TMI Tax Updates - e-Newsletter
March 17, 2021

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws

Articles

1. THRESHOLD LIMIT FOR REGISTRATION SHOULD BE RAISED IN THE INTEREST OF VERY VERY SMALL BUSINESSMEN

   By: KASTURI SETHI

2. DYNAMIC QUICK RESPONSE CODE ON B2C INVOICES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. 324 companies filed for bankruptcy between 2018 to 2020

2. 1,11,619 loans amounting to ₹ 24,985.27 crore extended under Stand Up India Scheme since inception

3. 82,072 assessment cases completed in faceless manner till 10th March 2021

4. Performance of Emergency Credit Line Guarantee Scheme for MSME

5. Plan of action by the Government to stabilise GDP

6. Auction for Sale (Re-issue) of ‘5.15% GS 2025’, ‘5.85% GS 2030’ and ‘6.76% GS 2061’

Notifications

Customs

1. 29/2021 - dated 15-3-2021 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca nut, Gold & Silver

GST - States

2. 38/1/2017-Fin(R&C)(191) - dated 12-3-2021 - Goa SGST

Supersession Notification No. 38/1/2017-Fin(R&C)(136) dated 2nd April, 2020

IBC

3. IBBI/2020-21/GN/REG070 - dated 15-3-2021 - IBC

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2021

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DIL2/CIR/P/2021/2480/1/M - dated 16-3-2021

Streamlining the process of IPOs with UPI in ASBA and redressal of investor grievances

Highlights / Catch Notes

GST

• Court Temporarily Stays Service Tax on Mining Lease Royalties; No Interim Relief for CGST and JGST Levies.

  Case-Laws - HC : Levy of service tax / GST on royalty - scope of the term "taxable service" - royalty in quarrying stones - While the revenue is not restrained from conducting and completing the assessment proceedings, until further orders recovery of service tax for grant of mining lease/royalty from the petitioners shall remain stayed. However, we are not satisfied at this stage that any case for granting interim protection is made out so far as the levy of CGST and/or JGST is concerned - HC
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Income Tax

• High Court rules that vague penalty notices u/s 274 are invalid; specificity required for Section 271(1)(c) penalties.

  Case-Laws - HC : Levy of penalty u/s 271(1)(c) - validity of notice issued u/s 274 - mere failure to tick mark the applicable grounds - These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. - Larger bench decision - HC
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• Appeal Rejected Under Direct Tax Vivad Se Vishwas Act Due to Late Filing; Section 2(1)(a) Interpretation at Issue.

  Case-Laws - HC : Rejection of application under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSVA) - Appellant / Assessee has filed an appeal with the application for condonation of delay where the period for filing an appeal was already expired - Section 2(1)(a) of the 2020 Act does not stipulate that the appeal should be admitted before the specified date, it only adverts to its pendency. - HC
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• High Court Rules Against Tax Authorities in Case of Evasion Disguised as Planning; Section 49(1) Amendment Key.

  Case-Laws - HC : Tax evasion in the guise of tax planning - Colourable Devise - arrangement to avoid payment of taxes on account of correct quantum of capital gain that would result on transfer of shares of NCCPL to GBFL - It is pertinent to note that there was a lacuna in law which has been addressed by Finance Act, 2012 by introducing clause (xiii) to sub clause(e) of Section 49(1) with effect from 01.04.1999. Before the aforesaid amendment, the assessment was complete. - The substantial questions of law answered against the revenue - HC
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• High Court Confirms Penalty for Concealment of Income u/s 271(1)(c) After Late Revised Tax Return Filing.

  Case-Laws - HC : Levy of penalty u/s 271(1)(c) - Filing of revised return offering an additions sum after initiating enquiry proceedings after the expiry of permissible period - Once we have found that the revised return cannot have the effect of effacing the original return, it is explicit that concealment of the particulars of income and furnishing of inaccurate particulars of income were revealed to the assessing officer in the course of proceedings under the Act - Levy of penalty confirmed - HC
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• Monitoring Fees to DEG Bank Classified as 'Interest,' Exempt from Tax under Indo-German DTAA Article 11(3)(b.

  Case-Laws - AT : TDS u/s 195 - Scope of the term 'Interest' - Monitoring fees paid by the assssee to DEG Bank, Germany qualified as ‘interest’ both under Income-tax Act, 1961 as well as the Double Taxation Avoidance Agreement between India & Germany and the payment made in question was not liable to Income tax under the Act in terms of the specific exemption granted under Article 11(3)(b) of the indo-German DTAA. - AT
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• Loan Waiver Taxed u/s 41(1) as Cessation of Liability, Interest Previously Deducted Now Taxable.

  Case-Laws - AT : Addition u/s 41(1) - cessation of liability - waive of loan as part of one time settlement of loan with the banks - The benefit gained by the assessee on account of waiver represent the interest debited to Profit and Loss account from the date of availing the loan in various assessment years till the date of redemption which was claimed by the assessee as deduction and the same required to be taxed u/s 41(1) - AT
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• Section 69C Additions Upheld: Assessee Fails to Justify Commission Payments with Required Documentation for Property Sale.

  Case-Laws - AT : Unexplained expenditure - Additions u/s 69C - commission paid by account payee cheques - no such details of the property, which has been sold through those persons, have been filed by the assessee to justify the services rendered by them despite due opportunity provided to the assessee. - Additions confirmed - AT
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• Land Sold Remains Agricultural for Tax Purposes Despite Non-Agricultural Use by Purchaser.

  Case-Laws - AT : Nature of land sold after plotting - Agriculture land or not - Merely for the reason that no agricultural operations was carried out during the period and subsequent use of land for non-agricultural operations by the purchaser, cannot change characteristic of the land being agricultural land as nonagricultural land - AT
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• Appeal Maintainability Questioned: No Provision in Section 246A for Appeals Against Interlocutory Orders on Reopening Assessments.

  Case-Laws - AT : Maintainability of appeal before the CIT(A) u/s 246A - interlocutory order disposing off objections filed by assessee against reopening of the concluded assessment u/s 147 - there are no clauses/sub-section within Section 246A of the Act which provides that an appeal can be filed by assessee against interlocutory order passed by the AO while disposing off objections filed by assessee against reopening of the concluded assessment u/s 147 - AT
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• Income Tax Guidance: Use LIBOR + 300 Basis Points for Interest on Delayed Receivables from Associated Enterprises.

  Case-Laws - AT : Appropriate rate for benchmarking - receivables from AEs - it would be most appropriate if the LIBOR rate is applied as most appropriate rate of interest for imputing interest on delay in receivables from AE. In this case, the AO has imputed notional interest by adopting PLR as the base rate. Therefore, we are of the considered view the LIBOR + 300 basis point rate is most appropriate rate and hence, direct the AO/TPO to adopt LIBOR + 300 basis point for imputing interest on overdue receivable. - AT
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Indian Laws

• Limitation period for appointing an arbitrator started on 12.02.2007; rejection on 10.11.2010 didn't reset it.

  Case-Laws - SC : Period of limitation for appointment of Arbitrator - The Appellant’s laconic letter dated 23.01.2007, which stated that the matter was under consideration, was within the 30-day period. On and from 12.02.2007, when no arbitrator was appointed, the cause of action for appointment of an arbitrator accrued to the Respondent and time began running from that day. Obviously, once time has started running, any final rejection by the Appellant by its letter dated 10.11.2010 would not give any fresh start to a limitation period which has already begun running, following the mandate of Section 9 of the Limitation Act. - SC
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• Revenue's penalty rejected as no prior assessment under Luxuries Act; Tribunal allows reassessment within limitation period.

  Case-Laws - HC : Petition of the Revenue is rejected on the ground that in the case on hand, no assessment determining the obligation/liability under the Luxuries Act is made, penalty proceedings are taken up, and by notionally calculating the amount the penalty is imposed. The Tribunal, has given liberty to department to first proceed to initiate assessment proceedings in accordance with law, subject to the period of limitation - HC
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IBC

• Debt Claims in CIRP: Filing Before IRP Needs Debt, Not Default, as per Sections 7, 9, 10 Requirements.

  Case-Laws - Tri : CIRP - Neither the Section of law nor the Regulation says that the claim of a debt can be made only when there is a default. The debt and default would be a sine qua non for the admission of a Section 7 or Section 9 or Section 10 petition. But for filing claim before IRP, mere debt is sufficient and it would not be necessary that the debt has been defaulted. - Tri
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• RP and CoC Breached Insolvency Code by Favoring a Resolution Plan, Undermining Process Integrity and Other Applicants' Rights.

  Case-Laws - Tri : Backdoor entry for approval of resolution plan - The action of the RP and CoC is in violation of the express provisions of the Code and Regulations made thereunder. However, if the CoC wanted to extend the timeline, it should have done so within the procedure prescribed there for. By providing a special treatment, back door entry for accepting the Resolution Plan of the DSKL’s the Resolution Professional and the CoC have deviated from the norms prescribed under the Code and the Regulations framed there under, which vitiates the Corporate Insolvency Resolution Process and caused prejudice to the other PRAs. - Tri
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VAT

• Appeals u/s 72: Use Appellate Authority for VAT Refund Disputes Before Approaching High Court's Writ Jurisdiction.

  Case-Laws - HC : Violation of principles of natural justice - Refund of VAT paid on goods sold - The appellate authority appointed by the Government for hearing appeals under Section 72 of the Act would be in a better position to appreciate both questions of fact and law. It is well settled that once statutory mechanism is provided for resolution of dispute, the party aggrieved must availed of the statutory remedy provided under the Statute and should not rush to the High Court invoking its extra ordinary writ jurisdiction. - HC
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• Chandrika Soap must be mostly handmade with significant artistic appeal to qualify as handmade in ongoing and future cases.

  Case-Laws - HC : Classification of goods - Chandrika Soap - Handmade soap or not - It must be predominantly made by hand. It does not matter if some machinery is also used in the process. (2) It must be graced with visual appeal in the nature of ornamentation or inlay work or some similar work lending it an element of artistic improvement. Such ornamentation must be of a substantial nature and not a mere pretence. These principles would apply to all pending matters and to all matters arising thereunder - HC
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Case Laws:

• GST

• 2021 (3) TMI 610
  Condonation of delay in filing appeal - Section 129(3) of the Uttar Pradesh Goods Services Tax Act, 2017 - HELD THAT:- Undisputedly, the appeal was filed with a delay of 14 months and 3 days. The delay was sought to be explained on account of illness of the petitioner. Perusal of Section 107(2) read with Section 107(4) of the Act reveals that against the order passed by the Assistant Commissioner, Trade Tax Mobile Squad, Etah dated 29.12.2018, the appeal could have been filed within three months from the date of communication. The delay, if any, in filing such appeal could be condoned under Section 107(4) of the Act which provides that the delay not exceeding one month beyond the period of three months may be condoned by the assessing authority on being satisfied. In the instant case, against the order dated 29.12.2018, the petitioner had filed the appeal on 02.03.2020. Thus, the appeal was filed well beyond the period of 14 months and 3 days. The admitted delay of 14 months and 3 days could not have been condoned. Consequently, the appellate authority has committed no error in rejecting the appeal as time barred - Petition dismissed.

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• 2021 (3) TMI 601
  Levy of service tax / GST on royalty - scope of the term taxable service - royalty in quarrying stones - minerals removed or consumed by the holder of a mining lease from the leased area, at the rate specified - also seeking declaration that Notification No. 22/2016-ST dated 13.04.2016 and its clarification is ultra-vires the provisions of the Finance Act, 1994 - HELD THAT:- The legal issues concerning the leviability of the tax can be answered after considering the response of the respondent CGST and the State. The challenge in these writ petitions are in two parts. One relating to levy of service tax on royalty till the coming of the GST regime. The other writ petitions relate to challenge to both service tax and GST upon royalty in case of the respective petitioners or JGST in three writ petitions referred to earlier. Finance Act, 1994 brought into force the concept of service tax. The GST Act was introduced from 01.07.2017. Both are separate enactments with detailed provisions relating to charging section and the measure of tax and machinery. It appears that in similar challenges made to the levy of service tax on royalty paid on minerals, the matter went up to the Apex Court in the case of Udaipur Chambers of Commerce and Industry and Others [ 2018 (8) TMI 287 - SC ORDER ], arising out of a judgment of the High Court of Judicature for Rajasthan at Jodhpur [ 2017 (10) TMI 975 - RAJASTHAN HIGH COURT ]- It was held by Apex Court that Until further orders payment of service tax for grant of mining lease/royalty by the petitioners shall remain stayed. Other High Courts have passed more or less similar interim orders relating to payment of service tax on royalty as noticed hereinabove. The High Court of Bombay at Goa in GOA MINING ASSOCIATION ANR VERSUS UNION OF INDIA ORS. [ 2017 (8) TMI 1632 - BOMBAY HIGH COURT ] has stayed the imposition of service tax on royalty, but at the same time clarified that it would not come in the way of the revenue for conducting and completing its assessment and enquiry. While the revenue is not restrained from conducting and completing the assessment proceedings, until further orders recovery of service tax for grant of mining lease/royalty from the petitioners shall remain stayed. However, we are not satisfied at this stage that any case for granting interim protection is made out so far as the levy of CGST and/or JGST is concerned - Let these matters appear in the week of 26th April, 2021.

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• Income Tax

• 2021 (3) TMI 608
  Levy of penalty u/s 271(1)(c) - validity of notice issued u/s 274 - mere failure to tick mark the applicable grounds - If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(l)(c), does a mere defect in the notice-not striking off the irrelevant matter-vitiate the penalty proceedings? - 3 Member bench decision - HELD THAT: - It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other s defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. Goa Dourado Promotions [ 2020 (1) TMI 140 - BOMBAY HIGH COURT] and other cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya [ 1995 (1) TMI 25 - BOMBAY HIGH COURT] does not lay down the correct proposition of law. Has Kaushalya [ 1995 (1) TMI 25 - BOMBAY HIGH COURT] failed to discuss the aspect of prejudice ? - HELD THAT:- No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application of mind and prejudice. - That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suffers. Kaushalya s insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has not met our acceptance. What is the effect of the Supreme Court s decision in Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? - HELD THAT:- Contravention of a mandatory condition or requirement for a communication to be valid communication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays non- application of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. Dilip N. Shroff [ 2007 (5) TMI 198 - SUPREME COURT] treats omnibus show-cause notices as betraying non-application of mind and disapproves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice.

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• 2021 (3) TMI 605
  Period of limitation to comply / give effect to the directions of Commissioner (appeals) - Omission of certain observation from the order of CIT(A) regarding refund of pre-deposit and interest u/s 244A - HELD THAT:- An order is passed by the CIT (Appeals) u/s 250, the same has to be given effect to within a period of three months from the end of the month in which the order u/s 250 is passed. The period of three months as above would be computed from the date of receipt by the Pr. CCIT or CCIT or Pr.CIT or CIT as the case may be. If however, it is not possible for the assessing officer to give effect to the appellate order within the aforesaid period of three months which has to be for reasons beyond his control, he has to make a request to the Pr CIT or the CIT seeking extension of time. - Extention can be granted for an additional 6 months. Looking at the requirement of section 153(5) of the Act, the orders giving effect to the appellate orders were to be passed by 30th June 2019. If the extended period of six months is added to this, then the orders ought to have been passed by 30th December 2019. However, nothing has been placed before us as to whether respondent No.1 made written request before respondent No.2 for extension of time and whether respondent No.2 had granted such extension of time on being satisfied. Thus, there is clear delay in passing the orders by respondent No.1 giving effect to the appellate orders. The provisions contained in section 153(5) of the Act have not been taken into consideration. We also find that the requirement of paying interest under section 244A is also missing from the above orders. The above orders are also silent on the adjustment of the 20% of the initial outstanding dues paid by the petitioner before the Commissioner of Income Tax (Appeals) while filing appeals for the purpose of stay. It would be in the interest of justice if the Pr CIT himself looks into the above aspects including impact of Circular No.19 of 2019 and thereafter decide afresh the issue relating to giving effect to the orders of the Commissioner of Income Tax (Appeals) passed under section 250.

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• 2021 (3) TMI 603
  Rejection of application under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSVA) - Appellant / Assessee has filed an appeal with the application for condonation of delay where the period for filing an appeal was already expired - Scope of the clarification issued by the CBDT as FAQ 59 as Q 59. Whether the taxpayer in whose case the time limit for filing of appeal has expired before 31st January, 2020 but an application for condonation of delay has been filed is eligible - HELD THAT: - In response to this query, several facets have been alluded to, which are not found in the 2020 Act. For instance, the respondent states that if the limitation or the time limit for filing the appeal expires during the period 01.04.2019 and 31.01.2020 (both dates included) and the application for condonation is filed before the date of issuance of the said clarification, i.e., 04.12.2020, the appeal can be construed as pending on the specified date i.e. 31.01.2020, only if it is admitted by the appellate authority before the filing of the declaration in the form prescribed under the 2020 Act. Insofar as the petitioner is concerned, as noted, the appeal which included the condonation of delay application, was filed on 11.07.2019, that is, well before the specified date; the specified date under the 2020 Act being 31.01.2020. We were not referred to any provision under the 2020 Act, which provided that limitation qua the subject appeal should be expired within the period spread out between 01.04.2019 and 31.01.2020 (both dates included) and it ought to have been admitted for it to be considered as pending under the 2020 Act. Section 2(1)(a) of the 2020 Act does not stipulate that the appeal should be admitted before the specified date, it only adverts to its pendency. Respondent no.1 seems to have, in our view, wrongly equated admission of the appeal with pendency. In our view, as noted above, the appeal would be pending as soon as it is filed and up until such time it is adjudicated upon and a decision is taken qua the same. We could have appreciated the stand of the respondents if a plea made for condonation of delay would have been rejected by respondent no.3/CIT(A) before the petitioner had filed Forms 1 and 2. If that situation obtained, the respondents could have, possibly, taken the stand that nothing was pending before the appellate forum. The order of rejection dated 28.01.2021 is bad in law. It is, accordingly, set aside.

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• 2021 (3) TMI 599
  Tax evasion in the guise of tax planning - Colourable Devise - arrangement to avoid payment of taxes on account of correct quantum of capital gain that would result on transfer of shares of NCCPL to GBFL was permitted and within the framework of law - Allegation of Transfer of shares to Godrej Group as part of sale of business of the Nutrine Group to Godgrej Group, routed through a series of transactions including the reconstitution of the defunt firm M/s. B.V. Reddy enterprises to accommodate the shareholders of M/s. Nutrine confectionery Co. P. Ltd HELD THAT:- The Supreme Court in AZADI BACHAO ANDOLAN supra held that an act which is otherwise valid in law cannot be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interest. The aforesaid view has quoted with approval in WALFORT SHARE AND STOCK BROKERS P. LTD supra . - As long as arrangement of the assessee to avoid payment of tax do not contravene any statutory provision and the same is within four corners of law it cannot be found fault with. There were two ways in which the shares of NCCPL held by 13 partners of BVRE to be transferred to Godrej Beverages and Foods Ltd., firstly, that 13 partners in their individual capacity could transfer the shares to NCCPL held by them to Godrej Beverages and Foods Ltd. at a price the shares were ultimately sold to Godrej Beverages and Foods Ltd. through NCSPL and secondly, the manner in which the assesses have transferred the shares through medium of the firm BVRE. The later course would definitely result in lesser tax burden to the assessee but the aforesaid course is permissible in law. It is pertinent to note that there was a lacuna in law which has been addressed by Finance Act, 2012 by introducing clause (xiii) to sub clause(e) of Section 49(1) with effect from 01.04.1999. Before the aforesaid amendment, the assessment was complete. It is also pertinent to mention that during the previous year relevant to Assessment Year 2007-08, there is no transfer of shares by the assessee (individual /HUF) in favour of Godrej Beverages and Foods Ltd. The tribunal on the basis of meticulous appreciation of evidence on record has recorded a conclusion in favour of the assessee. The substantial questions of law answered against the revenue and in favour of the assessee.

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• 2021 (3) TMI 595
  Levy of penalty u/s 271(1)(c) - concealment of income - suppression of turnover for sales tax purposes - Filing of revised return offering an additions sum after initiating enquiry proceedings after the expiry of permissible period - HELD THAT:- revised return was filed only on 14.1.1991, while the two years period for filing the revised return under Section 139(5) as it then stood for the assessment year 1987-88 expired on 31.3.1990. In the aforesaid factual scenario, it cannot be held that the revised return filed by the assessee can be treated in the eye of law as a return to substitute the original return with the revised one with the effect of completely effacing the original return. Once we have found that the revised return cannot have the effect of effacing the original return, it is explicit that concealment of the particulars of income and furnishing of inaccurate particulars of income were revealed to the assessing officer in the course of proceedings under the Act. There could be no manner of doubt that, if the assessing officer in the course of any proceedings under the then Act becomes satisfied about the concealment of income or furnishing of inaccurate particulars of such income, he is entitled to initiate proceedings for imposition of penalty as per Section 271(1)(c) of the Act. Decided against the assessee.

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• 2021 (3) TMI 591
  TDS u/s 195 - Scope of the term Interest as per clause 4 of the DTDA article between India and Germany - monitoring fees - HELD THAT:- Monitoring fees paid by the assssee to DEG Bank, Germany qualified as interest both under Income-tax Act, 1961 as well as the Double Taxation Avoidance Agreement between India Germany and the payment made in question was not liable to Income tax under the Act in terms of the specific exemption granted under Article 11(3)(b) of the indo-German DTAA. Hence, no deduction of tax at source was required to be made u/s. 195 of the Act. As there was no violation of Sec. 195 of the Act, the disallowance made u/s. 40(a)(ia) of the Act was deleted by the Ld. CIT(A). We find no infirmity in this finding of the ld. CIT(A). Loss on Interest Rate Hedging Contract - HELD THAT:- this issue is covered in favour of the assessee by the decision of the coordinate bench of this Kolkata Tribunal, B Bench in the case of M/s. Mcleod Russel India Ltd. Vs. DCIT [ 2019 (5) TMI 541 - ITAT KOLKATA ]. As the ld. CIT(A) has applied the proposition of law laid down by this Tribunal on this issue , we find no infirmity in the order of the Ld. CIT(A).

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• 2021 (3) TMI 590
  Addition u/s 41(1) - cessation of liability - waive of loan as part of one time settlement of loan with the banks - The assessee filed explanation objecting for treating the principal amount as income, since, it was not claimed as expenditure in the earlier years, therefore, submitted that the cessation of liability towards principal amount is not to be treated as income. - HELD THAT:- The issue with regard to taxing of principal amount as income was decided by this Tribunal the case of Vasavi Polymers (P) Ltd [ 2020 (6) TMI 401 - ITAT VISAKHAPATNAM] and the case is squarely covered by the decision of this tribunal in favour of the assessee. However, the breakup of loans, i.e., the principal component and interest component was not given by the bankers. We have gone through the settlement letters of banks dated 16/03/2015 of State Bank of India wherein the bank had informed the assessee that the sum of Rs. 40.00 crores were settled for outstanding loans of Rs. 57.39 crores which includes the interest up to 28/02/2015. Similar letters were also given by other consortium banks, thus, there was no bifurcation of principal and interest component in the sanction of banks. In our considered view, the interest debited to the Profit Loss account from the date of loan till the date of waiver of the loan required to be brought to tax u/s 41(1) of the Act subject to the maximum waiver of the loan amount and the balance to treated as the principal. The benefit gained by the assessee on account of waiver represent the interest debited to Profit and Loss account from the date of availing the loan in various assessment years till the date of redemption which was claimed by the assessee as deduction and the same required to be taxed u/s 41(1) of the Act. Thus the interest charged to the Profit and loss account on the term loans as well as working capital loans are the profits chargeable to tax u/s 41(1) of the act. Though this case is covered by the decision of this Tribunal in favour of the assessee in respect of waiver of principal amount of term loan as well as working capital loan in the case of Sri Vasavi Polymers Private Limited [ 2020 (6) TMI 401 - ITAT VISAKHAPATNAM] , waiver of interest needs to be verified. Matter remanded back.

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• 2021 (3) TMI 589
  Unexplained expenditure - Additions u/s 69C - commission paid by account payee cheques - HELD THAT:- The assessee was required to justify the payment of commission expenses. The Assessing Officer pointed out discrepancy in the information filed by the assessee on behalf of those persons and asked the assessee to produce those parties for verification of the services rendered by them for which they were given commission by the assessee. We find that no such details of the property, which has been sold through those persons, have been filed by the assessee to justify the services rendered by them despite due opportunity provided to the assessee. The assessee failed to discharge its obligation, and therefore, on such circumstances, the learned CIT(A) is justified in sustaining the disallowance. Decided against the assessee.

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• 2021 (3) TMI 588
  Rejection of books of accounts u/s 145(3) - Estimation of new profit - A.O estimated the Profit at 5% as against the negative profit of (-) 5.74% shown by the assessee - CIT(A) partly deleted by addition by estimating the profit at 2.3%. - HELD THAT:- All the discrepancies observed by the Ld. A.O have been duly rebutted by the facts of the case which shows that the assessee has properly maintained the books of accounts and the Ld. A.O was not justified in rejecting the same and estimating the profits. Also the basis taken by the Ld. A.O about the alleged unaccounted turnover observed by the Excise Department is no more a good basis since the assessee has succeeded before CESTAT and the alleged show cause notice for the unaccounted turnover has been quashed. We have gone through each and every fact relating to the observation made by Ld. A.O and come to the conclusion that no such discrepancy existed and we are thus satisfied with the losses incurred during the year. We thus set aside the finding of Ld. CIT(A) and are of the considered view that Ld. A.O grossly erred in rejecting the books of accounts of the assessee and proceeding ahead to estimate the net profit rate.

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• 2021 (3) TMI 587
  Nature of land sold after plotting - Agriculture land or not - Adventure in the nature of trade - CIT(A) observed that, the assessee has not been able to establish that land was purchased with an intention of carrying out agricultural activity - CIT(A) further observed that purchase and subsequent sale of land after splitting it into flats is adventure in the nature of trade and income derived there from is to be taxed as business income. - HELD THAT:- Land in question has been classified in revenue records as agricultural land and it was fit for agricultural operations. Merely for the reason that no agricultural operations was carried out during the period and subsequent use of land for non-agricultural operations by the purchaser, cannot change characteristic of the land being agricultural land as nonagricultural land . Therefore, we are of the considered view that the Assessing Officer as well as learned CIT(A) were erred in coming to the conclusion that profit derived from sale of land is assessable under the head income from business or profession. Additions deleted.

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• 2021 (3) TMI 586
  Maintainability of appeal before the CIT(A) u/s 246A - interlocutory order disposing off objections filed by assessee against reopening of the concluded assessment u/s 147 - Appeal against the communication of rejection of objections raised for reopening of assessment - HELD THAT:- it could be seen from the title heading of Section 246A of the Act that it provides for appealable orders before learned CIT(A) and as could be seen above that there are no clauses/sub-section within Section 246A of the Act which provides that an appeal can be filed by assessee against interlocutory order passed by the AO while disposing off objections filed by assessee against reopening of the concluded assessment u/s 147 of the Act. It is also not the case of the assessee that it is denying its liability to be assessed under the Act rather the assessee has voluntarily filed its return of income and offered its status to chargeability to tax as a trust and has paid taxes at the rates applicable for individual . In this bunch of fourteen appeals, wherever the liability to deposit tax was there keeping in view income offered to tax and rates as applicable to individual. The assessee had voluntarily come forward and deposited self assessment tax before filing its return of income with Revenue. Merely because objections raised by the assessee to reopening of the concluded assessment u/s 147 of the Act were disposed off by the AO does not mean that the assessee will be finally fastened with additions to income in its hand on merits. The assessee will always have an opportunity to appear before the AO during reassessment proceedings and raise objections on merits of the issue before any prejudice is caused to the assessee by way of adverse reassessment order to be passed u/s 147 read with Section 143(3) of the Act. The right to file an appeal with learned CIT(A) is a statutory right which emanates from the provisions of the Act and it could not be shown to us by the assessee that there existed any provision in the Act which enables it to file an appeal with learned CIT(A) against aforesaid interlocutory order. More so, the appellant is not remedy less as it will have any opportunity to file an appeal with learned CIT(A) u/s 246A of the Act in case reassessment proceedings culminates into an adverse order u/s 147 read with Section 143(3) of the Act. Appeal dismissed - Decided against the assessee.

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• 2021 (3) TMI 585
  Transfer Pricing adjustments - arms length price - treatment of the outstanding receivables from AEs as a separate international transaction - It is contended that delay in realization of receivables from AE beyond credit period is not a separate international transaction - HELD THAT:- we are of the considered view that there is no merit in the arguments taken by the assessee that delay in realization of AE receivables is not an international transaction. We further note that after the amendment to clause (c) of explanation to Section 92B of the Act, realization of receivables after abnormal delay beyond credit period would tantamount to indirect funding to AE and merely because the assessee is almost a debt free company or the margin of the assessee is higher than the comparables, no such funds of the assessee should be allowed to be utilized for indefinite period. We further note that once delay in realization of AE receivables constitute an international transaction, whether or not, assessee charges interest on receivables from AE or not, has no relevance because any understanding or arrangement between the assessee and its AE which is detrimental to Revenue and against the principles of scheme of Chapter X of the Act, cannot come to the rescue of the assessee. Merely because there is no provision to chargeability of interest in the agreement between the assessee and its AE for delayed realization and merely because assessee does not pay any interest to the AE on the security deposit, the Revenue cannot be deprived on its legitimate share in accordance with the scheme of Chapter X of the Act and the purpose behind the Chapter X. Appropriate rate for benchmarking international transactions for delay in realization of AE receivables - HELD THAT:- If we go by the standards, the LIBOR rate is most appropriate rate of interest in the international market and which is accepted by most of the countries. Therefore, it would be most appropriate if the LIBOR rate is applied as most appropriate rate of interest for imputing interest on delay in receivables from AE. In this case, the AO has imputed notional interest by adopting PLR as the base rate. Therefore, we are of the considered view the LIBOR + 300 basis point rate is most appropriate rate and hence, direct the AO/TPO to adopt LIBOR + 300 basis point for imputing interest on overdue receivable. Addition towards delayed deposit of employees contribution to PF ESI - HELD THAT:- The issue of belated payment of employees contribution to PF ESI is allowable expenditure u/s.43B of the Act or not is no longer res integra. The Hon ble Supreme Court in the case of M/s.Vinay Cement Ltd. [ 2007 (3) TMI 346 - SC ORDER] and also in the case of CIT V. Alom Extrusions Ltd. [ 2009 (11) TMI 27 - SUPREME COURT] has considered identical issue and held that employees contribution to PF ESI is deductible, even if such payment is remitted beyond due date specified under respective Acts, but made on or before due date of furnishing return of income filed u/s.139(1) of the Act.

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• Customs

• 2021 (3) TMI 606
  Duty Drawback - petitioner states that he has no objection in appearing once again before the Assessing Officer and producing the required documents to substantiate the bank realizations - HELD THAT:- It appears that the authority has accepted its submission and has been passed, dropping the adjudication proceedings. Petition allowed.

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• 2021 (3) TMI 602
  Principles of Natural Justice - seeking cross-examination of all persons referred - seeking direction to the respondent to cause fresh re-test of the imports - HELD THAT:- The impugned order is dated 01.07.2019 and this writ petition has been filed on 08.08.2019, within the period of statutory limitation. Thus it is permitted to approach the first Appellate Authority by way of statutory appeal. Such appeal, if filed within a period of four weeks from today along with compliance of all statutory conditions, shall be taken on file by the authority without reference to limitation and heard on merits and in accordance with law. The petitioner is permitted to raise all contentions before the Appellate Authority in respect of its appeal including reliance on Indian Standard specifications. Petition dismissed.

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• 2021 (3) TMI 582
  Interest of delayed refund of SAD - N/N. 102/2007-Cus dated 14.9.2007 - HELD THAT:- This Tribunal in the appellant s own case M/S. HLG TRADING VERSUS COMMISSIONER OF CUSTOMS, LUDHIANA [ 2017 (8) TMI 11 - CESTAT CHANDIGARH ] wherein this Tribunal observed that the appellants are entitled to claim interest of delayed refund, after three months from the date of filing of the refund claims. The appellant is entitled to claim interest of delayed refund after 3 months from the date of filing of refund claims - Appeal allowed by way of remand.

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• Corporate Laws

• 2021 (3) TMI 609
  Admission of certified list of 121 adjudicated claims of Ex-workers as admitted by the Official Liquidator - seeking direction to Corporation Bank to deposit an amount of 7,45,79,292/- with Rs. Official Liquidator to enable the Official Liquidator to distribute the same to 121 workers - validity of request of increasing the rate of adjudication of claim to the extent of Rs.250/- per claim instead of Rs.150/- per claim - HELD THAT:- Based on such a vague affidavit and devoid of any particulars whatsoever, there is no question of re-adjudication of the workmen dues. The entire exercise carried out by the professionals cannot be upset based upon some alleged chance discovery of salary slips. There is no guarantee about the authenticity of such salary slips and in any case, there is no reason to revisit this issue of determination of the workmen dues based on surmises and conjectures. The earlier determination process was fair and after the involvement of all stakeholders. Such determination cannot be set at naught based on such vague premises. Besides, it is quite surprising that the OL seeks to express doubts on the exercise undertaken by its empannelled Chartered Accountants on the fanciful grounds to be found in the self-serving report got prepared by the Bank - earlier determination by the Official Liquidator and the Chartered Accountants from the panel of the Official Liquidator can stand and there is no reason for any re-adjudication based upon surmises and conjectures or even vague and fanciful doubts. According to me, this is not how the dues payable to the workmen should be delayed either by the Official Liquidator or the Nationalized Bank. The Corporation Bank, through its authorized officer Ayub Khan has stated on affidavit that the total outstanding liability of the Company in winding up towards the bank was Rs.83.36 crores. The calculations will therefore have to be made on this statement and the Bank, cannot insist on running its interest meter and at the same time freezing dues payable to the workmen. Such an attempt is neither fair nor proper. By orders dated 26th February 2021 and 5th March 2021, an amount of Rs.1.46 crores or thereabouts was already directed to be paid to the 121 workmen on pro-rata basis. Therefore, this amount will have to be deducted from the amount of Rs.3.71 crores now payable to these 121 workmen. Further, Mr. Usgaonkar pointed out that by order dated 1st October 2015, an amount of Rs.71,19,770/- was also paid to the 121 workmen. Therefore, even this amount will have to be deducted from the amount of Rs.3.71 crores as aforesaid - Ms. Razaq points out that even on the amount of Rs.45.30, interest must have accrued and orders can be made for the distribution of such interest on a pro-rata basis. This is correct. However, since the payments to be made in terms of this order are only provisional and subject to the Official Liquidator/Bank recovering further amounts by the sale of assets of the Company in winding up, this amount accrued by way of interest can be taken into consideration at a later stage. Therefore, this amount will have to abide by further orders as and when the Official Liquidator takes out a fresh report seeking directions - So also it is clarified that the issue of 40 additional workmen will also have to be treated separately and the Official Liquidator is at liberty to complete the process and file a further report, if necessary. Application disposed off.

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• 2021 (3) TMI 594
  Disqualification of Directors - non-filing of financial statements or annual returns for any continuous period of three financial years - non-compliance/default under Section 164(2)(a) of the Companies Act, 2013 - company s name has been struck off from the Register of Companies - HELD THAT:- In terms of the judgment in ANJALI BHARGAVA AND ANR VS UNION OF INDIA AND ANR [ 2020 (12) TMI 1217 - DELHI HIGH COURT] the Petitioners would fall in category d . Further, since the disqualification of the Petitioners is prior to 7th May, 2018, the Petitioners would also fall in category a . In terms of the judgment in MUKUT PATHAK ORS., YOGESH KHANTWAL, AARTI KHANTWAL, AND VINEET WADHWA VERSUS UNION OF INDIA AND ANR. [ 2019 (11) TMI 319 - DELHI HIGH COURT] , the DINs and DSCs of the Petitioners shall be re-activated within a period of ten days. If, in addition, the Petitioners wish to seek restoration of the struck off company, the Petitioners are permitted to seek their remedies in accordance with law before the NCLT. Petition disposed off.

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• Insolvency & Bankruptcy

• 2021 (3) TMI 611
  Approval of scheme of compromise and arrangement - prohibition placed by the Parliament in Section 29A and Section 35(1)(f) of the IBC - Ineligibility during the resolution process and liquidation - Interplay between IBC liquidation and Section 230 of the Act of 2013 - Clean Slate - Constitutional Validity of Regulation 2B - Liquidation Process Regulations - Whether in a liquidation proceeding under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the l B Code ) the Scheme for Compromise and Arrangement can be made in terms of Sections 230 to 232 of the Companies Act? - If so permissible, whether the Promoter is eligible to file application for Compromise and Arrangement, while he is ineligible under Section 29A of the I B to submit a Resolution Plan ? Ineligibility during the resolution process and liquidation - HELD THAT:- The ineligibility which was engrafted by the amending legislation was incorporated in both the provisions of Chapter II dealing with the CIRP as well as in Chapter III dealing with the liquidation process. Section 29A stipulates the category of persons who shall not be eligible to submit a resolution plan . The proviso to Section 35(1)(f) incorporates the same norm in the liquidation process, when it stipulates that the liquidator shall not sell the immovable and movable or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant . These words in Section 35(1)(f) are clearly referable to the ineligibility which is set up in Section 29A. Interplay between IBC liquidation and Section 230 of the Act of 2013 - HELD THAT:- This Court emphasized that where a company is in liquidation, its assets are custodia legis, the liquidator being the custodian for the distribution of the liquidation estate. A compromise or arrangement in respect of a company in liquidation must foster a revival of the company, this being (as the Court termed it ) the clear statutory intention behind entertaining a proposal under Section 391 in respect of a company in liquidation. IBC liquidation and Section 230 scheme : a statutory continuum - HELD THAT:- Proposing a scheme of compromise or arrangement under Section 230 of the Act of 2013, while the company is undergoing liquidation under the provisions of the IBC lies in a similar continuum. Thus, the prohibitions that apply in the former situations must naturally also attach to the latter to ensure that like situations are treated equally. The Clean Slate - HELD THAT:- The liquidator exercises several functions which are of a quasi-judicial in nature and character. Section 35(1) itself enunciates that the powers and duties which are entrusted to the liquidator are subject to the directions of the adjudicating authority . The liquidator, in other words, exercises functions which have been made amenable to the jurisdiction of the NCLT, acting as the Adjudicating Authority. To hold therefore that the ineligibility prescribed under the provisions of Section 35(1)(f) can be disregarded by the Tribunal for the purpose of considering an application for a scheme of compromise or arrangement under Section 230 of the Act of 2013, in respect of a company which is under liquidation under the IBC, would not be a correct construction of the provisions of law. Constitutional validity of Regulation 2B - Liquidation Process Regulations - HELD THAT:- The public comments were invited. The discussion paper is what it professes to be a matter for discussion in the public realm. This cannot be held to constitute an admission of IBBI that an applicant who is ineligible under Section 29A may submit a scheme of compromise or arrangement under Section 230 of the Act of 2013. The validity of the provisions of Regulation 2B, more specifically the proviso, has to be considered on their own footing. The prohibition placed by the Parliament in Section 29A and Section 35(1)(f) of the IBC must also attach itself to a scheme of compromise or arrangement under Section 230 of the Act of 2013, when the company is undergoing liquidation under the auspices of the IBC - As such, Regulation 2B of the Liquidation Process Regulations, specifically the proviso to Regulation 2B(1), is also constitutionally valid. There is no merit in the appeals and the writ petition - Appeal dismissed.

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• 2021 (3) TMI 584
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Operational Creditor - existence of debt and dispute or not - HELD THAT:- It appears from the records that the claim of Operational Creditor has never been disputed by the Corporate Debtor within the timelines as mentioned in the Code nor the Corporate Debtor could show a pre-existing dispute in this matter - The applicant has qualified to become an Operational Creditor as the Corporate Debtor owed them debt which is considered as an Operational Debt . As the applicant has undoubtedly provided services to the Corporate Debtor, their dues are qualified to classify as Operational Debt . Default - HELD THAT:- The Corporate Debtor admits their debt and states that due to Covid 19 pandemic the construction works have come to a standstill, therefore the Corporate Debtor was not in a position to procure funds. Dispute - HELD THAT:- The Corporate Debtor could not establish any of the three points mentioned under the definition in the Code, i.e., the existence of the amount of debt, the quality of goods or service, or the breach of a representation or warranty. It is clear that the existence of dispute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the operational debt is exceeding Rs. 1 lakh [prior to the notification of 24th March 2020] and that the aforesaid debt is due and payable and has not been paid, in such a case, in the absence of any existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of the demand notice of the unpaid operational debt , the application under Section 9 cannot be rejected and is required to be admitted. Since all the aforesaid conditions are fulfilled in the instant case, this Tribunal is of the opinion that the application submitted by Operational Creditor is complete in all respects - Application admitted - moratorium declared.

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• 2021 (3) TMI 583
  Non-payment of salary - illegal actions by the Resolution Professional - inclusion of salary expenses as CIRP cost in the Resolution Plan - HELD THAT:- What appears is that the Appellant is reagitating what is already recorded in WEATHER MAKERS PRIVATE LIMITED VERSUS PARABOLIC DRUGS LIMITED [ 2021 (3) TMI 501 - NATIONAL COMPANY LAW TRIBUNAL, CHANDIGARH] and only because the liberty was given, the present Appeal is filed. The Appeal does not spell out grounds as required by Section 61 (3) of IBC and continues to agitate claims, discussed in Order dated 17.02.2021 - there are no reason to entertain the present Appeal. Appeal dismissed.

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• 2021 (3) TMI 580
  Seeking to declare the decision of the resolution professional of the Corporate Debtor for recognizing the Indirect Lenders as the Financial Creditors of the Corporate Debtor as null and void - seeking to de-recognize / declassify / delete the Indirect Lenders as Financial Creditors of the Corporate Debtor - seeking to prepare a reconstituted committee of creditors comprising of Financial Creditors of the Corporate Debtor as mandated under Section 21 of the IB Code, 2016 - seeking to perform his duties in accordance with the relevant provisions and regulation of the IB Code, 2016 - seeking to defer any meeting of committee of creditors of the Corporate Debtor - In the event, any meeting of committee of creditors of the Corporate Debtor is held, seeking to keep the resolutions passed in the said meeting, in abeyance till the outcome of the present application. HELD THAT:-The contention of the Applicant that there is no disbursal of any amount or loan to the Corporate Debtor and hence there is no financial debt is untenable. Here the loans were disbursed to RCOM entities and the Corporate Debtor had given guarantee in favour of the Respondents - When there is a Financial Debt due, irrespective of the fact that the same is defaulted or not, a claim can be made in the CIRP proceedings. For making a claim under CIRP, it is not required that the said debt should have been defaulted. We accept the contention of the Respondents that they were within their rights in filing the claim before the IRP as Financial Creditors. In this regard, the reliance of the Applicant on the judgement of SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] is totally misplaced since Swiss Ribbons deals with the debt and default for triggering CIRP process and the issue of limitation. Neither the Section of law nor the Regulation says that the claim of a debt can be made only when there is a default. The debt and default would be a sine qua non for the admission of a Section 7 or Section 9 or Section 10 petition. But for filing claim before IRP, mere debt is sufficient and it would not be necessary that the debt has been defaulted. In view of this, the submission of the Counsel for the Applicant that the claimant must establish not only the existence of the financial debt but also that the same is due and unpaid which means that the debt should have been defaulted, is untenable - Section 2(11) of the Code provides that debt means a liability or obligation in respect of a claim which is due from any person and includes financial debt and operational debt. Here, in this case, the Corporate Debtor by the DoH guaranteed the Respondents to pay the deficiency or shortfall, if any, towards the debt after realisation of the hypothecated assets. Admittedly, hypothecated assets were not sold in this case and hence the whole debt is due to the Respondents and the Respondents as Financial Creditors as already indicated by us are entitled to file a claim before the IRP. The IRP has rightly admitted the claim of Respondents as Financial Creditor. The contention of the Applicant that the said debt shall be in default is not applicable as far as filing of the claim is concerned, however, in view of the fact that CIRP has been initiated against the Corporate Debtor, Corporate Debtor as a guarantor is liable to pay the debts and the Respondents are right in filing a claim as a Financial Creditor. Filing a claim in CIRP cannot be construed as enforcement of security interest. Before the enforcement of security interest by the Security Trustee, CIRP intervened and the Creditors are entitled to file Form C before the IRP. It is to be noted that in Form C also the claimant has to give the name of the Financial Creditor, amount of claim, how and when the debt incurred, etc. A Security Trustee cannot become a Financial Creditor to file a claim before the IRP and we feel that on going through the contents of Form C even in cases when a Security Trustee is appointed there is no bar for a Financial Creditor to file a claim. The contention of the Applicant that the beneficiary can enforce his right only when the Trustee has failed to discharge his duties or otherwise cannot be accepted for the reason that there is no question of enforcement of right by the Trustee since CIRP has intervened.

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• 2021 (3) TMI 579
  Backdoor entry for approval of resolution plan - Seeking intervention and appropriate directions to the Respondent for successful, fair and unbiased completion of Resolution Process of the Corporate Debtor - Proper authority to file application - HELD THAT:- The Managing Director could file the Application. Since no relief is claimed against DSKL, it would not be a necessary party to the Application. The Application can very well be decided in its absence. The Hon ble NCLAT in the matter of Kotak Investment Advisors Limited Vs. Mr. Krishna Chamadia (Resolution Professional in the matter of Ricoh India Limited) and Ors. [ 2020 (8) TMI 389 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that It cannot be said that as per Process Memorandum, the Resolution Professional was entitled to accept any Resolution Plan at any point of time, without following the due process under the guise of maximization of value. The alleged act of the Resolution Professional in accepting the Resolution Plan after the expiry of the deadline for submission of Resolution Plan is arbitrary, illegal and against the principle of natural justice and cannot be treated as an act within the commercial wisdom of the CoC. Thus, after the expiry of the deadline for submission of Resolution Plan, the Resolution Professional, with the approval of CoC, was fully authorized to invite fresh invitation for Expression of Interest for submission of Resolution Plan. Thereby fair opportunity would have been available to all other Prospective Applicants to participate in the process thereby creating more healthy competition. Accepting one EoI, Resolution Plan from one party whose EoI had earlier been rejected by CoC after due deliberation is prejudicial and beyond the scope of the Code and the Regulations. When EoI is invited, then public notices are published. The action of the RP and CoC is in violation of the express provisions of the Code and Regulations made thereunder. However, if the CoC wanted to extend the timeline, it should have done so within the procedure prescribed there for. By providing a special treatment, back door entry for accepting the Resolution Plan of the DSKL s the Resolution Professional and the CoC have deviated from the norms prescribed under the Code and the Regulations framed there under, which vitiates the Corporate Insolvency Resolution Process and caused prejudice to the other PRAs. Such a practice has been strongly deprecated by the Hon ble NCLAT - application allowed.

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• Service Tax

• 2021 (3) TMI 613
  Condonation of delay of 388 days in filing the appeal - in several appeals which have recently come up before this Court that the orders passed by the CESTAT are stated to have been received by the revenue arm of the government after a lapse of between nine months and one year - HELD THAT:- We would like to enquire as to why such a state of affairs has come to exist. If the orders of the CESTAT are being uploaded on the website in the electronic form, there should be no reason why they should not be obtained by the competent authorities so as to facilitate the filing of appeals expeditiously. In order to enable the Court to have a full perspective, we request the Registrar (Judicial) to remit a copy of this order to the President of the CESTAT. We request the learned President of the CESTAT to request a senior officer, preferably the Registrar to file a report before this Court explaining the position and steps taken by the CESTAT to make available its orders to the litigating parties expeditiously.

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• 2021 (3) TMI 581
  CENVAT Credit - input services - General Insurance Services - Auxiliary Services - Renting of Immovable Property Services - Manpower Supply services - Department was of the view that the input services were not covered under the inclusive definition of input services and that these services were not used for providing the output service namely General Insurance Service - HELD THAT:- It is agreed by both the parties that the issue stands covered by the order of this Bench of the Tribunal in the assessee s own case in M/S. CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD. CHENNAI VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [ 2018 (10) TMI 839 - CESTAT CHENNAI ] wherein, under similar circumstances, the matter was remanded to the file of the Adjudicating Authority. Matter remanded back to the file of the Adjudicating Authority to re-adjudicate the issue involved in the present appeal - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2021 (3) TMI 607
  Violation of principles of natural justice - Refund of VAT paid on goods sold - plea of the petitioner is that since the order impugned has been passed in violation of the principles of natural justice and, therefore, availability of alternative remedy may not be a bar for the exercise of writ jurisdiction to review the impugned order - HELD THAT:- The impugned order, as is apparent from its bare reading, is speaking one and spells out reasons for the decision. The reasons may be good or bad but the same can only be made subject matter of challenge in an appeal before the appellate authority under Section 72 of the Act. This Court not being a Court of appeal may not be in a position to appreciate the factual aspect of the matter. The appellate authority appointed by the Government for hearing appeals under Section 72 of the Act would be in a better position to appreciate both questions of fact and law. It is well settled that once statutory mechanism is provided for resolution of dispute, the party aggrieved must availed of the statutory remedy provided under the Statute and should not rush to the High Court invoking its extra ordinary writ jurisdiction. This petition cannot be entertained - the petitioner is relegated to remedy of appeal provided under the Act. Should the petitioner approach the appellate authority by way of appeal against the impugned order, the appellate authority shall consider the condonation of delay, if any, liberally having regard to the post Covid-19 situation - petition dismissed.

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• 2021 (3) TMI 604
  Recovery of dues of deceased dealer - The immovable property sought to be put to auction is of the ownership of the mother of the deceased dealer and it is not the estate of the deceased - Section 57 of the Gujarat Value Added Tax Act, 2003 - notice of demand under Section 42 of the GVAT Act, 2003 read with Rule 61 of the Rules - HELD THAT:- There is nothing to indicate that the immovable property in question is the estate of the deceased. There is nothing to even indicate that the deceased dealer was the joint owner or a co-owner of the property in question. However, with a view to give one opportunity to the learned AGP to meet with the aforesaid two arguments of the learned counsel appearing for the writ applicant, we grant one week time to Mr. Utkarsh Sharma. On the next date of hearing, Mr. Sharma shall point out to the Court in what manner the property in question is the estate of the deceased and whether any notice of demand under Section 42 of the GVAT Act, 2003 read with Rule 61 of the Rules has been issued at any point of time, in accordance with law. Post this matter for final hearing on 15.03.2021 on top of the Board. Till the next date of hearing, the respondents shall maintain status quo as regards the nature, character and possession of the property in question.

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• 2021 (3) TMI 600
  Cancellation of Registration Certificate granted to the respondent - TNVAT Act - HELD THAT:- The order passed in the writ petition is dated 10.03.2015. Though the appeal was filed by the Department as early as November, 2015, the same has not been admitted, nor any interim order was granted and has been heard on two occasions and adjourned. Therefore, no useful purpose would be served by keeping the appeal pending any longer. The order passed in the writ petition is confirmed - the retrospective cancellation of the respondent s Registration Certificate is interfered with - the appellant are directed to issue notice to the respondent to the correct address and proceed in accordance with law in terms of the liberty granted by the learned Single Bench by invoking Section 39(14) of the Act - appeal disposed off.

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• 2021 (3) TMI 596
  Classification of goods - Chandrika Soap - whether assessee is entitled to be treated as Handmade soap and consequently obligated to pay tax at concessional rate of 4% or Chandrika Soap falls under the category i.e. soaps other than hand made? - interest on the differential tax - tax paid based on the return. HELD THAT:- It must be predominantly made by hand. It does not matter if some machinery is also used in the process. (2) It must be graced with visual appeal in the nature of ornamentation or inlay work or some similar work lending it an element of artistic improvement. Such ornamentation must be of a substantial nature and not a mere pretence. These principles would apply to all pending matters and to all matters arising thereunder - The report deals in sufficient detail on the purpose and utility of drum in the sequence of manufacturing process and used for mixing the raw material. This stand alone item ought not to be understood as Chandrika Soap made otherwise than Handmade. The Chandrika Soap is treated as hand made by the assessing authorities in the State of Karnataka. The dominant tests on what constitutes handmade are satisfied in the case on hand and the findings of the Tribunal are set aside and accordingly the first question is answered in favour of the assessee and against the Department. Whether the direction of the Tribunal for calculating interest on the differential tax and tax paid based on the return is legal? - HELD THAT:- The re-assessment does not arise and question is answered in favour of assessee and against the Revenue. Revision dismissed.

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• Indian Laws

• 2021 (3) TMI 612
  Period of limitation for appointment of Arbitrator - Seeking reimbursement on account of price variation - HELD THAT:- So far as the applicability of Article 137 of the Limitation Act to the applications under Section 11 of the Arbitration Act is concerned, it is clear that the demand for arbitration in the present case was made by the letter dated 07.11.2006. This demand was reiterated by a letter dated 13.01.2007, which letter itself informed the Appellant that appointment of an arbitrator would have to be made within 30 days. At the very latest, therefore, on the facts of this case, time began to run on and from 12.02.2007. The Appellant s laconic letter dated 23.01.2007, which stated that the matter was under consideration, was within the 30-day period. On and from 12.02.2007, when no arbitrator was appointed, the cause of action for appointment of an arbitrator accrued to the Respondent and time began running from that day. Obviously, once time has started running, any final rejection by the Appellant by its letter dated 10.11.2010 would not give any fresh start to a limitation period which has already begun running, following the mandate of Section 9 of the Limitation Act. This being the case, the High Court was clearly in error in stating that since the applications under Section 11 of the Arbitration Act were filed on 06.11.2013, they were within the limitation period of three years starting from 10.11.2020. On this count, the applications under Section 11 of the Arbitration Act, themselves being hopelessly time barred, no arbitrator could have been appointed by the High Court - Even otherwise, the claim made by the Respondent was also ex facie time barred. It is undisputed that final payments were received latest by the end of March 2003 by the Respondent. Even taking 16.02.2010 as the starting point for limitation on merits, a period of three years having elapsed by February 2013, the claim made on merits is also hopelessly time barred - Appeal allowed.

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• 2021 (3) TMI 598
  Dishonor of Cheque - non-repayment of friendly loan - section 138 of NI Act - HELD THAT:- This Court finds that during pendency of this criminal revision, the petitioner deposited an amount of Rs. 1,50,000/- in the bank account of this Court, the petitioner has shown his intention to settle the case out of court and the learned counsel for the opposite party no.2 has also expressed that if the amount of Rs. 1,50,000/- is remitted to the complainant s account, he has no objection if the conviction as well as the sentence of the petitioner is set aside. It is not in dispute that the present case arises out of friendly loan between the parties and the matter is under Section 138 of Negotiable Instrument Act. This case is disposed by way of compromise between the petitioner and opposite party no. 2. Accordingly, the conviction as well as the sentence of the petitioner arising out of Complain Case are hereby set aside on account of settlement out of court between the parties - Revision application disposed off.

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• 2021 (3) TMI 597
  Dishonor of Cheque - insufficient funds - Section 138 of the Negotiable Instruments Act - service of notice - rebuttal of presumption - HELD THAT:- This Court finds that both the learned courts below have failed to consider that there is no evidence available on the records of the case which suggests that the legal notice dated 29.02.2008 sent under registered cover was ever served upon the petitioner. The learned courts below have proceeded on the premise that the accused is also belonging from Distt. Hazaribag, so it may be presumed that the said notice was received by the accused till 2 March, 2008 i.e. on the third day when counted from the date of issuance of notice. This Court is of the considered view that the date of service of notice of cheque bouncing is a material date for the purposes of calculation of time line giving a cause of action for filing a Complaint under Section 138 of the Negotiable Instruments Act, 1881 and it is for the Complainant to prove that the cause of action arose as per the provisions under the proviso (c) to Section 138 of Negotiable Instruments Act, 1881 which clearly provides that the cause of action arises upon expiry of 15 days from the date of receipt of the cheque bouncing notice - In absence of the specific date regarding service of cheque bouncing notice, the finding of the learned trial court on the basis of presumption that the legal notice dated 29.02.2008 was received by the accused-petitioner till 2 March, 2008 is perverse and cannot be sustained in the eyes of law. This Court is of the considered view that both the learned courts below have erred in holding that the notice dated 29.02.2008 was presumed to have been served by 02.03.2008 and accordingly the Complaint was maintainable on 18.03.2008. Accordingly, this Court holds that the Complaint filed before expiry of the statutory period 15 days from the date of deemed service of the demand notice upon the petitioner regarding the dishonour of the cheque was premature in view of the fact that the cause of action for filing the Complaint had not arisen on 18.03.2008 and therefore, the Complaint itself was not legally maintainable. The petitioner is acquitted from the accusation thereunder and he is discharged from the liability of his bail bond - present criminal revision petition is hereby allowed.

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• 2021 (3) TMI 593
  Dishonor of Cheque - insufficient funds - error apperent on the face of record or not - no reply or compliance of calling of notice which resulted in filing of the Criminal case against the accused - offence punishable under Section 138 of the Negotiable Instruments Act - HELD THAT:- In the case on hand, Ex.P-1 cheque and the signature found therein is not in dispute. So also, the dishonor of cheque and issuance of statutory legal notice is also not in dispute. Perusal of cross examination of PWs.1 2 depicts that the accused has taken a defence that he had a monetory transaction with DW-2 and in that regard he had issued Ex.P-1 cheque to DW-2, who is none other than the co-brother of the complainant and Ex.P1 has been mis-used by the complainant to foist a false case against the accused herein. To probabalise such a defence, the accused did take the responsibility of not only examining himself as DW-1 but also summoned Sri Manjunath; the co-brother of the complainant who is examined as DW-2. In his cross examination, it has been categorically elicited that the cheque in question Ex.P1 was not collected by Manjunath from accused and handed over to the complainant for the purpose of presenting it and marking it as cause of action for filing a complainant. The first Appellate Court on re-appreciation of the entire material available on record concurred with the judgment passed by the learned Magistrate and did not alter the sentence. Having regard to the circumstances available in the case on hand and the defence having not been probabalised, this court is of the considered opinion that there is no error apparent on the finding recorded by the learned Magistrate in holding that the accused has committed an offence u/s.138 of the Negotiable Instruments Act, which has been confirmed by the first Appellate Court. In the considered opinion of this court, ordering Rs. 25,000/- fine towards the State is excessive as no State missionary is involved in the case on hand. Therefore, this court is of the considered opinion that ordering a sum of Rs. 2,30,000/- as fine by reducing from Rs. 2,50,000/- and maintaining compensation of Rs. 2,25,000/- and fine of Rs. 5,000/- payable to the State would meet the ends of justice - Application allowed in part.

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• 2021 (3) TMI 592
  Levy of penalty under Section 17A of the Luxuries Act - Tribunal deleted the penalty as no assessment was done - treatment charges as charges towards amenities and services under Section 2(fb) of the Luxuries Act - HELD THAT:- This Court notices that the Tribunal has found fault with the assessing authority and the appellate authority for notionally determining and assuming that 30% of gross charges would represent the luxury provided by respondent under Section 2(fb) of the Luxuries Act and that there is no material even to come to the conclusion as to the rate at which the accommodation is provided by the respondent. In other words, the reasoning of its Tribunal rightly points out the mistakes of authority under the Act in levy penalty. Petition is rejected on the ground that in the case on hand, no assessment determining the obligation/liability under the Luxuries Act is made, penalty proceedings are taken up, and by notionally calculating the amount the penalty is imposed. The Tribunal, has given liberty to department to first proceed to initiate assessment proceedings in accordance with law, subject to the period of limitation, if sufficient materials are available for doing so and consequently penalty proceedings could be contemplated. Petition dismissed.

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