Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 8, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seizure of goods alongwith the vehicle - E-way bill which accompanied the goods had expired before the goods could be delivered and meanwhile the vehicle developed some technical snag - section 130 of CGST Act - The respondent is directed to release the vehicle subject to payment of the applicable SGST and CGST by the petitioner to be treated as deposit. The respondent shall issue appropriate notice to the petitioner to show cause - HC
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Classification of goods - rate of GST - Fryums (different shapes and sizes of PAPAD) manufactured - The traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes. - The product ‘different shapes and sizes Papad’ involved in the present case merit classification under Tariff heading No. 19059040 - Chargeable to 18% rate of GST - AAAR
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Seeking direction to unblock Input Tax Credit - provisions of rule 86A - If indeed the respondents were of the view that the petitioner had not been cooperating with the department, they ought to have proceeded against it in a manner known to law. However, to say that reply is awaited and hence lifting of the restriction has not been resorted to is clearly illegal. - HC
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Classification of goods - Epoxidised Soya bean Oil - AAR - the Epoxidised Soyabean Oil is manufactured from Soyabean refined Oil i.e. vegetable oil not from the animal fats/Oils. - The product epoxidized Soya Oil is a chemically modified soyabean oil and falls under chapter heading no.1518 - AAR
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Classification of goods - rate of GST - Himsa Plus Oil, which is a ayurvedic hair oil used for various hair disease and headache - beauty product or medicinal products - The product Himsa Plus Oil is poured on hair for beautification or promoting attractiveness as the same is in the nature of cosmetics. - As such, the product Himsa Plus Oil is predominantly a hair oil (i.e. preparations for use on the hair) meriting classification under Chapter sub-heading 330590 - AAR
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Valuation - Section 15 of CGST Act - reimbursement of Employee Provided Fund & ESI - there is no contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of services as the Work Order dated 22.02.2017 simply provides that after deposit of EPF and ESI in the concerned department, the reimbursement will be done as per rule and there is no mention in the said Work Order that the contractor will deposit EPF and ESI as the pure agent of the applicant. - GST is liable to be paid @18% on the reimbursement of EPF and ESI contribution as the same is liable to be included in the value of supply - AAR
Income Tax
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Reopening of assessment u/s 147 - Notice after the expiry of period of four years - Admissibility of deduction u/s 80I - The issue was already considered by the AO - In our view, the exercise to reopen a validly framed assessment is merely on the basis of change of opinion by succeeding Assessing Officer and such a mere change of opinion cannot justify the exercise of jurisdiction under Section 148. - HC
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Taxability of rent received - Income from house property - the rule of consistency would certainly have a role to play here and we find that assessee had been having the same stand by treating the entire rentals as income from house property and claiming 30% standard deduction thereon. There is absolutely no case of divergent of facts in the case of the assessee. - AT
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Disallowance of interest as per provisions of Section 36(1)(iii) pertaining to interest free advances made treating the same to be not for the purpose of business of the assessee - assessee contended that since the year in which the advance was given, it was found that the advances had been made from interest free funds, there was no reason to make any disallowance of interest u/s 36(1)(iii) - Additions deleted - AT
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Penalty u/s 271(1)(c) - Reopening of assessment u/s 147 - addition of unexplained investment in property u/s 69 - firstly the AO who records the reasons and issues a notice u/s 148 should be a Jurisdictional AO and secondly the assessment also has to be framed by the same AO who initiated the proceedings u/s 147, 148. - the assessment order passed by the ITO, Ward-2, Phagwara is without jurisdiction and the same is not in accordance with law, hence required to be quashed. - AT
Customs
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Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Even if the exporter had ceased to operate from that premises and had not got amendments made in the official documents issued by various authorities, this cannot be held against the appellant Customs Broker to say that it violated Regulation 10(n) of the CBLR, 2018. For these reasons, RUD-2 also does not support the case of the Revenue. - AT
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Imposition of consolidated penalty levied u/s 112(a) read with Section 114A and 114AA of Customs Act - Appellant engaged for clearance of goods on commission basis - goods declared as men’s casual shoes ‘unbranded’ - evasion of customs duty - . It is not established that the appellant has forged or falsified any of the documents which were filed before the Customs. The allegation against the appellant that he prepared and signed documents in the name of anonymous foreign seller is not substantiated as no such documents containing signature of the appellant has been brought on record. We find for these reasons, penalty under Section 114AA is not attracted. - AT
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Benefit of exemption - Import of artificial glass - Machine Tuft/Coated Polyethylene Twisted Grass for soccer field known as ‘artificial grass’ and agrifab field sweeper from Canada for laying artificial football ground - competition of national or international level was conducted or not - Requirement to produce the end-use certificate - the certificate issued by the AIFF is suffice to fulfill the condition of the notificaition and there is no ambiguity in the said condition. - AT
Indian Laws
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Dishonor of Cheque - The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the instant case, the accused has succeeded in rebutting the presumption, showing preponderance of probability by leading evidence and hence, onus shifts upon the complainant to prove otherwise, however, the complainant has failed to prove that the cheque was drawn towards legally enforceable debt as neither any account nor any details of amount paid by the complainant is submitted by the complainant before the trial Court. - HC
Service Tax
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Valuation - inclusion of reimbursable expenses in the gross value of the for determination of the value of taxable service - It is found that the issue in respect of the reimbursable expenses has been considered and decided by the Hon’ble Apex Court for the period prior to amendments made in 2015, and we are concerned with same issue for the period prior to 2015, there are no merits in the impugned order. - AT
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Entitlement to Interest on the amount of deposit, pending litigation, from the date of deposit till the date of actual refund - such amount deposited during investigation and /or pending litigation is ipso facto pre-deposit and interest is payable on such amount to the assessee being successful in appeal, from the date of deposit till the date of refund. - AT
Central Excise
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Remission of duty - finished goods destroyed in the fire accident - inputs contained in the semi-finished goods destroyed in the fire accident - principles of natural justice - Rule 21 of Central Excise Rules, 2002 - claim made by such manufacturer in terms of Rule 21 for remission of these amounts cannot be brushed aside - we are not in position to agree with the findings recorded by the Commissioner demanding the reversal of CENVAT Credit by invoking the provisions of Rule 3 (5B) of the CENVAT Credit Rules, 2004. - AT
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Clandestine removal - denial of opportunity of cross-examination of witnesses - The only question is at what stage would he be entitled to cross-examine the witnesses - it is only after the statements of witnesses are recorded by the relevant authority in course of adjudication of proceedings and such evidence is regarded as relevant that the noticee has the right to claim that he be extended the opportunity to cross-examine such witnesses so as to extend to him fair, reasonable and adequate opportunity of defence. - HC
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Valuation - inclusion of cost of Pre-delivery Inspection (PDI) and After Sale Service (ASS) in the assessable value of the motor vehicles sold by the appellant to the dealers - charges/expenditure are incurred by the dealers from their profit margin - said charges cannot be included in the assessable value of the motor vehicles. - AT
Case Laws:
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GST
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2021 (12) TMI 272
Seeking direction to unblock Input Tax Credit - provisions of rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Curiously, the instructions do not refer to sub-rule (3) of rule 86A at all. The respondent no. 2 appears to be oblivious of such provision. Having regard to the statutory mandate in sub-rule (3) of rule 86A, the petitioner is entitled to claim that the input tax credit ought to have been unblocked immediately after one year of the restriction being imposed under sub-rule (1) thereof. If indeed the respondents were of the view that the petitioner had not been cooperating with the department, they ought to have proceeded against it in a manner known to law. However, to say that reply is awaited and hence lifting of the restriction has not been resorted to is clearly illegal. There are no reason to keep this writ petition pending - petition disposed off.
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2021 (12) TMI 271
Seizure of goods alongwith the vehicle - E-way bill which accompanied the goods had expired before the goods could be delivered and meanwhile the vehicle developed some technical snag - section 130 of CGST Act - HELD THAT:- Prima facie, it appears that the petitioner is liable to pay SGST CGST as the supply is within the State from Sembudoss Street, Chennai of the supplier to the petitioner at Thuvakudi in Trichy, though the bill has been sent to the petitioner's Head Office/Registered Office in Telungana. The respondent is directed to release the vehicle subject to payment of the applicable SGST and CGST by the petitioner to be treated as deposit. The respondent shall issue appropriate notice to the petitioner to show cause as to why SGST and CGST directed to be deposited should be demanded and why penalty should not be imposed on the petitioner - Petition disposed off.
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2021 (12) TMI 270
Confiscation of goods or conveyance - levy of penalty under Section 130 of the Central Goods and Services Tax Act, 2017 - confiscation of the goods under Section 130 CGST Act without resorting to Section 129 of the CGST Act - HELD THAT:- Issue Notice, returnable 09.12.2021. Learned AGP, Ms.Maithili Mehta waives service of notice for and on behalf of the respondent-State. She may also take necessary instructions before 09.12.2021. The representation of the petitioner shall be decided without, in any manner, being influenced by the pendency of this petition on or before 04.12.2021.
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2021 (12) TMI 269
Classification of goods - rate of GST - Fryums (different shapes and sizes of PAPAD) manufactured by the applicant - HELD THAT:- Papad in ready to cook/un-fried form is purchased by the appellant from the market. The same is first fried and various masala powders are applied and packed in small packets for being sold in market. The shape and size may vary but the ingredients, the proportion of ingredients, the composition and the recipe remains similar, if not exactly the same. The said product Papad of different shapes and sizes that are ready to eat condition eligible to be classified under Chapter Tariff Heading 1905 of Customs Tariff Act, 1975 accordingly, vide entry at Sr. No. 96 under Not. No. 02/2017-CT (Rate) dated 28.06.2017 product in question is exempted from the levy of Goods and Services Tax. The classification of goods under GST regime has to be done in accordance with the Customs Tariff Act, 1975, which in turn is based on Harmonised System of Nomenclature, popularly known as HSN . The rules of interpretation, section notes and chapter notes as specified under the Customs Tariff Act, 1975 are also applicable for classification of Goods under GST regime. However, once an item is classified in accordance with the Customs Tariff Act, 1975, the rate of tax applicable would be arrived at on the basis of notifications issued under GST by respective governments. From the ingredient of the product in question as submitted by the appellant, it is seen that the impugned product are manufactured from the wheat flour, superfine wheat flour, rice flour, starch, corn flour, cereal flour and all these products are covered under Chapter 10 and 11 of Customs Tariff Act. The said product can be categorized as crispy savoury food product as such it is made from the dough based on flour like wheat flour, rice flour, starch, corn flour and cereal flour. Therefore, the products of the appellant fall under the Chapter Heading 1905 - there is no mention of the product Papad in the Explanatory Notes of the HSN. The term Papad has neither been defined in the Customs Tariff Act, 1975 nor under the CGST Act, 2017 or the Notifications issued there under. It can be said that Fryums is brand name of a company and not the generic name of the impugned product, therefore it would not be logical to hold that the appellant s product is Fryums . However, in general public, Fryums is popular word for different shapes and sizes like round, square, semi-circle, hollow circle with bars in between or square with bars in between intersecting each other or shape of any instrument, equipment, vehicle, aircraft, animal type Papad. Similarly, calling product in question of different shapes and sizes by Fryums does not change the basic character of the product and the product in question remains papad - traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes. The traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes. The product different shapes and sizes Papad involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975. The product in question is classifiable under CTH No. 1905 of the Customs Tariff Act, 1975, the said CTH No. 1905 is covered under entry No. 16 of Schedule-III of Notification No. 1/2017-CT (Rate) dated 28.06.2017 and accordingly chargeable to 18% rate of Goods and Services Tax.
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2021 (12) TMI 268
Classification of goods - Epoxidised Soya bean Oil - to be classified under tariff item 1518 of Schedule-I (taxable at 5%) or Schedule-II (taxable at 12%) of Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017, as amended from time to time? - HELD THAT:- The product Epoxidised soyabean oil is chemically modified (epoxidised) oil. The chemical modification is such that its double bond - the Epoxidised Soyabean Oil is covered under the above chapter heading 1518. In case of COMMISSIONER OF CENTRAL EXCISE, SURAT-II VERSUS CONSUMER PLASTICS PVT. LTD. [ 2005 (10) TMI 321 - CESTAT, MUMBAI] , the Tribunal held that the Epoxidised vegetable Oil used as plasticisers or stabilisers in plastic industry, classifiable under Chapter 15 of Central Excise Tariff and not under Heading 38.12 ibid. Whether the product Epoxidised soyabean oil is covered under the Schedule-I or Schedule-II of Notification No.01/2017-CT dated 28.06.2017? - HELD THAT:- The product Epoxidised Soya bean Oil is mainly manufactured from the raw material refined soyabean Oil which is a vegetable Oil and the said product obtained by treating vegetable oil by reaction in the presence of catalyst and in other words it can be said that the product is chemically modified vegetable Oil. On going through the description of goods mentioned above in Entry No.90 i.e. 'Vegetable fats and Oils oxidized by heat in vacuum or inert gas or otherwise chemically modified which covered the Epoxidised Soya Oil. Hence, the said Epoxidised soyabean oil obtained by oxidized by heat in vacuum or chemically modified oil is rightly fits/covered under the said entry No.90. On. the similar issue, in case of IN RE : AGARWAL INDUSTRIES PVT. LTD. [ 2018 (9) TMI 973 - AUTHORITY FOR ADVANCE RULING - ANDHRA PRADESH] it was observed that since the product under question is manufactured out of Vegetable fats/ oils and not from animal fats/ oils, therefore, the correct HSN Code of Energy-G premium Oil is HSN 1518 vide S. No. 90 of Schedule I of Notification dated 28-6-2017 and the applicable rate of tax is 5%. The Deputy Commissioner, Registrar, AAR, Andhra Pradesh informed that no appeal has been filed against the abovesaid order of AAR - It is found that in this case also the Epoxidised Soyabean Oil is manufactured from Soyabean refined Oil i.e. vegetable oil not from the animal fats/Oils. Hence the above order is applicable in this case also. The product epoxidized Soya Oil is a chemically modified soyabean oil and falls under chapter heading no.1518 and specifically covered under entry no.90 of Schedule-I of Notification No.01/2017 dated 28.06.2017.
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2021 (12) TMI 267
Classification of goods - rate of GST - Himsa Plus Oil, which is a ayurvedic hair oil used for various hair disease and headache - beauty product or medicinal products - HELD THAT:- On reconciling the Chapter Heading with Chapter Note, it indicates that only those products whose curative or preventive value is substantial and the product is manufactured primarily with a view to control or cure a disease by adding suitable pharmaceutical ingredients shall be covered under Chapter 30. All other preparations and cosmetics even if they have therapeutic or prophylactic properties would not fall within the meaning of medicaments under the GST regime - the label of the product Himsa Plus Oil does not contain dosage (or a mention of 'as advised by the physician') which is essentially mentioned on the label of medicaments. The said fact indicates that the said product is not a medicament. The product Himsa Plus Oil is poured on hair for beautification or promoting attractiveness as the same is in the nature of cosmetics. Moreover as per Chapter Note 1(e) of Chapter 30 of the Customs Tariff Act, 1975, Chapter 30 does not cover preparations of heading 3303 to 3307, even if they have therapeutic or prophylactic properties. As such, the product Himsa Plus Oil is predominantly a hair oil (i.e. preparations for use on the hair) meriting classification under Chapter sub-heading 330590 and attracts GST @ 18%.
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2021 (12) TMI 266
Valuation - Section 15 of CGST Act - reimbursement of Employee Provided Fund ESI - HELD THAT:- Section 15(1) of CGST Act clearly stipulates that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Further, sub-section(2) of Section 15 elaborates in detail, the items that are required to be included in the value of supply, whereas sub-section (3) of Section 15 specifically elaborates the items that are not to be included in the value of supply. The condition contained in rule 33(iii) of the CGST Rules, 2017 provides that the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account - In the instant case, Labour contractor cannot be treated as pure agent as the contractor is not procuring any additional services from the third party and instead of this the contractor is providing/supplying the single service of manpower supply and the contractor is charging for the said service only. Further, there is no contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of services as the Work Order dated 22.02.2017 simply provides that after deposit of EPF and ESI in the concerned department, the reimbursement will be done as per rule and there is no mention in the said Work Order that the contractor will deposit EPF and ESI as the pure agent of the applicant. GST is liable to be paid @18% on the reimbursement of EPF and ESI contribution as the same is liable to be included in the value of supply as per Section 15 of the CGST Act, 2017.
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Income Tax
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2021 (12) TMI 265
Non billable warrant issued against the applicant as well as proceedings of Complaint Case u/s 276CC pending before Special Chief Judicial Magistrate, Varanasi - HELD THAT:- Considering the facts and circumstances of the case, this court feels that an adequate opportunity should be provided before passing of such orders. Hence, the application is partly allowed and matter is remanded back to the court below to pass appropriate orders on the compounding application dated 8.8.2019 within a period of two months without granting any unnecessary adjournments to either of the parties, in accordance with law. Till the disposal of the compounding application dated 8.8.2019 the non-bailable warrants issued against the applicant shall be kept in abeyance.
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2021 (12) TMI 264
Carry forward of unabsorbed depreciation - beyond the eight year period mandated under the provisions of Section 32 - scope of amended provisions - Whether subsequent amendment of Assessment Year 2001-02 has allowed the depreciation of Assessment Year 1997-98, 1998-99, 1999-2000 and 2000-01 to be carried forward for unlimited period and can be claimed to be set off Assessment Year 2008-09? - HELD THAT:- The issue involved in this case is no longer res integra and has been settled in several decisions. It is brought to our notice by the learned senior counsel for the respondent that in the case of Commissioner of Income Tax vs. Sanmar Speciality Chemicals Ltd. [ 2020 (9) TMI 770 - MADRAS HIGH COURT] identical issue was considered wherein the Court noted various decisions of the other High Courts and in particular the decision of the High Court of Gujarat in General Motors India P. Ltd. [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] as well as the circular no.14 of 2001 dated 9th November, 2001 issued by the Central Board of Direct Taxes (CBDT) and granted relief to the assessee as held restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. - Decided against the Revenue
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2021 (12) TMI 263
Reopening of assessment u/s 147 - Notice after the expiry of period of four years - Admissibility of deduction u/s 80I - HELD THAT:- There is nothing to indicate that there has been no failure on the part of petitioner to disclose fully and truly all material facts during the course of initial assessment proceedings. The reasons are entirely based on the records and documents available with respondents and filed by petitioner. The reasons stated that on perusal of record it indicates that there has been escapement of income. Admittedly, petitioner alongwith its return of income filed its Profit and Loss Account as well as the balance sheet. The computation of income that was filed clearly showed the manner in which the deduction under Section 80 I of the Act was claimed. In the course of the assessment proceedings a specific issue was raised by respondent which was replied to. It was only thereafter that the deduction under Section 80I of the Act was initially allowed by Respondent No.1. The duty of assessee is only to disclose fully and truly all primary facts and the duty ascertaining inferential facts as well as drawing necessary inference is on the Assessing Officer. We are satisfied that petitioner had discharged duty cast upon it and therefore even after there was failure on the part of Respondent No.1 to perform his duty, cannot justify initiation of proceedings under Section 147 of the Act. Also well settled that mere change in opinion by a succeeding Assessing Officer would not justify an exercise of jurisdiction under Section 148 of the Act. In the present case, the assessment for the Assessment Year 1992-93 was completed after due enquiry on 12th January, 1995. From the documents annexed to the petition, it is clear that petitioner s claim for deduction under Section 80 I of the Act was under consideration by the Assessing Officer who had sought details as to how the same was computed and petitioner had furnished details. Petitioner has clarified that the profits to determine after deduction from the gross operating earnings direct operating expenses, standing expenses, depreciation and interest charged. It was only after considering the same that Respondent No.1 having been satisfied with the correctness of petitioner claim allowed the deduction. In our view, the exercise to reopen a validly framed assessment is merely on the basis of change of opinion by succeeding Assessing Officer and such a mere change of opinion cannot justify the exercise of jurisdiction under Section 148. Deduction under Section 33 AC - The deduction prior to the amendment was available to the extent of the total income provided the amount was credited to reserve account and was utilised for the purchase of a new ship within the specified period. The circular further goes to state that it was noticed that shipping companies had diversified into other activities and are claiming deduction under Section 33AC of the Act even in respect of their income for the activities other than shipping for which there is no justification. Accordingly, it was decided to amend the provisions with effect from 1st April, 1996 to restrict deduction to 50% of the income derived from the business of operation of ships. Therefore, the fact that petitioner has been allowed a deduction under Section 33AC of the Act in respect of income from dividends, long term capital gains and interest, in our view is no ground for initiating proceedings under Section 148 of the Act.
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2021 (12) TMI 262
Revision u/s 263 by CIT - justifying the legislative intent of Section 115 JB and 115 JAA - HELD THAT:- Tribunal took note of the decision of the Hon ble Supreme Court in CIT vs. Alagendran Finance Limited [ 2007 (7) TMI 304 - SUPREME COURT] and held that the order passed by the CIT u/s 263(2) is hopelessly barred by limitation. The Tribunal rightly held that the period of limitation for the assessment year 2007-08 has to be reckoned from the date of the order passed by the AO under Section 143(3) read with Section 263 i.e. 8th December, 2011 and not from the date of the order passed by the AO under Section 143(3) read with Section 263 and 251 dated 29th November, 2012. Thus, we find that the Tribunal rightly allowed by the appeal filed by the assessee.
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2021 (12) TMI 261
Assessment made u/s143(3) - alternate remedy inter alia u/s 246(A) - assessment order proceeds on the basis that the selling price is only Ex- Quarry price - assessment order proceeds on the basis that the raising-cum-selling agreement i.e., aforementioned 30.11.2005 agreement between the petitioner and TAMIN requires the difference between the selling price and the raising rate to be paid for production of minerals with taxes - HELD THAT:- As in the case on hand, none of the exceptions are attracted as would be evident from the narrative (narrative that includes capturing rival submissions) and discussion which has been set out supra. The arguments that there should have been reopening of six previous assessment orders, that the reply from TAMIN ought to have been considered and that the first respondent should not proceeded on the basis of the reply / response of the writ petitioner may well qualify as grounds of appeal but they do not warrant interference in writ jurisdiction as it is neither excess of jurisdiction or any other issue leading to a jurisdictional issue. It is nobody's case that there was any violation of 'principles of natural justice' ('NJP') in the case on hand. Case on hand is not challenge to a statute or subordinate legislation. There is nothing demonstrable qua breach of fundamental rights. To put in a nutshell, none of the Commercial Steel exceptions are attracted. Writ petitioner is under the impression that appeal remedy is available under Section 248 of the IT Act. Considering the impugned order, it may not be under Section 248 of the IT Act as that pertains to 'Tax Deduction at Source' (TDS). However, in the case on hand, the appeal remedy will be under 246-A of the IT Act. It is not necessary to dilate further on this and for the purposes of this case it will suffice to say that there is a appeal remedy and there is nothing to demonstrate that appeal remedy is not efficacious. When the appeal remedy is available and there is nothing to demonstrate that it is not efficacious, in the light of the discussion and dispositive reasoning thus far, this Court has no hesitation in holding that this is a fit case for relegating the writ petitioner to the alternate remedy under Section 246-A of IT Act. If the writ petitioner files an appeal, as already alluded to supra, subject to limitation and subject to pre-deposit condition if any, the said appeal shall be considered on its own merits and in accordance with law by the appellate authority. It is also made clear that it is open to the writ petitioner to seek exclusion of time spent in the captioned writ petition under Section 14 of the Limitation Act and if the writ petitioner chooses to do so, the Appellate Authority shall decide the same on its own merits and in accordance with law.
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2021 (12) TMI 260
Special audit u/s 142(2A) - As argued twin conditions necessary for invoking the powers under Section 142(2A) of the I.T Act are missing - also there has been a violation of principles of natural justice as giving of opportunity only for a day before reference to the Special Audit would amount to non-availment of an opportunity - HELD THAT:- As the Court was disinclined to entertain this petition, learned Advocate Mr. Vora, for the petitioner has sought permission to withdraw this petition, permission is granted. Petition is dismissed as withdrawn.
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2021 (12) TMI 259
Unsecured loan u/s 68 - whether assessee has proved identity and creditworthiness of the parties? - HELD THAT:- It is very clear that there is no doubt of whatsoever with regard to genuineness of transactions. No doubt, bank might not have given narration with regard to cheque no., address and PAN while giving credit to the bank account of the assessee. But, fact remains that the assessee has filed all those details, including confirmation letter from loan creditors which matches with credit in the bank account of the assessee on 28.02.2008. Therefore, we are of the considered view that the assessee has filed necessary evidences to prove genuineness of transactions. Since, there is no dispute with regard to identity and creditworthiness of the loan creditors and further the assessee has filed necessary evidence to prove genuineness of transactions, CIT(A) has erred in sustaining additions made by the AO towards unsecured loans u/s.68. Hence, we set aside order of the CIT(A) and direct the Assessing Officer to delete addition made towards unsecured loans u/s.68 - Decided in favour of assessee.
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2021 (12) TMI 258
Assessment u/s 153A - Disallowance of interest - HELD THAT:- Disallowance was made by the ld. AO without making any reference to seized documents found during the course of search. Infact, the ld. AO himself of his order admits that in the course of assessment proceedings, it is observed that assessee has claimed expenses towards interest expenses and loan processing charges on loan borrowed from M/s. India Bulls Housing Finance Ltd., This observation clearly goes to prove that the ld. AO had only sought to re-examine the existing material already available on record while framing the search assessment for A.Y.2011-12 (being the unabated assessment year). The law is now very well settled that unless there is incriminating material found during the course of search, an unabated assessment shall not be disturbed in the search assessment. Reliance in this regard is placed on the decision of the Hon ble Jurisdictional High Court in the case of Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ] and on the decision in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT ] In view of the above, we are inclined to allow the additional ground raised by the assessee and direct the ld. AO to delete the disallowance made in respect of interest paid on loan from India Bulls Housing Finance Ltd., Accordingly, the additional ground raised by the assessee is allowed
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2021 (12) TMI 257
Taxability of rent received - Income from house property - assessee had received composite rent from its tenant State Bank of Patiala for letting out of premises and letting out of furniture and fixtures etc. - HELD THAT:- We find that the lessee bank had also treated the entire payment of rental and hire charges as the composite payment and had charged tax at source in terms of Section 194I - This aspect, in our considered opinion, is not a relevant consideration for the purpose of determination of taxability of rental under the head of income in the hands of the assessee. Hence, the arguments advanced by the ld. AR in this regard is hereby dismissed. As going by the fact that for A.Y.2010-11, the ld. AO in the order giving effect to ld. CIT(A) order had accepted the stand of the assessee vide his order dated 19/03/2014. Similarly, he has accepted the stand of the assessee in the scrutiny assessments framed for A.Y.2016-17 and 2018-19 vide order u/s.143(3) of the Act dated 26/12/2018 and 28/03/2021 respectively. Hence, the rule of consistency would certainly have a role to play here and we find that assessee had been having the same stand by treating the entire rentals as income from house property and claiming 30% standard deduction thereon. There is absolutely no case of divergent of facts in the case of the assessee. Hence, applying the principle laid down in the case of Radhasaomi Satsang [ 1991 (11) TMI 2 - SUPREME COURT] when there are no divergent facts, the Revenue cannot take a divergent stand for one particular year ignoring the rule of consistency. In view of the aforesaid observations, the ground No.2 is allowed. Taxability of reimbursement of maintenance charges received from the tenant under the head income from other sources - HELD THAT:- As assessee had made payment on 10/01/2012 towards the member s share of contribution for repairing of the entire society building. This payment was admittedly made by account payee cheque through regular banking channels by the assessee to the housing society. The assessee also paid a sum as its share of society maintenance on 24/01/2012 by account payee cheque. The total of these two payments worked. Out of this, since the repairs cost paid to the society by the assessee need to be borne by the tenant i.e. State Bank of Patiala, the assessee got a sum of ₹ 4,45,266/- reimbursed from State Bank of Patiala on 03/02/2012. In effect, the assessee claimed deduction on account of maintenance charges only to the extent of ₹ 21,536/- as the same represents its share to be borne. Since, the assessee had merely got the reimbursement of maintenance charges paid by it to the society of ₹ 4,45,266/- from its tenant State Bank of Patiala, there is no income element in it. Hence, the reimbursement received by the assessee cannot be sought to be taxed by the ld. AO under the head income from other sources
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2021 (12) TMI 256
Penalty u/s 271(1)(c) - Reopening of assessment u/s 147 - addition of unexplained investment in property u/s 69 - jurisdiction of ITO initiating the reopening - HELD THAT:- As it is admitted fact that ITO Ward-4 Phagwara, had no Jurisdiction over the case who has recorded the reasons and issued the notice u/s 148 and thereafter transferred the file to the Jurisdictional ITO i.e. Ward-2 Phagwara who in turn framed the assessment. The issue of jurisdiction in this regard is now settled law by orders of the Amritsar Bench, Agra Bench, Chandigarh Bench and Delhi Bench of ITAT where it has been held that firstly the AO who records the reasons and issues a notice u/s 148 should be a Jurisdictional AO and secondly the assessment also has to be framed by the same AO who initiated the proceedings u/s 147, 148. In our view, the assessment order passed by the ITO, Ward-2, Phagwara is without jurisdiction and the same is not in accordance with law, hence required to be quashed. The finding of the Ld. CIT(A) on the issue of jurisdiction and thereby confirming the assessment order are unwarranted and perverse and such a finding against the settled position of law can not be approved. We accept the grievance of the assessee genuine. We hereby quash the assessment order and the impugned order of the CIT(A) for the aforesaid reasons. The consequential penalty order u/s 271(1)(c) would become infructuous in view of dismissal of quantum appeal. - Decided in favour of assessee.
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2021 (12) TMI 255
Unexplained credits u/s 68 - case of the Revenue that the assessee has failed to discharge its onus to prove the genuineness and creditworthiness of the persons giving unsecured loans - HELD THAT:- To prove the genuineness of the transaction, it is case of the assessee that it has supplied evidence in the form of bank statement hence, the transaction was genuine and with regard to the creditworthiness, income tax return and the PAN No. of the creditor were given to the Assessing Officer. AO did not accept these documents and proceeded to make addition without making any independent inquiry by himself. We find merit into this contention of the assessee as from the records, it is evident that the Assessing Officer had not issued any notice to the creditors. AO ought to have made necessary inquiry from the lenders regarding their source of income etc. - considering the totality of fact hereby, set aside the finding of lower authorities qua amount received from Ms. Neha Madan and Shri R.N.Arora and restore the issue to the file of Assessing Officer for decision afresh. Needless to say that Assessing Officer would provide reasonable opportunity to the assessee. This ground of assessee s appeal is allowed for statistical purposes.
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2021 (12) TMI 254
Disallowance of interest as per provisions of Section 36(1)(iii) pertaining to interest free advances made treating the same to be not for the purpose of business of the assessee - assessee contended that since the year in which the advance was given, it was found that the advances had been made from interest free funds, there was no reason to make any disallowance of interest u/s 36(1)(iii) - HELD THAT:- It is not denied that identical disallowance of interest on the said advance to M/s Temptation Foods had been made in the preceding assessment year also and after various rounds of litigation, when the issue had been restored to the AO by the ITAT directing him to determine the nature of funds used for the purpose of making the advance, it was found by the AO that no interest bearing funds had been used and infact interest free funds in the current account of the assessee had been used for the purpose of making the advance. This conclusive finding of fact, therefore, puts an end to all dispute vis- -vis the issue of disallowance of interest on the advance given to M/s Temptation Foods, since it has been factually found by the department that interest free funds had been used for the purpose of making the advance. No occasion arises, therefore, for making any disallowance of interest u/s 36(1)(iii) of the Act with regard to the same. The reliance placed by the Revenue on the decision of the ITAT in A.Y 2014-15, is of no relevance since the ground was not adjudicated being not pressed by the assessee. Deemed dividend as per the provisions of Section 2(22)(e) - HELD THAT:- Since in the present case the assessee is not a shareholder of M/s Punjab Metalics Limited from which it has received the impugned advance and the same though qualifies as deemed income u/s 2(22)(e) of the Act, but is not taxable in the hands of the assessee. The addition so made is, therefore, directed to be deleted. Disallowance on account of tax deducted at source - HELD THAT:- We find that the contention of the assessee that the amount disallowable u/s 40(a)(ia) has been mistakenly reported by the tax auditor at a higher figure cannot be simply discarded. Assessee has made certain factual contentions while explaining the mistaken reporting, to the effect that while the assessee had deducted taxes @ 10% on the contractual payments to be disallowed of ₹ 7,88,680/-, amounting to ₹ 78868/-, the auditor had assumed tax deducted @ 2% and calculated the amount disallowable basis this rate of TDS, which amounted consequently to ₹ 39,24,228/-. The explanation of the Ld.Counsel for the assessee is not outrightly perverse or unbelievable, but the facts we find, as pointed out by him need to be verified. Therefore agreeing with the plea of the Ld.Counsel for the assessee, we restore this issue to the AO to examine it afresh in the light of the contentions made by the Ld.Counsel for the assessee before us as aforestated, duly verifying all relevant facts and thereafter decide the issue in accordance with law. Needless to add the assessee be granted due opportunity of hearing. Addition u/s 43B in respect of service tax and PF Payable - HELD THAT:- Assessee had attempted demonstrating the compliance with the requirements of section 43B of the Act vis a vis the issue of PF payable, but had failed to file clinching third party evidence for which he has sought further opportunity. In the interest of justice therefore we consider it fit to give the assessee adequate opportunity to substantiate its claim and accordingly restore the issue of allowance of PF as per the provisions of section 43B of the Act to the AO to examine it afresh and thereafter decide it in accordance with law. Needless to add the assessee be given due opportunity to produce all evidences it seeks to rely upon in support of its claim.
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Customs
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2021 (12) TMI 253
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - allegation is that the appellant failed to apply due diligence in obtaining proper KYC documents of the said exporters - violation of Regulation 10(n) of CBLR, 2018. In the case of M/s. Duoflex Expo India RUD 2: HELD THAT:- The Customs Broker is not Omniscient and Omnipotent. The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault does not lie at the doorstep of the Customs broker and it is not up to the Customs Broker to doubt the documents issued by the authorities and he cannot be faulted for believing them to be correct. It is possible that all the authorities who issued the above documents had issued them correctly and thereafter, by the time the jurisdictional GST officer who prepared the report (RUD-2) went for verification, situation may have changed. If so, it is a ground for starting a thorough investigation by the officer and is not a ground to suspend/cancel the licence of the Customs Broker who processed the exports - In this case, there is no clarity whether the exporter was not available at the registered premises on the date of export or if he ceased to operate after the export. Even if the exporter has changed his address and failed to change his address in various documents issued by various authorities immediately, it cannot be held against the Customs Broker. Thus, the Customs Broker has not failed in discharging his responsibilities under Regulation 10(n) as far as this case is exporter is concerned. In the case of Global CNI -RUD 3: HELD THAT:- There are no reason for the Revenue to have entertained the belief that the appellant Customs Broker had violated Regulation 10(n) in respect of this exporter when none of the documents obtained for KYC have even been alleged to be not genuine and no physical verification of the premises of the exporter was even done by the officers. We therefore, find that the Customs Broker has not violated Regulation 10(n) with regard to this exporter. In the case of Galaxy Impaxe: HELD THAT:- As far as RUD 2 is concerned, the officer reported that the GST Registration was issued in December 2018 and that the exporter was not found to be operating from the place. The SCN and the impugned order ignore several documents which were obtained by the appellant, which were issued by the various Government departments and authorities to the exporter with the same address. There are no reason to disbelieve all these officers of various government departments and believe only the verification report by the jurisdictional officer who submitted RUD2 - If the exporter ceased to operate from that premises subsequent to the issue of GST Registration, the report does not say whether the exporter ceased to operate prior to the date of export or after that date. Even if the exporter had ceased to operate from that premises and had not got amendments made in the official documents issued by various authorities, this cannot be held against the appellant Customs Broker to say that it violated Regulation 10(n) of the CBLR, 2018. For these reasons, RUD-2 also does not support the case of the Revenue. The impugned order cannot be sustained - Appeal dismissed - decided against Revenue.
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2021 (12) TMI 252
Imposition of consolidated penalty levied u/s 112(a) read with Section 114A and 114AA of Customs Act - Appellant engaged for clearance of goods on commission basis - goods declared as men s casual shoes unbranded - It appeared to Revenue that the goods were undervalued with intent to evade payment of appropriate customs duty - HELD THAT:- As per the facts on record, Shri Rajesh Kumar Gupta is the actual importer who has been importing goods in the name of proprietorship firm M/s Maa Shati of Shri Makhan Kant Sharma, which was having IEC number. Admittedly, appellant has introduced both the persons. The appellant was being paid nominal/nominal remuneration for facilitating the clearance of the goods, being imported by the said Shri Rajesh Kumar Gupta. There is no allegation in the show cause notice that this appellant was a partner or sharing in the profits being made in the business by Shri Rajesh Kumar Gupta, save and except, the normal remuneration/ commission, as a person handling clearances; It has not been established that the appellant has any role in arranging either the import of the goods or disposal of the same. He stated that he also came to know about the alleged mis-declaration only after inspection of the container in January/ February, 2010 by the Customs. During the course of adjudication, admittedly, non-RUDs were not provided; appellant s prayer for one adjournment or re-fixation of the date for receiving of the documents, was not accepted by the Adjudicating authority. To that extent we find that the order is bad as the appellant has not been provided proper opportunity to defend himself. It is further found that there is nothing against the appellant wherein it can be deduced that he was doing any of the act of omission /commission with regard to the goods under import, so as to render the same liable for confiscation - Neither Shri Makhan Kant Sharma nor this appellant was aware that Shri Rajesh Kumar Gupta was importing goods by resorting to mis-declaration and suppression, which amounted to smuggling. Revenue places reliance on some documents which have been allegedly taken from the pen drive, alleged to have been given to appellant by Shri Rajesh Kumar Gupta. However, there are no proper procedures for recovering the pen drive or taking extracts from pen drive have beed followed. In fact, even a Panchnama was not drawn. Under the circumstances, reliance placed on such documents, loses evidentiary value. The impugned order heavily depends on statements rather than the statements supported by concrete evidence. It is alleged that the appellant has given inculpatory statement. However, the appellant submits that the statement has been recorded under undue coercion and duress. It is apparent on the face of record that the recording of the statement started on 29.03.2010 and continued again on 30.03.2010 after which he was arrested - the learned Adjudicating authority has not followed the provisions of Section 138B of the Customs Act, 1962, while placing reliance on the statements. There is no provision in the law for such an imposition of penalty. The impugned order, is bad in law and is liable to be set aside on this ground alone. The appellant has been imposed penalty under Section 114A Customs Act, 1962. It is not established that the appellant has forged or falsified any of the documents which were filed before the Customs. The allegation against the appellant that he prepared and signed documents in the name of anonymous foreign seller is not substantiated as no such documents containing signature of the appellant has been brought on record. We find for these reasons, penalty under Section 114AA is not attracted. No charge of abetment is also evidenced against the appellant. It is not the case of the department that he was sharing the profit in the acts of duty evasion etc resorted to by the importers. It is not established that the appellant had knowledge of the illegal trade indulged in by Shri Rajesh Kumar Gupta - the penalty under Section 112(a) is also not attracted. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 251
Rejection of SAD refund claim - finalization of provisional assessment not done - time-limit prescribed in the N/N. 102/2007 dated 14th September 2007 - HELD THAT:- As per the Hon ble High Court of Delhi in PIONEER INDIA ELECTRONICS (P) LTD. VERSUS UNION OF INDIA ANOTHER [ 2013 (9) TMI 705 - DELHI HIGH COURT] has held that the question of payment of duty arises only after finalization of assessment of bill of entry. Admittedly, the refund claim has been filed by the appellant on 4th April 2012 which is well within one year from the date of 27th February 2012 when the bill of entry was still pending for final assessment. Therefore, the refund claim cannot be rejected on the ground of limitation. Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 250
Benefit of exemption - Import of artificial glass - Machine Tuft/Coated Polyethylene Twisted Grass for soccer field known as artificial grass and agrifab field sweeper from Canada for laying artificial football ground - competition of national or international level was conducted or not - Requirement to produce the end-use certificate - N/N. 21/2002-Cus dated 01/03/2002 - HELD THAT:- As per the condition of Customs N/N. 21/2002-Cus at serial No. 393 there is no requirement by the respondent to produce end-use certificate. The only condition is that, if such goods are imported requires to be used in national or international championship to be held in India or abroad. Therefore, the certificate issued by the AIFF is suffice to fulfill the condition of the notificaition and there is no ambiguity in the said condition. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2021 (12) TMI 249
Validity of FIR - disputes arising in relation to administration of a company - argument of the learned counsel for the petitioners is that the complainant has initiated the proceedings under the Companies Act before the NCLT and the criminal prosecution launched by filing the impugned First Information Report is thus mala fide and accordingly the F.I.R. and any proceedings drawn pursuant thereto are liable to be quashed - HELD THAT:- Once the Companies Act, 2013 has come into force, mismanagement of the affairs of a company or even allegations of fraud is to be investigated in terms of the procedure contemplated in the Companies Act, 2013. SFIO is the authority to conduct the investigation and special court established under Section 435 of the Act , 2013 is the competent court to try the offences which is empowered even to try the offences other than the offences under the Companies Act as per the provision contained in Section 436 (2). It is not only the FIR which is under challenge in this petition which has been lodged but in addition to it, three more FIRs have been lodged by the complainant against the petitioners in succession apparently on account of the fact that the prayer for grant of interim relief relating to convening the extraordinary general meeting of the company was not acceded to by NCLT. The first such prayer was rejected by NCLT on 26.07.2021 and thereafter again on 10.08.2021. It is in this background that it has been submitted on behalf of the petitioners that the impugned FIR has precipitated on account of malafide reasons. Though the investigation of the impugned FIR shall go on, however, till the next date of listing, the petitioners shall not be arrested in connection thereto - Application disposed off.
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2021 (12) TMI 248
Seeking restraint on 2nd Respondent from conducting any meetings of the Board or the Annual General Meeting of the shareholders of the 1st Respondent Company till disposal of petition - HELD THAT:- From a reading of the above, it is clear that Clause 3 of the notification GSR 464(E) dated 5th June, 2015 is applicable to a private company only if the interests of their shareholders are protected. In this case, since some of the shareholders (petitioners and Respondent No. 4) objected to the convening of the AGM, the AGM held without considering their request is against the spirit of the notification issued by Ministry of Corporate Affairs. The AGM held on 18.09.2021 is to be declared as null and void. Hence, it is declared that the AGM of the Company held on 18.09.2021 as null and void and the respondents are restrained from implementing any resolutions passed in the said AGM until further orders. Application disposed off.
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2021 (12) TMI 247
Sanction of Scheme of Amalgamation - Section 230-233 of the Companies Act, 2013 - HELD THAT:- Calling of the meetings of the members/shareholders of the Transferor Company as envisaged under Section 230(1) of the Companies Act, 2013 is not necessary and will not serve any purpose, if called. This Tribunal issue the directions with respect to calling, convening and holding of the meetings of the Shareholders, Secured and Unsecured Creditors or dispensing with the same as well as issue of notices including paper publication - Application disposed off.
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Insolvency & Bankruptcy
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2021 (12) TMI 246
Validity of Resolution Plan - the application of the then Resolution Professional under Section 30(6) of the IBC has been allowed without considering the claim of the Appellant - whether the claim filed by the Appellant is within the time period specified in the public announcement and the extended time period of 90 days included in Regulation 12 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016? - whether a claim, if filed after the specified time period, could be considered at this belated stage? - HELD THAT:- It is admitted by the Appellant that he filed the claim on 1.1.2020. The affidavit submitted by erstwhile RP Respondent No. 2 (diary no. 30107 dated 20.8.2021) makes it clear that the 90 days period after the public announcement as allowed in the CIRP Regulations (supra) for filing proof of claims expired on 9.2.2019. Moreover the RP vide letter dated 3.1.2020 communicated to the Appellant the fact of rejection of his claim and also that the Resolution Plan is already under consideration of the Adjudicating Authority. Therefore, the fact of rejection of his claim was within the knowledge of Appellant from 3.1.2020. It is noted that the Resolution Plan was submitted for approval to the Adjudicating Authority on 4.9.2020, which was much before the claim was filed by the Appellant. The erstwhile RP has stated in his additional affidavit that the claim of the Appellant did not form part of the Resolution Plan as it was filed belatedly and rejected by the Resolution Professional. The Resolution Plan as approved by the Adjudicating Authority, and which does not include the claim of Appellant since it was filed much belatedly, does not need any interference - Appeal dismissed.
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2021 (12) TMI 245
Validity of approved resolution plan - approved resolution plan challenged on the ground that it affects the Appellant s rights regarding termination of the existing Leave and Licence Agreement dated 16.6.2017 with Respondent No. 1 and refund of the security deposit upon delivery of the premises and on the ground that the order has been passed without giving any notice or opportunity of hearing to the Appellant - HELD THAT:- It is clear that there is a provision in the Licence Agreement for unilateral termination of the agreement without assignment of any reason by furnishing six months notice. Clause 12(c) makes the licencee liable for paying all outstanding payments which include rent, water charges and electricity charges calculated on the date of termination or the date of handover of the licensed premises. It is also noticed that a formal notice was given vide e-mail dated 27.4.2021 by the Successful Resolution Applicant SIFY Technologies Limited to he Appellant (attached at pp. 258-261 of Appeal paperbook, Vol. II), even if we consider this to be a formal notice under the leave and licence agreement and Successful Resolution Applicant to be responsible as a signing authority in the said agreement, more than 7 months have passed since the sending of this notice. Even then, as per clause 12 (b) of the licence agreement, unilateral termination of the agreement has been enforced by the Successful Resolution Applicant. It is also worth noting that the Appellant continued to enjoy the said premises after the approval of the Resolution Plan by the Adjudicating Authority and also continued to pay the licence fee as well as water and electricity charges. He was well aware of the status of the said premises as contained in the successful resolution plan and was asked to vacate the premises vide e-mail of Sify Technologies dated 30.11.2020. He has enjoyed the premises for over one year now from the date he was sent mail on 30.11.2020. Therefore, it would not be correct for the appellant to now say at this time and stage that his rights under the Licence Agreement should be protected, more so as clause 12(b) of the Licence Agreement does provide the possibility of unilateral termination of the Licence Agreement after the period of six months from giving notice - In the present case, even though the Licence Agreement s termination was included in the Resolution Plan, we find that the Successful Resolution Applicant followed the Licence Agreement as per clause 12 (a) in terminating the agreement. Thus he has not violated the rights of the Appellant in the Licence Agreement. The Appellant may be given time to shift its operation to another premises within two months from the date of this order. The Appellant will be liable to pay the licence fee, water and electricity charges to the Successful Resolution Applicant, till the time it vacates the said premises and simultaneously the Successful Resolution Applicant shall return the security deposit amount in accordance with the lease agreement to the Appellant - Appeal disposed off.
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2021 (12) TMI 244
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time limitation - Evidence of existence of debt - HELD THAT:- In the instant case, the Appellant had confirmed the default and the same is undisputed. Indisputably, to secure the repayment of ₹ 31,75,00,000/- invested by the 2nd and 3rd Respondents, the Corporate Debtor had created numerous securities to and in favour of 2nd and 3rd Respondents like that of promissory notes, purchase option agreement, mortgage of freehold lands, mortgage of residential flats on an exclusive charge basis, which was contractually financed by corporate guarantee and first personal guarantees from it promoters. Time frame for admission - HELD THAT:- Before an admission of an application filed under Section 7 of the I B Code, by a financial creditor , an Adjudicating Authority as per Section 7(4) of the Code is to find out the existence of the default within 14 days of receipt of the application, as mentioned in Section 7(4). On being satisfied that such a default took place, then, an Adjudicating Authority may admit such application, subject to rectification of defect, which the proviso in Section 7(5) of the Code enjoins that it must be done within 7 days of receipt of such notice from the Adjudicating Authority by the Applicant - As per Section 7(6) of the Code, the CIRP starts from the date of admission of the application. The Adjudicating Authority as per Section 7(7) is to communicate the order either or accepting or rejecting the application of the financial creditor or the Corporate Debtor within 7 days of such admission or rejection. Debt and default or not - HELD THAT:- Ordinarily, an Adjudicating Authority is not required to go into the claim or counter claim made by the parties except to ascertain whether or not the record is complete and whether or not there is a debt and default committed by the Corporate Debtor . Always a Corporate Debtor has the option to point out that a default had not occurred in the sense that debt including a disputed claim is not due - it is open to the Corporate Debtor or its Directors to mention that/point out that debt is not payable by the Corporate Debtor either in Law or on facts of a given case. A debt may not be due if it is not payable either on facts of a given case or in Law. Evidence of existence of debt - HELD THAT:- When there is any change in the Directors or ownership , the Power of Attorney , Authorisation letter need not be executed once again and that the subsisting authorisation is good enough in Law, all the more when the said authorisation was not revoked. Also that, in any event, no prejudice is caused to the Corporate Debtor in regard to the aspect of name change of the 2nd and 3rd Respondents. Further that, the aspect of name change will not affect the default committed by the Corporate Debtor especially when the Corporate Debtor admittedly had defaulted in meeting its obligations to the 2nd and 3rd Respondents as a result of which the CIRP was initiated by the 2nd and 3rd Respondents against the Corporate Debtor by filing the Section 7 application under I B Code before the Adjudicating Authority - It cannot be gainsaid that the Debenture Holders even in the absence of Debenture Trustees is entitled to file an Application under the I B Code seeking necessary relief. In short, the right of the 2nd and 3rd Respondent is very much saved in the Debenture Trust Deed - this Tribunal holds that they do have a valid and legal right to file the Section 7 Application under the I B Code, 2016. This Tribunal considering the facts and circumstances of the case comes to a consequent conclusion that the existence of financial debt and the default of financial debt were established on the part of the Financial Creditors /Applicant and debt in question is payable not only in Law and also in fact - this Tribunal unhesitatingly holds that the impugned order passed by the Adjudicating Authority dated 12.8.2021 (National Company Law Tribunal, Division Bench II, Chennai) in IBA/149/2020 in admitting the Application (Filed under Section 7 of the I B Code) by the Financial Creditors /Applicants is free from any legal infirmities. Appeal dismissed.
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Service Tax
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2021 (12) TMI 243
Entitlement to Interest on the amount of deposit, pending litigation, from the date of deposit till the date of actual refund - HELD THAT:- The issue is not longer res integra as the Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] have held that such amount deposited during investigation and /or pending litigation is ipso facto pre-deposit and interest is payable on such amount to the assessee being successful in appeal, from the date of deposit till the date of refund. This appeal by the Revenue is dismissed. Further, it is directed that the Adjudicating Authority shall disburse the amount of interest @ 12% per annum forthwith, within a period of 45 days from the date of receipt of the copy of this order, as held by Division Bench of this Tribunal in Parle Agro (P) Ltd. - Decided against Revenue.
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2021 (12) TMI 242
Valuation - inclusion of reimbursable expenses in the gross value of the for determination of the value of taxable service - period involved is upto March 2015 - HELD THAT:- In the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] referred to by the learned Counsel, Supreme Court while upholding the order of Hon ble Delhi High Court quashing Rule 5 of Service Tax Valuation Rules, 2006 has held that Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with consideration is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. It is found that the issue in respect of the reimbursable expenses has been considered and decided by the Hon ble Apex Court for the period prior to amendments made in 2015, and we are concerned with same issue for the period prior to 2015, there are no merits in the impugned order. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (12) TMI 241
Clandestine removal - denial of opportunity of cross-examination of witnesses - at what stage would he be entitled to cross-examine the witnesses - relevancy of statements relied upon - HELD THAT:- A stage prior to issuance of show-cause notice cannot be regarded as an inquiry or proceeding as contemplated in the Act. As per sub-section (1) of section 14 of the Act, power to summon witnesses in any inquiry for purposes specified therein has been conferred on an officer duly empowered by the Central Government and in terms of subsection (3) thereof, any such inquiry shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Indian Penal Code. Prior to the issuance of a show-cause notice, neither any inquiry nor a proceeding can be said to have commenced. Therefore, any statement recorded prior to the issuance of such show-cause notice is not a statement recorded in the course of an inquiry or proceeding and no right accrues in favour of a noticee to insist that he be offered for cross1- examination the witnesses, whose statements have been recorded and are referred to in the show-cause notice, even prior to a reply thereto being submitted. Once the show-cause notice is issued, it is for the petitioner to deny and dispute the allegations levelled therein and if he so chooses to raise such defence as he may be advised. Omission and/or failure to reply to a show-cause notice may not, in all cases, amount to an admission of the allegations. In the present case, such question of admission does not arise because the petitioner in his reply dated 23rd October, 2020 has clearly denied and disputed the allegations levelled against him. The only question is at what stage would he be entitled to cross-examine the witnesses. The petitioner is granted liberty to file a final reply to the show-cause-cum-demand notice dated 24th September, 2020 within a fortnight from date - Petition disposed off.
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2021 (12) TMI 240
Denial of benefit of notification no. 06/2011-CE dated 01/03/2011 - Concessional rate of duty - nickel perforated rotary screen classified under chapter heading 84405031 - HELD THAT:- Admittedly, in the case of COMMISSIONER OF C, EX., VAPI VERSUS HARISH INDUSTRIES ENGINEERS [ 2008 (1) TMI 60 - CESTAT AHMEDABAD] the dispute with regard to classification of product and in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S. MEWAR BARTAN NIRMAN UDYOG [ 2008 (9) TMI 33 - SUPREME COURT] , Hon ble Apex Court has clarified that while interpreting exemption notification, one cannot go by rules of interpretation applicable to cases of classification under the tariff. Therefore, the said decision in the case of COMMISSIONER OF C, EX., VAPI VERSUS HARISH INDUSTRIES ENGINEERS [ 2008 (1) TMI 60 - CESTAT AHMEDABAD] is not applicable to the facts of the present case. We take a note of the fact that the appellant has classified the impugned goods under CTH 844250 which includes Plates,cylinders and other printing components; . The appellant is entitles for benefit of Sno. 41 in list 2 of notification no. 06/2011-CE dated 01/03/2011. Therefore, no demand is sustainable against the appellant - appeal allowed - decided in favor of appellant.
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2021 (12) TMI 239
Valuation - inclusion of cost of Pre-delivery Inspection (PDI) and After Sale Service (ASS) in the assessable value of the motor vehicles sold by the appellant to the dealers - charges/expenditure are incurred by the dealers from their profit margin - HELD THAT:- The issue is no longer res integra as held in COMMISSIONER OF CENTRAL EXCISE, MYSORE VERSUS M/S TVS MOTORS COMPANY LTD. [ 2015 (12) TMI 874 - SUPREME COURT] where it was decided that the said charges cannot be included in the assessable value of the motor vehicles. The issue stand settled in favour of the appellant - Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 238
Remission of duty - finished goods destroyed in the fire accident - inputs contained in the semi-finished goods destroyed in the fire accident - principles of natural justice - Rule 21 of Central Excise Rules, 2002 - HELD THAT:- There is no dispute between the appellants and revenue, on the findings recorded by the Commissioner in para 19 of his order. Commissioner has recorded categorically that fire on the 02.04.2015 in the premises of the appellant was accidental and there was no negligence on the part of appellants. Since revenue has not challenged this finding of the Commissioner, by way of cross objections or cross appeal, this finding of Commissioner has become final. Also at the time of hearing, learned counsel appearing for the Appellant agreed that Commissioner was correct in his findings to the effect that for the finished goods on which remission of duty as per Rule 21 of Central Excise Rules, 2002 is allowed, the CENVAT Credit taken on the inputs contained in these finished goods need to be reversed as per Rule 3 (5C) of the CENVAT Credit Rules, 2004. Rejection of request for remission of duty - HELD THAT:- Rule 21 do not limit its application only to the finished goods manufactured by the manufacturer, but would include within its ambit all those goods which have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal. Clearly the word goods is wide enough to include all the goods, whether finished good, raw material, packing material, semi-finished goods or the capital goods within its ambit. It is settle principle of interpretation, that interpretation should be made without adding or deleting the words used in the Rules. What is to be remitted is the duty required to be paid by the manufacturer on the goods he intends to remove from his premises. When the amount required to be paid in terms of Rule 3 (5) has been deemed to be the duty paid by the manufacturer removing the inputs as such, then claim made by such manufacturer in terms of Rule 21 for remission of these amounts cannot be brushed aside if the Commissioner is satisfied that these goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacturer as unfit for consumption or for marketing, at any time before removal. The process of production as envisaged in CENVAT Credit Scheme thus commences the moment the goods are received by the manufacturer in his manufacture, and CENVAT Credit Scheme acknowledges this fact as it allows the taking of credit and even utilization of the same instantaneously on receipt of inputs. All the inputs, packing materials whether in process of manufacture or intended to be used in the process of manufacture of the finished goods which were destroyed in fire accident and could not be used so are covered by the decision of the Hon ble Supreme Court, we are not in position to agree with the findings recorded by the Commissioner demanding the reversal of CENVAT Credit by invoking the provisions of Rule 3 (5B) of the CENVAT Credit Rules, 2004. The demand of interest and penalties imposed by the Commissioner also set aside. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2021 (12) TMI 237
Dishonor of Cheque - discharge of legally enforceable liability or not - existence of valid agreement between parties or not - HELD THAT:- Indisputably, complainant was a member of COC and he accepted the consideration from the accused for not preferring an appeal against the order of the NCLT. Section 23 of the Contract Act, lays down that Consideration or Object of the agreement is unlawful, if it is forbidden by law or would defeat the provisions of law or would involve injury to any person or property of another or the Court considers it, as immoral, or opposed to public policy. It may be stated that it is contrary to the public policy to induce public officer for money or other valuable consideration, to use their position/office and influence to procure benefit. The agreement between the Complainant and the accused was, void since, beginning. Since liability sought to be enforced by the complainant under the agreement was void , the complaint under Section 138 of the NIA was not maintainable - Application allowed.
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2021 (12) TMI 236
Dishonor of Cheque - breach of contract - offence of cheating - contention of the learned counsel appearing for the petitioner is that absolutely there is no intention whatsoever to deceive the 2nd Respondent/defacto complainant - HELD THAT:- The Courts have quashed the proceedings when the companies were not arrayed as accused and the allegations primarily targeted the company. In such a situation the company not being made a party and the Directors of the company prosecuted in their individual capacity were relieved from the criminal prosecution. It is not the case in the present FIR. The very allegation of false assurance on payment of money made against the A1 and A2 in their individual capacity. Therefore, this Court is of the view that merely the company is not made as a party, it will not absolve the petitioners when the allegation prima facie made against them. Though, it is the contention of the learned counsel for the Petitioner that there is no evidence to show that there is a deception from the inception, it is relevant to note that whether the deception was present from the inception or developed later is the matter of evidence. What has to be seen in the FIR stage is, whether the allegation attracts the offence or not. The evidentiary value of the statements or ingredients cannot be gone into while exercising power under Section 138 of the Negotiable Instruments Act. It is very clear that merely because the commercial transaction it cannot be generally concluded that no criminal prosecution is maintainable. If the allegation in the FIR prima facie show the implication of the offence, the court cannot interfere the investigation at that stage. On looking of the allegations in the present FIR, as indicated, the allegations are made against both husband and wife on false promise and assurance given from the very inception. It is also indicated that six cheques have been issued on the promise of repayment, however the same was dishonoured. Thereafter, wife also assured and given other cheques. It is also alleged that the very supply itself were made on the promises and assurances by both the parties. Petition dismissed.
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2021 (12) TMI 235
Smuggling - narcotics medicine covered under the Narcotics Drugs and Psychotropic Substances Act, 1985 - 4200 tablets of Zolpidam - 6000 tablets of Alprazolam - 12000 tablets of Tramadol - admissibility of statements u/s 67 of the NDPS Act - HELD THAT:- The facts stated in the charge sheet do show prima facie the petitioners were dealing with narcotics and psychotropic substances in large scale. The petitioner Bablu Bhagwan Dangre allegedly had a company under the name of Krivi Infotech which used to deal with narcotic tables and an bank account in HDFC Bank, Nagpur and all the payments were received in this account in relation to the tramadol and other narcotic tablets were being used by petitioners along with Barun Chauhan. It is alleged all the orders of Tramadol tablets were received from India or other countries through mail or on phone were forwarded by Barun Chauhan for confirmation and thereafter to Mr.Lutz at Singapore through mail - Admittedly, the incriminating material has been seized from the mobiles, laptops of petitioners categorically demonstrate trafficking/ transportation/shipping/ external dealings in Tramadol and other psychotropic substances/drugs from India to UK and Singapore etc and petitioners are involved in external trading. The simplictor statement under Section 67 of the NDPS Act may not be admissible under Section 25 of the Indian Evidence Act, however the disclosure leading to discovery of facts within their knowledge that they were indulging in trade of narcotics, including Tramadol tablets in conspiracy with other accused persons coupled with other incriminating material seized on record is relevant in terms of Section 27 of the Indian Evidence Act - Even otherwise, per Section 66 of the NDPS Act, it is presumed the documents and other material seized and/or produced by the person are deemed to be conclusively proved and shall be used against such person unless contrary is proved. No ground is made out to release the petitioners on bail at this stage - Petition dismissed.
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2021 (12) TMI 234
Dishonor of Cheque - cheque was issued for discharge of legal liability towards complainant or not - failure to rebut the onus of proof and statutory presumption under Sections 118(a) and 139 of the NI Act - acquittal of the accused - HELD THAT:- It is well settled by catena of decisions that an appellate Court has full power to review, re-appreciate and consider the evidence upon which the order of acquittal is founded. However, the Appellate Court must bear in mind that in case of acquittal, there is prejudice in favour of the accused, firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reaffirmed and strengthened by the trial Court. The fact remains that there appears nothing on record to substantiate the claim of the complainant that the debt was legally enforceable debt for want of any material to substantiate the same and therefore, in the overall facts and circumstances of the case, the learned Magistrate has come to the conclusion that the debt cannot be said to be the legally enforceable debt, which is sine qua non in such matters and the complainant has failed to prove the same beyond reasonable doubt and in view of the aforesaid facts and circumstances and the evidence on record, this Court agrees with the view taken by the learned Magistrate. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the instant case, the accused has succeeded in rebutting the presumption, showing preponderance of probability by leading evidence and hence, onus shifts upon the complainant to prove otherwise, however, the complainant has failed to prove that the cheque was drawn towards legally enforceable debt as neither any account nor any details of amount paid by the complainant is submitted by the complainant before the trial Court. The complainant has failed to bring home the charge against accused for want of sufficient material. The findings recorded by the learned Magistrate do not call for any interference - Appeal dismissed.
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2021 (12) TMI 233
Principles of natural justice - petitioner s right to cross-examine the complainant was closed - issuance of non-bailable warrants - HELD THAT:- It is apparent that mere change of counsel cannot be a ground to recall a witness. It is further discernible that no prejudice would be caused to an accused if relief of recalling a witness is denied, considering that the accused was given sufficient opportunity to examine the witness but he failed to do the same - At this stage, learned counsel for the petitioner has prayed that only one opportunity may be granted to the petitioner to lead defence evidence. He submits that if permitted, the petitioner undertakes to examine the defence witnesses in one day. Doubtless, the petitioner is guilty of delaying the trial, however, this Court cannot lose sight of the fact that a fair trial is the hallmark of criminal procedure. It entails not only the rights of the victims but also the interest of the accused. It is the duty of every Court to ensure that fair and proper opportunities are granted to the accused for just decision of the case. In furtherance of the above, adducing of evidence by the accused in support of his defence is also a valuable right and allowing the same is in the interest of justice - this Court is of the opinion that interest of justice would be served if the petitioner is allowed one last opportunity to lead defence evidence, subject to his examining the defence witnesses on one single day. It is directed that the matter be listed before the concerned Trial Court on 10.12.2021 for the petitioner to take appropriate steps for leading his defence evidence. The same shall however be subject to payment of cost of ₹ 10,000/- to be payable to the respondent, within a period of three weeks from today - Petition disposed off.
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