Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 25, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Appeal against the rejection of application for Rectification of mistake (ROM) by the AAR - The appeal filed against the ROM order is not maintainable in as much as the impugned order is not an appealable order u/s 100 of the CGST Act, 2017 - the ROM rejection order does not merge with the original advance ruling - Since the appeal is not maintainable, the question of addressing the issues raised in appeal as well as the condonation of delay application do not arise. - AAAR
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Classification of goods - renting of e-bikes(Miracle), bicycles(Move) without operator - there are no transfer in the right to use the goods and we hold that in the absence of any such transfer of the right to use the goods, the Appellant does not get covered under entry Sl.No 17(iii) of the Rate Notification. The appropriate correct entry is SL.No 17(viia) i.e Leasing or renting of goods and the rate of tax will be the same rate of tax as applicable on supply of like goods involving transfer of title in goods. - AAAR
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Cancellation of petitioner's GST registration - scope of SCN - Since an alternative remedy in form of appeal under Section 107 of the CGST Act is available to the petitioners, which is more competent to deal with the fact finding issues, I am not inclined to entertain the instant writ petition - The petitioners are permitted to approach the Appellate Authority u/s 107 of the CGST Act within 2nd March, 2021. - HC
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Validity of SCN for cancellation of GST registration - Failure to file GST returns and pay taxes due ot covid-19 - there are no fault on the part of the proper officer in issuing the show-cause notice at Ext.P3 asking the petitioner to show-cause as to why the registration of the establishment should not be canceled. - The petitioner is permitted to approach the proper officer for preponement of date of hearing by submitting his reply to the show-cause notice - HC
Income Tax
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Income accrued or deemed to accrue in India - As the design services were inextricably connected with setting up of the plant and were rendered through this PE, the profit of the PE is required to be taxed in India as per the provision of Article 7.1 of the India-France DTAA in respect of these services. As the basic engineering design service and offshore advisory services are found covered under Article 7.1 of the DTAA, it is not necessary to examine whether the same are also covered under Article 13 of the DTAA or not. - AAR
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Rejection of extension of time for payment of the last installment of Tax under Income Disclosure Scheme, 2016 (IDS) - The case on hand is not one of illegal recovery of tax by the Revenue, or in other words, any tax paid by the assessee under mistake of law. This is a case of default on the part of the writ applicant as an assessee, and the consequences of the default are itself provided under the scheme in the form of Clause 191. - HC
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Validity of proceeding u/s. 153C - protective assessment - The seized material leads to the satisfaction that it has a bearing on the determining of the total income of the assessee at least for the assessment years for which the assessee did not file any return of income. Accordingly, do not find any substance or merit in this contention of the assessee - AT
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Addition u/s 68 - Cash deposits in bank account as undisclosed income - Section 68 makes it clear that in respect of a cash credit entry the explanation offered by the assessee can be rejected by the Income tax Officer only on cogent grounds, that is, only if such grounds are not based upon any evidence - Non reply to summons by debtors - if the parties had received the summons but did not appear, the assessee could not be blamed. - AT
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Validity of reopening of assessment - The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the similar STCG on same transaction, therefore, in our view, the assessee cannot be treated indifferently for similar transaction. - AT
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Bogus purchases - it cannot be said that the purchase have been bogus especially when the quantitative details have been tallied item wise and the sale proceeds have been taken into P&L account and the profit earned on such transaction is offered to tax. They could not have been any sales without purchase of the items. Hence, we are unable to accept the contention of the revenue - AT
Customs
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Smuggling - Gold - validity of SCN - As per submission of the petitioner, the allegations made in the Show Cause Notice are vague allegations without any corresponding data - The petition itself is premature. It is just at the stage of show cause - Petition dismissed. - HC
Indian Laws
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Dishonor of Cheque - self cheque - the cheque is styled as a self cheque and over and above it, the term "or bearer" has not been scored off. The holder of the cheque could be a 'holder in due course', who could maintain a complainant under Section 142 of the NI Act - the very contention that there is no endorsement and the self cheque does not attract Section 138 of the NI Act, cannot be accepted at this juncture. - HC
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Dishonor of Cheque - In this case the cheque amount is ₹ 52,000/-. The case of the year 2003. Now we are in the end of the year 2020. So nearly seventeen years the case is pending. Therefore, in my considered view the imposition of double the cheque amount as a fine is a proper sentence - HC
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Dishonor of Cheque - The preponderance of probabilities is tilting in favour of the accused. The accused has also brought on record such facts, material and circumstances in the cross-examination of PW.1 which could be reasonably said as accused proved a probable defence. Therefore, the burden to rebut the evidence of complainant and presumption in favour of complainant had been discharged by the accused to prove that the cheque was not issued in discharge of any legally recoverable debt or other liability or there exist any debt or liability by the accused to pay the said amount mentioned in the cheque to the complainant. - HC
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Dishonor of Cheque - A cheque given in discharge of a time barred debt will not constitute an unconditional undertaking or promise in writing either expressly or impliedly so as to attract the criminal offence under section 138 of N.I Act. - HC
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Dishonor of Cheque - petitioner has issued stop payment instructions to the banker - Once it was held that the cheque pertains to the account of the petitioner and that was issued by him, the presumptions under Section 118 of NI Act to the effect that cheque was issued for consideration and the presumption under Section 139 of the NI Act that the cheque was issued for discharge of liability arise. - Order of conviction for the offence u/s 138 confirmed - HC
IBC
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Initiation of CIRP - The Adjudicating Authority was concerned with the insolvency resolution qua the operational debt, which the Corporate Debtor owed to the Operational Creditor. It was immaterial whether it was solvent or insolvent qua other creditors. - The Adjudicating Authority clearly landed in error by observing that the course adopted by it was warranted on the principle of ease of doing business, ignoring the fact that such course was not available to it, ease of doing business only being an objective of the legislation viz. I&B Code along with other objectives specified in the preamble, which are sought to be achieved through CIRP process. - AT
Service Tax
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SVLDRS - the second declaration was filed on 10.01.2020 whereas the first declaration was rejected on 12.02.2020 - the quantum of service tax liability of the petitioner was the amount of service tax liability of the petitioners quantified in terms of the scheme on admission of the petitioners prior to the cut off date of 30.06.2019 approximately which roughly corresponds to the declared figure in the second declaration. - rejection of the second declaration of the petitioners on the ground of ineligibility is not justified. - HC
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Extended period of limitation - Merely because the Appellant collected an amount inclusive of taxes does not mean that service tax was included because there are many other taxes that are required to be paid - thus, it is not possible to sustain the demand of service tax raised against the Appellant as the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked. - AT
Central Excise
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Refund claim - Period of limitation - Relevant Date - Finalization of provisional assessment - the appellant was required to make an application for refund within a period of one year from the date of the order directing refund in favour of the appellant - The Tribunal erred in considering the date of finalization of price between the appellant and their customers as relevant date in the light of Explanation B (ec) of Section 11 of the Act - HC
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CENVAT Credit - trading activities - Rule 6 of CENVAT Credit Rules, 2004 deals solely with the situation of CENVAT Credit resulting from exempted services and exempted products. The rule itself is clearly designed to deny partial credit of CENVAT credit taken on inputs/input services used in exempted goods and services. The CENVAT credit of other kind has no relevance in this rule. - AT
VAT
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Classification of goods - Bicycle Chain Cover, Bell, Cycle Stand, Handle Grip Cover and Cycle Seat Cover, accessories - Since the Tribunal has yet not expressed its opinion on the common parlance test invoked by the assessee and since that finding does involve appreciation of facts, it is desirable that the present matter be re-considered by the Tribunal considering the observations made above, before this Court may examine the issue itself - HC
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Levy of tax - Inter-state sale - While following the decision of HC, the Tribunal committed an error in not correctly noting the ultimate relief for the assessment year 1980-81. In fact, in the last sentence of the said judgment, it was held that the order of the Tribunal levying tax on second inter-state sale effected by the assessee could not be sustained and was therefore set aside. Had the Tribunal noted this last sentence, the relief that should have been granted to the assessee was to allow the appeal and not to dismiss the same. This would be sufficient to interfere with the impugned order. - HC
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Refund - the rejection of claim for refund only on the ground that there is no provisions under the JVAT Act, 2005 for entertaining such a claim is not sustainable in law. Whether the contention of the petitioner that the entire sale transaction originated in a different State after payment of central sales tax amount and there was no sale transaction originating within the State of Jharkhand for the respondent to retain the amount so deposited is a matter of verification upon assessment. - HC
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Refund - Seeking return the amount of tax collected from the different parties during the said period of assessment - since 2014, the respondent authorities have not issued any assessment order after serving notice of provisional assessment in the prescribed form. Even no notice has been issued by the respondent authorities invoking provisions of Section 8A(a) of Section 34 of the GVAT Act, 2003. - The writ applicant is entitled to get the refund of amount. - HC
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Doctrine of Promissory Estoppel - Withdrawal of subsidy granted on account of change of opinion - definition of captive power plant - benefit of exemption of capital investment made in the captive power plant - the withdrawal of the benefit granted to the petitioner by the State level committee through its decision and the order of the State Appellate Forum is illegal and unjustified and is liable to be and is accordingly set aside/quashed with consequences to flow. - HC
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Classification of goods - rate of tax - Brass fittings - The products of the assessee though can be used as sanitarywares, also are used in general water supply and are covered under the various HSN codes - The products dealt with by the assessee cannot be covered as sanitaryware under 7418.20.10. - HC
Case Laws:
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GST
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2021 (2) TMI 995
Appeal against the rejection of application for Rectification of mistake (ROM) by the AAR - Liability of GST - work executed under JDA on land owner's portion where work commenced during pre-GST and continued under GST law - Rate of tax - HELD THAT:- An advance ruling pronounced by the Authority under Section 98(4) may be appealed against to the Appellate Authority within a period of 30 days from the date on which the ruling sought to be appealed against is communicated to the aggrieved person. However, the Appellate Authority may, if it is satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the said period of thirty days, allow it to be presented within a further period not exceeding thirty days. In terms of Section 101, the Appellate Authority may pass such order as it thinks fit, confirming or modifying the ruling appealed against. Further, Section 102 of the CGST Act, provides for rectification of advance ruling whereby the Authority or the Appellate Authority may amend any order passed by it under section 98 or section 101, so as to rectify any error apparent on the face of the record, if such error is noticed by the Authority or the Appellate Authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer, the applicant or the appellant within a period of six months from the date of the order. It is clear that even in cases where a rectification of mistake application is admitted and a mistake apparent on record is corrected, the original order is not set aside. The original order remains on record and only the mistakes are corrected therein. The principle of doctrine of merger will not apply in such cases. Any appeal can be made only against the original order which will be read together with the correction made in the rectification order. In this case, the rectification application was not admitted as there was no error apparent on record and hence, the original order stands without any changes. The ROM rejection order does not merge with the original advance ruling order. The original advance ruling stands without any corrections. The appeal should have been filed by the Appellant against the advance ruling order dated 25-07-2019 within the period of 30 days from the date of communication of the said order or such extended period as permitted in terms of the proviso to Section 100(2) of the CGST Act. The appeal filed against the ROM order KAR ROM 03/2020 dated 11-09-2020 is not maintainable in as much as the impugned order is not an appealable order under Section 100 of the CGST Act, 2017 - the ROM rejection order dated 11-09-2020 does not merge with the original advance ruling dated 25-07-2019. Since the appeal is not maintainable, the question of addressing the issues raised in appeal as well as the condonation of delay application do not arise. Appeal dismissed as not maintainable.
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2021 (2) TMI 994
Classification of goods - renting of e-bikes(Miracle), bicycles(Move) without operator - to be classified under the SAC 9973 - Leasing or rental services without operator or otherwise - Sl.No.17 (viia) of Notification No.11/2017-Central Tax (Rate) dated 28th June 2017 as amended - HELD THAT:- In the instant case, there is no doubt that the first two attributes laid down by the Supreme Court are evident in this transaction in as much as the User Agreement is very clear that the goods available for rent are the e-bikes Yule Miracle and bicycles Yule Move . However, in order to determine whether the instant transaction involves the transfer of the right to usegoods it is imperative that the other three attributes are also evident. We have gone through the User Agreement furnished by the Appellant which is an agreement with the Rider for rental, waiver of liability and release. Transfer of right to use also involves transfer of possession and control of the goods to the user of the goods. The right to use the goods - in this case, the right to use the vehicles - can be said to have been transferred by the Appellant to the rider only if the possession of the said vehicles had been transferred to them - the Rider would have the right to use the vehicle only if he was in lawful possession of it. There has to be, in that case, an act demonstrating the intention to part with the possession of the vehicle. In this context, we have to analyze the terms of the agreement to ascertain whether effective control and possession has been transferred by the supplier Appellant to the recipient of the goods. The agreement provides the rider access to use the vehicles (e-bikes and bicycles). Once access is provided, the rider uses the vehicle. However, while using such vehicle, there is no transfer of any interest in the vehicle in favour of the rider. The vehicle continues to be in possession of the transferor. What is used by the rider is the service which is provided by the Appellant. The rider never gets the possession of the vehicle. Getting access to use the vehicle does not tantamount putting the rider in possession of the vehicle. Except having access to the facility which the Appellant is providing by virtue of possessing such goods, no such right in the goods is transferred to the rider. Providing access does not amount to right to use goods. We also see from the terms of the User Agreement that the vehicles (e-bikes and bicycles) are always in the physical control and possession of the Appellant at all times and there is no transfer of right to use such goods. What is permitted under the User Agreement is a permission to have access to the vehicles and use the same in designated regions / areas for the designated period of time. In other words, the Appellant retains the effective control of the goods in all respects - there are no transfer in the right to use the goods and we hold that in the absence of any such transfer of the right to use the goods, the Appellant does not get covered under entry Sl.No 17(iii) of the Rate Notification. The appropriate correct entry is SL.No 17(viia) i.e Leasing or renting of goods and the rate of tax will be the same rate of tax as applicable on supply of like goods involving transfer of title in goods.
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2021 (2) TMI 991
Clandestine removal - copper wires - demand based on various statements - retraction of statements - HELD THAT:- We are not inclined to entertain the Special Leave Petition under Article 136 of the Constitution. SLP dismissed.
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2021 (2) TMI 990
Detention of goods alongwith vehicle - contention of the learned counsel for the petitioner that G.S.T. Tribunal under the Act, 2017 has yet not been constituted - Section 129 (1) (b) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Since the challenge to the impugned orders relates to questions of fact and the Appellate Tribunal is the last fact finding authority, therefore, we leave it open for all the petitioners to challenge the impugned orders before the Appellate Tribunal under Section 112 of the CGST Act/ U.P. GST Act as and when the State Bench and Area Benches of the Appellate Tribunal are constituted in the State of Uttar Pradesh. Release of vehicle - HELD THAT:- A self contained procedure has been provided under the C.G.S.T. Act, 2017 for release of the vehicle on fulfillment of the conditions after seizure of the goods and conveyance under Section 129 of the Act, itself. The petitioner has to comply with the provisions of the Act. The release of the goods and vehicles would be subject of the compliance of the requisite conditions by the petitioner. Petition disposed off.
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2021 (2) TMI 986
Cancellation of petitioner's GST registration - scope of SCN - petitioners say that the cancellation order has been made on grounds which did not find place in the show cause notice - HELD THAT:- Considering the charges made in the show cause notice and those in the order of cancellation, it appears that certain fact finding acts have been undertaken by the Proper Officer. The writ Court cannot go into the correctness of fact finding exercise said to have been undertaken by the Proper Officer. Since an alternative remedy in form of appeal under Section 107 of the CGST Act is available to the petitioners, which is more competent to deal with the fact finding issues, I am not inclined to entertain the instant writ petition - The petitioners are permitted to approach the Appellate Authority under Section 107 of the CGST Act within 2nd March, 2021. The Appellate Authority on being approached in time shall dispose of the petitioners appeal within a period of two months from the date of the petitioners preferring the appeal - Petition disposed off.
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2021 (2) TMI 984
Validity of SCN for cancellation of GST registration - Failure to file GST returns and pay taxes due ot covid-19 - Seeking to permit the petitioner to remit the arrears of tax within a time frame fixed by this Hon'ble Court - Rule 22 of the GST and ST Rules 2017 - HELD THAT:- The petitioner's establishment came to be registered on 04/07/2020 and accordingly registration certificate, Ext.P1 came to be issued in its favour. On 11/02/2021, a notice in Form GST REG-17/31 came to be issued to the petitioner asking it to show-cause as to why its registration should not be canceled. The show-cause notice mention the reason for intended cancellation of registration as any tax payer other than composition tax payer has not filed returns for a continuous period of six months . The petitioner is directed by this show-cause notice to furnish the reply within 30 days and to appear before the proper officer on 26.03.2021. In the interregnum, registration of the petitioner is suspended by the proper officer. It is thus clear that, in the event the registered persons fail to file returns for a continuous period of six months, the proper officer can cancel the registration, but that has to be done by granting opportunity of hearing to the registered person. Rule 22 of the GST and ST Rules 2017 deals with procedure for cancellation of registration and as per requirement of this Rule, the registered person is required to be issued with a show-cause notice requiring him to show-cause as to why the registration shall not be canceled - In the wake of these statutory provisions, there are no fault on the part of the proper officer in issuing the show-cause notice at Ext.P3 asking the petitioner to show-cause as to why the registration of the establishment should not be canceled. The petitioner is permitted to approach the proper officer for preponement of date of hearing by submitting his reply to the show-cause notice - petition dismissed.
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Income Tax
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2021 (2) TMI 993
Maintainability of Advance ruling application u/s 245R - amount received by the Applicant from DSP India for rendering business support services under Service Level Agreement and for providing information technology support services under IT Support Service Agreement - Revenue has submitted that the application may not be admitted for the reason that the questions raised in the application was already pending before the Income Tax Authority - whether the services rendered under 2013 agreement were pending before the Assessing Officer in the assessment proceeding for A. Y. 2016-17 - HELD THAT:- The issue can be said to be pending before the Income Tax Authority only when the return is selected for scrutiny to examine the change of stand by the assessee or where such change of opinion is examined by the Income Tax Authority and a considered view regarding such change of opinion is taken after such examination. When examined on these parameters, the matter can't be said to be pending before the Income Tax authority because the return for AY 2016-17 was not selected for scrutiny to examine any change of stand in the manner of offering of any particular income. We do not find that return for A. Y. 2016-17 was selected to examine any change of stand by the appellant. Therefore, we do not find any pendency in respect of the questions raised in the present application before the Income Tax Authority. Further, as the Applicant had already offered the amount for services rendered as Royalty/FTS in the return for AY 2016-17 there was no occasion for the AO to examine this change of stand. Therefore, we have no hesitation to hold that the change of opinion on the part of the Applicant in the present application did not render the issues pending in the AY 2016-17. The change of stand by the appellant is to be examined on the merits and this exercise can be undertaken in the course of merit hearing only. The Hon'ble Delhi High Court has held in the case of Hyosung Corporation [ 2016 (2) TMI 575 - DELHI HIGH COURT] that a notice under section 143(2) merely asking for certain information from assessee issued prior to filing of application before AAR will not constitute bar in terms of clause (i) to proviso to section 245R(2), on AAR entertaining and allowing the application - The same principle applies in respect of the notice issued u/s 142(1) of the Act. As already discussed earlier the specific question in respect of the nature of services rendered under the agreement or about the taxability of receipt of the services did not form part of any of the questionnaire or notices. Therefore, such notices issued prior to filing of the application cannot be a bar in terms of clause (i) to proviso to Section 245R(2) of the Act, for admitting the application. Department as well as the Applicant have relied upon a number of other judicial precedence, which are not found relevant considering the peculiar facts of the case as discussed above. The limited issue to decide the admission of this application is the issue of pendency and those decisions are not found relevant for this issue. Therefore, we do not deem it necessary to refer to those judicial pronouncements as referred by both the parties. Thus the issues involved in the questions raised in the application filed before us was not pending before the Income-tax Authority and the bar in terms of clause (i) of Proviso to Section 245R(2) is not found attracted. Therefore, the application is admitted under section 245R(2) of the Act.
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2021 (2) TMI 992
Advance ruling - Income accrued or deemed to accrue in India - Income taxable in India - consideration received/receivable for offshore supply of all equipments under Contract - basic engineering design services carried or to be carried out in France in relation to the construction, erection, installation, commissioning and testing of the Plant at Dahe - India-France DTAA - PE in India - HELD THAT:- Though the contract was signed on 21.11.2011, the effective date of contract was 15.04.2011 i.e. the date of NOA. Even if the PO was set up after the effective date of contract, the Applicant had the services of TIL at its command. It is found that personnel of TIL were involved in the bidding process of the Applicant from the very beginning from the purchase of tender document, attending techno-commercial price bid opening and bid clarificatory meetings etc - the deployment schedule of supervisory personnel for the Contract as filed by the Applicant had CVs of the key personnel and most of the key supervisory personnel were employees of TIL. Thus TIL was not only involved in the project from the very beginning but its key personnel were managing the affairs of the Applicant which makes them PE from the effective contract date. These employees not only had a secured right to use their office space but they were carrying on the business of the parent enterprise and in this sense the Applicant had a fixed place of business. Therefore, there is no doubt that the Applicant had a PE from the effective date of Contract. Taxability of offshore supply of Equipments - In view of the Clause (a) of Explanation 1 to Section 9(1)(i) and respectfully following the decision of the Apex Court in the case of Ishikawajima Harima Heavy Industries Ltd.[ 2007 (1) TMI 91 - SUPREME COURT] we are clear that no income arising in the hands of the Applicant from the off-shore supply of equipments materials can be held to be chargeable to tax in India, under the Income tax Act 1961, as the sale was completed outside India and there was no accrual or deemed accrual in India. Taxability of offshore services - Basic Engineering' and 'Detailed Engineering' services - The nature of these services has been dealt with earlier and these are not found connected with offshore supply of equipments at all. In the Annexure-C Contract Price Schedule of the Contract the offshore equipments were categorized under Supply, Fabrication / Construction, Erection and Installation whereas all the services were part of Design and Engineering - Butene-l Plant . Therefore, these services were in respect of designing and engineering of the Butene-l Plant and were not connected with the designing of equipments under offshore supply. As the rendering of the services was done by the PE of the Applicant, the same is found covered under Article 7 of the India-France DTAA - There is no dispute to the fact that business of the Applicant was carried through its PO in India. As the design services were inextricably connected with setting up of the plant and were rendered through this PE, the profit of the PE is required to be taxed in India as per the provision of Article 7.1 of the India-France DTAA in respect of these services. As the basic engineering design service and offshore advisory services are found covered under Article 7.1 of the DTAA, it is not necessary to examine whether the same are also covered under Article 13 of the DTAA or not. Ruling :- Ques. 1 The consideration received by Technip France SAS from OPAL for offshore supply of equipments under Contract Ref. No OPAL/BDA/MM/CTS/275/11-12 dated November 21, 2011 is not chargeable to tax in India under the provisions of Income-Tax Act, 1961 and DTAA between India and France. Ques.2 3 The consideration received by Technip France SAS from OPAL in respect of basic engineering design services in relation to the construction erection installation, commissioning and testing of the Plant at Dahej and advisory services in relation to detailed engineering are liable to tax in India as business income of the PE of the Applicant under the provisions of Income-Tax Act, 1961 and Article 7 .1 of the DTAA between India and France.
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2021 (2) TMI 989
Exemption u/s 11 - registration u/s 12AA denied - ITAT allowed the appeal and directed the Commissioner of Income Tax to allow registration of the Trust under Section 12AA - HELD THAT:- On a perusal of the order passed by the Tribunal, it is clear that the Tribunal has not gone into the issues that were decided by the Commissioner of Income Tax. While reversing the order passed by the Commissioner of Income Tax, the Tribunal should have considered the findings given by the Commissioner of Income Tax in detail. However, the Tribunal observed that the substitution or change of Trustees subsequent to the Trust Deed would not effect the original object unless the object itself is changed by the subsequent supplementary deed. When the Commissioner of Income Tax had given findings with regard to the induction of a minor as a Trustee and that the main object of the Trust would be lost by the subsequent supplementary deed, the Tribunal should have considered those aspects and given findings with regard to the same. Since the Tribunal has not considered those issues, we are of the considered view that the order passed by the Tribunal should be set aside and the matter be remitted back to the Tribunal for fresh consideration. - Appeal of revenue allowed for statistical purposes.
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2021 (2) TMI 988
Computation of the deduction u/s 10-A - Whether tribunal was right in holding that for the purpose of applying the formula under sub-section (4) of section 10A, the freight, telecom charges, or insurance attributable to delivery of articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India ought to be excluded both from the export turnover and from total turnover even though the statue has provided for such exclusion only from the export turnover? - HELD THAT:- The issue involved in the present appeals is covered by the decision of the Hon'ble Supreme Court of India in M/S MPHASIS LTD. (FORMERLY KNOWN AS MPHASIS BFL LTD.[ 2019 (11) TMI 1383 - SUPREME COURT ] wherein in agreement that M/S MPHASIS LTD. (FORMERLY KNOWN AS MPHASIS BFL LTD.) [ 2019 (2) TMI 122 - SC ORDER] preferred by the Revenue in respect of connected which was disposed of by the very same common Order [ 2014 (8) TMI 690 - KARNATAKA HIGH COURT] having taken note similar grounds raised in the special leave petition wherein the decision in Commissioner of Income-Tax And Another Vs. Tata Elxsi Ltd.[ 2011 (8) TMI 782 - KARNATAKA HIGH COURT ] relied that if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover - The components of the export turnover in the numerator and the denominator cannot be different - there is no definition of the term 'total turnover' in Section 10-A, there is nothing in the said Section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator - If what is excluded in computing the export turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretation would run counter to the legislative intent and impermissible - If that were the intention of the legislature, they would have expressly stated so - If they have not chosen to expressly define what the total turnover means, then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover - Decided against Revenue.
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2021 (2) TMI 977
Application for settlement of cases - effect of Bill proposed - petitioner submits that though Section 245C of the Income Tax Act, Chapter 19 still existing on the statute book, but the 3rd respondent is not receiving the application - as submitted that just because bill is introduced that will not have enforceability of law, unless it is passed by the Parliament and notification issued to that effect - HELD THAT:- In the present case nothing has happened and the statute remains on the statute book. The 3rd respondent is obligated to receive the application as long as the statute is valid and subsisting. Sri Namavarapu Rajeshwar Rao, learned Assistant Solicitor General takes notice on behalf of the 1st respondent and Sri B.Narsimha Sharma, learned Standing Counsel takes notice for the 2nd respondent and seeks time for getting instructions, Issue notice to the 3rd respondent. Personal service of notice is permitted. List on 12.04.2021.Meanwhile, the 3rd respondent is directed to receive the application of the petitioner and once the application is received, the consequences will follow.
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2021 (2) TMI 971
Rejection of extension of time for payment of the last installment of Tax under Income Disclosure Scheme, 2016 (IDS) - Seeking to allow extension of time, for payment of the last installment of Tax under Income Disclosure Scheme, 2016 - seeking to direct to refund the tax amount paid in the first and second installment of IDS, 2016 - whether the writ applicant is entitled to get the amount already deposited by him under the scheme adjusted in any manner so far as his tax liability is concerned? HELD THAT:- It is settled law that an application under Art. 226 of the Constitution would lie for enforcing the obligation of the State to refund and/or return the money-collected towards an illegal tax or duty. Ever since the decision in the case of THE SALES TAX OFFICER, BANARAS AND OTHERS VERSUS KANHAIYA LAL MAKUND LAL SARAF AND OTHERS [ 1958 (9) TMI 57 - SUPREME COURT] , it has been consistently held that the payment towards tax or duty which is without authority of law is a payment made under mistake within the meaning of S. 72 of the Indian Contract Act. Section 72 is based on equitable principles. Therefore, by claiming to retain the tax which has been collected without the authority of law, the Government cannot enrich itself and it is liable to make restitution to the person who had made payment under any mistake or under coercion. In the case on hand, the payment with respect to the first two installments were made in accordance with the scheme of 2016. It is the failure on the part of the writ applicant to deposit the amount of the third installment in time that created the trouble for him. The scheme, more particularly, the Clause 191 thereof specifically provides that any amount of tax paid under clause 184 in pursuance of a declaration made under clause 183 shall not be refundable. The case on hand is not one of illegal recovery of tax by the Revenue, or in other words, any tax paid by the assessee under mistake of law. This is a case of default on the part of the writ applicant as an assessee, and the consequences of the default are itself provided under the scheme in the form of Clause 191. Thus, no case is made out by the writ applicant for interference - application dismissed.
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2021 (2) TMI 969
Proportionate deduction u/s 80IB(10) - profits derived from the sale of residential units where in built up area is below 1500 Sq. Ft - whether no such apportionment is prescribed under the scheme of Section 801B(10)(C) of the Income- Tax Act? - HELD THAT:- Issue decided in favour of assessee as relying on M/S. BRIGADE ENTERPRISES LTD [ 2021 (1) TMI 789 - KARNATAKA HIGH COURT ] held that the assessee is eligible for deduction under Section 80IB(10) of the Act proportionately. - Decided in favour of assessee.
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2021 (2) TMI 957
Disallowance of professional expenses - disallowance @ 5% of total claim, was made by AO on the ground that the assessee had not given even the addresses and PAN of certain/ concerned parties because of which the verification regarding genuineness of the same could not be carried out; and further, that the assessee could not explain and substantiate the justification for such huge expenses for business need Disallowance of contract payments - assessee had not given the addresses and PANs of certain/ concerned parties because of which the verification regarding genuineness of the same could not be carried out; and, secondly that the assessee had applied lower rate for deducting tax at source as reported in the Audit Report HELD THAT:- It is settled law that onus is on the assessee to prove the genuineness of expenses claimed by the assessee as deduction. It is also settled law that the AO has statutory authority to make inquiries before completing assessment; and to gather all relevant material. Such statutory authority of the AO has also been specifically mentioned in relevant provisions of law including in sections 142, 142A 143(3), 131, 133, 133A of IT Act, for example. It is an assessee s duty to comply with lawful requirements prescribed by Revenue authorities. When an assessee does not comply with lawful requirements prescribed by Revenue authorities, the assessee cannot claim a lenient view as a matter of right, and the assessee must face the consequences in accordance with law; more so, when the onus is on the assessee to prove the genuineness of a claim. For this view, we take support from order of Co-ordinate Bench of ITAT, Delhi in the case of Aradhana Foods Juices Pvt. Ltd. v/s. ITO. [ 2017 (6) TMI 1263 - ITAT DELHI ], in which similar view was taken in respect of disallowance of unverified purchases which was affirmed by Hon ble Delhi High Court in the case of Aradhana Foods Juices Pvt. Ltd. [ 2018 (9) TMI 795 - DELHI HIGH COURT ]. In the fitness of things, therefore, in view of the foregoing, and in the facts and circumstances of the present case; we set aside the impugned order dated 07/09/2017 of Ld. CIT(A); and restore the issues in dispute in the present appeal before us to the file of the Assessing Officer for fresh order as per law after providing reasonable opportunity to the assessee.
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2021 (2) TMI 956
Disallowance u/s 35(1)((ii) - claim of donation made to one School of Human Genetics Population Health (SHG PH) Kolkata on the ground that the said institution is engaged in providing entry and indulged in laundering unaccounted money of the appellant - HELD THAT:-Appellant has made payment of ₹ 15,00,000/- as donation for the A.Y. 2014-15 to the institution i.e. School of Human Genetics Population Health (SHG PH) when the said institution has valid registration u/s 35(1)(ii) by and under Notification No. 35/2008/F. No. 203/135/2007/ITA II dated 14.03.2018. The said donee School of Human Genetics Population Health is also a registered institution under Section 12AA of the Act and certificate of exemption under Section 80G(5) of the Act by the Commissioner of Income Tax (Exemption) Kolkata under letter dated 03.02.2005. It is the case of the appellant that since the registration of that institution was cancelled by the Ministry of Finance on 06.09.2016 at the time of making donation by the appellant the said institution was holding the genuine registration under Section 35(1)(ii) of the Act. And, therefore, on that score alone the disallowance holding the said institution engaged in laundering of unaccounted money is not sustainable in the eye of law, taking into consideration the date of cancellation of registration of the said institution as on 06.09.2016. Appeal filed by the assessee by deleting the disallowance made by revenue relating to the claim of donation made by the assessee to School of Human Genetics Population Health(SHG PH). We, therefore, delete such disallowance made by revenue - Assessee s appeal is allowed.
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2021 (2) TMI 955
Penalty u/s.271(1)( c) - additional income offered to tax by the assessee pursuant to survey and which was also disclosed by him in the return of income filed - HELD THAT:- As factual paper book filed by the assessee comprising of the profit and loss account for the year ended 31/03/2009 and the schedule for the other income thereon, the sum of ₹ 3 Crores has been disclosed by the assessee exclusively as income declared under survey under the head other income . This itself goes to prove that the assessee had duly recorded that income offered in the survey in its books of accounts. We find that this sum of ₹ 3 crores was also duly offered to tax by the assessee in the return of income filed. Moreover, we find that similar issue had been the subject matter of adjudication by the Hon ble Delhi High Court in the case of CIT vs. SAS Pharmaceuticals [ 2011 (4) TMI 888 - DELHI HIGH COURT ] wherein it was held that for the purpose of imposing penalty u/s.271(1)(c) of the Act, concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the income tax return filed by the assessee. The Hon ble Delhi High Court held that no penalty would be exigible in such scenario. The facts of the case before us are exactly similar and identical to the facts before the Hon ble Delhi High Court. In the instant case also there is no dispute that assessee had indeed disclosed ₹ 3 Crores additional income in the income tax return filed by it. As decided in Shree Sai Developers [ 2019 (8) TMI 59 - GUJARAT HIGH COURT ] since there was no concealment in the return of income filed by the assessee which was ultimately accepted by the Revenue, there cannot be any levy of penalty u/s.271(1)(c) of the Act. Thus we hold that no penalty u/s.271(1)(c) would be exigible thereof in the hands of the assessee. Accordingly, the grounds raised by the assessee are allowed.
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2021 (2) TMI 954
Disallowance made u/s.14A of the Act r.w.Rule 8D(2) of the Rules both under normal provisions of the Act as well as in the computation of book profits u/s.115JB - HELD THAT:- As far as the disallowance of indirect expenses under third limb of Rule 8D(2) of the Rules, the only those investments which had actually yielded exempt income need to be considered for working out the disallowance thereon. This has been held by the Special Bench of Delhi Tribunal in the case of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] . However, if adoption of such computation mechanism results in absurdity, then the proportionate income theory is to be adopted for working out the disallowance as we hold that Rule 8D computation mechanism should be considered as the last resort and is not automatic in its application. In this regard, the ld. AR placed reliance in the case of Future Retail Ltd. [ 2020 (11) TMI 64 - ITAT MUMBAI] wherein under similar facts and circumstances, where investments were made only within the group companies predominantly vis a vis incurring of expenses for the purpose of earning dividend income We direct the ld. AO to compute the disallowance in accordance with the ratio laid in para 12 of the aforesaid order u/s.14A of the Act for the purpose of computing income under normal provisions of the Act. The same figure shall be utilized for making disallowance under clause f of Explanation to section 115JB of the Act while computing the book profits as they are actual expenses incurred on proportionate basis for the purpose of earning exempt income. Accordingly, the grounds raised by the assessee in cross objections and ground Nos.1-4 raised by the Revenue are disposed off in the aforesaid manner. Allowing ESOP discount as a deduction - as per AO the said expenditure is only incurred on a contingent basis and the same has not been incurred by the assessee and accordingly disallowed the same while completing the assessment - HELD THAT:- We find that the ld. CIT(A) had placed reliance on the Special Bench of Bangalore Tribunal in the case of Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] , M/S KOTAK MAHINDRA BANK LTD. [ 2018 (1) TMI 320 - ITAT MUMBAI] AND M/S. PVP VENTURES LIMITED [ 2012 (7) TMI 696 - MADRAS HIGH COURT] deleted the disallowance of ESOP expenses - e Special Bench of Bangalore Tribunal in the case of Biocon Ltd., has been subsequently approved by the Hon ble Karnataka High Court in the case of CIT vs. Biocon Ltd., [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] wherein it was held that discount on issue of ESOP was allowable as deduction u/s.37(1) of the Act as primary object was not to vest capital but to earn profits by securing consistent services of employees. Respectfully following the said decision, we hold no infirmity in the order of ld. CIT(A) granting relief to the assessee. Accordingly, the ground raised by the Revenue are dismissed. Claiming deduction towards education cess and secondary higher education cess paid - HELD THAT:- We find that this issue is covered in favour of the assessee in the case of Sesa Goa Ltd [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] held that education cess paid by the assessee is entitled for deduction. We find that the additional ground raised by the assessee goes to the root of the matter and does not involve any verification of facts and hence, we are inclined to admit the same and allow the same by respectfully following the decision of the Hon ble Jurisdictional High Court referred to supra.
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2021 (2) TMI 950
Validity of reopening of assessment - notice u/s 148 has been issued on a dead person - AO has not taken any steps to serve the notice u/s 148 on the legal heir but has proceeded to complete the assessment on the legal heir - HELD THAT:- Factum of the death of the assessee was brought to the notice of the AO during the re-assessment proceedings pursuant to issuance of notice u/s 148 but the AO has not taken any steps to bring Legal Heir on record and to issue notices u/s 148 of the Act to the L/Rs. In fact, the notice u/s 148 has been issued on a dead person and therefore, it is an invalid notice and the consequent assessment on the LRs without issuing the notice u/s 148 to the LRs is not sustainable - See SRI AEMALA VENKATESWARA RAO VERSUS INCOME TAX OFFICER, WARD-2 (1) , GUNTUR [ 2019 (5) TMI 767 - ITAT VISAKHAPATNAM] - Decided in favour of assessee.
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2021 (2) TMI 949
Validity of proceeding u/s. 153C - assessee has submitted that the AO has invoked the provisions of Section 153C but he has made only protective assessment for the AYs 2005-06 to 2008-09 ( part period) and therefore the action of the Assessing Officer is not sustainable in law to tax in the hands of the assessee based on the material found and seized during the search and seizure action - HELD THAT:- Documents found and seized during the search and seizure action belongs to Meja Filing Station including ledger accounts of assessee in the books of Hotel Ajay International as well as certain vouchers in the name of Shri Ajay Kumar and Vijay Kumar, who were running the filing station as per the authorization at the relevant point of time. The documents found and seized pertains to the Financial Year 2007 and there is no ambiguity in the details as found recorded in the seized material that the assessee was doing the business of running filing station being retail dealership of sale of petrol and high speed diesel. Since there was no return of income filed by the assessee up to the AY 2008-09 till 07.12.2007 therefore, the seized material constitute incriminating material disclosing undisclosed income of the assessee. The seized material leads to the satisfaction that it has a bearing on the determining of the total income of the assessee at least for the assessment years for which the assessee did not file any return of income. Accordingly, do not find any substance or merit in this contention of the assessee and Grounds No. 1 to 5 of the assessee s appeal are dismissed. Estimation of income by applying NP @ 1% of gross sales being excessive - HELD THAT:- Except the contention of excessiveness, the ld. AR of the assessee has not brought any material to show that the actual income of the assessee for these years is very less than 1%. Since the assessee has not produced any books of account as well as other supporting documents therefore, the N.P. applied by the ld. CIT(A) at 1% is very reasonable and proper and does not required any interference. Accordingly, appeals of the assessee dismissed. Assessment on substantive basis by AO by applying N.P. at 2% which was restricted by the ld. CIT(A) to 1% - AO rejected the books of account of the assessee due to non production of the relevant details - HELD THAT:- AO was justified however it is pertinent to note that for the AY 2008-09 (from 07.12.2007 to 31.03.2008) to AY 2010-11 the assessee firm filed return of income u/s. 139(1) of the Act disclosing the income from the business of retails outlet of selling petrol and high speed diesel and therefore, the material found and seized during the search and seizure action pertaining to the F.Y. 2007 shall have no bearing on determination of the total income of the assessee when the assessee has already declared the income from such business. AO has passed an identical order by applying the N.P. @ 2% after rejecting the books of account but the seized material which was found during search and seizure action reveals that the assessee is engaged in the business and once the assessee has already declared the income from said business in the return of income filed u/s.139(1) then the said seized material which reveals the details of the transaction of the FY 2007 up to 07.12.2007 would not be considered as incriminating material to have any effect on determination of the total income of the assessee for these years. Therefore, the addition made by the Assessing Officer in the proceeding u/s. 153C for the Assessment year 2008-09 from 07.12.2007 to 31.03.2008 to AY 2010-11 are not based on any material revealing undisclosed income. Accordingly, the additions made by the Assessing Officer for these years is liable to be deleted.
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2021 (2) TMI 946
Taxability of Amounts paid to the non-resident assessees /foreign companies for providing various services in connection with prospecting, extraction or production of mineral oil - Fee for technical services covered u/s 115A or it is inextricably connected with processing, extraction or production of mineral oil u/s 44BB - Payment for rendering services for microseismic acquisition, processing and interpretation of micro-seismic data in two observation wells during hydro-fracturing operations carried out in the wells at Bakrol oil field - Short deduction of tax deducted u/s 44BB - short deduction has been determined by the CPC-TDS in respect of deductees by treating that the tax was deductible at 10% u/s 115A - HELD THAT:- Following the decision rendered in Oil Natural Gas Corporation Ltd. [ 2015 (7) TMI 91 - SUPREME COURT] we are of the considered view that ld. CIT (A) has erred in treating the services rendered by M/s. ESG Solutions to the assessee in the nature of technical services to be covered u/s 115A of the Act rather these services are inextricably connected with prospecting, extraction or production of mineral oil petroleum products and these services are to achieve dominant purpose by rendering services for micro seismic acquisition, processing and interpretation of micro-seismic data in two observation wells during hydro-fracturing operations carried out in wells at Bakrol oil fields. Consequently, services rendered by the non-resident company fall within the purview of presumptive provision of section 44BB of the Act and the addition made by the AO and confirmed by the ld. CIT (A) is not sustainable, hence ordered to be deleted. Consequently, the appeal filed by the assessee is allowed.
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2021 (2) TMI 945
Income accrued in India - taxable income left in the hands of the PE - commission paid to Indian agent - Whether foreign entity having a permanent establishment in India shall be liable to income tax only to the extent as is reasonably attributable to the operations carried out in India? - commission/remuneration paid to RIPL from the profits attributed to the PE - India and UK DTAA - HELD THAT:- When we deduct commission/remuneration from the RIPL from the profits attributed to the PE, no taxable income left in the hands of PE. Consequently, addition made by the AO/CIT (A) is not sustainable in the eyes of law. Decision rendered by the coordinate Bench of the Tribunal in case of Amadeus Global Travel Distribution S.A [ 2007 (11) TMI 330 - ITAT DELHI-B] affirmed by the Hon ble Delhi High Court [ 2011 (4) TMI 1520 - DELHI HIGH COURT] and [ 2011 (5) TMI 1114 - DELHI HIGH COURT] by relying upon the decision in case of DIT vs. Galileo International Inc [ 2009 (2) TMI 497 - DELHI HIGH COURT] has been further followed by the coordinate Bench of the Tribunal in assessee s own case [ 2020 (11) TMI 206 - ITAT DELHI] We are of the considered view that when RIPL, a domestic subsidiary company, has already been remunerated at arm s length, no further attribution of profit to PE would be warranted. Even otherwise, by following the order passed by the coordinate Bench of the Tribunal in assessee s own case for AY 2007-08 [ 2020 (11) TMI 206 - ITAT DELHI] , when we deduct the remuneration/commission paid to RIPL from the amounts of profit attributed to the PE no taxable income left in the hands of the PE. Consequently, additions made by the AO and confirmed by ld. CIT (A) are ordered to be deleted being not sustainable in the eyes of law. Consequently, all the appeals filed by the assessee are hereby allowed.
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2021 (2) TMI 943
Addition u/s 68 - Cash deposits in bank account as undisclosed income - Non reply to summons by debtors - HELD THAT:- As total cash deposits of ₹ 45,50,000/- appearing in the bank statement, as stated above, ₹ 15,00,000/- was explained as received from Shri Hanuman. The assessee had paid this amount to him as an advance against purchase of his land in FY 2004-05. Later due to some disputes with the title of the said land the deal could not materialize, and the advance paid, remained receivable from Shri Hanuman. This amount duly appeared in the assessee s balance sheet as on 31.03.2005 - This transaction was further substantiated by filing the duly notarized sale agreement , entered into between the assessee and Shri Hanuman. The said amount was recovered in the year under appeal and the same was explained as being deposited in cash by the assessee. Since Shri Hanuman was not co-operating, the assessee had filed an affidavit of one of the witnesses to the sale agreement, who had confirmed on oath that, the said sum of ₹ 15,00,000/- was received from Shri Hanuman, by the assessee. In the case of the assessee, (i) the identity of Shri Hanuman remains undisputed, as the summons issued by the AO was duly served upon him, (ii) genuineness of the transaction is also proved (from books of accounts) beyond doubt, as amount paid as advance to him, duly appeared in the balance sheet of the assessee since FY 2004-05, as also the agreement to sale, that duly substantiates the transaction was available on records. As far as the third condition is concerned, it is submitted, that the assessee had not received any loan/ advance from him, but had only recovered his own money, thus, capacity is not the issue involved. Thus, all the conditions envisaged above are completely satisfied by the assessee. Section 68 makes it clear that in respect of a cash credit entry the explanation offered by the assessee can be rejected by the Income tax Officer only on cogent grounds, that is, only if such grounds are not based upon any evidence and the assessee has filed complete evidences for the explanation offered by it, and the sole reason to reject the assessee s explanation, was that the persons did not appear in person for the assessment proceedings. Your honors would appreciate the fact in such kind of land deals, normally advance paid is never returned and Sh. Hanuman was also not willing to repay advance taken by him and assessee had to put continuous efforts and follow up to persuade him to pay back money (which was eventually received in installments) and he was not in good terms with assessee for this reason. In such circumstances, it was not accepted from him to cooperate with Income Tax department in the case of assessee. In the case of CIT v. U.M. Shah, Proprietor, Shrenik Trading Co. [ 1972 (6) TMI 16 - BOMBAY HIGH COURT] has held that, if the parties had received the summons but did not appear, the assessee could not be blamed. In view of the above facts and circumstances, cash deposit of appearing in the bank statement also stands fully explained and substantiated, therefore, we direct the A.O. to delete the addition made. - Decided in favour of assessee.
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2021 (2) TMI 941
Validity of reopening of assessment - Short Term Capital Gain (STCG) on sale of asset - property owned by co-owners - addition is made by invoking of deeming provision of section 50C - AO made addition solely on the basis of information received from Sub-Registrar Office for charging the additional stamp value for transfer of land as per Jantri rate of Stamp Valuation Authority - HELD THAT:- We accept the contention of ld. AR for the assessee that once, the similar STCG offered by the co-owner has been accepted by the revenue, and the assessee is also entitled for similar relief. We find convincing force in the submissions learned AR for the assessee. Hence, the appeal of the assessee is allowed. So far as the objection of learned DR for the Revenue is that the case of co-owner of Shri Dipakbhai Dalpatbhai Rana, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the similar STCG on same transaction, therefore, in our view, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised by the learned DR for the revenue is not acceptable to us.
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2021 (2) TMI 940
Disallowance of commission expenses paid to other referral agents - non admission of additional evidence of assessee - assessee is an individual engaged in the business of a direct selling agent (DSA) for various Financial Institutions / Banks in the name and style of SSBS Financial Corp who gets various loans processed for his customers and earns commission from concerned financial institutions / banks -- HELD THAT:- CIT(A) has rejected the additional documents filed by the assessee on the ground that a formal petition was not filed. Following the Board Circular, the CIT(A) should have given an opportunity to the assessee to file the formal petition. The Hon ble Supreme court in the case of Sambhaji and Others v. Gangabai and Others [ 2008 (11) TMI 393 - SUPREME COURT] has held that procedure cannot be a tyrant but only a servant. It is not an obstruction in the implementation of the provisions of the Act, but an aid. The procedures are handmaid and not the mistress. It is a lubricant and not a resistance. A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. The Hon ble High Court of Punjab and Haryana in the case of Principal CIT v. Daljit Singh Sra [ 2017 (3) TMI 1258 - PUNJAB AND HARYANA HIGH COURT] has held that although the assessee did not co-operate with the Assessing Officer in completion of assessment proceedings but for delivery of justice, the real income of assessee has to be assessed and that too after hearing the assessee. The Court upheld the decision of Tribunal in directing the lower authorities to admit additional evidence and decide the case afresh after affording reasonable opportunity of being heard to the assessee. Additional evidences now sought to be admitted goes to the root of the issue raised in this appeal. Therefore, for a proper adjudication of the case and for substantial cause, admit the above additional evidence and the same is taken on record in light of aforesaid judicial pronouncement. Since I have admitted the additional evidence, the matter needs to be restored to the Assessing Officer de novo consideration. The A.O. shall take into consideration the additional evidences now admitted by the Tribunal. Appeal filed by the assessee is allowed for statistical purposes.
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2021 (2) TMI 939
Bogus purchases - certain names were appearing who had been considered as entities not dealing in actual business but only issuing bills to accommodate various parties like the assessee company - HELD THAT:- As gone through the items purchases by these parties and found that the items consists of hard discs, air span antennas, alberain bmax CPE IDU 10, CD writers, Cisco port switches, Cisco port Ethernet modules, delink ports switches and modem, DVD drive writer, infinite wireless systems. As gone through the quantitative details of the purchased and sale of the sale of goods in quantity and item wise. We find that the goods have been duly purchased and sold to Tulip Telecom Ltd. We have also examined the value of the total purchases made and also the receipts of sale out of such purchases and the profit earned thereof. Entire purchase from these parties is to the tune of ₹ 37,52,68,800/- whereas the sale receipts from that sales which have been duly accounted were to the tune of ₹ 38,27,42,200/-. We find that a profit of ₹ 74,37,422/- has been earned by the assessee from these transactions and duly offered to tax. Under these circumstances, it cannot be said that the purchase have been bogus especially when the quantitative details have been tallied item wise and the sale proceeds have been taken into P L account and the profit earned on such transaction is offered to tax. They could not have been any sales without purchase of the items. Hence, we are unable to accept the contention of the revenue. The appeal of the assessee on this ground is allowed. Disallowance of interest on advance to Sister concerns - whether in relation to disallowance of interest made u/s.36(1)(iii) of the Act, the action of the AO is correct or not? - HELD THAT:- The issue of disallowance of interest has reached finality with the judgment of Hon ble Supreme Court in the case of Hero Cycles (P.) Ltd. Vs. CIT, Ludhiana[ 2015 (11) TMI 1314 - SUPREME COURT] is that where the assessee had sufficient own interest free funds along with interest bearing funds and had made or advanced sums for non business purposes without charging any interest, the presumption that would arise is that the investment had been made out of interest free funds generated or available with the assessee, is still a good law in the light of the decision of the Hon ble Apex Court in the case of Hero Cycles Ltd. (supra). - Decided in favour of assessee. Undisclosed rental income - as argued that no show-cause notice has been given with regard to the addition made - HELD THAT:-As revenue could not dispute the contentions of the assessed by the way of production of any show cause notice issued. Hence the addition made by the AO is hereby directed to be deleted for failure to follow the principles of natural justice. The appeal of the assessee on this ground is allowed. Assessment u/s 153A - HELD THAT:- The assessment is not an abated assessment. There is no dispute that the additions made were not based on any seized material. Hence, in view of the judgment of the Hon ble Delhi High Court in the case CIT vs. Kabul Chawla ([ 2015 (9) TMI 80 - DELHI HIGH COURT] the appeal of the department is treated dismissed.
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2021 (2) TMI 938
TP Adjustment - calculation of the amount of transfer pricing adjustment - ALP of AE transactions computed by the TPO by reducing non-AE sales from the figure of total arm's length costs of the assessee - HELD THAT:- On one hand, the TPO took arm's length cost of the entity at ₹ 6364.17 lakh and on the other, he reduced the figure of non-AE sales of ₹ 4566.96 lakhs, which also contains the profit element apart from cost. What ought to have been done was to first compute the total cost in relation to the AE transactions and then increase it with the PLI of comparables for ascertaining the arm's length sale price. The resultant total cost in relation to the AE transactions, under this mechanism, comes to ₹ 1369.23 lakh, which is obtained by multiplying total cost of ₹ 5453.68 lakh with AE sales of ₹ 1530.98 lakh as divided by total sales of ₹ 6097.94 lakh. It is this cost of the transactions with AE which needs to be loaded with the margin of the comparables at 16.64% to find out ALP of the AE transactions at ₹ 1597.06 lakh (₹ 1369.23 lakh x 1.1664 lakhs), calling for further action. TPO erred in computing the assessee's PLI and that of the comparables by treating foreign exchange fluctuation gain as non-operating revenue, which also got echoed at the level of the DRP - No discussion in the TPO's order on the exclusion of the foreign exchange fluctuation gain from the operating revenue in computation of the assessee's operating profit margin. The DRP has held at para 3.4 of its direction that foreign exchange fluctuation gain cannot be considered as operating income by mainly relying on Rule 10TA(k) of the Safe Harbour Rules. Determination of the ALP shall be done in accordance with the safe harbour rules in terms of section 92CB of the Act and ex consequenti, the application of other rules will be ousted. The sequitur is that where such an option is not availed, neither section 92CB gets triggered nor the relevant rules including 10TA(k). In that scenario, determination of the ALP is done de hors the safe harbour rules. Once these rules are kept out of compass, the otherwise settled position by virtue of the judgment of the Hon'ble Delhi High Court in B.C. Management Services Pvt. Ltd. [ 2017 (12) TMI 255 - DELHI HIGH COURT ] and various Benches of the Tribunal across the country holding foreign exchange gain/loss as operating revenue/loss in the ALP determination, comes to the fore. Thus foreign exchange gain/loss earned/incurred by the assessee and the other comparables needs to be considered as a part of operating revenue/cost not only for the reason that the assessment year under consideration is prior to the applicability of the safe harbour rules but also that there can be no question of applying Rule 10TA(k) in the absence of the assessee having or exercising option to be subjected to the safe harbour Rules. We set aside the impugned order on this issue and send the matter back to the file of AO/TPO for fresh determination of the ALP of the international transactions under consideration in accordance with the above directions.
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2021 (2) TMI 937
Validity of reopening of assessment - Assessee argued that AO eopened the assessment by issuing notice u/s. 148 and passed the ex-parte order u/s. 144 r.w.s. 147 - unexplained investment in mutual fund - HELD THAT:- AO has recorded in the assessment order that assessee filed his reply dated 12.05.2014 explaining the circumstances under which the assessee received the money it was initially invested into the fixed deposit and thereafter the maturity amount was invested into mutual fund. These facts were recorded by the Assessing Officer of the assessment order. AO has also recorded this fact that the notice issued through post was received back with the postal remark that the addressee has shifted to Delhi and not residing at Mirzapur. Therefore, these facts were in the knowledge of the Assessing Officer that the assessee has shifted to Delhi. Since the assessment order was passed ex parte and the Ld. CIT(A) has also not verified the relevant record therefore, in the interest of justice, the matter is set aside to the record of the AO for proper verification of the evidences, bank statement of the assessee as well as the other evidences to be filed by the assessee along with the explanation of the source of investment in the mutual fund - Appeal filed by the assessee is allowed for statistical purposes.
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2021 (2) TMI 936
Addition of low drawings for household expenses - Assessee submitted that the AO has made an addition without any basis but merely on estimation, which is a purely a guess work - Also addition restricted by the Ld. CIT(A) on ad hoc basis - HELD THAT:- CIT(A) has noted that aggregate of cash withdrawal during the year under consideration comes to ₹ 3,52,500/- and after considering this amount of withdrawal the addition made by the Assessing Officer was restricted to ₹ 1.00 lacs as against ₹ 3.00 lacs. Thus, it is clear that more than ₹ 3,50,000/- was withdrawn from the bank account during the year under consideration and it is not the case of NIL withdrawal by the assessee for household expenditure. Thus once the assessee has shown reasonable amount of cash withdrawals from the bank and the income of the other family members of the assessee is also not ruled out then the addition confirmed by Ld. CIT(A) of ₹ 1.00 lacs on account of short withdrawal for household expenditure is not justified and the same is deleted. - Decided in favour of assessee.
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2021 (2) TMI 935
Validity of reopening of assessment u/s 147 - Undisclosed client code modification - assessee provided fictitious loss to different clients as well as fictitious profit to other clients - HELD THAT:- Reasons recorded clearly indicate that the reopening of assessments is on the basis of a letter received from DDIT (Inv.), Ahmedabad, wherein, it is alleged that some brokers are misusing the client code modification facilities to benefit their clients and in the process received commission varying between 0.5% to 2% of the amount of loss/profit transferred to the respective clients. It is noticed, on the basis of identical reasoning in assessee s own case for the assessment year 2010-11, assessment was reopened u/s 147 of the Act. The Tribunal while deciding the issue [ 2020 (2) TMI 1455 - ITAT MUMBAI ] following the decision of Hon ble Bombay High Court in case of M/s Coronation Agro Industries Ltd. vs. DCIT. [ 2017 (1) TMI 904 - BOMBAY HIGH COURT ], held the reopening of assessment as invalid and accordingly, quashed the assessment orders. Reopening of assessment is invalid - Decided in favour of assessee.
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2021 (2) TMI 934
Reopening of assessment u/s 147 - Addition u/s 69A - assessee failed to explain the source of the cash deposits in the bank account - HELD THAT:- Assessee explained to AO before recording the reasons of reopening of the assessment that total cash deposited in his two bank accounts out of the sale proceeds of Popular Trees. Still AO has mentioned incorrect amount in the reasons. Ultimately AO accepted that the figure of ₹ 17,69,000/- mentioned in the reason is incorrect because he made addition of ₹ 18,78,400/-in the reassessment order. The assessee also explained that he has several source of income and sale proceeds of Popular Trees were deposited in cash in bank account. Thus, the cash deposit per se may not be income of the assessee. Thus, it is clear that AO has not verified information so recorded. AO in the reasons also mentioned another incorrect fact that he has reasons to believe that income assessed u/s 143(1) has escaped assessment because income assessed u/s 143(1) was at ₹ 1,79,300/- only. AO never mentioned in reasons u/s 148 that he has reasons to believe that income of ₹ 17,69,000/- chargeable to tax had escaped assessment. The reasons are therefore, incorrect and based on no belief of AO. The ingredients of section 147 of IT Act are, therefore, not satisfied. The AO did not apply mind to information. The issue is, therefore, covered by order of ITAT Delhi Bench in the case of Dheeraj Yadav [ 2021 (1) TMI 731 - ITAT DELHI] . Following the same, we set aside the orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. - Decided in favour of assessee.
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2021 (2) TMI 933
Disallowance u/s 14A r.w.r 8D - assessee has claimed deduction of expenses in relating to income which is exempt from tax - whether the dividend income earned from overseas joint-venture OMIFCO-OMAN can be subjected to disallowance under section 14A - assessee had received dividend income from its overseas joint-venture OMIFCO-OMAN - According to the AO, the assessee is effectively not paying any tax on this income either in the source country or in India and thus dividend income for all purposes is exempted from tax - HELD THAT:- Tribunal in the case of the assessee for assessment years 2008-09 [ 2018 (5) TMI 1035 - ITAT DELHI ] wherein the Tribunal has decided to exclude the investment in OMIFCO-Oman for the purpose of the computing disallowance in terms of Rule 8D(2)(iii) of the Rules. Dividend income from M/s OMIFCO-Oman is not in the nature of the exempted income, respectfully following the finding of the Tribunal, we uphold the finding of the Ld. CIT(A) of computing disallowance under section 14A of the Act after excluding the dividend income from M/s OMIFCO-Oman. We do not find any infirmity in the order of the Learned CIT(A) on the issue in dispute, and accordingly, we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed.
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Customs
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2021 (2) TMI 985
Refund of countervailing duty (CVD) - import of mobile handsets including cellular phones falling under Customs Tariff Heading (CTH) 8517 - HELD THAT:- The issue raised in this writ petition would require further examination. Issue notice returnable after six weeks - Stand over to 9th April, 2021.
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2021 (2) TMI 981
Smuggling - Gold - validity of SCN - As per submission of the petitioner, the allegations made in the Show Cause Notice are vague allegations without any corresponding data - Principles of Natural Justice - HELD THAT:- The respondents are empowered to confiscate the goods and impose penalty by issuing Show Cause Notice after considering the representation as well as on hearing the affected persons. The Show Cause Notice at Ext.P13 contains an allegation that the petitioner had carried gold weighing 94 kgms during the period from 01.07.2019 to 15.10.2019 by train. The international value of the gold is stated to be 1,21,01,80,608/-. The Show Cause Notice names two carriers allegedly engaged by the petitioner. Averment in the Show Cause Notice is to the effect that the petitioner has engaged in the illegal act of bringing gold received from different jewellers and shop persons without documents from Chennai and other parts of Tamil Nadu, through his five regular carrier passengers - According to the respondent department, the petitioner has avoided all sort of accounting practices by keeping the transactions strictly to gold to gold basis in smuggled gold and thereby evading all duties and applicable taxes. It is the case of the respondent department that the petitioner is engaged in carrying the smuggled gold with the form changed under the shadow of jewellery manufacturing and he seems to be a part of well established smuggling syndicates. There are other ground enumerated in the Show Cause Notice issued to the petitioner asking him to show cause as to why the goods should not be confiscated and penalty should not be imposed. The Show Cause Notice further elaborates the legal provisions under which the action is sought to be taken against the petitioner, for which an opportunity of hearing is being accorded to him in pursuant to the provisions of Section 124 of the Customs Act, 1962. The petition itself is premature. It is just at the stage of show cause - Petition dismissed.
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Corporate Laws
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2021 (2) TMI 932
Oppression and Mismanagement - scope of arbitration clause under the MoU - seeking to direct independent forensic audit into the affairs of the Company from the F.Y, 2011-2012 till the F.Y. 2018-2019 by an appointing an independent auditor - Section 241 read with Section 242 of the Companies Act, 2013 or Sections 397 and 398 read with of the Companies Act, 1956 - HELD THAT:- In order to succeed in getting a reference of the dispute arose under Section 241-242, 244 read with Section 337, 341 of the Companies Act, 2013, the applicant would not only be liable to show that the entire gamut of the dispute falls within the purview of Arbitration Agreement but also the fact that the Company Petition is a sham and mischievous one which has been decked deliberately so as to gainfully sustain the plea of non-arbitrability of such dispute. There would also be a heavy burden cast upon the applicants to show that the Arbitration Agreement would bind the non-signatory respondents. In a case involving such complex question of law and facts, determination of the aforesaid aspect may call for deeper examination of the matter by this Tribunal. However, the applicant herein could not show that the entire gamut of he dispute falls within the purview of Arbitration Agreement. In the matter of a winding up petition, the petitioner therein M/s Haryana Telecon Limited filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, inter alia, contending that the High Court should refer the matter to arbitration. The Division Bench of the Hon ble High Court dismissed the plea of the appellants stating that the question regarding the winding up of a company could not be referred to an arbitrator - In this case, the CP is filed for oppression and mismanagement in the Company. In addition to that serious fraud has also been alleged by the petitioners. Since those questions cannot be considered by an Arbitral Tribunal, the relief prayed for reference to an Arbitral Tribunal cannot be accepted. It would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action that is to say the subject matter of the CP or in some cases bifurcation of the CP between the parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject matter of an action brought before the judicial authority is not allowed. Such bifurcation of a suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by this Tribunal would inevitably delay the proceedings. The whole purpose of speedy disposal of the dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums. Application filed for referring the matter to Arbitral Tribunal in terms of Arbitration Agreement contained in clause 8 of Memorandum of Understanding (MoU) dated 31st March, 2007 is dismissed.
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Insolvency & Bankruptcy
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2021 (2) TMI 952
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - payment / recovery of their dues such as remuneration / wages, other perquisites including terminal benefits, if any - existence of debt and dispute or not - HELD THAT:- Regulation 9 of the CIRP Regulations lays down the procedure for the workmen and employees to submit their claims before the IRP. IRP / RP is then to verify and determine the amount of the claim. The workers and employees thus are operational creditors. They are not members of the CoC of the Corporate Debtor. Regulation 22 of the IP Regulations mandates that an Insolvency Professional must ensure that the confidentiality of the information relating to insolvency resolution process, liquidation or bankruptcy process is maintained at all times. The exception to this disclosure can only be made to the relevant parties as required under the CIRP Regulations or the Code or for any other law for the time being in force. Therefore, reluctance and refusal of the Respondent in sharing the copy of the Resolution Plan with the Applicants cannot be faulted. It would not be appropriate or permissible for this Authority to do anything otherwise than what is expressly provided under the Code. Section 30 of the Code provides detailed procedure for submission of the Resolution Plan to the Resolution Professional, presentation of the Plan to the CoC for its approval and approval of the Plan by the CoC by a vote of not less than 66% of the voting share after considering its feasibility and viability, the manner of distribution proposed which would take into account the order of priority among creditors as laid down in sub-section 1 of Section 53 including priority and value of the security interest of Secured Creditors. The Committee shall also examine the viability or otherwise of the Plan in terms of the conditions provided under Section 30. Upon its approval by the CoC the Resolution Plan would have to be submitted to the Adjudicating Authority for its satisfaction and approval. In view of such express provisions in relation to the Resolution Plan it is clear that the statutory mandate requires that the Resolution Plan can only be presented to the CoC for its approval and presented before the Adjudicating Authority for its satisfaction in approving the same. The Code or the Regulations there under do not contemplate presentation or supply of the Resolution Plan or a copy thereof to any other body or entity - Workmen of the Corporate Debtor who stand on a different footing than other employees under Section 53 may have a prerogative in satisfaction of their claims under Section 53, but they certainly do not have any other privilege beyond that. To say that workmen being at par with the secured creditors are also entitled to privileges of a member of CoC would be fallacious and would go against the grain of the intent and purpose of the Code. The role of the Operational Creditors in the Resolution Process is very limited and is essentially confined to the satisfaction of their claims. Taking the facts of the case at hand and the law as it stands today into consideration we are of the humble view that the Applicants cannot be found entitled to a copy of the Resolution Plan or any portion thereof. They would also not be eligible to be heard or intervene during the process of consideration of the Resolution Plan by this Authority. The payments as to their wages and gratuity and other terminal benefits shall be in accordance with the law and in terms of the Resolution Plan guided by the provisions under the Code. Application dismissed.
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2021 (2) TMI 951
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational creditor - availability of alternative remedy - existence of debt and dispute or not - HELD THAT:- The Adjudicating Authority should have, in absence of any dispute contemplated under Section 8(2) having been raised by the Respondent Corporate Debtor as a pre-existing dispute or that the claim of Appellant Operational Creditor had been satisfied, proceeded to admit the Application, as no dispute had been raised before it, justifying its disinclination to admit the Application. Instead, the Adjudicating Authority proceeded to make out a case for the Respondent-Corporate Debtor on the premise that the Appellant-Operational Creditor has not invoked other remedies available under law. We cannot understand as to how the availability of alternate remedy would render the debt and default disputed. In absence of pre-existing dispute having been raised by the Corporate Debtor or it being demonstrated that a suit or arbitration was pending in respect of the operational debt, in respect whereof Corporate Debtor was alleged to have committed default, the Adjudicating Authority would not be justified in drawing a conclusion in respect of there being dispute as regards debt and default merely on the strength of an Agreement relied upon by the Appellant Operational Creditor, notwithstanding the fact that such Agreement provided for reference of a dispute arising between the parties in relation to a claim through arbitration. Even otherwise, Section 238 of the I B Code, which has an overriding effect over the existing laws or any other law or contract, would not admit of the alternative remedy being a disabling provision for Operational Creditor to seek resolution of a dispute in regard to operational debt claimed against the Corporate Debtor by triggering the Corporate Insolvency Resolution Process. The Adjudicating Authority was concerned with the insolvency resolution qua the operational debt, which the Corporate Debtor owed to the Operational Creditor. It was immaterial whether it was solvent or insolvent qua other creditors. The I B Code would not permit the Adjudicating Authority to make a roving enquiry into the aspect of solvency or insolvency of the Corporate Debtor except to the extent of the Financial Creditors or the Operational Creditors, who sought triggering of Corporate Insolvency Resolution Process - The Adjudicating Authority clearly landed in error by observing that the course adopted by it was warranted on the principle of ease of doing business, ignoring the fact that such course was not available to it, ease of doing business only being an objective of the legislation viz. I B Code along with other objectives specified in the preamble, which are sought to be achieved through CIRP process. The Adjudicating Authority is directed to pass an order of admission in respect of the Application filed by the Appellant-Operational Creditor under Section 9 of the I B Code within two weeks of communication of this order - appeal allowed - decided in favor of appellant.
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2021 (2) TMI 947
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of demand notice - HELD THAT:- The demand notice dated 06.12.2018 was sent at the address mentioned in the master data of the corporate debtor as well as at the email address. The postal receipt along with tracking report and email sent to the corporate debtor are at Annexures-8 and 9 respectively. A compliance affidavit filed vide Diary No.862 dated 20.02.2019 showing the postal envelope vide which the demand notice was sent to the corporate debtor and same was returned with remarks left is at Annexure A-1. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The respondent-corporate debtor has neither filed any reply to the petition nor disputed the liability towards the operational creditor. Thus, there is no dispute regarding the liability between the corporate debtor and the operational creditor. It is also observed that till the last date of hearing, there has been no representation from the respondent-corporate debtor. There is a total unpaid operational debt (in default) of ₹ 21,57,659.69. It is stated that the demand notice dated 06.12.2018 was sent for an amount of ₹ 21,57,659.69. Copy of ledger account of corporate debtor in the books of operational creditor for the period 17.04.2018 to 26.09.2018 is appended as Annexure-4. As a statutory requirement under Section 9(3)(b) of the Code, an affidavit dated 18.01.2019 (page Nos.17A to 18) stating that despite service of the demand notice dated 06.12.2018, the corporate debtor did not raise any dispute qua the outstanding payment and even no dispute was pending with or arose from the corporate debtor prior to sending of the statutory demand notice. Debt and default or not - HELD THAT:- It has been shown that the corporate debtor has failed to make payment of the aforesaid amount due as mentioned in the statutory notice till date. It is also observed that the conditions under Section 9 of the Code stand satisfied. The operational creditorpetitioner states that from the above mentioned fact it is clear that the liability of the respondent-corporate debtor is undisputed. Accordingly, the petitioner has proved the debt and the default, which is more than ₹ 1 lac by the respondent-corporate debtor. The present petition being complete and having established the default in payment of the Operational Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 9(5)(i) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Application admitted.
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2021 (2) TMI 944
Seeking for withdrawal of the Company Petition - whether the IRP is duty bound to file the Form-FA before the Adjudicating Authority within 3 days of receiving the settlement agreement? - whether the adjudicated authority can allow the withdrawal of CIRP in view of pending claims of other creditors and whether IRP has followed the letter and spirit of law as enunciated under Section 12A of the Code read with Regulation 30A (3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. HELD THAT:- It is an undisputed fact that the Corporate Debtor settled the dues of the original Operational Creditor soon after initiation of admission of CIRP on 23.10.219 against Corporate Debtor. The IRP upon receipt of Form FA immediately within 3 days filed an application to withdraw the CIRP against the Corporate Debtor - It is a trite law that Section 12A of the Code read with Regulation 30A (3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, mandates the IRP that upon the receipt of Form FA, has to file an application for withdrawal with adjudicating authority within 3 days of receipt of the same. It is clear that once a code gets triggered by admission of CIRP against the Corporate Debtor, it is necessary that the body which is to oversee the resolution process must be consulted before any individual Corporate Debtor is allowed to settle his claims. This being a collective action is a proceeding in rem. The moot question now remains to be answered is whether the Adjudicating Authority can allow a withdrawal of CIRP against Corporate Debtor before constitution of COC - it is irrelevant whether the last date for receiving claims is still open or lapsed as per the public notice, upon receiving Form FA, it is bounded duty of IRP to file the application for withdrawal within 3 days under Section 12A of the Code read with Regulation 30A (3) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It is an undisputed fact that the IRP has filed the application within 3 days and has acted in letter and spirit of law. This Adjudicating Authority is not vested with any powers under the Insolvency and Bankruptcy Code to direct settlement of parties while allowing withdrawal of CIRP against Corporate Debtor - further there are no misconduct of the IRP in filing application for withdrawal, within 3 days of receiving Form FA. The Cost of ₹ 10 lakhs on the Corporate Debtor is set aside - application allowed.
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2021 (2) TMI 931
Liquidation of Corporate Debtor - seeking to direct the Liquidator to arrange with prior notice to the Applicant for a sitting for a minimum period of a week to enable the Workmen to prefer their claim afresh by enlarging the period for preferring their claim for a further period of three months or till the disposal of the assets, whichever is earlier - seeking to direct the Liquidator to include the nominee of the applicant in the Stakeholders Consultation Committee Viz. Rajesh. R as workmen representative in place of the present incumbent Shri Venugopal, who is actually a management representative, within a time to be fixed by the Hon'ble Tribunal - seeking to direct the Liquidator to decide and admit the amount due to each Workmen in the same format as Annexure- W-5, irrespective of whether they have preferred a claim, based on the books and records of the company especially as some of the workmen may have expired and their legal heirs may not be aware of the Liquidation proceedings - Section 33 read with Section 53 of the Insolvency and Bankruptcy Code 2016 read with Rule 11 and 32 of the National Company Law Tribunal Rules, 2016. HELD THAT:- It is found that according to the learned counsel for the applicant , the purpose of forming the association was to collectively agitate before all the forums including this Bench and that there are 132 former workmen of the Company in Liquidation who are the members of this association, who have joined together to bring the issues before this Bench relating to the said workmen. Along with the written submission the learned counsel has submitted a copy of the members list, whereas, in the IA the applicant has not mentioned the number of employees in the association and only the signatories of Memorandum were annexed, in which only 7 members name are mentioned. Therefore, it is apparent from the records that the applicant Association itself is not sure as to how many workmen the association filed this application for the reliefs sought. The respondent is in the process of issuing fresh orders under Section 40 (2) of the I B Code clearly categorizing the amounts accepted and the amounts rejected, with reasons, the application filed under Section 33 read with Section 53 of the I B code, 2016 and Rules 11 and 32 of the National Company Law Tribunal Rules,2016 cannot be accepted. In case the applicants are aggrieved by the order passed by the liquidator, the applicants are at liberty to approach the appropriate forum under Section 42 of the I B Code. Application dismissed.
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Service Tax
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2021 (2) TMI 987
Liability of service tax - reverse charge mechanism - case of applicants is that the writ-applicant is a cooperative society and not association of the individuals. Therefore, the liability to pay the service tax would be of the recipient of the services and that would be the ONGC - HELD THAT:- By amendment, which has been permitted to be carried out, it is brought to the notice of this Court that the service recipient being ONGC Ltd. had already deposited the requisite service tax with the concerned authority and the payments were then made to the writ-applicant society. This writ-application is not entertained as the impugned order is appealable under Section 107 of the Act. However, we would like to seek the responsibility of the respondent no.2 as regards the case put up by the writ-applicant that the service recipient being ONGC Ltd. and ONGC having deposited the requisite service tax, the liability could be fasten upon the writ-applicant once again towards the service tax. Let Notice be issued to the respondents returnable on 8th March 2021.
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2021 (2) TMI 982
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - short payment of service tax - declaration was rejected by respondent No.4 on the ground of ineligibility with the remarks that the amount of service tax liability was not quantified finally before 30.06.2019 and that investigation was going on - HELD THAT:- In response to summons dated 10.04.2019, petitioner had submitted letter dated 04.06.2019 furnishing details of royalty paid to the government and service tax / GST paid on the said royalty payment, the details of which have been mentioned at page 43 of the paper-book which comes to the total figure of ₹ 47,37,377.00. However, at page 43 we find a note that the said service tax liability was not acceptable to the petitioner. From these two documents, no acknowledgment or admission of service tax liability by the petitioner is discernible. Also, the petitioner has stated about the details of royalty paid to the government and service tax / GST paid on the said royalty payment - Though learned counsel for the petitioner would like to submit that it was a clerical and inadvertent mistake as instead of the word 'paid' it should have been 'payable', we do not find any such indication either in the writ petition or in any of the documents annexed to the writ petition. The only time such a statement was made was when the petitioner wrote to the designated committee on 10.01.2020 explaining that ₹ 47,37,377.00 was the service tax liability for the period from 2016-17 and April, 2017 to June, 2017. But there is no pleading to that effect. There are no acknowledgment or admission by the petitioner of its service tax liability for the period under investigation prior to 30.06.2019 which is the cutoff date under the scheme - decision of respondent No.4 dated 04.03.2020 to reject the declaration of the petitioner dated 31.12.2019 on the ground that service tax liability of the petitioner was not quantified prior to 30.06.2019 cannot be faulted - petition dismissed.
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2021 (2) TMI 980
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of the petitioners or maintainability of the declaration to avail the benefits of the scheme under the category of investigation, enquiry or audit on the ground that service tax dues of the petitioners for the related period was not quantified on or before 30th June, 2019 - HELD THAT:- In Thought Blurb Vs. Union of India [ 2020 (10) TMI 1135 - BOMBAY HIGH COURT ], this court faced with a similar issue referred to provisions of the Finance (No.2) Act, 2019 and to the circular dated 27th August, 2019 of the Central Board of Indirect Taxes and Customs, 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. Thus, it is evident that all that would be required for being eligible 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. Though petitioners had made a mistake in not disclosing this figure of ₹ 6,13,91,021.00 in the first declaration, the situation was rectified by filing the second declaration before rejection of the first declaration disclosing the aforesaid figure. We find that the second declaration was filed on 10.01.2020 whereas the first declaration was rejected on 12.02.2020 - the quantum of service tax liability of the petitioner was the amount of service tax liability of the petitioners quantified in terms of the scheme on admission of the petitioners prior to the cut off date of 30.06.2019 i.e. ₹ 6 crores approximately which roughly corresponds to the declared figure of ₹ 6,13,91,021.00 in the second declaration. In such circumstances, rejection of the second declaration of the petitioners on the ground of ineligibility is not justified. The matter remanded back to respondent No.4 to consider the declaration of the petitioners dated 10.01.2020 afresh as a valid declaration in terms of the scheme under the category of investigation, enquiry and audit and thereafter grant the consequential relief(s) to the petitioners - petition allowed by way of remand.
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2021 (2) TMI 942
Invocation of Extended period of limitation by third SCN - Imposition of penalty on Directors - Cleaning Activity - services to government hospitals, educational institutes and non-commercial organizations, though a sizable portion of the revenue was generated from Sanjay Gandhi Post Graduate Medical Institute, Lucknow [SGPGMI] - HELD THAT:- The Department was aware of the facts when the first show cause notice was issued and, therefore, the extended period of limitation could not have been invoked in the third show cause notice. The Additional Director General has ignored the order passed by the Tribunal on November 20, 2018 on the first and the second show cause notices for the reason that the said notices or the order of the Tribunal had not been submitted by the Appellant. The Appellant in reply to the show cause notice had made a specific reference to the two show cause notices by giving the number and the dates and the order passed by the Tribunal. Even if it is assumed that the Appellant had not placed the two show cause notices and the order passed by the Tribunal, nothing prevented the Additional Director General from perusing the records of the Department for examining the two show cause notices and the order passed by the Tribunal. The Additional Director General could have even asked the Appellant to produce the two show cause notices and the order passed by the Tribunal. The important documents referred to by the Appellant that went to the root of the matter could not have been ignored in this manner. What also needs to be noted is that the amount charged for the exempted service that were provided by the Appellant was being repeatedly shown by the Appellant in the ST-3 returns filed in 2014 and 2015, and it is not a case where the Appellant had suppressed any information from the Department regarding the amount it had charged for the exempted services. It cannot, therefore, be urged that the Appellant had suppressed information or facts from the Department - What is further important to note is that on July 05, 2016, the Department also issued a notice to the Appellant for conducting an audit for the period 2012-13 to 2015-16. The Appellant was required to furnish all the relevant documents, including documents relating to details of the exempted services. The audit report does not mention that the Appellant had provided any service which was not exempted under the various Notifications and the audit report was also approved by the Deputy Commissioner (Audit). A Division Bench of the Tribunal in TRANS ENGINEERS INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2015 (9) TMI 787 - CESTAT MUMBAI] also examined whether the extended period of limitation could have been invoked when the audit report did not raise any query in respect of the payment of the service tax as alleged in the show cause notice where it was held that Revenue authority cannot invoke the extended period of limitation, when the records of the assessee were audited by the officers once but did not find any short payment from records. The 2nd audit party, doing the audit of same period or over lapping period, cannot allege that appellant has miss-stated (sic) or suppressed the facts from the departments. The Additional Director General has also observed that the Appellant had collected the service tax from most of the service recipients, but had mentioned in the ST-3 return that they were exempted services. This finding is also not based on the basis of records as nothing has been brought on the record to indicate that the Appellant had actually collected service tax for the exempted services. Merely because the Appellant collected an amount inclusive of taxes does not mean that service tax was included because there are many other taxes that are required to be paid - thus, it is not possible to sustain the demand of service tax raised against the Appellant as the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked. In this view of the matter, penalty could also not have been imposed upon the two Directors of the Appellant. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (2) TMI 974
Refund claim - Period of limitation - Relevant Date - Finalization of provisional assessment - It is contended that, the time limit of one year to claim refund will apply from the date of finalization of order of assessment by the Assistant Commissioner of Central Excise. Therefore, the Tribunal erred in considering the finalization of prices between the appellant and the oil companies as the relevant date for claiming refund as per Section 11B of the Act - Whether CESTAT having considered the assessment as provisional, has erred in equating the date of finalization of price by customers to finalization of assessment? - HELD THAT:- Admittedly, the application for refund made by the appellant on 24.08.2006 was rejected by the Assistant Commissioner by an order dated 24.05.2007. Being aggrieved by the order of the Assistant Commissioner, the appellant filed an appeal before the Commissioner of Central Excise (Appeals). It is not in dispute that the Commissioner of Central Excise (Appeals), by an order dated 24.12.2007, set aside the order passed by the Assistant Commissioner and allowed the appeal preferred by the appellant. Therefore, under the order dated 24.12.2007 passed by the Commissioner of Central Excise (Appeals), the appellant became entitled to the amount of refund. Thereafter, a fresh application was filed by the appellant on 11.02.2008. It is evident that where a duty becomes refundable as a consequence of judgment, decree, order or direction of Appellate Authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction would be relevant date for the purposes of Section 11B of the Act. Thus, the appellant was required to make an application for refund within a period of one year from the date of the order directing refund in favour of the appellant i.e. 24.12.2007 - The appellant admittedly has made an application on 11.02.2008. Thus, the application filed by the appellant was made within the period of limitation i.e. within a period of one year. However, the aforesaid aspect of the matter has not been considered by the Tribunal and the Tribunal has proceeded to examine the validity of the order in relation to the first application which has been made by the appellant. The Tribunal erred in considering the date of finalization of price between the appellant and their customers as relevant date in the light of Explanation B (ec) of Section 11 of the Act - question answered in the negative and in favour of the appellant - appeal allowed - decided in favor of appellant.
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2021 (2) TMI 953
CENVAT Credit - duty paid on re-exportation of the capital goods - denial of Cenvat credit on the ground that as per Rule 3(5A) there is no provision to clear the capital goods without payment of duty for export - HELD THAT:- Though there is no mention about export of capital goods in rule 3(5A) but in general any export of goods does not attract duty as the export goods can be cleared either under bond or under claim for rebate. The appellant has relied upon the various judgment wherein the issue of payment of duty in terms of Rule 3(5A) has been dealt with in respect of export goods. However both the lower authority have not dealt this situation in detail, after considering the relevant judgment on the issue. The appellant also vehemently argued that even if Cenvat credit is not available, since the goods have been exported the appellant are entitled for rebate claim. It is found that this is a vital issue raised by the appellant before the Adjudicating authority as well as the Commissioner (Appeals) .The same should have been considered in detail and proper finding should have been given however, both the authorities failed to properly consider the issue of rebate claim in accordance with law. Both the authorities have not considered the overall issue on the basis of the legal provision and also on the various judgments based on this issue therefore, in the interest of justice the only option left for us is to remit the matter back to the Adjudicating Authority for considering all the issues and pass a reasoned order - Appeal allowed by way of remand.
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2021 (2) TMI 948
CENVAT Credit - trading activities - non-maintenance of separate records for taxable as well as exempt activities - Rule 6(3A) of CENVAT Credit Rules, 2004 - Interpretation of the term CENVAT Credit taken on input services during the financial year appearing in clause ( c) (iii) of sub-Rule 3A of Rule 6 of CENVAT Credit Rules, 2004 as they were prior to amendment on March 01, 2016 - HELD THAT:- The appellants have been from time to time submitting intimation under Rule 6(3A) of CENVAT Credit Rules, 2004 showing full calculation of the manner in which they have arrived at the reversal of CENVAT Credit. In these circumstances, it is apparent that there was no suppression or mis-declaration on the part of the appellant and, therefore, the extended period of limitation could not have been invoked. It is also seen that with effect from March 01, 2016, the law has been amended clearly specifying that reversal of CENVAT Credit only on common inputs service is required. While clarifying the said issue, at the time of issue of said amendment, the Government of India vide DOF No. 334/8/2016-TRU dated February 29, 2016 clarified that Rule 6 of Cenvat Credit Rules which provides for reversal of credit in respect of inputs and input services used in manufacture of exempted goods or for provision of exempted services, is being redrafted with the objective of simplifying and rationalizing the same without altering the established principles of reversal of such credit. Thus, it is apparent that the amendment made is of clarificatory nature and the principles of reversal of credit remains the same. In the instant case, it is seen that Rule 6 of CENVAT Credit Rules, 2004 deals solely with the situation of CENVAT Credit resulting from exempted services and exempted products. The rule itself is clearly designed to deny partial credit of CENVAT credit taken on inputs/input services used in exempted goods and services. The CENVAT credit of other kind has no relevance in this rule. In these circumstances, it is obvious that reference to CENVAT Credit in the said Rule would be reference to CENVAT Credit on common input services which are used for exempted products and services as well as for dutiable products and services. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2021 (2) TMI 983
Classification of goods - Bicycle Chain Cover, Bell, Cycle Stand, Handle Grip Cover and Cycle Seat Cover, accessories - whether taxable as unclassified items, at the rate of 13.5% under Schedule-V of the Act or the bicycle parts to be notified under entry at item no. 19 of Schedule II Part-A of the Act taxable at the rate of 5%? - Section 59 of The U.P. Value Added Tax Act, 2008 - HELD THAT:- Tribunal has taken note of the material and evidence relied upon by the assessee. Yet, it misdirected itself in approach in as much as without first deciding whether the commodities in question were parts of bicycles it considered the question whether they were 'accessories of bicycles'. Undisputedly, there is no schedule entry of 'accessories of bicycles' or of 'accessories', under the Act. It was also not the argument of the assessee that the parts dealt with by it were 'accessories' and therefore liable to tax as bicycle parts. In absence of such taxing entry and considering the case set up by the assessee, the issue to be decided by the Tribunal was whether the commodities were cycle parts - If not, only then an issue would arise if the commodity was taxable as 'accessories' or as any other scheduled commodity or as an unscheduled commodity. To that extent the Tribunal has erred in reasoning that the commodity is accessory and therefore not parts of bicycle. Since the Tribunal has yet not expressed its opinion on the common parlance test invoked by the assessee and since that finding does involve appreciation of facts, it is desirable that the present matter be re-considered by the Tribunal considering the observations made above, before this Court may examine the issue itself. The matter remitted to the Tribunal to pass fresh order on the strength of the evidence and material available on record, as expeditiously as possible preferably within a period of three months from the date of production of a copy of this order before him - Petition allowed by way of remand. As regards the question, Whether the Tribunal was legally correct in holding that as per common parlance and commercial parlance, chain cover, carrier, seat cover, bell and handle grip cover are accessories to a bicycle and not its parts, and as such, these items were taxable as unclassified items under the U.P. VAT Act? , the same is left unanswered.
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2021 (2) TMI 976
Levy of tax - Inter-state sale - applicability of benefit of section 6(2)(b) of the Central Sales Tax Act - Section 3(a) of CST Act - HELD THAT:- In the assessee's own case, an identical issue was considered by the Hon'ble Division Bench of this Court in the decision reported in TRACTORS FARM EQUIPMENTS LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER [ 1998 (6) TMI 559 - MADRAS HIGH COURT] which went in favour of the petitioner - assessee holding that the sale was an inter-state sale under Section 3(a) of the Act. Following the said decision, the show cause notices issued to the assessee in respect of other years were also set aside. When the said judgment was placed before the Tribunal, the Tribunal, in paragraph 18 of the impugned order, noted the decision and held that the said decision would squarely applicable to the assessee's case for the assessment year under consideration also. However, the Tribunal committed an error in not correctly noting the ultimate relief for the assessment year 1980-81. In fact, in the last sentence of the said judgment, it was held that the order of the Tribunal levying tax on second inter-state sale effected by the assessee could not be sustained and was therefore set aside. Had the Tribunal noted this last sentence, the relief that should have been granted to the assessee was to allow the appeal and not to dismiss the same. This would be sufficient to interfere with the impugned order. The Department was bound by the decision of the Hon'ble Division Bench of this Court in the assessee's own case namely TRACTORS FARM EQUIPMENTS LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER [ 1998 (6) TMI 559 - MADRAS HIGH COURT] . Hence, we have no hesitation to hold that the impugned order passed by the Tribunal is incorrect. The second respondent is directed to grant exemption to the petitioner assessee under Section 6(2)(b) of the Central Sales Tax Act on the turnover for the assessment year under consideration - Petition allowed - decided in favor of petitioner.
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2021 (2) TMI 975
Review petition - Eligibility to get the benefit of subsidy in terms of the Chhattisgarh Naye Cinemagharon Ya Multiplex Cinemagharon Ke Nirman Ko Protsahan Yojna Ke Sahayta Anudan Niyam, 1982 - eligibility not being the Swamis (Proprietor) which was not properly considered - scope of Rule 3 of the 1982 Rules with reference to the date of commencement of operation of Cinema Hall/Multiplex was never adjudicated by the Bench while finalizing the matter - HELD THAT:- The provision contained herein is not with regard to imposition to any additional burden but is with regard to the relaxation given, by deleting the rider under Rule 3 of the 1982 Rules. The Rules of 1982 clearly provide for subsidy in respect of the Cinema Hall/Multiplex, construction of which was started after 01.07.1991. Of course, there was a rider that the benefit will be available, subject to the condition that no other Cinema Hall/Multiplex was existing within a radius of 10 KMs. This rider came to be deleted as per the amendment dated 04.03.2010, whereby the benefit of granting subsidy was widened to bring the then non-eligible lot also within the eligibility net. Since the benefit of the subsidy was intended to be paid for a total period of '8 years', the persons who were invited to set up the Cinema Halls/Multiplexes to augment the revenue of the State and who answered the call in the 'positive', despite the hard situations prevailing prior to 04.03.2010, cannot be pushed down for ever, when the barrier was lifted from 04.03.2010 onwards, at least in respect of the remaining period which alone has been ordered by the learned Single Judge. The amendment involved herein, bringing about relaxation for deciding the question of eligibility by deleting the rider which existed earlier under Rule 3 of the 1982 Rules, with effect from 04.03.2010, is different from a rider bringing in some new burden or liability, to be declared as only prospective. This being the position, the intention of the law makers to provide the benefit of subsidy, by way of refund of entertainment tax in respect of all constructions of Cinema Halls/Multiplexes after 01.07.1991 should also take in the parties who have started the operation prior to the cutoff date of 04.03.2010, for the remaining period after 04.03.2010, if the benefit under the Rules is a still continuing one. As it stands so, there is no merit in the contention with reference to the alleged prospectivity of deletion of the rider w.e.f. 04.03.2010. In the said circumstance, we do not find any error apparent on the face of record under this head as well. There is no error apparent on the face of record to invoke the power of review and to grant the relief - Review petition dismissed.
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2021 (2) TMI 972
Maintainability of refund claim - Realization of the amount without authority of law - rejection of claim holding that in absence of any statutory provision under JVAT Act the learned JCCT had no jurisdiction to allow the refund application of the petitioner - HELD THAT:- It is the case of the petitioner, undisputed by the respondent that petitioner is not a registered dealer under JVAT Act, 2005 nor has been assessed to tax under the Act. No demand notices were raised against the petitioner as such to the effect that any tax is due against him. Petitioner claims to have made deposit of ₹ 61,74, 899/- in order to ensure continuity of business and to avoid coercive action without any demand of tax since the goods transported by the petitioner were already excisable to Central Sales Tax to the tune of ₹ 58,05,157/- which were paid in the State of Origin. No sale took place in the State of Jharkhand within that period - The principles regarding maintainability of writ petition seeking refund in case the levy is unauthorized or without jurisdiction or is unconstitutional is well settled by the decisions of the Apex Court. In the case of HMM LTD. VERSUS ADMINISTRATOR, BANGALORE CITY CORPORATION [ 1989 (10) TMI 180 - SUPREME COURT] , the Apex Court has held that realization of tax or money without the authority of law is bad under Article 265 of the Constitution of India. The claim of refund has been denied on the plea that there is no provision under the JVAT Act since the petitioner is not a registered dealer and no assessment proceedings have been held. Under the Scheme of JVAT Act, assessment proceedings can be held against dealers, who have failed to get themselves registered. However, no assessment can be made under Sections 37 or 38 after expiry of 5 years from the end of the tax period, to which the assessment relates. On the face of the pleadings on record and the stand of the respondents brought through their counter affidavit, the rejection of claim for refund only on the ground that there is no provisions under the JVAT Act, 2005 for entertaining such a claim is not sustainable in law. Whether the contention of the petitioner that the entire sale transaction originated in a different State after payment of central sales tax to the tune of ₹ 58,05,157/- and there was no sale transaction originating within the State of Jharkhand for the respondent to retain the amount so deposited is a matter of verification upon assessment. The order of rejection of claim of refund by respondent no. 3 dated 1st September, 2016 (Annexure-4) and the order of learned Commercial Taxes Tribunal dated 31st October, 2017 (Annexure-8) upholding the same cannot be sustained in the eye of law Accordingly, they are set aside. The matter is remitted to the respondent no. 3, Joint Commissioner of Commercial Taxes (Admin), Ranchi to consider the claim of refund of the petitioner in accordance with law within a period of six weeks from today. Petitioner should appear before the respondent no. 3 on 15th February, 2021 with the relevant records. Petition allowed - decided in favor of petitioner.
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2021 (2) TMI 968
Seeking directions to the respondents to disburse the refund amount alongwith interest - reduction of admissible ITC on purchase of coke - Section 38 of the Gujarat Value Added Tax Act, 2003 - HELD THAT:- It is not in dispute that the writ applicant-Company was given an incentive on tax for the relevant period as mentioned in the petition by the authority, as sanctioned for the respective years - In view of the determination order passed under Section 80 of the GVAT Act, the full amount of refund has not been disbursed by the respondents. It is an admitted fact that the respondents-authorities have not invoked the Section 39 of the GVAT Act, which provides the powers to withhold the refund in certain cases. The time limit to initiate proceedings under GVAT Act is lapsed. It is required to be noted that Section 35 gives power to the authority to determine the amount of tax in respect of input tax credit etc after following the mandatory procedure as provided under the GVAT Act. However, the powers conferred under Section 35 cannot exercise after the expiry of 5 years from the end of the year in respect of which tax is assessable. Therefore, in view of the Section 35, the time limit is over and the authority now cannot initiate any proceedings in respect of refund. The writ applicants are entitled to get the refund amount and the authorities have no legal justification to withholding the same, which is otherwise refundable to the writ applicants Company, as the action of the respondents authorities is contrary to the provisions of GVAT Act - respondents are directed to disburse the refund amount along with 6% interest within a period of 6 weeks from the date of receipt of this order - application allowed - decided in favor of assessee.
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2021 (2) TMI 967
Refund - Seeking return the amount of tax collected from the different parties during the said period of assessment - non-communication of the cancellation of registration at the end of the respondents - It is the case of the writ applicant that after some business transactions, later on he came to know about his cancellation of registration with effect from 12.04.2010 and accordingly, he was duty bound to return the amount of tax collected from the different parties during the said period of assessment - HELD THAT:- It appears that at the time of search, it was informed by the writ applicant that he had made the payment to different parties to the tune of ₹ 8,14,250/- by way of cheque. Despite of this, the authorities had collected the tax to the tune of ₹ 9,05,318/-. Also, since 2014, the respondent authorities have not issued any assessment order after serving notice of provisional assessment in the prescribed form. Even no notice has been issued by the respondent authorities invoking provisions of Section 8A(a) of Section 34 of the GVAT Act, 2003. The writ applicant is entitled to get the refund of amount. The authorities have no legal justification for withholding the amount, which is otherwise refundable to the writ applicant and the action of the respondent authorities could be said that such withholding of refund is contrary to the provisions of Section 36 of the GVAT Act, 2003. Reliance can be placed in the case of SHILPA INDUSTRIES VERSUS STATE OF GUJARAT [ 2020 (2) TMI 297 - GUJARAT HIGH COURT] where it was held that In the facts of the case, no notice has been issued till date by the respondent authority invoking provisions of Section 8(A)(a) of Section 34 of the VAT Act, 2003. Therefore, in contemplation of invoking such provision for assessment without there being any satisfaction of the prescribed authority that the tax has been evaded etc. by the petitioner, the refund cannot be withheld. The respondents are directed to pay to the writ applicant a sum of ₹ 9,05,318/- together with statutory interest at the rate of 6% p.a. within a period of six weeks from the date of communication of this order - application allowed.
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2021 (2) TMI 965
Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - HELD THAT:- Petitioner fairly submits that the issue involved in this Writ Petition is squarely covered by a decision of this Court in, M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT] wherein it was held that till such time the order of this court in the case of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] is either stayed or reversed it is incumbent upon all Assessing Authorities within the State of Tamil Nadu to apply the rationale of the decision to all pending assessments. The Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. The State has, after the date of the above order, filed a Writ Appeal in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [ 2020 (3) TMI 450 - MADRAS HIGH COURT ] challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court holding that Appellant State and the Revenue Authorities are directed not to restrict the use of 'C' Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in 'C' Forms to such Dealers. The Circular letter of the Commissioner dated 31.5.2018 stands quashed and set aside along with the consequential Notices and Proceedings initiated against all the Assessees throughout the State of Tamil Nadu. Mr.Jaya Pratap submits that the State intends to challenge the order in Writ Appeal by way of a Special Leave Petition - As on date, however the order in Writ Appeal is final, and following the rationale thereof, this Writ Petition is allowed.
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2021 (2) TMI 964
Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C-Form - HELD THAT:- Petitioner fairly submits that the issue involved in this Writ Petition is squarely covered by a decision of this Court in, M/S. DHANDAPANI CEMENT PRIVATE LTD., M/S. TERU MURUGAN BLUE METAL VERSUS THE STATE OF TAMIL NADU, THE PRINCIPAL COMMISSIONER COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE JOINT COMMISSIONER (ST) TERRITORIAL, THE DEPUTY COMMISSIONER (ST) [ 2019 (2) TMI 1850 - MADRAS HIGH COURT] wherein it was held that till such time the order of this court in the case of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] is either stayed or reversed it is incumbent upon all Assessing Authorities within the State of Tamil Nadu to apply the rationale of the decision to all pending assessments. The Petitioner in these Writ Petitions has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. The State has, after the date of the above order, filed a Writ Appeal in THE COMMISSIONER OF COMMERCIAL TAXES, CHEPAUK, CHENNAI, THE ADDITIONAL COMMISSIONER (CT) VERSUS THE RAMCO CEMENTS LTD. AND THE STATE TAX OFFICER, THE JOINT COMMISSIONER (CS) (SYSTEMS) VERSUS SUNDARAM FASTENERS LIMITED [ 2020 (3) TMI 450 - MADRAS HIGH COURT ] challenging the decision in the case of Ramco Cements that has been considered and dismissed by a Division Bench of this Court holding that Appellant State and the Revenue Authorities are directed not to restrict the use of 'C' Forms for the inter-State purchases of six commodities by the Respondent/Assessees and other registered Dealers at concessional rate of tax and they are further directed to permit Online downloading of such Declaration in 'C' Forms to such Dealers. The Circular letter of the Commissioner dated 31.5.2018 stands quashed and set aside along with the consequential Notices and Proceedings initiated against all the Assessees throughout the State of Tamil Nadu. Mr.Jaya Pratap submits that the State intends to challenge the order in Writ Appeal by way of a Special Leave Petition - As on date, however the order in Writ Appeal is final, and following the rationale thereof, this Writ Petition is allowed.
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2021 (2) TMI 959
Doctrine of Promissory Estoppel - Withdrawal of subsidy granted on account of change of opinion - whether the benefits already granted to the petitioner as promised under the Industrial Policy 2004-09 can be withdrawn later on only in the light of change of opinion of the respondents? - definition of captive power plant - benefit of exemption of capital investment made in the captive power plant. Whether the petitioners would be entitled for the benefit of promised subsidy as per the industrial policy of 2004-09 is concerned? - HELD THAT:- In order to attract more and more Business Enterprises establishing industrial units in the State of Chhattisgarh, the State Government had given certain incentives in the industrial policy. One such policy was that of granting State Infrastructure Cost Fixed Capital Investment Subsidy. Granting of the subsidy is a sort of financial assistance provided to the new establishment which is to be setup and the financial assistance is in the from of subsidy. Initially the Government decided to grant 25% of total capital investment made in the establishment of a Captive Power Plant as subsidy. Finding the industrial policy and the incentives provided therein, the petitioners sought of setting of a plant in the State of Chhattisgarh and which they did foreseeing the incentives so provided in the policy - The petitioners thereafter having made the investment in a Captive Power Plant approached the authorities claiming for the benefit of subsidy. The State Level Committee in its meeting on 18.02.2009 took a decision to grant eligibility certificate entitling the petitioners the benefit of subsidy to the extent of ₹ 12,81,44,310/- as subsidy. Though the State Level Committee took a decision and the authorities in the State Government issued eligibility certificate, but the petitioners were never provided with the refund of subsidy or adjustment of the same against the subsequent liability. The petitioners had been repeatedly approaching the authorities claiming for adjustment of the tax liability against the incentives that the petitioners are entitled for, which the respondents did not respond and meanwhile the respondents raised the demand notice against the assessment order dated 27.02.2009 and later on the authorities also were able to get a revenue recovery certificate issued against the petitioners against the assessment order dated 27.02.2009 and similar demand notices have raised by the respondents in the subsequent years also. The provisions regarding grant of subsidy subsequently stood amended on 10-08-11, to the extent of the State Government introducing an upper cap of ₹ 300 Lacs (i.e. ₹ 3 Crores) as subsidy to the companies. Later on the State Level Committee in its 23rd meeting held on 31.05.2013 reviewed its earlier decision dated 18.02.2009 and recalled the order and held that the petitioners would not be entitled for the benefit of subsidy at all. Whether the decision of the State Level Committee concluding that subsidy to a captive power plant would be paid only to those captive power plants where the generated electricity is only for its own use and not as defined under Central Legislation i.e. Electricity Act 2003 and Electricity Rules framed thereunder of 2005? - HELD THAT:- What has to be visualized at this juncture is that the power that is generated cannot be stored. Whatever power that is generated has to be consumed or else the power would get wasted. What is also to be visualized is the fact that the requirement of power may fluctuate from one month to another depending upon various factors primarily the climatic conditions and also the production, that is to be made in a particular period of time and therefore it would not be possible for any establishment to decide the fixed amount of power that has to be generated and in a given month in case, if the demand falls, the only option available to the petitioner would be to give it to some third agency, which could also be the State Government and in that circumstances if the arguments advanced by the respondents are to apply then this Court has no hesitation in presuming that the benefit of subsidy would not be reaped by any person or any establishment. The policy thus framed would be a redundant or a policy only for name sake, the benefit of which cannot be availed by any establishment as such - in the opinion of the Court was never the intention and the object, firstly while framing the industrial policy, 2004-2009 and secondly while also framing the aforementioned Vidyut Aapurti Nivesh Rules, 2004. There being no specific definition of captive power plant in the industrial policy under which the petitioner s claims were being processed, the safest recourse that could be resorted to was to rely upon the definition of captive power plant as is provided under the Electricity Act as also the Rules framed therein. It is always a legitimate expectation of an investor of getting certain extra benefit in the course of making huge investment in a particular State. At the same time, the benefit so extended is for giving the booster to the investors by the State Government and while framing the policy, the respondents have not felt that the definition of captive power plant would not be what it is under the Electricity Act or it would be a different interpretation that would be given. Therefore it was assumed by the petitioner that the meaning would be the same as that is reflected in the Electricity Act and to add with it applying the same interpretation the State authorities at the first instance had issued the eligibility certificate. Another aspect which needs consideration is that it is not a case of the respondents of the petitioner playing fraud of any manner while seeking the benefit or while obtaining the eligibility certificate. Having granted the eligibility certificate once, it could not have been lightly recalled without a fair and reasonable opportunity of explanation to the petitioner. From the proceedings drawn by the authorities it clearly reflects that though there is a reference of notice having been issued, there is no evidence of the notice being duly served and further it would also reflect that even on the admitted factual dates that are reflected when the notice was issued and the date of the impugned order would again give a clear indication that the authorities had not granted reasonable time to the petitioner to explain - Yet another ground which needs consideration is the fact that there cannot be a definition given to a captive power plant contrary and violative to the definition as provided under the Electricity Act and the Rules framed therein. The withdrawal of the benefit granted to the petitioner by the State level committee through its decision dated 31.5.2013 (Annexure P-7) and the order of the State Appellate Forum dated 9.10.2015 (Annexure P-21) is illegal and unjustified and is liable to be and is accordingly set aside/quashed with consequences to flow - Petitioner would be entitled for the benefit of subsidy in terms of the policy prevalent on the date of issuance of the eligibility certificate, that is, to the extent of ₹ 12,81,44,310/- - Petition allowed.
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2021 (2) TMI 958
Classification of goods - rate of tax - Brass fittings i.e., Elbow, Tee, Socket, Union, Hex Nipples, Hose Colour, Pillar tap Inner fittings, etc. - Bib Cocks Brass or C.P., Brass Ball cock, brass Long body Bib cock C.P., Brass Short Body Bib Cock C.P., Brass Sink Cock C.P., Brass Angle Cock C.P., Brass Wall Mixers C.P., Brass Showers C.P., Brass shower Arm C.P., Brass Foot valve, etc - taxable at the rate of 12.5% or to be treated as items coming under Entry 3(2) of Third Schedule of the KVAT (Amendment) Act, 2005 and taxable at the rate of 4%? - Validity of Clarification under Section 94 of the KVAT Act, 2003 - HELD THAT:- Chapter 74 deals with Copper and articles thereof . The Note at the beginning of the Chapter says that it would take in alloys of copper also. Several items of copper are dealt with under different four digit HSN Codes bearing Nos. 7401 to 7419. HSN 7418 specifically deals with sanitaryware and parts thereof of copper. The four digit code HSN 7419 says other articles of copper. From the use of the word other in the heading of HSN 7419, it is amply clear that it refers to articles which are not mentioned elsewhere. When it comes to HSN 7419.99, again it is shown as other , so as to mean that the items mentioned subsequently are not items specified earlier. Therefore, HSN 7419.99.30 with which Entry 3(2) of the Third Schedule of the Act is aligned, cannot be deemed to include the specific products of the assessee being taps, valves and other fittings made of brass which also are used as sanitary-wares, especially for reason of the items mentioned under HSN Codes 7412.20 and 8481, 8481.80 and 8481.80.20 - Chapter 74 of the Explanatory Notes that specific items of copper and its alloys have been identified in eight digit HSN Codes. For example, HSN 7418.10.21 refers to utensils of brass. So also HSN 7418.20.10 refers to sanitaryware of copper. It can be seen that though sanitaryware of brass is not specifically mentioned the products dealt with by the assessee comes under the above extracted entries of 7412 and 8481. When we look at Entry 3(2) in Third Schedule, it can be seen that it does not take in all articles of brass. Entry 3 going by the heading takes in only such articles and other utensils of aluminium, brass, bronze, copper, etc. other than those specified in any other Schedule of the Act. HSN Code 7419.99.30 to which Entry 3(2) of the Third Schedule is aligned, speaks of Articles of brass under HSN 7419.99 with heading Other which takes in only those Articles not mentioned elsewhere - Thus this part answered against the assessee and in favour of the Revenue. HSN Codes - HELD THAT:- The products of the assessee though can be used as sanitarywares, also are used in general water supply and are covered under the various HSN codes as tubes or pipe fittings, taps, cocks, valves and similar appliances for pipes respectively coming in HSN Codes 7412 8481 - The products dealt with by the assessee cannot be covered as sanitaryware under 7418.20.10. The answer however does not interfere with the tax effect of the products which we have held to be covered, otherwise, under the SRO itself. The inclusion of the products under Entry 101 does not fall foul of Annexure-D judgment, since we found that it does not declare specifically as to under which entry the brass products of the assessee fall. Appeal dismissed - decided against appellant.
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Indian Laws
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2021 (2) TMI 979
Dishonor of Cheque - seeking one effective opportunity to the petitioners to lead their defence evidence - Section 45 read with Section 73 of Negotiable Instruments Act for examination of the hand writing expert and for the report of the FSL - HELD THAT:- Regarding first application the contention of the petitioners was that the cheque in question had been stolen by Mr. Davinder Kalra @ Raju Kalra, proprietor of the complainant Company with the help of unknown person and was misused by hatching a criminal conspiracy with the complainant. Neither the handwriting nor the ink of the cheque matched in any manner. The cheque had been manipulated and fabricated by the complainant. Said Davinder Kalra was unable to explain as to how the cheque, which was a bearer cheque, was presented and how it was crossed and made into an account payee cheque. The complainant even did not know the whereabouts of the employee of the petitioner Company who had handed over the cheque to him. It was submitted that the handwriting as well as ink used in the disputed cheque were admitted by the complainants witnesses, therefore, it was necessary to send the disputed cheque for obtaining FSL report to clear the doubts. Learned trial Court while dismissing the application noted that the signatures on the cheque had been admitted by the accused. The petitioner while recording his defence statement under Section 263 (g) had specifically admitted the signatures on the cheque in question. The trial Court relied upon a decision of this Court in GURMEET SINGH VERSUS STATE OF HARYANA AND ANOTHER [ 2012 (2) TMI 701 - PUNJAB HARYANA HIGH COURT] wherein it has been held that once an accused has admitted the signatures on the cheque, he could not escape his liability on the ground that the same had not been signed by him. When the blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque to fill the blank which has been left while signing the cheque. The petitioners have not been able to show as to how the evidence of the witnesses sought to be summoned is absolutely essential for the just decision of the case. Petition dismissed.
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2021 (2) TMI 978
Dishonor of Cheque - Seeking a decree of the amounts - Commercial Summary Suit under the provisions of Order XXXVII of the Code of Civil Procedure, 1908 - the advocates for the plaintiff sent a notice under section 138 of the Negotiable Instruments Act, 1881 to the defendant inter alia stating that the defendant had acknowledged the debt due and payable to the plaintiff and in case of failure to pay, the plaintiff would be constrained to initiate criminal action under section 138 of the said Act - failure on the part of Defendant to respond to the said notice or make repayment - HELD THAT:- Though serving a notice under section 80 of the CPC is mandatory, the same is capable of being waived. Naturally, whether there is a waiver or not, would depend on the facts and circumstances of the case. In fact, the plea for want of notice under section 80, and which is a clear bar to the institution of proceedings against the Government or a public officer, must be taken at the earliest possible opportunity and must be specifically pleaded. Where such a plea is taken by the defendant at a very late stage of the suit and at a time when the plaintiff would be precluded by the law of limitation from bringing a further suit against the defendant, the defendant must be deemed to have waived the privilege of the notice. Having seen that the provisions of section 12A of the CC Act and section 80 of the CPC are similar, I do not see why on parity of reasoning, it cannot be held that in a given set of facts and circumstances, the defendant has waived the privilege of asking the plaintiff to first invoke the remedy of pre-institution mediation before instituting a suit in this Court. As mentioned earlier, without considering the facts and circumstances of a particular case, to mechanically drive the plaintiff to go for mediation under section 12A of the CC Act before allowing him to institute the suit, would in fact run counter to the very object and purpose for which the CC Act was brought into force. This interpretation, which is earlier held to sub-serve the ends of justice, would not in any event cause prejudice to the defendant. The present suit came to be lodged on 6th July, 2019. After the suit was filed, the writ of summons was served on the defendant and the plaintiff thereafter filed the above Summons for Judgement on 16th August, 2019. The defendant also filed an affidavit-in-reply dated 11th December, 2019 to the Summons for Judgment as well as an affidavit in sur-rejoinder dated 10th January, 2020 to rejoinder filed by the plaintiff on 18th December, 2019. At no point of time has the defendant ever raised the contention that the present suit cannot be instituted because the plaintiff has not invoked the remedy of pre-institution mediation as contemplated under section 12A of the CC Act. This argument is, for the first time, canvassed only across the Bar by Mr. Bookwala when it was argued on 9th December, 2020 and 11th December, 2020 - The scope and ambit of section 12A is not to defeat a just claim of the plaintiff. As mentioned earlier, section 12A is a procedural provision and it is well settled that procedure cannot defeat justice. I am, therefore, clearly of the view that in the facts of the present case, the plaintiff cannot be non-suited on this ground considering that the plea of requiring the plaintiff to invoke pre-institution mediation has not even been raised in the pleadings before me and is only argued across the Bar for the first time in December, 2020. The provisions of section 12A have been substantially complied with. As mentioned earlier, the scope and ambit of section 12A is to try and see if the parties can resolve their disputes before approaching the Court of law. If they cannot, then naturally the parties have to approach the Court for redressal of their grievances. In the facts of the present case, after the suit was filed, the parties did try to resolve their disputes. This is clear from the order passed by this Court on 4th November, 2020, wherein it was specifically recorded on behalf of the defendant that the defendant is desirous of sending a settlement proposal to the plaintiff to see if the disputes can be resolved. Such a proposal was, in fact, sent by the defendant to the plaintiff and which was rejected by the plaintiff. This would, therefore, clearly go to show that in the facts of the present case, the parties did try to resolve their disputes amicably, albeit after the filing of the suit, but without any success. There is no dispute whatsoever with reference to the merits of the claim of the plaintiff. From the facts narrated above, it is clear that the defendant had taken moneys from the plaintiff and has not repaid the same. In fact, the defendant, to repay the moneys advanced by the plaintiff to the defendant, had also issued a post-dated cheque of ₹ 5 crores which was dishonoured when presented for payment. Similarly, even the cheque issued for the payment of ₹ 54 lakhs (towards interest) was dishonoured. The reason for dishonour of both the aforesaid cheques was funds insufficient . There is also no dispute with reference to the rate of interest payable. When one looks at the overall facts of the matter, it is abundantly clear that the defendant has absolutely no defence on the merits of the claim of the plaintiff. The defendant shall deposit in this Court, a sum of ₹ 5.54 crores within a period of twelve weeks from today. On the aforesaid condition being complied with, the defendant is granted leave to defend the suit and he shall file his written statement within a period of eight weeks from the date of deposit - If the aforesaid condition of deposit is not adhered to within the stipulated time, the plaintiff shall be entitled to apply for an ex-parte decree after obtaining a non-deposit certificate from the Prothonotary Senior Master of this Court. Summons disposed off.
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2021 (2) TMI 973
Seeking grant of Anticipatory Bail - Compliance with the condition imposed by the learned Appellate Court to deposit 20% of the compensation amount in the form of bank draft within 60 days - HELD THAT:- This Court is of the considered opinion that once bail was granted to the petitioner on the condition of deposit of 20% within a period fo 60 days and thereafter a period of about 1 years has elapsed and the petitioner has not deposited 20% of the compensation amount, the learned Appellate Court was justified in cancelling the bail because express condition of bail has been violated by the petitioner. The reliance made by the petitioner on Vivek Sahni's [ 2019 (7) TMI 1561 - PUNJAB AND HARYANA HIGH COURT ] , is also of no avail in view of the fact that now the law has been laid down by the Hon ble Supreme Court Surinder Singh Deswal and Ors. [ 2020 (1) TMI 263 - SUPREME COURT ] . Learned counsel for the respondent has brought to the notice of this Court that against the judgment passed by this Court in Vivek Sahni's case, an SLP was also preferred which has been dismissed by the Hon ble Supreme Court on 2.12.2019. However, a perusal of the same would show that the said SLP has been dismissed in limine and special leave was not granted and therefore, it does not lay down any law. However, on the other hand, the Hon ble Supreme Court in Surinder Singh Deswal and Ors. laid down the law in this regard by observing that if a condition of bail which was granted under Section 148 of the Act is violated and the amount is not deposited, then the bail is liable to be vacated. Petition dismissed.
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2021 (2) TMI 970
Smuggling - Smuggling - ganja - Whether the conviction of the appellant by the trial court for the offence under Section 8(c) which is punishable under Section 20(b)(ii)(C) of the NDPS Act is just and proper, having regard to the oral and documentary evidence available on record? - HELD THAT:- From the appreciation of the evidence of the witnesses examined by the prosecution, it is found that statements of all these witnesses under Section 161(3) of the Code do not bear any date. Further, statement under Section 161(3) of the Code of PW-1, who is the star witness of the prosecution around whom the entire case of the prosecution revolves, has not at all been recorded. Statements of the witnesses under Section 161 of the Code recorded by the Police during the course of investigation plays a major role during the course of trial. After lodging of the FIR and registering the case, investigation commences with the Investigating Officer visiting the scene of crime, drawing panchanama, seizing any incriminating articles found at the spot, recording the statements of the witnesses, arrest of accused, recovery, etc., and this part of investigation is covered under Sections 161 and 162 of the Code and the credibility of the witnesses, who are examined before the court, depends largely on this part of investigation - Statement under Section 161 of the Code forms a part of the charge sheet and this statement can be used by the accused for the purpose of contradicting thewitnesses in the manner as provided under Section 145 of the Evidence Act and the right of accused to cross-examine the witness, who has made a statement underSection 161(3) of the Code is a right guaranteed to the accused under Section 162 of the Code. Even without recording the statement of a witness under Section 161(3) of the Code, the said witness can be examined before the court, but the evidence of such a witness has to beappreciated very carefully and evidence of such witness shall carry less value and credibility. It is a settled principle of law that non-recording of statement under Section 161(3) of the Code or delayed recording of statement under Section 161(3) of the Code or improper recording of statement under Section 161(3) of the Code is a serious irregularity which is incurable. This irregularity gives rise to infer that prosecution has procured such statement to suit their case and therefore, such statement loses its credibility. When delay in recording statement under Section 161 of the Code itself casts cloud of suspicion on the case of the prosecution, non-recording of such statement or recording of such statement without mentioning the date, totally discredits the evidence of these witnesses - A witness, who contradicts his earlier statement and makes improvement in his subsequent statement or when there are omissions in his statement, such witness loses credibility. In the case on hand, non-recording of statement of PW-1 under Section 161(3) of the Code and non-mentioning of the date of recording of statement under Section 161(3) of the Code of all other witnesses is fatal to the case of the prosecution. For an offence punishable under the provisions of the NDPS Act, compliance of the requirement of law has to be scrutinized in a higher pedestal because the penalties imposed under this statute are very severe. The manner in which the investigation has been conducted in this case vitiates the entire investigation and resultantly it also affects the trial of the case. The order of conviction, therefore, cannot berecorded on the basis of evidence adduced by these witnesses. The investigation in the case appears to be totally tainted and unreliable. In the case on hand, the prosecution has failed to show that the materials were kept in safe custody as required under Section 55 of the NDPS Act and they have also failed to explain the inordinate delay of nearly two months in sending the sample articles to the FSL. Having regard to the manner in which investigation is conducted in the case, foul play cannot be completely ruled out - the investigation in the case is vitiated for improper recording and non-recording of statement of the witnesses under Section 161(3) of the Code, who have been examined in the court. The Investigation Officer has admittedly not maintained a case diary, wherein such statements are required to be recorded which is a mandatory requirement of law under Section 161(3) of the Code. Such an irregularity seriously prejudices the case of the accused and if the order of conviction is required to be based on the evidence of these witnesses, it will result in miscarriage of justice. There is also total non-compliance of mandatory requirements of Section 42 of the NDPS Act and there is an unexplained delay in forwarding the samples to the FSL. The prosecution has failed to establish that the car and the house from where the contraband articles were seized either belonged to the accused or his wife. It has come on record that the car belonged to accused No.2 and the prosecution has admitted that they have no record to prove that the house stands in the name of wife of the accused. The contraband articles were seized in the absence of the accused. A presumption under Section 54 of the NDPS Act can only be raised after the prosecution has established that the accused was found in possession of the contraband articles in a search conducted in accordance with the mandate of law and illegal search does not entitle the prosecution to raise such a presumption under Section 54 of the NDPS Act - this Court is of the considered opinion that the trial court was not justified in convicting the appellant for the offence under Section 8(c) which is punishable under Section 20(b)(ii)(C) of the Narcotic Drugs and Psychotropic Substances Act, 1985. Appeal allowed - decided in favor of appellant.
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2021 (2) TMI 966
Dishonor of Cheque - time limitation - grounds raised in the petition is that the alleged date of advancement of loan was barred by limitation - complaint averments disclose that the alleged loan transaction is more than four years and the same is barred by limitation - cheque was presented without an endorsement and it is not in dispute that it is a self-cheque - offence is made out under Sections 138 and 139 of the NI Act constituting an offence or not. Whether this Court can quash the proceedings in coming to the conclusion that the issuance of self cheque in respect of the time barred debt? - HELD THAT:- The very contention of the petitioner is that it is a time barred transaction; the same has to be decided only after recording the evidence not at the preliminary stage of taking the cognizance. It is settled law that whether it is time barred or not involves disputed facts and the same cannot be determined in a proceeding under Section 482 of Cr.P.C. since it involves mixed question of law and fact. Hence, the very contention that the transaction is time barred cannot be decided while taking the cognizance - The Apex Court also in MMTC LTD. VERSUS MEDCHL CHEMICALS PHARMA (P.) LTD. [ 2001 (11) TMI 837 - SUPREME COURT] , has categorically held that complaint need not allege existing of a subsisting debt or liability against which cheque issued. Burden of proving non-existence of any debt or liability is on the accused, to be discharged at the trial. Prior to that complaint cannot be quashed by High Court under Section 482 of Cr.P.C. In the case on hand also, the Court has only after considering the evidence has to decide whether the liability is in existence or not and the same cannot be decided without recording the evidence. Hence, Section 482 of Cr.P.C. cannot be invoked to quash the proceedings. The Apex Court also in the case of HMT Watches Limited's case, categorically held that Section 482 of Cr.P.C, can be exercised only to prevent abuse of process and further observed that sometimes on same set of facts, civil and criminal proceedings are also maintainable and further held that the sitting under Section 482 of Cr.P.C, while exercising the powers disputed question of fact cannot be disabled. Only the Trial Court can determine the disputed questions of fact - though the petitioner's counsel referred several judgments of different High Courts, it is settled law that whether the transaction is time barred or not has to be considered only after the trial not at the preliminary stage or at the time of taking cognizance - the question is answered in negative. Whether the self cheque issued by the petitioner attracts Section 138 of the Negotiable Instruments Act, 1881? - HELD THAT:- The Kerala High Court in Sarafudheen's case, discussing the same in paragraph No.11 and in paragraph No.12 held that the cheque is styled as a self cheque and over and above it, the term or bearer has not been scored off. The holder of the cheque could be a 'holder in due course', who could maintain a complainant under Section 142 of the NI Act - Having perused the principles laid down in the Judgment, the very contention that there is no endorsement and the self cheque does not attract Section 138 of the NI Act, cannot be accepted at this juncture. The respondent made out the prima facie case - question raised by this Court is answered as 'affirmative'. Whether both the Courts have committed an error in taking the cognizance and confirming the cognizance by the Revisional Court and it requires an interference of this court exercising the powers under Section 482 of Cr.P.C.? - HELD THAT:- The petitioner herein himself admitted in his reply to the demand notice dated 03.05.2019 that the petitioner handed over two self cheques each for ₹ 5 Lakhs. It is also clear that the word bearer has not been struck off. It is further observed that the scope of revision is very limited and the merits of the case cannot be decided in a revision petition. Further observed that the truth or falsity cannot be entered into by the Revisional Court, that too, in the initial stage of the case. There are no error committed by the Revisional Court also in confirming the taking of cognizance. The matter needs a full- fledged trial to decide the issue involved between the parties and the grounds which have been urged before this Court by the petitioner can be raised before the Trial Court during the course of the trial and the sitting under Section 482 of Cr.P.C, the Court cannot quash the same. Hence, there is no merit in the petition. Petition dismissed.
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2021 (2) TMI 963
Dishonor of Cheque - acquittal of accused - Rebuttal of presumption - Whether the learned trial court has appreciated the evidence before the court in the light of the sound principles regarding appreciation of evidence in cases arising out of 'Cheque Bounce under Negotiable Instrument Act 1881? - HELD THAT:- Both the documentary and oral evidence adduced by the complainant coupled with the presumption arising under section 118 and 139 of the Negotiable Instrument Act 1881 clearly indicates that, the complainant has discharged the initial burden on him to show that, the accused has issued the cheque by for ₹ 52,000/- and the said cheque was issued for existence of legally enforceable recoverable debt and liability. The accused can rebut the presumption by two ways one by cross-examining the complainant and the other is by leading his defense evidence - The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. On reading of the entire evidence of complainant and accused it is evident that, the accused has miserably failed to rebut statutory presumption. In view of section 20 of Negotiable Instrument Act, when once a person signs and delivers an negotiable instrument, the person signing shall be liable upon such instrument. So the contention that the cheque was issued blank cheque does not hold good in view of section 20 of Negotiable Instrument Act. The Hon'ble Suprme Court recently in BIR SINGH VERSUS MUKESH KUMAR [ 2019 (2) TMI 547 - SUPREME COURT] held that the cheque duly signed and voluntarily made over to payee, was in discharge of debt or liability arises irrespective of whether the cheque was post dated or blank cheque for filling by payer or any other person in the absence of evidence of undue influence or coercion - Therefore it is evident that the complainant has proved beyond all reasonable doubt that, the accused has borrowed ₹ 52,000/- as a hand loan and executed Ex.P.1 cheque for discharge of that debt or liability. He has further proved that, the said debt was legally recoverable/enforceable debt or liability. Inspite of issuance of demand notice by the complainant after dishonor of the cheque, the accused failed to repay the said amount, thereby committed offence punishable under section 138 of Negotiable Instrument Act. The accused has failed to rebut the said evidence and statutory presumption arising in favour of complainant by any legally admissible evidence. It is crystal clear that, the accused has committed an offence punishable under section 138 of Negotiable Instrument Act and he needs to be sentenced accordingly - Section 138 Negotiable Instrument Act, 1881 provides punishment both imprisonment which may extend two years or with fine which may extend to twice the amount of cheque, or with both. The offences under negotiable instrument Act are regulatory offences intend to give sanctity to the negotiable instruments. Keeping in mind the settled principles regarding imposition of sentence in cheque bounce case, in my considered view the accused needs to be imposed the fine double the cheque amount. In this case the cheque amount is ₹ 52,000/-. The case of the year 2003. Now we are in the end of the year 2020. So nearly seventeen years the case is pending. Therefore, in my considered view the imposition of double the cheque amount as a fine is a proper sentence - Appeal allowed.
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2021 (2) TMI 962
Dishonor of Cheque - rebuttal of presumption arising under Section 139 of the N.I.Act - burden to prove - legally recoverable debt or other liability - HELD THAT:- In perusing the oral evidence of PW.1 with reference to his written complaint and his evidence in examination-in-chief, it is evident that nowhere he has stated the date when he has given loan amount. Only for the first time in the cross-examination he states on 18.08.2009 he has given loan amount in cash and he himself went to the house of the accused and paid that amount which is not a natural course of conduct of a person in such situation. The two witnesses Mohd.Mukthar and Mohd.Rafi who were stated to be present at the time of giving loan amount, were not examined. Admittedly, the said amount was not withdrawn from any Bank or from his account. PW.1 states that the amount was received by him in respect of the plot sold by him at Solapur. But no records were produced in this regard. Complainant- PW.1 simply states that as himself and accused were doing business, he know accused. There is no separate close relationship or friendship between them. Complainant-PW.1 also admits about giving of ₹ 5.00 lakh loan to one Sagir Ahmed, who is son of sister of accused, and it is Sagir Ahamed was looks after business of the accused. Complainant-PW.1 also admits that accused has paid a sum of ₹ 1,20,000/- through cheque and against he paid a sum of ₹ 1,92,000/- in March 2008 and April 2008 to his wife. If at all the accused had barrowed the amount in August 2009, then what was the necessity for the accused to give the cheques in the name of wife of the complainant? for what purpose he has given the said cheques?. The initial burden is on the complainant to prove that there is existence of legally recoverable debt or other liability for which said Ex.P1-cheuqe was issued. Simply because a cheque is issued, the accused cannot be automatically held guilt of offence under Section 138 of the N.I.Act. The presumption arises under Section 139 of the Act regarding issue of cheque, is only in respect of holder of cheque that same has been issued for recovery of debt or other liability. There is no dispute about it. But initial burden is on the complainant to prove it. Accused can rebut such presumption by preponderance of probabilities either by cross-examination of PW.1 and also by leading his defence evidence. The complainant has stated that he has got other six cheques belonging to accused with him, that aspect assumes importance as to why he has kept still six cheques belonging to accused. Why the accused gave money through cheque on different dates to the wife of the complainant. All these circumstances, which are not explained creates doubt about genuiness of the contents of the complaint. PW.1 also admits that sister's son of accused was barrowing of loan amount and he has repaid the said amount. But PW.1 denies that he has misused the cheque given as security for the said loan, though the loan amount was already repaid. It is not that both the appellant and accused were very close friends or relatives or very much acquainted each other. Both are business men. Then how complainant could have advanced such huge amount without any interest to the person who is not acquainted with him is also one of the circumstance goes against the complainant's case. It is to be remembered that the burden to prove the consideration for the cheque lies on the accused. If not rebutted, the presumption is that the cheque was issued for consideration. It is for the accused to prove that the cheque was not issued towards a debt or liability. Accused has to lead credible evidence for rebuttal of this presumption. The presumption that the cheque was issued for valid consideration under Section 118 can be raised only when the proceedings are initiated after complying with the statutory requirement of service of notice on the drawer. The presumption under Section 139 of the Act is a presumption of law, it is not a presumption of fact. This presumption has to be raised by the Court in all the cases once the factum of dishonour of cheque is established, the onus of proof to rebut this presumption lies on the accused. The standard of such rebuttal evidence depends on the facts and circumstances of each of case. It is settled principles of law that the accused can rebut the presumption by two modes: First is by cross examining the complainant or his witnesses and elicit in their evidence such evidence to show that presumption in favour of PW.1-complainant is not tenable and his defence is probable; The second mode is accused entering the witness box and giving his own defence evidence so as to rebut the presumption ofcourse by preponderance of probabilities. The proof by accused is not beyond reasonable doubt - to rebut the evidence of complainant the accused entered the witness box and has given his own evidence as DW.1. The accused in his evidence states that he is not acquainted with the complainant nor he has given any cheque to complainant. But when his nephew Sagir Ahmed was looking after his transport business, at that time, he had made certain transactions and whenever he came to Gulbarga, the complainant used to visit Sagir Ahmed house. The said cheque was given to Sagir Ahmed by accused as security for the loan borrowed from the complainant. The said amount of ₹ 4.00 lakh was returned, but inspite of that the complainant did not return the cheque. The preponderance of probabilities is tilting in favour of the accused. The accused has also brought on record such facts, material and circumstances in the cross-examination of PW.1 which could be reasonably said as accused proved a probable defence. Therefore, the burden to rebut the evidence of complainant and presumption in favour of complainant had been discharged by the accused to prove that the cheque was not issued in discharge of any legally recoverable debt or other liability or there exist any debt or liability by the accused to pay the said amount mentioned in the cheque to the complainant. The trial Court is justified in acquitting the accused. The trial Court has raised proper points for consideration by considering the relevant provisions under the N.I.Act and also decisions stated thereon and also discussed oral and documentary evidence in detail and came to conclusion that the accused has rebutted presumption and there is no legally recoverable debt or liability in existence. It is settled principles of law, that while considering the judgment of acquittal, the First Appellate Court or High Court normally should not set aside the judgment of acquittal or interfere, unless the judgment of the trial Court is perverse and not based sound principles regarding appreciation of evidence in N.I.Act cases - the well reasoned finding of the trial Court need not be interfered - appeal dismissed - decided against appellant.
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2021 (2) TMI 961
Dishonor of Cheque - offence punishable under section 138 of Negotiable Instrument Act 1881 - the complainant-Bank issued demand notice on 30-07- 2007, the accused did not reply the aforesaid notice, nor repaid the amount - HELD THAT:- This complaint was filed as if the accused has borrowed the loan and in discharge of the said loan accused issued the Ex.P.1-cheque. Loan borrowed by the father of the accused had admittedly become time barred long back. Without mentioning the true and correct facts and suppressing the true facts this complaint was filed making a false allegation against the accused. Even the contents of the notice are false. Therefore no statutory presumption under N.I Act can be raised in favour of the complainant-Bank when a false contention is taken and true facts are suppressed before the Court. On perusal of the evidence of the complainant and defense evidence of accused it is evident that, the complainant has lodged this complaint by pleading false contention that the accused has borrowed the loan. The statutory legal notice was also issued stating that, accused has borrowed the loan and Ex.P.1-cheque issued in discharge of the said loan was dishonoured. The complainant has also contended in written complaint that, the accused issued the cheque in discharge of his liability of borrowing the loan from complainant-Bank. In fact the evidence of the Manager of the Bank /PW.1 is also to that effect which is admittedly not true. Now complainant Bank has totally given 'U' turn to the contents of the complaint and legal notice, in cross-examination of PW.1 stating that the accused being a Karta of the family has admitted the loan borrowed by his father and for discharge of that loan he has issued the cheque which is not their case at all. The party cannot be permitted to plead one case in complaint evidence and document and try to take shelter in cross-examination taking totally new stand which is not pleaded - The father of the accused died in the year 2004. If at all there was any such loan it has become time barred during his life time only. Defense evidence of accused totally falsify the case of the complainant. The slightest presumption even if any for issuance of cheque, stood clearly rebutted by accused defense evidence apart from rebutting the same though cross-examination of PW.1 and PW.2. The penal provision of Section 138 of the N.I.Act is applicable only to the cheques which are issued for the discharge in whole or in part, of any debt or other liability, which according to Explanation must be a legally enforceable debt or other liability. A cheque given in discharge of a time barred debt will not constitute an unconditional undertaking or promise in writing either expressly or impliedly so as to attract the criminal offence under section 138 of N.I Act. It is settled principle of law that this court being appellate court and as the Judgment under challenge is against the judgment of the acquittal by the trial court, unless there is perversity in the findings and judgment of the trial court, the Appellate court shall not interfere. The Judgment of the trial court clearly indicates that the learned trial court Judge has raised proper points for consideration and discussed the evidence in detail. The trial court has rightly held that mere issuance of cheque without corresponding legally recoverable debt is not an offence. The trial court has rightly come to conclusion that the complainant has not established his case and no presumption arise in his favour. The trial court rightly acquitted the accused - absolutely there is no ground to interfere with the judgment of acquittal passed by the trial court - Appeal dismissed - decided against appellant.
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2021 (2) TMI 960
Dishonor of Cheque - allegation is that having issued the Cheque towards discharge of his debt due to him, the petitioner has issued stop payment instructions to the banker to defraud him - Section 138 of the Negotiable Instruments Act - HELD THAT:- The respondent in his cross examination stated that apart from 3 acres of horticultural land and wet land, he owns 8 acres of dry land and he cultivates pineapple, ginger and groundnuts. The fact that of respondent owning the horticultural and agricultural lands and cultivation of the same was not disputed in his cross examination - Taking into consideration the aforesaid aspects, the contentions of the petitioner regarding the lending capacity of the respondent is untenable. Therefore, this Court does not find any perversity in the finding of the Courts below about lending capacity of the respondent. Reg. issuance of cheque and liability - HELD THAT:- The cheque was not dishonoured for any variations in the signature. DW.1 in his cross examination did not assert that the signature on Ex.P1 was forged one. He only said he cannot say if that is forged one or genuine one. If at all there was any doubt about his signature, the best option was to seek reference of Ex.P1 to the opinion of the hand writing expert which he did not resort to for the reasons best known to him - Once it was held that the cheque pertains to the account of the petitioner and that was issued by him, the presumptions under Section 118 of NI Act to the effect that cheque was issued for consideration and the presumption under Section 139 of the NI Act that the cheque was issued for discharge of liability arise. The petitioner failed to rebut the said presumption by adducing cogent, consistent and acceptable evidence. Therefore, the Courts below were justified in holding that the cheque Ex.P1 was issued by petitioner towards discharge of his liability. Acceptance of affidavit evidence of the petitioner - HELD THAT:- The original proceedings were of the year 2002. The petitioner having submitted his evidence by way of affidavit voluntarily, now in this revision petition, for the first time after more than a decade is trying to claim that in accepting his affidavit, the trial Court has committed jurisdictional error. The said contention runs contrary to the judgment of the Supreme Court in Srinath's case referred supra. For the aforesaid reasons this Court does not find any illegality, impropriety and incorrectness in the order of conviction. Sentence - HELD THAT:- The trial Court has sentenced the petitioner to imprisonment of one year but has not imposed any fine. The cheque amount was ₹ 4 lakhs. The compensation awarded is ₹ 4 lakhs. The offence under Section 138 of NI Act is punishable with imprisonment upto 2 years or with fine extending to twice the amount of the cheque or both. The respondent has fought this litigation for about 18 years. In adjudication of this matter the state resources are also diverted. Therefore, non imposition of any fine was not just and appropriate - Having regard to the age of the petitioner the sentence of imprisonment can be modified to sentence of fine with default sentence. Therefore, the petition is partly allowed. The impugned order of conviction for the offence under Section 138 of NI Act is hereby confirmed - The order of sentence is modified as follows: The petitioner is sentenced to fine of ₹ 8 lakhs. In default to pay fine, the petitioner shall undergo simple imprisonment of 30 days. Out of the fine amount sum of ₹ 7,90,000/- shall be paid to the respondent as compensation and ₹ 10,000/- shall be remitted to the State - Petition allowed in part.
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