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TMI Tax Updates - e-Newsletter March 3, 2020 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Refund of IGST paid under RCM on Ocean Freight News Review of Interest Subvention Scheme Provision for Quarterly Payment of GST by MSMEs Firm busted for issuing fake invoices to claim input tax credit of goods worth ₹ 436 crores Monthly GST lottery offer for B2C invoices to start from Apr 1 GST Revenue collection for February, 2020 Direct Benefit Transfer scheme Task force on Sustainable Public Procurement constituted Disinvestment of CPSEs Public Finance Management System has silently empowered India to be accountable , responsive and transparent : Smt Nirmala Sitharaman Notifications GST - States F.1-11(98)-TAX/GST/2020 - dated 17-2-2020 - Tripura SGST Notification regarding appointment of Authority for Advance Ruling of Tripura F. 1-11(91)-TAX/GST/2020(Part) - dated 27-1-2020 - Tripura SGST Seeks to extend the one-time amnesty scheme to file all FORM GSTR-1 from July 2017 to November, 2019 till 17th January, 2020 F.1-11(91)-TAX/GST/2020(Part) - dated 10-1-2020 - Tripura SGST Seeks to bring into force certain provisions of the Tripura State Goods and Services Tax (Second Amendment) Ordinance, 2019 to amend the Tripura State Goods and Services Tax Act, 2017. F.1-11(91)-TAX/GST/2019(Part-VI) - dated 8-1-2020 - Tripura SGST Seeks to extend the due date for furnishing of return in FORM GSTR-1 for registered persons having aggregate turnover more than 1.5 crore rupees for the month of November, 2019 F.1-11(91)-TAX/GST/2019(Part-VI) - dated 8-1-2020 - Tripura SGST Seeks to waive late fees for non- filing of FORM GSTR-1 from July, 2017 to November, 2019 F.1-11(91)-TAX/GST/2019(Part-VI) - dated 8-1-2020 - Tripura SGST Seeks to extend the last date for filing of FORM GSTR-3B for the month of November, 2019 by three days from 20.12.2019 till 23.12.2019 29/2019- State Tax (Rate) - dated 8-1-2020 - Tripura SGST Amendment in Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017 28/2019- State Tax (Rate) - dated 8-1-2020 - Tripura SGST Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017 27/2019- State Tax (Rate) - dated 8-1-2020 - Tripura SGST Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017 F.1-11(91)-TAX/GST/2019(Part-V) - dated 4-1-2020 - Tripura SGST Seeks to extend the due date for furnishing of return in FORM GSTR-3B for registered persons for the month of November, 2019 SEZ S.O. 895(E) - dated 21-2-2020 - SEZ Seeks to rescind Notification No. S.O. 2311(E) dated 11th September 2009 Circulars / Instructions / Orders DGFT Trade Notice No. 52/2019-20 - dated 2-3-2020 Steps taken by CBIC to facilitate clearances in view of situation arising due to Corona virus Customs PUBLIC NOTICE NO. 24/2020 - dated 20-2-2020 Facilitation of clearance of import containers due to delay in receiving of documents from China Highlights / Catch Notes GST Maintainability of application for advance ruling - Classification of goods - Flavoured Milk - The application for advance ruling could not have been made in this case as it is hit by the provisions of Section 98 (2) of the CGST Act in as much as an investigation was already initiated against them by DGGI on the very same issue that was raised before the Authority for Advance Ruling. - AAAR Visit to Get Source Benefit of exemption - commission earned from auctioning of flowers - principal agent relationship - agricultural produce or not - The commission earned from auctioning of flowers is not eligible for exemption - AAAR Visit to Get Source Benefit of exemption from GST - skill development training - services provided under sub-contract to main contractor, who in turn provides to M/s Maharashtra State Skill Development Society (MSSDS), in respect of training of Building and other construction workers (skill development training) - the required conditions are not fulfilled and hence the applicant is not entitled for exemption - AAR Visit to Get Source Classification of supply - Printing of contents on Poly Vinyl Chloride (PVC) banners - supply of goods or not - The transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material is supply of service - taxable @12% of GST - AAR Visit to Get Source Reopening of portal for filing of Form GST TRAN-1 - transitional credit - The respondents are directed to permit the petitioners to upload the declaration in form TRAN1 and as per order dated 7-2-2020 passed by the CBIC, the petitioners will be entitled to upload Form TRAN1 before 31st March 2020 to claim credit of CENVAT u/s 140(3) of the CGST Act, 2017 - HC Visit to Get Source Confiscation of goods alongwith vehicle which were already released - imposition of penalty - The proceedings, as on date, are at the stage of show cause notice, u/s 130 of GST. The proceedings shall go ahead in accordance with law - It is now for the applicant to make good his case that the show cause notice, issued in GST-MOV-10, deserves to be discharged. - HC Visit to Get Source Input tax credit - bogus tax purchases - As the statue is a complete code in itself, the respondents are yet to pass a final order, no case for interference is made out in the matter - HC Visit to Get Source Income Tax Exemption u/s 11 - registration u/s 12AA - Since by definition a charitable trust is not one which makes profits and if we accept the interpretation of the Revenue that first the activities of the trust must commence and its genuineness ascertained before the Principal Commissioner registers it, we would be asking the trust to carry on activities perhaps at a loss to the corpus or by compromising on the quality of such activities if the expenditure is done from the interest on the corpus because no one will donate money to a trust knowing that it is not tax deductable. - HC Visit to Get Source Reopening of assessment - sanction of Scheme of Arrangement for demerger - Mere winding up or dissolution of the Company would not take away its liability, which is a matter to be gone into by the Assessing Officer. - HC Visit to Get Source Nature of loss - business loss or speculation loss - trading in derivatives i.e. F&O of shares - The contract note clearly revealed that the transactions were supported by time stamped contract notes issued by the stock broker in which unique client identity and PAN number etc were also indicated - Loss sustained by the assessee from the transaction of purchase and sale of the shares cannot be deemed to be speculation loss. - HC Visit to Get Source Income accrued in India - income in respect of “off-shore supply” of equipment - DTAA between India and Austria - The part of the operations of supply agreement have definitely been carried out in India by the permanent establishment of the assessee and for which part of the profit from the supply agreement also need to be taxed in India in terms of the treaty between India and the Austria as the assessee relied on the treaty provisions for considering taxation of the supply agreement. - AT Visit to Get Source Customs Grant of regular bail - Bribe - question of parity - The investigation reveals that the petitioner is the man who has created fear in the mind of the complainant that he would be involved in cases with DRI and COFEPOSA and after creating this terror in the mind of the complainant, the bribe amount was settled of which a sum of ₹ 25 Lakhs have been recovered from the petitioner. It is the petitioner who was the ex-clearing agent of the complainant and he is the man who had made the complainant to believe that his firms would also be under the DRI investigation and laid the foundation of this entire case. - Bail application dismissed - HC Visit to Get Source IBC Interpretation of Statute - Prohibition during the moratorium period - the recovery of any property by an owner or less or where such property is occupied by or in the possession of the corporate debtor - Section 14(1)(d) of the Insolvency & Bankruptcy Code, when it speaks about recovery of property “occupied”, does not refer to rights or interests created in property but only actual physical occupation of the property. - SC Visit to Get Source Appointment of liquidator - Adjudicating authority rejected the "Approval of Resolution Plan" - 'Preferential transactions' - Power of adjudicating authority to cancel the lease agreement - The Adjudicating Authority is not empowered to pass an order of eviction and it is for an 'Aggrieved party' to move the appropriate forum for redressal of its grievances in accordance with Law. Visit to Get Source Admissibility of application - initiation of CIRP - Having made the payment prior to initiation of CIRP, we are of the view that the case of the Respondent/Applicant cannot be treated as a Financial debt and default, in view of no debt payable to the Financial Creditor. - AT Visit to Get Source CIRP Process - funds allegedly diverted by the Directors during the period of Moratorium - For violating the provisions of the 'I&B Code' including section 14, if the Appellant is liable for punishment under Chapter VII of the 'I&B Code', particularly section 70, 74 etc. of the 'I&B Code', they cannot divert the issue of punishment or their alleged violation of the order of the Adjudicating Authority/Tribunal by raising a separate issue which is not required for determination in this appeal in absence of any challenge of order of admission. - AT Visit to Get Source Service Tax Classification of service - BAS - amount of subsidy received - The amount of subsidy that the Appellant is receiving on account of sale of handsets at a lower price does not have any nexus with the promotion or marketing of the services provided by Tata Tele Services. - No service is being provided. - AT Visit to Get Source Central Excise Clandestine removal - suppression of production - Merely deposit of money at the time of investigation would not amount to acceptance of allegations of clandestine manufacture and removal as alleged by the department - the burden to prove allegation of clandestine manufacture and removal is heavily on the department and has to be discharged by producing clinching evidence on record, which has not been discharged by the department in the present case - AT Visit to Get Source VAT Classification of goods - 'hot mix material' transferred in a works contract - the goods transferred in execution of works contract will not be taxed at general rate but as per the rates prescribed of constituents material of the 'hot mix material'. - HC Visit to Get Source Levy of penalty - suppression of turnover - even if the transaction was disclosed in the books of account it will be of no benefit. - Section 38 is worded in a manner that it applies not only to maintaining false or incorrect account but also to filing incorrect or false returns, which the appellant did in the present case. - HC Visit to Get Source Case Laws: GST 2020 (3) TMI 73 Maintainability of application for advance ruling - Classification of goods - Flavoured Milk - contention is that the application filed by the respondent KCMPFL should not have been admitted by the Authority in terms of the proviso to Section 98 (2) of the CGST Act since an investigation was already pending against them on the same issue of classification of Flavoured Milk by the Directorate General of GST intelligence, Bangalore Zonal Unit(DGGI) - challenge to AAR decision. HELD THAT:- Sec. 98(2) provides that the application shall not be admitted where the question raised is already pending under any of the provisions of this Act. It is clear from the record submitted by the Appellant Department that proceedings were pending against KCMPFL before the DGGI and the issue taken up by the DGGI in the proceedings related to the classification of the Flavoured Milk - whether under Chapter heading 2202 99 30 or under 0402 99 90 - the respondent KCMPFL made an application for advance ruling on 20th March 2019 all the while being aware of the investigation being conducted against them by the DGGI, Bangalore. The respondent KCMPFL chose to keep this fact away from the Authority for Advance Ruling at the time of filing the application. The application for advance ruling could not have been made in this case as it is hit by the provisions of Section 98 (2) of the CGST Act in as much as an investigation was already initiated against them by DGGI on the very same issue that was raised before the Authority for Advance Ruling. The order of the lower Authority is void ab initio as it was vitiated by the provisions of Section 98(2) of the CGST Act - Appeal allowed. 2020 (3) TMI 72 Classification of services - commission earned from auctioning of flowers - principal agent relationship - agricultural produce or not - benefit of exemption in terms of the entry SI.No 54(g) of Notification No 12/2017 CT (R) dated 28.06.2017 - whether IFAB is a commission agent rendering services for the sale and purchase of agricultural produce ? - challenge to AAR decision. HELD THAT:- Going by the nature of activities performed by IFAB, they do not merely cause the sale of goods on behalf of their clients, the flower growers/sellers. They undertake the complete process of auction of the flowers and upon completion of the auction, the sales consideration is received not by the sellers but by IFAB. Thereafter, IFAB will make payments to the growers for the flowers supplied to them after deduction of the commission. The payments are made to the growers/sellers on the day following the end of the calendar week. IFAB themselves issue delivery orders which enables the buyers to take delivery of the flowers from the auction house. They do the billing work and collection of sale proceeds on behalf of their clients. IFAB also invests a great deal in the system of sale through the clock. They offer dealers sophisticated facilities for online buying - remote buying. With the help of such services, IFAB is able to attract an increasing number of international buyers to the auction. It therefore appears to reason that this wide gamut of activities of IF AB would go far beyond the scope of a commission agent since the services rendered by them are not restricted only to sale of goods on behalf of the sellers for consideration, which is the main edifice of the definition of commission agent. We are of the view that the activities of the respondent company - IFAB are more appropriately classifiable as Auctioneer service . Benefit of exemption under SI.No 54(g) of Notf No. 12/2017 CT (R) dated 28.06.2017 - HELD THAT:- The Notification, as it is worded, grants exemption to the services provided by a commission agent. Even if the absence of a definition of commission agent in the notification or in the GST statute causes some ambiguity, the notification s applicability to a particular class of service providers is to be arrived at by a strict construction and the benefit must go to the State. Viewed from this principle, it is clear that the respondent company - IFAB is not eligible for the exemption under entry 54(g) of Notification No 12/2017 CT (R). The commission earned from auctioning of flowers is not eligible for exemption under entry no. 54(g) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 and entry no. 54(g) of Notification (12/2017) FD 48 CSL 2017 dated 29.06.2017 - AAR decision set aside - appeal allowed. 2020 (3) TMI 71 Permission for withdrawal of Advance Ruling application - Classification of supply - rate of GST and cess - motor vehicle (bus) - supply of motor vehicle (bus), which is bullet proof, blast resistance and built to suit the requirement of a VIP, enabling the VIP to carry on with his administrative functions, even during transportation - HELD THAT:- The applicant had been given an opportunity of hearing on 09.01.2020. But the applicant vide their letter received in this office on 08.01.2020, requested this authority to permit them to withdraw their application, quoting the reason that the agreement with their customer is cancelled and the company would not be supplying such specialised goods in future. The application filed by the Applicant for advance ruling is disposed off as withdrawn. 2020 (3) TMI 70 Benefit of exemption from GST - skill development training - services provided under sub-contract to main contractor, who in turn provides to M/s Maharashtra State Skill Development Society (MSSDS), in respect of training of Building and other construction workers (skill development training) - Applicability of I. No. 69 and Si No. 72 of the notification 12/2017- Central Tax (Rate) New Delhi, dated 28th June, 2017. HELD THAT:- The tender has been called by Maharashtra State Skill Development Society, Skill Development and Entrepreneurship Department, Government of Maharashtra which is neither NSDC nor a SSC. The tender was meant for empanelment of Training Providers . The applicant has not furnished any documentary evidence so as to arrive at whether the main contractor qualifies to be a training partner, approved by either NSDC or SSC, or not. Further the training providers are not entitled for exemption under the entry No.69. Therefore the main contractor, in case if they get the said work, would not be entitled for exemption under this entry for the said work. Entitlement of exemption to the main contractor under entry No. 72, of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- In the instant case, the main contractor, if they get the work, would be providing service, of training for Recognition of Prior Learning (RPL) to construction workers, to the Government of Maharashtra, for which total expenditure is to be borne by the Government of Maharashtra. Therefore the main contractor would be eligible for exemption under entry No.72 of the said notification, subject to fulfillment of the aforesaid conditions. Whether the exemption that is applicable to the main contractor is applicable to the applicant or not? - HELD THAT:- In the instant case though the services to be provided by the applicant would be under training programme for Recognition of Prior Learning (RPL) to construction workers, the services would be provided to the Main Contractor i.e. the recipient of the services would be the Main contractor, but not the State Government. Therefore the required conditions are not fulfilled and hence the applicant is not entitled for exemption under entry No.72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Thus, the services to be provided by the applicant are taxable at 18% IGST or 9% each of CGST KGST. 2020 (3) TMI 69 Classification of supply - supply of goods or not - transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material - rate of GST. HELD THAT:- In the instant case, it is an admitted fact that the PVC material is classified under Chapter 39 prior to printing and after printing it would become Trade Advertising Material falls under Chapter 49. Therefore the activity of printing makes the PVC material into Trade Advertising Material i.e. banner/billboard etc., and thus the nature of the material changes. Further the applicant does not own or retain the usage rights of intangible inputs. In view of the foregoing the activity of printing of the content, supplied by the recipient, on the PVC material becomes principal supply and such supply constitute supply of service falling under SAC 9989. The transaction of printing of content provided by the customer, on Poly Vinyl Chloride (PVC) banners and supply of such printed trade advertisement material is supply of service - The classification of aforesaid supply of service is 9989 of the scheme of classification of services - The applicable rate of GST on the supply of aforesaid service is 18% up to 30.10.2017 12% effective from 31.10.2017, as per Entry No.27 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. 2020 (3) TMI 68 Confiscation of goods alongwith conveyance - levy of penalty - Section 130 of the GST Act - HELD THAT:- It appears that the writ-applicant availed the benefits of the orders passed by the Co-ordinate Bench of this Court, in accordance with law, and get the goods and vehicle released. This is a case in which the final order in Form GST-MOV-11 has been passed - In such circumstances, the writ-applicant are directed to prefer an appeal, against such order, under Section 107 of the Act, 2017. Application disposed off. 2020 (3) TMI 67 Reopening of portal for filing of Form GST TRAN 1 - transitional input tax credit under Section 140 of the CGST Act - HELD THAT:- The Nodal Officer has addressed a letter to the authority Incharge of the portal stating that the claim of the writ applicant to carry forward the Cenvat credit is justifiable and for that purpose, the portal be opened to enable the writ applicant to file his TRAN 1. Mr. Chintan Dave places on record the letter in writing sent to the authority Incharge of the portal. The same shall be kept with the record of this case. No further adjudication of this writ application on merits is now necessary. Let this exercise be undertaken at the earliest and the same shall be completed within a period of two weeks from the date of receipt of the writ of this order - Petition disposed off. 2020 (3) TMI 66 Reopening of portal for filing of Form GST TRAN 1 - transitional credit - restraint on the respondent from cancelling the GST registration - whether the petitioners are entitled to carry forward CENVAT Credit balance as on 30th June 2017 under Section 140 of the CGST Act, 2017 in absence of uploading form TRAN1 due to technical glitches? HELD THAT:- This question is no more res integra in view of decision of Coordinate Bench in case of M/S SIDDHARTH ENTERPRISES THROUGH PARTNER MAHESH LILADHAR TIBDEWAL VERSUS THE NODAL OFFICER [ 2019 (9) TMI 319 - GUJARAT HIGH COURT] where it was held that The respondents are directed to permit the writapplicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act. Thus, dictum of law as declared in above decision would be applicable to the facts of this case also as the petitioners are not be able to upload form TRAN1 due to technical glitches. The respondents are directed to permit the petitioners to upload the declaration in form TRAN1 and as per order dated 7th February 2020 passed by the Central Board of Indirect Taxes and Customs, the petitioners will be entitled to upload Form TRAN1 before 31st March 2020 to claim credit of CENVAT under Section 140(3) of the CGST Act, 2017 - Petition disposed off. 2020 (3) TMI 65 Confiscation of goods alongwith vehicle - imposition of penalty - HELD THAT:- While passing the aforesaid order, this Court directed that the vehicle as well as the goods be released, upon payment of the tax, subject to the writ applicant paying the tax and penalty as computed by the respondent authorities and also subject to filing a solemn undertaking before this court to the effect that the petitioner shall make good the deficit liability, if any, as may be determined finally by the authorities for the goods as well as for the vehicle/s subject to the petitioner's right to challenge the same in accordance with law. The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law - It is now for the applicant to make good his case that the show cause notice, issued in GST-MOV-10, deserves to be discharged. Application disposed off. 2020 (3) TMI 64 Input tax credit - bogus tax purchases - allegation is that the purchases made from the firms are bogus tax purchases and no input tax could have been availed on such bogus tax purchase - HELD THAT:- The statute governing the field i.e. The Integrated Goods and Services Tax Act, 2017 r/w The Central Goods And Services Tax Rules, 2017, which provides for a complete mechanism in case of evasion of the tax and this contention is that the show-cause notice has been issued to the petitioner and the petitioner has filed a reply to the show-cause notice, hence it is a premature writ petition as no final order has been passed. As the statue is a complete code in itself, the respondents are yet to pass a final order, no case for interference is made out in the matter - The admission is declined. 2020 (3) TMI 63 Permission for withdrawal of application - Release of attached Bank Accounts - proviso to sub-sec.(1) to Sec.50 of the GST Act, 2017, inserted vide Finance (No.2) Act, 2019, whether clarificatory in nature or directory in nature? - HELD THAT:- The petitioner prays for withdrawal of this writ petition to file an appeal before the appellate authority in accordance with law. He also prayed that the petitioner may be permitted to take all the pleas as have been raised in the present writ petition before the appellate authority. The writ petition is dismissed as withdrawn with the liberty to the petitioner to pursue the alternative remedy of appeal and to take all the pleas raised in this petition before the appellate authority in accordance with law. 2020 (3) TMI 62 Permission to file the returns in GSTR TRAN-1 - HELD THAT:- The issue involved herein is no more res integra in view of the order of this Court in M/S ASIAD PAINTS LIMITED, VERTIV ENERGY PVT. LTD., M/S. WEIWO COMMUNICATION PVT. LTD. AND ORS. VERSUS UNION OF INDIA, GOODS AND SERVICE TAX NETWORK, THE COMMISSIONER OF COMMERCIAL TAXES (GST) , THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [ 2019 (12) TMI 464 - KARNATAKA HIGH COURT ], whereby this Court has extended the period to file/revise the Form GST TRAN-1 by the registered persons by 31.12.2019. Hence, the petitioner is entitled to avail the extended period for filing/revising Form GST TRAN-1 as aforesaid. Petition disposed off. 2020 (3) TMI 61 Grant of Regular Bail - offence punishable under Sections 132(1) (i), 132(1)(c) and 1325(5) of the GST Act - input tax credit - HELD THAT:- In the facts and circumstances of the case and considering the nature of the allegations made against the applicants in the First Information Report, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicants on regular bail. The applicants are ordered to be released on regular bail on executing a personal bond of ₹ 10,000/- each with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - application allowed. 2020 (3) TMI 12 Refund of Input tax credit - Section 142(3) of the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- The material on record discloses that the appellant had also moved an application dated 28.06.2018 for refund of the Input Tax Credit claimed under the TNVAT Act and this application was without prejudice to their rights under Section 140(3) of the TNGST Act. The appellant had also challenged the various provisions of the CGST and TNGST Acts in this regard in W.P.(MD)Nos.18723 18724 of 2018, with regard to the time limit of 90 days in processing the applications for the credit of the Input Tax Credit. Pending the two writ petitions, the learned Single Judge, dismissed the instant writ petitions as being per-mature, by observing that it was open to the appellant to make appropriate modifications in the prayer in the pending writ petitions ie.,W.P.(MD)Nos. 18723 18724 of 2018, challenging the Rules of the CGST and TNGST to take care of the relief as prayed for in the writ petitions. Today, the learned Counsel for the appellant has withdrawn the writ petitions being W.P.(MD)Nos.18723 18724 of 2018. In view of the fact that the writ petitions have been withdrawn, we direct the respondents to consider the application dated 28.06.2018, submitted by the appellant for refund of the Input Tax Credit under the provisions of the TNVAT Act, independently and on its own merits. Appeal allowed. 2020 (3) TMI 1 The State jointly make a statement that the issue will be resolved without fail by next date of hearing - HELD THAT:- There are no good reason why this issue should not be resolved. Post this matter on 26.02.2020 on top of the board. Income Tax 2020 (3) TMI 60 Categorization of expenditure of non-compete fee - either capital or revenue - nature of expenditure - HELD THAT:- Revenue seeks permission to withdraw this special leave petition along with pending applications therein due to low tax effect. Permission granted, subject to just exceptions. The special leave petition and pending applications are dismissed as withdrawn, leaving question(s) of law open. 2020 (3) TMI 59 TDS u/s 194C OR 194J - TDS liability carriage fees, editing charges and dubbing charges - HELD THAT:- Revenue seeks permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect. Permission granted, subject to just exceptions.The special leave petition and pending applications dismissed as withdrawn, leaving question of law open. 2020 (3) TMI 58 Applicability of Section 115JB on banking Company - scope of rectification u/s 154 - Scope of amendment in 115JB by Finance Act, 2012 - as per HC sub- section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company -HELD THAT:- Delay condoned. Leave granted. 2020 (3) TMI 57 Assessment u/s 153C - additions made u/s 68 on account of share application money - absence of any incriminating material found during search - HELD THAT:- Delay condoned. Leave granted. 2020 (3) TMI 56 Disallowing expenditure - proof of receipt of any service from the consultant - addition on statement recorded during search operations held that the said person had not rendered any service to the assessee-company so as to receive such payments - retraction of statement - Deduction u/s 80IA - assessee had set up a captive power generating unit - rate at which the electricity generated by one unit of the assessee-company and provided to the another be valued - HELD THAT:- Delay condoned. Leave granted. 2020 (3) TMI 55 Unexplained cash credit under Section 68 - Payment of supplemental lease rent - Disallowance under Section 195 read with Section 40 (a) (i) of the Act for non-deduction of tax at source from payment to non-residents for maintenance reserve (supplemental lease rent) - Training and manpower development - Payment for the computerised reservation system - non-deduction of TDS from payment to non-residents for computerized reservation system - Free tickets - Interest on borrowed capital - Foreign travel expenses - Consultancy charges - Staff welfare expenses - Advertisement and publicity expenses - Air travel tax - Limitation under Section 201 - HELD THAT:- Leave granted. 2020 (3) TMI 54 Exemption u/s 11 - registration u/s 12AA - verification of genuineness of activity a condition precedent for granting registration under Section 12AA - whether the trust should show some activities undertaken by it before registration to the Commissioner to satisfy him or is the Commissioner required to be satisfied that the intended activities of the trust after registration are genuine? - HELD THAT:- On creation of the trust the trustees apply for registration under Section 12AA. In that case, they would have to demonstrate the genuineness of the objects of the trust, only, before the Commissioner. Secondly, the other situation where the trustees carry on activities for sometime and then apply for registration. In that case, the genuineness of the objects as well as the genuineness of its activities have to be proved to the Commissioner. In the second situation, practically speaking, any activity of the trust carried out without registration and without any tax benefit would likely to be insignificant. Every word in a statute has meaning and application. The legislature does not waste words. Nor does it indulge in surplussage. Hence, every word in Section 12AA has to be given its meaning and effect. In my opinion, when the statute refers to the objects of the trust and the genuineness of its activities to be investigated by the Commissioner, the words have to be given a proper and purposive construction. The Commissioner has to see that the constitution of the trust, its objects, its trustees and proposed activities are prima facie genuine. On that basis he has to consider registering the trust. If the activities are found not to be genuine at a later point of time, he always has the option of cancelling its registration under Section 12AA(3) of the said Act. The tribunal has appreciated the law correctly. The question in this appeal is answered in the negative, against the Revenue and for the assessee. As per other Judge too If a trust registered under Indian Trust Act and Registration Act as a charitable trust, does not get itself registered before the Principal Commissioner of Income Tax it loses certain benefits both for itself and for those who donate to it. Since by definition a charitable trust is not one which makes profits and if we accept the interpretation of the Revenue that first the activities of the trust must commence and its genuineness ascertained before the Principal Commissioner registers it, we would be asking the trust to carry on activities perhaps at a loss to the corpus or by compromising on the quality of such activities if the expenditure is done from the interest on the corpus because no one will donate money to a trust knowing that it is not tax deductable. In such view of the matter, the interpretation offered by the Revenue appears to be one which perhaps defeats Section 12A/12AA of the said Act of 1961 and its very purpose and, therefore, also it cannot be accepted. -Decided in favour of assessee 2020 (3) TMI 53 Revision u/s 263 - Capital gain on sale of land - reason for adopting the revised value - HELD THAT:- Even though there is no transfer of property by excluding the sale deed, but at the same time, the property has been revalued in accordance with law and capital gains tax also paid on the revised value. It is not the case of the department that for the purpose of evading the income tax, the assessee company has wrongly calculated the value of the lands which is less than the market value. Therefore, as pointed out by the Income tax Appellate Tribunal and the reliance placed in the case of CIT Vs. Max Inda Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] referred to by the learned counsel, it is very clear that time and again, as held by the Honourable Supreme Court as well as this court, when two views are possible, if the Assessing Officer had taken one of the plausible views, the CIT has no authority to set aside the order of the Assessing Officer and adopt its one of the other views. Therefore Principal Commissioner of Income Tax could not substitute a lawful view taken by the Assessing Officer. Admittedly in this case, the assessing officer has accepted the returns filed by the respondent/assessee company and the respondent/assessee company has also given reason for adopting the revised value and also pointed out that except the said property, the company has no other property for income and also the entire shares has been transferred and also the value of the land were revised and revalued and capital gains tax also paid. Therefore, under these circumstances, this court do not find any valid reason to interfere with the order passed by Income Tax Appellate Tribunal. The substantial question of law raised by the appellant/revenue is answered accordingly. Thus, we find no good reason to admit the Tax Case (Appeal) filed by the Revenue. 2020 (3) TMI 52 Addition u/s 40A - Reliance upon Rule 6DD was rejected by AO quoting the procedure followed for purchase of fire wood through open bidding system as states that no farmer sells fire wood directly in the open market and hence the protection under Rule 6DD would not be available to the petitioner - in addition, certain credits appearing in the bank accounts of the petitioner were proposed to be disallowed under Section 68 - HELD THAT:- Learned counsel states that adequate opportunity was not granted to the petitioner prior to completion of assessment. My attention is drawn to the medical records of VA Sadasivam to establish the need for emergency treatment0 and expenses incurred when the partner had met with a serious accident. The petitioner is relegated to statutory appellate remedy. The order of assessment may be challenged by way of first appeal before the Commissioner of Income Tax (Appeals) within a period of three weeks from today. If the appeal is filed within the period as aforesaid, the same shall be taken on file by the office of the Commissioner (Appeals) and disposed on merits and in accordance with law, without reference to limitation. Since the powers of the Commissioner (Appeals) are co-terminus with that of the Assessing Officer, a proper enquiry be conducted as to the veracity or otherwise of the explanations tendered by the petitioner both in response to the proposal under Section 68 of the Act as well as the applicability of Rule 6DD to the disallowance under Section 40A(3). Let an order of assessment be passed de novo within a period of three months from date of institution of appeal, after hearing the petitioner. Recovery of the disputed demand shall not be insisted upon till disposal of appeal. In the event the appeal is not instituted within the time frame as aforesaid, the order of assessment now impugned shall be revived and stand undisturbed. 2020 (3) TMI 51 Deduction of lease income and interest income under Section 80HHC - Whether lease income and interest income from loans and advances to the sister concerns will come in the domain of 'income from other sources'? - HELD THAT:- Once it is accepted that the income from lease and interest income is income from other sources, there is no question of it being eligible under Section 80HHC of the Act. The provision deals with deductions in respect of profits retained for export business. The income earned from interest and lease money is not income under the head 'profits and gains of business or profession'. In the facts of the present case, there is no question of setting off/adjusting the interest on debit side and on the credit side of the profit and loss account. The interest paid by the assessee is directly linked with the business and would be dealt with while calculating the income from business or profession. The lease money and interest income is not income from the business, rather it is income from application of money which might have been earned from business or profession. In such circumstances, there would be no question of netting/setting off the interest paid vis-a-vis the interest received. The Tribunal rightly rejected the contention of the assessee. In the present case, the interest received and the lease money is not even includable in the profits and gains determined under the head profits and gains of business or profession . Appeal dismissed. 2020 (3) TMI 50 Unexplained income of the assessee under section 68 read with section 69A - AO and CIT-A held that it was unexplained income - Tribunal held otherwise stating the assessee has been mis-utilized by his employer to route the cash through his bank account - HELD THAT:- What was the source of this money, to whom this amount was transferred immediately after it was deposited, the manner of transfer, the way the transferred fund was utilised have not been discussed at all by the tribunal. The onus is on the assessee to explain, otherwise it would be treated as unexplained income in his account. A speculative assertion by the tribunal that since the money came in and went out simultaneously would not absolve the assessee, in our opinion, unless substantial evidence is led by him to show the source of the fund and the application thereof. The question arises whether the order of the tribunal is perverse. In our opinion, it would be in the interest of justice if the said order of the tribunal with regard to the above issue is set aside and the matter is remanded for fresh determination.Direct the tribunal to rehear the matter and pronounce a reasoned decision within four months of communication of this order. 2020 (3) TMI 49 Reopening of assessment - sanction of Scheme of Arrangement for demerger - dissolution of the Company - rights of the Authorities assessing the affairs of the Company - HELD THAT:- The factual aspects of the affairs of the dissolved Company have to be gone into by the Assessing Officer and hence the learned Single Judge rightly remanded the matter back to the Assessing Officer and issued directions as stated supra. Section 506(5) proviso (a) of the Companies Act and Chapter XV of the Income Tax Act which deals with liability in special cases and its clause (L) which deals with discontinuance of business or dissolution and these provisions provide as to how and in what manner the liability against such Company arising under the Companies Act and under the Income Tax Act is required to be dealt with. Mere winding up or dissolution of the Company would not take away its liability, which is a matter to be gone into by the Assessing Officer. The decisions referred to by the learned counsel appearing for the appellant are not helpful to his case, since the Hon'ble Supreme Court in latest decision [ 2019 (3) TMI 703 - SUPREME COURT] has clearly held as stated supra and the relevant provisions of the Companies Act and the Income Tax Act have to be dealt with. Therefore, in our considered view, there is no reason to interfere with the order of the learned Single Judge, since the learned Judge has not gone into the matter on merits and only given liberty to the appellant to raise additional objections and the respondent was also directed to consider the same in accordance with law after extending due opportunity to the appellant and no prejudice would be caused to either parties. 2020 (3) TMI 48 Undisclosed income allegedly being profit on sale of plot - HELD THAT:- The document seized showed account as on 31.10.2001 while the registered sale deed of the plot was dated 23.5.2002. It was not the case of the revenue that the circle rate was more than what had been disclosed. No unaccounted cash was found to be paid by the buyer to the seller. There is no statement of the seller regarding obtaining the money and therefore the addition was not sustained. As noted at this stage that it is not the case of the department that the property was owned by the appellant or M/s Reliance Estate Agency. The case set up was that apart from the amount mentioned in the registered sale deeds or the payment received by cheques, there were certain cash transactions which were divided between the assessee and the Managing Director of the seller-company. Without having any quarrel with the issue that there may be a possibility that the assessee could apart from commission earn profit in a sale-purchase transaction but the basic issue would be that some cash amount would have been paid by the purchaser. The addition on said account made on the buyer never withstood the scrutiny in appeal. There is nothing on record to show that any addition was made in hand of the seller or the Managing Director of the seller-company for the alleged cash amount received. In this background, it would not be appropriate to hold that only intermediatory or the broker can be saddled with the additions. The contention of learned counsel for the revenue that the role of the appellant was more than that of a broker and he had earned profit also does not enhance the case of the revenue for the reasons mentioned above.- Decided in favour of assessee. 2020 (3) TMI 47 Nature of loss - business loss or speculation loss - HELD THAT:- A conjoint reading of clause (d) of the proviso to sub-section (5) of Section 43 of the Act and the explanation attached to it makes it clear that if a transaction in trading of derivatives is carried out electronically on screen based system through a stock broker or sub-broker and it is supported by a time stamped contract note issued by such broker which indicates unique client identity and PAN number of the client, it shall be an eligible transaction and shall not be deemed to be a speculative transaction . Tribunal while considering the appeal of the Revenue found that the CIT(A) at the time of deciding the appeal of the assessee against the addition made by AO treating the same as speculation loss, had called for the remand report to ascertain as to whether the assessee did fulfill the condition laid down under sub-clause (d) of proviso to Sub-section (5) of Section 43 - Contract notes were also produced by the assessee before the CIT(A), amongst which the note issued by the broker M/s Arihant Capital Market Ltd. through whom the assessee had undertaken the alleged transactions in respect of trading in derivatives i.e. F O of shares was also examined in particular. The contract note clearly revealed that the transactions were supported by time stamped contract notes issued by the stock broker in which unique client identity and PAN number etc were also indicated in accordance with the explanation-1 attached to clause (d) of proviso to sub-section (5) of Section 43 of the Act. Section 43(5) of the Act was also discussed in the order by the CIT(A) and on the basis of the same, the CIT(A) had arrived at the conclusion that the assessee had fully satisfied the requirements under clause (d) of the proviso to Sub-section (5) of Section 43 of the Act. Revenue has failed to point out that the findings returned by the CIT(A) and the Tribunal are erroneous or are perverse in any manner or are based on mis-appreciation of material on record. Loss sustained by the assessee from the transaction of purchase and sale of the shares cannot be deemed to be speculation loss. Accordingly, we answer the substantial question of law against the appellant-Revenue in the present case that the loss as claimed by the Revenue is not a speculation loss. 2020 (3) TMI 46 Deduction u/s 80P(2)(a)(i) - assessee is a Co-operative Society registered under the Karnataka Souharda Sahakari Act, 1997 - HELD THAT:- As decided in the case of M/s.Sindhu Credit Souharda Sahakari Niyamita v. ITO [ 2019 (12) TMI 1277 - ITAT BANGALORE] Assessee s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. But after holding so, set aside the order of CIT(A) and restore the matter back to the AO for fresh decision regarding allowability of deduction u/s. 80P(2)(a)(i) after examining other conditions for allowing such deduction because those conditions are not examined by the AO till now. - Appeal filed by the assessee is allowed for statistical purposes. 2020 (3) TMI 45 Deduction u/s 80P[2][a][i] 80P [2][d] - income derived from business of providing credit facilities to its members and Godown rent earned by the appellant under the facts and in the circumstances of the appellant's case - HELD THAT:- Assessee is an Agricultural Co-operative Society, registered under the Karnataka Co-operative Societies Act, 1959. The assessee filed its return of income for the assessment year 2016-2017 declaring total income of ₹ 8,23,810 after claiming deduction u/s 80P. The return of income was selected for scrutiny through CASS. The Assessing Officer noticed that the principles of mutuality were violated by the assessee-society and therefore denied the deduction in view of the Hon ble Supreme Court judgment in the case of M/s.Citizen Co-operative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT]. Tribunal in the case of Sindhu Credit Souharda Sahakari Niyamita [ 2019 (12) TMI 1277 - ITAT BANGALORE] , respectfully following the same, we remit the matter to the file of the Assessing Officer for adjudication afresh, on similar line. - Decided in favour of assessee allowed for statistical purposes. 2020 (3) TMI 44 Deduction u/s 80P(2)(d) - interest earned as other income , in the light of introduction of RERA - HELD THAT:- As decided in M/S. SINDHU CREDIT SOUHARDA SAHAKARI NIYAMITA [ 2019 (12) TMI 1277 - ITAT BANGALORE] Assessee s claim regarding deduction u/s. 80P(2)(a)(i) cannot be rejected on this basis that assessee is a Souharda Sahakari and therefore, cannot be regarded as a co-operative society. But after holding so, set aside the order of CIT(A) and restore the matter back to the AO for fresh decision regarding allowability of deduction u/s. 80P(2)(a)(i) after examining other conditions for allowing such deduction because those conditions are not examined by the AO till now. Appeal filed by the assessee is allowed for statistical purposes. 2020 (3) TMI 43 Income accrued in India - income in respect of off-shore supply of equipment - DTAA between India and Austria - (DTAA) between India and Austria - fixed place of business in India as per Article 5(2) - offshore supply of machinery - whether the two contracts constitute a composite contract as held by the Assessing Officer or whether the machinery supply contract was only offshore supply, independent of contract of supervision of erection of the machinery - HELD THAT:- The machinery components have been imported in India to commission a custom-made plant for the buyer and those imported goods may not be used for any other customer. The assessee has been entrusted the work of commissioning of the TPD plant in view of the expertise in this field. The service contract has a provision of termination clause in case of failure of performance and return of machinery supplied under supply contract and refund of money. All these terms make it clear that both the supply and service contract are intrinsically linked and not severable. It was not possible for the buyer to assemble or erect the plant from any other contractor without the supervision of the assessee and therefore, the buyer made its intention of getting the goods in a deliverable state of plant. The artificial division of composite contract into supply and service may be on paper but the conduct of the parties and terms and condition of the contract manifest that in substance it was a composite contract. The accounting practice followed for recognizing of revenue from service on completion of the project also support the intention of the parties to treat the erection of the plant as composite project. All the above terms and conditions of the contract cited by the Ld. DR, when read together clearly bring out the real nature and essence of both the contracts as part of one composite and turnkey works contract. Thus we hold that the Supply Service contracts represent a single, composite turnkey work contract. Income deemed to accrue or arise in India as per Section 9(1)(i) - whether the income from supply agreement is taxable in India? - In the instant case, the transit insurance of goods has been arranged by the assessee at its own cost from the ware house of supplier to the warehouse of the purchaser, which means the risk in case of damage of goods during transit remained with the supplier. In such a scenario, the article 7.1 that ownership and risk would be transferred to the purchaser, remained only on paper and not acted upon. In the instant case the parts of the machineries have been manufactured outside India but they have not been brought in deliverable state in India as per supply agreement and thus sale cannot be said as effected outside India. In the case of Ericson AB [ 2011 (12) TMI 91 - DELHI HIGH COURT] the contract of erection was executed by subsidiary company and thus the Hon ble court held that both the entity perform their own independent obligation, receive appropriate separate remuneration and are technically not dependent on each other. But in the instant case, both the contract of supply and supervision of installation or commissioning of plant has been executed/supervised by the one party, i.e., the assessee. In the instant case, the assessee has not provided the details of marketing activities or negotiation of the contract to the Assessing Officer despite repeated requests and thus, the decision relied upon is any way not assistance to the assessee. The assessee has supplied parts of goods by way of invoices raised,which have further been assembled in India to bring them in deliverable state as agreed in the supply agreement between the assessee and buyer , and thus property in goods have been passed in India and thus part of the consideration of supply agreement for offshore supply is taxable in India. We note that no information has been provided by the assessee in respect of the activity carried out in India subsequent to award of the tender to the assessee for collection of drawing of the factories of the buyer and other input information in relation to erection of plant and customized manufacturing of the parts of various section of the plant. Business connection in India - In the instant case, the part of the operations of the supply agreement have been carried out in India and sale of goods is in continuation of the process of erection of the plant , the conditions of the business connection exits. We have observed an element of continuity between the business of the assessee from supply to successful supervision of the commission of Plant. It is not the case of isolated sale of the off the self goods or stray transaction, in view of the fact that the assessee has rendered supervision of erection/commission of TPD Plant. Thus, the assess is doing business activities in India which are not isolated instances but represent real and intimate relationship between activities of assessee done outside India and those done inside India. The business operation being done in India by the assessee are revenue generating as these operations are required to earn the contract and to meet the contractual obligations. Therefore, all parameters of business connection as prescribed by above judicial authorities are satisfied in the case of the assessee.Accordingly, the income is deemed to accrue or arise in India in terms of section 9(1)(i) of the Act from the offshore supply of goods. Existence of PE in India - We do agree with the observation of the Assessing Officer that there was close proximity or connection between the PE and the assessee. The Learned Assessing Officer is correct in observing that substantial part of the business activity of the assessee of manufacturing and commissioning of TPD plant was carried out in taxable territory of the India and supply of parts of machinery for plant was incidental to service contract and for this reason a part of the profit is directly attributable to the PE in India. In the facts of the case the supervision services are not incidental to sale of the plant and machinery and it is otherwise that for commissioning of the plant, assessee has brought component of the machinery to India under supply agreement. It is not the case that the assessee is a pure trader or seller of the part of the machineries to be utilized for commissioning of the TPD plant, but the assessee is having domain expertise of commissioning of such plants. Existence of service PE has not be denied by the assessee. In the case of the assessee, the employees of the assessee were in India at the time of entry of the part of the machinery on the Indian soil. Those employees were instrumental in supervising the entire activity of inspection of part of the machinery imported into India and assembling of those machinery to bring into the deliverable state mentioned in the supply agreement. The service PE has also played the role in completing the supply agreement between the assessee and the buyer. The part of the equipment or the machinery needed for erection or commissioning of the TPD plant though has been manufactured in Austria but same have been utilized for creation of TPD plant in India. The part of the operations of supply agreement have definitely been carried out in India by the permanent establishment of the assessee and for which part of the profit from the supply agreement also need to be taxed in India in terms of the treaty between India and the Austria as the assessee relied on the treaty provisions for considering taxation of the supply agreement. Attribution of profit to permanent establishment - In the instant case, in addition to the marketing activities or engineering survey pre or post awarding of contract (for which no information has been filed by the assessee), the service PE has played role in assembling and bringing the equipment to deliverable state as agreed under the supply agreement. In such facts and circumstances, in our opinion, the 35% of the profit attributed to the PE is justified. Accordingly, we uphold the same. Interest as under section 234A/234B/234D - The assessee has accepted the existence of the PE before the AO and in that circumstances, it cannot take benefit that it was the responsibility of the deductor to deduct tax at source. In view of facts of the case being identical to the facts of the above case, we don t find any error in the order of the Assessing Officer on the issue in dispute. Accordingly, the ground No. 4 of the appeal of the assessee is dismissed. 2020 (3) TMI 42 Stay on collection/recovery of outstanding tax and interest amount - demand created as a result of assessment under section 143(3) r.w.s. 144C (13) - HELD THAT:- No case is made out that by making the partial payment of demands, as directed by the learned Commissioner, the assessee will be subjected to any serious and undue hardship. There is nothing to show that any significant inconvenience will be caused to the assessee in complying with the conditions imposed by the learned Commissioner, while granting the partial stay, or that the order of the learned Commissioner, in so granting the partial stay, is perverse or unreasonable. In these circumstances, we are not inclined to interfere in the matter so far as grant of stay is concerned. In today's world of ultrafast banking transactions, it is difficult to believe that a period of 15 days is less than sufficient to organize an inward foreign remittance, and it is not even the case of the assessee that the assessee has paucity of funds. In any event, it is open to the assessee to point out all the related facts to the Commissioner, and seek appropriate relaxations as he may be advised. Suffice to say that in the absence of any perversity or any unreasonableness on the part of the With the consent of the parties, however, we have posted the matter for an out of turn hearing on 24th February 2020. Customs 2020 (3) TMI 41 Grant of regular bail - Bribe - question of parity - offences punishable u/s 120B IPC and section 7A of The Prevention of Corruption Act - HELD THAT:- The petitioner is not entitled to parity with co-accused who have been released on bail. The petitioner in this case was dealing with the records of the firms of the complainant and he has asked for the bribe for the co-accused from the complainant alleging that the records of his firm has been seized by DRI alongwith the record of M/s Sadagati Clearing Agency Pvt, Ltd. It is alleged against the petitioner that he told the complainant that the records of 300 business firms which has been seized by the DRI included the firms i.e. M/s Anmol Tradex Pvt. Ltd. and M/s Bal Gopal Importers, both firms of the complainant and record of these firms were under compilation by DRI, Ludhiana. It is also alleged against the petitioner that he has even told the complainant that action under COFEPOSA could be taken against him which can lead to search of his premises and to his arrest. The investigation reveals that the petitioner is the man who has created fear in the mind of the complainant that he would be involved in cases with DRI and COFEPOSA and after creating this terror in the mind of the complainant, the bribe amount was settled of which a sum of ₹ 25 Lakhs have been recovered from the petitioner. It is the petitioner who was the ex-clearing agent of the complainant and he is the man who had made the complainant to believe that his firms would also be under the DRI investigation and laid the foundation of this entire case. During the investigation the conversation between the complainant and the petitioner has been collected which according to the prosecution reveals that he harassed and threatened the complainant to accede to their demand in order to save himself from the investigation of DRI. The petitioner is the master mind of the case as he was well aware about the business of the complainant being his ex-clearing house agent - the allegations against the petitioner are grave and serious in nature and he is not entitled to parity with his co-accused. Bail application dismissed. 2020 (3) TMI 40 Imposition of penalty u/s 114AA of the Customs Act, 1962 - goods in question are liable to be confiscated and also disallowed the duty drawback to the respondent - the Tribunal held that, since penalty has already been imposed under Section 114AA, the contention of the Revenue that the penalty should have been imposed under Section 114, deserves no merit - HELD THAT:- We do not think that any of the questions of law raised deserve merit for consideration in this appeal filed under Section 130 of the Customs Act, 1962. The original authority has issued show cause notice proposing imposition of penalty under Section 114AA of the Act. The order of the original authority would also reveal that penalty was imposed only under Section 114AA, based on the show cause notice issued and the explanation received. If the authority was having the opinion that penalty ought to have been imposed under Section 114, they could have taken appropriate steps to the extent if any permissible under law. The appeal filed before the Tribunal challenging the order, by contending that the penalty ought to have been imposed under Section 114, cannot be sustained as lawful - Appeal dismissed. 2020 (3) TMI 39 Grant of Duty Free Import Authorization (DFIA) - Export of Basmati Rice - It is submitted that as per para 4.29 of the Policy i.e. the Foreign Trade Policy for the year 2015-2020 in the matter of post-export, the period of import has to be calculated after the completion of the export and realisation of the proceeds - Whether PRC i.e. Policy Relaxation Committee has rightly considered the grievance of the petitioner on the anvil that the petitioner has prayed for post-export DFIA and not for pre-export DFIA? - HELD THAT:- The Committee has referred to the actual user condition in its impugned decision which would apply in a case of pre-export DFIA and not in a case of post-export DFIA. Therefore, the whole complexion of the decision of the Committee has changed as it does not deal with the actual issue raised by the petitioner in its representation/application which was to be dealt with by the said Committee. In such circumstances, the Committee is required to look into this matter again with reference to the fact that the case of the petitioner is post-export DFIA and not pre-export DFIA. The matter is remanded back to the Policy Relaxation Committee to decide the same afresh - Petition allowed by way of remand. 2020 (3) TMI 38 Whether the CESTAT was justified in remanding the matter for adjudication to the Primary Adjudicating Official, to first decide the issue of jurisdiction, after awaiting final decision by the Supreme Court in the appeal (by Special Leave) against Mangali Impex Limited v. Union of India, [ 2016 (5) TMI 225 - DELHI HIGH COURT ]? HELD THAT:- This Court is of the opinion that in larger interest of speedier resolution of the issues, rather than only deciding the question of jurisdiction, it would be appropriate that CESTAT should decide the merits of the appeal, i.e. the merits of the claim against the assessees, rather than remitting the matter for fresh overall consideration of the issues to Adjudicating Authority. In the latter event, much time and energy will be spent, and avoidable delay would occur - However, on the other hand, if matter is remitted to the CESTAT for decision on merits, there would be a fair likelihood that the same is resolved in favour of the assessee, in which event the way of further appeal and recourse to appellate proceedings by Revenue would be open. The matter is remitted to the CESTAT, which shall proceed to examine and decide the merits of the appeal without being influenced by the decision in Mangali Impex - Appeal allowed by way of remand. 2020 (3) TMI 37 Smuggling - Gold - Revenue is not in a position to return the goods confiscated - levy of redemption fine - HELD THAT:- Section 125 of Customs Act, 1962 has given right to the importer to redeem the goods on payment of redemption fine. Due to action of Revenue of selling impugned goods during the period of filing appeal before learned Commissioner (Appeals) the goods are not available for redemption therefore Revenue has rendered right of appellant under Section 125 of Customs Act, 1962 as non-enforceable. Therefore the contention of learned A.R. for Revenue that redemption fine should be recovered cannot be enforced because by payment of redemption fine, Revenue is not in a position to return the impugned goods. If goods are not available for redemption on account of disposal of the same by Revenue appellant is not required to pay redemption fine and Customs duty and also eligible for refund of sale proceeds - On examination of provisions of the Section 112(b) of said Act, the penalty is reduced to ₹ 1,33,429/- - As per record the amount of sale proceeds is ₹ 38,62,524/-. I therefore in the circumstances of the matter order for payment of ₹ 38,62,524/- Minus ₹ 1,33,429/- personal penalty to the appellant by Revenue. Corporate Laws 2020 (3) TMI 36 Winding up of respondent company - Section 433 and 434 of the Companies Act, 1956 - outstanding dues - HELD THAT:- Even though a Statutory notice was issued, the respondent company refused to accept the service of such statutory notice. No reply was given to such statutory notice and, therefore, the defence put forward by the respondent company in its affidavit in reply is nothing but an after-thought. It is on record that the respondent had admitted its outstanding dues and in fact made some payments after the meeting dated 26.6.2014 held between the representatives of the petitioner and respondent company. Even considering the losses for three financial years as also the pendency of SARFAESI proceedings reveal that the respondent company is a loss making company and has lost its financial substratum and the same leads to only one conclusion that the company is not in a position to pay its debts to the creditors. It would be just and proper to direct that the respondent company Polo Ceramic Private Limited be wound up - Petition allowed. 2020 (3) TMI 35 Maintainability of Company petition - locus to seek intervention - whether the Appellants did have locus to seek intervention in the Company Petition preferred under Section 252 of the Act? - HELD THAT:- It is well settled that the legal right sought to be enforced must ordinarily be the right of the petitioner himself who complains of infraction of such right and seeks legal remedy before a Court of Law. The principle of locus sandi may have been diluted to some extent by allowing public interest litigation in regard to enforcement of certain rights concerning the public at large, however, it does not detract from the broader principle that in case of any statutory violation, a right to seek remedy is conferred upon the statutory authorities like the Registrar of Companies entrusted with matters governing the companies or on members, creditors and other persons interested in the company. Even in case of a class action, a minimum threshold is prescribed. Merely because a Company happens to be a public company, it is not open to any member of the public to move the Court seeking directions to interfere in the management and affairs of the Company. Adverting to the facts of the instant case be it seen that the Appellants sought intervention in Company Petition on the ground that they had filed a Civil Suit against the Company. This ground, though does not justify intervention in Company Petition as person aggrieved , in fact warrants the Company s name being restored in the Register of Companies, more so, as the Company is said to be even now involved in active litigation for recovery of moneys allegedly siphoned off by the Appellants fraudulently which according to Respondent is a staggering amount of ₹ 112 Crore - Appellants cannot be heard to say that Ms. Mansi Vora, admittedly a shareholder of Respondent No. 1 having stakes in the Company, was not entitled to seek restoration of name of Respondent No. 1 in the Register of Companies. Appellants have miserably failed to prove their locus and their malafide intention to thwart the course of law is writ large on the face of their attempted intervention. The Appellants could not claim to be the aggrieved persons and had no locus to seek intervention in Company Petition. Neither of their legal rights was jeopardized nor was any of their legal right infringed - Appeal dismissed. Insolvency & Bankruptcy 2020 (3) TMI 34 Interpretation of Statute - Prohibition during the moratorium period - the recovery of any property by an owner or less or where such property is occupied by or in the possession of the corporate debtor - Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 - whether Section 14(1)(d) of the Code will apply to statutorily freeze occupation that may have been handed over under a Joint Development Agreement? - HELD THAT:- MHADA Act, as its preamble states, is an Act to unify, consolidate and amend the laws relating to housing, repairing and reconstructing dangerous buildings and carrying out improvement works in slum areas. By Section 4 of the Act, the Authority, i.e. the MHADA, is to be a corporate body, and is deemed to be a local authority for the purposes of the Act. By Section 5 the Rent Act, or any corresponding laws are not to apply. By Section 66, the Competent Authority is given power to evict persons from premises under certain circumstances. There is no doubt whatsoever that important functions relating to repairs and re-construction of dilapidated buildings are given to MHADA. Equally, there is no doubt that in a given set of circumstances, the Board may, on such terms and conditions as may be agreed upon, and with the previous approval of the Authority, handover execution of any housing scheme under its own supervision. However, when it comes to any clash between the MHADA Act and the Insolvency Code, on the plain terms of Section 238 of the Insolvency Code, the Code must prevail. This is for the very good reason that when a moratorium is spoken of by Section 14 of the Code, the idea is that, to alleviate corporate sickness, a statutory status quo is pronounced under Section 14 the moment a petition is admitted under Section 7 of the Code, so that the insolvency resolution process may proceed unhindered by any of the obstacles that would otherwise be caused and that are dealt with by Section 14. The statutory freeze that has thus been made is, unlike its predecessor in the SICA, 1985 only a limited one, which is expressly limited by Section 31(3) of the Code, to the date of admission of an insolvency petition up to the date that the Adjudicating Authority either allows a resolution plan to come into effect or states that the corporate debtor must go into the liquidation. The matter had come to this Court after the Adjudicating Authority had approved of a certain resolution plan, unlike in the facts of the present case, and what was clear, on the facts of that case, was that a show cause notice of the Municipal Corporation, which preceded admission of the insolvency resolution process, made it clear that assets of MCGM could not possibly be subsumed within a resolution plan without its approval/permission - thus, it is clear that Section 14(1)(d) of the Insolvency Bankruptcy Code, when it speaks about recovery of property occupied , does not refer to rights or interests created in property but only actual physical occupation of the property. Appeal allowed - decided in favor of appellant. 2020 (3) TMI 33 Maintainability of petition - alternative remedy of appeal - Reversal/recall of the Resolution Plan - Section 32 of IBC - HELD THAT:- The NCLT/Tribunal, in the impugned order held that the said prayer virtually amounts to reversal/recall of the Resolution Plan and the same cause could be taken as a ground for filing an appeal under Section 32 of IBC and not by way of this application which is impermissible in law. As regards exercise of inherent power, the Tribunal has observed that assuming the power of recall is inbuilt in IBC and it can be exercised only in cases where the order is passed without jurisdiction or fraudulently obtained and that is not the case here and the Tribunal, further observed that in the absence of specific conferment of review jurisdiction, it cannot exercise the power to review. The revision petitioner, under the guise of filing a revision, under Article 227 of the Constitution of India, wants this Court to issue a positive direction to NCLT, Chennai Bench, to exercise its inherent power in a particular manner. In the considered opinion of the Court, it cannot issue a positive direction to NCLT, Chennai Bench, as to how it should exercise its inherent power. The NCLT/Tribunal also found that in real sense, the revision petitioner wants to recall of the Resolution Plan and the said cause could be taken as a ground for filing an appeal under Section 32 of IBC. Thus, there is an effective alternate remedy provided to the revision petitioner who also claimed to be an Operational Creditor. If this Court starts entertaining revision petitions like this, there is a likelihood of opening of flood gates where the alleged aggrieved person, without resorting to the alternate remedy of appeal, would often approach this Court and that is not the object of IBC - This Court, on an independent appraisal of the entire materials as well as the contents of the impugned order passed by NCLT, Chennai Bench, is of the considered view that there is no error apparent or infirmity in the reasons assigned and finds no merit in this Civil Revision Petition. Petition dismissed. 2020 (3) TMI 32 Appointment of liquidator - Adjudicating authority rejected the Approval of Resolution Plan - 'Preferential transactions' - Power of adjudicating authority to cancel the lease agreement - Period of limitation for 'Related Party'- The bid of the appellant was approved the 'Committee of Creditors' with 97.20% voting - HELD THAT:- If an Adjudicating Authority is dissatisfied with a 'Resolution Professional', he may appoint another 'Resolution Professional' as a 'Liquidator'. Needless, to make an emphasis that it is the duty of Corporate Debtor to cooperate with a Liquidator. Section 35 of the Code, confers powers and duties of a Liquidator to ensure an orderly completion of the 'Liquidation Proceedings'. Even an Adjudicating Authority may assign certain duties, to be discharged by him. Undoubtedly a 'Liquidator' is to act under the supervision of an 'Adjudicating Authority'. A Liquidator is to establish a 'connivance' between a 'Company' and the 'Transferee'. It is well settled that the Resolution Professional is required to examine and confirm the Resolution Plan subject to the same being in conformity with the ingredient of Section 30(2) of the Code. A Resolution Professional can submit his ex facie opinion to the 'Committee of Creditors' that the law was or was not violated. It is true that the Section 30(2)(e) of the Code does not authorise the Resolution Professional to determine whether the Resolution Plan does or does not violate the relevant provisions of Law - In reality, ascribing conditions in the 'Resolution Plan' by the Appellant/Resolution Applicant is an unacceptable one, in the considered opinion of this Tribunal. Therefore, the Adjudicating Authority in the impugned order came to the right conclusion that the plan of the Resolution Applicant/Appellant was in negation of Law. The Adjudicating Authority is not empowered to pass an order of eviction and it is for an 'Aggrieved party' to move the appropriate forum for redressal of its grievances in accordance with Law. In short, the Committee of Creditors had approved the Resolution Plan in utter disregard regard to the ingredient of Section 30(2)(e) of the I B Code and as hence the same was rejected by the Adjudicating Authority. Moreover, the Adjudicating Authority had appointed a 'Liquidator' other than the 'Existing Resolution Professional'. Appeal dismissed. 2020 (3) TMI 31 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- It is noticed from the Petition that there is no pre-existing dispute regarding the unpaid operational debt and the principal amount of ₹ 3,31,580/- as principal amount as per invoice dated 22.09.2017 and date of default is 14.10.2017. Thus, the existence of both debt and default is established. There is no provision for interest in the invoice. In our order dated 17.09.2019 we have given further opportunity to the Corporate Debtor to represent before the bench and file the reply. However, despite service of court notice on the Corporate Debtor, no reply has been filed. Therefore, it is held that the Corporate Debtor does not dispute its liability and has defaulted in the payment to the operational creditor. The Petition made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared. 2020 (3) TMI 30 Admissibility of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - whether the Appellant i.e., Corporate Debtor has paid the debt prior to admission of Application under section 7 of IBC? - existence of debt and default or not - HELD THAT:- Record shows that the Payments have been made by the Appellant/Corporate Debtor prior to the admission of the Application i.e., on 03.05.2019. Having made the payment prior to initiation of CIRP, we are of the view that the case of the Respondent/Applicant cannot be treated as a Financial debt and default, in view of no debt payable to the Financial Creditor. Even the Respondent/Applicant did not deny the receipt of the aforesaid amount of ₹ 1,50,17,770/-. Whilst it is stated that the said amount has not been paid towards their debt but it has paid because of criminal cases filed against Directors of Corporate Debtor Company. The Corporate Debtor is released from rigour of 'Corporate Insolvency Resolution Process - Appeal allowed. 2020 (3) TMI 29 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- On perusal of the record it is found that for the first time the matter was notified on 13.03.2019. Since then, the matter was notified for hearing on different dates, but the respondent never appeared either in person or through advocate before the bench nor submitted any reply despite notice issued by the applicant as well as the Registry. The Adjudicating Authority passed an order on 23.07.2019 for paper publication. Since service is complete, the matter has been heard in absence of the corporate debtor. This adjudicating authority is of the considered view that operational debt is due to the Applicant. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects. Petition is admitted - moratorium declared. 2020 (3) TMI 28 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - service of SCN - whether the demand notice in Form No. 3 dated 17.12.2018 was properly served? - HELD THAT:- The demand notice dated 17.12.2018 was sent at the address as per the master data at Page No. 27 of the petition in which the registered office is shown as B-363, 364 365, Nehru Ground, NIT, Faridabad, Haryana - 121001. Also, the postal receipts alongwith the tracking reports showing successful delivery of the notice are found to be attached with Annexure H of the petition. Therefore, the statutory demand notice was duly delivered upon the corporate debtor. Whether the operational debt was disputed by the corporate debtor? - HELD THAT:- The respondent in its reply dated 27.09.2019, wherein it is specifically stated in Para No. 8 that as per the ledger account maintained by the respondent-corporate company in respect of the petitioner was certified and provided to applicant on 26.06.2018 acknowledging the existing debt and liability was of ₹ 22,78,708/-. Thus, there is no dispute as to the liability between the corporate debtor and the operational creditor. It has been proved beyond doubt that the corporate debtor has failed to make payments of the aforesaid amount due as mentioned in the statutory notice till date. As a statutory requirement under section 9(3)(c) of the Code, an affidavit dated 03.04.2019 has been placed by the operational creditor stating that no notice is given by the respondent-corporate debtor in terms of Section 8(2)(a) of the Code and the corporate debtor has not brought the notice the existence of any dispute in relation to the unpaid operational debt - It is also observed that the conditions under section 9 of the Code stand satisfied. The applicant-operational creditor states that the liability of the respondent-corporate debtor is undisputed. The petition for initiation of the CIRP process is admitted - moratorium is declared. 2020 (3) TMI 27 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- It is noticed from the documents placed on record the shipment was undertaken by the Operational Creditor on the instructions of the Corporate Debtor from time to time. There is also an acknowledgement of liability at p.53. The debt is within limitation since the date of default is 22.09.2017. There is default of a debt due and payable and the default is in excess of the minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. This Adjudicating Authority admits this petition and orders initiation of CIRP against the Corporate Debtor - Petition admitted - moratorium declared. 2020 (3) TMI 26 CIRP Process - violation of section 17 of the 'I B Code' and Moratorium declared under section 14 of the 'I B Code' by the 'Resolution Professional' and the Directors of the 'Corporate Debtor' - issue of direction to the 'Corporate Debtor' to recall the funds allegedly diverted by the Directors during the period of Moratorium - HELD THAT:- The 'Corporate Debtor' being a 'Financial Institution' as defined under section 3(14)(a) and 3(14)(b) of the 'I B Code' and it has obtained a Certificate of Registration under section 45-IA of the Reserve Bank of India Act, 1934 and is a Non-Banking Financial Company 'not authorised to accept public deposit' come within the meaning of 'Financial Service Provider'. It is evident that all 'non-banking financial institution' has been excluded from the definition of the 'Corporate Person', except those which are 'financial service provider'. The Appellant has failed to show any document that it is actually performing the business of 'financial service provider', as defined under the 'I B Code'. On the other hand, the Respondents have shown that it is not actually performing the business of 'financial service provider' and thereby does not come within the meaning of 'financial service provider'. For violating the provisions of the 'I B Code' including section 14, if the Appellant is liable for punishment under Chapter VII of the 'I B Code', particularly section 70, 74 etc. of the 'I B Code', they cannot divert the issue of punishment or their alleged violation of the order of the Adjudicating Authority/Tribunal by raising a separate issue which is not required for determination in this appeal in absence of any challenge of order of admission. Appeal dismissed. 2020 (3) TMI 25 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - recovery of the unpaid Operational Debt du - HELD THAT:- There seems to be pre-existing disputes among the parties for recovery of amount. As it is alleged that the Ex-Director of the Corporate Debtor Company, Mr.Babulal Mehta has colluded with the Petitioner and thus misused the Company's cheque in favour of the present Petitioner, which is a disputed question of facts and a debatable issue, which can be adjudicated before a Competent Civil Court - Hence, the present IB Petition is not maintainable. 2020 (3) TMI 24 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - pre-existing dispute or not - HELD THAT:- It becomes clear that material was to be returned by the Corporate Debtor to the godown of the Operational Creditor between 9 a.m. to 5 p.m., Sunday being holiday and the hire charges were to be calculated from the date of issue of the material till the same is received back at the godown of the Operational Creditor. It is also noted that when the material is delivered, it was the choice of the Corporate Debtor to have authorized agent to conduct inspection of the material, if required, after which no complaint was to be entertained by the Operational Creditor as per the terms and conditions, which are clear and unambiguous. The defence that has been projected by Counsel for the Corporate Debtor is hollow, as the same is not substantiated with any documentary evidence. It is an admitted fact that the material supplied has been used by the Corporate Debtor which is still in its possession. Therefore, the Corporate Debtor cannot deny the liability; the dispute raised is spurious, mere bluster and an afterthought. The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Bench is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt as claimed by the Operational Creditor - Application admitted - moratorium declared. 2020 (3) TMI 23 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- Since most of the exposure of the Respondent company was by way of consortium finance, and there is no bar for the applicant to approach this Hon'ble Tribunal for initiating resolution process without seeking consent of other lenders. There is sufficient evidence to prove default. The applicant has specified the name of the resolution professional and has annexed Form 2, the consent of the proposed IRP to the application accordingly. Petition admitted - moratorium declared. 2020 (3) TMI 22 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - time limitation - existence of debt and dispute or not - HELD THAT:- On perusal of the records it is found that Page Nos. 160 to 165 are balance confirmation letters issued by corporate debtor on different dates from 02.04.2013 to 31.03.2017 acknowledging the debt. That the said letters are duly stamped and signed by the corporate debtor confirming the outstanding debt in their loan account. That, this document itself is sufficient to prove that there exists financial debt - On perusal of the records it is found that the letter of authority dated 04.08.2018 issued by General Manager of the applicant bank authorising Mr. D Koteshwara Rao is proper and valid. As regards the other objections like denial of having taken any loan from the applicant bank appears to be illusory, imaginary and not sustainable in the eyes of law when volumes of documents produced by the bank evidencing execution of documents like term loan agreement, demand promissory note, undertaking to pay instalments, letter of hypothecation etc. are placed on record by the applicant bank. It is needless to add that all the above referred documents bear the stamp and signature of the corporate debtor. The Adjudicating Authority is of the considered view that there is a debt due to financial creditor and there is default on the part of the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'. The application under Section 7 (2) of the IB Code is complete in all respects and there is debt due to the financial Creditor and there is default on the part of the corporate debtor . Hence, there is no alternative but to admit the application in absence of any infirmity - the petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted. Petition admitted - moratorium declared. PMLA 2020 (3) TMI 21 Grant of Bail - Money Laundering - allegation of illegal schemes to mobilise deposits from the innocent investors including the deposits under the scheme of issue of debentures with false assurance of high return and thereby generated huge sums of money for different purposes by making fool the common people - case of Respondent is that the present petitioner being the Debenture Trustees of the company was responsible for the acts and daily affairs of the company at the relevant time and as per his plan and advice, the company planned such illegal schemes - HELD THAT:- It would appear from the investigation report that the petitioner accused the Debenture Trustee member accused no. 1 was responsible for the acts and affairs of the company and at the relevant time he planned and designed the illegal schemes to mobilise deposits from the investors including deposits under the schemes of issue of debentures with false assurance of high return and thereby generated huge sums and diverted and laundered the money for different purposes by be-fooling the common people. It is true that the debenture was advertised in 2001-2002 and this accused petitioner was a field Officer appointed by the Chairman Gautam Kundu of the company who is the key person in planning of such chit fund companies to the public at large but the accused petitioner was indicated as a Debenture Trustee of the accused company no. 1 obviously because of his expertise and designed in mobilisation the public at large to procure more and more money befooling the common public on the assurance of giving high return. This Court does not find any ground to enlarge the accused petitioner on bail on the ground of his medical treatment because Enforcement Directorate is ready to meet all expenditure on account of medical treatment through Super Speciality Hospitals in West Bengal which can be availed through the Superintendent Presidency Correctional Home - the application under Section 439 Cr.P.C. is rejected. 2020 (3) TMI 20 Bail application - money laundering - Section 439, read with Section 436A of the Code of Criminal Procedure, 1973 - period of detention of an under trial prisoner - whether any delay has been caused by the said accused person and the offence is not punishable with death? - HELD THAT:- The learned counsel has adverted to the provision of Section 436A of the Code of Criminal Procedure giving emphasis to the proviso clause that the Court may after hearing the public prosecutor and for reasons to be recorded by it in writing, order the continued detention of such person for a period longer than one-half of the said period or release him on bail instead of the personal bond with or without sureties; provided further that no such person shall in any case be detained during the period of investigation, inquiry or trial for more than the maximum period of imprisonment provided for the said offence under that law. Therefore, for the reasons to be noted the Court is well empowered to order continued detention in jail instead of releasing him on personal bond or on surety bond, however in no case the petitioner can be continued with the detention beyond the period of seven years. Whether delay in trial was caused by the petitioner and other accused person? - HELD THAT:- It is evident from the charge sheet that the petitioner is responsible for the acts and affairs of the company as the Chairman of Rose Valley Group of Company who planned and designed the illegal schemes to mobilize deposits from the innocent investors including deposits under the scheme of issue of debenture with false assurance of high return and thereby generated huge sums and diverted and thereby laundered the money for different purposes by befooling the common public and has committed offence under Section 3 read with Section 70(1) and (2) of PMLA Act punishable under Section 4 of the Act. Thus, the petitioner is involved in a grave economic crime having serious social ramification and in the larger interest of the society - the learned trial Judge has rightly turned down his prayer for release under the provision of Section 436A of the Code of Criminal Procedure by taking in view the proviso clauses for his continued detention till the conclusion of the trial. The prayer for release of the petitioner Gautam Kundu is refused considering the enormity of the crime and his involvement in many other cases relating to Rose Valley cheat fund scam case - Application dismissed. Service Tax 2020 (3) TMI 19 Demand of service tax from the partnership firm - appropriation of service tax by the proprietorship firm - a partnership firm was constituted and the proprietorship business was taken over by the partnership firm with all the assets and liabilities - HELD THAT:- The service tax for some period was being paid in the name of the sole proprietorship business, and not in the name of partnership firm. Subsequently the partnership firm claimed that the tax for the relevant period be treated as the tax paid by partnership firm - It is pointed out by learned counsel for the petitioner that a representation given for the same on 22.7.2019, as contained in Annexure-13 to the writ application, is still pending before the Commissioner of CGST, Central Excise Service Tax, Ranchi, which has not yet been disposed of. Application disposed off with the direction to respondent No.1, the Commissioner of CGST, Central Excise Service Tax, Ranchi, to dispose of the representation of the petitioner firm, by a speaking order within a period of four weeks from the date of receipt of such representation. 2020 (3) TMI 18 Non-payment of service tax - GTA service - repair and maintenance service - demand of service tax - recovery of inadmissible Cenvat Credit - demand of interest and penalty - HELD THAT:- Appellant had substantially demonstrated before the adjudicating authority about the differential amount that found reflected in ST-3 Return and financial statement but in the OIO the said explanation was dishonoured primarily on two grounds. First, appellant has accepted the audit report and discharged service tax liability immediately thereafter. Second, notification no. 30/2012-ST clearly stipulated that the service recipient in respect of transportation of goods is liable to pay 100% service tax under the reverse charge mechanism. Both the grounds are unsustainable for the reason that acceptance of an assessee or offer by an assessee to pay tax will not make the taxation rule legally tenable since it has to pay tax supposed to be imposed in conformity to Article-265 of the Constitution of India. CENVAT credit - HELD THAT:- As found from the OIO and OIA, admissibility of Cenvat Credit on other services like general insurance and maintenance, repair services were denied on the ground that Rule 2(l) clearly denies such availment but a bare reading of Rule 2(l) (BA) reveals that service of general insurance business, servicing, repair and maintenance, in so far as they relate to motor vehicle which is not used as capital goods are excluded from the definition of input service with certain exceptions. However, in the instance case, appellant had manifestly demonstrated that it had availed management, maintenance and repair services as defined in section 65(64) of the Finance Act, 1994 and not paid service tax towards maintenance and repair of vehicle, which was held to be inadmissible with the introduction of negative list. Demand of intererst and penalty - HELD THAT:- In view of decision of this Tribunal given in the case of NAGPUR NAGRIK SAHAKARI BANK LTD. VERSUS CCE ST, NAGPUR [ 2018 (11) TMI 1524 - CESTAT MUMBAI] , Cenvat Credit taken or utilised before amendment and utilised after amendment do not carry much difference to impose interest and penalty unless such utilisation is in respect of inadmissible credits. Therefore no penalty can be imposed on the appellant on all these three scores since the demands are unsustainable in law and facts. Appeal allowed - decided in favor of appellant. 2020 (3) TMI 17 Classification of service - Business Auxiliary Services or not - amount of subsidy received by the Appellant - demand of interest under section 75 of Finance Act for belated payment of service tax - extended period of limitation - HELD THAT:- The case of the Appellant is that these handsets are sold at a price fixed by Tata Tele Services, which price is lower than the purchase price of the handsets and Tata Tele Services reimburses the differential amount by way of subsidy. The show cause notice dated 19 October, 2011 proceeds on the footing that the Appellant has been appointed as a distributor of Tata Tele Services for selling/marketing their CDMA handsets with connections. This premise is not in accordance with the terms of the agreement. The agreement provides that Tata Tele Services intends to appoint a distributor to market the service of Tata Tele Services - There is no agreement between the Appellant and Tata Tele Services for selling mobile handsets at a lower rate. The mobile handsets are independently purchased by the Appellant and VAT is discharged on the sale of mobile handsets to the customers. However, while selling the handsets the Appellant sells them at a price lower than the purchase price and Tata Tele Services pays the differential amount as subsidy to the Appellant. In the present case, the SCN, even after reproducing the seven clauses of section 65(19), does not specify which particular clause was attracted and it only mentions that the assessee is an authorized distributor appointed by M/s TTSL for selling CDMA handsets along with connection to the customers. The expenditure incurred by the distributor is reimbursed by M/s TTSL in the guise of subsidy and the same appears to be covered under the definition of Business Auxiliary Service and chargeable to Service Tax since, the amount received by the assessee was in respect of providing Business Auxiliary Service to M/s TTSL. The submission made by learned Counsel for the Appellant deserves to be accepted. The Appellant did receive a fixed commission for marketing the services of Tata Tele Services for the works enumerated in schedule A of the Agreement. This schedule does not refer to buying and selling of handsets at lower prices and neither does the Agreement provide for payment of any subsidy, much less for promotion or marketing of Tata Tele Services. The subsidy, on the other hand, is paid to the Appellant by Tata Tele Services to compensate for the loss incurred by the Appellant on the sale of mobile handsets at a lower price and cannot be said to have any relation to the service of promotion or marketing. Thus, in the absence of any services provided by the Appellant to Tata Tele Services, service tax could not have been levied on the amount of subsidy received by the Appellant. In the present case, the Appellant is engaged in the marketing of telecommunication services of Tata Tele Services for which it is receiving a consideration and the Appellant is discharging service tax on the said amount of consideration. The amount of subsidy that the Appellant is receiving on account of sale of handsets at a lower price does not have any nexus with the promotion or marketing of the services provided by Tata Tele Services. It needs to be noted that Tata Tele Services is reimbursing only that amount to the Appellant which the Appellant would have otherwise received from the customer buying the handsets. No service is being provided. The amount of subsidy is merely a compensation and this amounts the Appellant would have received from the customer. In fact, it can be said that the arrangement between the Appellant and Tata Tele Service for selling the handset at a lower price only aids the business of the Appellant because it will be able to sell more handsets. Extended period of limitation - HELD THAT:- As it is not possible to sustain the demand, the contention of learned Counsel for the Appellant that the extended period of limitation under the proviso to section 73(1) of the Act could not have been invoked is not required to be examined. Appeal allowed - decided in favor of appellant. Central Excise 2020 (3) TMI 74 CENVAT credit - input services - Group Medical Insurance Policy for employees and their dependants - HELD THAT:- The issue has been laid to rest by the Hon ble High Court of Judicature at Madras in the case of M/S. GANESAN BUILDERS LTD. VERSUS THE COMMISSIONER OF SERVICE TAX [ 2018 (10) TMI 269 - MADRAS HIGH COURT] where the credit was allowed. The denial of CENVAT Credit on Group Medical Insurance Policy on the dependants of employees is bad - Appeal allowed - decided in favor of appellant. 2020 (3) TMI 16 CENVAT credit - duty paying invoices - Credit in respect of input on 10 Bill of Entries which were disputed by the Audit party - proper verification not carried out - principles of natural justice - Penalty imposed on Shri Hari Nair - HELD THAT:- The appellant for each and every objections whereby the Cenvat Credit was disallowed, given detailed explanation in a chart along with relevant documents submitted - the appellant have given proper justification for the discrepancies alleged by the revenue. They have also co-related the Bill of Entry with other documents. With this co-relation it has been established that against the Bill of Entry the appellant have received the input in their factory and the same have been used. Therefore, the Cenvat Credit should not have been disallowed only for the procedural/clerical lapse. It is the submission of the appellant that the co-relation and the supporting documents submitted by the appellant have not been verified by the adjudicating authority - it is found that even though some procedural lapse has occurred but since the receipt of inputs under the cover of Bill of Entry and use of input in the manufacture of final product was neither alleged nor established by the revenue, the Cenvat credit cannot be denied. Penalty imposed on Shri Hari Nair - HELD THAT:- It is evident from the record that the act of alleged wrong availment of credit has happened in the year 2008-09 whereas Shri Hari Nair has joined the appellant company only in 2011. Therefore, it cannot be said that he has abated in the act of alleged wrong availment of credit by the company. Moreover, the credit was disallowed only for some discrepancy in the documents which cannot be attributed to serious offence of evasion of duty with mala fide intention, therefore, in the facts and circumstances of the case Shri Hari Nair was wrongly imposed with penalty under Rule 26(2) of the Central Excise Rules, 2002. The adjudicating authority since not verified all the co-relation given by the appellant, the matter needs to be reconsidered by the adjudicating authority, the other issue of time bar is also kept open - Appeal allowed by way of remand. 2020 (3) TMI 15 Clandestine removal - suppression of production - MS Round - MS Sponge Iron - demand based on various documents recovered and various statements - Section 9D of CEA Act - HELD THAT:- The search has taken place at the premises of the appellant on 20.08.2013 and during the course of search, the department has found some loose computer printouts and hand written loose sheets showing data in respect of production and clearance of MS Round (TMT Bar) and Sponge Iron for the period from December, 2012 to July, 2013. Thereafter, the department recorded the statements of Shri Basant Kumar Sahu, V.P. (Commercial) of the appellant under Section 14 of the Act. The case of the department is mainly based on the documents recovered, (the authenticity of the same has been disputed by the appellant) and the statement of Shri Basant Kumar Sahu, which has also been disputed by the appellant. The statement recorded under Section 14 of the Central Excise Act cannot be relied upon as an evidence unless the learned Adjudicating Authority follow the procedure prescribed under Section 9D of the Act - In the present case, admittedly no process has been followed. The private documents recovered at the premises remains unrebutted by the department. Also, the allegation of clandestine manufacture and removal in the present case is based on the (a) computer generated sheets and (b) loose papers which cannot be relied upon as evidence, inasmuch there is no indication in the orders passed by the authorities below that the appellant was maintaining computerised records of their production and clearance of goods and whether any other computerised sheets were traced out in the files withdrawn. There is no compliance of Section 36B of the Act. Merely deposit of money at the time of investigation would not amount to acceptance of allegations of clandestine manufacture and removal as alleged by the department - It is well settled law that, payment of money at the time of investigation would be treated as a deposit under protest. Further, the burden to prove allegation of clandestine manufacture and removal is heavily on the department and has to be discharged by producing clinching evidence on record, which has not been discharged by the department in the present case - appeal allowed - decided in favor of appellant. 2020 (3) TMI 14 CENVAT credit - input/capital goods/input services - railway construction materials and wagons which were used to main railway tracks and for transportation of raw materials, finished goods within the factory premises - HELD THAT:- The identical issue pertaining to the railway track came before the Tribunal in the case of M/S. TATA STEEL LTD., M/S. SAIL, DURGAPUR STEEL PLANT AND COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS CCE, JAMSHEDPUR, CCE, BOLPUR AND M/S. SAIL, DURGAPUR STEEL PLANT [ 2016 (1) TMI 1059 - CESTAT KOLKATA] and relying upon the judgement of the Hon ble Supreme Court in the case of M/S JAYASWAL NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2015 (4) TMI 569 - SUPREME COURT] , whereby the cenvat credit was allowed on railway track material used for handling raw materials, process goods. Credit allowed - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2020 (3) TMI 13 Imposition of penalty on petitioner firm - transporting the goods without valid road permit - HELD THAT:- The submission of learned counsel for the petitioner that the road permit in the present case had expired due to the unforeseen fire occurrence, that had taken place in the business premises of the selling dealer, is of no help to the petitioner. The impugned Judgement clearly shows that this aspect of the matter had also been considered by the Tribunal, which shows that fire had occurred in the premises of the selling dealer at Shivkashi on 05.09.2012, and after about three months thereafter there was transaction between the petitioner firm and the selling dealer on 03.12.2012, pursuant whereto, the crackers were being transported. As such this case is also squarely a case, in which the crackers were being transported without any valid road permit. Application dismissed - decided against assessee. 2020 (3) TMI 11 Deletion of High Speed Diesel from the CST registration - the High Speed Diesel purchased by them at the concessional rate of tax, for consumption in manufacturing process, were found to be used for the purposes, other than the manufacturing purpose - contention of the learned counsel for the petitioners was that the deletion of High Speed Diesel from the CST registration of the petitioners was ordered without any notice to them and without there being any empowering provision in the Act to that effect - HELD THAT:- In the facts of this case as stated above, since the appeals filed by the petitioners against the penalty imposed under Section 10-A of the Act, is still pending before the Appellate Authority, we are of the considered view that it would be appropriate that even the question of deletion of High Speed Diesel from the CST registration of the petitioners be considered and decided by the Appellate Authority on merits. The writ applications are disposed off with the direction that in the appeals of the petitioners, pending against the penalty imposed under Section 10-A of the Act, the Appellate Authority shall also consider and adjudicate the question of deletion of High Speed Diesel from the CST registration of the petitioners - application disposed off. 2020 (3) TMI 10 Disallowance of deductions under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 - deduction denied on the ground that the goods purchased from the petitioner were not mentioned in the registration certificate of the purchasing dealer - HELD THAT:- From the provisions of Section 5(2)(a), it is evident that deduction is allowed of sales made to the registered dealer, of goods for resale or goods mentioned in registration certificate for use in manufacture of goods for sale. From the Clause 4 of form ST-IV, it is clear that only the goods which can be purchased for use in manufacture are mentioned, there is no list of goods intended to be re-sold - The deduction cannot be disallowed for non-specification of goods in the registration certificate where the dealer is registered for re-sale or is involved in trading also. The position would be different if the dealer is not registered for trading, in that case even non-scoring of purpose of purchase would be of no relevance as in such eventuality, only the goods specified in the certificate of registration can be purchased for use in manufacture. Application disposed off. 2020 (3) TMI 9 Entitlement to claim deemed assessment under Section 11-E of the Punjab General Sales Tax Act, 1948 read with Rule 33-B of the Punjab General Sales Tax Rules, 1949 - notification dated 9.7.1999 - case of petitioner is that as the appeal was pending against the assessment order, it is in continuation of the original proceedings and therefore as per the notification, there should be deemed assessment - Correct interpretation of Rule 33-B of the Punjab General Sales Tax Rules, 1949 and the notification dated 9.7.1999. HELD THAT:- As per Rule 1(2) of the Punjab General Sales Tax (fifth Amendment) Rules, 1949, the same shall apply to cases in which assessment is pending upto year 1994-95 and shall include even the cases in which the assessment proceedings had been initiated. From a plain reading of the Rule, it is evident that it does not cover the cases where the assessment has been finalised. In the case of the petitioner, the assessment order was passed in 1996 whereas the notification was dated 9.7.1999. Merely that the appeal was pending will not make the case of the petitioner eligible under the Rules. The case of the petitioner does not fall in the phrase 'pending for assessment' as the assessment proceedings only continued till the passing of assessment order in 1996. Petition dismissed - decided against petitioner. 2020 (3) TMI 8 Review application - area based exemption - expansion of the unit - application was rejected by the Higher Level Screening Committee (HLSC) on 25.5.2000 holding that the product i.e. desi ghee is covered under negative list of Rule 28B - HELD THAT:- The ground for rejection of exemption claim by HLSC could be sustained if the case was made out that any one of the conditions of proviso to Rule 28B(3)(a) of the Rules were not met. It was in that eventuality that application was to be dealt with under Rule 28B and the negative list would have relevance. Merely because by the time the application was submitted on 30.6.1999, Rule 28B of the Rules was inserted will not automatically bring the application for exemption under Rule 28B. If that is so, the proviso to sub-rule (3)(a) to Rule 28B would be rendered otiose. The proviso has extended the applicability of Rule 28A of the Rules. There cannot be any serious objection with regard to fulfilment of the three conditions as the unit had started commercial production on 15.4.1999 i.e. prior to insertion of Rule 28B of the Rules - Appellate Authority rightly allowed the appeal by considering the exemption application under Rule 28A of the Rules. The second contention that no land was purchased or taken on lease or rent is against the record. The diversified unit which started commercial production in 1995 was expanded and its capacity was extended from 10 metric tonnes to 14 metric tonnes. The land was already with the unit. It was not the case either before the HLSC that the land was not purchased or before the Appellate Authority, rather the departmental representative before the Appellate Authority conceded that three conditions of proviso to Rule 28B(3)(a) were fulfilled. Petition dismissed. 2020 (3) TMI 7 Taxability under CST Act - goods transfer in question supported by F Form - HELD THAT:- Reliance placed in the decision in the case of M/S. ADVANCE PAINTS (P) LTD. VERSUS THE COMMERCIAL TAX OFFICER, THE SALES TAX APPELLATE TRIBUNAL (ADDL. BENCH) [ 2019 (12) TMI 540 - MADRAS HIGH COURT ] where it was held that merely on the assumption or presumption of any such kind of pre-existing contract, the Assessing Authority could not have imposed the tax under the provision of Central Sales Tax Act. Since necessary documents and evidence were already furnished before the Assessing Authority himself, furnishing of the same again before the Appellate Authorities was not at all called for. And therefore, on this premise, the Appellate Authority should not have confirmed the finding of the Assessing Authority that the Assessee is liable to pay tax under the Central Sales Tax Act. There is no error in the order of the learned Tribunal and the finding of fact recorded by the learned Tribunal does to require any interference in this writ petition filed by the Revenue - Petition dismissed. 2020 (3) TMI 6 Classification of goods - 'hot mix material' transferred in a works contract - Whether the 'hot mix material' transferred in a works contract is to be taxed under the Act at the prescribed rates of its constituents or at general rate under the residuary clause? HELD THAT:- From the decisions relied, M/S. LARSEN TOUBRO LIMITED ANOTHER VERSUS STATE OF KARNATAKA ANOTHER [2013 (9) TMI 853 - SUPREME COURT ], the position emerges that the goods involved in the works contract are taxed as deemed sales. The restrictions under Article 286 of the Constitution of India would apply on the State Legislature while taxing the works contract. The State Legislature has power to prescribe uniform rate of tax on the goods involved in the works contract inspite of the fact that different rates are prescribed under the Act for the constituents involved therein. Further that identity of the goods transferred is lost in the process does not prevent them from being goods. The contention of learned counsel for the State that the goods when being incorporated were transferred in some other form and hence ingredients lose their identity, cannot be accepted, as there is a deemed sale of the ingredients of 'hot mix material' and the loss of identity of goods does not prevent them from being goods for the purpose of deemed sale. The State of Haryana has not prescribed any uniform rate for material used in the works contract. Cement, bitumen, rori etc. which are to be deemed to be sold cannot be taxed at general rate by resorting to residuary clause, these are to be taxed as per the rates prescribed. The residuary clause will come into play only in case the goods are not covered under any of the Schedule to the Act. Even otherwise it would restrict the full play to be given to the deeming fiction of sale of goods involved in works contract. There is another angle to view the contention of the State, if the argument is taken to the logical conclusion and it is held that transfer in works contract is not of the ingredients of hot mix material but of the new product, in that eventuality the restrictions of Article 286 of the Constitution of India and Sections 14 and 15 of the Central Sales Tax Act, 1956 would not apply for taxing the deemed sale - Such an eventuality would be against the law laid down by the Apex Court that restrictions of Article 286 of the Constitution of India will apply and that 46th amendment of the Constitution of India has only given a deeming fiction of sale of goods involved in the works contract and has not given separate or equivalent Entry in List II for levy of tax on sale or purchase of goods. Thus, it is held that the goods transferred in execution of works contract will not be taxed at general rate but as per the rates prescribed of constituents of the 'hot mix material'. Appeal allowed - decided in favor of appellant. 2020 (3) TMI 5 Levy of penalty - suppression of turnover - whether in the facts and circumstances of the case the penalty for suppression of turnover can be sustained when the turnover was reflected in the books of account? HELD THAT:- In the present case, inspite of the fact that the assessment was finalised under Section 15(3) of the Act, the turnover as shown in the returns was assessed. The appellant filed an appeal and the matter was remanded back even thereafter the suppressed turnover was never brought to the notice of the Assessing Officer, rather the returns filed were pressed upon. Section 38 of the Act envisages imposition of penalty where a return furnished is false or incorrect in any material particular. In the case in hand, the appellant had successfully suppressed the turnover not only in the returns but also in proceedings under Section 15(3) of the Act and the tax charged was illegally retained by the appellant. In such event, even if the transaction was disclosed in the books of account it will be of no benefit. Moreover, Section 38 of the Act is worded in a manner that it applies not only to maintaining false or incorrect account but also to filing incorrect or false returns, which the appellant did in the present case. The contention of the appellant that mischief was committed by authorised representative-Mr. Ram Tirath has rightly been rejected by the Tribunal by stating that no benefit could have been derived by Mr. Ram Tirath by suppressing the sales in question and filing false returns. The saving of tax, if any, was to the appellant. The sustaining of penalty by the Tribunal warrants no interference - Appeal dismissed. Indian Laws 2020 (3) TMI 4 Maintainability of petition - Dishonor of Cheque - offence punishable under section 138 of NI Act - Compoundable offences - petitioner has argued that though the petitioner has not surrendered but the revision petition filed by him against the impugned orders is very much maintainable - HELD THAT:- The respondent No.2 has verified that the matter has been compromised between the parties and the due amount has already been paid by the petitioner to the respondent No.2 - As per Section 147 of the N.I. Act, every offence punishable under this Act is compoundable. This criminal revision petition is allowed - The impugned orders are set aside - The petitioner is acquitted from the charge under Section 138 of the N.I. Act. 2020 (3) TMI 3 Partition of immoveable properties - dissolution of partnership firms in terms of the Agreement/Family Settlement - suit either for specific performance of what the defendants had agreed/undertaken under the Agreement/Family Settlement or for recovery of possession of or monies as may be due to plaintiffs from defendants. HELD THAT:- What the plaintiffs are required to do is a complete overhauling of the plaint and not merely amendment of the plaint. It is thus not deemed appropriate to adjourn the case - The counsel for the plaintiffs however states that the plaintiffs have paid court fees on the plaint and though the plaintiffs on amendment/filing fresh suit, would be required to pay additional court fees but if this suit is disposed of, the court fees paid shall be wasted. The suit and pending applications are dismissed as withdrawn with liberty to sue for enforcement of obligations of the defendants under the Agreement/Family Settlement dated 11th March, 2014 but on the condition that the plaintiffs, along with the fresh proceedings if any file copies of the plaint in the present suit as well as this order and in the fresh plaint/suit so filed, prominently plead the said aspect. A certificate entitling the plaintiffs to refund of court fees paid less ₹ 20,000/-, be issued and handed over to the counsel for the plaintiffs. 2020 (3) TMI 2 Dishonor of Cheque - section 138 of NI Act - petitioners were declared as proclaimed persons - Counsel for the petitioners has argued that after the complaint was filed, the petitioners were never served with the summons as is clear from the report of the Process Server - HELD THAT:- Considering the fact that the complaint filed under Section 138 of the N.I. Act was compromised and later on the same was withdrawn on 18.03.2019, there are merit in present petition as the petitioners have also shown a bona fide cause for non-appearance before the trial Court. The service was not effected at the ordinary place of residence of the petitioners and they were not aware of the said fact and immediately, on coming to know about the said order, they compromised the case with the complainant and the complaint under Section 138 of the Act was withdrawn later on. The present petition is allowed.
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