TMI Tax Updates - e-Newsletter
March 21, 2023

Case Laws in this Newsletter:

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

Articles

1. DATES OF SIGNING OF ASSESSMENT ORDER , COMPUTATION SHEET, DEMAND NOTICE ,PENALTY NOTICE Etc. ARE IMPORTANT – ASSESSMENT ORDER WITH DIRECTIONS OR DECISION MUST PRECEDE ISSUE OF OTHER NOTICES TO BE VALID.

   By: DEVKUMAR KOTHARI

2. AGGREGATE TURNOVER

   By: DR.MARIAPPAN GOVINDARAJAN

3. INTERPRETATION OF LAW BASED ON RULE OF READING DOWN

   By: Dr. Sanjiv Agarwal

4. Refund claims cannot be considered as dubious on the basis of erroneous findings

   By: Bimal jain

News

1. Delhi South CGST unearths fake invoicing racket involving tax evasion of Rs. 17 crore, 2 held

2. 2nd SFWG Meeting in Udaipur, Rajasthan from 21st-23rd March, 2023

3. Inaugural Address by Shri Shaktikanta Das, Governor, Reserve Bank of India at the Payment System Operators (PSO) Conference, Kochi, March 18, 2023

Notifications

Companies Law

1. S.O. 1269 (E) - dated 17-3-2023 - Co. Law

Establishment Centre for Processing Accelerated Corporate Exit (C-PACE) u/s 396 (1) of Companies Act, 2013 at Gurgaon (Haryana)

GST - States

2. F-A 3-35-2017-1-V (05) - dated 13-3-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-35-2017-1-V(63), dated 30th June, 2017

3. F-A 3-33-2017-1-V (42) - dated 13-3-2023 - Madhya Pradesh SGST

Amendment in Notification No. F-A-3-33-2017-1-V(42), Dated 29th June 2017

4. F A3-47-2017-1-V (03) - dated 13-3-2023 - Madhya Pradesh SGST

Amendment in Notification No. F A-3-47-2017-1-V(59), dated 30th June 2017

5. F A-3-42-2017-1-V (02) - dated 13-3-2023 - Madhya Pradesh SGST

Seeks to amend Notification No. F A-3-42-2017-I-V (53), dated 30th June 2017

Circulars / Instructions / Orders

DGFT

1. 61/2015-20 - dated 20-3-2023

Procedure for Registration Certificate for import of marble and Fresh (green) Areca Nut from Bhutan without Minimum Import Price condition

Highlights / Catch Notes

GST

• Single Authority Advised for Consistent Tax Decisions, Avoids Conflicting Outcomes and Benefits Both Assessee and Revenue.

  Case-Laws - HC : Concurrent jurisdiction to investigate the same issue - In our considered view, if the subject issue is one and the same or if the subject is inter-related, it is always better that one authority adjudicates the matter. By directing the assessee to face multiple authorities may result in conflicting decisions. Therefore, not only in the interest of the assessee but in the interest of the revenue also, one authority should take the decision. - HC
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Income Tax

• Authorities to Re-evaluate Tax Chargeability for Sum Under Distributor Agreement, Section 197 NIL Rate Certificate Sought.

  Case-Laws - HC : Application u/s 197 - reduction of withholding tax - petitioner had sought a certificate, at “NIL” rate of tax - request to issue certificate at lower was rejected - Reduction of withholding tax u/s 195 is the rule, it is required to be borne in mind, that deduction of withholding tax morphs into an obligation, only if the sum received is chargeable to tax. The petitioner’s entire case is, that the sum that it receives under the Distributor Agreement is not chargeable to tax. - Authorities directed to re-examine the issue - HC
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• Export Incentives Classified as Business Income u/s 28 Impact Deductions u/s 80IB of Income Tax Act.

  Case-Laws - AT : Deduction u/s. 80IB - the export incentives such as Duty Draw Back and MEIS is an income assessable under the head ‘profits or gains from business or profession’ as per clause (iiib) and (iiid) to section 28 of the Act. - AT
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• Assessee violated Section 194A by not deducting TDS on interest to minors, unregistered firms; Section 40(a)(ia) applied.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) r.w.s 194A - Non deduction of TDS - assessee had paid interest to minor and unregistered firms who were not members of the assessee. This is violation of section 194A - we are of the opinion that the AO has rightly invoked provisions of section 40(a)(ia) of the Act and disallowed interest paid to minor and unregistered firm - AT
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• No Penalty Imposed: Assessee's Explanation Meets Section 270A(6) Requirements, Not Covered by Section 270A(9)(a-f) Clauses.

  Case-Laws - AT : Penalty u/s 270A - The alleged disallowance does not find place in clause (a) to (f) of sub-section (9) of Section 270A. Assessee while filing response to the show cause during the assessment as well as during the penalty proceedings has given bona fide explanation within the scope of sub-section-6 of section 270A and disclosed all the material. - No penalty - AT
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• Court Upholds AO's Assessment; PCIT's Revision Order Quashed on Interest and Guarantee Commission Issues u/s 263.

  Case-Laws - AT : Revision u/s 263 - PCIT was of the view that AO has not made any enquiry with regard to the (1) interest on non-performing assets (2) deferred payment receipt on guarantee commission - t the assessee is a nationalized bank and there is no question of assessee investing in perpetual bonds other than for banking businesses. - Revision order quashed - AT
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• Income Tax Revision u/s 263 Challenged; AO's Deliberation on Assessment Process Found Adequate by Records.

  Case-Laws - AT : Revision u/s 263 by CIT - The assessee in its support had complied the requirements as raised by both the revenue authorities. Though the assessment order does not patently indicate that the issue in question had been considered by the AO, the record showed that the AO had applied his mind - Thus investigation by the ld. AO cannot be called ‘lack of investigation’. - AT
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Customs

• Courier Agency Wins Relief in Forfeiture Case; Minimal Delay, No Intentional Withholding of Info Cited in Decision.

  Case-Laws - AT : Forfeiture of the whole amount of security deposit alongwith imposing penalty on the Appellant a Courier Agency - The Appellant was in constant touch and had kept the customs informed. The apparent contravention is only due to involvement of three agencies, the Customs House, thereafter, the DRI and thereafter the SIIB. Thus, there is only few days gap in informing the particular agency but there is no deliberate keeping back of any information or giving or withholding any information whenever asked for. - Major relief granted - AT
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Indian Laws

• High Court Upholds Arbitral Tribunal's Decision on Interest Award for Equipment Hypothecation; No Interference u/ss 34, 37.

  Case-Laws - SC : Scope of arbitration award - Once it was found that the advance amount was paid for hypothecation of equipment and thereafter when the Arbitral Tribunal awarded the interest on advance for hypothecation of equipment, the same was not required to be interfered with by the learned Single Judge in exercise of the powers under Section 34 of the Arbitration Act and even by the Division Bench of the High Court while exercising the powers under Section 37 of the Arbitration Act. - SC
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• Court Upholds RBI Rule Restricting Multiple Bank Current Accounts for Customers with Existing Credit Facilities.

  Case-Laws - HC : Restriction on having current account with other banks if that customer already had credit facilities in the form of Cash Credit/Export Packing Credit (CC/EPC) in the banking system. - RBI banking Policy - Appliability of RBI circular is not erroneous - granting the Petitioner relief would in effect not only run directly contrary to the circular but would possibly permit the continuance or growth of the very mischief that is sought to be addressed. - HC
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IBC

• Petitioner's Appeal Denied: Lacks Standing and Interest in Liquidation Process; Deemed Disruptive and Futile.

  Case-Laws - AT : Seeking leave for filing an appeal - locus standi - the Petitioner / Appellant, is not a Stakeholder in the Liquidation Process, and in any event, has no vested interest, in the Corporate Debtor, comes to a resultant conclusion that the appeal, filed by the Petitioner / Appellant, is an Otiose one, and the same is filed, only to disrupt, the Liquidation Process of the Corporate Debtor - AT
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Service Tax

• Court Rules TDS Exclusion from Taxable Service Value Correct; TDS Not Part of Service Consideration.

  Case-Laws - AT : Valuation - inclusion of TDS amount remitted by the appellant - the expenditure towards TDS are met by the assessee. So, when such TDS is not received from the non-resident since it is not towards value/consideration, there is no merit in requiring such assessee to include even the TDS it paid in the value of services, as in the case on hand - the appellant was correct in not including the TDS amount in the value of taxable services. - AT
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• Cenvat Credit Available for Renting Immovable Property, Covers Service Tax on Construction Services Inputs Used in Property.

  Case-Laws - AT : Cenvat Credit - Providing output service of renting of immovable property - credit of service tax paid on construction services - the inputs used for construction of immovable property is eligible for Cenvat Credit when the Service Tax is paid on the service provided - AT
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Central Excise

• High Court Rejects Challenge to 2017 Notification on Tax Exemption for World Bank-Funded Projects; No Inherent Right to Exemption.

  Case-Laws - HC : Exemption from duty / tax - No assessee can claim an exemption as a matter of right. No doubt, in this case an exemption had been granted in respect of duty liability in respect of those projects that have been funded by the World Bank and the assessees had been availing the benefit of this exemption from 1989 onwards. - The challenge to Notification dated 30.06.2017 is rejected. - HC
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• Appellant Wins Refund for Late Notification of Increased Excise Duty on Dispatched Goods; Protest Note Considered.

  Case-Laws - AT : Refund of differential duty paid post clearance of goods - Appellant’s claim is that such notifications enhancing duties came to the knowledge of the Oil Industry very late in the evening and much after the clearance but to avoid any future complicacy, differential Excise duty basing on calculation at the higher rate as per the amended notifications were paid with a protest note. - Refund allowed - AT
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VAT

• Court Highlights Need to Prove "Sufficient Cause" u/s 7(5) of OET Act to Avoid Tax Penalties.

  Case-Laws - HC : Without Sufficient Cause - There is no ambiguity in holding that in the presence of the expression “without sufficient cause” in sub-section (5) of Section 7 of the OET Act and the petitioner(s) having justified by showing sufficient cause for failure to deposit amount of tax due along with the return, which cannot be treated as admitted tax in view of legal position contained in paragraph 30 of Reliance Industries Ltd. - HC
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• Audit Assessment Under GVAT Act Lacks Jurisdiction Due to Absence of Pending Proceedings, Violating Section 34(8A) Requirements.

  Case-Laws - HC : Audit assessment - exercising powers were invoked u/s 34(8A) of the GVAT Act despite the fact that no proceedings were pending - Since the basic condition ‘during the course of any proceedings under the Act’ of Sub section (8A) of Section 34 of the Act is not satisfied and no proceedings under the Act are pending, the impugned notice dated 1.9.2022 and the assessment order dated 16.9.2022 stands without jurisdiction. - HC
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Case Laws:

• GST

• 2023 (3) TMI 826
  Rejection to grant any interim order - concurrent jurisdiction to investigate the same issue - appellants are aggrieved by the SCN issued by the respondent on the ground that the very same issue is now subject matter of consideration by the Assistant Commissioner, State Tax, Bureau of Investigation, South Bengal (HQ), who has issued notice dated 7th November, 2022 - HELD THAT:- If the subject issue is one and the same or if the subject is inter-related, it is always better that one authority adjudicates the matter. By directing the assessee to face multiple authorities may result in conflicting decisions. Therefore, not only in the interest of the assessee but in the interest of the revenue also, one authority should take the decision. Admittedly, the Bureau of Investigation, South Bengal is a centralised agency and if that agency has already taken up the matter for consideration and the concerned Assistant Commissioner has issued notice dated 7th November, 2022, it is but appropriate that issues be considered by the said authority including the issue, which has been raised by the respondent in the show cause notice dated 29th December, 2022. The appeal as well as the writ petition are disposed of by directing the respondent to place the entire file pertaining to the show cause notice dated 29th December, 2022 to the Special Commissioner, State Tax, Bureau of Investigation, South Bengal, Headquarters, Kolkata, who shall in turn direct the said show cause notice and file be placed before the Assistant Commissioner, State Tax, Bureau of Investigation, South Bengal (HQ) and to adjudicate the show cause notice along with the proceedings already initiated pursuant to the notice dated 7th November, 2022.

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• 2023 (3) TMI 825
  Maintainability of writ petition - without final outcome of the proceeding initiated by the respondent no. 4, the petitioner has filed the instant writ petition - Validity of authorization for inspection and search - failure to produce any valid document regarding the mode of business operation of the petitioner - HELD THAT:- Annexure XIII, dated 25.08.2021, which is under challenge in this writ petition, clearly shows that if the petitioner fails to submit any response/reply to the liability intimated under Section 73(5) of the Act to this writ petition in Part-B within the time stipulated, in that case, Show-Cause notice will be issued against the petitioner. Thus, it is aptly clear that Annexure XII (dated 25.08.2021) is not a show-cause notice, which the petitioner prays to quash in this writ petition. Moreover, the proceeding initiated by the respondent no. 4 against the petitioner is pending and without any outcome of the proceeding, the petitioner had approached this court. This court feels that the present writ petition which is filed by the petitioner is at the pre-mature stage, and accordingly, the same is dismissed giving liberty to the petitioner to approach the appropriate forum. The petitioner has expressed that the petitioner has already paid the taxes, and he is not liable to pay any further tax and with regard to the consideration, the tax authorities have not considered in its entirety. The writ petition is premature and not maintainable, and therefore, stands dismissed.

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• Income Tax

• 2023 (3) TMI 824
  Application u/s 197 - reduction of withholding tax - petitioner had sought a certificate, at NIL rate of tax - request to issue certificate at lower was rejected - whether or not the consideration received by the petitioner against the sale of software constituted royalty within the meaning of Section 9(1)(vi) and/or Article 13(3) of the Double Taxation Avoidance Agreement (DTAA) entered into between India and Denmark? - HELD THAT:- Least that the concerned officer ought to have done was to, at least, broadly, look at the terms of Distributor Agreement, to ascertain as to what is the nature of right which is conferred on the distributor partner and/or the reseller. Reduction of withholding tax u/s 195 is the rule, it is required to be borne in mind, that deduction of withholding tax morphs into an obligation, only if the sum received is chargeable to tax. The petitioner s entire case is, that the sum that it receives under the Distributor Agreement is not chargeable to tax. It is in that context, that the petitioner has moved an application under Section 197 of the Act for being issued a certificate with NIL rate of withholding tax. We are of the view, that the best way forward would be to set aside the impugned certificate and the order, with a direction to the concerned officer, to revisit the application, in the light of what is indicated hereinabove. While doing so, the concerned officer will apply his mind, inter alia, to the terms of the Distributor Agreement, and the ratio of the judgment rendered by the Supreme Court in Engineering Analysis[ 2021 (3) TMI 138 - SUPREME COURT ] - thus provisions of Rule 28AA shall also be kept in mind. The concerned officer will not be burdened by the fact that a review petition is pending, in respect of the judgment rendered by the Supreme Court in Engineering Analysis. The concerned officer will ensure, that the re-examination of the application is carried out, at the earliest.

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• 2023 (3) TMI 823
  Validity of assessment u/s 153C r.w.s.144 - Denial of natural justice - no notice u/s 142(1) issued prior to the assessment - HELD THAT:- The undisputed fact situation obtained is that while passing the assessment orders, no notice was served upon the petitioner assessee in respect of any assessment years nor any notice was served before the competent authority proceeded to pass penalty order under section 271 of the Act. In none of these case Notice u/s 142(1) has been issued prior to the assessment. When the assessment under section 153 read with section 144 of the Act have been done by the assessing officer without giving the petitioner assessee an opportunity of being heard in terms of and within the meaning of section 144 of the Act, the orders are liable to be set aside on the said ground of not giving of opportunity and resultant breach of principles of natural justice. The proper course would be to remit back the cases to the assessing officer to be proceeded with from the stage of notice which shall be served upon the petitioner in each case. All the petitions are allowed. Order passed u/s 153C read with section 144 of the Act are set aside. Decided in favour of assessee.

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• 2023 (3) TMI 822
  Deduction u/s. 80IB - allowability of income under Duty Draw Back and MEIS scheme for the profits derived from eligible industrial undertaking - Effect of subsequent decision of Supreme court - AO has referred to the decision of the Hon ble Supreme Court in the case of M/s. Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] to exclude the export incentives for the purpose of deduction u/s. 80IB(11A) - whether the decision in the case of M/s. Meghalaya Steels Limited [ 2016 (3) TMI 375 - SUPREME COURT] held by the Apex Court does not over ride the subsequent judgment of the Apex Court in M/s. Liberty India [ 2009 (8) TMI 63 - SUPREME COURT] ? - HELD THAT:- As in view of the subsequent decision of the Hon ble Supreme Court in the case of Meghalaya Steel Ltd (supra), the findings recorded by the Ld. AO based on the decision of the Hon ble Supreme Court in the case of Liberty India (supra) cannot be held as sustainable as in Meghalaya Steel Ltd (supra) held that the Hon ble Himachal Pradesh High Court having wrongly interpreted the judgment in the case of CIT vs. Sterling Foods [ 1999 (4) TMI 1 - SUPREME COURT] and Liberty India (supra) to arrive at the opposite conclusion has held to be wrongly decided. Since the Hon ble Supreme Court has overruled its earlier decision in the case of Liberty India (supra) and now the decision in the case of Meghalaya Steel Ltd (supra) holds good. In the assessee s own case for the AY 2017-18 [ 2022 (6) TMI 350 - ITAT VISAKHAPATNAM] this Bench has held that the export entitlements is an income assessable under the head profits or gains from business or profession as per clause (iiib) and (iiid) to section 28 of the IT Act, 1961. Respectfully following the above precedents, we hold that the export incentives such as Duty Draw Back and MEIS is an income assessable under the head profits or gains from business or profession as per clause (iiib) and (iiid) to section 28 of the Act. In view of the above, the grounds raised by the Revenue are dismissed.

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• 2023 (3) TMI 821
  Disallowance u/s 37(1) on account of advertisement expenses - Addition being expenses for non-business purpose - HELD THAT:- Assessee could not prove how the said advertisement expenditure is wholly and exclusively for the purpose of the business. AR could not rebut the fact that during the assessment proceedings, it was accepted by assessee that he is unable to substantiate and therefore agreed for the addition. Expenditure incurred on advertisement was not wholly and exclusively for the purpose of the business of the assessee. Decided against assessee. Disallowance u/s 36(1)(viia) - AO observed that assessee was not having any Rural Advances, therefore, held that assessee was not eligible for deduction u/s 36(1)(viia) - HELD THAT:- As decided in assessee own case [ 2020 (3) TMI 687 - ITAT PUNE] assessee without rural branches / advances, is entitled to deduction u/s 36(1)(viia) of the Act. Decided against revenue. Disallowance u/s 40(a)(ia) r.w.s 194A - interest income earned by minor and partnership firm - HELD THAT:- No specific submission has been made vis- -vis interest paid to unregistered firm. As per the bylaws of the assessee, unregistered firm and minor are not eligible to be members. As per proviso to section 194A exemption is granted only to the members in case of co-operative societies. In the case of the assessee, it is an admitted fact that minors and unregistered firms cannot become members of the society. Thus, assessee had paid interest to minor and unregistered firms who were not members of the assessee. This is violation of section 194A - we are of the opinion that the AO has rightly invoked provisions of section 40(a)(ia) of the Act and disallowed interest paid to minor and unregistered firm hence, the said addition is confirmed. Decided against assessee.

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• 2023 (3) TMI 820
  Reopening of assessment u/s 147 - reason to believe - addition of LTCG u/s 50C - AR submitted that reopening was only on the ground of stamp valuation of the land in question is higher than the consideration appearing in conveyance deed - HELD THAT:- No discrepancies were pointed out by the Ld. AR as regards to reasons for reopening or approval for reasons for reopening u/s 147 of the Act. Therefore, ground no.1 is dismissed. LTCG addition - nature of land sold - capital asset u/s 2(14) or agricultural land - Section 50C applicability - Reference to DVO - AR submitted that the addition was made pending the report of DVO determining fair market value of the land in question - HELD THAT:- The assessee has sold agricultural land and, therefore, the same cannot be termed as capital asset and will not come under the purview of Section 50C - reference to DVO by adopting Fair market Value was not justified in the present case as the said report whether has taken the aspect of Sale Deed of agricultural land or not has not been pointed out by the AO. In the present case, the addition in respect of Section 50C is not justifiable since the agricultural land sale was executed on 27.09.2010 at the prevailing Jantri Rate. The registration of the sale deed was after the addition/contractual obligation relating to agricultural land converting into non-agricultural land was completed and the expenses were borne by the buyer and not by the assessee. Therefore, the addition made by the AO does not sustain. Decided in favour of assessee.

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• 2023 (3) TMI 819
  Disallowance u/s 80P - interest received from Cooperative Banks - Whether Urban Cooperative Bank come under the ambit of Co-operative Societies? - HELD THAT:- The decision of the Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Limited [ 2021 (1) TMI 488 - SUPREME COURT ] has taken a view that Section 80P being a benevolent provision enacted by the Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably. Various decisions especially that of Apex Court in Totgar s Co-operative Sales Society Limited [ 2010 (2) TMI 3 - SUPREME COURT ] and SBI [ 2016 (7) TMI 516 - GUJARAT HIGH COURT ] will not be applicable in the present case to the contest as the assessee has derived interest from member Co-operative Society Bank i.e. Mehsana Urban Co-operative Bank. This fact was not disputed by the Revenue. Urban Cooperative Bank which is coming under the ambit of Co-operative Societies as they are registered under the Societies Act and are into benefit of all the members of the Society. AO as well as the CIT(A) was not right in disallowing the deduction claimed u/s 80P(2)(d) of the Act. - Decided against revenue.

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• 2023 (3) TMI 818
  Assessment u/s 153C - Addition u/s 68 - unexplained share application money received by the assessee - modus operandi - incrementing material found during the search or not? - HELD THAT:- We find that, nowhere any of the seized material or documents relates to the assessee company or can be said to pertaining to the assessee company. Nowhere there is any of the statement which has been incorporated and discussed in detail, wherein the name of the assessee company has been figured. It mostly speaks about that the Poddar group of companies were taking accommodation entries. Nowhere the Ld. AO has pointed out that any of the seized material; or in any of the statement; or there is any whisper in the assessment order that any such information also pertains to the assessee or assessee was also part of any such beneficiary of the accommodation entry scheme. Had it there been any information or material found during the course of search regarding assessee company or any of the subscriber companies that these are bogus, then the AO was justified not only acquiring the jurisdiction u/s 153C of the Act, but also making the addition, because that it would have been based on incriminating material or information pertaining to the assessee. AO, contains information regarding Emerging Supply Pvt. Ltd. who has received accommodation entry in the form of share premium and subsequent to various transfer entities as per the direction of Shri Ajay Podar was sum aggregating to Rs. 1.15 crores. Nowhere has it been brought on record that this money was transferred in the form of share application money or share premium in the case of the assessee company. All these might be incriminating materials, but those incriminating material should have some reference of the assessee company or something can be inferred in the case of the assessee company, i.e., it pertains to the assessee. In so far as the assessee is concerned, there is no such reference of any such material or neither any information nor it has been discussed in the entire assessment order. It is based on the entire premise that some modus operandi of Podar group for routing through their unaccounted money in the form of share application / share premium in the group entities was unearthed. Based on that, the Ld. AO has assumed that assessee is also part of the same modus operandi wherein assessee has brought its unaccounted money through the medium of share subscribers. There has to be prima facie material which pertains to the assessee found from the search to rope in the assessee company within the scope of section 153C of the Act to make the additions. Thus in absence of any information pertaining to the assessee or any documents found during the course of search of Podar entities, no addition can be made in the case of assessee company specially when the A.Y. 2012-13 had attained finality and was not abated either at the time of search or either at the time of recording of satisfaction. - Decided in favour of assessee.

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• 2023 (3) TMI 817
  Late payment of employee s contributions to PF / ESI - Payment before the due date - HELD THAT:- Assessee has submitted the copies of bank challans and bank statements to prove that the payments to that extent were in fact made before due dates under PF/ESI laws. We further note that the evidences submitted by assessee are not at all disputed by revenue. Thus, it is clearly established that the sum paid before due dates under PF/ESI laws does not attract any disallowance under the provisions of Income-tax Act, 1961; the same had been made merely due to wrong reporting by the auditors. When it is so, CIT(A) was not justified in merely reproducing the provision of section 143(1)(a)(iv) in his order and thereby upholding the action of Ld. AO. We believe that the lower authorities, at least the CIT(A), should have taken a correct and judicious view in the situation and do not resort to making / confirming disallowance which even the provisions of section 2(24)(x) read with 36(1)(va) do not provide. More so, when the assessee has loudly explained that there was no delay, it was just a reporting mistake by auditors. Disallowance which is paid after due date under PF/ESI laws - Identical issue is recently decided against assessee M/s Prashanti Engineering Works (P) Ltd. Vs. ADIT, CPC, Bangalore [ 2023 (3) TMI 729 - ITAT INDORE] after taking into account the latest decision of Hon ble Supreme Court in Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] the legal provision of section 143(1) of the Act and various judicial rulings. We are also inclined to hold that the 2nd component i.e. employees contributions to PF / ESI paid after due date under PF / ESI laws is not an allowable deduction in computing taxable income of business and the revenue-authorities have rightly disallowed the same.Appeal of assessee is partly allowed.

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• 2023 (3) TMI 816
  Penalty u/s 271(1)(c) - assessee has made transaction in Penny Stock Scrip - assessee filed his return of income declaring income in response to notice issued u/s148 - detection of concealment of income by department - HELD THAT:- As decided in Rajiv Garg case [ 2008 (7) TMI 363 - PUNJAB AND HARYANA HIGH COURT] AO had simply rested his conclusion on act of assessee of having offered additional income in revised return and had failed to take any objection that declaration of income made by assessee in his revised return and his explanation were not bona fide, penalty imposed upon assessee, was not justified and had rightly been set aside by appellate authorities. Also in Whiteford India Limited [ 2014 (2) TMI 541 - GUJARAT HIGH COURT] held that in absence of clear finding of assessing officer whether assessee is guilty of concealment or furnishing inaccurate particulars of income, penalty levied under section 271(1)(c) cannot be sustained. Thus direct the AO delete the entire penalty addition u/s 271(1)(c). Decided in favour of assessee.

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• 2023 (3) TMI 815
  Penalty u/s 270A - payment of VAT was made / deposited after due date of filing of return - HELD THAT:- AO simply made disallowance by taking view that such amount was not paid before due date of filing return. It is settled law that disallowance of amount can be made, only on the event if such allowance is claimed in the computation of income. AO while passing the assessment order has not given any categorically finding that the assessee claimed deduction of such amount in computation of income of such amount. In response to show cause against levy of penalty u/s 270A(2), the assessee again specifically contended that assessee has not claimed the amount as expenditure in the succeeding assessment year. The alleged disallowance does not find place in clause (a) to (f) of sub-section (9) of Section 270A. Assessee while filing response to the show cause during the assessment as well as during the penalty proceedings has given bona fide explanation within the scope of sub-section-6 of section 270A and disclosed all the material. Thus, the penalty imposed by AO is quashed. Decided in favour of assessee.

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• 2023 (3) TMI 814
  Exemption u/s. 80P - denial of exemption on the ground that the Return was filed belatedly u/s. 139(4) - adjustment u/s. 143(1)(a) - HELD THAT:- It is apparent from the Ld. NFAC order when the assessee has clearly pointed out the amendment in Section 143(1) made by Finance Act, 2021 which is not applicable for the present assessment year 2019-2020. However the same was not been considered by the Ld. NFAC and erroneously dismissed the assessee s appeal. Assessee cannot be denied the deduction u/s. 80P of the Act on the ground that the assessee did not file the Return of Income within the due date prescribed u/s. 139(1) of the Act under proceedings made u/s. 143(1)(a)(v) of the Act for the Assessment Year 2019-20. Thus the intimation made u/s. 143(1) is invalid in law and thereby quashed. Appeal filed by the Assessee allowed.

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• 2023 (3) TMI 813
  Validity of assessment - absence of service of notice u/s 143 (2) - HELD THAT:- We may note that in this case Revenue has tried to distinguish the ld. CIT (A) s order by referring that assessee has not filed any return of income pursuant to notice u/s 148 - assessee submitted that pursuant to notice u/s 148, assessee has duly mentioned that return submitted earlier may be treated as the return being submitted pursuant to the notice. Assessee further pointed out that this was the exact position also dealt with in the case of Hon ble Delhi High Court in the case of Sh. Jai Shiv Shankar Traders Pvt. Ltd. [ 2015 (10) TMI 1765 - DELHI HIGH COURT ] Revenue s contention in this regard is not tenable in view of the aforesaid decision of Hon ble Delhi High Court. Appeal filed by the Revenue stands dismissed.

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• 2023 (3) TMI 812
  Revision u/s 263 - PCIT was of the view that AO has not made any enquiry with regard to the (1) interest on non-performing assets (2) deferred payment receipt on guarantee commission - HELD THAT:- On the issue of interest on non-performing assets the coordinate bench [ 2022 (4) TMI 1509 - ITAT MUMBAI] has categorically held that that the issue is squarely covered in case of the assessee by the decision of the honourable Supreme Court in case of CIT Vs. Vasisth Chay Vyapar Ltd, [ 2018 (3) TMI 56 - SUPREME COURT] wherein it has been held that non-performing assets on which no interest was received and possibility of recovery of capital was almost nil, possibility of recovery of interest is also nil, it could not be treated that such income has accrued to the assessee. Therefore, no income in the form of interest on non-performing assets could have been added in the hands of the assessee. Interest on perpetual bonds the coordinate Bench has also held that the issue is adequately enquired by the AO and further that interest paid on bonds are wholly and exclusively for the purposes of the business and allowable as deduction under section 36 (1) (iii) of the Act. It was further held that the assessee is a nationalized bank and there is no question of assessee investing in perpetual bonds other than for banking businesses. Accordingly, respectfully following the decision of the coordinate bench, we do not find any reason to sustain the order passed by the principal Commissioner of income tax, Mumbai for A.Y. 2016-17, under section 263 of the Act. Accordingly, we quash the revisionary order. Appeal of assessee allowed.

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• 2023 (3) TMI 811
  Ex-parte order of the CIT (A) - AO determined the total income of the assessee more as against the returned income by making various additions - as submitted by assessee although there was non-compliance before the learned CIT(A)-NFAC to the statutory notices issued by his office, however, the same was due to unavoidable circumstances and given an opportunity, the assessee is in a position to substantiate his case - HELD THAT:- We restore the issue to the file of the learned CIT(A)-NFAC with a direction to grant one last opportunity to the assessee to substantiate his case and decide the issue as per fact and law. Further, considering the continuous non-compliance of the assessee to the statutory notices issued by the office of the learned CIT(A)-NFAC, we levy a cost of Rs.10,000/- on the assessee for his callous and non-cooperation attitude and the same shall be paid to the PM s Relief Fund. Appeal filed by the assessee is allowed for statistical purposes.

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• 2023 (3) TMI 810
  Revision u/s 263 by CIT - introduction of capital contribution by the partners and amount raise through unsecured loan - scope of lack of investigation - allegation of non application of mind by AO - HELD THAT:- The entire finding of the revisional authority was not on any cogent material. The assessment was completed by a process of verification on which the assessee had completely participated. Observation of the revisional authority is related to lack of investigation by the assessing authority related to creditworthiness genuineness of transaction related to assessee with partners loan creditors. The assessee in its support had complied the requirements as raised by both the revenue authorities. Though the assessment order does not patently indicate that the issue in question had been considered by the AO, the record showed that the AO had applied his mind. Once such application of mind is discernible from the record, the proceedings under Section 263 would fall into the area of the Commissioner having a different opinion. Thus investigation by the ld. AO cannot be called lack of investigation . PCIT has not brought any material on record to show that the view taken is contrary to law or the investigation is erroneous. Decided in favour of assessee.

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• 2023 (3) TMI 809
  TP Adjustment - Adjustment determined in respect of warranty cost - Assessee provides telephonic support services for standard problems to the customers who purchase the products sold by DGBV in India - HELD THAT:- We notice that the coordinate bench of the Tribunal in assessee s own case [ 2022 (3) TMI 1511 - ITAT BANGALORE] for has considered the issue of adjustment towards warranty cost assessee is directed to demonstrate to the TPO that the above reimbursement has either been reduced from the costs or accounted for separately. In absence of such demonstration, the TPO can take the above to be a part of the warranty costs debited to the P L account and effect suitable adjustment. Since the services related to warranty are being handled by a third party and the assessee is being used only as a medium, the TPO is not correct in charging a markup on this amount. Hence, the objection relating to markup on the warranty cost is upheld. The TPO cannot charge a markup on warranty amount as such services are not rendered by the assessee to its AE. Respectfully following the above decision we direct the TPO to re-examine the issue raised in ground afresh. It is ordered accordingly. This ground is allowed for statistical purposes. Accrual of income - Addition of deferred revenue - amount received towards warranty is not refundable even when the customer cancels the warranty agreement - main ground on which the DRP confirmed the order of AO is that the amount received towards warranty is not refundable even when the customer cancels the warranty agreement - HELD THAT:- We are of the view that claim of the assessee deserves to be accepted and the addition made by the AO as confirmed by the DRP is hereby deleted. This ground accordingly is allowed in favour of the assessee. Miscellaneous expenses - AO disallowed expenditure for want of evidence - DRP confirmed the disallowance - HELD THAT:- We notice that the reason for disallowance of the expenditure by the lower authorities is that the assessee has failed to produce any evidence supporting the claim. The assessee has now submitted the additional evidence substantiating the claim of the expenditure which goes the root of the issue. For a proper adjudication of the issue and for substantial cause, the additional evidence is admitted and taken on record. We also notice that the DRP has not considered the evidences submitted by the assessee before the DRP. Therefore we remit this issue to the AO for verification of the evidence afresh and decision in accordance with law, after giving a reasonable opportunity of being heard to the assessee. Advances written off - AO rejected the claim of the assessee on that ground that deposit with sales tax department and service tax receivable cannot be written off as these are due from Government - HELD THAT:- These are losses incurred in the normal course of business and cannot be termed as debts written off. Service tax amount as submitted that the amount in the year under consideration is claimed basis the actual write off against the reversal of the provisions. The fact that provisions when created during the assessment year 2008-09 and 2009-10 are disallowed in the computation is substantiated by the computation statement relating to these years which were submitted as part of paper book. Given this the amount claimed as deduction on actual write off if disallowed will result in double disallowance provided the provisions are reversed and credited to the P L account of the year under consideration. This fact needs to examined based on evidences submitted in order to decide on the allowability of the advances write off. We therefore remit this issue back to the AO to verify the claim of the assessee factually based on evidences and allow the claim accordingly after giving an opportunity of being heard to the assessee. Provision for warranty and warranty expenses - Assessee had created a provision towards its obligation to provide warranty services, which it claimed as a deduction - AO disallowed the entire provision for warranty on the ground that it is not scientific and also disallowed expenses towards utilization of warranty on the ground that no evidence was submitted in support of such warranty expenses - HELD THAT:- We notice that the method of creation of warranty provision has not undergone change and is consistent with what is described in order. Respectfully following the decision of the coordinate bench in assessee s own case for AY 2009-10 [ 2022 (3) TMI 1511 - ITAT BANGALORE] we direct the AO to allow the provision made towards warranty. TDS u/s 194H - Disallowance u/s 40(a)(ia) of rebates given to customers - HELD THAT:- The assessee is distributing the products under two models i.e. Sales through distributors who act as agents and gets compensated on a commission basis. The second model is where the products are sold to the distributor and the distributer get a rebate in the products purchased based on the business volume. When the relationship between the assessee and the distributor is on a principal to principal basis, the rebate /volume discount given by the assessee on the price of products sold to distributer cannot be characterized as commission in order to attract section 194H of the Act thereby there is no liability to deduct tax at source. In agreements with distributors require examination to verify the claim of the assessee. We therefore remit this issue to the AO for verification of the agreements which the assessee has entered into with the distributors in relation to discount/rebate transactions and decide the allowability based on the ratio laid down in Bharti Airtel Ltd [ 2014 (12) TMI 642 - KARNATAKA HIGH COURT] after giving reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Disallowance of future lease rentals - HELD THAT:- During the course of hearing the ld AR submitted the details of lease rentals (principal and interest) for the year under consideration along with scheme of entries in the books of accounts pertaining to lease rentals. On perusal of the details it is noticed that the said amount relates to principal portion of the lease rentals, that relate to future years from FY 2010-11 onwards. Respectfully following the ratio laid down by the coordinate bench of the Tribunal in assessee s own case [ 2022 (3) TMI 1511 - ITAT BANGALORE] that the entire lease rental income does not accrue in the first year as the same ought to be taxed as and when they accrue over the lease period we hold that the amount does not accrue to the assessee in the year under consideration and therefore delete the addition made by the AO in this regard. This ground is allowed in favour of the assessee. Deduction of provision disallowed under section 40(a)(ia) in AY 2009-10 reversed in the current AY - HELD THAT:- The deduction as per the AR is done based on the fact that the provisions which are already disallowed in the previous assessment year is reversed and to avoid double disallowance the same is claimed as deduction in the computation. This fact has not been properly presented before the lower authorities. The lower authorities have to examine whether the year-end provision made on 31st March 2009 is fully reversed on 1st April 2009 and the expenses against which the provision was created is debited to the profit and loss account on payment after deducting TDS. This verification need to be carried out based on the journal entries and ledger copies produced by the assessee for the year under consideration which are submitted now in the form of additional evidence. If the accounting practice of the assessee to reverse the expenses on the 1st day of April of the year under consideration is substantiated by the evidences submitted by the assessee whereby it is demonstrated that there is no doubt allowance expenditure then the assessee would be entitled to claim the amount disallowed in the previous assessment year as otherwise it would amount to double disallowance. We therefore remit the issue back to the AO to verify the ledger and general entries of the assessee for the year under consideration and allow the expenditure in accordance with law. The assessee may be given a reasonable opportunity of being heard in this matter. The appeal is allowed in favour of the assessee for the statistical purposes. Disallowance of expenditure repairs and maintenance - HELD THAT:- We notice that the assessee has submitted details pertaining to the amount disallowed by the AO and that the lower authorities have not examined the same. We therefore remit this issue to the AO with a direction to verify the evidence submitted in the form of agreements with Comsoft and the journal entries by the assessee and decide afresh in accordance with law. Short credit of TDS - AR submitted that in the final assessment order, the AO has given credit of TDS less as against reflected in Form 26AS - HELD THAT:- After hearing the rival submissions we are remitting the issue back to the AO with a direction to examine the relevant evidences and give appropriate TDS credit accordingly. Levy of interest u/s.234A - HELD THAT:- The levy of interest u/s.234A is towards the failure on the part of the assessee to furnish the return of income under sub-section (1) or sub-section (4) of section 139, or in response to a notice under subsection (1) of section 142, or is not furnished at all. In the given case we notice that the assessee has furnished the return of income on 15.10.2010 which is before the due date for furnishing the return of u/s.139(1) for the year under consideration. Therefore we are of the considered view that the levy of interest u/s.234A does not arise. The levy of interest by the AO in this regard is deleted. Additions made on account of suppression of income of sale of goods and services as under - Credit notes not considered - HELD THAT:- The refund/credit for sales tax discharged cannot be claimed on credit notes raised beyond a period of 6 months from the date of sale for VAT purposes and hence there would not be a reduction in the taxable turnover as per the VAT return. However, the sales tax law per se do not restrict raising credit note after six months from the date of sale. The contention of the AO, that the credit notes pertaining to the sales made in earlier years cannot be claimed as deduction against the sales made during FY 2009-10 is not tenable. Hence we see no reason to interfere with the decision of the DRP that the Assessee s contentions cannot be brushed aside basis VAT and sales tax returns, and the value of goods returned by customers ought to be reduced from the value of sales irrespective of the date of the original sale. Standard warranty replacement - Considering the nature of transaction as explained and the evidenced supported by the assessee before the lower authorities we are of the view that the DRP has rightly directed deletion of the proposed addition based on the evidences filed. Goods in transit - We are of the view that the Assessee has not claimed the corresponding cost related to the GIT which has not been recorded as sales in the current year and therefore the we uphold the decision of the DRP in deleting the additions made in this regard. Internal consumption as per sales register - The taxable turnover disclosed in the VAT return towards such internal consumption should be reduced to reconcile the same with the revenue as per financials. In support of the contention, the assessee submitted details of such consumption along with invoice wise listing was furnished before the AO . Considering these facts we hold that the DRP was right in directing deletion of the adjustment. Scrap sales considered for sales tax return - Assessee in the financials credits the scrap sales to cost of materials used and discharges the VAT on the same, the turnover disclosed in the VAT return is reduced shown as part of the reconciliation - As submitted that once the scrap sales are credited to the cost of material used, no further addition is warranted - DRP has accepted the submission of the assessee and we are therefore of the considered view that rightly directed deletion of the addition on this count. Counter Veiling Duty part of turnover for VAT - While the duties/taxes are included in the turnover for the purposes of the other laws, they are not revenue to the Assessee. Therefore, we uphold the decision of the DRP in accepting the contention that same are not to be considered as revenue in the financials. Export turnover not part of sales tax return - We notice that the invoice-wise listing for the same were produced before the DRP and the DRP after the perusal of the above supporting evidences has deleted the addition made in this regard. We therefore see no reason to interfere with the decision of DRP. Disallowance of VAT refund claimed as deduction - As submitted that the amount of VAT refund cannot be considered as sales turnover and thus an adjustment was made in the reconciliation between taxable turnover as per VAT returns and sales turnover as per financial books - HELD THAT:- Considering the facts explained above we are of the view that the DRP is correct in deleting the addition made in this regard. Miscellaneous expenses addition - As issue has already been taken up by us in the assessee s appeal and remitted to the AO for fresh consideration. This issue is accordingly allowed for statistical purposes. Addition u/s. 69C - unexplained expenditure - HELD THAT:- We notice that the assessee has submitted the party wise breakup of the expenses and has submitted that the difference in the amount as per breakup and the amount as per profit and loss account is due to the amounts being debited to other line items in the profit and loss account or subsequent reversal. The submission that the entire amount is debited to the Profit and Loss account and accounted in the regular books of accounts, the same cannot be disallowed under Section 69C has merits as the source for the said expenditure is automatically explained. In our considered view the DRP has rightly considered the submissions and deleted the additions and we see no reason to interfere with the same. Disallowance of foreign exchange loss - HELD THAT:- As decided in assessee own case [ 2022 (3) TMI 1511 - ITAT BANGALORE] AO completely ignored the detailed workings on forex loss. Having mentioned in the order that sample invoice copies were submitted, the AO erred in contending that no evidences were provided by the assessee. The DRP rightly appreciated that evidences demonstrating foreign exchange loss had been submitted and that the same cannot be said to be contingent liability. Disallowance of other liabilities - HELD THAT:- We notice that the assessee has produced the details relating major portion of the expenses to prove the genuineness of the expenditure. Considering the turnover of the assessee , the volume of transaction, the global presence of the assessee and the fact that substantial portion of the liabilities already evidenced, we are of the considered view that the other liabilities cannot be termed as bogus and therefore see no reason to interfere with the decision of the DRP.

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• Customs

• 2023 (3) TMI 808
  Revocation of Customs Broker License - whether the Principal Commissioner of Customs was justified in revoking the Customs Brokers License granted in favour of the respondent? HELD THAT:- The Tribunal took note of the facts of the case and noted that let export orders were issued by the Customs Department after due verification by the concerned officials and the export manifest was also generated thereby implying that the goods in question has crossed the border. The Tribunal noted that in such factual scenario, the mere allegation that the respondent has not advised the exporter in an appropriate manner and he did not exercise due diligence was not established by the revenue by bringing on record the role played by the respondent in the alleged fake exports. It appears to be not in dispute that the respondent was not a co-noticee against any action initiated under the Customs Act along with the exporters and the allegation against the respondent is that they alleged to have violated regulation 10(d) and 10(e) of the Act. The Tribunal after noting the facts of the case slightly modified the order of penalty by ordering forfeiture of only Rs.25,000/- from and out of the security deposit furnished by the respondent. The Tribunal has examined the facts of the matter and exercised discretion and interfered with the order of revocation of license - there is no question of law, much less substantial question of law arising for consideration in this appeal. Appeal dismissed.

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• 2023 (3) TMI 807
  Demand of differential duty - related party or not - influenced import price or not - existence of any relationship between OMIFCO and KRIBHCO, the appellant and Government of India - HELD THAT:- On the identical issue number of Show Cause Notice were issued to IFFCO and KRIBHCO out of that some appeals of IFFCO and KRIBCO have been decided by this Tribunal in INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED, KRISHAK BHARTI COOPERATIVE LIMITED VERSUS C.C. -KANDLA AND C.C (PRV.) , JAMNAGAR VERSUS INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED [ 2023 (1) TMI 155 - CESTAT AHMEDABAD] . Since the identical issue and fact are involved in all the cases, in this case there is nothing more to add - It was held in the case that it is clear that even if it is assumed that the buyer and seller are related in terms of Rule 2 (2) of valuation Rules, 2007 read with explanation II of said Rule, the price at which the goods were purchased from OMIFCO is the true transaction value and not influenced by their relationship. In the present matter Department has also not produced any evidence to show that the relationship between the parties has influenced the price. Therefore, the reasons for rejecting the transaction value is not in consonance with law and therefore liable to be set aside. Appeal allowed - decided in favour of appellant.

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• 2023 (3) TMI 806
  Forfeiture of the whole amount of security deposit alongwith imposing penalty on the Appellant a Courier Agency - Appellant irresponsible for the misgivings on the part of their employee Mr M.S. Pareek, who persuaded Navya Creations to introduce the consignment of an outsider without informing or taking permission of the competent officer of the Appellant - ack of internal control procedures at the end of the Appellant - Appellant as an authorised courier has failed to verify the details of actual exporter and its functioning at the given address - failure to comply with the obligation under Regulation 12(iv) of CIER, 2010. HELD THAT:- It is found that there is no failure on the part of the Appellant under Regulation 6 (4) of CIER, 2010, as no case is made out of any violation of any instructions or public notice issued by the customs. Further, there is no allegation that the export consignments in question were not presented properly to the proper officer or to the satisfaction of the proper officer. Accordingly, the allegation and finding under Regulation 6(4) are set aside. Regulation 12 (iv) of CIER - HELD THAT:- In the case of booking of consignment through Navya Creations for one Mr. Rakesh Jagid, there is no violation of the provision, as both Navya Creation and Rakesh Jagid have responded in the course of enquiry and cooperated in the matter. However, so far the booking of the 2 consignments through their ASP- Allied Aviation Private Limited for one Mr. Munshi Jogi is concerned, it is evident that the Appellant did produce the relevant KYC documents (Aadhar card) of their client, but there is lack of sufficient efforts to trace and produce the said Mr. Munshi Jogi before the customs for enquiry and investigation. Thus, there is no violation of Regulation 12 (iv) of CIER with regard to the 2 consignments booked for the consignor - Mr. Munshi Jogi. The Appellant had urged that as the consignment was booked through their ASP, they had accepted the consignment relying on their ASP. Allegation under Regulation 12(v) - only allegation is that there is delay of about 3 months in bringing details/ information to the knowledge of the customs - HELD THAT:- The Appellant was in constant touch and had kept the customs informed. The apparent contravention is only due to involvement of three agencies, the Customs House, thereafter, the DRI and thereafter the SIIB. Thus, there is only few days gap in informing the particular agency but there is no deliberate keeping back of any information or giving or withholding any information whenever asked for. Accordingly, this ground is allowed and the findings of ld. Commissioner is set aside. Allegation under Regulation 12 (vi) and (vi) - HELD THAT:- It is found that there is lack of control and proper administration on their ASP. Further, appellant should have immediately informed the customs on termination of their employee M.S. Pareek with his future correspondence address and contact phone numbers. Aslo the illegal activity was found by customs, there being no complicity of the appellant. The order of forfeiture of security deposit of Rs. 10 lakhs is set aside - amount of penalty under Regulation 14 of CIER is reduced to Rs. 20,000/- - appeal allowed in part.

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• 2023 (3) TMI 791
  Denial of Bail - Smuggling of Gold - HELD THAT:- Petitioners have been in custody for nearly one year. The prosecution intends to examine 35 witnesses, out of which 3 have deposed during the proceedings. Considering that in this case the recoveries were made and even the penalty order has been framed by the competent authority, the petitioners are directed to be enlarged on bail subject to such conditions as the trial court may impose. SLP allowed.

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• Insolvency & Bankruptcy

• 2023 (3) TMI 805
  Seeking leave for filing an appeal - locus standi - concept of Sufficient Cause, is alien to the maintaining of an Appeal, under Section 61 (1) of the I B Code, 2016 or not - the plea of the Petitioner / Appellant is that, there is no need to prove any Sufficient Cause, to prefer an Appeal - Validity of Process of Sale and Realisation - Sale of the Corporate Debtor, as a Going Concern, by means of a Private Sale. HELD THAT:- In the instant case, consequent to the Order dated 19.01.2023, passed by the Adjudicating Authority, the Sale as a Going Concern for the Corporate Debtor, was allowed by the Adjudicating Authority, a Sale Agreement, was executed by the 2nd Respondent with the Corporate Debtor and the 2nd Respondent, took over the Whole Management and the Sale Proceeds, were distributed to the Stakeholders, as per Section 53 of the I B Code, 2016. In the light of foregoings and this Tribunal, bearing in mind a prime fact that the Petitioner / Appellant, is not a Stakeholder in the Liquidation Process, and in any event, has no vested interest, in the Corporate Debtor, comes to a resultant conclusion that the appeal, filed by the Petitioner / Appellant, is an Otiose one, and the same is filed, only to disrupt, the Liquidation Process of the Corporate Debtor, because of the fact that the entire Sale Proceeds, were distributed to the Stakeholders, as per Section 53 of the I B Code, 2016. Looking at from any angle, the Leave, prayed for by the Petitioner / Appellant, to file the instant Comp. App, is not assented to, by this Tribunal, cementing upon the facts and circumstances of the instant case. Appeal dismissed.

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• 2023 (3) TMI 804
  Sale of the Corporate Debtor, as a Going Concern, by means of a Private Sale - Seeking to consider the Proposal of the Petitioner / Appellant, for Swiss Challenge Method - wanton omission, breach and collusion, in between the Parties, in Compliance of the Order - it is the stand of the Petitioner / Appellant that the Offer of the Petitioner / Appellant, is more than the value offered by the 2nd Respondent, before the 1st Respondent, and that the Appellant s Proposal dated 08.11.2021, to purchase the Corporate Debtor / Company, as a Going Concern, is much beneficial to the Stakeholders Committee and Economy, at large. HELD THAT:- It must be borne in mind that the Proposals of one M/s. Galaxy Freight Systems and the Proposal of the 2nd Respondent / G C Logistics India Private Ltd., was placed before the Stakeholders Consultation Committee, and MA No.122 of 2021, was filed by the 1st Respondent / Liquidator, for a Swiss Challenge Auction, to be held, which was allowed, by the Adjudicating Authority, through its Order, passed on 11.03.2022. In the Swiss Challenge Auction, which took place on 06.04.2022, in which, the 2nd Respondent, was named as a Successful Bidder, and it satisfied the payment of Rs.44,64,00,000/-. Further, the purchase of the Corporate Debtor, as a Going Concern, by the 2nd Respondent, was allowed, by the Adjudicating Authority, through its Order, passed in IA(IBC)/1018/CHE/2022 in main CP/759/IB/CB/2018. In so far as the present case is concerned, it is brought to the fore that the New Management of the Corporate Debtor, had issued two communications dated 02.02.2023, whereby and whereunder, the 2nd Respondent had announced a Welcome Bonus, to all the employees of the Corporate Debtor. Also that, the Sale Proceeds, received in Full, from the 2nd Respondent, was distributed to the Stakeholders, as per the ingredients of Section 53 of the Code - Not resting with the above, this Tribunal, keeping in mind of a primordial fact that the Petitioner / Appellant, is not a Stakeholder, in the Liquidation Process of the Corporate Debtor, and in any event, has no substantial interest in the Corporate Debtor, comes to a cocksure conclusion that the Petitioner / Appellant, has no vested interest in the Corporate Debtor, and in view of the fact that the entire Management, was handed over to the 2nd Respondent and the entire Sale Proceeds, were distributed to the Stakeholders, the Leave sought for by the Petitioner / Appellant, to prefer the instant Comp. App (AT) (CH) (INS.) No. 33 of 2023, before this Tribunal, is not acceded to. Appeal dismissed.

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• 2023 (3) TMI 803
  Condonation of 55 days delay in filing the Appeal - delay due to health problems - HELD THAT:- The power to condone delay vested in this Tribunal under Section 61 (2) proviso is only 15 days. The judgment of this Tribunal in Chennai Bench in M. K. Resely Ors. vs. Union Bank of India Ors [ 2022 (11) TMI 1155 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI ] which has been relied by the Appellant in support of his submission is needed consideration. In the said case, this Tribunal relying on Section 14 of the Limitation Act has granted exclusion of the period from 25.01.2022 to 22.06.2022, during which period the Appellant of that case had indulged in bonafide litigious activity in preferring the Writ Petition No. 2832/2022 and Writ Appeal No. 537 of 2022 before the High Court of Kerala. The grounds as given in the application does not give any satisfactory cause for condonation of delay, which is beyond 15 days. The judgment of Chennai Bench of this Tribunal relied by the Appellant in M. K. Resely Ors. vs. Union Bank of India Ors. has no application in the facts of the present case. This application which prays of condonation of delay of 55 days cannot be accepted - COD application dismissed. Present is not a case where the Appellant is claiming any benefit of Section 14 of the Limitation Act. Appellant in the application has taken the ground that he received the impugned order dated 07.09.2022 on 24.11.2022 and the same was prepared by the registry on 16.11.2022 and due to health problems of the Appellant, the appellant could not provide the required documents and annexures.

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• Service Tax

• 2023 (3) TMI 802
  Classification of services - Management or Business Consultant services or Consulting Engineer services - Wrong availment of exemption under Notification No. 18/2002-S.T. dated 16.12.2002 by wrongly classifying the services imported from its group companies - on-inclusion of TDS in the taxable value of services received from outside India - invocation of extended period of limitation - revenue neutrality. Classification of the service - HELD THAT:- From the evidence on the record, particularly clauses from the agreement dated 03.03.2006 which are extracted in the Show Cause Notice, it is clear that the services rendered extend far beyond engineering to areas like procurement management, purchase negotiations, supplier selection, management information systems, trading and problem source identification, finance, advertising and communication, legal services, insurance, etc. - As Krishna Iyer J. put it in COMMISSIONER OF INCOME-TAX, AP VERSUS TN ARAVINDA REDDY [ 1979 (10) TMI 1 - SUPREME COURT ], The purpose is plain; the symmetry is simple; the language is plain. Why mutilate the meaning by lexical legalism? To treat legal, advertising, finance and insurance services as being linked to engineering would be to play this game of lexical legalism or, as Krishna Iyer J. put it in the same case, linguistic distortion. Having so concluded that the services in question do not constitute the services of a consulting engineer, the question remains as to whether these services constitute the services of a management or business consultant. The interpretation placed upon the definition of the term management or business consultant employed in section 65(65) by the Board is considered. From that interpretation, and from the words of the statute, what emerges is that the task of management extends to all those tasks that do not constitute the core business of the enterprise, and which do not fall under other specialisations. It appears that while no definition of the term management can be satisfactory, the best way to approach its construction would be negatively, i.e., by elimination. Section 65(65) too is worded widely enough to provide for this and covers financial management, human resources management, marketing management, management of information technology resources and, the crucial residuary limb other similar areas of management. In our opinion, all the services under the agreement we have referred to above will fall under one or the other of these limbs - we have to agree with the conclusions drawn by the Ld. Commissioner in classifying the services received by the appellant under management or business consultant service. Whether the TDS amount remitted by the appellant partakes the character of consideration for service ? - HELD THAT:- The TDS is a tax obligation which can never partake the character of value or consideration for the transaction or of the goods or of services. It is not uncommon that any business contract/agreement inter-se parties primarily focuses on the value/consideration and then spells out as to who would bear the TDS obligation. This cannot be construed as to mean that TDS is also a part of such value/consideration. This is also because, any value/consideration agreed upon is strictly the choice of the parties but the TDS depends on the rate in force at the relevant point of time. When it is contended that the assessee grossed up the TDS, it is understood to mean that the assessee has indeed received only the amount as agreed towards value/consideration and the expenditure towards TDS are met by the assessee. So, when such TDS is not received from the non-resident since it is not towards value/consideration, there is no merit in requiring such assessee to include even the TDS it paid in the value of services, as in the case on hand - the appellant was correct in not including the TDS amount in the value of taxable services. Whether the contention of the appellant that the situation is revenue neutral is correct? - HELD THAT:- Reliance placed on CESTAT larger Bench order in the case of JAY YUHSHIN LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [ 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI ], wherein it has been categorically held by the Learned 5-Member Bench that the issue of Revenue neutrality being a question of fact, the is to be established in the facts of each case and not merely by showing the availability of an alternate scheme - also, it is always open for the appellant to make such claim for credit, as per the Rules and Regulations prescribed under the statute. Whether the Show Cause Notice issued by invoking the extended period is justifiable? - HELD THAT:- There was a host of services received but there is also no doubt in our minds that a few of the activities could possibly be brought under consultant engineer services. The very fact that even the Board itself was not clear, for which reason an opinion was sought from the expert, namely, IIM Ahmedabad, fortifies the stand of the appellant that interpretation was involved. Thus, the appellant has made out a case for interference insofar as the invoking the larger period of limitation is concerned -To ascertain, however, the tax liability for the normal period, this issue, to this extent, is remitted to the file of adjudicating authority. Appeal disposed off.

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• 2023 (3) TMI 801
  Cenvat Credit - Providing output service of renting of immovable property - credit of service tax / duty paid on construction services - Appellant utilized credit while discharging the Service Tax liability on the leasing of the property - extended period of limitation - HELD THAT:- It is seen that the appellant has taken Cenvat Credit of Rs.2,29,99,232/- during the period under consideration. When they are not eligible for Cenvat Credit on account of constructed property which is sold, they have been regularly reversing the Cenvat Credit. These facts are being regularly disclosed in the ST-3 Returns as well as in the accompanying letter submitted to the Range/Division officials. In respect of the constructed portion which is leased out by them, there is no dispute that the Service Tax is being paid on the lease amount received by them. It is seen that on similar/identical issues the Tribunals and High Courts have been consistently holding that the inputs used for construction of immovable property is eligible for Cenvat Credit when the Service Tax is paid on the service provided - Hon ble Ahemdabad Tribunal in the case of Navratna S G Highway Prop. Pvt. Ltd. Vs. CST, Ahmedabad [ 2012 (7) TMI 316 - CESTAT, AHMEDABAD ] has held that without utilizing the service, mall could not have been constructed and therefore the renting of immovable property would not have been possible. Extended period of limitation - HELD THAT:- As per the factual evidence reproduced by the appellant in the form of ST-Returns and letters filed with the Department from time to time with regard to the Cenvat Credit taken and reversed by them in the course of their business, the Department has not made out any case against the appellant towards suppression - the demand for the extended period is required to be set aside in the present case also on account of time bar. Appeal allowed.

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• Central Excise

• 2023 (3) TMI 800
  Exemption from excise duty in regard to supplies of high speed diesel (HSD) manufactured and supplied by BPCL - Withdrawal of benefit of Notification No. 108/95 CE dated 28.08.1995 by virtue of a subsequent Notification bearing No.10 of 2017-Central Excise dated 30.06.2017 - Government is satisfied that such withdrawal of exemption was warranted in public interest - case of petitioner is that the exemption ought not to have been withdrawn during the currency of the agreement between the petitioner and TNRSP - second case of petitioner is that the Government cannot merely cite public interest but must be able to establish what the specific circumstances of public interest were, that justified such withdrawal. HELD THAT:- The case law cited by the petitioner being Birla Corporation [ 2019 (12) TMI 61 - SUPREME COURT] would be distinguishable for the reason that in that case the exemption notification had been issued and thereafter withdrawn even prior to the date of grant of the exemption. In the case of Unicorn Industries [ 2019 (9) TMI 791 - SUPREME COURT ], the three Judge Bench of the Hon ble Supreme Court considered the similar question as to whether the withdrawal of an exemption notification would result in the benefit of the argument of promissory estoppal being available to the petitioner - Upon consideration of several judgments that have been rendered earlier, Kasinka Trading Vs. Union of India [ 1994 (10) TMI 64 - SUPREME COURT ], Sales Tax Officer Vs. Shree Durga Oil Mills [ 1997 (12) TMI 114 - SUPREME COURT] , Shree Durga Oil Mills vs. Sales Tax Officer [ 1987 (9) TMI 407 - ORISSA HIGH COURT] , Shrijee Sales Corporation Vs. Union of India [ 1996 (12) TMI 61 - SUPREME COURT ], Motilal Padampat Sugar Mills Co. Ltd. Vs. State of U.P. [ 1978 (12) TMI 45 - SUPREME COURT ], State of Rajasthan Vs. Mahaveer Oil Industries [ 1999 (4) TMI 523 - SUPREME COURT] , Shree Sidhbali Steels Ltd., Vs. State of U.P. [ 2011 (1) TMI 1248 - SUPREME COURT ] Directorate General of Foreign Trade Vs. Kanak Exports [ 2015 (11) TMI 80 - SUPREME COURT] , the Court concluded that the modification or withdrawal of a notification in public interest would fall fully within the domain and discretion of the, public authorities, that is, either the Government or revenue authorities. No assessee can claim an exemption as a matter of right. No doubt, in this case an exemption had been granted in respect of duty liability in respect of those projects that have been funded by the World Bank and the assessees had been availing the benefit of this exemption from 1989 onwards. As far as the demand relating to the period post 01.07.2017, BPCL appears to have threatened the petitioner that it would invoke a bank guarantee that was in its possession though unrelated to the present contract - While the petitioner would deplore the action of BPCL in making such a threat, ultimately the payment has been effected by the petitioner to BPCL suo motu and has not been recovered by BPCL by invoking bank guarantee. This aspect of the matter is left as such, without comment except to state that the amount as above shall remain in the possession of BPCL till a final demand is raised by the Customs Authorities - petition disposed off.

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• 2023 (3) TMI 799
  Refund - 100% EOU - Refund of 5% excess Basic Custom duty paid - appellant submitted that during de-bonding, the appellants had paid the Customs and Excise Duties as if the goods are cleared under DTA, under protest, as directed by the Revenue on the semi-finished goods, work-in-progress and finished goods; however, the appellants are liable to pay duty, as per Sl. No. 2 of Notification No. 23/2003-C.E. - It is submitted by the Department that the appellants have paid the duty in accordance with the provisions of law and that there is no excess payment for granting refund. Whether the appellants have made payment of excess duty and if so, whether they are eligible for refund? HELD THAT:- In the case of CGST CCE, TRICHY VERSUS M/S. EID PARRY INDIA LIMITED [ 2018 (8) TMI 1494 - CESTAT CHENNAI] , the Tribunal held that the demand of duty in respect of semi-finished goods cannot sustain. The Tribunal followed the decision in the case of TIRUMALA SEUNG HAN TEXTILES LTD. VERSUS COMMR. OF C. EX. (A), HYDERABAD [ 2008 (9) TMI 252 - CESTAT BANGALORE] to set aside the demand. The rejection of refund is without any legal or factual basis. The appellants have also filed miscellaneous applications seeking consideration of the decision in the case of M/S. JUBILANT LIFE SCIENCES LIMITED VERSUS CCE, MEERUT-II [ 2013 (11) TMI 1213 - CESTAT NEW DELHI] and other decisions. There is no new plea put forward by the appellants and these applications are only a prayer for consideration of the application of the proposition of law laid down in these judgements. The same have already been considered. Appeal allowed.

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• 2023 (3) TMI 798
  Refund of differential duty paid post clearance of goods upon amended notification - enhancing rate of duty of Excise - Certain clearances were made on 12.11.2014 and 02.12.2014 during the course of the day but rates of duties were enhanced on those two dates vide Notification Nos. 22/2014-CE and 24/2014-CE respectively from its previous rate of duty applicable since 17.03.2012 as per Notification No. 12/2012-CE. Appellant s claim is that such notifications enhancing duties came to the knowledge of the Oil Industry very late in the evening and much after the clearance but to avoid any future complicacy, differential Excise duty basing on calculation at the higher rate as per the amended notifications were paid with a protest note. HELD THAT:- Appellant had admitted therein that it had knowledge about such enhancement on the same day, though it came late in the evening subsequent to the clearance of goods made during the course of day upon rising of invoice with old rate of duties prevailing at the time of clearance. As could be further noticed from the order of the Adjudicating Authority and Commissioner (Appeals), there was no pleading made before them that the Notifications came on the next day of its issue and Appellant itself also came to know about the same through the RTI application reply received in 2019. Even this fact of publication of both the Notifications on the next day of its issue was not within the knowledge of the Appellant nor it had taken the same as additional ground of appeal though we have accepted the same as additional piece of evidence and taken the same on record as those are issued by the office of the Director of Publication which is a public authority for which RTI reply can be put in the category of public documents. The submissions of learned Authorised Representative that the Notifications were issued and uploaded in the website of CBEC is acceptable for the reason that Appellant also admitted to have knowledge about such amended Notification that reached the Oil Industries in the late evening but going by sub-Section (5) of Section 5A, Issued for publication and completion of publication in the Gazette of India are pre-conditions before the same is offered for sale. Therefore, uploading in the website of the CBEC cannot alone attach enforceability to those Notifications. By the time order was passed by the Commissioner (Appeals), except on issue of unjust enrichment which Appellant s claimed to have crossed the bar in its refund application itself by annexing sample copies of the invoices with realisation of tax at the old rate, no illegality or irregularity could be noticeable therein but having regard to the fact that law on the issue has evolved and refined itself through judicial decisions and has become law of the land after the full Bench of the Hon ble Supreme Court dealt the same exhaustively taking into account all judicial precedent vis-a-vis the provisions of Excise Act and Section 5A being peri materia to Section 14 and Section 25(4) of the Customs Act, we thought it expedient, just and proper to modify the order passed by the Commissioner (Appeals), so as to extend the benefits to the Appellant. The order passed by the Commissioner of Central Excise (Appeals), Mumbai-II vide Order-in- Appeal No. PK/18 19/M-II/2016 dated 08.09.2016 observing that the Notification would be effective from the date of its issue is modified to the extent that the said Notifications would be effective from the date and time of its publication in its Official Gazette which were published on 13.11.2014 and 03.12.2014 respectively - appellant is entitled to the benefit of refund - appeal allowed.

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• 2023 (3) TMI 797
  Demand of differential duty - valuation of the packaging materials manufactured in the Chennai Unit of the appellant - adjustment of excess duty paid against duty short paid on finalization of provisional assessment against the appellant - HELD THAT:- The legal issues dealt with in the impugned order have already been decided by this Tribunal, for the earlier period in M/S. ITC LIMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2023 (3) TMI 730 - CESTAT CHENNAI] , as pointed out by learned counsel for the appellant, where it was held that Larger Bench in M/S ITC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [ 2016 (4) TMI 280 - CESTAT CHENNAI ] answered the reference, holding that the decision of the Chennai Bench of the CESTAT rendered in Final Order No. 542/2010 dated 11.05.2010 in the Revenue s appeal against M/s. Eveready Industries Ltd. [ 2011 (4) TMI 141 - CESTAT, CHENNAI ] and the subsequent decision of the same Regional Bench as reported in CCE, CHENNAI VERSUS M/S. EVEREADY INDUSTRIES (I) LTD. [ 2011 (4) TMI 141 - CESTAT, CHENNAI ] represent the correct position in law - The findings of the Larger Bench are The percentage of loading on such cost of production, mandated by provisions of Rule 8 for remittance of excise duty by the Bhadrachalam unit cannot not however be considered as comprised in the cost of the raw material consumed for manufacture of packaging material and thus constituting the cost of production at the Chennai unit. It has not been brought to our notice that the said Final Order, which pertains to the past period, has been either varied, modified or set aside as of date. Hence, there are no reason to deviate from the same for demands pertaining to the subsequent period. Appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (3) TMI 796
  Validity of assessment orders - levy of interest u/s 7(5) of Orissa Entry Tax (OET) Act, on the balance unpaid entry tax for the period prior to 2017 inasmuch as the amount of 1/3rd was treated as deposit till pronouncement on 28.03.2017 - Whether, pursuant to direction of this Court the Committee having recommended not to enforce penalty for non-payment or withholding of entry tax, except in cases of suppression, the taxable persons/dealers are liable to pay interest under Section 7(5) for the period from 2010 (interim Order dated 03.02.2010 being passed by the Supreme Court in STATE OF ORISSA ORS. VERSUS M/S. RELIANCE INDUSTRIES LTD. ORS. [ 2010 (2) TMI 1305 - SUPREME COURT ] to 2017 (till 28.03.2017, i.e, date on which the Division Bench of Supreme Court allowed the appeals of the State of Odisha)? HELD THAT:- Harmonious reading of the various provisions along with charging provision, i.e., Section 3 of the OET Act gives clear indication that whereas the entry tax is exigible on entry of goods specified in the Schedule appended to the OET Act into the local area for consumption, use or sale therein and return disclosing tax payable is required to be furnished as per sub- section (1) of Section 7. It is provided under sub-section (10) thereof that each and every return is to be scrutinized by the Assessing Authority. If mistake is detected as a result of scrutiny, the Assessing Authority is vested with power to proceed with the matter against the dealer as provided under sub-section (11). Thus, it is explicit that detection of mistake in return upon scrutiny triggers action against the dealer asking it to make payment of the extra amount of tax along with the interest as per the provisions of this Act . The OET Act provides for levy of interest under sub-section (5) of Section 7. No other provision empowering Authority to levy interest is brought to the notice of this Court by any of the parties. In the cases at hand, it is the consistent pleading of the petitioners that as this Court observed at RELIANCE INDUSTRIES LIMITED VERSUS STATE OF ORISSA (AND OTHER CASES) [ 2008 (2) TMI 825 - ORISSA HIGH COURT ] that the State of Odisha is not competent to levy entry tax on the goods brought from outside and not manufactured or produced within the State, the dealers are not required to pay entry tax. However, on the basis of STATE OF ORISSA ORS. VERSUS M/S. RELIANCE INDUSTRIES LTD. ORS. [ 2010 (2) TMI 1305 - SUPREME COURT ] of the State of Odisha by the Supreme Court they were required to deposit 1/3rd of tax due as disclosed in the returns. The Hon ble Court made it clear that such payment is treated to be deposit , but not tax . It seems there is obvious reason for not undertaking scrutiny of returns during 2010-17. The Hon ble Supreme Court granted stay of operation of paragraph 30 of said Judgment of this Court to the extent which spelt out that The State has no jurisdiction to impose tax on such goods imported from outside and are not manufactured within the State of Orissa. Therefore, the opposite parties may make scrutiny of the same and not realize entry tax on such goods . Though said interim order suffered modification vide Order dated 03.02.2010 by directing the dealers to deposit 1/3rd of the tax liability shown in the returns, the Assessing Authorities have not taken up each and every return for scrutiny. Therefore, it is not justified on the part of the Assessing Authorities to issue demand notice(s) in Form E-24 prescribed under Rule 10(6)(b) of the OET Rules as a result of scrutiny under sub-sections (10) and (11) of Section 7 of the OET Act that too in violation of observations made in Toyo Engineering [[ 2011 (9) TMI 888 - ORISSA HIGH COURT] ]. Following the ratio of Toyo Engineering (supra), this Court would have to remit the matter to the Assessing Authority, but considering that the same would not serve fruitful purpose at this distance of time holds that issue of notice in Form E-24 under Rule 10(6)(b) of the OET Rules is not in conformity with the statutory requirement. Since the balance amount of tax due as per disclosure made in the return(s) is known to the petitioner, setting aside the notice in Form E-24 and remanding for computation of tax liability to the Taxing Authority would enure to the benefit of none. Therefore, the petitioner is required to determine its own liability as per self-assessed return(s) already filed. Levy of interest under Section 7(5) of the OET Act - HELD THAT:- It is trite that provision for interest is to be construed as substantive law and not machinery provision. Ordinarily charging section which fixes liability is to be strictly construed. But the rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must be so construed as would effectuate the object and purpose of the statute and not defeat the same. Any provision made for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. There is no ambiguity in holding that in the presence of the expression without sufficient cause in sub-section (5) of Section 7 of the OET Act and the petitioner(s) having justified by showing sufficient cause for failure to deposit amount of tax due along with the return, which cannot be treated as admitted tax in view of legal position contained in paragraph 30 of Reliance Industries Ltd., of Orissa High Court, interest under Section 7(5) of the OET Act is not chargeable on such turnover falling within ambit of portion the said Judgment. Whether Court can grant interest in exercise of jurisdiction under Article 226 of the Constitution of India? - HELD THAT:- Interest is compensatory in character. Since by virtue of order of the Court entire amount of tax due was not discharged, such order should prejudice none. In the present case the petitioner(s) withheld 2/3rd of the tax due as disclosed in the return(s). The Hon ble Supreme Court while passing Order dated 03.02.2010 clarified that if State of Odisha loses, it would refund the amount deposited by the dealers along with interest. However, there was no proposition with regard to eventual losing of the petitioner(s). Nonetheless, the fact remains that the petitioner(s) could not succeed in the ultimate before the Supreme Court. Thus, there is warrant for an order from this Court granting compensation on the amount withheld since 2010 till 2017. Applying the principles for grant of interest at a rate fixed as compensation, this Court is of the considered opinion that since by virtue of interim orders of the Supreme Court of India and the orders in writ petition(s) by this Court following such interim orders, the State of Odisha was deprived of recovering 2/3rd of tax due relating to September, 2009 to February, 2017, the petitioner(s) is required to compensate the State of Odisha by making payment towards interest in the interest of justice and equity. Hence, writ of mandamus is liable to be issued in exercise of extraordinary power under Article 226 of the Constitution of India. Petition disposed off.

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• 2023 (3) TMI 795
  Audit assessment under Section 34(2) of the Value Added Tax Act, 2003 - main plank of the challenge to the notice and the consequential order dated 1.9.2022 and 16.9.2022 respectively that the powers were invoked under Section 34(8A) of the Act despite the fact that no proceedings were pending - HELD THAT:- Section 34 of the Act deals with the audit assessment. It says that subject to the provisions of Sub section (2), the amount of tax due from registered dealer shall be assessed in the manner provided, separately for each year during which the registered dealer is liable to pay tax. The clinching aspect is that the condition precedent for exercising powers under Section 34(8A) has not been satisfied, namely that any proceedings under the Act are not pending so as to invest the authority with the power to proceed under Sub section (8A) of Section 34. When the Section expressly contemplates that the assessment under the said provisions could be resorted to only during the proceedings under the Act, the powers has to be exercised in that manner only and upon fulfillment of the said condition. In the facts of the case there is no gainsaying that any proceedings are not pending so as to justify the assessment proceedings under Section 34(8A) of the Act. When learned Assistant Government Pleader was confronted with the aforesaid aspect and non-compliance of the condition precedent for exercise of powers of assessment, he was entirely at his receiving end. Since the basic condition during the course of any proceedings under the Act of Sub section (8A) of Section 34 of the Act is not satisfied and no proceedings under the Act are pending, the impugned notice dated 1.9.2022 and the assessment order dated 16.9.2022 stands without jurisdiction. It is an incurable jurisdictional defect and illegality rendering the notice and the order liable to be set aside - Petition allowed.

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• 2023 (3) TMI 794
  Violation of principles of natural justice - personal hearing was granted to the petitioner only on 18.02.2020 and not on 16.02.2020 as reflected in the impugned assessment orders - No fresh notice was also issued to the petitioner by the respondent, intimating a fresh date of personal hearing - HELD THAT:- Since the personal hearing has not been afforded to the petitioner, it is clear that principles of natural justice has been violated by the respondent. Hence, the impugned assessment orders have to be quashed and the matters will have to be remanded back to the respondent for fresh consideration on merits and in accordance with law. This Court deems it fit to fix the next date of personal hearing of the petitioner before the respondent as 14.03.2023 and on that date the petitioner shall appear before the respondent at 10:30 a.m. without fail - the impugned assessment orders dated 29.04.2021 and 27.04.2021 passed by the respondent are hereby quashed and the matters are remanded back to the respondent for fresh consideration on merits and in accordance with law - Petition disposed by way of remand.

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• Indian Laws

• 2023 (3) TMI 793
  Scope of arbitration award - Forfeiture of the security deposits - Arbitral Tribunal rejected the NBCC s claim for refund of two security deposits - rescinding of contract due to abandonment of work by NBCC - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The learned Arbitral Tribunal though observed that the IRCON was not justified in rescinding the contract under Clause 60.1, rescinding of the contract / termination of the contract was justified under Clause 17.4, and thereby has rejected the Claim Nos.33 and 34 of the NBCC which were with respect to forfeiture of the security deposits. The learned Single Judge as well as the Division Bench of the High Court have set aside the award passed by the learned Arbitral Tribunal rejecting Claim Nos.33 and 34 inter alia on the ground that once the Arbitral Tribunal gave the finding that the IRCON was not justified in invoking Clause 60.1, thereafter it was not open for the Arbitral Tribunal to take the help of Clause 17.4 and therefore, the learned Arbitral Tribunal was not justified in rejecting Claim Nos.33 and 34 which were with respect to forfeiture of security deposits, which could have been under Clause 17.4. However, it is required to be noted that as such the finding recorded by the Arbitral Tribunal on applicability of Clause 17.4 and/or rescinding of the contract under Clause 17.4 has not been set aside either by the learned Single Judge or by the Division Bench of the High Court and therefore, the findings recorded by the learned Arbitral Tribunal on applicability of Clause 17.4 has attained the finality. The learned Arbitral Tribunal as such was absolutely justified in considering whether IRCON was justified in rescinding the contract, may be either under Clause 60.1 or under Clause 17.4. Even otherwise, from the material on record and even the notice dated 21.02.1994 and the subsequent notice dated 07.03.1994, we are satisfied that the IRCON was satisfied that the work could not be completed by the contractor even within further extension of time. Both, under Clause 17.4 and 60.1, on failure of the contractor to complete the work, the IRCON is justified in rescinding the contract and forfeit the security deposit. At the cost of repetition it is observed that the learned Arbitral Tribunal on appreciation of entire evidence on record, had specifically observed that the contractor failed to complete the work even within the stipulated extended period of time and even abandoned the work and therefore, the IRCON was justified in rescinding the contract. The said finding as observed hereinabove has attained finality. Therefore, the IRCON was absolutely justified in forfeiting the security deposits and therefore, the learned Arbitral Tribunal was absolutely justified in rejecting Claim Nos.33 and 34, which were with respect to forfeiture of security deposits by the IRCON. Thus, the impugned judgment and order passed by the learned Single Judge as well as the Division Bench of the High Court quashing and setting aside the award passed by the learned Arbitral Tribunal rejecting Claim Nos.33 and 34 deserve to be quashed and set aside and the award passed by the learned Arbitral Tribunal rejecting Claim Nos.33 and 34 is required to be restored and upheld. Award passed by the Arbitral Tribunal awarding interest @ 18% on advance for the hypothecation of equipment - HELD THAT:- Once it was found that the advance amount was paid for hypothecation of equipment and thereafter when the Arbitral Tribunal awarded the interest on advance for hypothecation of equipment, the same was not required to be interfered with by the learned Single Judge in exercise of the powers under Section 34 of the Arbitration Act and even by the Division Bench of the High Court while exercising the powers under Section 37 of the Arbitration Act. However, at the same time to award the interest @ 18% can be said to be on a higher side. In the facts and circumstances of the case, if the interest is awarded @ 12% on advance for the hypothecation of equipment, the same can be said to be reasonable interest. The impugned judgment and order passed by the learned Single Judge as well as the Division Bench of the High Court quashing and setting aside the award passed by the Arbitral Tribunal rejecting Claim Nos. 33 and 34 are hereby quashed and set aside and the award passed by the Arbitral Tribunal rejecting the claim Nos. 33 and 34 is hereby restored - Appeal allowed.

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• 2023 (3) TMI 792
  Restriction on having current account with other banks if that customer already had credit facilities in the form of Cash Credit/Export Packing Credit (CC/EPC) in the banking system. - RBI banking Policy - Seeking release of attachment of petitioner s accounts Petition tells us that with HDFC Bank, Jindal Cocoa has a current account. It also had availed certain Export Packing Credit facilities - Jindal Cocoa claims that HDFC Bank wrongfully reversed and withheld some amounts of interest subvention and wrongfully levied penal interest and other charges, debiting these to Jindal Cocoa s current account and EPC facilities. HELD THAT:- As respondents point out, the entire purpose of the circular is to protect lending banks and to ensure smooth recovery. The RBI s Affidavit notes the prevalence and upsurge of frauds by diversion of funds: those that ought to have come into the lending bank s account were being moved into current accounts elsewhere. The circular attempts to curb and stop this. The circular s purpose is not achieved by permitting an unregulated dispersal of inflows into diverse accounts at the option of the borrower. Correctly read, the circular demands what is best thought of as a funnelling or channelling mechanism: once there is a lending account with an exposure of over Rs 50 crores, all inflows must be routed into that lending account. Inflow and outflow transactions in other current accounts are not permitted. If there are other current accounts, then these are carefully calibrated to be only collection accounts. The provision for an escrow mechanism is predicated on there being multiple lending banks. One of these may be chosen as the escrow bank. But where there is only one lending bank and there are also several other non-lending banks where a borrower has a current account then there is no question of an escrow . The entire concept of an escrow mechanism is to create a common pool from which disbursement is triggered only on the occurrence of defined events. Multiple lenders would be rival claimants to the funds in the escrow account. Which one should have priority, or how the funds should be shared (equally, pro rata to the size of the debt, according to priority of security, etc.) are all matters to be decided and which relate to distribution from this common escrow pool. In Ultratech Cement Ltd Anr v State of Rajasthan Ors. [ 2020 (7) TMI 513 - SUPREME COURT ], in paragraphs 25, 25.3 and 25.5, the Supreme Court referred to the decision in Desh Bandhu Gupta [ 1979 (2) TMI 175 - SUPREME COURT ] but did not depart from the principle. In fact, in paragraphs 25 and 25.1, we find that the attempt was to persuade the Supreme Court that the authority s understanding deserved to be accepted. The doctrine was said to be embodied in a maxim which meant that the best way to construe a document would be to read it as it would have read when made. In paragraph 25.3, the Ultratech Cement court said that the principle is applied as a guide to interpretation by referring to the exposition that the document received from the competent authority at the relevant point in time. The Ultratech Cement Court said that when there is a contemporaneous construction placed by an executive or administrative authority charged with executing the statute in this case the RBI the Courts would lean in favour of attaching considerable weight to it, but it cannot be said that the understanding of a particular administrative or executive authority must be applied even if it is shown to be clearly erroneous. We are unable to see how in the facts and circumstances of the case this can be said the application of the circular can be said to be erroneous. On the contrary, it is our view that granting the Petitioner relief would in effect not only run directly contrary to the circular but would possibly permit the continuance or growth of the very mischief that is sought to be addressed. There is no merit in the petition - petition dismissed.

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