Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 29, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Customs
- PUBLIC NOTICE NO. 15 / 2024 - dated
23-2-2024
Vide Public Notice No. 87/2023-24 dated 05.10.2023, under the provision of Section 10 & 8(b) of the Customs Act, 1962, the additional Liquid Cargo Jetty LB03/04 of M/s. JNPA, consisting of unloading platform of size 108m x 50m, mooring dolphins 04 Nos. & pump house 49m x 20m located at Jawaharlal Nehru Port, Village Nhava Sheva, Taluka Uran, Dist. Raigad, Maharashtra has been notified as Customs Area for unloading of Liquid Cargo.
- PUBLIC NOTICE No. 02 / 2024 - dated
20-2-2024
Bonds - To furnish KYC details of the company / individual like PAN, GSTN details, contact numbers of authorized person, bank account details of the company and Aadhar details of the proprietor/managing partner/director for the various bonds executed by importers under Custom Law- Reg.
Highlights / Catch Notes
GST
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Violation of principles of natural justice - Non-service of SCN - The high court quashes the impugned assessment order and remands the matter for reconsideration under certain conditions. It directs the petitioner to remit 10% of the disputed tax demand and permits them to issue a reply to the show cause notice.
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Violation of principles of natural justice - Validity of assessment order - The High court notes that while the petitioner filed a final return after the cancellation of registration, it's likely they wouldn't have regular access to the portal. Additionally, the assessment order shows the petitioner's non-participation in the proceedings, leading to interference with the impugned order. - Matter restored back for fresh adjudication.
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Duty Free Shops (DFS) at airports and various government authorities - Refund of amount collected by respondents No.3 and 4 (AAI) on wrongful application of CGST Act, the Integrated Goods and Service Tax Act, 2017 (the IGST Act) and PGST Act - The High Court held that the petitioner is bound to pay the GST on the Services provided by the respondents No.3 not only in accordance with the case laws discussed hereinabove but also due to the binding concession agreement between the petitioner and the respondents No.3 and 4 - The court ordered the company to reimburse a sum of Rs. 3,83,38,993 to the government authorities within four weeks, along with interest. The company was also directed to make necessary applications for claiming Input Tax Credit (ITC) and/or refund of the amount reimbursed.
Income Tax
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Offence u/s 276CC - petitioner prime facie found that the non-filing of the return was wilfull - Economic Offences - The petitioner's argument that the tax liability was covered by Tax Deducted at Source (TDS) was refuted, as the TDS amount was insufficient. - The High court emphasized the statutory presumption u/s 278E, shifting the burden onto the petitioner to prove absence of wilfulness. - High court dismissed the petitioner's appeal and directed the lower court to proceed with the proceedings, with a timeline for completion.
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Procedure of Conducting the search and seizure of the digital data from the premises of the petitioner - seizure of the .txt files from an undisclosed location - Digital Evidence Investigation Manual - The High court set aside the assessment orders related to the seizure, directing a re-examination in accordance with the Digital Evidence Investigation Manual issued by CBDT, highlighting that such procedures are mandatory and not optional.
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Penalty u/s 271(1) (c) - period of limitation - treatment of lease rent income - in the revised return, assessee claimed the same as income from house property to claim 30% standard deduction - AO treated the income of the assessee as income from business and initiated penalty proceedings - ITAT found that the penalty order was indeed unsustainable as it was passed beyond the prescribed time limit under section 275. Moreover, the ITAT emphasized that the mere rejection of a claim by the Revenue does not automatically warrant penalty imposition unless there is evidence of concealment or furnishing inaccurate particulars.
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Income from other sources u/s 56 (2) (x) - purchased the property - difference between the valuation adopted by the district valuation officer and actual consideration - While the appellant asserts the necessity of establishing "on money" payments to warrant taxation under the Act, the tribunal maintains that the absence of such evidence does not preclude the application of anti-avoidance provisions. - The tribunal upholds the decision of the CIT(A) to confirm the addition u/s 56(2)(x)(b), holding the appellant liable for the additional tax resulting from the disputed property valuation.
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Validity of revision proceedings u/s 263 - Adoption of either of view by AO - allowability under section 36(1)(viia) - The court concludes that the original assessment order was not erroneous or prejudicial to the interest of revenue. It holds that the AO's decision was based on a possible view, and therefore, the revision proceedings initiated by the PCIT under section 263 are deemed invalid. Consequently, the appeal of the assessee is allowed.
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Transfer Pricing Adjustments on Corporate Guarantee Charges, Interest on Optionally Convertible Loans (OCL), and Reimbursement of Expenses. - The Tribunal found that these issues were adjudicated in favor of the assessee in previous years, relying on ITAT and High Court decisions. The adjustments made by the AO were not upheld, and the tribunal directed the deletion of these adjustments, affirming the assessee's approach to charging 1% corporate guarantee fees and handling of OCL and reimbursement of expenses as per the precedents.
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Deemed dividend u/s 2(22)(e) - assessee company is a shareholder of lender company or not? - The ITAT held that for amounts to be considered as deemed dividends under Section 2(22)(e), specific conditions must be met, including the recipient being a shareholder of the lender company. The court found that the appellant companies were not shareholders of M/s. IG3 Infra Limited at the time of receiving the funds, hence the provisions of Section 2(22)(e) could not be applied.
Customs
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Maintainability of the writ petition - availability of alternative remedy - Direction to respondents to not to arrest the petitioner against the summons issued under Section 108 of Customs Act 1962 - The High court held that, considering the circumstances, it is not inclined to entertain the writ petition at that stage. - The petitioner's request for writs directing non-arrest and expeditious disposal of the inquiry is not granted, emphasizing that the respondent authorities must proceed in accordance with the law.
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Seeks rectification or re-assessment - Claim of Exemption under Notification No.152/2009-customs - The High Court held that there is no reason to reject the application merely because it does not make reference to Section 149 or on the ground that the word rectification is not used therein - The writ petition is disposed of with the directive for the respondent to treat the petitioner's application as a rectification application and decide on it based on merits within a stipulated timeframe.
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Application for Grant of bail - smuggling foreign origin gold - No duty paid - The High court ultimately rejected the bail application, citing the materials collected during the investigation, which indicate his possession of smuggled gold bars valued at a significant amount. The decision is based on the provisions of Section 135(1)(b)(i)(A) of the Customs Act, which renders the offense non-bailable considering the value of the seized goods.
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Application filed u/s 439 of the CrPC - for regular bail - Smuggling - Gold Paste - The court exercised discretion in granting bail to the applicant, considering factors such as the nature of the allegations, lack of recovery directly linked to the applicant, and completion of the investigation. - The court cited legal precedents, including relevant Supreme Court decisions, to support its decision to grant bail. - Bail granted subject to conditions.
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Valuation of the import of car - the CESTAT criticized the adjudicating authority for rejecting the declared value without sufficient reasoning. It emphasized that without evidence of undervaluation, the transaction value should be accepted. The court also disagreed with the use of Australian car values as a basis for revaluation, highlighting the difference in market dynamics.
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Import of brand new vehicle or not - Valuation of the car - Regarding the eligibility for customs duty exemption, the tribunal found that the vehicle's low mileage (121 km) and registration in UAE were not sufficient evidence to deem it as used. It emphasized that registration in UAE was likely for technical formalities and not for actual use.
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Imported goods declared as “Sonalleve MR HIFU KIT'' - MRI System accessories - The tribunal concludes that the imported goods, the Sonalleve MR HIFU KIT, are indeed accessories to MRI machines based on their specific functionality and interdependence with MRI technology. As a result, they are eligible for the customs duty exemptions claimed by the appellant. The tribunal also highlights the importance of adhering to the scope of the Show Cause Notice in adjudicating matters and emphasizes the principle of natural justice in administrative proceedings.
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Imported remelted zinc from Australia - CESTAT upheld the reclassification of "remelted zinc" by the department under CTH 7901 20 90, rejecting the appellant's classification under CTH 7901 12 00. Despite challenges to the reliance on test reports and the imposition of penalties, the tribunal found no fault in the department's actions.
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Application for conversion of shipping bills - time limitation - Facilitative Measures vs. Procedural Rigidity - The Tribunal held that the appellant had justified the necessity of conversion as they had produced the documents in terms of the Section 149 of the Act which entitles an amendment in the Bill of Entry even after the imported goods have been cleared for home consumption except on the basis of documentary evidence which was in existence at the time the goods were cleared and in the present case it is not that such documents were not in existence at the time of export of goods. - Accordingly, the appeal is allowed with consequential relief as per law.
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Imposition of redemption fine - import of Limestone Blocks - imported goods not covered by the license - confiscation of goods - The Tribunal observed the circumstances, including the timing of the shipments and the Appellant's voluntary disclosure of the license lapse. - Considering the Appellant's bonafide actions and the impact of heavy demurrage charges, the Tribunal decided to grant leniency in the quantum of redemption fine and penalty.
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Undervaluation of imported goods - Confiscation of goods - redemption fine - penalty u/s 12 - The CESTAT adopted a lenient view in reducing the quantum of fines and penalties imposed on the appellants, taking into account their obligations discharged under the Settlement Commission's order.
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Refund of SAD in terms of Notification No. 102/2007-Cus - The Tribunal interprets the notification liberally, emphasizing its intent to grant benefits to importers who fulfill the specified conditions. It holds that the procedural requirement should not hinder legitimate refund claims, especially when the appellant has complied with all essential conditions for eligibility.
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Smuggling - Seized 2332.800 gm of foreign marked gold - confiscation - Burden of proof - The Tribunal held that the appellant’s have satisfactorily discharged the burden cast upon them in law, u/s 123 of the Customs Act and have demonstrated the licit possession of seized gold. On the other hand the department has failed in irrefutably demonstrating any falsity in the evidence supplied by the appellant noticee. - Thus, for want of the same the seizure and the ultimate confiscation of the 20 gold bars is not warranted. It being therefore unlawful is liable to be set aside.
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Penalty on Customs Broker under Regulation 18 of CBLR, 2018 - violation of regulation 10(o) and Regulation 10(b) - Despite allegations of the exporter attempting fraudulent exports to avail excess GST refunds, the tribunal found no evidence of collusion between the appellant and the exporter. Therefore, holding the appellant accountable for the exporter's actions without any proof of collusion would be unjust. Penalty set aside.
FEMA
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Violation under FERA - charge u/s. 56 of FERA - Company being in Liquidation - Whether the charge against the Company can be framed through the petitioner? - Petitioner had resigned from the Company in the year 1993, that is, much before the alleged transaction that took place in 1997. - The court concludes that the trial court erred in framing the charge against the company through the petitioner. It orders modification of the impugned order to reflect that the charge against the company should be through the Provisional Liquidator. However, it clarifies that the charges framed against the petitioner in his individual capacity remain unaffected.
Corporate Law
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Effect of resignation from Directorship - ROC refused to remove the name of the Petitioner as a Director of Respondent No. 4-company - The High court acknowledged the peculiar circumstances of the case, particularly the non-commencement of business by the company and the impact of the Covid-19 pandemic. - The court interpreted Section 168(2) of the Companies Act, 2013, to determine the effective date of the petitioner's resignation as director. - Despite the company's failure to fulfill certain compliances, the court found no justifiable reason to prevent the Registrar of Companies from updating its records to reflect the petitioner's resignation.
Indian Laws
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Dishonour of Cheque - Proviso (b) to Section 138 of the NI Act not complied - notice of demand dated 08.06.2012 demanded Rs. 2 crores from the accused instead of the cheque amount of Rs. 1 crore - The High court concludes that the complaint filed by the respondent is not maintainable due to procedural irregularities, particularly the failure to comply with the requirements of Proviso (b) of Section 138. - Any demand made in excess of the cheque amount, without clear justification, renders the notice defective. - The petition is allowed, and the complaint against the petitioner is quashed, with no order as to costs.
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Dishonour of Cheque - Rule of evidence - acquittal of accused - Proof of liability - service of demand notice - The High court concluded that the complainant had fulfilled its responsibility of proving the authorization, and the trial court's refusal to accept certain evidence was unjustified and hyper-technical. - Consequently, the court set aside the judgment of acquittal and convicted the respondent for the offense under Section 138 of the Negotiable Instruments Act.
IBC
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Initiation of CIRP u/s 9 - time limitation - threshold limit of amount claimed - With respect to 234 invoices, which are payable within 30 days of the invoices, 224 invoices are ex-facie time barred and the remaining 10 invoices do not meet the threshold of Rs.1,00,00,000/-. - The claim of the Operational Creditor that they were having running account and are covered under Article 1 of the Limitation Act cannot be accepted - The NCLAT dismissed the appeal, ruling that the claims of the operational creditor cannot be accepted due to being either time-barred or not meeting the threshold limit.
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Prayer for direction for placing the Settlement Proposal submitted by the Appellant before the CoC for consideration - CoC unanimously decided to reject the proposal -The Adjudicating Authority's role is to ensure that the CoC's decision is not arbitrary. Upon review, it found that the CoC had adequately considered the proposal and made a reasoned decision. Therefore, the Adjudicating Authority upheld the rejection of the Appellant's application. - The National Company Law Appellate Tribunal (NCLAT) dismissed the appeal, finding no error in the Adjudicating Authority's decision to reject the Appellant's application.
PMLA
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PMLA - Media Reporting - Petitioner: Seeks direction to prevent Respondent No. 1/ED from leaking any information to the media regarding the ongoing investigation. Claims violation of privacy and dignity, affecting the right to a fair investigation. - The High court acknowledges the importance of a free press in a democratic society and the accountability of public figures to public scrutiny. - The HC determines that the leaked information does not invade the Petitioner's privacy or prejudice any potential trial. Considering the compliance of investigating agencies and the media with the Advisory on Media Policy, the high court dismissed the petition.
Service Tax
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Levy of service tax - GTA Service - Consignment Note not issued - The appellant claims exemption from service tax under the negative list, asserting that as the owner of the truck providing transportation services, they do not fall under the category of GTA services. - The Tribunal held that the appellant is not liable to pay the proposed service tax.
Central Excise
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Principles of unjust enrichment - Refund amount ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant - The Tribunal interprets Clause (e) of the third proviso to section 11B of the Central Excise Act, 1944, and concludes that the appellant had indeed borne the burden of the duty and had not passed it on to any other party. - Based on the findings, the Tribunal determines that the appellant is entitled to the refund amount along with interest, which should be reimbursed directly to the appellant instead of being credited to the Consumer Welfare Fund.
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CENVAT Credit - common inputs/input services used for manufacture of stock transferred exempted goods (lime stone) and dutiable products (Cement/Clinker) - The Tribunal clarified that the presence of two different final products (limestone as exempted and cement/clinker as dutiable) necessitates the maintenance of separate accounts for inputs/input services used. The court rejected the appellant's interpretation and emphasized that the rules apply to their situation, thus upholding the demand for payment under Rule 6(3)(i) due to the appellant's failure to maintain separate accounts. - However, the CESTAT agreed with the appellant regarding the limitation period, noting no grounds for invoking the extended period due to the appellant's transparent documentation and periodic disclosures.
VAT
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Jurisdiction - powers of AO to re-assess the escape turnover - Power of suo moto revision. - The High court found that the respondent No. 3 (Additional Commissioner of Taxes) exceeded his jurisdiction by revising the assessment orders without conclusively determining that the original orders were erroneous and prejudicial to the interests of revenue based on existing records. - The court also noted the anomaly where the revision under Section 20 of the Nagaland Act also covered aspects under the Central Sales Tax Act, 1956, which was beyond the jurisdiction of the respondent No. 3 under the said Section. - Revision orders quashed.
Case Laws:
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GST
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2024 (2) TMI 1293
Maintainability of petition - impugned order is an appealable order and the appeal would lie to the Appellate Tribunal under Section 86 of the Finance Act, 1994 - HELD THAT:- Under Section 174(2)(f) the repeal and savings clause under the GST Act, the makers of the statute have categorically held, that the repeal of the Act shall not affect any of the proceedings including that relating to an appeal instituted before on or after the date under the said amended act or repealed act and as such the proceedings shall be continued under the said amended act or repealed acts as if this act had not come into force and the said acts have not been amended or repealed. When the statutory authority themselves has entertained an application under Section 85 of the Act for the purpose of availing an appeal before the Commissioner, the natural corollary that would follow would be the next appellate forum under the same provision of law i.e., under Section 86, to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) which undisputedly is functional as on date and is also entertaining the appeals arising out of orders passed by the Commissioner under Section 85 of the Act. Since the petitioner has a forum of appeal available before the CESTAT, the present writ petition is rejected, reserving the right of the petitioner to avail the remedy of appeal. However, there shall be no order as to costs. Petition dismissed.
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2024 (2) TMI 1291
Violation of principles of natural justice - Non-service of SCN - petitioner became aware of the intimation, show cause notice and impugned order, upon examining the GST portal - HELD THAT:- Solely with a view to provide an opportunity to the petitioner to establish the genuineness of the transaction and consequently the genuineness of the ITC claim, the impugned order calls for interference. At the same time, it should be noticed that such impugned order was issued on 31.05.2023 and the petitioner has approached this Court belatedly. It should also be noticed that it appears prima facie that the ingredients of Section 74 were satisfied. In order to safeguard the interest of revenue in the facts and circumstances, the petitioner shall remit 10% of the disputed tax demand as a condition for remand. The petitioner, through counsel, also agrees to this condition. The impugned assessment order is quashed and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand within a maximum period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to issue a reply to the show cause notice within a maximum period of two weeks from the date of remittance. Petition disposed off.
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2024 (2) TMI 1290
Principles of natural justice - Validity of assessment order - alleged difference between the Input Tax Credit (ITC) claimed under GSTR 3B and that reflected in GSTR 2A - HELD THAT:- The assessing officer merely referred to the reply dated 21.12.2023 to the show cause notice and recorded that the reply is not acceptable. On that basis, the proposed levy of tax, interest and penalty was confirmed. The said findings clearly do not contain any reasons for rejecting the petitioner's reply and for confirming the proposed levy of tax, interest and penalty notwithstanding such reply. Therefore, the impugned order, which is completely unreasoned, calls for interference. The matter is remanded for re-consideration. The respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh reasoned order within a maximum period of two months from the date of receipt of a copy of this order - the impugned assessment order is set aside. Petition allowed.
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2024 (2) TMI 1289
Levy of tax - inadvertent error has crept in the proceedings - principles of natural justice - HELD THAT:- Since rules of natural justice are mandatory to the extent they bind the respondent authority to deal with the objection of the petitioner and if required grant opportunity of hearing to the petitioner before adverse order is passed, no useful purpose would be served in keeping this writ petition pending or calling for a counter affidavit at this stage. The order dated 5.12.2023 is set aside and the matter is remitted to respondent No.2 to pass a fresh reasoned and speaking order after affording due opportunity of hearing to the petitioner - Petition disposed off.
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2024 (2) TMI 1288
Validity of the N/N. 09/2023 dated 31.3.2023 and N/N. 515/SI-2-23-9(47)/17-T.C215-U.P. Act- 1-2017-Order-(273/2023) dated 24.4.2023 - valid reason exists to grant second extension of time to issue show cause notice under Section 73(10) of the U.P. GST Act, 2020 or not - HELD THAT:- All respondents are represented. They pray for and are granted six weeks' time to file counter affidavit. Petitioner shall have two weeks, thereafter, to file rejoinder affidavit. List thereafter showing the name of Sri N.C. Gupta as counsel for Union of India.
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2024 (2) TMI 1287
Violation of principles of natural justice - Validity of assessment order - order was passed without providing an opportunity to raise objections with regard to such assessment - cancellation of the GST registration - non-payment of GST arrears - HELD THAT:- The order of cancellation of registration was issued on 23.11.2022 pursuant to an application made by the petitioner on 10.10.2022. The final return is on record, and this document clearly indicates that such return was filed after the cancellation of registration on 17.03.2023. Nonetheless, in view of the cancellation of registration, it is likely that the petitioner would not have reason to access the portal in the manner that a registered person would be required to. In any event, the assessment order discloses that the petitioner did not participate in proceedings culminating in such assessment order. For this limited reason, the impugned order warrants interference. The matter is remanded for re-consideration by the first respondent. The petitioner is directed to submit a reply to the show cause notice in Form DRC- 01 within a maximum period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (2) TMI 1286
Validity of summons issued under Section 70 of the Tamil Nadu Goods and Services Tax Act, 2017 - imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- Reliance placed in the recent judgment of the Division Bench of this Court in TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT] where it was held that In the cases, where the challenge is made to the show cause notices, the writ petitioners shall submit their objections / representations within a period of four weeks from the date of receipt of a copy of this order. The petition is disposed off.
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2024 (2) TMI 1285
Duty Free Shops (DFS) at airports and various government authorities - Refund of amount collected by respondents No.3 and 4 (AAI) on wrongful application of CGST Act, the Integrated Goods and Service Tax Act, 2017 (the IGST Act) and PGST Act - clarification by Hon ble Third Judge - Respondents No.3 and 4 (AAI) contended that the amount that has been paid by the said respondents to respondent No.1 (UOI) has to be reimbursed to respondent No.3 by the petitioner and thereafter refund may be claimed from Union of India/respondent No.1 by the petitioner in accordance with law. HELD THAT:- The petitioner stopped paying the GST amount for services to respondent No.1 from November 2017. Despite the fact that respondents No.3 and 4 paid the said amount the petitioner is refusing to reimburse them causing continuous loss to the public exchequer. The petitioner was not willing to pay tax on Services on the ground that it was entitled to refund on account of supply of goods. Even though the petitioner was entitled to ITC he would still be liable to pay tax on the Services availed. The petitioner had not been paying taxes to respondents No.3 and 4 due to interim orders passed by the Court but respondents No.3 and 4 were depositing the same with the department/ authorities being the service provider. Therefore, the Hon ble Third Judge did not modify the order dated January 04, 2018, but clarified that the petitioner would be liable to pay interest on the withheld amounts of GST on Services in terms of interim order dated April 30, 2018. In the light of observations made and the interim orders dated January 04, 2018 and April 30, 2018 passed by Hon ble Third Judge and the terms of the concession agreement, it is opined that the petitioner should first pay the respondents No.3 and 4 and then claim ITC and/or subsequent refund, if any, from respondents No.1, 5 and 6. Therefore, the petitioner is bound to pay the GST on the Services provided by the respondents No.3 not only in accordance with the case laws discussed hereinabove but also due to the binding concession agreement between the petitioner and the respondents No.3 and 4 - it is directed that the petitioner will reimburse the sum of Rs. 3,83,38,993/- to the respondents No.3 and 4 within a period of four weeks from date of this order, along with interest as the order dated April 30, 2018 also makes it clear that the petitioner is liable to pay GST along with interest if it does not succeed in the writ petition. Petition disposed off.
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Income Tax
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2024 (2) TMI 1292
Addition u/s 69A - cash deposit in bank during demonetization period - as per assessee cash deposits are the amount as originated from the sale of stock - HELD THAT:- The assessee deposited cash by claiming that the amount was originated from the sale of stock. It is never a question that the assessee has never controverted that assessee has in sufficient stock and purchased on the date of announcement of demonetisation on dated 08.11.2016. The assessee sold goods from his shop. Before that date, the assessee was sufficiently covered by the stock. The assessment was completed by the Sales Tax Authority and the turnover and purchased was duly accepted. As further submitted that from the documentary evidence the source, purpose and sequence of event duly established that there was direct nexus of cash deposit in bank account out of sales realization in cash. It is settled position of law that when the ld. AO had not doubted the sales, purchases, stock and gross profit declared by the assessee then the cash deposit out of such sales cannot be doubted. The authority below had treated the normal transaction in respect of business receipt as something unusual and out of the ordinary only as undiscerningly which is against the principle of natural justice.We respectfully, relied on the order of Anand Metal Corporation [ 2004 (7) TMI 49 - MADRAS HIGH COURT] Assessee s books was rejected u/s 145(3) for non maintenance of stock register - The assessee claimed that the assessee is dealing with the items which are not possible for her to maintain stock register. The ld. AR respectfully relied in the order of the Hon ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath [ 2006 (10) TMI 145 - RAJASTHAN HIGH COURT] We also respectfully followed the order of the Hon ble Jurisdictional High Court in the case of non maintenance of stock register cannot be the reason for rejection of books of account. The assessee was eligible to prove the stock, the purchased and the assessment order of the Sales Tax Authority. There are no discrepancies on purchase and stock of goods. On mere suspicion the sale of goods cannot be treated u/s 69A of the Act. The ld. DR was unable to submit any contradictory orders / judgments before the bench. Accordingly, the ground of the appeal is allowed. Discrepancy of the stock valuation in survey team with the declared in the books of accounts - assessee filed a retraction letter for non-accepted the valuation of the revenue as assessee in reconciliation placed that the parties had accepted that the goods sale for approval, so, the same goods are not entered into the stock of the assessee and affidavit was also filed during the assessment and appeal proceeding but none of the revenue authorities had rejected the affidavit of the parties - HELD THAT:- In our considered view, the assessee was filed a proper calculation of stock and with the details of approval of goods which are not entered in the stock of the assessee. Accordingly, we set aside the impugned appeal order. The addition of amount is quashed.
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2024 (2) TMI 1284
Offence u/s 276CC - petitioner prime facie found that the non-filing of the return was wilfull - Economic Offences - petitioner submitted that there was no wilfulness on the part of the petitioner in not filing the returns and that the petitioner had Tax Deducted at Source standing to his credit which covers the entire income earned by the petitioner during the relevant point of time and mere delay in filing the income tax returns due to ill health should not result in a prosecution - HELD THAT:- The only criterion for initiation of prosecution is that there must be a wilful failure to furnish returns as required under Section 139(1) of the Act and once that requisite is fulfilled, the statutory presumption under Section 278E starts operating and this provision brings in a statutory presumption with regard to the existence of a culpable mental state. At this stage, the Court can only presume the culpable mental status of the petitioner and the onus is upon the petitioner to prove the contrary and that can be done only at the time of the trial. There is no dispute with regard to the fact that the petitioner did not file the returns under Section 139(1) of the Act for the Assessment Year 2014-2015 on or before 31/07/2014. The petitioner for the first time, reacted only after notice u/s 148 of the Act was issued to him. It must be borne in mind that the notice u/s 148 of the Act has nothing to do with the return of income to be filed u/s 139(1) of the Act.There is no connection between the notice issued u/s 148 of the Act and the duty of the assessee to file the returns under Section 139(1) of the Act. it is not as if the petitioner has paid the tax and there was only a delay in filing the returns. The petitioner cannot assume that the Tax Deducted at Source will cover the entire tax liability for the relevant Assessment Year even without filing his returns and declaring his total income. As petitioner submitted that an appeal has been filed against the assessment order and the same is pending before the appellate authority and therefore, the prosecution cannot be continued, there is no basis for this submission and the mere pendency of the appellate proceedings is not a relevant factor for initiating prosecution proceedings u/s 276CC. Useful reference can be made to the judgment of the Apex Court in Sasi Enterprises v. CIT [ 2014 (2) TMI 19 - SUPREME COURT] In the instant case, the trial has already commenced and this is yet another reason as to why this Court is not inclined to interfere with the criminal proceedings which was initiated in the year 2017. Therefore, it is left open to the petitioner to raise all the grounds before the Court below and the same will be considered on its own merits and in accordance with the law. Any finding rendered in this Order will not have any bearing on the trial court while dealing with the issues involved in the case. This Criminal Original Petition stands dismissed and there shall be a direction to the Court below to complete the proceedings in E.O.C.within a period of three months from the date of receipt of copy of this Order.
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2024 (2) TMI 1283
Procedure of Conducting the search and seizure of the digital data from the premises of the petitioner - seizure of the .txt files from an undisclosed location - No opportunities of personal hearing to the petitioner provided - denial of natural justice - main grievance of the petitioner was that the digital data evidences were collected by the respondents from unknown locations without any valid search warrant and without following the guidelines issued by the CBDT vide Digital Evidence Investigation Manual - HELD THAT:- The search was conducted and the Show Cause Notices dated 21.12.2022 and 22.12.2022 were issued in a hasty manner and the reply was filed on 24.12.2022 and 28.12.2022, for which the assessment order was passed on 30.01.2023 without providing any opportunities of personal hearing to the petitioner. Further, in the present case, an issue of suspicion is involved with regard to the collection and maintenance of data by the Department, whereby more than 52,000 files have been corrupted and some of them have been misplaced by the Department due to the storage of data/files in a very poor and negligent manner. Thus before passing the assessment order, the data, which were relied upon by the respondents, have to be corroborated by any additional evidences since the same is mandatory requirement as per the Digital Evidence Investigation Manual. However, the same was not done. Further, no opportunity of personal hearing was provided to the petitioner before the passing of assessment order. Hence, there is no doubt that the assessment orders were passed in violation of principles of natural justice and accordingly, the same were liable to be quashed. As the electronic data have been collected without following the various procedures laid down in the Digital Evidence Investigation Manual. This Court had already held that following the said Manual is mandatory and the respondents cannot claim any exemptions as held in State of Kerala vs. M/s.Kurian Abraham Pvt. Ltd., and another [ 2008 (2) TMI 289 - SUPREME COURT] and The Commissioner of Customs vs. Indian Oil Corporation [ 2004 (2) TMI 66 - SUPREME COURT] If any electronic data is relied upon by the Department, the same has to be corroborated with the evidences. This Court is of the considered view that since the respondents had not followed the Digital Evidence Investigation Manual while collecting and preserving the evidences, as per the law laid down by the Hon'ble Apex Court, if there is no corroborative evidence and proved in the manner known to law, the digital data collected by the Department in the course of search and seizure and thus, the said search and seizure is against the law and ab initio bad In the present case, within a short span i.e., 10 days of time, after the show cause notice was issued without providing any time limit, the assessment orders were passed. Further, neither the opportunity of personal hearing nor the opportunity to cross-examine the witnesses, was provided to the petitioner. Therefore, no doubt, the assessment orders were passed in violation of principles of natural justice and accordingly, the assessment order is liable to be set aside. Rule 46A of the IT Rules only talks about the production of any additional evidences before the Deputy Commissioner (Appeals) and Commissioner (Appeals). In the present case, there is no question with regard to the production of additional evidences but the entire case is revolving around the failure on the part of the respondents to supply the documents, which they have relied upon in the show cause notice and thereafter, providing an opportunity for cross-examination of the witnesses, who had made sworn statements against the petitioner and also with regard to the failure to provide the opportunity of personal hearing before the passing of assessment orders. Therefore, it is not that a particular evidence alone needs to be produced or cross-examined by the petitioner and for that extent alone, the Appellate Authority can ask the Assessing Officer to provide the opportunity of personal hearing or cross-examination, etc. On the other hand, in the present case, the matter has to be re-adjudicated in its entirety since no procedure has been followed, which is complete violation of principles of natural justice as discussed above. Taking all these aspects into consideration and to avoid the multiplicity of proceedings, it would be appropriate to set aside all the assessment orders, which are under challenge in the present writ petitions and thereafter, remit the matter back for re-consideration to the Authority concerned and to pass appropriate orders in accordance with law. ORDER - The Digital Evidence Investigation Manual has been issued by the CBDT by virtue of powers available under Section 119 of the IT Act and hence, the Income Tax Authorities and all the other persons employed in the execution of this Act are bound to observe and follow such orders, instructions and directions issued by CBDT. The electronic data have been collected in .txt files in violation of the provisions of Digital Evidence Investigation Manual. Though the procedures have not been followed while collecting the electronic data in .txt files, the data collected by the respondents can be relied upon only if the said data are supported by the corroborative evidences. 2nd respondent is directed to provide all the documents relied upon by them in the Show Cause Notice as requests by the petitioner. Assessing Officer is directed to pass the assessment order in detail taking into consideration of the deposition of the witnesses, during the cross-examination, whose statements are relied upon by the 2nd respondent to corroborate the electronic data collected by them.
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2024 (2) TMI 1282
Penalty u/s 271(1) (c) - period of limitation - treatment of lease rent income - initially assessee claimed the same as business income and claimed depreciation on assets - in the revised return, assessee claimed the same as income from house property to claim 30% standard deduction - AO treated the income of the assessee as income from business and initiated penalty proceedings - HELD THAT:- As section 275 of the Act is clear in its purport that no order imposing penalty under chapter XXI after the expiry of financial year in which the proceedings, in the course of which action for imposition of penalty have been initiated, are completed, or six months from the end of the month in which the order of the Appellate Tribunal was received by the PCIT or Chief Commissioner or Principal Chief Commissioner or Commissioner, whichever period expires later. In this case, the Tribunal passed the orders on 24/03/2021 and by 31/03/2021, the financial year ends or by the end of September, 2022, six months expires from the end of the month in which the order by the Appellate Tribunal was passed. There is evidence to justify the action of the AO in passing the current impugned order dated 01/04/2022. On this score, Revenue has no case. Coming to the second objection, we are in agreement with the learned AR that whether or not subsequently cancelled by the learned CIT(A), with the passing of the first penalty order by 13/08/2021 within six months from the end of the month in which the Appellate Tribunal passed the orders, AO became functus officio and he has no jurisdiction to pass the second penalty order beyond the period prescribed u/s 275(1) of the Act. Lastly, it is an established principle of law that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible; that when such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law; that full probe and appraisal is natural and normal; that threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings; that normally, penalty proceedings in such cases should not be initiated unless there are valid or good grounds to show that factual concealment has been made or inaccurate particulars on facts were provided in the computation. Law does not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the AO. Merely because the assessee preferred a claim which was not acceptable to the Revenue, the assessee cannot be visited with the proceedings u/s 271(1)(c) unless and until the twin requirements u/s 271(1)(c) of the Act are satisfied . Viewing from any angle, we find that the impugned penalty order is unsustainable in law and while accepting the plea of the assessee, we hold that the penalty cannot be sustained. Accordingly, we direct the learned assessing officer to delete the same. Decided in favour of assessee.
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2024 (2) TMI 1281
Income from other sources u/s 56 (2) (x) - difference between the valuation adopted by the district valuation officer and actual consideration - Onus to prove on-money transaction - assessee has purchased the property for a consideration which is less than the value determined by the learned departmental valuation officer - HELD THAT:- There is no provision in the act that before invoking the provisions of section 56 (2), the AO or the CIT-A should prove with evidence that there is a transaction of on money and then only addition can be made. It is an anti avoidance provision. Therefore, such argument deserves to be rejected. Whether observation made by the learned registered valuer were not at all considered by the lower authorities i.e. CIT A? - The preliminary valuation report was also submitted to the assessee and an opportunity was given for submitting the objection. Assessee submitted objection and it were considered by the learned DVO. Thus in view of the independent sale instances of similar sale consideration, it cannot be said that the report of the learned DVO suffers from any infirmity. As nothing was pointed out before the learned CIT A that the valuation report prepared by the learned TPO suffers from any infirmity, it cannot be said that the learned CIT A has blindly accepted the report of DVO. We have considered the submission made by the assessee on 27/3/2023 to the CIT A placed at page number 48 67 of the paper book to reach at this conclusion. In view of the above facts, we do not find any infirmity in the order of the learned CIT A in making the addition to the total income of the assessee being the difference between the actual consideration and the valuation determined by the learned district valuation officer. Thus we, uphold the orders of the learned CIT A in confirming the addition under section 56 (2) (x) (b) (b) of the act as the assessee has purchased the property for a consideration which is less than the value determined by the learned departmental valuation officer in accordance with the provisions of section 50 C - Decided against assessee.
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2024 (2) TMI 1280
Validity of revision proceedings u/s 263 - Adoption of either of view by AO - allowability under section 36(1)(viia) - HELD THAT:- As observed that different benches of ITAT have taken different views on the issue of allowability under section 36(1)(viia) deduction for provision for standard assets. The ITAT Indore Bench in the case of Vikramaditya Nagrik Sahkari Bank Maryadit Vs. ACIT [ 2018 (3) TMI 1516 - ITAT INDORE] , Kotak Mahindra Bank Limited [ 2023 (2) TMI 1005 - ITAT MUMBAI] and Dy.CIT Vs. M/s.Punjab Gamin Bank [ 2016 (6) TMI 1443 - ITAT AMRITSAR] = had held that deduction under section 36(1)(viia) is allowable for provision for standard assets which is basically in the nature of bad doubtful debts. As relying on AMITABH BACHCHAN [ 2016 (5) TMI 493 - SUPREME COURT] and MEPCO INDUSTRIES LIMITED. [ 2006 (11) TMI 164 - MADRAS HIGH COURT] when two views are legally possible and AO adopts one view the Assessment Order cannot be said to be erroneous for the CIT to invoke jurisdiction u/s 263. In this case, applying the above principle of law, it is held that assessment order is not erroneous and prejudicial to the interest of the revenue and hence the order under section 263 is bad in law. Accordingly, appeal of the assessee is allowed.
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2024 (2) TMI 1279
TP Adjustment - adjustment made to the ALP of the international transaction of corporate guarantee charges - AO/TPO had proposed adjustment on account of corporate guarantee by applying rate of 2.52% which was confirmed by the DRP - HELD THAT:- As in assessee own case 2012-13 and 2013-14 ITAT had held, corporate guarantee fees charged at 1% on the international transaction with AEs was at ALP. DR was unable to distinguish the decisions of the ITAT in the preceding years in any way before us; whether on facts or in law. In view of the same, the decision of the ITAT in the preceding years in the case of the assessee itself, will apply in the present case also, following which, we hold that the ALP of the bank guarantee charged by the assessee at the rate of 1% is justified. The adjustment, therefore, made to the same by adopting 1.5% rate is directed to be deleted. Adjustment made to the international transaction of Optionally Convertible Loans (OCL) issued by the assessee to its AE on account of charging of interest - HELD THAT:- Going through the decision of the ITAT in the preceding year, which is reproduced in the order of the ITAT for AY 2014-15 [ 2022 (9) TMI 1560 - ITAT AHMEDABAD] we have noted that the ITAT held the convertible loans advanced to the assessee to be in the nature of quasi-capital in the sense that, substantive reward or true consideration for such loan was not interest simplicitor on the amount advanced, but was an opportunity to own the capital on certain favourable terms. ITAT also noted the fact that whenever the assessee s right to exercise option on conversion of the loans into equity came to an end, it was entitled to interest on commercial rates and noting that it was not even the case of the authorities below that the interest so charged by the assessee in a situation in which the right of exercising the option had come to end, is not at an arm s length; that ITAT held that in such facts and circumstances, where the loans given by the assessee was found to be in the nature of quasi-capital and in the scenario of non-conversion of the loans into equity, the assessee was entitled to interest at commercial rate which was at arm s length, no TP adjustment on account of interest on such loans was warranted. ITAT in the case of the assessee itself, in the preceding assessment years, as noted by us, and in the light of the fact that no distinguishing facts has been brought to our notice by the Revenue, the issue, we hold, stands covered in favour of the assessee by the consistent decision of the ITAT, in its own case in preceding years. TP adjustment made on account of alleged reimbursement of expenses to its AE - HELD THAT:- Since no distinguishing facts have been pointed out by the ld.DR from the facts of the preceding years, the decision rendered by the ITAT in Asst. Year 2014-15 [ 2022 (9) TMI 1560 - ITAT AHMEDABAD] will apply to the impugned year also, following which, we direct deletion of the adjustment made to the transaction of reimbursement of the expenses by AE to the assessee. Nature of expenses - Product Registration Expenses and expenses product for Registration Support Services - revenue or capital expenses - HELD THAT:- As issues have been decided in favour of the assessee in the preceding assessment years, including immediately preceding assessment years i.e. Asst. Year 2014-15, [ 2022 (9) TMI 1560 - ITAT AHMEDABAD] and no distinction having been made before us either on facts or on law by the DR we see no reason to confirm the order of the AO treating the impugned expenses as capital in nature. Entitlement of weighted deduction for expenditure on Scientific Research u/s. 35(2AB) in respect of Clinical Trials and Bio-equivalence Study - HELD THAT:- Issue decided in favour of the assessee in the preceding assessment years, including immediately preceding assessment year i.e. Asst. Year 2014-15; that the issue relating to the claim of weighted deduction under section 35(2AB) of the Act on activities carried outside the R D facility of the assessee pertaining to clinical trial and bio-equivalence study, had been allowed by the ITAT in Asst. Year 2006-07 to 2010-11, which order had been confirmed by the Hon ble Gujarat High Court holding that no question of law arose on the point. Disallowance u/s 14A added to the book profits of the assessee u/s 115JB - HELD THAT:- we have no reason to uphold the order of the AO in this regard, as the finding of the AO is not in consonance with the ratio laid down by the Special Bench in Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] nor with the decision of the ITAT in case of the assesse in the immediately preceding A.Y 14-15. Therefore, the addition made to the book profits of the assessee on account of expenses disallowed under section 14A of the Act is directed to be deleted. Decided in favour of assessee.
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2024 (2) TMI 1278
Deemed dividend u/s 2(22)(e) - assessee company is a shareholder of lender company or not? - whether the loans advanced by M/s. IG3 Infra Limited to the assessee companies can be brought to tax in the hands of the assessee companies as deemed dividend u/s. 2(22)(e)? - HELD THAT:- Primary condition to attract section 2(22)(e) is the recipient of the loan or person benefitted should be a shareholder in the lender or payee company - such shareholder should own not less than 10% of the voting power. It implies that only the equity share holders are covered since they are the ones who are eligible for voting power, thus, excluding all other shareholders like preference etc. The expression 'shareholder, being a person who is the beneficial owner of shares is a subject matter of debate i.e. whether the shareholder to mean registered and beneficial or beneficial alone. As in the case of CIT v. Ankitech (P.) Ltd [ 2011 (5) TMI 325 - DELHI HIGH COURT] has held that the term 'shareholder used in the section referred to both a registered and beneficial shareholder. In view of the above, having withdrawn the appeal by the assessee in the case of National Travel Service v. CIT 2021 (8) TMI 1380 - SC ORDER] as on date the binding judgement on the issue of the expression 'shareholder is that of CIT v. Ankitech (P.) Ltd (supra) as affirmed in the case of CIT v. Madhur Housing Development Co [ 2017 (10) TMI 1279 - SUPREME COURT] Thus, respectfully following the same, we hold that the shareholder referred to in section 2(22)(e) of Act implies registered and beneficial shareholder. Relevant date for determining the shareholding in order to examine the applicability of section 2(22)(e) - As we hold that the relevant date for determining the shareholding is the date of advancing of the loans. In the case of assessee companies, neither the assessee companies nor its shareholders are the shareholders of M/s. IG3 Infra Limited as on the date of advancing of loans. There are no common registered and beneficial shareholders between M/s. IG3 Infra Limited and the respondent companies on the date of advancing of loans. Even prior to change in the shareholding pattern of the respondent companies, it is not the case of the revenue that both M/s. IG3 Infra Limited and the respondent companies have equity shareholders with 10% of the voting power or more. None of the family members of Shri Thiagarajan are registered and beneficial shareholders of M/s. IG3 Infra Limited and the respondent companies either before or after change in shareholding of the respondent companies. Thus, we are of the opinion that the provisions of section 2(22)(e) are not applicable to the facts of the respondent companies and accordingly no addition towards deemed dividend is warranted in the hands of the respondent companies. The undisputed facts are Shri Shanmugam Thiagarajan and Smt Rukmini Thiagarajan are not the registered shareholders of M/s. IG3 Infra Limited and consequently, both of them cannot be regarded as a registered and beneficial shareholder . Smt Unnamalai Thiagarajan though is a registered shareholder of M/s. IG3 Infra Limited, her shareholding in the company amounted to 0.002% which is less than the prescribed voting power of 10% to attract the provisions of third limb of section 2(22)(e) of the Act. Thus, none of the three persons of Thiagarajan family satisfy the legal requirements of being a shareholder in M/s. IG3 Infra Limited in order to attract third limb of section 2(22)(e) - Whether the Thiagarajan family benefitted from the loans advanced by M/s. IG3 Infra Limited or not is immaterial when they do not fall within the conditions laid down in section 2(22)(e) of the Act. In view of this, we are of the opinion that even third limb of section 2(22)(e) of the Act is also not applicable to the facts of the case and accordingly no addition under section 2(22)(e) of the Act is warranted in the hands of the respondent companies. No addition under section 2(22)(e) of the Act will survive in the hands of the respondent companies, another question considered is whether deemed dividend if any is taxable in the hands of the respondent companies when the respondent companies are not the shareholders. In this context, reliance is placed on the following judicial precedents: The Hon ble Bombay High Court in the case of CIT v. Universal Medicare Private Limited [ 2010 (3) TMI 323 - BOMBAY HIGH COURT] has held that the deemed dividend under section 2(22)(e) of the Act is required to be taxed in the hands of the shareholder and not in the hands of the concern in which such shareholder has substantial interest which received the loan. We hold that the deemed dividend under section 2(22)(e) of the Act is required to be taxed only in the hands of the common registered shareholder in a case where a closely held company advances a loan to a company in which such common shareholder has substantial interest and the said deemed dividend is not taxable in the hands of the company which is in receipt of the loan. Accordingly, on this count as well, the loans advanced by M/s. IG3 Infra Limited cannot be taxed in the hands of the assessee companies since the assessee companies are not the shareholders in M/s. IG3 Infra Limited. We are of the opinion that the ld. CIT(A) has rightly deleted the additions made by the Assessing Officer under section 2(22)(e) of the Act in the hands of the assessee companies. Decided against revenue.
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Customs
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2024 (2) TMI 1277
Validity of Provision mandating a pre-deposit of 7.5% of the penalty - challenge to the constitutional validity of Section 129-E - limitation - HELD THAT:- We dispose of these special leave petitions by reserving liberty to the petitioners herein to withdraw the writ petitions filed by them before the High Court. Consequently, the impugned order would pale into insignificance as far as the petitioners herein are concerned. However, liberty is reserved to the petitioners herein to file an appeal u/s 129-E of the Customs Act, 1962 within a period of one month from today. If an appeal is filed within a period of one month from today, the CESTAT shall not raise the issue of limitation, since we have granted liberty to the petitioners to file an appeal. The Special Leave Petitions are disposed of in the aforesaid terms. Pending applications shall stand disposed of.
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2024 (2) TMI 1276
Penalty imposed u/s 117 - handling agent in respect of the import of goods - HELD THAT:- Undoubtedly, the petitioner was not provided a reasonable opportunity. In addition, on examining Section 117 of the Customs Act, I find that the sum of Rs. 4,00,000/- is the ceiling with regard to imposition of penalty, whereas, in the impugned order, a penalty of Rs. 5,00,000/- was imposed u/s 117. This is clearly unsustainable. Thus, the impugned order is quashed in so far as it imposes a penalty on the petitioner. As a corollary, the matter is remanded for reconsideration. After providing a reasonable opportunity to the petitioner, including a personal hearing, a fresh order shall be issued in respect of the petitioner within a maximum period of six weeks from the date of receipt of a copy of this order. W.P.No.4398 of 2024 is disposed of on the above terms. There will be no order as to costs. Consequently, W.M.P.No.4738 of 2024 is closed.
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2024 (2) TMI 1275
Cancellation of the Advance Authorization Scheme - For duty free imports - received foreign remittances - Recovery for demand duty - application for conversion of shipping bill from one scheme code to another - HELD THAT:- The case of the Petitioner is to the effect that the request of the Petitioner was bona fide and it was obviously on account of a mistake which had taken place in entering the wrong scheme code, hence, the Application filed by the Petitioner for entering the correct scheme code ought to have been granted. We find that as the hearing that has taken place before the Commissioner of Customs NS-II on 29th March 2023 which was post the filing of this Petition, the Petitioner needs to raise all the contentions as raised in the present Petition, before the Commissioner, and an appropriate decision can be taken by the Commissioner, after considering the principles of law as applicable including in the decisions noted hereinabove. Accordingly, a final decision be taken by the Commissioner of Customs, NS-II and an order thereon be passed in accordance with law. Needless to observe that, in the event, the Commissioner is of the opinion that there was any inadvertent error and all other statutory compliances have been met, the Commissioner would consider granting the benefit to the Petitioner. The Petitioner is directed to appear before the Commissioner with a copy of this order - Writ Petition disposed of in the above terms.
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2024 (2) TMI 1274
Maintainability of the writ petition - availability of alternative remedy - Direction to respondents to not to arrest the petitioner against the summons issued under Section 108 of Customs Act 1962 - seeking expeditious disposal of enquiry pertaining to the Seizure of Betel Nuts, pending since May 2023 preferably within a stipulated time period - HELD THAT:- It is not in dispute that the maintainability of the writ petition under Article 226 of the Constitution of India is concerned, the same is maintainable with only rider that such power should be exercised sparingly and the same has been considered the judgement in Choodamani Parmeshwaran Iyer [ 2018 (12) TMI 1897 - GUJARAT HIGH COURT] . Thus, at this stage we are not inclined to entertain the writ petition - Accordingly, the writ petition is disposed of.
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2024 (2) TMI 1273
Seeks rectification or re-assessment - Claim of Exemption under Notification No.152/2009-customs - manufacturing and trading in iron and steel products - HELD THAT:- Given the fact that power is conferred u/s 149 of the Customs Act on the proper officer to consider an application for rectification, there is no reason to reject the application merely because it does not make reference to Section 149 or on the ground that the word rectification is not used therein. It should, however, be noticed that it is necessary for the person claiming exemption to place on record and establish that all relevant documents were in existence at the time of clearance of the goods concerned for home consumption. Therefore, it is necessary to direct the petitioner to produce such documents. Thus, this writ petition is disposed of by directing the respondent to consider the application dated 26.12.2023 as a rectification application and dispose of the same on merits within four weeks of production of all relevant documents by the petitioner. The petitioner is directed to produce all relevant documents before the respondent within a maximum period of two weeks from the date of receipt of a copy of this order. W.P.No.2443 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.No.2668 of 2024 is closed.
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2024 (2) TMI 1272
Application for Grant of bail - smuggling foreign origin gold - No duty paid - provision of Section 135 (1)(b)(i)(A) of the Customs Act - HELD THAT:- We have found that as per the materials collected by the DRI, during the course of investigation, the gold seized was smuggled to India and no document/authority could be shown by the applicant for his possession of the seized gold. Sampling was done in accordance with the provisions. There is no specific allegation on behalf of the applicant that how the provisions of law are not complied with while sampling the recovered gold. Seizure memo was prepared as per the provision, which is on record. The statement of accused-applicant is recorded by DRI which is signed by the applicant and the same is on record as annexure no.3 to the counter affidavit filed on behalf of DRI. The statements of other three co-accused were also recorded by the DRI, which was signed by them and same is on record as annexure nos.4 to 6, to the counter affidavit filed on behalf of DRI. Whatever it may be, from the materials on record and on hearing the rival submissions made by the respective learned counsel for the parties, this Court is of the view that this is not a fit case to grant bail to the applicant, at this stage, as there are materials collected during the investigation of the case that the applicant had, in his possession four gold bars weighing 2441.500 grams valued at Rs. 1,49,90,810/- covering the case by the provision of Section 135 (1)(b)(i)(A) of the Customs Act. Therefore, the prayer for bail of the applicant stands rejected.
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2024 (2) TMI 1271
Application filed u/s 439 of the CrPC - for regular bail - Smuggling - Gold Paste - Offence punishable under Sections 135(1) (i)(a) and 135(1)(i)(b) of the Customs Act, 1962 - HELD THAT:- There is no recovery or discovery at the instance of the present applicant accused. The applicant accused has been arraigned as an accused on the basis of the statement of the co-accused. Thus, considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. Hence, the present application is allowed and the applicant is ordered to be released on regular bail on executing a personal bond with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions. The authorities will release the applicant only if he is not required in connection with any other offence for the time being - The present application stands allowed accordingly. Rule is made absolute. Direct service is permitted.
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2024 (2) TMI 1270
Import of brand new vehicle or not - Valuation of the car - Vehicle imported 2013 Nissan Petrol Car Upper Grade ASR SPEC (13-999) - benefit of Notification No. 21/2002 - not produced type approval / COP certificate by the listed agency country of manufacture - confiscation - HELD THTA:- On perusal of records, it is seen that the report given on first check of the imported car, is that the car is new. The reading is only 121 Kms. The department though alleges that the car has been used has not produced any evidence to show that the car has been registered for the purpose of use. The registration, if in UAE is only to comply with technical formalities of the said country and not for using the vehicle on road. Following the case of Lorenzo Bestonro [ 2013 (11) TMI 387 - CESTAT MUMBAI] and Noshire Moody [ 2012 (5) TMI 386 - BOMBAY HIGH COURT] it was held that when registration is for the purpose of complying formalities it cannot be said that the car is used one. Thus, we are of the considered opinion that the allegation that the car is not new cannot be accepted. The appellant has produced copy of the GSO conformity certificate. The importer has opted to purchase the vehicle through the dealer in UAE. The vehicle also is said to have been registered in UAE. In such circumstances, merely because the said certificate shows the vehicle as right hand drive, which is the model used in India, it cannot be said that the appellant has not complied with policy conditions. In the present case, there is no evidence suggesting undervaluation especially when the value of the goods could be easily verified from website. The adjudicating authority has taken the view that since the vehicle imported is of right hand drive and the vehicles used in UAE are of left hand drive, the value cannot be accepted. We cannot endorse the said view. Further, the value of the goods imported into Australia cannot be taken as a comparable value for redetermining the assessable value of the goods since the value differs on the basis of destination of shipment also. Thus, we find that the order passed by Commissioner (Appeals) allowing the benefit of exemption Notification No.21/2002-Cus. as well as setting aside the order of confiscation of the goods is legal and proper. The enhancement of value was also found to be not justified. The impugned order does not call for any interference. The Department appeal is dismissed.
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2024 (2) TMI 1269
Imported goods declared as Sonalleve MR HIFU KIT'' - MRI System accessories - classified them under 90181300 - claiming concessional rate of Basic Customs Duty at 5% as per serial no.357B (ii) of Customs Notification No. 021/2012- Cus and CVD at nil rate in terms of serial no. 59(i) of Central Excise Notification No.6/2006 - differential duty demand confirmed along with interest - whether the Sonalleve MR HIFU KIT are accessories to MRI machine - HELD THAT:- In the case of Commissioner of Customs, Chennai Vs. Indian Surgicals [ 2009 (8) TMI 280 - CESTAT, CHENNAI] , the question considered was whether cardiac stents can be considered as accessories of cardiac catheters so as to be eligible for exemption under Notification 17/2001-Cus. The Tribunal observed that stents are used in cardiac catheters and are mounted and placed after dilation of blood vessels. They are essential for cardiac catheter treatment through the process of angioplasty. Without implanting the stent with help of catheters, the treatment cannot be completed. The Tribunal held that the stent are accessories to cardiac catheters. After understanding the function of the impugned goods and following the decisions above we hold that the Sonalleve HIFU KIT classified under CTH 9018 13 00 is an accessory to MRI. The goods are eligible for benefit of Notification of 21/2002-Cus at Sl.No.357B (ii) and benefit of Notification of 6/2006 CE at Sl. No. 59 (i). Allegation raised in the Show Cause Notice is that the appellant has wrongly availed benefit of Notification 21/2002 Cus at serial no. 357B (ii) in regard to BCD. There is no mention of wrong availment of CVD under Notification No.6/2006. However, the impugned order has denied the exemption of CVD available @ serial no. 59 (i) of Central Excise Notification No. 6/2006. The argument of the Learned Counsel that the impugned order has travelled beyond the scope of the Show Cause Notice is not without substance. The confirmation of the differential duty which has not been proposed in the Show Cause Notice cannot be sustained. For this reason also the demand of differential duty cannot sustain. In the result, the impugned order set aside. The appeal is allowed with consequential relief. The Miscellaneous application is disposed.
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2024 (2) TMI 1268
Imported remelted zinc from Australia - classification of remelted zinc that whether it will be covered under CTH 7901 20 90 as claimed by the Department or under CTH 7901 12 00 as claimed by the Appellant - HELD THAT:- We note that the Appellant vide Bill of Entry 3940705 dated 09.11.2017 and 4542175 dated 25.12.2017 have admittedly declared zinc at 95.85 % and 95.75% respectively which clearly does not correspond to the requirement as envisaged under note (b) of Chapter 79. The classification of the goods by the Department is proper and needs no interference. Either way the claims of Appellant find no merit. We observe that there was no foul in the department s reliance on the test reports in furtherance of ascertaining the classification of the goods in dispute. Thus, we are of the view that the impugned orders are just and legal which does not require any interference. Accordingly, the impugned orders are upheld. The appeals are dismissed.
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2024 (2) TMI 1267
Application for conversion of shipping bills - time limitation - Drawback (Scheme Code 19) to Drawback and ROSCTL (Rebate of State and Central Taxes and Levies) SB (Scheme Code 60) - whether the period of time limit of three months prescribed in the circular is binding in view of the provisions of Section 149 of the Customs Act - HELD THAT:- We find that the export goods is not in dispute and therefore, the entitlement of the appellant to claim the benefit under the scheme is clearly admissible and the same cannot be denied on account of any procedural lapse as provided in the circular. We also find that the examination level of Drawback Scheme and that of Drawback along with ROSCTL Scheme is the same and therefore, there is no reason to deny the benefit of the scheme. We also find that the examination level of Drawback Scheme and that of Drawback along with ROSCTL Scheme is the same and therefore, there is no reason to deny the benefit of the scheme. The error made by the appellant in making the application for conversion before the Commissioner, Nhava Sheva is concerned, the same needs to be ignored in terms of the response given by the Cell at Mumbai, the appellant had made the on line application on 31.03.2021. The appellant had justified the necessity of conversion as they had produced the documents in terms of the Section 149 of the Act which entitles an amendment in the Bill of Entry even after the imported goods have been cleared for home consumption except on the basis of documentary evidence which was in existence at the time the goods were cleared and in the present case it is not that such documents were not in existence at the time of export of goods. Circular was meant to liberalise the migration from one scheme of the Foreign Trade Policy to another and it could not have imposed rigid restrictions which are not contemplated in the parent statute and in the context of facilitative intent, is to be implemented in accordance with the spirit of liberalised approach to request for conversion from one scheme to another, Haldiram Foods International Pvt. Ltd. Vs. Commissioner of Customs [ 2020 (12) TMI 1229 - CESTAT MUMBAI] . The impugned order denying the amendment on the ground that the same has been made by the exporter beyond the period of three months from the date of Let Export Order in terms of the circular, deserves to be set aside. Accordingly, the appeal is allowed with consequential relief as per law.
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2024 (2) TMI 1266
Imposition of redemption fine - import of Limestone Blocks - imported goods not covered by the license - confiscation of goods - penalty - HELD THAT:- We observe that the order was placed by the Appellant during the validity of their license wherein out of the total shipments in dispute, Bill of lading bearing No. MSCUS5860867 was issued and the rest within a month of the same time which we observe is close to the lapse of the license of the Appellant. Furthermore, we note that the Appellant have voluntarily updated the adjudicating authority about the said issue. Taking the said facts into consideration we are of the view that the Appellant is a bonafide as they have not suppressed facts relevant in the present case. We also find that in the present case the appellant suffered heavy demurrage due to which the profit of the appellant has also wiped off. Thus, we are of the view that appellant deserve the leniency with regard to quantum of redemption fine and penalty. Accordingly, we reduce the redemption fine and penalty in the matter of Appeal No. C/10327/16 to Rs.25,00,000/- and Rs.4,00,000/- respectively and in Appeal No. C/10623/16 to Rs.20,00,000/- and Rs. 3,00,000/- respectively. The impugned orders are modified to the above extent. Appeals are partly allowed in the above terms.
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2024 (2) TMI 1265
Undervaluation of imported goods - Confiscation of goods - redemption fine - penalty u/s 12 - HELD THAT:- We observe in the present case that the immunity granted to the Appellant is under show cause notice No. DRI/HQ -CI/50D/Int-2/2018/CI/8935 dated 14.11.2019 does not ipso facto cover the show cause notice No. DRI/HQ CI/50D/Int-2/2018/CI-7806-7809 dated 04.10.2018. However taking into consideration the obligations discharged by the Appellant under the Settlement Commission s order, we are of the view that it would be only fair that a lenient view be adopted with regards to the quantum of fine and penalty imposed. Accordingly, in Appeal, the redemption fines of Rs. 12,00,000/-, Rs. 20,00,000/- and Rs. 7,50,000/- are reduced to Rs. 6,00,000/-, Rs. 10,00,000/- and Rs. 4,00,000/- respectively and in Appeal, penalty of Rs. 20,00,000/- is reduced to Rs. 5,00,000/- The impugned order is modified to the above extent. Appeals are partly allowed in above terms.
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2024 (2) TMI 1264
Refund of SAD in terms of Notification No. 102/2007-Cus - Procedural lapse - Importing goods on payment of appropriate Countervailing Duties (CVD) and 4% Special Additional Duty (SAD) - import duties through DEPB Script - appellant has filed multiple refund claims against one bill of entry - HELD THAT:- We observe that the Department has applied the said condition stating that the Appellant has filed two separate claims on the same Bills of Entry. It has to be noted here that under the given circumstances the application of this procedural requirement seems trivial to the purposes of the said issue as in the present case the payment of 4% SAD was done through two mediums by DEPB Script and Cash which was the sole reason behind the Appellant filing two claims. The conditions under the said circular act as a procedural safeguard that can be differentiated based on the facts and circumstances of a case. It would be contrary to the essence of the circular to deny the substantial benefit of refund only on a procedural requirement when it is silent towards such issues like that in case of the Appellant. The scope of benefit entailed under a Notification cannot be curtailed solely based on the claims as made in the present case. It would render the effectiveness of a Notification redundant when all other essential conditions required for the said purposes have been adhered with which in the present case has been complied with by the Appellant. The intent of the Notification has been given priority over the executive application of a Circular. Thus, we are of the considered view that the benefits under Notification No.102/2007-Customs should not be denied to the Appellant thereby the Appellant is entitled for refund claim. Hence, the impugned order is set aside. Appeal is allowed.
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2024 (2) TMI 1263
Smuggling - Seized 2332.800 gm of foreign marked gold - confiscation of seized gold - Burden of proof - four invoices of VBC initially recovered from Satendro Panda at the time of recovery - invocation of Section 123 of CA - HELD THAT:- We find that it remains a matter contentious between the department and the appellant, that only photocopies of two invoices of BBC were made over to the authorities and original not produced by the appellant, while the latter claims to have made it over to the Deputy Commissioner, who had personally verified the same. The fact that copy of the said invoices each were procured by the department from the end of BBC, sets to rest any doubts in this regard, in the purported absence of the originals/invoices. It is also not the case that the two invoices were tendered quite later during the investigation process, as it is on record that the appellant, at the time of claim of ownership of seized gold within days of seizure (gold seized on 18.08.1999 while ownership claim application and BBC invoices received by the department on 23.08.1999), itself tendered the said invoices virtually hinting at proximate time span in the matter. Also we find not enough merit in disregarding the application indicating 20 Tolas in lieu of 200 Tolas in one of the application tendered by the appellant, which error the appellant have described as to a clerical one. We also find no substance in the departments plea of reading exceptionally into the act of interpolating UBS in the MMTC issued delivery challan/invoice, which the appellant indicates was for reason of their own internal consumption. MMTC has admittedly raised the invoice in question in favour of BBC which the department sourced upon investigations done with BBC and a copy of which was made over to the department by the appellant during investigations. Also, BBC has submitted before the authorities that sales were normally made against manual invoices, but computerized billing was resorted to by them on the basis of customer s request. We note it is these computerized invoices that the department laid its hands on while conducting immediate follow up with BBC. We are of the view that the appellant s have satisfactorily discharged the burden cast upon them in law, u/s 123 of the Customs Act and have demonstrated the licit possession of seized gold. On the other hand the department has failed in irrefutably demonstrating any falsity in the evidence supplied by the appellant noticee. Thus, for want of the same the seizure and the ultimate confiscation of the 20 gold bars is not warranted. It being therefore unlawful is liable to be set aside. For reasons thus, we quash and set aside the orders passed by the lower authority and also set aside the order of confiscation of gold and imposition of penalty and allow the appeal with consequential relief as per law.
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2024 (2) TMI 1262
Penalty on Customs Broker under Regulation 18 of CBLR, 2018 - violation of regulation 10(o) and Regulation 10(b) - not complied with the condition of KYC of the exporter Fraudulent export - correct value of the goods not verified - HELD THAT:- Valuation of the goods is not the responsibility of the custom broker. The custom broker has limited responsibility of documentation on behalf of the exporter and of course the verification of KYC which is not disputed in present case. Therefore, both the allegations are not sustainable. There is no case of the department that the appellants have colluded with the exporter knowingly about fraudulent export of goods with intension to avail the refund of GST, therefore in absence of any such evidence merely because some fraud was committed by the exporter the custom broker cannot be implicated automatically even though he has no role in the offence of fraudulent export. Therefore, in my considered view there is no reason in the present case to penalise the appellant. Accordingly, the penalty is set aside. Appeal is allowed.
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Corporate Laws
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2024 (2) TMI 1294
Maintainability of complaint against the petitioner - Dishonour of Cheque - vicarious liability of Non-Executive Director - issuance of a legal demand notice to the accused company and its directors - HELD THAT:- It is trite that the Non-Executive Director is not involved in the day to day affairs of the company or in the running of its business. Further, when a complaint is filed against the Director of the company, who is not a signatory of the dishonoured cheque, specific averments have to be made in the pleadings to substantiate the contentions in the complaint that such Director was incharge of and responsible for conduct of the business of the company unless such Director is designated Managing Director or Joint Managing Director. A bare reading of para 3 of the complaint shows that in the complaint it has not been substantiated that in what manner the petitioner/accused no. 4 was incharge of and responsible for conduct of the business of the accused company, which elaboration was mandatory since the petitioner is neither a signatory to the cheque nor was he the Managing Director or Joint Managing Director of the accused company. This being the position, the complaint is not maintainable against the petitioner. In view of the undisputed status of the petitioner as a Non-Executive Director and further regard being had to the fact that the petitioner is neither signatory to the cheque nor Managing Director or Joint Managing Director of the accused company, making him stand the trial would be an abuse of process of Court. Appeal disposed off.
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2024 (2) TMI 1261
Effect of resignation from Directorship - Removal of name of the Petitioner as a Director of Respondent No. 4-company - HELD THAT:- Although certain compliances on the part of the company were necessary, however, in the peculiar facts of the present case, it is clear that the company itself did not commence its business, as also the other director being a foreign director did not take any steps in that regard. Added to this was the Covid-19 pandemic period during which such compliances could not be made. All these circumstances ought not to weigh against the petitioner, for deletion of his name as a director from the record of the Registrar of Companies. This also for the reason that severance of the petitioner s relationship as a director of the company took effect from 1 September 2021 as per the petitioner s letter dated 24 August 2021 received by the company. This is the legal consequence as brought about by Section 168(2) of the Companies Act, 2013. Except for certain forms not being filled by the company within the prescribed time, there does not appear to be any other gross default or illegality or any other justifiable reason for the Registrar of the Companies to give effect to the resignation of the petitioner, in the official records, as maintained by him. This is fortified from the contents of the reply affidavit of the official respondents which categorically state that even the explanations / comments and / or compliances as demanded by the Registrar of Companies from respondent No. 4/company were reported to be not answered by the company. This was a default on the part of a non-functional company. Thus, this is clearly a case where the company itself was stillborn. Petition allowed.
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Insolvency & Bankruptcy
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2024 (2) TMI 1260
Qualified bidder or not - Application rejected holding that in third round of e-auction conducted by the Respondent property lot-III as is specified in e-auction notice dated 07th July, 2023 also stands sold - grievance of the Appellant is that in the process document, the time for payment was provided for 10 days whereas in the Schedule I, the time for payment is for 90 days. HELD THAT:- Auction having already held with regard to lot-III, challenge to auction notice cannot be entertained. In so far as the submission of the Appellant that in the process document only 10 days time is allowed for making payment whereas regulation provides for 90 days, it is well settled that in event of conflict between a clause in the process document and the regulations, it is the regulation which will override. The question of payment arises only when auction is confirmed and when bidder is declared a successful bidder. It is not the case of the Appellant that Appellant has been declared as Successful Bidder and he has been asked to deposit within 10 days, Appellant having not participated in the auction, at his instance the auction notice has not rightly been quashed by the Adjudicating Authority. There is no merit in the Appeal, the Appeal is dismissed.
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2024 (2) TMI 1259
Initiation of CIRP u/s 9 - time limitation - threshold limit of amount claimed - whether the claims made by operational creditor are time barred? - whether the claims are meeting the threshold limit for them to be eligible for section 9 proceedings? - acknowledgement of debt - HELD THAT:- This Tribunal in S.M. GHOGBHAI VERSUS SCHEDULERS LOGISTICS INDIA PVT. LTD. [ 2022 (5) TMI 1210 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] had held that proceedings under Section 9 of the IBC 2016 cannot be set to be a suit relating to accounts and as such Article 1 of the Limitation Act is not applicable and the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of the Limitation Act. Accordingly, the time from which period of limitation begins is when the right to apply accrues and right to apply accrues when the invoices were to be paid. Time barred claims or not - HELD THAT:- The Limitation period begins to run from the time when the right to apply accrues i.e. limitation will be three years from when the right to apply accrues, which is over for 224 out of 234 invoices, as the due dates of these invoices, admittedly are from 2013 to 2014. In the instant case there are six projects, located in different locations, though under the same construction company viz HCCL. Most of the invoices pertain to the period of 2012 to 2014 and default dates varies from the year 2012 to 2014 in majority of the cases. Therefore, the three-year limitation period, even for the last invoice out of the 224 invoices had lapsed in September 2018, while this Company Petition was filed on 25th February, 2021. Therefore, the argument of the petitioner that for Company Appeal the limitation stood extended is not tenable. The legal tenability of running accounts has already been noted in the instant case for all the invoices together and there cannot be any better justification to settle them project wise as per Article 1 and therefore they also have to be settled as per Article 137 of the Limitation Act. The Operational Creditor has not been able to cross the hurdle of limitation and the threshold of Rupees one crore in a consolidated manner for 234 invoices claimed in his demand notice - with respect to 234 invoices, which are payable within 30 days of the invoices, 224 invoices are ex-facie time barred and the remaining 10 invoices do not meet the threshold of Rs.1,00,00,000/-. Therefore, this line of argument of the operational creditor is also not tenable. Emails-are they acknowledgement of debt? - whether the emails of 14.07.2017, 07.01.2019 and 26.03.2019, annexed to the petition constitute an acknowledgement of debt or not? - HELD THAT:- The claims either suffer from hurdle of limitation or threshold or most of the time by both. In the present case as the so-called acknowledgement of liability by these emails is not before the expiration of the period of limitation. Taking these projects individually, in the case of Kashang Hydro Electric Project the due date for the last invoices had fallen on 28.06.2014. The claims were rendered time barred on 28.06.2017. And the purported emails sent by the Appellant is dated 10.11.2017, which is much after the period of expiry of limitation. Similarly , the due date for the last invoice for the Uri Project had fallen on 23.01.2014. The claims were rendered time barred on 23.01.2017. Appellant had relied upon email dated 14.07.2017, which is much after the period of expiry of limitation. Same is the case for other projects also. Therefore, section 18 of the Limitation Act doesn t apply and these emails do not provide any acknowledgement of the debt and doesn t help the Appellant. It is well settled that the period of limitation for application under Section 9 of the IBC, would be governed by Article 137 of The Limitation Act, 1963. The claim of the Operational Creditor that they were having running account and are covered under Article 1 of the Limitation Act cannot be accepted - In the instant case in most of the claims, as noted by the Adjudicating Authority they are time barred. Specifically, out of 234 invoices 224 are ex-facie time barred and for the remaining 10 invoices the total does not make it more than the threshold of Rupees one crore and therefore the claims of the Operational Creditor cannot be accepted. Accordingly, the Appeal is dismissed.
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2024 (2) TMI 1258
Prayer for direction for placing the Settlement Proposal submitted by the Appellant before the CoC for consideration - CoC unanimously decided to reject the proposal - HELD THAT:- On looking into the minutes of the CoC, it is clear that the proposal submitted by the Appellant was duly considered and deliberated by the CoC. The reasons have also been noted in the minutes due to which the proposal did not find favour with the CoC. The decision to accept or reject the proposal under Section 12A is essentially a business decision and is in the domain of commercial wisdom of the CoC - the submission of learned counsel for the Appellant that proposal of the Appellant was not adequately considered by the CoC or there is any error in consideration or CoC has arbitrarily acted in rejecting the proposal of the Appellant, is not accepted. It is well settled that jurisdictional review of the decision of CoC for accepting or rejecting a proposal by the Adjudicating Authority is only on the ground that decision is arbitrary. The minutes of the CoC meeting does indicate that there is application of mind and CoC has rejected the proposal after due consideration and deliberation. There are no error in the order of the Adjudicating Authority rejecting the application - appeal dismissed.
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FEMA
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2024 (2) TMI 1257
Violation under FERA - charge u/s. 56 of FERA - Company being in Liquidation - Offences by companies u/s 68 of FERA - As submitted Company being in Liquidation and a Provisional Liquidator having been appointed for it, only the Provisional Liquidator can represent the Company in the proceedings pending before the learned ACMM and not the petitioner herein. Whether the charge against the Company can be framed through the petitioner? - HELD THAT:- As per Section 305 CrPC Procedure when corporation or registered society is an accused would show that where the accused person is a company, it may appoint a representative for the purpose of the trial, and where such representative appears, any requirement of the CrPC that anything shall be done in the presence of the accused or shall be read or stated or explained to the accused, shall be construed as a requirement that that thing shall be done in the presence of the representative or read or stated or explained to such representative. Sub-Section (4) of Section 305 CrPC states that where the representative of a company does not appear, any such requirement as is referred to in sub-Section (3) of Section 305 CrPC shall not apply. In the present case, there is no authorization of the petitioner to represent the Company in the trial. In fact, the Company is in liquidation and a Provisional Liquidator already stands appointed for the Company. In terms of Section 457 of the Companies Act, 1956 (as was then applicable), it is only the Provisional Liquidator or person authorized by the Provisional Liquidator, who could represent the Company in the trial. The petitioner, therefore, cannot be said to be representing the Company. It is another thing to say that he would face the trial in his individual capacity as an accused, but another thing to say that he would also face the trial as a representative of the Company. Though the above issue was flagged before the learned Trial Court, as is reflected in the Orders the learned Trial Court proceeded to frame the charge against the Company taking the petitioner herein to be representing the Company. The same cannot, therefore, be sustained. Conclusion Directions - Trial Court has clearly erred in framing the charge against the Company through the petitioner. The charge against the Company has to be through the Provisional Liquidator appointed for the Company . The impugned order dated 03.08.2007 shall stand modified to this limited extent. It is clarified that the charges framed against the petitioner in his individual capacity have not been interfered with by this Court.
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PMLA
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2024 (2) TMI 1256
Violation of right to privacy and dignity and right of fair investigation by press reports - Preventing any information from being leaked, including any confidential, sensitive, unverified/unconfirmed information, to the print / electronic media in relation to the ongoing investigation / proceedings - alleged violation of the provisions of Foreign Exchange Management Act, 1999 - HELD THAT:- It is well settled that modern communication mediums advance public interest by informing the public of the events and developments that takes place in a democratic set-up. Dissemination of news and views for popular consumption is a must and any attempt to deny the same has always frowned upon by Courts. It is also equally well settled that freedom of speech and expression guaranteed under Article 19(1)(a) includes freedom of press and communication needs in a democratic society i.e., the right to be informed and the right to inform, however, not at the cost of right to privacy. The Apex Court in Indian Express Newspapers (Bombay) Pvt. Ltd. vs. Union of India, [ 1984 (12) TMI 65 - SUPREME COURT] has observed Newspapers being purveyors of news and views having a bearing on public administration very often carry material which would not be palatable to governments and other authorities. The authors of the articles which are published in the newspapers have to be critical of the actions of government in order to expose its weaknesses. Such articles tend to become an irritant or even a threat to power. The Petitioner herein is a former elected Member of Parliament and a public figure. The people are entitled to know about any news regarding the public figures. The accountability of persons who are public figures towards society is higher and they are subject to a higher level of public gaze and scrutiny - Since public figures are subject to closer scrutiny, unless the publications amount to harassment and invasion in private life of the individual public personality concerned or the family of the public personality, publications regarding the public life of such public personalities cannot be stopped from being published either by the Government or by the Orders of the Court. The newspaper cuttings do not deal with the private life of the Petitioner but are only reporting regarding the investigation that is being conducted against the Petitioner who is a public figure and same is unrelated to her private life. There is nothing in the news articles which would have the effect of invading into the privacy of the Petitioner or tend to impair the impartiality of the investigation or that it can have the effect of prejudicing the trial of the Petitioner in the event it is initiated. It is well settled that Gag Orders against the media can be passed only when it has the potential to prejudice any investigation or an ongoing trial. In view of the statement made by the learned Counsel for Respondent No. 1/ED that the Advisory on Media Policy issued by the Government of India vide Office Memorandum dated 01.04.2010 has been and is being followed, and after perusing the news articles, this Court is of the opinion that the reliefs as sought for by the Petitioner by way of the present writ petition need not be granted at this stage - Petition dismissed.
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Service Tax
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2024 (2) TMI 1255
Seeking permission to withdraw the present appeals - COD Clearance- COD clearance to agitate quantum of demand and liability of Service Tax - Tribunal bound by ONGC case direction till they are overruled. Necessary COD clearance for challenge thrown under appeals filed absent - HELD THAT:- The appeals are disposed of as withdrawn.
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2024 (2) TMI 1254
Eligibility for works contract composition scheme - ongoing works contract as on 01.06.2007 - HELD THAT:- The contracts executed by the appellants is composite in nature as the Appellant is engaged in both supply of goods as well as service and have been rightly classified under the tax entry works contract service. It can be understood from the interpretation by the Hon ble Supreme Court in the case of Larsen Toubro Ltd [ 2015 (8) TMI 749 - SUPREME COURT] that there is no liability to service tax in respect of indivisible composite works contract prior to 01.06.2007. In the present case the Appellant is not contesting their service tax liability under works contract service after 01.06.2007 but their entitlement to pay the said tax in terms of composition scheme of 2007. The original authority held that the appellants switched over from construction service to works contract service only to avail the benefit of the scheme and thus are in contravention of the provisions of the said scheme. It has been observed that the denial of the composition scheme by the Adjudicating Authority is only based on the change of head from Commercial or Industrial construction service to works contract service that because of which the Appellant cannot opt for payment of service tax under works contract service under the composition scheme. The activities carried out by the appellants become liable for taxation only with effect from 01.06.2007 as such activities prior to 01.06.2007 were not categorised as taxable services therefore it is inconsequential to the issue. Post introduction of the new tax entry the appellant discharged service tax in tune to the provisions applicable to them therefore their entitlement cannot be denied. The absolute identical issue that whether in case of ongoing project running from the period prior to 01.06.2007 and after 01.06.2007 whether the assessee is eligible to avail the composition scheme under works contract service form 01.06.2007 has been elaborately considered by relying upon Hon ble Gujarat High Court, in the case of JMC Project India Ltd [ 2022 (6) TMI 303 - CESTAT AHMEDABAD] where it was held that prior to 01.06.2007, the activity int nature of work contract were not taxable. Thus, it is no longer res-integra that the assessee can opt for composition scheme under works contract service even in respect of ongoing projects with effect from 01.06.2007. The Appellant is eligible for Composition Scheme under Works Contract. The impugned order is set aside - appeal allowed.
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2024 (2) TMI 1253
Non-payment of service tax - Renting of Immovable Property Service - appellant did not discharge the service tax liability on the above service right from 2010 onwards - HELD THAT:- The matter stands clarified by the Boards Circular dated 24.5.2010 for the period 1.4.2010 to 30.6.2012 and Notification No. 1/2018-ST dated 30.11.2018 for the period 1.7.2012 to 30.6.2017, which covers the period of demand - no service tax was payable by the Appellant by way of letting the road sides to cable TV network firms and telephone / mobile network operators for laying optical fibre cables. The impugned order hence merits to be set aside. The impugned order set aside - appeal disposed off.
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2024 (2) TMI 1252
Levy of service tax - GTA Service - Consignment Note not issued - HELD THAT:- The Tribunal in catena of decisions have held that issuance of Consignment Note is pre-requisite for taxability under GTA services. The Tribunal have categorically laid down the law that in absence of consignment note services cannot be considered as GTA services and the demand of service tax under the category of Goods Transport Agency does not sustain. Reference is invited to the decisions in DINSHAWS DAIRY FOODS VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2018 (4) TMI 912 - CESTAT MUMBAI and M/S. MAHANADI COALFIELDS LTD. VERSUS COMMR. OF CENTRAL EXCISE SERVICE TAX, BBSR-I [ 2019 (7) TMI 1803 - CESTAT KOLKATA] . In Mahanadi Coalfields Ltd. it was held that The issue of consignment note, is a non-derogable ingredient to make the goods transporter as Goods Transport Agency as defined in the statute. From the facts of the present case, it is found that the appellant apart from running the petrol pump outlet is also providing the transportation of petroleum pump on behalf of M/s BPCL, the service receiver and M/s BPCL has issued a certificate mentioning that service tax has been discharged by them on monthly basis being the person liable to pay tax on services received under Goods Transport Agency as per the provisions of the Finance Act. Therefore, the service tax liability has been discharged by the service receiver and consequently the appellant is not liable to discharge the same once again. In the present case, it is found that it is an undisputed position that the appellant had not issued any consignment notes by whatever name and hence in view of the law laid down by the series of decisions, no service tax liability can be imposed. The demand proposed in the show cause notice for recovery of service tax of Rs. 1,69,003/- along with interest and penalty is liable to be dropped and the impugned order needs to be set aside - Appeal allowed.
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Central Excise
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2024 (2) TMI 1251
Seeking permission to withdraw the present appeal - Cum-duty benefit - it was held by High Court that Since the taxes were paid by the respondent-assessee on the goods as per the explanation to Section 4(1), the assessee was entitled to cum-duty benefit - HELD THAT:- The Civil Appeal is dismissed as withdrawn.
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2024 (2) TMI 1250
Maintainability of appeal - Appellate jurisdiction - HELD THAT:- This appeal can be disposed of on the short ground that the Custom, Excise and Service Tax Appellate Tribunal (the CESTAT) in exercise of its appellate jurisdiction has allowed the appeal filed by the Department without giving any reason whatsoever. For the reason that the decision is not accompanied by reasons, the judgment and order passed by the CESTAT is set aside and matter remanded back for consideration and passing appropriate orders giving reasons for its order. Appeal disposed off.
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2024 (2) TMI 1249
Principles of unjust enrichment - Refund amount ordered to be credited to the Consumer Welfare Fund instead of being paid to the appellant - HELD THAT:- The appellant paid the disputed amount as differential duty after the SCN was issued and it was not paid at the time of clearance of the goods nor was an invoice raised for this amount at that time. It is also an admitted fact that the appellant had attempted to recover the differential duty from its customers M/s Bharat Broadband Network Ltd. by issuing a supplementary invoice, but the customer refused to pay it on the ground that central excise duty @ 10.3% was already paid as per the purchase order and the differential duty paid after calculating excise duty at the higher rate of 12.36% was not required to be paid by it. The appellant had borne the burden of the differential duty and had not passed it on to its customer or to anyone. Thus, the appellant s case falls squarely under Clause (e) of the third proviso to section 11B of the Central Excise Act, 19445, i.e., the duty of excise and interest paid on such duty were borne by the appellant manufacturer and it had not passed on the incidence of such duty and interest to any other person. The appellant is entitled to the refund of the amount sanctioned which should be paid to it instead of it being credited to the Consumer Welfare Fund. Needless to say the consequential interest must also be paid as per section 11BB. The refund amount along with interest under section 11BB should be paid to the appellant instead of being credited to the Consumer Welfare Fund - the impugned order is set aside - appeal allowed.
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2024 (2) TMI 1248
CENVAT Credit - common inputs/input services used for manufacture of stock transferred exempted goods (lime stone) and dutiable products (Cement/Clinker) - non-maintenance of separate accounts as required under Rule 6(2) of Cenvat Credit Rules, 2004 - liability to pay an amount of 5%/6% of the value of exempted goods (stock transferred lime stone) as under Rule 6(3)(i) of Cenvat Credit Rules, 2004 - Time Limitation - HELD THAT:- The lime stone stock transferred being exempted product there is no question of payment of duty or consequent availment of credit by receiving unit. When appellant has used common inputs/input services for stock transferred limestone, appellant has to maintain separate accounts. The appellant not having maintained separate accounts and not having exercised any option under Rule 6(3), the demand raised invoking Rule 6(3)(i) is legal and proper. The decision of the Hon ble Apex Court in the case of JAYPEE REWA CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, MP [ 2001 (8) TMI 1332 - SUPREME COURT] is referred by Ld. Consultant to argue that lime stone is only an intermediate product and cannot be considered as a final product. The issue that was considered in the said case was whether Modvat credit is eligible on explosives used for extraction of limestone which is the raw material used in manufacture of cement. The Hon ble Court was considering the applicability of Rule 57A of erstwhile Central Excise Rules, 1944. The assesse therein contended that explosives used in the mining operation must be regarded as inputs. The Tribunal came to the conclusion that as the inputs (explosives) had not been brought into the factory and had been used in the mines outside the factory are not eligible for credit. The Hon ble Apex Court held that even in respect of inputs used in the manufacture of intermediate product, which product is then used for manufacture of a final product (Cement) the credit is eligible. The issue in the case on hand is not on the eligibility of credit on explosives, and not applicable. In the case of VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [ 2006 (1) TMI 130 - SUPREME COURT] the question that was considered was again the eligibility of credit on explosives used in captive mines. The Hon ble Apex Court held that the credit would be eligible and that the decision in the case of M/s.Jaypee Rewa Cement would apply. It was also held that CENVAT Rules in effect substituted the Modvat Rules. The issue on hand is not eligibility of credit on explosives used in captive mines, and therefore not applicable. Time Limitation - Penalty - HELD THAT:- The appellant had periodically filed returns and disclosed the credit availed by them. Further, the demand has been raised on the basis of the accounts maintained by the appellant. The appellant has maintained proper delivery challans and documents for the amount of lime stone stock transferred. There is no positive act of suppression established by the department. Further, the department for the period 1/2017 to 6/2017 has set aside the demand interpreting the issue in favour of appellant - there are no grounds for invoking the extended period. The issue on limitation is answered in favour of appellant and against the Revenue - Being stock transfer of limestone to appellant s own units, and also of interpretational nature, the penalties are to be set aside entirely. The appellant is liable to pay duty along with interest for the normal period. The impugned order is modified to the extent of upholding the demand and interest for the normal period only. The penalties for normal period is set aside - The appeal is partly allowed.
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CST, VAT & Sales Tax
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2024 (2) TMI 1247
Classification of goods - Ujala Supreme - classifiable under Entry No. No.54 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as synthetic organic colouring matter or not? - It was held by High Court that The product Ujala Supreme is held liable for VAT under H.P. VAT Act at the rate which is applicable for items against Entry 54(113) of the Part-II of Schedule-A of H.P. VAT Act - HELD THAT:- It is not required to interfere in the matter(s) - SLP dismissed.
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2024 (2) TMI 1246
Maintainability of petition - Jurisdiction - powers of AO to re-assess the escape turnover - Power of suo moto revision. Maintainability of petition - HELD THAT:- The Supreme Court of India in the case of Godrej Sara Lee Limited Vs. Excise and Taxation Officers-cum-Assessing Authority and Others [ 2023 (2) TMI 64 - SUPREME COURT] has observed that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and the Article 226 does not, in terms, impose any limitation or restraint on the exercise of powers to issue writs. Mere existence of an alternative statutory remedy would not oust the jurisdiction of this court to entertain writ petitions and to issue prerogative writs under Article 226 of the Constitution of India, if the case of the petitioner falls within any of the exceptions carved out in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai [ 1998 (10) TMI 510 - SUPREME COURT] . There appears to be no dispute at bar that the power of assessment under Section 14 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967 has been delegated to the Superintendent of Taxes by the Commissioner of Taxes under Section 45 of the said Act. In the instant case also, in all the writ petitions, the original assessment orders were passed by the Superintendent of Taxes. The petitioner s contention, in all three writ petitions, is that the powers to re-assess the escape turnover is primarily vested by Section 14 on the Assessing Officer and same is to be exercised subject to certain limitations and that in exercise of power under Section 20(1) of the Act, the Additional Commissioner does not have the power to re-assess the escape turnover which is outside the purview of the powers of suo-motu revision conferred on the Additional Commissioner. In the present bunch of writ petitions, the petitioner has challenged the very jurisdiction of the respondent authorities to issue impugned show cause notices as well as to pass impugned order. From a reading of subsection (1) of Section 20, it is clear that the power of suo-moto revision can be exercised by the Commissioner only if, on examination of the records of any proceeding under this Act, he considers that any order passed therein by the person appointed to assist him is erroneous in so far as it is prejudicial to the interest of revenue - The Commissioner cannot initiate proceedings with a view to starting fishing and roving inquiries into matters or orders which are already concluded. Such actions will be against the well accepted policy of law, and there must be a point of finality in all legal proceedings. That stale issue should not be re-activated beyond a particular stage, and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must be in other spheres of human activity. For exercising powers under Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967, the Commissioner must come to a conclusion that the orders passed by the person appointed under Section 5 of the Act to assist him is erroneous, however, in the instant case, bare perusal of the orders dated 09.09.2020 passed in connection with the Assessment year 2014-2015, 2012-2013 and 2013-2014, it appears that though it is observed therein that the assessment orders are erroneous so far as it is prejudicial to interest of revenue, however, it is also mentioned therein that it requires further inquiry and verification, which itself shows that the respondent No. 3 had not arrive at a conclusion that the order of assessment passed by the Assessing Officer were erroneous, rather, it appears that the respondent No. 3 had embarked upon reverification and recalculation of the assessment proceedings which were already examined by the assessing authority at the time of completion of the original assessment - The finding that the assessment orders are erroneous and prejudicial to the interest of revenue must be based on the materials available from records called for by the Commissioner and for arriving at the said conclusion, he cannot call for the documents from the assessee himself as it would amount to reexamination and reverification of the returns filed by the assessee. The respondent No. 3 cannot initiate proceedings with a view to start a fishing and roving inquiry in matters or orders which are already concluded unless there are materials available on records called for by him from which he arrives at a conclusion that the assessment orders are erroneous and prejudicial to the interest of revenue - the power under Section 20 of the Act cannot be exercised by the Commissioner without satisfying the two components mentioned in the Section 20(1) of the Act, the Commissioner does not have the power to reexamine the accounts and determine the turnover himself at a higher figure merely because he is of the opinion that the estimate made by the assessing authority was on the lower side. This Court is of considered opinion that the respondent No. 3 acted beyond jurisdiction in issuing show cause notices dated 28.04.2020 to the petitioner for the assessment years mentioned therein and also in issuing orders by which the assessment for the years 2012-2013, 2013-2014 and 2014-2015 were revised and turnover escaped assessment and short payment of notice taxes were determined. The respondent No. 4 has also acted beyond jurisdiction in issuing demand notices dated 09.09.2020 on the basis of orders passed by respondent No. 3 - The proceeding for suo-motu revisions under Section 20 (1) of the Act in all three cases pending before the Additional Commissioner of Taxes are hereby quashed. Petition allowed.
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Indian Laws
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2024 (2) TMI 1245
Dishonour of Cheque - Proviso (b) to Section 138 of the NI Act not complied - notice of demand dated 08.06.2012 demanded Rs. 2 crores from the accused instead of the cheque amount of Rs. 1 crore - no reason given for excess demand - typographical error or not - HELD THAT:- In view of the Proviso (b) to Section 138 of the NI Act, therefore, the cause of action for filing of the complaint would interalia accrue to the complainant only where the complainant makes a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by the complainant from the bank regarding the return of the cheque as unpaid. In the present case, admittedly, the notice of demand dated 08.06.2012 demanded Rs. 2 crores from the accused instead of the cheque amount of Rs. 1 crore. It also did not specify the reason for demanding the amount in excess. Therefore, the notice was not in compliance with Proviso (b) to Section 138 of the NI Act. The plea of the respondent of there being a typographical error in the notice, even if accepted on facts, cannot be accepted in law to give rise to a cause of action to the respondent to maintain the complaint under Section 138 of the NI Act. The notice being defective, the cause of action for filing of the complaint under Section 138 of the NI Act did not accrue in favour of the respondent. The plea of the respondent that since the complaint has been pending for long, this Court should not exercise its power under Section 482 of Cr. P.C. to quash the complaint, also cannot be accepted. The petitioner cannot be made to suffer the agony of defending a complaint, which on the face of it is not maintainable. Petition allowed.
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2024 (2) TMI 1244
Dishonour of Cheque - Rule of evidence - acquittal of accused - Proof of liability - service of demand notice - complainant company has proved their representative C.W. No. 1 was authorised by them to give evidence before the court or not - trial court has committed wrong in discarding the oral and documentary evidence or not - HELD THAT:- It is a rule of evidence that a document has to be proved by producing the original that is primary evidence. It is also true that a document can be proved by way of secondary evidence. There are rules for producing a secondary evidence. It is laid down in Section 65 of the Indian Evidence Act. If the conditions therein are fulfilled the party can rely upon secondary evidence. So can it be said that the complainant was justified in relying upon certified true copy of board resolution instead of producing the original minutes book? When the complainant has averred in the affidavit about production of the original and prayed for return of document, I think the complainant has fulfilled its responsibilities of proving the same - it was necessary for the accused at least to point out during the cross-examination that their originals are not produced. He need not call upon the complainant s witness to produce their original, he could have certainly asked the complainant s witness that the original minutes book is not produced. This was not put during the cross-examination. So that was the best opportunity for the accused to point out that lacuna. In fact, he allowed the complainant to go on with the case on the basis of the line of cross-examination he has adopted. Ultimately, the trial is conducted on the basis of what case you are putting. When it comes to the accused it is by way of cross-examination. When these questions were not put to complainant at a subsequent stage, you cannot put him to surprise by raising that plea subsequently at the time or arguments. This objection is not of such a kind which goes to the root of the matter. This objection is about mode of proof of the document. By way of his conduct, the Respondent Accused was not justified in raising this plea at subsequent stage. Certainly, the findings can be considered as perverse. Because the trial court has unnecessarily observed about non-production of the original minutes book while writing the judgment. The observation is erroneous and unwarranted in the set of facts and circumstances mentioned above. When the witness has produced the original at some point of time, it was not objected throughout the trial, then the learned trial judge was wrong in discarding the true copy of the resolution simply for the reason that original minutes book is not produced. This is hyper-technical view and needs to be corrected. Thus, it is held that the complainant has proved that the Respondent Accused has committed an offence punishable under Section 138 of the Negotiable Instruments Act. Hence, judgment of acquittal needs to be set aside and Respondent Accused needs to be convicted for offence under Section 138 of the Negotiable Instruments Act - Respondent Accused is sentenced to pay a fine of Rs. 1,00,00,000/-. Appeal allowed.
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