Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 15, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Proper officer under sections 73 and 74 of the Central Goods and Services Tax Act, 2017 and under the Integrated Goods and Services Tax Act, 2017 - Amends Circular No. 31/05/2018-GST - CGST - Circular
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Provisional attachment of bank accounts of petitioner - Section 83 of GST Act - it is in the best interest of both parties to permit the petitioner to continue in business operations subject to the caveats laid by me above and any further that the revenue may choose to impose. - If a representation is filed by this petitioner, let it be disposed within a period of three (3) weeks from date of receipt thereof, after hearing the petitioner - HC
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Classification of goods - Jack Fruit Chips and Banana Chips (salted and masala varieties) made out of raw as well as ripe banana and sold without BRAND NAME - classifiable as NAMKEENS or not - when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriately classifiable under heading 2008, by virtue of rule 3(a) of the rules for interpretation. In view of clear provisions in GST laws för interpretation of tariff, the contention of the appellant regarding common parlance understanding of a goods does not hold water, as is therefore rejected. - AAAR
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Levy of GST - reimbursement of expenses - pure agent - Rule 33 (iii) of the CGST Rules 2017 stipulates that the applicant must procure certain supplies from the third party, as a pure agent of the recipient of supply, which are in addition to the services he supplies on his own account. In the instant case, the applicant has not furnished any information with regard to procurement of supplies from the third party i.e. trainees. Thus the applicant is not fulfilling the required condition - the applicant does not qualify to be a pure agent and hence the GST is chargeable on the entire transaction value. - AAR
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Classification of goods - HSN Code - rate of GST - Old Watches - Wrist watches, pocket-watches and other watches, including stopwatches, with case of precious metal or of metal clad with precious metal will fall under CH 9101 of the GST Tariff and Wrist watches, pocket-watches and other watches, including stop-watches, other than those of Heading 9101 will fall under Heading 9102 of the said Tariff. The rate of GST is 18% and the same will be applicable even to Old Watches. - AAR
Income Tax
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Addition u/s 56(1) - unaccounted money of the assessee company which have been introduced in the garb of share application money - The High Court was not right and justified in disposing of the appeal with one paragraph order without discussing the issues which arose for consideration - SC
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Assessee is a revocable trust OR AOP - as the names of the beneficiaries of the assessee trust and their shares were known since inception i.e at the time of the formation of the trust as is evident from the minutes of the meeting dated 27.12.2007, therefore, it can safely be concluded that the assessee trust is a determinate trust i.e a non-discretionary trust. - AT
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Levy of interest under section 234C - Nil return or assessed tax - it is pertinent to note that section 234C refers to the term ‘returned income’ in comparison to section 234B which refers to the term ‘assessed tax’ for imposing interest. In the present case, it is not in dispute that returned income in case of assessee trust was NIL. As only in the case of default / shortfall in payment of advance tax as compared to tax due on returned income, interest is chargeable under sections 234C of the Act. Thus, we hold that no interest is chargeable under section 234C of the Act in the present case - AT
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Disallowance of expenditure incurred on account of LFR - Non deduction of TDS - Disallowance u/s 40(a)(ia) - There can be question of suspecting that the BPCL did not include such rental income from the assessee in its return of income. It is, therefore, held that the case of the assessee is covered by second proviso to section 40(a)(ia) and hence the disallowance made cannot be sustained. - AT
Customs
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Confiscation of export of prohibited goods - A plain reading of section 113(d) shows that ‘any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force’ are liable for confiscation. Thus export itself must be prohibited - Undisputedly, in this case, the goods have been exported. Once, they are exported, they move out of the customs control as well as the territory of India. In fact, the Customs Act, 1962 did not, during the relevant period, extend to outside the territory of India - In this case, the goods were already exported and hence they cannot be confiscated under section 113(d). - AT
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Classification of goods - partially assembled vehicles, described by the applicant as Completely Knocked Down (CKD) kits of vehicles - The CKD kits, as described by the applicant and presented together as a kit merits classification under heading 8703 - the CKD kits are eligible for 30% rate of BCD - AAR
Indian Laws
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Dishonor of Cheque - acquittal of the accused - panchayati compromise - in view of the fact that the matter has been compromised, the order of conviction to be quashed/set aside and the same would be subject to the petitioner depositing an amount of ₹ 36,750/- which is 15% of the cheque amount, within a period of one month from today with the High Court Lawyers' Welfare Fund. - HC
Service Tax
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Refund of service tax deposited - unjust enrichment - services of advertisements of the advertisers and broadcasting or telecasting them -The appellant is directed to return the amount collected by it, under the garb of its liability to pay service tax when actually it was not liable, to all those customers from whom it was collected that too within a period of two months - the order under challenge confirming the demand with interest and imposing penalty upon appellant is hereby set aside - AT
VAT
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Recovery of arrears of tax - Power of Special JMFC (Sales Tax) Court to attach the property through FLW through Commissioner, BBMP - Only the District Magistrate is empowered to attach the property not the Commissioner, BBMP. When such being the case, the order requires an interference of this Court since the Commissioner of BBMP., has no any authority to attach the property as ordered by the Special JMFC (Sales Tax) Court - HC
Case Laws:
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GST
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2022 (3) TMI 578
Refund claim - rejection on the ground of delay - Section 54(1) of the CGST/UPGST Act - HELD THAT:- On the fact of the present case, it is found that the refund application of the petitioner could not have been rejected by the respondent no.4 merely on the ground of delay, ignoring the order of Hon'ble Supreme Court in its order dated 10.01.2022 [ 2022 (1) TMI 385 - SC ORDER ] where it was held that In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. The impugned order cannot be sustained and is hereby quashed. Matter is remitted back to the respondent no.4 to decide the refund application of the petitioner in accordance with law, by reasoned and speaking order, expeditiously and preferably within six weeks from the date of presentation of copy of the order, after affording reasonable opportunity of hearing to the petitioner.
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2022 (3) TMI 577
Provisional attachment of bank accounts of petitioner - Section 83 of GST Act - HELD THAT:- it is in the best interest of both parties to permit the petitioner to continue in business operations subject to the caveats laid by me above and any further that the revenue may choose to impose. The petitioner must be permitted to approch the revenue by way of a representation seeking lifting of the bank attachment, conditional upon her furnishing an undertaking therein to made earnest efforts to repay the admitted dues in line with a scheme of installment to be arrived at. The revenue will consider the representation, take into account the amounts remitted by the petitioner, till date, arrive at a new scheme of installment and thereafter, consider lifting the bank attachment. In the case of NOKIA INDIA PVT LTD VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX O [ 2014 (3) TMI 1195 - SUPREME COURT] , an order under Section 281(B) of the Income Tax Act, provisionally attaching the bank accounts of that assessee under the Income Tax Act for arrears of income tax, was considered by the Hon'ble Supreme Court and noticing the position that the petitioner was managing a running concern, the bank account was ordered to be lifted, upon condition that a monthly statement of account is filed in hard copy, to ensure proper monitoring of the receipts and payments from that account. If a representation is filed by this petitioner, let it be disposed within a period of three (3) weeks from date of receipt thereof, after hearing the petitioner - Petition disposed off.
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2022 (3) TMI 576
Classification of goods - Jack Fruit Chips and Banana Chips (salted and masala varieties) made out of raw as well as ripe banana and sold without BRAND NAME - classifiable as NAMKEENS and are covered by HSN Code 2106.90.99 and taxable under Entry 101 A of Schedule of Central Tax (Rate) Notification 1 of 2017 or not - Sharkaraivaratty sold without BRAND NAME is classifiable as SWEET MEATS - covered by HSN Code 2106.90.99 and taxable under Entry 101A of Schedule of Central Tax (Rate) Notification L of 2017 or otherwise? - Roasted and salted / salted / roasted preparations such as of Ground-nuts, Cashew nut and other seeds are NAMKEENS and when sold without a brand name - classified under HSN 2106.90.99 and taxed under Entry 101 A of Schedule of Central Tax (Rate) Notification 1 of 2017 or not - salted and masala chips of Potato and Tapioca are classifiable as Namkeens and when sold without a brand name - classified under HSN 2106.90.99 and taxed under Entry 101 A of Schedule I of Central Tax (Rate) Notification 1 of 2017 or not. Roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts - HELD THAT:- It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not being processed or preserved by the said processes shall be covered in chapter 20. The processes specified in chapter, 7, 8 or 11 are freeing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted nuts and fruits such as ground nuts, cashew nuts. other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate) - there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of interpretation of the tariff. Banana chips, tapioca chips, potato chips, jackfruit chips and sharkara varatty - HELD THAT:- The manufacturing process applied by the appellant in making these items is not in dispute. These chips are made by slicing, frying, adding salt or masala or jaggery syrup before packing and supply. It is not the case of the appellant that the essential characteristics of the fruits or vegetables are getting changed by applying the processes. As far as the essential nature of the products remains unchanged, the edible parts of plants are appropriately classifiable under heading 2008. In this case, the raw banana or potato or jackfruit or tapioca even after going through the process of frying and salting remain as vegetables and fruits only. The process of frying in oil and roasting are cooking methods wherein high temperature is used for processing of the edible parts of the fruit or vegetables as in this case - When according to chapter notes and description of tariff items, the products are classifiable under specific headings of Chapter 20, they cannot be classified under Heading 2105 as food preparations not elsewhere specified or included or under Chapter claimed by the appellant. Application of rule 2(a) of the general rule of interpretation of the import tariff by the learned authority for advance ruling - HELD THAT:- By applying the rules for interpretation of the tariff, specially rule 1, 2 and 3 of the same, it is evident that the impugned goods are appropriately classifiable under heading 2008 and not under heading 2106. Rule 2(a) provides that any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance, according to which the chips of jackfruit, potato, banana or tapioca gets also appropriately classifiable under. heading 2008 along with specifically covered goods viz. Roasted and salted nuts under examination (which is covered by Rule 3(a) of the said rules for interpretation). Further, chapter 21 covers Miscellaneous edible preparations, whereas chapter 20 specifically covers Preparations of vegetables, fruits, nuts or other parts of plants - when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriately classifiable under heading 2008, by virtue of rule 3(a) of the rules for interpretation. In view of clear provisions in GST laws f r interpretation of tariff, the contention of the appellant regarding common parlance understanding of a goods does not hold water, as is therefore rejected. All the products that fall under Chapter Heading 2008 of the Customs Tariff Act, 1975 attract GST at the rate of 12 %.
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2022 (3) TMI 575
Classification of supply - Ready Mix Concrete (HSN Code : 38245010) - covered under definition of Continuous supply of Goods under Section 2(32) of the CGST Act 2017 or not - HELD THAT:- In the instant case, the question in respect of which the Applicant sought advance ruling is not covered under the specified issues and hence the instant application is liable for rejection. The application filed by the applicant for advance ruling is hereby rejected.
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2022 (3) TMI 574
Levy of GST - reimbursement of expenses - Applicant is acting as a pure agent of the Industry partner to the extent of reimbursement received towards stipend paid to trainees on behalf of Industry partner as part of training agreement - reimbursement received against cost of medical and accident insurance obtained for the benefit of trainees by the Applicant and reimbursed by the Industry partner as per the training agreement - HELD THAT:- The applicant, being an approved NEEM (National Employability Enhancement Mission) facilitator partner with various trainers and Employers/Company/Industry (industry partner) for imparting training to NEEM trainees. The applicant as well as the Industry partner have certain obligations as per the NEEM Regulations and thus to fulfill the obligations, the applicant charges Administration Fee, Sourcing Fee, Enrollment Fee, Reimbursement of monthly stipend paid to trainees on behalf of Industry partner and Reimbursement of cost of medical and accident insurance obtained for welfare of trainees as agreed by the Industry Partner - applicant, though collecting GST on the entire transaction value including the reimbursement amounts, is of the view that the reimbursement received towards stipend and cost of medical accident insurance is an expenditure or cost incurred as pure agent of the Industry Partner as per rule 33 of the CGST Rules 2017 and therefore such reimbursements should be excluded from the taxable value and hence GST should not be charged on such reimbursements. Whether the applicant qualify to be a pure agent of the Industry Partner or not? - HELD THAT:- A pure agent would be a person (supplier i.e. applicant in this case) who enters into a contractual agreement with the recipient of supply (Industry partner in this case) to act as recipient's pure agent to incur expenditure or costs, in the course of supply of goods or services or both. It is an admitted fact that the applicant herein is raising invoice for stipend and insurance cost and distributes the same to the trainees on receipt of the said amount and also not furnished any contractual agreement to incur expenditure first and to claim the said amounts later. Thus the applicant does not qualify to be a pure agent at all, in terms of rule 33 of the CGST Rules 2017. Rule 33 (iii) of the CGST Rules 2017 stipulates that the applicant must procure certain supplies from the third party, as a pure agent of the recipient of supply, which are in addition to the services he supplies on his own account. In the instant case, the applicant has not furnished any information with regard to procurement of supplies from the third party i.e. trainees. Thus the applicant is not fulfilling the required condition - the applicant does not qualify to be a pure agent and hence the GST is chargeable on the entire transaction value.
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2022 (3) TMI 573
Input Tax Credit - common services utilized for both taxable as well as exempted supply of Varnika (IMU) and printing press of rupee note located in Mysuru Unit - such as CISF Township Security Services, Maintenance of Water Treatment Plant, Horticulture, Maintenance of Residential Quarters, Maintenance of Information System (Computers, Software Electronic Equipment), Maintenance of Sewage Treatment Plant, etc. - turnover of which financial year to be considered in Rule 42 of the CGST Rules, 2017 while calculating ineligible ITC for the invoices which were accounted in the books of accounts in the FY 2019-20, however ITC was claimed during April to September of FY 2020-21 as per section 16(4) of the CGST Act, 2017. HELD THAT:- The applicant is engaged in printing of rupee notes, in their Mysuru Unit; supply the same to RBI on agreed rate of cost-plus margin basis which is wholly exempted from levy of GST vide S.No. 117 of Notification No. 2/2017 of Central Tax (Rate) and S.No. 117 of Notification No. 2/2017 of Integrated Tax (Rate). Further, the applicant also manufactures ink, which is used in printing of rupee notes, consumes captively, transfers to their branch located at Salboni, West Bengal and also supplies to M/s. Security Printing and Minting Corporation of India Ltd (hereinafter referred to as SPMCIL'). Thus the applicant is involved in taxable as well as exempted supplies. Whether ITC can be claimed on common services which are utilized for both taxable as well as exempted supplies? - HELD THAT:- This question is not covered under the issued referred to in Section 97 (2), in respect which an applicant can seek advance ruling, as the ITC of the tax paid on common services, utilized for both taxable as well as exempted supplies is governed under Section 17 (2) of the CGST Act 2017 read with Rule 42 of the CGST Rules 2017 - any registered person, to avail the input tax credit, has to check the entitlement in terms of Section 16 (1) and also whether the said credit falls under the blocked credits in terms of Section 17(5) or not. If they are still entitled to avail the said credit, then they should apportion the said credit in terms of Section 17(1) Section 17 (2), if the relevant supplies are utilized partly for the purpose of business and partly for other purposes or partly for effecting taxable supplies including zero-rated supplies and partly for effecting exempt supplies, as per Rule 42 of the CGST Rules 2017. Therefore the applicant has to check each and every supply in the manner mentioned above and then decide whether they are entitled to avail the credit and if so to what extent. Whether the method followed by the applicant in connection with claiming of Input Tax Credit is in accordance with the provisions of law? - HELD THAT:- The applicant is involved in supply of both taxable and exempted supplies. Thus the applicant has to avail the credit proportionately in terms of Section 16, 17 of the CGST Act 2017 read with Rule 42 of the CGST Rules 2017, wherein the procedure to be followed has been clearly mentioned - the inward supplies of goods or services are used for both taxable and exempted supplies and the applicant is entitled to avail the input tax credit, on the said goods or services, to the extent of taxable outward supply. The amount of ITC to be reversed proportionate to taxable outward supply need to be determined as per Section 17 (2), 17(6) of the CGST Act 2017, read with Rule 42 of the CGST Rules 2017, for a particular financial year. Turnover of which financial year to be considered in Rule 42 of the CGST Rules, 2017 while calculating ineligible ITC for the invoices which were accounted in the books of accounts in the FY 2019-20, however ITC was claimed during April to September of FY 2020-21 as per section 16(4) of the CGST Act, 2017 - HELD THAT:- Manner of claim of ITC is determined in terms of Rule 42 of the CGST Rules, 2017 and the impugned issue is not covered under Section 97(2) of the CGST Act, 2017 and hence this authority refrains from giving any ruling in this regard - However, it is observed that the turn over of 2019-20 only need to be considered as the Rule 42 of the CGST Rules 2017 is applicable only for a particular tax period only.
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2022 (3) TMI 572
Classification of goods - HSN Code - rate of GST - Paintings Bought from individual art collectors - old cars - Old Jewellery - Antique Jewellery of an age exceeding one hundred years - Old Watches - Antique Watches of an age exceeding one hundred years - Antique Books - Whether Applicant dealing in second hand goods is required to pay tax on the difference between selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017? HELD THAT:- The Appellate Authority observed that, they had to only decide the limited issue of the applicability of Rule 32(5) of the CGST Rules, 2017 - The Appellate Authority held that SAPL (Astaguru.com) was eligible to take the benefit of Rule 32(5) for the said products, viz. Paintings bought from individual art collectors, Antique Watches, Antique Jewellery and Antique Books. Paintings - HELD THAT:- Paintings bought from individual art collectors will be classifiable under Heading 9701 and the applicant is liable to pay GST of 12%. Old Cars - HELD THAT:- Motor Vehicles fall under Heading 8703 of the GST Tariff. All the items under 8703 will attract 28% GST except Tariff item 870310 10; Sub-heading 8703 80. However old cars will attract a lower rate of tax as per Notification No. 08/2018 CT (Rate) dated 25.01.2018. As per the said Notification, the lesser rate of tax i.e. 18 % is applicable to old cars provided the conditions mentioned therein are fulfilled. Old Jewellery - HELD THAT:- Articles of jewellery and parts thereof, of precious metal will fall under Heading 7113 of the GST Tariff attracting 3% GST. Antique jewellery - HELD THAT:- Antique jewellery of age exceeding 100 years:- Antique jewellery of age exceeding 100 years will fall under Tariff item 9706 00 00 and will be liable to tax @ 12% GST. Old Watches - HELD THAT:- Wrist watches, pocket-watches and other watches, including stopwatches, with case of precious metal or of metal clad with precious metal will fall under CH 9101 of the GST Tariff and Wrist watches, pocket-watches and other watches, including stop-watches, other than those of Heading 9101 will fall under Heading 9102 of the said Tariff. The rate of GST is 18% and the same will be applicable even to Old Watches. Antique watches of age exceeding 100 years - HELD THAT:- Antique watches of age exceeding 100 years will fall under Tariff item 9706 00 00 and will be liable to tax @ 12% GST. Antique Books - HELD THAT:- Antique books would fall under HSN 9706 of the GST Tariff and would attract GST @ 12%. Whether Applicant dealing in second hand goods is required to pay tax on the difference between selling price and purchase price as stipulated in Rule 32(5) of CGST Rules, 2017? - HELD THAT:- Answered in the affirmative in respect of the impugned goods. The provisions of Rule 32(5) of CGST Rules will be applicable to applicant in respect of second hand goods i.e used goods which are purchased by them and then sold.
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Income Tax
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2022 (3) TMI 580
Additional depreciation u/s 32(1)(iia) - activities undertaken by the assessee amount to Manufacture - Whether the term manufacture was introduced in the Act w.e.f. 01.04.2009 by way of insertion of section 2(29BA) and therefore, the claim of the assessee regarding its activity qualifying as manufacture ? - CIT- allowed the deduction - HELD THAT:- We find that CIT(A) while deciding the issue has noted that the facts of the case under consideration were similar to A.Y. 2007-08. We further find that while deciding the identical issue in assessee s own case for A.Y. 2011-12 2012-13 [ 2021 (3) TMI 935 - ITAT DELHI] and following the decision of Tribunal in assessee s own case or A.Y. 2013-14 [ 2020 (1) TMI 1371 - ITAT DELHI] held the issue to be covered in assessee s favour. Before us, Revenue has not placed any material on record to demonstrate that the facts in the case in the year under consideration and that of earlier years are different and distinguishable and further no material has been placed by the Revenue to demonstrate that the decision rendered by the Tribunal in assessee s own case in earlier years has been stayed/ set aside/ overruled by higher judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A). Thus grounds of the Revenue are dismissed.
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2022 (3) TMI 571
Addition u/s 56(1) - unaccounted money of the assessee company which have been introduced in the garb of share application money - HELD THAT:- The High Court was not right and justified in disposing of the appeal with one paragraph order without discussing the issues which arose for consideration. We, therefore, allow this appeal, set-aside the view taken by the High Court and remit the matter back to the High Court for fresh consideration. Income Tax Appeal is thus restored to the file of the High Court to be decided afresh and purely on its own merits.
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2022 (3) TMI 570
Reopening of assessment u/s 147 - carbon credit to be treated as capital receipt or not? - HELD THAT:- Division Bench of this Court in the case of Principal Commissioner of Income Tax Vs. L.H.Sugar Factory (P) Ltd. [ 2016 (3) TMI 367 - ITAT LUCKNOW] has held that carbon credit is a capital receipt. The present controversy arose on account of issuance of notice under Section 148 of the Act for the assessment year 2016-2017, recording reasons not being a capital receipt. Prima facie, the impugned notices under Section 148 of the Act is based on 'change of opinion' which is not permissible under the provisions of Sections 147/148 of the Act. Consequently, the notices dated 6.12.2021 under Section 143(2) and 27.1.2022 under Section 142(1) of the Act are also prima facie without jurisdiction. Since, prima facie, it appears to us that the notice under Section 148 of the Act dated 30.3.2021 is without jurisdiction, therefore, impugned notices are stayed till the next date of listing. Income Tax Department prays for and is granted four weeks time to file counter affidavit. The petitioner shall have two weeks thereafter to file rejoinder affidavit.
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2022 (3) TMI 569
Penalty u/s 271(1)(c) - additional income surrendered by the assessee - true nature of disclosure made by the assessee - revised return consequent to scrutiny assessment - HELD THAT:- The questions of law as proposed by the revenue referred to above are no longer res-integra in view of the order passed by a Co-ordinate Bench of this Court in the case of Principal Commissioner of Income Tax-3 Vs. R. Umedbhai Jewellers Pvt. Ltd [ 2016 (9) TMI 9 - GUJARAT HIGH COURT] wherein concerned with the similar situation where the assessee revised his return pursuant to the search operation during which he had admitted to have concealed the income. The Court held that such revised return could not be treated as voluntary return and penalty under Section 271(1)(a) of the Act would be leviable. - Decided in favour of assessee.
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2022 (3) TMI 568
Late payment of Employees contribution towards EPF/ESI by invoking the provision of Section 36(1)(va) - as per assessee all the amounts have been deposited with the appropriate authorities before filing of return of income by the assessee - Diversified views - HELD THAT:- We find that the various Benches of the Tribunal at Delhi and other Tribunal have held that the delayed deposits of PF ESIC before the date of filing of return is an allowable expenditure and for which reliance was placed on the decision of Hon ble Delhi High Court in the case of AIMIL Ltd[ 2009 (12) TMI 38 - DELHI HIGH COURT] . DR on the amendment brought out by Finance Act 2021 is concerned, notes on clauses to the Finance Bill 2021 clearly states that the amendment will take effect from 1st April 2021 and will apply in relation to the assessment year 2021-22 and subsequent assessment year. In such a situation, we are of the view that the amendment brought out by Finance Act 2021 does not apply to the assessment year under consideration. When two judgments are available giving different views, then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] no disallowance u/s 36(1)(va) of the Act is warranted in the present case. We therefore direct the AO to delete the addition. Thus the assessee s ground is allowed.
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2022 (3) TMI 567
Exemption u/s 11 - Assessment of trust - denial of claim as application of income on account of provisions for doubtful debts - HELD THAT:- We find that CIT(A) after considering the submissions of the assessee has given a finding that the provision made by the assessee was ascertained and quantified and the provision was made in furtherance of the objectives of the trust. He further relying on the decision in the case of NASSCOM [ 2012 (5) TMI 204 - DELHI HIGH COURT] held that the income for application for charitable purpose is to be computed in accordance with the commercial principles. Before us, Revenue has not placed any contrary binding decision in its support nor has pointed to any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of the Revenue are dismissed.
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2022 (3) TMI 566
Assessee is a revocable trust OR AOP - income taxable in the hands of the assessee or taxable in the hands of the contributors - as per AO assessee is an AOP and should be taxed under the term defined for person u/s. 2(31) of the Act - HELD THAT:- We observed that Ld.CIT(A) has dealt with the issue in detail and gave a clear finding that assessee is a revocable trust and not an AOP. In view of the provisions of section 61, 62 and 63 of the Act, it was held that income is not taxable in the hands of the assessee but the same is taxable in the hands of the contributors. We observed that the facts in the present appeal are exactly similar to the facts in the case of ITO v. M/s. Scheme A1 of ARCIL CPS 002 XI Trust [ 2020 (9) TMI 465 - ITAT MUMBAI] , therefore we are inclined to follow the decision of the Coordinate Bench of the Tribunal wherein held assessee trust could not be considered as an indeterminate trust. In fact, we are in agreement with the view taken by the CIT(A) that as neither any discretion have been given to the trustee to decide the allocation of the income every year, nor any right is given to the beneficiary to exercise an option to receive the income or not each year, therefore, it cannot be held that the share of the beneficiaries were indeterminate. In our considered view, as the names of the beneficiaries of the assessee trust and their shares were known since inception i.e at the time of the formation of the trust as is evident from the minutes of the meeting dated 27.12.2007, therefore, it can safely be concluded that the assessee trust is a determinate trust i.e a non-discretionary trust. Accordingly, finding no infirmity in the view taken by the CIT(A) who had rightly concluded that the assessee is a determinate trust, we uphold the same - Decided against revenue.
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2022 (3) TMI 565
Exemption u/s 11 - violation under Section 13(1)(d) and 13(2)(h) - income earned from non-prohibited investments - HELD THAT:- It is only when shares of the concern carrying not less than 20% of voting power are owned by authors / founders of the trust, such person shall be deemed to have a substantial interest in the concern. It is evident from the facts of the present case, as also noted by the Assessing Officer, that Shri Ratan N. Tata, founder trustee of the assessee, was holding 3,368 ordinary shares of Tata Sons Ltd. constituting only 0.83% of the aggregate paid up ordinary share capital of Tata Sons Ltd., which was much less than the threshold requirement of provision of Explanation 3 to section 13 of the Act. Therefore, Shri Ratan N. Tata cannot be held to be having substantial interest in Tata Sons Ltd. Accordingly, the investment by the assessee trust in shares of Tata Sons Ltd. is not affected by the vice of section 13(2)(h) of the Act. In the present case, the only basis for invoking the provisions of section 13(2)(h) of the Act by the AO was that Shri Ratan N. Tata, being the Chairman of Tata Sons Ltd., could have influenced the decision of Tata Sons Ltd. as well as of the assessee trust at the time of investment, is nothing but conjectures/surmises which is not even supported by the statutory requirements of section 13(2)(h) read with Explanation 3 to section 13 of the Act. As in a recent decision in the case of Sir Dorabji Tata Trust v. DCIT (Exemption) [ 2020 (12) TMI 1121 - ITAT MUMBAI ] held that observation made in the said decision of Jamsetji Tata Trust [ 2014 (5) TMI 890 - ITAT MUMBAI ] is a sweeping observation based on conviction rather than material available on record, as it observes that As far as the violation of clause(h) of section 13(2) is concerned we find that the author of the assessee trust and its relative definitely have a substantial interest in the Tata Sons Ltd., therefore, the investment in the shares of Tata Sons Ltd. is clear violation of clause(h) of section 13(2) . We hold that by making investment in shares of Tata Sons Ltd., assessee trust didn t violate provisions of section 13(2)(h) of the Act. Accordingly, ground no.1 raised in assessee s appeal, insofar as it pertains to violation of section 13(2)(h) of the Act, is allowed. Denial of benefits of section 11 of the Act only in respect of the income from prohibited investments - HELD THAT:- In the present case, the assessee had made investment in redeemable preferential shares of Tata Sons Ltd. which the AO, inter-alia, held to be in violation of provision of section 13(1)(d) of the Act. The income that could be derived from such an investment would be dividend income or the capital gains on sale of such investment. However, due to violation of provisions of section 13, income derived from property held under trust is not exempted under section 11 of the Act. The issue which arises in the present case is whether the entire income of the trust shall become ineligible for exemption under section 11 of the Act or it is restricted to only the income derived from prohibited investments. Hon ble Jurisdictional High Court in the case of CIT v. Audyogik Shikshan Mandal[ 2018 (12) TMI 1344 - BOMBAY HIGH COURT] held that on a plain reading of sections 11 and 13 of the Act, it is clear that the legislature did not contemplate the denial of benefit of section 11 of the Act to the entire income of the Trust. Thus we direct the AO to only consider income from prohibited investments while denying the benefits of section 11, and, at the same time, grant the exemption under section 11 of the Act on interest income and income earned from non-prohibited investments by the assessee. Accordingly, ground nos. 2 to 4 raised in assessee s appeal are allowed. Levy of interest under section 234C - HELD THAT:- Under the provisions of section 208 or section 209 of the Act, advance tax is to be computed on the estimated current income of the assessee and in case such income is not taxable, there is no liability imposed on the assessee to pay any advance tax. In the present case, as the assessee trust at the relevant time of deposit of advance tax had NIL taxable income, there was no liability to deposit any advance tax. Consequently, no default can be attributed to the assessee for non-deposit of advance tax while estimating its income - it is pertinent to note that section 234C refers to the term returned income in comparison to section 234B which refers to the term assessed tax for imposing interest. In the present case, it is not in dispute that returned income in case of assessee trust was NIL. As only in the case of default / shortfall in payment of advance tax as compared to tax due on returned income, interest is chargeable under sections 234C of the Act. Thus, we hold that no interest is chargeable under section 234C of the Act in the present case. The AO is directed to delete the interest levied under section 234C of the Act. Accordingly, ground no. 7 raised in assessee s appeal is allowed. Levy of interest under section 234B / 234D - HELD THAT:- While ground no. 9 in assessee s appeal pertains to addition of interest received under section 244A of the Act. During the course of hearing, learned counsel submitted that all these grounds are consequential in nature. Thus, the AO is directed to compute the interest under sections 234B and 234D, if leviable, in accordance with law. Further, the AO may grant the interest under section 244A of the Act in accordance with law. Accordingly, ground nos. 6, 8 and 9 in assessee s appeal are allowed for statistical purpose. Exemption under section 10(34) of the Act on dividend income received on shares by the assessee - HELD THAT:- It is pertinent to note that vide Finance (No.2) Act, 2014, sub-section (7) was inserted in section 11 of the Act whereby it has been provided that benefits of exemption provided in section 10 shall not be available to any Trust/Institution registered and claiming the benefit of section 11 of the Act. This amendment was brought w.e.f. 1st April, 2015 and therefore, is only applicable to assessment year 2015-16 and onwards. Thus, respectfully following the aforesaid decision of M/S. JASUBHAI FOUNDATION [ 2015 (4) TMI 305 - BOMBAY HIGH COURT] , order passed by the CIT(A), inter-alia, granting benefit of exemption under section 10(34) of the Act in respect of dividend income received by assessee is upheld. Accordingly, ground nos. (i) to (iii) raised in Revenue s appeal are dismissed. Claim of depreciation by the assessee trust - HELD THAT:- As decided in RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [ 2017 (12) TMI 1067 - SUPREME COURT] in case of charitable institution registered under section 12A, even though expenditure incurred for acquisition of capital assets was treated as application of income for charitable purpose under section 11(1)(a), yet depreciation would be allowed on assets so purchased. Vide Finance (No.2) Act, 2014, sub-section (6) was inserted in section 11 of the Act whereby it has been provided that benefits of depreciation shall not be available to any Trust/Institution registered and claiming the benefit of section 11 of the Act. This amendment was brought w.e.f. 1st April, 2015 and therefore, is only applicable to assessment year 2015-16 and onwards. In view of the above, respectfully following the aforesaid decision of Hon ble Supreme Court, we, inter-alia, upheld the order passed by the CIT(A) allowing the claim of depreciation on fixed assets to the assessee. Accordingly, ground no. (iv) raised in Revenue s appeal is dismissed. Carry forward of excess application/ deficit to subsequent assessment year - HELD THAT:- We find that on similar issue Hon ble Supreme Court in the case of CIT(Exemption) v. Subros Education Society [ 2018 (4) TMI 1622 - SC ORDER] held that any excess expenditure incurred by trust/charitable institution in earlier assessment year would be allowed to be set off against income of subsequent years by invoking section 11 of the Act - we, inter-alia, upheld the order passed by the CIT(A) allowing the carry forward of deficit. Accordingly, ground no. (iv) raised in Revenue s appeal is dismissed.
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2022 (3) TMI 564
Unaccounted sale consideration - undisclosed income - assessee could not able to prove receipt of ₹ 2,44,166/- by the sellers during the ex-parte assessment proceedings, as well as before the appellate proceedings before the Ld. CIT(A) even after lapse of four years from the date of sale registration - HELD THAT:- Addition to the extent of ₹ 2,44,166/- which has not been shown as receipt by one of the sellers i.e. father of the assessee herein. The assessee has neither proved with supporting evidence about the receipt of outstanding sale proceeds by the seller, nor able to show whether the same was taxed in the hands of persons involved in the transaction. Thus, the assessee has not discharged his onus before the Income-tax authorities or before us. This factual aspect was verified by the Ld. CIT(A), which does not call for our intervention, and therefore, ground No. 1 of the appeal is rejected.
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2022 (3) TMI 563
Validity of assessment u/s. 143(3) - notice only in the name of the non-existing company - whether assessment proceedings on erstwhile company was a curable error u/s. 292B and 292BB - HELD THAT:- The facts of amalgamation was well within the knowledge of the AO. Despite this, the AO issued jurisdictional notice only in the name of the non-existing company. We are of the considered view that the decision in assessee's own case for AY 2010-11 placing reliance on the decision of the Hon'ble Supreme Court in PCIT vs. Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT] will hold good for the present appeal also. - Decided in favour of assessee.
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2022 (3) TMI 562
Disallowance of expenditure incurred on account of LFR - Non deduction of TDS - Disallowance u/s 40(a)(ia) - HELD THAT:- As decided in own case [ 2019 (2) TMI 2008 - ITAT DELHI] Tribunal had deleted the said disallowance held that second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 1.4.2005. On a conjoint reading of second proviso to section 40(a)(ia) and first proviso to section 201(1), it becomes graphically clear that if the payee has furnished his return of income under section 139 and has taken into account such sum paid by the payer for computing income in such return of income and has paid income tax thereon, then the payer cannot be treated as assessee in default. A fortiori, no disallowance under section 40(a)(ia) can be made in such circumstances. Adverting to the facts of the instant case, it is seen that the assessee paid a sum to Bharat Petroleum Corporation Limited. There can be question of suspecting that the BPCL did not include such rental income from the assessee in its return of income. It is, therefore, held that the case of the assessee is covered by second proviso to section 40(a)(ia) and hence the disallowance made cannot be sustained. - Decided in favour of assessee. Disallowance of expenditure incurred on account of Cash Handling Charges - HELD THAT:- Reasoning given by the Assessing Officer that handling of cash is responsible and risky work for which he should have engaged professionals, then he was required to deduct TDS. Such a reasoning for making the disallowance cannot be held to be valid ground, because in the nature of business carried out by the assessee which is selling of petrol and petroleum product from its petrol pump, huge cash is generated throughout the working hours and if assessee is paying cash handling charges to two persons which is in the form of salary, then disallowance cannot be made especially when vouchers for such payment have been produced. Accordingly, respectfully following the order of the Tribunal for the earlier years, we delete the same.
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Customs
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2022 (3) TMI 561
100% EOU - Sibutramine Hydrochloride - Applicability of Notification dated 10.2.2011 - Section 26A of the Drugs and Cosmetics Act, 1940 - prohibition on export of Sibutramine hydrochloride under the notification or not - Confiscation - penalties imposed under section 114(i) and 114AA of Customs Act - HELD THAT:- The show cause notice is issued to the appellant on the ground that the appellant had exported Sibutramine Hydrochloride in violation of the notification issued by the Ministry of Health and Family Welfare vide GSR82(E) dated 10.02.2011. Accordingly, it was felt that the Sibutramine hydrochloride so exported was liable for confiscation under Section 113(d) of the Customs Act. The proposals for imposition of penalties under Section 114(i) and 114AA follow from this. Since the goods were already exported, the proposal in the SCN was to confiscate the sale proceeds of the exports. Whether export of Sibutramine hydrochloride was prohibited by the Ministry of Health and Family Welfare Notification GSR82(E) dated 10.02.2011? - HELD THAT:- A plain reading of the notification shows that among the drugs which were prohibited was Sibutramine but NOT Sibutramine hydrochloride which was exported. The two are clearly different molecules with different molecular weights although the pharmacological effect of both will be the same. It is a matter of common knowledge that many active ingredients of pharmaceuticals are by themselves not soluble in water and hence cannot be easily digested and absorbed by the human body. Hence, they are reacted with some acid such as Hydrochloric acid, Sulphuric acid or Tartaric acid to get hydrochloride salt or sulphate salt or tartarate salt of the pharmaceutical - if the notification had mentioned Salbutramine and its salts the expression would have covered all its salts including Salbutramine hydrochloride. Clearly, the notification did not cover salts of Salbutramine and therefore, Salbutramine hydrochloride which is allegedly exported by the appellant is not covered in the notification at all. It is also evident from the text of the notification that what was prohibited were the manufacture, sale and distribution of the notified drugs and not their export either explicitly or implicitly. Whether Section 26A under which the notification was issued or any other provision of the Drugs and Cosmetics Act, 1940 provides for regulation of exports at all? - HELD THAT:- Section 26A also empowers the Central Government to regulate, restrict or prohibit, by notification, three activities viz., manufacture, sale or distribution. These are the very three activities which were prohibited in the notification. Exports were NOT prohibited in the notification and section 26A also does not envisage prohibition of exports - while the Act regulates imports, manufacture, sale and distribution, the Central Government is also empowered to grant exemption from such conditions if the import was only for transport through and export from India. There is no provision, whatsoever, in the entire Drugs and Cosmetics Act, 1940 which authorizes the regulation of export of drugs. Salbutramine hydrochloride was not covered in the notification dated 10.2.2011 at all. Further, the notification does not prohibit export of any of the drugs mentioned in it. Section 26A of the Drugs and Cosmetics Act under which the notification was issued does not envisage prohibition of exports. The scope of the Drugs and Cosmetics Act, 1940, as can be seen from the preamble, also does not extend to prohibition of exports - Unless salts of Salbutramine or Salbutramine hydrochloride is read into the notification, prohibition of export is also read into the notification and prohibition of export is also read into Section 26A of the Drugs and Cosmetics Act, 1940 and its preamble is also read so as to enlarge its scope to include prohibition of export, export of salbutramine hydrochloride is not prohibited by the notification. Whether Salbutramine hydrochloride is prohibited goods in terms of section 2(33) of the Customs Act? - HELD THAT:- Firstly, Salbutramine hydrochloride or salts of salbutramine were not covered under the notification dated 11.2.2011. Secondly, the notification does not prohibit import or export of the drugs which are notified but only prohibits manufactured, sale and distribution. Therefore, Salbutramine hydrochloride exported by the appellant is NOT prohibited goods in terms of section 2(33) of the Customs Act. If the export is not prohibited but there are some other regulations or restrictions under some other laws, such as Drugs and Cosmetics Act, 1940, Drugs and Cosmetics Rules, 1945 or any notifications issued under them and which are violated, will such export goods be liable for confiscation under section 113(d)? - HELD THAT:- A plain reading of section 113(d) shows that any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable for confiscation. Thus export itself must be prohibited either under the Customs Act or any other law for the time being in force to attract section 113(d). Any other illegality or violation of any law which is NOT PROHIBITION OF EXPORT either under the Customs Act or under any other law does not attract section 113 (d). Undisputedly, in this case, the goods have been exported. Once, they are exported, they move out of the customs control as well as the territory of India. In fact, the Customs Act, 1962 did not, during the relevant period, extend to outside the territory of India - In this case, the goods were already exported and hence they cannot be confiscated under section 113(d). For this reason also, the confiscation of the goods which have already been exported cannot be sustained. Can the amounts paid by the appellant through a Pay Order during investigation be confiscated under section 121 of the Customs Act? - HELD THAT:- Since it is found that the Salbutramine hydrochloride exported by the appellant is not liable for confiscation under section 113(d), confiscation of the sale proceeds of such exports under section 121 also cannot be sustained - the penalties imposed under Section 114(i) and 114AA also cannot be sustained once the basis for confiscation of goods under Section 113 is absent. The appeal is allowed.
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2022 (3) TMI 560
Classification of goods - partially assembled vehicles, described by the applicant as Completely Knocked Down (CKD) kits of vehicles - classifiable under Customs Tariff Entry 8703 and eligible for exemption under Serial No. 437(1) of the Notification No. 12/2012-Cus. dated March 17, 2012 or not - HELD THAT:- In the instant case, the applicant has stated that they will be importing kits of passenger cars and it is also settled, if all the parts are presented in knocked down condition and they have the essential character of a complete article, they have to be assessed as complete article, in terms of said rule 2(a) of GIR. In the present case, the motor vehicles are initially assembled at site to a substantive extent for thorough verification and testing, albeit with few missing components. It is held that at this stage the vehicles have acquired the essential characteristics of motor vehicle to merit classification under heading 8703. Their subsequent disassembling and import in such disassembled form as a kit, will not change the essential character of the goods. Therefore, these disassembled parts of motor vehicles, with specified missing parts, will be classified as the motor vehicles under heading 8703, noting that they are principally designed for the transport of persons, numbering less than ten persons. C.B.E.C. Circular F. No. 528/128/97Cus-TRU, dated 5-12-1997, wherein explaining the scope of said Rule 2(a), it is mentioned that engine, gear box, chassis, transmission assembly system, body/cab suspension system, axle front and rear are among the parts or components or sub-assemblies, considered most essential to bring into effect a finished motor car. Whether the vehicle kits being imported by the applicant would be covered under sub-category 1 as Completely Knocked Down kit or under sub-category 2 as motors cars in any other form, and if under sub-category 1, whether under 1(a) or 1(b), attracting effective rate of BCD of 15% or 30% respectively? - HELD THAT:- Further sub-categorisation under the aforesaid notification and eligibility for the lowest rate of 15% duty is based on the state of assembly of three critical parts/components of car, namely engine, gearbox and transmission mechanism. It is found that the applicant has clearly stated that the CKD kits include pre-assembled engine and gear-box, which has also been accepted by the concerned Commissioners of Customs - the CKD kits will fall under sub-category 1(b) and attract effective rate of BCD of 30%, being ineligible of the lower rate of 15% since the engine and gear-box are being imported in pre-assembled condition. The CKD kits, as described by the applicant and presented together as a kit merits classification under heading 8703 - the CKD kits are eligible for 30% rate of BCD under notification No. 50/2017-Cus. dated 30.06.2017, since they are covered under S.No.526(1)(6).
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Insolvency & Bankruptcy
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2022 (3) TMI 579
Rejection of application - recalling of ex-parte order - application were not served on the Corporate Debtor nor Demand Notice under Section 8 was served on the Corporate Debtor - principles of natural justice - HELD THAT:- The present is a case where Corporate Debtor was asking for recall of the order dated 8th February, 2019 and 10th April, 2019. Both the orders were passed ex-parte and no notices were served. The Adjudicating Authority committed error in holding that the Appellant was asking for review of the admission order. In the impugned judgment dated 30 th November, 2021, learned Adjudicating Authority have relied on a judgment of Allahabad High Court in the matter of Khan Enterprises vs. National Company Law Tribunal Ors. [ 2018 (9) TMI 1908 - ALLAHABAD HIGH COURT ] for forming an opinion that Rule 11 of NCLT Rules cannot be used seeking recall/ review of the orders. It is noticed that what Corporate Debtor was seeking, was to recall the ex-parte order, which power was specifically conferred on the Adjudicating Authority under Rule 49, sub-rule (2). When power is specifically conferred under the Rule, there was no question of exercising any review jurisdiction in the facts of the present case. The Adjudicating Authority was fully competent to recall ex-parte order in exercise of its jurisdiction under Rule 49, sub-rule (2). This Tribunal was not called to consider the case for recall of ex-parte order, which was passed without service of notice on the Corporate Debtor. In the present case, the Adjudicating Authority has not rejected the Application of the Corporate Debtor on the ground that it has been passed after constitution of CoC. In the facts of the present case, the Appellant has clearly pleaded that although admission order under Section 9 was passed on 10th April, 2019, but CoC was constituted only in March 2021 that is much after filing of CA 405 of 2019 - the present is a case where Application to recall of order was filed much before the constitution of CoC. The amount having withdrawn by the Directors to their accounts, from the account of the Corporate Debtor, the Directors may deposit back the said amount into the account of the Corporate Debtor. Let the aforesaid deposit be made within 30 days from today by the Appellants - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 559
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- An application under Section 7 of the Code is maintainable if the debt is proved to be due and there is default. In view of the Section 4 of the Code, the moment default is of Rupees one hundred lakhs or more, an application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The applicant clearly comes within the definition of Financial Creditor. The material placed on record as stated in the paras above further confirms that respondent has debt due and has committed default in repayment of the outstanding financial debt. On a perusal of Form-I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional - the present application is complete in all respect. The applicant financial creditor is entitled to move the application against the corporate debtor in view of admitted outstanding financial debt and default of the same by the corporate debtor. The default in repayment of the financial debt is not refuted by the Corporate Debtor. In terms of Section 7(5)(a) of the Code, the present application is hereby, admitted - application allowed - moratorium declared.
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2022 (3) TMI 558
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - providing licenses for exporting various kind of material to the corporate debtor - existence of debt and dispute or not - HELD THAT:- In order to establish its claim, the applicant has placed copy of the invoice dated 27.05.2019 and copies of Licenses alleged to have been issued in the favour of corporate debtor, but neither the invoice is acknowledged nor the licenses were signed by the corporate debtor. The ledger placed by the applicant is also not acknowledged or verified by the corporate debtor. The applicant has not placed any other document to show that the claimed operational debt is due and payable by the corporate debtor. Further, no communication or agreement has been placed before this Tribunal to establish the fact that the claim amount is due and payable by the respondent. Unless any cogent and convincing evidence is there on the record, merely on the basis of some invoices and copies of licenses, it could not be proved that the applicant herein was engaged by the respondent to arrange those licenses for the corporate debtor. In the absence of any reliable evidence, it could not be established that the applicant herein was actually engaged by the corporate debtor to arrange licenses for it. Accordingly, as per Section 9 of the Code, the applicant has failed to establish its claim against the respondent corporate debtor. The applicant measurably failed to establish the fact that its operational debt is payable by the respondent corporate debtor, thus the present application being devoid of any merit, stand rejected without any costs - application dismissed.
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PMLA
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2022 (3) TMI 557
Maintainability of petition - availability of alternate remedy to the petitioner before Adjudicating Authority - Seeking to defreeze petitioner's attached Bank accounts - respondent No.2 has not summoned the petitioner company or any or its officers - proceeds of crime or not - Section 8(2) of the PMLA - HELD THAT:- Reliance placed upon the judgment of the Supreme Court in case of M/S. KAUSHALYA INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED VERSUS UNION OF INDIA ANR. [ 2022 (3) TMI 497 - SC ORDER] , wherein it was held that the proceedings before the Adjudicating Authority under Section 8 of the PMLA shall have no bearing on the challenge to the Provisional Attachment Order under Section 5 of the PMLA, which can be decided/adjudicated independently irrespective of the remedy available under Section 8 of PMLA. Whether the bank accounts of the petitioner could be attached? - it is contended that since registration of the ECIR till date, the respondent No.2 has not summoned the petitioner company or any or its officers and as such it is unclear how respondent No.2 has come to the conclusion that the bank account in question is in receipt of proceeds of crime or is involved in money laundering - HELD THAT:- Reliance placed in the judgement of Supreme Court in Swaran Sabharwal [ 1987 (5) TMI 374 - DELHI HIGH COURT ] where it was held that held that the procedure which is contemplated under Section 17 of the PMLA regarding seizure was not adhered to (which is not an issue herein) and therefore, the seizure was bad. This cannot be construed to mean the Supreme Court had disagreed/overruled its decision in the case of Tapas D. Neogy (supra) where it was held that a bank account can be considered to be a property . The plea the Provisional Attachment Order dated August 25, 2021 does not expressly state that the Bank Account itself is attached, is also untenable, as the said Provisional Attachment Order in paragraph 20 under Schedule of Attached Properties include the Bank Account with the amount lying therein. It is held that the petitioner is not entitled to the prayers made. The petition is dismissed.
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Service Tax
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2022 (3) TMI 556
Jurisdiction - power of Commissioner (Appeals) under Section 35A(3) of the Central Excise Act, 1944 - Construction, erection, commissioning or installation of original work pertaining to airport, port or railway etc. - HELD THAT:- It is to be noted here that the power of the Central Excise Service Tax Appellate Tribunal is limited to the examination of legality of the order passed by the Commissioner (Appeals) and not like the Commissioner (Appeals) s power under Section 35A(3) of the Central Excise Act, 1944 that authorises him to make such further enquiry as may be necessary and pass such order as he finds just and proper. Since, in the instant case exemption notification would only cover part of the disputed period, its application to the entire proceeding can only be determined by the adjudicating authority. In the absence of any finding on its application for wants of its invocation at the time of adjudication proceedings, it would be just and proper to remand the matter back to the original adjudicating authority for fresh adjudication concerning application of Notification No. 25/2012-ST and its amended Notification No. 9/2016-ST, so as to arrive at a conclusion on the sustainability of such duty demand including invocation of the extended period. The appeal is allowed by way of remand for readjudication by the original adjudicating authority and accordingly the order passed by the Commissioner of GST Central Excise Tax (Appeals) Nagpur is set aside.
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2022 (3) TMI 555
Taxability - services of advertisements of the advertisers and broadcasting or telecasting them - circular No. 341/43/96-TRU dated 31.10.1996 - Return / refund of money deposited as service tax - Unjust enrichment - HELD THAT:- Undisputedly, the appellant is involved in only the third activity of carrying the advertisements in its channels. CBEC Circular No. 341/43/96-TRU dated 31.10.1996 clarified that the amount paid for space and time in getting the advertisement published in the print or electronic media would not be included in the value of taxable service rendered by the advertisement agency and accordingly the service tax was payable only on the commission received by the advertisement agency. In the present case, it is true that no service tax was chargeable on the activity of the appellant, viz., carrying the advertisements in its broadcast and telecast. Therefore, the Government cannot collect service tax. It is also true that Section 73A(2) which mandated that any person who collects any amount as representing service tax to deposit it with the Government also did not exist at the relevant time. Thus, the Government had no authority to demand the amount. Had the appellant collected the amounts from its customers as representing tax as a matter of precaution, it could have paid it as tax under protest. Once, it is decided that no tax is payable, the appellant could have repaid the customers and claimed a refund. If the appellant had claimed refund without returning the amounts in part or whole to its customers, such refund would have been sanctioned under section 11B and the amounts would have been credited to the Consumer Welfare Fund under Section 11B of the Central Excise Act as applicable to the provisions of Service tax by Finance Act, 1994. Section 11B, including the provision of refunds being credited to the Consumer Welfare Fund were applicable during the period of dispute - Neither the Government nor the appellant has any right over the amounts collected from the customers as representing service tax in the absence of any legal provisions. The appellant is directed to return the amount collected by it, under the garb of its liability to pay service tax when actually it was not liable, to all those customers from whom it was collected that too within a period of two months - the order under challenge confirming the demand with interest and imposing penalty upon appellant is hereby set aside - Appeal allowed.
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Central Excise
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2022 (3) TMI 554
CENVAT Credit - capital goods - wrongful classification of goods - it is claimed that these are bot capital goods as supplier has described it as steel furniture and classified it under C.H. 94.03 in the invoice - HELD THAT:- In the decision of M/S. DAYA SUGAR VERSUS COMMISSIONER, CENTRAL EXCISE, MEERUT-1 [ 2014 (10) TMI 722 - ALLAHABAD HIGH COURT] passed by the Hon ble Allahabad High Court, it has been held that it was immaterial if the supplier of the item had wrongly classified the same since, the actual classification and the eligibility for CENVAT credit is dependent on the actual usage of goods and therefore CENVAT credit is admissible to the Appellant. The appeal is allowed.
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CST, VAT & Sales Tax
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2022 (3) TMI 553
Recovery of arrears of tax - Power of Special JMFC (Sales Tax) Court to attach the property through FLW through Commissioner, BBMP - assessing authority comes to the conclusion that the petitioner is liable to pay Sales Tax at 12% on sale of food articles - HELD THAT:- There are no dispute with regard to the fact that the recovery proceedings is initiated based on the order. When the petition is filed before the learned Special JMFC (Sales Tax) Court invoking Section 421 of Cr.P.C., issued the warrant and the same is as per Section 421(2) of Cr.P.C., which says only the District Magistrate is empowered to attach the property not the Commissioner, BBMP. When such being the case, the order requires an interference of this Court since the Commissioner of BBMP., has no any authority to attach the property as ordered by the Special JMFC (Sales Tax) Court and the same can be enforced under Section 421(1)(b) of Cr.P.C, through the collector of the District. The petition is allowed.
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Indian Laws
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2022 (3) TMI 552
Validity of orders of the Central Administrative Tribunal on the issue of the withdrawal of Inter-Commissionerate Transfers (ICT) - High Court held that ICTs would violate the unique identity of each cadre envisaged under Rule 5 of RR 2016 and hence the circular withdrawing ICTs is not invalid - HELD THAT:- Rule 5 of RR 2016 postulates that each CCA has a separate cadre and does not contain a provision for bringing in, by way of absorption, persons from outside the cadre. Inducting persons from outside the cadre by absorption requires a specific provision in the subordinate legislation for the simple reason that the concept of a cadre would otherwise militate against bringing in those outside the cadre. That is the reason why Rule 4(ii) of the erstwhile RR 2002 contained a specific provision to this effect. That provision has however not been included when RR 2016 were framed. If the authority entrusted with the power of framing rules under Article 309 of the Constitution did so on the ground that the provision was subject to misuse and was contrary to the interests of the administration, no employee can assert a vested right to claim an ICT. Undoubtedly, while all matters pertaining to the CBEC and CBDT are under the domain of the Department of Revenue, there has to be a harmonious construction with the subjects which are assigned to the DoPT. In fact, the need for a harmonious reading is emphasized, as we have seen earlier, in Rule 4(4) of The Government of India (Transaction of Business) Rules 1961, which requires the advice of DoPT to be sought on methods of recruitment and conditions of service and on the interpretation of existing orders relating to recruitment and conditions of service - the appellants have sought to urge that Rule 4(ii) of RR 2002 was not included while RR 2016 were being framed on the advice of the DoPT on the ground that such a provision is generally not made in the recruitment rules. This submission is based on the disclosure made by the Department of Revenue under the Right to Information Act 2005 on 3 July 2018. The realm of policy making while determining the conditions of service of its employees is entrusted to the Union for persons belonging to the Central Civil Services and to the States for persons belonging to their civil services. This Court in the exercise of judicial review cannot direct the executive to frame a particular policy. Yet, the legitimacy of a policy can be assessed on the touchstone of constitutional parameters. The State, consistent with the mandate of Part III of the Constitution, must take into consideration constitutional values while designing its policy in a manner which enforces and implement those values. The State in the present case has been guided by two objectives: first, the potential for abuse of ICTs and second, the distortion which is caused in service leading to plethora of litigation. The State while formulating a policy for its own employees has to give due consideration to the importance of protecting family life as an element of the dignity of the person and a postulate of privacy. How a particular policy should be modulated to take into account the necessities of maintaining family life may be left at the threshold to be determined by the State. In crafting its policy however the State cannot be heard to say that it will be oblivious to basic constitutional values, including the preservation of family life which is an incident of Article 21 - While proscribing ICTs which envisage absorption into a cadre of a person from a distinct cadre, the circular permits a transfer for a stipulated period on a loan basis. Appeal disposed off.
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2022 (3) TMI 551
Petitioner seeking permission to travel to UAE and Thailand from March - April, 2022 - HELD THAT:- It is noted from the record that the investigation is pending against the petitioner since 2020 and a complaint has been filed against the main accused. The summons were issued to the petitioner on February 22, 2021. It is stated by Ms. Malhotra that the petitioner is yet to furnish complete particulars of the requisition as made for in the summons. She does concede that the statement of the petitioner was recorded on May 17, 2021 pursuant to the orders of this Court. She also conceded that no summons are pending against the petitioner as of today. She also stated that the department intends to issue summons in future but no specific date has been given by her. Learned counsel for the respondents have not stated that the petitioner has misused the permission granted by this Court to the petitioner to visit UAE and UK. If that be so, this Court is inclined to allow the present application and permit the petitioner to travel to UAE and Thailand, with a further direction that he shall return to India on or before April 06, 2022, subject to the conditions imposed - The application is disposed of.
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2022 (3) TMI 550
Dishonor of Cheque - insufficient funds - compounding of the offence - compromise - amicable settlement between parties - HELD THAT:- The record of the present case would clearly show that the compromise had been effected between the parties and the said compromise has been reiterated by both the counsel during the course of arguments. The matter seems to have been finally settled and the said compromise will bring peace and harmony between the petitioner and the respondent. The Coordinate Bench of this Court in RAM PARKASH AND OTHERS VERSUS STATE OF PUNJAB AND OTHERS [ 2016 (1) TMI 1478 - PUNJAB AND HARYANA HIGH COURT] , has allowed the petition under Section 482 Cr.P.C. under similar circumstances holding that where not only the parties but their close relatives (including daughter and son-inlaw of respondent No.2) have also supported the amicable settlement, we are of the considered view that the negation of the compromise would disharmonize the relationship and cause a permanent rift amongst the family members who are living together as a joint family. Nonacceptance of the compromise would also lead to denial of complete justice which is the very essence of our justice delivery system. Hon'ble Supreme Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] and thus, as per settled law, this Court has the power to set aside the judgment of conviction against the petitioner on the basis of a valid compromise. The compromise in the present case is genuine and valid. The present matter has been compromised and the compromise is genuine and bona fide, the present revision petition is allowed and impugned judgment and order of sentence dated 03.04.2017 as well as the impugned order dated 21.09.2019 are set aside in view of the compromise and the petitioner and respondent are permitted to compound the offence. The same is however, subject to the petitioner depositing 15% of the cheque amount i.e. ₹ 30,000/- with the Punjab State Legal Services Authority within a period of one month from today - the said amount is not deposited within the stipulated period, then the present petition would be deemed to have been dismissed.
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2022 (3) TMI 549
Dishonor of Cheque - acquittal of the accused - panchayati compromise - appeal has not been finally adjudicated and is still pending and during the pendency of the appeal, compromise has been effected between the parties, as per which, all the disputes between petitioner and respondent No.1 have been resolved - HELD THAT:- Keeping in view the law laid down in the above said judgment, more so, the judgment of the Hon'ble Supreme Court in RAMGOPAL, KRISHNAPPA ANR. VERSUS THE STATE OF MADHYA PRADESH, STATE OF KARNATAKA [ 2021 (9) TMI 1358 - SUPREME COURT] , the relevant parameters for consideration as laid down in the said judgment, would be considered by this Court. Firstly, the occurrence which has been involved in the present petition can be categorized as purely personal/criminal act of private nature. Secondly, in the present case, there is no injury caused to any person and complaint under Section 138 of the Act of 1881, has been registered on account of a monetary dispute, which has been settled and the allegations in the case do not exhibit an element of mental depravity or commission of an offence of such a serious nature. The acquittal in the present case would not override public interest. Thirdly, since the allegations in the complaint show that there was only a monetary dispute, which has now been settled, it is immaterial that the petitioner has been convicted by the trial Court. Fourthly, compromise is without any coercion or compulsion and has been entered into willingly and voluntarily. Fifthly, the occurrence in the present case took place in the year 2011 and there is nothing to show that any untoward incident had taken place after the same. Sixthly, the compromise effected between the parties would help in bringing out peace and harmony among the parties. Seventhly, the object of administration of the criminal justice system would remain unaffected on acceptance of the said amicable settlement between the parties and/or resultant acquittal of the petitioners. Hon'ble the Supreme Court in Damodar S. Prabhu's case [ 2010 (5) TMI 380 - SUPREME COURT ] had observed that in case, compromise has been effected at the stage as in the present case, 15% of the cheque amount would have to be deposited by the petitioner. The present petition is allowed
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