional attachment. The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled. Such powers when exercised must need to be preceded by the formation of an opinion by the Commissioner that it is necessary to so do it for the purpose of protecting the interest of the Government Revenue and the opinion needs to be formed on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the Government Revenue - the reference to the provisions of Rule 159(5) also provides that a person whose property is attached is entitled to the safeguard of submitting the objections that the property was or is not liable to attachment and needs to be given an opportunity of being heard and the Commissioner is duty bound to deal with the objections by passing a reasoned order which must be communicated to the taxable person whose property is attached. In the instant case, the search was carried out under the GGST Act at the office premises of the petitioner no.1 and the panchnama was drawn on 04.10.2019. There was discrepancy noticed in the stock, therefore summons came to be issued on 22.10.2019 under Section 70 of the GGST Act - The search proceedings were initiated on 07.07.2021 at the residential premises and concluded on the same date, it concluded on 09.07.2021 at the head office and at the factory and office premises, it continued upto 15.07.2021. The directors since were not present, they were asked to remain present and the proceeding was postponed on 16.07.2021. Once again, the search team on 10.08.2021 had visited the factory and office premises to carry out the search. The Court chooses not to enter into the arena of the merit at this stage when the hearing has already been concluded, however, noticing that there are certain obligations to be fulfilled by the company, it is deemed appropriate that the respondent authority shall deliver the order of the hearing, concluded of the show cause notices, within 10 days of the receipt of the copy of this order. This petition is being disposed of without entering into the merits of the matter. The disposal of this matter shall not prejudice the rights of the parties before the authority concerned.

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• 2021 (12) TMI 224
  Validity of action of the respondent of detaining the goods and conveyance - declining the release of goods under Section 129 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The fact that all other documents are in place and the issue is with regard to the pricing of the goods on a lower side which have been transported, the decision rendered in case of K.P.Sugansh Ltd. vs. State of Chhattisgarh [ 2020 (3) TMI 890 - CHHATTISGARH HIGH COURT] requires to be regarded, where also, there was an allegation of undervaluation of the goods. At the time of the detention of the vehicle and the seizure of the goods in transit under the GST and where also the e-way bill and invoices were accompanied, the Court had not sustained the seizure of the goods and the vehicle. It permitted the department to initiate appropriate separate proceedings with regard to the alleged undervaluation, however, it held that undervaluation cannot be a ground for the seizure of the goods in transit by inspecting authorities if otherwise all other aspects are in order. The contention raised of the alternative remedy in that case was not entertained by holding that since the entire proceedings of the detention of the vehicle and seizure of goods were in contravention of law, relegating the petitioner to the alternative remedy would not be proper and justifiable. From the submissions of the learned advocates on both the sides and as ensured to this Court by the learned Assistant Government Pleader within four (4) weeks the assessment of the entire issue would be completed by the Assessing Officer after drawing the sample from the goods detained and therefore, keeping all contentions raised by both the sides open to be decided, it is deemed appropriate to direct release of the goods and the vehicle both by the respondents on the petitioner having shown its readiness to pay the amount of penalty and tax both and also having expressed his wish to cooperate - The matter is peremptorily fixed on 16.12.2021.

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• 2021 (12) TMI 223
  Transitional tax credit - grievance of the petitioner is that the notice had been issued only for the assessment under the VAT Act and the order came to be passed on 12.01.2021 under the VAT Act where the authority examined and disallowed the transitional tax credit claimed under the GST Act, raising the huge demand of tax along with interest and penalty - HELD THAT:- Noticing that the issue essentially raised is of non-availment of an opportunity of hearing, more particularly, while disallowing the transitional tax credit and also noticing that the Input Tax Credit was lying unutilized in the Electronic Credit Ledger and the respondent authority has demanded the tax under the VAT Act where this aspect also has been covered, let the opportunity of hearing be made available to the petitioner. Learned APP for the respondent has no objection to the very officer hearing the matter afresh in accordance with law. Any documentary evidences if are needed to be further adduced, the same be done within a period of one week from the date of receipt of a copy of this order and the hearing shall be completed within a period of four weeks thereafter. The impugned order dated 12.01.2021 passed by the Assistant Commissioner of State Tax (2), Unit-68 (12), Surat is quashed and set aside without entering into the merits of the case and only on the non availment of an opportunity of hearing on the aspect of disallowance of the transitional tax credit - Petition allowed.

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• 2021 (12) TMI 222
  Disbursement of refund - Section 56 of the CGST Act - HELD THAT:- This non-attendance of the issue has resulted into not only the non-payment of the refund amount which is otherwise not being disputed by the respondents, but has caused hardship for the petitioner and many others who for no fault of theirs are suffering. Payment of interest on late payment can never furnish the reason to delay payment, the four weeks time is granted to resolve the issue, if need be felt for outsourcing by the authority concerned for taking assistance of experts on the part of the software engineers, let that also be taken for attending to this issue. The authority concerned may also consider of taking in advance, the amount of Rs. 39,05,121/- from the petitioner of the sum of the Welfare Fund and making the payment to the amount of Rs. 51,27,47,703/- to the petitioner is entirety, if that can act as a solution before the software is improvised. However, if nothing materializes, let the amount be paid at the end of four weeks to the petitioner without fail with interest. If not paid at the end of four weeks, the rate of interest on the sum due shall be 12% on the entire sum from the due date of payment till the actual date of payment. Petition disposed off.

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• 2021 (12) TMI 221
  Maintainability of Advance ruling application - levy of GST - Liquidated damages for delay in supply as penalty (in nature of penalty) - Liquidated damages for compensation of extra cost on account of default from the supplier (in the nature of abetment to the cost of purchase) - sale of tender form/fees for participation in the tender - HELD THAT:- The Applicant, vide their letter dated 25.08.2021 has requested this authority to quash the application filed for advance ruling, quoting the reason that they have already got the clarity on the applicability of GST on the transactions for which advance ruling was sought and that they do not require any further proceedings. Further the applicant has to discharge fee of Rs. 5,000/- each under the CGST Act 2017 as well as KGST Act 2017 as per Section 97(1), whereas the applicant has discharged the fee of Rs. 5,000/- under KGST Act 2017 only and hence the instant application is liable for rejection under Section 98(2) of the CGST Act 2017. The application filed by the Applicant for advance ruling is hereby rejected.

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• 2021 (12) TMI 220
  Maintainability of Advance Ruling application - business of supplying, erecting and commissioning of elevators and escalators in building - Such buildings consists of more than one residential unit and falls under the definition of residential complex - applicability of Sl.No.3(v)(b) of Notification 11/2017-CT or not - HELD THAT:- The Applicant, vide their e-mail dated 26.08.2021, informed this authority that they withdraw their application, filed for Advance ruling. Further the applicant has to discharge fee of Rs. 5,000/- each under CGST Act 2017 as well as KGST Act 2017 as per Section 97 (1), whereas the applicant has discharged the fee of Rs. 5,000/- under KGST Act 2017 only and hence the instant application is liable for rejection under Section 98(2) of CGST Act 2017. The application filed by the applicant for advance ruling is hereby rejected.

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• 2021 (12) TMI 219
  Permission for withdrawal of Advance Ruling application - supply of turnkey engineering, procurement and construction (EPC) contract for construction of solar power plant wherein both goods and services are supplied - composite supply or not - supply of Solar Power Generating System - taxable at 5% GST or otherwise? - HELD THAT:- The Applicant, vide their letter dated 18.08.2021, requested this authority to permit them to withdraw the application filed for advance ruling quoting the reason that they have got the clarity on manufacturing of solar power systems and the rate of tax applicable thereon from the Notification No.24/2018-Central Tax (Rate) dated 31.12.2018. Further the applicant has to discharge fee of Rs. 5,000/- each under CGST Act 2017 as well as KGST Act 2017 as per Section 97 (1), whereas the applicant has not discharged the fee of Rs. 5,000/- each under any of the CGST/KGST Act 2017 and hence the instant application is liable for rejection under Section 98(2) of CGST Act 2017. The application filed by the Applicant for advance ruling is hereby rejected.

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• 2021 (12) TMI 218
  Maintainability of Advance Ruling application - taxability of Tamarind seeds - HELD THAT:- The Applicant, vide their letter dated 16.08.2021, has informed this authority that they wish to withdraw their application. Further the applicant has to discharge fee of Rs. 5,000/- each in terms of Section 97(1) of the CGST Act 2017 as well as KGST Act 2017, whereas the applicant has discharged the fee of Rs. 5,000/- only under KGST Act 2017 and hence the instant application is liable for rejection under Section 98 (2) of CGST Act 2017. The application filed by the Applicant for advance ruling is hereby rejected.

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• 2021 (12) TMI 217
  Permission for withdrawal of Advance Ruling application - classification of services - job work of slitting, cut to length and matt finishing of stainless steel sheets - to be classified under HSN code 9988 or otherwise? - HELD THAT:- The issue on which the applicant has sought advance ruling is not in respect of any of the issues covered under Section 97(2) of the CGST/KGST Act 2017. Further the applicant has to discharge fee of Rs. 5,000/- each in terms of Section 97 (1) of the CGST Act 2017 as well as KGST Act 2017, whereas the applicant has discharged the fee of Rs. 5,000/- under KGST Act 2017 only and hence the instant application is liable for rejection under Section 98(2) of CGST Act 2017. The application filed by the Applicant for advance ruling is hereby rejected.

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• 2021 (12) TMI 216
  Seeking permission for withdrawal of petition - rate of tax - trailers registered to be used for agriculture purposes - trailers without tipping kit and to be registered for use for agricultural purposes - HELD THAT:- The applicant has to discharge fee of Rs. 5,000/- each in terms of Section 97(1) of the CGST Act 2017 as well as the KGST Act 2017, whereas the applicant has discharged the fee of Rs. 4,975/- only under the KGST Act 2017 only Rs. 25/ - under the CGST Act 2017 and hence the instant application is liable for rejection under Section 98(2) of the CGST Act 2017. The application filed by the Applicant for advance ruling is hereby rejected

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• 2021 (12) TMI 215
  Classification of services - preparation of Detailed Project Report (DPR) and providing Project Management Consultancy (PMC) services for projects under Beneficiary Led Construction in Lucknow Cluster under Pradhan Mantri Awas Yojna (Urban) under an agreement with State Urban Development Agency (SUDA) - whether the activity would fall under activities in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or otherwise? - pure services or not - serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017. HELD THAT:- As per Sl. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution are exempt from tax - SUDA has been established as a state level nodal agency, under the department for Urban Employment and Poverty Alleviation by Uttar Pradesh Government. The Consultancy services rendered by the Applicant under the contract with SUDA, and for PMAY are in relation to functions entrusted to Municipalities / Panchayats under Article 243W / 243G of the Constitution of India. Pure services or not - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June, 2017 issued under Central Goods and Services Tax Act, 2017 (CGST) and corresponding Notifications No. - KA.N.I.-2-843/X1-9 (47) / 17-UP. Act-1 - 2017 - Order - (10) 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act).

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• 2021 (12) TMI 214
  Input Tax Credit - GST charged by service provider on hiring of bus, having seating capacity of more than thirteen person for transportation of employees to from workplace - amount recovered by the Applicant from employees for usage of bus transportation facility - restriction of credit to the extent of cost borne by the Applicant (employer) - HELD THAT:- Section 17 of the CGST Act, 2017 provides for apportionment of credit and blocked credit. It is pertinent to have a look at the relevant legal provisions under Section 17(5) of the CGST Act. The Section 17 (5) has been amended by CGST (Amendment) Act. 2018 (No. 31 of 2018) dated 29.08.2018 made effective from 01.02.2019 vide Notification No. 02/2019 - C.T.- 2019 dated 29.01.2019. In the subject case, since the applicant has specifically submitted that they are using motor vehicles having approved seating capacity of more than thirteen persons (including the driver), the applicant shall be eligible for Input lax Credit in this case. However we would like to make it very clear that if the motor vehicle hired by them does not have an approved seating capacity of more than thirteen persons (including the driver), then in that case the applicant will not be eligible for Input Tax Credit. Whether GST is applicable on nominal amount recovered by Applicants from their employees for usage of employee bus transportation facility in non-air conditioned bus? - HELD THAT:- As per clause 1 of the said Schedule-III, services by an employee to the employer in the course of or in relation to his employment shall be treated neither as a supply of goods nor a supply of services. Since the applicant is not supplying any services to its employees, in view of Schedule III mentioned above, it is held that GST is not applicable on the nominal amounts recovered by Applicants from their employees in the subject case. Restriction of ITC to the extent of cost borne by the Applicant - HELD THAT:- The issue has already been settled by the Hon ble High Court of Bombay in the case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [ 2010 (10) TMI 13 - BOMBAY HIGH COURT] wherein the Hon ble High Court has held that although the assessee is entitled for input service credit for the manufacturing of final product but the amount reimbursed by the employees by way of contribution is not entitled for input service credit.

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• 2021 (12) TMI 213
  Input Tax Credit - Tax paid on cost proposed to be incurred in relation to activity mentioned in Annexure attached with the application - Section 16 of the CGST Act, 2017 - HELD THAT:- According to Section 16 (1) of the CGST Act, 2017, every registered person is entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used by him in the course or furtherance of his business. We find that apart from conditions as laid down under Section 16 of the CGST Act, 201 7; Section 17 provides for restrictions and factual position and situations where ITC would not be available. When the goods or services are bought for construction of immoveable property which will be used in the course of business, the GST paid on such good or service is also not eligible- to be claimed as Input tax credit if the immoveable property is constructed for own purpose, as the owner will become the end user and he cannot avail ITC of cost incurred on construction goods, as there is a break in the tax chain. According to the provisions of Sec. 17(5) read with the explanation to it, credit of civil structure is covered under blocked credit. Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property As such, input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available. The Input Tax Credit of Tax paid on cost proposed to be incurred in relation to activity mentioned is not admissible.

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• 2021 (12) TMI 212
  Time limitation for filing appeal - Cancellation of GST registration of petitioner - non filing of statutory returns for a continuous period of six months - appellant failed to respond to the Show Cause Notice on or before the given date of personal hearing - whether the appeal has been filed within the prescribed time- limit? - HELD THAT:- Though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017. It is also found that the appellant has not submitted any ground for not filing of appeal within the stipulated period - though the delay in filing the appeal is condonable only for a further period of one month provided that the appellant was prevented by sufficient cause from presenting the appeal is shown and the delay of more than one month is not condonable under the provisions of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017. The appellant has filed this appeal beyond the prescribed period that too after expiry of further one month s period in terms of sub section (4) of Section 107 of the Central Goods and Service Tax Act, 2017 which could be condoned by the undersigned. The appellate authority has no power to allow an appeal which is filed beyond the prescribed period. Accordingly, since the appeal is filed after expiry of the prescribed period of three months and a further period of one month which may be condoned by the undersigned, the appeal deserves to be rejected on the grounds of limitation without going into the merits of the case - Appeal disposed off.

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• Income Tax

• 2021 (12) TMI 232
  TDS u/s 194C - addition u/s 40(a)(ia) - Non deduction of TDS on payments made to various transporters, this included the freight inward charges and clearing and forwarding charges - HELD THAT:- As relying on VALIBHAI KHANBHAI MANKAD [ 2015 (1) TMI 203 - SC ORDER] assessee company has not deducted the TDS of payment made to the transporters as per sub-section(6) of section 194(c). However, the details of the transporters have been filled-in in the TDS return, wherein their PAN cards also have been duly submitted to the Income-tax authorities, as this is a sufficient compliance of sub-section (7) of section 194(c). The Tribunal was absolutely correct in upholding the version of the assessee. It also rightly held that after obtaining the PAN Card from the transporters, assessee is needed to furnish the same in the prescribed form to the prescribed authority within prescribed time. Tribunal held that there is no prescribed authority nominated under the provisions of law. Thus, in absence of such prescribed authority, no fault was attributed to the assessee obviously for not filing the details before such authority. The details filed by the respondent assessee along with Form No.26 naturally could be construed as sufficient compliance. No fault can be found with these detailed findings and the settled position of law. - Decided in favour of assessee. Disallowance of commission expenses - Assessing Officer has treated as non-genuine commission claimed by the assessee given to M/s. C.M. Smith and Sons Ltd.- HELD THAT:- We notice that the Assessing Officer chose not to exercise its powers under section 131/133(6) of conducting the investigation or enquiries. Tribunal has rightly observed that on surmises and conjectures, AO has chosen to make disallowance. This Court in the case of Voltamp Transformers Pvt. Ltd. vs. CIT [ 1980 (10) TMI 35 - GUJARAT HIGH COURT] has left it to the concerned assessee to decide its commercial expediency and business needs. Ordinarily, a business person would alone decide as to in what manner it would seek to hire the service of the commission agent. Merely because, the doubt was created by the Assessing Officer only on the premises that two of the companies were already being served by the respondent assessee and the sales were made in the past, it chose to disallow the commission, is not a sustainable premise. If there was any question with regard to genuineness of the transaction further inquiry or investigation is permissible under the law and in absence thereof, doubting agreement or financial statement of the agent was impermissible, much less, disallowing the commission without appreciating business expediency.

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• 2021 (12) TMI 211
  Rectification u/s 254 - HELD THAT:- Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.

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• 2021 (12) TMI 210
  Validity of Revision u/s 264 - Reopening of assessment u/s 147 - Whether revision under Section 264 of the 1961 Act is an alternate remedy to the remedy of regular appeal provided under Section 246 of the 1961 Act or not? - HELD THAT:- Prescription of waiver of right of appeal as sine qua non for entertaining revision leads to an inevitable conclusion that the remedy available under Section 264 of the 1961 Act is an alternate remedy to the appeal. The provision itself provides for the cases in which the authority shall not revise any order which are enumerated in sub-Section 4. It is not the case of respondents that the case of the petitioner is barred on any of the aforesaid counts. Thus, in our view, the revisional authority erred in dismissing the revision petition filed by the petitioner merely on the ground that the same was not maintainable . As already held hereinabove, remedy under Section 264 of the 1961 Act is an alternate remedy to the appeal under Section 246 of the 1961 Act. Once the petitioner chose to revoke the revisional jurisdiction, the authority was under obligation to decide the same in accordance with the provisions of Section 264 of the 1961 Act only - See Paradigm Geophysical Pty. Ltd [ 2017 (11) TMI 1157 - DELHI HIGH COURT] Whether the authority ought not have proceeded to give findings on merits after holding that revision was not maintainable? - We need to observe that it is a trite law that in case the Court wishes to non-suit the litigant on the issue of maintainability, it ought not enter into the merits of the case as held in Nawab Shaqafath Ali Khan Ors. Versus Nawaz Imdad Jah Bahadur Ors. [ 2009 (3) TMI 1023 - SUPREME COURT] . However, in the present case(s), the revisional authority has not only dismissed the revision petition as not maintainable but has also non-suited petitioner(s) on the merits of the case. Keeping in view the aforesaid discussions, we hold that the impugned order is erroneous on both the counts. Consequently, we deem it appropriate to set aside the orders passed by the revisional authority in all the three petitions. The matter is remanded to the Commissioner to decide the revision petitions afresh in accordance with law.

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• 2021 (12) TMI 209
  Fluctuation loss disallowance - whether ITAT erred in law in upholding the order of CIT(A) in allowing fluctuation loss without having ascertained the purpose for loan ? - whether ITAT erred allowing spared over of upfront fees in absence of any enabling legal sanction under Income Tax Act, 1961? - HELD THAT:- The substantial questions of law (a) and (c) have been answered against the appellant revenue in the respondent assessee s own case [ 2021 (12) TMI 105 - CALCUTTA HIGH COURT] . Capital asset u/s 50 - HELD THAT:- As decided in favour of the respondent/assessee by following the decision of the Hon ble High Court of Bombay in Commissioner of Income Tax versus ACE Builders (P) Ltd. [ 2005 (3) TMI 36 - BOMBAY HIGH COURT] . The said decision was noted with approval in the case of Commissioner of Income Tax, Panji versus V.S. Dempo Company Limited [ 2016 (10) TMI 62 - SUPREME COURT] - Substantial question no.(b) is also answered against the revenue.

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• 2021 (12) TMI 208
  Computation of Fringe Benefits Tax - Whether expenses incurred by the employer towards payment of Fringe Benefit to its employees in case of Tea Company is subjected to Rule 8 of the Income Tax Rules - HELD THAT:- It cannot be disputed that the amount of expenditure incurred by the assessee in extending fringe benefits to its employees was not solely for the purpose of business. The expenditure incurred is both for the purpose of business and for the purpose of agriculture. The submission made that the expenditure on account of fringe benefits has already been taken into account is not correct. The net profit and loss of the business has to be arrived at after deducting all the expenses as indicated in illustration A in the case of Doom Dooma [ 2009 (2) TMI 9 - SUPREME COURT] . Once that is done 40% of the net profit and loss has to be worked out which shall be chargeable to tax. Once this is done the expenditure on account of fringe benefits would automatically stand reduced to 40% as would appear from illustration B in the case of Doom Dooma [supra]. The revenue is interested in contending as would appear from the impugned orders that the expenditure on account of fringe benefit cannot be reduced to 40% for the purpose of computing fringe benefit tax. If that is done, the result would be that the agricultural income itself would become liable to tax, which is not permissible under sub-Section 1 of Section10 of the Income Tax Act. The provisions contained in Chapter XII H of the Income Tax Act have to be read subject to Section 10 of the Income Tax Act. For the aforesaid reasons, we are of the opinion that the judgment of the learned Tribunal cannot be sustained. The submissions advanced naturally do not help the revenue. The judgment cited by her was with regard to the question as to whether fringe benefit tax amounts to double taxation. That question was answered by Their Lordships in the negative. Before us, the question of double taxation has not arisen for consideration. The question formulated above is, therefore, answered in the affirmative and in favour of the assessee.

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• 2021 (12) TMI 207
  Reopening of assessment u/s 147 - re-assessment notice issued under the erstwhile section147/148 after 1.4.2001 without following the mandate of new section 148A - petitioners are aggrieved of issuance of the re-assessment notice u/s.148 which according to the petitioners is barred by limitation and that the respondent before issuing the notice under Section 148 of the Act has not followed the mandatory procedure prescribed under Section 148A of the Act as prescribed by the Finance Act, 2021 and applicable w.e.f. 01.04.2021 - HELD THAT:- The issue involved in these writ petitions has been considered and decided in ASHOK KUMAR AGARWAL VERSUS UNION OF INDIA THROUGH ITS REVENUE SECRETARY NORTH BLOCK AND 2 OTHERS [ 2021 (10) TMI 517 - ALLAHABAD HIGH COURT] in favour of assessee.

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• 2021 (12) TMI 206
  Unexplained Credit u/s 68 - HELD THAT:- Any sum which as found credited in the books of the assessee maintained for any previous years and he can for more explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, such sum can be charged to income tax as the income of the assessee of that previous year. On the strength of the suspicion, AO had added the sum and charged the amount to income tax as the income of the assessee. Both the authorities have rightly held that to be an addition which is devoid of any rational.

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• 2021 (12) TMI 205
  Penalty u/s 271(1)(c) - additional depreciation for plant and machinery u/s 32(1)(iia) which has been disallowed by them on the ground that the production has been started in the current year by the respondent, and therefore, it cannot be said to have been already engaged in the business of manufacturing - HELD THAT:- Its quite clear from the detailed discussion on the issue that assessee had not been alleged of not having disclosed any particulars, which it was required to do under the law. It had made a complete disclosure of the claim, which was also certified by the Chartered Accountant. Necessary declarations as required in the prescribed form were also made, therefore, both CIT Appeals and the ITAT were absolutely right in holding that non-allowance of any claim of the assessee would not make the penalty proceedings sustainable under the law. While so holding, ITAT relied upon the decision in the case of CIT v. Reliance Petroproducts (P) Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] wherein held that making of incorrect claim would not amount to concealment of particulars. Here also, in absence of any furnishing of inaccurate particulars on the part of the respondent of any concealment on his part while making a claim, no proceedings could be initiated of penalty. It fails to understand that additional depreciation was not available to it under the law if claims before the authority concerned, by disclosing all particulars which, it was require to do and if the claim is disallowed, how could it become either the concealment or furnishing of inaccurate particulars. Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT ] has clearly held that there has to be a concealment of particulars of the income of the assessee or matter to be covered under Section 271(1)(C). Secondly, it must have furnished inaccurate particulars of his income. In the matter before Apex Court it was an admitted position that no information given in the written was found to be incorrect or inaccurate. It was not that any statement made or any details supplied it was found to be factually incorrect. The revenue had argued that submitting an incorrect claim in law for the expenditure or interest would amount to be inaccurate particulars of such income. The Court said that such cannot be the interpretation of the concerned words, the words are clean and simple and in order to expose the assessee to the penalty, unless the case is strictly covered by the Proviso, the penalty provision cannot be invoked and by no stage of imagination the incorrect claim in law can tantamount to furnishing of inaccurate particulars.

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• 2021 (12) TMI 204
  Exemption u/s 11 - certificate of registration u/s 12A not traceable - petitioner since has been denied having exemption u/s. 11 on account of non-production of the physical copy of the registration certificate from the petitioner - application under Right to Information Act seeking certified duplicate copy of certificate of registration u/s. 12A(a) - non-response to the application made to RTI - HELD THAT:- We notice from the reply which has been given by the Information Officer, Assistant Commissioner of Income Tax (Exemption) Central Public Information Officer, Ahmedabad, in response to the said information under the RTI Act dated 27.07.2020 that it has been replied that there is no evidence found showing transfer of records of the applicant from the respective CIT to the office of the Assistant Commissioner of Income Tax (Exemption) Central Public Information Officer, Ahmedabad. Petitioner also addressed a letter to the Commissioner of Income Tax on 28.09.2020 requesting for issuance of fresh registration certificate effective from 11.02.1975 under the circumstances narrated in the said letter. In the said letter, the petitioner also reproduced the relevant extract from the order under section 7(1) of the RTI Act. The record of certificate of registration under section 12A of the Act and the same is permanent record, the respondent department should have maintained and in absence thereof, it cannot be concluded that the trust is not registered. Instead of moving such an application to the Central Commissioner of Income Tax (Exemption) appellate authority under the RTI Act, the petitioner has moved the application with a request for issuance of fresh certificate from the authority Commissioner of Income Tax, Vejalpur Ahmedabad, without questioning the order in his capacity as an appellate authority, we are, therefore, of the view that the record which is to be maintained of the unit by the concerned authority is required to respond positively and the same when is not only the requirement but an obligation to maintain it. The application made by the petitioner be treated as an application under the RTI Act and be considered within the time period specified under the very statute. Let the appellate authority under the RTI Act respond to the petitioner without fail. Any grievance if still persisting, the petitioner shall have legal recourse open.

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• 2021 (12) TMI 203
  Assumption of jurisdiction u/s 153C - whether the satisfaction note recorded by the LD AO is sustainable in law or not? - when there is no satisfaction e- recorded in the case by LD AO of the searched persons, whether assessment u/s 153C in the case of other person can be upheld or not? - HELD THAT:- CIT(A) has extensively dealt with the satisfaction note dated 24.04.2012 recorded by the ld AO which does not have reference to any incriminating material found during the course of search. There is also no finding that such material pertaining to the assessee. Therefore, the issue is squarely covered by the decision of the Pepsico Food Products Ltd [ 2014 (8) TMI 425 - DELHI HIGH COURT] and Pepsico India holding pvt ltd. [ 2014 (8) TMI 898 - DELHI HIGH COURT] Further, based on the letter of ld AO dated 22.12.2014 referred to the para No. 4.8 of the order of the ld CIT(A), a finding is recorded that the ld AO of the searched persons has not recorded any satisfaction with respect to any of a material, which pertains to assessee company. On plain reading of the section it is apparent that there has to be a satisfaction in case of the persons searched by assessing officer that particular material or valuable articles found during the course of that search does not belong to the person who has been searched but that material is pertaining to the 3rd party. This is necessary to assume jurisdiction in the case of the third party. In present case there is no such satisfaction recorded by the learned assessing officer of the searched person. Further, there is no reference of any material pertaining to the assessee in the satisfaction note recorded by the ld AO of the assessee i.e. third person. Thus, the issue is squarely covered in favour of the assessee.

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• 2021 (12) TMI 202
  Estimation of income - Bogus purchases - HELD THAT:- The assessee may not have been able to prove the genuineness of purchases from the declared source, however, it is a fact on record that the Assessing Officer has not disputed the sales effected by the assessee. Therefore, it goes to prove that the assessee must have purchased goods from some other undisclosed source. In such circumstances, it is the settled legal position that the entire purchases cannot be disallowed, but only the profit element embedded in such purchases can be considered for addition. Therefore, keeping in view the decisions of the Tribunal in identical nature of cases, the decision of the Assessing Officer to restrict the disallowance to 12.5% of the non genuine purchase is fair and reasonable requiring no interference from this forum. Accordingly, we set aside the impugned order passed by the learned CIT(A) and uphold the order of the Assessing Officer.Issue is decided in favour of the assessee.

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• 2021 (12) TMI 201
  Disallowance of prior period expenses - HELD THAT:- Once any particular expenditure is crystallized during relevant accounting period, the same needs to be allowed as deduction irrespective of the fact that said expenditure pertains to earlier financial year and paid in subsequent financial years. In this case, the ld.CIT(A) has recorded categorical finding that the liability towards expenditure was crystallized during the current year and hence, it does not constitute prior period expenses - As noted that it is not a case of the AO that expenditure claimed by the assessee is not deductible at all. In fact, the AO has not made any adverse comments about deductibility of expenses. In this case, on perusal of facts available on record, we find that although expenditure pertains to earlier financial years but the same was accrued and crystallized during current assessment year and hence, we are of the considered view that there is no error in the findings recorded by the ld.CIT(A) to delete addition made by the AO towards reimbursement of expenses to subsidiary company. Hence, we are inclined to uphold the findings of CIT(A) and reject ground taken by the Revenue. Disallowance of depreciation on guest house - assessee has claimed depreciation @ 10% on guest house, which is applicable to factory and office buildings - assessee had also claimed depreciation @ 15% on plant machinery, kitchen equipments and electrical fittings - AO has allowed depreciation @ 5% on total amount spent towards guest house including plant machinery, kitchen equipments, electrical fittings, on the ground that guest house was used for residential purpose and hence, depreciation as per the Act is allowable @ 5% but, not 10% / 15% as claimed by the assessee - HELD THAT:- CIT(A) has recorded categorical finding that each item of asset is to be classified independently by applying functional test especially when specific categorization is made in Appendix-I to Rule 5 of Income Tax Rules and further cannot be correlated to any other asset on the basis of their place of installation. In this case, there is no doubt with regard to the fact that other assets installed in guest house building like plant machinery, furniture fittings and electrical installations are entitled for 15% depreciation. Once, a particular asset is entitled for higher depreciation as per the Act, the AO was erred in restricting depreciation on said assets to 5%, which is applicable to residential building merely because those assets are installed in guest house building. The CIT(A) after considering relevant facts, has rightly directed the AO to allow depreciation as per Appendix-I to Rule 5 of Income Tax Rules, 1962 on assets, on the basis of their functional test. We do not find any error in the findings of the ld.CIT(A) and hence, we are inclined to uphold the findings of CIT(A) and reject ground taken by the Revenue.

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• 2021 (12) TMI 200
  Upward TP adjustment on account of corporate guarantee - considering the charge of 2.52 percent for the guarantee provided by the Appellant to the banks for the loans availed by Associated Enterprises ( AE ) - HELD THAT:- Methodology adopted by the TPO for computation of arm s length price of these guarantees is wholly erroneous - TPO has proceeded on the basis that the guarantee commission charges by the State Bank of India and Bank of India are static rates which hold good in all circumstances, but then, in reality, the guarantee commission rates vary on a large number of factors and vary from client to client. The adoption of difference between coupon rate of A rated bonds and BB rated bonds is even more inappropriate and it proceeds on the assumption, an unrealistic assumption at that, pre issuance of corporate guarantee by the assessee for its AE, its credit equivalence is of BB rated bond, which gets converted into A rated bond upon issuance of assessee s corporate guarantee, and the said benefit belongs entirely to the assessee. A computation based on such assumptions can never qualify to be treated as an external CUP. None of the rates, described as external CUPs, can be treated as valid inputs for the computation of arm s length price on the facts of this case. Such crude and unscientific methods of determining ALPs of corporate guarantees cannot meet any judicial approval - no sound basis for disturbing the arm s length computation of these corporate guarantees, issued by the assessee in favour of its AEs abroad, taken at 1% which has been approved for earlier assessment years as well - we approve the plea of the assessee, direct the Assessing Officer to adopt the benchmarking @1% as done by the assessee, and delete the impugned ALP adjustment. The assessee gets the relief accordingly. Upward TP adjustment on account of notional interest computed on optionally convertible loans granted to its AE - As argued during the year under consideration, no interest has accrued to the Appellant in terms of the agreement with the AE - HELD THAT:- As fairly accepted by the learned Departmental Representative, that all the material facts and circumstances are the same, and many of these loans are merely extensions of the earlier loans. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in assessee s own case [ 2017 (4) TMI 462 - ITAT AHMEDABAD] . Respectfully following the same, we uphold the plea of the assessee on this issue as well, and delete the impugned ALP adjustment. Upward TP adjustment on account of reimbursement of expenses - TPO proceeded to make disallowance under section 37(1) by holding that there was no commercial expediency in making these reimbursements - HELD THAT:- So far product liability insurance is concerned, the assessee has justified bearing the same on the ground that US AE is an LRD (limited risk distributor) with a targeted operated margin, and, therefore, under this business model, these costs are to be borne by the assessee company. We see no infirmity in this approach and this explanation. When AE is only doing distribution, it is entirely a commercial call of the assessee as to which type of product related expenses are to be borne by the assessee. These expenses thus clearly pertain to the assessee as the US AE is admittedly, and beyond dispute, only an LRD. The same is the position with respect to the legal expenses. As been specifically explained by the assessee, and this explanation has not even been called into question, that the US AE was holding the ANDAs and patents, as a trustee and in fiduciary capacity, for the assessee company. It would, therefore, be wholly immaterial as to who is holding the patents and the ANDAs- the assessee or the US AE, because, at the end of the day, the beneficiary is only the assessee company. Yet, the TPO has held the legal expenses to be not at an arm s length price only because the ANDA in question was held by the US AE. Whosever owns the IPRs in question, it is related only for the business of the assessee company and not the US AE. The approach adopted by the TPO is erroneous for this reason also. Similar is the position with respect to stability charges and analytical charges. The TPO has held that there is nothing to show that these expenses were for the purpose of business of the assessee, but then there is no dispute that these expenses pertains to the products owned by the company and in respect of which US AE is only an LRD. The expenses in question were thus clearly for the purpose of the business of the assessee, and deserved to be allowed in full. The TPO should not have ventured into the job of the AO, but that technicality apart, even on merits, entire related expenses, which have been wrongly disallowed by making an ALP- something clearly contrary to the scheme of the Act, these expenses were fully admissible for deduction. In any case, there is not even a whisper of a discussion about the method of ascertaining the ALP employed by the TPO. When a TPO makes an ALP adjustment, he has to justify on the basis of a prescribed method of ascertaining the ALP. Thus, whichever way we look at it, the impugned ALP adjustment cannot be justified. We, therefore, uphold the plea of the assessee on this point as well, and direct the Assessing Officer to delete the impugned ALP adjustment . TDS u/s 195 - Addition u/s 40(a)(i) - HELD THAT:- Payments made to the US based and Canada based entities, which are covered by make available clauses in both the Indo US as also Indo Canadian tax treaties- see item no. 1 to 7, are taken outside the ambit of disallowance under section 40(a)(i). Payments made to two Thailand based entities - These payments are admittedly for clinical trials and testing. As learned counsel for the assessee rightly contends, there is no FTS clause in the India Thailand DTAA, and, therefore, in the absence of a PE of the recipient companywhich is admittedly not the case here, the income embedded in payments made to Thai entities cannot be taxed in India. This issue is also covered, in favour of the assessee, by a coordinate bench decision in the case of DCIT Vs Ford India Ltd[ 2017 (4) TMI 459 - ITAT CHENNAI] - payments made to Thai entities, in respect of clinical trials and testing charges, cannot be said to be taxable in India. The disallowance under section 40(a)(i) for item no. 8 and 9 in the chart reproduced earlier thus must stand deleted. Access to online database and journals, as paid to US and Dutch entities - As relying on own case [ 2017 (4) TMI 462 - ITAT AHMEDABAD ] we uphold the plea of the assessee to the effect that disallowance under section 40(a)(i) could not have been made for payments on account of access to online publications and database etc to Chemical Abstract Services, USA, Elsevier BV, Netherlands and Thompson Reuters Inc USA. The disallowances is deleted. Payment on account of consultancy charges paid to Cambridge Soft Corporation USA - HELD THAT:- As not even the case of the revenue, and rightly so, that these consultancy services satisfy make available clause in the Indo US tax treaty and are of such a nature that by providing this consultancy service the US entity has enabled the assessee to provide these services without recourse to the US entity; inherently, the consultancy services cannot be of such a nature. In this view of the matter, these services cannot be taxed under article 12 of the Indo US DTAA, and since, in any case, the US entity does not have any PE in India, or fixed place of business in India, the income in question cannot be taxed as a business profit or independent personal service, for this short reason alone. The disallowance under section 40(a)(i), in respect of this payment therefore, must stand deleted. Purchase of software from Cambridge Soft Corporation USA - This issue now stands concluded, in favour of the assessee, by Hon ble Supreme Court s judgment in the case of Engineering Analysis Centre of Excellence Pvt Ltd Vs CIT[ 2021 (3) TMI 138 - SUPREME COURT] Payment to Millies International Ltd for payment of exports commission - There are number of decisions of the coordinate benches, including in the case of DCIT Vs Welspun Corporation [ 2017 (1) TMI 1084 - ITAT AHMEDABAD] , which hold that such incomes in the hands of foreign commission agents cannot be taxable in India. We see no reasons to take any other view of the matter than the view so taken by the coordinate benches. Respectfully following the same, we hold that the assessee did not have any obligations to deduct tax at source from these payments, and, accordingly, disallowance under section 40(a)(i) does not come into play. Payment to Swiss Biogenic Ltd, Srilanka - claim of the assessee that the claim of the assessee is that it was for a market survey to find out product feasibility in the domestic markets - As contentions of the assessee concerned, Indo Srilanka DTAA does not have any make available clause in the provision for fees for technical services under article 12(3)(b). There is also no dispute that the payment is made for market survey services which are essentially covered by the broad scope of managerial, technical or consultancy services . The existence of PE has no relevance for this purpose. As for taxation under the domestic law, since the payment is for conducting the market survey, which are covered by equally wide scope of managerial, technical or consultancy services under Section 9(i)(vii), it is clearly taxable under the domestic law. On this point, therefore, we reject the plea of the assessee and hold that disallowance under section 40(a)(i) was justified. Nature of expenses - Product Registration Expenses and reimbursement of expenses for Product Registration Support Services - Trademark Registration Fees and Patent Registration Fees incurred - HELD THAT:- As assessee does indeed deserve to succeed on this point for the short reason that even the Assessing Officer has admitted that the issue is covered by the binding judicial precedents in assessee s own case and the additions have been made, so to say, keep the issue alive. Learned representatives fairly agree that this issue is settled in favour of the assessee by decisions of the coordinate benches in assessee s own case, and Hon ble High Court has declined to admit appeal against such decision, as in the esteemed views of Their Lordships, no question of law arises from these decisions. The relief granted to the assessee on this point in past has thus achieved finality. In this view of the matter, we uphold the plea of the assessee, and direct the Assessing Officer to treat the product registration expenses and product support service expenses as revenue expenditure, and to, therefore, delete the impugned disallowance. Weighted deduction for expenditure on Scientific Research u/s. 35(2AB) in respect of Clinical Trial and Bio-equivalence Study - HELD THAT:- Learned representatives fairly agree that this issue is settled in favour of the assessee by decisions of the coordinate benches in assessee s own case. These decisions hold good as on now, and we are respectfully bound by those decisions as on now. Of course, whatever we hold does, and shall always, remain subject to what Hon ble Courts above decide- as and when that happens. In this view of the matter, we uphold the plea of the assessee, and direct the Assessing Officer to delete the impugned disallowance of Rs. 39,39,31,000. This disallowance must stand deleted as on now. The assessee gets the relief accordingly. Depreciation on Hummer Car - Car was in the name of the Director and there was no evidence to show that the same was used wholly and exclusively for the purpose of business - HELD THAT:- As car was used for the purpose of business and the Assessing Officer has himself allowed the running and maintenance expenses of this car. It has also been noted that the registration of car in the name of driver was a matter of convenience as it gave advantage to the assessee in terms of road tax. On these facts, as held by the DRP, the mere fact that the car was not legally owned by the assessee company- particularly when beneficial ownership of this vehicle is not even in dispute, the depreciation on car cannot be declined. - Decided in favour of assessee.

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• Customs

• 2021 (12) TMI 199
  Seeking permission for withdrawal of petition - seizure of goods - Big cardamom - HELD THAT:- Since petitioners have been pursuing the matter before this Court, issue of limitation shall not come in the way, if the appeal is preferred within next four weeks. The petition is dismissed reserving liberty to prefer an appeal before the CESTAT (constituted under Section 129 of the Customs, Excise and Service Tax Appellate Tribunal).

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• 2021 (12) TMI 198
  Proper officer - Power of officers of DRI - Power to investigation versus power to assessment - Classification of imported goods - Areca Nuts - to be classified under Chapter 0802 or under Sub Heading 2106 of the Customs Tariff Act,1975? - Seeking to release the Arecanuts imported from Myanmar - waiver of demurrage and detention charges - proper officer to issue SCN for the purpose of assessment the third and the fourth respondents as defined under Section 2(34) of the Customs Act, 1972 - HELD THAT:- The Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] observed that Additional Director General of DRI was not a Proper Officer to exercise the power under Section 28(4) of the Customs Act, 1962 and the initiation of the recovery proceedings was held without jurisdiction and liable to be set aside. As far as the assessment of imported consignment is concerned, it is the Deputy Commissioner or the Assistant Commissioner of Customs and Central Excise namely, the first and the second respondents and/or the Appraiser of Customs who are competent authority albeit the Proper Officer to determine the correct classification. The Hon ble Supreme Court in CANON INDIA PRIVATE LIMITED has held that, if it was intended that officers of the Directorate of Revenue Intelligence who are officers of Central Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act. The Court further observed that the reason why such a power is conferred on the Central Government is obvious and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry of Finance and Customs officers who, till 11.5.2002, were appointed by the Central Government. The court held that the notification which purports to entrust functions to a proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2 (34) of the Customs Act. The Court further held that the notification is obviously invalid having been issued by an authority which had no power to do so in purported exercise of powers under a section which does not confer any such power. There is a prohibition of goods falling under Heading 0802 of Customs Tariff Act, 1975, if the value is below vide Notification No. No.20/2015-2020 dated 25.07.2018 of the Ministry of Commerce and Industry, Department of Commerce, New Delhi, if the value is below a specified value. Thus, under Notification No.20/2015-2020 dated 25.07.2018 of the Ministry of Commerce and Industry import of goods falling under 0802 of the Customs Tariff Act, 1975 is deemed to have been prohibited under a Notification issued under Section 11 of the Customs Act, 1962 - it should be emphasized that it is no part of the duty or function of the third and fourth respondents and their counterparts in Chennai to stall an assessment proceeding by a proper officer designated under the Customs Act and the Notification No.40/2012- Cus(NT) dated 2.5.2012. There has to be a proper determination as to whether there is prohibition of the imported goods. This exercise can be carried only by a Proper Officer and cannot be usurped by the third or fourth respondents or their counter parts in Chennai - Merely because the officers of the third and the fourth respondents have powers to investigate by itself means will not mean that they can insist on a hands off approach by a competent officer who have been given the powers to assess Bill of Entry filed by an importer. Even if the jurisdictional officer of the DRI from Chennai i.e., the counter parts of the third and the fourth respondents felt that the import was without proper licence and that there was an attempt to import prohibited goods, it is their duty to merely inform the assessing officers namely The Additional Commissioner of Customs, The Assistant Commissioner of Customs, Superintendent of Central Excise and Customs or the appraiser of customs who are the assessing officer s to make proper assessment to safeguard the interest of the Revenue. If the Proper Officer is of the view that the goods fall under Heading 0802 of the Customs Tariff Act, 1975 and there is a misdeclaration by the petitioner by disguising the classification in the respective Bills of Entries under Heading 2106 of the Customs Tariff Act, 1975, a quick decision should be taken and proceed in accordance with law - A proper officer can also initiate proceeding under Section 111(d) read with Section 124 of the Customs Act, 1962 to confiscate the consignment and impose penalty under Section 112 of the Custom Act, 1962. Since the imported goods are natural products and are prone to deterioration due to exposure to elements and natural causes with efflux of time and humid inclement weather condition in Chennai and are lying at Balmer Lawrie CFS, Chennai since the end of September, 2021 the 1st and the 2nd respondents and/or such other officers vested with the powers to assess the Bills of Entries are directed to exercise their powers under the Customs Act, 1962 one way or the other - The initial exercise regarding the determination of classification may be completed within 15 days from the date of hosting of this Order in the website. In case, the proper officer is of the primafacie view that the goods are liable for confiscation, seizure order may be issued followed by confiscating the imported goods if they are found to be prohibited in terms of the Notification of the Commerce Ministry. If not, the imported goods can be allowed to be redeemed. This should be decided within a period of 30 days thereafter. The proper officer shall bring a closure to the issue one way of the other within a period 30 days thereafter after duly following the safe guards under the Customs Act,1962 and principle of natural justice. Petition disposed off.

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• 2021 (12) TMI 197
  Seeking direction to allow the first respondent to destuff the container and permit warehousing of the goods under Section 49 of the Customs Act, 1962 - also seeking to draw fresh samples in presence of the first respondent and send the sample for retesting to any accredited laboratory - HELD THAT:- The Writ Court or much less this Court cannot be converted into an Executing Court to execute the order passed by the Commissioner of Customs which is admittedly now been challenged before the Tribunal. In any event, we are of the view that a workable solution needs to be worked out as the goods have been imported in September 2020 and still lying in the Customs area. It may be true that the appeal as against the order of Commissioner of Customs was filed by the department only on 29th October 2021 but the filing of the said appeal was very well within the period of limitation and for such reason the first respondent cannot compel for execution of the order passed by the Commissioner that too by filing the writ petition well within the period of limitation prescribed for filing an appeal to the Tribunal by aggrieved person against the order of the adjudicating authority. Be that as it may, now the goods have been accepted to be warehoused by the department itself conceding to such portion of the order of the Commissioner. The appellant department is directed to draw representative sample in the presence of the first respondent/importer and in accordance with the relevant procedure and send the samples for testing to the accredited laboratory in Kolkata and the charges be payable by the first respondent - Appeal allowed in part.

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• 2021 (12) TMI 196
  Rejection of application for provisional release of the seized warehoused goods - goods were exclusively meant for export - Section 110A of the Customs Act, 1962 - HELD THAT:- Since the proceeding of DRI is continued, no final conclusion can be drawn as regard the allegation of DRI that whether the appellant have correctly classified the goods and/or valued the imported goods therefore, we proceed to decide only the issue of release of the goods - since the goods before import and warehousing was intended to be exported, no prejudice will cause to the revenue with regard to dispute, if any for classification of goods and/or valuation of the goods. There is no dispute on the fact that the appellant had export order in possession, moreover, they had received the part payment against the export order therefore, it is clear that the goods which were warehoused and the goods seized by the DRI was already meant for export. In this position, the mala fide cannot be attributed to the appellant. From the provision of Foreign Trade Policy and Hand Book Procedure, it is clear that continued withholding of export consignment even if seized by any agency is not appreciated as per Foreign Trade Policy . After drawl of samples, the seized goods can be allowed to clear for exports pending investigations by accepting undertaking of the exporter - In view of the clear provision under Foreign Trade Policy and Hand book Procedure as reproduced above, the goods which are under seizure is required to be released provisionally for export without payment of duty. It is also found that the department could not make a prima facie case even for seizure of the goods in view of the contrary test reports. The warehoused goods which are meant for export only must be released provisionally by accepting only a bond of the total value of the goods, accordingly, we direct the concerned respondent to release the goods provisionally on execution of only a bond for full value of the goods and the same shall be allowed to be exported without any payment of duty, fine, penalty. The appellant is given liberty to approach the concerned authority for issuance of waiver certificate for the demurrage charges which the concerned authority shall consider in the facts and circumstances of the present case, in accordance with law - Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 195
  Levy of interest on Customs duty levied before final assessment - Section 18(3) of the Customs Act - HELD THAT: -The date of provisional assessment and date of release of imported goods are reflected and both parties failed to place any provision of law that dictates that interest is payable from the date of import vis- -vis assessment till the date of release of goods. Further, except Section 18(3) of the Customs Act which empowers the Respondent-Department to collect interest after final assessment, no provision of law is placed before this Tribunal to hold a finding that interest can be charged for the period between the date of import and the date of release upon provisional assessment, besides the fact that the order of the Commissioner (Appeals), which is supposed to be defended by the Respondent-Department, is being disputed by the Departmental Representative without a cross appeal as the same contradicts is own finding that the letter of Appraising Officer was not an appealable/adjudication order. The legality of findings of the Commissioner (Appeals) that such provisional assessment was a deemed final assessment in view of dismissal of WRIT by the Hon ble Delhi High Court is unsupported by any provision of law and apparently based on imagination/surmises. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2021 (12) TMI 194
  Prayer for substitution of Respondent No. 4, Late Provat Kumar Mitra with his legal heirs, Mr. Shantanu Mitra and Ms. Sharmistha Musgrave as Respondents No. 4A and 4B - death of Respondent No. 4 and impleadment of the legal heirs of the Respondent No. 4 - Rule 53 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- The most relevant fact that is to be considered is that this has been a family company, and that each branch of the family was always represented in the company. The legal principles embodied in Order XXII CPC and its Rules have to be applied keeping this fact in view. When the time comes for pronouncement of final orders in the matter, it is better that each branch of the family is represented, so as to obviate any scope for arguments that the orders were passed without some party being given an opportunity to take part in these proceedings. These observations are provisional in so far as the status of the company as a family company are concerned. At this present point of time, no prejudice shall be caused to anyone if the impleadment application is allowed - Application is thus allowed.

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• 2021 (12) TMI 193
  Sanction of the Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation with various meetings issued - directions with regard to issuance of notices also issued. The scheme is approved - application allowed.

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• 2021 (12) TMI 192
  Sanction of scheme of Amalgamation of the Transferor and Transferee Companies - section 233 of the Companies At, 2013 - HELD THAT:- The judgement of the Supreme Court in the case Vodafone Essar Gujarat Limited and another [ 2015 (8) TMI 475 - SC ORDER ], makes it clear that even if the scheme of amalgamation is evolved to save income tax, it cannot be said that the only object of the scheme was tax avoidance. The scheme of amalgamation may consequently result in some tax benefit to the Petitioner Companies. Only on that ground, going by the spirit of the above cited judgement, it cannot be said that the Scheme of Amalgamation is impermissible. The Scheme also clarifies that all the taxes and duties payable by the 1st and 2nd transferor companies from the appointed date onwards including all or as any refund and claim shall for all purposes be treated as the tax and/or duty liabilities or refunds and claims of the transferee and upon the scheme becoming effective, the transferee company is expressly permitted to file its respective income tax, sales tax etc., and any other return to claim refunds. There are no reason to deprive the Petitioner Companies of the benefit of amalgamating the transferor and transferee companies which is intended for the beneficial growth of the Companies - petition disposed off.

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• Insolvency & Bankruptcy

• 2021 (12) TMI 191
  Validity of commercial arrangement that was prevailing between the parties immediately before commencement of the CIRP of both the parties - Section 14(2A) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is decided not to go deep into the merits of the main Appeal and also not expressing any opinion about the merits of the matter, for the reason that this Tribunal cannot decide the contractual matters in a summary jurisdiction. However, taking into consideration, the paramount interest of the parties for the reason that both the Companies i.e. KSK Mahanadi and Raigarh Champa are under CIRP, the supplies are to be made by the Raigarh Champa to the KSK Mahanadi and in turn the KSK Mahanadi has to pay the charges for the supplies to keep both the companies as a going concern. This Tribunal is conscious of the decision of the Hon ble Supreme Court in re-Tata Consultancy Services [ 2021 (11) TMI 798 - SUPREME COURT ] where the Hon ble Supreme Court held that the NCLT and NCLAT cannot rewrite the terms of Contract Agreement. The Appellant is hereby directed to pay 50% of the outstanding due to the Resolution Professional of the 1st Respondent within one month from today - Appellant is hereby directed to pay 50% of the bills/invoices to be raised or raise by the Respondent No.1 periodically without fail - Appellant cannot ask for any adjustments of the amount already paid to the 1st Respondent. The matter is posted on 15.12.2021.

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• 2021 (12) TMI 190
  Seeking direction to remove / release the lien on the said property of the Corporate Debtor - HELD THAT:- Hon ble Supreme Court in the case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. [ 2019 (11) TMI 731 - SUPREME COURT ], where it was held that successful resolution Applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution Applicant who successfully take over the business of the corporate debtor. The Respondents are directed to forthwith lift lien on property and file claim before Liquidator as Operational Creditor - application disposed off.

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• 2021 (12) TMI 189
  Seeking extension of the Corporate Insolvency Resolution Process (CIRP) period by 90 days beyond 31.05.2021 - seeking exclusion of period on account of lockdown and difficulties faced from 01.01.2021 till 31.05.2021 - HELD THAT:- The application for extension has been filed in the month of May 2021. The explanation given seeking for exclusion of time from 01.01.2021 to 31.05.2021, is not satisfying as there was no lockdown imposed by the Government from 01.01.2021 to 15.05.2021, hence exclusion of the CIRP period from 01.01.2021 to 15.05.2021, cannot be granted. The Resolution Professional has been conducting meetings and has been performing her duties even during the period sought for exclusion. However, the object of the Code is to revive the Company and in view of the fact that a Resolution Plan is awaited, the exclusion of the time from the date the application was under consideration of this Adjudicating Authority that is from 14.05.2021 till the date of this order is granted and extension of 90 days to the CIRP period is also granted. Application dismissed.

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• 2021 (12) TMI 188
  Seeking direction to Resolution Professional to not submit the Resolution Plan before the CoC - seeking stay on the process of voting to be held on 10.08.2021, on the two Resolution Plans - seeking restraint on members of the Association from name calling or defaming the parties herein - HELD THAT:- It is seen that the applicants belong to the class of home buyers and being the class of creditors, they have filed this application to stay the process of voting to be held on 10.08.2021 on the two resolution plans and also a direction to the resolution professional not to submit the resolution plan. Hon ble Supreme Court in the Jaypee Case [ 2021 (3) TMI 1143 - SUPREME COURT ] held that To sum up this part of discussion, in our view, after approval of the resolution plan of NBCC by CoC, where homebuyers as a class assented to the plan, an individual homebuyer or association cannot maintain any challenge to the resolution plan nor could be treated as carrying any legal grievance . Considering this position of law and particularly this fact that the CoC has already approved the resolution plan on 17.08.2021 - Application dismissed being not maintainable.

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• 2021 (12) TMI 187
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - deduction of tax at source also made - HELD THAT:- The contentions raised by the Petitioner during the course of arguments seeming to suggest that the defects were subsequently cured by the Petitioner is in itself an admission of dispute and the Petition is required to be dismissed on that ground alone. Therefore, in the lights of Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT] this bench is convinced that this Petition is liable to be rejected. It is beyond reasonable doubt that a pre-existing dispute remained outstanding on the date of issuance of the statutory notice as well as on the date of filing of the Petition. Petition dismissed.

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• 2021 (12) TMI 186
  Jurisdisction - power of Tribunal to entertain the instant CA - Whether the attachment of the properties of the corporate debtor made under the provisions of the Maharashtra Protection of Interests of Depositors (In Financial Establishments) Act, 1999 (MPID Act) vide notification dated 28.08.2014 i.e. prior to the date of initiation of CIRP against the corporate debtor is liable to be de-attached in view of the overriding affect under Section 238 and other provisions of IBC 2016? - HELD THAT:- The Hon ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank another, [ 2017 (9) TMI 58 - SUPREME COURT ] , while dealing with the overriding effect of the Code under Section 238 of IBC with reference to Maharashtra Relief Undertakings (Special Provisions) Act, 1958 has held that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process under the Code. The Hon ble High Court of Bombay in Anil Kohil case [ 2020 (11) TMI 677 - BOMBAY HIGH COURT ] while setting aside the order of the NCLT wherein it was directed that the bank account of the corporate debtor to be defreezed, held that the designated court under Section 7 of the MPID Act alone is having jurisdiction to decide the validity of any order passed under MPID Act. However, in our considered view the said judgment has no application to the facts of the present case in view of the observations made in Para 26 of the said judgment itself. In the said judgment the Hon ble High Court of Bombay after considering the judgment of the Hon ble Apex Court in Innoventive Industries Limited [ 2017 (9) TMI 58 - SUPREME COURT ] categorically observed that the position of law as held by the Hon ble Apex Court in Innoventive Industries Limited is well settled and there cannot be any dispute about the same however, in the case on hand i.e. in Anil Kohil s case, the learned counsel for the respondent i.e. the RP of the corporate debtor therein has not argued that the provisions of MPID Act are repugnant with the provisions of I B Code whereas in the instant case both the counsels argued elaborately on the issue of repugnancy of the provisions of MPID Act to that of provisions of IBC 2016. The respondents are directed to release/de-attach all the assets/properties of the corporate debtor and to cooperate with the RP and to supply all the necessary documents and information pertaining to the property of the corporate debtor - the respondents are permitted to file their claims, if any, with the RP within two weeks from the date of receipt of this order and in such an event the RP shall consider the same in accordance with the Code and Regulations made thereunder and shall not reject the same on the ground of delay in submission of the claims. Application disposed off.

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• 2021 (12) TMI 185
  Seeking exclusion of 105 days from the CIRP period of the Corporate Debtor - seeking direction to the CoC of the Corporate Debtor to consider the Resolution Plan on PRA in time-bound manner - HELD THAT:- It is the prime intent of IBC and also held by the Hon ble Apex Court that resolution and not liquidation should always be considered with all possibilities. The grant of time to Resolution Professional and CoC for moving towards achieving Resolution of the Corporate Debtor will be in the interest of all Home Buyers, who are also interested in considering the Plans. The only lacunae in the process of considering of Plan by CoC beyond prescribed period of CIRP. If the same is considered by this Bench for exclusion or extension there is possibility of Resolution forthcoming. The Hon ble Supreme Court has also held that the wisdom of CoC be not interfered, unless same is in violation of law. The Resolution with respect to exclusion/extension was passed by CoC beyond threshold limit of 330 days as laid down in the Code. Hence, the Plans should not have been considered. If exclusion or extension is not considered the only option will be to send the Corporate Debtor in liquidation. This application is allowed by extending the CIRP period for further 50 days from today with the direction to allow the CoC to consider the Resolution Plans already placed before CoC or any other plans, if received within ten days of this order and complete the entire process strictly within the time granted.

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• Service Tax

• 2021 (12) TMI 184
  Right of the petitioner to get deduction of deposits made prior to the issuance of show cause notice - benefit of SVLDRS - amnesty scheme by way of Finance (No.2) Act, 2019 was introduced by the Central Government - HELD THAT:- A bare reading of Section 124(2) reveals that the relief calculated under Section 124(1) is subject to the condition that any amount paid during the enquiry, investigation or audit has to be deducted when issuing the statement indicating the amount payable by the declarant. The bare provision talks of any amount paid , the same does not distinguish between the amounts paid under different heads. It clearly envisages two kinds of deductions firstly any pre-deposit made at any stage of appellate proceedings under the indirect tax enactment and secondly, any deposit made during enquiry, investigation or audit. Both these species of pre-deposit need to be deducted while finalizing the computation. Amount deposited by the petitioner falls in the second category. The provision only talks of amount irrespective of whether it has been paid as tax or interest or penalty. Thus, the view taken by the Designated Committee cannot be sustained. There is another side to the story. Had the petitioner remitted the entire amount paid by him towards tax, the respondents would have given credit of entire amount and his interest liability would have been waived off as well. The petitioner cannot be punished for depositing the amount under different heads once the provision mandates to discount the amount paid during the investigation dehors the head it has been deposited under. The comments of Designated Committee informs SVLDRS-2 and SVLDRS-3 are quashed - Designated Committee is directed to re-consider the claim of the petitioner within two weeks from the receipt of certified copy of the order by adjusting amounts paid towards interest and penalty, in accordance with law and the petitioner is directed to make the payment within two weeks from the date Designated Committee issues SVLDRS-3 - Petition allowed.

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• 2021 (12) TMI 183
  Refund of Service Tax - service tax was paid under the mistake of law - Business Auxiliary Services - reverse charge mechanism - principles of unjust enrichment - period April 2007 to June 2012 - HELD THAT:- The M/S INTEROCEAN SHIPPING COMPANY VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2012 (12) TMI 477 - CESTAT NEW DELHI] does not exclude the taxability of ship broking services under any other taxable category. However, the period involved in the proceedings before us is prior to 1 July 2012 when only specified services were taxable, and the onus was entirely upon the Revenue to prove classification and taxability of ship broking services under any other taxable category. No negative inference could be drawn merely from the fact that ship broker services does not appear in Section 66D of the negative list introduced with effect from 1 July 2012 whereby all services were made taxable, unless exempted. Instead of discharging the burden of correctly classifying and establishing taxability of ship broking services under a particular taxable category by putting the Appellant to notice, the Revenue has on the contrary sought to shift this burden upon the Appellant as the Notice dated 30 October 2014 did not even propose classification of ship broking services under any other taxable category. Unjust enrichment - HELD THAT:- The Appellant had adduced a Certificate from a Chartered Accountant certifying the non-availment of credit of the service tax alleged to have been paid mistakenly under the category Business Auxiliary Services as also regarding the incidence of tax having not been passed on to any other person. There is merit in the contention of the Appellant that the Certificate of an expert cannot be discarded unless a contrary opinion has been expressed by another expert - the findings of the appellate authority as regards the CA Certificate dated 25 March 2015 being not a conclusive proof of the incidence of tax not having been passed on by the Appellant to any other person also cannot be accepted. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 182
  Classification of services - Appellant s activities relating to Horizontal Directional Drilling (HDD) works - classifiable under Site Preparation Clearance Service or under Works Contract Service? - denial of benefit of lower rate of tax vide Notification No. 32/2007 dated 22.05.2007 - Pipeline construction charges - Supply of Tangible Goods Service - Time Limitation - HELD THAT:- The subject SCN only raised a classification dispute alleging that the Appellant s activities relating to Horizontal Directional Drilling (HDD) works were appropriately classifiable under Site Preparation Clearance Service and not Works Contract Service . The SCN never alleged that the Appellant failed to fulfill any of the conditions of Notification No. 32/2007 dated 22.05.2007 relating to Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. This aspect is also not disputed by the Learned Authorized Representative for the Respondent Revenue. It is settled law that the Show Cause Notice is the foundation in the matter of levy and recovery of duty, penalty and interest and if there is no invocation of a provision in the Show Cause Notice, it would not be open to the adjudicating authority to invoke the said provision later on. The learned Commissioner has erred in adjudicating the issues not raised in the SCN. Further it cannot be said, as contended by the learned Authorized Representative, that issue of non-fulfillment of the conditions of Notification No.32/2007 dated 22.05.2007 relating to Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was consequential to the classification issue. The issue of non-fulfillment of the conditions of Notification No.32/2007 is a separate and distinct issue and there has to be a specific allegation regarding the same considering the facts and circumstances of a particular case. This has indisputably not been done in the instant case. Pipeline construction charges - HELD THAT:- The same had been reflected in the relevant service tax returns for FY 2007-08 under the category of Site Preparation Clearance Services . There cannot arise any question of further including the said amount and paying service tax of Rs. 53,06,663/- under the category of Commercial Industrial Construction Service . The said position is borne out from the documents annexed in the appeal paper book and is further supported by the CA certificate. Hence, we hold that the demand of Rs. 53,06,663/- in relation to pipeline construction charges cannot be sustained and is set aside. Supply of Tangible Goods Service - HELD THAT:- The department has adduced no evidence to show how the subject service falls under the head Supply of Tangible Goods Service within the meaning of Section 65 (105) (zzzzj) of the Finance Act. The said demand is based on presumptions and assumptions and is unsustainable in law and hence set aside. Time Limitation - HELD THAT:- The impugned issues relate to pure questions of law and classification. The learned Commissioner has also held in favour of the Appellant on the said classification issue and also on another issue relating to CENVAT credit. The SCN raised legal issues based upon comparison of documents such as the appellant s work orders, contracts, audited financial statements, service tax returns. In the said facts and circumstances, allegation of suppression of facts with the intention to evade payment of tax cannot be upheld and as such extended period of limitation cannot be invoked. The Appellant is entitled to consequential refund of duties and interest deposited during the course of the instant proceeding - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (12) TMI 181
  Nature of activity - service or process amounting to manufacture - production of electricity - Scope of Business Auxiliary Service - HELD THAT:- The Business Auxiliary Service excludes activity that amounts to manufacture. In ORIENT PAPER INDUSTRIES LTD. VERSUS ORISSA STATE ELECTRICITY BOARD [ 1989 (1) TMI 138 - HIGH COURT OF ORISSA ] , it was held that electricity that has been specified in the First Schedule to the CE Act after its amendment was excisable goods and, therefore, generation of electricity should be understood as manufacture or production of electricity. In CMS (I) OPERATIONS MAINTENANCE CO. P. LTD. VERSUS C. CE, PONDICHERRY [ 2007 (5) TMI 74 - CESTAT, CHENNAI ], the Southern zonal Bench of the CESTAT held that electricity was manufactured goods in terms of Section 2(f) of the CE Act and, therefore, the activity of electricity generation was not liable to service tax as Business Auxiliary Service under Sections 65 (19) read with 73 of the Finance Act. The Court finds no reason to interfere with the impugned order of the CESTAT in the present case - Appeal dismissed - decided against appellant.

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• 2021 (12) TMI 180
  Clandestine manufacture - petitioner sought the inspection of the relied upon documents and the statements as well as those statements which had not been relied upon by the department - seeking cross-examination of witnesses - principles of natural justice - HELD THAT:- The Courts have thus upheld the rights of cross examination and any denial of the opportunity on that count has been held to be in violation of the principle of natural justice. It is the right of the defence/litigating parties to ask for the examination of defence witnesses who could be from any pool which can include those witnesses whose statements have been recorded and not relied upon by the Department while prosecuting the person. In the instant case, the statements have been recorded of many of the witnesses and some of whom have not been examined as they have not been relied upon in the show cause notice. Surely from the said pool, the defence can make a request for examination of witnesses as defence witnesses and that simply cannot be denied by the authority. We are not in agreement with the respondent department when it disputes that basic proposition that the statements of prosecution witnesses which have not been relied upon and if the request comes forth for those witnesses to be examined as the defence witnesses, the same shall need to be allowed, subject to statutory provision of Section 128 as it is always to be left to the parties concerned in adjudicatory process as to whom they need to be brought as the defence witnesses. Here some of the witnesses are those whose statements were recorded before the show cause notice had been issued and for the reasons suited best to the respondents, quite a few of them were not included in the show cause notice. It would be always the right of the party against whom the show cause notice is issued to call them as defence witnesses as it is the right given to the party which faces the adjudication proceedings. The Court needed to take a note of the fact that the order-in-original came to be passed despite the specific assurance given by the then learned Standing Counsel. It is also reflected in the order-in-original. We had directed the affidavit to be filed however, that has not come on record. We have chosen not to stretch this issue, but, the then learned Standing Counsel was expected to guide the officer concerned dispassionately and as otherwise needed as Court Officer. The order-in-original is passed in complete disregard to the adjournment sought by the respondent and assurance given to the Court even while urgency was made. Remand the matter back to the authority who passed the order-in-original to hear it from the stage where it was when they approached this Court. Let the petitioner cooperate. The matter to be completed in twelve (12) weeks time from the date of receipt of copy of this order - Petition allowed by way of remand.

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• 2021 (12) TMI 179
  Legality and validity of the show cause notices issued by the respondent authorities - whether the said show cause notice is ex facie without jurisdiction and authority of law and in clear disregard to the binding order of the superior authority amounting to abuse of process of law, illegal and void? - HELD THAT:- The impugned show cause notice once again of raising the very issue when the order of Commissioner (Appeals) has attained finality without any challenge by the department, which deserves indulgence. It is a judicial discipline which demands following the mandate of superior authority, even when it is a quasi judicial body as such discipline is an intigral part of this well laid down principle and deserves scrupulous observance by all concerned. No one is permitted to obliterate this well defined boundaries, even in a zeal to earn more revenue or profit the interest of the State as done by the respondent No.2. The show cause notice is issued without any new material in the matter and on the very ground which had been decided by the Commissioner (Appeals) and therefore it is ex facei without jurisdiction and hence, the interference under Article 226 of the Constitution of India despite the availability of the alternative remedy would be necessary in the instant case. This nowhere requires the reopening of the process which had already attained the finality and quietus. We accept the version of the learned ASG that this is not a case where we can impute any mala fides to the respondent No.2. It is over enthusiasm of the officer to advance the departmental cause that without grasping the ratio on the subject and disregard to the settled principles of law that he has initiated the action and hence, the interference is a must by quashing and setting aside the impugned show cause notice - Petition allowed.

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• 2021 (12) TMI 178
  CENVAT Credit - default in payment of duty beyond 30 days - failure to pay interest on defaulted amount of duty and that the appellant had utilized Cenvat credit - Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT:- Evidently, as per Rules of interpretation, where a provision is inserted by way of substitution, it is deemed to have been inserted w.e.f. the date of the original statute, unless otherwise provided. Further, it is noticeable that the erstwhile Rule 8(3A) provided that in case an assessee is in default in depositing the duty for a period of more than 30 days, then the assessee shall be deemed to be in default and during such default, he shall not be entitled to utilise the Cenvat credit and shall be liable to pay duty consignment wise (i.e. on each clearance), whereas the substituted Rule 8(3A) provides that if the duty is not deposited or paid within a period of one month from the due date then the assessee shall be liable to pay a penalty @ 1% on such amount of duty not paid for each month or part thereof, during the period such failure continues. The Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] have been pleased to quash/read down the provision of erstwhile Rule 8(3A) to the extent it disabled an assessee from utilising the Cenvat credit lying to its credit, in utilising during the period of default. Accordingly, in view of the substituted provision w.e.f 11/07/14, the show cause notice is bad in law in view of the amendment in Rule 8(3A) of the Central Excise Rules 2002 w.e.f. 11/7/2014. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 177
  Levy to Excise Duty - Ready Mix Concrete (RMC) or concrete mix manufactured by the appellant at the site of M/s Supertech Limited - extended period of limitation - HELD THAT:- Admittedly, there has been no inspection at the site (Eco Village-II), where the appellant has installed their batching plant for supplying to M/s Supertech Limited. Further, admittedly the appellant has taken registration under Service Tax provisions with the Department, and were paying service tax on the job charges. Admittedly, appellant have raised two bills one for supply of material and the other for job work mixing the cement, aggregate water, etc. in its batching plant. Further, appellant has raised the job work invoice for concrete mix. Extended period of limitation - HELD THAT:- Revenue have not brought any facts on record in support of its allegation of manufacture of RMC by the appellant. Thus, in the facts and circumstances, it is concluded that what has been manufactured and supplied by the appellant is concrete mix , which is not dutiable - the appellant has taken registration for service tax, paying service tax and making compliances for the said activity under dispute, the facts were in the knowledge of the Department and as such extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 176
  CENVAT credit - input service - GTA service - disallowed on the ground that the appellant have availed the CENVAT credit in respect of outward transportation of the goods cleared from the factory to depot and from the factory/depot to customer - HELD THAT:- If the GTA service in respect of receipt of inputs that will amount to inward transportation and credit is undisputably available in terms of definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004. In the case of outward transportation for clearance of finished goods from factory to depot, depot being the place of removal , CENVAT credit on GTA service from factory gate to place of removal is clearly admissible. However, there is a dispute on the facts which is the root of the case. Therefore, at this stage, the Tribunal cannot take a conclusive view in absence of clarity on facts. The matter needs to be reconsidered on the facts of the case that whether the GTA service on which credit was taken is for outward transportation from factory gate to the customer or it is in respect of inward transportation from vendors/suppliers of inputs place to the appellant s factory. Appeal is allowed by way of remand to the adjudicating authority.

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• CST, VAT & Sales Tax

• 2021 (12) TMI 172
  Rate of tax - services rendered a pure services (Cleaning) to the Nagar Parishad, different Nagar Panchayat and submitted Bill without GST and received payment without GST - Section 61 of the Goods and Service Tax Act, 2017 and Rule 99 of the Bihar Goods and Services Tax Rule, 2017 - HELD THAT:- Undisputedly, minimum statutory period of 30 days mandated under the provisions of Section 74(A) of CGST/BGST Act, 2017 was not afforded to the petitioner for making payment due and prior to the expiry of 30 days, the assessing officer proceeded to pass the order, ex parte in nature. The notice dated 05.02.2020 (Annexure-7) directed the petitioner to file reply on 29th of February, 2020 which was within the period of 30 days. It is the mandate of law that 30 days period has to be afforded to the parties, which was not done in the instant case. The notice dated 05.02.2020 (Annexure-7) as also the order of assessment dated 05.03.2020 (Annexure-8) is quashed with the direction to the assessing officer to issue a fresh notice in the light of the statutory provisions and pass an appropriate order in accordance with law - petition allowed.

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• Indian Laws

• 2021 (12) TMI 175
  Dishonor of Cheque - vicarious liability against the appellants - legally enforceable debt or other liability - furnishing of security is covered under the provisions of Section 138 of the NI Act - Magistrate in view of Section 202 CrPC - postponment the issuance of process - HELD THAT:- The explanation to Section 138 of the NI Act provides that debt or any other liability means a legally enforceable debt or other liability. The proviso to Section 138 stipulates that the cheque must be presented to the bank within a period of six months from the date on which it is drawn or within its period of validity. Therefore, a cheque given as a gift and not for the satisfaction of a debt or other liability, would not attract the penal consequences of the provision in the event of its being returned for insufficiency of funds - the term debt also includes a sum of money promised to be paid on a future day by reason of a present obligation. A post-dated cheque issued after the debt has been incurred would be covered by the definition of debt . However, if the sum payable depends on a contingent event, then it takes the color of a debt only after the contingency has occurred. Therefore, in the present case, a debt was incurred after the second respondent began supply of power for which payment was not made because of the non-acceptance of the LCs . The issue to be determined is whether Section 138 only covers a situation where there is an outstanding debt at the time of the drawing of the cheque or includes drawing of a cheque for a debt that is incurred before the cheque is encashed. Under Sub-Section (1) of Section 202, a Magistrate upon the receipt of a complaint of an offence of which he/she is authorized to take cognizance is empowered to postpone the issuance of process against the accused and either (i) enquire into the case; or (ii) direct an investigation to be made by a police officer or by such other person as he thinks fit. The purpose of postponing the issuance of process for the purposes of an enquiry or an investigation is to determine whether or not there is sufficient ground for proceeding - The requirement of recording reasons which is specifically incorporated in Section 203 does not find place in Section 202. Section 204 which deals with the issuance of process stipulates that if in the opinion of the Magistrate taking cognizance of an offence, there is sufficient ground for proceeding, he may issue (a) in a summons case, a summons for attendance of the accused; (b) in a warrant case, a warrant or if he thinks fit a summons for the appearance of the accused. These proceedings have been interpreted in several judgments of this Court. For the purpose of the present case, some of them form the subject matter of the submissions by the appellants and the second respondent. Section 145 of the NI Act provides that evidence of the complainant may be given by him on affidavit, which shall be read in evidence in an inquiry, trial or other proceeding notwithstanding anything contained in the CrPC. The Constitution Bench held that Section 145 has been inserted in the Act, with effect from 2003 with the laudable object of speeding up trials in complaints filed under Section 138. Hence, the Court noted that if the evidence of the complainant may be given by him on affidavit, there is no reason for insisting on the evidence of the witnesses to be taken on oath - Section 202(2) CrPC is inapplicable to complaints under Section 138 in respect of the examination of witnesses on oath. The Court held that the evidence of witnesses on behalf of the complainant shall be permitted on affidavit. If the Magistrate holds an inquiry himself, it is not compulsory that he should examine witnesses and in suitable cases the Magistrate can examine documents to be satisfied that there are sufficient grounds for proceeding under Section 202. The test to determine if the Managing Director or a Director must be charged for the offence committed by the Company is to determine if the conditions in Section 141 of the NI Act have been fulfilled i.e., whether the individual was in-charge of and responsible for the affairs of the company during the commission of the offence. However, the determination of whether the conditions stipulated in Section 141 of the MMDR Act have been fulfilled is a matter of trial. There are sufficient averments in the complaint to raise a prima facie case against them. It is only at the trial that they could take recourse to the proviso to Section 141 and not at the stage of issuance of process - In the present case, it is evident that the principal grounds of challenge which have been set up on behalf of the appellants are all matters of defence at the trial. The Magistrate having exercised his discretion, it was not open to the High Court to substitute its discretion. Appeal dismissed - decided against appellant.

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• 2021 (12) TMI 174
  Principle of Issue Estoppel - whether, in view of the award declared by the Housing Commissioner, M.P. Housing Board, who was appointed as an arbitrator pursuant to the order passed by the High Court in Writ Petition No.9131 of 2008, was it open for the respondent contractor thereafter to file a reference before M.P. Arbitration Tribunal with respect to the very claim/claims which were the subject matter of arbitration before the Arbitrator Housing Commissioner? HELD THAT:- Apart from the fact that the award declared by the Arbitrator Housing Commissioner was not challenged by the respondent contractor, even, so long as the said award is not challenged before the higher forum the same is binding between the parties. Even the award or a nullity order has to be challenged before the appropriate forum/higher forum. In the present case it cannot be said that there was a total lack of jurisdiction of the Arbitrator Housing Commissioner in passing the award as it was the High Court who passed the order with consent referring the dispute between the parties for the adjudication to the Arbitrator Housing Commissioner. Therefore, unless and until it was challenged by the contractor before the higher forum, the respondent contractor cannot be permitted to ignore and/or to avoid the award passed by the Arbitrator Housing Commissioner dated 07.11.2008. As per Section 19 of the 1983 Act, Revision Application to the High Court shall be maintainable only against the award passed by the learned Arbitral Tribunal. Therefore, prima facie it appears that as such the order passed by the learned Arbitral Tribunal rejecting the reference petition was not maintainable as by order dated 27.02.2017, no award was passed by the Tribunal - technically speaking the award passed by the Arbitrator Housing Commissioner dated 07.11.2008 stands even today. It is binding between the parties. So long as the award passed by the Arbitrator Housing Commissioner dated 07.11.2008 stands, there cannot be any subsequent fresh proceeding with respect to the same claims which were considered and adjudicated by the Arbitrator Housing Commissioner while passing the award dated 07.11.2008. So long as the said award stands it is binding between the parties. As no objections were raised by the respondent contractor at the appropriate stage, the award cannot be annulled subsequently. At the cost of repetition, it is observed that at no point of time the respondent contractor had challenged the award passed by the Arbitrator Housing Commissioner and as observed and held hereinabove even no court has set aside the award declared by the Arbitrator Housing Commissioner dated 07.11.2008 and the same has attained finality. Therefore, the same is binding between the parties - the subsequent fresh reference petition before the learned Arbitral Tribunal under the 1983 Act for the very same claims which were raised before the Arbitrator Housing Commissioner would not be maintainable at all. We agree with the view taken by the Arbitral Tribunal. The impugned judgment and order passed by the High Court quashing and setting aside the order passed by the learned Arbitral Tribunal constituted under the 1983 Act dated 27.02.2017 is hereby quashed - Appeal allowed - decided in favor of appellant.

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• 2021 (12) TMI 173
  Sale of the mortgaged asset - violation of the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Security Interest (Enforcement) Rules, 2002 - obligation to comply with Section 13(3A) of the Act - Time Limitation - validity of separate valuation of machinery in the subject property when it obtained the valuation before it sold the property to the 2nd respondent - incumbent on the part of the 1st respondent to obtain a fresh valuation certificate in view of the long gap between the valuation report and the e-auction sale or not. Whether the 1st respondent Bank had an obligation to comply with Section 13(3A) of the Act and give a response to the petitioners representation dt.01.11.2016 and whether the Debts Recovery Tribunal was correct in holding that there was no such obligation on the part of the 1st respondent Bank? - HELD THAT:- The Bank had proceeded to issue possession notice on 3rd March 2017 under Section 13(4) of the SARFAESI Act long after receipt of the representations dated 1st/6th November 2016, but without making any reference to the aforesaid representation. Accordingly, on the first point, the High Court concluded that there had been a violation by the Bank of its mandatory statutory duty under Section 13(3A) of the SARFAESI Act. Whether any of the reliefs claimed in the O.A. by the petitioners is barred by limitation? - HELD THAT:- In the present case, it is clear from a bare perusal of the letter dated 7th November 2016 sent by the Bank to its Zonal Manager that the Bank actively considered the Borrower s request for extension of the moratorium period. The Borrower did not submit the viability report and failed to bring in Rs. 45,00,000/- (Rupees forty five lakhs only). Post this default also there were negotiations with assurances and promises by the Borrower. Displaying forbearance, the Bank granted indulgence as action under the SARFAESI Act was deferred for nearly one year from 7th November 2016 till 6th October 2017. Thereafter, negotiations were held on 30th October 2017, 6th November 2017 and 8th November 2017 - in the present case, the Borrower has waived and is estopped from challenging violation of Section 13(3A) of the SARFAESI Act and hence, the first issue is decided in favour of the Bank. Given the aforesaid position, we do not think we are required to examine the second point, i.e. whether in an application under Section 17 of the SARFAESI Act, which can be filed when a Borrower is aggrieved by any of the measures referred to in sub-section (4) to Section 13 within forty five days from the date such measures are taken, the Borrower can challenge other measures, steps and procedures which preceded the ultimate sale even if barred by the limitation period of forty five days. Whether it was proper for the 1st respondent Bank not to separately value the machinery in the subject property when it obtained the valuation before it sold the property to the 2nd respondent? - HELD THAT:- Auction sale as confirmed was at a price higher than the fair market valuation of the land, the building and the machinery. Whether or not the price of the machinery should be accounted for the purpose of payment of stamp duty on a composite sale wherein the land, the building and the machinery located in the building are sold, would not be of any relevance and importance as the issue in question does not concern payment of stamp duty and the principles applicable. On the other hand, the law recognises that the lender knows its interests and how to secure best value of the property given the fact that the mortgaged property had to be sold for recovery of the debts due and payable to the Bank. Whether it was incumbent on the part of the 1st respondent to obtain a fresh valuation certificate dt.19.02.2018 in view of the long gap between the valuation report and the e-auction sale held on 11.09.2018? - HELD THAT:- The valuation certificate or report is dated 19th February 2018. As held above, attempts to sell the property were made thereafter on 28th March 2018 and 14th June 2018 but without success as there were no bidders. Accordingly, it was decided to reduce the reserve price from Rs. 2,78,10,000/- to Rs. 2,60,00,000/-. However, in the fourth auction the successful bid given by Basa Chandramouli was for Rs. 2,91,20,000/-, which is much higher than the reserve price of Rs. 2,60,00,000/- or the fair market value of Rs. 2,73,80,000/- in terms of the valuation report. The order passed by the Debts Recovery Tribunal dated 1st July 2019 upholding the procedure and sale of the Subject Property under the SARFAESI Act is upheld - petition dismissed.

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