TMI Tax Updates - e-Newsletter
February 13, 2021

Case Laws in this Newsletter:

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

TMI SMS

• The refund of the dual payment would not fall within the ambit of Section 19 of the Customs Act - No unjust enrichment and time limitation - HC

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Articles

1. AMENDMENT TO THE PROVISIONS OF ‘TDS’ AND ‘TCS’ BY FINANCE BILL, 2021

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. 15th Instalment of ₹ 6,000 crore released to the States to meet the GST compensation shortfall.

2. Frequently asked questions on QRMP scheme

3. Due dates for filing of Form GSTR-3B from the Tax Period of January, 2020

4. World Bank Signs Project to Support Nutrition-Supportive Agriculture in Tribal-Dominated Areas of Chhattisgarh

5. Decline in core sector output

6. Control and Regulation of e-Commerce Platform

7. Amendments for enabling FPIs to subscribe to listed debt securities of REITs and InvITs

Notifications

Companies Law

1. S.O. 644 (E) - dated 11-2-2021 - Co. Law

Seeks to bring in force Section 52 and 66 of Companies (Amendment) Act, 2020.

2. G.S.R. 113 (E) - dated 11-2-2021 - Co. Law

Companies (Share Capital and Debentures) Amendment Rules, 2021

3. G.S.R. 112 (E) - dated 11-2-2021 - Co. Law

Producer Companies Rules, 2021.

GST - States

4. 90/2020 – State Tax - dated 29-1-2021 - Jharkhand SGST

Amendment in Notification S.O. No. 54 – State Tax, dated the 29th June, 2017

5. 89/2020 – State Tax - dated 29-1-2021 - Jharkhand SGST

Seeks to waive penalty payable for non-compliance of the provisions of notification No.14/2020 – State Tax, dated the 25 June, 2020. - Non issuance of invoice having Dynamic Quick Response (QR) code

6. 13/2020-STATE TAX - dated 9-12-2020 - Kerala SGST

Amendment in Notification No. 1/2017-State Tax dated the 6th July, 2017

7. 12/2020-STATE TAX - dated 9-12-2020 - Kerala SGST

Seeks to rescind Notification No. 10/2020-State Tax, dated the 27th October, 2020

Income Tax

8. 05/2021 - dated 11-2-2021 - IT

U/s 138(1) of IT Act 1961 - Central Government specifies Chief Executive Officer, Center for e-Governance, Government of Karnataka

Circulars / Instructions / Orders

GST

1. 145/01/2021 - dated 11-2-2021

Standard Operating Procedure (SOP) for implementation of the provision of suspension of registrations under sub-rule (2A) of rule 21A of CGST Rules, 2017

2. Instructions No. 01/2020-21 [GST-Investigation] - dated 2-2-2021

Instructions/Guidelines regarding procedures to be followed during Search Operation

Highlights / Catch Notes

GST

• Guidelines for Conducting GST Searches: Authorization, Record-Keeping, Respecting Rights, and Confidentiality Protocols.

  Circulars : Instructions/Guidelines regarding procedures to be followed during Search Operation - Instructions
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• Court Rules No Implied Consent to GST Impact in Toll Revenue Dispute; Future Interest on Compensation Awarded.

  Case-Laws - HC : Compensation on account of inter alia the loss in revenue triggered by reduced toll collections once GST was implemented w.e.f. 1-7-2017, along with future interest - there are no merit in the petitioner’s contention that the respondent’s consent to execute the contract agreement on 30-6-2017 ought to be construed as an acquiescence on its part to bear the consequences of the implementation of GST. - HC
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• Court Grants Bail in Fake Invoice and ITC Fraud Case; No Risk of Evidence Tampering Noted.

  Case-Laws - DSC : Grant of Bail - fake invoices without supply of goods - fraudulent availment of ITC - entire record is in the custody of department. - At this stage, no entity will be in position to manufacture or destroy record. If the department has become more active after filing reply in the Court on 29th January 2020 and has searched the premises of various suppliers of M/s Dholagiri Enterprises and the applicant has placed on record affidavits of some of those suppliers that they were forced to make statements, it cannot be said that he is so powerful as to influence the witnesses. There are always two sides of coin. The Court does not want to go into the question as to whose version is correct, but definitely this is not a case to justify further incarceration of the applicant. - Bail granted - DSC
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Income Tax

• Seismic Survey Vessels for Oil Prospecting Taxed u/s 44BB of Income Tax Act, Income Source in India.

  Case-Laws - AAR : Income accrue or arise, or deemed to accrue or arise in India - It was admitted that the applicant conducts seismic surveys offshore for which it requires seismic vessels and agreements were made with VPCs for providing such vessels. It was further admitted that provision of such vessels on hire to be used in prospecting of mineral oil is covered u/s 44BB. - the place where the vessels are deployed for operation would be deemed to be the source of such business income. - AAR
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• Court Rules Arbitrary Disallowance of Weighing and Unloading Charges Unjustified; Validity of Vouchers Must Be Verified.

  Case-Laws - HC : Disallowance of expenditure on account of the weighing and unloading charges - If the Assessing Officer had any doubt with regard to the genuinity of any one of the vouchers produced he could have drawn sample vouchers and called upon the assessee to establish its genuineness. - Without doing so, making an adhoc disallowance by not specifically assigning any reason to a voucher or bunch of vouchers is not legally tenable. - HC
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• Section 40(a)(ia) Disallowance on Commission for Property Sale Overturned; TDS Non-Deduction Not Applicable to Capital Gains.

  Case-Laws - AT : Non-deduction of TDS on commission paid for sale of property - Invoking provisions of section 40(a)(ia) while computing income under the head “Capital Gain” - the disallowance u/s.40(a)(ia) of the Act made by the revenue authorities cannot be sustained - AT
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• Charitable Organization Challenges Registration Cancellation u/s 12AA for Questioned Donation Authenticity; Cites Compliance with Sections 11 and 2(15).

  Case-Laws - AT : Exemption u/s 11 - charitable activity u/s 2(15) - cancellation of registration u/s 12AA - the assessee submitted that the same were directly deposited in the in the bank account and duly accounted in the books of accounts. If the Ld.CIT(E) suspects the donations, the CIT(E) ought to have taken action for assessing the same as income u/s 68 r.w.s. 115BBE as per law, but there is no case for suspecting the genuineness of the activity of the society. - AT
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• PCIT's Show Cause Notice Deemed Irrelevant for Section 12AA(3) Registration Cancellation; Assessing Officer to Address in Assessments.

  Case-Laws - AT : Exemption u/s 11 - cancellation of registration u/s 12AA - The issues raised in the show cause notice dated 6.12.2018 issued by Ld. PCIT are not relevant for cancellation of registration u/s 12AA(3) of the Act. Such types of issues can be examined by the Assessing Officer during the course of regular assessment proceedings wherein on the basis of his examination/ investigation necessary view as permissible in law can be taken if violation of Section 11 and Section 13 of the Act by the assessee are observed. - AT
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• Pre-closure compensation in contract manufacturing seen as capital receipt; not taxable under Income Tax Act Section 28(va)(a).

  Case-Laws - AT : Nature of receipt - Compensation received for pre-closure of contract manufacturing agreement is in the nature of capital receipt paid for loss of profit from business / loss of investment, but not in the nature of any compensation or other sum paid for not using any know-how, patent, copyright, trade-mark, license, etc., which can be brought to tax u/s.28(va)(a) of the Act. - AT
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• Assessing Officer Disallows Tax Credit for Prior Period Input Service Tax Refund Carried Forward to Current Year.

  Case-Laws - AT : Disallowance of tax credit / service tax written off - disallowance made by the AO for the refund of input service tax written off - Prior period item - When the input service tax credit is carried forward from earlier financial year to the current financial year, it partakes the nature of taxes paid for the current financial year and hence deductible as and when the assessee has debited into the profit & loss account. - AT
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• Valuation Officer Misses Deadline for Building Valuation Report u/s 142A(6); CIT(A) Rules Against Income Tax Department.

  Case-Laws - AT : Unexplained investment u/s. 69 - DDIT (Inv.) could not have referred the question of cost of construction/valuation of the assessee’s building to the Valuation Officer in the year 2014 ; and thereafter, since the DVO did not present the valuation report after AO has referred the valuation vide letter dated 22.01.2016 as well as the Ld. CIT(A) within six months from the end of the month of the reference, the Ld. CIT(A) rightly held that DVO was bound by law [sec. 142A(6)] to have submitted the valuation report within the statutory time limit, which view we endorse.- AT
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• Tax Department's Challenge on Related Party Purchases Fails Due to Prior Acceptance u/s 40A(2)(b.

  Case-Laws - AT : Addition u/s 40A(2)(b) - purchases made by the assessee from related party - The department itself having accepted the price/value of the impugned transaction in the hands of the related party in scrutiny assessment and nothing having been brought before us demonstrating any corrective action being initiated by the department against it in view of the impugned transaction being found to be at inflated prices, we find no force in the argument of the Revenue. - AT
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• Penalty u/s 271(1)(c) Not Justified by Mere Disallowance of Expenditure; Inaccuracies Must Be Clearly Established.

  Case-Laws - AT : Penalty u/s 271(1)(c) - such provision of services and it subsequent revision may result in disallowance of the expenditure but certainly it cannot lead to levy of penalty u/s 271 (1) (C) of the income tax act for furnishing of inaccurate particulars of income - AT
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• Assessing Officer's Addition Deleted as Payments to Goldsmiths Were Within Limits, CIT(A) Order Set Aside u/s 40(a)(ia.

  Case-Laws - AT : TDS u/s 194C - payment was made to goldsmiths for making charges - The payment made was less than ₹ 20,000/- and aggregate payment does not exceed the sum of ₹ 50,000/- as per the details furnished by the assessee. This fact was not disputed by the Ld.CIT(A). Therefore, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO u/s 40(a)(ia). - AT
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• Bank Not at Fault for Not Deducting TDS if Customers Report Interest Income and Pay Taxes, Confirms AO.

  Case-Laws - AT : Non deduction of TDS against the interest - if the AO is satisfied that both the customers have shown their interest income received from the assessee bank in their respective Return of Income and they have remitted the tax on it, then the assessee bank should not be treated as an assessee in default. - AT
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Customs

• Court Rules Against State Using Limitations Defense for Duplicate Payments; Refund Claim Not Under Customs Act Section 19.

  Case-Laws - HC : Seeking reimbursement / refund of “Amount paid twice” - The State is not expected to get itself unduly enriched by erroneous or forced or inadvertent payments of money made by its citizens. The State is not expected to bring in defence of limitation in respect of such payments resulting in unjust enrichment. The claim of the petitioner for refund of the dual payment, in the circumstances, would not fall within the ambit of Section 19 of the Customs Act. - HC
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Indian Laws

• Court Erred: Complainant Unfairly Tasked to Prove Liability Despite Admission of Cheque and Deed Signing.

  Case-Laws - SC : Dishonor of Cheque - Jurisdiction - Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon the Complainant Respondent to explain the circumstances under which the appellants were liable to pay. Such approach of the trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law. - SC
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• Applicant's Claims Dismissed for Lack of Evidence in Cheque Dishonor Case; Importance of Proof and Timely Bank Notification.

  Case-Laws - HC : Dishonor of Cheque - insufficiency of funds - The facts as stated by the applicant will have to be duly proved during trial and bald assertions cannot be accepted at the stage of discharge. No explanation was forthcoming from the applicant as to why he did not informed the bank when his cheque was lost. - HC
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• False Statement to Revenue Authorities: No Cheating Under IPC Section 420, Penalized by Authorities, Not Complainant Company.

  Case-Laws - HC : Cheating - allegation is that the petitioner had given a false statement before the Revenue Authorities - The best allegation against the petitioner is that he suppressed the business relations between the petitioner and the complainant company with the Revenue Authorities to save tax. For this the complainant cannot be said to have been cheated. The revenue authorities, which was the only appropriate authority, has already imposed punishment upon the petitioner’s company as per law. Thus, there is no application of Section 420 of the Indian Penal Code in this case. - HC
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IBC

• Sole proprietorships can file for insolvency u/s 9 of the Insolvency and Bankruptcy Code as operational creditors.

  Case-Laws - Tri : Initiation of CIRP - the operational creditor is a sole proprietorship firm and would fall within the definition of a person. An Operational Creditor means a person to whom an operational debt is owed/due. From the above, it is clear that the petitioner is an operational creditor of the respondent." Accordingly, the petition filed by a proprietary concern under Section 9 of the Code was held to be maintainable. - Tri
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Service Tax

• CENVAT Credit Allowed for Input Services in Pipeline Installation; Revenue's Objections Deemed Unsustainable.

  Case-Laws - AT : CENVAT Credit - input services - laying pipeline - transportation of gas through pipeline - The fundamental objection of the revenue is that pipelines are immovable property and not goods and therefore, any service tax paid on such installation cannot be claimed as input credit by the appellant. - Objections of the Revenue are not sustainable - Credit allowed - AT
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• Penalty u/s 78 Challenged: Tribunal and Authority Err in Misjudging Service Tax Remittance, Confirming Penalty.

  Case-Laws - HC : Levy of penalty u/s 78 of the Finance Act, 1994 - No independent reasons have been given by the first appellate authority to confirm the penalty under Section 78 of the Act. When the matter went before the Tribunal, no attempt has been made to examine the facts of the case and the Tribunal also was of the view that the assessee had separately collected the service tax and not remitted to the Department, but filed Nil return. This being contrary to facts, both the authorities and the Tribunal committed error in levying/confirming the penalty under Section 78 of the Act. - HC
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Central Excise

• High Court Affirms Tribunal's Decision to Remove Penalty Due to Department's Delay in Show Cause Notice Issuance.

  Case-Laws - HC : Deletion of penalty - assuming “bonafides” - the Department took more than 2-1/2 years to issue show cause notice when they were fully aware that the CENVAT credit was wrongly availed by the respondent. Therefore, the finding rendered by the Tribunal on the facts and circumstances cannot be termed to be perverse for us to interfere in an appeal filed under Section 35G of the Act. - HC
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• Court Denies Refund of CENVAT Credit for ICB Project Supplies; Goods Not Deemed as Exports.

  Case-Laws - AT : Refund of accumulated CENVAT Credit - goods have been supplied to a project awarded under ICB, treating such supplies to be deemed exports - export goods or not - In view the various discussions we find that none of the decisions relied upon by the appellants decided the issue in their favour. - AT
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VAT

• Penalty u/s 27 TNVAT Act Invalid if Based on Alleged Admissions Before Inspecting Authority; Independent Assessment Required.

  Case-Laws - HC : Levy of penalty under Section 27(3)/27(4) of TNVAT Act - Any alleged admission before the Inspecting Authority cannot be put against the assessee because the Assessing Officer is an independent Authority, who will deal with the matter upon receipt of the report from the Inspecting Wing. Hence, it hardly matters as to what stand was taken by the assessee when the inspection was conducted. Accordingly, so far as the levy of penalty under Section 27(4) of the Act for the assessment year 2009-10 is concerned, the same cannot be sustained. - HC
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• Court Overturns Tax Reassessment Citing Violations of Sections 11(1) and 11(3) Using Article 226 Judicial Review Powers.

  Case-Laws - HC : Re-assessment of tax - demand of tax - The apposite order of reassessment, as, embodied in Annexure P- 12-A, displays qua an allusion being made to the audit observations, appertaining to the purported under-assessed or escaped tax, and, further reveals qua theirs arising from purported breaches being visited, to, the provisions of Section 11(1) and 11 (3) of the Act - this Court proceeds to set aside the impugned Annexures, through its invoking the power of judicial review, invested under Article 226 of the Constitution. - HC
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Case Laws:

• GST

• 2021 (2) TMI 506
  Filing of declaration in form GST Tran 1 - transitional credit - vires of Rule 117(1) (1A) of the Central Goods and Service Tax Rules, 2017 - time limitation - CBIC Circular No.39/13/2018-GST dated 03.04.2018. HELD THAT:- Issue Notice.

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• 2021 (2) TMI 503
  Jurisdiction - once an investigation into the alleged illegal functioning of the companies has started and is being carried out by one agency which is DGGI, Headquarter, even if the other zonal agencies have jurisdiction all over the India, should investigations be carried out for different quarters by different agencies? - fake input uax credit - issuance of fake invoices - HELD THAT:- This Court deems it fit to direct the petitioners to join the investigation till the next date of hearing before the respondent No.1 on notices being issued. In the meantime, no coercive action will be taken against the petitioners. List the petition for consideration on 25th March, 2021.

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• 2021 (2) TMI 500
  Release of goods under detention upon payment of the tax and penalty - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Nothing remains to be done now in this writ application. It shall be open for the writ applicant to challenge the same by preferring an appeal under Section 107 of the Act. This writ application stands disposed of.

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• 2021 (2) TMI 479
  Compensation on account of inter alia the loss in revenue triggered by reduced toll collections once GST was implemented w.e.f. 1-7-2017, along with future interest - HELD THAT:- It is a general truth that once the Government of India had proposed implementing the GST all over the country, the respondent was aware of its advent, but I find the petitioner s deduction that the respondent s awareness of the regime implied that it had knowledge of the date on which it would be implemented, on the date of submission of the bid, entirely unsupported and presumptuous. It is far-fetched to argue that the respondent s awareness of the existence of a policy would equip it with the ability to predict the date on which the said policy would be implemented. The Learned Arbitrator has rightly held that once the earlier date of 1-4-2017 was postponed by the Government of India, the next date of implementation was not known or could not be speculated by anybody. The petitioner s assertion that the respondent ought to have refrained from executing the contract agreement if it was unwilling to bear the consequences of the GST regime also proceeds on the presumption that the respondent had the ability to predict the adverse impact of this decision on consumer behaviour with respect to utilization of national highways. This line of argument also fails to account for the fact that by 28-6-2017, the day when the Government of India announced its intention to implement this regime, the parties were already bound contractually owing to the LoA issued by the petitioner on 21-6-2017, which aspect had been elucidated by the Learned Arbitrator - there are no merit in the petitioner s contention that the respondent s consent to execute the contract agreement on 30-6-2017 ought to be construed as an acquiescence on its part to bear the consequences of the implementation of GST. Whether the implementation of the GST regime qualified as any change in law which has a material adverse effect on the obligation of the parties hereto. as envisaged in the force majeure Clause, i.e. Clause 25(b) of the contract agreement? - HELD THAT:- The respondent observed the then prevailing traffic volume statistics and immediately sent notices to the petitioner on 5-7-2017 and 10-7-2017, which have also been duly noted by the Learned Arbitrator in its award. Thus, the respondent gave the petitioner early notice and regular updates regarding the downward dip of highway traffic and toll collections at that point of time. The respondent even requested the petitioner to carry out its own traffic assessment to verify the respondent s claims, but the petitioner refused. It is against this backdrop that the petitioner issued the circular dated 16-3-2018, specifically for the benefit of its toll collection contractors, which stipulated that while the implementation of the GST Act constituted a change in law , but whether this change invited application of the force majeure clause in a contract would be determined in the facts of each case by the respondent s representatives. There are no merit in the petitioner s contention that the implementation of GST could not be construed as a change in law to qualify as a force majeure event in the respondent s case. In the first place, on 16-3-2018, once the petitioner released a public circular deeming the implementation of GST as a change in law qualifying as a force majeure event, I see no reason to deprive the respondent of the benefit of this declaration. Secondly, even if the petitioner wished to rebut the respondent s contentions on this ground, it was the petitioner s duty to provide the Learned Arbitrator with a transparent and complete picture of the flow of traffic and toll collections arising therefrom, instead of providing data containing inflated figures owing to exclusion of non-tollable vehicles. A perusal of the findings extracted hereinabove show that the petitioner s sole caveat in the circular that the toll contractors had been unable to prove their claims, stood resolved when the Learned Arbitrator not only delved into the specifics of the respondent s claims, but also meticulously combed through the specific project inputs provided by the respondent to conclude that it had suffered material losses in toll revenue owing to the implementation of GST. There is absolutely no ground made out to interfere with the impugned arbitral award passed by the Learned Arbitrator warranting the exercise of the limited jurisdiction of this Court under Section 34 of the Act - Petition dismissed.

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• 2021 (2) TMI 477
  Constitutional validity of the retrospective amendment to Section 140 of the Central Goods and Services Tax Act, 2017 and Rule 117 of the Central Goods and Services Rules, 2017 - HELD THAT:- The following questions arise for consideration in these writ petitions: (1) Whether Input Tax Credit is a vested right and therefore, whether the imposition of a time limit for transitioning or utilisation thereof is constitutionally impermissible? (2) Whether the time limit imposed in Rule 117 of the CGST Rules is mandatory or directory? (3) Whether Section 140 of the CGST Act read with Rule 117 of the CGST Rules divests the assessee of an alleged vested right or whether it prescribes conditions relating to the enforcement of such right? (4) Whether the assessee has a legitimate expectation that the Input Tax Credit availed under the erstwhile tax regime should be permitted to be transitioned to the new tax regime without imposing a time limit? (5) Whether the deprivation of the benefit of transitional Input Tax Credit would amount to double taxation of the assessee as alleged? List on 18.09.2020. Issue notice to the second and third respondents returnable by then.

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• 2021 (2) TMI 437
  Grant of Bail - fake invoices without supply of goods - fraudulent availment of ITC - offence punishable under Section 132 of GST Act - HELD THAT:- The contention of the respondent that information is pouring in and, as of date, wrongful availment of ITC to the tune of Rs.8,82,55,520/- has come to the fore, cannot be ex-post facto justification for arrest of the applicant. It will not be out of place to mention that wrongful/fraudulent availment of ITC of more than Rs.5 crores has to be seen at the time of authorizing arrest. If the amount falls short, then the Commissioner has no reason to believe that a person has committed a cognizable and non-bailable offence within the meaning of Section 132 of the Act so as to justify his arrest in order to investigate further. Needless to say that in Rs.5 cases where there is no cogent material to show that ITC of more than Rs.5 crores has been wrongfully/ fraudulently availed, the authorities may continue with the investigation without arrest of the applicant. If, on conclusion of investigation, it is found that the amount so availed was more than Rs.5 crores, complaint will be instituted under 132 (a) or (b) or (c) or (d) of sub Section 1 read with Clause (i) of sub Section 1 of Section 132 of the Act. Otherwise, complaint will be filed either under Clause (ii) or clause (iii) or clause (iv) of sub Section 1 of Section 132 of the Act but, by no stretch of imagination, can arrest of a person be justified to enable the department to collect evidence if at the time of arrest, the material fell short of indicating the availment of ITC of more than Rs.5 crores. The manner in which the statement of Nitish was pleaded to have been recorded at his residence, but now it is being tried to be projected that it was recorded in the office of CGST at Kamal in response to notice under Section 7 of the CGST Act raises a serious suspicion about manipulation, so is the attempt by the authorities to surreptitiously incorporate in the panchnama that record pertaining to M/S Dholagiri Enterprises was recovered from the premises of the applicant. It will not be out of the place to mention that the statement of the applicant was recorded on 9.1.2021. He was allegedly shown the panchnama dated 8.1.2021 drawn at the registered premises of M/s Dholagiri Enterprises and was asked about invoices worth Rs.133.47 crores involving ITC amounting to Rs.24.28 crores approximately. It is not clear as to how and on what basis this figure of Rs.133.47 crores was arrived at particularly when in his statement Nitish Kumar has simply referred to ITC amounting to Rs.24.25 crores. Needless to say that the applicant acknowledged having received the invoices but never admitted availment of ITC amounting to Rs.24.28 crores. He is alleged to have admitted that he wrongly availed ITC amounting to Rs.4.50 crores approximately from Dholagiri Enterprises. This was all the more a reason for the commissioner not to pull the trigger by authorizing arrest of the applicant even after he had reversed an amount of Rs.2.55 crores immediately. In Rakesh Arora Versus State of Punjab CRM-M 1511- 2021 on which reliance is being placed by counsel for respondent, the Hon ble High Court did not differ with the guidelines laid down in Akhil Krishan Maggu [ 2019 (11) TMI 942 - PUNJAB AND HARYANA HIGH COURT ], but it rejected the plea for bail of the applicant on the ground that the case was covered by illustration 6. In this case, the guidelines/illustrations at serial No.l, 2, 3 and 5 are not applicable. In so far as the guideline at serial No.4 is concerned, there is least possibility of the applicant fleeing from country given the fact that he has a large number of government contracts in his hands. Even otherwise, this aspect can be taken care of by making a condition for surrender of passport. Coming to guideline No.6, as observed, herein above, there was no direct documentary or otherwise concrete evidence available on record indicating tax evasion of more than Rs.5 crores. Moreover, the applicant has established business. It is not denied that he is paying good amount of direct and indirect taxes. He is not a fly by night operator - As rightly pointed out by counsel for the respondent, the guidelines are illustrative and not exhaustive, but he has not been able to persuade the court as to apart from these guidelines/ illustrations which other grounds could be there. The court is conscious that in some aspects it has gone into merits which, at the time of deciding application for bail is not advisable, but this was necessary because the contention before the court was that the applicant was authorised to be arrested by the Commissioner without there being material to form a reasonable belief that he had committed offence punishable under Clause (i) of Sub-Section 1 of Section 132 of the Act. In view of the law laid down in Akhil Krishan Maggu (supra), the Court was required to look into the entire facts and circumstances to find out if there was credible material to justify arrest of the applicant. In Dhruv Krishan Maggu versus Union of India decided by the Hon ble Delhi High Court on January 8, 2021 on which reliance has been placed by the respondent also, it was held that though it was not inclined to interfere with investigation at that stage and that too, in writ proceedings, but at the same time innocent persons cannot be arrested or harassed. The Hon ble High Court went on to observe that it has no doubt that the trial court, while considering the bail or remand or cancellation of bail application, will separate the wheat from the chaff and will ensure that no innocent person, against whom baseless allegation has been made, is remanded to police judicial custody . It follows that a bail application in a case under CGST Act has to be treated differently from a bail application in oridnary matter in which merits are not to be dwelt upon. The court is of the opinion that while authorising arrest of the applicant, there was no credible material with the commissioner to form a reasonable belief that the application had wrongfully/fraudulently availed ITC of more than Rs.5 crores. Moreover, there was nothing to suspect that the applicant was a fly by night operator, who would vanish if not arrested immediately. Therefore, his arrest may not be justifiable. Now that, he is in custody since 9.1.2021 and, he has already paid Rs.2.55 crores which is 10 per cent of the disputed liability, he deserves bail as on the same condition the Hon ble Supreme Court had directed no coercive action against the petitioner in C.Pradeep Versus the Commisioner of GST and Central Excise Selam and another Special leave to appeal (Crl.) No.6834/2019. The apprehension of the respondents that he will interfere in investigation by tampering with evidence or by winning over the witnesses seems to be unfounded for the reason that entire record is in the custody of department - Whatever information is to be collected from other entities will be available with them or on the portal/ in the records of the department. At this stage, no entity will be in position to manufacture or destroy record. If the department has become more active after filing reply in the Court on 29th January 2020 and has searched the premises of various suppliers of M/s Dholagiri Enterprises and the applicant has placed on record affidavits of some of those suppliers that they were forced to make statements, it cannot be said that he is so powerful as to influence the witnesses. There are always two sides of coin. The Court does not want to go into the question as to whose version is correct, but definitely this is not a case to justify further incarceration of the applicant. The application is admitted to bail on his furnishing personal bonds in the sum of Rs.5 lacs with one surety in the like amount to the satisfaction of Ilaqua/Duty Magistrate. He shall not leave India without prior permission of the Court and shall surrender his passport while furnishing bonds - Application allowed.

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• Income Tax

• 2021 (2) TMI 507
  Income accrue or arise, or deemed to accrue or arise in India - contract of ONGC that the applicant had utilized the services of seismic vessels of the VPCS [ vessel providing companies] for acquisition of 4C-3D Base Survey Seismic Data - explanation to source rule - source of the business income of the VPCs was embedded in the contract awarded by ONGC to the applicant - acquisition of 4C-3D Base Survey Seismic Data for which the vessels were deployed was only a part of the composite lump-sum contract awarded by ONGC - accrual of income of the VPCs through the business connection in India and also about the territorial nexus of the income generated by them - period of deployment in Indian Territory - business income taxable u/s 44BB ot not? - What is the nature of the sum paid by the applicant to the VPCs under the BBC agreement i.e. whether it is business income taxable u/s 44BB of the Act or royalty income u/s 9(1)(vi) of the Act? - HELD THAT:- The hiring of the vessels by the applicant, pursuant to the contract with ONGC, was for this purpose only. Further, the Explanation to the section 44BB clarifies that plant includes ship or any scientific apparatus or equipment used for the purpose of said business. Thus, the research vessel employed by the applicant is found to be covered within the scope of plant as defined in this section. Therefore, the payment made by VPCs is found to be for supply of plant and machinery on hire used in the prospecting for mineral oil in India and is squarely covered under the provision of section 44BB(2)(a) of the Act. Since the receipt is found to be covered under the provision of Section 44BB it cannot partake the character of royalty in view of specific exclusion under clause (iva) of Explanation 2, to section 9(1)(vi) of the Act. The amounts paid by the applicant to the VPCs is found to be covered under the provision of section 44BB of the Act. In fact, the applicant has no serious objection to treat the revenue in the hands of VPCs as income u/s 44BB of the Act. It was admitted that the applicant conducts seismic surveys offshore for which it requires seismic vessels and agreements were made with VPCs for providing such vessels. It was further admitted that provision of such vessels on hire to be used in prospecting of mineral oil is covered u/s 44BB. The source of business income of the vessels was held partly outside India and partly in India, even though the vessel was operating in India during the entire period of contract. In our considered opinion such a concept of accrual of income is not only anomalous but also fraught with manipulation as one can take the vessel away from the place of operation on the date of agreement/renewal and redeploy it at the site afterwards, to escape the rigor of source or territorial nexus. As the business activity in the nature as described in section 44BB of the Act was carried out by the VPCs through the seismic vessels, we are of the opinion that the place where the vessels are deployed for operation would be deemed to be the source of such business income. The parameters of the source rule as explained by the Apex Court in the case of GVK industries [ 2015 (2) TMI 730 - SUPREME COURT ] is found fulfilled in this case and the business activity of the VPCs is found to have a clear nexus with the Indian Territory. There was existence of close, real, intimate relationship and commonness of interest between the non-resident VPCs and the applicant both of whom were operating in Indian Territory and which satisfies the essence of business connection and territorial nexus . Ruling : - The sum paid by the applicant to the vessel providing companies (VPCs) under global usage under bare boat charter (BBC) agreements is deemed to accrue and arise in India and is liable to tax in India under the Income-Tax Act and, therefore, subject to withholding tax in India. The income liable to tax is to be assessed as business income under the provisions of Section 44BB of the Act. Sum received by VPCs is not in the nature of Royalty under section 9(1)(vi) of the Act. Computation mechanism u/s 44BB of the Act would apply.

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• 2021 (2) TMI 501
  Disallowance of expenditure on account of the weighing and unloading charges - some of the vouchers were hand made and some vouchers were not available so 20% of the expenses was disallowed and added back to the returned income - HELD THAT:- Assessee had produced the books of accounts, ledgers, purchase and sales registers, stock registers, bills, vouchers for expenses claimed including purchase bills, freight bills as called for by the Assessing Officer. This is admitted by the Assessing Officer in the assessment order. Admittedly, the assessee s case was selected for scrutiny under section 143(3) of the Act. If such is the fact situation, the Assessing Officer was bound to scrutinize the documents produced and frame an assessement by granting/refusing eligible/ineligible deduction. We find that the AO has made observation that the vouchers are self made/hand written and some vouchers are not produced. This in our opinion appears to be a vague statement. This finding has been recorded by the Assessing Officer with regard to the amount claimed by the assessee as expenses towards transport charges. Given the nature of the industry, we can take judicial notice of the fact that always computer generated vouchers may not be issued by the transporters unless they are an organization owning a large fleet. If the Assessing Officer had any doubt with regard to the genuinity of any one of the vouchers produced he could have drawn sample vouchers and called upon the assessee to establish its genuineness. Without doing so, making an adhoc disallowance by not specifically assigning any reason to a voucher or bunch of vouchers is not legally tenable. Thus it is not a case where there is no record available with the assessee to justify their claim and had the Assessing Officer taken a little effort to examine the correctness of the vouchers, in all probabilities the assessee might have not been before us by way of this appeal. Thus, we are convinced that the assessement requires to be re-done after a thorough verification - Decided in favour of assessee.

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• 2021 (2) TMI 497
  Deduction u/s 80P(2)(a)(i) - whether activity of the appellant is that of finance business and cannot be termed as cooperative society? - assessee - society is registered under the provisions of the TNCS Act - definition of the word members - HELD THAT:- As decided in M/S. S-1308 AMMAPET PRIMARY AGRICULTURAL COOPERATIVE BANK LTD. [ 2019 (1) TMI 116 - MADRAS HIGH COURT] Definitions of the expressions members and associate member under the TNCS Act held that an associate member is also a member in terms of Section 2(16) of the TNCS Act. Furthermore, the Assessing Officer himself found that the associate members are also admitted as members of the society. In such circumstances, the Assessing Officer fell into an error in not granting any relief to the assessee society, which was rightly granted by the CIT (A) as confirmed by the Tribunal. In addition to that, the Assessing Officer has not pointed out that loans have been disbursed to all and sundry in terms of the provisions of the TNCS Act and in terms of Clause (b) to Sub-Section (4) of Section 80P of the Act, the society has an area of operation, operates within the taluk and will provide long term credit for agricultural and rural development activities as well. The CIT (A) rightly granted the relief to the assessee as confirmed by the Tribunal. - Decided against the Revenue.

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• 2021 (2) TMI 491
  Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax - a preliminary objection raised that there was no undisclosed foreign income and asset, and which objection has been dismissed by the respondent - It is contended that the said dismissal is contrary to the preponderance of probabilities and the petitioner is thus entitled to maintain the petition - HELD THAT:- As remedy against the order of assessment and whether in the said remedy, it will be open to the petitioner to also assail the finding with respect to the existence of the jurisdictional fact. Though we are of the prima facie opinion that a better course, in view of the line of judgments falling from D.P. Maheshwari Vs. Delhi Administration [ 1983 (9) TMI 317 - SUPREME COURT] would be to not entertain this writ petition at this stage and to allow the petitioner to avail of the appellate remedy and if the same is draconian, to at that stage interfere with the condition for maintaining an appeal, if found to be too harsh, but it is deemed appropriate to consider. Issue notice. Notice is accepted by the counsel for the respondent.

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• 2021 (2) TMI 486
  Treatment to Professional Fees as income - provisional fees not being treated as income during the year by ignoring the Section 199 of the Act read with Rule 37BA of the Rules - Double addition - HELD THAT:- Tribunal has taken the view that the assessee had offered tax in the subsequent year and if any addition is made in the year under consideration, the same may amount to double addition, which would be contrary to the provisions of law. In such circumstances, we are of the view that no error could be said to have been committed by the Tribunal in taking such view. Disallowance u/s 14A of the Act in respect of the interest expenditure - HELD THAT:- In case of the assessee that netting of interest income and outgo is required to be done while invoking Rule 8D (2)(ii) of the IT Rules in the light of the decision of the Hon ble Gujarat High Court in the case of Pr.CIT Vs. Nirma Credit Capital (P.) Ltd. [ 2019 (7) TMI 33 - GUJARAT HIGH COURT] in view of the decision holding that interest earned by the assessee is required to be factored for the purpose of ascertaining the amount of expenditure incurred by the assessee by way of interest, we find merit in the plea of the assessee that Rule 8D(2)(ii) shall have no application in the given facts where the interest income earned outweigh the interest expenditure. In consonance with the decision of the Hon ble Gujarat High Court, we decline to interfere with the conclusion drawn by the CIT(A) on the issue in favour of the assessee. Addition to book profit under Section 115JB being a mere 1 % of the exempt income - Admit this Tax Appeal on Question No.2[C] - Whether the Appellate Tribunal has erred in law and on facts in restricting the addition made to book profit under section 115JB being a mere 1 % of exempt income?

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• 2021 (2) TMI 480
  Refund along with interest u/s 244A - upon the petitioner filing an application under section 154 Transfer Pricing Officer reduced the additional income to Nil vide order and order not given effect to and the refund was not issued, petitioner filed the present writ petition - HELD THAT:- Having perused the paper book, this Court is of the view that it is strange that the Appeal Effect Order was not passed for around eight months. The fact that an assessee after succeeding in a protracted litigation has to file another legal proceeding i.e. a writ petition to implement and execute the said order, does not reflect well on the functioning of the Tax Department. This Court is of the view that the respondents should have given effect to the Appeal Effect Order as well as issued the refund immediately and there should have been no occasion for the petitioner to file the present writ petition. As the request for adjournment, once again, is declined and the respondents are directed to pass the Appeal Effect Order in pursuance to Transfer Pricing Officer s order dated 19th February, 2020 and to grant refund along with interest under section 244A of the Act as well as to pass rectification orders on the petitioner s application dated 19th August, 2020 within four weeks in accordance with law.

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• 2021 (2) TMI 475
  Non-deduction of TDS on commission paid for sale of property - Invoking provisions of section 40(a)(ia) while computing income under the head Capital Gain - whether the provisions of Section 40(a)(ia) is applicable for computing the income chargeable under the head Profits and gains of business or profession or computation of income under any other heads of income also? - assessee is a partnership firm - HELD THAT:- Section 40 clearly stipulates that Notwithstanding anything to the contrary in Sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession . Hence it is evident that the provisions of Section 40(a)(ia) is applicable while computing income chargeable under the head Profits and gains of business or profession and it is not applicable to any other heads of income. In the case of Mahatma Gandhi Seva Mandir [ 2012 (5) TMI 396 - ITAT MUMBAI] the Hon ble ITAT Mumbai has held that the exception in Section 40 is carved out, only for the purpose of Section 28 and not for computing the exemption of income of a charitable trust under Section 11. The disallowance made under Section 40(a) will only go to enhance the business profit of an assessee whose income is assessable under Section 28 and not otherwise. Hence, provisions of Section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of Section 11. In view of the clear language of the relevant statutory provisions it is of the view that the disallowance u/s.40(a)(ia) of the Act made by the revenue authorities cannot be sustained and I direct the said addition to be deleted and allow the appeal of the Assessee.

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• 2021 (2) TMI 473
  Bogus purchases - accommodation entries of bogus purchase - additional income u/s 69C - HELD THAT:- The documents relied upon by parties were not considered. The documents related to M/s. Maniprabha Impex Pvt. Ltd., M/s. Kangan Jewels Pvt. Ltd. and Dharm Impex have been produced and discussed above which were duly corroborated with the bank statement of the assessee. There is no plausible explanation that as to why the statement of Shri Dharmchand S. Jain recorded u/s 131 of the Act dated 28.11.2017 was not properly considered. This statement was specific in connection with the transactions in question. The statement of Shri Dharmchand S. Jain was considered which was general in nature and got recorded in the year of 2013. There should be cogent and convincing evidence on record to make the addition on record. When the person who sold the article have made the statement before the AO in pursuance of notice to the fact that he did not provide any accommodation entry then there should be sufficient evidence on record to decline the evidence adduced by assessee as well as by seller if any - Additions deleted - Decided in favour of assessee.

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• 2021 (2) TMI 471
  Penalty u/s 271(1)(c) - assessee offered additional income during the search and has paid taxes on the same - Assessment order passed pursuant to notice under section 153C - HELD THAT:- No addition has been made by the Ld.AO on such income offered by assessee and has been accepted by the revenue. We note that, while passing the assessment order the Ld.AO recorded satisfaction in respect of concealment towards the additional income offered by assessee based on the seized material. The notice issued under section 274 of the Act is for both the limbs being filing of inaccurate particulars of income as well as concealment. On a careful perusal of the penalty order passed by the Ld.AO, it is clear that all throughout the submissions made by assessee was in respect of concealment of income regarding the additional sale consideration of land, the Ld.AO levies penalty for furnishing inaccurate particulars of sale consideration of the land. This in our opinion is a clear nonapplication of mind by the Ld.AO. Penalty was initiated by the Ld.AO therein in assessment order passed pursuant to notice under section 153C of the Act, wherein assessee therein declared additional income in the returns filed in response to notice under section 153C of the Act. As decided in Rajkumar Gulab Badgujar [ 2019 (9) TMI 360 - SC ORDER ] where no addition to the income declared by the searched person in the return filed pursuant to search is made it is not open to the revenue to levy penalty by virtue of Explanation 5 to section 271 - Decided in favour of assessee.

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• 2021 (2) TMI 470
  Addition u/s 68 - No source of cash deposits in his savings bank account with Canara Bank - HELD THAT:- The assessee has filed a letter in which the complete details of cash withdrawals and deposits from various banks were furnished. The assessee has also submitted the details of proprietary concern M/s. Voltron Power Systems, where turnover for the concerned assessment year was about Rs. 1,45,00,000, which was deposited in different bank accounts and periodical withdrawals were partly used for deposit in the saving bank account maintained by the assessee with Canara Bank. The assessee has also filed the above details before the CIT(A), but the same was neither examined nor considered. Consequently, the assessee had filed application u/s 154 but CIT(A) rejected the application u/s 154 on the ground that the detailed written submissions were filed on 23.01.2018, and therefore, not considered in the appellate order, which was passed on 17.01.2018. Admittedly, the assessee s books of account are audited and copies of the books of account audited are placed in the paper book filed by the assessee. In the interest of justice and equity, we are of the view that the matter needs to be examined de novo by the A.O - thus addition is restored to the files of the A.O - Decided in favour of assessee for statistical purposes.

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• 2021 (2) TMI 469
  Exemption u/s 11 - charitable activity u/s 2(15) - cancellation of registration u/s 12AA - CIT-E doubted genuineness of the activity of the society, because, he had observed certain defects with regard to profit for the F.Y. 2015-16, 2016-17 and 2017-18 - HELD THAT:- Assessee has furnished financial statement and as seen from the financial statements, the same refers to the construction account undertaken by the assessee which was not reflected in the income and expenditure statement, but recorded in the balance sheet. Thus, there was an error in the finding of the Ld.CIT(E) with regard to profit making activity of the assessee society. Violation of provisions of section 13(1) - Unreasonable payment of rent - no basis for suspecting the source of income of the daughters for purchase of land. It is observed that the assessee society is paying the rent of Rs. 50,000/- per year for 1355 sq.yds of land which is leased to the society for 15 years for the purpose of construction of old age home which works out Rs. 3.00 per square yard for month. The rent of Rs. 50,000/- per year on 1355 sq.yds of land in the vicinity of Visakhapatnam district appears to be reasonable and there is no reason to suspect the reasonableness of payment of rent. Payment of salary to Sri P.Prabhakar, who is working in the orphanage home for 24 x 7 cannot be said to be unreasonable by any stretch of imagination - CIT(E) ought to have considered the minimum wages as per the act in the area as decided by the District Collector, working hours and compared the salary paid to Sri P.Prabhakar with the minimum wages to arrive at the reasonableness. Defects of donations, Loyola Sweet Home is stated to be the name of orphanage home and on the receipt, registered number of the society was also duly printed and no defects were brought on record with regard to accounting of the receipts in the society s books, thus, there is no reason to suspect the genuineness of the activity of the society. Donations deposited in the bank account on 15.11.2016 and 25.11.2016, the sums of Rs. 1.00 lakh and Rs. 10,000/- respectively, the assessee submitted that the same were directly deposited in the in the bank account and duly accounted in the books of accounts. If the Ld.CIT(E) suspects the donations, the CIT(E) ought to have taken action for assessing the same as income u/s 68 r.w.s. 115BBE as per law, but there is no case for suspecting the genuineness of the activity of the society. Purchase of Maruti van, it is observed that Maruti van was purchased by the society prior to registration and the same was not brought into books of accounts. Van was used exclusively for ambulance of the society. The invoices was also available for purchase of Maruti van and no depreciation was claimed. The Ld.CIT(E) ought to have taken the appropriate action for the A.Y.2010-11( relevant to the Previous year 2009- 10) if necessary as per law. Loans, genuineness cannot be doubted. The assessee has accepted the interest free loans, the creditors are identifiable and the no individual benefit was given by accepting interest free loans thus there is no reason for the CIT(E) to reject the registration u/s 80G of the Act. Bills for construction activity, the assessee stated that it would produce the bills given the opportunity. In the instant case, we find that though the assessee has filed application on 29.03.2019, the case was taken up by the Ld.CIT(E) at the fag end of the period i.e. 13.09.2019, thus there was no time for the Ld.CIT(E) to examine the issue properly. Though all the issues prima facie appears to be not a reason for rejection of application of the assessee society, all the above issues needs to be verified in detail to take further action. Therefore, in our considered opinion, the issue needs to be remitted back to the file of the CIT(E). Accordingly, we remit the matter back to the file of the Ld.CIT(E) with a direction to examine the issues with regard to genuineness of the society and take appropriate action as per law. Appeal filed by the assessee is allowed for statistical purpose.

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• 2021 (2) TMI 467
  Addition u/s 69B - investments exceeding the amount shown in the sale deed would not fasten any liability on the assessee under section 69B - HELD THAT:- No documentary evidence has been placed on record which revealed that the assessee in the present case had purchased the property in question at a higher sum than what was revealed in the sale deed. Even otherwise, after going through contents of the registered sale deeds placed on record, we are of the view that these sale deeds are registered documents and the sale consideration of Rs. 39,12,000/- and Rs. 32,15,000/- were received by Shri Narayan and Shri Ganga Ram respectively. On the contrary, no document or corroborative evidence has been placed on record by the revenue authorities to prove that the investments made exceeded the investments shown in the books of account of the assessee. Therefore, merely stating that the assessee made investments exceeding the amount shown in the sale deed would not fasten any liability on the assessee under section 69B - We delete the addition - Decided in favour of assessee.

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• 2021 (2) TMI 466
  Exemption u/s 11 - cancellation of registration u/s 12AA - donations received from various concerns - HELD THAT:- As regards the alleged donations received from various concerns mentioned in the impugned order, we are satisfied with the identity of the alleged donors, genuineness of the transaction of giving donation to the assessee trust since most of the alleged donors are either charitable trusts or known to the Directors/ Promoters and the transactions being carried out through banking channel and we are also satisfied with the creditworthiness of the alleged donors as they have sufficient financial strength to provide the donation to the assessee trust. As regards the alleged irregularity in education process noted by CBI the matter is still subjudice with the court and the order of Regulatory Authority namely Admission Fee Regulatory Committee stand stayed by the Hon ble jurisdictional High Court vide stay order dated 23.7.2015 which is effective till date. The alleged irregularity is for one of the year in only one of the college run by the trust amongst other hospitals and colleges which are undisputedly providing charitable services in the field of medical and education. The issue of irregularity in admission process is not part of the show cause notice dated 6.12.2018 issued to the assessee in connection with the cancellation of registration u/s 12AA(3) of the Act which shows that assessee was not granted reasonable opportunity of being heard on this issue which in itself makes the proceedings bad in law. The issues raised in the show cause notice dated 6.12.2018 issued by Ld. PCIT are not relevant for cancellation of registration u/s 12AA(3) of the Act. Such types of issues can be examined by the Assessing Officer during the course of regular assessment proceedings wherein on the basis of his examination/ investigation necessary view as permissible in law can be taken if violation of Section 11 and Section 13 of the Act by the assessee are observed. Ld. PCIT can only cancel the registration u/s 12AA(3) of the Act if it is found that the activities of the society/trust are either not genuine or are not being carried out in accordance with its object provided in bye laws. Nothing on record has been brought before us by way of an independent enquiry by Ld. PCIT thereby collecting necessary evidence which can show that the activities of the assessee society are either not genuine or are not being carried out as per the objects of the society which were filed before the registering authority at the time of granting registration u/s 12AA of the Act. It is therefore established that the activities carried out by the appellant assessee society by way of running hospitals and medical colleges for the benefit of public at large and for the students are for charitable purposes only as provided in Section 2(15) of the Act. The impugned order of Ld. PCIT cancelling the assessee s registration granted u/s 12AA(1) of the Act deserves to be quashed - Decided in favour of assessee.

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• 2021 (2) TMI 465
  TP Adjustment - ALP Determination - Forex gain earned form Software Development Services - considered operative in nature while computing the PLI - HELD THAT:- As relying on M/S. FIDELITY BUSINESS SERVICES INDIA PVT. LTD. [ 2020 (12) TMI 728 - ITAT BANGALORE] we are of the opinion that foreign exchange gain arising from the fluctuation of foreign exchange has to be considered as operative in nature while computing the PLI. The CIT (Appeals) has taken a correct view holding that the foreign exchange gain earned having nexus with international transaction as part of operating income. This ground of appeal of revenue is dismissed.

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• 2021 (2) TMI 463
  Reopening of assessment u/s 147 - AO has made addition towards compensation received for termination of manufacturing agreement u/s.28(va)(a), on the ground that any sum whether received or receivable in cash or kind under agreement for not carrying out any activity in relation to any business shall be chargeable to Income Tax under the head profits and gains of business or profession for not sharing any know-how, patent, copyright, trade-mark, license, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services - HELD THAT:- In this case, on perusal of assessment order passed u/s.143(3) of the Act on 15.12.2009, we find that there is no discussion of whatsoever in the assessment order regarding the issue of compensation received for termination of contract. Further, the assessee has also failed to file any evidence to prove that it has furnished necessary details about receipt of compensation to the AO. In absence of any evidence to prove that all materials necessary for completion of assessment were placed before the AO, it cannot be said that the AO has considered the issue and formed an opinion on the issue. Unless, the AO has formed an opinion on the issue on the basis of materials furnished by the assessee, then it cannot be said that the assessment has been reopened on mere change of opinion. There is no merit in the arguments taken by the assessee challenging reopening of assessment. In so far as, various case laws cited by the assessee including the decision of Hon ble Supreme Court in the case of CIT vs. Kelvinator India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] we find that those case laws are not applicable to facts of present case and hence, are not considered. Hence, we reject the ground taken by the assessee challenging reopening of assessment. Addition towards compensation received for termination of manufacturing agreement u/s.28(va)(a) - assessee is not owning any know-how, patent and trade-mark required for manufacturing of goods. Consequently, compensation paid for pre-closure of manufacture agreement cannot be brought to tax u/s.28(va)(a) of the Act, because the same is not in the nature of compensation or any sum paid for not carrying out any activity in relation to any business or not sharing any know-how, patent, copyright, trade-mark, license or any other business or commercial right, which is evident from the fact that even after the termination of agreement with Dr.Reddy s Laboratories Ltd., the assessee continue to manufacture and distribute pharmaceutical products. Compensation received for pre-closure of contract manufacturing agreement with Dr.Reddy s Laboratories Ltd., is in the nature of capital receipt paid for loss of profit from business / loss of investment, but not in the nature of any compensation or other sum paid for not using any know-how, patent, copyright, trade-mark, license, etc., which can be brought to tax u/s.28(va)(a) of the Act. The AO as well as the CIT(A) without appreciating the facts, had simply made addition towards compensation received from Dr.Reddy s Laboratories Ltd., u/s.28(va)(a) of the Act. Hence, we direct the AO to delete addition made towards compensation received for termination of contract manufacturing agreement. Appeal filed by the assessee is allowed.

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• 2021 (2) TMI 462
  Disallowance of tax credit / service tax written off - disallowance made by the AO for the refund of input service tax written off - Prior period item - Appellant is operating in Special Economic Zone (SEZ) and as such it is exempt from service tax - First objection of the AO was that input service tax written off was not an item of expenditure deductible u/s.37(1) of the Act, because the assessee has not rooted said expenditure through profit loss account - HELD THAT:- None of the reasons given by the AO is in accordance with law, because service tax paid on input services is an item of expenditure deductible u/s.37(1) of the Act. But, if assessee claims input tax credit on said Service Tax, then the same cannot be claimed as deduction in the profit loss account once again. In this case, the AO has not disputed the fact that the assessee has not debited Service Tax component paid on input services into the profit loss account. Therefore, we are of the considered view that there is no merit in the observation of the AO that it is not an item of profit loss account. Even it is to be treated as profit loss account item, it was never treated as income at any point in time - Assessee has accounted input services exclusive of service tax and treated service tax component as input tax credit pending adjustment. Further, when the application filed by the assessee for refund was rejected by the Department, the assessee has written off said input tax credit and debited in to profit loss account. Therefore, the second observation of the AO would also fails. Said expenditure relatable to previous financial year and hence, partakes the nature of prior period item which is not eligible to be claimed as an expenditure for the current financial year - Coming to the third observation of the AO, the AO observed that even if it is deductible as expenditure but said expenditure is relatable to earlier financial year and partakes the nature of prior period item which cannot be allowed as deduction. We do not find any merit in the observation of the AO for the reason that although part of input tax credit pertains to earlier financial year but the same has been carried forward to subsequent financial year as per the provisions of law. Further, the same has been claimed as refund with respective department during the current financial year. When the input service tax credit is carried forward from earlier financial year to the current financial year, it partakes the nature of taxes paid for the current financial year and hence deductible as and when the assessee has debited into the profit loss account. Therefore, on this count also the observation made by the AO fails. It is well settled principle of law by the decision of various courts and Tribunals that input tax credit / CENVAT is deductible u/s.37(1) of the Act, when such input tax credit is reversed or written off in the books of account. The Hon ble Gujarat High Court in the case of CIT vs. Kaypee Mechanical India (P) Ltd. [ 2014 (4) TMI 829 - GUJARAT HIGH COURT] has held that Service Tax paid out of pocket is an item of expenses deductible u/s.37(1) - ITAT, Ahmedabad in the case of Girdhar Fibres P. Ltd vs. ACIT [ 2012 (11) TMI 161 - ITAT, AHMEDABAD] has held that input CENVAT incurred but not adjusted against output CENVAT is deductible as item of expenditure when such input credit is written off in the books of account. Also by following the ratios laid down by various Courts and Tribunals, we are of the considered view that input service tax credit is deductible u/s.37(1) of the Act when such input tax credit is written off in the books of account. But, facts with regard to refund claim made by the assessee and rejection of such refund claim by the concerned authorities for the impugned assessment year was not on record. Therefore, to ascertain the fact with regard to the claim of the assessee with regard to rejection of refund claimed, we set aside the issue to the file of the AO for the limited purpose of verification of claim of the assessee regarding rejection of refund claim. In case, the assessee is able to substantiate its claim with necessary evidence before the AO, then the AO is directed to delete addition made towards disallowance of Service Tax written off account. Appeal of assessee is treated as allowed for statistical purpose.

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• 2021 (2) TMI 459
  Unexplained investment u/s. 69 - Addition on basis of valuation report of the District Valuation Officer (DVO) - reference to the DVO for estimation of assets - non-submission of DVO report after reference by AO - search and seizure operation u/s. 132(1) of the Act was conducted at office/residence of assessee trust along with other assessee s of JIS Group - notice u/s. 153A(1) issued and the assessee trust filed return of income disclosing total income at Rs. Nil - HELD THAT:- CIT(A) makes the finding that the failure of the DVO to submit valuation report within six months of making of valid reference, the DVO s initial valuation report could not have been relied upon to make additions cannot be faulted since it is in line with the ratio of the decision of Smt. Amiya Bala Paul [ 2003 (7) TMI 4 - SUPREME COURT] . The non-submission of DVO report after reference by AO and Ld CIT(A) within the statutory period has not been challenged nor this factual finding could be controverted by the Revenue before us and, so it attains finality. In the result, we find that there is no valid valuation report submitted by DVO on reference by AO/Ld. CIT(A). AO had made the entire addition in all assessment years based on the initial valuation report submitted by the Valuation Officer pursuant to the reference made by the DDIT (Inv.) dated 11.07.2014 when he [DDIT (Inv.)] did not had the power to make the reference to the DVO which power he acquired as noted above only on 01.04.2017 by Finance Act, 2017 u/s. 132(9D) of the Act. And it has also been noted that neither the DVO filed the valuation report pursuant to the AO s reference dated 22.01.2016 nor the DVO filed the valuation report pursuant to the Ld. CIT(A) s reference through the AO by letter dated 29.01.2019. Thus, we note that the addition has been made only on the basis of the initial valuation report dated 18.11.2014 which was pursuant to the DDIT(Inv.) s reference which he [DDIT (Inv)] had no power to do call for. DDIT (Inv.) could not have referred the question of cost of construction/valuation of the assessee s building to the Valuation Officer in the year 2014 ; and thereafter, since the DVO did not present the valuation report after AO has referred the valuation vide letter dated 22.01.2016 as well as the Ld. CIT(A) within six months from the end of the month of the reference, the Ld. CIT(A) rightly held that DVO was bound by law [sec. 142A(6)] to have submitted the valuation report within the statutory time limit, which view we endorse. Whether in absence of any incriminating material found in the course of search at the premises of the assessee trust (administrative office only), the additions made in the assessments of the assessee trust which were unabated [since assessment of AY 2008-09 to AY 2012-13 was non-pending] on the date of search 13.03.2014, could be held to be sustainable on facts and in law? - From the perusal of panchnama and the assessment orders, it can be safely inferred that the reference made by DDIT (Inv.) for valuation of the properties on 01.04.2014 was without any incriminating materials found during search [oral or documentary which could have suggested that the assessee has shown less investment in its books for building construction] Therefore, no addition was permissible in the assessment order u/s 153A of the Act in the case of un-abated assessments unless it is based on relevant incriminating material found during the course of search qua the assessee and qua the AY. Thus the assessee succeeds in its cross-appeals on the legal issue raised in respect of appeals pertaining to AY 2008-09 to AY 2012- 13.Consequently appeal of assessee pertaining to these assessment years are allowed.

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• 2021 (2) TMI 456
  TP Adjustment - Most Appropriate Method (MAM) of determining Arm s Length Price (ALP) in respect of international transaction of import of finished goods for trading purposes by the Assessee from its Associate Enterprise - assessee adopted Resale Price Method (RPM) as the Most Appropriate Method (MAM) for determining ALP - DRP excluded certain comparables selected by the TPO under the TNMM method against which the Revenue has filed appeal before the Tribunal - whether RPM should have been adopted as MAM? - HELD THAT:- We are of the view that the approach of the Revenue authorities in rejecting the RPM as the MAM and the reasons given by them for doing so cannot be sustained. It would be appropriate to set aside the order of DRP on the issue of ALP and remand the question of determination of ALP to the TPO/AO for consideration afresh adopting RPM as the MAM. As pointed in the decision cited by learned DR in the case of Kohler India Corporation Pvt. Ltd. [ 2016 (3) TMI 826 - ITAT BANGALORE] , the assessee is directed to furnish all the required information necessary for determination of ALP in the set aside proceedings. In view of the decision and the MAM, we are of the view that the grounds raised by the Revenue in its appeal viz., grounds 1 to 4 on the exclusion of comparable companies by the DRP under the TNMM does not require any adjudication. Addition made u/s. 40A(7) - assessee company had incorporated certain changes for which no approval from the CIT was acquired and the contribution to fund is only a provision not an actual expense under the purview of section 37(1) - HELD THAT:- Gratuity fund had been approved by the CIT vide approval dated 12.02.1993. The assessee was previously known as Krone Communications Ltd. Since the name of the assessee at the time of assessment had been changed to M/s. ADC India Communications Ltd., the AO took the view that the approval on which the assessee sought to place reliance was not valid and accordingly he disallowed the claim for deduction of the aforesaid sum by relying on the provisions of section 40A(7) of the Act. On objections by the assessee, the DRP deleted the addition made by the AO by following the decision of the IT AT, Hyderabad Bench in the case of Capital IQ Information Systems (India) Pvt. Ltd., Vs. ACIT [ 2014 (9) TMI 125 - ITAT HYDERABAD] wherein it was held that even if the payment is made to an unapproved gratuity fund, the same has to be allowed as a deduction under section 37(1). We are also of the view that the approval in the erstwhile name of the assessee will hold good and the action of the AO in this regard cannot be sustained. Accordingly, ground No. 5 raised by the Revenue is dismissed.

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• 2021 (2) TMI 454
  Addition u/s 40A(2)(b) - purchases made by the assessee from related party - at arms length or Fair Market Value (FMV) and making adjustment thereto - HELD THAT:- Sale price of the impugned transaction in the hands of the related party is undoubtedly established to be at fair market value and consequently so the purchases in the hands of the assessee. The assessee we find has sufficiently established the reasonableness of the purchases made from sister concern. Reasoning of the Ld. CIT(A) holding the purchases to be inflated, we find, is based on surrounding circumstances and there is no direct evidence establishing the unreasonableness of the purchases. The entire case of the Revenue is that the assessee was unable to justify fall in gross profits during the year and that its explanation of having procured an order from the government which it outsourced to its related party for manufacturing the product, the assessee itself acting as a trader alone, resulting in larger share of the profit in the transaction being given to the related party and the assessee retaining only a small portion, was all unsubstantiated and make believe. The department itself having accepted the price/value of the impugned transaction in the hands of the related party in scrutiny assessment and nothing having been brought before us demonstrating any corrective action being initiated by the department against it in view of the impugned transaction being found to be at inflated prices, we find no force in the argument of the Revenue. Transaction of purchases made by the assessee with its related party stands established to be at fair market value and the addition u/s. 40A(2)(b) - Decided in favour of assessee.

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• 2021 (2) TMI 449
  Addition u/s 14A r.w.r. 8D - Non recording dissatisfaction about its claim - HELD THAT:- Regarding the addition made on account of interest expenses, we note that the assessee has substantial amount of interest free fund in the form of share capital and reserve which exceeds the amount of investment. This fact can be verified from the balance sheet of the assessee. Intterest free fund of the assessee is sufficient enough to meet the investment then no any disallowances on account of interest is warranted under section 14A r.w.r. 8D of the Act. - we direct the AO to delete the addition made on the account of interest expenses. Addition on account of administrative expenses - AR not submitted before us any details of the expenditure suggesting/justifying that no expenditure was incurred by the assessee in connection with the impugned exempted income. As such the onus lies upon the assessee to provide the documentary evidence that it has not incurred any expense against the exempted income. In the absence of such details, the AO had no option except to resort to the provisions of section 14A read with rule 8D for making the disallowance against the exempted income. Accordingly, we confirm the disallowance made by the AO which was subsequently confirmed by the learned CIT(A) towards the administrative expenses. Disallowance of deduction claimed u/s. 35(1)(ii) - investigation wing of Kolkata in the case of School of Human Genetics and Population Health (here in after SHGPH) in survey as accepted by the office bearer and chartered accountant that the SHGPH has been working as entry provider through bogus bills and donation - institution is receiving bogus donation through the banking channel and thereafter remitting the amount in cash to donor - HELD THAT:- Admittedly, the basis of disallowance was the material gathered during the survey under section 133A of the Act at SHGPH but the same was not supplied as well as no opportunity of cross examination was provided to the assessee despite the specific request made to the AO. It is the settled law that there cannot be any addition/disallowances of the claim made by the assessee until and unless the materials on the basis of which the addition/disallowance was proposed, provided to the assessee for the rebuttal and cross-examination. In this regard we find support and guidance from the judgment of Hon ble Supreme court in case of Maneka Gandhi vs. Union of India [ 1978 (1) TMI 161 - SUPREME COURT] wherein as laid down that rule of fair hearing is necessary before passing any order. Similarly, we also note that the revenue has not brought anything on record suggesting that the assessee has received any cash against the donation made by it to SHGPH which was very vital to establish that the assessee has made bogus claim - also see S.G. VAT CARE P. LTD. VERSUS ITO, WARD-4 SABARKANTHA. [ 2019 (1) TMI 1694 - ITAT AHMEDABAD] - Decided in favour of assessee.

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• 2021 (2) TMI 448
  Disallowance of provision written back - CIT-A directing AO to examine the records of assessee, whether whole or part of the provision written back was disallowed in any of the A.Y. 2010-11 and 2011-12 and if so, to allow the provision to the extent it was disallowed in the assessment order for the relevant previous year - HELD THAT:- Disallowances in earlier year has not been accepted by the assessee. The assessee is very much contesting the disallowances. So no impact of those disallowances can be considered in this year. The assessee in this year has written back the provisions made in earlier years as the assessee is of the view that they are no longer required. Hence, once the assessee writes back certain provisions as no longer required and takes the same into income, it cannot deduct the same from computation of income, on the ground that in the earlier year these provisions were disallowed. As the assessee is contesting the disallowances and for 1 year it has even succeeded at ITAT. In this view of the matter, the assessee is claiming double deduction during the year. Hence the order of CIT appeals to grant relief to the assessee is erroneous. The learned counsel of the assessee has fairly agreed to this. However, he has pleaded that direction may be given to the assessing officer that if the assessee loses in appeal for the matters in contest for earlier years the corresponding relief should be given to the assessee for this year. The request of the learned counsel of the assessee is not tenable. What will be the final impact of these appeals is not something which is within our domain of anticipation and any direction to consider future possibility will render the order speculative. Moreover, it is trite law that tribunal should confine itself to the matters in dispute for the assessment year under consideration and the tribunal cannot give any direction in speculation of outcome of appellate proceedings of the years not under consideration. Hence, we decline to give any direction to the assessing officer in this regard. - Decided in favour of revenue

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• 2021 (2) TMI 447
  Penalty u/s 271(1)(c) - addition of legal and professional fees levied - assessee has debited expenditure in legal and professional expenses for the impugned assessment year based on the mandate given to the professionals and service providers - HELD THAT:- The assessee submitted the details of the legal and professional charges as well as the details of sum written back. As these full facts were disclosed by the assessee we do not find that assessee has furnished any inaccurate particulars of income. It is not unusual that a provision is required to be made for some payable professional based on the mandate for services to be rendered for that particular year. It is also not impossible that those professional do not render such services in the next year and instead of that some other professional render such services. In that case the provision of legal and professional fees made in the earlier year was reversed in the subsequent year. Even otherwise expenditure is debited in the one year and if not paid same is reversed in the next year. It is not the case of the AO that no such mandate for provision of services was available from the professionals. There may be many reasons for a professional to not to render those services even after agreeing a particular fees. It may be because of multiple reasons. However such provision of services and it subsequent revision may result in disallowance of the expenditure but certainly it cannot lead to levy of penalty u/s 271 (1) (C) of the income tax act for furnishing of inaccurate particulars of income. The learned that lower authorities have not considered the above explanation of the assessee for first making provision for expenditure and subsequently writing back in the subsequent year. According to us, there is no inaccurate particulars of any income furnished by the assessee in this case. Full facts were already disclosed before the assessing officer. The details furnished were also not found to be false - we reverse the finding of the lower authorities and direct the ld AO to delete the penalty levied u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. Appeal of the assessee is allowed

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• 2021 (2) TMI 446
  TDS u/s 194C - payment was made to goldsmiths for making charges - HELD THAT:- Payment was made to three heads of goldsmiths which was in turn distributed to other goldsmiths and each payment was less than Rs. 20,000/- and, the aggregate amount paid throughout the year was below Rs. 50,000/-,thus, the payment does not attract TDS u/s 194C. CIT(A) confirmed the disallowance for want of evidences such as work bills, confirmations from the individual goldsmiths etc. Goldsmiths are moving labour force, works with head goldsmiths and does the work wherever the work is available, thus it is ambitious to expect the work bills, confirmations from the goldsmiths for their work. They are unorganized sector, makes the work and receives the daily payment. Also common that the head goldsmith brings the group of labour along with him and collect the charges and distributes to the remaining labour force. Since the assessee has furnished the details of head goldsmiths and the payment was not suspected, there is no reason to apply the provisions of section 194C and the 40(a)(ia) of the Act. The payment made was less than Rs. 20,000/- and aggregate payment does not exceed the sum of Rs. 50,000/- as per the details furnished by the assessee. This fact was not disputed by the Ld.CIT(A). Therefore, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO u/s 40(a)(ia). For remaining amount since the assessee failed to furnish the details either before the AO or before the Ld.CIT(A), we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Appeal of the assessee on this ground is partly allowed. Unaccounted purchases - Difference between the purchases reported in VAT returns and purchases recorded in the books of accounts - HELD THAT:- The assessee produced the books of accounts, bills and vouchers and the AO did not find any inflation of purchases. There is no dispute that the purchases were duly accounted in the books of accounts. The assessee explained that the difference was due to exempted purchases which were not reflected in the VAT returns. Since there was no defect found in the books of accounts and the AO did not make out a case that the assessee has over stated the purchases, there is no reason to make the addition. Hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. The assessee s appeal on this ground is allowed.

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• 2021 (2) TMI 444
  Unexplained cash credit u/s 68 - assessee has failed to prove the creditworthiness of the transaction - assessee challenged the findings of the AO on the ground that the AO has made the additions without conducting any enquiry to ascertain the genuineness of the transaction - HELD THAT:- CIT(A) has not addressed this grievance of the assessee in its order. We further notice that the Ld. CIT (A) has endorsed the findings of the AO holding that the newly introduced proviso to section 68 by Finance Act lays down a more stringent test for the companies where public are not substantially interested. CIT (A) has nowhere discussed the plea of the assessee and the reasons for rejecting the same. CIT (A) has confirmed the addition as deemed income merely stating that the assessee could not explain the source of the cash credit in question even during the appellate proceedings. CIT(A) has not discussed the reasons for not accepting the explanation regarding source of cash credit in question. CIT (A) has not even discussed the plea of the assessee and the reasons for rejecting the same. During assessment proceedings not even a single notice was issued to the party, from whom the assessee had taken loan - CIT (A) has also ignored this aspect while passing the impugned order. Thus issues involved in the present appeal require fresh adjudication by the Ld. CIT (A) on merits - Appeal of assessee allowed for statistical purposes.

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• 2021 (2) TMI 442
  TDS u/s 194A - Demand u/s. 201(1) and u/s. 201(1A) - non deduction of TDS against the interest credited/paid to the customer by the bank - bank as an assessee in default for not deducting TDS and took up the case of two customers (i) Shri Debabrata Hati and (ii) Smt. Kamala Nag - AO acknowledges that both the customers have filed Form 15G as provided u/s. 197A(1)/1A and read with Rule 29C and was of the opinion that since the interest amount exceeded the threshold limit of taxable income, the AO declared assessee bank as an assessee in default - THAT: - As both the customers against whom the AO has found that the assessee bank failed to deduct tax have duly reflected and shown the entire interest income in their respective return of income for AYs 2014-15 and 2015-16 and has remitted the tax on it, then in such a scenario the assessee bank cannot be held to be an assessee in default. However, according to the AO, the assessee did not fulfill the conditions specified as per the first proviso to section 201 of the Act. In the light of the discussion, we set aside the order of the Ld. CIT(A) and remand the issue back to the file of the AO and direct the appellant bank to furnish the documents as required under first proviso to section 201 of the Act and if the assessee files the same before the AO; and if the AO is satisfied that both the customers have shown their interest income received from the assessee bank in their respective Return of Income and they have remitted the tax on it, then the assessee bank should not be treated as an assessee in default. - Appeals of the assessee are allowed for statistical purposes.

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• Customs

• 2021 (2) TMI 489
  Seeking reimbursement of Amount paid twice - time limitation - whether the delay will spoil the right of the petitioner for refund of dual payment/duplicate payment? - HELD THAT:- Section 19 of the Lighthouse Act, 1927 provides that where Light Dues have been paid in respect of any ship in excess of the amount payable under this Act, no claim for refund of such excess payment shall be admissible, unless it is made within six months from the date of each payment. It is relying on the said period of limitation prescribed that the Assistant Commissioner of Customs has rejected the application preferred by the petitioner. The Act, 1927 was promulgated for the purpose of effective management of Lighthouses by the Central Government. Section 9 of the Act, 1927 enables the additional 3rd respondent to levy Light Dues in respect of every ship arriving at or departing from any Port in India, for the purpose of providing and maintaining lighthouses for the benefit of ships voyaging to or from India or between Ports in India - Light Dues are directly related to tonnage of the ship/vessel and excess payment can occur when payment of Light Dues is made disproportionately disregarding the tonnage of the ship. Shipping companies and shipping agents are expected to measure the tonnage of the ship/vessel correctly and pay Light Dues with due regard to notified rates. Excess payment of Light Dues may occur if the shipping companies/agents cause mistake in the tonnage of the ship or in respect of notified rates. It is for the refund of such excess payment effected by the shipping companies/shipping agents without regard to the tonnage of the ship or rate of Light Dues, that a period of limitation has been prescribed under Section 19. The dual payment made by the petitioner in this writ petition cannot be described as excess payment, in the sense contemplated by Section 19 of the Lighthouse Act, 1927. What is effected by the petitioner is a dual payment or duplicate payment. The petitioner was forced to make such dual payment due to the failure of the web portal system to generate a receipt, when the petitioner made the first payment through the web portal. This Court is of the view that Section 19 is not intended to operate in such circumstances. If Section 19 does not apply to the dual payment made by the petitioner, then there is no question of a period of limitation under the Customs Act for making an application for refund of the dual payment - The State and its authorities are not expected to act in a Shylochian manner and squeeze money from its citizens. Levy of any tax/dues should have the authority of law. If the petitioner calculated Light Dues in respect of the Vessel correctly and remitted the correct amount, then Section 19 of the Act, 1927 cannot be resorted to withhold an erroneous double payment or dual payment made by a citizen due to a system error or failure. The State is not expected to get itself unduly enriched by erroneous or forced or inadvertent payments of money made by its citizens. The State is not expected to bring in defence of limitation in respect of such payments resulting in unjust enrichment. The claim of the petitioner for refund of the dual payment, in the circumstances, would not fall within the ambit of Section 19 of the Customs Act. Exts.P5 and P9 orders are therefore otiose. The 2nd respondent and additional 3rd respondent are directed to refund to the petitioner the dual payment made, within a period of one month - Petition allowed.

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• 2021 (2) TMI 483
  Maintainability of appeal - pre-deposit not insisted - HELD THAT:- An appeal under Section 128 of the Customs Act, 1962 was preferred by the petitioner before the Commissioner Customs (Appeals) on 24th October, 2019. The said appeal is still pending before the Commissioner Customs (Appeals). The Commissioner Customs (Appeals) to decide the appeal titled as M/s Spartan International Vs. Joint Commissioner of Customs, preferred by the petitioner against the Order-in-Original dated 28th August, 2019, in accordance with law and relevant Rules, Regulations and Government Policies applicable to the facts of the case as also taking into account the evidence on record. Needless to state that an opportunity of hearing shall be given to the concerned parties before taking a decision. The said appeal shall be decided as expeditiously as possible and practicable, if not already decided. Petition disposed off.

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• 2021 (2) TMI 458
  Validity of SCN - Non-adjudication of show cause notice within reasonable period - Whether the show cause notices issued on 07.10.2016 and adjudicated on 28.05.2019 shall stand vacated in terms of the explanation 4 to Section 28 of the Customs Act, 1962 or not? - Whether the show cause notice can be issued for recovery under Section 28 of the Customs Act, 1962 without challenging the assessment under Section 17 of the Customs Act 1962? - Whether in the absence of following the procedure prescribed under Section 138C of the Customs Act, 1962, the documents relied by the adjudicating authority are admissible or not? - Difference of opinion. HELD THAT:- In view of the difference in opinion expressed by the Members hearing these appeals, the following question is referred to Hon ble President for referring the same to third member for his consideration- Whether in the facts and circumstances of this case,- these appeals should be allowed following the decision of Hon ble Punjab Haryana High Court in case of M/s Prabhat Fertilizers Chemical Works Works [ 2020 (2) TMI 1443 - PUNJAB AND HARYANA HIGH COURT] as held by Hon ble Member (Judicial); Or these appeals should be dismissed as the decision of Hon ble Punjab Haryana High Court in case of M/s Prabhat Fertilizers Chemical Works Works [ 2020 (2) TMI 1443 - PUNJAB AND HARYANA HIGH COURT] is not applicable as has been held by Hon ble Member (Technical).

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• Corporate Laws

• 2021 (2) TMI 468
  Seeking approval of the proposal for settlement of the claims of Fagne Sonagarh Expressway Limited (FSEL) against the National Highways Authority of India (NHAI) and permit Fagne Sonagarh Expressway Limited and National Highways Authority Limited to execute a Settlement Agreement to record the proposal for termination and settlement of claims by Fagne Sonagarh Expressway Limited against National Highways Authority of India - HELD THAT:- The Applicant in CA No. 1166 of 2020 was a subcontractor of the FSEL. The FSEL or its holding company ITNL owes certain amount to the Applicant for the civil works it had executed in the Project which has been classified as financial dues in the proposed Settlement Agreement. Therefore, the Applicant deserves to be admitted as intervenor in CA No. 1156 of 2020. Since the claim of the Applicant is admitted by FSEL the other prayers regarding implementation of Settlement Agreement and claim of dues would merge with the relevant prayers made in CA No. 1156 of 2020 concerning the Applicant-Intervenor. Besides, Hon ble Justice Mr. D. K. Jain (Retd.) has approved the claim and the proposed Settlement Agreement between the NHAI and FSEL. Provision in the proposed Settlement Agreement has also been made for payment of financial dues to FSEL subcontractors. The proposal for settlement of the claims of FSEL against NHAI and for implementation of Settlement Agreement and other consequential terms as approved by Hon ble Justice Mr. D. K. Jain (Retd.) needs to be ratified and recorded. Application allowed.

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• 2021 (2) TMI 460
  Seeking sanction of Scheme of Amalgamation - Section 230-232 of Companies Act - HELD THAT:- On going through the report of the Registrar of Companies, it is seen that both companies have violated the provisions of the Companies Act and the petitioners could not successfully controvert the objections raised by the Regional Director. They have not followed most of the provisions of the Companies Act, which are mandatory for continuance of a company honestly. They must be humble and serious enough to abide the law and any proposition of business must be planned in such a manner that no law, logic and rights of any person are violated. Hence this Tribunal is of the opinion that this is not a fit case to sanction the Scheme of Amalgamation. Application dismissed.

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• 2021 (2) TMI 453
  Mismanagement and oppression - submissions of the Petitioners are that there is mismanagement and huge discrepancies in the Financial Statements submitted by the Respondent No.1 Company with the Registrar of Companies - whether the acts of Respondents as alleged by the Petitioners would indeed constitute an act of oppression against the minority shareholders or mismanagement or misappropriation of the company will affect the public interest at large, which calls for the intervention of this Tribunal? - HELD THAT:- It is profitable to refer the decision rendered by the Hon ble Supreme Court in NEEDLE INDUSTRIES (INDIA) LTD. VERSUS NEEDLE INDUSTRIES NEWEY (INDIA) HOLDING LTD. [ 1981 (5) TMI 89 - SUPREME COURT] , wherein the court laid down the yardstick as to when an act of the majority can be considered as oppressive under the provisions of Section 397 of the Companies Act, 1956. This Tribunal came to the conclusion that averments made by the Petitioners regarding oppression and mismanagement against the Respondents is considered to be an isolated one and not a continuous one for which this Tribunal cannot hold that there is Oppression and Mismanagement in the Company. In the instant case, the petitioner failed to prove the continuing oppressive acts conclusively and we cannot rely upon an act of the Directors as an oppressive act. Hence, this Tribunal came to the conclusions that whatever done by the Respondents is in the best interest of the Company which cannot be stated to be unfair which would prejudice the Petitioner s interest in the Company or prejudicial to the public interest. Hence the Petitioners have no locus standi to approach this Tribunal under Section 241 praying the reliefs - this Tribunal is of the opinion that the petitioners could not make out a case for interference of this Tribunal invoking Section 241-242 of the Companies Act,2013. Petition dismissed.

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• 2021 (2) TMI 441
  Seeking order for execution of Consent Term No. 12 of the Consent Terms of the recorded order dated 14.11.2014 by the Company Law Board, New Delhi while dealing with the matter which was deputed from the Company Law board, Chennai - seeking directions to Respondent Nos. 1, 3 4 (R3 Group) to move an application in OS No. 3329 of 2011 pending before the Hon ble Delhi High Court to the effect that R2 Group R3 Group along with their companies can use/advertise in Google and Just Dial - HELD THAT:- This Tribunal has noted that there are two separate vakalat filed by two different counsels for representing R2 herein before this Tribunal and this Tribunal has heard both the parties at length. That one vakalat dated 17.01.2020 is filed by Mr. T. Sujan Kumar and the other vakalat dated 11.02.2020 is filed by Mr. Saurabha Kalia. Both the vakalat are supported by two different Resolutions dated 25.09.2008 24.09.2007 respectively. That this Tribunal at this juncture cannot take an exercise of verification of the authencity of the Board Resolutions and the respective vakalat. However, if this Tribunal comes to a finding at any time in future that either of the vakalt is not genuine, an appropriate action will be taken against the concern party. It is a fact, not in dispute that all the terms of the consent terms dated 14.11.2014 were adhered to by the parties concerned except consent term No. 12 in terms of which in the suit No. 3329 of 2011 (Renumbered as CS (COMM) No. 1 of 2017, before Hon ble High Court of Delhi, the R3 group ought to have moved an application before the court to the effect that the R2 group and R3 group along with their companies can use/advertise in Google and just dial and the said suit can be continued in future. During the course of hearing in the instant company petition, it was brought to the notice of this Tribunal during hearings held on 11.02.2020 and 24.02.2020 that an Application has already been moved by Respondent No. 3 before Hon ble High Court of Delhi for taking on record Consent terms dated 14.11.2014, more particularly with respect to para 12 of the said Consent terms. It was also submitted that the Hon ble Delhi High Court was pleased to issue notice in the said Application and the same is pending before Hon ble Delhi High Court. It is seen from the record placed before this Tribunal that R3 group consist not only R3 (Mr. Rajender Agarwal) herein but also R1 (Mr. Ramesh Agarwal) and R4 (Mr. Dinesh Agarwal). In these circumstances, this Tribunal deems it proper to direct for the execution of consent term No. 12 of order dated 18.11.2014. Accordingly, this Tribunal hereby directs R3 group (i.e., R1, R3 R4) herein to move an appropriate Application in CS NO. 1 of 2017 before Hon ble High Court of Delhi to the effect that R2 Group R3 Group along with their companies can use/advertise in Google and Just Dial. This Tribunal is conscious of the fact that the authority and jurisdiction conferred on this Tribunal is sub-ordinate to the Hon ble High Court and hence it is made clear that this Tribunal is confining its jurisdiction and authority to the limited extend of issuing the aforesaid directions keeping in view the consent terms recorded before the CLB (presently NCLT) and is not dwelling into the merits of the case pending before a higher judicial forum i.e., the Hon ble High Court of Delhi. Further, the direction issued herein should not be deemed or viewed as expression of any opinion by this Tribunal with respect to the matter pending before the Hon ble High Court of Delhi. Petition disposed off.

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• Insolvency & Bankruptcy

• 2021 (2) TMI 474
  Maintainability of new Application which was filed under Section 9 of I B, Code, inspite of earlier Application under Section 9 - HELD THAT:- We have gone through the earlier Application under Section 9 which was filed and the new Application which was filed under Section 9 of I B, Code. Both of the Applications referred to the same amount and similar facts are averred. We are not ready to accept the submissions made by the Learned Counsel that the Corporate Debtor had stated that it would settle the dues and because of that the earlier Application was withdrawn. The Learned Counsel for the Appellant referred to earlier Order of withdrawal Annexure A/3 where the Tribunal recorded that Learned Counsel for the Operational Creditor submitted that he has instructions from the Corporate Debtor to withdraw the matter . On basis of such noting in the earlier Order (which could even be typing error) the argument is tried to be made that there was offer of settlement. We do not accept such submissions. It would be strange that the Opposite Party gives instructions to the other side and other side on instructions from the Opposite Party withdrawing petition. Even otherwise, when present Application under Section 9 is filed, the earlier Reply Notice which was sent by the Corporate Debtor discloses Pre-existing dispute. The Section 9 Application claims debt relying on Ledger Account of Appellant itself. This read with the Notices on record shows various disputes pre-existing between parties. That being so, even if one is to look into merits in the alternative, the Application under Section 9 does not show that it deserves to be admitted. Appeal dismissed.

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• 2021 (2) TMI 464
  Maintainability of application - initiation of CIRP - corporate debtor committed default in making repayment of the loan facility availed by it from the financial creditor - Financial Creditor or not - existence of debt and default or not - HELD THAT:- There is a force in the submissions made by the petitioner with regard to the relevant factors to be looked into by the Adjudicating Authority in admitting the company petition. As rightly contended by the petitioner the Adjudicating Authority has to merely look into the existence of debt and default for admitting a Company Petition under Section 7 of the code as per law laid down by Hon ble Supreme Court in various judgments. When once the debt and default is proved the company petition has to be admitted. Even otherwise the petitioner successfully demonstrated before this Tribunal that the subject matter of the vessels could not be disposed of by the financial creditor on account of their own mishandling of the financial affairs of the corporate debtor accumulating the losses and maritime liens on the vessels. Mr. Rohan Rajadhyaksha also fairly conceded that the financial creditor has no objection for excluding the sale proceeds of the vessel MT Premmala presently lying with the Bombay High Court in the pending appeal filed by State Bank of India from the purview of the CIRP process of this Company Petition - there are no merits in any of the contentions raised by the Corporate Debtor as they are beyond the scope of Section 7 of the Code. Application admitted - moratorium declared.

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• 2021 (2) TMI 461
  Liquidation of the Corporate Debtor - Section 33(1) of IBC, 2016 - HELD THAT:- In order to state that the Adjudicating Authority can approve the Liquidation of Corporate Debtor Company without taking any steps for resolution of the Corporate Debtor, the Applicant has referred to a decision of the Hon ble NCLAT in the matter of Sunil S. Kakkad Vs. Altrium Infocom Private Limited [ 2020 (8) TMI 392 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]. This Tribunal heard the learned counsel appearing for the Resolution Professional and had gone through all the case records including the Resolution passed by the Committee of Creditors in the 2nd meeting held on 07.12.2020, and being satisfied with the conditions enshrined in the CIRP Regulations and ordered that Corporate Debtor M/s. Auto Friction Components India Private Limited is hereby put under liquidation with immediate effect under Section 33(1) of IBC, 2016. Application allowed.

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• 2021 (2) TMI 452
  Seeking approval of the Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2) of the Code. The Hon ble Court observed that the role of the NCLT is no more and no less . The Hon ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The same needs to be approved. Application allowed - moratorium declared.

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• 2021 (2) TMI 451
  Jurisdiction - power of Adjudicating Authority to examine the documents filed with the application under section 10 of I B Code - HELD THAT:- Ld. Adjudicating Authority has analyzed the financial statements of the corporate applicant and held that there are discrepancies in financial statements. We are of the view that ld. Adjudicating Authority exceeded its jurisdiction in analyzing the financial statements of the Corporate Applicant. It is held in the case of M/S. UNIGREEN GLOBAL PRIVATE LIMITED VERSUS PUNJAB NATIONAL BANK, CORPORATION BANK, VIJAYA BANK AND ORIENTAL BANK OF COMMERCE [ 2018 (1) TMI 505 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] that if any action has been taken by the financial creditor under SARFAESI Act 2002, against the Corporate Debtor or a suit is pending against the corporate debtor under Section 19 of DRT ACT before a Debt Recovery Tribunal or appeal pending before the Debt Recovery AT cannot be a ground to reject an application under Section 10 of I B Code - In the present case the financial creditor has initiated proceedings under SARFAESI Act against the borrower. The applicant being a guarantor has filed the application under Section 10 of I B Code hence the Adjudicating Authority has drawn an inference that the corporate applicant has filed the application under Section 10 with an intention to defeat the SARFAESI measures initiated by the financial creditor. Thus the application is filed with an ulterior motive. The finding of ld. Adjudicating Authority also be cannot be agreed, and it is held that this fact is unrelated and beyond the requirement under I B Code or forms prescribed under the Adjudicating Authority Rules. Therefore, the application cannot be rejected on this ground. The existence of debt and default is established and no winding up proceedings against the appellant and appellant is not covered by the ineligibilities provided under Section 11 of the I B Code. However, the adjudicating authority has rejected the application on extraneous grounds. Therefore, the impugned order is set aside. The case is remitted back to the adjudicating authority (NCLT, Chennai) to admit the application under Section 10 after notice to the parties if there is no defect - Appeal allowed by way of remand.

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• 2021 (2) TMI 450
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - existence of debt and dispute or not - Time Limitation - HELD THAT:- The present Application is filed before this Tribunal on 06.09.2019. The Financial Creditor has obtained a copy of the revival letter dated 01.06.2012 as per Section 18 of the Limitation Act in and by which the period of limitation is being extended for the further period of three (3) years from 01.06.2012. For the purpose of bringing the present Application within the period of limitation it is submitted that the Principal Borrower has given an OTS proposal on 06.10.2016. It is now well settled from the judgments of the Hon ble Supreme Court and Hon ble NCLAT that the OTS letter does not extend the period of limitation. Even for the sake of argument if the said OTS letter is taken into consideration, the same was obtained only on 06.10.2016 which is much after the expiry of 3 years from the date of default i.e. 31.05.2012. Therefore, in all respects, it is seen that the claim of the Financial Creditor is against a time barred debt. In the present case, the Financial Creditor has not placed on record any Revival Letter obtained from the Respondent after 01.06.2012. From the records, it is also to be noted that the Account of the Principal Borrower had been declared as Non Performing Asset (NPA) on 06.06.2012 as evident from the Demand Notice issued to the Principal Borrower which is presently under Liquidation before this Tribunal, the CIRP of which was initiated by this Tribunal based on an Application filed by its Operational Creditor in the matter of M/S. CORTICA MANUFACTURING (INDIA) PRIVATE LIMITED VERSUS M/S. VICTORY ELECTRICALS LIMITED [ 2019 (4) TMI 1938 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI] . The CIRP in relation to the principal borrower was triggered not at the instance of the present Financial Creditor but by an Operational Creditor under Section 9 of the Insolvency Bankruptcy Code, 2016. Even though the liability of the Principal borrower is co-extensive to that of the Guarantor, in an Application filed under Section 7 of IBC, 2016, the Applicant is required to satisfy the debt and default on the part of the Respondent independently and also it is a statutory duty of this Tribunal to ascertain as to whether the debt is a time barred debt or not, eventhough a defence to such an effect is not raised by the Respondent. The Demand Notice to the Respondent / Corporate Guarantor annexed at Page 335 and issued by the Applicant is to be noted is of the year 2013. Thus, from the very documents filed by the Financial Creditor, we are of the considered view that the debt as claimed by the Financial Creditor is time barred and the Financial Creditor has failed to place on record any iota of document recognized under the law to substantiate that the debt falls well within the period of limitation - the debt on the part of the Respondent/Corporate Guarantor is time barred and as such the Application filed by the Financial Creditor is liable to be dismissed - Application dismissed.

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• 2021 (2) TMI 445
  Seeking CIRP timeline of 27 days from the available 60 days exclusion timeline for approval of Resolution Plan - section 12 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A bare perusal of Section 12 of the IBC, 2016 mandates that the CIRP period should be completed within the period of 330 days. Further, it has been clearly stated that the CIRP extension, beyond the stipulated period of 180 days, shall be granted only once, not exceeding 90 days. However, the IBC, Amendment Act, 2019 fails to address on how this Tribunal can treat the Applications which seek for CIRP extension beyond the period of 270 days to 330 days. In the facts of the present case, it is evident from the records that CIRP extension was already granted once for a period of 60 days from 18.01.2020 till 18.03.2020 and thereby the 240 days period of CIRP came to an end on 18.03.2020. The second proviso to sub-section 3 of Section 12 of the IBC, 2016 states that the CIRP shall be mandatorily completed within a period of 330 days from the Insolvency commencement date, including any extension of the period of the CIRP granted under this section and the time taken in the legal proceedings - thus, it can be inferred from the second proviso to subsection 3 of Section 12 of the IBC, 2016 that after granting extension once for a maximum period of 90 days, and upon 270 days of the CIRP coming to an end, this Tribunal has the power to exclude certain period from the CIRP proceedings provided the said exclusion period should not exceed the total CIRP period of 330 days. In other words, exclusion can be granted only for a period of 60 days after the expiry of 270 days. As to the facts of the present case, it is seen that the Resolution Plan is already approved by the CoC and is pending adjudication before this Tribunal and also keeping in mind the rationale of the decision of the Supreme Court in the matter of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] , the period of lockdown from 25.03.2020 till 31.08.2020 is excluded in view of Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and also the period of 27 days i.e. from 19.03.2020 till 24.03.2020 (6 days) and from 01.09.2020 to 21.09.2020 (21 days) is also excluded from the period of CIRP - Since, it was submitted by the Learned Counsel for the Resolution Professional that the Resolution Plan is already filed before this Tribunal on 21.09.2020, extension of CIRP period beyond the period as already excluded does not arise. Application allowed.

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• 2021 (2) TMI 443
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - unpaid operational Debt due from M/s Web Date Systems Private Limited - Application under section 9 of the IBC before the NCLT, wherein it is mentioned in Part-IV for Particulars of Operational Debt is due - As per ANANT BIJAY SINGH, JUDICIAL MEMBER: HELD THAT:- The Ld. Adjudicating Authority has rightly distinguished the facts of the case from Judgment in M. RAVINDRANATH REDDY VERSUS G. KISHAN [ 2020 (2) TMI 56 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] of this Appellate Tribunal. In as much as this is not a simple case where the rent is due which is part of the rent. The Respondent No. 1 has provided different type of services to the Appellant which has been referred hereinabove. There are dues of electricity, diesel, sewer and water charges which are undisputed by the Corporate Debtor which is more than Rs. 1 Lac. We are of the considered view that the Ld. Adjudicating Authority has rightly admitted the Application filed under section 9 of IBC. Thus there are no merit in this Appeal. The Appellant has failed to demonstrate that the impugned order suffers from any legal infirmity. The Appeal being devoid of merit is dismissed. Interim orders, if any, stand vacated. As per V.P. SINGH, TECHNICAL MEMBER: HELD THAT:- In this case, the dispute relates to the deemed continuation of lease deed. The Corporate Debtor claims that lease of the ground floor was terminated after notice, and part of the premises was vacated. Per contra, the Operational Creditor claims that vacation of part premises was not permissible and therefore, lease rent for whole premises is recoverable as an operational debt. Thus, even if the Lease Rent is considered as an operational debt U/S 5(21) of the Code, in case of pre-existing dispute, such operational debt is beyond the scope of Sec 9 of the Insolvency Bankruptcy Code, 2016. Based on the demand notice, it is clear that the alleged operational debt is related to the lease rent of Ground Floor and Basement Floor of the said premises. In response to the demand notice dated 27th September 2018, the Corporate Debtor submitted its reply on 08th October 2018 - thus, it is clear that in reply to the demand notice, the Corporate Debtor had contended that there was a pre-existing dispute between the parties. The Corporate Debtor emphasised our attention towards mail dated 13th September 2018. It is clear that dispute between AITHENT and WDS existed till the date of issuance of demand notice, i.e. 27th September 2018. Since the provision of Section 9 can only be invoked for the realisation of the undisputed operational debt, the petition u/s 9 is thus, not maintainable - The Operational Creditor s contention is that since the basement floor and ground floor were part of the same lease deed, therefore, part vacation of the property and subsequent termination of lease for the said portion is not permissible. Therefore, the request made by the Corporate Debtor through an email dated 23rd March 2018 was not accepted. The Operational Creditor further wrote that in case the Corporate Debtor surrenders basement floor, new lease deed could be executed after full payment of Rs. 40,27,179/- - there was pre-existing dispute from the time before issuance of demand notice dated 27th September, 2018. The Adjudicating Authority has admitted the petition under section 9 without giving any finding on the pre-existing dispute, even though the Corporate Debtor has raised the plea in its reply to the demand notice. On perusal of the record of the case, I am satisfied that there is sufficient evidence to show that there was pre-existing dispute between the parties - Adjudicating Authority has admitted the petition ignoring the fact that the alleged dues are relating to the outstanding Lease Rent. In contrast, there is sufficient evidence to show that pre-existing dispute existed regarding vacation of part of the leasehold premises, i.e. Basement Floor only, despite there being a Joint lease Agreement for Ground Floor and Basement. Such questions cannot be decided in summary jurisdiction exercised by the Adjudicating Authority under the Code u/s 9 of the Code. The Application preferred by 1st Respondent under section 9 of the I B Code is dismissed. The appellant Corporate Debtor (company) is released from all the rigours of Moratorium and is allowed to function through its Board of Directors with immediate effect. The Interim Resolution Professional / Resolution Professional will provide and intimate the fees for the period he has functioned and costs of Corporate Insolvency Resolution Process incurred by him to the Appellant/ Corporate Debtor and amount, if any, already received. The Interim Resolution Professional will hand over the assets and records to the Board of Directors of the Corporate Debtor. However, it is to be clarified that the view taken by me is in the minority. Hence, it shall not come into effect, and the view taken by the Hon ble co-Members of the Bench shall prevail - application dismissed.

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• 2021 (2) TMI 440
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Debt - allegation is that the petitioner herein does not fall under the definition of Person - existence of debt and dispute or not - HELD THAT:- A look at the definition of Person as per Section 3(23) of the IBC, specifies that it is an inclusive definition and hence the categories mentioned in the definition are only illustrative and there can be others also which can be covered under the definition. Thus to restrict the definition to those categories which have been enumerated in the definition is not the correct interpretation of the law. The Hon ble National Company Appellate Tribunal ( NCLAT ) in the case of Neeta Saha v. Ram Niwas Gupta [ 2020 (2) TMI 1442 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] has addressed the issue of the maintainability of an application filed under Section 9 by a sole proprietorship and clarified that Section 2 of IBC amongst other entities, applies to proprietorship firms. Moreover, it also noted that the definition of person in Section 3(23) of IBC is an inclusive definition. Thereafter, Hon ble NCLAT has approved the initiation of CIRP against the CD after the sole proprietor filed the amended memo of parties by including his name. Thus, the operational creditor is a sole proprietorship firm and would fall within the definition of a person. An Operational Creditor means a person to whom an operational debt is owed/due. From the above, it is clear that the petitioner is an operational creditor of the respondent. Accordingly, the petition filed by a proprietary concern under Section 9 of the Code was held to be maintainable. The operational creditor has clearly established the existence of debt and default on the part of the corporate debtor - CIRP started - application admitted - moratorium declared.

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• 2021 (2) TMI 439
  Seeking extension of CIRP period by 90 days beyond 180 days after excluding the lockdown period - Section 12(2) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 40 of the IBBI Regulations 2016 - HELD THAT:- The Hon ble National Company Law Appellate Tribunal in Suo Moto-Company Appeal IN RE : SUO MOTO [ 2020 (6) TMI 495 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where Corporate Insolvency Resolution Process has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal. Thereafter, the Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 and the same is as: Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process. Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the said regulation reads as Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. Since the facts are not disputed and in view of the orders of the Hon ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, we allow the instant IA and extend the period of CIRP by 90 days, beyond 180 days after excluding the period from 25.03.2020 to 31.07.2020 - Application allowed.

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• 2021 (2) TMI 438
  Liquidation of the Corporate Debtor - section 33 of the IB Code - CIRP expired on 18.05.2020 i.e. during the lockdown period - HELD THAT:- It is found that the CoC has resolved for liquidation of the Corporate Debtor vide its Seventh meeting dated 30.06.2020. It is also to be noted that this Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC as observed in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT] . The moratorium declared under Section 14 of the IB Code shall cease to have effect from the date of the order of liquidation - the application so filed by the RP under Section 33 34 of the IB Code, 2016 is allowed and the Adjudicating Authority passes an order for initiation of liquidation of the Corporate Debtor viz., Dhorajia Engineering Company Private Limited. The RP i.e. Mr. Kiran Shah, shall act as the Liquidator for the purpose of liquidation of the Corporate Debtor. Further, the lockdown period of 68 days i.e. from 25.03.2020 to 31.05.2020, is exempted from the CIRP period.

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• PMLA

• 2021 (2) TMI 488
  Money Laundering - attachment of the bank account of the Petitioner - Section 8 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- A perusal of the impugned order shows that the application filed by the Petitioner has not been considered by the Adjudicating Authority. According to ld. counsel for the Petitioner, the question as to whether reasons to believe have to be be supplied or not, has been decided by two judgments i.e. the Division Bench of this court in J. SEKAR, S. RAMACHANDRAN, K. RETHINAM, SRS MINING, T. VINAYAK RAVI REDDY, SURENDRA KUMAR JAIN AND ORS., M/S. SWASTIK CEMENT PRODUCTS PVT. LTD. ORS., DHAWAN CREATIVE PRINTS PVT. LTD. AND ANR., APARAJITA KUMARI ANR., PRATIBHA SINGH ANR. VERSUS UNION OF INDIA JOINT DIRECTOR, ENFORCEMENT DIRECTORATE ANR. [ 2018 (1) TMI 535 - DELHI HIGH COURT] . The Adjudicating authority ought to have decided the application and thereafter proceeded to finally adjudicate the matter. However, the submission as to availability of an alternate remedy is not without merit. Under Section 26 of the PML Act, an appeal lies to the Appellate Tribunal against an order of the Adjudicating Authority. Merely because of the fact the application was not decided by the authority would not be sufficient ground to entertain the present writ petition. The same could be a plea that the Petitioner can raise before the PMLA Appellate tribunal as well - This Court directs the Petitioner to approach the Appellate Tribunal under Section 26 of PML Act. The said Appellate Tribunal would firstly take a view on the Application filed by the Petitioner, and after adjudicating upon the said Application, the Appellate Tribunal shall proceed to hear the appeal on merits, against the order passed by the Adjudicating Authority. Petition disposed off.

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• Service Tax

• 2021 (2) TMI 499
  Rejection of declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking a direction to the said respondent to reconsider the declaration of the petitioner - eligibility of a declarant for making a declaration in terms of the scheme under the category of investigation, enquiry or audit or maintainability of such a declaration - amount of tax dues was not quantified on or before 30.06.2019 - HELD THAT:- All that would be required for being eligible in terms of the scheme under the above category is a written communication which will mean a written communication of the amount of duty payable including a letter intimating duty demand or duty liability admitted by the person concerned during inquiry, investigation or audit. For eligibility under the scheme, the quantification need not be on completion of investigation by issuing show-cause notice or the amount that may be determined upon adjudication. The issue is no longer res integra and decided in the case of THOUGHT BLURB VERSUS UNION OF INDIA AND ORS. [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT] where it was held that there are no hesitation to hold that petitioner was eligible to file the application (declaration) as per the scheme under the category of enquiry or investigation or audit whose tax dues stood quantified on or before 30th June, 2019. Reverting back to the facts of the present case, it is found that in the course of the investigation, statement of Shri. Nipun Radhu, authorized representative of the petitioner was recorded on 26.11.2018 by the Senior Intelligence Officer in the office of DGGI. The statement was recorded under section 83 of Chapter V of the Finance Act, 1994 read with section 14 of the Central Excise Act, 1944 as well as under the provisions of the CGST Act, 2017. In the course of his statement, the authorized representative acknowledged that service tax liability of the petitioner for the year 2016-17 was to the tune of Rs. 1,61,01,194.00 and for the year 2017-18 (upto June, 2018), the service tax liability was to the extent of Rs. 14,60,823.00. This admission was reiterated by Shri. Nipun Radhu in his subsequent statement recorded on 13.03.2019. Both the statements were made prior to the cut-off date of 30.06.2019. Therefore, petitioner was clearly eligible to file a declaration in terms of the scheme under the category of investigation, enquiry or audit - Also, it is a well settled principle of natural justice that if an authority relies upon a document which is adverse to the person concerned and results in an adverse decision, copy of such a document is required to be furnished to the person concerned so that he can put up an effective defence. Devoid of the same, any personal hearing granted would be an empty formality. The matter remanded back to respondent No.5 to consider the declaration of the petitioner afresh in terms of the scheme as a valid declaration under the category of investigation, enquiry or audit and grant the consequential relief to the petitioner - petition allowed by way of remand.

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• 2021 (2) TMI 494
  Levy of penalty u/s 78 of the Finance Act, 1994 - construction of complex service - Correctness of the findings - HELD THAT:- The Adjudicating Authority as well as the Tribunal committed a fundamental error while appreciating the factual position. It is not in dispute that the assessee did not separately collect service tax from its buyers/clients. Their consistent stand was that they have collected advance amount from their clients, who have booked the apartment for the purpose of construction of residential complexes and after 16.06.2005, they had not collected/realised any amount from their clients separately towards service tax. This factual position has been noted and admitted by the Adjudicating Authority while issuing the show cause notice dated 19.04.2007, as could be seen from paragraph 11(iv) of the show cause notice - Unfortunately, the Adjudicating Authority did not examine this factual position for its correctness, but proceeded on the basis as if the assessee collected service tax separately, did not remit it to the Department, on the contrary filed Nil return. Uncertainty in the implementation of the law - HELD THAT:- For the first time, this particular service was brought within the service tax net with effect from 16.06.2005. The service tax was introduced by amendments to Finance Act, 1994 with effect from from 10.09.2004. The legislation was at its nascent stage. There were several interpretations to the new law and uncertainty loomed even with the Department. This submission made by the assessee was not considered by the Adjudicating Authority. In fact, the assessee stated that as soon as the Department had advised them, they had remitted the entire amount along with interest. This was much prior to the issuance of show cause notice. The first appellate authority did not render any independent finding, but chose to interfere with the order of the Adjudicating Authority by deleting the penalty under Sections 76 and 77 of the Act. No independent reasons have been given by the first appellate authority to confirm the penalty under Section 78 of the Act. When the matter went before the Tribunal, no attempt has been made to examine the facts of the case and the Tribunal also was of the view that the assessee had separately collected the service tax and not remitted to the Department, but filed Nil return. This being contrary to facts, both the authorities and the Tribunal committed error in levying/confirming the penalty under Section 78 of the Act. The substantial question of law is answered in favour of the assessee - Appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 487
  Levy of service tax - Tour operator service - respondent is engaged in providing package tours to domestic destination as well as international tourist spots - reverse charge mechanism - HELD THAT:- Admittedly, the order passed by the Commissioner (Appeals) is based on the decision of the High Court of Deli in TRAVELITE (INDIA) VERSUS UOI AND OTHERS [ 2014 (8) TMI 200 - DELHI HIGH COURT] . The aforesaid decision has been stayed by the Supreme Court in UNION OF INDIA AND ORS VERSUS M/S TRAVELITE (INDIA) [ 2014 (12) TMI 1099 - SC ORDER] and the matter is pending before the Supreme Court. Therefore, in the factual situation of the case, no useful purpose would be served by keeping the appeal pending before this Court. In the circumstances of the case, the orders passed by the Tribunal dated 21.06.2016 and 15.06.2016 passed by the Tribunal as well as the order dated 28.10.2014 passed by the Commissioner (Appeals) are hereby quashed and the Commissioner (Appeals) is directed to await the orders passed by the Supreme Court in the Special Leave Petition pending before it and to decide the appeal before it in the light of the decision which may be rendered by the Supreme Court in the aforesaid special leave petition. Appeal disposed off.

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• 2021 (2) TMI 457
  CENVAT Credit - input services - credit of the service tax charged on the input service was taken by the Appellant, for purposes of adjusting the same against its output service tax liability on the provision of transportation of gas through pipeline - Whether the Tribunal committed an error in entertaining the ground of the respondent M/s. GSPL on such question of CENVAT credit in a Rectification Application and whether the Tribunal can be stated to have corrected the error apparent on the face of record? - HELD THAT:- The appellants are engaged in the business of transporting gas through pipe line. For the purpose of transporting gas through pipe line it is essential for them to lay pipe lines between their different station. For the purpose of laying pipeline the appellants engage various contractors to procure pipes and completed the activity of laying the pipeline. In this process these contractors get the price of material used by them and all the services provided by them. These contractors pay service tax on the services provided by them to the appellant. These contractors take services from various sub contractor. The issue before us is if the appellants are entitled to take the credit of service tax paid by these contractors directly supplying services to the appellant for the purpose of laying pipeline. The fundamental objection of the revenue is that pipelines are immovable property and not goods and therefore, any service tax paid on such installation cannot be claimed as input credit by the appellant. It is seen that the issue involved in the instant case is squarely covered by the decision of tribunal in the appellant s own case GUJARAT STATE PETRONET LTD. VERSUS COMMR. OF C. EX. S.T., AHMEDABAD [ 2013 (9) TMI 1171 - CESTAT AHMEDABAD] . The said decision was also approved by Hon ble High Court. The Learned Special Counsel for revenue has argued since the Hon ble Apex Court has issued notice, the decisions of tribunal and Hon ble High Court cannot be applied to the instant case - there are no force in this submission as the decision of Hon ble High Court has not been stayed. The second issue raised by the Learned Special Counsel is that tribunal solely relied on the decision of AP High Court in the case of COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] , and that the decision in the case of Sai Samhita Storages Pvt Ltd relates to inputs and not inputs services - We do not find any merit in argument of Learned Special Counsel. The decision of tribunal upheld by Hon ble High Court in Appellant s own case is comprehensive in all respects. In view of the fact that the decision in the case of Sai Samhita Storages Pvt Ltd was examined by the co-ordinate bench of tribunal and the said decision has been approved by the Hon ble High Court. There are no merit in the impugned order - appeal allowed - decided in favor of appellant.

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• 2021 (2) TMI 455
  Levy of Service Tax - erection, commissioning and installation services - commercial or industrial construction services - consultancy engineering services - contracts which are turnkey contracts and involve both supply of goods and provision of services and when the amounts payable for services are mentioned separately and amounts payable for the goods are mentioned separately - argument of the Revenue is that the contracts are divisible not only between the different individual companies of the consortium but also between the supply of goods and rendering of services, these cannot be treated as composite works contracts. HELD THAT:- Identical matter came up before this Bench in respect of same assessee in the case of M/S BEEKAY ENGG. CORPN. LTD. VERSUS CCE, RAIPUR [ 2018 (1) TMI 1620 - CESTAT NEW DELHI] where it was held that prior to June, 2007 the Works Contract Services were not subjected to Service Tax - The learned Commissioner should have followed the ratio of the above decision which were binding on him. Learned Counsel for the appellant has demonstrated that these cases were specifically cited before learned Commissioner but no finding has been given as to why they were not being followed. Learned Commissioner, however, sought to distinguish the case of the appellant from the judgement of the Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] - In our view, when the applicability of judgement of the Supreme Court in the case of Larsen and Toubro Ltd . to the appellant s case has been decided by this Tribunal, judicial discipline required the Commissioner to follow it. He just ignored it. The impugned order is not sustainable and needs to be set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2021 (2) TMI 495
  CENVAT credit availed and distributed by the respondent prior to getting registered as an input service Distributor - penalty under erstwhile Rule 15(4) of the CENVAT Credit Rules, 2004 - CHA Services - services availed after the goods has been cleared from the place of removal. CENVAT credit availed and distributed by the respondent prior to getting registered as an input service Distributor under the Act - penalty under erstwhile Rule 15(4) of the CENVAT Credit Rules, 2004 - HELD THAT:- The issue has already been decided in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [ 2016 (2) TMI 183 - GUJARAT HIGH COURT] where it was held that It is true that the Government had framed Rules of 2005 for registration of input service distributors, who would have to make application to the jurisdictional Superintendent of Central Excise in terms of Rule 3 thereof. Sub-rule (2) of Rule 3 further required any provider of taxable service whose aggregate value of taxable service exceeds certain limit to make an application for registration within the time prescribed. However, there is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons dis-entitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. The decision has been accepted by the Central Board of Excise and Customs, vide Circular dated 16.02.2018. Therefore, the questions have to be decided against the Revenue and accordingly, decided so. CENVAT Credit - CHA Services - services availed after the goods has been cleared from the place of removal - HELD THAT:- There were no material facts and evidences available on record on this aspect as to whether this CHA services rendered to the assessee could also be availed for the purpose of CENVAT credit. Therefore, the Tribunal has granted relief to the assessee. Hence, we are of the considered view that there is no substantial question of law arises for consideration on this issue, viz., with regard to allowing CENVAT credit on CHA services and therefore, we are not inclined to interfere with the order passed by the Tribunal. Appeal dismissed.

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• 2021 (2) TMI 493
  Clandestine Removal - applicability of principle of beyond reasonable doubt or on the principle of preponderance of probability - cross examination of co-Noticees - absence of cross examination of the co-Noticees - the documentary evidence itself lost its relevance, especially when none of the statements had been retracted by the tenderers - ignoring vital evidences presented by the Department - Penalty. HELD THAT:- The Tribunal found that there were serious lacunae in the investigation and analyzed those lacunae in respect of each of the demand. The largest demand was of Rs. 83.09 Lakh and the evidence in respect of the said demand was 136 LRs and daily book register and there was no evidence that so produced that could be relied upon. The investigation was not carried out at the end of the actual transporters and from the testimony of the staff member, who was examined, it transpired that M/s Aishwarya Roadlines, the alleged transporter was mere a booking agent. Demand of Rs. 65.85 Lakh - HELD THAT:- The Tribunal found that the documents recovered from the Octroi Department were only photocopies. The statements of transporters were without reference to any documentary evidence. Even the transporters were not allowed to be cross-examined. In respect of the demand of Rs. 55.92 Lakh, no investigation was carried out at the end of the consignee. The demand of Rs. 58 Lakh was based on theoretical calculations. Further the smallest demands of Rs. 4,61,000/- and Rs. 2,40,575/- were also based on statements whose Authors were not offered for cross-examination - The Tribunal also found that the evidence stated to have been recovered from the hard-disks was from the hard-disks which were cloned and showed loss of master boot record. The production of log-sheet so printed from cloned hard-disks, which the Tribunal rightly found could not be relied upon. The Tribunal also referred to Section 36-B of the Act of 1944 in respect of cloning and re-cloning of the hard-disks. It cannot be said that the assessment of evidence was perverse. Even assuming the burden was not stringent, even that burden was not satisfactorily discharged by the Appellant - Rest of the issues are purely questions of fact. Therefore, the issues raised and the questions framed in this Appeal are not questions of law. Penalty - HELD THAT:- As the demands were rightly not established against the Respondent, the issue of penalty does not survive. Appeal dismissed - decided against Revenue.

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• 2021 (2) TMI 490
  Deletion of penalty - validity of ignoring the explanation 1 appended to Sec.11AC for deleting mandatory penalty on respondent - whether assuming bonafides ignoring the categorical finding by the authorities below that the conduct of the respondent amounts to suppression ? - applicability of decisions reported in COMMR. OF C. EX., BANGALORE-I VERSUS GENEVA FINE PUNCH ENCLOSURES LTD. [ 2011 (1) TMI 746 - KARNATAKA HIGH COURT] and PANASONIC AVC NETWORKS INDIA CO. LTD. VERSUS COMMR. OF C. EX., MEERUT-II [ 2010 (8) TMI 765 - CESTAT, NEW DELHI] . HELD THAT:- Section 11AC of the Act deals with penalty for short levy or nonlevy of duty in certain cases and the amount of penalty for such non-levy or short levy or non-payment or short payment or erroneous refund is in terms of Clauses (a) to (e) of the said provision. If we take a look at Clause (a) of Section 11AC, it states that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded for any reasons other than fraud or collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay penalty In the case on hand, there is no allegation of fraud or collusion or wilful misstatement or suppression of facts. The revenue seeks to bring the assessee s case under the caption contravention of the provisions of the Act or the rules made thereunder. The statute further states that such contravention should be with an intent to effect payment of duty to make the person liable for payment of penalty which will be equivalent to the amount of duty payable at the relevant point of time. As stated above, the assessee has accepted the fact that they are not entitled to avail CENVAT credit without payment of CVD. Their case initially was that they have set right the mistake and reversed the credit and also remitted the interest much prior to the audit party inspection. However, this has been found factually incorrect by the Commissioner of Appeals because the credit was reversed only on 31.01.2004 and interest was remitted only on 20.02.2004 whereas the audit party visited the factory between 12.01.2004 to 14.01.2004. On realizing that a wrong statement has been given, the respondent while accepting the mistake would state that the head office of the Company is at Coimbatore and the Managing Director does not come over to Dharapuram to take case of day-to-day affairs and the employee taking note of the quantum of CVD mentioned in the EPCG license had wrongly availed the CENVAT credit - The Tribunal took note of the overall facts and circumstances of the case and found that availment of CENVAT credit without payment of CVD was done by an employee of the Company and it was a bonafide mistake. Furthermore, the Department took more than 2-1/2 years to issue show cause notice when they were fully aware that the CENVAT credit was wrongly availed by the respondent. Therefore, the finding rendered by the Tribunal on the facts and circumstances cannot be termed to be perverse for us to interfere in an appeal filed under Section 35G of the Act. The Tribunal has referred to the decision of the Karnataka High Court in the case of COMMR. OF C. EX., BANGALORE-I VERSUS GENEVA FINE PUNCH ENCLOSURES LTD. [ 2011 (1) TMI 746 - KARNATAKA HIGH COURT] and in the case of PANASONIC AVC NETWORKS INDIA CO. LTD. VERSUS COMMR. OF C. EX., MEERUT-II [ 2010 (8) TMI 765 - CESTAT, NEW DELHI] - On going through the facts of the said case, we find that those two decisions cannot be applied to the case on hand. Be that as it may, we do not find any substantial question of law arising for consideration in this appeal to interfere with the factual finding recorded by the Tribunal. No substantial question of law arises for consideration in this appeal - Appeal dismissed.

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• 2021 (2) TMI 472
  Refund of accumulated CENVAT Credit - goods have been supplied to a project awarded under ICB, treating such supplies to be deemed exports - export goods or not - Rule 5 of CENVAT Credit Rules, 2004 - N/N. 12/2012-CE (S No 336) - HELD THAT:- the refund of the accumulated credit in terms of Rule 5 of the CENVAT Credit Rules, 2004 was admissible only, if the person claiming such refund was able to establish actual and physical export of the goods cleared by him for export under bond or against a letter of undertaking. These conditions are substantial and in case of non fulfillment of the same refund could not have been allowed. In view the various discussions as above we find that none of the decisions relied upon by the appellants decided the issue in their favour. Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2021 (2) TMI 502
  Rectification of Mistake - HELD THAT:- The cause shown in the affidavit filed in support of application is sufficient. The application is allowed. Order dated 27.2.2020 is corrected.

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• 2021 (2) TMI 498
  Levy of penalty under Section 27(3)/27(4) of TNVAT Act - whether the First Appellate Authority could have admitted documents for the first time and as to whether there was an embargo under Section 63 of the Act? - HELD THAT:- The finding recorded by the Tribunal that the documents could not be taken into consideration at the appellate stage is unsustainable. On facts, we find that the documents were not admitted by the First Appellate Authority for the first time, but the documents were already available on record. Upon perusal of the said documents, the First Appellate Authority found that the receipts did not relate to any sale. Therefore, the Tribunal did not go into the factual position to ascertain as to whether the First Appellate Authority admitted fresh documents or were the documents available on record even when the assessment was completed. This aspect has been clearly brought out by the First Appellate Authority in his orders dated 31.12.2014, which aspect has not been examined by the Tribunal. Hence, on the said score also, the petitioner - assessee is bound to succeed. Levy of penalty under Section 27(3) and (4) of the Act - HELD THAT:- The levy of penalty under Section 27(3) of the Act arises for all the five years. However, the levy of penalty under Section 27(4) of the Act arises for the assessment years 2009-10 and 2010-11 alone. No specific ground was raised as to how the penalty was imposable. The First Appellate Authority granted relief to the assessee by setting aside the penalty, which was levied by the Assessing Officer. In doing so, the First Appellate Authority referred to Section 27(2) of the Act and held that the levy of penalty was provided under the said provision on the actual availing of input tax more than admissible input tax and found that the petitioner assessee reversed the input tax, which was availed owing to Section 19(20) of the Act much before finalization of the assessment. Therefore, the First Appellate Authority held that there was no excess availing of input tax and also reversal of input tax was not detected and not based on any suppression of fact or bogus claim - Ultimately, the penalty levied under Section 27(3)/27(4) of the Act was set aside. The Tribunal did not assign any reasons as to why the finding written by the First Appellate Authority setting aside the penalty was not justified. The Tribunal proceeded on the basis that during the VAT Audit, the assessment came to light and therefore, the willfulness on the part of the assessee was established. Any alleged admission before the Inspecting Authority cannot be put against the assessee because the Assessing Officer is an independent Authority, who will deal with the matter upon receipt of the report from the Inspecting Wing. Hence, it hardly matters as to what stand was taken by the assessee when the inspection was conducted. Accordingly, so far as the levy of penalty under Section 27(4) of the Act for the assessment year 2009-10 is concerned, the same cannot be sustained. The question, which arose for consideration namely as to whether Section 63 of the Act contemplates a total embargo on the First Appellate Authority or the Tribunal to admit documents is answered in favour of the petitioner/assessee - The other questions, which have been raised, are all factual in nature and as we have upheld the orders passed by the First Appellate Authority deleting penalty under Section 27(3)/27(4) of the Act as well as equal time addition, those questions do not arise for consideration. Revision allowed.

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• 2021 (2) TMI 496
  Works Contract - recovery of tax alongwith penalty - appellant s argument was that they are civil contractors and in terms of Section 6(4) of the Act, payment of tax for the works contract done is based on the receipts for the relevant assessment year and taxes are to be paid by the appellant when the appellant receives payment or receivable from the person, for whom the works contract was undertaken by the appellant - HELD THAT:- Considering the fact that the assessments are of the years 2012-13 and 2013-14, that the matters are dragged on till now, that apart from the taxes, which were remitted by the dealer in the year 2015, the Department has not been able to recover tax nor the penalty, which has been quantified in the impugned assessment orders passed in the year 2017 and that the assessment orders remain as paper orders, this Court is of the view that one more opportunity can be granted to the appellant to go before the Assessing Officer by producing the original records to substantiate their claim. However, such an option shall be given subject to a stringent condition. The appellant shall pay 50% of the disputed tax for each of the assessment years within a period of 60 days from the date of receipt of a copy of this common judgment and if the payment is made for both the assessment years within the time stipulated, the appellant will be entitled to treat the assessment orders dated 23.1.2017 for the years 2012-13 and 2013-14 as show causes notices, give their explanation, appear before the Assessing Officer on the date to be fixed by him and produce original records to justify their stand - Appeal allowed.

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• 2021 (2) TMI 484
  Maintainability of petition - availability of alternate remedy - TNVAT Act - adjustment done towards the sales tax dues payable by the appellant - Section 19(17) of TNVAT Act - HELD THAT:- If we are to accept the submission of Mrs.G.Dhanamadhri, learned Government Advocate appearing for the respondent, the consequence, which would follow is that the Department has to refund the amount of Rs. 14,84,690/- together with interest from January 2015 i.e when the adjustment was made till the date it is paid and the interest should be definitely compensatory. From the facts placed before the Court in the two earlier writ petitions as well as before the learned Single Judge in the impugned order, it is clear that the excess input tax credit, which accrued to the said M/s.Essa Hosiery Mills is not in dispute. Therefore, it will be too late in the day for the Department now to reopen the entire issue and conduct an autopsy of the matter especially because the adjustment was at the behest of the Department. Even assuming that the adjustment was erroneous and it had to be reversed, then the dealer would have to be refunded the entire amount with interest, which, in our opinion, should be not less than 18% per annum. Thus, considering the factual situation and bearing in mind the interest of the Revenue, we are of the considered view that the order dated 04.12.2015 impugned in the present writ petition has to be quashed. Appeal allowed.

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• 2021 (2) TMI 482
  Time Limitation of assessment order - reversal of input tax credit on the inter-state sales effected to Government Departments - applicability of judgment of the Hon ble Supreme Court dated 12.10.2018 in the case of TVS Motor Company Ltd. Vs. State of Tamil Nadu and others [2018 (10) TMI 887 - Supreme Court] . HELD THAT:- The tax case revision is allowed, the impugned order passed by the Tribunal is set aside and the matter is remanded to the Tribunal for a fresh consideration. The Tribunal shall permit the petitioner dealer to file additional grounds of appeal duly supported by decisions and thereunder, the appeal shall be heard and decided on merits and in accordance with law.

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• 2021 (2) TMI 481
  Maintainability of petition - availability of alternate remedy of appeal - Re-assessment of tax - demand of tax - HELD THAT:- The power of re-assessment, of, under-assessed or escaped assessment, of, tax as borne in the apposite returns, filed by the taxable unit, becomes visibly vested in the assessing authority, through statutory empowerment, becoming conferred, upon the assessing authority. In sequel thereto, the latter through an order borne in Annexure P-12A, anvilled its reassessment, of, the initially assessed tax qua the petitioner-Unit, upon, an audit observation - The apposite order of reassessment, as, embodied in Annexure P- 12-A, displays qua an allusion being made to the audit observations, appertaining to the purported under-assessed or escaped tax, and, further reveals qua theirs arising from purported breaches being visited, to, the provisions of Section 11(1) and 11 (3) of the Act Hon ble Apex Court, in case rendered in case titled as FIS Global Business Solutions India Pvt. Ltd. Versus Principal Commissioner of Income Tax-3, New Delhi and another decided on 16.11.2018 in [ 2018 (12) TMI 130 - DELHI HIGH COURT ], (i) wherein it has been expostulated that the expostulations of law, borne in a judgment rendered in case title as Carlton Overseas Pvt. Ltd. v. Income Tax Officer Ors [ 2009 (8) TMI 57 - DELHI HIGH COURT ] (ii) inasmuch as the reassessment of the completely assessed tax, upon, apposite tax returns, filed by the taxable unit, being valid, only upon, tangible material being made available to the revenue, and, also that hence an audit objection or an audit report issued by the revenue rather not constituting potent material - The afore expostulations of law borne in the judgment, for all the hereinabove reasons, is pointedly and squarely applicable to the factual matrix available hereat, and, in consonance therewith, this Court proceeds to set aside the impugned Annexures, through its invoking the power of judicial review, invested under Article 226 of the Constitution. Petition allowed.

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• 2021 (2) TMI 476
  Scope of Casual Dealer - whether the respondent can be treated to be a casual trader or not? - HELD THAT:- This court finds that the Tax Board has considered the judgment passed by this court in identical matter i.e.Sales Tax Officer v. Jagdish Prasad [ 2013 (5) TMI 1028 - RAJASTHAN HIGH COURT ] wherein the department s appeal was rejected by the High Court and it was held that such a person who gets the vehicle for his own use would fall within the provisions of Section 10 (B) (I) (II) and would have to be taken as casual trader. Since the assessment had been done more than two years back, the provisions of limitation with regard to bar of reopening assessments after two years would therefore apply - Keeping in view thereof, the Tax Board has found that the action taken by the present petitioner beyond limitation and the order dated 9-10-2012 was accordingly set aside. Revision petition dismissed.

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• Indian Laws

• 2021 (2) TMI 505
  Dishonor of Cheque - Jurisdiction - whether the High Court erred in reversing the findings of the trial Court in exercise of its powers under Section 378 of CrPC? - HELD THAT:- It is true that the High Court would not reverse an order of acquittal merely on formation of an opinion different than that of the trial Court. It is also trite in law that the High Court ought to have compelling reasons to tinker with an order of acquittal and no such interference would be warranted when there were to be two possible conclusions. The powers of this Court under Article 136 of the Constitution also do not encompass the reappreciation of entirety of record merely on the premise that the High Court has convicted the appellants for the first time in exercise of its appellate jurisdiction. This Court in RAM JAG AND OTHERS VERSUS THE STATE OF U.P. [ 1973 (12) TMI 90 - SUPREME COURT] , RAVEEN KUMAR VERSUS STATE OF HIMACHAL PRADESH [ 2020 (10) TMI 1103 - SUPREME COURT] , evolved its own limitations on the exercise of powers under Article 136 of the Constitution and has reiterated that while entertaining an appeal by way of special leave, there shall not ordinarily be an attempt to re-appreciate the evidence on record unless the decision(s) under challenge are shown to have committed a manifest error of law or procedure or the conclusion reached is ex-facie perverse. On a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these reverse onus clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him - Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon the Complainant Respondent to explain the circumstances under which the appellants were liable to pay. Such approach of the trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law. The defence raised by the appellants does not inspire confidence or meet the standard of preponderance of probability . In the absence of any other relevant material, it appears to us that the High Court did not err in discarding the appellants defence and upholding the onus imposed upon them in terms of Section 118 and Section 139 of the NIA. Compensation raised on behalf of the respondent - HELD THAT:- Chapter XVII of the NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for dishonour of cheque as well as civil liability for realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the Courts should uniformly levy fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. The record indicates that neither did the respondent ask for compensation before the High Court nor has he chosen to challenge the High Court s judgment. Since, he has accepted the High Court s verdict, his claim for compensation stands impliedly overturned. The respondent, in any case, is entitled to receive the cheque amount of Rs. 11.20 lakhs which the appellant has already deposited with the Registry of this Court. The present appeal is liable to be dismissed.

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• 2021 (2) TMI 504
  Certification of bill as a Money Bill under Article 110(1) of the Constitution - Whether the decision of the Speaker of the House of People House of People interchangeably referred as Lok Sabha under Article 110(3) of the Constitution, to certify a bill as a Money Bill under Article 110(1) is final and binding, or can be subject to judicial review? - if the decision is subject to judicial review, whether the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 had been correctly certified as a Money Bill under Article 110(1) of the Constitution? HELD THAT:- The issue whether judicial review can be exercised over a decision of the Speaker of the House of People under Article 110(3), arose subsequently before another Constitution Bench in Rojer Mathew v. South Indian Bank Ltd. [ 2019 (11) TMI 716 - SUPREME COURT ] where it was held that .This was in the context of whether some of the provisions of the Finance Act, 2017 (relating to appointments to Tribunals and the conditions of service of members) could have been certified as a Money Bill under Article 110. Consequently, the correctness of the judgment in Puttaswamy (Aadhaar-5J.), in relation to what constitutes a Money Bill under Article 110 of the Constitution, the extent of judicial review over a certification by the Speaker of the House of People and the interpretation which has been placed on the provisions of the Aadhaar Act while holding the enactment to be a Money Bill , are issues which will be resolved by a larger bench, which is yet to be constituted. If these review petitions are to be dismissed and the larger bench reference in Rojer Mathew were to disagree with the analysis of the majority opinion in Puttaswamy (Aadhaar-5J.), it would have serious consequences - not just for judicial discipline, but also for the ends of justice. As such, the present batch of review petitions should be kept pending until the larger bench decides the questions referred to it in Rojer Mathew - it is concluded that the constitutional principles of consistency and the rule of law would require that a decision on the Review Petitions should await the reference to the Larger Bench.

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• 2021 (2) TMI 492
  Dishonor of Cheque - insufficiency of funds - as mandated under the provisions legal notice is also given to the applicant to which he did not respond and nor any payment has been made - section 138 of Negotiable Instruments Act - order assailed inter alia on the grounds that the trial Court has rejected the discharge application without considering the facts and circumstances of the case, and also without applying judicial mind as mandated under Section 204 (2) Cr.P.C. - HELD THAT:- In the present case specific and serious allegations have been levelled by the complainant by unequivocally stating that he had been given a cheque by the applicant which was dishonored due to insufficient funds. Learned counsel appearing for opposite party no. 2 has also disclosed the fact that amount in question was payable to him by the applicant. He has also stated that opposite party no. 2 had duly informed the applicant about the dishonour of the cheque and the applicant had not made by response to the said notice, pursuant to which complaint was filed and summons were issued to the applicant. It is clear that prima-facie case under Section 138 of Negotiable Instruments Act is made out against the applicant and during trial the applicant shall have full opportunity to lead evidence in his defense, but on the application for discharge mini trial cannot be conducted and unless it is proved in evidence during trial, benefit of the facts as narrated by the applicant cannot be given to him - The facts as stated by the applicant will have to be duly proved during trial and bald assertions cannot be accepted at the stage of discharge. No explanation was forthcoming from the applicant as to why he did not informed the bank when his cheque was lost. There is no infirmity with the order of the revisional Court - Application dismissed.

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• 2021 (2) TMI 485
  Review application - arrears of rent and eviction of the revisionist from house - Service of notice - HELD THAT:- It finds that learned trial court while deciding the issue no.1 with regard to whether Rs. 8,000/- had been agreed upon as rent by the landlord and the tenant, had considered in detail, the situation of the building, the covered area of the tenanted premises and also the photographs of the building and its situation as produced before the trial court. The rent reciepts were also produced in original. The trial court emphasized also the fact that for the same premises the tenant had taken an independent electricity connection for which he was paying Rs. 6,000/- to Rs. 7,000/- per month as electricity charges to the distribution company. The learned trial court has observed after referring to the oral statement of the landlord as also the tenant and his witness, that it was quite improbable that the landlord would have agreed to accept merely Rs. 3,000/- as electricity charges for the tenanted premises whereas in ordinary course, Rs. 6,000/- to Rs. 7,000/- was liable to be paid as electricity charges by the tenant. The trial court has given finding of fact on the basis of actual photographs of the building produced before him that there was no space on the ground floor near the stair case and toilet for construction of cabin as alleged to have been promised to the tenant by the landlord and for agreement by the tenant to pay Rs. 2,000/- as rent for a cabin to be so constructed. Service of notice - HELD THAT:- The relevant extract of which has been filed at page-86 to page 87 of the application for interim relief. It finds that there is no contention raised by the tenant before the learned trial court that notice was not served as it was sent on a wrong address; rather the tenant had stated that the notice was not served upon him because he may have been out of station as he worked as a Recovery Agent also for the Bank of Baroda and had to undertake certain recoveries for the Bank in different towns as well. Moreover, in the plaint also, as has been pointed out by learned counsel for the respondent, the same address of the tenant has been mentioned as was mentioned in the legal notice, and it is improbable that summons were served of the plaint on the defendant on the same address to which he responded by filing a written statement; while at the same time the legal notice dated 11.08.2016 was not served. The question regarding the scope of a Revision before the High Courts in various Rent Control legislations in different States was considered by a Constitution Bench of Hon ble Supreme Court in HINDUSTAN PETROLEUM CORPORATION LTD. VERSUS DILBAHAR SINGH [ 2015 (12) TMI 521 - SUPREME COURT] ; the Supreme Court in the said judgment has referred to several state Acts but has concluded that none of the Acts conferred on Revisional Authority the power as wide as that of the Appeal despite such statutory revisional power being wider than that provided in section 115 of the C.P.C. , the provision in a revision does not permit the High Court to invoke its revisional jurisdiction under the cloak of an appeal in disguise. The Revisional Court is not entitled to re-appreciate the evidence and substitute its own conclusion in place of the conclusion of the Trial court. The decision emphasises that the examination of findings of fact by the High Court is limited to satisfy itself that the decision is according to law . The High Court has only to satisfy itself as to the legality, regularity, or propriety of the decision or that it is according to law and does not suffer from any error of law - Whether or not a finding of fact recorded by a subordinate court is according to law is required to be seen on the touchstone, whether such finding of fact is based on some legal evidence, or it suffers from any illegality like misreading of the evidence or overlooking and ignoring the material evidence altogether, or suffers from perversity, or any such illegality or such finding has resulted in gross miscarriage of justice. The findings returned by the learned trial court with regard to the agreed rate of Rent or with regard to service of notice upon the defendant, do not suffer from any perversity for this Court to show any interference in revisional jurisdiction - Review/recall application is rejected.

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• 2021 (2) TMI 478
  Cheating - allegation is that the petitioner had given a false statement before the Revenue Authorities for which the petitioner company suffered loss, as he was deprived of future business transactions - offence under Section 420 of the Indian Penal Code - HELD THAT:- There is no allegation of delivering any property to any person, nor there is any allegation of altering or destroying any security. The element of deception vis- -vis the complainant is missing in this case. The best allegation against the petitioner is that he suppressed the business relations between the petitioner and the complainant company with the Revenue Authorities to save tax. For this the complainant cannot be said to have been cheated. The revenue authorities, which was the only appropriate authority, has already imposed punishment upon the petitioner s company as per law. Thus, there is no application of Section 420 of the Indian Penal Code in this case. Thus, the petitioner was not entrusted with any property by the complainant nor did he dishonestly misappropriate or convert any property for his own use. On the facts stated above, Section 406 of the Indian Penal Code is also not applicable in this case. The Hon ble Supreme Court in the case of STATE OF HARYANA VERSUS BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] of the said judgment has framed various categories of cases by way of illustration for exercise of the extraordinary power under Article 226 of the Constitution of India or the exercise of inherent powers under Section 482 of the Code of Criminal Procedure, to prevent abuse of the process of any Court or otherwise to secure the ends of justice. This case is a fit case and falls in Category (1) and (5) of the above guidelines laid down by the Hon ble Supreme Court for exercise of inherent powers under Section 482 of the Code of Criminal Procedure - Petition allowed.

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