Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 7, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Gold Deposit Scheme, 1999 - Amendment in Notification No. GSR 634(E), dated 14-9-1999 - Notification
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Scheme of amalgamation - notice u/s 142(1) - appointed date v/s effective date - transferor company no longer survives & the question of assessing such company for the purpose of income tax would not possible - HC
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Purchase of computer software - Capital v/s Revenue - the license fees paid was for renewal of the usage of software and for a limited period for less than two years thus held to be in nature of revenue - AT
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Addition u/s. 68 - unless the bank statement are supported by any other corroborative evidence to establish the financial capacity of the donors the bank statements do not prove the credit worthiness - AT
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Searches and seizures u/s 132 - it is not for this Court to indulge in the exercise of finding out the sufficiency or the relevance of the materials, which were available with the authority concerned, for arriving at his conclusion. - HC
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Unexplained credits u/s 68 - share application money - merely filing confirmatory letters to establish the identity of the creditors is not enough and it cannot be said that onus lying on the assessee had been discharged. - AT
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Penalty u/s 158BFA (2) - the party seeking protection from the penalty must file return pursuant to notice under section 158BD. - 'Nil return filed does not satisfy the proviso. - HC
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Search and seizure - mere possession of money, bullion, jewelery or such valuable article or thing per-se would not be sufficient to enable the competent officer to form a belief that the same had not been or would not be disclosed for the purpose of the Act. - HC
Customs
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Amendment in Customs House Agents Licensing Regulations, 2004 – Amendment in Regulation 8 - Examination of the applicant - Notification
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Confiscation of the gold and gold ornaments - 18 years elapsed - return of the sale proceeds - Petitioner was himself to blame in not paying the redemption fine within a reasonable period. - HC
DGFT
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Amendment in Notification No 24(RE-2012)/2009-14 dated 19th October 2012 relating to export of edible oils. - Notification
Corporate Law
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Withdrawal of the share application money - The prospectus issued by a company was an invitation to offer and if the application for shares is made, pursuant to issuance of a prospectus, it was only an offer which could be withdrawn at any stage before its acceptance. - HC
Service Tax
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Recovery of the refund - one who gets the benefit because of the order of the Court and that order is set aside, he is bound to restore the benefit from whom he got. Therefore, the Tribunal was fully justified in ordering the recovery of the said amount from the person to whom it was paid - HC
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Cenvat Credit - repair of insured vehicles - insurance company entitled to take input service credit on repair and maintenance services under the cashless scheme - AT
Case Laws:
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Income Tax
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2013 (2) TMI 128
Scheme of amalgamation - transferor company challenge notice u/s 142(1) as it no longer survives & the question of assessing such company for the purpose of income tax would not possible - appointed date v/s effective date - Held that:- As it emerges from the record that the transferor company had merged in transferee company with effect from 1.4.09. The High Court did not provide for any modification in the appointed date as envisaged in the merger scheme itself. In that view of the matter, as held by the Supreme Court in the case of Marshall Sons and Co. (India) Ltd v. I.T.O., [1996 (11) TMI 6 - SUPREME COURT] the effective date for amalgamation would be the date as envisaged under the scheme. Thus no hesitation in holding that the transferor company would no longer be amenable to assessment proceedings for the assessment year 2010-11. The notice for producing documents for such assessment would, therefore, be invalid. Reference of the Revenue to clause 6 of the scheme is wholly misplaced. Clause 6 refers to two dates, namely, appointed date and the effective date. It only clarifies that the scheme shall be operative from the appointed date, but shall become effective from the effective date. This, in our opinion, does not alter the position of law - against revenue.
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2013 (2) TMI 127
Purchase of computer software - Capital v/s Revenue - CIT(A) treated the expenses as revenue expenditure - Held that:- As decided in CIT and Another v Toyota Kirloskar Motors Pvt. Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] when the life of a computer software is less than two years and the right to use it is for a limited period, the fee paid for the acquisition of the right is allowable as revenue expenditure and if the software is licensed for a particular period, fresh license fee is to be paid for utilizing it for subsequent years. Therefore, without renewing the license or without paying the fee for such renewal, it is not possible to use the software. In such circumstances, the fee paid for obtaining the software and the licence for renewing it was revenue expenditure. Thus in the instant case, the license fees paid was for renewal of the usage of software and for a limited period for less than two years thus held to be in nature of revenue - In favour of assessee. Computation of deduction u/s 10B - Exclusion of telecommunication expenses from the total turnover - Held that:- As decided in CIT and another v Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] there should be uniformity in the ingredients of both the numerator and the denominator of the formula. It is intended to provide incentives to promote exports. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover - in favour of assessee. Disallowance of set off of carried forward losses and unabsorbed Depreciation prior to allowing deduction under section 10B - Held that:- As decided in Yokogowa India Ltd. [2011 (8) TMI 845 - KARNATAKA HIGH COURT] deduction under section 10B is to be granted prior to setting off of brought forward business loss and unabsorbed depreciation. No brought forward depreciation - Held that:- As the assessee has vouched a sum available as brought forward depreciation for the relevant assessment year & had filed a comprehensive statement of available unabsorbed depreciation AO is therefore, directed to verify the correctness and the authenticity of the claim of the assessee of availability of brought forward depreciation and to take appropriate decision in accordance with law - in favour of assessee for statistical purposes.
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2013 (2) TMI 126
Consultancy charges & expenditure towards repairs and maintenance disallowed - CIT(A) allowed the claim - Held that:- As found from the orders of the authorities below that they decided the issue without recording the findings properly in a cryptic manner. The grievance of the AO while making the disallowance is that the assessee had not filed proper evidence to corroborate its claim. Therefore, deem it fit and proper to remit the issue to the file of the AO to decide the issue afresh after examining the issue elaborately - in favour of revenue for statistical purposes. Disallowance of transport charges - CIT(A) restricted the disallowance - Held that:- no proper findings have been given by the CIT(A) while restricting the disallowance except mentioning that certain transportation vouchers had not been provided to the AO. Since the lorry receipts and proof of expenditure had not been furnished, the AO made the disallowance. In these circumstances, we set aside the order of the CIT(A) and remit the issue to the file of the AO to decide the issue afresh by recording proper findings and in accordance with law. Disallowance of adhoc portion of 40% of the temple expenditure while accepting the genuineness of the expenditure - Held that:- Do not find any infirmity in the order of the CIT(A) in sustaining the 40% of the disallowance, out of the disallowance of Rs. 14,55,868/- made by the AO on account of temple expenditure by holding that even though the employees use the temple, yet it is not open only for the employees, but for others as well, therefore, all the expenditure cannot be attributable to employees welfare. Disallownace of selling expenses to the extent of Rs. 10 lakhs - Held that:- The disallowance made by the lower authorities on this count is that the assessee has not furnished proof for the expenditure incurred on account of selling expenses. Neither the AO nor the CIT(A) dealt the issue by giving elaborate findings. Hence, set aside the order of the CIT(A) and remit the issue to the file of the AO with a direction to decide the issue afresh in accordance with law. The assessee is directed to furnish the evidence for the expenditure incurred in support of its claim. In favour of assessee for statistical purposes.
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2013 (2) TMI 125
Addition u/s. 68 - assessee had received gifts from 4 NRI’s staying abroad friends - CIT(A) deleted the addition upto Rs.8,76,000/- out of Rs.26,55,968/- - Held that:- In case of Shri Ramanbhai Patel though the gift given is of Rs.870000/- only the copy of confirmation, passport and certificate of the bank issuing Demand Draft is on record. The copy of his income tax return is not on record and therefore in his case, the capacity to gift cannot be proved. In the case of Shri Suresh Patel, it can be seen that in the income tax return he has stated that he is unemployed and has filed return of income jointly with his wife and the total joint income after payment of tax is USD 1741 and he has said to have given a gift of USD 10349 to the assessee. Thus the gift appears to be far in excess of the after tax income for the year earned by the assessee jointly with his wife.In case of Shri Dilip Patel, his total joint income along with his wife after payment of taxes is USD 42523. He is stated to have given gift of USD 10267 to assessee. The gift thus works out to 24% of their joint income. Further the details of their income tax return reveals that they have stated to have given aggregate gift of USD 251 in the year. Thus their total gifts as reported in their Income tax return is of USD 251. In the present case Shri Dilip Patel has stated to have given gift of over USD 10,000 to assessee which therefore leads to the conclusion that the gift to assessee has not been disclosed by them in the return of Income.In the case of Shri Vipul Patel his joint total income along with his wife after payment of taxes for calendar year 2004 is USD 34764. The gift of USD 10023 to assessee thus amounts to around 29% of their joint income after payment of tax. Thus nothing has been brought on record to prove the relationship between the donor and donee that necessitated the love and affection which could result into giving of gift. The part relief granted by the CIT (A) was in cryptic manner stating that since the A.O. has not given any finding, the general observation of the A.O. that the credits were not genuine has to be rejected in respect of these two donors, as the initial onus of the appellant stands discharged as the reason given for granting relief in respect of the impugned two donors appears to be non-convincing especially when the A.O. has given findings of facts. Thus unless the bank statement are supported by any other corroborative evidence to establish the financial capacity of the donors the bank statements do not prove the credit worthiness of the donors for showing that they were financially sound for making such gifts because the bank statements merely indicate the movement of the funds and not the credit worthiness of the account holder. Thus considering the factual matrix, the totality of facts as seen in the background of decision in the case of Rajeev Tandon (2007 (7) TMI 40 - HIGH COURT , DELHI) and TIRATH RAM GUPTA [2006 (9) TMI 166 - PUNJAB AND HARYANA HIGH COURT] the action of the A.O. in treating the gifts as income cannot be faulted - against assessee.
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2013 (2) TMI 124
Validity of search and seizure proceedings - Jurisdiction - Block assessment - one of the main issues raised on behalf of the petitioners is that the searches and seizures conducted by the respondents, in the premises in question, are arbitrary and illegal, due to lack of jurisdiction. As such, all the proceedings of the respondents, based on the illegal searches and seizures, would be void. - It is also noted that the petitioners had claimed that the respondents had not followed the procedures contemplated under the relevant provisions of law for ordering such searches and seizures, including the provisions contained in section 132 of the Income-tax Act, 1961. Held that:- It is not for this court to indulge in the exercise of finding out the sufficiency or the relevance of the materials, which were available with the authority concerned, for arriving at his conclusion. If the authority had some materials for his belief that certain documents and other relevant materials were secreted, it would be sufficient for giving him a reason to order the search and seizure. Department was justified in having the reasons to believe that certain documents and other things had been secreted in the premises in question and that they would be relevant, in respect of the alleged evasion of payment of income-tax, said to be payable by the petitioners. Further, the authority concerned had also the reason to believe that such documents and things would not be produced by the persons concerned, in the normal course, to enable the respondent-Department to conduct necessary inquiries in the matter. It is also noted that the authority concerned, who had issued the search warrants, had the necessary information from the pre-search enquiries and from the available income-tax records. Further, it is not in dispute that it would be open to the petitioners to raise all the grounds available to them in defending themselves during the enquiry and in the subsequent proceedings that may be initiated against them, based on the materials seized during the search. It would also be open to them to prove, by way of sufficient evidence, that there was no evasion of payment of income-tax, as alleged by the respondents. There is no doubt that the acts of search and seizure cannot be justified by the availability of incriminating materials in the premises in question, during such search, to support the decision made by the authority concerned, once it is found that the issuance of the warrants to search was invalid in the eye of law. However, in the present cases, the petitioners have not been in a position to show that the authority concerned had issued the warrants of search, arbitrarily, without following the procedures established by law or with a mala fide motive. Writ petition dismissed - decided against the assessee.
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2013 (2) TMI 123
Unexplained credits u/s 68 - CIT(A) in sustaining the addition of Rs. 17,25,000/- out of share capital - whether unexplained investment in the share capital can be assessed in the hands of the company u/s 68 - Held that:- As decided in G. Venkatareddy & Co. Vs. DCIT [2000 (10) TMI 182 - ITAT HYDERABAD-B] merely filing confirmatory letters to establish the identity of the creditors is not enough and it cannot be said that onus lying on the assessee had been discharged. Therefore, the AO was justified in not being satisfied by the explanation offered by the assessee in relation to the impugned cash credits because assessee had not proved capacity of such creditors to advance the money and he was justified in making additions of the cash credits under sec. 68 - all the amounts introduced by the assessee-company under the guise of share application money is nothing but income earned from the sources not disclosed to the department and the same were brought into the books by way of share application on different names - uphold the order of the CIT(A) in sustaining the addition of Rs. 17,25,000/- out of share capital as unexplained credits u/s 68 - in favour of revenue. Difference in job work charges/conversion charges credited to the P&L a/c and the amount furnished in the TDS certificate - additions confirmed by CIT(A) - Held that:- The assessee had produced the details of tax deducted at source with respect to job work charges and transport charges and the difference of Rs. 84,850/- represents the amounts paid by various parties on account of transport charges and has been credited to the account of transport charges. Therefore, the addition made by the Assessing Officer and confirmed by the CIT(A) on the ground that the assessee has not been able to produce satisfactory evidence in the matter, explaining the difference in the amount of job work charges as per TDS certificate and the amount offered as receipts, is deleted. Disallowance as contributions towards PF and ESI as per the provisions of section 43B - Held that:- The deduction of payment of employees’ contribution towards provident fund and ESI cannot be disallowed under section 43B, if paid before the due date of filing the return. Set aside the order of the CIT(A) and restore the issue to the file of the AO with a direction to allow this ground of appeal of the assessee, if the payments of PF & ESI are made before the due date of filing of the return in the light of the decision of Allied Motors Pvt. Ltd. (1997 (3) TMI 9 - SUPREME COURT). Reducing 90% of the job work charges and excise duty from profits of business applying clause (baa) of Explanation to section 80 HHC - Held that:- As decided in CIT Vs. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] the excise duty refund is not includible in the total turnover for the purpose of computing deduction u/s 80 HHC. As regards the job work charges the same is covered by the decision of Ravindranthan Nair (2007 (11) TMI 10 - SUPREME COURT OF INDIA) wherein held that processing charges, which are part of gross total income, form an item of independent income like rent, commission, brokerage, etc., and, therefore, 90 per cent of the processing charges has also to be reduced from the gross total income to arrive at the business profits and, therefore, it has also to be included in the total turnover in the formula for arriving at the business profits in terms of clause (baa) of the Explanation to section 80HHC(3). Addition of agricultural income as income from other sources - Held that:- The assessee itself agreed before the CIT(A) that the net agricultural income can be treated as ‘income from other sources’, therefore, we uphold the order of the CIT(A) in sustaining the addition of Rs. 1,61,050/- on this issue.
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2013 (2) TMI 122
Computation of short-term capital gains u/s. 50 - whether deposits to MIDC, BSES, BMC and Gas Authority, license fees paid , prepaid expenses and properly tax paid in advance form part of the cost of the industrial galas in the computation all aggregating to Rs. 72,60,184/- - Held that:- From the material examined it is find that none of the grounds, as agitated by the assessee is/are particularly and specifically against the valuation difference of Rs. 2,27,48,713 (Rs. 11,20,81,000 – Rs. 8,93,32,286). Therefore, there in no issue relating to the valuation of sale consideration of the Galas. However, the AR, maintains that the sale consideration includes the value relating to other blocks and deposits. However, assesse/AR did not file any evidence to substantiate the same. Therefore, in these circumstances, the arguments advanced by the assessee, primarily based on the valuation of the galas are non maintainable, hence not going into the valuation aspect. Nevertheless, there is not one clue, which points towards lump sum sale, as has been reiterated by the AR at every stage. Thus lump sum sale would, under all circumstance give one single comprehensive figure, not exact figure, going down to rupees and paise. Assessee has also not filed any evidence to suggest that the deposits are part of the cost of the assets in various blocks, therefore, we have to reject both the pleas of the AR. As such, neither there is any clarity as to what is the nature of the advances, as to when and in what head these advances were paid or whether these were principal amounts or were in the nature of penalties/fee/fines, nothing had been brought on record, neither before the revenue authorities - in favour of revenue. Non allowance of the write off of WDV on safes, computer programme on jewellery, CPU at office equipments connecting TV monitoring - Held that:- The assessee has not at any stage, discharged its onus to prove the correctness and justification for write off. Even today assessee has simply produces some photographs, showing the interiors done somewhere, i.e. no authentication, that those photographs pertained to the demised galas. Even if those were presumed and accepted to be of demised galas, even then, those photographs does not prove anything with regard to the impugned items. In these circumstances, the views taken by the revenue authorities can be sustained - in favour of revenue. Deletion of values of office equipments and fixtures - CIT(A) allowed 50% of the WDV to be added to the cost as determined by the AO - Held that:- The orders of the revenue authorities and the relevant clause in the tripartite agreement, the orders of CIT(A) had been reasonable. As seen from the photographs which are only presuming to be taken of the demised galas, it is found that the fittings and glass facade/partitions were intricately fixed and a fair presumption can be made that, if the assessee vacated the premises and new entrants took over the possessions of the galas immediately, these fittings would have gone with the possession as well. In these circumstances, the values adopted by the CIT(A) are very reasonable. Concessions given by the CIT(A) on electric fittings, gas pipe line, furniture & fixtures - relief fully in respect of the WDV claim of electric fittings and gas pipelines & 50% on the block relating to furniture and fixture - Held that:- CIT(A) granted relief considering the fact that the electric fittings and gas pipelines are concealed ones and they cannot be easily separated and sold for consideration. Regarding the furniture and fixture the photographs filed before us indicate the inseparability of these items from the galas - observation of the CIT(A) is proper and it does not call for any interference.
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2013 (2) TMI 121
Penalty u/s 158BFA (2) - search and seizure u/s 132 in the case of appellant's wife at her premises - Block assessment under section 158 BC completed - Held that:- Appellant has not filed the return within the meaning of clause (1) to the proviso. The return filed being 'Nil' return, he cannot also lay store by the revised return filed earlier. The law is very clear that the party seeking protection from the penalty must file return pursuant to notice under section 158 BD. Appellant concedes that 'Nil return filed does not satisfy the proviso. On a perusal of the provisions contained in the proviso, it is clear that requirements which are to be satisfied are cumulative. The law contemplates that on receipt of notice under section 158 BD, the party must file return disclosing the income. He must pay the tax or he must offer that the money seized may be adjusted against the tax payable. He must provide the evidence for tax paid along with the return in clause (iii). Also notice the presence of the word 'and' after clause (iii) which is followed by clause (iv) which deals with the last of four requirements to be fulfilled by the assessee, namely, that he should not appeal the assessment of that part of income shown in the return. The provisions of clause (iv) clearly indicate that he must not file any appeal against that part of income which is shown in the return. This signifies that the assessee must indeed file a return and not a 'Nil' return and that all the clauses must be fulfilled. Therefore,there is no merit in the appeal - against the asseessee.
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2013 (2) TMI 120
Search and seizure - challenge the operations & seeking release of gold ornaments, being stock in trade - assessee also challenged the territorial jurisdiction of the Court - Held that:- On the basis of the record and the reasons noted by the authority, it was not possible to come to the conclusion that the petitioners had not or would not have disclosed the jewelery for the purpose of the Act. Recall that for authorization of search operations under section 132(1)(c) it is required that the competent authority in consequence of the information in his possession has reason to believe that the jewelery, bullion, etc. which represents either wholly or partly income or property has not been or would not be disclosed for the purpose of the Act. Perusing to documents it is found that the entries of gold distributed to various goldsmiths matched perfectly with the entries of gold ornaments received from such persons after adding alloys for conversion of gold from 24 carat to 22 carat. The so called discrepancies pointed out by the Revenue in such documents really do not exist. Respondents fail to notice that the gold ornaments would weight marginally more than the weight of gold from which they are made due to addition of alloys. They also failed to see that such increase in weight was uniform in all cases. Accounts were also maintained regarding labour charges to be paid to different agencies. It can therefore not be stated that there was sufficient information in possession of the Director of Income Tax to have reason to believe that such jewelery had not been or would not be disclosed for the purpose of the Act. There were some discrepancies highlighted by the Department particularly with respect to the agreement dated 14th June 2012. It was argued that such agreement was found in possession of the petitioners and not in possession of the lessee & that the co-relation between the gold actually used in preparation of the ornaments and the one which was available with MG-HUF could not be established but to our mind, these factors would not be sufficient to clothe the authorities with the power to issue search authorization under section 132(1)(c). The Department's doubt about the source of gold of MG-HUF, even if it is genuine, cannot cast any shadow on the question whether the petitioners would or would not have disclosed the same for the purpose of the Act. Further, the contention that the identity of the gold could not be established also is not a sufficient factor as once the gold was, as claimed by the petitioners, received from MG-HUF and the same was distributed among different goldsmiths for preparation of ornaments, failure to see how the exact identity of the gold or co-relation thereof could be maintained or established. When it was pointed out that the petitioners had maintained voluminous records right from the beginning and when such record was found from the premises of petitioner No.1 Company, immediately upon the survey operation being conducted, unable to find as how the competent authority could form a reasonable belief that such gold jewelery had not been or would not be disclosed for the purpose of the Act. On the basis of the various decisions L. R. Gupta And Others [1991 (11) TMI 51 - DELHI HIGH COURT] & VINDHYA METAL CORPORATION [1997 (3) TMI 3 - SUPREME COURT] it emerges that mere possession of money, bullion, jewelery or such valuable article or thing per-se would not be sufficient to enable the competent officer to form a belief that the same had not been or would not be disclosed for the purpose of the Act. What is required is some concrete material to enable a reasonable person to form such a belief - Thus the petition is allowed. Search and seizure operation is declared illegal and it is hereby quashed. Consequently, seizure of the gold ornaments under panchnama dated 26th July 2012 is also quashed.
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Customs
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2013 (2) TMI 119
Condonation of delay of 110 days in filing Appeal against the acquittal - Held that:- From the record, it appears that it is a case of importing more than 48 Kgs. of gold worth more than Rs.1.12crores in the international market and Rs.1.61crores in the local market. Said matter was ended in acquittal. Said acquittal is challenged in the Appeal with Application for Leave to file Appeal, but belatedly apparently with delay of about 110 days. As today none present for the Union of India, notice be issued to the Standing Counsel of Union of India requiring his presence in the matter and to explain the laxity of Counsel for Union of India who is assigned this matter, when apparently the present matter is of very sensitive nature involving import of gold of huge amount. Stand over for one week & Later on Special Public Prosecutor for Union of India appeared and prayed for time to argue. Hence, notice to the Standing Counsel of Union of India shall not be issued and matter is now stand over for two weeks instead of one week.
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2013 (2) TMI 118
Confiscation of the gold and gold ornaments - representation of the Petitioner rejected for the return of the sale proceeds of the gold after adjusting the outstanding government dues - Held that:- By his letters dated 18 February 2009 and 8 December 2009 the Petitioner referred to the "enormous delay" on his part in paying the redemption fine and penalty and admitted that due to a severe financial crunch, he was unable to pay the fine and penalty. The contents of these letters clearly belie what is sought to be stated in the alleged letters dated 28 April 1993 and 14 October 2002 that the Petitioner was ready and willing to pay the redemption fine and penalty. After the final order of the Tribunal, the Petitioner took no steps whatsoever until 2009 when he addressed a communication to the Respondents. On this state of the record, it is apparent that the Petitioner was himself to blame in not paying the redemption fine within a reasonable period. A period of nearly 18 years elapsed before the Petition was filed and this can by no stretch of imagination be regarded as a reasonable period. The option of redemption was granted to the Petitioner which he failed to exercise. The gold having vested absolutely in the Union Government, no fault can be found in the action that was pursued of selling the confiscated property. The prayer for the return of the gold ornaments or in the alternative, for the payment of the sale proceeds cannot be acceded to.
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2013 (2) TMI 117
Importer and its Director are contesting that barring the Plant Quarantine Certificate no other evidence were relied upon in the SCN and the evidences have been used for the first time in the order, thus depriving them the right to defend their case effectively. Also that the Department also is questioning legality and properity of the impugned order on the grounds set out in the appeal, therefore, it is considered expedient to set aside the orders and remand the matter to the original authority for fresh decision.
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Corporate Laws
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2013 (2) TMI 116
Winding up petitions filed by the creditors - BIPL and one NRI lead Bank referred to the arbitral Tribunal pursuant to an agreement entered & an Award was rendered in which SICOM, IDBI, IFCI and some other banks and State Financial Corporations were impleaded as parties. Relying on the Award, BIPL took possession of the factory premises & upon an application made by SICOM in the execution petition following the Award, an order was passed by the Court directing the status quo to be maintained. Ceylon Biscuits Ltd. (‘CBL’), a Sri Lankan company made an offer of Rs. 12.5 crores and deposited the earnest money of Rs. 25 lakhs in US Dollars a bid for the land and plant and machinery of BIPL in Patiala, Punjab accepted by the Company Court and the sale in its favour was confirmed meanwhile, an application had been filed by BIPL in the Company Court for a direction to SICOM not to sell the property and for maintaining status quo in respect thereof - Held that:- On or before 21st January 2013 CBL will be paid a sum equal to Rs. 8,18,02,491.65 minus Rs. 10,00,000 minus Rs. 11,91,190 minus Rs. 2,82,866 collectively by SICOM, IDBI and IFCI, simultaneous with the handing over of the possession of the factory premises by CBL to the OL, subject to the OL being satisfied about the inventory of the plant and machinery tallying with the report of ITCOT annexed to the Minutes of Inspection dated 5th December 2012 (except the five Kadam-on-edge packing machines in respect of which orders have already been passed hereinabove). IFCI and SICOM will pay their respective shares of the aforementioned amount to IDBI which, in turn, will pay the same along with its share to CBL in ACU. It will be open to the OL as well as SICOM and IFCI, to have one expert each of their choice present at the factory premises for verifying that the assets taken over tallies completely with ITCOT report as directed above. A representative of the exmanagement of BIPL is also permitted to remain present. Additionally, PSPC Punjab State Power Corporation Ltd claiming the electricity dues will also depute its representative to remain present in the premises and make an inventory of equipments belonging to it which are in the premises. CBL is permitted to take back such office equipment and furniture that may belong to it. If there is any dispute as to any office equipment and furniture which CBL claims belonging to it, then the OL will seek directions from this Court before handing over such office equipment and furniture to CBL. ITCOT is appointed as a Valuer and its representatives will remain present at the factory premises on 21st January 2013 and any further dates that it might require, subject to the orders of the OL, to make a complete inventory of the plant and machinery. ITCOT will submit a comprehensive valuation report of the land, plant and machinery to the OL within a period of six weeks from today. The fees of ITCOT is tentatively fixed at Rs. 2,00,000 will be paid which will be paid by the secured creditors, i.e., SICOM, IFCI and IDBI. 50% of the fees will be paid within four weeks and the balance on submission of the valuation report. Any further sum will be paid by the said secured creditors as and when the final bill is received from the Valuer. The OL will engage a security agency in consultation with the secured creditors for providing security to the factory premises and also retain the minimum number of workers and for upkeep of the plant and machinery. The expenses thereof will be reimbursed by the secured creditors. It will be open to the OL to engage a technically qualified person in consultation with the ex-management of BIPL for the upkeep of the plant and machinery. CBL will file an undertaking in this Court by way of an affidavit, within two weeks, stating that in the event that the OL finds that any further statutory dues is found payable for the period between 3rd March 2005 and 15th September 2008 the said dues will be cleared by CBL forthwith upon intimation to that effect by the OL. The application filed by PSPC is disposed of by directing the OL to decide the claim of PSPCL in accordance with law as and when it is lodged before the OL. The load sanctioned for the factory will be reduced to 15 KVA by PSPC at the earliest and not later than 21st January 2013. The OL will settle all the current bills raised by PSPC after such reduction of the load to 15 KVA as and when the bills are raised. The past dues of ITCOT in the sum of Rs. 3,35,209 will now be paid to it by the OL out of the Common Pool Fund within a period of four weeks. The notice dated 8th June 2011 issued by IFCI under Section 13 (2) of the SARFAESI Act and other incidental proceedings are hereby set aside.
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2013 (2) TMI 115
Withdrawal of the share application money - the petitioner submitted that it is well settled that the prospectus is an invitation to offer and that an applicant desirous of applying for shares of a listed company can withdraw his offer prior to its acceptance - whether the date of closure is to be taken into account for determining whether or not the petitioner company achieved the minimum subscription - Held that:- A share application is like any other offer which would require acceptance of the offer made. The acceptance of an offer of this nature can only be brought about, inter alia by allotment of shares made in favour of the applicant by some overt method. Like in any other transaction between two individuals before an offer is accepted, the offerer is entitled to revoke the offer. This is precisely what happened in the present case. The minimum subscription clause is inserted in a prospectus to protect the interest of the investors, which is why Section 69 of the Companies Act provides that if minimum subscription is not achieved, a company issuing the prospectus cannot proceed to allotment of shares. The argument advanced on behalf of respondent no.1/company that on receipt of the share application form, a concluded contract came into existence, is a submission which is completely misconceived because if it was so the concerned company would have to, as of necessity, allot to the applicant, without fail, the exact number of shares for which a request is lodged. As is well known, on very many occasions the opposite happens. This is legitimate since in law, a share application is only an offer. Therefore, the minimum subscription clause appearing in the prospectus would have to yield to the right of an applicant to withdraw his offer before its acceptance. The prospectus issued by a company was an invitation to offer and if the application for shares is made, pursuant to issuance of a prospectus, it was only an offer which could be withdrawn at any stage before its acceptance. Thus minimum subscription would have to be calculated after taking into account the requests made for withdrawal of share application.[See Official Liquidator of Bellary Electric Supply Co. Ltd. Vs. Kanniram Rawoothmal and A. Sirkar vs Parjoar Hosiery Mills Ltd. (1932 (9) TMI 11 - HIGH COURT OF MADRAS) Undoubtedly, in this case like in other public issues, there are rejections by a Registrar based on various technical grounds. If as per the clause of minimum subscription, the minimum subscription had to be calculated as on the date of closure, it would be well impossible to carry out that exercise as more often than not the rejections are made even after the date of closure. Therefore, if the minimum subscription amount is not reached, which is the case in the present petition, then surely no allotment can be made. Withdrawal can only take place if its is accepted by the company and since in the present case, the withdrawal request was accepted by the Registrar the order of the Chairman SEBI had to be reversed. Once a request is triggered for withdrawal of a share application, in law, it requires no acceptance. The only bar which is statutorily introduced, is one, provided under section 72(5) of the Companies Act. The bar is also put in place for a limited period of time i.e., till the closing of the 5th day of the opening of the subscription list. It is no one’s case before the authorities below that withdrawal applications were not received after the expiry of the eclipse period, as provided in section 72(5) of the Companies Act - Thus the order of the Chairman SEBI dated 22.05.1998 would have to be sustained and the directions contained therein for refund of the money to the share applicants would have to be implemented.
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Service Tax
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2013 (2) TMI 135
Recovery of the refund - applicant being the transport operator (Service Provider) whereas TISCO, being the person who availed the services of the transport operator - Whether the Tribunal was justified in law holding the refund to be recovered from the applicant and not from TISCO where the applicant was not liable to pay tax and TISCO was liable to pay the tax and paid the tax and that tax has been refunded and paid to the applicant? - Held that:- It may be true that assessment can be against an assessee or a person who is liable to furnish the return in accordance with the rules and notice can be issued to that assessee only for charging any tax or for determination of tax or for quantification of tax or for imposition of penalty or interest but in this case, liability is determined and not in question. The amount has been paid to the Revenue and that amount is not refunded because of the setting aside of the order of demand in appeal or otherwise but that amount was refunded which could have been refunded only to that assessee, has been paid to the assessee’s agent but by virtue of the judgement of the Supreme Court in Laghu Udyog Bharati & Others [1999 (7) TMI 1 - SUPREME COURT OF INDIA] and the effect of the Supreme Court’s judgement was nullified by statutory enactment, validity of which has been upheld by the Supreme Court. In that situation, one of the legal proposition applicable is that, one who gets the benefit because of the order of the Court and that order is set aside, he is bound to restore the benefit from whom he got. Therefore, the Tribunal was fully justified in ordering the recovery of the said amount from the person to whom it was paid in view of the judgement of Supreme Court effect of which has been nullified by Finance Act, 2000. The plain and logical consequence of making such law is to restore status quo ante and imposing a duty and obligation on the noticee who got the refund under the overruled judgement to pay back that amount - against the applicant and held that the Tribunal was justified in demanding refund of the amount of the tax paid to the applicant from applicant with the liability of payment of interest @ 24%.
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2013 (2) TMI 134
CENVAT Credit on mobile phone - Whether CENVAT credit of the service tax paid on telephone (mobile phone) service is admissible - October 2004 to October 2005 - Held that:- Following the decision in case of EXCEL CROP CARE LTD. (2008 (7) TMI 160 - HIGH COURT GUJARAT) that the mobile phones were owned by the assessee and supplied to their employees to be used in or in relation to the manufacture and clearance of their final product. Therefore, CENVAT credit was allowed to the assessees in respect of mobile phone service. In favour of assessee
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2013 (2) TMI 133
Waiver of Pre-deposit - Stay of recovery - Construction of complex - Residential complex - Constructed certain houses for Tsunami victims - Held that:- Following the decision in case of MACRO MARVEL PROJECTS LTD. (2008 (9) TMI 80 - CESTAT, CHENNAI), waive the requirement of pre-deposit of all dues arising from the impugned order and stay its collection during the pendency of the appeals. In favour of assessee
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2013 (2) TMI 132
Waiver of pre-deposit - Circular F.No.334/1/2010-TRU dated 26.2.2010 - Assessee is an insurance Company, provides insurance on motor vehicles - applicants are paying service tax on insurance premium - Denial of CENVAT credit paid on repair service of vehicles done by the authorized service station on behalf of the insurance company under the cashless scheme Revenue argued that the service tax component on account of repair charges/ services is not entitled to them for input service credit as the repair service of the vehicle was availed by the vehicle owners as the invoices are in the name of the vehicle owners Held that:- Such situation as clarified by CBEC, in their Circular F.No.334/1/2010-TRU dated 26.2.2010 wherein it is clarified the insurance company is the service receiver. Therefore, on the basis of the above cited Circular, prima facie, the applicant are entitled to take input service credit on the impugned services - the applicant has made out a case for 100% waiver of predeposit.
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Central Excise
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2013 (2) TMI 114
Refund of Modavat credit - Modavat claim disallowed - Held that:- The issue sought to be raised by the appellant-Revenue is already answered in the case of Samtel India Ltd. Vs. CCE reported in 2003 (2003 (3) TMI 121 - SUPREME COURT OF INDIA)therefore, in this appeal no question of law arises including with respect to the other two issues. The objection of the Revenue that in this very proceeding refund could not have been claimed as the assessee became barred by time, it is to be considered that when the order with respect to disallowance itself had not become the final, before that the claim of refund could not have been raised by the assessee. Therefore, during the pendency of his claim for Modvat allowance itself was under consideration wherein the authority had jurisdiction to pass appropriate order with respect to the entitlement of Modvat benefit to the assessee, then in that situation, the assessee could not have moved any application for refund of the said amount which would have been in air. The question of bar of limitation in fact cannot apply and, therefore, there arises no question of law in this appeal - appeal of Revenue is dismissed.
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2013 (2) TMI 113
SSI exemption Notification No.9/2003-CE dated 01.03.2003 - Cenvat credit on SS bar received in their factory during the year 2004-2005 - demand notice for reversal of cenvat credit of the inputs gone into the manufacture of the finished goods in process - Held that:- Commissioner (Appeals) has not extended an effective hearing to the appellant and also the order is not a reasoned one. Finding force in the claim of the assessee that their address for correspondence as mentioned in their Appeal Memorandum in EA-1 Form before the Commissioner (Appeals) and before all other forums including this Tribunal, has been the same and it is their factory address from where the factory is still operating. This fact is not disputed by the the Department in these circumstances, there is a violation of principles of natural justice - the matter needs to be remitted to the Commissioner (Appeals) for a fresh decision without insisting any further predeposit as the appellant had already deposited an amount of Rs.30,000/- pursuant to the direction of this Tribunal - in favour of assessee by way of remand.
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2013 (2) TMI 112
MODVAT Credit on inputs - Solvent 1425 lies in Chapter sub-heading 2710.11 or 2710.14 - disallowance of Credit under Rule 57I(1) and penalty under Rule 173Q(bb) - Held that:- This issue is no more res integra as settled in Sarvesh Refractories case (2007 (11) TMI 23 - SUPREME COURT OF INDIA) wherein held that the classification of the capital goods by the manufacturer-supplier cannot be changed in the hands of the user-manufacturer. In the present case, as the input was classified under Chapter sub-heading 2710.11, the same cannot be changed to 2710.14, as claimed by the Appellant. The judgement of this Tribunal in Balkrishna Industries case 2013 (1) TMI 324 - CESTAT, NEW DELHI) is inapplicable to the facts of the present case, in view of the fact that there has been change in the definition of input as was in existence in 1997 and now in the provisions of CENVAT Credit Rules, 2002/2004. In the changed definition of input under the CENVAT Credit Rules, 2002/2004, Motor Spirit commonly known as petrol, was excluded from the scope of input, whereas in the definition of input during the relevant period, the goods classified under Chapter Sub-Heading 2710.11 had been excluded from the scope of input. Therefore, Solvent 1425 even if considered as not Motor Spirit and allowed CENVAT Credit to be availed on the same under the CENVAT Credit Rules, 2002/2004, the same cannot be made applicable for the period in dispute, i.e.January to October, 1997, when all goods falling under Chapter Sub-Heading 2710.11 were specifically excluded from the scope of MODVAT Credit - no merit in the arguments of the Appellant - in favour of revenue.
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2013 (2) TMI 111
CENVAT Credit on GTA (Outward Freight) Service - charge of excess credit - Held that:- Commissioner (Appeals) has allowed the CENVAT Credit on the GTA (Outward Freight) Service following the decision of ABB Ltd. vs. CCE & ST, LTU, Bangalore [2011 (3) TMI 248 - KARNATAKA HIGH COURT]. This interpretation is valid till 1-4-2008 substantial questions of law raised are answered in favour of the assesses.
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2013 (2) TMI 109
Reversal of CENVAT Credit availed - Credit against the service tax paid by them to the service provider - imposition of penalty and levy of interest on Credit wrongly availed - Held that:- Accepting the objection of the Department, assessee had already reversed the Credit of Rs.80,446/- in March, 2008 and such payment has not been disputed. As the Revenue has accepted the fact that the assessee had paid interest for the entire period on CENVAT Credit wrongly availed by them no merit in the present Appeal filed by the Revenue on the aspect of penalty. Order of the Commissioner (Appeals) to the extent of dropping the penalty against the assessee is upheld. The Appeal of the Revenue is partly allowed to the extent of chargeability of interest, which is already paid by the Assessee.
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CST, VAT & Sales Tax
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2013 (2) TMI 110
Rejection of licence - responsibility of disposal of stock as held in warehouse - India Made Foreign Liquor - suit for damages and/or loss caused to the plaintiff-appellant - Held that:- The plaintiff-appellant under a license issued by the authority, gathered the stock of IMFL and Beer etc. but because of his license was not renewed and/or that he did not get the license following tender process, and, because of the law that he cannot dispose the stock of his own as Bonded Warehouse is always under the system of double lock having a key of lock with the Inspector of Excise, in charge of the Bonded warehouse and another with the owner of the bonded warehouse & in absence of the Excise Inspector, owner of the bonded Warehouse cannot open it and he has no right to do it, definitely the responsibility was on the defendant-respondents to arrange disposal of the stock of the plaintiff-appellant. Rule 153 clearly prescribes the provision for disposal of such stock which the defendant-respondents failed to apply and therefore, a Civil suit for damages and/or loss caused to the plaintiff-appellant surely maintainable against the defendant-respondents and the provisions of Section 92 and 93 cannot be applied as a bar. If Section 92 and 93 is strictly applied irrespective of the factual situation of the case, the plaintiff-appellant will be remediless. As the plaintiff-appellant clearly brought on record with oral and documentary evidence that the price of destructed IMFL was Rs.3,12,604/-. The plaintiff-appellant also calculated godown rent @ Rs.10,000/- per month from 31.03.1995 till 11.11.1997 and the amount was Rs.3,15,000/-. The labour cost for shifting all the stock for destruction, the plaintiff-appellant claimed as Rs. 3000/-. This amount of Rs. 6,30,604 the plaintiff-appellant is entitled to get as damages from the defendant-respondents. The plaintiff-appellant claim of 15% interest per annum on the cost price of the destructed intoxicants i.e. Rs.3,12,604/- is not acceptable & the defendant-respondents should make payment of the same with 6% simple interest thereon from the date of service of notice under Section 80 CPC i.e. from 20.11.1998. The defendant-respondents are directed to make the payment within 60 days failing which the amount shall carry a penal interest @ 12% per annum.
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Indian Laws
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2013 (2) TMI 131
Public Distribution System (PDS) through the Gram Panchayats - High Court allowed the writ petition quashing the order of the State Government by which the PDS through the Gram Panchayats had been withdrawn - Held that:- It is evident that the High Court has taken a view that the provision of Article 243-G is merely an enabling provision, and it is not a source of legislation. Whatever may be the merit of the case, the issues raised before this Court have neither been agitated before the High Court nor the same have been considered. There are no proper pleadings in respect of the said issues. No factual foundation had been laid down by any of the parties to deal with such issues nor the necessary/proper parties are before us. More so, the judgment and order impugned was passed by the High Court about one decade ago. Subsequent to the said judgment, many developments had taken place and a large number of orders have been passed by the Central Government as well as by the State of U.P. Thus, in view of the same, it is neither desirable nor permissible for us to examine the issues raised by learned ASG at this stage as we do not think it proper to enter into the said controversy. The writ petition had been filed by the respondent no.1 without having any locus standi nor it could claim to be a person aggrieved of the order of the Government dated 13.1.2000, withdrawing the order dated 10.8.1999 conferring the power to allot and cancel the fair price shops in rural areas on the Gran Panchayats. The writ petition was filed in 2003 after a delay of 3 years and was thus liable to be dismissed on the ground of delay and laches. Respondent no.1 could not maintain the writ petition as it could not be aggrieved of the Government Order dated 13.1.2000. Even the direction issued by the High Court had not been challenged by the said respondent. More so, the judgment and order was stayed by this Court vide order dated 19.4.2004. The appeal is allowed with liberty to the State Government to pass appropriate orders taking into consideration the provisions of Articles 243-G and 243-N of the Constitution and the amendment to Section 15 of the Act 1947 and Section 32 of the Act 1961 and Schedule I to the same if it so desires.
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2013 (2) TMI 130
Challenging appointment of judge of the High Court of Andhra Pradesh - pendency of the criminal case against him - writ of mandamus commanding the Bar Council of Andhra Pradesh to cancel his enrolment as an advocate - two petitioners are advocates of the High Court of Andhra Pradesh - Held that:- A perusal of the court record shows that during the entire period, service of summonses in the ordinary course were not effected on the four accused persons. Although a proclamation under Section 82 and 83 of the Code of Criminal Procedure was ordered to be issued, the record does not show any publication having been made. However, the record does show that service was sought to be effected by beat of drum only on accused 3. There is nothing on the record to show that any attempt, let alone any serious attempt, was made to serve the summons or the non-bailable warrants on any of the accused persons. The purpose in adverting to the proceedings of the criminal case in detail is not to point out the irregularities in the proceeding. Anyone even with a passing acquaintance with the Code of Criminal Procedure can see that gross irregularities were committed practically at every step in the proceeding. Referring to the proceedings to judge whether respondent No. 3 could be said to have any knowledge of the case in which he was cited as accused 4. From the record of the case as discussed it very difficult to hold that respondent No. 3 was even aware that in some record buried in the courts at Mangalagiri he was named as an accused and he was required to appear in the court in connection with that case. Apart from the record of the case, there are external circumstances that strengthen this view. From the resume of respondent No. 3, it may be seen that before his appointment as a judge of the High Court, he was the Additional Advocate General of Andhra Pradesh. If the case would have been within his knowledge it is unimaginable that he would not have attended to it and got it concluded one way or the other. Here it may also be noted that before filing this writ petition before this Court the petitioners had made a representation, both before the Chief Justice of India and the Law Minister, asking for the removal of respondent No. 3 as a judge of the Andhra Pradesh High Court on the same allegations. The representation that came to the office of the Chief Justice of India received full consideration and the Chief Justice of India called for a report on the matter from the Chief Justice of the Andhra Pradesh High Court & made a detailed enquiry and submitted his report stated that it does appear that Justice XXX was unaware of the pendency of the criminal case against him and he deserves to be believed when he says so. Thus no hesitation in holding that at the time respondent No.3 was being considered for appointment as a judge of the High Court, he was unaware of any case being pending in which he was named as an accused and it is quite wrong to refer to him as “an absconder and a proclaimed offender” in the case. This finding leads to another and that is, it is not a case of suppression of any material fact by respondent No.3 or at his behest. No case is made out for issuing a writ of quo warranto quashing the appointment of respondent No. 3 as the judge of Andhra Pradesh High Court. The writ petition owes its origin to a news report published in a Telugu daily newspaper called ‘Sakshi’ on December 27, 2011 based on incorrect facts and is full of statements and innuendos that might easily constitute the offence of defamation leave alone contempt of court. After the news broke out, the petitioners seem to have collected the record of the criminal case and filed this writ petition on that basis it, therefore, appears to that this writ petition is not a sincere and honest endeavour to correct something which the petitioners truly perceive to be wrong but the real intent of this petition is to malign respondent No.3.
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2013 (2) TMI 129
Appointment procedures - workman cannot be given appointment in Group 'C' post by virtue of merger of Group 'D' post in Group 'C' - Held that:- The petitioner was entitled to appointment in Group 'D' and since that post has merged into Group 'C' post and till the order dated 24.11.2008 remains as it is, the workman is entitled to get the benefit which were available to the staffs of the Group 'D' post who also without there being any order from the Staff Selection Commission, got the post in Group 'C'. Therefore, the Tribunal has not committed any error in directing the petitioner to comply with the order dated 24.11.2008.
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