TMI Tax Updates - e-Newsletter
February 26, 2020

Case Laws in this Newsletter:

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

Articles

1. PREPARATION FOR NEW EXPORT REMISSION SCHEME: REMISSION OF DUTIES & TAXES ON EXPORT PRODUCTS (RODTEP)

   By: Vivek Jalan

2. Do you know about form 26AS?

   By: sarojni singh

News

1. Tariff Notification No. 17/2020-CUSTOMS (N.T.)

2. Payroll Reporting in India – A Formal Employment Perspective

Notifications

Customs

1. 17/2020 - dated 25-2-2020 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

DGFT

2. 48/2015-2020 - dated 25-2-2020 - FTP

Amendment in Export Policy of Personal Protection Equipment/Masks

GST

3. G.S.R. 139(E) - dated 24-2-2020 - CGST

Corrigendum – Notification No. 07/2019-Central Tax, dated the 03rd February, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD2/DCAP/CIR/P/2020/27 - dated 24-2-2020

Review of Margin Framework for Cash and Derivatives segments (except for Commodity Derivatives segment)

Highlights / Catch Notes

GST

• High Court Dismisses Petition Over Seizure of Goods Linked to Alleged GST Evasion; No Show by Petitioner.

  Case-Laws - HC : Seizure of goods - release of seized goods - evasion of GST - petitioner has one declared godown and three undeclared godowns and stocks were also found at the undeclared godowns during seizure - Notices / summonses have been issued but no one appeared on behalf of the writ petitioner on the date fixed - Petition dismissed - HC
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• Applicant Must Prove Dismissal of Show Cause Notice in GST-MOV-10 After Confiscation u/s 130 of CGST Act.

  Case-Laws - HC : Confiscation of goods alongwith vehicle - levy of penalty u/s 130 of CGST Act - It is now for the applicant to make good his case that the show cause notice, issued in GST-MOV-10, deserves to be discharge - HC
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• Court Rules 7-Day Objection Period for Provisional Attachment u/r 159(5) CGST is Directory, Not Mandatory.

  Case-Laws - HC : Provisional release of bank accounts - Section 83 of the CGST Act - time limitation for filing objections - The respondents do not suffer any adverse consequence on account of delay, if any, in moving the objections, thus, the period of 7 days prescribed in Rule 159(5) of the CGST Rules for moving the objections to the provisional attachment is merely directory and not mandatory. - HC
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• High Court Rejects Petition to Reopen Portal for TRAN-1 Form Submission Due to Lack of Prior Attempt by Petitioner.

  Case-Laws - HC : Permission to submit TRAN-1 form electronically by opening electronic portal - the petitioner had infact never tried to fill TRAN-1 within the stipulated period or within the extended period and also was not able to take advantage of circular dated 03.04.2018 if at all if he had bonafidely tried to fill TRAN-1. - Petition rejected - HC
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• GST Law: Officers Must Allow Up to 3 Months for Fine Payment Before Confiscating Goods u/ss 129(1) & 130(7).

  Case-Laws - HC : Detention of goods - In view of the section 129(1) read with section 130(7), the concerned officer was required to give reasonable time not exceeding three months to pay fine in lieu of confiscation before disposal of the goods or conveyance as stipulated therein. - HC
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Income Tax

• Court Overturns Refund Order: Evidence Lacking for Seized Goods Ownership Claim by Second Respondent. Decision Requires Reassessment.

  Case-Laws - HC : Release of goods seized - the learned Single Judge failed to consider certain facts and directed the appellants to pass refund order in favour of the second respondent, which warrants interference of this Bench. It is not proved that all the seized properties were assessed in the name of the second respondent. - HC
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• High Court Urges CBDT to Excuse Delay in Tax Filing for Export Unit's Benefits u/s 10B, Citing Section 119(2)(b) Authority.

  Case-Laws - HC : Delay in filing returns u/s 139 - Denial of benefit / exemption u/s 10B - EOU unit - Power of CBDT to condone the delay u/s 119(2)(b) - not filing returns for the two years in time - Failure on the part of the petitioner to file such returns in time ought to have been condoned by the CBDT. - strict application of procedure should not come in the grant of legitimate export incentive to an assessee. - HC
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• No Penalty for Cash Loan Repayment Due to Urgent Medical Needs, Section 271E & 269T, Income Tax Act.

  Case-Laws - AT : Penalty u/s 271E - contravention of provisions of S. 269T - repaying of loan in Cash - The funds were needed for an urgent requirement made at the hospital towards the treatment of mother of the Partner - The assessee therefore, paid the amount through different family members, who are close relative of the partners of the firm - No penalty - AT
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• Section 23(5) Amendment for ALV of Unsold Units Effective April 1, 2018, Not Applicable to Current Case-Year.

  Case-Laws - AT : Income from house property - computing the ALV of unsold units - Amendment inserted in section 23(5) is applicable w.e.f. 01-04-2018 and is not applicable for the year under consideration - AT
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• Offshore supply income under composite contracts isn't taxable in India per Section 44BBB and Article 7(6) of the India-Japan DTAA.

  Case-Laws - AT : Income from offshore supplies - Income attribution - composite contracts - the income from offshore supplies is not liable to tax in India both u/s 44BBB as well as under the provisions of Article 7 r.w. para 6 of DTAA between India and Japan - AT
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• Notice for Reopening Assessments Must Be Issued to Merged Entities, Not Original Companies, u/s 170.

  Case-Laws - HC : Assessment after merger of company - scope of section 170 - No separate notice issued for the amalgamated company - for reopening of assessment proceedings in respect of EDIPL, now merged with EDPL, a notice can only be issued in the name of the merged entity. - HC
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• Reassessment Valid if Investor Identity Disclosure Insufficient u/s 147; Source Detail Required for Compliance.

  Case-Laws - HC : Validity of reopening of assessment - the mere disclosure of the identity of the investor (as being holding company of assessee) in the return of income and the audited financial statements of the assessee as the source of share application money received, is not sufficient to constitute “disclosure” under the proviso to section 147. - HC
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Customs

• Penalties under Customs Act Section 114 cannot be imposed without evidence of individuals' knowledge or involvement in fraud.

  Case-Laws - AT : Imposition of penalty u/s 114 of CA on Persons involved - Without bringing on record any evidence to show that these persons have acted beyond their normal business requirements or had the knowledge of the fraud being committed, they cannot be held liable for aiding or abetting the fraud. Thus the penalty imposed under Section 114(i) and 114(iii) is not maintainable - AT
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DGFT

• DGFT Amends Export Policy for Personal Protection Equipment to Balance Domestic Supply and International Distribution Needs.

  Notifications : Amendment in Export Policy of Personal Protection Equipment/Masks - Notification
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Corporate Law

• Supreme Court Limits Use of Company Law Provisions in Fraud and Mismanagement Cases to Prevent Unjust Asset Attachment.

  Case-Laws - SC : Fraud/misconduct/conspiracy - oppression and mismanagement - powers under the provisions cannot possibly be utilized in order that a person who may be the head of some other organization be roped in, and his or her assets be attached - SC
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IBC

• Corporate Debtor Must File Memorandum Under MSME Act Section 8 to Claim CIRP Benefits; Section 29A Restrictions Apply.

  Case-Laws - Tri : Status of corporate debtor claiming as MSME - CIRP proceedings - Persons not eligible to be Resolution Applicant u/s 29A - No doubt an option is given to micro or small enterprises or to the medium enterprises engaged in rendering of services. If the person who established the enterprises, is not exercised the option of filing the memorandum with the specified authority under sub-section (3) or (4) of section 8, then the person who is running the enterprises, is not entitled for the benefits under the MSME Act. - Tri
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SEBI

• SEBI Updates Margin Framework for Cash and Derivatives Segments to Boost Market Stability and Investor Protection.

  Circulars : Review of Margin Framework for Cash and Derivatives segments (except for Commodity Derivatives segment) - Circular
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Service Tax

• Liability of Service Tax on ISP Peering Arrangements Referred to Larger Bench for Further Examination and Resolution.

  Case-Laws - AT : Liability of service tax - peering arrangement with other internet service providers for carrying internet traffic on each others’ backbone - Matter referred to larger bench - AT
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• No Service Tax on Admin Charges in Vehicle Sale if Included in Sale Price, Confirms Court.

  Case-Laws - AT : Levy of service tax - administrative charges collected during sale of vehicle - Service Tax cannot be demanded on the same value which has been absorbed in the sale price of the vehicle. - AT
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Central Excise

• Supreme Court Decision Sets Relevant Date for Excise Duty Refund Limitation Period Amid Tribunal Proceedings.

  Case-Laws - AT : Refund of Central Excise Duty - Period of limitation - the matter was sub judice before the Tribunal and naturally, when the matter was lis pendens, no such application for refund could be filed - Hence the date of the judgment of the Hon. Supreme Court is to be considered for determining the relevant date - AT
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• Partnership and private company relationships aren't defined by partner-director ties; impacts related party transactions under Central Excise laws.

  Case-Laws - AT : Valuation - related party transaction - sister concerns - Only on the basis of natural relationship between the partner of a partnership firm and Director of private limited company, it cannot be a criteria to decide the relationship between a partnership firm and private limited company. - AT
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VAT

• High Court rules VAT refund in Indian Rupees; company to cover exchange rate losses on USD fluctuations.

  Case-Laws - HC : Refund of Amount unauthorisedly deducted as tax under VAT - Whether the amount should be in U.S. Dollars or in Rupees? - TDS due to wrong interpretation by ONGS - Refund will be in INR, however, ONGC will pay difference due to fluctuation in the Dollar vis-a-vis Indian Rupee - HC
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Case Laws:

• GST

• 2020 (2) TMI 1109
  Seizure of goods - release of seized goods - evasion of GST - petitioner has one declared godown and three undeclared godowns and stocks were also found at the undeclared godowns during seizure - not maintaining the Account Book / Stock Register - HELD THAT:- The facts, as revealed in the counter affidavit, clearly reflect upon the conduct of the writ petitioner post seizure of its goods. Till date, no TRAN-1 has been submitted by the writ petitioner. The enquiry preceding seizure has revealed that the petitioner has one declared godown and three undeclared godowns and stocks were also found at the undeclared godowns during seizure. As such, proceedings have been initiated under section 67 (2) of the Uttar Pradesh Goods and Services Tax Act, 2017, read with Rule 139 (1) of the Uttar Pradesh Goods and Services Tax Rules, 2017. It is noticed that consequent upon proceedings initiated by the concerned respondent authority, the writ petitioner never deposited any tax or penalty or bond or security, as required under section 67 (6) of the Uttar Pradesh Goods and Services Tax Act, 2017. Notices / summonses have been issued but no one appeared on behalf of the writ petitioner on the date fixed - So far as the rejoinder affidavit is concerned, the stand of the writ petitioner, as contained therein, is evasive and vague. Petition dismissed.

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• 2020 (2) TMI 1108
  Confiscation of goods alongwith vehicle - levy of penalty u/s 130 of CGST Act - principles of natural justice - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in GST-MOV-10, deserves to be discharge - application disposed off.

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• 2020 (2) TMI 1107
  Freezing of petitioner s bank account - HELD THAT:- List on 21.04.2020 - In the meantime, Mr. Jasmeet Singh Juneja, Director of the petitioner company is directed to appear before the Senior Intelligence Officer at DGGI Headquarters on 20.02.2020 i.e. Thursday at 11:00 A.M. to record his statement. We direct him to cooperate with the respondents in every way while recording the statement. Since he has expressed apprehension of him being ill-treated by the respondents, which is vehemently denied by the respondents, we permit the counsel of the petitioner to remain present during the interrogation of Mr. Juneja. The respondent shall supply the order of freezing of bank account of the petitioner to Mr. Juneja, when he appears before the respondents on 20.02.2020 i.e. Thursday at 11:00 A.M.

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• 2020 (2) TMI 1106
  Provisional release of bank accounts - Section 83 of the CGST Act - time limitation for filing objections - HELD THAT:- The period of 7 days prescribed in Rule 159(5) is a directory and not a mandatory period. Therefore, on account of delay on the part of the objector, if he prefers his objections beyond the period of 7 days, the objections cannot be rejected on the ground of limitation. No consequence is prescribed either in the Act or in the Rules to say that if the objections are not preferred within 7 days, they shall not be entertained. The decision in Sambhaji (2008 (11) TMI 393 - SUPREME COURT) is clearly attracted to the present case. Moreover, it is the objector who would suffer adverse consequence on account of delay on his part in raising the objections. The respondents do not suffer any adverse consequence on account of delay, if any, in moving the objections, thus, the period of 7 days prescribed in Rule 159(5) of the CGST Rules for moving the objections to the provisional attachment is merely directory and not mandatory. Objections raised by the petitioner, therefore, could not be rejected on that ground alone. The proceedings are remanded back to the concerned authority for passing a fresh order on the merits of the objections - petition allowed by way of remand.

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• 2020 (2) TMI 1105
  Permission to submit TRAN-1 form electronically by opening electronic portal - input tax credit under Rule 117 of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- The petitioner is a trader as defined under the provisions of the GST Act. Under Section 140(3) of the GST Act, the petitioner was entitled for availing input tax credit. That, for the purpose of availing the input tax credit, the petitioner was required to complete the formalities as envisaged under Rule 117 of the CGST Rules. Under the original rules, TRAN-1 was required to be filled by 31.09.2017. The said period was further extended till 31.11.2017 and again extended up till 27.12.2017 - There is no proof adduced by the petitioner of his having attempted to fill TRAN-1 during the said extended period up till 27.12.2017. As is discussed in the earlier paragraph, the Govt. of India itself vide their circular dated 03.04.2018 permitted filling up of TRAN-1 by the 31.04.2018, the said extended period of 31.04.2018 was however for only those who have in the past attempted but failed to fill up TRAN-1. There is no evidence made available by the petitioner of having tried to fill up TRAN-1, but was unsuccessful for availing the facilities so provided under circular dated 03.04.2018. What is also surprising is that the petitioner also has not mentioned anything in respect of having approached any of the competent authorities in the department raising his concern about his inability in filling up of TRAN-1. The relief sought for by the petitioner cannot be extended to those cases where the assessee defaults in not filling up of TRAN-1 even within the extended period up till 27.12.2017. The petitioner also failed to establish of having approached any of the officers in the department, nor is there any proof in his possession. There is also no document to show any correspondence made with any of the officers in the department in this regard. The writ benefit cannot be extended to such indolent persons who sleeps over their rights and duties without any plausible explanation and justification and now at the belated stage woke up from slumber and is trying to get a relief from the High Court without any bonafide ground - the petitioner had infact never tried to fill TRAN-1 within the stipulated period or within the extended period and also was not able to take advantage of circular dated 03.04.2018 if at all if he had bonafidely tried to fill TRAN-1. This court is of the opinion that no strong case is made out by the petitioner for issuance of any sort of writ to the respondents - Petition rejected.

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• 2020 (2) TMI 1104
  Reopening of portal for Filing of Form GST TRAN-1 - permission to petitioner to pay taxes on the regular electronic system also which is being maintained for use of the credit likely to be considered for the petitioner - HELD THAT:- The issue decided in the case of M/S ASIAD PAINTS LIMITED, VERTIV ENERGY PVT. LTD., M/S. WEIWO COMMUNICATION PVT. LTD. AND ORS. VERSUS UNION OF INDIA, GOODS AND SERVICE TAX NETWORK, THE COMMISSIONER OF COMMERCIAL TAXES (GST) , THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [2019 (12) TMI 464 - KARNATAKA HIGH COURT] where it was held that The request of the petitioners to extend the time prescribed under Rule 117 cannot be denied. The writ petitions are allowed directing the respondents to permit the petitioners to file/ revise the TRAN-1 either electronically or manually on or before 31.12.2019. Petition disposed off.

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• 2020 (2) TMI 1103
  Detention of goods - proceedings initiated based on the report obtained by respondent No.3 from CAMPCO Limited. Petitioners claim to be the owners and consignors of the goods detained by respondent No.3 - HELD THAT:- The records indicate that much earlier to the publication of the auction, learned Additional Government Advocate had entered appearance on behalf of respondents and the notice of auction was not brought to the notice of the Court, even though the respondents participated in the proceedings. That apart, there is nothing on record to show that an opportunity was given to the petitioners to get the seized goods released in terms of Section 129 (1) (a) of the Act. Respondents have also failed to comply with Section 130 (7) of the Act. In view of the said provisions, the concerned officer was required to give reasonable time not exceeding three months to pay fine in lieu of confiscation before disposal of the goods or conveyance as stipulated therein. The only order that could be passed is to permit the petitioners to pay the applicable tax and penalty equal to one hundred percent of the tax payable on such goods as per Section 129 of the Act and on such payment, sale proceeds of Rs. 75,33,620/- shall be returned to the petitioners - Petition disposed off.

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• Income Tax

• 2020 (2) TMI 1102
  Computing book profit u/s 115-J - assessee entitled to charge arrears of depreciation due to a change in the method of providing depreciation for earlier years to the profit and loss account of the current year - Correct interpretation of Section 115-J for determining the Book Profit , the appellant had option to adopt depreciation rates prescribed in the Income Tax Rules, 1962 in preference to the rates prescribed in Schedule XIV of the Companies Act, 1956 - HELD THAT:- Assessing officer while computing the income under Section 115-J has only the power of examining whether the books of account are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The assessing officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the assessing officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115-J. See APOLLO TYRES LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2002 (5) TMI 5 - SUPREME COURT] Question is answered in favour of the assessee. The matter is remanded back to the Assessing Officer to compute the income under Section 115J of the 1961 Act in accordance with law.

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• 2020 (2) TMI 1101
  Revision u/s 263 - information from the Investigation Wing about suspicious long term capital gain on shares, the case was selected for scrutiny - HELD THAT:- Section 263 of the Act gives a supervisory power to PCIT and the two requirements are that the order passed by the Assessing Officer is erroneous and is prejudicial to the interest of the revenue. Explanation 2 to Section 263 of the Act was added by Finance Act, 2015 w.e.f. 1.6.2015. In the present case, a cursory look at the assessment order is good enough to hold the same to be erroneous. There was a specific information provided to the Assessing Officer about suspicious long term capital gain. Without going by the length of the order, there is not even a whisper that an enquiry was held with regard to the long term capital gain what to say about recording of satisfaction. The contention of assessee that it was a case of change of opinion or case of inadequate enquiry is not well founded. There is no enquiry at all by the Assessing Officer, there is no question of change of opinion. The information which was with the Assessing Officer from the Investigation Wing was not examined and the transaction was not verified. There was material on record before the PCIT that the tax leviable was not imposed as the Assessing Officer had not applied his mind while allowing exemption of long term capital gain. It would be worth mentioning that the present case is squarely covered within the four corners of explanation 2 to Section 263 of the Act. Be that as it may, even otherwise for the reasons mentioned above, the order of the Assessing Officer is erroneous. - Decided against assessee.

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• 2020 (2) TMI 1100
  Reopening of assessment u/s 147 - Assessment not been passed within the period of limitation - HELD THAT:- Anchi Devi [ 2008 (3) TMI 39 - HIGH COURT PUNJAB AND HARYANA] is related to a situation where the assessment order had not been passed within the period of limitation under Section 143 (2) of the Act and that order attained finality with the dismissal of Revenue s Appeal by the ITAT. Thereafter, a fresh notice was issued under Section 148 of the Act for reopening of assessment. It was in this background that the Punjab Haryana High Court held that the proceedings could not be reopened since the original assessment had not been completed within the period of limitation and was time barred. In the present case, the notice under Section 148 had been issued to make assessment and not to reopen the assessment. There is no question of reopening of the assessment since the same had been quashed by the Tribunal on a purely technical ground. Metro Auto Corporation [ 2006 (7) TMI 139 - BOMBAY HIGH COURT] was a case where the notice under Section 143 (2) was not issued before the expiry of the period of limitation. In that situation, the issuance of the notice under Section 148 of the Act was held to be bad in law. In the present case, the assessment has been sought to be made under Section 148 within the period of limitation. The earlier assessment order was held to be non est, since the same was not issued in the name of merged entity. Revenue cannot be expected to be complacent and not act with diligence only because their appeal [ 2019 (9) TMI 1322 - DELHI HIGH COURT] is pending consideration before this Court against the order of the ITAT whereby the assessment order has been quashed on a technical ground. Revenue is expected to ensure that they initiate a proceeding, so that, in the eventuality of the aforesaid appeal of the Revenue being dismissed by this Court, they are not faced with a situation that initiation of fresh action under Section 148 is barred by limitation. We are inclined to consider the plea of Mr. Vohra that in view of the pendency of aforesaid appeal, the proceedings initiated under Section 148 of the Act should not result in passing of any enforcement of the fresh assessment order since there cannot be parallel proceedings undertaken with respect to the same assessment year. In order to consider the plea, we issue notice.

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• 2020 (2) TMI 1099
  Disallowance of interest u/s 36 (1) (iii) - assessee had obtained interest bearing loans which had in turn been advanced to sister concerns and other associates without charging interest - ITAT allowed the appeal of the assessee, rejecting the disallowance made by the AO - HELD THAT:- This Court in Commissioner of Income Tax v DD industries [ 2015 (3) TMI 895 - DELHI HIGH COURT] observed that where adequate funds were available during the assessment years and, since in the past the Revenue had accepted the assessee s plea in this regard and not brought the amounts to tax under Section 36 (1)(iii), the Revenue could not have taken a different view for three years in question, particularly, without any conclusion that, in fact, general reserves, surpluses and other funds were not available. Reference may also be made to the decision of this Court in Commissioner of Income Tax v Tin Box Co. [ 2002 (11) TMI 75 - DELHI HIGH COURT] wherein it was held that the finding of the Tribunal that the Department had not been able to controvert or disprove the fact that the assessee had substantial capital and interest-free funds available with it, not only in the preceding years but also in the years under consideration, which far exceeded the interest-free advances to the sister concern, is not without any evidence or material and therefore, disallowance of interest was deleted. Therefore, as already noted, in the present case, it is clear that there were sufficient interest free funds available with the assessee, allowing them to advance the loans in question. Thus, the Tribunal, in our view was correct in concluding that it could not be said that it was the interest-bearing loan obtained from Bank of Baroda and Andhra Bank which had been advanced as interest-free loan to M/s Gaursons India Ltd. No substantial question of law arises. We therefore find no infirmity in the impugned order passed by the Tribunal. No substantial question of law arises for our consideration

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• 2020 (2) TMI 1098
  Release of goods seized - whose custody the assets were seized - wife of the first respondent had retracted her earlier statement saying that all the seized articles belong to her and not to her husband and hence on an appeal filed by the first respondent, he was acquitted by this Court, which was also confirmed by the Hon ble Supreme Court - HELD THAT:- Even though, the Hon ble Supreme Court confirmed the acquittal of the first respondent, it has observed that the wife of the first respondent has admitted that she has amassed the wealth by selling cycle rims and leather products without any bill and out of money amassed by her, she had persuaded her husband to deposit the same in various banks. She has also admitted that the recovered seized assets belong to her. Therefore, whether she has been prosecuted for the above non-disclosure or not is not brought before this Court. I n fine, however, the learned Single Judge failed to consider the above and directed the appellants to pass refund order in favour of the second respondent, which warrants interference of this Bench. It is not proved that all the seized properties were assessed in the name of the second respondent. Therefore, the order passed by the Single Judge is set aside to that extent alone. Hence the second appellant is directed to verify as to whether the seized assets have been shown in the returns filed by the wife of the first respondent at any point of time. If it is so, the second appellant is directed to pass orders in accordance with law, after verifying the returns filed by the wife of the first respondent, if not, the appellants are directed to take action against the wife of the first respondent in accordance with law for not showing assets in her returns and not paying the income tax. Further the Department of Commercial Tax and the Department of Wealth Tax, are directed to take action against the wife of the first respondent for selling the products without any bill and amassing wealth.

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• 2020 (2) TMI 1097
  Reopening of assessment u/s 147 - objections against the reopening notice served - HELD THAT:- The petitioner has filed a return of income for the first time on 27.06.2019 in respect of assessment year 2012-13 after receipt of notice u/s 148. Immediately on receipt of the notice under Section 148, objections appeared to have been filed without seeking reasons. Reasons for re-assessment have been sought only on 16.12.2019 and furnished on the same date. Thus, in line with the procedure set out by the Supreme Court in GKN DRIVESHAFTS (INDIA) LTD. [ 2002 (11) TMI 7 - SUPREME COURT] , the petitioner is permitted to file his objections to the assumption of jurisdiction within a period of two weeks from today. A separate order on the objection will be passed by the respondent and duly communicated to the petitioner and thereafter, the matter taken up on merits, if at all. After hearing the petitioner, an order of re-assessment shall be passed by the respondent in accordance with law.

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• 2020 (2) TMI 1096
  Delay in filing returns u/s 139 - Denial of benefit / exemption u/s 10B - EOU unit - Power of CBDT to condone the delay u/s 119(2)(b) - not filing returns for the two years in time - HELD THAT:- To claim the benefit of Section 10B an assessee is required to file the returns by the due date prescribed u/s 139. In this case, the last date for filing the return fell on 30.9.2008 and 30.9.2009 respectively. However, the returns were filed by the petitioner belatedly on 7.1.2009 and 20.11.2009. By filing the returns belatedly, the petitioner did not gain anything. On the contrary, the petitioner risked losing the benefit of deduction under Section 10 B of the Income Tax Act, 1961. An assessing officer has no powers to condone the delay in filing returns under Section 139 (1) of the Income Tax Act, 1961 for allowing deduction under Section 10 B of the Income Tax Act, 1961 . Therefore, mandatory it was for the petitioner to have filed the returns in time to claim deduction under Section 10B of the Act. Only the 2nd respondent has been vested with the powers to grant relaxation, if strict application of any provisions of the Income Tax Act, 1961 results in denial of any legitimate benefit which may otherwise be available to an assessee. The claim for deduction under Section 10 B is dependent on the returns filed by the due date as per Section 139 (1) of the Income Tax Act, 1961. However, the failure on the part of the petitioner to claim deduction on account of the delay comes in the legitimate way of the petitioner claiming deduction. The failure to file the returns in time has to be construed liberally to allow the benefit, provided such applications are made within a reasonable time. In this case, the assessment orders have been passed for the respective assessment years on 28.12.2010 and on 26.12.2011. While passing the assessment order, the assessing officer could have extended the benefit to the petitioner but for the delay in filing returns in time. Legitimate export incentives that are genuinely available to an 100% Export Oriented Unit should not be denied if such unit is otherwise entitled to such relief on merits. Failure on the part of the petitioner to file such returns in time ought to have been condoned by the 2nd respondent. After all the procedures are meant only to discipline and regulate the conduct of assessts. However, strict application of procedure should not come in the grant of legitimate export incentive to an assessee. Allow the above writ petitions by directing the 5th respondent to complete the reassessment on merits by accepting the returns filed by the petitioner belatedly for the purpose of grant of deduction under Section 10 B of the Income Tax Act, 1961. In case, the petitioner is otherwise entitled to the benefit of the deduction under the aforesaid provision but for the delay in filing the returns, the second respondent is directed to allow the benefit and pass appropriate orders is in accordance with law.

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• 2020 (2) TMI 1095
  Deduction u/s 80P - whether the petitioner-Society registered under the 1997 Act is to be treated on par with Co-operative Society registered under the 1959 Act and whether the petitioner would be entitled for the benefit of Section 80P? - HELD THAT:- As in terms of the order in M/S. SWABHIMANI SOUHARDA CREDIT CO. OPERATIVE LTD [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] and connected writ petition, the present writ petition is disposed of. Annexure-A, assessment order is quashed. The respondents to pass fresh assessment order treating the petitioner as Co-operative Society, extending the benefit under Section 80P of the 1961 Act with all other exceptions

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• 2020 (2) TMI 1094
  Extension of stay on realization of outstanding demand - HELD THAT:- Assessee does have a prima facie case and balance of convenience is in its favour for extension of stay since there is no change in the facts and circumstances from the stay extended earlier till today and the delay in non-disposal of the appeal is not attributable to the assessee. Further, the Tribunal, in assessee s own case in the earlier year, has decided both the issues in favour of the assessee and one of the issues i.e., disallowance of supplementary rent stands decided in favour of the assessee by the decision of the Hon ble Delhi High Court in assessee s own case and the SLP filed by the Revenue has been dismissed by the Hon ble Supreme Court Further, if MAT credit as claimed by the assessee is given, then, there will be a refund due to the assessee. Considering the totality of the facts of the case we extend the stay of realization of outstanding demand for a further period of six months or till the disposal of the appeal whichever is earlier. Since the assessee does not intend to pursue as an intervenor in the matter before the larger Special Bench at Mumbai, the instant appeal is thus ripe for hearing. We, therefore, with the consent of both the sides, fix the appeal for hearing on 4th May, 2020 which was announced in the open court. It was further announced that no separate notice of hearing shall be sent to which both the parties agreed. The Stay Application filed by the assessee is accordingly allowed.

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• 2020 (2) TMI 1093
  Penalty u/s 271E - contravention of provisions of S. 269T - HELD THAT:- Provision of 269T and 269SS has been enacted in order to prevent the increase in black money and to stop tax evasion. The intention of the legislature was not to cover the bonafide and genuine transaction wherein the AO himself was satisfied and no tax evasion/use of the black money was involved. Also observe that a genuine transaction made in an emergency, does not attract penalty u/s 271E. It has been held that the amount paid by the assessee in cash to meet with his urgent need of money, was a reasonable cause in terms of Sec 273B. The funds were needed for an urgent requirement made at the hospital at Ahmedabad towards the treatment of mother. The assessee therefore, paid the amount through different family members, who are close relative of the partners of the firm Shri Sampatraj Lunawat and Shri Mahendra Lunawat to meet with urgent need of medical treatment expenditure in emergency and hence does not attract penalty. No justification for the penalty so imposed U/s 271E - Decided in favour of assessee.

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• 2020 (2) TMI 1092
  Unexplained gold jewellery - search proceedings - HELD THAT:- There is no dispute regarding the fact that jewellery to the extent 343.328 gms. represents the purchases made by the assessee from time to time which is duly supported by the purchase bills found during the search and seizure action. The said quantity of jewellery is duly recorded in the balance sheet/ books of account of the assessee and his family members. Once the AO has not disputed the purchases made by the assessee of the said quantity of jewellery then the same cannot be treated as unexplained jewellery of the assessee. AO has denied the benefit of the said quantity of jewellery on the ground that since the benefit of reasonable jewellery to the extent of 850 gms. as per CBDT Instruction No. 1916 dated 11-05-1994 is already granted, therefore, to that extent, no further benefit can be granted. It is pertinent to note that CBDT Instruction No. 1916 dated 11-05-1994 has explained in case of gold jewellery found in the possession of the assessee during the course of search and seizure action and the assessee is not able to explain the same then the quantity prescribed under the said CBDT Instruction No. 1916 in respect of married female member, unmarried female member and male member of the assessee would be treated as a reasonable holding of jewellery on account of acquisition of that much jewellery on various occasions of marriages, other social customary occasions as prevailing in the society. Reasonable possession of the jewellery as per the customs prevailing in the society is the basis for allowing the benefit of certain quantity of jewellery explained by the CBDT Instruction No. 1916 dated 11-05-1994 which means that the assessee need not to explain the source of jewellery found in his possession to the extent of specified quantity treated as reasonable possession by family members of the assessee. The said CBDT Instruction No. 1916 allowing the specific quantity as reasonable and need not to be explained, does not include the jewellery which is otherwise explained by proof of documents of acquisition as well as declared/ recorded in the books of account of the assessee. Quantity of jewellery which is otherwise explained by the assessee by producing the purchase bills as well as recorded in the books of account of the assessee and the AO had not disputed the said explanation then the quantity which is explained otherwise by producing the purchase bills and books of account would not be treated as part of the quantity of reasonable possession as prescribed under the said CBDT Instruction No. 1916 dated 11-05-1994. Therefore, the benefit of CBDT Instruction No. 1916 dated 11-05-1994 will not take away the benefit of the explained jewellery acquired by the assessee. Accordingly, quantity of jewellery to the extent of 343.328 gms. has to be allowed separately as explained jewellery and no addition can be made to that extent. Valuation of gold jewellery - AO has valued the entire jewellery by applying the prevailing rate of 2700/- per gram and by ignoring the fact of actual cost of acquisition to the extent of 343.328 gms. at Rs. 4,57,404/- as reflected in the purchase bills as well as in the books of account of the assessee. No error illegality to the extent of value of said jewellery accepted by the CIT(A). Hence, the addition sustained by the CIT(A) on account of unexplained jewellery is deleted. 50% of the addition on account of silver items sustained by the CIT(A) - we find that silver items of Rs. 1,33,650/- were found at the time of search out of which the CIT(A) has considered 50% of the same as reasonable holding of silver items by the assessee, considering the status and standing of the assessee family. In the absence of any other material or facts brought before us, we do not find any error or illegality in the order of the ld. CIT(A) by considering 50% of silver items as reasonable and to the extent the order of the CIT(A) is upheld. - Appeal of the assessee is partly allowed.

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• 2020 (2) TMI 1091
  Addition u/s 68 - advances received by the assessee for booking of commercial space - HELD THAT:- Revenue has not brought any tangible material on record to support the addition made u/s 68 of the Act regarding the advances received by the assessee for booking of commercial space, we hereby decline to interfere with the order of the ld. CIT (A). - Decided against revenue.

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• 2020 (2) TMI 1090
  Unexplained cash payments - assessee could not prove the source of cash payments made to the various farmers - HELD THAT:- Addition prima facie was unsustainable in the wake of various material placed on record before the Ld. CIT (A) and also before the AO that the amount of Rs. 90 lac was withdrawn from the bank account and thereafter, it was immediately paid to the seller and this was proved by way of sale deed, copy of bank statement, copy of cash book and ledger account. Even, the Ld. CIT (A) has finally not made any adverse inference, and in this manner such an addition stood deleted. Addition u/s 68 on account of share application money received from the Director of the assessee company - HELD THAT:- All the amounts have come through clearance. Ld. CIT(A) did not even asked to prove the source of such credit amount in his bank account if the creditor/share applicant who has furnished his bank statement and if the creditor is not confronted about the source, then assessee cannot be expected to prove the source of the source or explain the credit entries of the creditor, because same can only be proved by the creditor himself which in this case both Assessing Officer and Ld. CIT(A) have failed to do so and has simply gone by the fact that the income returned is less. The other material fact of availability of fund has not been inquired into, when Director of the assessee company was duly responding and complying with the notices and therefore, merely on such presumption, the addition cannot be made, because in so far as assessee is concerned it has not only established the identity and genuineness of the transaction but also the creditworthiness by providing the entire bank statement and the source wherefrom the amount have been received. It is not a case of any information or material coming on record that the share application money has been received through any accommodation entry or by an entry provider or by any conduit manner. Therefore, such an addition of Rs. 1.50 crore cannot be sustained and same is directed to be deleted - Appeal of the assessee is allowed.

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• 2020 (2) TMI 1089
  Income from house property - computing the ALV of unsold units - AO treated the Annual Letting Value (ALV) of unsold unit and on the basis of ALV so computed and granting 30% deduction under section 24, brought the income of such units under the head Income from house property - HELD THAT:- Coming to the facts of the present case, when the fats are not at variance as the assessee has shown the unsold unit as opening stock. Therefore, respectfully following the decisions of coordinate bench the and the decisions of Gujarat High Court in Neha Builders [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] we are of the view that the AO was not justified in bringing the unsold flat to bring it under income from house property. The submission of the ld DR that the legislature has already brought the amendment in section 23(5) to bring the unsold unit after a vacancy period of one year is not acceptable to us as the said amendment was brought by Finance Act, 2017 and is applicable from 01.04.2018, thus, the said amendment is not applicable for the year under consideration. Amendment inserted in section 23(5) is applicable w.e.f. 01-04-2018 and is not applicable for the year under consideration and in view of the aforesaid discussion and on the basis of decision of co-ordinate bench of this Tribunal, we are of the view that the AO was no justified in computing the ALV of unsold units and bringing the same under the head Income from house property . In the result, ground 1 of the appeal is allowed.

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• 2020 (2) TMI 1088
  Undisclosed income - Addition u/s 68 - action of AO in charging tax at special rate u/s. 115BBE whereas the same should have been charged at the normal rates - Penny stock company - order/warning or penalty visited upon bogus company by SEBI/Regulatory Authority Specific company in the specific period has been held to be a bogus/sham company by the appropriate Regulatory Authority or not? - There is no reference whatsoever to the fact that SEBI, the concerned Regulatory Authority has held the said company to be a bogus/sham company for its activities during the period. It is a fact that issues of irregular prices/malpractices and bogus companies etc. are to be looked into by SEBI who is authorized to issue warnings, direct orders for delisting etc. and penalize the errant companies by resorting to take action in terms of the powers vested on it. I find no reference has been made to any order of SEBI or any other Regulatory Authority either delisting or threatening delisting/warning etc. issued in the name of M/s. UNNO Industries Ltd. To my understanding, this power vested in the Regulatory Authority cannot be usurped by any other Authority. The power to hold, penalize and act against a company in the event the company is a sham company floated against the laws of the land vests with the Ministry of Corporate Affairs, SEBI and SFIO who can recommend the removal of its name from the Registrar of Companies. For want of any relevant discussion thereon, the order at best proceeds only on presumptions and suspicions. It is seen that this aspect has not been considered in the case of Shri Abhimanyu Soin [ 2018 (4) TMI 1620 - ITAT CHANDIGARH] relied upon by Id. CIT-DR. Accordingly, adjournment application of the Id. AR was rejected and it was deemed appropriate to restore the file back to the CIT(A) with the direction to bring out necessary facts as to whether the specific company in the specific period has been held to be a bogus/sham company by the appropriate Regulatory Authority or not. I am of the view that the facts, evidences and deficiencies noticed are sufficient to justify re-assessment or re-opening in cases where other statutory formalities in regard to re-opening etc. have been fulfilled as suspicions of stock manipulation etc. are damaging facts and are sufficient in certain circumstances to arouse suspicion and justify a greater scrutiny. However, ultimately whether a specific company is a bogus company or a sham company, is an order which has to be passed by the Appropriate Regulatory Authority. No such order has been referred to by the parties. The impugned order is set aside and the matter is restored back to the file of the CIT(A) with the direction to pass a speaking order in accordance with law

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• 2020 (2) TMI 1064
  Computing income u/s 115J - Special provisions relating to certain companies - whether while computing income under Section 115J of the 1961 Act, the depreciation is to be allowed only as the provisions of the 1956 Act and not as per the Income Tax Rules, 1962 ? - HELD THAT:- The Supreme Court in Malayala Manorama Co. Ltd. v. Commissioner of Income-Tax [ 2008 (4) TMI 20 - SUPREME COURT] while dealing with the question: Whether in respect of a company consistently charging depreciation in its books of account at the rates prescribed in the Income-tax Rules, the Income-tax Officer has jurisdiction under section 115J of the Income-tax Act, 1961, to rework net profits by substituting the rates prescribed in Schedule XIV to the Companies Act, 1956? allowed the appeal of the assessee and set aside the view taken by Kerala High Court. Learned counsel for the revenue was not able to dispute the above discussed legal position The judgment of the Supreme Court in Apollo Tyres Ltd. s case [ 2002 (5) TMI 5 - SUPREME COURT] was found to be not applicable in the facts of that case. The issue related to profit and loss not being determined in accordance with Part II and Part III of Schedule VI to the 1956 Act was the bone of contention whereas in the present case, the controversy is as to whether depreciation can be claimed as per the Rules or has to be restricted as per Schedule VI to the 1956 Act. In view of the decision of this Court in Sona Woollen Mills (P) Ltd. s case [ 2006 (10) TMI 99 - PUNJAB AND HARYANA HIGH COURT] the question is answered in favour of the assessee. The matter is remanded back to the Assessing Officer to compute the income under Section 115J of the 1961 Act in accordance with law.

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• 2020 (2) TMI 1061
  Validity of reopening of assessment - funds received by the assessee from a foreign entity - information has been received from DIT (Intell. Cr. Inv.) - valid reasons to believe - Assessment after merger of company - scope of section 170 - No separate notice issued for the amalgamated company - HELD THAT:- In the present case, new facts, material or information have come to the knowledge of the Assessing Officer by way of the report of DIT (Intelligence and Criminal Investigation) with regards to the doubtful source of the investments made into the petitioner companies. At the time of original assessment, the AO was not aware of or in possession of information which could have indicated that the introduction of share capital from outside India has been routed through a doubtful entity. DIT (I CI) Delhi had also made detailed enquiries regarding origin of funds which were used for introduction of share capital and premium. This information was received much later after the original assessment had been completed, and is germane and relevant to the subjective opinion formed by the AO in regard to escapement of income. In the present case, the AO s reasons to believe are fortified with the tangible material in the form of specific information received by the Investigation Wing. Thus, the AO is downright justified in issuing the notice for reassessment. It is revealed from the said material available on record that a reasonable belief was formed by the Assessing Officer that income of the petitioner has escaped assessment and therefore, once the reasonable belief is articulated and expressed by the AO on the basis of cogent tangible material, he was not expected to arrive at a final conclusion thereon at the stage of issuance of notice. Even if scrutiny assessment has been undertaken in the first place, if significant new material is found in the form of information, the assessing officer can form a belief that the income of the petitioner has escaped assessment, and reopen assessment. It is also trite law that for cases relating to inter alia, share application money, three vital aspects have to be considered by the Assessing Officer, namely (i) the identity of the investors; (ii) the credit worthiness of the investors; and (iii) the genuineness of the transaction. Ex-facie, the order of assessment which was passed by the Assessing Officer under Section 143(3), does not indicate that all these aspects were gone into. Today, there is serious doubt relating to credit-worthiness of the share applicant/investor, in view of the investigation report noted above and clarity can only come in by way of reassessment. In the present case, however, the mere disclosure of the identity of the investor (as being holding company of assessee) in the return of income and the audited financial statements of the assessee as the source of share application money received, is not sufficient to constitute disclosure under the proviso to section 147. Therefore, the assessee cannot be said to have made true and complete disclosure. Hence, the notice for reassessment is justified. In the present case, the return of income merely lists Gold Singapore as the holding company and the Notes to the audited financial statement merely mention that securities application money has been received from the Holding Company, being Gold Singapore. The genuineness of this transaction as also the creditworthiness of the investor are doubtful in the present case and, therefore, mere mention of the said transaction does not amount to full and true disclosure. Therefore, this amounts to the fulfilment of the second condition, that is, failure to disclose fully and truly all material facts, relevant for his assessment in that assessment year. Requirement of sanction u/s 151 - Held that:- in the present case, approval/sanction has been obtained from both, the Addl. Commissioner of Income Tax as well as Principal Commissioner of Income Tax, which is the appropriate authority for issuance of such sanction Assessment after merger of company - scope of section 170 - No separate notice issued for the amalgamated company - Held that:- On the date of the reassessment notice, therefore, EDIPL and EDPL existed as a single common entity, for the relevant AY 2012-2013, i.e. beginning on 01.04.2012, which is the date of the amalgamation. Petitioner contends that the common notice for reassessment issued in the name of EDPL is bad in law as separate notices are required to be issued in the name of EDPL in its own capacity and in the name of EDPL, as successor-in-interest of EDIPL separately since during the relevant time, i.e., AY 2012-2013, they existed as separate entities. There is no dispute that in the present case, the amalgamating company does not exist on the date of issuance of notice and accordingly, the assessment had to be made in the name of amalgamated company i.e. the petitioner. We cannot construe Section 170 (2) of the Act in the manner, the petitioner has urged. The aforesaid provision nowhere requires that two separate notices and separate assessment order are to be passed. On the contrary, the petitioner as a successor would also be liable for the income of the previous year in which the succession took place upto the date of the succession. We are therefore unable to understand as to what purpose would be served by two separate assessment orders. Pertinently, as of now, we are only concerned with the requirement of issue of two separate notices under Section 147/148 and we cannot find any such requirements emanating from Section 170 (2) of the Act. In the present case also, on the date of issue of reassessment notice, i.e. 31.03.2019, EDIPL had ceased to exist as a separate entity (w.e.f. 01.04.2012). Therefore, for reopening of assessment proceedings in respect of EDIPL, now merged with EDPL, a notice can only be issued in the name of the merged entity. There is no requirement to issue two separate notices in the name of amalgamated company (i) as successor-in-interest of the amalgamating company and (ii) in its individual capacity, as the amalgamated company (EDPL) has taken over the liabilities of the amalgamating company (EDIPL) and the notice mentions the liabilities of EDIPL as it accrued pre-amalgamation in its individual capacity. Notices for reopening of assessment proceedings under section 148, are valid and the Assessing Officer has sufficiently showcased that there are reasons to believe that the income of the assessee(s) may have escaped assessment, with tangible material on record. - Decided against assessee.

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• 2020 (2) TMI 1053
  Income from offshore supplies - Income attribution - composite contracts - Offshore supply qua PE - amount paid or payable to the assessee whether in or out of India irrespective of whether towards offshore supply or towards onshore services become income u/s 5 and 9 of the Act by fiction created u/s u/s 44BBB - order of the CIT(A) holding the assessee a Dependent Agent Permanent Establishment - DTAA between India and Japan - HELD THAT:- A perusal of the decision of the Hon ble High Court in LG Cables [ 2010 (12) TMI 948 - DELHI HIGH COURT] shows that the Hon ble High Court has dealt with each of the issues raised by the AO in the present case. The Hon ble High Court has also referred to the decision of the apex court in the case of Ishikawajima Harmia Heavy Industries Co. Ltd. Vs. Director of Income-tax [ 2007 (1) TMI 91 - SUPREME COURT] as held that the existence of PE would not constitute sufficient business connection. It has further been held that there exist a difference between the existence of a business connection and the income accruing or arising out of such business connection. The Apex Court has further held that para 6 of the protocol to the DTAA is not applicable because for the profits to be attributable directly or indirectly, the PE must be involved in the activity giving rise to the profits. In view of the above discussion, we are of the considered opinion that the ld.CIT(A) is correct in holding that the income from offshore supplies is not liable to tax in India both u/s 44BBB as well as under the provisions of Article 7 r.w. para 6 of DTAA between India and Japan. Accordingly, grounds No.1 and 2 raised by the Revenue are dismissed. Liaison offices - liaison offices do not constitute PE liable to tax in India. Since the facts and the issue involved are same in in assessee s own case in the immediately preceding assessment year 2005-06 we hold that the Liaison offices of the assessee do not constitute PE liable to tax in India. No income is liable to be attributed in India even if Mitsui Co. Ltd., constituted a DAPE [ Dependent Agent Permanent Establishment ] of the assessee in India Determination of income from Teesta and Purulia projects on cash basis instead of mercantile basis - HELD THAT:- AO applied section 44BBB in respect of onshore supplies and onshore services in computing the income on the basis of amount accrued. We find the ld.CIT(A) at para 5.3 of the order has discussed the issue and held that as per the provisions of section 44BBB, it is a presumptive module. The relevant observation of the CIT(A) is at para 5.3 of his order. The ld. DR could not controvert the findings given by the ld.CIT(A). In our opinion, the ld.CIT(A) was fully justified in holding that while computing the presumptive income books of account are not required to be maintained. Therefore, what is received by the assessee during the year a fixed percentage of such receipt is deemed to be the income. In absence of any distinguishable features brought before us by the ld. DR in the findings given by the ld.CIT(A), we do not find any infirmity in the same. Accordingly, the same is upheld and the ground raised by the Revenue is dismissed.

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• Customs

• 2020 (2) TMI 1087
  Demand of Customs duty - wastage/brokerage available within the factory premises - the wastage neither exported nor removed from the bounded warehouse - Imposition of Customs Duty - breach of Policy Sion Norms by the appellant/assessee - HELD THAT:- The two main grounds urged by the appellants were not even adverted to, much less, considered by the Tribunal, it is only appropriate that the impugned judgment and orders made by the Tribunal are set aside and the appellant s appeals are restored before the Tribunal for fresh disposal on their own merits and in accordance with law. On this occasion, however, the Tribunal will have to address these two main grounds as also consider the appellant s contention based upon the Ministry s decision dated 23/9/2008 and 26/11/2008. We order accordingly. We, however, make it clear that we have not examined the merits of the rival contentions and, therefore, the Tribunal to examine such rival contentions on their own merits and in accordance with law in pursuance with this remand - The substantial questions of law are disposed of in the aforesaid terms, without we answering the same ourselves - These appeals are accordingly, disposed off.

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• 2020 (2) TMI 1086
  Demand of Additional duty of Customs (High Speed Diesel Oil) - section 116 of the Finance Act, 1999 with effect from 1.3.1999 - HELD THAT:- The issue is squarely covered by the decision of tribunal in case of SJLT. TEXTILES (P) LTD. VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2014 (1) TMI 1523 - CESTAT BANGALORE] wherein it has been held that notification no. 43/2002 does not grant exemption from levy under section 116 of the Finance Act, 1999. Appeal dismissed.

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• 2020 (2) TMI 1085
  Refund of SAD - refund rejected on the ground that it was difficult for correlating the imported goods with that of the sold goods; that the respondent being a trader, there was possibility of one grade of the imported material moving faster than the other grade; that it was not possible from the description mentioned in the sales invoice to find out which grade of the imported material was exhausted or left unsold; etc. - principles of natural justice. HELD THAT:- Strangely, the First Appellate Authority having observed that a personal hearing was offered on 14.03.2013 before his predecessor, still proceeded to decide the case on merit, based on the available records, without providing an opportunity to the assessee on account of change, in violation of the principles of natural justice. The Adjudicating Authority has given a categorical finding on the payment of Sales Tax/VAT as also the correlation of VAT/Sales Tax with goods sold in the Order-in-Original which is duly supported by the certificate of a qualified Chartered Accountant, which fact has not at all been disputed by the Revenue which in effect proves that the Adjudicating Authority had no such difficulties insofar as correlations, etc., are concerned. The above findings in the Order-in-Original is based on the verification of relevant documents like the invoices, Chartered Accountant s certificate, etc. There are no strength in the First Appellate Authority s rejection of the refund for want of correlation, which exercise apparently has already been carried out to the satisfaction of the Adjudicating Authority - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1084
  Condonation of delay of 587 days in filing the appeal - requirement to file appeal within 60 days from the date of communication of the order, and 30 days thereafter explaining the reasons for the delay in filing the appeal - Section 128 of Customs Act, 1962 - HELD THAT:- Undisputedly the appeal was filed before the learned Commissioner (Appeals) with the delay of 587 days from the date of communication of the order. There are force in the contention of the learned A.R. for the Revenue that the Commissioner (Appeals) is vested with the power to condone the delay upto a maximum period of 30 days in addition to the statutory limit of 60 days for filing an appeal. Therefore, the Commissioner (Appeals) was justified in rejecting the appeal as not maintainable. There are no merits in the appeal - appeal dismissed - decided against appellant.

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• 2020 (2) TMI 1083
  Imposition of penalty u/s 114 of CA - Involvement of appellants / persons in the claiming higher Duty Drawback by the exporter - Valuation of export goods - Mens 100% Cotton Knitted T Shirts - rejection of declared value - duty drawback - Section 76(1)(b) of the Customs Act, 1962. HELD THAT:- It is quite evident that neither in Show Cause Notice nor adjudication a finding has been recorded that these person were in knowledge of the export fraud being committed by the other co-noticees. CHA has admitted that it was responsible for undertaking the work of custom assessment and physical examination in docks. These are the functions that are to be attended by the CHA in normal course of his business. Similar M/s Panorama Express Agencies was in business of freight forwarding and cargo movement for his client. Nothing has been brought on record by which it can be shown that they had the knowledge of fraud being committed by the exporters by mis-declaring the value - Without bringing on record any evidence to show that these persons have acted beyond their normal business requirements or had the knowledge of the fraud being committed, they cannot be held liable for aiding or abetting the fraud. Thus the penalty imposed under Section 114(i) and 114(iii) is not maintainable. Similar issue decided in the case of FREIGHTWINGS AND TRAVELS LTD, DASHRATHLAL BHAGWANDAS GUPTA VERSUS COMMISSIONER OF CUSTOMS (EXPORT) ACC, MUMBAI [ 2017 (4) TMI 259 - CESTAT MUMBAI ] where it was held that Mere filing of bills or presentation of goods that were found to be liable to confiscation does not constitute act or omission referred to in section 114 because these are procedural requirements. None of the statements establish that the appellants were aware or participated in the procurement, packing or transportation of the goods. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1082
  Rectification of mistake - error apparent on the face of record - release of goods - levy of demurrage charges - HELD THAT:- There is no error apparent in the order passed by the Tribunal dated 27-3-2019 whereby the Tribunal after considering the submissions of both the parties and after examining the regulations of DGCA and DGFT, has directed the Customs authorities to release the goods on payment of appropriate customs duty. The Customs Department did not file any appeal against the said order of the Tribunal but at the same time did not comply with the directions to release of the impugned goods. When the importer filed an application praying for enforcement of the order and notice sent to the Department, then the Department moved an application for rectification of mistake after the expiry of about 3 months from the date of receipt of the misc. order which does not appear to be bona fide. Since the order passed by the Tribunal, dated 27-3-2019 has not been appealed against and has not been stayed, there is no justification in not giving effect to the order passed by the Tribunal. In spite of the fact that Bangalore has so many specialized agencies/manufacturers in the field of aviation, no efforts seem to have been made by the Customs to further their case and to aver that the observation by this Bench were a mistake on the record. On going through the DGCA notifications, this Bench had reasons to believe that by the sheer size and weight, the impugned goods (being less than 250 gms) are beyond the purview of the clarification issued by the DGCA/DGFT policy. In addition, the appellant has successfully demonstrated that assuming, not accepting the Department s contention on the impugned goods is correct, the restrictions of DGCA placed are apparently on the use of impugned goods by the prospective users and not by the importer under any circumstances. There is no merit in the ROM application filed by the Department - ROM application dismissed.

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• Corporate Laws

• 2020 (2) TMI 1081
  Fraud/misconduct/conspiracy - oppression and mismanagement - injunction from disposing movable and immovable properties/assets which belong to them and whose assets were frozen - HELD THAT:- Under Section 241(2), the Central Government, if it is of the opinion that the affairs of the Company are being conducted in a manner prejudicial to public interest, may apply itself to the Tribunal for orders under this Chapter, which is headed prevention of oppression and mismanagement . Apart from the vast powers that are given to the Tribunal under Section 242, powers under Section 337 and 339 are also given in aid of this power, which will apply mutatis mutandis - Section 337 refers to penalty for frauds by an officer of the company in which mis-management has taken place. Likewise, Section 339 refers to any business of the company which has been carried on with intent to defraud creditors of that company. Obviously, the persons referred to in Section 339(1) as persons who are other than the parties to the carrying on of the business in the manner aforesaid which again refers to the business of the company which is being mismanaged and not to the business of another company or other persons. This being the case, it is clear that powers under these sections cannot possibly be utilized in order that a person who may be the head of some other organization be roped in, and his or her assets be attached - impugned order set aside - appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1080
  Oppression and mismanagement - transfer of shares - section 111A of the erstwhile Companies Act, 1956 - HELD THAT:- Though it was argued that the petitioner had become a deemed public limited company, and therefore it was not open to grant of relief under Section 111 of the Companies Act, 1956 and only petition under Section 111A of the Companies Act, 1956 ought to have been filed, it is evident that as per sub clause (14) to Section 111 of the Companies Act, 1956, company means a private company and includes a private company which had become a public company by virtue of Section 43 A of the said Act. Therefore, the company petition filed by the 1st respondent before the Company Law Board was proper - The erstwhile management of the 2nd respondent company who were the shareholders of the 2nd respondent company had decided to offload the entire share in favour of the appellant and his family which was recorded in a Board Meeting dated 20.4.1992 of the 2nd respondent company under the chairmanship of the 3rd respondent herein. From a reading of the records of the case it is evident that though the erstwhile Board of Directors of the 2nd respondent company had decided to offload the entire share in the 2nd respondent company in favour of the appellant and his family and that the 3rd respondent was authorised to do all that was necessary to implement the decision taken by the Board of Directors on 20.4.1992, the 1st respondent had failed to cooperate in this regard - It is evident when the 3rd respondent approached with the proposal to offload the shares in favour of the appellant and his family to the 1st respondent when the company was still occupying the 1st respondent s premises and therefore the 1st respondent did not wish to part with the 500 shares at that time. Thus, he has exercised the rights over the shares. He has also indicated that he was willing to transfer the shares to the appellant if the 3rd respondent agreed to pay the consideration agreed between them. Under Section 27 of the Sale of Goods Act, 1930 where any goods are sold by a person who is not owner of the goods and who sells them without authority or without the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods by his conduct can precluded from denying the sellers authority to sell - there is no dispute that the 1st respondent was in Board of the 2nd respondent Company which decided to sell the shares to the appellant and his family members pursuant to the decision taken by the erstwhile Board of directors of the 1st respondent company on 20.4.1992. The private dispute between the 1st and the 3rd respondent regarding the amount to be paid inter se has remained unsettled. Since the 3rd respondent failed to pay the amount, the 1strespondent has refused to part with 500 shares. Therefore, the transfer of shares to the appellant with the help of duplicate shares cannot be sustained. The 3rd respondent could not transfer 500 shares of the 1st respondent to Shri Girish Chimanlal Parikh. Therefore, the 1st respondent was justified in filing the said company petition before the Company Law Board by the 1st Respondent - there are no reasons to interfere with the impugned order of the Company Law Board. Further, the issue of duplicate shares also accompanied a letter of indemnity from the 3rd respondent to indemnify the 2nd respondent company on account of any adverse orders/consequences arising out of issue of duplicate shares. Therefore, it is for the appellant and the 2nd respondent to work out their remedy against the 3rd respondent. Appeal dismissed.

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• 2020 (2) TMI 1079
  Auction - Recall of the confirmation of sale of the property - reopening of the sale - rights of the Appellant arising out of the acceptance of its bid for the purchase of the property - HELD THAT:- The Company Court was not justified in passing the impugned order dated 25.07.2019, whereby the bid of Rs. 23 crores of prospective buyer (Respondent No.3) was accepted, thereby setting aside the earlier order dated 06.09.2018, accepting the bid of the Appellant. The Company Court failed to take into consideration that vide the aforesaid order dated 06.09.2018, the OL was directed to hand over the possession of the property once the entire bid amount was paid by the Appellant. On the date of passing of the impugned order dated 25.07.2019, the entire amount stood deposited and the transaction stood concluded. No doubt, the bid of Respondent No.3 would result in realizing an amount of Rs. 1.16 crores (approx.) more for the property in question and that would enure to the benefit of the creditors of the company. At the same time, one cannot lose sight of the fact that the appellant would be entitled to refund of the amount deposited with interest accrued thereon. Thus, the OL would lose the interest on the amount deposited by the Appellant upto 09.04.2019. Moreover, financial gain that may result, cannot be the sole criteria for deviating from the sale process. There are nothing improper in the conduct of the Appellant. Much has been said about the fact that after having been unsuccessful in the first round, the Appellant had by its conduct waived its objection to the re-bidding of the property. There are no waiver on the part of the Appellant. In the appeal proceedings, the Court found the action to be premature in as much, as, it was observed that the order impugned in the first appeal had only called upon Respondent No.3 to make a bid and therefore the matter had not attained finality. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2020 (2) TMI 1078
  Maintainability of petition - initiation of CIRP - Status of Financial Debt - application dismissed taking into consideration the nature of transaction held that it is a pure and simple advancement of loan denuded of any element of time value for money - HELD THAT:- From the pleadings made by the parties, it is found that the amount allegedly stated to be the debt is: a) Was not borrowed against the payment of interest. b) It is not the amount accepted/ raised under any credit facility. c) The amount has not been raised pursuant to any Note Purchase Facility or issue of Bonds, Debentures, loan stock etc. d) The amount does not arise of any liability in respect of hire purchase contract, or lease or any other instrument to suggest that the Appellant is deemed as finance or capital lease. e) The amount has not been raised under any other transaction including any forward sale or purchase agreement having the commercial effect of borrowing. f) It is not the amount of any derivatives transaction entered into. g) The amount is not against any counter indemnity. h) It is not the amount of any liability in respect of any guarantee. In view of the aforesaid position of fact and there being a disputed question of fact relating to payment of amount for the purpose, there is no ground to interfere with the decision of the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi - appeal dismissed.

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• 2020 (2) TMI 1077
  Revision of Resolution plan - direction to revise expression of interest (EOI) issued and float new revised EOI by making changes suggested and extending date - section 10 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is stated for the Appellant that section 240A was inserted in the IBC with effect from 6th June, 2018 and provided that notwithstanding anything to the contrary contained in the Code, the provisions of Clause c and h of section 29A shall not apply to the Resolution Applicant in respect of Corporate Insolvency Resolution Process of any Micro, Small and Medium Enterprise - the Adjudicating Authority found that the Applicant had failed to establish that Corporate Debtor was MSME. It also observed that the Applicant had not raised any such issue of being MSME before COC (Committee of Creditors) and that issue was raised when CIRP (Corporate Insolvency Resolution Process) period was to expire. It also found that the Appellant had not raised any concrete Resolution Plan before COC. In the present matter, the Resolution Professional has raised disputes with regard to the claim of MSME. Even in the Reply (para - 12) filed in this Appeal, issue has been raised with regard to the claim to be small enterprise and reference is being made to the valuation report. Under section 29B of the Industries (Development Regulation) Act, 1951, Central Government has powers to exempt any industrial undertaking in public interest from applying all or any of the provision of that Act, subject to conditions as it may think fit. The learned Counsel for the Appellant has not been able to show us as to how Resolution Professional when he receives expression of interest could be expected to go into accounts and other factors or facts and go into Notifications to apply law and hold under which classification an applicant would or not fall. It is not shown how Resolution Professional with time bound milestones fixed in IBC can decide if or not the Corporate Debtor fits into classifications under section 7 or is not covered by MSME Act at all - Section 7 itself shows that the Central Government has to classify any class or classes or enterprises either as micro or small or medium on the basis of parameters fixed in section 7. The Appellant has not brought on record that the Corporate Debtor has been classified by Central Government and if yes, under which parameter. In the Summary Procedure under IBC, the Resolution Professional and Adjudicating Authority are not expected to go into accounts and investigate if and in which category an application falls under section 7 examining Notifications under Explanation 2 or sub-section 9 of section 7 of MSME Act. There is no reason why, looking to the nature of proceedings under the IBC the prospective Resolution Applicant who claims eligibility on the basis that the Corporate Debtor is MSME, should not provide necessary Memorandum Certificate. The Resolution Professional cannot be going into investigations and enquiries and findings whether or not a Corporate Debtor falls under the classifications of MSME and Adjudicating Authority is also not expected to make such investigations, enquiries on such evidence or give findings on such issues, which may not be accurate without assistance of an opposite side or Government Counsel bringing forth which or the other Notification etc. applies. Under sections of MSME Act, even if getting Memorandum Certificated for a given enterprise may be optional, if advantage is to be taken of MSME Act, the Applicant must take pains to get the Memorandum Certificate to seek benefits under IBC - Under the statutory law, the requirement to get a special Resolution passed by AGM or EGM was provided on 6th June, 2018 in section 10 of IBC vide Second Amendment Act, 2018 and thus, it is not found that the admitting of proceedings under section 10 in the present matter on 26th April, 2018 (which was prior in time) to be bad. The Counsel for Respondent submitted that the Appellant having moved section 10 Application with his shareholding of 93.30% got the CIRP put into motion and enjoyed the protection which moratorium attracts to the Corporate Debtor and having taken advantage, is now trying to wriggle out on some or the other ground as Resolution Plan with benefit of haircut has not come forward and is creating obstructions in the CIRP process. We find substance in submissions of Counsel for Respondent. Process of IBC cannot be allowed to be abused under section 10 of IBC. Appeal dismissed - decided against appellant.

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• 2020 (2) TMI 1076
  Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and default or not - whether debt, default in question is established without there being any dispute raised by the Respondent, in the light of pre-requisite conditions, as prescribed under section 9 of Code, under which the present Petition/Application is filed? Whether the basic document, on which entire cause of action arise is Firefly Agreement dated 25th August, 2014(FF Agreement-RL-01 Linga-VFX D Aging-Budget-Vo6) is an agreement enforceable under law or not? - HELD THAT:- There is no debt arise in the instant case basing on valid legal document. Moreover, whether the Adjudicating Authority being the Authority to examine the issue summarily, could not go into the details of the validity of the Agreement in question. Therefore, the validity of the Agreement can be examined by competent Civil Court, after adducing relevant evidence. Since the terms of Agreement are acted upon by the Parties and thus validity of it is no more re sintegra is not tenable. Whether the alleged debt in question is dispute or not? - HELD THAT:- The Code sections 3(6) 8B(11) of the Code, defined Claim and Debt. Debt means a liability or obligation in respect of a claim, which is due from any person and includes a financial debt and operational debt; and claim means- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured - the right to claim, in the instant case, arise on the Agreement in question, which was not properly executed in accordance with law. It is a settled position of law that the provisions of the Code can be invoked where fundamental issues like debt, default, are not in dispute as it is summary proceedings in nature. Relevant issues to be examined in a Petition filed U/s 9 of the Code is whether there are debt and default in question and whether any pre-existing dispute is there or not. The Petitioner has failed to make out any case so as to initiate CIRP against the Respondent as prayed for - Petition dismissed.

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• 2020 (2) TMI 1075
  Maintainability of application - initiation of CIRP - Appellant submitted that the Appellant has settled the claim with the Respondent - Operational Creditor and Committee of Creditors has not been constituted - HELD THAT:- The Committee of Creditors has not been constituted, which is also accepted by learned counsel for the Interim Resolution Professional. Interim Resolution Professional having worked for about 20 days, has already incurred cost against publication of notice - Rs. 15,000/- approx., engagement of lawyer - Rs. 1/- lakh approx., travelling expenses - Rs. 50,000/- approx., therefore, we assess the total fee and cost of the Interim Resolution Professional at Rs. 2.75/- lakh. However we round it up at Rs. 3.00 lakh. The Interim Resolution Professional having already paid a sum of Rs. 2 lakh, the Appellant will pay another sum of Rs. 1 lakh to the Interim Resolution Professional immediately but not later than 15 days. Application is disposed off as withdrawn.

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• 2020 (2) TMI 1074
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- It is noted that the Corporate Debtor has admitted the liability by the letter dated 30.01.2019, at p.59 of the Petition. The affidavit in reply dated 18.09.2019 of the Corporate Debtor, also admits the liability and states that the Corporate Debtor is not in position to repay the debt. This also establishes the existence of debt and default. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition - In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2020 (2) TMI 1073
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existing of pre-existing debt and dispute or not - HELD THAT:- The Operational Creditor has filed Affidavit by complying with Section 9 (3) (b) of the I B Code, 2016, along with the typed set of document wherein under Paras 4 and 5, it has been deposed that the Operational Creditor has not received any payment or notice of dispute with regard to the unpaid operational debt. The Operational Creditor in compliance of Section 9 (3) (c) of the I B Code, 2016, has also filed a Certificate issued by Kotak Bank, to the effect that they have not received any payment by way of cheque from the Corporate Debtor for the period 04.06.2019 to 05.07.2019. The Application as has been filed by the Operational Creditor is admitted and consequently Corporate Insolvency Resolution Process is initiated - application admitted - moratorium to come into force.

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• 2020 (2) TMI 1072
  Status of corporate debtor claiming as MSME - CIRP proceedings - Persons not eligible to be Resolution Applicant u/s 29A - Directions to the Resolution Professional to conduct the Corporate Insolvency Resolution Process (CIRP) in accordance with the provision of I B Code - main grievance of the applicant in this application is that EOI floated is defective and it is not in accordance with the provisions of the IBC - Section 60(5) read with section 20(2)(e) of the Insolvency Bankruptcy Code, 2016 read with rule II of NCLT Rules. HELD THAT:- Section 7 of the MSME Development Act, 2006 deals with classification of enterprises. section 7(1)(a) deals with enterprises engaged in the manufacturer or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951. section 7(1)(b) deals with enterprises engaged in providing or rendering of services. The Corporate Debtor in the case on hand, is engaged in providing or rendering of services. Therefore, it is section 7(1)(b) of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 mat is applicable to the facts on hand. Section 8 states, any person who intends to establish micro or small enterprises is given discretion to file memorandum of Micro Small Enterprise with such authority as may be specified by the State Government under sub-section 4 of section 8 or the Central Government under sub-section (3) of section 8. A similar discretion is also given to medium enterprises engaged in providing or rendering services, whereas a medium enterprise engaged in manufacture production of goods is not given such discretion to file memorandum of enterprises with the prescribed authority is under sub-section (3) or sub-section 4 of section 8 - The proviso to section 8(1) also says that a small scale industry that obtained a registration certificate may also at his discretion, file memorandum, even it is i established before the commencement of MSME Development Act, 2006. The proviso (b) says, an industry engaged in the manufacturer or production of goods pertaining to any industry specified in the Fist Schedule to the Industries (Development and Regulation) Act, 1951 having investment in plant and machinery of more than one crore rupees but not exceeding ten crore rupees and, in pursuance of a notification of the Government of India in the erstwhile Ministry of Industry (Department of Industrial Development) within 180 days from the commencement of this Act, file the memorandum, in accordance with the provisions of MSME Act. In the case on hand, the industry is not an industry in manufacturer of production of goods. Therefore, the proviso to section 8 is not applicable to the Corporate Debtor. Therefore, in order to claim benefits under the MSME Act, the Corporate Debtor must get itself registered under the MSME Act by filing a memorandum. No doubt an option is given to micro or small enterprises or to the medium enterprises engaged in rendering of services. If the person who established the enterprises, is not exercised the option of filing the memorandum with the specified authority under sub-section (3) or (4) of section 8, then the person who is running the enterprises, is not entitled for the benefits under the MSME Act. Therefore, applicant having failed to establish that it is a MSME. The Micro, Small and Medium Enterprise Development Amendment) Bill, 2018 is not yet passed by the Parliament and it has not come into force. Further Applicant being the participant of the CoC did not raise such issue before CoC. It is when CIRP Period was to expire, Applicant raised such issue without bringing concrete Resolution plan before CoC - the applicant is not able to establish that corporate debtor comes under the MSME, It cannot urge that it is within the knowledge of the RP that the Corporate Debtor is MSME. Moreover, applicant even in its email dated 18.08.2018 did not state that it is MSME Even thereafter, applicant did not bring to the notice of the RP that it is MSME. Moreover, it is not on the ground that applicant is disqualified U/s 29A, its offer to bid for resolution of the Corporate Debtor is rejected. The RP did not act upon the email dated 18.08.2018 issued by the applicant on the ground that the requirement The Promoter, Director is not qualified U/s 29A of the Code to present the resolution plan. Above all the applicant did not approach the IRP or this Authority till the closure of the CIRP period - there are no merits in this application - application disposed off.

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• PMLA

• 2020 (2) TMI 1063
  Preventing the petition from travelling abroad - Look Out Circular (LOC) having been issued against the petitioner - allegation against the petitioner, as a director of a company against which there were certain allegations of default of a loan given by the respondent no. 3 Bank - Prevention of Money Laundering Act - HELD THAT:- A bare perusal of the contract of employment of the petitioner, annexed as annexure P2 at page 29, shows that the outer limit within which the petitioner has to returned in India is 5 months from the commencement of the date of his voyage. As such, in the present case there is little or no scope for the petitioner to remain out of India after the said period - That apart, in the present case, the travels sought by the petitioner are not even for luxury but to maintain his livelihood, since he is a sailor by occupation and in the event he does not honour the contract of employment, he may also face financial consequences for that and lose his regular income. Further, in view of the CBI itself having discharged the petitioner from the criminal case initiated against the petitioner along with others, and such order being affirmed in revision, there is no pending allegation of offence under the Indian Penal Code or any penal statue, as contemplated in the Guidelines regarding issuance of Look Out Circulars, which can prevent the petitioner from travelling abroad - The financial default which has been alleged by the Bank, ipso facto, is not a good ground for issuance of look out notice or at least preventing the petitioner from leaving the country. Since the Bank has already taken steps as per the appropriate law governing such loans and defaults relating thereto and already an existing attachment order is there, such order operates as sufficient security for the Bank for the time being. Moreover, although by virtue of the current amendments to the Guidelines, offences which affect adversely THE economic interest of the country as a whole would be the closest charge which could be attracted in the present case for restraining the petitioner from his travels. Accordingly, since extensive arguments were extended at this stage of deciding interim prayers, such arguments had to be dealt with and this elaborate order had to be passed. However, the writ petition cannot be disposed of at this juncture in view of the respondents praying for opportunity to file their affidavit in opposition. Yet, subject to filing of the undertaking, the petitioner s right to travel abroad has to be opened up - Accordingly, the respondents are directed to file their affidavit in opposition within four weeks from date.

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• Service Tax

• 2020 (2) TMI 1071
  Maintainability of appeal - appropriate forum - Classification of services - real estate agent services or not - Sahara was to acquire the land, including the cost and development expenses - case of appellant is that Tribunal erred in not treating the respondent as providing real estate agent service, and in treating the transaction, between the respondent and Sahara, as one of trading - HELD THAT:- Appeals to the High Court, against orders passed by the learned Tribunal, in matters relating to service tax, lie under Section 83 of the Finance Act which, in turn, refers to Section 35G and 35L of the Central Excise Act, 1944. It stands authoritatively held by this Court, in catena of pronouncements, including COMMISSIONER OF SERVICE TAX VERSUS GECAS SERVICES INDIA PVT. LTD. [ 2015 (9) TMI 889 - DELHI HIGH COURT] , COMMISSIONER OF SERVICE TAX, NEW DELHI VERSUS MENON ASSOCIATES [ 2014 (11) TMI 970 - DELHI HIGH COURT] , COMMISSIONER OF SERVICE TAX VERSUS AMADEUS INDIA PVT LIMITED AND OTHERS [ 2015 (9) TMI 888 - DELHI HIGH COURT] and COMMISSIONER OF SERVICE TAX, DELHI VERSUS TRANSCORP INTERNATIONAL LTD. [ 2014 (11) TMI 932 - DELHI HIGH COURT] , relying on Section 83 of the Finance Act read with Sections 35G and 35L(2) of the Central Excise Act, 1944, that, where the lis pertains to chargeability of the activity, conducted by the assessee, to service tax, no appeal would be maintainable before this Court, and that the appeal would lie, instead, to the Supreme Court. This position, it has been noted in the said decisions, also stands clarified by Circular No. 334/15/2014-TRU, dated 10th July, 2014 of the Central Board of Excise and Customs. The present appeal is, clearly, not maintainable before this Court - Appeal dismissed as not maintainable.

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• 2020 (2) TMI 1070
  Liability of service tax - peering arrangement - Department has entertained a view that the appellant have entered into a bilateral domestic private pearing arrangement with other internet service providers for carrying internet traffic on each others backbone. There has been a primary allegation of the Department that the appellant has not discharged service tax on the value of the service provided by them to other internet service providers for carrying their internet traffic on their own backbone - demand alongwith interest and penalty - difference of opinion. HELD THAT:- In view of the separate orders recorded by both the Members, due to difference of opinion, the following questions arise for determination by the third member:- As held by the Member Judicial that the appellant is not liable to pay service tax on their invoice raised on NIXI, as the NIXI is not the ISP and hence, neither the service provider nor the service receiver, hence not liable to pay service tax under the Finance Act, 1994. OR, As held by the Member Technical that the appellant is liable to pay service tax on the services provided to the other ISPs through NIXI, and they have raised invoice for such services provided, on NIXI, and have also admitted to pay service tax. Registry is directed to put up this matter before the Hon ble President for referring it to the ld. third Member for his opinion.

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• 2020 (2) TMI 1069
  Imposition of penalty u/s 76 of FA - short payment of service tax - service tax paid on being pointed out - however, appellant did not pay the interest before issuance of the show cause notice, which was paid before adjudication - HELD THAT:- In the impugned order the sole reason for imposing penalty by the learned Commissioner (Appeals) is that the basic contravention of rule in this case is non-declaration of correct taxable value in their ST-3 returns for the period 2015-2016 and short payment of service tax for the said period therefore, penalty is imposable on the appellant. The appellant has paid service tax at the time of audit and during the relevant period, there were different rates of service tax payable by the appellant on the services provided. Due to that reason, the appellant could not pay service tax correctly and as pointed out by the audit, the appellant paid service tax and later on interest was also paid - the penalty under Section 76 of the Finance Act, 1994 is not sustainable against the appellant - Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1068
  Levy of service tax - legal services - reverse charge mechanism - legal expenses incurred by them during the period 2013-2014 - HELD THAT:- The demand of service tax has been demanded only on Rs. 5,45,689/- by no stretch of means an amount of Rs. 1,29,448/- is payable on Rs. 5,45,689/- which shows that completely non-application of mind while passing the impugned order. The said act is not appreciable. Further it has been observed by the learned Commissioner (Appeals) that the appellant has paid a sum of Rs. 10,444/- towards service tax on legal expenses. No consideration has been given for the said deposit. At least the learned Commissioner (Appeals) was required to reduce the demand to the extent of the appellant paid by the appellant. This shows gross negligence of the officers while adjudicating the cases. There is gross negligence of the officers while adjudicating the cases. The said situation can be avoided and the litigation work before this Tribunal can be reduced by proper application of mind by the officers, as the appellant by way of written synopsis has shown that there was no consideration of the invoices found during the course of audit, therefore, the matter is required consideration at the end of the Adjudicating Authority to examine how much a service tax payable by the appellant and how much service tax has already been discharged towards legal expenses by the appellant - Appeal allowed by way of remand.

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• 2020 (2) TMI 1067
  Nature of activity - sale or service - Business Auxiliary Services or not - production of coal from its various mines and sells the same on payment of Sales Tax/ VAT. For providing such activities, the appellant receives consideration, in addition to base price in the name of sizing charges - HELD THAT:- There is no service involved in the facts of the matter, being an activity before sale. Considering in the facts of matter, it is found that the appellant company offering the cut to size coal to its customer, is like offering their coal in various forms and sizes. Hence, the cutting of coal to various sizes is not a service to the buyer, because buyer is being charged on per tonnage basis of coal including the sizing charge. Further, on this amount, appellant have paid excise duty, VAT, clean energy cess etc. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1066
  Levy of service tax - administrative charges collected during sale of vehicle - demand alongwith interest and penalty - HELD THAT:- A close perusal of the case record would reveal that appellant had collected those charges on the sale invoices itself as part of price of vehicle sold and only in their books of account, it was wrongly shown as administrative charges (para 6 of the Order-in- Original). Further, the total value of the vehicle including the above sale expenditure is maintained by the appellant as per the catalogue price declared by the vehicle manufacturing company. This being the factual aspect and Service Tax collection being dependent on the invoice value of services rendered which is un-associated with a sale invoice on which GST/Sales Tax is levied, Service Tax cannot be demanded on the same value which has been absorbed in the sale price of the vehicle. The demand of Service Tax on such price solely on the basis of wrong reflection in the books of account (ledger) is not in conformity to the law and same is required to be set aside - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (2) TMI 1060
  Levy of interest u/r 96ZP(3) of Central Excise Rules, 1944 - HELD THAT:- The present writ petition deserves to be allowed on the basis of the aforesaid judgment of the Honourable Supreme Court in Shree Bhagwati Steel Rolling Mills -Vs- Commissioner of Central Excise [2015 (11) TMI 1172 - SUPREME COURT] , as the Rule levying such interest itself has been struck down by the Honourable Supreme Court for the reason that there is no substantive provision for levy of such interest in the main charging provision under Section 3A of the Act. The impugned communication / order of the Superintendent of Central Excise dated 04.05.2005 demanding interest at the rate of 18% under Rule 96ZP(3) of the Central Excise Rules, 1944 is hereby quashed - Petition allowed - decided in favor of petitioner.

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• 2020 (2) TMI 1056
  Valuation - inclusion of VAT in assessable value - VAT amount, instead of paying in cash, the same is adjusted against the subsidy granted to them - when there is no actual payment of VAT, whether, the adjusted amount cannot be considered as payment of VAT and the same is not excludible from the transaction value? - HELD THAT:- The issue involved herein is not res integra as the identical issue has been considered by this Tribunal in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [ 2018 (1) TMI 915 - CESTAT NEW DELHI] where it was held that even though the VAT payment was adjusted against the subsidy received by the appellant, there is VAT payment and the same is excludible from the assessable value. Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1055
  Valuation - related party transaction - sister concerns - SCN was issued to the appellant wherein it was contended that the appellant is a private limited company and SSI is a partnership firm some of the Directors of the appellant company or their relatives are either partners of SSI or relatives of such partners - whether the appellant s transaction value is acceptable in a case when goods were sold to partnership firm wherein one of the partner is Director in the appellant s company? HELD THAT:- The entire case was made out only on the limited facts that in the buyer partnership firm one of the partner is Director in the appellant s company, therefore, both the concern are interconnected undertaking. Except this so called relationship there is no other allegation of mutual interest between both the concern, therefore, the matter is examined in terms of the statutory provision as provided under Section 4 (3) (b) and Rule 8/9 of Central Excise Valuation Rules, 2000. From Rule 9, it can be seen that though in Section 4 (3) (b) (i) interconnected undertaking are deemed to be related, however, in Rule 9 only the relationship mentioned under sub-clauses (ii), (iii) or (iv) of clause (b) of sub-Section (3) of Section 4 are considered for the purpose of related person, therefore, even though the seller and buyer are interconnected undertaking, if not related person in terms of sub-clauses (ii), (iii) or (iv) of clause (b) sub-Section (3) of Section 4, the same cannot be qualify as related person. Therefore, merely for the reasons that the partners of the buyer partnership firm are Director or relative of Director, the partnership firm and the appellant which is a private limited company cannot become related person for the purpose of Section 4 (3) (b). In an identical facts where the supplier is a private limited company and buyer is a partnership firm in the case of M/s Surabh Tubes Pvt. Ltd. versus Commissioner of Central Excise, Indore [ 1770009 ], a coordinate bench of this Tribunal having identical facts of the present case the supplies made by a private limited company to a partnership firm it was held that both are not related. Accordingly, the appeal was allowed - In another case of RELIANCE INDUSTRIAL PRODUCTS VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-II [ 2011 (3) TMI 704 - CESTAT, MUMBAI ], the Tribunal has held that a partnership firm and a public limited company having Director who are also partner in the partnership firm, the partnership firm and public limited company cannot be held related person. The appellant and the buyer partnership firm cannot be treated as related person. The Adjudicating Authority mainly contended that the partnership of the buyer partnership firm are either Director in the appellant s company or relative of Director of the appellant company. The relationship has to be seen between a partnership firm and a private limited company both are artificial juristic person. Only on the basis of natural relationship between the partner of a partnership firm and Director of private limited company, it cannot be a criteria to decide the relationship between a partnership firm and private limited company. The appellant and M/s Sunshine Steel Industries, buyer in the present case, do not fall under the term related person in terms of Section 4 (3) (b) of Central Excise Act, 1944. Therefore, the transaction value on which the goods were sold by the appellant is a correct and legal, hence a deemed value in terms of Rule 8 of Central Excise Valuation Rules, 2000 is not applicable - Appeal allowed - decided in favor of appellant.

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• 2020 (2) TMI 1054
  Refund of Central Excise Duty - allegation that the appellants were indulging in evasion of Central Excise Duty - rejection of refund on the ground of time limitation - HELD THAT:- The Delhi Bench of the Tribunal in the case of MAHANAGAR TELEPHONE NIGAM LTD. VERSUS C.S.T. - DELHI [ 2016 (12) TMI 1276 - CESTAT NEW DELHI] was seized of a more or less similar issue and was dealing with refund under Section 11B of the Central Excise Act, 1944, as in the case on hand. The Delhi Bench after considering the rival contentions has held that the refund claim finally stands settled only with the order of the apex court. Hence the date of the judgment of the Hon. Supreme Court is to be considered for determining the relevant date in this case i.e. 4.7.2012. The refund claim stands filed on 21.8.2012, which is within a period of 1 year as permitted under Section 11(B), thus, refund claim is filed in time. From the discussions of the Delhi Bench, which has found that the claim for refund, which was made after the dismissal of SLP, was correct and the same applies to the case on hand also, since upon the Revenue preferring an appeal against the Order-in-Appeal (with the assessee also filing its cross-objection), the matter was sub judice before the Tribunal and naturally, when the matter was lis pendens, no such application for refund could be filed. The appellant s claim for refund is not hit by limitation - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2020 (2) TMI 1065
  Imposition of penalty u/s 54(1)(14) of UP VAT Act, 2008 - detention of goods on the ground that goods being carried as well as weighing is different from the details of goods and weight disclosed in the documents produced by the revisionist - HELD THAT:- The Tribunal came to the conclusion that the assessee had deliberately not disclosed correct measurement of tiles being carried with intention to evade tax. The Tribunal has clearly mentioned that penalty order was passed only after considering all the documents being carried by the vehicle and even on inspection by the Assessing Authority it was found that the truck was carrying 1598 sq. ft. goods in excess then what was disclosed in the documents accompanying the vehicle. The Tribunal has also been persuaded by the fact that the assessee had voluntarily deposited the penalty amount without raising any objection with regard to the nature and quantity of goods. From perusal of order of the Tribunal, which is final fact finding authority, it is clear that the goods being carried by the revisionist from Rajasthan to Lucknow the documents had clearly disclosed that the goods were weighing more than what was actually disclosed by the assessee. The weight of the goods was found in excess than that was found declared in the documents accompanying the goods. The Tribunal also recorded that the Assessing Authority found 1598 sq. ft. goods in excess - From perusal of Section 50 read with Section 54(1)(14) of the Act, 2008, it is clear that if any objection is raised that nature and quantity of goods is different then what has been declared, penalty proceedings can be drawn against the assessee. Considering all the facts the Tribunal has recorded that the details of goods being transported by the assessee, have not been disclosed correctly. This Court do not find any error in the order of the Tribunal, which may require interference - revision dismissed.

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• 2020 (2) TMI 1059
  Validity of Auction Notice - Restraint from Auction of assets - claim of charge towards secured assets - default in repayment of the credit facilities - account having been classified as Non Performing Asset (NPA) -whether the state can put forward its claim of first charge over the secured assets of the borrower or the Bank would have the first charge? - HELD THAT:- The issue is no longer res-integra in view of the pronouncement of this Court in the case of Kalupur Commercial Co-operative Bank Ltd. vs. State of Gujarat [2019 (9) TMI 1018 - GUJARAT HIGH COURT] . This Court has ruled that the Bank will have the first charge over the secured assets of the original borrower such a claim cannot be defeated by virtue of Section 48 of the VAT Act. No further adjudication of this writ application is necessary. The Bank was permitted to put the secured assets of the original borrower to auction and the auction proceedings have attained finality - application disposed off.

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• 2020 (2) TMI 1057
  Refund of Amount unauthorisedly deducted as tax under VAT - Whether the amount should be in U.S. Dollars or in Rupees? - HELD THAT:- It is nobody s case that the State had directed ONGC to mandatorily carry out deductions under the TVAT Act. Such deductions were carried out by ONGC of its own interpretation of the statute. It could have released the amount to the petitioner - It is out of contractual contract between the petitioner and ONGC. Hence, to contend that the only currency acceptable by the State towards deposit of tax being Indian currency, ONGC had no option but to deposit the tax amount by converting US Dollars to Indian currency at the prevailing rates and thus ONGC had no role in the collection and deposit of the tax is not correct. The question of law posed in the present petition, to be no longer res integra. In FORASOL VERSUS OIL NATURAL GAS COMMISSION (ONGC) [ 1983 (10) TMI 234 - SUPREME COURT] the Apex Court, under similar circumstances, directed the very same respondent i.e. ONGC to refund the amount in terms of currency agreed upon by the parties. The petitioner shall be entitled to take credit of the amount in terms of Memorandum dated 16th June, 2017 - The difference in the exchange rate in terms of fluctuation in the Dollar vis-a-vis Indian Rupee, shall however be made good by ONGC. This also has to be in US Dollars, and the rate prevalent as on the date of payment. Application disposed off.

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• 2020 (2) TMI 1052
  Valuation - inclusion of VAT in the assessable value - inter-State purchasers of High Speed Diesel at the concessional rate 2% of CST, on the basis of Form-C - Sections 47(1)(b) and 48(1) of the Jharkhand Value Added Tax (JVAT) Act, 2005 - HELD THAT:- At this stage, only notices have been issued to the petitioners Companies and they have been asked to satisfy the Commercial Taxes Authorities, with the relevant documents, that they had not committed any breach of the provisions of Sections 47(1)(b) and 48(1) of the JVAT Act - Admittedly, this is not a final action against the petitioners Companies, by which, the petitioners companies are aggrieved. At this stage the petitioners Companies have only to satisfy the concerned authorities, with the help of the documents called for, that they had not committed any violation of Sections 47(1)(b) and 48(1) of the JVAT Act, and in case they are able to satisfy the concerned authorities on these facts, no action is warranted against them, for which, the final decision has to be taken by the Commercial Taxes Authorities, on the basis of the documents, to be produced by the petitioners Companies. It is directed that the petitioners Companies to appear before the Commercials Taxes authorities with the relevant documents, and their reply to the show cause notices, which shall be considered by the authorities concerned, who may take appropriate action, taking into consideration the fact, whether the petitioners companies had reduced the base price of the High Speed Diesel to the actual price, on which, the same was purchased by them at the relevant point of time, and whether they had escalated or decreased their bills to the actual price of the High Speed Diesel paid by them, as compared to the base price, quoted by them. Application disposed off.

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• Wealth tax

• 2020 (2) TMI 1058
  Wealth tax assessment - valuation of land - value of the asset as on the valuation date - Addition on the basis of the instance of sale occurred subsequent to the date of valuation when the impugned land was subject to Urban Land (Ceiling and Regulation) Act, 1976 as on the date of valuation - HELD THAT:- There could not have been a better guide for the Wealth Tax Officer for adopting the market value of the property in question than the actual sale itself which occurred within a few months from the relevant date of the valuation. In present case though the actual sale might have taken place after the valuation date, substantial amount of money was paid prior to the valuation date as an advance consideration. The view taken by the Tribunal cannot be faulted. A conjoint reading of section 7 and section 2(q) of the Act would indicate that the requirement of the law is that the value of any asset for the purpose of this Act shall be its value as on the valuation date. For determining the value of the asset as on the valuation date there cannot be any embargo on the Wealth Tax Officer not to take into consideration valuation of identical assets immediately preceding or succeeding the valuation date or that he has to arrive at the valuation of the asset only as per the valuation report. The decision of the Supreme Court in the case of S. N. Wadiyar [ 2015 (9) TMI 1065 - SUPREME COURT] is not on the proposition that valuation of an identical asset immediately succeeding the valuation date cannot be taken into consideration for determining the valuation of the asset as on the valuation date - in said judgment, it is stated that valuation of the asset has to be on the valuation date which has reference to the last day of the previous year. In other words, it is 31st March and immediately preceding the assessment year. The valuation of the asset arrived at as on that date is the valuation on which wealth tax is assessable. Clarifying the matter further Supreme Court held that the Wealth Tax Officer has to form an opinion about the estimated price if the assets were to be sold in the assumed market and the estimated price would be the one which an assumed willing purchaser would pay for it. No error or infirmity in the view taken by the Tribunal. Further, there is concurrent finding of the two appellate authorities below and we do not find such finding to be vitiated by any material irregularity or perversity, warranting interference in an appellate proceeding under Section 27A of the Act.

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• Indian Laws

• 2020 (2) TMI 1062
  Offence of gambling and betting - online game known as Dream 11 - petitioner has submitted that public in general are cheated in the name of Dream 11 game and people become culprit of gambling and betting without having the proper knowledge of law - HELD THAT:- The Dream 11 game does not involve any commission of offence of gambling and betting. Petition dismissed.

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