TMI Tax Updates - e-Newsletter dated: April 19, 2022 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

Pricing Login

Tax Management India. Com
Law and Practice : Digital eBook
Research is most exciting & rewarding

Case Laws Acts Notifications Circulars Classification Forms Manuals Articles News D. Forum Highlights Notes

TMI - e-Newsletter TaxTMI GST Amnesty Scheme Under Section 128(A) Offers... TaxTMI GST Orders Uploaded Without Proper Service Violate... TaxTMI GST Time Extension During COVID-19: Court Defers... TaxTMI Bail denied for mastermind accused of Rs. 53.03... TaxTMI Taxpayer's Appeal Succeeds as Cash from Selling... TaxTMI SEBI Extends Cybersecurity Framework Compliance... TaxTMI SEBI Revises Lock-in Rules for InvIT Preferential... TaxTMI Customs Duty Rates Under India-UAE CEPA to Change... TaxTMI Income-tax Rules Amended: Form 3CD Gets Major... TaxTMI Government Amends India-Mauritius CECPA Tariff... TaxTMI SEBI Amends REIT Regulations: Relaxed Lock-in Rules... TaxTMI SCN Issued Two Days Beyond Section 73(2) Deadline... TaxTMI GST Assessment Order Set Aside for Lacking Document... TaxTMI Refund of Unutilised Input Credit Allowed After... TaxTMI Tribunal Excludes Three IT Giants as Comparables... TaxTMI Latest Case-Laws TaxTMI Latest Notifications + Circulars TaxTMI GST Council Decisions TaxTMI

Home


Tax Updates - TMI e-Newsletters

Home e-Newsletters Index Year 2022 April Day 19 - Tuesday ← Older Newer →
TMI e-Newsletters FAQ
You need to Subscribe a package.
Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 19, 2022 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 1. Prejudices and mechanical style of working continue – while issuing notices us 148 A, Enquiry and order us 148A and then notice us 148- as per recent experience new provisions are not likely to serve purposes and roving enquiry will continue in name of reassessment. By: DEVKUMAR KOTHARI Summary: The article critiques the implementation of new provisions under Section 148A of the Income Tax Act, highlighting that the process of issuing notices for reassessment remains prejudiced and mechanical. Despite the intended reforms effective from April 1, 2021, the procedures continue to be executed without proper application of mind, often in haste and with preconceived notions. The author argues that the Assessing Officer's actions, including issuing notices under Section 148, lack thorough consideration of original returns and assessments, leading to unnecessary litigation. The article suggests that these practices undermine the purpose of the new provisions and calls for more mindful execution. News 1. CCI approves acquisition of minority stake of BDR Pharmaceuticals International Private Limited by Multiples Private Equity Fund III, SRF Transnational Holdings Limited, Balkrishna Industries Limited, Dharmayug Investments Limited, QRG Investments and Holdings Limited, Mr. Nishant K. Agarwal and Ms. Mallika Srinivasan Summary: The Competition Commission of India has approved the acquisition of a minority stake in BDR Pharmaceuticals International Private Limited by a group of investors, including Multiples Private Equity Fund III, SRF Transnational Holdings Limited, Balkrishna Industries Limited, Dharmayug Investments Limited, QRG Investments and Holdings Limited, and two independent investors. This acquisition falls under Section 5(a) of the Competition Act, 2002. BDR Pharmaceuticals specializes in oncology, critical care, gynecology, and neurology, and is involved in manufacturing active pharmaceutical ingredients, formulations, and providing contract development and manufacturing services. A detailed order from the CCI is forthcoming. 2. India's sugar exports grow by 291% since 2013-14 Summary: India's sugar exports have surged by 291% from USD 1,177 million in 2013-14 to USD 4,600 million in 2021-22, with exports exceeding 10 million tons for the first time. In 2021-22 alone, exports increased by 65%, despite COVID-19 logistical challenges. India exported sugar to 121 countries, with major importers including Indonesia, Bangladesh, and Sudan. The growth reflects government policies aimed at boosting farmer incomes through global market access. Uttar Pradesh, Maharashtra, and Karnataka are key production states. India, the world's second-largest sugar producer, has consistently produced surplus sugar, enhancing export opportunities and benefiting farmers. 3. MCA registers highest ever 1.67 lakh companies in FY 2021-22 Summary: During the financial year 2021-22, the Ministry of Corporate Affairs (MCA) in India registered a record 1.67 lakh companies, marking an 8% increase from the previous year. This growth is attributed to the government's Ease of Doing Business initiatives, including the SPICe+ form launched in February 2020, which integrates multiple services across various government departments. Maharashtra led in new registrations, followed by Uttar Pradesh and Delhi. The business services sector saw the highest number of incorporations. Recent regulatory reforms by the MCA aim to simplify compliance and promote business growth, such as redefining small companies and incentivizing One Person Companies. 4. WPI based rate of inflation for March at 14.55% Summary: The Wholesale Price Index (WPI) based inflation rate in India for March 2022 reached 14.55%, compared to 7.89% in March 2021. This increase is attributed mainly to rising prices of crude petroleum, natural gas, mineral oils, and basic metals, driven by global supply chain disruptions due to the Russia-Ukraine conflict. The WPI for March 2022 showed a month-over-month increase of 2.69% from February 2022. The Office of the Economic Adviser released these provisional figures, which are subject to revision. The final WPI for January 2022 was 143.8 with an inflation rate of 13.68%. 5. Union Finance Minister Smt. Nirmala Sitharaman to embark late tonight on official visit to USA to attend Spring Meetings of the IMF-World Bank Summary: The Union Finance Minister of India is set to visit the USA starting April 18, 2022, to attend the Spring Meetings of the International Monetary Fund (IMF) and the World Bank. The visit includes participation in the G20 Finance Ministers and Central Bank Governors meetings, as well as bilateral meetings with countries such as Indonesia, South Korea, Sri Lanka, and South Africa. The minister will also engage with CEOs from key sectors and meet with the World Bank President. Additional engagements include a panel discussion at the IMF and events at the Atlantic Council and Stanford University. Notifications Income Tax 1. 31/2022 - dated 18-4-2022 - IT Central Government notifies National Bank for Financing Infrastructure and Development, established under section 3 of the National Bank for Financing Infrastructure and Development Act, 2021 Summary: The Central Government has issued a notification regarding the National Bank for Financing Infrastructure and Development, established under the National Bank for Financing Infrastructure and Development Act, 2021. This notification, effective from its publication date in the Official Gazette, recognizes the bank under clause (48D) of section 10 of the Income-tax Act, 1961. It grants the bank tax-related benefits for ten consecutive assessment years, starting from the 2022-2023 assessment year. The notification is issued by the Ministry of Finance, Department of Revenue, through the Central Board of Direct Taxes. Highlights / Catch Notes GST Circular No.37/2018-Cus doesn't legally support denying export incentives; IGST refund manual rectification by officers is prohibited. Case-Laws - HC : Duty Drawback - IGST refunds - zero rated supply - Paragraph No.2.5 of Circular No.37/2018-Cus, dated 09.10.2018 cannot be pressed to deny legitimate export incentive as same is not sanctioned under law. Only higher rate of drawback cannot be claimed exports covered by shipping bills, where for such exports, the refund of IGST is claimed if two rates are then. IGST refund is completely system driven and processed in the system and manual intervention by the Departmental Officers to rectify the same is also not possible. However, that would apply only where higher rate of duty drawback is claimed. - HC Visit to Get Source Court Clarifies Tax Intimation Process Under GST Act Section 74: Use Form GST DRC-01A, No Coercive Language Allowed. Case-Laws - HC : Validity of intimation of tax ascertained u/s 74(1),(5) - Threat of recovery - There is a vast difference between Rule 142(1)(a) and Rule 142 (1A) of the Rules. Therefore, from now onwards, if the department deems fit to issue any intimation of tax ascertained as being payable under sub-section (5) of Section 74 in accordance with the Rule 142(1A) of the Rules, it shall issue notice in the Form GST DRC – 01A. In such a notice of intimation, the proper officer shall not threaten the dealer that if he would fail to comply with the intimation, the department shall proceed to recover the tax. - HC Visit to Get Source Court Orders Immediate IGST Refund for Firm's Zero Rated Supplies u/s 16; Exported Goods Qualify for Mercantile Scheme. Case-Laws - HC : Refund of IGST - Zero Rated Supplies - Bare reading of the contents of the shipping bills referred to the fact that the declaration has also been made by the writ applicant firm about its intent to avail reward as made available under Mercantile Scheme. Thus, undisputedly, the goods being exported out of India, the same are to be treated and termed as “Zero Rated Supplies” as provided under Section 16 of the IGST Act. - The respondent Authority are directed to immediately sanction the refund of IGST - HC Visit to Get Source Sewage Treatment Plant Water Exempt from GST as "Purified" Clause Excludes STP Treated Water. Case-Laws - AAAR : Exemption from GST - relevant entry - Treated Water obtained from STP - it is amply clear that the term “purified”, mentioned under the exemption clause of the relevant entry, will definitely not include the STP treated wager. Hence, the impugned product, i.e., STP treated water, is rightfully eligible for exemption - AAAR Visit to Get Source Government Earthwork Contract Exceeds 75% Value, Defined u/s 2(119) of CGST Act, 2017, Notification 11/2017-CTR. Case-Laws - AAR : Works Contract - Earth Work - the applicant is rendering composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, to GMIDC, a Government Authority, and such rendering of composite supply of works contract involves predominantly earth work that is, constituting more than 75per cent. of the value of the works contract. Thus, the impugned activity of the applicant is covered under the Sr. No. 3 (vii) of Notification No. 11/2017-CTR dated 28.06.2017 as amended - AAR Visit to Get Source Contract Breach Penalties Taxable Under CGST and SGST as Price Adjustments to Main Supply. Case-Laws - AAR : Levy of GST - liquidated damages/penalties received by the applicant - price adjustment to the main supply or not - Liquidated damages and penalties received by the applicant due to breach of conditions of the contract from the contractor are exigible to tax under CGST and SGST Acts. - AAR Visit to Get Source Import Sales from Port: Registration Needed for Direct Sales Across Indian States per Entry 8, Schedule III, CGST Act 2017. Case-Laws - AAR : Requirement to obtain registration in the state in which goods are imported - said goods are directly sold from the port of importation to the customers located across different states in India - Input Tax Credit of IGST paid -The applicant is already having the registration in the State of Telangana which will cover all taxable transactions - The transactions made by the applicant after clearing them from customs in their own account are subsequent sales and not sales in course of import, where the customs clearance will be made by the purchaser in which case the transactions will be covered under Entry 8 of Schedule III to the CGST Act, 2017 prescribed above. - AAR Visit to Get Source Farmers' Fair Trade Premium Subject to GST; Considered Part of Taxable Supply's Value and Consideration. Case-Laws - AAR : Levy of GST - Fair Trade Premium - association of farmers, engaged in supply of agricultural produce through concept of fair trade - The Fair Trade Premium forms part of the consideration and value of taxable supply of the goods supplied and the applicant is liable to pay GST on the same rate as the rate applicable to the respective goods supplied. - AAR Visit to Get Source High Court Orders Release of Detained Cement Truck After 25% Penalty Payment for Invoice Address Violations. Case-Laws - HC : Seeking release of detained goods alongwith the truck - truck load of cements - violation in the invoice that the full address of the buyer has not been mentioned - this violation is a recurring one from the petitioner, therefore a larger fine has to be imposed. - The petitioner on payment of 25% of the demand of the penalty in each of the case, the goods and vehicles in question detained by the respondent shall be released - HC Visit to Get Source Income Tax Court Rules Asset Costs Must Include Subsidy Adjustments u/s 43(1) for Accurate Depreciation Calculations. Case-Laws - HC : Determination of cost of assets - Depreciation - Applicability of Explanation and proviso to 43(1) - subsidy utilisation specifically under the head building, furniture, plant & machinery and computer software - financial assistance received without reference to specific purpose, still by application of proviso to Explanation 10 of section 43(1) of the Act the actual cost is apportioned and reduced from the cost of the assets of the assessee for the purpose of computing the depreciation. For the above reasons, the common question in both the appeals is answered in favour of Revenue and against the assessee. - HC Visit to Get Source Court Rules Orders u/s 92CA(3) of Income Tax Act Barred by Limitation; Deadline Clarified as October 31, 2019. Case-Laws - HC : Validity of the orders passed by the first appellant u/s 92CA (3) on the ground of limitation as contemplated u/s 153 of the Act - Scope of the work "may" - The word “may” is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to the sub-section clarifies the mandatory nature of the time schedule. The word “may” cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31.10.2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory. - HC Visit to Get Source Section 153A: Can Seized Material Infer Similar Transactions Over Six Years? Revisiting Pre-Chapter XIV-B Practices. Case-Laws - HC : Assessment u/s 153A - Obviously an assessment has to be made under this Section only on the basis of seized material. The question, however, is whether the seized material can be relied upon to also draw the inference that there can be similar transactions throughout the period of six years covered by Section 153A. We have to remember that with the advent of Section 153A we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search. - HC Visit to Get Source Court Clarifies: Assessments u/s 153A Can Be Reopened u/s 147 of the Income Tax Act. Case-Laws - HC : Legality and validity of the impugned notice issued u/s 148 seeking to reopen an assessment as undertaken u/s 153A - To say that the assessment undertaken u/s 153A of the Act can never be reopened under Section 147 of the Act, would be an incorrect statement of law.- HC Visit to Get Source Assessment Reopened u/s 147 Based Solely on DVO Report Lacks Additional Evidence of Income Escaping Assessment. Case-Laws - AT : Reopening of assessment u/s 147 - difference pointed out by the DVO in his valuation report - There should be a live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding the escapement of income. In the present case, there is no material except the valuation report of DVO which has a live link and base for the assessing officer to form a belief regarding the escapement of income. Rather, the natural conclusion which can be drawn is that the assessing officer has re-opened the assessment on the basis of DVO's valuation report - AT Visit to Get Source Section 56(2)(vii)(c) of Income Tax Act: No Extra Tax on Shares Allotted Below Market Rate to Specific Shareholder. Case-Laws - AT : Addition u/s 56(2)(vii)(c)(ii) - allotment of shares to assessee shareholder at a value lower - whether Tax to be paid by the shareholders or the company? - The shares have been allotted on 31.03.2014 to the assessee instead of allotting shares to all the existing shareholders and thus even if it is assumed that the shareholders to whom shares were not allotted have given up their right of allotment in shares to other shareholders, it is a case of transfer of right in shares by one relative to another relative and therefore also section 56(2)(vii)(c) would not get attracted. - AT Visit to Get Source Tax Tribunal Upholds CIT(A) Decision: Section 40A(3) Disallowance Not Applicable for Cash Payments Below Threshold Limit. Case-Laws - AT : Addition u/s 40A(3) - expenditure paid at various project sites in cash mode - unexplained expenditure - We invoke stricter interpretation of the impugned disallowance provision in Section 40A(3) that it is attracted only when an assessee incurs "any expenditure in respect of which a payment of aggregate of payments in a day" - CIT(A) rightly deleted the additins - AT Visit to Get Source Tax Deduction Required for Year-End Commission to Non-Residents; Case Sent Back for Review u/s 195. Case-Laws - AT : TDS u/s 195 - Demand u/s 201(1) and interest charged u/s 201(1A) - the year-end provisions made by the assessee included “Commission payable to non-residents”, which is liable for deduction of tax at source u/s 195 of the Act. The provisions of sec.195 are triggered only if that payment is chargeable under the provisions of Income tax Act. We notice that the assessee has not furnished any detail to the AO/CIT(A) with regard to the applicability or otherwise of provisions of sec.195 to the above said payment. - Matter restored back - AT Visit to Get Source Customs Anti-Dumping Duties: Impact of Exchange Rate Changes on Non-Injurious Price in INR per Annexure-III of ADR 1995. Case-Laws - HC : Levy of Anti-Dumping Duty - scope of domestic industry - non-injurious price - determination in terms of Indian Rupees (INR) - If due to the change in exchange rate, there is also a corresponding change in the absolute value of the non-injurious price in terms of INR as because it had been determined in terms of USD, and the determination of the non-injurious price is based upon input parameters which are in terms of INR as per the principles provided in Annexure-III to the ADR 1995, any such change in the absolute value of the non-injurious price in terms of INR due to change in the exchange rate, would also have the effect of a deemed change in the input parameters for determining the non-injurious price. - HC Visit to Get Source Court Quashes Proceedings Against DRI Officer for Duty Evasion Allegations; Requires Government Sanction u/s 197 CrPC. Case-Laws - HC : Prosecution against Senior Intelligence Officer of the DRI - evasion of duty - undervaluation - illegal transactions - allegation that petitioners did not deliberately enquired with the supplier - The use of the words ‘no’ and ‘shall’ under Section 197 Cr.P.C. would make it abundantly clear that the bar on the exercise of power of the court to take cognizance of any offence is absolute and complete and taking of the cognizance is barred under law - the initiation of prosecution against them without sanction from the competent Government would erode their confidence in discharging their duties efficiently. Conducting parallel proceedings against them for the acts done by them in discharge of their official duties and rendering them liable for prosecution would not allow them to discharge their duties fearlessly. As such, it is considered fit to allow the petition quashing the proceedings against the petitioners. - HC Visit to Get Source Court Rules Shortages Alone Insufficient for Penalties in EOU Yarn Case; No Substantial Evidence of Clandestine Activities Found. Case-Laws - AT : 100% EOU - Clandestine removal - illicit clearance of imported yarn and indigenous Yarn - detection of shortages at the time of the visit of the officers - The Appellant has placed reliance upon various judgments to canvas their point that in absence of corroborative evidence no demand can be made - it is also found that apart from the alleged shortages, there is virtually no other evidence on record to reflect upon the clandestine activities of the appellant. As per the settled law such shortages, by themselves, cannot lead to the fact of clandestine removals so as to justify confirmation of demands. - AT Visit to Get Source Court Directs Petitioners to Correct Shipping Bills with Customs Before DGFT Can Review MEIS Scheme Issue. Case-Laws - HC : Seeking declaration of relaxation/condonation of the procedure lapse - non-mentioning of MEIS scheme in the shipping bills at the time of export - The DGFT has rightly declined on the basis of the bills received in the server from the Customs Department. Therefore, the petitioners ought to have approached the Customs Department for correction of the shipping bills and after such correction in the shipping bills, the DGFT get jurisdiction or authority to examine the matter. - HC Visit to Get Source Appeal Dismissed for Non-Deposit of Statutory Amount u/s 129E, Customs Act; No Waiver Allowed Since 2014. Case-Laws - AT : Maintainability of appeal - non-deposit of the statutory amount under Section 129E of the Customs Act, 1962 - It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit - The appeal is dismissed. - AT Visit to Get Source Imported Networking Devices and Antennas Classified Under Customs Tariff Act Sub-headings 8517 62 90 and 8517 70 90. Case-Laws - AAR : Classification of imported goods - networking device - The networking devices model Nos. D5N87C (rooftop node or RT node) and D5N87D9 (customer premise node or CP node) are classifiable under sub-heading 8517 62 90; and passive antennas, one high gain and one low gain, having model No. HD3T2A are classifiable under sub-heading 8517 70 90 of the First Schedule to the Customs Tariff Act, 1975. - AAR Visit to Get Source Indian Laws Magistrate mishandles cheque dishonor case by mechanically taking cognizance, ignoring Section 138 of Negotiable Instruments Act requirements. Case-Laws - HC : Dishonor of Cheque - “Taking cognizance” though requires great exercise of judicial mind and is not a mechanical process but it appears in the present case that the magistrate concerned has understood the term “ taking cognizance” as delivery system in the post office without application of mind. Unfortunately this is never the intention of the legislature, as is evident from the provision of section 190(a) of Code of Criminal Procedure which shows learned magistrate can proceed on curtain direction upon receiving the petition of complaint of facts which constitute such offence. Magistrate never considered whether the allegations levelled in the complaint constitutes offence under section 138 of N.I. Act and whether prima facie case persists which is pre-eminently required and the same cannot be surrogated to a mechanical process. - HC Visit to Get Source Individuals in Charge of Partnership Face Prosecution for Dishonored Cheques u/s 141 of Negotiable Instruments Act. Case-Laws - HC : Dishonor of Cheque - It is not in dispute that the disputed cheques have been issued by the partnership firm and as per the provision contained in Section 141 of the NI Act, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of the business of the firm, shall be deemed to be guilty of the offence and shall be liable to be proceeded against under the provision of Section 138 of the NI Act. - HC Visit to Get Source IBC No Conflict Between Benami Property Act and Insolvency Code: Section 32A Allows Sale of Corporate Debtor's Property During Liquidation. Case-Laws - Tri : Provisional Attachment - general principle for construction - Prohibition of Benami Property Transaction Act, 1988 - Section 32A of I & B Code - As there is nothing to stop the Applicant/Liquidator herein to proceed under the relevant provision to revive the provisional attachment. And that, this Adjudicating Authority having not found any conflict between the two statutes as there is no bar in selling the property of the Corporate Debtor solely on the ground that the Corporate Debtor is under Liquidation. And that the Liquidator is also not barred by the code to add the said property into the liquidation estate. - Tri Visit to Get Source Service Tax Service tax demand on late payment dismissed; upheld for works contract and lease rent. Some penalties upheld, others set aside. Case-Laws - AT : Levy of Service Tax - liquidated damages received - The demand of service tax on late payment surcharge meter renting charges and supervision charges are set aside. The demand of service tax on works contract service and lease rent is upheld and the same stands already deposited by the appellant. The penalties for the extent of service tax on works contract service and lease rent is upheld and the remaining penalties are set aside - AT Visit to Get Source VAT Section 21 Withholding Refund Requires Formal Order with Reasoning; File Notation Insufficient for Taxpayer Impact. Case-Laws - HC : Withholding of refund - seeking release of refund - Legislature was conscious of the fact that the power conferred to withhold refund in Section 21 is akin to exercising power to stay the money decree and thus, an option was given that the refund can be directed to be made on furnishing of security as the objective is to affect the recovery only. It goes without saying that any order passed to withhold the refund is prejudicial to the interest of assessee. - Noting on file cannot be a substitute to an order required to be passed under the provisions of Section 21. Further impugned order Annexure P-10 is bereft of any reasoning. It is trite that mere reproduction of the words of statute cannot be construed as substitute for the reasons that an authority exercising statutory power is required to record. - HC Visit to Get Source Case Laws: GST 2022 (4) TMI 824 Seeking grant of Regular Bail - availment of inadmissible input tax credit - fake invoices - Section 132 of the Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- Without commenting anything as regards the merits of the case but while keeping in view that all the three petitioners are ladies and have been behind bars for a substantial period of about 8 months whereas the maximum sentence as may be imposed is 5 years, further detention of the petitioners will not be justified. The petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned. - petition allowed. 2022 (4) TMI 823 Validity of intimation of tax ascertained u/s 74(1),(5) - Threat of recovery - Seeking respondents to forthwith refrain from taking any further steps or proceeding pursuant to or in implementation of the impugned notice - notice of intimation of tax issued by the Assistant State Tax Commissioner, Ghatak 3, Ahmedabad - Section 74(1) and (5) resply of the GST Act, 2017 - HELD THAT:- Sub-section (5) makes it very abundantly clear that before service of a show cause notice under sub-section (1) referred to above, such person may pay the amount of tax along with interest payable under Section 50 and a penalty equivalent to 50% of such tax on the basis of his own ascertainment of such tax or the tax as may be ascertained by the proper officer and inform the proper officer in writing about such payment - by virtue of sub-section (5) of Section 74, one opportunity is given to the dealer to pay the amount towards tax as ascertained by the proper officer or on the basis of his own ascertainment. If the dealer proceeds to avail the benefit of sub-section (5), then he gets the benefit of sub-section (6) of Section 74 of the Act. The Form GST DRC 01 is in the form of a show cause notice, which is issued under sub-section (1) of Section 74 of the Act i.e. in accordance with Rule 142(1)(a) of the Rules, 2017. At the stage of an intimation under sub-section (5) of Section 74 in the Form GST DRC 01A, it is Rule 142(1A) which is applicable. Therefore, while issuing an intimation, the proper officer in the notice could not have said that failure on the part of the noticee may entail the consequence of recovery of the entire amount with penalty and interest - The intimation under sub-section (5) has to be strictly in Form GST DRC 01A. It is not a show cause notice. In the intimation, the dealer should be informed that if he fails to make the payment, the next step in the process will be issue of a show cause notice under sub-section (1) of Section 74 in accordance with the Form GST DRC 01. Once there is a show cause notice in the Form GST DRC 01 in accordance with Rule 142(1)(a) of the Rules to be read with sub-section (1) of Section 74, the same would ultimately lead to regular assessment proceedings with final assessment order. Therefore, the department needs to correct itself not only as regards their understanding of the entire procedure, but even the contents of the Forms are incorrect. The intention of the proper officer was to give an intimation in accordance with sub-section (5) of Section 74 and therefore, the intimation should have been in the Form GST DRC 01A and not Form GST DRC 01. There is a vast difference between Rule 142(1)(a) and Rule 142 (1A) of the Rules. Therefore, from now onwards, if the department deems fit to issue any intimation of tax ascertained as being payable under sub-section (5) of Section 74 in accordance with the Rule 142(1A) of the Rules, it shall issue notice in the Form GST DRC 01A. In such a notice of intimation, the proper officer shall not threaten the dealer that if he would fail to comply with the intimation, the department shall proceed to recover the tax. The proper officer should inform the dealer that if he would pay the tax, well and good, otherwise the department shall proceed to issue a show cause notice under sub-section (1) of Section 74 in accordance with Rule 142(1)(a) of the Rules, 2017 in Form GST DRC 01 and carry out regular assessment proceedings. The impugned intimation of tax in the Form GST DRC 01 is hereby quashed and set aside - Application disposed off. 2022 (4) TMI 822 Exemption from GST - supply related to supply of electricity - composite supply or not - Constitutional Validity of para 4 (1) of the impugned Circular No.34/8/2018-GST dated 1.3.2018 - seeking to declare that charges such as application fee, meter rent, testing fee, etc collected by the Petitioners towards activities directly and closely connected with the transmission or distribution for electricity are exempt from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017 - HELD THAT:- The writ applicant is of the view that in the event, if the Union succeeds before the Supreme Court then it will have to deduct service tax and/or GST and pay the same to the Government. One of the consumers objected to this action on the part of the writ applicant in obtaining such undertaking. The matter was carried before the Consumer Grievance Redressal Forum, Ahmedabad. The Consumer Grievance Redressal Forum passed an order dated 30.04.2021 below the Complaint No.18 of 2021 holding that it is permissible for the writ applicant to obtain such undertaking from its consumers. The matter thereafter, was carried further by the very same complainant before the Ombudsman of the Gujarat Electricity Regulatory Commission. The Ombudsman of the Commission has passed an order dated 20.12.2021 taking the view that as the Electricity Act, 2003 does not provide or empower the company to obtain such undertaking, it is not permissible for the writ applicant to obtain such undertaking from the consumers. In other words, the Ombudsman is of the view that the writ applicant as a generation, transmission and distribution of electricity company cannot compel the consumers to furnish such undertaking. If the consumer on its own free will and volition agrees to furnish such undertaking then there should not be any problem. Let Notice be issued to the respondents, returnable on 06.07.2022. 2022 (4) TMI 821 Seeking release of detained goods alongwith the truck - truck load of cements - violation in the invoice that the full address of the buyer has not been mentioned - HELD THAT:- Since the notice dated 07.03.2022 is having the operative portion of a direction to pay the amount, the petitioner was triggered to file this writ petition challenging the same. Even though the petitioner s counsel says or indicates that, only a sum of Rs. 5,000/- will be normally imposed, that kind of arrangement is not agreeable for the learned Additional Government Pleader for the respondent as according to him, this violation is a recurring one from the petitioner, therefore a larger fine has to be imposed. The petitioner on payment of 25% of the demand of the penalty in each of the case, the goods and vehicles in question detained by the respondent shall be released. Such payment of 25% of the penalty is without prejudice to the right of the petitioner to be urged or raised before the Appellate Authority against the final order now has been passed on 11.03.2022 - Petition disposed off. 2022 (4) TMI 820 Power of Review - Section 112(3) of the CGST Act, 2017 - HELD THAT:- The order dated 08.10.2020, passed by the Commissioner (Appeals), appears to have been reviewed suo motu on 18.02.2021 by the Principal Commissioner, CGST, Delhi. It is stated by Mr. Mangla that no intimation whatsoever was given to the petitioner, with regard to the exercise of purported power of review - List the matter on 04.05.2022. 2022 (4) TMI 819 Refund of IGST - Zero Rated Supplies - it is alleged that the writ applicant had declared on the shipping bill for claiming the higher rate of duty drawback - HELD THAT:- Undisputedly, the writ applicant is holding the valid registration No. under the Goods and Service Tax Act, 2017. The writ applicant being an exporter is entitled to the benefit as envisaged under the provisions of GST / IGST Act, 2017. Admittedly, the goods are exported outside India for the relevant months of July, 2017 and August, 2017 as emerged from the various documents in the nature of GST invoices, export invoices, shipping bills, export general manifest bills, bill of lading, one cannot lose sight of the fact that the at the relevant stage, the writ applicant seems to have paid IGST @ 5% as reflected in the aforesaid bill. Bare reading of the contents of the shipping bills referred to the fact that the declaration has also been made by the writ applicant firm about its intent to avail reward as made available under Mercantile Scheme. Thus, undisputedly, the goods being exported out of India, the same are to be treated and termed as Zero Rated Supplies as provided under Section 16 of the IGST Act. Rule 96 of the CGST Rule, 2017 - HELD THAT:- It provides that the shipping bills filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods export outside India and such application shall be deemed to have been filed only when the person in charge of conveyance carrying exported goods duly filed and exported manifestly or an export report covering the date and proof and shipping bill and date of export and the application must have furnished the valid return the in the Form GSTR 1 and GSTR-3B - the writ applicant is otherwise entitled to the refund of IGST as envisaged under the relevant provisions of IGST Act, 2017. The respondent Authority are directed to immediately sanction the refund of IGST aggregating to an amount of Rs. 37,10,326/- in regard to the shipping bills exported as Zero Rated Supplies within a period of two weeks from the date of receipt of this order - petition allowed. 2022 (4) TMI 818 Exemption from GST - relevant entry - Treated Water obtained from STP - purified water or not - eligible for exemption from GST by virtue of SI. No. 99 of the Exemption Notification No. 02/2017- Integrated Tax (Rate) dated 28 June 2017 or taxable at 18% by virtue of SI. No. 24 of Schedule -III of Notification No. 01/2017-Integrated Tax (Rate) dated 28th June 2017? - HELD THAT:- On perusal of the facts of the case, it is seen that the impugned product, i.e., STP treated water, is obtained after carrying out various physical and biological processes on the sewage water. By carrying out the said physical and biological processes on the sewage water inside the Sewage Treatment Plant, the sewage water is made free from various organic and inorganic substances, such as suspended particles, grit, clays, pollutants like nitrogen, phosphorus, etc. However, even after carrying out the said physical and biological processes, water coming out from the Sewage Treatment Plant still contains various biological contaminants such as bacteria, virus, E. coli, along with other impurities. Thus, it can be safely concluded that the resultant water is not pure due to presence of the said impurities and foreign elements - Thus, it is adequately clear that water containing anything apart from the Hydrogen and Oxygen will not be construed as pure water. It is further observed that even potable water, which is fit for human consumption, will not be treated as pure water due to the presence of various minerals and ether elements like chlorine, which are added to it to kill the harmful micro-organisms that causes diseases. All these groups of specific water mentioned under the exclusion clause of the relevant entry are supplied in the packaged form, i.e., in the sealed container, in order to preserve their characteristics and specificity, while the same is not the case with the impugned product, i.e., STP treated water, which are supplied through pipelines without any such concerns - it is amply clear that the term purified , mentioned under the exemption clause of the relevant entry, will definitely not include the STP treated wager. Hence, the impugned product, i.e., STP treated water, is rightfully eligible for exemption under entry at Sl. No. 99 of the exemption notification no. 02/2017-C.T. (Rate) dated 28.06.2017. 2022 (4) TMI 817 Works Contract - Earth Work - SI No 3A- Chapter No. 9954 as per Notification No. 12/2017-CT. (Rate) dated 28.06.2017, as amended by Notification No. 2/2018-C.T. (Rate) dated 25.01.2018, w.e.f. 25.01.2018 - HELD THAT:- To fall under Sr. No 3 A mentioned above, the primary requirement is that the supply should be in the form of a Composite supply of goods and services . We have already found above in para 5.8 above that, the impugned activity is a Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017. Being a Composite supply of works contract, the impugned activity cannot be covered under Sr. No. 3A. It is also seen that the impugned supply is similar to the supply in the case of IN RE: M/S. SOMA MOHITE JOINT VENTURE. [ 2020 (9) TMI 1143 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] wherein it was held by the Appellate Authority for Advance Ruling, Maharashtra that, the supply was not covered under Sr. No. 3A of Notification No. 12/2017-CTR dated 28.06.2017 - Relying of the said decision of the Appellate Authority and the discussion made, it is opined that the impugned is not covered under Sr. No. 3A of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, as amended - the first question is answered in the negative. Whether the said contract is covered under the term Earth Work and therefore covered under SI No - Chapter No. 9954 as per Notification No. 31/2017-Central Tax (Rate) dated 13th October 2017? - HELD THAT:- In the instant case, the applicant is rendering composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, a fact which is supported by the decision of Maharashtra Appellate Advance Ruling Authority in the case of SMJV - applying the ratio of the said decision and as per discussions made, it is found that such rendering composite supply of works contract involves predominantly earth work that is, constituting more than 75per cent. of the value of the works contract, (also seen from the submissions made by the applicant as well as the jurisdictional officer) - the GMIDC is a Government Entity. In the instant case, the applicant is rendering composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, to GMIDC, a Government Authority, and such rendering of composite supply of works contract involves predominantly earth work that is, constituting more than 75per cent. of the value of the works contract. Thus, the impugned activity of the applicant is covered under the Sr. No. 3 (vii) of Notification No. 11/2017-CTR dated 28.06.2017 as amended by Notification No. 31/2017-CTR dated 13.10.2017. Notification No.11/2017-CT (Rate) dated 28/6/2017, was further amended vide Notification No. 15/2021-CTR dated 18.11.2021 (with effect from 01.01.2022) and against Sr. No 3, in column (3), in the heading Description of Services , in item (vii) for the words Union territory, local authority, a Governmental Authority or a Government Entity the words Union territory or a local authority shall be substituted that means the words Governmental authority or a Government Entity are omitted. Therefore, with effect from 01.01.2022, the impugned services supplied by the applicant will not be covered under Sr. No. 3 (vii) of Notification No. 11/2021 - CTR dated 28.06.2017 as amended from time to time. 2022 (4) TMI 816 Levy of GST - liquidated damages/penalties received by the applicant - price adjustment to the main supply or not - supply under CGST Act - HELD THAT:- When the parties to a contract specify the time for its performance, it is expected that either party will perform his obligation at the stipulated time. But if one of them fails to do so, the question arises what is the effect upon the contract. \ A combined reading of the provisions (1) (3) of Section 55 of the Indian Contract Act, 1872 reveals that a failure to perform the contract at the agreed time renders it voidable at the option of the opposite party and alternatively such party can recover compensation for such loss occasioned by non-performance - Section 73 74 of the Indian Contract Act enables recipient of supplies under a contract to be compensated with damages for breach of any provision of the contract. In the present case, Liquidated damages are claimed by the applicant from the contractor due to the delay in performance of the contract, beyond the date prescribed in such contract by the contractor. Similarly, penalties are fixed for breach of the provisions of the contract. These amounts are consideration for tolerating an act or a situation arising out of the contractual obligation - Further Section 2(31)(b) of the CGST Act mentions that consideration in relation to the supply of goods or services or both includes the monetary value of an act of forbearance. Therefore such a toleration of an act or a situation under an agreement constitutes supply of service and the consideration or monetary value is exigible to tax. The Consideration received for such forbearance is taxable under CGST and SGST @9% each under the chapter head 9997 at serial no. 35 of Notification No.11/2017- Central/State tax rate. 2022 (4) TMI 815 Requirement to obtain registration in the state in which goods are imported - said goods are directly sold from the port of importation to the customers located across different states in India - Input Tax Credit of IGST paid - HELD THAT:- The transactions made by the applicant after clearing them from customs in their own account are subsequent sales and not sales in course of import, where the customs clearance will be made by the purchaser in which case the transactions will be covered under Entry 8 of Schedule III to the CGST Act, 2017 prescribed above. Therefore this subsequent sale when made to a customer within the State of Telangana will be an intra State sale liable to CGST SGST and when such sale is made to a customer in other States of a country it will be a Inter-State sale liable to IGST. Being a taxable sale the person making such taxable sales is liable to take registration under CGST Act, 2017. This registration is sufficient to cover the transactions or supplies in nature described by the applicant - Under Section 16 of the CGST Act, 2017 read with Section 20 of IGST Act, the IGST paid on imports is eligible to be availed as Input Tax Credit (ITC) both on intra-state and inter-state sales. 2022 (4) TMI 814 Levy of GST - Fair Trade Premium - association of farmers, engaged in supply of agricultural produce through concept of fair trade - component of Fair Trade Premium constitutes consideration or additional consideration for supply of goods made by the applicant? - component of Fair Trade Premium can be treated as an ex gratia payment which is not liable for GST either as supply of goods or as supply of services? - HELD THAT:- As per Section 15(1) of the CGST Act, the value of a supply of goods or services or both shall be the transaction value, which is explained as the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Sub-sections (2) and (3) of Section 15 list out the inclusions and exclusions to the value of supply. It is clear that any payment made or to be made whether in money or otherwise in respect of or in response of inducement of supply of goods or services or both forms part of the consideration and should form part of the value of taxable supply. The definition of the term consideration is inclusive which not only includes the payment received by the supplier in relation to the supply from the recipient but also from any other person. The Fair Trade Premium is calculated as a percentage of the volume of produce sold. The amount of premium farmers receive differs from product to product and across regions. The statement of facts in the instant case reveals that the applicant receives the fair trade premium from the recipient of supply itself and fair trade premium has a clear nexus with the supply of goods as it is determined/calculated as a prescribed percentage of the volume/quantity of each produce/commodity sold and it is collected from the ultimate consumer as a component of the price of the product itself. Therefore, the fair trade premium received by the applicant is nothing but part of the price that is actually paid/received in response to the supply of the goods made by the applicant and invariably constitutes an additional consideration received in respect of the supply of goods and is to be added to the taxable value of the respective goods supplied and liable to GST at the same rate as applicable to the goods supplied. The Fair Trade Premium forms part of the consideration and value of taxable supply of the goods supplied and the applicant is liable to pay GST on the same rate as the rate applicable to the respective goods supplied - the Fair Trade Premium forms part of the consideration for the goods supplied. 2022 (4) TMI 813 Seeking grant of Anticipatory Bail - alleged inadmissible input tax credit - Section 70 of the CGST Act - ongoing investigation - It is argued that subsequent thereto, fresh summons have been issued to them, and there is apprehension that they might be apprehended falsely into the present case and hence the present applications were moved. - HELD THAT:- Considering the fact that applicants have already paid a sum of Rs. 10 crores against the alleged inadmissible input tax credit to the tune of Rs. 70 crores at best as per its own claim of the department, and reading the facts, in the light of the judgment of C. PRADEEP VERSUS THE COMMISSIONER OF GST AND CENTRAL EXCISE SELAM ANR. [ 2019 (11) TMI 659 - SUPREME COURT] the recent judgment of TARUN JAIN VERSUS DIRECTORATE GENERAL OF GST INTELLIGENCE DGGI [ 2021 (12) TMI 135 - DELHI HIGH COURT] , it is hereby directed that in the event of arrest, both the applicants namely Danish Sharma Naveen Chauhan be released on their furnishing personal bonds in the sum of Rs. 1 lakh with two local sureties of the like amount each, subject to the terms and conditions imposed. Application allowed. 2022 (4) TMI 812 Seeking grant of anticipatory Bail - ready mix material of Pan Masala or Guthka - it has been alleged against the accused that accused supplied huge quantity of ready mix of pan masala and guthka (a banned product) valued in crores of rupees to late Sh. Manoj Kumar Dudhoria without issuance of invoices and received payment in cash - HELD THAT:- It is evident that there is no planning of the arrest of the accused in this case as no approval as such has been taken and even the proposal has not been made to arrest the accused. Moreover, as stated by Ld. Counsel for the accused that accused has once joined the investigation on the notice of the department somewhere in August/September 2021 and thereafter, no notice from the side of the respondent has been issued to the applicant to join the investigation. On being asked from the Ld. Counsel about the immediate apprehension of his arrest, except the apprehension that one of the accused Manoj Kumar Dudhoria has expired and accused may not meet the same fate. There is nothing to show that co-accused was died in the custody and merely having such apprehension without any basis cannot be regarded as apprehension of arrest and moreover department itself is not making any effort to arrest the accused. Thus, no ground for anticipatory bail is made out, hence the application is dismissed. 2022 (4) TMI 760 Duty Drawback - IGST refunds - zero rated supply - Section 16 of the Integrated Goods and Services Tax Act, 2017 - whether exports made without payment of IGST under bond on which, duty drawback is claimed under the provisions of the Customs and Central Excise Duties and Service Tax Drawback Rules, 2017, (formerly 1995) would entitle such an exporter, the benefit of refund of input tax credit under sub-Section (3) of Rule 16 of the IGST Act 2017 r/w 54 of the CGST Act, 2017 read with the Rules made thereunder? HELD THAT:- When the goods were exported by the petitioner, the Central Excise Act, 1944, Rules made thereunder, Chapter V of the Finance Act, 1994 containing the provisions of Service Tax, Rules made thereunder and other Indirect Taxes had been repealed and subsumed into the provisions of the Goods and Services Tax enactments with effect from 01.07.2017. Corresponding changes in the Customs Notifications were not fully made. Refund of the input tax credit under Section 16(3) of Integrated Goods and Services Tax Act, 2017 r/w Section 54 of the Central Goods and Services Tax Act, 2017 and Rules 89 and 96 of Central Goods and Services Tax Rules, 2017 cannot be denied, merely because the petitioner has claimed duty drawback under the provisions of Customs and Central Excise Duties and Service Tax Drawback Rules, 2017. It does not mean that the petitioner is not entitled to refund under Section 16(3) of the Integrated Goods and Services Tax Act, 2017 r/w Section 54 of the Central Goods and Services Tax Act, 2017 and Rules 89 and 96 of Central Goods and Services Tax Rules, 2017. Paragraph No.2.5 of Circular No.37/2018-Cus, dated 09.10.2018 cannot be pressed to deny legitimate export incentive as same is not sanctioned under law. Only higher rate of drawback cannot be claimed exports covered by shipping bills, where for such exports, the refund of IGST is claimed if two rates are then. IGST refund is completely system driven and processed in the system and manual intervention by the Departmental Officers to rectify the same is also not possible. However, that would apply only where higher rate of duty drawback is claimed. The respondents are directed to scrutinize the refund claims filed by the petitioner under Section 16(3) of the Integrated Goods and Services Tax Act, 2017 read with Section 54 of the Central Goods and Services Tax Act, 2017 and Rule 89 of the Central Goods and Services Tax Rules, 2017 and other applicable Rules and refund the same together with applicable interest - petition allowed. Income Tax 2022 (4) TMI 811 Entitlement to benefit of the provisions of Section 10B - Manufacture or production of articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit - tests which have been formulated in the decision of this Court in Textile Machinery Corporation Ltd [ 1977 (1) TMI 3 - SUPREME COURT] - whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business - HELD THAT:- In coming to the conclusion that the tests which have been formulated in the decision of this Court in Textile Machinery Corporation Ltd (supra) and reiterated in Indian Aluminium ( 1977 (1) TMI 5 - SUPREME COURT] have been duly fulfilled, the Tribunal has entered specific findings of fact that the new unit was fully a independent unit with a production capacity of 15 lakh tons per annum as compared to the earlier production capacity of 2 lakh tons per annum of the old unit. The Tribunal has also dealt with the reasons which were furnished by the CIT in coming to the conclusion that what was set up was only an expansion of the old unit and not a new unit. Ex facie, the reasons which weighed with the CIT were not compliant with the tests which have been formulated in the judgments of this Court. In this backdrop, the judgment of the Division Bench of the High Court of Bombay at Goa [ 2020 (10) TMI 1053 - B OMBAY HIGH COURT] affirming the judgment of the Tribunal does not suffer from any error. The Special Leave Petition is accordingly dismissed. 2022 (4) TMI 810 Validity of assessment u/s 144 r.w.s. 144B - as submitted High Court ought not to have entertained the Writ Petition and ought to have relegated the original writ petitioner to avail statutory remedy of appeal before the CIT(A) - HELD THAT:- As one of the grounds on which the High Court has set aside the assessment order was sub-section (9) of Section 144B of the Income Tax Act, 1961 which, at the relevant time, provided that any assessment made shall be non est, if such assessment is not made in accordance with the procedure laid down under the said Section and as submitted that, as such, sub-section (9) of Section 144B of the Act has been deleted with effect from 01.04.2021 and the provision to declare the assessment as non est if such assessment is not made in accordance with the procedure laid down under Section 144B of the Act has been deleted. Issue notice, returnable on 04.05.2021. Dasti, in addition, is permitted. In the meantime, the observations made by the High Court in para 9 of the impugned judgment and order are ordered to be stayed. 2022 (4) TMI 809 Determination of cost of assets - Depreciation - Applicability of Explanation and proviso to 43(1) - subsidy utilisation specifically under the head building, furniture, plant machinery and computer software - Grant received by the Appellant from the Government of India under the Scheme Assistance to States for developing Export Infrastructure and other allied activities (ASIDE) to be reduced from the cost of assets under Section 43(1) and Explanation thereto - Whether by virtue of Explanation 10 and/or proviso to Explanation 10 to Section 43(1) introduced with effect from 01.04.1999, a subsidy or grant received without reference to specific assets is to be apportioned and reduced to the cost of assets for the purpose of computing depreciation? - HELD THAT:- The proviso enables adjustment of subsidy in all the assets of the assessee. The language of the proviso is clear that the subsidy received without specifics shall have to be adjusted from the assets of the assessee. The object is to limit depreciation only on the actual cost of the assets of the assessee. The proviso takes care of the general financial assistance i.e. without specific purpose, received and the actual cost is worked as per the proviso. We follow the precedent in Sundaram Pillai case [ 1985 (1) TMI 306 - SUPREME COURT] on the point and hold that the proviso is an independent expression on working of actual cost of assets of assessee. The assessee, under t(he ASIDE, in the assessment year 2008-09 received and for the assessment year 2009-10 though has not received any financial assistance, the actual cost of the asset has been reworked by deducting the financial assistance received up to the financial year 2000-01. Any other interpretation or construction of Explanation 10 and proviso would be contrary to the explicit words used by the parliament for achieving a particular object of granting depreciation on the actual cost incurred by the assessee. The Explanation and the proviso, in our understanding, are clear and do not suffer from ambiguity. This relates other substantial questions of law and would be considered independently. Hence, we hold that financial assistance received without reference to specific purpose, still by application of proviso to Explanation 10 of section 43(1) of the Act the actual cost is apportioned and reduced from the cost of the assets of the assessee for the purpose of computing the depreciation. For the above reasons, the common question in both the appeals is answered in favour of Revenue and against the assessee. Apportionment of the subsidy to building, furniture, plant machinery, computer software etc. is illegal and contrary to the definition of the actual cost under Section 43(1) of the act r/w Explanation 10 r/w proviso - Revenue is unable to controvert the stand of the assessee that in the exercise of the discretion given to the assessee on utilisation of funds, the assessee has enhanced the capacity of existing facilities viz. power, water distribution in the Industrial Park under its administration. For the purpose of Section 32 of the Act, the actual cost of assets alone will have to be determined, and in a broad spectrum, the subsidy is deducted even in respect of the assets which did not have value addition from or through the financial assistance received under ASIDE then the very purpose of depreciation of an asset is defeated/undermined. The extent of details furnished in Annexure1 to the assessment order dated 15.12.2010, we are of the view that the apportionment of subsidy against the written down value of the assets as on 01.04.2007 on building, furniture and plant machinery, computer software etc. suffer from patent illegality and what is due to the assessee while determining the actual cost of the asset is denied. Therefore, the order of assessment is set aside to the extent that the subsidy is apportioned against all the assets viz. building, furniture and plant machinery, computer software. The matter is remitted to the Assessing Officer for determination afresh. The assessee, since can place the actual cost after deducting the amount spent in the capacity building of the water and power distribution and files revised statements taking into consideration such revised statements, the assessment is completed. The question under consideration is answered in favour of the assessee and against the Revenue. Computation of depreciation under Section 32 r/w Section 43 for the assessment year 2009-10 - The Central Government is left to the discretion of the State Government and/or the authorities where export-oriented industries are set up to replenish the infrastructure from the financial assistance given to the assessee - This being the undisputed fact, treating the entire financial assistance received in the slab years as falling under the proviso introduced with effect from 01.04.1999 is illegal and unsustainable. It is not the case of Revenue before us that the amendment is retrospective. The justification offered for reworking the actual cost of assets is on the ratio decided in Saharanpur Electric Supply [ 1992 (1) TMI 2 - SUPREME COURT] - We have already held that the said judgment is distinguishable. No material is placed indicating that the amendment inserted through the Finance (No.2) Bill, 1998 has retrospective operation or nullified the dictum of PJ Chemicals. We are in complete agreement with the view expressed both by this Court and the Gujarat High Court, on the amendment to Section 43(1), Explanation 10 and the proviso as prospective. The adjustment of Rs. 13,75,00,885/- as noted in the assessment order is illegal, and even for the view, we have taken while answering the main question, unsustainable. Having regard to the above discussion, we are of the view that the computation of depreciation under Section 32 r/w Section 43 for the assessment year 2009-10 is illegal and liable to be set aside and accordingly set aside. The Assessing Officer is directed to re-determine the actual cost by excluding the amount received by the assessee prior to 31.03.1999. This Court held that apportionment on the written down value of the assets as on 01.04.2008 and also on all the assets of the assessee, for the assessment year 2008-09 is illegal. The adjustment at best could be against the assets which received the addition from financial assistance received under ASIDE. Therefore, insofar as the assessment year 2009-10 is concerned, the inclusion of the financial assistance received upto 31.03.1999 is incorrect and contrary to the ratio of PJ Chemicals judgment [ 1994 (9) TMI 1 - SUPREME COURT] . Therefore by excluding assistance received upto 31.03.1999 the balance financial assistance i.e Rs. 1,51,00,000/- received needs to be reworked. It is hardly clear from the material on record that the reasons for including Rs. 3,75,88,500/-in the assessment year for working the actual cost of the assets for depreciation for the assessment year 2009-10. Therefore, to the limited extent of financial assistance received after 01.04.1999, the assessee is given liberty to file a statement on utilisation of assistance for capacity building of assets in the subject assessment years and the Assessing Officer shall pass fresh orders. The question as indicated above is answered in favour of the assessee and against the Revenue 2022 (4) TMI 808 Validity of the orders passed by the first appellant u/s 92CA (3) on the ground of limitation as contemplated u/s 153 of the Act - Scope of the work may - Period of limitation applicable to TPO u/s 92CA(3A) and incidentally u/s 153 - HELD THAT:- In the present cases, the Financial Year is 2015-16 and the assessment year is 2016-17. The period of 21 months would commence on 31.03.2017, the assessment year ended on 31.12.2018 normally and the extended period would end on 31.12.2019 and not on 01.01.2020. The contention of the appellants that the time to pass the assessment order would end at 00.00 hours on 01.01.2020, is fallacious as 31.12.2019 would end at 23:59:59 and 00.00 is regarded as the next day. A day for the purpose of reckoning the date ends before the stroke of midnight and the next date would commence at midnight immediately after the expiry of the previous day. The last date would be the last day of the month (31.12.2019), which cannot be the first day of the next month (01.01.2020). The date must not be reckoned with respect to sun rise but with respect to the time of 24 hours in a day. The moment last minute of the day expires, the day ends and the next moment which is the first moment of the next day becomes irrelevant for the purpose of reckoning the period of limitation. A reference can also be made to various insurance policies, wherein the beginning of the day is reckoned as 00.00 hours and the end of the day at 23:59:59 hours. Even as per the contentions of the appellants, the assessing officer has time upto 23:59:59 hours on 31.12.2019 to pass assessment orders. However, according to them, the time limit expires at/on 00.00 hours of 01.01.2020. The fallacy in such contention is that 00.00 hours of 01.01.2020 denotes not only the beginning of the next day of the month, but also the fact that it comes after 23:59:59 hours on 31.12.2019 and by such time, the time limit had already expired. By resorting to such fallacious argument, the department wants to relate 00:00 hours of 01.01.2020 to 31.12.2019 and stretch it to 01.01.2020 to extend the period of limitation for the entire day of 01.01.2020, which cannot be permitted. Even as per Section 153, no order can be passed at any time after expiry of twenty one month s implying that the order has to be passed before 23:59:59 hours on 31.12.2019. The provision cannot be considered ignoring the words at any time after expiry , in the opinion of this court. Even the employment of the General Clauses Act will not aid the Revenue, the reason of which will be disclosed a little later in this judgment. But, right now, it is relevant to consider the scope of the word to . The word to is used as a preposition or as an adverb. In popular sense, it is used to express the direction in which a person, thing, or time travels. The flow of direction is to be gauged from the preceding word or words used, like prior to or upto . Keeping the same in mind, if we look at the wording of Section 92CA (3A), we cannot accept the contention of the Revenue that the time to be reckoned is from 31.12.2019 and not 30.12.2019 as has been rightly done by the learned Judge. The word date in section 92CA(3A) would indicate 31.12.2019. But the preceding words prior to would indicate that for the purpose of calculating the 60 days, 31.12.2019 must be excluded. The usage of the word prior is not without significance. It is not open to this court to just consider the word to by ignoring prior . The word prior in the present context, not only denotes the flow of direction, but also actual date from which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. The language employed is simple. 31.12.2019 is the last date for the assessing officer to pass his order under Section 153. TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words prior to and the TPO has to pass order before the 60th day. In the present case, the word before used before 60 days would indicate that an order has to be passed before 1/11/2019 i.e on or before 31.10.2019 as rightly held by the Learned Judge. Even considering for the purpose of alternate interpretation, the scope of Section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, reading down the provision with the use of the word from , which denotes the starting point or period of direction in general parlance, would mean that 60 days from the last date . Even going by Section 9 of the General Clauses Act, when the word from is used, then, that date is to be excluded, implying here that 31.12.2019 must be excluded. After excluding 31.12.2019, if the period of 60 days is calculated, the 60th day would fall on 01.11.2019 and the TPO must have passed the order on or before 31.10.2019 as orders are to be passed before the 60th day. Therefore, either way the contention of the Revenue is a fallacy and has no legs to stand. From Section 153, the regular time for passing the assessment order ends on 31.12.2018 and with extension on the matter being referred to TPO, the time limit to pass assessment order would lapse on 31.12.2019. What is not to be forgotten, while interpreting a taxing statute, is the explicit and clear language used by the parliament while enacting the law. If the language employed in any statute is clear and unambiguous from its plain and natural meaning, external aid for interpretation are unnecessary. In the present case, we are called upon to adjudicate the period of limitation applicable to TPO under Section 92CA(3A) and incidentally under Section 153. Usage of the word may in Section 92CA (3A) indicates that the time fixed is only directory, a guideline, not mandatory and is for the sake of internal proceedings - Upon consideration of the judgments and the scheme of the Act, we are of the opinion that the word may used therein has to be construed as shall and the time period fixed therein has to be scrupulously followed. The word may is used there to imply that an order can be passed any day before 60 days and it is not that the order must be made on the day before the 60th day. The impact of the proviso to the sub-section clarifies the mandatory nature of the time schedule. The word may cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31.10.2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory. 2022 (4) TMI 807 Legality and validity of the impugned notice issued u/s 148 seeking to reopen an assessment as undertaken u/s 153A - whether the law permits the Assessing Officer to reopen an assessment carried out u/s 153A of the Act by issuing a notice u/s 148? - HELD THAT:- In the case on hand, the AO seeks to reopen the assessment for the assessment year 2013-14. The search was carried out on 07.08.2013. As a result of the search, notice u/s 153A of the Act was issued by the AO on 19.08.2014 for the year under consideration. AO framed the assessment vide order dated 28.03.2016 under Section 143(3) read with Section 153A - The consequence of notice under Section 153A (1) of the Act is that the assessee is required to furnish fresh return of income in each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessment by the revenue for the first time in the case of abated assessment proceedings. Consequent to the notice under Section 153A of the Act, the earlier return that may be filed for the purpose of assessment which is pending would be treated as non est in law. Further, section 153A (1) of the Act itself provides that on filing of the return consequent to the notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore, the provisions of the Act which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act would also continue to apply in case of return filed under Section 153A of the Act. Whether the material found in the course of the survey in the premises of the builder could be used in Block Assessment of the assessee? - A block assessment under Chapter XIVB of the Act is for bringing to tax undisclosed income which is computed on the basis of evidence found as a result of search and/or other information as is available with the AO which is relatable to such evidence. Final conclusion on the issue in question is as under:- (a) Unlike Chapter XIV-B which provided for a special procedure for assessment of search cases, Section 153A which provides for an assessment in case of search, and was introduced by the Finance Act, 2003 w.e.f. 01.06.2003, does not provide that a search assessment has to be made on the basis of evidence found as a result of search or other documents and such other materials or information as are available with the AO and relatable to the evidence found. The earlier Section 158BB which is not applicable in case of a search conducted after 31.05.2003, provided that the computation of the undisclosed income can only be on the basis of the evidence found as a result of search or other documents and materials or information as are available with the Assessing Officer, provided they are relatable to the evidence found. It is in such circumstances that this Court in the case of Cargo Clearing Agency [ 2008 (8) TMI 86 - GUJARAT HIGH COURT] held that one cannot envisage escapement of undisclosed income once a search has taken place and material recovered on proceeding of which undisclosed income is brought to tax. To put it in other words, to contend that the undisclosed income has escaped assessment despite an assessment having been framed under Chapter- XIVB of the Act by adopting special procedure prescribed by the said chapter is to contend as observed by this Court in Cargo Clearing Agency (supra) is something which is inherently not possible. (b) Section 153A(1)(b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. The question, however, is whether the seized material can be relied upon to also draw the inference that there can be similar transactions throughout the period of six years covered by Section 153A. We have to remember that with the advent of Section 153A we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search. (c) To say that the assessment undertaken u/s 153A of the Act can never be reopened under Section 147 of the Act, would be an incorrect statement of law. The matters shall now be placed for further hearing so as to determine on facts whether any case has been made out by the Revenue for the purpose of reopening of the assessments undertaken u/s 153A of the Act. 2022 (4) TMI 806 Reopening of assessment u/s 147 - difference pointed out by the DVO in his valuation report - AO has formed his belief for escapement of income on the basis of the incriminating documents/files impounded during the survey proceedings - HELD THAT:- Assessment, on the basis of DVO s report, cannot be reopened as held by the Hon ble Supreme Court in the case of M/s Dhairya Construction Co. [ 2010 (2) TMI 612 - SC ORDER] and in the case of Sargam Cinema [ 2009 (10) TMI 569 - SC ORDER] Amount of escaped assessment is not emanating from any evidence on record found during survey but it is the difference pointed out by the DVO in his valuation report. The report of DVO is not an information for re-opening assessment u/s 147 of the Act. The AO has to apply his mind to the information if any collected and must form a belief on them. As we have noted earlier that assessment, on the basis of DVO s report, cannot be reopened as held by the Hon ble Supreme Court in the case of M/s Dhairya Construction Co. [ 2010 (2) TMI 612 - SC ORDER] therefore, it is abundantly clear that reassessment proceedings initiated by the assessing officer is bad in law and therefore should be quashed. CIT(A) during the appellate proceedings, observed that there were no such discrepancies in the construction expenses - the assessing officer is referring to certain material without describing them and quantifying the amounts contained therein. There should be a live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding the escapement of income. In the present case, there is no material except the valuation report of DVO which has a live link and base for the assessing officer to form a belief regarding the escapement of income. Rather, the natural conclusion which can be drawn is that the assessing officer has re-opened the assessment on the basis of DVO s valuation report - we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 2022 (4) TMI 805 Addition u/s 56(2)(vii)(c)(ii) - allotment of shares to assessee shareholder at a value lower - whether Tax to be paid by the shareholders or the company? - HELD THAT:- In the present case since the explanation (e) of section 56(2)(vii) which provides that in case of HUF, any member thereof falls in the definition of relative, as the shares allotted to the assessee to the extent of 95.35% was from the interest of his relatives, the same ought not be subject to tax and the company since it is Private Limited company and holding the majority of shares by the relatives , where the assessee himself the karta is Director and member of HUF holding major shares in the company. The shares have been allotted on 31.03.2014 to the assessee instead of allotting shares to all the existing shareholders and thus even if it is assumed that the shareholders to whom shares were not allotted have given up their right of allotment in shares to other shareholders, it is a case of transfer of right in shares by one relative to another relative and therefore also section 56(2)(vii)(c) would not get attracted. Whether there is a difference between allotment of shares and receipt of shares ? - For receipt of share there should be shares in existence and a person holding such share transferring it to another person. As against this in case of allotment of shares, it comes into existence after it is allotted and there is no transfer of shares from one person to another person. Therefore allotment of shares cannot be equated with receipt of shares because in case of receipt of shares the property is already in existence whereas in case of allotment of shares the property comes into existence after it is allotted. Whether assesses comes under the definition of Relative? - There is no dispute in the contention of the assessee is that all the shareholders are relatives and 95% of the shares have been within the relatives. The transaction between the close relatives is not taxable under the head income from other sources u/s 56(2) of the Act. We are of the opinion that the section 56(2)(vii)(c) has no application and the company is liable to be taxed . The opinion and well known facts that in a private limited company major percentage of shares are holded by the relatives only. Whether it is fresh allotment of shares or existing allotment of shares? - Where the receipt of shares in as much as there is a distinction between allotment of shares and receipt of shares. Receipt is the action of receiving something or the fact of its being received whereas allotment is defined as the portion or share of something. For receipt of share there should be shares in existence and a person holding such share transferring it to another person. There is no dispute that existing shareholders prior to fresh allotment was the assessee and his relatives and the provisions of section 56(2)(viii)(c)(ii) shall not apply in case of money or any property received from any close relative .In the present case it is fresh allotment of shares. Taking into consideration the facts, circumstances of the case and also the decision in the case of ACIT vs. Venkanna Choudhary [ 2020 (1) TMI 1012 - ITAT VISAKHAPATNAM] we allow the appeal of the assessee and set aside the order of CIT(A) and addition confirmed by the CIT(A) is deleted. - Decided in favour of assessee. 2022 (4) TMI 804 Royalty payments treated as capital expenditure - HELD THAT:- Facts being pari-materia the same in this year as per earlier AY year. [ 2022 (4) TMI 702 - ITAT CHENNAI] we would hold that the royalty payment was to be treated as revenue expenditure. The grounds thus raised stands allowed. Disallowance of excess depreciation - Assessee was engaged in the business of security services for the purpose of secured transportation for ATM services and for the same it was using motor lorries customized as armored/ security vans and vehicles deployed were customized motor Lorries which were used in the business of running them on hire for transportation of valuables - HELD THAT:- It could be seen that majority of the depreciation as claimed by the assessee is on opening written down value (WDV) of the block. The vehicles under consideration form part of 30% Block of Assets - the depreciation on vehicles have been allowed at higher rates in earlier years. AR submitted that similar disallowance as made in earlier years was deleted by learned first appellate authority for which revenue did not prefer any further appeal and thus, the issue has attained finality in earlier years. Keeping in view these facts, we direct Ld. AO to allow depreciation at higher rates as claimed by the assessee. The grounds thus raised stands allowed. Disallowance of Miscellaneous expenditure - HELD THAT:- M/s SDB CIDCO Pvt. Ltd. has expressed desire to obtain and utilize the professional, technical and other specialized skills of Shri Alexander John George for the business integration, operation, due diligence and managing business. The SDB CIDCO Pvt. Ltd. was to be charged for the costs incurred including reimbursement of out-of-pocket third-party costs and expenses. Accordingly, IIFS has raised periodic debit note on the assessee, the copies of which are on record. The copy of the employment contract between IIFS and Shri Alexander John George is also on record. Thus, it could be seen that this employee was in employment of IIFS but it was seconded to the assessee under a contract. The assessee reimbursed IIFS as per the contract and the deduction of the expenditure has been claimed by the assessee. Since the person is an employee of IIFS, Form No.16 would be issued by ISS only. On the basis of all these facts and documentary evidences, there is no reason to deny the deduction of the expenditure to the assessee. Disallowance u/s. 43B - service tax liability was outstanding as on 31.03.2012 - HELD THAT:- Provisions of Sec.43B could not be applied to this expenditure as held by Hon ble Delhi High Court in Noble Hewitt (I) (P) Ltd [ 2007 (9) TMI 238 - DELHI HIGH COURT] . We concur with the decisions provided it could be shown that the liability to pay Service Tax as per relevant Service Tax Rules did not arise before due date of filing return of income. Therefore, we direct Ld. AO to verify this fact and delete the disallowance if the liability to pay Service Tax did not arise as per relevant Service Tax Rules before due date of filing of return of income. The assessee to provide requisite information and substantiate its stand. This ground stand allowed for statistical purposes. 2022 (4) TMI 803 Reopening of assessment u/s 147 - eligibility of reasons to believe - undisclosed sundry creditors - whether there was any fresh tangible material in the possession of the AO at the time of recording of the reasons to believe ? - HELD THAT:- In the present case, it is noticed by us that the case of the assessee is that there was no fresh tangible material in the possession of Ld. AO at the time of recording of impugned reasons which starts with On examination of the financial statements annexed to the Income tax return along with submissions filed by the assessee for the AY 2013-14, the following issues emerge- [emphasis supplied by us]. A perusal of the reasons to believe recorded by the Ld. AO in this case reveals that at the time of recording of these reasons , the Ld. AO had examined the original assessment records only and no fresh material had come in his possession. In response to our specific query and based on case records produced before us, DR could not point out any fresh material available with the AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted. The original assessment, the Ld. AO had asked the assessee to clarify the issue of large sundry creditors and furnish the details. It is true that in the order of assessment u/s 143(3) of the Act, the Ld. AO had not elaborated much on this aspect but had not made any disallowance or addition in the hands of the assessee which would not by itself mean that the same was not scrutinized or that the Ld. AO had not formed an opinion with respect to the same. We refer to decision in the case of Gujarat Power Corpn. Ltd.[ 2012 (9) TMI 69 - GUJARAT HIGH COURT ] which observed that if after detailed scrutiny during the assessment, the AO examines a claim but does not reject the claim of the assessee which had come up for scrutiny, would not enable the Revenue to argue that the AO had not formed any opinion on such issue and, therefore, reopening of the assessment would be permissible without there being any new or additional material available to the AO. In the judgment of Hon ble Supreme Court in the case of CIT v. Kelvinator India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT ] it is laid down that for reopening of the assessment, the AO should have in his possession tangible material . The term tangible material has been understood and explained by various courts subsequently. There has been unanimity of the courts on this issue that in absence of fresh material indicating escaped income, the AO cannot assume jurisdiction to reopen already concluded assessment. In the present case before us, it is clear that the action of the Ld. AO tantamount to reviewing the action of the earlier AO who has verified the claim of sundry creditors for which the case of the assessee was selected for scrutiny assessment u/s 143(3) of the Act. We find that in the instant case, original assessment order was passed after the examination of issue under consideration and the same has been reopened for reassessment without bringing any new and fresh tangible material on record which amounts to nothing but a mere change of opinion. The reopening shall be made only if new tangible material is available on record. Accordingly, this being the case of change of opinion , the Ld. AO lacks jurisdiction u/s 147 of the Act to reopen the completed assessment u/s 143(3) of the Act dated 02.02.2016. Thus we hold that the Ld. CIT(A) has rightly appreciated the contentions raised by the assessee in respect of legal ground taken by the assessee on the validity of reopening of the completed assessment and has rightly held the action of the Ld. AO to be bad in law. - Decided in favour of assessee. 2022 (4) TMI 802 Capital gain computation - STCG - FMV determination - AO completed the assessment by taking into consideration of SRO s value as per section 50C - HELD THAT:- Case of the assessee is that before the DVO, when the assessee has asked specifically the sale instances locally where the land and building is situated, without giving any such information, the DVO has determined the value of the property is not correct. We find that nowhere the assessee has stated that the sale consideration cannot be applied at Rs..7,10,00,000/- due to difficulties in the property such as no approach road, litigation, or any other reason neither before the DVO nor before the Assessing Officer or before the ld CIT(A) or even before the Tribunal. Assessee has no reply/explanation as to why the fair market value adopted by the SRO cannot be applied in the case of the assessee. Therefore the objection of the assessee is liable to be rejected. By considering the SRO s value and DVO s report, the Assessing Officer has adopted the SRO s value as per section 50C - in the assessment order, the AO has correctly adopted the fair market value of the land and building at Rs..7,10,00,000/- by invoking the provisions of section 50C and the ld. CIT(A) has rightly confirmed the assessment order. Hence, we find no reason to interfere with the order passed by the ld. CIT(A). Thus, the ground raised by the assessee is dismissed. Rectification u/s 154 - CIT(A) has omitted to consider the valuation report of M/s. D. Parthasarathy Associates, a chartered engineer, which was submitted during the course of hearing is a mistake apparent in the ld. CIT(A) s order and prayed for rectification - HELD THAT:- CIT(A) has rejected the above contention of the assessee on the ground that the assessee has not filed any application under Rule 46A of Income Tax Rules, 1962 in relation to the admission of additional evidence. The assessee has also not filed any evidence of having filed an application under Rule 46A of the IT Rules before the ITAT. Thus, the ground raised by the assessee is dismissed. 2022 (4) TMI 801 Revision u/s 263 - As per CIT AO has not examined the sale consideration as per section 56(2) - case was reopened u/s. 147 - assessee had purchased an immovable property along with six other members, however, the assessee did not disclose the same in his return of income - HELD THAT:- As notice under section 148 of the Act and after considering the submissions of the assessee, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 14.12.2017 by accepting the income returned after examining the purchase deed and source of purchase of immovable property. Subsequently, the ld. PCIT issued show-cause notice under section 263 of the Act on the ground that the assessment order is erroneous and prejudicial to the interest of Revenue since the assessee has not offered the revised stamp duty value of the immovable property purchased as income from other sources as per section 56(2) - ongoing through the relevant provisions, we find that the relevant assessment year under consideration is 2013-14 and the provisions of section 56(2)(vii)(b) was introduced in the Finance Act, 2013 w.e.f. assessment year 2014-15. Therefore, we are of the opinion that the provisions of section 56(2)(vii)(b) of the Act has no application to the assessment year 2013-14 under consideration and accordingly, the revision order passed under section 263 of the Act is quashed. For AY 2014-15 assessee has not offered the revised stamp duty value of the immovable property purchased as income from other sources as per section 56(2) - Against the show cause notice issued, the assessee has neither appeared nor furnished any written submission and accordingly, while setting aside the assessment order, the ld. PCIT directed the Assessing Officer to redo the assessment. Since the provisions of section 56(2)(vii)(b) of the Act applies with effect from the assessment year 2014-15 and the assessment year under consideration is also 2014-15, we are of the opinion that the ld. PCIT has rightly invoked the provisions of section 263 of the Act and directed the Assessing Officer to redo the assessment. Thus, we find no infirmity in the order passed by the ld. PCIT under section 263 of the Act. Thus, the ground raised by the assessee is dismissed. 2022 (4) TMI 800 Addition u/s 40A(3) - expenditure paid at various project sites in cash mode - unexplained expenditure - Addition based on assessee s alleged search statement making the corresponding disclosures - HELD THAT:- There is no rebuttal to the CIT(A) s clinching findings that the assessee s books are neither reliable nor do they indicate the specific violation of the impugned statutory provision that the impugned cash payments had exceeded the specified limit; payee-wise, as the case may be. We thus invoke stricter interpretation of the impugned disallowance provision in Section 40A(3) that it is attracted only when an assessee incurs any expenditure in respect of which a payment of aggregate of payments in a day . We also quote hon ble apex court s recent landmark decision in Commissioner of Customs Vs. Dilip Kumar [ 2018 (7) TMI 1826 - SUPREME COURT] that provisions in the Act have to be strictly construed only. We accordingly uphold the CIT(A) s findings deleting Section 40A(3) disallowance. Undisclosed income addition based on the assessee s search statement - AO had only made Section 40A(3) disallowance only than un-disclosed income addition based on the assessee s authorised person s search statement. That being the case, we are afraid that the Revenue s hands are indeed tied at this stage as it would not be allowed to make any addition once the AO has invoked Section 40A(3) only. Case law CIT Vs. Shapoorji Pallonji Mistry [ 1962 (2) TMI 12 - SUPREME COURT] as well as CIT Vs. Union Tyres [ 1999 (9) TMI 81 - DELHI HIGH COURT] hold that such an addition would not be allowed to be made even by way of enhancement in first appellate proceedings despite the fact that the CIT(A) is vested with his jurisdiction co-terminus with the AO. Their lordships make it clear that Section 251(1) enhancement jurisdiction does not extend to a new source of income. We therefore accept assessee s arguments and reject Revenue s stand regarding the alleged undisclosed income addition which was never added in both assessment orders since the Assessing Officer had merely invoked Section 40A(3) disallowance. We therefore accept the assessee s pleadings to this limited extent. 2022 (4) TMI 799 Levy of penalty u/s.271(1)(c) - addition u/s.68 on Unexplained cash deposits in the Savings Bank A/c maintained with India Bank - assessee as stated primary defect in the notice i.e. the jurisdictional issue that the AO while initiating penalty proceedings has not scored-off under which limb the penalty is levied - even the Ld.CIT(A) in the first round has categorically quashed the penalty order as relying on SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] - HELD THAT:- Where defective notices, were neither of limb is scored off, the notice is treated as defective. We noted that when the very defect is quashed by the Ld.CIT(A) in the first round, nothing survives for penalty on the remainder amount. When this was pointed out to the ld.Sr.DR, he could not controvert the above stated facet situation. As the issue is clear in the first round of appeal that the Ld.CIT(A) has deleted the penalty and Revenue is not in appeal against the order of the Ld.CIT(A) and hence, that has become final. However, the penalty levied in the second round will not survive, because the very case is jurisdictional issue goes to the root of the matter, once root is taken out, nothing survives. Hence, we deleted the penalty and allow the appeal filed by the assessee. 2022 (4) TMI 798 TDS u/s 195 - Assessee-in-default - demand u/s 201(1) / 201(1A) - assessee paid international ocean freight charges for import of coal to various shipping agencies including M/s Noble Chartering Inc., a British Virgin Islands incorporate entity - HELD THAT:- The undisputed position that emerges is that impugned payments have not been made by the assessee during AY 2010-11 and these payments have been made in subsequent years. This being so, the impugned demand as raised against the assessee in this year would have no legs to stand. Therefore, considering the aforesaid position, we delete the impugned demand as raised against the assessee. - Decided in favour of assessee. 2022 (4) TMI 797 Reopening of assessment u/s 147 - Validity of reason to believe - Addition being notional interest calculated at the rate of 12% on the share application money pending for allotment for the reason that the same is pending for long time - interest on pending share capital money calculated at the nominal rate of 12% was assessed to tax in the absence of any reasoning/reply from the assessee - HELD THAT:- In this case, the assessee has not filed any reasons for pending share capital money either before the Assessing Officer or before the ld. CIT(A). However, considering the prayer of assessee to afford one more opportunity to substantiate its case, we are of the opinion that the assessee shall be given an opportunity to substantiate its case before the AO. In view of the above facts and circumstances, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the AO to decide the issue afresh in accordance with law by affording an opportunity of being heard to the assessee to substantiate its case and the assessee is also directed to furnish complete details before the Assessing Officer for verification and deciding the issue. Appeal filed by the assessee is allowed for statistical purposes. 2022 (4) TMI 796 Validity of reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- AO has not alleged that there is a failure on the part of the assessee to disclose fully and truly all material facts to complete the assessment. That apart, we find that there is no failure on the part of the assessee in respect of disclosure of all relevant materials required for assessment fully and truly. Therefore, in our opinion, the reopening of assessment under section 147 of the Act is invalid and the same is quashed. 2022 (4) TMI 795 Demand u/s 201(1) and interest charged u/s 201(1A) - disallowance of certain expenditure u/s 40(a)(i) and 40(a)(ia) of the Act for not deducting tax at source from those expenses - Scope of year end provisions - HELD THAT:- It is the responsibility of the assessee to satisfy the assessing officer by preparing a list of expenses, for which payees could not be identified at the time of making provision and the reasons for the same.We notice that there are certain judicial rulings holding that there will not be TDS liability, if the payee is not identifiable. It is the responsibility of the assessee to prove that payees are not identifiable with credible reasons. Accordingly, if the assessee, in the present case, is able to prove that the payees could not be identified in respect of particular expenses, then the mechanism provided under Chapter XVII-B would fail and hence the AO is not entitled to demand tax u/s 201(1) and interest u/s 201(1A) in respect of those expenses. Assessee has claimed to have deducted tax at source at the time of accounting of invoices/payments. Accordingly, the year-end provisions may fall under anyone of the categories discussed above. Accordingly, we restore this issue to the file of AO in order to enable him to recompute the liability, if any, u/s 201(1) and interest u/s 201(1A) of the Act. We noticed earlier that the year-end provisions made by the assessee included Commission payable to non-residents , which is liable for deduction of tax at source u/s 195 of the Act. The provisions of sec.195 are triggered only if that payment is chargeable under the provisions of Income tax Act. We notice that the assessee has not furnished any detail to the AO/CIT(A) with regard to the applicability or otherwise of provisions of sec.195 to the above said payment. Hence we restore this issue also to the file of the AO for examining it afresh in accordance with law and in the light of discussions made supra. Customs 2022 (4) TMI 794 Registration for import of poppy seed from China - fixation of country cap and initiation of registration process - Public Notice No. 1/2022, dated 7-1-2022 - HELD THAT:- The apprehension can be assuaged by directing the petitioners to accept the applications to be filed by the respondent(s) herein within one week from today. This relaxation will apply only to the respondent(s) before this Court and none-else; and this order shall not be treated as precedent in any other case as it is being passed in exercise of plenary powers under Article 142 of the Constitution of India. Thus, it is not necessary to dilate on the correctness of the judgment under challenge in the present special leave petitions, except to observe that the High Court ought not to have departed from the policy in vogue - SLP disposed off. 2022 (4) TMI 793 Direction to decide the waiver application within a stipulated period with liberty to challenge the order passed in the said proceedings - HELD THAT:- Taking into consideration the innocuous nature of the relief, the Commissioner of Customs, Kandla are directed to decide the waiver application as directed in the impugned order, within a period of ten days from today. The appellant would be at liberty to challenge the order passed by the Commissioner of Customs, Kandla in the event, it is adverse to the appellant. Appeal disposed off. 2022 (4) TMI 792 Seeking declaration of relaxation/condonation of the procedure lapse - non-mentioning of MEIS scheme in the shipping bills at the time of export - seeking direction to Respondent No.2 by themselves, their sub ordinate servants to award the MEIS to the petitioner on export of their products - realisation of export proceeds - HELD THAT:- As per HBP Chapter 3, Clause 3.13 provides validity period and revalidation and according to which, Duty Credit Scrip issued on or after 1.1.2016 under Chapter 3 shall be valid for a period of 24 months from the date of issue and must be valid on the date on which actual debit of duty is made. Revalidation of Duty Credit Scrip shall not be permitted unless covered by Paragraph 2.20(c) of HBP. Clause 3.15 provides the last date of filing of the application for Duty Credit Scrips and according to which, the application shall be filed within a period of 12 months from the date of LEO date or 3 months from the date of uploading of EDI shipping bills on to the DGFT server by Customs - The Commissioner of Customs issued Public Notice No.88/2017 dated 5.7.2017 prescribing the procedure for amendment/conversion of the shipping bills from one scheme to another scheme and according to which the post-shipment amendments shall ordinarily be examined and disposed of within a period of 30 days from the date of receipt of the request from the CB/exporter and in case of delay beyond the stipulated period, the CB/exporter may approach the JC/ADC concerned to resolve the matter. Action of the DGFT in this petition by which the claim has been rejected - HELD THAT:- The DGFT has rightly declined on the basis of the bills received in the server from the Customs Department. Therefore, the petitioners ought to have approached the Customs Department for correction of the shipping bills and after such correction in the shipping bills, the DGFT get jurisdiction or authority to examine the matter. Petition dismissed. 2022 (4) TMI 791 Maintainability of appeal - Classification of export goods - ropes made of PP (Polypropylene) and PP Polyester - Re-opening of assessment order by issue of SCN u/s 124 read with Section 28 of the Customs Act - no appeal was preferred - penalty on the Directors/CEO of the Respondent Company and on the Respondent Company as well - limiting the scope of de-novo adjudication while remanding back the matter to the adjudicating authority - HELD THAT:- The entire controversy or the origin of the entire controversy is classification dispute which relates primarily to the determination of question of levy of duty applicable. The appellant may prefer an appeal before the Hon ble Supreme Court of India and this court will have no jurisdiction. Appeal dismissed. 2022 (4) TMI 790 Waiver of customs duty for import - Export Obligation Discharge Certificate - fulfilment of export obligation or not - HELD THAT:- This Court feels that, a direction can be given to the 3rd respondent to pass orders on the application of the petitioner dated 21.10.2013 within a time frame for issuance of EODC and based on which, further action could be decided by the 1st respondent, till such time, the impugned order can be kept in abeyance. There shall be a direction to the 3rd respondent to pass orders on the application of the petitioner dated 21.10.2013 by taking into account the reply submitted by the petitioner dated 27.12.2021, in response to the show cause dated 07.12.2021 and accordingly pass orders for grant of EODC if the petitioner is otherwise eligible for the same, within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off. 2022 (4) TMI 789 Violation of principles of natural justice - ex-parte order - appellants were not aware about the date of hearing - HELD THAT:- It is indisputable that on 24.3.2021 situation prevailing in the Country, particularly in Mumbai and State of Maharashtra, was unprecedented and many had to undergo lot of hardship - an opportunity is granted to appellants to present its case on merits before the Tribunal for which we have to set aside the impugned order dated 24.3.2021. The matter is remanded for de novo consideration to Customs, Excise and Service Tax Appellate Tribunal, WRB, Mumbai. Tribunal is requested to endeavor to dispose off the appeals at the earliest and preferably within 12 weeks from today - appeal allowed by way of remand. 2022 (4) TMI 788 Benefit of concessional rate of duty - Sr. No. 215 of Notification 21/2002-Cus dated 1-3-2002 - essentiality certificate issued by the Director General of Hydrocarbon, Ministry of Petroleum and Natural Gas with post import condition of use in the said project of ONGC - illegal diversion to local market - HELD THAT:- No doubt that the tribunal can decide the present disputed question of facts as a final fact-finding authority. However, since the disputed matter in appellant s own case is pending before the Hon ble Gujarat High Court, we are of the opinion that the matter needs to be re-considered on the basis of the outcome of the decision of Hon ble Gujarat High Court in the above tax appeal. Matter remanded to original adjudicating authority for passing a fresh order after the outcome of the decision of Hon ble Gujarat High Court - appeal allowed by way of remand. 2022 (4) TMI 787 Maintainability of appeal - non-deposit of the statutory amount under Section 129E of the Customs Act, 1962 - HELD THAT:- It would be seen from a bare perusal of section 129E of the Customs Act that after 6.8.2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 129E on 06.08.204 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in NARAYAN CHANDRA GHOSH VERSUS UCO BANK [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statue confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. The appeal is dismissed. 2022 (4) TMI 786 Classification of imported goods - networking device - to be classified under sub-heading 8517 62 90 or not - antenna - to be classified under 8517 70 90 or not - HELD THAT:- In the present proceedings, the networking device model Nos. D5N87C and D5N87D9 have a function not very dissimilar to the three networking devices already considered. These two devices are also designed for use in conjunction with a Fire TV stick for providing access to audio-video content like movies, series, etc. These network devices are also designed to receive a command/signal in either electrical or radio form, convert the electrical signal into radio frequency signal or vice versa, and transmit the signal to the receiver or the Amazon cloud in the acceptable format. Therefore, there is no reason to depart from my earlier decision that network devices of the type discussed here merit classification under sub-heading 8517 62 90. Antennas - HELD THAT:- The role of antennas in the network explained by the applicant is limited to transmit the commands of the user in the form of RF signals to CP Node via RF cables and to receive the desired content from CP Node and radiate the signals to the Fire TV for viewing by the customer - it is not be able to concur with the suggestion of the Commissioner of Customs, Chennai that antennas merit classification under Heading 8529 since that heading applies to parts suitable for use solely or principally with the apparatus of Heading 8525 to 8528. The networking devices model Nos. D5N87C (rooftop node or RT node) and D5N87D9 (customer premise node or CP node) are classifiable under sub-heading 8517 62 90; and passive antennas, one high gain and one low gain, having model No. HD3T2A are classifiable under sub-heading 8517 70 90 of the First Schedule to the Customs Tariff Act, 1975. 2022 (4) TMI 759 Levy of Anti-Dumping Duty - scope of domestic industry - whether the evaluation of the non-injurious price in terms of the United States Dollar (USD) at the exchange rate as it prevailed in the year 2012 would be acceptable in law or it should be determined in terms of Indian Rupees (INR)? - non-injurious price to be determined in terms of INR and not USD? - Whether producers related to the exporter or importer of the dumped articles are excluded from the definition of Domestic Industry ? - HELD THAT:- The initial definition of domestic industry by providing for an exception that such producers who are related to the exporters or importers of the alleged dumped article or are themselves importers thereof shall be deemed not to form a part of domestic industry , explicitly excludes such producers from being included as a domestic industry and no discretion is vested upon the authority to include such producer. The mandatory nature of the provision for such exclusion flows from the definition itself that such producers can be deemed not to form a part of the domestic industry . In the instant case the amendment incorporated by the Notification No. 44/1999 dated 15.07.1999 in the definition of the expression domestic industry do not indicate any element of obligation on the part of the authority to also include the domestic producers related to the exporters or importers of the dumped article or the importers themselves as a domestic industry . In fact by the amendment the earlier obligation as per the initial definition had been withdrawn. In such situation the only interpretation of the expression domestic industry as provided in the Notification No. 44/1999 dated 15.07.1999 would be that a discretion has been vested upon the authorities to also include such producers who are related to the exporters or importers of the dumped article or the importers themselves to be included within the meaning of domestic industry. In the instant case, by the amendment brought in by the Notification dated 01.12.2011, by omitting the word only , the element of exclusion of the producers related to the exporters or importers of the dumped article or the importers themselves of the dumped article, brought in by the word only in the pre-amended definition of domestic industry, stands removed. In other words, the permissibility to even include producers related to the exporters or importers of the dumped article or the importers themselves of the dumped article, is now being brought in. In the instant case it cannot be understood that inclusion of the word only in the definition of domestic industry as per the notification dated 27.02.2010 had led to an absurdity or anomaly or unless material - intrinsic or external - is available to consider it to be superfluous. The word only gave a definite meaning to exclude the producers related to the exporters or importers of the dumped article or the importers themselves from the purview of domestic industry . A removal of the word only by the amendment contained in the notification dated 01.12.2011 would therefore have to be construed that such removal had withdrawn the effect of exclusion of such producers and therefore, it cannot be understood that a superfluous word had been removed. Thus, it is the considered view of the Court that the amendment brought in to the definition of domestic industry by the notification dated 01.12.2011 in Rule 2(b) of the ADR 1995 do bring in a discretion upon the authorities to include the producers related to the exporters or importers of the dumped article or the importers themselves in the concept of domestic industry . But again because of the nature and implications of the successive amendments, we have to understand that such discretion may not be an absolute discretion but would be a circumstantial discretion to be determined on case to case basis. Whether non-injurious price is to be determined in terms of INR or USD? - HELD THAT:- The concept of non-injurious price is with reference to Rule 17(1)(b) of the ADR 1995 which provides for the designated authority to submit a final finding to the Central Government recommending the amount of duty, which, if levied, would remove the injuries where applicable to the domestic industry. As the non-injurious price would be directly relatable to the ADD that may be levied and the ADD not to exceed the margin of dumping where margin of dumping is the difference between export price and its normal price and where both export price and normal value are ordinarily in terms of USD, therefore, it cannot be but accepted that for the purpose for which the non-injurious price is determined the same would have to be in terms of USD - on a reading of the provisions of Section 9 A(5) of the Act of 1975 which provides that the ADD which may be imposed, unless revoked earlier, shall cease to have its effect on the expiry of 5 years from the date of such imposition, conjointly with the provisions of 9A(1) which provides for imposition of ADD in the event an article is imported to India at a value less than its normal value in the exporting country, makes it discernible that an ADD if levied and not revoked earlier would have its effect for a period of five years. A look at the principles for determination of the non-injurious price makes it discernible that the input parameters for determining the non injurious price in respect of the domestic producers are all calculated and maintained in INR. The output of such exercise by taking into account the input parameters resulting in the non injurious price would therefore also have to be in terms of INR. Once the non injurious price upon undertaking the aforesaid exercise is arrived at, and the same is in INR, whenever the authorities are required to utilize the non injurious price arrived at for the purpose of determining the margin of dumping as well as to arrive at the ADD to be levied, the same can always be done by converting the determination made in INR to USD or the basis of the prevailing rate of exchange - If due to the change in exchange rate, there is also a corresponding change in the absolute value of the non-injurious price in terms of INR as because it had been determined in terms of USD, and the determination of the non-injurious price is based upon input parameters which are in terms of INR as per the principles provided in Annexure-III to the ADR 1995, any such change in the absolute value of the non-injurious price in terms of INR due to change in the exchange rate, would also have the effect of a deemed change in the input parameters for determining the non-injurious price. It would be more appropriate to have the non-injurious price determined in terms of INR by following the procedure and principles for determination provided in Annexure-III to the ADR 1995 and thereupon convert it to USD by applying the rate of exchange prevailing on the date when the non-injurious price so determined is required to be acted upon by the authorities for arriving at the ADD that may be levied. Such a procedure adopted would also be consistent with the provisions of Article 2.4.1 of the GATT-ADA. Application disposed off. 2022 (4) TMI 758 Prosecution against Senior Intelligence Officer of the DRI - requirement of sanction to prosecute the petitioners - evasion of duty - undervaluation - illegal transactions - allegation that petitioners did not deliberately enquired with the supplier - Whether there is necessity to obtain sanction to prosecute the petitioners under Section 197 Cr.P.C.? - HELD THAT:- The Central Government by notification entrusted to the officers mentioned in the notification specific functions like search, seizure and arrest as a functional necessity to prevent the problem of smuggling to combat the inability of the customs department to be present across the length and breadth of the country. Thus, the Central Government considered even Class-IV employees of the Customs Department working in any place in India and all the officers of the DRI as appointed by the Central Government by the above notification. The petitioners being the Senior Intelligence Officer and the Intelligence Officer of Customs appointed as Customs Officers under Section 4(1) of the Customs Act are undoubtedly public servants acting in discharge of their official duties. Hence, sanction of Government is required before prosecuting them for any offences committed by them while discharge of their official duties. Whether the offences alleged against the petitioners can be considered as committed in discharge of their official duties or not? - HELD THAT:- In the present case, the allegations were made against the petitioners about tampering of evidence while they were conducting search at the office premises and at the residence of the 2nd respondent and seizure of certain documents. Thus, the offences were alleged to have been committed by the petitioners while they were performing their official duties of search for evidence and seizure of the documents in discharge of their official duty. Section 197 of the Code of Criminal Procedure if construed too narrowly, it can never be applied, as it is no part of an official s duty to commit an offence and never can be, as observed by the Hon ble Apex Court in SHREEKANTIAH RAMAYYA MUNIPALLI VERSUS THE STATE OF BOMBAY [ 1954 (12) TMI 34 - SUPREME COURT] . No narrow interpretation can be given to Section 197 Cr.P.C., as the acts alleged against the petitioners are reasonably connected in discharge of their official duties. As such, cognizance cannot be taken by the Court without the requisite sanction of the appropriate Government. As such, taking cognizance of the offences by the Court against the petitioners without prior sanction is considered as illegal and void ab initio. The use of the words no and shall under Section 197 Cr.P.C. would make it abundantly clear that the bar on the exercise of power of the court to take cognizance of any offence is absolute and complete and taking of the cognizance is barred under law - Issue is answered in favour of the petitioners holding that the petitioners are public servants and there is necessity of sanction under Section 197 Cr.P.C. to prosecute them for the offences alleged against them from the competent Government by which they were appointed and were not removable from their office. Whether the petitioners were entitled to protection under Section 155 of the Customs Act? - HELD THAT:- Sub-Section (1) of Section 155 of the Customs Act gives a protection to the Central Government or any officer of the Government or a local authority for anything which is done or intended to be done in good faith in pursuance of the Act or the rules or regulations. There is a bar on filing a suit, prosecution or other legal proceedings, if the act is done in good faith - there are no merit in the contention of the learned counsel for the 2nd respondent that the protection was available only when a person was accused of offence under the Customs Act, but not of the offence under IPC. As in the above case, relied upon by the learned counsel for the petitioners also the Customs Officers were alleged to have committed offence under Section 302 IPC by causing death of a person, wherein the Hon ble Apex Court came to the protection of the Customs Officers by saying that the protection under Section 155 of the Customs Act was available to them. As such, point No.2 is also answered in favour of the petitioners. Whether the proceedings in CC No.57 of 2016 are liable to be quashed under Section 482 Cr.P.C.? - HELD THAT:- As the intention behind Section 197 Cr.P.C. as well Section 155 of the Customs Act is to protect the public servants acting in discharge of their official duties from facing harassive, retaliatory, revengeful and frivolous proceedings, the initiation of prosecution against them without sanction from the competent Government would erode their confidence in discharging their duties efficiently. Conducting parallel proceedings against them for the acts done by them in discharge of their official duties and rendering them liable for prosecution would not allow them to discharge their duties fearlessly. As such, it is considered fit to allow the petition quashing the proceedings against the petitioners. The Criminal Petition is allowed. 2022 (4) TMI 757 100% EOU - Clandestine removal - illicit clearance of imported yarn and indigenous Yarn - detection of shortages at the time of the visit of the officers - recovery of Kachha Delivery Challans from the premises of Appellant - presence of corroborative evidences or not - demand based on assumptions and presumptions - HELD THAT:- It is settled law that though the admission is extremely important piece of evidence it cannot be said to be conclusive and it is open to the person who has made the admission to show that this is incorrect. It is also noted that there are numerous decisions of the Tribunal laying down that such admission of shortages without there being any admission of clandestine removal, cannot be considered to be conclusive evidence to establish the guilt of the assessee. Burden of proof is on the Revenue and is required to be discharged effectively. Clandestine removal cannot be presumed merely because there was shortages of the stock or on the basis of statement of person only - Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS LAXMI ENGG. WORKS [ 2001 (8) TMI 162 - CEGAT, NEW DELHI] has held that there being no corroborating evidence in the form of receipt of raw materials or sale of final products to each buyers, the allegations of clandestine removal cannot be upheld. The department apart from the Kachcha Delivery Challan seized from the Appellant s premises and statement of partner and supervisor has not been able to give any independent evidence which can corroborate the charges. No statement of alleged buyers to whom the impugned goods were cleared recorded by the department. The Appellant has placed reliance upon various judgments to canvas their point that in absence of corroborative evidence no demand can be made - it is also found that apart from the alleged shortages, there is virtually no other evidence on record to reflect upon the clandestine activities of the appellant. As per the settled law such shortages, by themselves, cannot lead to the fact of clandestine removals so as to justify confirmation of demands. The entire case of the Revenue is based upon the surmises and conjectures. No concretes positive and tangible evidence appears on record. The evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal. The demand of duty along with interest and imposition of penalties as well as confiscation and imposition of redemption fine on the raw materials and the finished goods are not sustainable. Penalties imposed on partner of Appellant s firm - HELD THAT:- The demand itself is not sustainable against the main Appellant, hence the question of penalties on partner of Appellant s firm does not arise. Appeal allowed - decided in favor of appellant. Corporate Laws 2022 (4) TMI 785 Sanction of Scheme of Amalgamation - Sections 230-232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The objections/observations to the Scheme received from RD, ROC, OL and IT have been adequately replied by the petitioner company and hence there is no impediment in approval of the Scheme. The Scheme (Annexure-F) is approved and the same is declared to be binding on all the shareholders and creditors of the Petitioner Company and on all concerned. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or in respect of any permission/compliances with any other requirement which may be specifically required under any law - the scheme is approved - application allowed. 2022 (4) TMI 784 Seeking approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of all the petitioner companies to the proposed scheme, as well as the objections filed by the regional director, northern region, the official liquidator, and the income tax department and being satisfied in view of affidavit of undertaking filed by the transferor company, there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under section 230 232 of the Companies Act, 2013. The companies however remain bound to comply with the statutory requirements in accordance with law. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme, will not come in the way of action being taken, albeit, in accordance with law, against any of the concerned person, director and officials of the petitioners - In compliance with requirement of section 230(7) of the Companies Act, 2013, the transferee company herein shall until the scheme is fully implemented, file with the Registrar of Companies, the statement in Form No. CAA.8 along with such fees as specified in the Companies (Registration offices and fees) Rules, 2014 within two hundred and ten days from the end of each financial years. The scheme is approved - application allowed. 2022 (4) TMI 783 Sanction of Scheme of Amalgamation - section 230-232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 - HELD THAT:- The Scheme of Amalgamation is sanctioned by this Tribunal to be binding with the appointed date fixed as 01st April 2020 and shall be binding on the Transferor Companies with the Transferee Company and their respective shareholders, Creditors and all concerned. The scheme is sanctioned - application allowed. Insolvency & Bankruptcy 2022 (4) TMI 782 Provisional Attachment - general principle for construction - Prohibition of Benami Property Transaction Act, 1988 - Section 32A of I B Code - HELD THAT:- The Corporate Debtor was ordered for Liquidation vide Order dated 14.02.2019 by this Adjudicating Authority. It is seen from the Orders of the Respondents that the Provisional attachments were made on 01.11.2019. At this juncture it is pertinent to note that the period of moratorium starts with the initiation of the CIRP and ends in two circumstances: either on the commencement of Liquidation or upon the approval of a resolution plan - In the present case, the Liquidation period has commenced before the date of in which the provisional attachment was made which indicates that the Respondents herein had not acted in violation of the moratorium. Further, the question of violation of Section 32A does not arise at all as there is no sale of property of the Corporate Debtor consequent to any Resolution Plan. As there is nothing to stop the Applicant/Liquidator herein to proceed under the relevant provision to revive the provisional attachment. And that, this Adjudicating Authority having not found any conflict between the two statutes as there is no bar in selling the property of the Corporate Debtor solely on the ground that the Corporate Debtor is under Liquidation. And that the Liquidator is also not barred by the code to add the said property into the liquidation estate. The applicant/Liquidator herein is open to approach the appropriate forum to raise the attachment or any other relief as per the provisions of the said act. Application dismissed. 2022 (4) TMI 781 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- In view of settlement proposal of the Corporate Debtor, by its group companies dated 16.05.2019, the limitation stands extended in view of the acknowledgement in writing under Section 18 of the Limitation Act - the application which seeks condonation of delay of 1450 days is disposed of and that there is a clear acknowledgement of debt, which extends the limitation period from 16.05.2019 and therefore the contention that the Petition is barred by limitation is untenable. In view of the aforesaid, the petition is admitted. The nature of Debt is a Financial Debt as defined under section 5(8) of the Code. It has also been established that there is a Default as defined under section 3(12) of the Code on the part of the Debtor. The two essential qualifications, i.e., existence of debt and default , for admission of a petition under section 7 of the I B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation - it is found that the Petitioner has not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves Admission . Petition admitted - moratorium declared. 2022 (4) TMI 780 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- It is noted that the Operational Creditor supplied the goods to the Corporate Debtor and raised the various invoices during the period from 11.02.2020 to 03.03.2020 for the amount of Rs. 2,43,95,183.17/- and from 24.05.2021 to 07.11.2021 for the amount of Rs. 62,41,832/-. The aforesaid invoices do not fall within the amended provision of Section 10A of the IBC, 2016 as all the invoices were raised by the Operational Creditor prior to and after the effect of the aforesaid section. It is also noted that the Corporate Debtor has acknowledged the debt on 31.10.2021 and also proposed to pay the outstanding amount in a phased manner wherein the first installment of the commitment was to be paid by the Corporate Debtor on 09.11.2021 which was not paid by the Corporate Debtor. The Demand Notice was issued to the Corporate Debtor on 17.11.2021 which was delivered on 22.11.2021 but the Corporate Debtor neither paid the outstanding amount nor raised any dispute/replied to the said demand notice. The Corporate Debtor also admitted the default amount in its reply to the instant application dated 09.02.2022. It is also noted that the present application is well within the limitation and also meets the threshold limit as given in Section 4 of the IBC, 2016. The present application is otherwise complete and defect-free - Application allowed. 2022 (4) TMI 779 Liquidation of the Corporate Debtor Company - sub-section 1 of section 33 of I B Code - HELD THAT:- On reading the Application and the documents enclosed therein, it is clear that, the RP has complied with the procedure laid under the Code read with Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations), and thus this case is fit to pass liquidation order under sub-section 1 of section 33 of the Code as no resolution plan has been submitted before the Adjudicating Authority by the Resolution Professional. Application allowed. 2022 (4) TMI 778 Seeking dissolution of the Applicant Company - Section 59 of the Insolvency Bankruptcy Code (described in short as IBC), 2016, read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT:- The Application is duly supported by the affidavit of the Liquidator. The Liquidator has distributed all the proceeds to the shareholders and has closed the Account. Further, in terms of Regulation 38 of the IBBI Regulations, the liquidator has submitted the Final Report to the IBBI ROC through email on 15.10.2021. In view of the satisfaction accorded by the Liquidator by way of the present Petition, duly accompanied by his affidavit, the said Applicant Company is hereby dissolved with effect from the date of the present order. Application allowed. 2022 (4) TMI 777 Approval of Resolution Plan - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- While the matter came up on 26.11.2021, both the parties were directed to sit together and decide the dues and settle the matter in accordance with the provisions of IBC. The Applicant was also directed to pay the amount of dues so arrived at without further loss of time. The Respondents were also directed to find out the left over amount of dues and to intimate the same to the Petitioner. In pursuance of the directions of this Bench vide orders dated 30.09.2021 and 26.11.2021, the Applicant paid an amount totalling to Rs. 20,10,817.75/- to the Respondents computed after 20.09.2018 against the demand notices issued by the Respondents in respect of the 14 tea gardens and Rs. 2,20,661.25.00 remain to be adjusted against excess payment made in respect of certain tea gardens. The settlement made in respect of the gardens post approval of the resolution plan has been enclosed in the affidavit of compliance at page 14 and the supplementary affidavit submitted by the Applicant at page 4 to 9. Since the Respondents have not filed any claims for the period from 1986-87 except 2012-14 and 2014-15 before the Resolution Professional/before the approval of the Resolution Plan, the left over claims of the Respondents from 1986-87 till the approval of the Resolution Plan, if it has been filed now or to be filed in the future, is not to be entertained by the Resolution Applicant/Corporate Debtor. The demand of the Respondent, prior to the date of approval of the Resolution Plan by this Bench, is hereby extinguished. Application disposed off. 2022 (4) TMI 776 Seeking for extension of 120 days for payment of balance amount on the date of approval of the Plan - HELD THAT:- In spite of availing substantial time, the Applicant again filed the instant I.A. seeking further time of one month to pay the balance amount of Rs. 12.78 Crores along with additional amount of Rs. 15 lakh from the date of disposal of the instant I.A. In view of the intervening Covid-19 difficulties after the approval of the Plan, the Instant I.A. is allowed to the limited extent of granting one month from today to the Resolution Applicant to implement the Resolution Plan and also to pay the additional amounts as agreed by it in the previous order dated 06.08.2021 and also the latest letter of the State Bank of India dated 18.01.2022. Application disposed off. PMLA 2022 (4) TMI 775 Seeking grant of regular bail - bail is sought on medical grounds - stand of Revenue is that there is a possibility that the petitioner may flee from the country, as he has been granted the permission to travel abroad - HELD THAT:- After hearing learned counsel for the parties and going through the medical record of the petitioner, which is based on a report of Medical Board comprising of seven doctors, constituted by Civil Surgeon, Ambala, it is found that case of the petitioner would be covered under proviso to Section 45(i) of PMLA as he is a sick person requiring urgent medical treatment, especially in view of the fact that while in custody for a period of about 03 months, he was repeatedly advised medical care, as noticed in earlier part of this order. Petition allowed. Service Tax 2022 (4) TMI 774 CENVAT Credit - duty paying invoices - adherence to the provisions of Section 68[2] of the Finance Act, 1994 amended from time to time or not - photocopies of the invoices - eligible documents to allow credit or not - Rule 9 of the CENVAT Credit Rules, 2004 - Double taxation - HELD THAT:- Whatever the ratio, the tax in its entirety has reached the hands of the ex-chequer. Merely for the reason that there was no strict adherence to the ratio as envisaged during the relevant point of time for payment of tax insofar as the assessee and the service provider, the assessee cannot be made liable to pay the double tax. What is significant to note is that the discharge of entire tax amount is not disputed. Thus, the reverse charge mechanism would not lead to double taxation. Issue of photocopies of the invoices based on which no CENVAT Credit was allowed - HELD THAT:- It is pertinent to note that the learned Single Judge has remanded the matter for fresh consideration mainly on the ground that the assessee is ready and willing to produce the original invoices. Hence, adjudicating upon the issue of award of CENVAT Credit on the basis of the Photostat copies of the documents would become academic. In the present set of facts, without dwelling upon the said issue, more particularly, in view of the assessee being ready and willing to produce the original invoices, this case is disposed off confirming the order of remand. The Writ Appeal stands disposed of directing the Settlement Commission to re-consider the matter afresh - Appeal allowed by way of remand. 2022 (4) TMI 773 Levy of Service Tax - liquidated damages received by the appellants from the other parties who failed to perform as per the contracts - HELD THAT:- This issue was not specifically dealt in the final order dated 14 January 2021 in respect of the appellant. However, this matter was dealt with in several cases by the Tribunal, such as, M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] where it was held that In the present case, the agreements do not specify what precise obligation has been cast upon the appellant to refrain from an act or tolerate an act or a situation. It is no doubt true that the contracts may provide for penal clauses for breach of the terms of the contract but, as noted above, there is a marked distinction between conditions to a contract and considerations for a contract . Southeastern Coalfields was followed in several other decisions by this Tribunal In short, the view constantly held by this Tribunal is that there is a distinction between a consideration under a contract and the compensation for failure to fulfill the contract. While the consideration is something done by one party at the desire of the other party. Compensation or damages are paid when one party fails to perform - Consideration is the result of the performance of the contract. Compensation/damages are the result of frustration of contract or not performing the contract as per the conditions laid down in it. Compensation can be of two forms - HELD THAT:- If the suffering party sues the other in a court and damages are award by the court such damages are un-liquidated damages. The quantum of damages is decided by the court taking into account the facts and circumstances of the case and the damage suffered. Liquidated damages are those damages and which are built into the contract itself. They provide that the defaulting party shall pay to the other a certain amount in case of default. The purpose of the liquidated damages in a contract is to dissuade the parties from reneging from the contract - What is chargeable to service tax is where the tolerance itself is the purpose of the contract. Liquidated damages are a compensation for failure of the defaulting party to perform as per the contract. Therefore, no service tax can be levied on liquidated damages received under any contract. The demand of service tax on late payment surcharge meter renting charges and supervision charges are set aside. The demand of service tax on works contract service and lease rent is upheld and the same stands already deposited by the appellant. The penalties for the extent of service tax on works contract service and lease rent is upheld and the remaining penalties are set aside - Appeal disposed off. 2022 (4) TMI 772 Refund of service tax - taking industrial lands on long term lease from Kerala Industrial Infrastructure Development Corporation (KINFRA) by paying an upfront amount on long term lease - insertion of Section 104 into Chapter V of the Finance Act, 1994 with retrospective effect - HELD THAT:- The issue involved has been answered in favour of the taxpayer by this Bench in the case of COMFORT NIGHT LINEN PRODUCTS AND PROCESS INSTRUMENTATION AND ENGINEERS VERSUS COMMISSIONER OF CENTRAL TAX CENTRAL EXCISE, CALICUT [ 2021 (8) TMI 169 - CESTAT BANGALORE] where it was held that I find that these bills/invoices issued by KINFRA clearly show the payment of service tax by the appellant to KINFRA and KINFRA in turn has paid the same to the Government. Though these invoices/bills were not produced before the Original Authority but various Challans issued by KINFRA were produced along with worksheets showing the payment of service tax to KINFRA by the appellants. The assertions of both the parties are correct, inasmuch, as the issue involved in these appeals has been answered by this Bench for which reason, the impugned orders cannot be sustained - Appeal allowed - decided in favor of appellant. Central Excise 2022 (4) TMI 771 Levy of penalty u/r 26 of CER - separate penalties on partnership firm and the partners of the firm - Clandestine removal - non-issuance of invoices - payments received in cash - HELD THAT:- Both the adjudicating authority has considered the entire records and evidences as is against the appellant and imposed the penalty. There is confessional statement of Appellant, the entire clandestine activity was also supported by the transactions recorded in records which were recovered from appellant. Further the Manufacturer, M/s Shree Ram Ispat also not disputed the demand of central excise duty involving the role of appellant in this matter. The penalty provisions were correctly invoked to impose penalty on him. There are no reason to set aside such a reasoned orders for the imposition of penalty. However, the appellant being an individual considering the overall facts of this case, the penalty imposed on the appellant is reduced to Rs. 50,000/-. Penalty on Partner - HELD THAT:- The Ld. Adjudicating authority in impugned order-in-appeal described the role of Appellant and had observed that the Appellant was engaged in clandestine removals of the goods as partner of M/s Shree Ram Ispat and facts of this case very clearly establish that he was the key person and was responsible for clandestine removal of the goods manufactured by M/s Shree Ram Ispat. He, as a partner, was looking after day-to-day affairs of M/s Shree Ram Ispat and had concerned himself in various irregular activities related to excisable goods including manufacture, storage, removal etc of such goods - the Adjudicating authority had given the detailed finding on the role of the partner. However, considering the overall facts of this case penalty imposed on the Appellant is reduced to Rs. 50,000/-. Appeal allowed in part. CST, VAT & Sales Tax 2022 (4) TMI 770 Violation of principles of natural justice - inter-state sales against C Form - assessment of central tax on the export sale - recovery of false and fabricating evidences - levy of tax emerging out of the assessment - HELD THAT:- The first appellate authority was directed by the Tribunal to hear the appeals a fresh on merits and the recovery proceedings were also ordered to be stayed till the final disposal of the first appeals. All the aspects which the Tribunal took into consideration, are the very same aspects even so far as the assessment for the F. Y. 2015-16 is concerned - It appears that the Joint State Tax Commissioner, Ahmedabad has accepted the case of the writ applicant based on Form C produced by the writ applicant, thus treating the transactions as interstate transactions not taxable under the State Act. With respect to the assessment for the F. Y. 2015-16, the appeals filed by the writ applicant herein before the first appellate authority should be heard on their own merits. In fact, both the appeals can be heard together on their own merits i.e. for the F. Y. 2014-15 as well as for the F. Y. 2015-16 - Application allowed. 2022 (4) TMI 769 Revision of assessment order - withholding of refund - seeking release of refund - assessment year 2013-14 - Haryana VAT Act, 2003 - HELD THAT:- Section 20(5) of 2003 Act mandates that any amount refundable to any person as a result of an order passed by any Court, appellate authority or revising authority, shall be refunded to him on an application made in the prescribed manner. Section 21 prescribes the power to withhold refund to which an assessee claims himself to be entitled under Section 20. Section 21 clothes the competent authority with the power to withhold the refunds. However the same can be exercised only where an order giving rise to refund is subject matter of further proceedings and the taxing authority interested in the success of such proceedings is of the opinion that the grant of refund is likely to adversely affect the recovery in the event of success of such proceedings. Admittedly, in the present case, reference to the Commissioner for withholding the refund was made on 28.08.2019. On 28.08.2019, order passed by Tribunal i.e. the order giving rise to a refund was not subject matter of any further proceedings. So far as according of approval to withhold the refund by Commissioner on file is concerned, the same is inconsequential. From analysis of Section 21, one would infer that it confers power on Commissioner to pass an order withholding refund or allowing the refund on furnishing of security on satisfaction of the conditions enumerated under Section 21(2). Legislature was conscious of the fact that the power conferred to withhold refund in Section 21 is akin to exercising power to stay the money decree and thus, an option was given that the refund can be directed to be made on furnishing of security as the objective is to affect the recovery only. It goes without saying that any order passed to withhold the refund is prejudicial to the interest of assessee. Noting on file cannot be a substitute to an order required to be passed under the provisions of Section 21. Further impugned order Annexure P-10 is bereft of any reasoning. It is trite that mere reproduction of the words of statute cannot be construed as substitute for the reasons that an authority exercising statutory power is required to record. The impugned order is unsustainable - authorities are directed to issue refunds to the petitioner as per law within a period of one month from the date of receipt of certified copy of this order - petition allowed. Indian Laws 2022 (4) TMI 768 Mainatianbility of suit - summons and notices returned unclaimed - additional opportunity granted to the defendants to defend the suit or not - HELD THAT:- The summons/notices issued by the learned Trial Court were returned unclaimed as the same were sent at the address at Chennai and the house was closed as the appellants herein original defendants were staying in USA and thereafter the said house was sold and so as to give one additional opportunity to the defendants to defend the suit and as by now entire decretal amount is deposited by the appellants to show their bonafides and therefore the amount alleged to have been due and payable to the Bank is secured, we are of the opinion that if the appellants are given one additional opportunity to defend the suit it will be in the fitness of things and meet the ends of justice. The amount already deposited by the appellants herein (50% of the amount pursuant to the order passed by the High Court and the balance 50% of the decretal amount pursuant to the order passed by this Court) is concerned, it will be open for the respondent Bank original plaintiff to withdraw the same and keep it in an interest bearing fixed deposit which shall be dealt with subject to the ultimate outcome of the suit. Appeal allowed. 2022 (4) TMI 767 Dishonor of Cheque - legally enforceable debt or liability or not - cross-examination of witnesses - rebuttal of presumption - Section 138 of the N.I. Act - HELD THAT:- The offence under Section 138 of the N.I. Act is an offence in the personal nature of the complainant and since it is within the special knowledge of the accused as to why he is not to face trial under section 138 N.I. Act, he alone has to take the plea of defense and the burden cannot be shifted to complainant. There is no presumption that even if an accused fails to bring out his defense, he is still to be considered innocent. If an accused has a defense against dishonor of the cheque in question, it is he alone who knows the defense and responsibility of spelling out this defense to the Court and then proving this defense is on the accused. In view of the procedure prescribed under the Cr.P.C, if the accused appears after service of summons, the learned Metropolitan Magistrate shall ask him to furnish bail bond to ensure his appearance during trial and ask him to take notice under Section 251 Cr.P.C and enter his plea of defence and fix the case for defence evidence, unless an application is made under Section 145(2) of N.I. Act for recalling a witness for cross-examination on by an accused of defence - Once the summoning orders in all these cases have been issued, it is now the obligation of the accused to take notice under Section 251 of Cr.P.C., if not already taken, and enter his/her plea of defence before the concerned Metropolitan Magistrate s Court and make an application, if they want to recall any witness. If they intend to prove their defence without recalling any complainant witness or any other witnesses, they should do so before the Court of Metropolitan Magistrate. In the instant case the respondent no. 2/complainant in his complaint under Section 138 and 142 of N.I. Act has made specific averments that the Accused No.1 is a Partnership Firm and through its proprietor approached the Complainant for providing shuttering material and requested the complainant to supply the said materials to the Accused. The Accused in order to partly liquidate the outstanding amount and towards the legally enforceable debt, which has been due and payable to the complainant, issued a cheque, which was dishonored. Jurisdiction - HELD THAT:- The Court, in exercise of its jurisdiction under Section 482 Cr.P.C. cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed question of facts. The issues involving facts raised by the petitioner by way of defence can be canvassed only by way of evidence before the Trial Court and the same will have to be adjudicated on merits of the case and not by way of invoking jurisdiction under Section 482 Cr.P.C. at this stage - Upon analyzing the provisions of the N.I. Act, it is clear that Section 138 of the Act spells out the ingredients of the offence as well as the conditions required to be fulfilled before initiating the prosecution. These ingredients and conditions are to be satisfied mainly on the basis of documentary evidence, keeping in mind the presumptions under Sections 118 and 139 of the N.I. Act and Section 27 of the General Clauses Act, 1897 as well as the provisions of Section 146 of the Act. The parameters of the jurisdiction of the High Court in exercising jurisdiction under Section 482 Cr.P.C, are now almost well-settled. Although it has wide amplitude, but a great deal of caution is also required in its exercise. The requirement is the application of well-known legal principles involved in each and every matter Adverting back the facts of the present case, this Court does not find any material on record which can be stated to be of sterling and impeccable quality warranting invocation of the jurisdiction of this Court under Section 482 Cr.P.C. at this stage - More so, the defence raised the petitioners in the petition requires evidence, which cannot be appreciated, evaluated or adjudged in the proceedings under Section 482 of Cr.P.C. and the same can only be proved in the Court of law. There are no flaw or infirmity in the proceedings pending before the Trial Court. However, the Trial Court shall certainly consider and deal with the contentions and the defense of the petitioner in accordance with law - petition dismissed. 2022 (4) TMI 766 Dishonor of Cheque - insufficiency of funds - vicarious liability of directors - requirements of Section 141 of the N.I. Act met or not - HELD THAT:- In the first place, the Registration Kit Loan Against Shares placed on the record as Annexure R-2, lists out the Full Time Directors of the Company at page 12 of the e-file and the petitioner has been named as one such Full Time Director. Had he resigned before the execution of the said document, why would his name be included? If the petitioner has an explanation, he can offer it but only at his turn, during trial. The document, it may be noted once again, is signed on 25th June, 2007. It includes details of the petitioner s documents. His shareholding has also been disclosed i.e. that the petitioner is holding 300 shares. It would be for him to prove during trial that such a shareholding did not allow him to conduct the business of the Company or that despite being a Full Time Director, he had no say in the conduct of the Company s business. It is addressed to the Board of Directors. It only bears an endorsement of receipt by some undisclosed person. There is nothing to show that the resignation has been accepted. No Board Resolution has been annexed nor has a certified copy of Form 32 filed with the Registrar of the Companies been placed on the record. Thus, prima-facie without proof that such a letter had been written on the date stated on the letter and in the absence of evidence of statutory compliance for the acceptance of the resignation and change in the constitution of the Board of Directors, no credibility can be attached to this so-called letter of resignation to exonerate the petitioner from criminal liability. Petition dismissed. 2022 (4) TMI 765 Seeking grant of regular bail - Smuggling - Indian Currency - Methylenedioxphenyl - Propanone - validity of statement under Section 67 of the NDPS Act - HELD THAT:- As far as the question that the petitioner has been in incarceration for the last 7 years and the trial is still yet continuing, this can be one of the ground for consideration of the bail application but the same is not so in the case of the petitioner, specifically when it has been categorically stated by the respondent-DRI that the petitioner is a habitual offender and while on bail he has been booked in two cases of NDPS Act. This conduct of the petitioner does not entitle him to be released on bail simply because he has been incarcerated for a long period. The reasons given by the petitioner for claiming grant of bail become insignificant on account of huge recovery mentioned hereinabove and the two involvements of the petitioner in the same offence under NDPS Act while he was on bail. At this stage of the case, all that could be seen is whether the statement made on behalf of the prosecution witnesses, if believable, would result in conviction of the petitioner or not. But at this juncture one cannot say that the petitioner/accused is not guilty of the offence if the allegations made in the charge are established - In cases where narcotics drugs and psychotropic substances are involved, the accused would indulge in activities which are lethal to the society and in the instant case, the petitioner has already indulged in two other cases while on bail. The other contention raised by the counsel for the petitioner that the prosecution has not been able to connect the tenanted premises with the petitioner or the panchnama are forged and fabricated, therefore the witnesses of the panchnama are not truthful, these are all matters to be looked into at the time of trial and this is not the stage to analyze the testimony of the witnesses in depth as desired by the counsel for the petitioner, otherwise the same would prejudice the case of either of the parties. There are no grounds for bail - bail application dismissed. 2022 (4) TMI 764 Dishonor of Cheque - scope of the term Taking cognizance - breach of contract - issuance of summon upon accused person - dispute between the parties is purely civil in nature or not - sections 406/409/120B of the Indian Penal Code - section 138 of NI Act - HELD THAT:- The entire order which forms the very basis of issuing summon upon the accused persons, including the present petitioner, has been acted in a mechanical way on a printed order where the magistrate had put only the next date and put his signature beneath the order. This is a glaring example to show that a responsible officer like judicial magistrate is putting signature on a printed order without even knowing what is written in the order. There is no whisper in the entire complaint put by OP-2 that the complaint relates to any dishonour of cheque to attract section 138 of the Negotiable Instrument Act 1881(N.I. Act). Without going through the contents of the complaint Magistrate found prima facie case under section 138 of N.I. Act. From the sum and substance of the complaint it appears that complainant had tried to make out in his complain No.C-16913/11, a case under section 406/409/120B of the Indian Penal Code and not a single word has been used in the entire complaint in connection with dishonour of any cheque, so that it can attract section 138 of N.I. Act. It is by now well-settled that although the word cognizance has not been described in the Code of Criminal Procedure but under section 190 of the Code of Criminal Procedure, cognizance of offence by magistrate said to have taken when the magistrate takes notice of the acquisition and applies his mind to the allegations made in the complaint and on being satisfied that the allegations, if proved would constitute an offence, only then he decides to initiate the judicial proceeding against the offender by issuing summon. Taking cognizance of an offence is not a mere formality. Before taking cognizance magistrate is to apply his judicial mind to see, if on the fact alleged there is prima facie case to issue process. Taking cognizance is mental act as well as judicial act. Taking cognizance though requires great exercise of judicial mind and is not a mechanical process but it appears in the present case that the magistrate concerned has understood the term taking cognizance as delivery system in the post office without application of mind. Unfortunately this is never the intention of the legislature, as is evident from the provision of section 190(a) of Code of Criminal Procedure which shows learned magistrate can proceed on curtain direction upon receiving the petition of complaint of facts which constitute such offence. Magistrate never considered whether the allegations levelled in the complaint constitutes offence under section 138 of N.I. Act and whether prima facie case persists which is pre-eminently required and the same cannot be surrogated to a mechanical process. Revision application allowed. 2022 (4) TMI 763 Dishonor of Cheque - existence of enforceable debt or not - acquittal of the accused - corroborative evidences or not - signature of the cheque is denied or not - Section 139 of the Negotiable Instrument Act, 1881 - HELD THAT:- The oral evidence can be manufactured and that is why if a transaction is created in writing, then, the written document must be produced. The fact is also noted that the respondent no. 2, being the accused, supported the version of the complainant that he had given a written declaration on a stamp paper, but, it was only for borrowing a loan of Rs. 50,000/- and not for borrowing Rs. 2 lakh as according to respondent no. 2 he had never taken such loan from the complainant. The learned trial Judge has suspected the case of the complainant on the ground that the complainant has failed to adduce any evidence that he had any transaction with the respondent no. 2 after 2012. Learned trial court also held that the complainant has failed to establish that he had enforceable debt to the respondent no. 2. The learned trial court also disbelieved the case of the complainant on the ground that the complainant has suppressed the written declaration without any explanation, which was the best evidence to substantiate the exact date and time as well as the quantum of loan, the respondent no. 2 had borrowed from the complainant. There are no wrong with the findings of the learned trial court as to why the complainant had suppressed the said written declaration when it could have been the best evidence to substantiate his allegation that the respondent no. 2 had borrowed Rs. 2 lakh from him in the year 2018. That apart, the respondent no. 2 has categorically stated that he repaid Rs. 50,000/- to the complainant which was also corroborated by DW-2, Rupak Debnath, and further evident from the money receipt - the view taken by the learned trial court is a possible and probable view. As such, the view of the learned trial court should not be disturbed, particularly, when it is a case of acquittal when the presumption of innocence in favour of the accused gets further re-inforced or fortified. Appeal dismissed. 2022 (4) TMI 762 Dishonor of Cheque - legally enforceable debt or not - disputed cheques were given by way of security in the year 2016 or not - HELD THAT:- From the record, it is clear that there was a transaction between the parties and the complainant had given the aforesaid amount, for which, it was agreed that the accused will pay interest at the rate of 12% p.a. Thus in the facts of the present case, it cannot be said that the disputed cheques have been issued for the debt, which is not legally enforceable as contended by learned advocate for the applicants. It is pertinent to note that the complainant had not given amount of Rs. 34,50,000/- for a specific period - the complainant has specifically averred in the impugned complaint that the applicant nos.2 and 3 have agreed that they will pay interest at the rate of 12% p.a. regularly and as and when the complainant requires the said amount, the said amount will be returned immediately by the accused persons. In the impugned complaint, specific averments and allegations are leveled against the applicant nos.2 and 3, who are partners of the applicant no.1 partnership firm. It is not in dispute that the disputed cheques have been issued by the partnership firm and as per the provision contained in Section 141 of the NI Act, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of the business of the firm, shall be deemed to be guilty of the offence and shall be liable to be proceeded against under the provision of Section 138 of the NI Act. This Court is not inclined to exercise the powers under Section 482 of the Code in favour of the present applicants - Application dismissed. 2022 (4) TMI 761 Maintainability of petition - availability of alternative remedy of appeal - power of judicial review - refund claim alongwith interest - violation of principles of natural justice - HELD THAT:- Preferring an appeal is the rule. Entertaining a Writ Petition before exhausting the appellate remedy is an exception. Undoubtedly, writ proceedings may be entertained before exhausting the appellate remedy. However, it is to be ensured that there is an imminent threat or gross injustice warranting urgent relief to be granted. Mere violation of principles of natural justice is insufficient to entertain a writ proceedings under Article 226 of the Constitution of India, as every Writ Petition is filed based on one or the other ground stating that the principles of natural justice is violated or statutory requirements are not complied with or there is an illegality or otherwise. Thus, dispensing with an appellate remedy is to be granted cautiously in view of the fact that the very purpose and object of legislation providing an appellate remedy cannot be diluted nor the benefit be denied to the aggrieved person to exhaust the same. The power of judicial review of the High Court under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority by following the procedures as contemplated, but not the decision itself. Therefore, the routine entertainment of a Writ Petition by dispensing with appellate remedy is not preferable and such an exercise would cause injury to the institutional hierarchy and the importance attached to such appellate institutions - the finding of such appellate forums would be a valuable assistance for the purpose of exercise of judicial review by the High Court under Article 226 of the Constitution of India. The High Court cannot conduct a roving enquiry with reference to the facts and circumstances based on the documents and evidences. Based on the mere affidavits filed by the litigants, the disputed facts cannot be concluded. Thus, the importance of fact finding by the appellate forums is of more value for the purpose of providing complete justice to the parties approaching the Court of law. The point of delay may be an acceptable ground for the purpose of entertaining a Writ Petition. The practise of filing the Writ Petition without exhausting the statutory remedies are in ascending mode and such Writ Petitions are filed with a view to avoid pre-deposits to be made in statutory appeals and on the ground that the appellate remedies are time consuming. The petitioner is at liberty to prefer an appeal before the competent authority within a period of four weeks from the date of receipt of a copy of this order in a prescribed format and in the event of receiving any such appeal, the Appellate authority shall consider the same without reference to the delay in filing and dispose of the appeal on merits and in accordance with law and by affording opportunity to the writ petitioner - Petition disposed off. 2022 (4) TMI 756 Dishonor of Cheque - insufficiency of funds - default in payment of the cheque amount - case is filed after completing of 30 days - applicability of section 138 of Limitation Act - HELD THAT:- In case of M/S. SAKETH INDIA LIMITED AND OTHERS VERSUS M/S. INDIA SECURITIES LIMITED [ 1999 (3) TMI 591 - SUPREME COURT] , the Apex Court has observed that where a period is fixed within which a criminal prosecution or a civil action may be commenced, the day on which the offence is committed or the cause of action arises is excluded in the computation. So, also, where a statute provides that something may only be done within a certain period from the passing of the Act, the day on which the Act was passed is excluded. There are no infirmity in the findings arrived at by both the Courts below. Since the petitioner herein has failed to make out his case before the Courts below, this Court has no hesitation to say that in the revision, appreciation of the factual issues are not permissible. The instant revision petition stands dismissed.
← Older Newer →

Quick Updates:

What's New:
Latest Case Laws

What's New:
Latest Notifications

What's New:
Latest Circulars

F: Taxpayer Faces Portal Issues When Correcting Payment Mapping Error Bet...

T: Total Income Calculation Must Include Exempt Income Under Chapter XVII...

T: Tax Bill Requires Dual Explanations for Unexplained Credits and Loans ...

T: Members' Share Calculation in AOP/BOI Income: Deducting Remuneration, ...

T: Tax Liability When Your Income Is Included in Another Person's Total I...

F: Exports to Nepal and Bhutan Qualify for Duty Drawback Regardless of Pa...

F: Director's Foreign Cab Services for Client Meetings Subject to GST Und...

A: TDS Rate on Rent Payments Under Section 194IB Reduced from 5% to 2% Ef...

A: Mandatory ISD Registration Now Required for Head Offices Distributing ...

A: Finance Act 2025 Brings GST Amendments: Input Distribution, Multi-Fact...

A: Avoiding Common Errors in Company Law Document Filing: Deadlines, Accu...

A: Income Tax Exemption: How 12A Registration Works for Non-Profits and W...

A: Dedicated Freight Container Corridors Transform Logistics with Speed, ...

A: India's Path to Becoming the Third-Largest Economy Requires Sustained ...

A: India's "Perfume Capital" Kanauj Balances Traditional Attar Craftsmans...

A: Essential Strategies for Managing Export Business Risks: From Market D...

A: Inefficient Waste Management and Weak Enforcement of SWM Rules 2016 Fu...

A: Comprehensive Solutions to Landfill Crisis: From Circular Economy to A...

A: Implementing Eco-Friendly Elections: Eliminating Physical Campaign Mat...

A: India's Export Opportunities: Selecting Profitable Products in Textile...

A: Gold Ornaments Seizure Case Dismissed After 15-Year Customs Delay With...

H: Input Tax Credit Not Available for Share Buyback Expenditure Under GST...

H: Gujarat Maritime Board Dredging Services Not Eligible for Exemption Un...

H: GST Demand Against Deceased Invalid Without Show Cause Notice to Legal...

H: Condonation of Delay in GST Returns Filing Beyond 30-Day Period Under ...

H: No GST Payable on Gas Lost During Transit, But Input Tax Credit Must B...

H: Investment Firm Cannot Claim Input Tax Credit on Mutual Fund Transacti...

H: Free Scraping Tool with Apsara Oil Pastels Constitutes Mixed Supply Un...

H: Section 34 Application Filed on Next Court Working Day After Holiday P...

H: GST Officer Appointed Under Karnataka GST Act Qualifies as Proper Offi...

↑Top

Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter April 19, 2022

Articles

1. Prejudices and mechanical style of working continue – while issuing notices us 148 A, Enquiry and order us 148A and then notice us 148- as per recent experience new provisions are not likely to serve purposes and roving enquiry will continue in name of reassessment.

News

2. India's sugar exports grow by 291% since 2013-14

3. MCA registers highest ever 1.67 lakh companies in FY 2021-22

4. WPI based rate of inflation for March at 14.55%

5. Union Finance Minister Smt. Nirmala Sitharaman to embark late tonight on official visit to USA to attend Spring Meetings of the IMF-World Bank

Notifications

1. 31/2022 - dated 18-4-2022 - IT

Highlights / Catch Notes

GST

Circular No.37/2018-Cus doesn't legally support denying export incentives; IGST refund manual rectification by officers is prohibited.

Court Clarifies Tax Intimation Process Under GST Act Section 74: Use Form GST DRC-01A, No Coercive Language Allowed.

Court Orders Immediate IGST Refund for Firm's Zero Rated Supplies u/s 16; Exported Goods Qualify for Mercantile Scheme.

Sewage Treatment Plant Water Exempt from GST as "Purified" Clause Excludes STP Treated Water.

Government Earthwork Contract Exceeds 75% Value, Defined u/s 2(119) of CGST Act, 2017, Notification 11/2017-CTR.

Contract Breach Penalties Taxable Under CGST and SGST as Price Adjustments to Main Supply.

Import Sales from Port: Registration Needed for Direct Sales Across Indian States per Entry 8, Schedule III, CGST Act 2017.

Farmers' Fair Trade Premium Subject to GST; Considered Part of Taxable Supply's Value and Consideration.

High Court Orders Release of Detained Cement Truck After 25% Penalty Payment for Invoice Address Violations.

Income Tax

Court Rules Asset Costs Must Include Subsidy Adjustments u/s 43(1) for Accurate Depreciation Calculations.

Court Rules Orders u/s 92CA(3) of Income Tax Act Barred by Limitation; Deadline Clarified as October 31, 2019.

Section 153A: Can Seized Material Infer Similar Transactions Over Six Years? Revisiting Pre-Chapter XIV-B Practices.

Court Clarifies: Assessments u/s 153A Can Be Reopened u/s 147 of the Income Tax Act.

Assessment Reopened u/s 147 Based Solely on DVO Report Lacks Additional Evidence of Income Escaping Assessment.

Section 56(2)(vii)(c) of Income Tax Act: No Extra Tax on Shares Allotted Below Market Rate to Specific Shareholder.

Tax Tribunal Upholds CIT(A) Decision: Section 40A(3) Disallowance Not Applicable for Cash Payments Below Threshold Limit.

Tax Deduction Required for Year-End Commission to Non-Residents; Case Sent Back for Review u/s 195.

Customs

Anti-Dumping Duties: Impact of Exchange Rate Changes on Non-Injurious Price in INR per Annexure-III of ADR 1995.

Court Quashes Proceedings Against DRI Officer for Duty Evasion Allegations; Requires Government Sanction u/s 197 CrPC.

Court Rules Shortages Alone Insufficient for Penalties in EOU Yarn Case; No Substantial Evidence of Clandestine Activities Found.

Court Directs Petitioners to Correct Shipping Bills with Customs Before DGFT Can Review MEIS Scheme Issue.

Appeal Dismissed for Non-Deposit of Statutory Amount u/s 129E, Customs Act; No Waiver Allowed Since 2014.

Imported Networking Devices and Antennas Classified Under Customs Tariff Act Sub-headings 8517 62 90 and 8517 70 90.

Indian Laws

Magistrate mishandles cheque dishonor case by mechanically taking cognizance, ignoring Section 138 of Negotiable Instruments Act requirements.

Individuals in Charge of Partnership Face Prosecution for Dishonored Cheques u/s 141 of Negotiable Instruments Act.

IBC

No Conflict Between Benami Property Act and Insolvency Code: Section 32A Allows Sale of Corporate Debtor's Property During Liquidation.

Service Tax

Service tax demand on late payment dismissed; upheld for works contract and lease rent. Some penalties upheld, others set aside.

VAT

Section 21 Withholding Refund Requires Formal Order with Reasoning; File Notation Insufficient for Taxpayer Impact.

Case Laws:

GST

Income Tax

Customs

Corporate Laws

Insolvency & Bankruptcy

PMLA

Service Tax

Central Excise

CST, VAT & Sales Tax

Indian Laws

Quick Updates:

TMI Tax Updates - e-Newsletter
April 19, 2022