Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 24, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
DGFT
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62/2015-2020 - dated
23-3-2022
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FTP
Amendment in Export Policy and insertion of Policy Condition under Chapter 29 and 38 of ITC (HS), 2018 - Export Policy of Hydrofluorocarbons (HFCs)
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61/2015-2020 - dated
23-3-2022
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FTP
Amendment in Policy condition for export of rice (Basmati and Non-Basmati) - Sl. No. 55 & 57, Chapter 10 Schedule-2, ITC(HS) Export Policy, 2018 amended.
GST - States
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39/2021-State Tax - dated
22-3-2022
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Delhi SGST
Seeks to bring in provisions of sections 2, 3, 7 to 16 of the Delhi Goods and Services Tax (Amendment) Act, 2021
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38/2021-State Tax - dated
22-3-2022
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Delhi SGST
Seeks to bring in force provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Delhi Goods and Services Tax (Eighth Amendment) Rules, 2021
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22/2021-State Tax (Rate) - dated
22-3-2022
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Delhi SGST
Seeks to supersede notification 15/2021 – State Tax(Rate), dated the 16th March, 2022 and amend Notification No 11/2017- State Tax (Rate), dated the 30th June, 2017.
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20/2021-State Tax (Rate) - dated
22-3-2022
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Delhi SGST
Amendment in Notification No. 21/2018-State Tax (Rate) , dated the 2nd September, 2019
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19/2021-State Tax (Rate) - dated
22-3-2022
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Delhi SGST
Seeks to amend Notification No. 2/2017-State Tax (Rate), dated the 30th June, 2017
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18/2021-State Tax (Rate) - dated
22-3-2022
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Delhi SGST
Seeks to amend Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017
SEBI
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SEBI/ LAD-NRO/GN/2022/76 - dated
22-3-2022
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SEBI
Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) (Second Amendment) Regulations, 2022
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Standard Operating Procedure (SOP) for Scrutiny of GST returns for FY 2017-18 and 2018-19
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Seeking grant of anticipatory bail - fraudulent availment of inadmissible Input Tax Credit (ITC) - bailable offence or not - Section 132 of the Act lists 12 offences that are punishable with imprisonment and/or a fine. - In the present case, it is a common ground between the applicants and the opposite party No. 3 that the offences are bailable. - granting of anticipatory bail does not arise for an offence which is bailable and a direction for the same can be issued only in respect of non-bailable and cognizable offences, the present anticipatory bail application deserves rejection - HC
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Power of police authorities to check and inspect vehicles under GST - Prima facie the impugned first information report appears to be malicious and grave abuse of power by the informant Sub Inspector i.e. respondent no. 3. If the goods were not accompanied by proper documents for transportation, it is only the authorities under the U.P. Goods and Service Tax Act, 2017/Central Goods and Service Tax Act, 2017 and I.C.S.T. Act, 2017, as the case may be, are empowered to check and take action in accordance with law, as provided under the relevant Acts and Rules. But the police has no authority to check invoices etc. and accounting the goods during transportation. - HC
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Classification of goods - rate of tax - Namkeens or not - The Jackfruit Chips and Banana Chips are classifiable under Customs Tariff Heading 2008.19.40 (Not as Namkeens) - Sharkara Varatty is classifiable under Customs Tariff Heading 2008.19.40 - Halwa is appropriately classifiable under Customs Tariff Heading 2106 90 99 - Roasted/ salted / roasted and salted Cashew nuts are classifiable under Customs Tariff Heading 2008.19.10 and roasted / salted/ roasted and salted Ground nuts and other nuts are classifiable under Customs Tariff Heading 2008.19.20 - The salted and masala chips of Potato and Tapioca are classifiable under Customs Tariff Heading 2008.19.40 - AAAR
Income Tax
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Reopening of assessment u/s 147 - It is settled law that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. - HC
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Maintainability of appeal before ITAT when CIRP proceedings have been initiated - As per section 31 of the Code, resolution plan as approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Thus, this will prevent State authorities, Regulatory bodies including Direct & Indirect Tax Departments from questioning the resolution plan. Therefore, there is no reason to keep this appeal pending. - AT
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Disallowance of membership fee paid to club u/s. 37 - unless assessee demonstrate with relevant evidences that subscription fee paid to club, is for the purpose of business of the assessee and said expenditure is aided for overall development of the assessee, it cannot be held that expenses, at personal in nature, is in the nature of business expenditure incurred wholly and exclusively for the purpose of business, since the assessee has not demonstrated with any evidences and proved that subscription fee paid to club is for the purpose of business. - AT
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Jurisdiction of income tax authorities - Transfer of case u/s 127 - No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ITO which was beyond his jurisdiction and the same was therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not issue any notice u/s 143(2) of the Act to assume jurisdiction to frame the assessment. - AT
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Taxability of Interest earned as per the provisions of section 244A - we are satisfied that the ld. CIT(A) was justified in holding that interest on income-tax refund amounting to ₹ 1.18 crore cannot be charged to tax on the processing of return u/s.143(1) during the year under consideration for the raison d’etre that the regular assessment made in the year 2017 resulted into creation of demand and wiping out the refund already granted to the assessee along with recovery of interest. - AT
Customs
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Import of restricted goods - Canada Whole Green Peas - The only short-coming here is the quantitative restriction and hence, the redemption fine and penalty should be commensurate with the quantity that exceeded the limit of import. Viewed thus, the redemption fine ordered to be paid is very much on the higher side - the redemption fine could be modified to the extent of ₹ 2.5 lakhs instead of ₹ 7.5 lakhs under Section 125 - AT
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Valuation of imported goods - rejection of transaction value - enhancement of assessable value - it is found that the revaluation have been resorted to without following the due process of law - the rejection of transaction value as well as the revaluation of the goods done are set aside. Thus, the declared value as per the Bill of Entry is accepted. - AT
Indian Laws
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Willful defaulter under the RBI Master Circular dated July 1, 2014 or not - Since all the documents on which the respondents allegedly relied on have been disclosed in the respondents’ affidavit-in-opposition and disclosed in the present writ petition, there is nothing to prevent the petitioner from making a complete representation on all facets of the allegations of Willful Defaulter, including the question of validity of the show-cause notice. - The show cause notice in the present case was sufficient to pass muster, insofar as adherence to the RBI Master Circular is concerned - HC
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Dishonor of Cheque - presumption of innocence - On bare perusal of provisions of Sections 91 and 311 of CrPC, it apparent that non-affixing of seal over the documents is not material as in the light of provisions made under the Bankers Book Evidence Act, no Bank Officer shall be compelled to produce documents and it shall be presumed that the documents were issued by the authority of the Bank concerned and it can be proved before the Court very well. It is also relevant to mention here that the matter is regarding Section 138 of the NI Act and the objection raised by the petitioner in the present matter is irrelevant. - HC
IBC
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Seeking rectification of mistake - In an appeal wherein rejection of a claim is being considered by the Adjudicating Authority, the RP who has rejected the claim should be heard to arrive at a judicious, fair and transparent decision. This has not been done in the present case - since the claim of the Respondent was submitted with inordinate delay and in view of the advanced stage of CIRP, it is held that the claim of the Respondent should not be included in CIRP since such an inclusion would mean that the resolution plans would have to be invited afresh leading to unnecessary delay in the resolution of the corporate debtor which could even jeopardize the eventual insolvency resolution of the corporate debtor. - AT
Service Tax
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Condonation of delay of 6 months and 22 days in filing appeal - rejection on the ground of time limitation or not - The period till 30.9.2020/ 28.2.2022 still remains excluded, hence appeal filed on 25.09.2020 is held to have been filed within the period of limitation. Irrespective that the benefit of both these announcements have to be extended in favour of the appellant. The matter cannot be held to have crossed the period of its limitation as the same was extended. - AT
Central Excise
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Clandestine removal - shortage of finished goods - There are force in submissions of Appellants that in the remand proceedings, adjudicating authority has not followed judicial discipline and by not allowing cross examination of witness as sought by Appellants, the entire proceedings have been vitiated in facts of this case. In the second round of litigation, the Commissioner(Appeals) has also brushed aside submissions of Appellant by only general findings - Demand set aside - AT
VAT
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Rectification of mistake - error apparent on the face of record - This Court had interfered with the impugned orders on facts that were peculiar therein or for not granting an opportunity of hearing even after requesting for such a hearing. In the instant case, as already mentioned, an opportunity for hearing was never requested and further, the impugned order had considered the points raised by the petitioner in the rectification application. The question whether the findings in the order declining rectification is correct or not cannot be gone into in this jurisdiction under Article 226 of the Constitution. - HC
Case Laws:
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GST
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2022 (3) TMI 978
Non-payment of GST - manufacture and sale of flavoured Supari, Sweet Supari and Chewing Tobacco - offence punishable under Section 132(1)(a), (d), (f), (g), (j) and (k) - HELD THAT:- Issue notice. Ms. Suhani Mathur accepts notice on behalf of the respondents. List the matter for hearing on 22.04.2022 - In the meantime, the petitioners shall join the investigation without fail on 21.03.2022 and thereafter, on 23.03.2022 at 11:30 a.m. After that the petitioners shall join the investigation as and when they are so summoned by the officials of the department. The copies of the summons be also sent to the briefing counsel for the petitioners, namely, Mr. Prakhar Sharma.
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2022 (3) TMI 977
Seeking grant of anticipatory bail - fraudulent availment of inadmissible Input Tax Credit (ITC) - bailable offence or not - present dispute is much less than ₹ 5 crore - Whether an application under Section 438 Cr.P.C. would lie and is maintainable for an offence which has been declared by the concerned statute as a bailable offence? - HELD THAT:- The provision of anticipatory bail as per its scheme can be invoked by a person who has a reason to believe that he may be arrested for committing a non - bailable offence . In the case Onkar Nath Agrawal v. State [ 1976 (1) TMI 189 - ALLAHABAD HIGH COURT ] it was held that the power under section 438 Cr.P.C. is not to be exercised in vacuum but only on the satisfaction of the conditions spelled out in the section itself. It is thus concluded that the conditions prerequisite for the court's exercise of its discretion under Section 438 Cr.P.C. is that the person seeking such relief must have a reasonable apprehension of his arrest on an accusation of having committed a non-bailable offence - The question thus gets answered by the discussion that an application under Section 438 Cr.P.C. is only maintainable by a person who has apprehension of his arrest on accusation of having committed a non - bailable offence. Section 132 of the Act lists 12 offences that are punishable with imprisonment and/or a fine. The terms of imprisonment and the amount of fine, is dependent on the amount involved in the offence, or in some cases, the act committed by the offender - In the present case, it is a common ground between the applicants and the opposite party No. 3 that the offences are bailable. Even para-28 of the counter affidavit to the said effect stands unrebutted. The question thus being answered by holding that granting of anticipatory bail does not arise for an offence which is bailable and a direction for the same can be issued only in respect of non-bailable and cognizable offences, the present anticipatory bail application deserves rejection - Application rejected.
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2022 (3) TMI 976
Power of police authorities to check and inspect vehicles under GST - Transportation of betel-nuts and tobacco - valid papers not carried by petitioners - commanding the respondents not to arrest the petitioner - commanding the concerned respondents authority to not adopt any coercive measure against the petitioners - Sections 420, 188 IPC and Section 63 of Copy Right Act, 1957 - HELD THAT:- The basic requirement of presence of two persons is also absent. Since the alleged act does not prima facie falls within the meaning of word cheating , consequently no case is made out under Section 420 I.P.C. on bare reading of the impugned first information report. Section 188 I.P.C. relates to disobedience of the order promulgated by a public servant. There is no allegation in the impugned first information report that the petitioner has disobeyed the order promulgated by a public servant. Thus, prima facie from bare reading of the impugned first information report no offence is made out under Section 420/188 I.P.C. - mere alleged failure to show the invoices to the informant Sub Inspector at the time of interception of the vehicle and without presence of any of the ingredients of an offence under Section 63 of the Copy Right Act, the allegation of commission of offence under Section 63 is prima facie not made out. Prima facie the impugned first information report appears to be malicious and grave abuse of power by the informant Sub Inspector i.e. respondent no. 3. If the goods were not accompanied by proper documents for transportation, it is only the authorities under the U.P. Goods and Service Tax Act, 2017/Central Goods and Service Tax Act, 2017 and I.C.S.T. Act, 2017, as the case may be, are empowered to check and take action in accordance with law, as provided under the relevant Acts and Rules. But the police has no authority to check invoices etc. and accounting the goods during transportation. The impugned first information report, on the very face of it, prima facie, reflects ill intention of the informant and obstruction in free flow of trade and commerce. Let a counter affidavit be filed by the respondents by means of a personal affidavit of Superintendent of Police, Jalaun within three days - Put up as a fresh case on 18.08.2021 at 10.00 a.m.
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2022 (3) TMI 975
Maintainability of petition - availability of alternative remedy of filing a Second Appeal - HELD THAT:- When the petitioner has an alternative, efficacious statutory remedy available, it would not be proper for this Court to exercise any power under Article 226 of the Constitution of India. The petitioner must invoke their alternative remedy - Application disposed off.
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2022 (3) TMI 974
Classification of goods - rate of tax - Namkeens or not - Jackfruit Chips, Banana Chips, Tapoica Chips, Potato Chips, Chembu Chips, Pavakka Chips and roasted / salted / roasted and salted preparations of Ground nuts, Cashew nut and other seeds supplied or proposed to be supplied by the appellant - Whether the impugned products ought to have been classified as Namkeens or sweetmeats under the HSN 2106.90.90 of the Customs tariff and taxed to GST @ 5% as per entry 101A of Schedule I to Notification No. 1/2017-CT(Rate) dated 28.06.2017? - HELD THAT:- From the plain reading of the contents of chapter 21, it reveals that it includes the food preparations which are not elsewhere specified in the customs tariff. Those food preparations not specified or included elsewhere in the tariff being preparations for use either directly or after processing for human consumption are to be classified under this heading 2106. Further the heading 2106 specifically excludes the preparations made from fruit, nuts or other edible parts of plants of heading 20.08, provided that the essential character of the preparations is given by such fruit, nuts or other edible parts of plants. Therefore, it is evident that the entry 2106.90 is a residuary entry in respect of edible preparations and hence the edible preparations shall be classified under this entry only if the same are not classifiable under any of the other specific entries for edible preparations. It is noticed that as per chapter note 1(a) to chapter 20, the chapter does not cover vegetables, fruits or nuts prepared or preserved by the processes specified in chapter 7, 8 or 11. It means that these items not being processed or preserved by the said processes shall be covered in chapter 20. The processes specified in chapter, 7, 8 or 11 are freezing, steaming, boiling, drying, provisionally preserving and milling. Chapter heading 2008 covers roasted, salted or roasted nuts and fruits such as ground nuts, cashew nuts, other seeds and nuts and these are specifically covered under said heading vide sl. No. 40 of schedule II to notification No. 1/2017-CT (rate) - there remains no doubt that the roasted/salted/roasted and salted ground nuts, cashew nuts and other seeds/nuts shall be appropriately classifiable under heading 2008 of customs tariff. Even otherwise also, heading 2106.90 being a residuary heading shall not stand against a specific heading 2008 as per Rules of interpretation of the tariff. Banana chips - tapioca chips - potato chips - jackfruit chips - sharkara varatty - HELD THAT:- These chips are made by slicing, frying, adding salt or masala or jaggery syrup before packing and supply. It is not the case of the appellant that the essential characteristics of the fruits or vegetables are getting changed by applying the processes. As far as the essential nature of the products remains unchanged, the edible parts of plants are appropriately classifiable under heading 2008. In this case, the raw banana or potato or jackfruit or tapioca even after going through the process of frying and salting remain as vegetables and fruits only. The process of frying in oil and roasting are cooking methods wherein high temperature is used for processing of the edible parts of the fruit or vegetables as in this case - The process of roasting and frying has not been excluded in Note 1 to Chapter 20 and as such Note 1 is applicable to Roasted and fried vegetables, fruits, nuts and edible parts of plants. Further the explanatory notes to heading 2008 specify that this heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter. When according to chapter notes and description of tariff items, the products are classifiable under specific headings of Chapter 20, they cannot be classified under Heading 2106 as food preparations not elsewhere specified or included or under Chapter 8 as claimed by the appellant. By applying the rules for interpretation of the tariff, specially rule 1, 2 and 3 of the same, it is evident that the impugned goods are appropriately classifiable under heading 2008 and not under heading 2106 - when there is a specific entry providing for the most specific description in the heading 2008 to the impugned products over the residuary heading description of heading 2106.90, the said impugned goods is held appropriately classifiable under heading 2008, by virtue of rule 3(a) of the rules for interpretation. In view of clear provisions in GST laws for interpretation of tariff, the contention of the appellant regarding common parlance understanding of a goods does not hold water, as is therefore rejected. All the other contentions of the appellant are rejected being not tenable and impugned goods viz. Jackfruit Chips, Banana Chips, Tapoica Chips, Potato Chips, Chembu Chips and Pavakka Chips (Bittergourd) (Whether salted/ masala or otherwise) are held classifiable under Tariff Heading 2008 19 40 of the Customs Tariff Act, 1975. Regarding classification of roasted/salted/roasted and salted Cashew nuts, Ground nuts, and other nuts, there are specific headings under Chapter 20 that covers the products. Accordingly, roasted /salted / roasted and salted Cashew nuts are held classifiable under Tariff Heading 2008 19 10, and other roasted/ salted / roasted and salted nuts and seeds are classifiable under 2008 19 20 of the Customs Tariff Act, 1975.
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Income Tax
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2022 (3) TMI 973
Reopening of assessment u/s 147 - Notice issued after the expiry of 4 years from the end of relevant year - e ligibility of reasons to belive - change of opinion - Allowability of subsidy received and the provision for expenses - HELD THAT:- Both the issues raised in the reasons for reopening were subject matter of consideration before the Assessing Officer. When primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence the proceedings for reassessment. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. We are satisfied that the proposed reopening is purely based on change of opinion which is not permissible in law. The notice, therefore, has to go. It is settled law that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee.
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2022 (3) TMI 972
Addition u/s.36(1)(va) read with section 43B - delayed payment of employees contribution to EPF ESIC etc - HELD THAT:- Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f. 01.04.2021. The effect of this amendment is that if the amount of employees contribution towards EPF, ESIC, etc is delayed by an employer beyond the due date under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date u/s 139 of the Act. The Memorandum explaining the provisions of the Finance Bill, 2021, provides that this amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to assessment year 2021-2022 and subsequent assessment years. Since the assessment year under consideration, namely, 2017- 18 is anterior to the amendment carried out with effect from A.Y. 2021-22, I hold that the position of law as set out by various Hon ble High Courts including the one in CIT vs. Nipso Polyfabriks Ltd.[ 2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] squarely applies to the facts and circumstances of the instant case thereby not warranting any disallowance as the amount in question was admittedly deposited before due date u/s 139(1) - Appeal of assessee allowed.
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2022 (3) TMI 971
Maintainability of appeal before ITAT when CIRP proceedings have been initiated - in the case of the assessee, the matter is pending before the Insolvency Professional in terms of the Insolvency and Bankruptcy Code, 2016 ( the Code ) and moratorium period has been declared as per section 14 of the Code - HELD THAT:- As per the provisions of section 14 of the Code institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority shall be prohibited during the moratorium period. The period of moratorium shall have the effect from the date of such order till the completion of the corporate insolvency resolution process. In the present case, the appeal filed by the Revenue is an institution of suit against the corporate debtor, which is prohibited under section 14 of the Code. Hon ble Supreme Court in the case of Pr. CIT v. Monnet Ispat Energy Ltd. [ 2018 (8) TMI 1775 - SC ORDER] has upheld overriding nature and supremacy of the provisions of the Code over any other enactment in case of conflicting provisions, by virtue of a non-obstante clause contained in section 238 of the Code. It is further pertinent to note that under section 178(6) of the Act, as amended w.e.f. 01.11.2016, the Code shall have overriding effect. As per section 31 of the Code, resolution plan as approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Thus, this will prevent State authorities, Regulatory bodies including Direct Indirect Tax Departments from questioning the resolution plan. Therefore, there is no reason to keep this appeal pending. In view of the above, we dismiss the appeal filed by the Revenue with the liberty to the Assessing Officer to file the appeal afresh after completion of moratorium period upon the revival of the Corporate Debtor as per Resolution Plan as approved by the Adjudicating Authority or upon appointment of the Liquidator, as the case may be. The appeal filed by the assessee also cannot be sustained as the assessee did not furnish any permission obtained from Hon ble NCLT as held by the Hon ble Madras High Court in Mrs. Jai Rajkumar v. Standic Bank Ghana Ltd.[ 2019 (1) TMI 1254 - MADRAS HIGH COURT] . Further, no letter of authority issued by the Interim Resolution Professional in favour of the Authorised Signatory of the assessee, in respect of present cross-appeals before us, has been filed. Nor it has been brought on record whether the Interim Resolution Professional has been authorised by the Committee of Creditors. Appeal filed by the assessee is also dismissed with the liberty to file the appeal afresh by the Interim Resolution Professional / Resolution Professional, as may be substituted by the Hon ble NCLT, on behalf of the Corporate Debtor with prior permission of the Hon ble NCLT
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2022 (3) TMI 970
Delayed Employees contribution to provident fund and employees state insurance, u/s. 36(1)(va) - HELD THAT:- The question whether the payments made beyond the due date prescribed under respective statutes, but before the due date prescribed u/s. 139(1) of the Income tax Act was considered and decided in favour of the assessee in the case of M/s. Shakuntala Agarbathi Company [ 2021 (10) TMI 1196 - ITAT BANGALORE] held that the assessee would be entitled to deduction of employees' contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s. 139(1) of the I.T. Act. Also the amended provisions of section 43B as well as 36(1)(va) of the I.T. Act are not applicable for the assessment year under consideration. By following the binding decision of the Hon'ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd. [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] the employees' contribution paid by the assessee before the due date of filing of return of income u/s. 139(1) is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. - Decided in favour of assessee.
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2022 (3) TMI 969
Deduction u/s 80IB(10) - unaccounted receipt - HELD THAT:- It is undisputed fact that impugned on money was pertained to the undisclosed business receipt attributable to the Pimpri project of the assessee. A.O has not proved contrary to the claim of the assessee that the aforesaid on money was business receipt - Following the decision of M/S. SURANA MUTHA BHASALI DEVELOPERS VERSUS ACIT, CIRCLE 11 (2) , PUNE [ 2021 (7) TMI 104 - ITAT PUNE] . We direct the A.O to allow deduction u/s 80IB(10) - Accordingly, the appeal of the assessee is allowed.
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2022 (3) TMI 968
Disallowing interest outgo on bank loans/ overdrafts as business expense - Whether CIT(A) has erred affirming with Ld. AO in not considering the additions as part of total income of the coop credit society and hence allowable as deduction u/s 80P(2)(a)(i) - HELD THAT:- It is undisputed fact that assessee had borrowed money against its own fixed deposit to advance the same to the member of the society. The assessee has categorically submitted before the ld. CIT(A) that interest paid to the bank was expenditure and not the income of the society, however, without disproving contrary the CIT(A) has rejected the claim of the assessee, for payment of interest on loan to the bank which was a part of its expenditure and not income. In this regard we have also perused the decision of coordinate bench of the ITAT, Delhi ACIT Vs. M/s Sangwari Primary Agr. Co-op Society Ltd. [ 2012 (12) TMI 1224 - ITAT MUMBAI] Thus payment of interest to the bank is an expenditure of the assessee and not income of the society, therefore, the ld. CIT(A) is not justified in confirming the said addition made by the A.O, therefore, ground no. 1 of the assessee is allowed. Since, we have allowed ground no. 1 of the assessee, therefore, ground no. 2 of the assessee for claiming deduction u/s 80P(2)(a)(i) of the Act on the amount of addition sustained by the ld. CIT(A) is not required any adjudication. Appeal of the assessee is partly allowed.
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2022 (3) TMI 967
Unexplained cash deposits u/s 68 - bank account in which the cash was deposited was a joint account of the assessee with his father - HELD THAT:- It is an undisputed fact that the That both were in the business of contractors and had returned income on presumptive basis u/s. 44AD @ 8% net profit on business receipts - which has been accepted in scrutiny assessment by the Revenue. DR was unable to controvert the above facts before us. We fail to understand how the entire cash deposited has been/could be attributable to that belonging to the assessee alone particularly when no reason has been given by the Revenue for doing so. Noting that the admitted business receipts of the assessee and his father were in the ratio of 1: 2.5, it would be reasonable to attribute the cash deposits in the said bank account in the same ratio, applying which the cash deposits attributable to the assessee at the most comes to ₹ 9,16,500/- (32,08,00 x 1/3.5). The addition in any case of unexplained cash deposits, we hold, could not have exceeded ₹ 9,16,500/-. Since the entire exercise is based on surmises and approximations, the resultant unexplained cash deposit of ₹ 3 lacs odd out of total cash deposits of ₹ 32,08,000/-, being barely 10% of the same is too immaterial to be treated as cash deposit remaining unexplained. We therefore hold that there was no case at all for making any addition on account of unexplained cash deposits. The addition therefore made ₹ 12,83,200/- is accordingly directed to be deleted. - Decided in favour of assessee.
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2022 (3) TMI 966
Addition u/s.14A r/w. Rule 8D being 0.5% of the investment made in earning exempted income - main plea of the assessee before us is that the assessee has no exempt income, being so, there cannot be any disallowance u/s. 14A r/w. Rule 8D - HELD THAT:- AO observed in his order that disallowance u/s.14A could be made even in a year in which no exempt income has been earned or received by the assessee. In our opinion, as decided in the case of PCIT v. Texport Overseas Pvt. Ltd. [ 2019 (12) TMI 1312 - KARNATAKA HIGH COURT] disallowance u/s. 14A should be limited to the exempt income. Accordingly, we hold that where there is no exempt income, no disallowance could be made by the AO and direct the AO to disallow the expenditure to the exempt income only. If there is no exempt income, no disallowance should be made. Addition on account of amount deducted from profit which is the amount written back in the balance sheet out of BWSSB deposit collected from the flat owners and already offered to tax - contention of the Ld. AR is that this amount has been offered to tax in the AY 2012-13 - HELD THAT:- AR drew our attention to the assessment order for AY 2012-13 dated 14.8.2014 and submitted that the unutilized deposits has been offered to tax for the AY 2012-13 and amount of ₹ 1.09 crores has been included in this amount and same cannot be treated as income for the current AY 2014-15. In our opinion, this requires verification at the end of AO whether the sum is considered as income on account of unutilized deposits in the AY 2012-13 and if it is actually included, the same cannot be taxed in the assessment year under consideration. Accordingly, the issue is remitted to the AO for fresh consideration. Deduction u/s. 80G - Claim denied on the reason that the assessee has not produced any documentary details of donation - assessee before us filed copies of donation receipts and pleaded that the issue may be remitted to the AO for fresh consideration - HELD THAT:- In our opinion, these details were part of the books of account and produced before the AO which are not properly examined by him. Being so, in the interest of justice, we remit the entire issue to the file of AO for fresh consideration. He should take note of these donation receipts and decide the issue in accordance with law. Amount collected towards corpus fund - application of section 28(iv) or 41(1) - HELD THAT:- In the present case, the amount collected towards corpus fund was lying with assessee and it is not perquisites in the hands of the assessee so as to apply the provisions of section 28(iv) of the Act. There is no cessation of liability and it is shown as outstanding liability in the books of account. Being so, the CIT(Appeals) rightly deleted the same. We do not find any infirmity in his order and the same is confirmed. The revenue's appeal is dismissed.
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2022 (3) TMI 965
TDS u/s 195 - disallowance of online advertisement expenditure under section 40(a)(i) - whether online advertisement services are in the nature of royalty under section 9(1)(vi) of the Act on which TDS is applicable - HELD THAT:- We are of the opinion that the similar issue came up for consideration before the Tribunal in the case of Moonfrog Labs Pvt. Ltd.[ 2022 (1) TMI 1089 - ITAT BANGALORE] - Thus we remit the issue to the file of AO with similar directions. AO shall call for the Master Services Agreement which reveals the type of services rendered by the service provider. The assessee is directed to cooperate in the proceedings before the AO by providing all relevant information. We have placed reliance on Supreme Court judgment in the case of Engineering Analysis Centre of Excellence P. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] we have not considered the order of the coordinate Bench of the Tribunal in the case of Urban Ladder Home D cor Solutions Pvt. Ltd. 2021 (8) TMI 927 - ITAT BANGALORE] . Appeal is allowed for statistical purposes.
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2022 (3) TMI 964
Long Term Capital Gains arising from the JDA - determine correct value of consideration received as a result of transfer of property - HELD THAT:- In this case, AO has adopted fair market value of the building at ₹ 6544 per sq.ft by considering compensation paid by the assessee to the builder @ ₹ 11,544 per sq.ft, including UDS, cost of land @ 5000 per sq.ft and determined value of building at 6544 per sq.ft. In our considered view, the method adopted by the AO is incorrect, because amount paid by the assessee to the builder, includes profit element of the builder and therefore, same cannot be considered for the purpose of determining full value of consideration in the hands of the assessee. At the same time, though, the assessee claims to have taken cost of construction of building @ ₹ 3500 per sq.ft, but no evidence has been filed to justify rate, including any confirmation from builder. In case, rate adopted by the assessee is supported by an evidence, then same may be considered for computing full value of consideration. Since, facts are not clear, we are of the considered view that the issue needs to go back to the file of the Assessing Officer to determine correct value of consideration received as a result of transfer of property. Deduction towards amount paid to builder as compensation for sharing less constructed area - HELD THAT- Amount paid by the assessee to the builder to compensate lesser super built up area amounts to expenses of transfer which needs to be allowed as deduction, when the Assessing Officer has not disputed fact that the assessee has paid compensation to the builder. Further, although the assessee has not made claim in the return of income, but claim was made in the revised statement of total income filed before completion of assessment. Therefore, in our considered view, the Assessing Officer should have entertained claim of the assessee. Hence, we direct the Assessing Officer to allow claim of the assessee towards compensation paid to builder as expenses of transfer. Deduction towards encumbrance cost / cost of improvement, although the assessee claims to have discharged encumbrance on the property by paying loan availed from banks - HELD THAT:- It is well settled principle of law by the decision of the Hon'ble Supreme Court in the case of V.S.M.R. Jagadishchandran (Decd.) [ 1997 (7) TMI 6 - SUPREME COURT] if previous owner creates encumbrance on the property and subsequent owner discharge encumbrance, then amount spent for discharging encumbrance amounts to cost of acquisition / improvement of the property. In this case, the assessee claims that there was encumbrance on the property and the same has been discharged by him, whereas, the authorities below recorded categorical finding that encumbrance was created by the present owner, but not previous owner. The facts are contradictory. Therefore, we are of the considered view that this issue also needs to go back to the file of the Assessing Officer to ascertain correct facts and also decide the issue in light of decision of the Hon'ble Supreme Court in the case of V.S.M.R. Jagadishchandran (Decd.) Vs. CIT (supra). The issue needs to go back to the file of the Assessing Officer to recompute long term capital gain derived from transfer of property, in pursuant to joint development agreement, in light of our discussions given hereinabove. Hence, we set aside this issue to the file of the Assessing Officer and direct the A.O. to reconsider the issue in accordance with law. Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (3) TMI 963
Disallowance of gratuity paid u/s. 43B - HELD THAT:- AO while processing the return filed by the assessee u/s. 143(1) has made additions towards gratuity payment on the ground that the assessee has claimed deduction towards provision for gratuity. Assessee claims that deduction towards gratuity expenses is on payment basis, for which, necessary evidence has been filed before the CIT(A). We find that the assessee has paid gratuity to employee's through cheque drawn on ICICI Bank and the same has been debited to gratuity expenses account. From the details filed by the assessee, we find that deduction claimed towards gratuity expenses is on actual payment basis, but not on provision made for gratuity expenses - AO as well as the CIT(A) were erred in disallowing gratuity expenses u/s. 43B of the Act. Hence, we direct the AO to delete the additions made towards gratuity expenses. Denial of MAT credit u/s. 115JB - AO denied the MAT credit, because of additions towards gratuity expenses and employees' contribution to PF ESI, the income declared by the assessee turned to be positive and hence, computed tax under normal provision of the Act and denied MAT credit - HELD THAT:- As assessee contended that since additions made by the AO towards employees' contribution to PF ESI has been deleted by the Ld. CIT(A) and further MAT credit relates to disallowance of gratuity is consequential and hence suitable directions may be given to AO to verify and allow MAT credit in accordance with law. We find that MAT credit entitlement of the assessee is consequential and hence, we direct the AO to verify the entitlement of the assessee towards credit and allow credit, if any, after computing income as per provisions of Sec. 115JB of the Act and also under normal provisions of the Act. Disallowance of membership fee paid to club u/s. 37 - HELD THAT:- There is no merit in the arguments taken by the assessee, then the adjustment made by the AO towards disallowance of subscription fee paid to club is not permissible u/s.143(1)(a)(iv) - As regards, the contention of the assessee that subscription fee paid to club is for overall development of the business and thus, it partakes nature of expenses incurred wholly and exclusively for the purpose of business, we find that unless assessee demonstrate with relevant evidences that subscription fee paid to club, is for the purpose of business of the assessee and said expenditure is aided for overall development of the assessee, it cannot be held that expenses, at personal in nature, is in the nature of business expenditure incurred wholly and exclusively for the purpose of business, since the assessee has not demonstrated with any evidences and proved that subscription fee paid to club is for the purpose of business. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make disallowance towards subscription fee paid to club. We are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the assessee.
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2022 (3) TMI 962
LTCG computation - Exemption u/s. 54 - AO has rejected the revised statement of total income filed by the assessee to compute long term capital gains from transfer of property on the basis of consideration received as per sale agreement, only on the ground that the claim of the assessee cannot be entertained unless a claim is made by filing revised return - HELD THAT:- We are of the considered view that when the assessee has filed a revised statement of total income considering full value of consideration as per sale agreement, the Ld. CIT(A) ought to have entertained the fresh claim of the assessee towards computation of long term capital gains and exemption claimed u/s. 54 of the Act. Hence, we direct the AO to consider the revised statement of total income filed by the assessee, enhancing the computation of long term capital gains from sale of property on the basis of sale consideration received as per sale agreement. Exemption u/s. 54 - We are of the considered view that once, the source of money is not disputed and which has come from sale of property, then any surplus money including additional consideration would also partake character of income generated from that source. This principle is supported by the decision of ITO v. Abraham Varghese Charuvil [ 2017 (4) TMI 1148 - ITAT COCHIN] . In this case, the source of additional money is not disputed by the AO, because the AO has made additions towards difference in sale consideration on the basis of Sale Deed and sale agreement - once the source of income is not disputed, then the AO ought to have considered the additional income, if any, from that source as a part of income generated from the source itself - direct the AO to consider the revised long term capital gains computed by the assessee on the basis of sale consideration as per sale agreement and allow the benefit of exemption u/s. 54 of the Act as per revised computation, because, the investment made by the assessee for purchase of house property at Bangalore, is more than the amount of long term capital gains derived from sale of house property. Appeal of assessee allowed.
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2022 (3) TMI 961
Delayed payments of employees' contribution to ESI PF account within the due date provided under the PF ESI Act - HELD THAT:- As relying on Lumino Industries Limited [ 2021 (11) TMI 926 - ITAT KOLKATA] if employees' contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed.
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2022 (3) TMI 960
Deduction u/s.80IA - claim denied as Assessee company failed to follow the due procedure in filing of Form No.10CCB electronically - Assessee had not claimed deduction in the original return filed but made a fresh claim by filing a letter dated 17.09.2015 and the due procedure for filing of Form 10CCB was not followed - as per AO the provisions of Section 80AC of the Act is mandatory - HELD THAT:- We have noted that the provisions of Section 80IA(5) only requires filing of return of income but nowhere it states that the claim should be made in the original return and not by way of original return - when the original return was filed within the due date, then the revised return filed, thereafter, before the completion of assessment proceedings, is to be considered by the AO, because the Act has given an opportunity to the Assessee to file his return u/s.139(4) of the Act for the removal of defects or omission in the original return. Here, in the present case, the Assessee has made a claim by filing a letter during the course of the Assessment proceedings and once the claim is made during the course of the assessment proceedings, the Assessing Officer has to consider the same and decide. We noted that there is no dispute as regards to merits of the claim of deduction u/s.80IA of the Act. Hence, we find not infirmity in the order of the Commissioner of Income Tax (Appeals) and the same affirmed. - Decided against revenue.
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2022 (3) TMI 959
Revision u/s 263 by CIT - Allowability of claim of deduction u/s.80IA - HELD THAT:- We noted that the PCIT himself admits that there are different views possible on this issue and issue is highly debatable. Once the issue is highly debatable no revision is possible invoking the provisions of section 263 of the Act. Hence, we quash the revision order passed by PCIT u/s.263 of the Act and allow the appeal of the assessee.
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2022 (3) TMI 958
Jurisdiction of income tax authorities - Transfer of case u/s 127 - Transfer of jurisdiction from the ITO to the ACIT/DCIT - A.R. has contended that in this case notice u/s 143(2) issued by ITO, Ward- 26(2) had no valid sanction of law, because he had no pecuniary jurisdiction over the case and that no notice u/s 143(2) was issued by the ACIT, Circle-26(1), Kolkata to assume jurisdiction to frame assessment u/s 1434(3) - HELD THAT:- Jurisdiction to transfer case from one AO to other Officer lies with the Officers as mentioned in section 127(1) who are of the rank of Commissioner or above. No document has been produced on the file by the Department to show that the case was transferred by the competent authority from Income Tax Officer to ACIT. The notice u/s 143(2) has been issued by ITO which was beyond his jurisdiction and the same was therefore, void ab initio. Under the circumstances, the assessment framed by ACIT, is bad in law as he did not issue any notice u/s 143(2) of the Act to assume jurisdiction to frame the assessment. CIT(A), this respect has placed reliance on the decision in the case of Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] wherever the Hon ble Supreme Court has held that issue of notice u/s 143(2) is sine-qua-non to assume jurisdiction to frame assessment - The decision of Hon ble Calcutta High Court in the case of Kusum Goyal [ 2010 (4) TMI 655 - CALCUTTA HIGH COURT] to hold that a valid order u/s 127 of the I.T.Act is required to be passed to transfer the case from one Assessing Officer to other AO. Appeal of the revenue stands dismissed.
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2022 (3) TMI 957
Taxability of Interest earned as per the provisions of section 244A - interest on income-tax refund received at the time of processing of return u/s.143(1) - HELD THAT:- If the amount of interest on income-tax refund received at the time of processing of return u/s.143(1) in the financial year relevant to the assessment year under consideration is charged to tax, which has eventually been refunded on completion of assessment u/s 143(3) in the year 2017, and later on the assessee becomes entitled to refund through some appellate proceedings and again receives interest u/s.244A, that also covers interest for the period from the A.Y. 2012-13 up to the date of grant of earlier refund on 12.3.2014, which will have to be necessarily charged to tax in the year of receipt, then the amount of interest initially received on processing of return u/s.143(1) during the year under consideration would stand charged to tax twice, which is impermissible under the law. Had it been a case of the assessee receiving refund along with interest on 12.3.2014 simpliciter not followed by any regular assessment u/s.143(3), thereby assigning finality to the processing of return u/s 143(1), the amount of interest on income-tax refund would have merited inclusion in the total income of the year of receipt itself. C Thus we are satisfied that the ld. CIT(A) was justified in holding that interest on income-tax refund amounting to ₹ 1.18 crore cannot be charged to tax on the processing of return u/s.143(1) during the year under consideration for the raison d etre that the regular assessment made in the year 2017 resulted into creation of demand and wiping out the refund already granted to the assessee along with recovery of interest. This ground is, therefore, not allowed. Education cess as an allowable expenditure - Revenue has set up a case that the provisions of section 40(a)(ii) have not been taken into consideration - HELD THAT:- It is seen that this issue is no more res integra in view of the judgment of Hon ble jurisdictional High Court in Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] laying down that education cess is not disallowable expenditure u/s.40(a)(ii) of the Act. Similar view has earlier been taken by the Hon ble Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd. and Another Vs. JCIT ([ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] - Since the ld. CIT(A) s view accords with that of the Hon ble jurisdictional High Court, we, ergo, accord our imprimatur to the same. This ground is not allowed.
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Customs
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2022 (3) TMI 956
Recovery proceedings while appeal in pending in the absence of any Stay order - Valuation of imported goods - rejection of declared value - price declared was comparable to the value derived from NIDB or not - Rule 41 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 - HELD THAT:- It is evident that the appellant has filed an appeal before the Tribunal, as against the order dated 25.04.2019 passed by the Commissioner of Customs (Appeals-II) in Order in Appeal SEA.C.Cus II No.338/2019. Pending appeal, the appellant filed two applications, one for grant of interim stay and another for fixing a date for final hearing of the appeal. The Tribunal fixed 11.03.2020 as the date for final hearing of the appeal and therefore, the appellant withdrew the application for grant of interim stay. However, it is stated that due to want of coram and prevalence of Covid-19 Pandemic situation, the appeal could not be taken up for hearing on the date fixed by the Tribunal. The appellant has filed the instant application for restoration of the application for interim stay by stating that the department is attempting to implement the order-in-original (denovo) No.64397/2018 dated 11.07.2018 passed by the Deputy Commissioner of Customs, which was confirmed by the first appellate authority on 25.04.2019, notwithstanding the fact that the order dated 25.04.2019 is the subject matter of appeal pending before the Tribunal. The application for restoration of the stay application filed by the appellant was rejected by the Tribunal on 24.01.2022, which has prompted the appellant to approach this Court with this appeal. It is evident that the appeal filed by the appellant is pending for quite some time and during the pendency of the appeal, it is contended that the Department is seeking to implement the order passed by the original authority. It is also seen that the appellant withdrew the application for interim stay when the Tribunal fixed a date for final hearing of the appeal - The respondent shall not make any recovery from the appellant till the disposal of the appeal pending before the Tribunal. Appeal disposed off.
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2022 (3) TMI 955
Seeking direction to the respondents for release of the vehicle - fraudulent import of high-end luxury vehicles by importing them into India in the name of foreign diplomat - evasion of customs duty - Section 110A of the Customs Act, 1962 - HELD THAT:- The provisional release order dated 29.11.2021 is modified by striking off condition No.3 . Insofar condition No.1 is concerned, petitioner shall deposit 50% of the duty amount mentioned therein by way of cash / demand draft and the remaining 50% shall be covered by way of bank guarantee of a nationalised bank. This exercise shall be done within a period of two (02) weeks from the date of receipt of a copy of this order whereafter the seized vehicle shall be provisionally released to the petitioner. Petition is disposed off.
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2022 (3) TMI 954
Valuation of imported goods - Canada Whole Green Peas - restricted goods, in terms of the Mandatory Compliance Requirements/Appraising Instructions, or not - granting of redemption option without ordering for absolute confiscation - penalty - HELD THAT:- The findings in the impugned order as regards non-violation of minimum import price as well as port restriction has attained finality, as there being no specific challenge by the Revenue. The very fact that the adjudicating authority himself has ordered confiscation but, however, has also granted an option for redemption of goods on payment of fine has also not questioned by the Revenue. Section 125 ibid. prescribes for providing an option to pay in lieu of confiscation, in case of any goods the importation or exportation of which was prohibited under this Act or under any other law for the time being in force, subject to the conditions laid down thereunder. Such option could be offered to the owner of the goods or, where such owner is not known, to the person from whose possession such goods were seized and hence, the appellant could be treated as other person from whose possession the impugned goods have been seized. The only short-coming here is the quantitative restriction and hence, the redemption fine and penalty should be commensurate with the quantity that exceeded the limit of import. Viewed thus, the redemption fine ordered to be paid is very much on the higher side - the redemption fine could be modified to the extent of ₹ 2.5 lakhs instead of ₹ 7.5 lakhs under Section 125 ibid - penalty imposed under Section 112 is on the higher side and hence, the same is directed to be reduced to ₹ 1 lakh. Appeal allowed in part.
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2022 (3) TMI 953
Valuation of imported goods - rejection of transaction value - enhancement of assessable value - mis-declaration of goods - mismatch of invoices - HELD THAT:- Only few goods were found to be mismatch with the invoice and packing list. It is found that the appellant had given cogent explanation based on the statement and clarification of the shipper, via E-mail, clarifying that due to a large variety of goods being small in nature there occurred error at the time of packing of the goods, resulting in some mismatch and finding of few undeclared goods which is not deliberate. It is found that the shipper had also offered to take back the undeclared goods as per the shipping documents. Thus, it is found that there is no case of any deliberate mis-declaration on the part of the appellant (importer) who had filed the Bill of Entry declaring the goods under import as per the invoice and packing list. Accordingly, the allegation of mis-declaration is set aside. Rejection of declared value - HELD THAT:- The court below have rejected the transaction value against the provisions of law without complying with the condition precedent for rejection. Further, it is found that the revaluation have been resorted to without following the due process of law - the rejection of transaction value as well as the revaluation of the goods done are set aside. Thus, the declared value as per the Bill of Entry is accepted. The order of confiscation as well as the redemption fine imposed are set aside - the penalty imposed on the proprietor Shri Joginder Singh under Section 112(a) of the Act are set aside - appeal allowed - decided in favor of appellant.
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2022 (3) TMI 952
Provisional release of seized goods - opportunity of hearing not provided to the appellants - violation of the principle of natural justice - reliance placed on CBIC Circular No 35/2017 dated 16.08.2017 for rejecting the request made by the appellants - HELD THAT:- From the reading of the communication dated 12.11.2021 and the referred circular, it is quite evident that ADG, has even while considering the request made by the appellant for the provisional release has concluded that the goods need to be absolutely confiscated, as the same are in his view covered by the definition of prohibited goods as per Section 2(33) of the Customs Act, 1962. Arriving at such a finding even without hearing the appellant is not only flagrant violation of the principle of natural justice but also suffers from the vice of reasonableness to be exercised by the administrative/ adjudicating authorities while exercising the discretion vested in them. In both the decisions which are backbone of the Board Circular, MALABAR DIAMOND GALLERY PVT. LTD. VERSUS THE ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF REVENUE INTELLIGENCE, THE COMMISSIONER OF CUSTOMS (IMPORT) , THE COMMISSIONER OF CUSTOMS (AIR) [ 2016 (8) TMI 530 - MADRAS HIGH COURT] and MALA PETROCHEMICALS POLYMERS VERSUS THE ADDITIONAL DIRECTOR GENERAL, DIRECTORATE OF REVENUE INTELLIGENCE ANR. [ 2017 (5) TMI 1234 - DELHI HIGH COURT] , it is found that both Hon ble Madras High Court and Hon ble Delhi High Court have cautioned that the discretion vested in terms of the Section 110A needs to be tested against the test of relevance and reasonableness. In the communication dated 12.11.2021, in para 2, ADG observes that some of the seized goods in the same proceedings for the same violations have been disposed of by the jurisdictional officers even prior to adjudication, and in para 3.4 observes that these goods would pose threat to safety and security of the power industry within the country. He also ignores the fact that Show Cause Notice dated 20.08.2019, which proposes the confiscation of these good under Section 111(d), (l) (m) of Customs Act, 1962, also demand the differential duty in respect of the past clearance of 213 consignments of the same goods. The order/ communication dated 12.11.2021 of the Additional Director General (Adjudication) DRI Mumbai cannot be sustained and the same is set aside. Matter remanded back to the original authority for consideration of the request for provisional release considering the test reports, policy provisions and other submissions made by the appellant - Appeal allowed by way of remand.
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2022 (3) TMI 921
Seeking restoration of the stay application - valuation of imported goods - foreign supplier being related company - correctness of the declared value - HELD THAT:- The appellant submits that valuation of the goods as done by the SVB should be stayed during pendency of the appeal. On the early date of hearing, Ld. Counsel had submitted that he does not wish to proceed with stay application as the early hearing of the appeal had been allowed. Thus the stay requested for in the present application is not from recovery of the demand but for stay of valuation and collection of duty for clearing the goods. Such a prayer cannot be allowed by the Tribunal. The EH application having been allowed by the Tribunal, the appellant can get relief for the earliest disposal of the appeal. There are no grounds for grant of stay as sought for in the application. The stay application is dismissed.
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Insolvency & Bankruptcy
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2022 (3) TMI 951
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - rejection of application on the ground of pre-existing dispute between the parties - HELD THAT:- The section 9 Application shows very clearly that nine invoices mentioned earlier Judgment were all taken together as part of the operational debt owed by the Corporate Debtor to the Operational Creditor. There are force in the argument of Ld. Counsel for the Respondent that the operational debt relating to the invoices cannot be bifurcated so that only such invoices which are not disputed are considered for the admission of Section 9 application. There is quite obviously a major dispute relating to supply of eighty-four tons of raw material, regarding which there was a big delay in supplying causing disruption production schedule and also loss of money due to increase price of raw material that had to be sourced from the open market to the Corporate Debtor. Detailed examination also makes it clear that a dispute existed between the two parties regarding the debit note and the amount of debt and both the parties were trying to resolve it. The demand notice was issued by the operational creditor on 18.06.2019 and the email communication to resolve the dispute was taking place between the Corporate Debtor and the Operational Creditor much before the issue of demand notice by the operational creditor. gave no reply and thereafter section 9 application was filed by the Appellant/Operational Creditor for initiation of CIRP. Thus, the issue of non-supply of eighty-four tons of raw material, which resulted in the Corporate Debtor raising a debit note of ₹ 12.50 lakhs which was not accepted by the Operational Creditor and became an element of dispute, is sufficient to show that there was a pre-existing dispute between the Operational Creditor and the Corporate Debtor regarding the debt and its payment. This pre-existing dispute is not illusory or a sham one created only to counter the claim of the Operational Creditor by the Corporate Debtor, but a real one. The Adjudicating Authority has not committed any error in rejecting the section 9 application on the ground of pre-existing dispute - there are no reason to interfere with the impugned order - appeal dismissed.
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2022 (3) TMI 950
Seeking rectification of mistake - mistake apparent on the face of record or not - Rejection of claim filed by the Respondent by RP - Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- RP s claim is that he was not given a notice of application I.A. No. 95 of 2021 and thus not given an opportunity to be heard, and in such a situation he was unable to place correct facts before the Adjudicating Authority. Therefore, this order may be rectified - such a request is not in the nature of seeking correction of clerical or arithmetical mistake and therefore, it was correctly rejected by the Adjudicating Authority. It is clear that 90 days period which is provided under Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 expired on 17.12.2019. The initial claim was submitted by the Respondent on 26.10.2020, more than 10.5 months beyond the expiry of time limit on 17.12.2019 for submission of proofs of claims. It is also evident that subsequent to the invitation of Expression of Interest on 18.08.2020, the prospective Resolution Applicants were short-listed in the 9th CoC Meeting on 22.10.2020 and even by this time the Respondent had not submitted his claim to the RP. The proposed resolution Plans were considered in the 9th CoC Meeting whereas the claim in question was sent to the RP on 26.10.2020. CoC had short-listed and considered the proposed resolution plans and till then no claim had been received from the Respondent. Thereafter, the Resolution Plans were considered and approved in the 10th CoC Meeting on 07.11.2020 and the approved Resolution Plan was submitted for approval of the Adjudicating Authority vide I.A. No. 5283 of 2020 on 25.11.2020. Thus, it is clear that when the claim was first submitted by the Respondent to the RP, the CoC had already opened the proposed Resolution Plans received on 17.10.2020 and had begun considering them on 22.10.2020. Quite obviously the CIRP was at an advanced stage nearing finalization of the Resolution Plan before the claim was submitted to the RP by the Respondent. In an appeal wherein rejection of a claim is being considered by the Adjudicating Authority, the RP who has rejected the claim should be heard to arrive at a judicious, fair and transparent decision. This has not been done in the present case - since the claim of the Respondent was submitted with inordinate delay and in view of the advanced stage of CIRP, it is held that the claim of the Respondent should not be included in CIRP since such an inclusion would mean that the resolution plans would have to be invited afresh leading to unnecessary delay in the resolution of the corporate debtor which could even jeopardize the eventual insolvency resolution of the corporate debtor. Application disposed off.
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2022 (3) TMI 949
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The existence of litigation clearly shows the disputes pending between the parties with regard to the calculation of dues. It is also evident from the reply to the Demand Notice that several conditions mentioned in the tender and the provisions of the Drugs and Cosmetics Act were violated by the applicant. The applicant included misbranded and adulterated drugs The packing of drugs was not as per the requirement of tender. A house fly was seen in one of the bottles of Cloxacillin injection. Numerous complaints regarding the quality of drugs supplied by the applicant herein were received from the Corporate Debtor s warehouses. The Corporate Debtor requested the applicant to replace the damaged and adulterated drugs. However, they did not respond to this request. Therefore, the Corporate Debtor sent a notice to the applicant asking them to appear in person to explain why they should not be blacklisted for non-adherence of tender conditions and violation of Drugs and Cosmetics Act. There is a pre-existing dispute with regard to the calculation of dues and that the Writ Petition with regard to the blacklisting of the Operational creditor for the supply of non-standard quality of drugs supplied by them is still pending before the Hon ble High Court of Kerala. The said fact is suppressed by the Operational Creditor in this application, as rightly pointed out by the Corporate Debtor/ Respondents - there are no merit in this application warranting admission for initiating Corporate Insolvency Resolution Process against the Respondent. Hence, this application which is bereft of merit is dismissed. It is stated that the Operational Creditor (Sic) (Corporate Debtor) has neither replied nor disputed the Demand Notice till date. Whereas, in the application on Page 23, the applicant itself has produced a reply received by them from the Corporate Debtor Kerala Medical Service Corporation Limited stating the pre-existence of dispute. The applicant has suppressed many facts and tried to abuse the process of law by filing this application. There are no merit in this application warranting admission for initiating Corporate Insolvency Resolution Process against the Respondent. Hence, this application which is bereft of merit is dismissed.
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2022 (3) TMI 948
Seeking directions to the Income Tax Department to release the lien on the Bank Account of Corporate Debtor under liquidation - HELD THAT:- The account of the Corporate Debtor had been seized at the instance and directions of Commercial Taxes, State of Bihar and this Adjudicating Authority had directed that since the Corporate Debtor was in the course of liquidation and in order to have completion of process of liquidation in expeditious manner, the department shall release the accounts which have been seized. The Income Tax Department are directed to immediately remove their lien from the Bank Account No. 691011002989, 691044000138 in Kotak Mahindra Bank which belongs to the Corporate Debtor under Liquidation - application disposed off.
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2022 (3) TMI 947
Rejection of Scheme of Arrangement/Compromise - HELD THAT:- The Scheme submitted by the Applicant in the present case was already considered by one of the major stakeholders in respect of the Corporate Debtor viz. Maximus ARC Limited and the same was rejected. Further, in any case in the stakeholders Consultation Committee held on 17.11.2020, the Stakeholders have decided to go for e-auction of the sale of the assets of the Corporate Debtor and has categorically stated that Liquidator need not wait for any Schemes since it would delay the completion of the Liquidation Process. The Liquidator was right in rejecting the Scheme of Compromise propounded by the Applicant - petition dismissed.
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2022 (3) TMI 946
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- In relation to the debt and default, it is seen that the Corporate Debtor already had acknowledged that a sum of ₹ 3,90,38,461/- is outstanding due and payable by the Corporate Debtor as on 31.03.2018. Further, it is seen from the records that the Corporate Debtor has not raised any dispute in relation to the amount which is due and payable to the Operational Creditor. All these would go on to show that there is an 'operational debt' and the Corporate Debtor has committed 'default' in repayment of such 'operational debt'. Time Limitation - HELD THAT:- It is evident from the perusal of the Invoices as filed by the Petitioner/Operational Creditor that the invoices have been raised during the period commencing from 28.04.2016 to 23.05.2016 and the last payment made by the Corporate Debtor to the Operational Creditor on 30.06.2018. The present Application under Section 9 of IBC, 2016 has been filed by the Operational Creditor before this Tribunal on 16.12.2020 and as such it falls well within the period of limitation. Further, the default arising in the present Application is has happened much before the advent of Covid-19 and hence the Corporate Debtor also cannot seek shelter under Section 10A of IBC, 2016 - this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.
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2022 (3) TMI 945
Seeking for a direction to cooperate and assist the Resolution Professional in conducting the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - Section 19(2) and 60(5) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Applicant is appointed and he has initiated the CIRP and the said process is a time bound one. On an assumption that if the order initiating the CIRP is recalled, this Application would become infructuous, the CIRP process cannot be hurdled by the non-cooperation of the Respondents. Section 19(1) of IBC, 2016, mandates that, the Personnel of the Corporate Debtor, its Promoters or any other person associated with the management of the Corporate Debtor shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the Corporate Debtor - Section 19(3) of the IBC, 2016 mandates that, the Adjudicating Authority, on receiving an application under sub-section (2), shall by an order, direct such personnel or other person to comply with the instructions of the Resolution Professional and to cooperate with him in collection of information and management of the Corporate Debtor. It is evident that there is a non-cooperation on the part of the Respondents to the Applicant. The reasons mentioned in the counter are not sufficient to dismiss the application. The contention that they have not received the documents from the earlier management inspite of they coming into management w.e.f. 01.06.2021 is not found to be tenable - there shall be direction to all the respondents to cooperate with the Applicant and provide all the information/documents/clarifications as and when required till the completion of the CIRP period including books of accounts for the smooth running of CIRP process of the Corporate Debtor. Application allowed in part.
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2022 (3) TMI 944
Initiation of contempt proceedings against the Respondent/Suspended Directors - wilful disobedience - time limitation - section 14(1)(c) read with 60(5)(a) of IBC - HELD THAT:- The question regarding the acceptance of time barred claim and interest was considered by the Coordinate Bench HIMALAYAN CREST POWER PVT. LIMITED VERSUS PANKAJ KHAITAN RESOLUTION PROFESSIONAL, M/S. SASI POWER PVT. LIMITED [ 2022 (2) TMI 206 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] and the time barred claim was rejected. The order passed in the application is also upheld by the Hon'ble NCLAT in [ 2022 (2) TMI 206 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] Therefore, applying the same principle, it is opined that the RP has rightly considered the claim and refused to accept the time barred claims and so, there is no illegality in the order dt. 21.08.2021. Therefore, the view taken by the RP need not be interfered. Application dismissed.
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FEMA
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2022 (3) TMI 943
Legality and validity of the seizure orders - HELD THAT:- The facts of the case reveal that before the learned Single Judge, though a prayer for quashment of seizure orders dated 26.08.2021, 30.09.2021 and 15.12.2021 was made, an interlocutory application was preferred for release of ₹ 15,35,45,317/- and the learned Single Judge has allowed the application. The writ petition itself has been disposed of by the impugned order dated 11.02.2022. In the considered opinion of this Court, once the seizure orders were not set aside and no statutory provision was brought to the notice of the learned Single Judge for release of such amount and the seizure orders have been affirmed by the competent authority under Section 37A(2) of the Act, no such provisional release could have been ordered by disposing of the writ petition itself. Learned counsel for the Union of India has also brought to the notice of this Court the press release issued by the Reserve Bank of India dated 24.02.2022 and the same reflects that even the banking licence of the respondent No.1/writ petitioner has been cancelled. However, as this Court is not dealing with the cancellation of licence, no comment has been offered in respect of such cancellation. Learned counsel for the respondent No.1/writ petitioner has stated that he does not have a copy of the aforesaid order and he is not aware of the same. Section 37A of the Act provides for a remedy of appeal and therefore, as now an order dated 04.02.2022 is in existence, the respondent No.1/writ petitioner shall certainly be free to prefer an appeal or to avail the other remedies available under the law. Resultantly, the order passed by the learned Single Judge is set aside and the writ appeal stands allowed.
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PMLA
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2022 (3) TMI 942
Seeking suspension of LOC issued against the Petitioner - seeking permission to travel to Dubai and Italy - HELD THAT:- During the pendency of the writ petition till November 22, 2021 no compliant under Section 45 of the PMLA was filed by the respondent No.1 before the Special Court. It was in the reply filed on December 28, 2021 to CM APPL. 47740/2021, the respondents for the first time stated that a second supplementary prosecution complaint has been filed before Special Court, PMLA, Rouse Avenue Courts, New Delhi on December 22, 2021 against the petitioner and others in Complaint Case No.75/2019 in ECIR/07/DZCR/2019 for the offence of money laundering as defined under Section 3 of the PMLA and the Special Court has taken cognizance of the complaint and issued summoning order, and accordingly, the writ petition is liable to be dismissed as the petitioner should approach the concerned Special Court, PMLA, where the trial of the petitioner is pending, for quashing of the LOC. It is seen that the respondents have taken objection on the maintainability of the petition at the first available opportunity and as such the plea of Mr. Handoo that the respondents have not taken any objection on the maintainability of the petition in their counter affidavit is unmerited. This Court is of the view that the plea of Mr. Hossain on the maintainability of the petition needs to accepted and the writ petition and connected applications are closed.
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2022 (3) TMI 941
Money Laundering - proceeds of crime - predicate/scheduled offence - registration of the subject ECIR, sustainable or not - Criminal liability or not - HELD THAT:- The trial of money laundering offence is independent trial and it is governed by its own provisions and it need not get interfered with the trial of scheduled offence. The PMLA, being a special enactment, contemplates a distinct procedure at the initial stage and thereafter provides for initiation of prosecution, in order to achieve the special purpose envisaged under the Act and as such, it cannot be construed that proceedings under the PMLA are to be equated with prosecution initiated under the criminal proceedings for predicate/scheduled offences. Thus, initiation of action under the PMLA cannot have any implication or impact in respect of registration of other cases, either under the Indian Penal Code or any other penal laws. The offence of money laundering contemplated under Section 3 of the PMLA is an independent offence. A reference to criminal activity relating to offence under PMLA has a wider connotation, and it may extend to a person, who is connected with criminal activity relating to scheduled offence, but may not be the offender of scheduled offence - It is not necessary that a person has to be prosecuted under the PMLA only in the event of such person having committed scheduled offence. Prosecution can be independently initiated under PMLA only for the offence of money laundering. Further, a careful perusal of Section 2(1)(u) of PMLA and the explanation thereof makes it clear that a wider definition is given to proceeds of crime including property not only derived or obtained from the scheduled offence, but also any property which may directly or indirectly be derived or obtained as a result of criminal activity relatable to a scheduled offence. Section 3 of PMLA further clarifies that a person shall be guilty of offence of money laundering, if such person is found to have directly or indirectly attempted to indulge or knowingly assists or knowingly is a party or is actually involved in concealment, possession, acquisition, use, projecting as untainted property, claiming as untainted property and the process or activity connected with the proceeds of crime is a continuing activity, which itself shows the offence of money laundering is a continuing offence - a bare reading of Sections 2(1)(u), 3 and 44(1)(d) of PMLA along with explanations thereof makes it clear that the offence of money laundering is a stand-alone offence and the trial proceedings are completely different to that of the scheduled offence. In the instant case, the dispute is not between two private individuals. The petitioner is alleged to have caused wrongful loss to MMTC, a public sector enterprise, to a huge magnitude of ₹ 194 crores. Basing upon the complaint lodged by MMTC, the CBI registered a case against the petitioner and basing upon the case registered by CBI, the Enforcement Directorate registered the subject ECIR basing upon the scheduled offences registered by the predicate agency. In the given facts and circumstances of the case, in the subject dispute, it cannot be said that civil liability is converted into criminal liability. The Enforcement Directorate has issued only summons under Section 50(3) of PMLA to the petitioner. Summons are issued to a person under Section 50(3) of PMLA requiring his attendance to give evidence or to produce any records during the course of investigation or proceedings. Hence, issuance of summons to the petitioner can neither be categorized as an act of prosecuting him, nor would make him an accused under PMLA. As rightly contended by the learned Assistant Solicitor General of India, if the petitioner proves his innocence before the ED authorities, he would not be charged with any offence under PMLA - the adjudicating authority under the PMLA is not trying a criminal case, but only decides the effect of breach of obligations by the concerned. Further, ECIR registered by Enforcement Directorate cannot be equated with an FIR under Section 154 of Cr.P.C. The petitioner, instead of cooperating with the investigation, filed this quash petition, which is nothing but a premature attempt to escape from his criminal liability, if any. This Court is of the considered opinion that continuation of proceedings in the subject ECIR against the petitioner would not amount to abuse of process of law. In the interests of justice also, the proceedings against the petitioner in the subject ECIR cannot be quashed - the Criminal Petition is dismissed.
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2022 (3) TMI 922
Issuance of summons - validity of issue of summons to appear before the Respondent No.1 and make a statement and disclose information despite the Petitioners being accused which is the subject matter of investigation - HELD THAT:- The writ petitioner No.2 has appeared before the Enforcement Directorate and therefore, in the considered opinion of this Court, no further orders are required to be passed in W.A.No.198 of 2016 and all the issues are left open. Learned counsel for the appellants has informed this Court that the appellant No.2 has already appeared pursuant to the aforesaid summons issued by the Enforcement Directorate and therefore, in the considered opinion of this Court, no further orders are required to be passed in W.A. No. 199 of 2016 also and all the legal issues are left open - Application disposed off.
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Service Tax
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2022 (3) TMI 940
Condonation of delay of 6 months and 22 days in filing appeal - rejection on the ground of time limitation or not - HELD THAT:- It is observed that learned Commissioner (Appeals) has rejected the appeal on the ground of limitation while laying emphasis upon the decision of Hon ble Apex Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] wherein it was held by Hon ble Apex Court that language used in section 35(1) of Central Excise Act which is para materia to Section 85(3A) of Finance Act and makes the position clear that legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days from the date of receipt of Orders-in-Original, which is the normal period for preferring appeal. Hon ble Apex Court observed that there is complete exclusion of Section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period beyond two months from the date of receipt of Order-in-Original. In these circumstances, it is observed that Commissioner (Appeals) has committed no error while rejecting the impugned appeal on the grounds of limitation. The simultaneous fact which is apparent beyond anybody s control is that during the said period of two months there had been unprecedented condition of outbreak of covid 19 panedemic resulting into complete nation wide lockdown. It is in view of these circumstances that the Tax department had issued ordinance No. 2/2020 extending the period of limitation with respect to the due date falling from 20.3.2022 to 27.6.2022 to 30.9.2020 - Keeping in view the same and mandate of article 141 of Constitution of India the period from 02.03.2020 when appeal would have been filed before Commissioner (Appeals), that Commissioner (Appeals) has not committed any error while dismissing the appeal on the ground of limitation, it being statutory mandate on the Commissioner (Appeals) on 25.09.2020 when appeal before him was actually filed is hereby excluded from the period of limitation. The period till 30.9.2020/ 28.2.2022 still remains excluded, hence appeal filed on 25.09.2020 is held to have been filed within the period of limitation. Irrespective that the benefit of both these announcements have to be extended in favour of the appellant. The matter cannot be held to have crossed the period of its limitation as the same was extended. This is a fit case to be remanded back to the Commissioner (Appeals) for adjudication on merits without considering plea of limitation The matter be preferably be decided within four months from the date of impugned order - the appeal stands allowed by way of remand.
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2022 (3) TMI 939
Refund/rebate of SBC and KKC paid on services used for supply of ATF to the foreign going vessels - Tribunal has jurisdiction to entertain the appeal filed against the impugned order passed by the Ld. Commissioner (Appeals) or not - Section 35EE of the Central Excise Act, 1944 as made applicable by Section 83 of the Finance Act, 1994 - HELD THAT:- The appellants have admitted the fact that the rebate/refund claim filed under Notification No.41/2012-ST dated 29.06.2012 pertains to exportation of goods. Insofar as the dispute relating to export of service is concerned, Section 86 ibid provides for filing of appeal before the Tribunal. The appeal provisions contained in Section 35 B ibid apply to the exportation of goods. The first proviso appended to sub-section (1) of Section 35B mandates that in case of rebate of duty of excise on the exportation of goods, no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide such appeal. In the present case, since the issue relates to rebate/refund pertain to goods, the case will squarely falls under Section 35B ibid and not under Section 86 ibid. In view of the fact that the goods were exported by the appellants, this Tribunal has no jurisdiction to entertain the appeal filed against the order passed by the learned Commissioner (Appeals). In such eventuality, the provisions contained in Section 35EE ibid would apply for filing of revision application before the Central Government. The preliminary submissions made by Revenue should be accepted that the present appeals filed by the appellants are not maintainable before the Tribunal - Appeal dismissed - decided against appellant.
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Central Excise
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2022 (3) TMI 938
Seeking direction upon the respondent nos.2 and 3 to return non-relied upon documents (Non RUDs) and relied upon documents (RUDs) as mentioned in the seizure list dated 12th September, 2017 - prohibition on respondents from adjudicating the show cause notice - applicability of Rule 24A of the Central Excise Rules, 2002 - extended period of limitation - principles of natural justice - HELD THAT:- The challenge to the show cause notice was rightly rejected by the learned Writ Court and therefore, to that extent the order passed in the writ petition stands affirmed. Applicability of Rule 24A of the Rules - HELD THAT:- It will be too late for the appellants to now harp upon the 30 days time limit for returning the documents as it is the appellants, who approached this Court not once but thrice for certain reliefs and in W.P. No.9985 of 2021 direction was issued to the authority to pass a speaking order on the request made by the appellants. Thus, the order dated 28th January, 2022 having been passed in accordance with the directions issued by this Court in the writ petition, the question of now invoking the 30 days time limit under Rule 24A does not arise. Whether the department was entitled to invoke the extended period of limitation under Section 11A of the Act? - HELD THAT:- It is not purely a question of law but a mixed question of law and fact and it is for the appellants to agitate the same while submitting reply to the show cause notice. It is noted that the submission of the learned counsel for the appellants that if the appellants are not afforded reasonable opportunity to examine the documents, they will not be in a position to submit an effective reply to the show cause notice. However, we wish to add a caveat to this submission that while it may be true that the appellants should have an effective opportunity to submit a reply to the show cause notice, that would not automatically entitle the appellants for return of the documents to them as the adjudication is yet to commence. If the appellants are permitted to examine the documents in the office of the respondents and permitted to take photostat copies of the relevant pages of the documents at the cost of the appellants and thereafter if the appellants are given time to submit reply to the show cause notice, it would fulfill the principles of natural justice. This appeal is partly allowed while affirming the order passed by the learned Single Bench in rejecting the challenge to the show cause notice.
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2022 (3) TMI 937
CENVAT Credit - duty paying invoices - wrongful availment of CENVAT credit on the strength of invoices issued by M/s. Jain Ispat without actually receiving the inputs of these invoices in their factory - HELD THAT:- There is no denial to the fact by the appellants that M/s. ASL has not challenged the impugned order vide which the entire demand against them to the tune of ₹ 69,13,299/- and ₹ 76,20,922/- along with the proportionate interest and penalty to the equal amount has been confirmed. Statement of Director of M/s. ASL, Shri Vikram Agnihotri is very much on record where he has admitted that on some occasions they were purchasing the iron and steel scrap from the market. Both the appellants have been admitted to be their raw material suppliers. When it came to proving the purchase of raw material respect of imports from the present appellants. Shri Vikram Agnihotri had not deposed as to who arranged the transport and who paid the freight while receiving raw material from the present appellants. There is no denial that M/s. Jain Ispat has been the dealer of scrap of M/s. ASL. Their premises also were got searched. The appellants defence against M/s. Jain Ispat has been discussed by the Adjudicating Authority in para 16 of order under challenge whereof it has been appreciated that the lorry receipts recovered from M/s. Jai Ispat premises were fabricated as the name of transport company and the telephone numbers mentioned in those lorry receipts were found bogus. Based upon the said evidence only the adjudicating authority had held that objective of the invoices issued by M/s. Jain Ispat and the said false lorry receipts were intended to assist M/s. ASL to avail the CENVAT credit on the goods fraudulently. Coming to the evidence against M/s. K G Ispat Ltd., admittedly no search was conducted in the premises of M/s. K G Ispat. Though the documents recovered from M/s. ASL are showing receipt of inputs under the invoices issued by M/s. K G Ispat during the period 2.5.2008 to 31.08.2008 but the documents recovered from M/s. ASL could not be corroborated from any of the documents from M/s. K G Ispat as no recovery from their premises was made by the department - No doubt the Director of M/s. ASL while deposing involvement of M/s. Jain Ispat has simultaneously named M/s. K G Ispat as well, but the only factum as far as M/s. K G Ispat is concerned is that there is nothing more than the third party evidence against M/s. K G Ispat. Penalty upon M/s. K G Ispat - HELD THAT:- The director of M/s. K G Ispat Shri Raj Kumar Gupta in his statement dated 28.5.2009 deposed that MS ingots(HC) cannot be used for rolling purpose. M/s. K G Ispat was admittedly the supplier of MS ingos (HC). No chemical report has been produced by the department to falsify the statement of Shri Raj Kumar Gupta. The statement of Shri Amit Shukla, Manager (Finance) of M/s. Raj Ratan Castings (P) Ltd. who was supplying the MS Ingots (HC) to M/s. K G Ispat also cannot be relied upon in absence of chemical analysis report or any other technical verification. Mere 3rd party evidence cannot be relied upon to fasten the penalty. Penalty upon M/s. K G Ispat is held to have wrongly been imposed. The penalty imposed on M/s. Jain Ispat has been upheld while the penalty of ₹ 10 lakh imposed on M/s. K G Ispat is hereby set aside - appeal allowed in part.
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2022 (3) TMI 936
Clandestine removal - shortage of finished goods - relied upon documents for demand provided or not - during adjudication in remand cross-examination were allowed or not - revenue has discharged burden to prove or not - HELD THAT:- Appellant s Factory was searched on 08.02.2011. Excise Duty demand of ₹ 23,613/- only is on shortage of 3.275 M/T of finished goods SS Patta Patti found at the time of search as compared to the recorded stock in daily stock account RG-1 and it has been concluded in O-I-O/O-I-A that the said quantity of 3.275 M/T valued at ₹ 2,29,250/- attracting Excise duty of ₹ 23,613/- was removed clandestinely by the Appellant M/s Sarvottam Steel Industries. Other demands worked out are totally of ₹ 13,30,355/- on the basis of LRs of M/s Alpesh Roadways, found from Factory of Appellant M/s Sarvottam Steel Industries, and from offices of of M/s Alpesh Roadways, [Transporter] at Ahmedabad and Rajkot alleging clandestine manufacture and removal of the finished goods by M/s Sarvottam Steel Industries, based on such LRs. Cross-examination of witnesses - HELD THAT:- By not allowing Cross Examination of witness u/s 9D of Central Excise Act 1944, adjudicating authority has destroyed case of Revenue and the entire case of Revenue in remand has vitiated proceedings, making the duty demand unsustainable for violation of the Principles of Natural Justice. Except these statements of witnesses and co-noticee, there is nothing on record to establish clandestine manufacture or removal of finished goods from the Factory of Sarvottam Steel Industries. Thus, when in remand Adjudicating Authority has neither provided all documents sought by Appellants nor allowed cross examination of any of the witnesses, then, all such statements and documents need not be considered as valid evidences and consequently, duty demands based thereon deserves to be dropped in the facts of this case. Shortage of 3.275 M/T - HELD THAT:- Settled judicial view is that stock taking would be conducted in a proper manner, which should obviously be supported by some material such as, weighment slip, counting slip etc., as the case may be. It cannot be on the basis of eye estimation or otherwise of employee witness [Amrishbhai] who is not allowed for cross examination to ascertain facts on shortage of goods found on 08-02-2011. Unsupported statement of representative of the assessee during stock verification, without allowing his cross examination is not sufficient to prove actual weighment as alleged - demand of ₹ 23,613/- on alleged shortage found on 08-02-2011 is not sustainable in the law. There are force in submissions of Appellants that in the remand proceedings, adjudicating authority has not followed judicial discipline and by not allowing cross examination of witness as sought by Appellants, the entire proceedings have been vitiated in facts of this case. In the second round of litigation, the Commissioner(Appeals) has also brushed aside submissions of Appellant by only general findings - as per Remand directions by Commissioner (Appeals) in the first round of litigation, allowing the cross examination of witness was mandatorily required in the facts of this case, to arrive at correct fact finding in the interest of justice. There is no other material placed on record by Revenue to justify excise duty demands. Therefore, the duty demand is also not sustainable on this legal ground alone. The disputed excise duty demands of total ₹ 13,53,968/- deserves to be set aside - When the duty demand is not sustained against main Appellant M/s Sarvottam Steel Industries, consequential demands of interest and imposition of penalties on all the Appellants would not survive and the same are also set aside - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 935
Incorrect availment and utilization of CENVAT credit - ineligible import services - short payment of duty on scrap sales - HELD THAT:- In the present case, the above mentioned scrap apparently reveals that no raw material has been used for those scrap to be generated nor the said scrap is the outcome of any process or any kind of deliberation or manipulation being done by appellant to their raw material. Those are not even the by-products emerging unintentionally in the process of manufacturing as is the case of bagasse in manufacture of sugar from sugarcane as raw material. The scrap in question is purely the leftovers of the packing material or the worn out parts of the consumables used by the appellant in their premises for various activities as different from manufacture. This particular observation is sufficient to hold that even Rule 6 of CCR, 2004 will not be applicable to the scrap in question even the Explanation to Rule 6 of CCR, 2004 does not deem non-manufactured goods as exempted goods as have been defined under Rule 2(d) of CCR, 2004. Even the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS WEST COAST INDUSTRIAL GASES LTD. [ 2003 (4) TMI 110 - SUPREME COURT] has held that no duty can be demanded on the material which is used for packing of the imports on which credit has been taken when such packing material is cleared from the factory of the manufacturer. It is based upon this decision that Department had issued a Circular No.721/37 dated 6th June, 2003. As already held from the description of the scrap on which duty has been demanded, it is clear that the scrap in question is non-excisable being non-manufactured product of the appellant. The demand of duty for the said reason itself is highly improper and illegal - Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 934
Irregular availment of Cenvat credit - inability to produce proper documents in support of such availment of Cenvat credit - reverse charge mechanism - Rule 9 of the Cenvat credit Rules, 2004 - demand of Service Tax on legal charges - Penalty imposed on the Director under Rule 26 of the Central Excise Rules, 2002 - HELD THAT:- The Appellant has produced their entire input Cenvat Credit Register certified by a Chartered Accountant and also produced copies of invoices said to be missing for the period 2012-13 in the Order-in-Original by the department - On perusal of such Registers and invoices, it is opined that it is not in dispute that the Appellant No.1 has received the goods or services on which Cenvat credit has been availed. The only dispute as alleged in the Show Cause Notice was relating to production of documents for the purpose of said Cenvat credit for which an independent verification has been done by the Range superintendent also vide its report dated 20/06/2017. To meet the ends of justice, it is deemed appropriate to remand the matter to the Ld. Adjudicating authority with a direction to verify all the documents which are in possession of the Appellant to the extent of the confirmation of demand of ₹ 2,36,08,399/- only. Needless to say that sufficient time and opportunity to represent be given to the Appellant. Demand of Service Tax on legal charges - HELD THAT:- It is seen from the documents submitted with the Appeal Paper book that the Appellant has not made any payments to the Advocate concerned and that the charges have been debited by the bank. Also from the invoice of the Advocate it is clear that the same has not been issued in favour of the Appellant. Hence the demand on such invoices cannot survive. Penalty imposed on the Director under Rule 26 of the Central Excise Rules, 2002 - HELD THAT:- The captioned case only relates to non- production of documents by the Appellant before the Department and there is no allegation of availment of Cenvat credit without receipt of goods and /or services. Hence the imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the Director is unjustified and we accordingly set aside the same with consequential relief as per law. Whether the learned Adjudicating authority has not verified the correctness of the verification report of the Range Superintendent? - HELD THAT:- The same is merely an assumption without any corroborative evidence in this regard produced by the Department. On the other hand the Ld. Commissioner has relied upon the verification report and based on that only the demand has been reduced for the Cenvat credit as it has been seen that the range Superintendent had verified the documents to that extent. It is also a fact that the Show Cause Notice had not disputed the receipt of goods and /or services and also that the Appellant had been paying Excise duty regularly in its ER 1 return for the manufacture of goods - It is clear that more than 17000 pages of documents were examined in details and the department has taken photo copies of all such documents, the assumption that the Appellant Company may not have the documents or original documents of Cenvat credit is something which cannot be acceded to. Appeal disposed off.
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2022 (3) TMI 933
Refund of CENVAT credit - distribution of credit in respect of advertisement services - reversal of credit made under protest - time limitation - unjust enrichment - Rule 7 of the Cenvat Credit Rules, 2004 - HELD THAT:- The rule as it existed at the material time has been interpreted by the Bangalore bench in the case of ECOF INDUSTRIES (P.) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2009 (10) TMI 171 - CESTAT, BANGALORE] where it was held that The restrictions sought to be applied by the Department in this case in limiting the distribution of the Service Tax credit made in respect of the Malur Unit on the ground that the services were used in respect of the Cuttack Unit finds no mention in the relevant rules. As such, restricting the distribution of Service Tax credit in a manner as has been done by the impugned order of the lower appellate authority (original authority had approved of such distribution) cannot be upheld. In case the Department wants to place such restriction as is sought to be placed in the case, the rule is required to be amended. As per this decision, the reason for denial of cenvat credit in terms of the rule as it existed during the material time cannot be sustained. Time Limitation - unjust enrichment - HELD THAT:- The grounds raised by the learned AR on issue of limitation and unjust enrichment do not carry forward the case of Revenue as we observed that these grounds were never taken by the original authority - In view of the specific provisions in Section 11B, the refund claim by the appellant could not have been denied on these grounds. It is observed that when the Revenue seeks to deny the credit distributed by the input credit distributor to amongst more than one office unit, then the credit is sought to be denied in a particular unit. For whatever reason the same credit would be admissible to another unit to whom this credit could have been properly distributed even after the amendment made in 2012, i.e. the total credit distributed to all the units remained the same, the only question can be with regard to the correctness of the credit distributed to a particular unit. If credit is sought to be denied at one place, input credit distributor should have been asked to distribute this credit to the other unit. Since this credit is admissible either to unit or its sister concern, there are no merits in the argument advanced by the authorized representative on the unjust enrichment. The claim of learned AR that the debit made under protest and the communication of audit should be treated as an appealable order, cannot be acceded to. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 932
CENVAT Credit - credit availed by the Appellant on the strength of invoices issued by its Head Office as ISD - whether loading services availed by the Appellant is eligible for credit - denial of credit on the ground that the subject input service for loading is not eligible for credit under the Credit Rules - time limitation - HELD THAT:- The credit has been denied merely on the ground that goods against which loading services have been availed have not been received by the Appellant in their factory. It is also found that the authorities have taken an erroneous view that in order to avail credit of service tax paid on loading services, the goods in respect of which such loading services have been availed, should have also been physically received in the factory of the Appellant which is not correct inasmuch as there is no such condition prescribed in the Credit Rules. The case would have been different had the credit of central excise duty been availed by the Appellant without bringing the goods in the factory which is not the case herein. Moreover, it is admitted in the facts of the case, that the goods in respect of which loading services have been availed have been duly exported outside the country. Even otherwise, in that case also, the appellant would have been eligible for claiming refund of input service under Rule 5 of the Credit Rules subject to compliance with the conditions prescribed therein. In the instant case, instead of availing refund of input service, the appellant has availed the credit under the Credit Rules for payment of output excise duty on excisable goods cleared form the factory - there are no reason to deny the credit. Time limitation - HELD THAT:- SCN has been issued in August 2016 by invoking extended period of limitation. Apart from the general aversion, there is no evidence to show that credit has been wrongly availed by way of fraud or suppression. Hence, the impugned demand is also barred by limitation and hence, not sustainable on that count also. Appeal allowed - decided in favor of appellant.
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2022 (3) TMI 923
Seeking release of documents which the respondent concerned did not want to rely and return to the petitioner - documents seized in course of search and seizure proceeding which were not relied upon by the respondent concerned - principle of constructive res judicata - HELD THAT:- This Court sitting in the writ jurisdiction cannot decide which are the documents seized from the petitioner are to be relied or not to be relied or are required for consideration or not in course of investigation by any investigating authority and it is the discretion of the respondent concerned authority and they will have to take the decision which are the documents relevant and are required to be retained in an investigation proceeding and which are not. So far as any other grievance by making fresh cause of action which petitioner wants to raise in this third writ petition on the basis of some facts or allegations which were already in existence at the time of filing first and second writ petition, petitioner is not entitled to raise those grievances since it is hit by the principle laid down under Order 2, Rule 2 of the Code of Civil Procedure as well as by the principle of constructive res judicata. The impugned order dated 28th January, 2022 does not require any interference - Petition dismissed.
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CST, VAT & Sales Tax
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2022 (3) TMI 931
Classification of goods - rate of tax - sale of huggies - taxable @12% or not - claim of deduction of the trade discount - failure to discharge burden to prove - enhancement of turnover by ten times - allowing tax adjustment paid at the check gate in respect of tricycle, freezer, pushcart and stablizer - HELD THAT:- It is seen that despite opportunities, the Assessee could not produce evidence to explain the branch transfer in respect of that container. It is seen that the AO has enhanced the turnover by 10 times by treating this as fraud . The Court is of the view that enhancement by 10 times may be disproportionate and, therefore, modifies the impugned assessment order, as affirmed by the ACST and the Tribunal, from 10 times to 5 times the turnover. The Court is unable to agree with the above submissions of the Assessee. Although the RC of the Assessee incorporates ice cream which the Assessee deals in, it does not contain the above 4 items viz., tricycle, freezer, pushcart and stabilizer. While this may be incidental to the selling of ice cream, unless these items are specifically incorporated in the RC, the 3rd proviso to Rule 36 will not stand attracted. Consequently, the Court is unable to agree with the submission of the Assessee and upholds the findings of the AO as affirmed by the Tribunal. The revision petition is disposed of.
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2022 (3) TMI 930
Validity of assessment order - appellant did not participate in the personal hearing - HELD THAT:- It is seen from the records that before passing the order of assessment dated 09.08.2021, a second show cause notice dated 13.07.2021 was issued fixing the date for personal hearing as 19.07.2021. Even though the appellant cites several reason for non appearance, they failed to seek an adjournment on the date fixed for hearing and sought for an opportunity of hearing on another date. As the appellant did not avail the opportunity of hearing granted to them, the assessing authority has passed the order of assessment. The learned Judge, taking note of the facts, has rightly directed the appellant to assail the order of the assessing officer by filing an appeal to the appellate authority. There are no reason to interfere with such a direction issued by the learned Judge - appeal dismissed.
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2022 (3) TMI 929
Rectification of mistake - error apparent on the face of record - it is alleged that the impugned order is perverse and is issued in violation of the principles of natural justice - HELD THAT:- When an error is not self-evident, it ceases to be an error apparent. As observed by the Courts, an error that is apparent from the record should be one which is not dependent for its discovery on elaborate arguments on questions of fact or law. An appreciation of the impugned order reveals that the same is not a cryptic order. The assessing officer has considered the various contentions raised by the assessee in the application for rectification. The correctness or otherwise of the conclusions of the assessing officer in the rectification order cannot be gone into in this jurisdiction under Article 226 of the Constitution of India. Those are matters for consideration under the statutory remedies available - The statutory prescription for grant of an opportunity of hearing is only when the rectification has the effect of enhancing an assessment or penalty. In the instant case, there is no scope for any enhancement of assessment or penalty, as the rectification application was attempted by the assessee itself. However, had the assessee sought for an opportunity of hearing, the situation could have been viewed differently. Since the assessee itself did not seek an opportunity of hearing, it cannot be said that the impugned order was issued in violation of the principles of natural justice. This Court had interfered with the impugned orders on facts that were peculiar therein or for not granting an opportunity of hearing even after requesting for such a hearing. In the instant case, as already mentioned, an opportunity for hearing was never requested and further, the impugned order had considered the points raised by the petitioner in the rectification application. The question whether the findings in the order declining rectification is correct or not cannot be gone into in this jurisdiction under Article 226 of the Constitution. The observations in this judgment are not based on specific factual consideration of issues arising in the instant case. Since the petitioner has an alternative statutory remedy against the order of rectification, the observations made in this judgment shall not be treated as a finding on the merits of the rectification petition. If any statutory remedy is invoked, the same shall be considered untrammelled by any of the observations in this judgment. Petition dismissed.
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2022 (3) TMI 928
Validity of assessment order - opportunity of hearing not provided - violation of the principles of natural justice - HELD THAT:- Admittedly, before issuing Ext.P4 order of assessment, the assessee was not given an opportunity of hearing - It is evident from a reading of the impugned order, that, the opportunity for filing written objections and for personal hearing was granted to the petitioner on the same day, i.e., 03.03.2021, which was adjourned to 10.03.2021, on which day the petitioner preferred its objections. Thus it is evident that, after filing the reply, no further opportunity of hearing was granted to the petitioner. It is evident from the circumstances of the present case that the assessee was not granted an opportunity of hearing. On 10.03.2021, the objections were filed and the same was considered and found to have no merit and is seen rejected. However, the request for personal hearing, sought for by the petitioner, was not even considered by the officer - the principles of natural justice was infringed while issuing Ext.P4. The impugned order of assessment is therefore liable to be set aside. However, the interest of justice demands that the assessing officer passes fresh orders of assessment in a time bound manner, after granting an opportunity of hearing to the petitioner. The Assessing Officer is directed to pass fresh orders after granting an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a copy of this judgment - Petition allowed - decided in favor of petitioner.
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Indian Laws
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2022 (3) TMI 927
Willful defaulter under the RBI Master Circular dated July 1, 2014 or not - petitioner contends that the impugned notice was drawn in the form of a demand notice instead of a proper showcause notice - contravention of Clause 3, sub-clauses (a) and (b) of the RBI Master Circular - HELD THAT:- It is observed that in MAHESWARY ISPAT LTD ORS. VERSUS STATE BANK OF PATIALA ORS. [ 2013 (10) TMI 1560 - CALCUTTA HIGH COURT] , the writ petition had been preferred against a final decision branding the writ petitioners as willful defaulters and upon their names having been brandished on the CIBIL and other websites without following the procedure laid down under the RBI Master Circular. As distinguished from the said case, the present writ petition has thrown a challenge at the stage of showcause itself. In the present case the petitioner has a remedy to approach with a representation before the Willful Defaulter Committee. Moreover, even if the petitioner is branded as a Willful Defaulter by the WD Committee, there is scope of further review by the Review Committee headed by the Chairman/Chairman and Managing Director or the Managing Director and Chief Executive Officer/C.E.O.s and two independent Directors/Non-Executive Directors of the bank before the order becomes final upon confirmation by the Review Committee. Hence, at the nascent stage of mere issuance of a show cause notice, the petitioner s challenge is premature. The only requirement as per Clause 3(a) of the RBI Master Circular is that the First Committee has to examine the evidence of willful default to conclude prima facie whether the accused is a Wilful Defaulter for the purpose of issuance of a show cause notice to that effect. Although the petitioner has raised an arguable question as to whether the show-cause notice itself was sufficient, since the documents on which the First Committee came to such conclusion were not disclosed therewith, such requirement is not a mandate of the RBI Master Circular, but a mere technicality to enable the petitioner to make a proper representation on all the allegations before the WD Committee. Since all the documents on which the respondents allegedly relied on have been disclosed in the respondents affidavit-in-opposition and disclosed in the present writ petition, there is nothing to prevent the petitioner from making a complete representation on all facets of the allegations of Willful Defaulter, including the question of validity of the show-cause notice. The show cause notice in the present case was sufficient to pass muster, insofar as adherence to the RBI Master Circular is concerned - the petitioner is granted liberty to approach the Willful Defaulter Committee with his representation on the show-cause notice impugned in the present writ petition, within 15 (fifteen) days hence - petition dismissed.
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2022 (3) TMI 926
Dishonor of Cheque - stand of the petitioner is that although, he was a Director of the said partnership firm, he has since retired from the Firm at the time the alleged cheques were issued and dishonoured - vicarious criminal liability - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The respondent No. 1 has failed to make any material averment under Section 141 of the N.I. Act that the petitioner herein was in-charge of and was responsible to the respondent No. 2 Firm at the time the alleged offence was committed and only a bald or mechanical averment made in the complaint is not sufficient, but the specific role of the petitioner herein was required to be averred because a complaint under Section 138 N.I. Act seek to place vicarious criminal liability on individuals. What can be understood is that Section 482 Cr.P.C can be resorted to, to ensure that orders under the code of criminal procedure are given effect to, secondly, to prevent abuse of the process of any Court and thirdly, to secure ends of justice, Court can always take note of any miscarriage of justice and prevent the same by exercising its powers under Section 482 of Cr.P.C. These powers are neither limited nor curtailed by any other provisions of the Code. To fasten a liability under Section 141 of the N.I. Act, a clear case should be spelled out in the complaint against the person sought to be made liable is what the Hon ble Supreme Court has held in the case of SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT] . A bald and vague averment made in the complaint would not suffice to compel a person to subject him or herself to criminal prosecution particularly, in cases under Sections 138, 141 142 N.I. Act - Even if the fact is admitted that the petitioner Mr. Mark Alexander Davidson is a partner in the said Firm and also even if the so called Retirement Deed is not taken into account, that is, that the legal provisions of Section 72 of the Partnership Act was not complied with, as far as the issue of notice is concerned, yet the fact remains that his role in the partnership firm has not been specifically spelt out and saying that he was also incharge of and responsible for the affairs of the said Firm is indeed only a bald averment. This Court hereby finds that the petitioners herein in all these set of related similar and identical petitions have been able to made out a case for exercise of inherent powers under Section 482 Cr.P.C as there has been an abuse of the process of the Court and ends of justice has to be meted out, as far as the impugned proceedings are concerned - Petition disposed off.
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2022 (3) TMI 925
Dishonor of Cheque - presumption of innocence - calling the original statement of account from concerning bank in order to prove the factum of dishonour of cheque - section 91 311 of CrPC - HELD THAT:- From bare perusal of provisions of Section 91 of CrPC, it is clear that provisions of Section 91 of CrPC may be utilized during recording of defence evidence. In Indian Criminal Jurisprudence, the presumption of innocence is the legal principle/tenet of criminal justice system. Under Section 91 of CrPC the sole discretion rests with the trial Court and the High Court should not interfere with the discretion conferred on the Trial Court in the matter of summoning documents except for their good reasons - under Section 311 of CrPC, the object underlying Section 311 of the Code is that there may not be failure of justice on account of mistake of either party in bringing the valuable evidence on record or leaving ambiguity in the statements of the witnesses examined from either side. It is the sole discretion of the Court in exercise of powers under Section 311 of CrPC and the determinative factor is whether it is essential to the just decision of the case or not? On bare perusal of provisions of Sections 91 and 311 of CrPC, it apparent that non-affixing of seal over the documents is not material as in the light of provisions made under the Bankers Book Evidence Act, no Bank Officer shall be compelled to produce documents and it shall be presumed that the documents were issued by the authority of the Bank concerned and it can be proved before the Court very well. It is also relevant to mention here that the matter is regarding Section 138 of the NI Act and the objection raised by the petitioner in the present matter is irrelevant. The learned trial Court has not committed any manifest error of law warranting interference under exercise of inherent powers of this Court. Admittedly, there is no reason in the present matter to exercise powers under Section 482 of CrPC to make such orders as may be necessary to give effect to any order under the Code or to prevent abuse of process of any Court or otherwise to secure the ends of justice - Petition dismissed.
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2022 (3) TMI 924
Dishonor of Cheque - vicarious liability or not - justifiable grounds to invoke the power granted under Section 482 of Code of Criminal Procedure or not - only contention of the petitioners is that as they have not issued the alleged cheques, they cannot be held liable vicariously - Section 141 of the N.I. Act - HELD THAT:- Every person responsible for the conduct of business of the company as well as the company shall be deemed to be guilty of the offence punishable under Section 138 of N.I.Act, unless it is proved that the offence was committed without the knowledge of the said person or that he had exercised all due diligence for preventing the commission of such offence. In the case on hand, petitioners are not disputing their association with the firm. Whether they were performing duties and were managing the affairs of the firm during the relevant time cannot be discussed and decided by this Court. Furthermore, the power granted under Section 482 Cr.P.C., to quash the proceedings is very limited i.e., to say that the said power cannot be exercised except to make necessary order to give effect to an order under the Code of Criminal Procedure or to prevent abuse of the process of any Court or otherwise to secure the ends of justice - The petitioners in the case on hand have not made out such circumstances to exercise the said special power, which should be sparingly and cautiously exercised. The Criminal Petition is dismissed.
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