TMI Tax Updates - e-Newsletter
March 19, 2022

Case Laws in this Newsletter:

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

Articles

1. If tax Collected During Investigation under Coercion, such collection is violation of Article 265 and 300-A of the Constitution and does not fall under ambit of 74(5) and hence liable to be refunded-

   By: Rachit Agarwal

2. Maintainability of WP where there is no appeal provided A case about delegation of power under GST law decided by the Supreme Court discussion with relevant provisions.

   By: DEVKUMAR KOTHARI

News

1. Webinar on Smart Search HSN- An Enhanced search HSN functionality for taxpayers

2. India’s merchandise export has reached almost USD 390 billion and will certainly cross USD 400 billion during the current fiscal- Shri Piyush Goyal

3. Centre focusses on promoting exports of GI-tagged niche agricultural products

4. More than 6.63 crore Income Tax Returns (ITRs) and 99.27 lakh statutory forms filed on the new e-filing portal of the Income Tax Department

Notifications

GST - States

1. 9/2021 – State Tax (Rate) - dated 11-1-2022 - Chhattisgarh SGST

Amendment in Notification No. 2/2017–State Tax(Rate), dated the 29th June, 2017

2. 8/2021 – State Tax (Rate) - dated 11-1-2022 - Chhattisgarh SGST

Amendment in Notification No. 1/2017–State Tax (Rate), dated the 28th June, 2017

3. 12/2021 – State Tax (Rate) - dated 11-1-2022 - Chhattisgarh SGST

Seeks to exempt CGST on specified medicines used in COVID-19, up to 31st December, 2021

4. 11/2021 – State Tax (Rate) - dated 11-1-2022 - Chhattisgarh SGST

Amendment in Notification No. 39/2017–State Tax (Rate), dated 18th October, 2017

5. 10/2021 – State Tax (Rate) - dated 11-1-2022 - Chhattisgarh SGST

Amendment in Notification No. 4/2017–State Tax (Rate), dated the 28th June, 2017

6. ERTS (T) 65/2017/Pt.I/457 - dated 24-2-2022 - Meghalaya SGST

Amendment in Notification No. 13/2020 - State Tax, dated the 21st March, 2020

SEBI

7. SEBI/LAD-NRO/GN/2022/75 - dated 16-3-2022 - SEBI

Securities and Exchange Board of India (Alternative Investment Funds) (Second Amendment) Regulations, 2022

SEZ

8. S.O. 1186 (E) - dated 15-3-2022 - SEZ

Central Government de-notifies an area of 0.469 hectares thereby making the total area of the Special Economic Zone as 5.78 hectares. at Nanakramguda Village, Serilingampally Mandal, Ranga Reddy District, in the State of Telangana

Circulars / Instructions / Orders

DGFT

1. 50/2015-2020 - dated 17-3-2022

Amendments in the Guidelines of ANF-4F of Handbook of Procedures 2015-2020

Customs

2. 401/103/2021 -Cus-III - dated 14-3-2022

Instruction No. 2/2022-Customs dated 02.02.2022 regarding Notification of Authorised Officers under Section 25 read with Section 47 (5) of FSS Act, 2006 and Regulation 13 (1) of FSS (Import) Regulation, 2017

Highlights / Catch Notes

GST

• Court Upholds Detention of Goods for Expired E-Way Bill; Allows Release Upon Bank Guarantee for Penalty.

  Case-Laws - HC : Detention of goods alongwith vehicle - the E-Way Bill already taken had expired - the impugned detention order as well as the show cause notice are tenable. Therefore, the same do not require any interference of this Court - it is open to the petitioner to give a bank guarantee for a sum being the proposed penalty against the petitioner and if such bank guarantee is given by the petitioner, after accepting the same, the respondent Revenue can release the goods in question forthwith. - HC
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• Court Rejects Input Tax Credit Claim Based Solely on Electronic GST Records; Petition Dismissed for Late Filing.

  Case-Laws - HC : Input Tax Credit - Mere reflection of the amounts in the Goods and Service Tax records electronically is not sufficient. If credit is to be allowed and adjusted on such transactions, it would lead to unintended benefits being conferred. - The petitioner has approached this Court long after the expiry of the limitation - petition dismissed. - HC
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• Court Rules Mismatch in ITC Claim Not Assessee's Fault; Respondents Misinterpret JGST Act Section 161 Time Limit.

  Case-Laws - HC : Blocking of Input tax credit - mismatch or excess availment of ITC - non-consideration of rectification application submitted by the assessee - The respondents perhaps are labouring under the impression that since the period of six months contemplated under Section 161 of the JGST Act, 2017 has expired much before they are precluded from deciding the application. It is also evident that the application remained undecided not on account of any fault on the part of the petitioner. The respondents cannot therefore take advantage on their wrong also. - HC
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• Taxpayer Can File or Revise Tran-1 Form for Transitional Credit; Verify Records Under Central Excise Act, 1944.

  Case-Laws - HC : Transitional Credit - payer to file or revise form Tran-1 already filed either electronically or manually and consequently avail the benefits - The respondents are directed to verify the records and returns of the petitioner under the Central Excise Act, 1944 and if the credit had been unutilised on the cut off date (i.e) 30.06.2017, the respondents shall suitably credit into the electronic credit register of the petitioner the amount which had remained unutilized and would not be transitioned under the GST regime. - HC
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Income Tax

• Court Rules Reopening Assessment u/s 147 a Change of Opinion; Previous Acceptance of Transaction Affirmed.

  Case-Laws - HC : Reopening of assessment u/s 147 - Change of opinion - In fact, the petitioner was called upon to explain the very transaction, in respect of which, during the course of scrutiny assessment, the then Assessing Officer had already solicited information and documents. Eventually, during the course of scrutiny assessment, the Assessing Officer having been satisfied with the explanation furnished by the petitioner, did not make any addition. In the course of the proceedings under section 153A also, the revenue did not claim that any incriminating material was found qua the transaction with JMPL. In this view of the matter, the reopening of the assessment on the premise that the creditor lacked the creditworthiness and thus the loan transaction was sham, is nothing but a change of opinion. - HC
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• High Court Upholds Tribunal's Decision to Dismiss Unjustified 'On Money' Additions in Real Estate Tax Case.

  Case-Laws - HC : Estimation of profit embedded in the total unaccounted on money receipts from real estate business of the assessee - CIT(A) noted that if the extra work doubted by search or survey party, no further investigation was made against those flats owners. The adoption of huge ‘on money’ without iota of evidence is not justified and deleted the entire addition. - Order of ITAT confirming the deletion of additions upheld - HC
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• Educational Trust Wins Registration u/s 12AA Despite Surplus, Aligns with Charitable Objectives in Trust Deed.

  Case-Laws - AT : Exemption u/s 11 - not granting registration u/s 12A - in the case of the appellant, the activity is running education which is a charitable activity as defined u/s 2(15) of the Act. The Surplus is in the range of 10-15% .The ld.Commissioner has not alleged that the surplus has been used for non charitable activities. It means surplus has been used for the objects mentioned in the trust deed. After analysing all these facts, we are of the opinion that the appellant trust is eligible for registration u/s 12AA of the Act. - AT
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• No Penalty Imposed for Non-Compliance with Summons Due to Ignorance in Remote Areas u/s 272A(1)(c.

  Case-Laws - AT : Penalty levied u/s. 272A (1)(c) - non compliance with summons issued under section 131(1A) - ignorance of law is certainly no excuse for a default committed but, at the same time, there is no presumption in law that everybody knows the law - The application of this rule would differ from case to case and person to person. In a given case, there may be a person who is quite illiterate, living in remote village, rarely coming in touch with law enforcing machinery and not required to discharge any statutory obligations under a particular law. Ignorance of law may be a good excuse in his case. - No penalty - AT
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• Supplier's Excess Costs Recovered as Income Deductible u/s 80IE for Appellant Company.

  Case-Laws - AT : Eligible income for the purpose of deduction u/s 80IE - the recovery of excess cost charged by the supplier is extricably connected with income of the industrial undertaking as of the undertaking of the appellant company and therefore, is entitled to deduction under Section 80IE of the Act. We, thus, allow the said deduction in respect of the appellant company under Section 80IE of the Act. - AT
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• Assessee cannot raise new DDT liability issue in current appeal; advised to file with CIT(A) for leniency.

  Case-Laws - AT : Additional ground relating to DDT liability - the assessee cannot raise the additional ground relating to DDT liability in the present appeal. The assessee, if so advised, may prefer appeal in that regard before Ld CIT(A). Since the assessee had entertained bonafide belief that its grievance on DDT liability can be raised as additional ground before ITAT, it did not file appeal before Ld CIT(A). Accordingly, we direct the Ld CIT(A) to take a lenient view on the matter of condonation of delay, if the assessee prefers appeal before him on DDT liability of the year under consideration - AT
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• Taxpayer's Provision for Bad Debts Not Deductible u/s 36(1)(vii), Income Tax Act 1961.

  Case-Laws - AT : Disallowance of provision for Bad Debt Written off - provision made by the assessee for bad and doubtful debts is only a provision, but not actual written off of bad debts which is irrecoverable. Hence, we are of the considered view that the assessee is not entitled for deduction towards provision made for bad and doubtful debts u/s. 36(1)(vii) of the Income Tax Act, 1961. - AT
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• Penalty for Not Uploading Form 3CEB Deleted: Unintentional Mistake u/s 271BA, No Adjustments by Transfer Pricing Officer.

  Case-Laws - AT : Penalty u/s 271BA - admittedly the assessee failed to upload Form No. 3CEB in terms of the statutory requirement - Specified Domestic Transaction - Assessee contended that, this being the first year of this new provision it could not upload the same electronically which is neither willful nor wanton. - The assessee has further pleaded that based on the report, no adjustments have been proposed by the TPO. - Non uploading of Form 3CEB for the first time is an unintentional bona fide mistake. - Levy of penalty deleted - AT
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Customs

• Court Orders Release of Detained Base Oil at Mundra Port; Applicant Must Execute Satisfactory Bond Covering Potential Liabilities.

  Case-Laws - HC : Seeking clearance of goods for home consumption - imported Base Oil - If ultimately, any such show cause notice is issued, the writ applicant will have to meet with it. At this point of time, we are only concerned with the goods. There is no point in keeping the goods detained at the Mundra Port. The goods should be ordered to be released subject to the writ applicant executing a Bond of an amount to the satisfaction of the authority concerned (inclusive of interest, fine and penalty) - HC
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• Customs Duty Order Invalid as DRI Officer Lacks Authority to Issue Show Cause Notice; Only Proper Officer Can Do So.

  Case-Laws - AT : Jurisdiction - proper officer to issue SCN - Undisputedly, the bills of entry in this case were not assessed by the officers of DRI but by the officers of the Custom house. Only that officer who has assessed the Bills of Entry in the first place or his successor in office was “the proper officer‟ who, if he was subjectively satisfied that some duty had escaped assessment, could have issued the SCN. As the SCN has been issued by officer of DRI who is not competent to issue it, the impugned order deciding such an SCN cannot be sustained and needs to be set aside. - AT
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• Court Confirms Levy Against Appellant for Mis-declaration and Under-valuation in Fraudulent Land Rover Import Case.

  Case-Laws - AT : Mis-declaration of goods - under-valuation of goods - fraudulent import of the Land Rover - The retracted statement is held to be an afterthought to manipulate evidence. There is no other evidence on record to prove the appellant’s innocence as far as the knowledge of fraudulent import - Levy confirmed - AT
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Indian Laws

• Courts Must Enforce 20% Fine Payment for Cheque Dishonor Appeals, Interpreting 'May' as 'Shall' u/s 148.

  Case-Laws - HC : Dishonor of cheque - quantum of deposit of fine - scope of the word ‘may’ - A purposive interpretation of section 148 of the Act is necessary and the same would warrant that the expression ‘may’ as contained in section 148 of the Act be read as ‘shall’. Read this way, the provision would mean that the Court ‘shall’ order the convict to pay minimum of 20% amount of fine in an appeal against conviction under section 138 of the Act and resultantly, the plight of the drawee would be eased (as intended by the legislature while enacting section 148 of the Act) which otherwise would have been aggravated due to prolonged judicial proceedings. - HC
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• Court Criticized for Relying Solely on Presumptions u/s 139 in Cheque Dishonor Case Without Evaluating Evidence.

  Case-Laws - HC : Dishonor of Cheque - legally enforceable debt or not - rebuttal of statutory presumption - petitioner had been convicted for offences u/s 138 - The judgment passed by the Courts below are conjectural and are not based upon objective assessment of the material adduced on record. The Courts below have failed to take account of the shift of onus on the complainant to establish having advanced the money and that the cheque in question had been duly issued to him in discharge of the liability and to have proceeded solely on the basis of presumption under Section 139 of the Negotiable Instruments Act, 1881 ignoring all other circumstances. - HC
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IBC

• Bank's Unjust Default Claim Quashed; No Principal Borrower Default on Aug 1, 2019, u/s 7.

  Case-Laws - AT : CIRP process - Financial Creditors - In the present case, the Bank has not acted fairly - It was omission or commission of the Bank in not refunding the facility fee to the borrower due to which Bank cannot contend that any default was committed by the borrower on 01.08.2019 - there being no default on principal borrower on 01.08.2019, the Bank also cannot proceed against the Corporate Debtor by filing of Application on the basis of default dated 01.08.2019. - The Adjudicating Authority committed error in admitting the Application under Section 7 on the ground that default was committed by the Appellant on 01.08.2019. - Application quashed - AT
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• Respondents can present revised Scheme to Financial Creditors for consent under Companies Act Section 230(2)(c); Authority's order upheld.

  Case-Laws - AT : Consideration of Scheme of Compromise or Arrangement - no opportunity was given to Respondent Nos.2 and 3 to explain and clarify their Scheme before Financial Creditors and Members of Stakeholder Consultation Committee on 22nd October, 2021, on which date the meeting was convened by the Liquidator. - Respondent Nos.2 and 3 are entitled to an opportunity to place and explain their revised Scheme before Financial Creditors and it is for the Financial Creditors to consider the Scheme for purposes of giving consent as contemplated by Section 230, sub-section (2) (c) of the Companies Act. - The order passed by the Adjudicating Authority is affirmed - AT
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Central Excise

• Managing Director's Statement Valid for Show-Cause Notice Without Re-Testimony u/ss 14 and 9D of 1944 Act.

  Case-Laws - HC : Clandestine removal - Jurisdiction - The statement of the Managing Director recorded under Section 14 of the Act of 1944 could be relied upon and treated as a relevant piece of material while issuing the show-cause notice to the Managing Director as well as the appellant company and the same could be relied upon without calling upon the Managing Director to again depose as a witness before the adjudicating authority in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944. - HC
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• High Court Upholds CESTAT Decision: Interest on Post-GST Refunds Governed by Central Excise Act, Not GST Provisions.

  Case-Laws - HC : Entitlement for interest of refund from the date of deposit - Post GST regime - Section 142 of the Act when read with Section 2(48) of the Act is a complete answer to the plea raised by the appellant qua the issue of jurisdiction. The provision explicitely provides that every claim of refund shall be dealt under the existing law i.e. Central Excise Act, 1944 and not by the provisions of the Act. Thus the plea of transfer of jurisdiction due to GST regime is not available to the appellant (revenue) - CESTAT rightly allowed the interest - HC
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• Excise Duty Refund to Dealers Through Cheques Not Considered Unjust Enrichment in Recent Case Decision.

  Case-Laws - AT : Refund of Excise Duty - unjust enrichment - As it is on record that excess duty and differential excess amount received by the appellant has been refunded to the dealers by way of cheque, in these circumstances, it is not a case of unjust enrichment. - AT
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VAT

• Court Grants Regular Bail in Fraud and Conspiracy Case; Trial to Determine Receipt of Illegal Gratification.

  Case-Laws - HC : Grant of regular bail - criminal conspiracy - Whether any illegal gratification has been received by the present applicant for any manipulated, fraudulent entries with an intention to cause loss to the Government treasury would be a question of evidence which would be required to be examined during the course of trial. Further, since the charge-sheet is filed and considering the facts and circumstances of the case, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant. - The applicant is ordered to be released on regular bail- HC
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• Court Rules Ujala Supreme as 'Synthetic Organic Colouring Matter' under HSN Code 3204 for Consistent Tax Classification.

  Case-Laws - HC : Classification of goods - Ujala Supreme - ‘synthetic organic colouring matter’ or not - The only corollary that can be drawn from the use of HSN code is to have reference of the product viz-a-viz Customs Tariff Act, 1975 for the purposes of identification. Since the AVP is referable to item denoted by HSN code 3204 as adopted by Customs Tariff Act, 1975, the same can not be ignored for the purposes of H.P. VAT Act. - HC
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Case Laws:

• GST

• 2022 (3) TMI 742
  Detention of goods alongwith vehicle - the E-Way Bill already taken had expired - HELD THAT:- A show cause notice was issued and hence it should be faced by the petitioner by giving a reply and to appear before the Revenue and whatever defence he wants to take, he can take before the concerned authority of the Tax Department. Without taking the said route in replying to the show cause notice and cooperating with the Revenue for completing the adjudication proceedings, the petitioner has rushed to this Court challenging the very show cause notice itself along with the detention order. Therefore, this Court is not inclined to or impressed with the grounds raised by the petitioner to have a successful challenge against the impugned proceedings. The impugned detention order as well as the show cause notice are tenable. Therefore, the same do not require any interference of this Court - it is open to the petitioner to give a bank guarantee for a sum of Rs. 15,80,246/- being the proposed penalty against the petitioner and if such bank guarantee is given by the petitioner, after accepting the same, the respondent Revenue can release the goods in question forthwith - Petition disposed off.

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• 2022 (3) TMI 741
  Violation of principles of natural justice - restoration of cancellation of registration under the TNGST Act, 2017 - non-filing of return consecutively for six months - HELD THAT:- Since this is one of such case, where the petitioner could not move the Appellate Authority in time, because of Covid-19 situation, this writ petitioner also can be relegated to approach the Appellate Authority by filing an appeal with a petition as per the conditions imposed. Petition disposed off.

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• 2022 (3) TMI 740
  Cancellation of registration of petitioner - non-filing of return for consecutively six months - time limitation - appealable order or not as per Section 107 of GST Act - appeal rejected on the sole ground that the appeal could not be entertained, because it is filed beyond the limitation period of three months and the condonable period of one month - HELD THAT:- The order passed by the Appellate Authority only on the ground of delay may not be justifiable in view of the extraordinary situation, where Covid 19 situation had intervened. The impugned orders are set aside and the matter is remitted back to the respondents, where, the appeal shall be entertained and considered on merits and it may be decided at the earliest, taking into account the conditions imposed or observations made by the learned Judge - petition allowed by way of remand.

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• 2022 (3) TMI 739
  Maintainability of appeal - appeal left remediless - non-constitution of State Bench and Area Benches of GST Tribunal in the State of Uttar Pradesh - HELD THAT:- In view of alarming situation created due to non-establishing of State Bench and Area Benches of GST Tribunal in the State of Uttar Pradesh, rendering the entire class of dealers remediless under the Act, 2017 from availing statutory remedy of appeal under Section 112 of the Act, 2017, under the facts and circumstances and prevailing situation, the matter with regard to the following questions are referred to Larger Bench:- (i) Whether by interim order dated 04.03.2021 in PIL CIVIL No.6024 of 2021 (Awadh Bar Association High Court, Lko Thru Gen.Secy. Anr. vs. U.O.I.Thru Secy. Finance Ministry, New Delhi Ors.) [ 2021 (3) TMI 244 - ALLAHABAD HIGH COURT ], directing for not establishing GST Appellate Tribunal for State of Uttar Pradesh without leave of the court, could be passed in conflict with the final judgment dated 09.02.2021 in Writ Tax No.655 of 2018 [ 2021 (2) TMI 435 - ALLAHABAD HIGH COURT ] passed by the Division Bench? (ii) Whether under the facts and circumstances of the case and in the interest of dealers in State of Uttar Pradesh under the CGST Act/ U.P.GST Act, 2017, a direction needs to be issued immediately to the respondent No.4 to notify the State Bench and Area Benches of GST Appellate Tribunal in the State of Uttar Pradesh, within a time bound period so that persons/ dealers may avail statutory remedy of appeal under Section 112 of the CGST Act/ U.P. GST Act, 2017 and they may not suffer further? (iii) Establishment of the State Bench of GST Appellate Tribunal at Prayagraj and its four Area Benches in the State of Uttar Pradesh in terms of the final judgment of the Division Bench dated 09.02.2021 in Writ Tax No.655 of 2018 (M/s Torque Pharmaceuticals Pvt. Ltd. vs. Union of India and 5 others) [ 2021 (2) TMI 435 - ALLAHABAD HIGH COURT ] and other 29 connected writ petitions? Let this order alongwith the records of the writ petition be placed before Hon ble the Chief Justice for constitution of a Larger Bench so that people in the State of Uttar Pradesh having right to avail remedy of appeal under Section 112 of the CGST/ U.P. GST Act, 2017 may avail the statutory remedy and may not remain remediless.

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• 2022 (3) TMI 738
  Maintainability of petition - avoiding of pre-deposit - availability of alternative remedy of appeal - Input Tax Credit - HELD THAT:- The impugned order clearly states that the petitioner has an alternate remedy before the Deputy Commissioner, Goods and Service Tax. This writ petition appears to have been filed with a view to avoid pre-deposit, while filing a statutory appeal before the Appellate authority under the provisions of the respective Goods and Service Tax Act. The pre-assessment notice, dated 29.01.2021, clearly states that the petitioner is not entitled to avail input tax credit. There are no records to substantiate the case. There are several disputed question of facts. Prima facie, there are no merits in the submission made by the learned counsel for the petitioner inasmuch as the notice was issued to the petitioner, namely, the pre-assessment notice and revision notice which seems to indicate that the petitioner had no documents to substantiate a valid availing of input tax credit. Mere reflection of the amounts in the Goods and Service Tax records electronically is not sufficient. If credit is to be allowed and adjusted on such transactions, it would lead to unintended benefits being conferred. The petitioner has approached this Court long after the expiry of the limitation prescribed under the act to challenge the impugned order. The writ petition has been filed with a view to get over - the petitioner has an alternate remedy which has been deliberately not exercised by the petitioner - petition dismissed.

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• 2022 (3) TMI 737
  Blocking of Input tax credit - mismatch or excess availment of ITC - non-consideration of rectification application submitted by the assessee - opportunity of hearing to the petitioner company not provided - violation of principles of natural justice - HELD THAT:- It appears from perusal of the order passed by the Apex Court which stands further extended up to 28.02.2022 vide order dated 10.01.2022 that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the period prescribed under Sections 23 (4) 29 (A) of the Arbitration and Conciliation Act, 1996, Section 12 A of the Commercial Court Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation not only for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of the proceedings. As such it is not only the delay in filing of suits, appeal, application or any proceedings which stands relaxed for the period 15.03.2020 till 28.02.2022, but even the period of limitation for termination of proceedings. The respondents perhaps are labouring under the impression that since the period of six months contemplated under Section 161 of the JGST Act, 2017 has expired much before they are precluded from deciding the application. It is also evident that the application remained undecided not on account of any fault on the part of the petitioner. The respondents cannot therefore take advantage on their wrong also. The respondents should take a decision on the application for rectification dated 28th September, 2019 pending before them in accordance with law as expeditiously as possible - petition disposed off.

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• 2022 (3) TMI 736
  Transitional Credit - seeking direction to respondent to permit the petitioner/tax payer to file or revise form Tran-1 already filed either electronically or manually and consequently avail the benefits - HELD THAT:- Reliance placed in the case of COMMISSIONER OF GST AND CENTRAL EXCISE, ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, CENTRAL BOARD OF EXCISE AND CUSTOMS, PRINCIPAL COMMISSIONER VERSUS M/S. BHARAT ELECTRONICS LIMITED [ 2021 (11) TMI 818 - MADRAS HIGH COURT ] and from the few decisions of the Hon ble Supreme Court particularly in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [ 1999 (8) TMI 920 - SUPREME COURT ] , wherein, it has held that credit availed under the provisions of the erstwhile Central Excise Act and Central Excise Rules, 1944 are indefeasible and are intended to reduce the cascading effect of the tax to benefit the consumers. There is no lapsing of such untilised credit. The respondents are directed to verify the records and returns of the petitioner under the Central Excise Act, 1944 and if the credit had been unutilised on the cut off date (i.e) 30.06.2017, the respondents shall suitably credit into the electronic credit register of the petitioner the amount which had remained unutilized and would not be transitioned under the GST regime. Application disposed off.

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• 2022 (3) TMI 735
  Input Tax Credit - Seeking permission to petitioner to upload the GST Tran-1 Form either by opening the GST portal or by allowing them to file manually - HELD THAT:- This Writ Petition stands disposed of by directing the respondents to verify whether indeed the petitioner had not utilized the input tax credit under TNVAT regime, which could not be transmitted by filing Tran-1 form in terms of Section 140 of the respective CGST Act. If such transition was permissible, but for the reasons given in the Writ Petition, the same should be allowed to be utilised by allowing the petitioner either to file a manual Tran-1 form or by making direct credit to the electronic credit register to the petitioner. The respondents shall examine the same and pass appropriate orders in terms of the above order of this Court. Petition disposed off.

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• 2022 (3) TMI 734
  Sanction of interest amount accrued owing to the delay caused in processing the Refund Applications - non-disbursal of balance SGST portion of the sanctioned refund - HELD THAT:- The Court does not find any justification in keeping the writ petition pending and deems it appropriate that a direction be issued for such payment. The respondents no.1 and 3 are directed to ensure payment of Rs. 1,44,65,283/- as per Form GST RFD-06, dated 12.01.2021 under the signature of the respondent no.3 to the petitioner within a period of four weeks from the date of production of the copy of order before the 3rd respondent as per Section 56 of the Central Goods and Services Tax Act, 2017 - Petition disposed off.

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• 2022 (3) TMI 733
  Delay on the part of the respondents in sanctioning the amount of GST receivable by the petitioner - blanket direction to disburse the amount in the absence of any proper verification and consideration by the competent authorities - HELD THAT:- On a perusal of the representations submitted by the petitioner as well as the Government Orders, this Court is of the opinion that the 1st respondent has to take a decision on Ext.P7 and Ext.P8, in a time bound manner, bearing in mind the claim put forth by the petitioner. There will be a direction to the 1st respondent to consider Ext.P7 and Ext.P8 representations, as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment, after hearing the petitioner as well as the 2nd respondent - Petition disposed off.

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• 2022 (3) TMI 732
  Maintainability of appeal - petitioner failed to furnish the certified copy as well as to remit the additional court fee - HELD THAT:- The respondent has adopted a hyper-technical approach in rejecting the appeal especially during these times of Covid-19 pandemic. Though the petitioner is bound to cure the defects, within the time stipulated in the notice issued by the respondent, in the present circumstances, this Court is of the opinion that one more opportunity ought to be granted to the petitioner to rectify the defects. Interests of justice demand that a liberal approach is adopted, especially since the Covid-19 pandemic has affected every person, in every walk of life. The limitation periods had even been extended by the Supreme Court due to the unprecedented situation prevailing so that the litigants are not prevented from having access to justice, on account of prescribed periods of limitation. The respondent are directed to restore the appeal back to the files on condition that petitioner furnishes the additional court fee, as well as the certified copy of the order, appealed against, within a period of 15 days from the date of receipt of a copy of this judgment - petition allowed.

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• 2022 (3) TMI 731
  Seeking withdrawal of the writ petition - Blocking of Input tax credit - revocation of suspension of registration of the petitioner - HELD THAT:- The writ petition is dismissed as withdrawn leaving it open to the petitioner to pursue his representation before the respondent authorities relating to his grievance of blocking of Input Tax Credit lying in the Electronic Credit Ledger.

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• Income Tax

• 2022 (3) TMI 730
  Reopening of assessment u/s 147 - Validity of reasons to believe - bogus share premium and share application - HELD THAT:- Petitioner has made categorical statement that during the assessment year 2009-10 no share of the company was issued to any party let alone at a premium and moreover the payment that was received was through banking channels and not in cash. In the order rejecting objections, the Assessing Officer has not considered or dealt with this factual aspect. Even in the petition there is averment to this effect. Though the petition came to be admitted on 24th November, 2014, no reply has been filed even denying these averments. Therefore, in our view there is no reason to believe that income chargeable to tax has escaped assessment. Moreover, even for a moment we assume that the share premium charged was unjustifiable still on receipt of share premium and share application money no income arises as the receipt is on capital account - we hereby hold that the notice issued under Section 148 is unsustainable - Decided in favour of assessee.

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• 2022 (3) TMI 729
  Reopening of assessment u/s 147 - HELD THAT:- Respondent No.1 has initiated re-assessment proceedings passed only on audit objection raised by the Revenue and to which the then AO i.e., ACIT Bangalore had replied and states in its letter dated 30th March, 2011 and there is no error in the original assessment completed by him and that audit objection is not accepted by him. Therefore, if the AO after application of mind to the facts of the case passes the original assessment order and comes to a certain conclusion and thereafter even does not accept audit objection raised by the audit party on the said conclusion, re-opening by the subsequent Assessing Officer only on the basis of such audit objection is bad in law. This has been raised in ground F to the petition and in the affidavit in reply of one Mr. P.D. Chougule affirmed on 25th June, 2015, respondent admit that the contents thereof are true and correct.

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• 2022 (3) TMI 728
  Reopening of assessment u/s 147 - Change of opinion - escapement of income premised on the lack of creditworthiness of JMPL and the consequent sham nature of the loan transaction was enquired into by the AO on as many as four occasions - As argued jurisdictional condition to reopen the assessment is not fulfilled as no income escaped assessment on account of failure to make a true and full disclosure of the material relevant for the assessment, on the part of the petitioner - HELD THAT:- The information solicited by the Assessing Officer during the course of scrutiny assessment under section 143 of the Act, Mr. Mistri would urge, there is no room to allege that the income escaped assessment on account of the failure on the part of the assessee to disclose truly and fully all the relevant material. We are persuaded to hold that, in the facts of the case, the submission appears impeccable. Indisputably, the petitioner had disclosed the unsecured loan transaction of Rs. 75 Lakhs availed from JMPL. The petitioner had availed loan from multiple entities. This propelled the Assessing Officer to seek details of unsecured loans/deposits in a prescribed format. Not only the information was furnished by the petitioner but all the supporting documents were submitted. It can hardly be gainsaid that all the primary facts were placed before the Assessing Officer by the petitioner. Respondents made an endeavour to draw home the point that though the information and documents were furnished, yet the petitioner did not disclose all the relevant information. The genuineness of the transaction and the creditworthiness of the creditor could not be ascertained at that point of time, on account of non-disclosure of the relevant facts. The submission of Mr. Suresh Kumar that the information and documents so furnished did not equip the Assessing Officer to draw inference about the non-genuineness of the transaction and question the creditworthiness of the creditor, cuts the revenue s case in two ways. First, it implies an admission that all the primary facts were placed before the Assessing Officer. Second, the revenue s stand becomes vulnerable to the charge of change of opinion. The fact that in the assessment order under section 143(3), the Assessing Officer did not explicitly advert to the questions of non-genuineness of the transaction and the creditworthiness of the creditor does not carry the case of the revenue any further. What matters is the consideration of the issues at that point of time. Once the queries were raised and information solicited, an inference follows that the Assessing Officer considered those issues. The next submission on behalf of the petitioner that proposed reopening of the assessment suffers from the vice of change of opinion also appears well founded. Evidently, the search action under section 132 of the Act, did not reveal any tangible material qua the transaction of unsecured loan from JMPL. In fact, the petitioner was called upon to explain the very transaction, in respect of which, during the course of scrutiny assessment, the then Assessing Officer had already solicited information and documents. Eventually, during the course of scrutiny assessment, the Assessing Officer having been satisfied with the explanation furnished by the petitioner, did not make any addition. In the course of the proceedings under section 153A also, the revenue did not claim that any incriminating material was found qua the transaction with JMPL. In this view of the matter, the reopening of the assessment on the premise that the creditor lacked the creditworthiness and thus the loan transaction was sham, is nothing but a change of opinion. The conspectus of the aforesaid consideration is that the jurisdictional condition to reopen the assessment is not made out. In any event, the exercise falls in the realm of change of opinion with regard to the very same material. The petition, thus, deserves to be allowed.

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• 2022 (3) TMI 727
  Reopening of assessment u/s 147 - Whether AO has taken a prima facie view while issuing notice under Section 148 of the Act on the ground that the assessee ought to have deducted tax at source on payments made to the non-residents under Section 195? - HELD THAT:- After examining the objections so raised by the appellant, the respondent has concluded that there are tangible material evidence made available to resort to re-assessment proceedings and rejected the same. Respondent has only rejected the objections raised by the appellant and re-assessment proceedings are yet to be initiated. It is to be mentioned that earlier, a final order dated 28.12.2011 was passed by the respondent under Section 143 (3) read with Section 147 of the Act raising an additional demand Towards tax - the said order was set aside by this Court in the order [ 2021 (8) TMI 513 - MADRAS HIGH COURT] filed by the appellant herein. Thus, a final order in the re-assessment proceedings initiated by the respondent is yet to be passed. While so, as rightly pointed out by the learned counsel for the respondent, the writ petition itself was premature and no relief could be granted thereof. The learned Judge has only directed the appellant to participate in the re-assessment proceedings and to place all the materials and legal issues before the Assessing Authority for consideration. Such a direction issued by the learned Judge, in the given facts and circumstance of the case, is proper and it does not call for any interference by this Court. Appellant prayed this Court to issue appropriate direction to the respondent to afford an opportunity of personal hearing before passing final order in the re-assessment proceedings for which the learned Standing counsel appearing for the respondent has no objection. Therefore, the respondent is hereby directed to afford an opportunity of hearing to the appellant and after considering all the objections raised, pass appropriate orders on merits and in accordance with law within a period of three months from the date of receipt of a copy of this order.

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• 2022 (3) TMI 726
  Addition on account introduction of un-explained partner s opening capital in the assessee s books of accounts - As per Tribunal separate addition can be made once the net profit rate is applied on contract receipts of the appellant for estimating its income from contract work when the provisions of section 68 is directly hit in the instant case - HELD THAT:- This Court answers the question No.(i) in the negative, i.e. in favour of the Appellant assessee against the Department by holding that the ITAT erred in holding that a separate addition on account of introduction of unexplained partner s opening capital in the assessee s books of accounts could be made particularly since the net profit was uniformly applied at 8% as an estimation. Adjust the TDS or refund back the same even though the said amount was deposited during the assessment year 2005-06 - HELD THAT:- CIT (A) directed the AO to withdraw the credit given for TDS . The ITAT while agreeing with the finding of the CIT (A) ought to have been to permit the Assessee to adjust the amount so paid or ordered it to be refunded to the Assessee. There is no explanation why this was not done. Learned counsel for the Department also could not support the above failure of the CIT(A) as well as the ITAT to issue such a direction. Question (ii) is also answered in the negative i.e. in favour of the Appellant assessee and against the Department by holding that the ITAT and the CIT(A) were not tried in failing to give a direction to adjust the TDS amount or refunded although the said amount to be deposited in AY 2005-06 Disallow the partner s salary although the same is permissible u/s.44AD - HELD THAT:- The proviso to Section 44AD (2), as it read at the relevant time, did permit the salary and interest paid to the partners of a firm to be deducted from income of the firm subject to the condition specified under Section 40(d) of the Act being fulfilled. This appears to have been lost sight of by the ITAT. Accordingly, question (iii) is also answered in the negative i.e., in favour of the Appellant assessee and against the Department by holding that the ITAT erred in law in not allowing deduction the salaries paid to the partners from the income of the firm.

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• 2022 (3) TMI 725
  Reopening of assessment u/s 147 - objections against the reasons for reopening - HELD THAT:- Bare reading of the relevant extract of web page of the portal indicates about the attachment annexed with the communication dated 10.06.2021, more particularly, under the column view other action, there is reference to view attach document file. The said document is suggestive of the fact that in fact the document in the nature of attachment was very much available on the Income Tax Business Application portal - without going into the aforesaid controversy of service of reasons recorded by the Assessing Officer seeking reopening of the assessment under Section 147 to balance equity we find it appropriate to relegate the writ applicant to submit it s objections along with necessary documents, if any, which the writ applicant may propose to rely, in response to the reasons being produced before this Court. Writ applicant is permitted to approach the respondent Authority to submit the objections against the reasons for reopening of the relevant A.Y. under consideration with necessary documents, if any, within a period of two weeks from the date of receipt of the copy of this order. The writ applicant is at liberty to take all legal contentions as may be permissible in law. On receipt of such objections along with documents, if any, the respondent Authority is hereby directed to look into the matter and take decision in accordance with law. We clarify that even otherwise we have not gone into merits of the legality and validity of the impugned notice.

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• 2022 (3) TMI 724
  Estimation of profit embedded in the total unaccounted on money receipts from real estate business of the assessee - CIT(A) did not approve the AO s estimate of the figure of on money based merely on the two statements of the buyers - HELD THAT:- AO estimated the figure of on-money on the basis of statements of two buyers namely Shri Anand Gaur and Sudhirbhai Parikh, recorded during the survey. We have further noted that CIT(A) independently examined the statement of both these two flat buyers, CIT(A) on examination of their statement held that both the parties stated about the rate of flat booking, payment terms, money paid from time to time both the buyers nowhere asked in the statement that they have made on money payment. The statement of purchaser cannot alone prove that they were having any agreement with the assessee regarding any payment made outside books of accounts. The contention of assessee that both the buyers paid extra money for extra work agreement is also proved by proof of disbursal of bank loans as well as by extra work agreements. CIT(A) further noted that if the extra work doubted by search or survey party, no further investigation was made against those flats owners. The adoption of huge on money without iota of evidence is not justified and deleted the entire addition. We should not disturb the order passed by the Appellate Tribunal dismissing the Appeal filed by the Revenue thereby affirming the findings recorded by the CIT(A).

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• 2022 (3) TMI 723
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - eligibility of 80HHC deduction - HELD THAT:- In this case it is a fact that, in the reasons recorded for reopening, the assessing officer has not alleged that assessee has failed to disclose material facts truly and fully. It is also a fact that reopening has been done based on the record already available at the time of original assessment order. No new information has been received by the AO - CIT(A) in his order has demonstrated that during original assessment order the assessing officer has considered income on account of financial activity while calculating 80HHC deduction. Before us, the AR filed copy of submission dated 10/01/2006 filed by the Assessee during the original assessment proceeding before the assessing officer Addl.CIT Range 8 - The assessee had submitted all the details during original assessment proceedings. Therefore, the reopening is merely based on Change of Opinion. Therefore, in the case of Titanor Components Ltd. [ 2011 (6) TMI 138 - BOMBAY HIGH COURT] and assessee s own case [ 2013 (12) TMI 1725 - ITAT PUNE] it is held that notice under section 148 of the Act is bad in law and therefore, the consequential re-assessment is hereby by cancelled. Thus, the grounds of appeal by Revenue are dismissed.

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• 2022 (3) TMI 722
  Exemption u/s 11 - not granting registration u/s 12A - whether the Objects are charitable or not? - only objection of the ld.Commissioner of Income Tax (Exemption) is that during festivals the premises were used for stalls and rent was earned - HELD THAT:- There is hardly any income from other sources, i.e. rent from stalls. Main income of the appellant is school fee and main expenditure is also towards the running of the schools. The Surplus is maximum 15 % as mentioned by the Commissioner of Income Tax (Exemption) in the order. Hon ble Supreme Court in the case of Islamic Academy of Education Vs. State of Karnataka[ 2003 (8) TMI 469 - SUPREME COURT] has observed, While this Court has not laid down any fixed guidelines as regard fee structure, in my opinion, reasonable surplus should ordinarily vary from 6% to 15%, as such surplus would be utilized for expansion of the system and development of. Education , Also the Hon ble Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [ 1979 (11) TMI 1 - SUPREME COURT] has held that the test of predominant object of the activity is to be seen whether it exists solely for education and not to earn profit . Thus, in the case of the appellant, the activity is running education which is a charitable activity as defined u/s 2(15) of the Act. The Surplus is in the range of 10-15% .The ld.Commissioner has not alleged that the surplus has been used for non charitable activities. It means surplus has been used for the objects mentioned in the trust deed. After analysing all these facts, we are of the opinion that the appellant trust is eligible for registration u/s 12AA of the Act. Accordingly, the ld.Commissioner of Income Tax (exemption) is directed to grant registration u/s 12AA of the Act, to the applicant. Appeal of assessee allowed.

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• 2022 (3) TMI 721
  Denial of deduction u/s.80P - Assessee was accepting deposits from its regular members and also nominal members - difference between the rights and obligations of the regular and nominal members, the AO held that the nominal members could not be considered as members for the purpose of deduction u/s.80P - HELD THAT:- The assessee Co-operative society is admittedly engaged in carrying on the business of banking and providing credit facilities. Section 80P(2)(a)(i) provides that in the case of co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profits and gains of business attributable to such activities shall be deductible in the computation of total income. The claim of assessee for deduction has been negated by the authorities below, inter alia, on the ground that it admitted certain Members, described as Nominal Members , who were neither entitled to dividend nor voting rights. It is relevant to note that the term Member has been defined u/s 2(19) in the Maharashtra Act to mean: a person joining in an application for the registration of a Co-operative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, associate or sympathizer member . On going through the above definition of Member , it becomes overt that the term Member also includes a Nominal Member. Once it is accepted that the assessee, governed by the Maharashtra Act, made advances to certain Nominal Members from whom interest income was earned, there can be no doubt whatsoever that the deduction u/s 80P(2)(a)(i) has to be allowed. It is evident that when the loans are given to Nominal Members and the relevant State Act includes, Nominal Member within the purview of Member , there can be no question of denial of benefit u/s 80P(2)(a)(i). The Hon ble jurisdictional High Court in Jalgaon District Central Co-operative Bank Ltd. VS. Union of India [ 2003 (9) TMI 56 - BOMBAY HIGH COURT ] has held that the definition of `Member given in section 2(19) of the Maharashtra Act takes within its sweep even a nominal member and there is no distinction between a duly registered member and nominal member. In view of the above discussion, overturn the impugned order on this score. Assessee earning interest from fixed deposits held with co-operative bank - HELD THAT:- This issue is no more res integra by virtue of an order of the Pune Bench dated 28-11-2018 in the case of ITO Vs. Sureshdada Jain Nagri Sahakari Patsanstha [ 2018 (11) TMI 1589 - ITAT PUNE ] wherein the decision of CIT(A) allowing deduction u/s.80P was approved by the Tribunal. Tribunal discussed the contrary views expressed by the Hon ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT ] allowing the deduction u/s. 80P on interest income and the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. [ 2014 (9) TMI 833 - DELHI HIGH COURT ] not allowing deduction u/s.80P on interest income, earned from banks under similar circumstances. Both the Hon ble High Courts have taken into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT ] There being no direct judgment from the Hon ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE ] preferred to go with the view taken in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). We direct to grant the deduction.

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• 2022 (3) TMI 720
  Penalty levied u/s. 272A (1)(c) - non compliance with summons issued under section 131(1A) - appellant neither attended on the appointed date nor till the date of passing of the penalty order - HELD THAT:- There is no finding of the AO based on some contradictory evidence to disapprove that explanation offered by the assessee was false or the assessee was not able to substantiate the explanation furnished or fails to prove that such explanation is not bona fide and that all the facts relating to the same and material to the computation of his total income has not been disclosed by him. We further arrive at a conclusion that ignorance of law is certainly no excuse for a default committed but, at the same time, there is no presumption in law that everybody knows the law. The application of this rule would differ from case to case and person to person. In a given case, there may be a person who is quite illiterate, living in remote village, rarely coming in touch with law enforcing machinery and not required to discharge any statutory obligations under a particular law. Ignorance of law may be a good excuse in his case. As submitted by the Ld AR for assessee that there is no willful failure to comply the with summons u/s 131(IA) of the IT Act dated 04.10.2013. Therefore the order on the CIT (A) is accordingly set aside and thus penalty u/s 272A(1)(c) levied by the AO is not in accordance with law therefore same is cancelled. In the result appeal of assessee is allowed.

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• 2022 (3) TMI 719
  Disallowance in respect of the advances written off - HELD THAT:- Assessee has placed on record the purchase orders on four vendors referred to in para 6.2 of order of Ld. FAA advances shown non recoverable to whom were disallowed. They mentions that under the head project Shadara Kempinki Hotel the orders were placed. The project being abandoned led to non-return of the money nor supplying of the articles as they were actually no more required. That is how justification to treat the advances as non-returnable is claimed. The Bench is of considered view that when advance is paid to prospective vendors and the same is forfeited due to discharge of the contract, on account of failure of the assessee himself to honour the contract, there can be no reason to expect the assessee to pursue any remedy or recourse under law to either get the article delivered or the amounts refunded. There was no other recourse to the assessee then to consider the advances as non-recoverable and treat them as expenses while writing them off. In the light of aforesaid discussion of facts and circumstances and relying on the judgment in T.R.F. Ltd. Case [ 2010 (2) TMI 211 - SUPREME COURT] as there is no necessity to establish that the debt has in fact become irrecoverable, the findings of ld. First Appellate Authority cannot be sustained. Appeal of assessee allowed.

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• 2022 (3) TMI 718
  Addition u/s 68 - unexplained investment - genuineness of transaction could not be established/proved by the assessee - CIT-A deleted the addition - HELD THAT:- Merely on the basis of opening balances without making a substantive inquiry, the sundry creditors could not have been rejected. The order of assessment indicates that based upon the remarks on the envelopes issued to the creditors of the assessee, the AO has presumed them to be bogus liability treating them income of the assessee from undisclosed sources. The lack of attempt of inquiry by Ld. AO is exhibited by observations in rejecting the books of accounts of the assessee without actually calling for them and which has been rightly made foundation by the Ld. First Appellate Authority, to hold that rejection of books of accounts was not in accordance with the provisions of the Act. In the judgment relied by the counsel for assessee of M/s. Pranidhi Holdings Pvt. Ltd. [ 2018 (4) TMI 403 - DELHI HIGH COURT as held that when assessee has brought on record all the documents necessary to establish the creditworthiness of the creditors and the genuineness of the transaction and the AO has not preferred to file any comment then there is no scope of interference into the findings returned by the Ld. CIT(A). In the appeal in hand also, as in spite of opportunity by the Ld. First Appellate Authority, calling for comments on merits of the additional evidence, the Ld. AO failed to respond, now before this Tribunal, the revenue cannot succeed. Addition for failure of assessee to reconcile the amounts in record to the transactions - HELD THAT:- This issue with regard to validity of addition is restored to Ld. FAA for deciding the issue afresh after granting adequate opportunity of hearing to both the parties and by passing a speaking order on the issue.

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• 2022 (3) TMI 717
  Reopening of assessment u/s 147 - scheme of amalgamation conceived - notice in the name of non-existing entity - addition u/s 68 - Undisclosed share application money / share premium - HELD THAT:- In spite of the intimation of amalgamation being given to the ld. Assessing officer he failed to consider the same and passed the assessment order on 28.12.2017. It also establishes that there is no force in the contention of the Ld DR, that assessee had not taken the plea at the appropriate stage. Thus, what can be concluded is that at the time of issuance of notice u/s 148 on 25.08.2014, the company petition for scheme of amalgamation was pending before Hon ble Delhi High Court and after issuance of the notice on 25.08.2014 the assessee by letter dated 14.09.2014 had intimated of the amalgamation which was effective from 01.04.2013. Hon ble Delhi High Court in the case of Spice Enfotainment Ltd. vs. CIT[ 2011 (8) TMI 544 - DELHI HIGH COURT] has held that the framing of assessment against non-existing entity / person goes to the root of the matter which is not a procedural irregularity but jurisdictional defect. This order has been upheld by the Hon ble Supreme Court of India in CIT, New Delhi vs. Spice Infotainment Ltd. [ 2017 (12) TMI 754 - SC ORDER] As a matter of fact, in a case reported in NIRVANA LIFESTYLE PVT. LTD. [NOW MERGED WITH M/S TTJ IMPEX PVT. LTD.] VERSUS THE A.C.I.T., CENTRAL CIRCLE-29, NEW DELHI [ 2018 (3) TMI 1879 - ITAT DELHI] with regard to an assessee company M/s. Nirvana Lifestyle Pvt. Ltd., which had also merged with TTJ Impex Pvt. Ltd and was one of the Co petitioner of present assessee in the Company petition no 644 of 2013, a Coordinate Bench of ITAT, Delhi had set aside re-assessment and assessment holding them to be in the name of non-existing entity. Assessee appeal allowed.

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• 2022 (3) TMI 716
  Eligible income for the purpose of deduction u/s 80IE - Exclusion of miscellaneous income being recovery of excess cost charged by suppliers of goods from the profits eligible for deduction under Section 80IE - HELD THAT:- Upon considering the entire facts we find that the recovery of excess cost charged by the supplier is extricably connected with income of the industrial undertaking as of the undertaking of the appellant company and therefore, is entitled to deduction under Section 80IE of the Act. We, thus, allow the said deduction in respect of the appellant company under Section 80IE of the Act. The AO is directed to grant relief to the appellant accordingly. This ground of appeal preferred by the assessee is, therefore, allowed. Exclusion of income earned in the nature of cash discount from the profits eligible for deduction under Section 80IE - HELD THAT:- As relyig on the case of Nirma Ltd. [ 2014 (12) TMI 171 - GUJARAT HIGH COURT ] the cash discount received as above is eligible for deduction under Section 80IE of the Act and we, therefore, allow this ground of appeal in favour of the assessee. Exclusion of interest income earned by the appellant from the profit eligible for deduction under Section 80IE - HELD THAT:- On the aspect of netting off of interest income we have considered the judgment passed by the Jurisdictional High Court in the case of Nirmal Ltd. [ 2014 (12) TMI 171 - GUJARAT HIGH COURT ] we find it fit and proper to allow this ground of appeal filed by the assessee by directing the AO to re-compute the addition upon netting off of interest income by excluding the same from profits eligible for deduction under Section 80IE of the Act of the appellant undertaking, in the light of the above observation made.

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• 2022 (3) TMI 715
  Disallowance of payment made towards LIC employees group gratuity scheme u/s 40A(7) - HELD THAT:- In this case, the assessee neither exercised any control or influence over the management of the funds nor did it have any say in the matters relating to payments of the benefits arising or accruing there from which was due to the Members/ Employees. So by relying on the ratio of Textool Ltd [ 2009 (9) TMI 66 - SUPREME COURT] held that, the intention of Section 36(1)(v) of the Act, is that the employer should not have control over the funds of the irrevocable trust created exclusively for the benefit of the employees of the assessee and the Hon ble Allahabad High Court decision in M/s Scooters India Ltd. [ 2017 (2) TMI 1296 - ALLAHABAD HIGH COURT] which decision is on identical issue, we hold that the assessee is entitled for the deduction of the payments made to LIC towards the group gratuity scheme, so we are inclined to allow the claim of the assessee. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee. However, the AO is directed to verify the actual payment made by the assessee towards the gratuity scheme to LIC of India since there is confusion in the order of Ld. CIT(A) on this issue. With the aforesaid observation, the claim of the assessee is allowed.

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• 2022 (3) TMI 714
  Additional ground relating to DDT liability - additional ground in the appeal filed against the assessment order passed u/s 143(3) - Whether issue of DDT can be said to arise out of the impugned assessment order? - HELD THAT:- In the instant case, first of all, the DDT liability is not forming part of assessment order passed u/s 143(3) of the Act. Further, the liability u/s 115-O can be challenged under the clause an order against the assessee where the assessee denies his liability to be assessed under this Act mentioned in sec.246A(1)(a) as held by Hon ble Supreme Court. The above said clause is a separate clause unconnected with the clause any order of assessment under sub-section (3) of section 143 . Accordingly, we are of the view that the assessee cannot raise the additional ground relating to DDT liability in the present appeal. The assessee, if so advised, may prefer appeal in that regard before Ld CIT(A). Since the assessee had entertained bonafide belief that its grievance on DDT liability can be raised as additional ground before ITAT, it did not file appeal before Ld CIT(A). Accordingly, we direct the Ld CIT(A) to take a lenient view on the matter of condonation of delay, if the assessee prefers appeal before him on DDT liability of the year under consideration - we reject the additional ground raised by the assessee on DDT liability. Disallowance of information technology support services - A.O. has disallowed the claim of the assessee treating it as capital in nature - HELD THAT:- We notice that an identical issue came to be considered by the coordinate bench in the assessee s own case in assessment year 2008-09 [ 2020 (3) TMI 1195 - ITAT BANGALORE] and the addition made in that year was deleted as held that Assessee had acquired no right or interest whatsoever in the EDA tools and had only a right to use the software. It is not the case of the revenue that the EDA tools was not connected to the business of the Assessee. In such circumstances, we are of the view that the deduction was rightly allowed by the CIT(A) as revenue expenditure. Addition u/s 40(a)(ia) - Disallowance of lease rentals paid on car taken under financial lease - HELD THAT:- We notice that an identical issue has been decided in favour of the assessee by the Hon ble High Court of Karnataka in the assessee s own case in assessment year 2008-09 holding that there is no deduction required to be made either under Section 194-C or under Section 194-I of the Act in respect of the payments made to the lease financial company on the lease financial amounts paid to such company by the assessee. Therefore, there is no violation of the said provisions and Section 40(a)(i)/(ia) is not attracted to the present case. TPA Adjustment - exclusion of two comparable companies namely M/s. Asian Business Exhibition Conferences Ltd. and M/s. ICC International Agencies Ltd. in determining ALP of marketing support services segment - HELD THAT:- We notice that both these comparables have been held to be not good comparables in the case of Electronics for Imaging India Pvt. Ltd. [ 2017 (7) TMI 1335 - ITAT BANGALORE] - Accordingly, following the above said decision, we confirm the exclusion of both the companies.

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• 2022 (3) TMI 713
  Levy of penalty under section 272A(1)(d) - non-compliance of the notice issued under section. 142(1) - HELD THAT:- Department was gradually moving towards e-assessments and the notices were being served to the assessee online/electronically and the year 2019 being the first year of this shift from physical to electronic mode coupled with the fact that assessee was not carrying out any business operations during the relevant period and hence, was working on minimal employees, the employees of the assessee failed to take not of the notice issued electronically. We are satisfied that the assessee has been able to show reasonable cause for not responding to the initial notice issued under section 142(1) of the Act. It is pertinent to mention here that subsequently on learning about ongoing assessment proceedings, the assessee appeared before the Assessing Officer and furnished the requisite details. Assessing Officer after taking note of the documents/submissions of the assessee has passed the assessment order under section 143(3) of the Act . It is not a case of absolute non-appearance of the assessee before the Assessing Officer. Appellate authority has rejected the explanation furnished by the assessee for non-compliance of the notice issued under section 142(1) of the Act merely for the reason that during penalty proceedings under section 272A(1)(d) of the Act, the assessee has not stated the reasonable cause. We are not in agreement with the findings of CIT(A). The assessee has explained that about ongoing assessment proceedings the assessee came to know only on receipt of order u/s. 272A(1)(d) of the Act and demand notice. The explanation furnished by the assessee before the CIT(A) and before the Tribunal is consistent. We are satisfied that non-appearance of the assessee in response to the initial notice under section 142(1) of the Act was not deliberate. The year 2019 being the initial year of shift towards digital and electronic mode, the mistake appears to be bonafide. The assessee has been able to show reasonable cause for the failure to comply with statutory notice u/s. 142(1) of the Act. Thus, in our view penalty levied u/s. 272A(1)(d) of the Act is unsustainable. The Assessing Officer is directed to delete the penalty - Decided in favour of assessee.

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• 2022 (3) TMI 712
  Disallowance of provision for Bad Debt Written off - assessee has made a provision for bad and doubtful debts @ 2.5% of sundry debtors on sale of power and claimed that such provision is required to be made in terms of Electricity (Supply) Annual Account Rule, 1985 - assessee is into business of generation, transmission and distribution of electricity to consumers in the State of Tamil Nadu - HELD THAT:- In the present case, the assessee is into business of generation, transmission and distribution of electricity to consumers in the State of Tamil Nadu. As claimed by the assessee, it has made ad-hoc provision @ 2.5% on total sundry debtors at the end of financial year as provision for bad and doubtful debts for possible bad debts arise in the future course of business in terms of Part IV of Electricity (Supply) Annual Account Rule, 1985. As claimed by the assessee, the assessee has not examined individual consumer account and identified possible bad debt accounts to make provision. The assessee has made provision on ad-hoc basis on total sundry debtors without identifying individual bad debt accounts as irrecoverable. Therefore, in the given facts and circumstances of this case, what we understand is that provision made by the assessee at fixed percentage on sundry debtors is only a mere provision for bad doubtful debts, but not written off of actual bad debts which is irrecoverable. Therefore, from the facts of present case, it is very clear that the assessee has made ad-hoc provision for bad and doubtful debts on fixed percentage in terms of certain regulatory requirements without identifying individual consumers accounts as bad debts which is irrecoverable. Therefore, provision made by the assessee for bad and doubtful debts is only a provision, but not actual written off of bad debts which is irrecoverable. Hence, we are of the considered view that the assessee is not entitled for deduction towards provision made for bad and doubtful debts u/s. 36(1)(vii) of the Income Tax Act, 1961. CIT(A), after considering relevant facts has rightly upheld additions made by the Assessing Officer towards disallowance of provision for bad and doubtful debts. Hence, we are inclined to uphold the findings of learned CIT(A) and reject grounds taken by the assessee - Decided against assessee.

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• 2022 (3) TMI 711
  Accumulation under section 11(1)(a) - Whether CIT(A) has erred allowing the assessee accumulation u/s. 11(1)(a) at the rate of 15% instead of allowing the accumulation to the extent of available surplus funds/income as provided in section 11(1)(a) - HELD THAT:- Tribunal the decision in the assessee s own case relating to the Asstt. Years 2010-11 and 2012-13 [ 2015 (9) TMI 1637 - ITAT AHMEDABAD] and [ 2019 (1) TMI 1340 - ITAT AHMEDABAD] wherein this Tribunal has allowed claim of the assessee for accumulation of income and set off of income to the extent of 15% of the receipt as contemplated under section 11(1)(a) of the Act. Carry forward of excess expenses and set off of the same in the subsequent year - In view of above decisions of the co-ordinate bench in assessee s own case for the earlier asst. years 2010-11 and 2012-13, we have no hesitation in following the same ratio for the present asst. year 2015-16 and reject the Grounds filed by the Revenue and upheld the action of the assessee in accumulating 15% of income derives from property held under the Trust u/s. 11[1][a] of the Act. On the second issue of carry forward and set off of losses against the income of the current year, this has been put at rest by the Apex Court and Hon ble Jurisdictional High Court in favour of the assessee and therefore remains no more res integra. Thus, we do not find any merit in the appeal filed by the Revenue, which is dismissed.

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• 2022 (3) TMI 710
  Penalty u/s 271BA - admittedly the assessee failed to upload Form No. 3CEB in terms of the statutory requirement - HELD THAT:- It is seen that the consistent explanation of the assessee has been ignored. The assessee has pleaded ignorance in regard to the said legal requirement and has demonstrated that the word Specified Domestic Transaction was inserted in section 92E by Finance Act, 2012 w.e.f. 01-04-2013 which is applicable for the first time from the assessment year 2013-14. Though the assessee obtained the Form 3CEB from the Chartered Accountant but had failed to up load electronically, as it has not aware about the recent changes and amendments in the provision. Further this being the first year of this new provision it could not upload the same electronically which is neither willful nor wanton. The assessee has further pleaded that based on the report, no adjustments have been proposed by the TPO. Copy of the assessment order dated 02.12.2016 passed u/s. 143[3] r.w.s. 92CA(3) clearly shows that there were no adjustment made by the TPO and the AO accepted the returned income as the Assessed Income. Thus there is no mala fide is found in the above transaction, but only a bond fide mistake of new amended provision is not followed by the assessee. It is further seen that both the lower authorities has proceeded as though the levy of penalty u/s. 271BA as automatic, without considering section 273B of the Act. For the reasons stated above, non uploading of Form 3CEB for the first time is an unintentional bona fide mistake. Being satisfied by the explanation offered by the assessee, after considering the position of law as applicable, we hold the respective orders imposing and confirming the penalty are set aside. The penalty order is quashed and the assessee appeal is allowed.

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• 2022 (3) TMI 709
  Exemption u/s 11 - refusing the registration to the assessee s trust u/s.12AA - assessee trust was not acting in accordance with the objectives of the Trust or that its activities were not genuine - HELD THAT:- We find that identical issue was earlier dealt by the ITAT Delhi Bench in the case of Nanak Chand Jain Charitable Trust v. CIT(E), [ 2018 (2) TMI 874 - ITAT DELHI] . Later on, an identical issue was decided by Coordinate Bench of the Tribunal in the case of Roundglass Foundation Vs. CIT(E) [ 2020 (1) TMI 1045 - ITAT CHANDIGARH] wherein, it has been held that merely because the assessee trust had been found by another company for complying with CSR requirements, it cannot be denied registration u/s. 12AA of the Act unless the genuineness of the activities of the assessee s trust or its charitable objects are doubted. CIT(E) has neither disputed the charitable nature of the objects of the assessee trust, nor has doubted the genuineness of the activities carried out by the assessee trust, the assessee trust deserves to be granted registration u/s. 12AA of the Act. Accordingly, we set aside the order of the Ld. CIT(E) and direct him to grant registration to the assessee trust. Appeal of the assessee stands allowed.

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• 2022 (3) TMI 708
  Assessment u/s 153A - Unexplained investment made in the a penny stock company - primary contention of the Assessee before the CIT(A) was that the assessment year under consideration was not an abated assessment year and the AO has been erred in making additions without there being any incriminating documents/materials - HELD THAT:- CIT(A) has returned factual finding that the additions made by the AO are not based on any incriminating material found during the course of search and the same remains uncontroverted. The Ld. Departmental Representative could not dispute the proposition that additions in the present case cases have not been made on the basis of any incriminating material found during search. CIT(A) has granted relief by following the decision of the jurisdictional High Court in the case of Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] wherein it has been held that no addition can be made in respect of unabated assessments which have become final in absence of any incriminating material found during search. This view has also been upheld in the case of CIT vs. Sinhgad Technical Education Society and Others [ 2017 (8) TMI 1298 - SUPREME COURT] . We do not find any merit in the present appeal.

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• Customs

• 2022 (3) TMI 707
  Recovery of duty Drawback claimed - company has not furnished proof of foreign inward remittance - violation of Rule16-A of the Customs Central Excise Duties in Service Tax Draw Back Rules, 1995 - violation of principles of natural justice - HELD THAT:- It appears that after the company was closed, the assets were sold later. It is not clear whether the said company s name was struck off from the Registrar of Companies. At the same time, the petitioner has submitted all the records pertaining to export to substantiate inward remittance are available and therefore if a fair chance is given to file a statutory appeal against the impugned order or if the matter is remitted back to the respondents to pass a fresh order, the consequential recovery proceedings can be kept in abeyance. Considering the fact that the Show Cause Notice No.11 of 2018, dated 07.02.2017 had remained unserved on the said company, the impugned order in Original No.72 of 2018, dated 20.02.2018 has been passed in violation of principal of natural justice. It is therefore liable to be quashed. Consequently, the impugned recovery notice is also liable to be quashed. The petitioner may have records to prove that there were inward foreign remittance on the exports. The case is remitted back to the second respondent to pass a fresh order within a period of 90 days from the date of receipt of copy of this order - Petition allowed by way of remand.

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• 2022 (3) TMI 706
  Refund the drawback and interest paid by the petitioner - petitioner has not filed the proof for realisation of sale proceeds in foreign exchange - HELD THAT:- Merely because it takes some time by the revisional authority to decide the revision to be filed in this regard under Section 35 EE of the Act, it cannot be stated that it would not be an efficacious alternative remedy. If at all the issue relates only to interest, whether that should be paid to the petitioner or not, since it is a simple issue, it can be decided easily at the earliest by the authority concerned before whom if such revision is filed by the petitioner. Therefore, within a time frame such revision to be filed by the petitioner can be disposed of. The petitioner can approach the revisional authority under Section 35EE of the Act by filing a revision within a period of two weeks from the date of receipt of a copy of this order - Once such revision is filed, the same shall be entertained and decided by the revisional authority within a period of 60 days thereafter, as the issue to be decided in the said revision is only with regard to the claim of the petitioner for getting interest - Petition disposed off.

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• 2022 (3) TMI 705
  Exemption of goods - goods cleared from SEZ to DTA by way of stock transfer - no evidence to the effect that the assessee paid respective State Sales Tax/VAT on the said goods even at any subsequent stage of transfer of the said goods - interpretation of Circular No.44/2013 Customs dated 30th December, 2013 - invocation of extended period of limitation - Bill of Entries were countersigned by the customs official prior to clearance of goods - suppression of facts and/or any misstatement of the assessee/Respondent - N/N. 45/2005 Customs dated 16th May, 2005. HELD THAT:- The adjudicating authority, namely, the Principal Commissioner of Customs (Airport and Administration), Kolkata was of the view that the respondent/assessee is not entitled to benefit of notification no.45/2005 Customs dated 16th May, 2005 in the light of the circular issued by the Board being Circular no.44/2013 Customs. Accordingly, the adjudicating authority confirmed the proposal in the show cause notice and denied the benefit of the notification. The decision of the Hon ble Supreme Court in the Commissioner of Customs, Bangalore-1 vs- Motorola India Limited [ 2019 (9) TMI 229 - SUPREME COURT] . It was pointed out that when the question involved is whether an assessee is covered by an exemption notification or not is a question relatable to the rate of duty. If that be the legal position, then this Court cannot entertain this appeal. Thus, the preliminary objection raised by Mr. Ghosh is sustained and appeal is held to be not maintainable before this Court. The appeal is dismissed as not maintainable. The Registry is directed to return the original certified copy of the order passed by the Tribunal to the learned advocate for the appellant after retaining a photostat copy.

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• 2022 (3) TMI 704
  Seeking clearance of goods for home consumption - imported Base Oil - seeking waiver of penal charges like container detention charges, demurrage charges, ground rent charges etc. - HELD THAT:- As on date, the writ applicant has not been able to take delivery of the goods, said to be for home consumption. The goods are lying at the Mundra Port since June, 2021. The Revenue should not be interfered with, if the Revenue intends to carry out any further inquiry so as to be absolutely sure of the exact nature of the goods. Even with the materials as on date on record, the Revenue may, if it deems fit, issue a show cause notice calling upon the writ applicant to show cause as to why the goods should not be confiscated. If ultimately, any such show cause notice is issued, the writ applicant will have to meet with it. At this point of time, we are only concerned with the goods. There is no point in keeping the goods detained at the Mundra Port. The goods should be ordered to be released subject to the writ applicant executing a Bond of an amount to the satisfaction of the authority concerned (inclusive of interest, fine and penalty) with an appropriate further undertaking in writing on oath. The respondents nos.3 and 4 respectively are directed to release the goods after obtaining a Bond from the writ applicant of the requisite amount as above to its satisfaction and also an appropriate undertaking on oath at the earliest - petition disposed off.

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• 2022 (3) TMI 703
  Jurisdiction - proper officer to issue SCN - competence of DRI to issue SCN - fraudulent evasion of Customs duty - preparation of false documents - benefit of Notification No. 21/2002-Cus. Dated 1.3.2002 - HELD THAT:- There is no need to examine the merits of the case, if the SCN itself was issued by an officer competent to do so. The SCN gets vitiated and so will any order deciding the proposals in such an SCN. Hon ble Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] held that DRI officers were held to be not proper officers for issue of SCN demanding duty under Section 28 in the Canon India. Since the SCN itself was issued without authority of law, the entire proceedings get vitiated. The ratio of Canon India was followed in several cases and demands were set aside by the Supreme Court, various High Courts and this Tribunal only on the ground that the SCN was issued under Section 28 by the officers of DRI. Undisputedly, the bills of entry in this case were not assessed by the officers of DRI but by the officers of the Custom house. Only that officer who has assessed the Bills of Entry in the first place or his successor in office was the proper officer who, if he was subjectively satisfied that some duty had escaped assessment, could have issued the SCN. As the SCN has been issued by officer of DRI who is not competent to issue it, the impugned order deciding such an SCN cannot be sustained and needs to be set aside. Appeal allowed - decided in favor of appellant.

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• 2022 (3) TMI 702
  Mis-declaration of goods - under-valuation of goods - fraudulent import of the Land Rover which was imported in contravention of the Customs Act, 1962 - retraction of statements - benefit of N/N. 21/2002-Customs dated 01.03.2002 - penalty under Section 112 of Customs Act - HELD THAT:- There is no denial of appellant, despite retracting his earlier statement, that Shri Sumit Walia was running a business of sale and purchase of cars including that of high end luxury imported cars from his premises of petrol pump. This is also admitted by the appellant that he knew that Shri Sumit Walia with his associate Shri Kunal Kapoor is importing such cars in the name of different persons instead of importing in their own name - These admitted facts are opined sufficient to falsify retraction of the statement of appellant. The retracted statement is held to be an afterthought to manipulate evidence. There is no other evidence on record to prove the appellant s innocence as far as the knowledge of fraudulent import by Shri Sumit Walia is concerned. Violation of principle of natural justice - HELD THAT:- It is observed from the order under challenge that three opportunities of personal hearing were awarded to the appellant, that too, with reasonable time for appearance but the appellant fail to appear. No reason has been put forth by the appellant for not receiving those notices also for not marking appearance before the Commissioner (Appeals). The intentional absence cannot be ruled out. Jurisdiction - power of DRI Officers to issue SCN - HELD THAT:- The latest decision of Hon ble Apex Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . The said decision clarifies that the show cause notices issued for confiscation of the goods do not debar the officer of DRI to be competent. It is only the show cause notices for demanding differential duties as issued under Section 28 of the Customs Act, 1962, that the DRI Officers were not held to be the proper officers. The present case relates to confiscation of the land rover in question. Imposition of penalty in terms of Section 112 (b) of Customs Act - HELD THAT:- The appellant cannot deny acquiring possession of the Land Rover which is found to have been imported with a tampered chassis which is a stolen car but has been imported as a new car that too under-valuing its cost - there are no infirmity in the order under challenge, when the penalty of Rs. 8,00,000/- has been imposed upon the appellant. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2022 (3) TMI 701
  Maintainability of application - CIRP process - Financial Creditors - default was committed by the Appellant or it was commission and omission on behalf of the Bank - refund of the facility fee not done by bank - cancellation of the 2nd tranche of credit facility availed - violation of principles of natural justice - HELD THAT:- When Bank charges facility fee on borrowing, it cannot be accepted that on a loan of Rs. 1700 Crores facility fee shall be charged on the first tranche of Rs. 750 Crores and no facility fee was chargeable on 2nd tranche of Rs. 950 Crores. The payment of facility fee was received by the Bank on disbursement of 1st tranche which was facility fee for both the tranches and when 2nd tranche of Rs. 950 Crores stood cancelled, the Bank was obliged to refund the proportionate facility fee. The action of Bank in not refunding/ adjusting the proportionate facility fee is unjust enrichment by the Bank at the cost of borrower. The relationship between a banker and borrower is of trust. The purpose of all financing is for the purpose of promotion and completion of project by different borrowers. Bank is supposed to extend a helping hand and to act as a facilitator in carrying out the project. In the present case, the Bank has not acted fairly and even after cancellation of 2nd tranche of Rs. 950 Crores, it did not of its own refunded the proportionate facility fee which it ought to have been done in all fairness so as the borrower may be relieved from some financial burden but instead of refunding the proportionate fee, the Bank has pushed the borrower into serious financial constraint. The payment of monthly interest which was to be made for a period of 36 months was substantial amount of more than Rs. 6 Crores per month and refund of proportionate facility fee would have brought great help to the borrower to meet the interest instalment. Bank who was obliged to reverse/ refund the proportionate facility fee, it could not be allowed to withhold the aforesaid facility fee and contend that borrower has committed default on 01.08.2019. It was omission or commission of the Bank in not refunding the facility fee to the borrower due to which Bank cannot contend that any default was committed by the borrower on 01.08.2019 - there being no default on principal borrower on 01.08.2019, the Bank also cannot proceed against the Corporate Debtor by filing of Application on the basis of default dated 01.08.2019. There being no default by the principal borrower on 01.08.2019, all subsequent action by the Bank on the alleged default dated 01.08.2019 are unsustainable. Hence, information recorded in the information utility on the strength of loan recall notice dated 18.11.2019 in no manner can be read as material to prove that default was committed by the Bank on 01.08.2019 - sufficient ground was raised by the Appellant in I.A which was filed by the Appellant in Section 7 Application on which ground Section 7 Application deserves to be rejected. The Adjudicating Authority committed error in admitting the Application under Section 7 on the ground that default was committed by the Appellant on 01.08.2019. There was no default on the part of the Appellant on 01.08.2019 and it was commission and omission on behalf of the Bank of which no benefit can be taken by the Bank - Section 7 Application filed by the Respondent Bank is dismissed.

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• 2022 (3) TMI 700
  Validity of Resolution Plan - inadequate allocation for salary, pension and gratuity amounts of workmen/employees in the approved Resolution Plan or not - HELD THAT:- The resolution plan envisages that the financial creditors are being paid 21.6 % of the total financial debt whereas the operational creditors are being paid 12.6% of the total verified operational debt. The financial creditor Bank of India has been paid 28% and workmen dues of past 24 months has also been made 28% in view of the calculation in a previous paragraph. Creditors in the same class should be treated equally and hence such apportionment of the amount to be paid to the financial creditors and the operational creditors is the business decision in accordance with the commercial wisdom of the CoC. The Successful Resolution Plan has been considered by the CoC and approved by a majority of 100% of members voting share in the CoC. This approval is according to the provisions of Section 30(4) where the CoC has to approve a Resolution Plan by a vote of not less than 66 % of voting share of the financial creditors after considering its feasibility and viability, the manner of distribution proposed which would take into account order of priority amongst the creditors as laid down in sub-section 1 of Section 53. The constitution of COC has been done by taking the claim of Bank of India (Financial Creditor) as Rs. 41.50 Crores. It is seen that the Competent Authority of Bank of India vide OTS Letter dated July, 29 2017 approved a OTS of the Corporate Debtor at Rs. 19.30 Crores, against which the Corporate Debtor paid an amount of Rs. 9,70,21,000/- to the Bank of India. Despite such a payment having been made, the representative of Bank of India continued to claim that the amount proposed by the Bank of India at Rs. 41.49 Crores be included as due as financial debt due from the Corporate Debtor, there are a series of communication (attached at PP. 126 135 of the Appeal Paperbook) which culminated in this issue being discussed in the first meeting of the CoC held on December, 22 2017 - since the voting share of Bank of India even with the reduced claim shall be around 80% we do not think it would affect the overall voting pattern in the CoC when the resolution plan was approved with a 100% vote share, since any percentage of voting for approval more than 66% would have achieved the same result. In the matter of Venus Recruiters (P) Ltd. v. Union of India [ 2020 (11) TMI 850 - DELHI HIGH COURT ] Hon ble Delhi High Court has emphasised on the strict timeline provided under the IBC and relied on Hon ble Supreme Court s judgement in Innoventive Industries case to state that Certainty and timeliness is the hallmark of the Insolvency and Bankruptcy Code, 2016 and therefore, since avoidance proceedings are time barred, they cannot be entertained after the completion of the CIRP. Therefore the pendency of avoidance applications while the resolution plan is approved does not vitiate the approval of the plan. The approved resolution plan complies with the provisions of the IBC with slight modification in the amounts proposed to be paid to the workmen and employees in relation to their dues including provident fund - the workmen should get an additional payment of Rs. 0.1652 crores Rs. 0.09 crores = Rs. 0.8834 crores to be distributed among them as per their proportionate shares. With the above-stated modifications in the Resolution Plan, the Resolution Plan is approved by the Adjudicating Authority - appeal disposed off.

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• 2022 (3) TMI 699
  Seeking direction to Resolution Professional (RP) to submit report under Section 99 of the Code for acceptance for rejection of the Application - HELD THAT:- In the present case, Demand Notice as contemplated under Rule 7 sub-rule (1) of the 2019 Rules was sent by India Post on the address of the Appellant as mentioned in the Deed of Guarantee. The Demand Notice dated 07.10.2020 was duly delivered on the said address on 13.10.2020 and accepted by Mr. Karthik Wadhawan, an adult member of the Appellant s family. Fourteen days after service of Demand Notice, Application under Section 95 was filed on 01.12.2021. Rule 3(g) of the 2019 Rules provides mode and manner of sending any communication. As per Rule 3(g) serve means sending any communication by any means, including registered post, speed post, courier or electronic form. The proviso of 3(g) contemplate the situation where a document cannot be served in any of the modes, it shall be affixed at the outer door or some other conspicuous part of the house or building in which the addressee ordinarily resides or carries on business or personally works for gain. The statute provides a particular manner of service of notice. Demand Notice is to be served at house or building in which the addressee ordinarily resides. In the present case, proviso to Rule 3(g) was not resorted to since the Notice dated 07.10.2020 was sent and received on 13.10.2020. The Adjudicating Authority in impugned judgment after considering the submissions has come to the conclusion that notice served in Form B at the address of the Appellant is valid service. The Adjudicating Authority also came to the conclusion that service of Demand Notice is not requirement of personal service. Order 5 Rule 24 of the Civil Procedure Code is provision for issuance and service of summons. Said provision is not relevant in so far as service of Demand Notice is contemplated as per 2019 Rule 3(g) read with Rule 7 - Demand Notice which was dated 07.10.2020 was duly served on the Appellant as per Rule 3(g) read with Rule 7 of 2019 Rules. Service of Notice of Demand has been effected in accordance of procedure prescribed in 2019 Rules. There are no infirmity in the order of the Adjudicating Authority by which the Adjudicating Authority has held that the Demand Notice has been duly served and report under Section 99 of the Code by the Resolution Professional has been called for. The Application filed under Section 95(1) is yet to be admitted or rejected under Section 100 of the Code. After receipt of the report by the Resolution Professional as contemplated under Section 99, it is open for the Appellant to raise all his pleas and objections at the time of admission or rejection of Application under Section 95. The Appeal is dismissed.

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• 2022 (3) TMI 698
  Consideration of Scheme of Compromise or Arrangement - no steps were directed to be taken with regard to the auction of the assets of the Corporate Debtor - Section 230 of Companies Act - HELD THAT:- Section 230(2)(c) uses expression any scheme of corporate debt restructuring consented to by not less than seventy-five per cent of the secured creditors in value . Sub-clause (c) of sub-section (2) of Section 230 is attracted when there is a scheme of corporate debt restructuring. The expression used in sub-clause (c) is corporate debt restructuring . Debt restructuring is well known concept. Debt given by a lender can be restructured by the lender by any scheme issued by the lender or Reserve Bank of India or Central Government. Debt restructuring scheme which are issued by the Reserve Bank of India or Central Government from time to time are to mitigate the hardship of the borrowers. When lenders restructure the debt i.e. permit the borrower to make the payment debt in different time schedule or different instalment as per any Scheme, the said will be debt restructuring. The statutory scheme required consent by not less than 75% of the secured creditors for such debt restructuring which indicate that debt restructuring is to be consented by specific majority of secured creditors and it is secured creditors who are generally banks and the financial institution who can restructure the debt. Obligation to obtain the consent of 75% of the Creditors is on the person who proposes the Scheme. When the Scheme was submitted by Respondent Nos.2 and 3 to the Liquidator, the Liquidator was required to intimate the Respondent Nos.2 and 3 to obtain consent by 75% of creditors and it was for Respondent Nos. 2 and 3 to present the Scheme before Creditors and impress them to give their consent - The Liquidator in the present case, after holding Respondent Nos.2 and 3 to be eligible to submit the Scheme on 21st October, 2021, placed the Scheme before Stakeholder Consultation Committee on the next day, that is, 22nd October, 2021 and refused Respondent Nos.2 and 3 to present and clarify the Scheme before the Stakeholder Consultation Committee - no opportunity was given to Respondent Nos.2 and 3 to explain and clarify their Scheme before Financial Creditors and Members of Stakeholder Consultation Committee on 22nd October, 2021, on which date the meeting was convened by the Liquidator. Respondent Nos.2 and 3 are entitled to an opportunity to place and explain their revised Scheme before Financial Creditors and it is for the Financial Creditors to consider the Scheme for purposes of giving consent as contemplated by Section 230, sub-section (2) (c) of the Companies Act. The conduct of liquidator indicates that liquidator herself never wanted to give any opportunity to the Respondent No.2 to appear before the Stakeholders Consultation Committee and to explain his Scheme. Had liquidator wanted to give any opportunity and she wanted to obtain advice of the Stakeholders Consultation Committee on the above, she ought to have put the item before Stakeholders Consultation Committee first to consider before putting their Scheme for consideration. The hurried calling for the meeting on 22.10.2021, when she decided on 21.10.2021 that Respondent Nos. 2 and 3 are eligible, then not providing opportunity to Respondent Nos. 2 and 3 to explain the Scheme before the Financial Creditors or other stakeholders indicate that the liquidator never wanted the Scheme to be considered and she took all steps to get the Scheme rejected so that she may proceed with the auction which she has already fixed for 25.10.2021. The order passed by the Adjudicating Authority is affirmed - Respondent Nos.2 and 3 are allowed one month s time from this date to submit the revised Scheme along with an affidavit indicating the consent of Financial Creditors as contemplated by Section 230, sub-section 2(c) of the Companies Act, 2017, if any.

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• Service Tax

• 2022 (3) TMI 697
  Refund of service tax paid on the services utilized in SEZ for authorized operations - Validity of remanding the matter back to the lower authorities - Commissioner (Appeals) has got power to remand the case to the lower authority after the amendment made in the relevant Section w.e.f.11.05.2001, or not - refund of Service tax on services which were not specified services for authorised operations. Power of remand of the Commissioner (Appeals) - HELD THAT:- In the present case, the observation made by the Commissioner (Appeals) in Para XXII,XXIII, II, XII, XXXVIII mentioned in the part (D) of discussion and finding of impugned OIA cannot be regarded as amounting to a remand. In the present case, the directions given by the Commissioner (Appeals) for re-verifying a few aspects related to refund cannot be considered as amounting to a remand to the lower authority. These directions should have amounted to remand, if any, of the issues in dispute had been left unresolved by the Commissioner (Appeals) and sent back to the lower authority for a fresh decision or adjudication - This has not happened in the present case as all the issues raised by the Lower Authority in the adjudication order have been decided conclusively by the Commissioner (Appeals) as is evident from impugned Order-In-Appeal - there are no merits in the appeal of the Revenue. Refund of services which have been used by the respondent for authorized operation in the SEZ - HELD THAT:- There is no dispute in the present matter that the said services have been used by the respondent for authorized operation in the SEZ. Further, it is found that not mentioning the said services in the Approved List is only a technical defect and it should not debar the substantive benefit to the assessee who has utilized those services for carrying out authorized operation. It is also noted that disputed input services have been subsequently approved by the Committee in the approval List of services. Refund in respect of Chartered Accountancy Service - HELD THAT:- The Revenue disputed the refund on repair service on the ground that the pump was sent at Ahmedabad at vendor s premises. The services were provided at Ahmedabad, which is situated outside the SEZ. The refund is available for the services used within SEZ and not outside SEZ. It is found that there is no dispute by the revenue that the impugned services of repair were used by the appellant in relation to the authorized operation and also covered under the approved list. When there is no dispute about the use of the said services in authorized operation, the question of rejecting the refund claim in itself is incorrect. Rejection of refund - whether the Commissioner (Appeals) has erred by ignoring the procedural lapses viz. incorrect address, incomplete address, address not mentioned? - HELD THAT:- In Some case the service provider mentioned the address of Sambhav Building. As per the condition of the Notification, the service should be utilized within SEZ, hence the address of SEZ is mandatory requirement. Hence such services cannot be considered as utilized in relation to authorized operation. On perusal of the impugned order, it is found that the Commissioner (Appeals) after going through the impugned Order-in-Original has passed a detailed order and thereafter set aside the Order-in-Original. There are no infirmity in the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2022 (3) TMI 696
  Wrongful availment and utilization of CENVAT Credit - recovery in cash of Service tax credit of wrongly utilized - credit on input services was denied on the ground that the input services were also used in PNG Sale i.e. trading activity - HELD THAT:- Since the input services were not used for providing of output services, the Cenvat credit used in such activity was denied. We observe that during the relevant period Appellant carried out three activities: (i) Providing Services of transportation of natural gas through pipeline on which service tax is paid (ii) Manufactured CNG gas from natural gas received from M/s Gujarat State Petroleum Corporation Ltd. and paid appropriate central excise duty on the same (iii) Purchased PNG from M/s Gujrat State Petroleum Corporation Ltd and sold it to its customers i.e trading activity on which no service tax is paid. As regard the trading activity specific amendment was made in the Cenvat Credit Rules, w.e.f. 1.4.2011 as per Notification No. 3/2011-C.E. (N.T.), dated 01.03.2011 wherein, the trading activity was incorporated in the definition of exempted services accordingly Rule (6) became applicable but it is only from 1.4.2011, prior to that there was no provision for either denial of credit or for reversal of the same. In this case, since the dispute is for the period of April 2006 to March 2007, the denial of Cenvat Credit not correct and legal. Clearly the position was clarified by the Government by insertion of Explanation only with effect from 1-4-2011 that the trading activity will be Exempted Services which cannot be given retrospective effect. Short payment of service tax - credit wrongly utilized in excess of availability during the period April 2006 to October 2006 - HELD THAT:- Since the Cenvat demand in the present case is not sustainable, the said input service credit was correctly utilized for payment of service tax during the impugned period and any short payment of service tax shall stand adjusted against the available credit including the credit in this case. Appeal allowed - decided in favor of appellant.

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• 2022 (3) TMI 695
  Refund of service tax - 100% export of granite/other stone slabs, for which services availed - rejection of refund on the ground of absence of export documents and as such non-compliance of the condition of notification merely for the reason that the substantive documents were submitted with certain delay - rejection also on the ground of unjust enrichment - HELD THAT:- The refund of the tax paid under certain exemption notification in favour of the assessee is a substantial benefit being given by the Revenue to the assessee/exporter. The law in this respect has already been settled - This Tribunal, Hyderabad Bench, in the case of M/S COROMANDEL STAMPINGS STONES LTD. VERSUS THE COMMISSIONER. C.C. E S. T. HYDERABAD -II [ 2016 (7) TMI 780 - CESTAT HYDERABAD] has held that once there is no dispute about the goods to have been exported and the service tax to have been paid by the exporter, the failure to notify the Assistant/Deputy Commissioner by filing form EXP 1 and non submission of return in form EXP 2 as are otherwise required under the exemption notification, cannot lead to denial of the substantial benefit of refund. The said lapse is merely a procedural one and the substantial benefit cannot be denied on technical grounds. The Principle Bench of the Tribunal also in the case of M/S HEG LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, BHOPAL [ 2019 (7) TMI 773 - CESTAT NEW DELHI] has held that once the compliance of all the conditions of notification are undisputed, delay in the said compliance, being merely a procedural lapse cannot be made the basis to deny the substantial benefit as that of refund in terms of the exemption granted to the appellant vide an exemption notification. The delay has specifically been held to be insignificant to deny such a benefit. In view of the documents being duly filed by the appellant proving the export of the goods by availing services of Goods Transport Agency and the payment of service tax in respect thereof. Keeping in view the entitlement of the appellant for the exemption as per Notification No. 31/2012-S.T. dated 20th June 2012, it is held that delay in compliance of the conditions of said notification is wrongly held to be a reason to deny/reject the refund of the service tax paid - the rejection on this ground is hereby set aside. Unjust enrichment - HELD THAT:- Hon ble Bombay High Court, in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE 1 COMMISSIONERATE VERSUS M/S SANDVIK ASIA LTD. [ 2015 (10) TMI 719 - BOMBAY HIGH COURT] , has clarified that presumption of passing on incidence of duty is absolutely immaterial and irrelevant. Hon ble Bombay High Court clarified that even if the amount has been shown as expenses in accounts, it does not mean that the burden has been passed on to the consumer - In the present case, there, in addition, is a deposition on behalf of the appellant that too in the form of affidavit that the burden shall not be remaining with consumers and the entries of profit and loss accounts shall be accordingly changed - the findings of Commissioner (Appeals) with respect to the element of unjust enrichment of the appellant are held merely presumptive in nature. The rejection on said account also is therefore held to be irrelevant. Both the grounds of rejection of refund claim by Commissioner (Appeals) are held irrelevant - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (3) TMI 694
  Clandestine removal - Jurisdiction - Power to summon persons to give evidence and produce documents in inquiries - reliability of statements - statement of Managing Director of the appellant-company recorded under Section 14 of the Central Excise Act, 1944 could be treated as a relevant piece of material without complying with the provisions of Section 9D of Central Excise Act, 1944 - suo-moto deposit of differential duty liability, whose details have been mentioned in SCN issued to the appellant as well as to its Managing Director can be said to be an admission on the part of the appellant regarding clandestine removal of goods - penalty imposed by the adjudicating authority upon the Managing Director of the Company, having attained finality, can itself be used against the appellant or not - impugned order was passed solely on the statement of the Managing Director of the Company recorded under Section 14 of the Central Excise Act, 1944 or otherwise - entries made in private diary of the Managing Director of the Company could have been a basis for passing the impugned order or not. As per Aparesh Kumar Singh, J HELD THAT:- The order of learned Tribunal cannot be sustained in the eye of law. It is accordingly set aside. The substantial questions of law framed for adjudication in this appeal are accordingly answered in favour of the Appellant Assessee. Let the Lower Court Records be sent to the concerned Tribunal and Authorities. As per Anubha Rawat Choudhary J HELD THAT:- It can be concluded as follows:- i. the statement recorded under Section 14 is per-se admissible in evidence by the adjudicatory authority under Central Excise Act, 1944 subject to scrutiny by the adjudicating authority in the light of Section 24 of the Indian Evidence Act. ii. Such scrutiny is required to be done by the adjudicating authority on the basis of materials available before him including the evidences collected and statements recorded under Section 14, before relying upon such statements and treating them as relied upon evidence while issuing show-cause notice. iii. Upon scrutiny under Section 24 of the Evidence Act, such statement recorded under Section 14 of the Act of 1944 can be relied upon by the adjudicating authority while issuing show-cause notice without calling upon the person to depose as a witness in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944. The moment the adjudicating authority relies upon the statement recorded under section 14 of the Central Excise Act, it is indicative of the fact that necessary scrutiny in terms of Section 24 of the Evidence Act has been done and no separate order is required to be passed to this effect and this is also subject to any objection to be raised by the noticee/ person whose statement has been recorded. This is because the recording of evidence is permissible under Section 14 of the Act of 1944 by issuing summons by a Central Excise Officer duly empowered by the Central Government in this behalf and the person concerned is under statutory legal obligation to disclose the truth and there are penal consequences for giving false evidence and the recording of evidence under section 14 of the Act of 1944 is deemed to be a judicial proceeding under Section 193 and Section 228 of Indian Penal Code. iv. This will not be the position with regards to the statements under other provision of the Act of 1944 which are not recorded pursuant to summons under Section 14, including those of arrested persons under Section 21 of the Act of 1944. They would require compliance of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944, if they are to be relied upon by the adjudicating authority and the only exception are those circumstances as provided under Section 9D (1) (a) of the Act of 1944. v. In case of any objection with regards to the statements recorded under Section 14 of the Act of 1944, the person can be called upon at the instance of the noticee for cross-examination and the adjudicating authority is bound to consider such request and pass an appropriate order, failing which such statement recorded under Section 14 of the Act of 1944 is to be eschewed. On account of situation covered under Section 9D(1)(a), the statement becomes relevant in terms of Section 9D(1)(a) read with Section 9D (2) of the Act of 1944 as the person need not be produced for cross- examination. vi. It is the right of the noticee to have the statements excluded from relied upon evidence by the adjudicating authority in light of Section 24 of the Indian Evidence Act and equally the duty of the adjudicating authority to exclude it even suo-moto if the vitiating circumstances appear from the records, as Section 24 of the Evidence Act uses the word appears to the court . When the noticee alleges that the statement recorded under Section 14 of the Act of 1944 was a result of threat or undue pressure of the authority, he must prove his allegation to be true, though the burden of this proof on the noticee is not very heavy, but certainly such allegation should be based on some material. vii. Admittedly in the instant case no request was made before the adjudicating authority to cross examine any witness whose statements were recorded under section 14 of the Act of 1944 including that of the Managing Director of the appellant company. Admittedly no objection whatsoever was made in connection with the relied upon statements before the adjudicating authority and there was no material before the adjudicating authority to discard the statements in the light of Section 24 of the Evidence Act. The retraction by the Managing Director for the first time at appellate stage after expiry of more than four years was clearly an afterthought. The statement of the Managing Director recorded under Section 14 of the Act of 1944 could be relied upon and treated as a relevant piece of material while issuing the show-cause notice to the Managing Director as well as the appellant company and the same could be relied upon without calling upon the Managing Director to again depose as a witness before the adjudicating authority in terms of Section 9D (1) (b) read with Section 9D (2) of the Act of 1944. Application disposed off.

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• 2022 (3) TMI 693
  Entitlement for interest of refund from the date of deposit - Post GST regime - grant of interest as per the amended provisions of Section 35FF of the Central Excise Act, 1944 - HELD THAT:- Claim for refund in the present case was filed on 6th January, 2016 which was returned and again filed on 19th April, 2017. Section 142 of the Act deals with miscellaneous transitional provisions including the claim for refund filed by any person before, on or after the appointed day for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law. Section 142 of the Act when read with Section 2(48) of the Act is a complete answer to the plea raised by the appellant qua the issue of jurisdiction. The provision explicitely provides that every claim of refund shall be dealt under the existing law i.e. Central Excise Act, 1944 and not by the provisions of the Act. Thus the plea of transfer of jurisdiction due to GST regime is not available to the appellant - It is not disputed that the provisions of Income Tax Act, 1961 and Central Excise Act, 1944 are pari materia and, therefore, law laid down by the Supreme Court in the case of Sandvik Asia Ltd. [ 2006 (1) TMI 55 - SUPREME COURT] shall be applicable to the present case. The applicability thereof to the facts of the present case - the instant appeal is hereby dismissed.

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• 2022 (3) TMI 692
  Payment of differential excise duty upon finalisation of the price between parties - Price Escalation Clause - Adjustment of interest (out of refund arising subsequently) - barred by time limitation or not - HELD THAT:- Hon ble Delhi High Court in the case of HINDUSTAN INSECTICIEDES LTD. VERSUS COMMISSIONER CENTRAL EXCISE, LTU [ 2013 (8) TMI 225 - DELHI HIGH COURT] relied upon, wherein the similar issue of payment of differential duty, subsequent to price revision was involved, and whether the interest was payable for the retrospective period from the date of original invoice, under the fact that the appellant have suo moto paid the differential duty upon raising of the supplementary invoice. Extended period of limitation - HELD THAT:- The benefit of extended period of limitation is not available to Revenue in the present matters, there being no element of fraud, mis-statement or contumacious conduct on the part of the appellant. Thus, the demand of interest is hit by limitation. Appeal allowed - decided in favor of appellant.

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• 2022 (3) TMI 691
  Refund of Excise Duty - unjust enrichment - price reduction clause - rejection of refund claim on the ground that goods were sold for delivery at the time and place of removal at factory gate and therefore transaction value would be applicable on which excise duty has been paid by the appellant - admissibility of refund claim filed on discount given to the dealer - HELD THAT:- The facts of the case are not in dispute that after reduction of the rate of duty vide Notification no. 58/2008-CE dated 7.12.2008 wherein rate of duty on the car were reduced from 24% to 20% and consequent to that stock lying as on date with dealers reduced the price and issued credit note and refund the difference along with duty by way of cheques. The only controversy is that whether the subsequent reduction in the price by the appellant and refund thereof proportionate duty attributable to reduced prices is refundable or not. As issue is squarely covered by the decision of PRAG INDUSTRIES (INDIA) PVT. LTD. VERSUS COMMR. OF C. EX. S.T., LUCKNOW [ 2019 (4) TMI 1835 - CESTAT ALLAHABAD ], therefore, as payments were made in accordance with the reduced price subsequently paid by the appellant, in that circumstances the appellant is entitled to claim refund of the excess duty paid by them. In such circumstances, there is no requirement for opting provisional assessment or as the appellant was not aware that subsequent reduction of duty by notification number 58/2008 dated 7.12.2008. As it is on record that excess duty and differential excess amount received by the appellant has been refunded to the dealers by way of cheque, in these circumstances, it is not a case of unjust enrichment. The appellant is entitled for refund claim - Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2022 (3) TMI 690
  Grant of regular bail - criminal conspiracy - fraudulent entries with an intention to cause loss to the Government treasury - sections 406, 420, 465, 467, 468, 471, 167 and 120B of IPC, sections 13(1)(b) and 13(1)(c) of the Prevention of Corruption Act and section 85(1)(d) of the Gujarat Value Added Tax (Rules), 2003 - HELD THAT:- With regard to the allegations of the applicant s connivance with the co-accused, in case of manual Challans of four dealers in respect of 2015-2016, is stated to have been produced but the allegations against the present applicant is that those were approved without due verification. The Departmental Circular dated 05.09.2011 referred to, gives direction to the Dealers to adopt the E-payment mode for the tax payment above Rs. 10,00,000/- while option has been given to the tax payment below the level of Rs. 10,00,000/-. Here in the case of assessment of four dealers, the tax so assessed is below Rs. 10,00,000/-. This requires the production of Form No.207 which shows that the duplicate of the Challan is required to sent to the CTU. The triplicate copy is for the treasury and the duplicate is to be sent to the CTU. The information with regard to the payment of the challan would be in the VAT is system. Reliance has been placed on the provision of law under Section 34 of the Gujarat Value Added Tax Act, 2006 for the amount of tax due on the registered Dealer which is required to be assessed separately every year and it was urged that the applicant as a State Tax Officer was required to tally the information regarding the challan payment of the VATis system to the data reflected in IFMS which in turn is entered in the website of the Tax Department - Whether there has been a criminal conspiracy or any negligence of the applicant would be a question which is to be examined during the course of trial by adducing evidence. How the challans were manipulated and false postings were made in the VAT is system with an intention to defraud by causing losses to the Government exchequer would be a question of fact. Whether any illegal gratification has been received by the present applicant for any manipulated, fraudulent entries with an intention to cause loss to the Government treasury would be a question of evidence which would be required to be examined during the course of trial. Further, since the charge-sheet is filed and considering the facts and circumstances of the case, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant. The applicant is ordered to be released on regular bail - Application allowed.

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• 2022 (3) TMI 689
  Classification of goods - Ujala Supreme - classifiable under Entry No. No.54 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as synthetic organic colouring matter or not? - HELD THAT:- The Entry in Column-II of notification issued by the respondent detailing Industrial input and packing material entry against Entry 55 (113) of Schedule-A, Part II-A of H.P. VAT Act, denotes the HSN number, i.e Harmonized System of Nomenclature developed by International Customs Organization and adopted in the Customs Tariff Act, 1975. Noticeably, the Entry against serial No. 113 of the notification issued by respondent detailing Industrial input and packing material specified in Entry 54 of Part-2 of Schedule-A of the H.P. VAT Act, can not be said to be used without purpose. The only corollary that can be drawn from the use of HSN code is to have reference of the product viz-a-viz Customs Tariff Act, 1975 for the purposes of identification. Since the AVP is referable to item denoted by HSN code 3204 as adopted by Customs Tariff Act, 1975, the same can not be ignored for the purposes of H.P. VAT Act. The question of law framed in these petitions finds its answer on all fronts from the aforesaid judgment passed by Hon ble Supreme Court in M/S. MP. AGENCIES VERSUS STATE OF KERALA [ 2015 (3) TMI 787 - SUPREME COURT ]. The product Ujala Supreme is thus held to be classifiable under Entry 55 (113) of Schedule-A, Part II-A of H.P. VAT Act, 2005 as Synthetic organic colouring matter and assessable to the rate of VAT applicable to such Entry of Schedule-A. The product Ujala Supreme is held liable for VAT under H.P. VAT Act at the rate which is applicable for items against Entry 54(113) of the Part-II of Schedule-A of H.P. VAT Act - Petition allowed.

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• 2022 (3) TMI 688
  Validity of assessment order - service of demand notice - violation of principles of natural justice - Section 25(1) of the Kerala Value Added Tax Act, 2003 - HELD THAT:- Apparently, from the address shown in the orders of assessment, issued against the petitioner, it is evident that the notice was not been send to the correct address of the petitioner. Similarly, the e-mail address to which the notice is supposed to have been send, is stated by the counsel for the petitioner as the e-mail ID of an earlier employee, who had left the services of the petitioner even before the reassessment proposal was issued. The veracity or otherwise of the notice through e-mail is not being probed at this juncture, having regard to the nature of the order that is proposed to pass in the instant case. Indisputably, the hard copy of the notice issued by registered post to the petitioner was send not to the changed address maintained in the register of the tax authorities, but only to the prior address. After the address particulars of the petitioner was corrected, as is seen from Ext.P2 registration certificate, the assessing officer ought to have issued the notice to the correct address - the petitioner is justified in contending that the impugned orders are issued in violation of the principles of natural justice for non service of notice. Since the assessment orders relate to the years 2017- 18, it is necessary that the assessing officer be directed to complete the assessments against the petitioner, as expeditiously as possible - the assessing officer is directed to grant a fresh opportunity to the petitioner to file their objections to the proposal for reassessment and pass appropriate orders after granting an opportunity of hearing, within a period of three months from the date of receipt of a copy of this judgement - petition allowed.

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• Indian Laws

• 2022 (3) TMI 687
  Seeking a fresh appointment of Arbitrator - Section 33 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- Paragraph 160 of the award cannot be read in isolation. It was a part of the award dealing with the Application for amendment of counter claim filed by respondent-ECL. The award carried the subtitle before paragraph 157. Paragraph 160 contains mere submissions advanced on behalf of the appellant/claimant. MECON report was called with respect to the amendment of the counter claim regarding expenses required for putting the plant into running condition. After deliberating upon the said amendment, at the end of paragraph 161, the conclusion was that the application for amendment stood dismissed. The MECON report and the M/s AKB Power Consultants Pvt. Ltd. report, both related to the expenses sought to be incurred in bringing back the plant into running condition. Parties had filed their objections to both the reports as there was substantial difference in the figures indicated in the two reports. But once the Arbitrator found that the amendment in the Counterclaim itself was not relevant for the adjudication, there was no question of proceeding any further in inviting evidence etc. with respect to the reports - The submission is based upon the misreading and misrepresentation of the said paragraph, in isolation bereft of preceding and succeeding paragraphs. The same is accordingly rejected. The application deserves to be rejected and is accordingly rejected.

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• 2022 (3) TMI 686
  Dishonor of Cheque - summoning of the accused - it was observed by the trial court that it did not have the jurisdiction to try the complaint case as the payee bank was situated in North District, hence the accused could not be summoned - HELD THAT:- It is evident that the present complaint ought to have been filed in the Court under whose jurisdiction the bank of the payee, i.e., petitioner is situated. The bank of the payee is situated at Model Town-III, Delhi, which falls in the North District and the courts of the said district are situated at Rohini Courts Complex, New Delhi - Apparently, the Court of the learned Metropolitan Magistrate in West District does not have the jurisdiction to try the complaint in question, which was filed due to bona fide belief in a District Court, which has no jurisdiction. The criminal complaint under Section 138 N I Act pending in the court of Sh. Devanshu Sajlan, learned Metropolitan Magistrate (MM), West District, Tis Hazari Court, Delhi is ordered to be transferred to the Court of learned Chief Metropolitan Magistrate, District Rohini, North, Rohini Courts Complex, New Delhi along with all the original and complete records - petition disposed off.

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• 2022 (3) TMI 685
  Dishonor of cheque - Fund insufficient - transmission of legal notice, cheque return and statutory provision under section 138(c) and 142(b) of Negotiable Instruments Act which was required to be filed on 11.09.2017 - time limitation - HELD THAT:- It is an admitted fact that it is not in dispute that the cheque was returned on 29.07.2017, notice for payment by way of legal notice was issued on 09.08.2017. The petitioner has received the notice on 12.08.2017 and the complaint was filed on 20.09.2017. It has been discussed in the order taking cognizance. For correct appreciation of the limitation, here the Court is required to look into section 138 of the Negotiable Instruments Act alongwith the proviso and sub section (b) of section 142 of Negotiable Instruments Act. On perusal of sub-section(b) of section 142 of the Negotiable Instruments Act, it is crystal clear that the complaint is required to be made within one month of the date on which the cause of action arose - The proviso (c) of section 138 of Negotiable Instruments Act speaks that for the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice, complaint is required to be filed. Thus, in view of the above date, which has been discussed here, it is crystal clear that 15 days time completed on 26.09.2017 and the complaint was filed on 20.09.2017. Thus, it was within the time. The contention of the learned counsel for the petitioner with regard to limitation of 8 days is not substantial and, accordingly, there is no illegality in the cognizance order. Petition dismissed.

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• 2022 (3) TMI 684
  Dishonor of cheque - quantum of deposit of fine - it is argued that petitioner that Section 148 of the Act uses the expression may and, therefore, the learned Appellate Court was not justified in imposing such an onerous condition particularly when the amount of fine was exorbitant and there was a discretion with the Appellate Court to not direct the petitioner to deposit such amount - whether the usage of word may in section 148 provides a discretion to the Court to impose or not to impose the condition of depositing minimum 20% of the fine amount, is required to be dilated upon at some length? - HELD THAT:- If section 148 is regarded to be discretionary, to the effect that the Court may do away with the deposit, then, the Court would render defunct the very requirement of deposit pendente lite appeal. Because as per section 148 of the Act, such amount cannot be less than 20% of the fine amount and any other percentage of amount (being less than 20%) would be in direct contravention of the express provision which postulates that minimum of 20% of fine amount has to be deposited - Because not directing any amount to be deposited would be tantamount to depositing 0% of the fine amount and the same being less than 20% of the fine amount is impermissible as per the mandate of section 148 of the Act. Had the legislature intended to make the exercise of power under section 148 discretionary, it would not have imposed the duty upon the Court to direct deposit of a minimum 20% of fine amount. In the opinion of this Court, if modal auxiliary verbs or imperative words such as may , should etc. are followed by the provision/expression prescribing lower bar/limit such as minimum , not below , etc. then, these words ( may , should , etc.) are required to be read as shall . Similarly, if the word shall is followed by provision/words providing upper cap/upper limit by usage of words maximum or not above , etc. then, the expression may or shall confer the discretion upon the Court/Authorities and hence, the words may or shall would be read as may . A purposive interpretation of section 148 of the Act is necessary and the same would warrant that the expression may as contained in section 148 of the Act be read as shall . Read this way, the provision would mean that the Court shall order the convict to pay minimum of 20% amount of fine in an appeal against conviction under section 138 of the Act and resultantly, the plight of the drawee would be eased (as intended by the legislature while enacting section 148 of the Act) which otherwise would have been aggravated due to prolonged judicial proceedings. This Court does not find any error or infirmity in the impugned order - Petition dismissed.

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• 2022 (3) TMI 683
  Dishonor of Cheque - legally enforceable debt or not - rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 - petitioner had been convicted for offences u/s 138 - HELD THAT:- It is a settled proposition of law that presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from a presumption of fact, such a presumption is a rebuttable presumption and the drawer of the cheque may dispel the same. The aforesaid position in law stands settled in the judgment of the Hon ble Supreme Court in the matter of Hiten P. Dalal Vs. Bratindranath Banerjee [ 2001 (7) TMI 1172 - SUPREME COURT] . It was, thus, held that the obligation on the prosecution may be discharged with the help of presumption of law or fact, unless, the accused adduces evidence showing reasonable possibility of the non-existence of the presumed fact. Thus, to say that if the facts required to form the basis of a presumption of law exist, there is no discretion left with the Court but to draw the statutory conclusion, but the same does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. The rebuttal does not have to be conclusively established, but such evidence must be adduced in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man . The law is thus well settled that in order to rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. The Court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated - To disprove the presumption, an accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or that their non-existence was so probable that a prudent man, would under the circumstances of the case, act upon the plea that they did not exist. The petitioner having denied issuance of the cheque and having denied receipt of any money from the complainant or having any transaction with him coupled with the circumstances, the presumption of law under Section 139 of the Negotiable Instruments Act would not continue to exist against the accused-petitioner and the burden would shift upon the complainant to establish that the transaction in question had duly taken place and that the cheque had been issued to him in discharge of a legally enforceable debt - The failure to display prudence of an ordinary person and to establish his capacity to advance the sum to the petitioner give rise to a suspicion against presence of an enforceable debt against the petitioner and thus tilting the balance in favour of the accused. The burden lies on the complainant to prove his case against the accused, in whose favour, there is a presumption of innocence. The judgment passed by the Courts below are conjectural and are not based upon objective assessment of the material adduced on record. The Courts below have failed to take account of the shift of onus on the complainant to establish having advanced the money and that the cheque in question had been duly issued to him in discharge of the liability and to have proceeded solely on the basis of presumption under Section 139 of the Negotiable Instruments Act, 1881 ignoring all other circumstances. Petition allowed.

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